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<TITLE>APT SATELLITE HOLDINGS LIMITED</TITLE>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
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<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
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<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
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<DIV align="center" style="font-size: 0pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV>
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<DIV align="center" style="font-size: 18pt; margin-top: 0pt"><B>FORM 20-F</B>
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    <TD>&nbsp;</TD>
    <TD><B>REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or 12(g) OF THE SECURITIES EXCHANGE ACT OF
1934, or</B></TD>
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    <TD><B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.</B></TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>FOR THE FISCAL YEAR ENDED<BR>
DECEMBER 31, 2005</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>or</B></DIV>

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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
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    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934.</B></TD>
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<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>or</B></DIV>

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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
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    <TD><B>SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934</B></TD>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>Date
of event requiring this shell company report &#095;&#095;&#095;&#095;&#095;&#095;&#095;&#095;&#095;</B></DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Commission file number 001-14564</B></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>

<DIV align="center"><DIV style="font-size: 0pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="center" style="font-size: 10pt">(Exact Name of the Registrant Specified in its Charter)</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Bermuda</B></DIV>

<DIV align="center"><DIV style="font-size: 0pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="center" style="font-size: 10pt">( Jurisdiction of Incorporation or Organization)</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>22 Dai Kwai Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong</B></DIV>

<DIV align="center"><DIV style="font-size: 0pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="center" style="font-size: 10pt">(Address of Principal Executive Offices)</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Securities registered or to be registered pursuant to Section&nbsp;12(b) of the Act:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">NONE</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Securities registered or to be registered pursuant to Section&nbsp;12(g) of the Act:
</DIV>

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    <TD align="center" valign="top">Title
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Name of Each Exchange on Which Quoted</TD>
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    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
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    <TD>&nbsp;</TD>
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    <TD align="center" valign="top">Ordinary Shares<BR>
American Depositary Shares
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    <TD>&nbsp;</TD>
    <TD align="center" valign="top">The Stock Exchange of Hong Kong Limited<BR>
New York Stock Exchange</TD>
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<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Securities for which there is a reporting obligation pursuant to Section&nbsp;15(d) of the Act:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">NONE</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate the number of outstanding shares of each of the issuer&#146;s classes of capital or common
stock as of the close of the period covered by the annual report:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">413,265,000 Ordinary Shares as of December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule&nbsp;405 of the Securities Act.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">YES <FONT face="Wingdings">&#111;</FONT> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NO <FONT face="Wingdings">&#254;</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark if the registrant is not required to file reports pursuant to Section&nbsp;13 or
15(d) of the Securities Exchange Act of 1934.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">YES <FONT face="Wingdings">&#111;</FONT> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NO <FONT face="Wingdings">&#254;</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the Company: (1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for
such shorter period that the Company was required to file such reports), and (2)&nbsp;has been subject
to such filing requirements for the past 90&nbsp;days.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">YES <FONT face="Wingdings">&#254;</FONT> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NO <FONT face="Wingdings">&#111;</FONT></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or
a non-accelerated filer. See definition of &#147;accelerated filer and large accelerated filer&#148; in Rule
12b-2 of the Exchange Act. (Check one):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Large accelerated filer&nbsp;<FONT face="Wingdings">&#111;</FONT> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accelerated filer&nbsp;<FONT face="Wingdings">&#111;</FONT> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Non-accelerated filer&nbsp;<FONT face="Wingdings">&#254;</FONT>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark which financial statement item the Company has elected to follow.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Item&nbsp;17 <FONT face="Wingdings">&#111;</FONT> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Item&nbsp;18 <FONT face="Wingdings">&#254;</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is a shell company (as defined in Rule&nbsp;12b-2 of the Exchange Act).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">YES
<FONT face="Wingdings">&#111;</FONT>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NO
<FONT face="Wingdings">&#254;</FONT></DIV>


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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

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<DIV align="center" style="font-size: 10pt; margin-top: 18pt">TABLE OF CONTENTS
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    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">GLOSSARY OF CERTAIN TERMS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">iii</TD>
    <TD>&nbsp;</TD>
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    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
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    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">Item&nbsp;1. Identity of Directors, Senior Management, and Advisers</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
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    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#103">Item&nbsp;2. Offer Statistics and Expected Timetable</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#104">Item&nbsp;3. Key Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#105">Selected Consolidated Financial Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#106">Risk Factors</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#160">The SARS Outbreak</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107">Item&nbsp;4. Information on the Company</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#108">History and Development of the Company</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#109">Business Overview</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#110">Industry and Market Overview</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#111">Broadcasting and Telecommunications Markets in Asia</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#112">Customers and Services</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#113">Competition</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#114">Regulation</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#115">Organizational Structure</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#116">Property, Plant and Equipment</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#117">Item&nbsp;4A. Unresolved Staff Comments</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#118">Item&nbsp;5. Operating and Financial Review and Prospects</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#119">Overview</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#156"><U>Application
of Critical Accounting Matters</U></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#157"><U>Contractual
Obligations and Commercial Commitments</U></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#120">Off-Balance Sheet Arrangements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#121">Results of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#122">Liquidity and Capital Resources</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#123">Forward Looking Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#124">Other</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#125">Item&nbsp;6. Directors, Senior Management and Employees</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#126">Compensation</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#127">Board Practices</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#128">Employees</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#129">Share Option Schemes</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#130">Share Ownership</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#131">Service Agreements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#132">Item&nbsp;7. Major Shareholders and Related Party Transactions</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#133">Major Shareholders</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#134">Related Party Transactions</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#135">Item&nbsp;8. Financial Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#136">Item&nbsp;9. The Offer and Listing</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#137">Item&nbsp;10. Additional Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#138">Exchange Controls and Other Limitations Affecting Security Holders</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#139">Taxation</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#140">Item&nbsp;11. Quantitative and Qualitative Disclosures about Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#141">Interest Rate Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#142">Exchange Rate Sensitivity</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#143">Limitations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#144">Item&nbsp;12. Description of Securities Other Than Equity Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-i-
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Page</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#145">Item&nbsp;13. Defaults, Dividend Arrearages, and Delinquencies</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#146">Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#147">Item&nbsp;15. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#148">Item&nbsp;16A. Audit Committee Financial Expert</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#149">Item&nbsp;16B. Code of Ethics</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#150">Item&nbsp;16C. Principal Accountant Fees and Services</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#151">Item&nbsp;16D. Exemption from the Listing Standards for Audit Committees</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#152">Item&nbsp;16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#153">Item&nbsp;17. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#154">Item&nbsp;18. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#155">Item&nbsp;19. Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00612exv8w2.htm">EX-8.2 FINANCIAL STATEMENTS OF APT SATELLITE TELECOMMUNICATIONS LIMITED</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00612exv99w1.txt">EX-99.1 CERTIFICATION OF CEO</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00612exv99w2.txt">EX-99.2 CERTIFICATION OF CFO</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00612exv99w3.txt">EX-99.3 CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00612exv99w4.txt">EX-99.4 CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. SECTION 1350</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00612exv99w5.txt">EX-99.5 UPDATED SIGNIFICANT DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
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</DIV>

<P align="center" style="font-size: 10pt">-ii-
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>GLOSSARY OF CERTAIN TERMS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this Form 20-F, unless the context otherwise requires, the following expressions have the
following meanings:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ADS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">An American Depositary Share representing
ownership of eight shares of the Company&#146;s Ordinary
Shares, evidenced by American Depositary Receipts.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">analog
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A method of storing, processing or transmitting
information through a continuously varied (rather
than pulsed) signal.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">APCN2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Asia Pacific Cable Network 2, a submarine cable
project under a consortium of telecommunication
companies. The project provides additional telecom
capacity for designated Asian cities.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">APSTAR System
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Company&#146;s current and future satellites,
including APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V,
APSTAR VI (formerly APSTAR VB), and any other
satellites to be launched by the Company in the
future.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT/APT HK
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">APT Satellite Company Limited, a company
incorporated in the HKSAR and a wholly-owned indirect
subsidiary of the Company.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT BVI
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">APT Satellite Investment Company Limited, a
company incorporated in the British Virgin Islands
with limited liability and a wholly-owned subsidiary
of the Company.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT Group
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Company and its subsidiaries and affiliates.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT International
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">APT Satellite International Company Limited, a
company incorporated in the British Virgin Islands
with limited liability and a shareholder of the
Company.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT Telecom
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">APT Satellite Telecommunications Limited, a
jointly controlled entity of the Company which is
incorporated in the HKSAR that had been engaging in
the provision of telecommunication services.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT Telecom Lease
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The agreement for lease dated March&nbsp;12, 2001 made
between APT Telecom and Science and Technology Parks
Corporation in respect of the Remaining Portion of
Section&nbsp;E of Tai Po Town Lot No.&nbsp;13 and Extension
Thereto, Hong Kong, as modified by the Modification
of Agreement for Lease and Modification of Proposal
Form.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT&#146;s Leases
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Lease Agreement as supplemented and modified
by the Cancelled Agreement for Lease, the Deed of
Cancellation, the Second Supplemental Agreement, the
Fifth Modification of Lease and the Fifth
Modification Proposal.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">bandwidth
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A range of frequencies occupied by a modulated
carrier or the range of frequencies which can be
transmitted through a communications system.
Bandwidth is one measure of the information carrying
capacity of a transponder. The wider the bandwidth,
the more information can be transmitted.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Bank loan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">On December&nbsp;16, 2002, APT Satellite Company
Limited entered into a secured term facility of
US$240&nbsp;million, It was amended by a Deed of Amendment
and Restatement on October&nbsp;27, 2004 and a Second Deed
of Amendment and Restatement on May&nbsp;18, 2005.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Basic Law
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Basic Law of the Hong Kong Special
Administrative Region (HKSAR)&nbsp;of the People&#146;s
Republic of China, effective as of July&nbsp;1, 1997, is
the constitutional document for the HKSAR.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">beam
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The directed electromagnetic rays emanating from a
spacecraft or ground station. With respect to
satellites, it typically refers to aggregates of
these rays such as a China (coverage)&nbsp;beam or global
(coverage)&nbsp;beam.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-iii-
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Cancelled Agreement<BR>
for Lease
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The agreement for lease dated June&nbsp;19, 2000 made
between APT and the Science and Technology Parks Corporation in respect of the
original Remaining Portion of Section&nbsp;E of Tai Po Town Lot No.&nbsp;13 and
Extensions Thereto.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">C2C
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">C2C Pte. Ltd., a cable network provider under a
consortium of telecommunication companies led by
Singapore Telecommunications Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">CCTV
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">China Central Television, a PRC state-owned
enterprise under the supervision and control of the
SARFT.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">CITV
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">China International Television Corporation, a PRC
state-owned enterprise under the supervision and
control of the SARFT.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">CLTC
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">China Satellite Launch and Tracking Control
General, a PRC state-owned enterprise subject to the
supervision and control of the Defense Commission.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">C-band
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">In satellite communications (FSS)&nbsp;used to refer to
downlink frequencies between 3.4 GHz and 4.2 GHz and
uplink frequencies between 5.85 GHz and 7.075 GHz.
It is often referred to as 4/6 GHz.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">cellular
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Domestic public cellular radio telecommunications
service. Cellular systems are based on multiple base
stations, or &#145;&#145;cells,&#146;&#146; that permit efficient
frequency reuse and on software that permits the
system to band mobile calls from cell to cell as
subscribers move through the cellular service area.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">China Aerospace
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">China Aerospace Science &#038; Technology Corporation
(formerly China Aerospace Corporation or the PRC
Ministry of Aerospace Industry), a PRC state-owned
enterprise engaged in the research, design, testing
and manufacturing of launch vehicles and satellites.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ChinaSat
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">China Telecommunications Broadcast Satellite
Corporation, a PRC state-owned enterprise under the
supervision of the MII and which is the satellite
operation arm of the MII.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">DBS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Direct broadcast satellite, a satellite capable of
transmitting direct-to-home television programming.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">dBW
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Decibel relative to one watt, a measure of a
satellite&#146;s power (e.g., 50 dBW is 10 times more
powerful than 40 dBW).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Deed of Cancellation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The deed of cancellation and surrender dated March
12, 2001 in respect of cancellation of the Cancelled
Agreement for Lease made between APT and Science and
Technology Parks Corporation.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">digital
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Referring to a method of storing, processing, or
transmitting information through a pulsed (rather
than continuously varied) signal.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">downlink
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The receiving portion of a satellite circuit
extending from the satellite to the earth.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Director(s)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director(s) of the Company, including all
executive director(s), all non-executive director(s)
and independent non-executive directors.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">earth station
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The antennae, receivers, transmitters and other
equipment needed on the ground to transmit and
receive satellite communications signals.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">EBITDA
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Net income before taking into account: (i)&nbsp;interest
expenses; tax; any share of the profit of any
associated company or undertaking, except for
dividends received in cash by any member of the
Company; any share of the non-cash loss
of any investment company of other associated company or undertakings; and extraordinary and exceptional items; and (ii)&nbsp;without
double-counting, after adding back all amounts provided for as depreciation, amortization, impairment assets value or other
provision not involving an outflow of cash.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-iv-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">EIRP
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Equivalent isotropic radiated power, the product of the power supplied to the antenna and the
antenna gain in a given direction relative to an isotropic antenna (absolute or isotropic gain).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Eligible Employee(s)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employee(s) (whether full time or part time employee(s), including any executive director but not
any non-executive director) of the Company or its subsidiaries.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Eligible Grantee(s)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Persons who are eligible to accept the offer of the grant of an Option in accordance with the
Scheme 2001 or Scheme 2002, as the context requires.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FCL
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fixed Carrier Licence issued by OFTA for the provision of Facility-based External
Telecommunication Services.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Fifth Modification of Lease
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The fifth modification of agreement for lease dated May&nbsp;31, 2002 made between APT and Science and
Technology Parks Corporation in respect of modification of purpose of the lease contained in the
Lease Agreement.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Fifth Modification Proposal
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The fifth modification to proposal form dated May&nbsp;31, 2002 made between APT and Science and
Technology Parks Corporation in respect of modification of purpose in the proposal form in
relation to the Lease Agreement.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">footprint
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The geographic area covered by a satellite&#146;s downlink or uplink beams, the outer edge of which is
generally defined as that area where the quality of communication degrades below an acceptable
commercial level due to the spacecraft antenna pattern, power of the signal or curvature of the
earth.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">frequency
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Number of repetitions in a given time. Typically it refers to the rate of variation per second
of the carrier wave or modulating signal. Communications satellite RF signals are typically in
the GHz frequency range. See C-band and Ku-band.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">FTNS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fixed telecommunications network services, presently known as Fixed Carrier Licence.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">GEO
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Geostationary orbit.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">geostationary orbit
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A geosynchronous orbit in which the orbital inclination and eccentricity of a satellite are zero
such that the satellite appears to hover over a fixed position on the earth&#146;s equator.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Global Offering
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Company&#146;s initial world-wide public offering of Ordinary Shares and American Depositary
Shares, each representing eight shares of the Company&#146;s Ordinary Shares dated December&nbsp;13, 1996.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">HDTV
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">High definition television.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">HKSAR
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hong Kong Special Administrative Region of the PRC.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ISDN
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Integrated services data network.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">ITU or International<BR>
Telecommunication Union
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The International Telecommunication Union, the telecommunications agency of the United Nations,
established to provide standardized communications procedures and practices, including frequency
allocation and radio regulations, on a world-wide basis.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Joint Declaration
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Joint Declaration of the Government of the United Kingdom and the Government of the PRC on
the Question of Hong Kong with Annexes signed on December&nbsp;19, 1984.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ku-band
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">In satellite communications (FSS), it is used to refer to downlink frequencies between 10.7 GHz
and 12.75 GHz and uplink frequencies between 13.75 GHz and 14.8 GHz. Often it is referred to as
11/14 or 12/14 GHz.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lease Agreements
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The agreement for lease dated February&nbsp;26, 1993, made between APT and the Science and Technology
Parks Corporation in respect of Subsection 1 of Section E of Tai Po Town Lot No.&nbsp;13 and Extension
Thereto, Hong Kong on which APT&#146;s satellite control center is developed.</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-v-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">LEO
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Low-earth orbit of up to 1,500 miles above the earth.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Master Registry
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Master International Frequency Register of the ITU, which lists frequency assignments of
orbital slots upon notification.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">MEO
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mid-earth orbit of up to 18,000 miles above the earth.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">megahertz (MHz)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A measure of frequency, 1&nbsp;million cycles per second.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">microwave
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Radio frequency carrier waves with wavelengths of less than one meter- frequencies above 300 MHz.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">MII
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ministry of Information Industry of the PRC.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">mobile satellite services
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Services transmitted via satellites to provide mobile telephone, paging, messaging, facsimile,
data, and position location services directly to users.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">OFTA
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Office of the Telecommunications Authority of Hong Kong or, where the context requires, the
Telecommunications Authority of Hong Kong.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">operational life
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The time for which a satellite is capable of operating in its allotted position. The expected
end of a satellite&#146;s in-orbit operational life is mainly based on the period during which the
satellite&#146;s on-board fuel permits proper station-keeping maneuvers for the satellite.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Option(s)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Options granted to the Eligible Grantees under the Scheme 2001 or to the Participants under the
Scheme 2002, as the context requires.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">paging
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A service designed to deliver a message to a person whose location is unknown; messages may be
received via an alphanumeric or character display or small speaker.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Participant(s)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Any person belonging to any of the following classes of persons: (a)&nbsp;any Eligible Employee; and
(b)&nbsp;any non-executive directors (including independent non-executive directors) of the Company or
any of its Subsidiaries, in accordance with the Scheme 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">PRC
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The People&#146;s Republic of China, other than HKSAR.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">PSTN
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Public switched telephone networks which comprise the network infrastructure necessary for
providing basic telephone services.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">radio frequency
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A frequency that is higher than the audio frequencies but below the infrared frequencies, usually
above 20 KHz.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Radio Regulations
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Radio Regulations of the ITU.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Radio Regulatory Department
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Radio Regulatory Department of the MII.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Radiocommunication Bureau
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Radiocommunication Bureau of the ITU.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">SARFT
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">China State Administration of Radio Film and Television, a government office responsible for the
management of the provision of Radio, Film and Television in the PRC.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Satellite Control Center
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The earth station of the APT Group for the TT&#038;C of APSTAR Systems and the provision of
broadcasting transmission and telecommunication services. It is located in Tai Po, New
Territories, Hong Kong.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Science and Technology
Parks Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hong Kong Science and Technology Parks Corporation (formerly known as Hong Kong Industrial
Science and Technology Parks Corporation), the lessor of certain Lease Agreements with the
Company.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">scrambled programming
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Programming signals which require a decoder for purposes of viewing.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-vi-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Second Supplemental Agreement
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The second supplemental agreement for lease and grant of second extension area dated March&nbsp;12,
2001 made between APT and the Science and Technology Parks Corporation in respect of Subsection 3
of Section&nbsp;E of Tai Po Town Lot No.&nbsp;13 and Extensions Thereto.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">signal
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A physical, time-dependent energy value used for the purpose of conveying information through a
transmission line.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">switch
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A device that opens or closes circuits or selects the paths or circuits to be used for
transmission of information; switching is the process of interconnecting circuits to form a
transmission path between users.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">teledensity
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telephone access lines per 100 persons.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">telemetry
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Radio transmission of coded or analog data from a satellite to a ground station.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">telephony
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Science of construction and operation of telephones and telephonic systems.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">transponder
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A microwave repeater which provides a discrete path to receive communications signals, translate
and amplify such signals and retransmit them to earth or another satellite.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TT&#038;C
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telemetry, tracking and command.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">TT&#038;C Station
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telemetry, tracking and command station, a land-based facility that monitors and controls the
positioning, altitude and status of a satellite in orbit.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">uplink
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">In satellite communications, the signal from the earth station to the space station (satellite).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">VSAT
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Very small aperture terminal.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">-vii-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART I</B>
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1. Identity of Directors, Senior Management, and Advisers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;2. Offer Statistics and Expected Timetable</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;3. Key Information</B>
</DIV>

<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Selected Consolidated Financial Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents selected consolidated financial information for APT Satellite
Holdings Limited (the &#147;Company&#148; or &#147;APT Holdings&#148;) as of and for the five fiscal years ended
December&nbsp;31, 2005. The financial statement information as of and for each of the years in the
five-year period ended December&nbsp;31, 2005 has been derived from, and should be read in conjunction
with, and are qualified in their entirety by reference to, the Company&#146;s Audited Consolidated
Financial Statements (the &#147;Audited Consolidated Financial Statements&#148;) and with &#147;Item&nbsp;5. Operating
and Financial Review and Prospects.&#148; The Audited Consolidated Financial Statements are prepared in
accordance with Hong Kong GAAP, which differs in certain significant respects from US GAAP. For a
discussion of the nature and effect of such differences between Hong Kong GAAP and US GAAP, see
Item&nbsp;18 and Note 28 of the &#147;Notes to the Audited Consolidated Financial Statements&#148; of the Company,
which contain descriptions of the significant differences between Hong Kong GAAP and US GAAP, a
reconciliation of net loss from Hong Kong GAAP to US GAAP for the years ended December&nbsp;31, 2003,
2004 and 2005, and reconciliation of shareholders&#146; equity from Hong Kong GAAP to US GAAP as of
December&nbsp;31, 2004 and 2005. In addition, Note 28 to the Audited Consolidated Financial Statements
of the Company contains additional disclosures required under US GAAP, which are not disclosed
elsewhere in the Audited Consolidated Financial Statements of the Company.
</DIV>

<P align="center" style="font-size: 10pt">-1-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2001</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2002</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">US$</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px"><B>Statement
of Operations Data:</B><BR>
<I>(in millions, except per share data)</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hong Kong GAAP:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">374.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">351.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total costs and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(348.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(365.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(354.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(323.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(378.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(48.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income/(loss) from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(148.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(78.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share of losses of jointly controlled
entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(57.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income/(loss) before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(205.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(45.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(123.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income/(loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(217.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(62.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(136.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Attributable to:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity shareholders of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(216.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(60.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(135.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">Basic earnings/(loss) per share
(cents)<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(52</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(33</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic earnings/(loss) per ADS
(cents)<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(416</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(120</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(264</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(32</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">Diluted earnings/(loss) per share
(cents) <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(52</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(33</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted earnings/(loss) per ADS
(cents)<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(416</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(120</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(264</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(32</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted average number of shares
outstanding<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
&#151; Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted average number of shares
outstanding<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
&#151; Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dividend per share (cents)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US GAAP:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">373.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">347.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">316.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total costs and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(342.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(314.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(484.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(323.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(445.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(57.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income/(loss) from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(167.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(46.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(109.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share of losses of jointly controlled
entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(65.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income/(loss) before income taxes and
minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(214.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(43.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(118.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income/(loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(225.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(58.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(130.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic earnings/(loss) per share
(cents)<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(55</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(32</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic earnings/(loss) per ADS
(cents)<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(440</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(112</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(256</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(32</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">Diluted earnings/(loss) per share
(cents)<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(55</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(32</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted earnings/(loss) per ADS
(cents)<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(440</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(112</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(256</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(32</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted average number of shares
outstanding<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
&#151; Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted average number of shares
outstanding<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>  &#151; Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px"><B>Balance Sheet Data:</B><br><I>(in millions)</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hong Kong GAAP:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Working capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,478.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">739.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">482.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">533.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property, plant and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,132.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,002.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,429.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,680.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,999.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">386.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,308.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,347.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,305.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,621.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,614.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">463.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Long-term liabilities (less current
portion)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">542.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">377.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">769.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,191.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,255.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">816.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">864.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,046.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,423.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,552.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital stock-common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,492.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,482.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,253.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,193.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,058.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">263.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US GAAP:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Working capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,454.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">739.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">482.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">533.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">194.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,284.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,339.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,297.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,613.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,615.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">463.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">816.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">864.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,046.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,423.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,554.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,468.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,468.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,244.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,186.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,057.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">263.7</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">-2-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Per share and per ADS data is derived from the weighted average number of shares
outstanding during the applicable period. Diluted earnings per share was the same as the
basic earnings per share as there were no dilutive potential ordinary share in existence for
five fiscal years ended December&nbsp;31, 2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The Hong Kong Institute of Certified Public Accountants (HKICPA)&nbsp;has issued a number of new
and revised Hong Kong Financial Reporting Standards (HKFRSs) that are effective for accounting
periods beginning on or after January&nbsp;1, 2005. Information on the changes in accounting policies resulting from initial
application of these new and revised HKFRSs is provided in note 4 of the &#147;Notes to the
Audited Consolidated Financial Statements&#148; of the Company. Certain amounts for the years
before 2005 have been restated to the extent that the new accounting policies are adopted
retrospectively as disclosed in note 4.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Hong Kong Dollar is freely convertible into other currencies (including the US
Dollar). Since October&nbsp;17, 1983, the Hong Kong Dollar has been linked to the US Dollar at the rate
of approximately HK$7.80 to US$1.00. The central element in the arrangements which give effect to
the link is an agreement between the government of Hong Kong and the three Hong Kong
banknote-issuing banks, The Hongkong and Shanghai Banking Corporation Limited, Standard Chartered
Bank and Bank of China (Hong Kong) Limited. Under this agreement, the Government of the Hong Kong
SAR Exchange Fund issues certificates of its indebtedness to the banknote-issuing banks against
payment in US Dollars at the fixed exchange rate of HK$7.80 to US$1.00. The banknote-issuing banks
hold the certificates of indebtedness to cover the issuances of banknotes. When the banknotes are
withdrawn from circulation, the banknote-issuing banks surrender the certificates of indebtedness
to the Government of the Hong Kong SAR Exchange Fund and are paid the equivalent US Dollars at the
fixed rate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements of the APT Group are expressed in Hong Kong
dollars (&#147;HK$&#148;). The translations of amounts from Hong Kong dollars into United States dollars for
convenience of the reader in this annual report have been made at the rate on December&nbsp;31, 2003,
2004 and 2005 of HK$7.80 = US$1.00. No representation is made that the Hong Kong dollar amounts
could have been, or could be, converted into United States dollars at that rate or at any other
certain rate on December&nbsp;31, 2003, 2004 and 2005, or any other date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market exchange rate of the Hong Kong Dollar against the US Dollar continues to be
influenced by the forces of supply and demand in the foreign exchange market. Exchange rates
between the Hong Kong Dollar and other currencies are influenced by the rate between the US Dollar
and the Hong Kong Dollar.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The exchange rates of the Hong Kong Dollar to the United States Dollar as of and during the
years ended December&nbsp;31, 2001, 2002, 2003, 2004 and 2005 were as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2001</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2002</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7774</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">High</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.8001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.8000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.8001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.8010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.8000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Low</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7519</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">End of Period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7978</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7981</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7723</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7545</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The rate of exchange means the noon buying rate in New York City for cable transfer in
foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.
The average rate means the average of the exchange rates on the last day of each month during
the period.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The exchange rates of the Hong Kong Dollar to the United States Dollar for each month during
the previous six months were as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">December 2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">January 2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">February 2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">March 2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">April 2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">May 2006</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">High</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7573</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7584</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Low</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7565</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7534</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.7513</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">-3-
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risk Factors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Prior to making an investment decision, prospective investors should carefully consider all of
the information set forth in this annual report, including the following risk factors. If any of
the following risks actually occur, the Company&#146;s business, financial condition and operating
results could be adversely affected. As a result, the trading price of the Company&#146;s ordinary
shares and ADSs could decline and all or part of a prospective investor&#146;s investment could be lost.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Technical Risks of satellite systems</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Satellite programs involve inherent technical risks. Given the intense competitiveness of
Asian satellite markets, any launch or in-orbit failure affecting any of the Company&#146;s present or
future satellites would have a material adverse effect on the Company&#146;s results of operations and
financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Risk of Satellite Defects or Failure</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Satellite defects as well as possible damage from electrostatic storms or collisions with
space debris or other external causes may result in a partial or total loss of a satellite&#146;s
communication capacity. APSTAR IIR and APSTAR V are FS-1300 models, and APSTAR VI is a SB-4100 C1
model, which is a new general satellite platform with heritage from previous SB series satellite
model. Although these models were chosen based on a number of factors, including risk management,
there can be no assurance that the Company&#146;s satellites will perform as designed and as
manufactured. Significant defects in or damage to any of the Company&#146;s satellites would adversely
affect the Company&#146;s results of operations and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Limited Life of Satellites</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All satellites have limited operational lives. A number of factors affect the operational
lives of satellites, including construction quality, component durability, fuel usage, the launch
vehicle used and the skill with which the satellite is monitored and operated. There can be no
assurance as to the actual operational life of APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V or APSTAR
VI. The Company&#146;s results of operations and financial condition would be adversely affected if the
operational lives of satellites in the APSTAR System or any other satellites it may operate are
significantly shorter than expected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>TT&#038;C Systems and Earth Station</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All satellites in the APSTAR System, except APSTAR V, are controlled with respective TT&#038;C
systems, which are operated by the technical staff of the Company. All TT&#038;C systems are installed
in the Satellite Control Center of the Company. The reliability and performance of the Satellite
Control Center has been good and comparable to that of the industry. However, there can be no
assurance that there will not be technical problems, accidents or disasters in the future in
respect of the operation of the TT&#038;C systems or the Satellite Control Center. The Company&#146;s results
would be adversely affected in the event of the occurrence of any such technical problem, accident
or disaster.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Risk of Interruption or harmful interference of APSTAR V</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR V is operated by Loral Skynet through the satellite antenna facility of the Company.
Loral Skynet is an experienced satellite operator particularly in the operation of satellites based
on the FS1300 platform such as APSTAR V. However, there can be no assurance that the operation of
APSTAR V will be free from interruption or harmful interference in the future. The Company&#146;s
operating results could be adversely affected by the occurrence of such defect or problem.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Changes in Technology and Industry</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Technology in the broadcasting and telecommunications industry is in a rapid and continuing
state of change, with new technological developments and innovations constantly emerging. If such
developments and
</DIV>

<P align="center" style="font-size: 10pt">-4-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">innovations were to decrease general commercial demand for the use of satellites
of the type operated by the Company, the Company&#146;s results of operations and financial condition
could be materially adversely affected. Further, while the Company designs its satellites to
incorporate state-of-the-art technology, there can be no assurance that the technology used in the
Company&#146;s satellites will continue to be the most advanced throughout the entire operational life
of each satellite. Any technological lag which develops could result in lower rental fees after
the initial rental term for any given transponder, and could therefore have a material adverse
effect on the Company&#146;s results of operations and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Regulatory Risks</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Regulatory Regime for Satellite Operations</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The business prospects of the Company (including the launch and the timing of the launch of
new satellites) could be adversely affected by laws, policies or regulations that modify the
present regulatory regime in HKSAR or elsewhere applicable to APT Group or the launch, operation
and commercial usage of its satellites.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Satellite services are subject to international space law. A country that is a party to the
International Outer Space Treaty or other treaties or conventions regulating outer space activities
is responsible for fulfilling its own obligations under such treaties or conventions. This often
results in the adoption by a member country of domestic laws to regulate the activities of their
own citizens or corporations in order to enable the country concerned to comply with its
international obligations. APT&#146;s satellite operations are principally regulated by the Outer Space
Ordinance 1997 (the &#147;Outer Space Ordinance&#148;). The Outer Space Ordinance prohibits any person from
launching or procuring the launch of a satellite, or operating a satellite, without obtaining the
appropriate license. The ultimate authority to grant licenses and otherwise to administer the
Outer Space Ordinance is vested in the Chief Executive of HKSAR acting in consultation with the
Executive Council of Hong Kong (&#147;Chief Executive in Council&#148;). In practice, all relevant matters
are dealt with on a regular basis by and through the OFTA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since July&nbsp;1, 1997, HKSAR and its government and regulatory bodies have been subject to its
Basic Law and the principle of &#147;One country, two systems&#148;. However, the Outer Space Ordinance
states that where the Central People&#146;s Government of the PRC issues an instruction to the Chief
Executive in relation to any licence to be issued or revoked under the Outer Space Ordinance on the
ground that if the instruction were not complied with the national security or the international
obligations of the PRC would be significantly affected, the Chief Executive shall comply with such
instruction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On November&nbsp;1, 2003 and April&nbsp;4, 2005, OFTA granted the Space Station Carrier Licence for the
TT&#038;C operations of APSTAR V and APSTAR VI, respectively, to APT. In addition, on April&nbsp;4, 2005 OFTA
also granted to APT the Outer Space Licence in relation to the launch and operation of APSTAR VI.
The Company currently has licenses for the operation of APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V
and APSTAR VI. Owing to the fact that APSTAR V is under the leasehold arrangement and is operated
by Loral Skynet instead of the Company, there is no need for the Company to obtain the Outer Space
Licence for APSTAR V. However, there can be no assurance that existing laws and regulations
affecting the Company will remain applicable in the future, or whether any such applicable laws and
regulations are likely to be amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Priority for Orbital Slots</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Satellites are entitled to protection from radio frequency interference by other satellites
and earth stations only upon the registration of the location, frequency and use of such satellites
with the Radiocommunication Bureau. Registration requires the successful completion of a
coordination process with other existing and potential users of locations and frequencies who have
commented on the application for registration. The coordination process is carried out in part at
the government-to-government level, which is beyond the control of the Company. The coordination
process has become increasingly complex and time-consuming in the Asia Pacific region because a
large number of operators have registered new systems operating at high power levels with very
broad coverage. The coordination process may result in modifications of proposed coverage areas or
satellite design to eliminate or minimize interference with other potential users.
</DIV>

<P align="center" style="font-size: 10pt">-5-
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Radio Regulations, during the coordination process a country may request the
Radiocommunication Bureau to assist it in resolving disputes in connection with existing or
proposed uses of frequencies and orbital locations. However, should any such disputes remain
unresolved, and the coordination process therefore not be successfully completed, there is no
formal dispute resolution mechanism. Any country that nonetheless places a satellite or any earth
station into operation without coordination and notification may not be entitled to seek the
assistance of the Radiocommunication Bureau to resolve complaints relating to interference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT, through the PRC government, has requested the Radio Regulatory Department of the PRC via
OFTA of Hong Kong to file and coordinate applications by APT for orbital slots with the
Radiocommunication Bureau and for resolving interference concerns. The Radio Regulatory Department
has notified the Radiocommunication Bureau the proposed use of several orbital slots, namely 76.5
degrees East, 89.5 degrees East, 92.2 degrees East, 96 degrees East, 102.8 degrees East, 131
degrees East, 131.8 degrees East, 134 degrees East, 138 degrees East and 140 degrees East. APT also
filed for the orbital slot at 142 degrees East but such filing has also been, for administration
purposes, transferred to ChinaSat in 2004 after liaising with OFTA. Pursuant to such transfer,
APSTAR I can be positioned at 142 degrees East under the existing licenses from OFTA. Under ITU
regulations, no assurance can be given as to whether substantial modifications to satellite
coverage or services may be required with respect to 142 degrees East, and no assurance can be
given whether the coordination process with the ITU, with respect to the orbital slot at 76.5
degrees East, where APSTAR IIR is currently positioned, or any other orbital slot to be used by the
Company&#146;s satellites will be completed or whether the Company will have any priority for any such
orbital slot.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Possible Disputes Relating to Orbital Slots</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR V replaced APSTAR I on August&nbsp;13, 2004. APSTAR V is utilizing certain designated
C-band, extended C-band frequencies and Ku-band frequencies in the orbital slot at 138 degrees
East. APSTAR VI replaced APSTAR IA on July&nbsp;7, 2005. APSTAR VI is utilizing certain designated
C-band and extended C-band frequencies in the orbital slot at 134 degrees East. The right to use
these frequencies at such orbital slots has been licensed to the Company by the Kingdom of Tonga
(&#147;Tonga&#148;), which, through its agent namely Friendly Islands Satellite Communications Limited
(&#147;TongaSat&#148;), has responsibility for the ITU coordination process with respect to such orbital
slots and the frequencies covered by the Company&#146;s license.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT and TongaSat entered into a license agreement on July&nbsp;8, 2003, under which APT can utilize
certain designated C-band, extended C-band and Ku-band frequencies in the orbital slot at 138
degrees East for APSTAR V. APT and TongaSat also entered into an operator agreement on December
19, 2003 for the utilization of certain Ku-band frequencies in the same orbital slot for APSTAR V,
which operator agreement was approved by the corresponding administrations of both HKSAR and Tonga
on March&nbsp;15, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT and TongaSat also entered into a license agreement on April&nbsp;15, 2005, under which APT can
utilize certain designated C-band, extended C-band and Ku-band frequencies in the orbital slot at
134 degrees East for APSTAR VI.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tonga has confirmed to the Company that it has not granted rights to any third party that
would affect the Company&#146;s license or the Company&#146;s entitlement to use the frequencies at such
orbital slot covered by the license. Disputes may arise with respect to these and other orbital
slots used by or contemplated for the Company&#146;s satellites. Any such disputes or interference may
have a material adverse effect on the Company&#146;s business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR I has been relocated to 142 degrees East and APSTAR IA is in the process of being
relocated to another orbital slot. APT is authorized by customers to locate and operate these two
satellites under inclined angle modes. Third parties liabilities insurance policies have been taken
out in respect of the relocation of APSTAR IA. No assurance can be given by the Company that these
two satellites will not cause any interferences or damages to any third parties leading to damages
of any third party, nor the insurance policy will be sufficient for any damage payments.
</DIV>


<P align="center" style="font-size: 10pt">-6-
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Regulatory Constraints on End-users</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of the Company&#146;s existing and potential customers who may wish to use the APSTAR System
to broadcast into or provide telecommunications services for countries in Asia are subject to
government licensing. The applicable regulatory schemes in these countries vary considerably.
While the Company does not believe these regulatory schemes will prevent it from pursuing its
business, there can be no assurance that its customers&#146; licenses and approvals are or will remain
sufficient in the view of foreign regulatory authorities or that these authorities will not
discourage or prevent existing or potential customers from utilizing transponders on the APSTAR
System.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of the Company&#146;s customers must also have authorization from the countries in which they
are located in order to uplink to and communicate by means of the Company&#146;s satellites. While
obtaining such authorizations on behalf of its customers is not the Company&#146;s responsibility, the
Company&#146;s success may depend on the ability of its potential customers to obtain required
authorizations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Export Restrictions</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The United States government has imposed certain restrictions on technology transfers to
certain countries including the PRC. Export licenses for the deliveries of TT&#038;C systems and
satellites are required to be obtained by the manufacturers of other satellites that the Company
may launch in the future in connection with launches in any country subject to restrictions on
technology transfers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the APT-Loral Term Sheet dated September&nbsp;23, 2002 and the agreements signed between
Loral Orion and APT HK in December&nbsp;2003, Loral Orion agreed to participate in the development of
APSTAR V by investing up to 50% of the capital necessary for the APSTAR V project on a pro rata
basis in order to obtain rights to 27 transponders at a value of approximately US$115.0&nbsp;million.
In March&nbsp;2003, the parties agreed to lower the number of transponders to be purchased by Loral
Orion to 25, but Loral Orion&#146;s capital commitment remains unchanged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because of the failure of Space Systems/Loral Inc., a subsidiary of Loral Space &#038;
Communications (&#147;SS/Loral&#148;), to obtain the export license for the transfer of the title of APSTAR V
in time for launching, APT entered into a Satellite Procurement Amendment Agreement, a Satellite
Transponder Agreement and a Satellite Agreement (collectively the &#147;Definitive Agreements&#148;) with
SS/Loral and Loral Orion Inc. (&#147;Loral Orion&#148;) on August&nbsp;26, 2003 for the purpose of minimizing any
further delay in the launch of the satellite. Under the Definitive Agreements, the title of APSTAR
V was transferred to Loral Orion upon intentional ignition of APSTAR V and simultaneously therewith
APT was granted an irrevocable lease of forty-one and one-half (41-1/2) transponders for the lease
term commencing upon transfer of title from SS/Loral to Loral Orion until the end of operational
life of APSTAR V. Under the Satellite Agreement, APT will release the leasehold interest of twelve
and one-half (12-1/2) transponders to Loral Orion in stages over a five years period from the
in-service date of APSTAR V subject to payment of installments by Loral Orion to APT. This will
result in APT having 29 transponders. Under the leasehold arrangement, Loral Orion has committed to
continue pursuing the necessary export license for title transfer of APSTAR V. The Definitive
Agreements were approved by the United States Bankruptcy Court on October&nbsp;28, 2003. The Company
believes that entering into the Definitive Agreements facilitated the timely replacement of APSTAR
I so that satellite transponder services of the APT Group can be enhanced. The Definitive
Agreements will not adversely impact the business and future plans of the APT Group because the
leasehold interests under the Definitive Agreements will allow APT to carry on its business in a
normal commercial practice of leasing its transponders capacities to any third parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Owing to the absence of export license for the delivery of the TT&#038;C system of APSTAR V, the
satellite is currently controlled by Loral Skynet through the Satellite Control Centre of the APT
Group until the export license for the delivery of the TT&#038;C system of APSTAR V is obtained by Loral
Skynet. Loral Orion has committed to continue pursuing the necessary export license for title
transfer of APSTAR V. However, there can be no assurance that the relevant vendor of any satellite
of the Company will be able to obtain all the necessary licenses or that such other licenses will
not be revoked by the relevant government or that the relevant government will not impose
additional restrictions or trade sanctions against the PRC or other countries that would
significantly delay the planned launch of the satellite in question or other satellites that the
Company or any of its subsidiary or associated company may launch in the future.
</DIV>

<P align="center" style="font-size: 10pt">-7-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Business Risks</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Insurance</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has in-orbit insurance coverage in respect of APSTAR IIR, APSTAR V and APSTAR VI
until October&nbsp;18, 2006, June&nbsp;29, 2006 and April&nbsp;12, 2007, respectively. No in-orbit insurance is
maintained in respect of APSTAR 1 and APSTAR IA as their remaining design lives are less than one
year. On April&nbsp;30, 2004 OFTA granted the Company a waiver whereby the requirement of third party
liability insurance in respect of APSTAR I, IA and IIR, respectively, for in-orbit operation is waived. There can be no
assurance that the Company will not be subject to claims for third-party liability in respect of
satellites under the APSTAR System. CGWIC, the launch service provider of APSTAR VI, has secured
third-party liability insurance for the launch with a one year period after launch, which covers,
among others, the Company, the governments of Hong Kong and PRC as additional insured. As the title
of APSTAR V has transferred to Loral Skynet upon launch, there is no need for the Company to obtain
an Outer Space Ordinance Licence for APSTAR V and the Company is not required to secure third-party
liability insurance for APSTAR V. No assurance can be given with respect to the change of policy
of OFTA. Because of the drifting of APSTAR IA from its original geostationary orbital slots to new
orbital slots for the provision of services to customers under inclined modes, APSTAR IA is covered
under third-party liability insurance over drifting and operation until November&nbsp;1, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After the World Trade Center event happened on September&nbsp;11, 2001, the insurance industry
imposed unfavorable terms on satellite insurance with respect to both the launch insurance and
in-orbit insurance. Such impositions include a higher premium rate and additional exclusion
clauses. The Company&#146;s in-orbit insurance must be renewed annually. There can be no assurance
that the Company will be able to obtain future insurance on terms satisfactory to the Company, or
at all. The failure to secure adequate insurance coverage may result in the Company not being in
compliance with its Outer Space Ordinance License, and could adversely affect the Company&#146;s
financial condition if an event were to occur for which the Company was not adequately insured.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s launch insurance is unlikely to fully reimburse the Company for its expenditures
with respect to launching a replacement satellite, with uninsured expenses comprising legal and
other professional fees, interest and certain other expenses. It is the Company&#146;s policy to secure
in-orbit insurances to cover only the book value, rather than the replacement cost, of a satellite,
however, the Company may take into account the obligations under the Bank loan conditions and the
general industrial practice on a case by case basis. There is no assurance that the Company will
take in-orbit insurance to fully cover the book value of its satellites. Further, the Company&#146;s
insurance coverage does not compensate the Company for business interruption and similar losses
(including, among other things, loss of market share, loss of revenue and incidental and
consequential damages). In addition, the Company&#146;s insurance policies include customary exclusions
including, among other things, exclusions from losses resulting from (i)&nbsp;war or similar hostile
actions, (ii)&nbsp;anti-satellite, nuclear or laser or directed energy devices, (iii)&nbsp;insurrection and
similar acts or governmental action to prevent such acts, (iv)&nbsp;governmental confiscation, (v)
nuclear reaction or radiation contamination, (vi)&nbsp;electromagnetic or radio frequency interference,
except for damage directly caused by such interference, or (vii)&nbsp;willful or intentional acts of the
Company or its contractors except for the acts of the range safety officer acting within the limit
of his authority.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Competitive Nature of the Industry</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The international satellite communications industry is highly competitive. The Company faces
competition from numerous international, regional and domestic satellite companies and from other
communications companies which offer competing services using satellites or land-based facilities
in the Asia Pacific region. Many of these competitors have substantially greater financial
resources than the Company. The Company expects that new satellites will be launched covering all
or part of the Asia Pacific region in the future. Assuming announced plans for such launches are
successfully implemented, there would be an increase of transponder capacity serving the region and
the increased supply of international telecommunications facilities, including those of the
Company, would likely exceed the demand for such services. Such overcapacity could have a negative
impact on the Company&#146;s results of operations and financial condition. Technological developments,
such as the use of digital video compression technology, and the proliferation of fiber optic
cables in the form of land cables and submarine cables at
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">comparatively lower cost for
point-to-point telecommunication services may also result in reduced demand for transponder
capacity as such advancements become commercially viable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The laws of certain countries require domestic television broadcasters and domestic satellite
telecommunications operators providing services in their home countries generally to use
state-owned or locally-owned satellites to the extent capacity is available. These legal
requirements may prevent the Company and other satellite companies from competing in the provision
of transponder capacity to these potential customers. There can be no assurance that other
countries in the Asia Pacific or Middle East regions, including those countries within the
footprints of APSTAR System satellites and in which the Company&#146;s customers currently provide
programming or telecommunications services, will not impose similar requirements to use state-owned
or locally-owned satellites in the future on domestic broadcasters or operators. The imposition
of such requirements could adversely affect the Company&#146;s results of operations and financial
condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Additional Financing Requirements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;16, 2002, APT entered into a Bank loan which is secured by the assignment of the
construction, launching, and related equipment contracts relating to APSTAR V and APSTAR VI and
their related insurance claim proceeds, assignment of all present and fixed charges over certain
bank accounts which will hold receipts of transponder utilization income and termination payments
under construction, launching and related equipment contracts. As of December&nbsp;31, 2004 and 2005,
the aggregate outstanding borrowing amount under the Bank loan was US$125.1&nbsp;million and US$144.5
million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Bank loan contains financial covenants, including maintenance of collateral coverage
ratio, minimum net worth and minimum EBITDA. The Bank loan also contains customary limitations,
including those on dividends, investments, capital expenditures, changes of controlling
shareholders, creating liens and transactions with affiliates. No assurance can be given that APT
will be able to meet any financial and operating covenant. These covenants and limitations may
limit the Company&#146;s ability to raise additional funds when required and could significantly
restrict the Company&#146;s business expansion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Dependence on Key Customers</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues from the Company&#146;s five largest customers for the years ended December&nbsp;31, 2003,
2004, and 2005 were HK$119.2&nbsp;million, HK$111.9&nbsp;million and HK$ 112.9&nbsp;million (US$14.5&nbsp;million),
respectively, which represented 39.4%, 40.4% and 33.6%, respectively, of total revenues. Revenues
from the Company&#146;s largest customer represented 12.6%, 12.7% and 9.1%, respectively, of total
revenues during such periods. The Company&#146;s results of operations could be materially and
adversely affected by the loss of one or more of its key customers. There can be no assurance that
the key customers will renew the existing satellite capacity utilization agreements on similar
commercial terms, including price levels and for similar capacity. In addition, to the extent the
credit quality of key customers deteriorates or these customers seek bankruptcy protection, we may
not be able to collect our receivables from these customers, which may adversely affect our
operating results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Interference</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjacent satellites may use the same band of frequencies as the Company&#146;s satellites and the
transmission made by other satellites or other legal or illegal source of transmission which may
interfere with the transmissions of the Company&#146;s satellites. Such interference could lead to the
loss of revenues if customers migrate to competitors who operate satellites without such
interference. Further, there can be no assurance that the Company can avoid the material
interference with other satellites. If this occurs, the Company may be in violation of the Outer
Space Ordinance Licence, and the affected parties may submit a complaint in the ITU.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Political and Economic Risks</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all of the Company&#146;s revenues are derived from its operations conducted in the
Asia Pacific region, including the PRC and Hong Kong. As a result, the Company&#146;s results of
operations and financial condition may be influenced by the political situation in the PRC, Hong
Kong and elsewhere in the Asia Pacific region and by
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the general state of the various Asian
economies. For the years ended December&nbsp;31, 2003, 2004, and 2005, approximately 74.7% 70.4% and
60.0%, respectively, of the Company&#146;s revenues were derived from customers based in other regions
in the PRC. In addition, due to the geographic coverage of the Company&#146;s satellites, the most
significant market for the Company&#146;s customers (whether or not such customers are based in the PRC)
has been, and is expected to continue to be, the PRC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The economy of the PRC differs from the economies of most countries belonging to the
Organization for Economic Co-operation and Development in such respects as structure, government
involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate
of inflation and balance of payments position. For over 50&nbsp;years, the economy of the PRC has been
a planned economy subject to five-year state plans adopted by central PRC government authorities
and implemented, to a large extent, by provincial and local
authorities, which set production and development targets. Although the majority of
productive assets in the PRC are still owned by the government, in the past several years emphasis
has been placed on decentralization and the utilization of market mechanisms in the development of
the PRC economy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the late 1970s, the PRC government has been reforming its economic systems. Many of the
reforms are unprecedented or experimental, and are expected to be refined and improved. Other
political, economic and social factors could also lead to further readjustment of the reform
measures. This refining and readjustment process may not always have a positive effect on the
operations of the Company and its PRC customers. The Company and its PRC customers may be
adversely affected by changes in the PRC&#146;s political, economic and social conditions and by changes
in policies of the PRC government, such as changes in laws and regulations (or the interpretation
thereof), measures which may be introduced to control inflation or imposition of additional
restrictions on currency conversion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsequent to the accession of the PRC into the World Trade Organization in November&nbsp;2001,
there has been no immediate adverse impact on the satellite industry in the PRC market. However,
its long-term implications are uncertain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC government has mandated that international satellite channels must distribute their
channels in the PRC using a unified satellite platform different from the APSTAR System. The
implications of this requirement are not yet certain, but since over 70% of the Company&#146;s revenue
is derived from the PRC, there may be an adverse impact on the Company&#146;s business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Most of the payments under the Company&#146;s transponder utilization agreements are required to be
made in US Dollars. The PRC currently has extensive foreign exchange controls. The ability of the
Company&#146;s PRC customers to convert Renminbi (the currency of the PRC) into foreign currency and to
purchase foreign currency is subject to various PRC laws and regulations. There can be no
assurance that in the future the PRC&#146;s foreign exchange controls will not adversely affect the
ability of the Company&#146;s PRC customers to make payments to the Company in US Dollars.
</DIV>

<DIV align="left">
<A name="160"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The Outbreak of Infectious Diseases</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the first half of 2003, there was the outbreak of a highly infectious deadly flu-like
disease known as Severe Acute Respiratory Syndrome (&#147;SARS&#148;) in the Asia Pacific region, including
the PRC. The SARS outbreak severely affected the economic environment of most of Asia. No vaccine
has yet been successfully developed, and therefore another outbreak of SARS could adversely affect
the economies of the region.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to SARS, there were incidences of bird flu reported in the Asia Pacific region,
including Vietnam, Thailand and the PRC. Effective treatments for such bird flus have not yet been
successfully proved, and therefore further outbreaks of bird flu or other similar disease could
adversely affect the economies of the region.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;4. Information on the Company</B>
</DIV>

<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>History and Development of the Company</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is a Bermuda company incorporated on October&nbsp;17, 1996 with its principal place of
business originally at Rooms 3111-3112, 31<SUP style="font-size: 85%; vertical-align: text-top">st</SUP> Floor, One Pacific Place, 88 Queensway,
Hong Kong (Telephone: 852 2526-2281) and subsequently removed to 22 Dai Kwai Street, Tai Po
Industrial Estate, Tai Po, New Territories, Hong Kong on December&nbsp;8, 2003 (Telephone: 852
2600-2100). The Company&#146;s registered office is at Clarendon House, 2 Church Street, Hamilton, HM
11, Bermuda. APT is a Hong Kong company and a wholly-owned indirect subsidiary of the Company.
References herein to the Company include APT Holdings and its subsidiaries, except where the
context otherwise requires.
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Business Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company, through its subsidiary, APT, is a leading provider of high quality satellite
services throughout the PRC and elsewhere in the Asia Pacific region. APSTAR System broadcasts
satellite TV channels of many prominent international broadcasters, and PRC, Taiwan and Hong Kong
broadcasters including CCTV, CETV-1, CBSAT, D-Sky and CableTV. The Company&#146;s strategy is to serve
as a preferred operator for these and other international and PRC, Taiwan, and Hong Kong
broadcasters. The Company also provides transponder service to telecommunications operators, among
others, Singapore Telecommunications Limited (&#147;SingTel&#148;), BtN Access, China Telecom Corp. and China
United Telecommunications Corp. (&#147;China Unicom&#148;) and China Netcom. In additional, the Company has
made a breakthrough with its business development in the Indonesian market in 2005, and has been
providing transponder service to customers in Indonesia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is comprised of two main business segments, namely provision of satellite
transponder capacity and related services, and provision of satellite-based broadcasting and
telecommunications services. In order to reflect the segments of business affected by similar
economic conditions, the satellite control services income have been aggregated to the segment of
provision of satellite transponder capacity and related services. A summary of the Company&#146;s
business segments is provided below (in HK$&nbsp;millions):
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Business segments:</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenue from external customers:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision of satellite transponder capacity and related
services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">282.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">238.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">290.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision of satellite-based broadcasting and
telecommunications services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Service income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Provision of satellite transponder capacity and related services</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s income from provision of satellite transponder capacity is derived from its
operating satellites.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s first satellite, APSTAR I, was launched in July&nbsp;1994 and commenced commercial
service on September&nbsp;15, 1994. APSTAR I was replaced by APSTAR V on August&nbsp;13, 2004 at 138 degrees
East. APSTAR I currently has sufficient fuel to operate in an inclined mode until mid to late 2007.
APT has entered into a utilization agreement with a customer to utilize APSTAR I at 142 degree East
through the end of its useful life. APSTAR I was drifted from 138 degrees East to 142 degrees
East.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s second satellite, APSTAR IA, was launched in July&nbsp;1996 and commenced commercial
service on September&nbsp;1, 1996. APSTAR IA was replaced by APSTAR VI on June&nbsp;7, 2005 at 134 degree
East. APSTAR IA currently has sufficient fuel to operate until mid 2010. APT has entered into a
utilization agreement
</DIV>

<P align="center" style="font-size: 10pt">-11-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">with a customer to utilize APSTAR IA through the end of its useful life.
APSTAR IA was drifted from 134 degrees East to a new location.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company launched a third satellite, APSTAR IIR, in October&nbsp;1997, and it commenced
commercial service on January&nbsp;1, 1998 for the provision of high quality and high power transponder
capacity in the Asia Pacific region. APSTAR IIR is located at 76.5 degrees East.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to take advantage of the demand in the PRC and elsewhere in the Asia Pacific region
for varied television programming with superior picture and sound quality, the Company launched
high power satellites, APSTAR V and APSTAR VI, on June&nbsp;29, 2004 and April&nbsp;12, 2005, respectively,
as replacement satellites of APSTAR I and APSTAR IA, respectively. APSTAR V commenced its
commercial service on August&nbsp;13, 2004 while APSTAR VI commenced its commercial operation on June&nbsp;7,
2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As at December&nbsp;31, 2005, the utilization rates of APSTAR V and APSTAR VI were 68.5% and 45.0%,
respectively (in 2004, the utilization rates of APSTAR V was 50.3%).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR V is intended to satisfy demand in both Asia and Australia for transponder capacity.
The Company has focused its marketing efforts on developing a customer base of international and
PRC broadcasters and telecommunications providers. The Company has established close relationships
with its existing customers and believes that it is well-positioned to continue to provide capacity
on future satellites to its existing customers as well as to expand its customer base to include
other prominent broadcasting and telecommunications customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR VI provides broad Asia Pacific footprints and has a strong neighborhood effect due to
the presences of CCTV and other renowned Chinese broadcasters and we anticipate that it will become
one of the most popular multilingual and multicultural satellite platforms in the Asia Pacific
region.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Satellite-based Broadcasting and Telecommunications Services</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In order to fully tap the business potential arising from the telecommunications field in the
Asia Pacific region, including the PRC, APT Telecom Services Limited provides telecommunication
services with its FCL (formerly known as external satellite-based fixed telecommunication network
services), which was issued by the OFTA. Services under the FCL include VSAT, wholesale voice and
Internet POP gateway services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;10, 2003, APT Satellite Telecommunications Limited (&#147;APTT&#148;), a jointly controlled
entity owned by the Company, entered into a master agreement with APT Telecom Services Limited, a
wholly-owned subsidiary of the Company (&#147;APTTS&#148;), Skywork and SingaSat, whereby the business of
APTT was reorganized through the transfer of APTT&#146;s FCL business together with the FCL to APTTS and
the transfer of APTT&#146;s cable interests related to FCL, including the transfer of the APCN and C2C
interests to SingTel. The former transfer was done pursuant to a transfer of business agreement
between APTT and APTTS at consideration of HK$6,800,000 together with compensation of HK$13,500,000
payable by APTT in 5 equal annual installments commencing on February&nbsp;1, 2005 to APTTS&#146;s holding
company, APT Satellite Company Limited, and the surrender by APTT of the remaining term of a
services and facilities lease agreement in respect of a premises in Tai Po Industrial Estate. The
latter transfer was done pursuant to a cable interests transfer agreement between APTT and
SingaSat, which interests were subsequently assigned it to SingaSat&#146;s holding company, SingTel, at
considerations of HK$2,986,000 and HK$2,574,000in respect of the APCN interest and C2C interest,
respectively. This reorganization was completed on October&nbsp;10, 2003. The Company believes that the
reorganization will allow the APT Group to concentrate on the satellite-related telecom services
business, which is in line with the APT Group&#146;s core business in providing satellite transponder
services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT Satellite TV Development Limited (&#147;APT TV&#148;) established a satellite TV broadcasting
platform based on the Satellite Television Uplink and Downlink License first granted by the
Government of HKSAR in 1999 and was further broadened in March and June&nbsp;2005 to include APSTAR V
and APSTAR VI. To accommodate the future demand for satellite TV program services, enhance the
encoding capability of APT TV and further develop the Company&#146;s satellite broadcasting business,
APT increased investments in uplinks and downlinks and
</DIV>

<P align="center" style="font-size: 10pt">-12-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">TV-program transmission and broadcasting
facilities during the first half of 2002. At December&nbsp;31, 2005, APT TV&#146;s DVB MPEG-2 encoding
capability was up to 53 channels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2002, APT TV and Eurosport, Societe Anonyme (&#147;Eurosport&#148;) established an associate
venture in which APT TV owned 35% interest in the associate. Through this associate, APT TV and
Eurosport provide the Chinese market with satellite TV broadcasting services, and commenced
operation of the first sports news channel in the PRC in July&nbsp;2002. In December&nbsp;2002, the
associate venture signed an agreement with China International TV Corporation and obtained a permit
for limited broadcasting in PRC. Owing to the change in business strategy of the associate such
that the APSTAR System could not be used by the associate in establishing its business, APT TV
transferred a 33% interest in the venture and the amount due from the associate to Eurosport at a
consideration of HK$634 thousand (US$81 thousand). Although APT TV transferred a 33% interest in
that associate&#146;s total share capital to Eurosport in December&nbsp;2003, the Company will continue to
pursue the establishment of the satellite TV platform as an overall strategy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2002, APT acquired an additional 20% interest in CTIA VSAT Network Limited (&#147;CTIA&#148;),
in which it previously had a 40% ownership interest. CTIA indirectly owns 21% of a PRC company
that provides data broadcasting services for the PRC market, Beijing Zhong Guang Xin Da Data
Broadcast Technology Co, Ltd. (&#147;Beijing Zhong Guang Xin Da&#148;). After the acquisition, the Company
indirectly holds a 12.6% effective interest in Beijing Zhong Guang Xin Da. The Company&#146;s
acquisition of an additional ownership interest in CTIA is in line with its strategic development
plan of shifting towards end-users in the value-chain of the broadcasting businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The revenue generated from provision of satellite-based broadcasting and telecommunications
services were approximately HK$16.4&nbsp;million, HK$38.7&nbsp;million and HK$45.5&nbsp;million (US$5.8&nbsp;million)
for the years ended December&nbsp;31, 2003, 2004 and 2005, respectively, which represented 5.4%, 14.0%
and 13.5%, respectively, of total revenues for such years.
</DIV>
<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Industry and Market Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Satellites</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The global communications market for video, data and voice transmissions is served primarily
through terrestrial and submarine optical fiber and coaxial cable, microwave systems and
satellites.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ground-based microwave systems disseminate signals in the form of radio waves from an antenna
on top of a building or a transmission tower. Microwave systems are well suited for use by local
television stations and cellular telephone systems because the reach of the transmission signal
typically is limited to one discrete area. Microwave systems are not suitable for long distance
communication or broadcasting, since transmission over long distances requires the construction of
a number of microwave relay stations to relay a signal, and repeated transmission can distort a
signal. Satellite systems require only two stations to cover long distances, one uplink station
and one downlink station. Most importantly, satellites can provide point to multipoint
transmissions while simultaneously transmitting signals over the entire region covered within the
satellite&#146;s footprint.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Satellite systems generally operate in three main orbits &#151; low-earth orbit (&#147;LEO&#148;), mid-earth
orbit (&#147;MEO&#148;) and geostationary orbit (&#147;GEO&#148;). LEO systems operate in orbits at distances of
between a few hundred miles up to 1,000 miles from earth, whereas MEO systems operate from 1,000 up
to 20,000 miles from earth, although they will typically be in the range of 6,000 to 15,000 miles
high. Satellites in these systems are not geostationary, that is, they do not constantly overlook
the same area on earth. The inability to cover the same area on earth continuously makes these
systems impractical for broadcasting and traditional telecommunications usage. In general, LEO and
MEO systems comprise of a series of satellites that are used commercially primarily for mobile
satellite services. By contrast, GEO satellites are located in orbit approximately 22,300 miles
above earth and can blanket large geographic areas with signal coverage.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GEO satellites can be accessed through an uplink station virtually anywhere within the
satellite&#146;s footprint. With broad coverage capability, GEO satellites have commonly been used for
(i)&nbsp;television broadcasting, principally to cable operators for redistribution and also to
households equipped with direct reception antennae as well as for
</DIV>

<P align="center" style="font-size: 10pt">-13-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">supplementary terrestrial
transmission networks in remote areas, (ii)&nbsp;international and domestic trunk telephony
complementing optical fiber and coaxial cable and microwave backbone networks and (iii)&nbsp;business
services, principally for voice, data and video transmissions to private networks such as VSAT
networks and program exchanges between television broadcasters, including satellite news gathering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Communications satellites typically are evaluated on (i)&nbsp;their coverage area or &#147;footprint&#148;,
(ii)&nbsp;the quality of the signal transmitted to the coverage area and (iii)&nbsp;the availability of the
transponders. Footprint is a measurement of the breadth of a satellite&#146;s coverage. A key
measurement of signal quality is the intensity of transmission power in the coverage area. Higher
power signal enables a customer to use smaller, lower-cost antennae on the ground. Availability is
determined by considering a satellite&#146;s operational &#147;lifetime&#148; as well as the number of
transponders capable of providing service. The Company considers all three factors in determining
whether a particular satellite is appropriate for its needs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial telecommunications and broadcast satellites typically transmit signals using either
C-band or Ku-band. C-band is used worldwide for satellite communications to transmit signals with
less interference from atmospheric conditions. C-band frequencies are also used by ground-based
microwave systems. In certain parts of the world, C-band satellite transmission antennae must be
located far from centers of population to avoid interference with ground-based systems. Since
there are fewer Ku-band systems in existence than C-band systems, more powerful Ku-band
transponders can be used in urban areas without similar interference concerns. Because of higher
available transmission power, Ku-band frequencies can be used in conjunction with antennae that are
smaller than antennae that are used in conjunction with C-band frequencies. Ku-band is generally
used for the same purposes as C-band as well as for satellite news-gathering (transportable
antennae) and in some VSAT applications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The combination of high power transmitters and small antennae also makes Ku-band suitable for
direct-to-home television.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Direct-to-home television did not become commercially viable until recently because available
satellite technology did not have the power to transmit to receivers and digital compression
technology had not been adequately developed. Today, DBS provides an efficient point-to-multipoint
delivery of video and audio transmissions. The advent of high-powered satellites allows for dishes
as small as 18 inches and digital compression technology permits the broadcast of up to 10 channels
of programming per transponder. In the United States, Europe and Japan, DBS operators have had
success in penetrating their respective markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Satellite operators such as APT provide satellite transponder capacity. For television
programming distribution, these services may consist of arranging satellite capacity and providing
teleport transmission facilities and other value-added services. Services for other broadcasting
applications, such as live news and sports reporting, may include the arrangement of satellite
capacity, the provision of trucks equipped for live news and sports broadcasts, transmission
scheduling and signal monitoring. Services for business communications networks are generally more
extensive and may include arranging satellite capacity, procurement and installation of on-site
antennae and network design, integration, management, operation and maintenance. Satellite
operators either provide these services or provide satellite capacity to other companies which
provide these services. The Company has chosen to focus on the provision of satellite transponder
capacity, through the establishment of the APSTAR System, in order to maximize the efficient use of
its resources so as to provide the highest quality service.
</DIV>
<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Broadcasting and Telecommunications Markets in Asia</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Increased Distribution of Television Programming</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until the recent financial crisis and general economic downturn, the television market in Asia
had been experiencing significant growth, both in terms of the number of broadcasters creating
programming and the number of channels available to viewers. In particular, the number of
television broadcast networks has grown substantially since 1991. International television
programmers have been seeking to provide entertainment in Asia. Satellites are ideally suited for
broadcasting to international, regional, and national audiences and for delivering television
programming to cable operators or microwave transmission stations for local redistribution.
</DIV>


<P align="center" style="font-size: 10pt">-14-
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The television markets in Asia are not uniform, and among the nations of Asia, there are numerous regional differences in
language, culture, and ideology as well as in income levels and income distribution. Programmers who wish to take full advantage
of the entire Asian television market must tailor their programming to be responsive to these regional differences. Access to
satellite transponder capacity from satellite operators provides opportunities to television broadcasters to tailor programming
for particular audiences. The Company believes that this will stimulate demand for transponder capacity on its satellites.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Liberalization of the Television and Telecommunications Industries</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liberalization of the television industry in a number of countries in Asia has increased the
portion of programming on satellites that is broadcast by private television networks and
programmers which complement or compete with state-owned or state-sponsored broadcasters.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Most countries in Asia have been liberalizing their telecommunications markets to some degree
or another in order to permit private service providers, in addition to the traditional
state-sponsored telephone monopolies, to provide facilities and services. The PRC has begun to
liberalize its telecommunications markets by breaking the monopoly status of China Telecom as the
country&#146;s sole telecommunications services provider and by allowing limited numbers of domestic
service providers in various service areas (such as mobile services, internet telephony and other
services). New telecommunications service providers stimulate demand for satellite capacity such
as that offered by the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Continuing Technological Advancements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company believes that technological advances will increase information carrying capacity
and reduce transmission and equipment costs which may, in turn, stimulate demand for satellite
communications services. Such advances include the following:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>High-powered Satellites. </I>New satellites, which are of higher power, can deliver improved
quality signals to antennae that are generally smaller and less expensive (and are therefore more
convenient for private and commercial use) and can cover a larger area than those used with
earlier-generation satellites. The increasing use of these smaller, less expensive antennae is
expanding the markets for public and private communications networks and video distribution
services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Digital Communications. </I>Analog telephone systems carry relatively low volumes of information.
Globally, telephone companies are rebuilding their infrastructure to carry high-speed digital
communications, which permit new and enhanced business communications and consumer services.
Examples include video phones, video conferencing, video-on-demand, wide-area networks,
telecommuting and interactive TV. Many of these services use satellite transponder capacity within
their transmission circuits and, because of their high transmission rates, will require significant
transponder capacity. Furthermore, developments in digital technology for VSATs, which reduce
terminal size and increase transmission throughput, are encouraging the development of new,
cost-effective business and rural communications applications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Compressed Digital Video. </I>Digital video compression technology is designed to compress
multiple high-quality video channels into the same transponder capacity that previously carried one
analog channel. This technology facilitates a significant increase in the number of available
video channels with improved transmission quality and allows satellite operators to provide
satellite transmission services using less bandwidth. Digital video compression technology is
expected to lower the costs of delivering programming via satellite and cable television systems,
thereby permitting more programming options to be provided to niche markets. Digital video
compression technology may also permit broadcasters, by lowering per channel costs, to offer local
broadcasting platforms including programming designed for particular national audiences and
particular cultures and languages. The Company believes that digital video compression technology
may facilitate the efforts of broadcasters to distribute their programming regionally to multiple
audiences.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Digital video compression technology may also in the future facilitate the introduction of
HDTV. Digital video compression technology is expected to permit HDTV signals with superior
picture quality to use an amount of
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">bandwidth comparable to that used by a current analog channel
with a far inferior image since analog form typically consumes large amounts of bandwidth.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Increased Spending on Telecommunications Projects</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many countries in Asia lack basic telephone services as well as the sophisticated optical
fiber and digital switching infrastructure required for large bandwidth, high speed data
applications for businesses. The governments of many of the developing countries in Asia have
recognized the effect of shortages of telecommunications services in their countries and are
responding by setting goals aimed at significantly increasing teledensity (measured in main
telephone lines per 100 inhabitants) in their countries. The Company believes that government
organizations in such countries and other less developed regions in Asia will depend significantly
on wireless communications, including satellites, to serve their communications needs because the
development of land-based infrastructure is more costly and time-consuming.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Growth of Information Services Markets</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company believes that the market in Asia for information services still has the potential
to grow, both in terms of the numbers of providers and users of such services and the types of
services available. Satellite distribution is ideally suited for the provision of information
services supplied by global service providers.
</DIV>
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Customers and Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company provides satellite transponder capacity primarily to the broadcasting and
telecommunications markets. For the years ended December&nbsp;31, 2003, 2004 and 2005, the Company&#146;s
revenues were derived from the following customer bases:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Years Ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Broadcasting</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">49.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">51.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">41.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Telecommunications</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">46.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">44.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">49.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other service</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.7</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues from the Company&#146;s five largest customers for the years ended December&nbsp;31, 2003, 2004
and 2005 were HK$119.2&nbsp;million, HK$111.9&nbsp;million and 112.9&nbsp;million (US$ 14.5&nbsp;million),
respectively, which represented 39.4%, 40.4% and 33.6%, respectively, of total revenues. Revenues
from the Company&#146;s largest customer represented 12.6%, 12.7% and 9.1%, respectively, of total
revenues during such periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Broadcasting Customers</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Local, national and international broadcasters use satellite transponder capacity for (i)
television programming distribution, (ii)&nbsp;contribution or &#147;backhaul&#148; operations (the transmission
of video feeds from one location to another) and (iii)&nbsp;ad hoc or &#147;spot&#148; services such as the
transmission of special events and live news reports from the scene of the event. At present, most
of APT&#146;s broadcasting customers utilize transponder capacity for distributing programming to
television stations, local cable operators and master antenna systems.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On July&nbsp;6, 1999, the Company was first granted the Satellite Television Uplink and Downlink
License by the HKSAR government. According to this license, the Company is able to use the newly
acquired uplink platform and downlink system, together with certain encryption and digital
compression technologies, to provide satellite television uplink and downlink services through the
Company&#146;s APSTAR IIR (C &#038; Ku-band), and APSTAR V (Ku-band only) and APSTAR VI (C &#038; Ku-band) and
other approved satellite.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Television Programming Distribution. </I>The Company&#146;s strategy is to position the APSTAR System
as a preferred provider of satellite capacity covering the PRC and the Asia Pacific region. This
strategy has been
</DIV>


<P align="center" style="font-size: 10pt">-16-
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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">implemented by targeting both international and domestic broadcasters as
customers for services on the APSTAR System.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Local cable television operators and over-the-air local broadcasters install and position
their downlink antennae to receive programming from programmers using a satellite in the APSTAR
System. Once such antennae have been installed and positioned to receive signals from a particular
programming provider on the relevant APSTAR System satellite, cable operators and local
broadcasters can receive programming using the same antenna from other providers using such
satellite. As a result, new programmers may seek to utilize transponder capacity on a satellite
with an established audience rather than leasing transponder capacity on a satellite with a
less-established audience.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For domestic Asian broadcasters, the APSTAR System offers the ability to create national
networks where, due to difficult terrain and the high costs of building the required
infrastructure, none was possible before. For example, China Broadcast Film Television Satellite
Co. Ltd. uses capacity on APSTAR VI (migrated from APSTAR IA) to distribute a variety of CCTV channels, its national television network, to
audiences throughout the PRC, including remote areas.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The APSTAR System also offers a number of other benefits for domestic broadcasters. By using
one of the satellites in the APSTAR System, domestic broadcasters may, for example, purchase
certain segments of an international programmer&#146;s feed using the same satellite for broadcast as
part of their own programming, without incurring the cost of adding a separate earth station to
receive the international programmer&#146;s segments. In addition, domestic broadcasters can sell their
own programming regionally or internationally because the APSTAR System allows them to use the same
transmission antennae to relay their programming internationally as well as domestically to others
using the same satellite. Local cable and television station operators also benefit from using the
APSTAR System for television programming distribution because they need only one earth station
pointed at an APSTAR satellite to receive programming from both domestic and regional broadcasters
using the same satellite.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following chart lists APT&#146;s typical broadcasting customers and the nature of their
programming:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="49%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Customer</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Programming</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">China Central Television (&#147;CCTV&#148;)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>National television in the PRC
including CCTV-1 to 12, CCTV New,
CCTV Cartoons except CCTV-4 and
CCTV-9</I></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">China Education Television (&#147;CETV-1&#148;)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Educational television in the PRC</I></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">China Broadcasting Film Television
Satellite Co., Ltd. (&#147;CBSAT&#148;)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Provisional television in the PRC,
including Yunnan, Xinjiang, Tibet
and Hainan, totally around 16
provinces and around 25 channels</I></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Backhaul Services. </I>Broadcasters can use satellite capacity for &#147;backhaul&#148; operations, such as
transporting programming from a broadcaster&#146;s foreign news bureau to its broadcast center for
simultaneous or later transmission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Ad Hoc Services. </I>Broadcasters can also use satellites to transmit coverage of live scheduled
special events to programmers on a short-term ad hoc basis as well as to relay live news coverage,
short duration video feeds and syndicated programming for broadcasters on a scheduled or ad hoc
basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Telecommunications Customers</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s telecommunications services include the provision of transponder capacity for
private communications networks for data and voice communications and the provision of PSTN carrier
services including the wholesale voice to telecom network operators and other communications
service providers in Asia.
</DIV>

<P align="center" style="font-size: 10pt">-17-
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Private Networks. </I>Many businesses and organizations utilize satellites rather than
ground-based transmission media for a variety of reasons, including (i)&nbsp;cost savings for large,
geographically dispersed networks, (ii)&nbsp;independence from telephone companies, (iii)&nbsp;predictability
of costs over a long period, (iv)&nbsp;flexibility in changing and adding remote locations to a network,
(v)&nbsp;integrated network management and control of remote locations and (vi)&nbsp;increased network
availability and lower transmission error rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For example, retail chains use satellite business communications networks for rapid credit
card authorization and inventory control. Banks use satellite networks to connect automatic teller
machines to processing computers. News agencies use satellite networks to distribute information
to numerous locations and paging operators use satellite networks to distribute paging information
from a central switch to multiple remote transmitters for retransmission to pagers. The Company
believes that there will continue to be opportunities in Asia to market transponder capacity to
certain end users which, due to inadequate telecommunications infrastructure or high costs of local public networks, desire to operate their own private
networks for data and voice transmission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company offers satellite services for private business communications networks, including
VSAT networks. VSAT networks consist of small rooftop antennae and are utilized by customers that
need to send short bursts of data over a network for relatively short periods of time. Through the
use of VSAT technology and sophisticated software, these networks can be served with a relatively
small amount of satellite capacity. Networks using VSATs have been growing rapidly to meet the
specialized data requirements of particular industries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Carrier services. </I>A portion of the Company&#146;s revenues in the telecommunications market is
derived from the provision of satellite capacity to domestic and regional communications carriers
in Asia, including telecom network operators in the PRC that use the capacity as part of their
communications network on a national or international basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Other Service Customers</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the satellite services agreement, APT provides the necessary satellite control services
for APSTAR IIR to Loral Asia. This agreement will continue throughout the useful life of APSTAR
IIR unless terminated by Loral Asia with at least 120&nbsp;days&#146; prior written notice. In consideration
of the services provided, APT receives a payment of approximately US$1&nbsp;million per year from Loral
Asia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;11, 2003, APT and SingTel entered into a new agreement (the &#147;New Agreement&#148;)
superceding the old agreement, which was entered on January&nbsp;8, 2001 pursuant to which SingTel was
to use 15 C-band transponder services of APSTAR V. Pursuant to the New Agreement, APT agreed,
subject to certain conditions, to provide 6 C-band transponders services of APSTAR V to SingTel,
and upon SingTel&#146;s written request within three years from the date on which APSTAR V commences
operation, to also make available 5 more C-band transponders services of APSTAR V to SingTel. APT
is obligated to provide operational and maintenance services to SingTel through APSTAR V&#146;s useful
life, which is expected to be not less than 13&nbsp;years, in exchange for an annual management fee
which will cover all costs associated with operations and management of the transponders as well as
tracking, telemetry and command services, and all necessary maintenance. The fixed aggregate value
of the management fees for the 6 transponder capacity amounts to US$16.3&nbsp;million (approximately
HK$127.1&nbsp;million), and the annual amounts of the management fees will range from US$0.8&nbsp;million
(approximately HK$6.6&nbsp;million) to US$1.4&nbsp;million (approximately HK$11.0&nbsp;million). If SingTel
exercises its rights to utilize additional transponder capacity, the fixed aggregate amount of the
management fees for the additional transponder capacity will be US$13.6&nbsp;million (approximately
HK$105.9&nbsp;million).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;1, 2004, APT and SingTel entered into an agreement to amend certain terminology
and to modify the New Agreement into the form of utilization agreement for clarification purpose.
The term and condition contained in the New Agreement remain unchanged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;22, 2004, APT entered an agreement with National Astronomical Observatories of the
Chinese Academy of Sciences (&#147;NAOC&#148;) to utilize APSTAR I through the end of its useful life.
Under the agreement with NAOC, APT provides the necessary satellite control services for APSTAR I
to NAOC. In consideration of the services provided, APT receives a payment of approximately US$300
thousand per year from NAOC.
</DIV>

<P align="center" style="font-size: 10pt">-18-
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;30, 2005, APT entered an agreement with NAOC to utilize APSTAR IA through the end of
its useful life. Under the agreement with NAOC, APT provides the necessary satellite control
services for APSTAR IA to NAOC. In consideration of the services provided, APT receives a payment
of approximately US$300 thousand per year from NAOC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Transponder Utilization Agreements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s typical transponder utilization agreement allows for utilization of the capacity
of a transponder, either in whole or in part, on the APSTAR System. These agreements require
service fees to be paid in advance and provide for renewal options. All of APT&#146;s transponder
utilization agreements require payment of all amounts due in US Dollars. Generally, upon a fixed number of months&#146; notice, a customer
may terminate its transponder utilization agreement without cause. In such a case, however, the
customer is obligated to pay to APT specified liquidated damages based on the terms of the
transponder utilization agreement. In addition, the transponder utilization agreements, in
general, provide for a specified reduction in the service fees if transponder service is
interrupted for reasons not caused by the customer or beyond the control of APT (such as mechanical
transponder failure). If such service interruptions continue without correction (within an
acceptable period of time) and APT is unable to provide suitable alternative capacity within an
agreed period thereafter, the customer is entitled to terminate the transponder utilization
agreement without further obligation to APT. Under the terms of the transponder utilization
agreements, APT is not liable for the lost profits or other indirect or consequential damages of
its customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT has also entered into several transponder utilization agreements under which its customers
have obtained the right to use transponder capacity on APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V or
APSTAR VI for the life of the transponder. Most of the commercial terms of such transponder
utilization agreements are substantially the same as those found in the typical transponder
utilization agreements, except that payment for the entire period of use is to be completed by the
end of the second year of the term of the agreement. APT provides a limited warranty for a period
of 96&nbsp;months in the case of one transponder on APSTAR IIR commencing on the date the transponder is
made available for the customer&#146;s use. There is no warranty period for the 43 out of 44 of the
transponders on APSTAR IIR that are provided to Loral Asia. In respect of APSTAR I, which is being
utilized by NAOC<B>, </B>APT agreed to provide a limited warranty for utilizing at least 16 transponder
capacity for the first 2&nbsp;years and at least 12 transponder capacity for the third year of the
utilization functioning properly. In respect of APSTAR IA, which is being utilized by NAOC<B>, </B>APT
agreed to provide a limited warranty for utilizing at least 16 transponder capacity for the first
4.57&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Sales and Marketing</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marketing activities include customer visits, trade shows, advertisements, customer training,
event sponsorships, joint marketing programs and presentations at industry conferences. APT&#146;s
current sales and marketing efforts are focused on new business development so as to solicit
customers for unused or underutilized transponder capacity on APSTAR satellites. In addition,
APT&#146;s sales and marketing also focus on the creation of awareness resulting in lead generation of
APSTAR V and APSTAR VI. APT&#146;s sales and marketing staff maintain regular contact with customers
even after they have decided to utilize transponder capacity in order to ensure continuing customer
satisfaction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Operation of the APSTAR System</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The APSTAR System is an integrated satellite system that covers more than 100 countries from
Japan to South Africa and from Germany to Australia, encompassing approximately 75% of the world&#146;s
population.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The APSTAR System is the product of an extensive strategic planning process. This planning
has been both internal to APT, such as the analysis and evaluation of satellite make-up, platform
choice and launch vehicle choice, and external, in the sense of designing the APSTAR System to meet
the practical and strategic needs of its customers.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The APSTAR System offers its customers the ability to relocate from one satellite to another
for strategic reasons of their own. The compatibility of the satellites in the APSTAR System also
permits APT to move customers&#146; programming from one transponder to another, intra-satellite, or
from one satellite to another, for technical reasons or to ensure continuity of service in the
event of any difficulties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The APSTAR System is structured to provide flexibility for customers, which is a benefit that
the Company believes, is attractive to customers and provides APT with a competitive advantage.
Intra-satellite back-up capacity is manifested by the preemptible transponders located on each
satellite. These transponders are intended, in the ordinary course, to be provided to customers on
a preemptible basis (at reduced cost), under the understanding that the customers&#146; use will be
pre-empted if the transponder is needed by another customer as a result of a technical problem.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional back-up capacity will also be available to APSTAR System customers on an
inter-satellite basis. Preemptible transponder capacity on APSTAR satellites enables customers to
be &#147;re-routed&#148; on an as-needed basis to another satellite in APSTAR System. Similar back-up
capacity is available not only from satellite to satellite, but also from use to use.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s TT&#038;C facility, which enables the Company to monitor the status of its satellites
and respond to the technical demands of its customers, is an important part of the APSTAR System.
See &#147;Satellite Control Center.&#148;
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SUMMARY OF SATELLITE DATA</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>APSTAR I</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>APSTAR 1A</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>APSTAR IIR</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>APSTAR V</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>APSTAR VI</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Region covered</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">North and</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">North and</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Europe, Asia,</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap> Most of Asia,</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Most of Asia, </TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Southeast Asia</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Southeast Asia</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Middle East,</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Australia, New</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Australia, New </TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Africa</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Zealand, Pacific</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Zealand,</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>region, Hawaii</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>Pacific region,</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Hawaii</TD>

</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Status</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Operational</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Operational</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Operational</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Operational</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Operational</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>(inclined mode) </TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap>(inclined mode) </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Model</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">HS&nbsp;376</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">HS&nbsp;376</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">FS&nbsp;1300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">FS1300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">SB4100C1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Manufacturers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Hughes</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Hughes</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">SS/Loral</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">SS/Loral</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Alcatel</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Transponders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ku-band</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">16</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">C-band</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">38</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected end of</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">**</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">***</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2021</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">operational life</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>As at August&nbsp;13, 2004, APT has taken up 25 C-band and 12 Ku-band transponders of APSTAR V.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">**</TD>
    <TD>&nbsp;</TD>
    <TD>It is expected that APSTAR I will be operating for at least 3&nbsp;years at an inclined mode from
October&nbsp;2004.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">***</TD>
    <TD>&nbsp;</TD>
    <TD>It is expected that APSTAR IA will be operating for at least 4.57&nbsp;years at an inclined mode
from December&nbsp;2005.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>APSTAR Satellites</I></B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APSTAR I</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR I, a Hughes HS-376 model satellite, was launched in July&nbsp;1994 by a Long March 3 launch
vehicle from Xichang in the PRC. APSTAR I was placed into a geostationary orbit at 138 degrees
East and has a footprint that covers the PRC, Japan and Southeast Asia, reaching as far south as
Papua New Guinea and Indonesia. The total
</DIV>

<P align="center" style="font-size: 10pt">-20-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">cost for the construction and launch of APSTAR I, including launch insurance, ground facilities, related expenses and capitalized interest, was
approximately US$132.4&nbsp;million, which was financed through a combination of shareholders&#146; loans and
a syndicated term loan. On May&nbsp;31, 2001, the Company fully repaid the amount outstanding under the
syndicated term loan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR I carries 24 C-band transponders, 20 of which have a bandwidth of 36 MHz (suitable for
television broadcasting and telecommunications purposes) and four of which have a bandwidth of 72
MHz (suitable for telecommunications purposes). The transponders have a maximum EIRP value of 38.5
dBW.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR I started commercial operations on September&nbsp;15, 1994 and was replaced by APSTAR V on
August&nbsp;13, 2004. APSTAR I currently has sufficient fuel to work in an inclined orbital mode until
mid to late 2007. APT has entered into a utilization agreement with a customer to utilize APSTAR I at 142
degree East through the end of its life.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APSTAR IA</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR IA, a Hughes HS-376 satellite, was launched in July&nbsp;1996 on a Long March 3 launch
vehicle from Xichang into a geostationary orbit at 134 degrees East. The cost for the construction
and launch of APSTAR IA, including launch insurance, ground facilities, related expenses and
capitalized interest, was approximately US$128.6&nbsp;million, which was financed through a combination
of shareholders&#146; loans, a syndicated term loan and internally generated funds. As of December&nbsp;23,
1996, the total amount due under the syndicated term loan was fully repaid using the proceeds from
the Global Offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The specifications of APSTAR IA are virtually identical to those of APSTAR I, except that
APSTAR IA provides enhanced coverage of India. As with APSTAR I, APSTAR IA carries 24 C-band
transponders with a maximum EIRP value of 39 dBW.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR IA started commercial operations on September&nbsp;1, 1996. After successful launch and
completion of In-Orbit Testing of APSTAR VI, APSTAR IA has been replaced on June&nbsp;7, 2005. APSTAR IA
currently has sufficient fuel to work in an inclined orbital mode until mid 2010. APT has entered
into a utilization agreement with a customer to utilize APSTAR IA through the
end of its life.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APSTAR IIR</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR IIR, an SS/Loral FS-1300 satellite, was successfully launched into its designated
orbital slot at 76.5 degrees East on October&nbsp;17, 1997. The total cost for construction and launch
of APSTAR IIR, including launch insurance, ground facilities, related expenses and capitalized
interest, was approximately US$233.5&nbsp;million. APSTAR IIR commenced commercial operation on January
1, 1998.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On August&nbsp;18, 1999, APT entered into a lease agreement with Loral Asia for the provision of 43
out of the 44 transponders of APSTAR IIR. According to the agreement, Loral Asia is entitled to
use the capacities of these transponders until their service span expires. The price was
approximately US$298&nbsp;million, payable by eighteen installments in US Dollars within four years.
Loral Asia later proposed to advance the date of payment and, as a result, the price was revised to
approximately US$273&nbsp;million, payable in three installments, with the last installment of
approximately US$181&nbsp;million paid on March&nbsp;27, 2000. According to the agreement and all relevant
operating licenses, APT continues to be the legal owner of APSTAR IIR and is responsible for the
operational control of the satellite under the satellite service agreement with Loral Asia.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APSTAR V</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT together with SS/Loral and China Great Wall Industry Corporation, respectively, signed the
Procurement Agreement and the Launch Agreements of APSTAR V satellite on January&nbsp;8, 2001, to
confirm the commissioning of the satellite. On October&nbsp;23, 2002, the launch services to be
provided by China Great Wall Industry Corporation originally for APSTAR V were transferred to
APSTAR VI. In March&nbsp;2003, APT selected Sea Launch for the launch of APSTAR V.
</DIV>

<P align="center" style="font-size: 10pt">-21-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;20, 2002, APT entered into the APT-Loral Term Sheet and subsequently entered into
certain other agreements. Under the APT-Loral Term Sheet and the agreements, Loral Orion agreed to
jointly participate in the development of APSTAR V by investing up to 50% of the capital necessary
for the APSTAR V project on a pro rata basis in order to obtain rights to 27 transponders at a
value of approximately US$115&nbsp;million, which is 50% of the initial projected costs of approximately
US$230&nbsp;million for the construction, insuring and launch of APSTAR V. This amount was adjusted to
reflect 50% of the actual costs of construction, insuring and launch of APSTAR V, exclusive of the
costs of certain function modifications required by Loral Orion, which was borne solely by Loral
Orion. Loral Orion paid 25% of the project costs prior to launch of the satellite. The other 25%
of the project costs was paid to APT in four installments over a period of five years from the
in-service date of APSTAR V. The amount of the installments making up the remaining balance range
between US$10.7&nbsp;million and US$17.1&nbsp;million and no interest is payable on such amounts. Title to
the transponders attributable to Loral Orion and 25% of the common portions of the satellite will pass to Loral Orion in installments
corresponding to and subject to the payments made by it under the term sheet and the agreements.
As a result of discussions regarding a matter related to the launch vehicle, the parties agreed to
reduce the number of transponders attributable to Loral Orion from 27 to 25 in March&nbsp;2003 with no
adjustment to consideration payable by APT and Loral Orion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because of the failure of SS/Loral to obtain the export license for the transfer of the title
of APSTAR V in time for launching, APT entered into a Satellite Procurement Amendment Agreement, a
Satellite Transponder Agreement and a Satellite Agreement (collectively the &#147;Definitive
Agreements&#148;) with SS/Loral and Loral Orion on August&nbsp;26, 2003 for the purpose of minimizing any
further delay in the launch of the satellite. Under the Definitive Agreements, the title of APSTAR
V was transferred to Loral Orion upon intentional ignition rather and simultaneously therewith.
APT has entered into an irrevocable lease with Loral Orion for forty-one and one-half (41 and 1/2)
transponders for the lease term commencing upon transfer of title from SS/Loral to Loral Orion
until the end of operational life of APSTAR V. Therefore, the joint development of APSTAR V was
converted to a lease. Under the Satellite Agreement, APT will release the leasehold interest of
twelve and one-half (12 and 1/2) transponders to Loral Orion in stages over a five years period
from the in-service date of APSTAR V subject to payment of installments by Loral Orion to APT.
This will result in APT and Loral Orion having 29 and 25 transponders respectively at the end of
the five years period from the in-service date. Under the leasehold arrangement, Loral Orion has
committed to continue pursuing the necessary export license for title transfer of APSTAR V.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The delay in obtaining the Export License caused the postponement of the launch of APSTAR V.
To cope with the delay, APT entered into a Settlement Agreement with Loral Orion Inc. and the
Amended Launch Agreement with SS/Loral and Sea Launch Limited Partnership on November&nbsp;16, 2003. The
Settlement Agreement made certain amendments to the Satellite Procurement Amendment Agreement, the
Satellite Transponder Agreement and the Satellite Agreement and the Launch Agreement to allow for
(i)&nbsp;a postponement of the date of launch of APSTAR V to April&nbsp;28, 2004 (later on, due to the
partial failure of deployment of north solar array of EdS, a SS/L-made satellite that was launched
by Sea Launch in January&nbsp;2004, the launch date of APSTAR V was further postponed to June&nbsp;26, 2004);
and (ii)&nbsp;for Loral Orion to take an additional 4.5 transponders as Initial Loral Orion
Transponders, which are in aggregate 17 transponders to be taken up upon the completion of in-orbit
test of APSTAR V, resulting in Loral Orion assuming the payment of US$20.4&nbsp;million that would
otherwise to be paid by APT HK for the construction, launch and insurance of APSTAR V. Such payment
significantly reduced the cash-flow pressure of APT HK. The total number of 25 transponders of
APSTAR V to be taken up by Loral Orion will remain unchanged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Settlement Agreement and the Amended Launch Agreement were approved by the United States
Bankruptcy Court on December&nbsp;4, 2003 and the Export License of APSTAR V was issued by United States
government on November&nbsp;25, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR V was launched by Sea Launch Limited Partnership on June&nbsp;29, 2004. APSTAR V, a high
powered satellite based on an FS 1300 model satellite manufactured by SS/Loral, is comprised of 38
C-band and 16 Ku-band transponders. The satellite is located at the geostationary orbital slot of
138 degrees East, and the footprints of C-band transponders will cover a majority of the Asian
countries in the Asia Pacific region, including China, India, South East Asia, Australia, New
Zealand, and the Hawaiian Islands in the United States for provision of high quality and reliable
broadcasting and telecommunications services. The footprints of Ku-band transponders are
</DIV>

<P align="center" style="font-size: 10pt">-22-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">spanning across China (Beam One), and China and India (Beam Two). In-Orbit Test (IOT)&nbsp;was completed on
August&nbsp;13, 2004 and the result showed that all satellite specifications are in line with design and
satellite useful life time is estimated to be 15.3&nbsp;years. APSTAR V started commercial operations
upon completion of IOT. All customer carriers on APSTAR I have been successfully migrated to
APSTAR V on 138 degrees East. Based on the arrangements entered into by the Company and Loral
Orion, title of the APSTAR V remained with Loral Orion. The Company assumed risks and rewards of
37 transponders (&#147;APT Transponders&#148;) for the entire operational life of APSTAR V under finance
leases while the risks and rewards relating to the other 17 transponders remained with Loral Orion.
The total cost for the communication satellites held under finance leases in connection with the
APT Transponders of APSTAR V amounted to US$148.4&nbsp;million, which has been funded by internal
resources and the Bank loan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the various amended agreements with Loral Orion, Loral Orion is to acquire and
terminate APT&#146;s right and interest in 4 APT Transponders on the fourth anniversary and 4 APT
Transponders on the fifth anniversary after completion of IOT of APSTAR V at a total consideration
of US$36.3&nbsp;million.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APSTAR VI (formerly APSTAR VB)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;11, 2001, APT entered into a Satellite Procurement Agreement with Alcatel for the
design, construction, testing and delivery of APSTAR VI. APT had secured the Satellite Launch
Service Agreement with CGWIC to launch APSTAR VI on board the Long March 3B (&#147;LM-3B&#148;) launch
vehicle on October&nbsp;23, 2002 by amending the Satellite Launch Service Agreement of APSTAR V. APSTAR
VI is a high powered satellite and is based on a SB-4100 C 1 model satellite of Alcatel with 38
C-band and 12 Ku-band transponders. The footprints of its C-band will cover substantially all of
the Asian countries in the Asia Pacific region including China, India, Southeast Asia, Australia,
Hawaii, Guam, and the South Pacific Islands, whereas its Ku-band will cover China including Hong
Kong, Macau and Taiwan and provide effective and reliable broadcasting and telecommunications
services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR VI was launched successfully on April&nbsp;12, 2005 on a LM-3B launch vehicle and has been
located at geostationary orbital slot at 134 degrees East. Its commercial operation started on 7
June&nbsp;2005 and is expected to have an operation mission life over 15&nbsp;years. The customers of APSTAR
IA have been migrated to APSTAR VI successfully. Total capital expenditures for the design,
construction and launch of APSTAR VI amounted to US$227&nbsp;million, which has been funded by internal
resources and Bank loans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Existing Orbital Slots</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR V and APSTAR VI are utilizing certain designated C-band and Ku-band frequencies in the
orbital slots at 138 degrees East and 134 degrees East. The right to use these frequencies at such
orbital slots has been licensed to the Company by the Kingdom of Tonga (&#147;Tonga&#148;), through TongaSat,
which has responsibility for the ITU coordination process for the orbital slots at 138 degrees East
and 134 degrees East with respect to such orbital slots and the frequencies covered by the
Company&#146;s license. The license agreements for the orbital slots at 138 degrees East and 134
degrees East each cover a period of 15&nbsp;years (approximately coterminous with the expected
operational life of the satellites).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR I is currently located at 142 degrees East under PRC&#146;s filing as approved by OFTA.
APSTAR IA is currently located at 130 degrees East under PRC&#146;s filing as approved by OFTA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT has obtained a priority position in the ITU filing process for the use of the orbital slot
located at 76.5 degrees East, where APSTAR IIR is currently positioned. The Company is still in
the process of completing frequency coordination for this slot. The Company has filed with the ITU
to upgrade its status from the coordination stage to final stage and is awaiting the final result.
</DIV>


<P align="center" style="font-size: 10pt">-23-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Future Satellites</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>APSTAR VIB</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In view of the risk of satellite launch, it was necessary for APT to have a contingency plan
safeguarding the replacement arrangement of APSTAR IA and to lock a launching slot in case of
failure of the launching of APSTAR VI. APT therefore entered into an agreement with CGWIC on
November&nbsp;10, 2004 (the &#147;Option Agreement&#148;) pursuant to which APT was granted a right to require
CGWIC to provide for the design, construction, delivery and launch of APSTAR VIB to a designated
orbit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In view of the successful launch of APSTAR VI on April&nbsp;12, 2005, APT did not exercise the
option before the expiry date of September&nbsp;30, 2005. According to the terms of the Option
Agreement, the option has expired and the Option Agreement is deemed to be terminated. APT was
responsible for all reasonable costs and expenses incurred up to the date of termination in respect
of the preparation works for the design, construction, delivery and launch of APSTAR VIB. The
balance of option price (net of all reasonable costs and expenses incurred) could be transferred to
such other satellite project as may be designated by the Company or the contractor within two years
after the expiry date of the option. In the event that the balance of option price would be
transferred to a satellite project for another customer as designated by the contractor, the
balance of the option price would be refunded to the Company. Up to and including the date hereof,
the Company has no plan for the procurement and launch of a new satellite in the coming two years
due to the fact that the transponder market has remained highly competitive and the current supply
of transponders exceeds demand in the Asia Pacific region, the possibility of transferring the
preparation works of APSTAR VIB to another satellite project of another customer as designated
either by the Company or the contractor in the coming two years is expected to be remote.
Accordingly, as the Company does not currently expect the option price to be applied towards any
future satellite project within the required time restriction or that the contractor will refund
the balance of option price to the Company, an impairment loss of HK$59.9&nbsp;million (2004: HK$nil)
that has been recognised in respect of the prepayment for construction of a satellite.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Insurance</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT maintains in-orbit insurance for thirty-seven transponders for APSTAR V, APSTAR IA, APSTAR
VI and one transponder for APSTAR IIR. The Company is not aware of any reason why it will not be
able to renew the existing insurance for APSTAR V, APSTAR VI and APSTAR IIR. The Company&#146;s
insurance policies have standard provisions and customary exclusions. For 2003, 2004 and 2005, the
Company spent HK$5.0&nbsp;million, HK$12.6&nbsp;million and HK$44.8&nbsp;million (US$5.7&nbsp;million), respectively,
on in-orbit insurance
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>In-orbit Insurance. </I>Satellite in-orbit insurance is purchased on an annual basis. Such
insurance provides protection only against the total loss, destruction or failure of the satellite.
Total loss is defined as the loss of more than 75% of the satellite&#146;s communications capacity for
insured satellites. The Company renewed its annual in-orbit insurance until April&nbsp;30, 2006 for
APSTAR IIR. The in orbit insurance of APSTAR V (thirty-seven transponders only) and APSTAR VI has
already been renewed until June&nbsp;29, 2006 and April&nbsp;11, 2007, respectively. The Company is currently
negotiating the second renewal of in-orbit insurance of APSTAR V.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Third-Party Liability Insurance. </I>Third-party liability insurance offers protection against
liability to third parties for damage arising out of a particular launch and the operation of the
satellite. On April&nbsp;30, 2004, OFTA granted the Company a waiver exempting the Company from
complying with the requirement of maintaining third-party liability insurance with respect to
APSTAR I, APSTAR IA and APSTAR IIR for in-orbit operation. The launch service provider of APSTAR
VI has taken the third party liability insurance for the launch with one year after launch, which
covers, among others, the Company, the governments of Hong Kong and PRC as additional insured.
There is no need to take third party liability insurance for APSTAR V as the title of APSTAR V is
with Loral Orion. Because of the drifting of APSTAR IA from its original geostationary orbital
slot to a new orbital slot for the provision of services to customer under inclined mode, APSTAR IA
is covered by third-party liability insurance over drifting and operation in its new orbital slot
until November&nbsp;1, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Satellite and Ground Operation Facility</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT operates a 77,000 square foot facility consisting of the Satellite Control Center, Network
Operation Center and TV uplink Center on a 85,000 square feet property at the Tai Po Industrial
Estate, Tai Po, Hong Kong. APT employs approximately 35 experienced satellite and communications
specialists and engineers to continuously
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">control and monitor APT&#146;s satellites in geostationary orbit, as well as to operate ground teleport and satellite TV uplink services.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To better support the operation of APSTAR V and APSTAR VI as well as the satellite television
uplink services, the Company has expanded its operating facilities since year 2000 by purchasing
antennae, radio frequency and baseband equipment. The Company currently operates a number of
antennae ranging from 3 meter to 13 meter in diameter and transmission facilities, as well as the
related equipment and facilities, such as radio frequency equipment, baseband units, ground
monitoring systems, data processing systems and communication traffic monitoring systems. Each
antenna is capable of controlling any of the Company&#146;s satellites and is designed to withstand
winds of up to 150 miles per hour. The Company maintains its own power generator and uninterrupted
power supply to provide continuous electricity supply in case of a power outage.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Satellite TT&#038;C operations with the APT satellites are carried out at our Satellite Control
Center. Once a satellite is placed at its orbital location, it is controlled by the TT&#038;C facility
on a 24-hour basis until the end of its in-orbit life. The Company&#146;s engineers at the Satellite
Control Center periodically correct each satellite&#146;s attitude and conduct east-west and north-south
station keeping maneuvers, thus ensuring that the Company&#146;s satellites maintain their proper
orientation and orbital position. In addition, commands from the Satellite Control Center can
switch transponders in and out of service, control the charging and discharging of the batteries,
activate back-up equipment and engage other control functions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT has leased data and voice link in order to provide a direct data and voice communications
link between the Satellite Control Center and the satellite manufacturers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The customer carrier monitoring and teleport services are carried out at our Network Operation
Center, which provides 24-hour support to customers via the Carrier Monitoring System. The Company
also provides external satellite-based FTNS such as VSAT, Wholesale Telecom Services, and Internet
POP Gateway under the external satellite-based FTNS license issued by OFTA on June&nbsp;19, 2000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has completed the installation of satellite broadcasting facilities in the
Satellite TV Uplink Center, under the Satellite Television Uplink and Downlink License issued on
July&nbsp;6, 1999. The Satellite TV Uplink Center provides &#147;one stop solution&#148; service to customers such
as playout, digital video broadcasting compression, turn around and radio frequency uplink
transmission service. The Center&#146;s DVB MPEG-2 encoding capability is up to 28 channels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Customer Technical Qualifications and Support</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Before uplink communication by a customer&#146;s equipment with a satellite is permitted, the
Company ensures that each customer can meet the Company&#146;s strict performance and operations
specifications so that the customer&#146;s equipment does not interfere with other customers on the same
satellite or users of neighboring satellites. The Company&#146;s engineers advise customers on any
adjustments required to the customer&#146;s equipment in order to minimize interference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company provides extensive technical support to its customers. It helps customers
determine and evaluate their equipment configurations, carrier modulations, bandwidths and power
requirements, design their networks and calculate link budgets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Additional Orbital Slots</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OFTA, on behalf of the PRC government, is responsible for the coordination of a number of
orbital slots for APT including the orbital slot at 76.5 degrees East in which APSTAR IIR is
located. The Company has filed an application and manage the filing for the orbital slot at 131
East, 89.5 East, 92.2 degrees East, 96 degrees East, 102.8 degrees East, 131.8 degrees East, 138
degrees East, 140 degrees East and 143 degrees East. Those orbital slots could be used by future
satellite which the design should meet the coordination requirement for each slot.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Employees</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Including the executive directors and senior management of the Company, as of December&nbsp;31,
2005, the Company had 161 full-time employees, of which 26 employees were in management, 135 were in
engineering and operations, marketing, accounting and administration. The directors of the Company
will continue to closely monitor the number of employees, ensuring that the number is in line with
the needs and corporate strategies of the APT Group. The Company believes that its relations with
its employees are good. A majority of the Company&#146;s technical and engineering staff employed at
the Satellite Control Center were originally seconded from affiliates of ChinaSat and China
Aerospace.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group provides on the job training to employees to update and upgrade their knowledge on
related job fields.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Share Option Scheme</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company adopted a new share option scheme (&#147;Scheme 2002&#148;) at its 2002 annual general
meeting in response to new rules governing the listing of securities on The Stock Exchange of Hong
Kong Limited (the &#147;Listing Rules&#148;) that took effect in September&nbsp;2001. New options after the
adoption of Scheme 2002 are granted by the Company only pursuant to such scheme. Since the
adoption of Scheme 2002, no further options have been granted under the previous share option
scheme, which was adopted on May&nbsp;22, 2001 (&#147;Scheme 2001&#148;) which itself replaced the old Share
Option Scheme (See Item&nbsp;6 below for a more detailed description of the old Share Option Scheme).
All of the options granted on June&nbsp;19, 2001, a total of 14,650,000 share options, under Scheme 2001
to Eligible Employees will, however, remain valid until the expiration of their terms. By their
terms, all of the options granted on June&nbsp;19, 2001 are exercisable from May&nbsp;22, 2003 to May&nbsp;21,
2011 for a nominal consideration of HK$1 per grantee. During 2002, 2003, 2004, and 2005 the
Company did not grant any options. The total number of outstanding options under the existing share
option schemes (including Scheme 2001 and Scheme 2002) that have been granted and not yet exercised
equals 4,230,000, which represents 1.03% of the issued share capital of the Company as at December
31, 2005.
</DIV>
<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Competition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT currently serves the satellite communications market in Asia. A number of international
and domestic satellite operators also compete in this market. The Company&#146;s primary focus is Asian
intra-regional broadcasting, TV uplink and downlink, IP broadband and telecommunications, with
special emphasis on the PRC. The Company has not attempted to enter the international PSTN trunk
route market, which is dominated by the International Telecommunications Satellite Organization
(&#147;Intelsat&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In providing satellite capacity, the Company competes with major established companies and
organizations. The Company&#146;s competitors include government-owned and privately-owned
international, regional and domestic satellite companies. Many of these competitors have
long-standing customer relationships and are substantially larger and have financial resources that
are substantially greater than those of the Company. The Company believes that its ability to
compete with these organizations depends on its existing customer relationships and the quality of
its customer service, its reputation as a reliable operator of commercial satellites, flexible and
value pricing policy, and the technical advantages of its advance and powerful satellites.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company faces competition in all its markets from one or more satellite systems. Other
than domestic satellite companies, the Company is currently aware of five other international or
regional satellite companies with coverage of the PRC: Intelsat, Asia Satellite Telecommunications
Holdings Limited (&#147;AsiaSat&#148;), PanAmSat Corporation (&#147;PanAmSat&#148;), Satelindo-PT Satelit Palapa
Indonesia (&#147;Palapa&#148;) and Sino Satellite Communications Company Limited (&#147;SinoSat&#148;). Due to the
economic slowdown in many Asian countries, many satellite-related projects have been delayed or
cancelled and the current supply of transponders is still greater than the demand. For such
reasons, APT has faced fierce market competition resulting in price-cutting and pressure on
utilization rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Digital video compression technology may have the effect of increasing the overall supply of
transponder capacity in the satellite industry. Such technology permits programmers to use less
transponder capacity than is currently required to transmit the same amount of programming. At
present, however, digital integrated
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">receivers-decoders which are necessary to unscramble digitally compressed transmissions are not generally available outside the more developed markets, and the
Company believes that it may be some time before they are commonplace in the developing markets of
Asia. Customers who make significant financial commitments to the use of satellites for
broadcasting and telecommunications applications often seek to secure back-up transponder capacity
in order to protect their investment. The Company believes that potential customers in Asia may,
at some future point, prefer to use those satellites that can provide backup capacity to help
reduce customer risk.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>International Satellites</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market for international satellite communications capacity has been dominated by Intelsat
for 30&nbsp;years, and Intelsat can be expected to continue to dominate it for the foreseeable future.
Intelsat, established by international treaty in 1964, owns and operates the largest fleet of
commercial geosynchronous satellites in the world (over 20 satellites), and now comprises a
consortium of 143 countries. Intelsat has been operating communications satellites in the Asia Pacific region since the 1960s. Although the number
varies depending upon the exact criteria used to define Asia Pacific, Intelsat has several
satellites in the region. At present, however, Intelsat primarily uses beams which have a much
lower EIRP than the Company&#146;s satellites and therefore require larger diameter antennae for its
transmission to be received. Intelsat is traditionally seen as a &#147;long-haul&#148; carrier for PSTNs.
Intelsat has substantially completed a planned transition to a privatized entity which may
strengthen Intelsat&#146;s capabilities and competitive position. The television distribution and VSAT
operations of Intelsat could potentially compete directly with the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PanAmSat was started in the 1980s to compete with the Intelsat monopoly. It currently
operates four satellites providing coverage over the Atlantic, Pacific and Indian Oceans and is one
of the Company&#146;s principal competitors in the Asia Pacific region. PanAmSat&#146;s PAS-4 has some
features similar to those of APT&#146;s satellites, including coverage of certain of the same geographic
areas. PanAmSat has announced that it intends to launch additional satellites to provide further
global coverage.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Regional Satellites</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Coverage, service and target customers of AsiaSat are very similar to those of APT. AsiaSat
2&#146;s footprint is smaller than that of APSTAR IIR, but AsiaSat 3S, which was successfully launched
in March&nbsp;1999, has a footprint very similar to APSTAR IIR&#146;s footprint. AsiaSat 4 was also
successfully launched in April&nbsp;2003 and provides footprints coverage across Asia and Australia.
The Company believes AsiaSat is and will continue to be a major competitor of APT in the Asia
Pacific market, including the PRC market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Satelindo&#146;s Palapa system began operations in the mid-to-late 1970s to support communications
in Indonesia and Southeast Asia. Satelindo is currently implementing its third generation of
communications satellites. Palapa has been successful in attracting international broadcasters to
its satellites and is planning to increase the coverage of its satellites to cover the entire Asia
Pacific region and to compete with Intelsat across the Pacific Ocean. Palapa is already servicing
a number of international broadcasting companies, and it is a major competitor of APT outside the
PRC market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ST-1 satellite system, which is partly owned and operated by Singapore Telecom, was
successfully launched in September&nbsp;1998. Its C-band coverage stretches from the Middle East to
Japan and Southeast Asia. Its Ku-band coverage focuses on the Indian subcontinent and Southeast
Asia. Due to the satellite design and coverage area, the ST-1 satellite system only has the
ability to compete with the Company in C-band segment of the Asia Pacific market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SinoSat, which was established in May&nbsp;1994, has four major shareholders including China
Aerospace Science &#038; Technology Corporation, State Development and Investment Corporation, China
Financial Computerization Company, and Shanghai Alliance Investment Limited. Its first satellite,
SinoSat-1, was launched on July&nbsp;18, 1998 carrying 24 C-band and 14 Ku-band transponders with
footprints including China and Asia Pacific regions for providing telecommunication, data
transmission and TV broadcasting whereas its SinoSat-2 is still in the planning and development
stage. Because of its coverage and transponder capacity, SinoSat-1 is one of APT&#146;s competitors in
the China region.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Domestic Satellites</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A number of companies located in various countries in the region have launched or are planning
to launch domestic satellites. These include ChinaSat, which is also a Principal Shareholder
(which term is defined below), Chinastar (merged with ChinaSat) and SinoSat of the PRC, INSAT of
India, JSAT and NSTAR of Japan, Koreasat of Korea, Measat of Malaysia, Optus of Australia, Thaicom
of Thailand, Mabuhay of the Philippines, and GE-1A of the United States. Although these satellites
may be focused on their respective domestic markets, such companies may have the ability, due to
satellite design and coverage areas, to compete with the Company in segments of the Asia Pacific
market. In certain of these countries, domestic television broadcasters and domestic satellite
telecommunication operators providing services in their home countries are generally required to
use a state-owned or locally-owned satellite systems to the extent capacity is available and
therefore may not use APT&#146;s satellites. In addition, many of the domestic systems are planning to
add at least some regional transponders with substantial beam coverage to their next generation of satellites, and therefore may in the
future become competitors of APT in the regional markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Other Satellites</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other existing and proposed organizations have considered or might consider competing in the
Asia Pacific regional market. These include Russian systems, TongaSat, and others. Some of the
existing potential competitors offer low-cost, low-performance transponders, which do not compete
directly with the Company&#146;s high-performance transponders. New organizations face significant
competitive barriers including scarcity of orbital slots and high costs of entry.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Optical Fiber Systems</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Optical fiber systems have been widely installed for point-to-point trans-oceanic
communications. In addition, point-to-point optical fiber connections between major cities in Asia
are common. Optical fiber is being used in more developed markets for cable TV networks, telephony
services and more recently in broadband and internet users. Owing to the telecom-boom era legacy of
huge overcapacity in the market, prices for leasing wholesale cable have plummeted over the past
five years as supply has still outstripped overall demand. The abundant supply of cable capacities
and rock-bottom prices have led to the situations that satellite capacities are difficult to
compete with cable in point-to-point communications.
</DIV>
<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Regulation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The international telecommunications industry is highly regulated. Satellite services are
subject to international space law, and the principal body of international law relating to the use
of outer space is the Outer Space Treaty. Countries which are party to the Outer Space Treaty or
to other treaties or conventions regulating outer space activities are responsible for fulfilling
their own obligations under such treaties or conventions. This often results in the adoption by
such member countries of domestic laws to regulate the activities of their own subjects in order to
enable the country concerned to comply with its international obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As an operator of privately-owned satellites in Hong Kong, APT is subject to the regulatory
authority of APT&#146;s principal regulator, OFTA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of the Company&#146;s existing and potential customers who may wish to use the APSTAR System
to broadcast into or provide telecommunications services for countries in Asia are subject to
government licensing. The applicable regulatory schemes in these countries vary considerably.
While the Company does not believe these regulatory schemes will prevent it from pursuing its
business, there can be no assurance that its customers&#146; licenses and approvals are or will remain
sufficient in the view of foreign regulatory authorities and that these authorities will not
discourage or prevent existing or potential customers from utilizing transponders on the APSTAR
System.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of APT&#146;s customers must have authorization from the countries in which they are located
in order to uplink to and communicate by means of APT&#146;s satellites. While obtaining such
authorizations on behalf of its
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">customers is not the Company&#146;s responsibility, the Company&#146;s success may depend on the ability of its customers to obtain the required authorizations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>International Telecommunication Union</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Member nations are required by treaty to give notice of, coordinate and register radio
frequency assignments and any associated orbital locations in the geosynchronous satellite orbit
with the Radiocommunication Bureau. The purpose of such notice, coordination and registration is
to eliminate harmful interference between earth and space-based stations of different countries, to
improve the use of the radio frequency spectrum and the geosynchronous satellite orbit and to
accommodate, to the extent possible, a country&#146;s needs. Pursuant to the Radio Regulations, after a
country gives notice to the Radiocommunication Bureau of its intent to use given frequencies in
connection with given orbital locations and for a particular type of service, the &#147;advance
publication&#148; stage commences during which other countries are afforded the opportunity to apprise
the Radiocommunication Bureau of any conflicts with any existing or intended satellite systems.
When a present or potential conflict is noted, countries are then obligated to negotiate (during the
&#147;coordination&#148; process) in an effort to coordinate the proposed uses and resolve any interference
concerns.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An orbital slot is a function of intended use, orbital location and frequency band. As
international coordinations vary in complexity, the time for their completion is uncertain and
depends on the number of countries involved and the extent to which there are competing uses for
the frequency bands that are the subject of the coordination. The coordination process may result
in modification of proposed coverage areas or satellite design to eliminate or minimize
interference with other potential users.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When coordination is completed and conflicts are resolved, the proposed users achieve
&#147;notification&#148; status with the Radiocommunication Bureau. The frequency assignments are then
recorded in the Master Registry, and such users are thereafter entitled under international law to
protection from interference from subsequent or nonconforming uses from other countries. The
failure to use an orbital slot within six years of advance publication (extendable for a further
three years) could result in loss of priority in the coordination process.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Radio Regulations, during the coordination process, a country may request the
Radiocommunication Bureau to assist it in resolving disputes in connection with existing or
proposed uses of frequencies and orbital locations. However, should any such disputes remain
unresolved, and the coordination process therefore not be successfully completed, there is no
formal dispute resolution mechanism and any country that nonetheless places a satellite or any
earth station into operation may not be entitled to seek the assistance of the Radiocommunication
Bureau to resolve complaints relating to any interference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Export Regulation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The United States government has imposed certain restrictions on transfers of US technology to
the PRC and certain other countries, such as Russia. The launch site for each of the existing
APSTAR satellites, other than APSTAR V, was located in the PRC and the launch provider was an
entity licensed by the PRC government. The launch sites for other satellites that the Company may
launch in the future may also be located in the PRC or other countries subject to such
restrictions. As a result, export licenses are required to be obtained by manufacturers of
satellites that the Company may launch in the future which contain US technology in connection with
launches in any country subject to such restrictions on technology transfers. The export of
US-origin commercial communications satellite equipment also requires a Presidential waiver of the
restrictions contained in the US Foreign Relations Authorization Act relating to such exports to
the PRC and of any sanctions that are then in effect under the US Arms Export Control Act or other
US laws and regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Hong Kong Regulation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s satellite operations are principally regulated by the Outer Space Ordinance.
The Outer Space Ordinance prohibits any person from launching or procuring the launch of a
satellite, or operating a satellite, without obtaining an appropriate license. The Outer Space
Ordinance further stipulates that any such license shall describe the activities authorized by it
and also provides that licenses may be granted subject to conditions specified
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">therein. The conditions may include basic orbital parameters and requirements to avoid interference with the
activities of other users of outer space. Breach of any such conditions can give rise to a right
of revocation of the relevant license.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ultimate authority to grant licenses and otherwise to administer the Outer Space Ordinance
is vested in the Chief Executive. In practice, all relevant matters are dealt with on a regular
basis by OFTA. Effective July&nbsp;1, 1997, the regulation of satellite launch and operation by Hong
Kong companies has remained under the authority of OFTA. APT had previously been granted licenses
under the Outer Space Act 1986 (Hong Kong) Order 1990 (the &#147;Outer Space Order&#148;) by the Chief
Executive covering current and future operation of each of APSTAR I, APSTAR IA and APSTAR IIR,
subject to the conditions of the respective licenses and under the Outer Space Ordinance, such
licenses are valid and effective as if granted, maintained or made under the Outer Space Ordinance.
Each of these licenses requires the approval of the Hong Kong government for any transfer of a
beneficial interest in the satellite.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s earth station operations involve the operation and use of telecommunications
apparatus at and from its earth station at Tai Po, Hong Kong. Establishment, possession and use of
such telecommunication apparatus in Hong Kong is regulated by the Telecommunication Ordinance and
the orders and regulations thereunder. APT has the benefit of licenses granted under the
Telecommunication Ordinance for each of APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V and APSTAR VI
covering all of its TT&#038;C operations, as well as monitoring and testing functions, subject to the
terms and conditions of the respective licenses. Such licenses have terms of 20&nbsp;years, commencing
on July&nbsp;19, 1994, June&nbsp;11, 1996, October&nbsp;13, 1997, November&nbsp;1, 2003 and April&nbsp;4, 2005,
respectively. The licenses require APT (among other things) to avoid harmful interference with
other telecommunication apparatus operating within or outside Hong Kong and to ensure compliance
with all relevant requirements of the International Telecommunication Convention, a complementary
document to the ITU&#146;s constitution document, and any other international telecommunication
agreements which may from time to time be acceded to by or on behalf of, or applied to, Hong Kong.
These licenses were formally granted with the grant of the licenses under the Outer Space Order
referred to above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Telecommunication Ordinance also contains provisions for (i)&nbsp;the taking of possession by
the Hong Kong government of telecommunications stations where the Chief Executive in Council is of
the opinion that an emergency has arisen in which it is expedient for the public service that the
Hong Kong government should have control over telecommunications stations and (ii)&nbsp;the payment of
compensation should such taking of possession occur.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Overseas National Telecommunications Authorities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The laws and regulatory requirements regulating access to satellite systems vary from country
to country. Some countries have substantially deregulated satellite communications, making
customer access to the Company&#146;s satellites a relatively simple procedure, while other countries
have maintained strict monopoly regimes. The application procedure for access to satellite systems
can be time-consuming and costly, and the terms of the licenses vary among different countries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Direct reception of satellite television is currently illegal in a number of countries in Asia
and the Middle East, and is subject to stringent restrictions in certain other countries in those
regions. Private ownership of dishes is currently prohibited in the PRC, although certain
tourist-grade hotels and apartments and other specified entities are permitted to operate dishes
upon application to the relevant authorities. In addition, regulations regarding content of
advertisements and advertising vary from country to country, making it difficult for broadcasters
to address advertisements to Asia and the Middle East as a whole.
</DIV>
<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Organizational Structure</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The parent company of the APT Group is APT Satellite International Company Limited (&#147;APT
International&#148;), which directly controls approximately 51.83 % of the interest of the Company. APT
International is in turn jointly 100% owned by five principal shareholders. More information on
major shareholders is set forth in &#147;Item&nbsp;7. Major Shareholders and Related Party Transactions.&#148;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company, through APT BVI, indirectly owns 100% of APT. The full list of subsidiaries of
APT Group is set forth in Note 1 to the Audited Consolidated Financial Statements.
</DIV>
<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Property, Plant and Equipment</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s executive offices are located in the Satellite Control Center in Tai Po
Industrial Estate, Hong Kong. Upon the removal of the Company&#146;s business office to its Satellite
Control Center in Tai Po on December&nbsp;8, 2003, the lease of the Company&#146;s business office space
originally in Room&nbsp;3107-3109 and 3111-3112, 31/F One Pacific Place, 88 Queensway, Hong Kong was
terminated on February&nbsp;29, 2004. The rental amount (excluding rates and management charges) under
the lease was approximately HK$0 for 2005 and HK$530 thousand for 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The TT&#038;C operations of APSTAR Systems are conducted through the Company&#146;s Satellite Control
Center. The 45,192 square foot site (Site 1) where the TT&#038;C facility is located and the adjacent
39,902 square foot site (Site 2) where Phase II of the Satellite Control Center is located, are held by the
Company pursuant to a lease between APT and the Science and Technology Parks Corporation. In early
2000, APT had leased from the Science and Technology Parks Corporation property originally
designated as The Remaining Portion of Section&nbsp;E of Tai Po Town Lot No.&nbsp;13 and Extensions Thereto
with approximately 8,919.29 square meters (equivalent to 95,972 square feet) adjacent to its Tai Po
Satellite Control Center site for a term expiring June&nbsp;30, 2047. On March&nbsp;21, 2001, APT with the
Science and Technology Parks Corporation entered into the Cancelled Agreement, which divided the
interest of the property originally designated as The Remaining Portion of Section&nbsp;E of Tai Po Town
Lot No.&nbsp;13 and Extensions Thereto between APT and APT Telecom. On March&nbsp;21, 2001, the Science and
Technology Parks Corporation leased the majority portion of that piece of property, totaling
6,903.29 square meters (approximately 74,279 square feet) (Site 3A) (newly designated as the
Remaining Portion of Section&nbsp;E of Tai Po Town Lot No.&nbsp;13 and Extension thereto), to APT Telecom for
telecommunications services, and granted a lease of the remaining portion of the property, totaling
2,016 square meters (approximately 21,692 square feet) (Site 3B) (newly designated as Subsection 3
of Section&nbsp;E of Tai Po Town Lot No.&nbsp;13 and Extensions thereto) to APT by the Second Supplemental
Agreement and this piece of property was merged with the property originally leased, Site 1 and
Site 2. In order to expand the Company&#146;s satellite operations and control capabilities in
preparation for the launch of APSTAR V and APSTAR VI, as well as expand its capabilities with
respect to broadcasting and telecommunication services, APT Group completed the construction of
Phase II of the Satellite Control Center (&#147;Phase II&#148;) for APSTAR V and APSTAR VI on Site 3B and
Site 2. The Company commenced operation of Phase II in February&nbsp;2002. Phase II, which has a total
floor area of approximately 55,540 square feet, is specially designed for providing satellite TV
broadcasting platform. Phase II also includes a new data center (approximately 14,700 square feet)
for the telecommunications services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the satellite TV broadcasting license granted by the Government of HKSAR, the Company&#146;s
wholly-owned subsidiary, APT Satellite TV Development Limited, has developed a satellite television
broadcasting platform as part of Phase II. As at December&nbsp;31, 2005, the Company has invested
HK$28.8&nbsp;million (US$3.7&nbsp;million) in the facilities. As a result, the Company&#146;s program transmission
capacity is increased, strengthening its capacity to meet future demand for satellite TV services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company assumed risks and rewards of thirty-seven transponders for the entire operational
life of APSTAR V under finance leases on August&nbsp;13, 2004. The Company invested HK$1,157.9&nbsp;million
(US$148.4&nbsp;million) for the thirty-seven transponders of APSTAR V in 2004. No further cost
invested in such transponders after In-Orbit Test of APSTAR V on August&nbsp;13, 2004. See Summary of
Satellite Data for further details related to the Company&#146;s satellite assets.
</DIV>
<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;4A. Unresolved Staff Comments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company currently has no unresolved SEC Staff comments.
</DIV>




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<DIV align="left">
<A name="118"></A>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;5. Operating and Financial Review and Prospects</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion and analysis should be read in conjunction with the Audited
Consolidated Financial Statements of the Company. The Audited Consolidated Financial Statements
have been prepared in accordance with Hong Kong GAAP, which differs in certain respects from US
GAAP. For a summary of significant differences between Hong Kong GAAP and US GAAP, see Item&nbsp;18 and
Note 28 of the Notes to the Audited Consolidated Financial Statements.
</DIV>
<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s existing satellites together with APSTAR I and APSTAR IA which were operated in
an inclined orbital mode, APSTAR IIR, APSTAR V and APSTAR VI provide commercial service to
broadcasting and telecommunications customers in the Asia Pacific region. APSTAR IIR began
commercial service on January&nbsp;1, 1998, APSTAR V on August&nbsp;13, 2004 and APSTAR VI on June&nbsp;7, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT&#146;s transponder utilization agreements typically require the payment of a deposit of one
calendar quarter&#146;s utilization fee upon signing of the contract, provide for an escalation of
utilization fees during the agreement term according to an agreed schedule, require utilization
fees to be paid in advance and provide for renewal options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain aspects of the business of the Company are subject to governmental regulation,
including the coordination of orbital slots under the regulations of the ITU and the licensing of
the Company&#146;s satellite-related activities in Hong Kong by the HKSAR under the Outer Space
Ordinance. Licenses from the HKSAR must be obtained to launch or operate a satellite. APT has
obtained licenses covering current and future operation of each of APSTAR I, APSTAR IA, APSTAR IIR,
APSTAR V and APSTAR VI. The licenses each require the approval of the HKSAR for any transfer of a
beneficial interest in the satellite. Fees with respect to each of these licenses are payable
annually at fixed rates. The Company paid aggregate license fees with respect to its satellites of
HK$556 thousand (US$71 thousand) to the HKSAR in 2005. Although neither the Joint Declaration nor
the Basic Law makes express provision with respect to the Outer Space Ordinance or the regulation
of satellite launch and operation or other outer space activities, the Basic Law provides that the
laws previously in force in Hong Kong shall be maintained, except for any laws that contravene the
Basic Law, and subject to any amendment by the legislature of the HKSAR.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company believes that the market for satellite communications will not improve
significantly in the coming year due to the uncertain economic outlook of the Asia Pacific region
and increased competition in the transponder services market, which the Company believes will grow
increasingly intense. At the same time, the Company plans to develop new satellite broadcasting
and telecommunications businesses, with a view to maintaining business growth. The Company is
currently focusing its sales and marketing efforts on:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>providing transponder capacity to broadcast customers for the distribution of
programming to television audiences in the PRC and Asia Pacific region;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>providing telecommunications networks for data and voice communications; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>providing satellite television uplink and downlink service through the APSTAR System.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s future revenues will depend upon the success of the above business strategies,
and it cannot provide any assurances that it will be successful in implementing its strategies or
meeting its projections.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APSTAR System, together with their corresponding telemetry, tracking and control systems, have
been operating under normal conditions. The Company&#146;s core business remains the provision of
satellite transponder capacity and broadcasting services in the Asia Pacific region. There has
been an increase of revenue contributed from the provision of satellite-based telecommunication
services. In the first half of 2003, the economic conditions in the Company&#146;s markets continued to
be sluggish due to SARS, which exacerbated an already weakened economic environment. Market
competition in the satellite broadcasting business was extremely fierce in 2003 as demand for
transponder capacities remained weak. In the second half of 2003, the economic outlook improved in
the Asia
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pacific region as the SARS outbreak was brought under control and the economy in the PRC
continued to grow at an increased pace. In the year of 2005, the transponder service market
remained highly competitive. The market for satellite communications in the Asia Pacific region
remained highly competitive because of the following reasons: (i)&nbsp;there was a significant
oversupply in transponder capacities with respect to transponders operating on both the C-band and
Ku-band; and (ii)&nbsp;there was an over-supply in submarine cable capacities, particularly with respect
to telecommunication services. As of December&nbsp;31, 2005, the utilization rates of APSTAR V and
APSTAR VI stood at 68.5% and 45.0%, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company intends to continue focusing on its core-business of providing satellite
transponder capacity and satellite-based telecommunications services in the Asia Pacific region in
the near term. While there is no current indication that the over-supply in transponder capacities
and submarine cable capacities in the region will be reduced in the near term, the transponder
markets as well as the broadcasting and telecommunication services market began a limited recovery
at the end of 2005. APT continues to aggressively market the services of its new, state-of-the-art
satellites, APSTAR V and APSTAR VI, which were launched on June&nbsp;29, 2004 and April&nbsp;12, 2005,
respectively, in an attempt to gain market share as the economy improves. The Company believes
that the advantages of these two satellites include (i)&nbsp;higher power; (ii)&nbsp;broadened footprints;
(iii)&nbsp;smooth customer migration; (iv)&nbsp;linking northern and southern hemispheres and bridging major
cities between North America and Asia; (v)&nbsp;anti-jamming features (APSTAR VI only); and (vi)&nbsp;the
potential for strong neighborhood effects with such customers as CCTV and other renowned
broadcasters, which enjoy over 300&nbsp;million TV-households. Upon the completion of the Company&#146;s
satellite replacement program following the commencement of service of APSTAR VI, the Company
believes that its market competitiveness should be significantly strengthened.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT Satellite TV Development Limited (&#147;APT TV&#148;) has established its satellite TV uplink and
broadcasting services platform (the &#147;Satellite TV Platform&#148;) for the provision of broadcasting
services under a Satellite TV Broadcasting Licence granted by HKSAR. The Company believes that the
Satellite TV Platform will help establish a neighborhood effect, whereby the APSTAR System will
stimulate more demand for transponder capacities for the APSTAR System. As at December&nbsp;31, 2005,
APT TV has carried up to 53 satellite TV channels for the broadcasters in the region. APT Telecom
was re-organized on September&nbsp;10, 2003 in response to the continued downturn in the market for
telecommunication services and the oversupply of submarine cable capacities. After the
reorganization, APT Telecom Services Limited continued to provide telecommunication services under
the Fixed Carrier License approved by OFTA in October&nbsp;2003. The Company believes that the provision
of broadcasting service and telecommunication service offerings to its customers provides an
important competitive advantage with respect to customers who desire a &#147;one-stop&#148; shop in
communications services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company projects that the broadcasting and telecommunication businesses in the Asia
Pacific region will see steady growth during 2006. The transponder service market will likely
still be highly competitive due to excess capacity in the transponder market in the region. While
the Company believes that the business climate in the next year will remain challenging, it
believes that the successful launch of APSTAR V and APSTAR VI will enhance its competitiveness in
the transponder services market. As a result of the economic growth in the Asia Pacific region and
the continued rapid economic growth in China, the Company anticipates that the demand for
transponders will grow steadily in 2006. The Company believes that there will be increases in
customers and transponder utilizations, and the increase in telecommunications or broadcasting
services. Meanwhile, the market competition will still be fierce due to supply over demand with
keen price pressure. The Group expects APSTAR V and APSTAR VI will continue to increase in
utilizations and expand market shares further in 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An analysis of the sources of the Company&#146;s revenues by business segment for the three years
ended December&nbsp;31, 2005 is shown in Item&nbsp;4 &#147;Information on the Company &#150; Business Overview&#148;. The
following table sets forth, for the periods indicated, the percentage of revenues from continuing
operations represented by certain revenue and expense items in the Company&#146;s statements of
operations.
</DIV>

<P align="center" style="font-size: 10pt">-33-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Statement of Operations Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Costs and expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Cost of services (excluding depreciation
and amortization)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">24.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">30.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">78.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">64.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">58.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Selling, general and administrative
(excluding depreciation and amortization)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">24.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">28.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">22.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total costs and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">117.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">116.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">112.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17.5</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16.7</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12.5</TD>
    <TD nowrap>%)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(67.9</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16.4</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(36.7</TD>
    <TD nowrap>%)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(71.8</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22.4</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(40.6</TD>
    <TD nowrap>%)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An analysis of the source of the Company&#146;s revenues by geographical area for the years ended
December&nbsp;31, 2003, 2004 and 2005 is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>Years Ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 0px solid #000000">(HK$ in millions)</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">% of Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">% of Total</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">% of Total</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Revenues</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Revenues</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Amount</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Revenues</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">The People&#146;s
Republic of China:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Hong Kong</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">11.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other regions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">225.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">74.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">195.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">70.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">201.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Singapore</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">USA</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Indonesia</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has not incurred any research and development expenditure for the years ended
December&nbsp;31, 2003, 2004 or 2005.
</DIV>



<DIV align="left">
<A name="156"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Application of Critical Accounting Policies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial statements are based on the selection and application of significant accounting
policies, which require management to make significant estimates and assumptions that affect the
reported amount of assets and liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities at the date of the financial statements. Actual results may
differ from these estimates under different assumptions or conditions. The following are some of
the more critical judgment areas in the application of the Company&#146;s accounting policies that
currently affect the Company&#146;s financial condition and results of operations.
</DIV>

<P align="center" style="font-size: 10pt">-34-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Depreciation</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation of satellite assets is provided for on the straight-line method over the
estimated useful life of the satellite, which is determined by engineering analysis performed at
the in-services date and re-evaluated periodically, to residual value. A number of factors affect
the operational lives of satellites, including construction quality, component durability, fuel
usage, the launch vehicle used and the skill with which the satellite is monitored and operated. As
the telecommunication industry is subject to rapid technological change and the Company&#146;s
satellites have been subjected to certain operational lives, the Company may be required to revise
the estimated useful lives of its satellites and communication equipment or to adjust their
carrying amounts periodically. Accordingly, the estimated useful lives of the Company&#146;s satellites
are reviewed using current engineering data. If a significant change in the estimated useful lives
of our satellites is identified, the Company accounts for the effects of such change as
depreciation expenses on a prospective basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation for future satellites will depend on in-orbit testing on their estimated useful
lives after successful launch and, as the cost of the future satellites is greater than the
carrying value of the current satellites, the depreciation charge is expected to increase in the
coming years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Accounts receivables and other receivables</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The management of the Company estimates the provision of allowances required for the potential
non-collectability of receivables at each balance sheet date based on the aging of its customer
accounts and its historical write-off experience, net of recoveries. The Company performs ongoing
credit evaluations of its customers and adjusts credit limits based upon payment history and the
customers&#146; current credit worthiness. The Company does not make a general provision on its
accounts receivables and other receivables, but instead, makes a specific provision on its accounts
receivables and other receivables. Hence, the Company continuously monitors collections and
payments from customers and maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the financial
condition of the customers of the Company were to deteriorate, actual write-offs would be higher
than estimated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As disclosed in Note 21(e) to the Consolidated Financial Statements for the years ended
December&nbsp;31, 2003, 2004, and 2005, the Company did not write off accounts receivable. For the
years ended December&nbsp;31, 2003, 2004, and 2005, the Company made allowance for doubtful receivables
in the amounts of HK$8.4&nbsp;million (US$1.1&nbsp;million), HK$5.7&nbsp;million (US$731 thousand) , and HK$0.4
million (US$53 thousand), respectively. If the financial condition of the Company&#146;s customers were
to deteriorate, additional allowances may be required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company periodically reviews the carrying amounts of provision for doubtful debts to
determine whether there is any indication that the provision needs to be written off. If the
Company becomes aware of a situation where a customer will not be able to meet its financial
obligations due to change of contact information by the customer without notification or after
seeking professional advice from lawyers or debt collection agent that the probability of recovery
is remote, the Company would write off the account receivable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Impairment of property, plant and equipment</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company periodically reviews the carrying amount of the assets to determine whether there
is any indication that those assets have suffered an impairment loss. If the recoverable amount of
an asset is estimated to be less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. In assessing the recoverable amount of these assets, the
Company is required to make assumptions regarding estimated future cash flows and other factors to
determine the net realizable value. If these estimates or their related assumptions change in the
future, the Company may be required to adjust the impairment charges previously recorded. Under HK
GAAP, the estimated future cash flows are discounted at a discount rate when assessing the
recoverable amount of the assets. Under US GAAP, recoverability of assets is measured by a
comparison of the carrying amount of an asset or asset group to future undiscounted net cash flows
expected to be generated by the asset or asset group. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the carrying amounts
of the assets exceed the fair value of the assets.
</DIV>

<P align="center" style="font-size: 10pt">-35-
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company applies the foregoing analysis in determining the timing of the impairment test,
the estimated useful lives of the individual assets, the discount rate, future cash flows used to
assess impairments and
the fair value of impaired assets. It is difficult to precisely estimate the price of the
transponder capacities and related satellite services and residual values because the market prices
for our assets are not readily available. The estimates of future cash flows are based on the
terms of existing transponder capacity and service agreements. The dynamic economic environment in
which the Company operates and the resulting assumptions used in setting depreciable lives on
assets and judgment relating to the utilization rate of the assets, price and amount of operating
costs to estimate future cash flows impact the outcome of all of these impairment tests. If these
estimates or their related assumptions change in the future, the Company may be required to record
impairment loss for these assets not previously recorded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company periodically reviews the carrying amounts of its property, plant and equipment
through reference to its use value and fair market value as assessed both by the Company and by an
independent professional property appraiser. If the use value or fair market value of the
property, plant and equipment are lower than their carrying amount, the Company may be required to
record additional impairment loss not previously recognized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the years ended December&nbsp;31, 2003, 2004 and 2005, the Company conducted a review of the
Company&#146;s property, plant and equipment and determined that certain assets were impaired as the
recoverable amount of these assets is estimated to be less than their carrying amount. An
impairment loss relating to Company&#146;s property plant and equipment of HK$129.1&nbsp;million in respect
of communication satellites was recognized for the year ended December&nbsp;31, 2003 while impairment
loss of HK$1.8&nbsp;million in respect of construction in progress was recognized for the year ended
December&nbsp;31, 2004. For the year ended December&nbsp;31, 2005, HK$7.5&nbsp;million in respect of
communication satellite equipment had been recognised and charged to the statement of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Contingencies and provisions</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contingencies, representing an obligation that are neither probable nor certain at the date of
the financial statements, or a probable obligation for which the cash outflow is not probable, are
not recorded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provisions are recorded when, at the end of period, there is an obligation of the Company to a
third party which is probable or certain to create an outflow of resources to the third party,
without at least an equivalent return expected from the third party. This obligation may be legal,
regulatory or contractual in nature.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To estimate the expenditure that the Company is likely to bear in order to settle an
obligation, the management of the Company takes into consideration all of the available information
at the closing date for its consolidated financial statements. If no reliable estimate of the
amount can be made, no provision is recorded. For details, please refer to Item&nbsp;18 and Note 14 of the &#147;Notes to the Audited Consolidated
Financial Statements&#148; of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Change in accounting policies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Hong Kong Institute of Certified Public Accountants (HKICPA)&nbsp;has issued a number of new
and revised Hong Kong Financial Reporting Standards (HKFRSs) that are effective for accounting
periods beginning on or after January&nbsp;1, 2005. Information on the changes in accounting policies
resulting from initial application of these new and revised HKFRSs is provided in Note 4 of the
&#147;Notes to the Audited Consolidated Financial Statements of the
Company&#148;. Figures for 2004 and 2005
have been adjusted for these new and revised policies in accordance with the transitional
provisions and as disclosed in Note 4. Earlier years have only been restated to the extent that the
new accounting policies are adopted retrospectively as disclosed in the Note 4.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Recent US GAAP pronouncements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please see item 18 and Note 28(i) to the Audited Consolidated Financial Statements of the
Company for recent US accounting pronouncements.
</DIV>

<P align="center" style="font-size: 10pt">-36-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Commitments and Contingencies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the ordinary course of its business, the Company enters into commercial commitments for
various aspects of operations, such as repair and maintenance. However, the Company believes that
those commitments will not have a material effect on the Company&#146;s financial condition, results of
operations or cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables aggregate the contractual obligations and other commercial commitments of
the Company as of December&nbsp;31, 2005 (HK$ in millions):
</DIV>


<DIV align="left">
<A name="157"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Contractual Obligations:</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Payments due by period</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Less than</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>1&#151;3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>4&#151;5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>After 5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>1 year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>Years</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US$240&nbsp;million term Bank
loan<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,127.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">379.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">529.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest payment obligations <SUP style="font-size: 85%; vertical-align: text-top">(2) </SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">245.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase obligations
the Company <SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating leases <SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total contractual obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,377.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">187.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">499.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">588.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Other Commercial Commitments:</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Amount of commitment expiration per period</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>amounts</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Less than</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>1 &#151; 3</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>4 &#151; 5</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>After 5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>committed</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>1 year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000"><B>years</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other commercial
commitments
&#151; the Company
<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deposit received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">126.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total commercial
commitments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">126.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>This line item represents the cash obligations for principal payments of the
Bank loan. The Bank loan was secured by the assignment of the construction, launching
and related equipment contracts relating to satellites under construction and their
related insurance claim proceeds, assignment of all present and future utilization
agreements of their transponders of satellites under construction, launching and
related equipment contracts. The above Bank loan does not include the borrowing cost
amounting to HK$9.2&nbsp;million (US$1.2&nbsp;million).</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>This line item represents the contractual interest payable for the Bank loan.
The interest payable is calculated by using average interest rate since the actual
interest payment depends on future LIBOR.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>This line item represents various purchase commitments entered into with the
Company&#146;s suppliers due to the long lead times required before the satellites become
operational.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>This line item represents future minimum payments under operating leases with
remaining terms of one year or more.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>This line item represents various purchase commitments authorized by the
Company with its suppliers but not contracted at the balance sheet date.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">-37-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Contingencies:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT&#146;s overseas withholding tax charged on certain transponder utilization income in respect
of 1998 and before, calculated at the applicable rates based on the relevant transponder income
earned in those years, and not provided for in the financial statements, amounted to
approximately HK$75.9&nbsp;million (US$9.7&nbsp;million). (See Note 14 of the Company&#146;s Consolidated
Financial Statements). APT did not recognize liabilities as the Company&#146;s position is that the
applicable tax rules are effective from 1999 onwards. If such tax charge is claimed for the
period from 1998 and before, it could result in a significant adverse effect on the Company&#146;s
financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003, APT received a letter from the Hong Kong Inland Revenue Department (&#147;IRD&#148;) in
connection with the Profits Tax Return that IRD disagreed with APT on the capital gain claim of
HK$389.7&nbsp;million (US$50.0&nbsp;million) in 1999 in relation to the transfer of substantially all of
the satellite transponder capacities of APSTAR IIR for the rest of its useful life. APT has
claimed the gain as a non-taxable capital gain in its 1999/2000 Profits Tax Return. The
non-taxable claim is under review by the IRD which has proposed to treat the proceeds received
as taxable income to APT with a corresponding entitlement to statutory depreciation allowance
in respect of APSTAR IIR. On January&nbsp;23, 2006, IRD raised a Profits Tax assessment for the
year of assessment 2000/2001 to include that portion of the proceeds from sale of the satellite
received during 2000/2001 as taxable income. The tax demanded for the year of assessment
2000/2001 is HK$212.8&nbsp;million (US$27.3&nbsp;million). On February&nbsp;20, 2006, APT lodged an objection
against the IRD&#146;s assessment on the grounds that it is excessive.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;24, 2006, APT received a notice from the IRD confirming that the entire tax in
dispute would be held over on condition that APT purchase HK$78.4&nbsp;million of Tax Reserve
Certificate (&#147;TRC&#148;) by March&nbsp;15, 2006 and the balance of the amount of HK$134.5&nbsp;million would
be held over unconditionally. Should any amount of tax held over on condition of the purchases
of TRC become payable upon the final determination of the objection, the same amount of TRC
would be used for settlement of tax due. For that part of the TRC not utilized to offset the
tax payable, interest will accrue from the date of issue of the TRC to the date of
determination of the objection and be refunded to APT. In order to fulfill the condition of
hold over of tax payment, APT purchased TRC of HK$78.4&nbsp;million on March&nbsp;15, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the receipt of the above mentioned notices, the Company has obtained external legal
and tax advice, and the Company continues to believe that it has a reasonable likelihood of
success in defending its position that the gain derived from the transaction should be treated
as non-taxable. Accordingly, no provision for additional taxation has been made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, certain potential losses of a satellite or the satellite&#146;s functionality may not
be fully covered by the Company&#146;s launch or in-orbit insurance policies. For example, APT Group&#146;s
insurance coverage would not compensate it for business interruption and similar losses (including,
among other things, loss of market share, loss of revenue and incidental and consequential
damages). In the event that the insurance proceeds exceed the carrying amount of the satellites,
the excess of the proceeds over the carrying value of the satellite would be recognized as income.
Any shortfall between the insurance proceeds and the carrying amount of the satellites would be
recognized in the statements of operations as expense.
</DIV>
<DIV align="left">
<A name="120"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Off-Balance Sheet Arrangements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company does not have any off-balance sheet arrangements other than its operating leases.
The Company does not believe that such operating leases have or are reasonably likely to have a
current or future effect on the Company&#146;s financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that would be material to
investors.
</DIV>

<P align="center" style="font-size: 10pt">-38-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="121"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Results of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Year Ended December&nbsp;31, 2005 Compared to Year Ended December&nbsp;31, 2004</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Total Revenues. </B>Total revenues for the year ended December&nbsp;31, 2005 were HK$336.5&nbsp;million
(US$43.1&nbsp;million), an increase of HK$59.2&nbsp;million (US$7.6&nbsp;million), or 21.4%, as compared to total
revenues of HK$277.3&nbsp;million (US$35.5&nbsp;million) for the same period in 2004. The increase of
revenues in 2005 was due to commencement of new utilization contracts for APSTAR V and APSTAR VI in
the PRC and Indonesia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Total Costs and Expenses. </B>The major components of total costs and expenses consist of cost of
services, depreciation and amortization, and selling, general and administrative expenses. Total
costs and expenses for the year ended December&nbsp;31, 2005 were HK$378.4&nbsp;million (US$48.5&nbsp;million), an
increase of HK$55.0&nbsp;million (US$7.1&nbsp;million), or 17.0%, as compared to total costs and expenses in
the same period in 2004. This increase was primarily due to an increase in in-orbit insurance and
depreciation of the additional satellite of APSTAR VI which commenced service at the beginning of
June&nbsp;2005 and an increase in costs of running the satellite-based external telecommunications
business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Cost of Services, including Depreciation and Amortization</B>. The major components of cost of
services include depreciation and amortization, license fees, orbital slot management fees,
in-orbit insurance and satellite operations services charges. The cost of services, including
depreciation and amortization for the year ended December&nbsp;31, 2005 was HK$301.1&nbsp;million (US$38.6
million), an increase of HK$56.4&nbsp;million (US$7.2&nbsp;million) or 23.0% when compared to the cost of
HK$244.7&nbsp;million (US$31.4&nbsp;million) for the year ended December&nbsp;31, 2004. This increase was due to
all of the factors discussed below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Cost of Services, excluding Depreciation and Amortization</B>. Cost of services excluding
depreciation and amortization for the year ended December&nbsp;31, 2005 was HK$103.3&nbsp;million (US$13.2
million), an increase of HK$36.2&nbsp;million (US$4.6&nbsp;million) or 53.9% as compared to cost of services
of HK$67.1&nbsp;million (US$8.6&nbsp;million) for the year ended December&nbsp;31, 2004. The increased cost of
services is mainly due to the payment of in-orbit insurance for APSTAR VI, which began operation on
June&nbsp;7, 2005, while there were no such related expenses in 2004 for APSTAR VI.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Depreciation and Amortization. </B>Depreciation and amortization for the year ended December&nbsp;31,
2005 was HK$197.9&nbsp;million (US$25.4&nbsp;million), an increase of HK$20.2&nbsp;million (US$2.6&nbsp;million) or
11.4% as compared to depreciation and amortization of HK$177.7&nbsp;million (US$22.8&nbsp;million) for the
year ended December&nbsp;31, 2004. This increase was mainly due to an increase in depreciation of the
additional satellite of APSTAR VI which commenced service at the beginning of June&nbsp;2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Selling, General and Administrative Expenses. </B>The major components of selling, general and
administrative expenses include staff costs, office rental expenses, office general expenses,
provision for bad and doubtful receivables, marketing and promotion expenses and professional fee.
Selling, general and administrative expenses for the year ended December&nbsp;31, 2005 were HK$77.2
million (US$9.9&nbsp;million), slightly decreased by HK$1.5&nbsp;million (US$0.2&nbsp;million), or 1.9%, as
compared to selling, general and administrative expenses of HK$78.7&nbsp;million (US$10.1&nbsp;million) for
the year ended December&nbsp;31, 2004. The administrative expense decreased under the tight control in
expenses budget.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Other Operating Revenues. </B>The major components of other operating revenues consist of
interest income and other income and the reasons for such decrease are discussed below. Aggregate
non-operating items resulted in income of HK$30.8&nbsp;million (US$3.9&nbsp;million) in the year ended
December&nbsp;31, 2005, an increase of HK$21.5&nbsp;million (US$2.8&nbsp;million) as compared to the revenues of
HK$9.3&nbsp;million (US$1.2&nbsp;million) for the year ended December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>Interest Income &#151; Net. </B>Interest income &#151; net was HK$12.9&nbsp;million (US$1.7&nbsp;million) in the year
ended December&nbsp;31, 2005, an increase of HK$5.6&nbsp;million (US$0.7&nbsp;million), or 76.7%, as compared to
the interest income
</DIV>

<P align="center" style="font-size: 10pt">-39-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">of HK$7.3&nbsp;million (US$937 thousand) for the year ended December&nbsp;31, 2004, which
was largely as a result of increase in interest rates on bank deposits.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Other Income. </B>Other income was HK$15.6&nbsp;million (US$2.0&nbsp;million) in the year ended December
31, 2005, which was the compensation income from a contractor for the late delivery of the
satellite while there were no such related other income in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Impairment Loss Recognized In Respect to Property, Plant and Equipment. </B>Impairment loss in
respect to communication satellite equipment of HK$7.5&nbsp;million (US$1.0&nbsp;million) was recognized for
the year ended December&nbsp;31, 2005, as compared to impairment loss in respect of construction in
progress of HK$1.8&nbsp;million (US$231 thousand) recognized for the year ended December&nbsp;31, 2004. For
the year ended December&nbsp;31, 2005, the Company re-assessed the discounted expected future revenues
of the broadcasting and telecommunication business, which the Company expects the future revenues
to be lower than originally projected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Impairment Loss Recognized In Respect of prepayment for construction of a satellite</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In view of the successful launch of APSTAR VI on April&nbsp;12, 2005, the Company did not exercise
the option before the expiry date of September&nbsp;30, 2005. According to the terms of the option
agreement, the option has expired and the option agreement is deemed to be terminated. The Company
was responsible for all reasonable costs and expenses incurred up to the date of termination in
respect of the preparation works for the design, construction, delivery and launch of APSTAR VIB.
The balance of option price (net of all reasonable costs and expenses incurred) should be
transferred to such other satellite project as may be designated by the Company or the contractor
within two years after the expiry date of the option. In the event that the balance of option price
would be transferred to a satellite project for another customer as designated by the contractor,
the balance of the option price would be refunded to the Company. Up to and including the date
hereof, the Company has no plan for the procurement and launch of a new satellite in the coming two
years due to the fact that the transponder market has remained highly competitive and the current
supply of transponders exceeds demand in the Asia Pacific region. The possibility of transferring
the preparation work of APSTAR VIB to another satellite project of another customer as designated
either by the Company or the contractor in the coming two years is expected to be remote.
Accordingly, as the Company does not currently expect the option price would be applied towards any
future satellite project within the required time restriction or the contractor will refund the
balance of option price to the Company, an impairment loss of HK$59.9&nbsp;million (US$7.6&nbsp;million) has
been recognised in respect of the prepayment for construction of a satellite. No such expenses were
recognized for the year ended December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Borrowing Costs. </B>For the year ended December&nbsp;31, 2005, the Company incurred finance costs of
HK$46.7&nbsp;million (US$6.0&nbsp;million) representing interest expenses of HK$44.5&nbsp;million (US$5.7&nbsp;million)
incurred under the Bank loan and other related finance costs of HK$2.2&nbsp;million (US$282 thousand) as
part of satellite construction costs and including amount capitalized into construction in progress
of HK$9.8&nbsp;million (US$1.3&nbsp;million). For the year ended December&nbsp;31, 2004, the Company incurred
finance costs of HK$20.8&nbsp;million (US$2.7&nbsp;million) representing interest expenses of HK$17.2&nbsp;million
(US$2.2&nbsp;million) incurred under the Bank loan and other related finance costs of HK$3.6&nbsp;million
(US$461 thousand) as part of satellite construction costs and including amount capitalized into
construction in progress of HK$16.7&nbsp;million (US$2.1&nbsp;million). The increase of finance costs was
primarily due to new bank borrowings and an increase of interest rate in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Share of Losses of Jointly Controlled Entities. </B>Share of losses of jointly controlled
entities was HK$8.0&nbsp;million (US$1.0&nbsp;million) for the year ended December&nbsp;31, 2005, an increase of
HK$5.3&nbsp;million (US$0.7&nbsp;million) as compared to the share of losses of jointly controlled entities
of HK$2.7&nbsp;million (US$0.3&nbsp;million) for the year ended December&nbsp;31, 2004. The increase was mainly
due to the share of impairment loss of HK$7.2&nbsp;million (US$1.0&nbsp;million) from one of the jointly
controlled entities in respect of an investment property as compared to impairment loss of HK$2.2
million (US$ 282 thousand).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under US GAAP there has been an adjustment to share of loss of jointly controlled entities as
a result of GAAP difference of depreciation of investment property of HK$1.8&nbsp;million (US$231
thousand) for the year ended December&nbsp;31, 2005 and 2004. For details, please refer to Item&nbsp;18 and
Note 28(a)(i) to the Audited Consolidated Financial Statements of the Company.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Provision for Income Taxes. </B>Provision for income taxes was HK$13.2&nbsp;million (US$1.7&nbsp;million)
in the year ended December&nbsp;31, 2005, a decrease of HK$3.4&nbsp;million (US$436 thousand), as compared to
provision for income taxes of HK$16.6&nbsp;million (US$2.1&nbsp;million) for the year ended December&nbsp;31,
2004. The decrease was mainly due to the utilization of deferred tax assets which partly offset the
increase in overseas withholding tax
provided in year 2005. For the year ended December&nbsp;31, 2005, a brought forward tax loss from
a subsidiary was utilized to offset its assessable profit for the year. This resulted in the
deduction of deferred tax assets of the subsidiary. No provision for current Hong Kong profits tax
has been made, as the Company and its subsidiaries either had substantial accumulated tax losses
brought forward which are available for set off against current year&#146;s assessable profits or have
sustained tax losses as of year end.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Net Loss. </B>Net loss for the year ended December&nbsp;31, 2005 was HK$136.6&nbsp;million (US$17.5
million), an increase of HK$74.6&nbsp;million (US$9.6&nbsp;million) as compared to the net loss (restated)&nbsp;of
HK$62.0&nbsp;million (US$7.9&nbsp;million) for the year ended December&nbsp;31, 2004. This increase of net loss
was due to all of the factors discussed above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Year Ended December&nbsp;31, 2004 Compared to Year Ended December&nbsp;31, 2003</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Total Revenues. </B>Total revenues for the year ended December&nbsp;31, 2004 were HK$277.3&nbsp;million
(US$35.5&nbsp;million), a decrease of HK$24.9&nbsp;million (US$3.2&nbsp;million), or 8.3%, as compared to total
revenues of HK$302.2&nbsp;million (US$38.7&nbsp;million) for the same period in 2003. The decrease of
revenues in 2004 was due to continued intense market competition, which put further downward
pressure on transponder pricing, eroding the Company&#146;s profit margins and leading to a further drop
in revenues. The Company believes that the commencement of operations of APSTAR V and APSTAR VI
will enhance the Company&#146;s competitive position. By bundling broadcasting services and
telecommunication services into a &#147;one-stop&#148; shop for communications services, the Company aims to
further strengthen the utilization rates of its satellites as the regional economic outlook
improves, in an effort to increase its profit margins.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Total Costs and Expenses. </B>The major components of total costs and expenses consist of cost of
services, depreciation and amortization, and selling, general and administrative expenses. Total
costs and expenses for the year ended December&nbsp;31, 2004 were HK$323.4&nbsp;million (US$41.5&nbsp;million), a
decrease of HK$30.9&nbsp;million (US$4.0&nbsp;million), or 8.7%, as compared to the same period in 2003.
This decrease was primarily due to the decrease of HK$35.6&nbsp;million (US$4.6&nbsp;million) in cost of
services, which was partially offset by an increase of HK$4.7&nbsp;million (US$601 thousand) in selling,
general and administrative expenses. Total costs and expenses as a percentage of revenues were
116.7% in the year ended December&nbsp;31, 2004, as compared to 117.2% in the year ended December&nbsp;31,
2003, as further discussed as below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Cost of Services, including Depreciation and Amortization</B>. The major components of cost of
services include depreciation and amortization, license fees, orbital slot management fees,
in-orbit insurance and satellite operations services charges. The cost of services, including
depreciation and amortization for the year ended December&nbsp;31, 2004 was HK$244.7&nbsp;million (US$31.4
million), a decrease of HK$35.6&nbsp;million (US$4.6&nbsp;million) or 12.7% when compared to the cost of
HK$280.3&nbsp;million (US$35.9&nbsp;million) for the year ended December&nbsp;31, 2003. The decrease was due to
the decrease in depreciation and amortization incurred in running the business as further discussed
as below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Cost of Services, excluding Depreciation and Amortization</B>. Cost of services excluding
depreciation and amortization for the year ended December&nbsp;31, 2004 was HK$67.1&nbsp;million (US$8.6
million), an increase of HK$22.8&nbsp;million (US$2.9&nbsp;million) or 51.2% as compared to cost of services
of HK$44.3&nbsp;million (US$5.7&nbsp;million) for the year ended December&nbsp;31, 2003. The increased cost of
services is mainly due to the payment of in-orbit insurance for APSTAR V, which began operation on
August&nbsp;13, 2004, while there were no such related expenses in 2003 for APSTAR V. Furthermore, a
full year&#146;s result is reflected in 2004 while only a 3-month result is reflected in 2003 in respect
of the Company&#146;s acquisition of the satellite-based external telecommunications business of a
jointly controlled entity on October&nbsp;10, 2003.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Depreciation and Amortization. </B>Depreciation and amortization for the year ended December&nbsp;31,
2004 was HK$177.7&nbsp;million (US$22.8&nbsp;million), a decrease of HK$58.3&nbsp;million (US$7.5&nbsp;million) or
24.7% as compared to depreciation and amortization of HK$236.0&nbsp;million (US$30.2&nbsp;million) for the
year ended December&nbsp;31, 2003. This decrease was mainly due to firstly, an impairment loss that was
recognized in respect to communication satellites for the year ended December&nbsp;31, 2003, secondly,
the Company revised its estimate of the remaining useful life of APSTAR IA by extending 6&nbsp;months.
As a result, depreciation recorded for the year ended December&nbsp;31, 2004 was decreased.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Selling, General and Administrative Expenses. </B>The major components of selling, general and
administrative expenses include depreciation and amortization, staff costs, office rental expenses,
office general expenses, provision for bad and doubtful receivables, and marketing and promotion
expenses. Selling, general and administrative expenses for the year ended December&nbsp;31, 2004 were
HK$78.7&nbsp;million (US$10.1&nbsp;million), an increase of HK$4.7&nbsp;million (US$601 thousand), or 6.3%, as
compared to selling, general and administrative expenses of HK$74.0&nbsp;million (US$9.5&nbsp;million) for
the year ended December&nbsp;31, 2003. This increase was largely due to reflection of full year&#146;s
result in 2004 while only 3-month result in respect of the Company&#146;s acquisition made reflected in
2003 as discussed above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Other Operating Revenues. </B>The major components of other operating revenues consist of
interest income and other income and the reasons for such decrease as discussed below. Aggregate
non-operating items resulted in income of HK$9.3&nbsp;million (US$1.2&nbsp;million) in the year ended
December&nbsp;31, 2004, a decrease of HK$23.7&nbsp;million (US$3.0&nbsp;million), or 71.8%, as compared to the
revenues of HK$33.0&nbsp;million (US$4.2&nbsp;million) for the year ended December&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Interest Income &#151; Net. </B>Interest income &#151; net was HK$7.3&nbsp;million (US$937 thousand) in the year
ended December&nbsp;31, 2004, an increase of HK$201 thousand (US$26 thousand), or 2.8%, as compared to
the interest income of HK$7.1&nbsp;million (US$912 thousand) for the year ended December&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Other Income. </B>Other income was HK$2.0&nbsp;million (US$256 thousand) in the year ended December
31, 2004, decrease of HK$23.9&nbsp;million (US$3.1&nbsp;million), or 92.2%, as compared to other income of
HK$25.9&nbsp;million (US$3.3&nbsp;million) in the year ended December&nbsp;31, 2003. The decrease was mainly due
to a compensation payment of HK$13.5&nbsp;million (US$1.7&nbsp;million) from a jointly controlled entity for
the early termination of services and a facilities lease as the result of the jointly controlled
entity&#146;s reorganization in October&nbsp;2003 that was recognized in 2003, while there was no such income
recognition in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Impairment Loss Recognized In Respect to Property, Plant and Equipment. </B>Impairment loss
recognized in respect to property, plant and equipment of HK$1.8&nbsp;million (US$0.2&nbsp;million) was
recognized for the year ended December&nbsp;31, 2004 with respect to the Company&#146;s construction in
progress as compared to impairment loss recognized in respect to communication satellites of
HK$129.1&nbsp;million (US$16.6&nbsp;million) for the year ended December&nbsp;31, 2003. Impairment loss on
construction in progress and communication satellites was recognized for the excess of the carrying
value over the discounted expected future cash flow to be generated by the respective assets. For
the year ended December&nbsp;31, 2004, the Company re-assessed the discounted expected future revenues
of the broadband project, which the Company expects the future revenues to be lower than originally
projected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Borrowing Costs. </B>For the year ended December&nbsp;31, 2004 the Company incurred finance costs of
HK$20.8&nbsp;million (US$2.7&nbsp;million) representing interest expenses of HK$17.2&nbsp;million (US$2.2&nbsp;million)
incurred under the Bank loan and other related finance costs of HK$3.6&nbsp;million (US$462 thousand) as
part of satellite construction costs and including amount capitalized into construction in progress
of HK$16.7&nbsp;million (US$2.1&nbsp;million). As APSTAR V has commenced commercial operation on August&nbsp;13,
2004, the Company no longer capitalized the finance costs of HK$4.1&nbsp;million (US$529 thousand) from
that date but expensed it to the statements of operations. For the year ended December&nbsp;31, 2003,
no interest expenses were recorded because the interest expenses incurred under the Loan Facility
were capitalized as part of satellite construction costs. The interest expenses of HK$6.6&nbsp;million
(US$846 thousand) and other related cost of HK$1.2&nbsp;million (US$154 thousand) incurred in obtaining
the loans were capitalized.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Share of Losses of Jointly Controlled Entities. </B>Share of losses of jointly controlled
entities was HK$2.7&nbsp;million (US$347 thousand) for the year ended December&nbsp;31, 2004, a decrease of
HK$54.4&nbsp;million (US$7.0&nbsp;million) or 95.3% as compared to the share of losses of jointly controlled
entities of HK$57.1&nbsp;million (US$7.3&nbsp;million) for the year ended December&nbsp;31, 2003. The decrease
was mainly due to the share of impairment loss from one of the jointly controlled entities in
respect of cables and satellite-based telecommunication equipment and property, and compensation
expense for early termination of services and facilities lease for the year ended December&nbsp;31, 2003
while no such expenses were recognized for the year ended December&nbsp;31, 2004. The impairment loss
recognized in 2003 on cable and satellite-based telecommunications equipment and property resulted
primarily from excess capacities in the cable and satellite-based communications services markets
during the continued downturn in the regional telecommunications sector, which exerted a downward
pressure on pricing and the ability of the jointly controlled entity to grow its customer base, and
partially due to write-downs in obsolete telecommunications
equipment. As a result, projected cash flow was lower than the carrying value of the property
and equipment and the shortfall was recognized as an impairment loss in 2003 consolidated
statements of operations. Share of the impairment loss was HK$49.0&nbsp;million (US$6.3&nbsp;million) and
share of the compensation expense was HK$7.4&nbsp;million (US$949 thousand) in 2003. For results of
operations and financial position of the jointly controlled entity, please refer to Exhibit&nbsp;8.2
&#147;Financial Statements of APT Satellite Telecommunications Limited&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under US GAAP there has been an adjustment to share of loss of jointly controlled entities as
a result of GAAP difference of depreciation of investment property of HK$1.8&nbsp;million (US$231
thousand) for the year ended December&nbsp;31, 2004, a decrease of HK$875 thousand (US$112 thousand)
when compared to the depreciation of HK$875 thousand (US$112 thousand) for the year ended December
31, 2003. The decrease was mainly due to full year depreciation charge accounted for in year 2004
while only half-year depreciation charge accounted for in year 2003. For details, please refer to
Item&nbsp;18 and Note 28(a)(i) to the Audited Consolidated Financial Statements of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Provision for Income Taxes. </B>Provision for income taxes was HK$16.6&nbsp;million (US$2.1&nbsp;million)
in the year ended December&nbsp;31, 2004, an increase of HK$4.9&nbsp;million (US$628 thousand) or 41.9%, as
compared to provision for income taxes of HK$11.7&nbsp;million (US$1.5&nbsp;million) for the year ended
December&nbsp;31, 2003. The increase was mainly due to the combined effect of decrease in both deferred
tax written back and overseas withholding tax provided in year 2004. The decrease in overseas
withholding tax provided in year 2004 is due to decrease in overseas income that is subject to tax
while the decrease in deferred tax written back is mainly due to a certain leasing arrangement that
is subject to tax was written back in year 2003 while no such written back in year 2004. The
leasing arrangements entered in year 1994 provided the Company with an initial cash inflow in
return for being responsible for the future obligations to make payments of taxation under the
arrangements. Any differences between the initial benefit and the eventual tax liability were
provided for over the lives to the relevant leases. The arrangement was completed in December
2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Net Loss. </B>Net loss for the year ended December&nbsp;31, 2004 was HK$62.0&nbsp;million (US$7.9&nbsp;million),
a decrease of HK$155.0&nbsp;million (US$19.9&nbsp;million), or 71.4%, as compared to the net loss of HK$217.0
million (US$27.8&nbsp;million) for the year ended December&nbsp;31, 2003. This decrease of net loss was due
to all of the factors discussed above.
</DIV>
<DIV align="left">
<A name="122"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liquidity and Capital Resources</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Sources of Cash and Credit Available</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Since the Company&#146;s initial public offering, it has financed its operations primarily through
cash flows from operations.
As of December&nbsp;31, 2005, the Company had HK$326.4&nbsp;million (US$41.9&nbsp;million) of available cash,
HK$68.7&nbsp;million (US$8.8&nbsp;million) of restricted cash. It is expected that the operations of the
Company for the foreseeable future will be funded through cash flows from operation. Up to the end
of December&nbsp;2005, no further credit facility was available to the Company
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Capital Expenditures</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT&#146;s principal use of capital in the last several years has been (and will for the
foreseeable future be) capital expenditures related to the construction and launch of its
satellites, construction of Phase II of the Satellite Control Centre and investment in its
satellite TV broadcasting platform. The Company&#146;s business is capital-intensive, requiring
substantial capital outlays before any given satellite is commissioned for commercial service and
can begin providing a return on capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company makes periodic satellite project progress payments relating to construction of
satellites, launching and related services, insurance costs and finance costs on amounts borrowed
to finance such expenses. Upon the commencement of commercial service of an APT satellite,
satellite project progress payments relating to the satellite are transferred in full to property,
plant and equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The total cost for the communication satellites held under finance leases in connection with
the APT transponders of APSTAR V amounted to US$148.4&nbsp;million. The total capital expenditures for
the design, construction and launch of APSTAR VI amounted to US$227.0&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, if the Company was to consummate any strategic transactions or undertake any
other project requiring significant capital expenditures, it may be required to seek additional
financing. There can be no assurance that additional funds will be available at all or that, if
available, will be obtained at terms favorable to the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Contractual Obligations and Other Commercial Commitments</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For capital commitments in respect of capital expenditures, see &#147;Item&nbsp;5. Contractual
Obligations and Commercial Commitments.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Cash Flow Items</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Net Cash Provided by Operating Activities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities amounted to HK$149.5&nbsp;million (US$19.2&nbsp;million) for
the year ended December&nbsp;31, 2005, a decrease of HK$83.9&nbsp;million (US$10.75&nbsp;million), or 35.9%,
compared to net cash provided by operating activities of HK$233.4&nbsp;million (US$29.9&nbsp;million) for the
year ended December&nbsp;31, 2004. The decrease in net cash provided by operating activities over the
period was principally due to the prepayment by SingTel of transponder utilization income of
HK$231.3&nbsp;million (US$29.7&nbsp;million) for the remaining life of APSTAR V in 2004 and no similar
prepayment was made in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Net Cash Used in Investing Activities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities was HK$617.5&nbsp;million (US$79.2&nbsp;million) for the year
ended December&nbsp;31, 2005, an increase of HK$253.0&nbsp;million (US$32.4&nbsp;million), or 69.4%, compared to
net cash used in investing activities of HK$364.5&nbsp;million (US$46.7&nbsp;million) for the year ended
December&nbsp;31, 2004. The increase in net cash used in investing activities over the period was
mainly due to the increase of progress payments for the construction of APSTAR VI, increase of the
pledged deposits for Bank loan due to restrict the funds for repayment of bank borrowings in the
coming year and was partially offset by an increase in interest received due to an increase of the
interest rate in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Net Cash Provided by Financing Activities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities was HK$118.9&nbsp;million (US$15.2&nbsp;million) for the year
ended December&nbsp;31, 2005, a decrease of HK$139.0&nbsp;million (US$17.8&nbsp;million), or 53.9%, compared to
net cash provided by financing activities of HK$257.9&nbsp;million (US$33.1&nbsp;million) for the year ended
December&nbsp;31, 2004. The decrease in net cash provided by financing activities over the period was
primarily the result of less new borrowings under the secured Bank loans for APSTAR VI of HK$229.3
million (US$29.3&nbsp;million) compared to net new borrowings of HK$273.8&nbsp;million (US$35.1&nbsp;million) in
2004 and repayment of bank borrowings of HK$77.8&nbsp;million (US$10.0&nbsp;million) in 2005.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Financing</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;16, 2002, APT entered into a US$240&nbsp;million secured term bank loan. The Bank loan
was amended by a Deed of Amendment and Restatement on October&nbsp;27, 2004 and Second Deed of Amendment
and Restatement on May&nbsp;18, 2005. The first amendment amended certain terms of the Bank loan for the
purpose of adjusting for the cancellation of the unutilized portion relating APSTAR V satellite and
APSTAR VI backup satellite. Accordingly, the maximum aggregate amount under the Bank loan was
reduced to US$165&nbsp;million and certain financial covenants were amended. The second amendment
extended the availability period of drawing under the Bank loan with respect to APSTAR VI to June
30, 2005 and amended the financial covenants. The Company was in compliance with these covenants
as of December&nbsp;31, 2005. For detail of the restrictive financial covenants, please refer to Item&nbsp;18
and Note 10 of the &#147;Notes to the Audited Consolidated Financial Statements&#148; of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The availability period for drawn down expired on June&nbsp;30, 2005. As at December&nbsp;31, 2004 and
2005, the aggregate borrowings under the Bank loan were HK$975.8&nbsp;million (US$125.1&nbsp;million) and
HK$1,127.3&nbsp;million (US$144.5&nbsp;million), respectively. At December&nbsp;31, 2004, APSTAR V and APSTAR VI
were under construction with an aggregate carrying value of approximately HK$2,398.2&nbsp;million (US$
307.5&nbsp;million) and bank deposits of approximately HK$20.8&nbsp;million (US$2.7&nbsp;million). At December&nbsp;31,
2005, APSTAR V and APSTAR VI
were reported under fixed assets with a net book value of approximately HK$2,752.2&nbsp;million
(US$352.8&nbsp;million) and the bank deposits of approximately HK$68.7&nbsp;million (US$8.8million).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Bank loan is secured by the assignment of the construction, launching and related
equipment contracts relating to APSTAR V, APSTAR VI and their related insurance claim proceeds,
assignment of all present and future utilization agreements of the transponders of satellites under
construction, assignment of all present and fixed charges over certain bank accounts which will
hold receipts of the transponder income and the termination payment under construction, launching
and related equipment contracts. Pursuant to the Bank loan, any insurance claim proceeds and
contract termination payments must be deposited in a designated account and withdrawal of any
amount from this designated account may only occur in accordance with the terms of the Bank loan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Bank loan limits the amount of annual dividends that the Company may pay its shareholders
which limit is tied to certain EBITDA and cash to debt service ratios contained therein. The Bank
loan includes covenants customary for agreements of this type, including restrictions on the
Company&#146;s and its subsidiaries&#146; ability to incur indebtedness, certain ownership restrictions,
certain restrictions on the Company&#146;s ability to pay dividends, restrictions on affiliated
transactions, certain financial covenants, covenants with respect of compliance with laws,
maintenance of licenses and permits required for APT&#146;s business and a requirement that all future
transponder utilization agreements be entered into on an arms-length basis. Among other things,
APT has undertaken to ensure that APT International directly owns at least 50.01% of the voting
rights in the Company. The Bank loan also contains financial covenants, including maintenance of
collateral coverage ratio, minimum net worth and minimum EBITDA. The Bank loan also contains
customary limitations, including those on dividend, investments, capital expenditures, change of
controlling shareholders, creating liens and transactions with affiliates. No assurance can be
given that APT will be able to meet any of the financial performance covenants contained in the
Bank loan.
</DIV>
<DIV align="left">
<A name="123"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Forward Looking Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This report contains statements and other information made by or on behalf of the Company that
constitute &#147;forward-looking&#148; statements within the meaning of Private Securities Litigation Reform
Act of 1995. Statements that are not historical facts are forward-looking statements. By their
nature, forward-looking statements involve inherent risks and uncertainties, both general and
specific, and actual results could be materially different from those expressed or implied by
forward-looking statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Words such as &#147;believes,&#148; &#147;anticipates,&#148; &#147;expects,&#148; &#147;intends&#148; and &#147;plans&#148; and similar
expressions are intended to identify forward-looking statements but are not the exclusive means of
identifying such statements. Forward statements herein may include, without limitation, statements
relating to the Company&#146;s expectations, plans, objectives or goals relating to (i)&nbsp;its operations
and financial results; (ii)&nbsp;launch schedules and anticipated transponder utilization; (iii)&nbsp;the
technical capabilities of the APSTAR System; (iv)&nbsp;customer demand for the Company&#146;s system; (v)
strategic relationships that impact its operations; (vi)&nbsp;its funding needs and sources; (vii)
</DIV>

<P align="center" style="font-size: 10pt">-45-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">satellite communications regulatory matters; (viii)&nbsp;the pricing of its services, (ix)&nbsp;its
competitors and their services; and (x)&nbsp;actions of the Company&#146;s suppliers, vendors and service
providers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company cautions you that a number of important factors could cause the Company&#146;s results
of operations to differ materially from the plans, objectives, expectations, estimates and
intentions expressed in such forward-looking statements. These factors include, but are not
limited to: (i)&nbsp;technological risks related to the development, operation and maintenance of
various components of the APSTAR System; (ii)&nbsp;delays and cost overruns related to the construction,
deployment and maintenance of the Company&#146;s APSTAR System; (iii)&nbsp;risks related to the operation and
maintenance of the Company&#146;s new satellites, APSTAR V and APSTAR VI; (iv)&nbsp;competition from other
satellite operators and a number of existing satellite systems that provide similar services in
various markets; (v)&nbsp;actions taken by regulators with respect to the Company&#146;s business and
practices in one or more of the countries in which the Company conducts its operations; (vi)&nbsp;the
Company&#146;s capital structure and its ability to maintain sufficient liquidity and access capital
markets; (vii)&nbsp;customer demand for the services of the Company&#146;s satellite transponders and the
perceived overall value of these services by customers; (viii)&nbsp;the ability to increase market share
and control expenses; (ix)&nbsp;the ability of counterparties to meet their obligations to the Company;
(x)&nbsp;the possibility of foreign exchange controls, expropriation, nationalization or confiscation of
assets in countries in which the Company conducts its operations; (xi)&nbsp;the effects of changes in
laws, regulations or accounting policies or practices; (xii)&nbsp;the ability to retain and recruit
qualified personnel; (xiii)&nbsp;the strength of the
global economy in general and the strength of the economies of the countries in which the
Company conducts its operations in particular; (xiv)&nbsp;political and social developments, including
war, civil unrest or terrorist activity; and (xv)&nbsp;the Company&#146;s success at managing the risks
involved in the foregoing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company cautions you that the foregoing list of important factors is not exclusive. When
evaluating forward-looking statements, you should carefully consider the foregoing factors as well
as the risks identified herein and the Company&#146;s reports on Form 6-K furnished to the US Securities
and Exchange Commission. These and other factors could result in the forward-looking statements
proving to be inaccurate and may materially affect the Company&#146;s operations. The Company does not
undertake any obligation to publicly release any revisions to the forward-looking statements
contained in this report, or to update them to reflect events or circumstances occurring after the
date of this report, or to reflect the occurrence of unanticipated events.
</DIV>
<DIV align="left">
<A name="124"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Other</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Exchange Rates</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all of APT&#146;s historical revenues from transponder capacity utilization, premiums
for satellite launch and in-orbit insurance coverage, debt service and capital expenditures have
been denominated in US Dollars. The remaining revenues and expenses have been primarily
denominated in Hong Kong Dollars, which are fully convertible into US Dollars, and the exchange
rates for that currency against the US Dollar have been pegged since 1983. As the exchange rate
between the Hong Kong Dollar and the US Dollar has been pegged, the Company does not engage in or
plan to engage in hedging activities to offset risks of exchange rate fluctuations. There can be
no assurance that the exchange rates will remain stabilized in the future. See &#147;Exchange Rate
Information.&#148; On December&nbsp;31, 2005, all of the Company&#146;s material contracts and obligations were
denominated in US Dollars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Inflation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inflation has not materially affected the Company&#146;s operations during its operating history.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Taxation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s loss for the years ended December&nbsp;31, 2003, 2004 and 2005, which are deemed to
be Hong Kong-sourced are subject to Hong Kong profits tax, was levied at the rate of 17.5%, 17.5%
and 17.5%, respectively. Offshore interest income and capital gains derived by the Company is not
subject to Hong Kong profits tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The overseas withholding tax is currently charged at the rate of 10% on transponder
utilization income in 2003, 2004 and 2005, respectively.
</DIV>


<P align="center" style="font-size: 10pt">-46-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsidiaries of the Company in the PRC are currently subject to PRC income tax and
charged at the rates of 15% and 33% in Shenzhen and Beijing, respectively, during each of 2003,
2004 and 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>US GAAP Reconciliation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s financial statements are prepared in accordance with Hong Kong GAAP, which
differ in certain significant respects from US GAAP. The differences impacting the Company are
presented in Note 28 to the Audited Consolidated Financial Statements of the Company.
</DIV>
<DIV align="left">
<A name="125"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;6. Directors, Senior Management and Employees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A majority of the Company&#146;s current executive officers were originally seconded from
affiliates of the Principal Shareholders, principally affiliates of ChinaSat, SingaSat and China
Aerospace. A majority of APT&#146;s technical and engineering staff employed at the Satellite Control
Center in Tai Po were seconded from affiliates of ChinaSat, and China Aerospace and became
employees of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The directors and executive officers of APT Holdings are set forth below.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Date First</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Elected or</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Age</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Appointed</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B><I>Executive Directors</I></B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ni Yifeng
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">58</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and President (appointed on July&nbsp;16,
2005)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2005</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tong Xudong
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">42</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and Vice President (appointed on March
29, 2004 and April&nbsp;20, 2004 respectively)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2004</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chen Zhaobin
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">50</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director and President (Resigned on July&nbsp;16, 2005)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2001</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B><I>Non-executive Directors</I></B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Liu Ji Yuan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">72</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1998</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Zhang Hainan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">61</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deputy Chairman
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2004</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lim Toon
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">63</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1993</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Wu Zhen Mu
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">60</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1998</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yin Yen-liang
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">55</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2003</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ho Siaw Hong
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">57</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director (appointed on March&nbsp;27, 2006)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2006</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tseng Ta-mon
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">48</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Alternate Director to Yin Yen-liang (appointed
September&nbsp;8, 2004)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2003</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kwok Kah Wai Victor
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">50</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Alternate Director to Lim Toon and Lim Wee Seng
(resigned on March&nbsp;27, 2006)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2004</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lim Wee Seng
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">52</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director (resigned on August&nbsp;16, 2005)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2004</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lan Kwai-chu
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">42</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director (appointed in August&nbsp;2005 and resigned
on March&nbsp;27, 2006)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2005</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-47-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Date First</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Elected or</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Age</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Position</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Appointed</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B><I>Independent
Non-executive directors</I></B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yuen Pak Yiu, Philip
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">70</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="center" valign="top">1996</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Huan Guocang
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">56</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="center" valign="top">2002</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lui King Man
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">51</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="center" valign="top">2004</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B><I>Executive Officers</I></B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dong Gang
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">52</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President (appointed in July&nbsp;2005)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="center" valign="top">2005</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lo Kin Hang, Brian
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">49</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President &#038; Company Secretary
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD colspan="0" align="CENTER" valign="top">2002/1996</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chen Xun
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">35</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Assistant President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="center" valign="top">2004</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yang Qing
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">42</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Assistant President
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="center" valign="top">2004</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Cui Xinzheng
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">52</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President (resigned on July&nbsp;31, 2005)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="center" valign="top">2001</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Executive Directors</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;NI Yifeng</B>, aged 58, was appointed as the Executive Director and President of the Company
in July&nbsp;2005. He is responsible for the overall management of the Company. He is also the Director
of APT Satellite Company Limited, APT Satellite Investment Company Limited, Acme Star Investment
Limited, APT Satellite Telewell Limited, APT Satellite Vision Limited, APT Satellite TV Development
Limited, Skywork Corporation, APT Telecom Services Limited, Ying Fai Realty (China) Limited, APT
Satellite Global Company Limited, APT Satellite Enterprise Limited and APT Satellite Link Limited,
subsidiaries of the Company. He is also the Chairman of the board of directors of APT Satellite
Telecommunications Limited, a jointly controlled entity between a wholly-owned subsidiary of the
Company and one of the shareholders of APT Satellite International Company Limited (&#147;APT
International&#148;), the substantial shareholder of the Company. Mr.&nbsp;Ni is also the Director of APT
International. Mr.&nbsp;Ni graduated from the Research Institute of Chinese Academy of Social Science
and obtained a MBA degree from the Chinese University of Hong Kong and accredited as Senior
Accountant in China. He is currently Vice President of China Satellite Communications Corporation,
which is the holding company of one of the shareholders of APT International, the substantial
shareholder of the Company. He also is the Chairman of a listed company in Shanghai, China, namely
Chinasatcom Guomai Communications Co. Ltd. He held the posts of Deputy Director of Planning
Department, Deputy Director of Finance Department, and Deputy Director General of
Directorate-General of Telecommunications of Ministry of Post and Telecommunications (presently
known as Ministry of Information Industry). He was also President and Vice Chairman of Guoxin
Paging Company Limited and Deputy General Manager of China Telecommunications Broadcast Satellite
Corporation, which is one of the shareholders of APT International. Mr.&nbsp;Ni has over 30&nbsp;years&#146;
experience in post and telecommunication fields and abundant experience in corporate management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;TONG Xudong</B>, aged 42, was appointed as the Executive Director and Vice President of the
Company in March and April&nbsp;2004, respectively. Mr.&nbsp;Tong is also the member of the Nomination
Committee and the Remuneration Committee of the Company. Mr.&nbsp;Tong is also the Director of APT
Satellite Company Limited, APT Satellite Investment Company Limited, APT Satellite Vision Limited,
APT Satellite TV Development Limited, APT Satellite Global Company Limited, APT Satellite
Enterprise Limited, APT Satellite Link Limited, APT Communication Technology Development (Shenzhen)
Company Limited, CTIA Vsat Network Limited and Beijing Asia Pacific East Communication Network
Limited (&#147;BAPECN Limited&#148;), subsidiaries of the Company. He is also the chairman of BAPECN Limited.
He is also the Director of APT Satellite International Company Limited, the substantial shareholder
of the Company. Mr.&nbsp;Tong graduated from Nanjing Aeronautic Institute in 1985 and obtained a master
degree from Beijing Institute of Space Mechanics and Electricity, Chinese Academy of Space
Technology in 1988. Immediately after his graduation, he served for the Beijing Institute of Space
Mechanics and Electricity. In 1993, he further pursued his studies in Samara University of
Aeronautics and Astronautics, Russia. From May&nbsp;1995
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to June&nbsp;2000, he served as the Vice-Director of
Beijing Institute of Space
Mechanics and Electricity and was appointed as professor in 1998. From June&nbsp;2000 to December
2003, he was the Director of the same Institute. In 2003, he was appointed as the Vice-President of
Chinese Academy of Space Technology. Mr.&nbsp;Tong is a standing committee member of Chinese Society of
Space Research and Chairman of the Committee of Recovery and Reentry, Chinese Society of
Astronautics.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;CHEN Zhaobin</B>, aged 50, was appointed as the Executive Director and President of the
Company in February&nbsp;2001. He was responsible for the overall management of the Company. He
graduated with a Bachelor&#146;s Degree in Engineering from the Beijing University of Posts and
Telecommunications in 1982 and accredited as a Senior Engineer. He held the posts of Deputy General
Manager of China Telecommunications Broadcast Satellite Corporation, one of the shareholders of APT
Satellite International Company Limited, the substantial shareholder of the Company, Vice-Chairman
and President of China Telecom (Hong Kong) Limited (presently known as China Mobile (Hong Kong)
Limited) and China Telecom (Hong Kong) Group Limited, Director and Deputy President of Telpo
Communications (Group) Limited, and the Deputy Director of the Office of Coordination Production of
the Ministry of Posts and Telecommunications of the PRC (presently known as Ministry of Information
Industry). Mr.&nbsp;Chen has many years&#146; of experience in post and telecommunication fields and in
corporate management. Mr.&nbsp;Chen resigned as Executive Director and President of the Company on July
16, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Non-Executive Directors</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;LIU Ji Yuan</B>, aged 72, was appointed as the Chairman of the Company in June&nbsp;1998. Mr.&nbsp;Liu
is also the Director of APT Satellite Company Limited and APT Satellite Investment Company Limited,
subsidiaries of the Company. He is also the Director of APT Satellite International Company
Limited, the substantial shareholder of the Company. Mr.&nbsp;Liu graduated from Bowman Polytechnic
University, Moscow, USSR (presently known as Russia) majoring in automatic and remote control, and
obtained a Master&#146;s degree in 1960. After graduation, he was appointed consecutively as a Deputy
Director and Director of the Twelfth Research Institute of the Seventh Ministry of Machinery
Industry, Vice President of the China Academy of Launch Vehicle Technology under the Ministry of
Astronautics and accredited as a Senior Engineer from May&nbsp;1983 to March&nbsp;1984, the Vice Minister of
the Ministry of Astronautics and accredited as a Research Fellow from April&nbsp;1984 to March&nbsp;1988, and
the Vice Minister of the PRC Ministry of Aerospace Industry (later known as China Aerospace
Corporation) from April&nbsp;1988 to April&nbsp;1993. In April&nbsp;1993, Mr.&nbsp;Liu was appointed as the
Administrator (Ministerial) of China National Space Administration (CNSA), as well as the President
of China Aerospace Corporation. In 1988, Mr.&nbsp;Liu was granted the award of National Outstanding
Young and Middle-aged Expert in the PRC. In the same year, he was appointed as a visiting professor
of Harbin Institute of Technology, Beijing University of Aeronautics and Astronautics, and Beijing
Information Control Institute. After 1993, Mr.&nbsp;Liu was also appointed as the President of the
Chinese Society of Astronautics, Member of International Academy of Astronautics, President
(third-term) of China Automatic Measurement and Control Association, and Honorary Chairman of China
Aerospace Industrial and Entrepreneurial Management Association.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;ZHANG Hainan</B>, aged 61, was appointed as the Non-Executive Director and Deputy Chairman of
the Company in March&nbsp;2004. Mr.&nbsp;Zhang is also the Director of APT Satellite Company Limited and APT
Satellite Investment Company Limited, subsidiaries of the Company. He is also the Director of APT
Satellite International Company Limited, the substantial shareholder of the Company. Mr.&nbsp;Zhang
graduated from the Northwestern Polytechnical University in 1968 and was accredited as a senior
engineer. Since 1984, he has been deputy director of Factory Number 782 and 762, the Ministry of
Electronics Industry of China; deputy head and head of the Bureau of Electronics Industry, Shanxi
Province; deputy head and head of Shanxi Economic and Trade Commission; and assistant to the
governor of the Shanxi Province government, among others. In 2001, he was transferred to China
Satellite Communications Corporation, the holding company of one of the shareholders of APT
Satellite International Company Limited, as deputy general manager and general manager. Mr.&nbsp;Zhang
has many years&#146; experience in government and corporate management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;LIM Toon</B>, aged 63, has been a Director of APT Satellite Company Limited since February
1993 and was appointed as the Non-Executive Director of the Company in October&nbsp;1996. Mr.&nbsp;Lim is
also the Director of APT Satellite Company Limited and APT Satellite Investment Company Limited,
subsidiaries of the Company. He is also the Director of APT Satellite Telecommunications Limited, a
jointly controlled entity between a wholly-owned
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">subsidiary of the Company and one of the
shareholders of APT Satellite International Company Limited, the substantial shareholder of the
Company. Mr.&nbsp;Lim is also the Director of APT Satellite International Company
Limited. In 1966, Mr.&nbsp;Lim graduated from the University of Canterbury in New Zealand, with a
first class honours degree in Engineering. In 1975, Mr.&nbsp;Lim obtained a Postgraduate Diploma in
Business Administration from the University of Singapore. He attended the Advanced Management
Programme at Harvard Business School in 1992. He has been the Chief Operating Officer of SingTel,
the holding company of one of the shareholders of APT Satellite International Company Limited,
since April&nbsp;1999 and has worked for Singapore Telecom since 1970, serving in various appointments
of engineering, radio services, traffic operations, personnel &#038; training and information systems
departments. He was appointed Executive Vice President of Network Services in April&nbsp;1989 and
Executive Vice President of International Services in April&nbsp;1994. He was awarded the Efficiency
Medal in 1978 and the Public Administration Medal (Gold) in 1991 by the Singapore government. He is
presently a Director of a number of overseas companies. Mr.&nbsp;Lim has retired from SingTel on
February&nbsp;26, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;WU Zhen Mu</B>, aged 60, was appointed as the Non-Executive Director of the Company in June
1998. Mr.&nbsp;Wu is also the Director of APT Satellite Company Limited and APT Satellite Investment
Company Limited, subsidiaries of the Company. Mr.&nbsp;Wu is also the Director of APT Satellite
International Company Limited, the substantial shareholder of the Company. Mr.&nbsp;Wu graduated in
Manufacturing Engineering of the Beijing Institute of Aeronautics in 1969 and obtained a Master&#146;s
degree in Electro-Mechanical Automation in the same institute in 1981. He was a lecturer in
Zhengzhou Institute of Aeronautics from 1970 and 1979 and had been a lecturer, associate Professor
and Professor in Beijing University of Aeronautics and Aerospace from 1982 to 1993. Since then, he
has been appointed as a Professor of the Commission of Science and Technology of China Aerospace
Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Dr.&nbsp;YIN Yen-liang</B>, aged 55, was appointed as the Non-Executive Director of the Company in
January&nbsp;2003. Dr.&nbsp;Yin is also the Director of APT Satellite Company Limited and APT Satellite
Investment Company Limited, subsidiaries of the Company. Dr.&nbsp;Yin is also the Director of APT
Satellite International Company Limited, the substantial shareholder of the Company. Dr.&nbsp;Yin
graduated with an MBA Degree from National Taiwan University in 1983 and received the PhD Degree in
Business Administration from National Chengchi University in 1987. He has been President of the
Ruentex Group, the holding company of one of the shareholders of APT Satellite International
Company Limited, since 1994 and concurrently holding the position of Executive Director of SinoPac
Holdings Co., Ltd., Executive Director of Bank SinoPac, Director of Acer Incorporate, Chairman of
Aetna SinoPac Credit Card Company Limited.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;HO Siaw Hong</B>, aged 57, was appointed as the Non-Executive Director of the Company on March
27, 2006. He had been an Alternate Director to Mr.&nbsp;Wong Hung Khim and Mr.&nbsp;Lim Toon, the
non-executive director of the Company, from October&nbsp;1996 to July&nbsp;1999. Mr.&nbsp;Ho is also the Director
of APT Satellite Company Limited and APT Satellite Investment Company Limited, subsidiaries of the
Company. He is also the Director of APT Satellite Telecommunications Limited, a jointly controlled
entity between a wholly owned subsidiary of the Company and a shareholder of APT Satellite
International Company Limited (&#147;APT International&#148;), the substantial shareholder of the Company.
Mr.&nbsp;Ho is also the Director of APT International. Mr.&nbsp;Ho joined Singapore Telecommunications
Limited (&#147;SingTel&#148;), the holding company of one of the shareholders of APT International, the
substantial shareholder of the Company, in August&nbsp;1972 after graduating from the then University of
Singapore, now known as the National University of Singapore, with a Bachelor of Engineering
(Electrical) degree. He has held managerial positions in areas including planning and operations of
transmission network, radio network, mobile network, telephone exchange equipment, switch software
management, etc. Mr.&nbsp;Ho is currently the Vice President for Fixed Networks Engineering of SingTel
and SingTel Optus Pty Limited (&#147;Optus&#148;) responsible for the engineering and planning of the fixed
core networks for both SingTel and Optus. Before this appointment, he was seconded to SingTel&#146;s
Joint Venture company in Indonesia, PT Bukaka SingTel International (&#147;BSI&#148;) as its President
Director from February&nbsp;1999 to January&nbsp;2001. He continued to oversee the operations of BSI upon his
return from Indonesia while concurrently holding the post of Vice President for Network Support in
the Networks directorate. He was also Assistant Vice President for Satellite Services of SingTel
between 1997 and 1999. Mr.&nbsp;Ho is also a board member of the BSI&#146;s Board of Commissioner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;TSENG Ta-mon</B>, aged 48, was appointed as an Alternate Director to Dr.&nbsp;Yin Yen-liang, the
Non-Executive Director of the Company, on September&nbsp;8, 2004. He had been the Non-Executive Director
of the Company from July&nbsp;2003 to September&nbsp;2004. Mr.&nbsp;Tseng is also the Alternate Director to Dr.
Yin Yen-liang, the director of APT Satellite Company Limited and APT Satellite Investment Company
Limited, subsidiaries of the Company. Mr.&nbsp;Tseng is also the Alternate Director to Dr.&nbsp;Yin
Yen-liang, the
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">director of APT Satellite
International Company Limited, a substantial shareholder of the Company. Mr.&nbsp;Tseng graduated
with an LL.B. Degree from National Chengchi University in 1980 and subsequently received the LL.M.
Degree from University College London in 1982 and the LL.B. Degree from B.A. at University of
Cambridge in 1984 respectively. He also graduated from the Inns of Court School of Law of Middle
Temple in 1985 and became Barrister-at-Law in the same year. He was the Specialist of the Board of
International Trade from 1985 to 1987. He was also the Partner of Dong &#038; Lee from 1987 to 1992. He
has been the Counsel of the Ruentex Group, the holding company of one of the shareholders of APT
Satellite International Company Limited, since 1992.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;LIM Wee Seng</B>, aged 52, was appointed as the Non-Executive Director of the Company on 20
December&nbsp;2004. Mr.&nbsp;Lim had been an Alternate Director to Mr.&nbsp;Lim Toon and Mr.&nbsp;Tay Chek Khoon, the
non-executive directors of the Company, from September to December in 2004. He also had been an
Alternate Director to Mr.&nbsp;Lim Shyong, the non-executive director of the Company, from September
2003 to September&nbsp;2004. Mr.&nbsp;Lim graduated from the University of Singapore with a First Class
Honours Degree in Bachelor of Engineering (Electrical and Electronics) in 1979 and subsequently
obtained a Master of Science (Electrical Engineering) Degree in 1985. He has been with Singapore
Telecommunications Limited (&#147;SingTel&#148;), the holding company of one of the shareholders of APT
Satellite International Company Limited, since 1979 and has held management positions in various
areas including engineering, radio services, network, carrier wholesale business and strategic
investment. From 1998 to 2000, he was the Managing Director of SingTel&#146;s subsidiary company in UK,
responsible for the setting up and running of SingTel&#146;s voice and data business in Europe. He was
also a member of the Singapore ST-1 satellite planning team in 1991 to 1993. Mr.&nbsp;Lim is currently
Director of Strategic Investment in SingTel and is responsible for mergers, acquisitions and
monitoring of SingTel&#146;s joint venture companies. Mr.&nbsp;Lim resigned as the Non-Executive Director of
the Company on August&nbsp;16, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Ms.&nbsp;LAN Kwai-chu</B>, aged 42, was appointed as the Non-Executive Director of the Company in
August&nbsp;2005. Ms.&nbsp;Lan is currently the head of the Mergers &#038; Acquisition Unit of Singapore
Telecommunications Limited (&#147;SingTel&#148;), the holding company of one of the shareholders of APT
Satellite International Company Limited, the substantial shareholder of the Company. Ms.&nbsp;Lan&#146;s
experience includes corporate planning and strategy, and management of SingTel&#146;s sales and
representative offices around the world. Ms.&nbsp;Lan holds a Bachelor of Economics and a Master in
Business Administration. Ms.&nbsp;Lan is also a Chartered Accountant. Ms.&nbsp;Lan resigned as the
Non-Executive Director of the Company on March&nbsp;27, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;KWOK Kah Wai Victor</B>, aged 50, was appointed as an Alternate Director to Mr.&nbsp;Lim Toon and
Ms.&nbsp;Lan Kwai-chu, Non-Executive Directors of the Company, in December&nbsp;2004 and August&nbsp;2005,
respectively. Mr.&nbsp;Kwok had been the Alternate Director to Mr.&nbsp;Lim Wee Seng, Non-Executive Director
of the Company, from December&nbsp;2004 to August&nbsp;2005. He had also been the Vice President of the
Company from March&nbsp;2001 to June&nbsp;2004 responsible for Marketing and Sales division of the Company.
Prior to joining the Company, Mr.&nbsp;Kwok was the Managing Director of Global Services Development in
Singapore Telecommunications Limited (&#147;SingTel&#148;), the holding company of one of the shareholders of
APT Satellite International Company Limited, the substantial shareholder of the Company. Mr.&nbsp;Kwok
has been with SingTel for the last twenty years and has held management positions in Corporate
Product Marketing and Corporate Account Management. Mr.&nbsp;Kwok is currently the Director of
Partnership and Strategic Planning of Corporate Business Marketing of SingTel. Mr.&nbsp;Kwok graduated
from National University of Singapore with an Honors Degree in Electrical Engineering and an MBA
degree in 1981 and 1987, respectively. Mr.&nbsp;Kwok also attended the Harvard Business School&#146;s
International Senior Management Program in May, 1993. Mr.&nbsp;Kwok resigned as the Alternate Director
to Mr.&nbsp;Lim Toon and Ms.&nbsp;Lan Kwai-chu, the Non-Executive Directors of the Company, on March&nbsp;27,
2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Independent Non-Executive Directors</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;YUEN Pak Yiu, Philip</B>, aged 70, was appointed as an Independent Non-executive Director of
the Company in October&nbsp;1996. Mr.&nbsp;Yuen is the Chairman of the Audit Committee and the Nomination
Committee of the Company and also is the member of the Remuneration Committee of the Company. He
graduated from Law School in England in 1961 and commenced the practice of law in Hong Kong in
1962. In 1965, he established his solicitors&#146; firm, Yung, Yu, Yuen &#038; Co., and now is the principal
partner in the firm. Mr.&nbsp;Yuen has over 30&nbsp;years&#146; experience in
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the legal field and has been a
Director of a number of listed companies including Henderson Investment Limited, Henderson China
Holdings Limited and Melbourne Enterprises Limited. He is a member of the China Appointed Attesting
Officers Association in Hong Kong, a Member of the National Committee of
Chinese Peoples&#146; Political Consultative Conference and an Arbitrator at the China
International Economic &#038; Trade Arbitration Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Dr.&nbsp;HUAN Guocang</B>, aged 56, was appointed as an Independent Non-executive Director of the
Company in August&nbsp;2002. Dr.&nbsp;Huan is the member of the Audit Committee, the Nomination Committee and
the Remuneration Committee of the Company. He is the Managing Partner of Primus Pacific Partners
Limited (&#147;Primus&#148;). Before joining Primus, he was the Head of Investment Banking, Asia Pacific of
The Hongkong and Shanghai Banking Corporation Limited and was the Managing Director and Co-Head of
Investment Banking, Asia Pacific of Salomon Smith Barney. Dr.&nbsp;Huan has been joining investment
banking sector since 1987 and has held senior positions at the Brookings Institution, the Atlantic
Council of the U.S., J.P. Morgan &#038; Co., BZW Asia Limited, and Columbia University. Dr.&nbsp;Huan holds a
Ph.D. degree from Princeton University, Master of Arts from Columbia University and Master of Arts
from the University of Denver.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Dr.&nbsp;LUI King Man</B>, aged 51, was appointed as an Independent Non-Executive Director of the
Company in August&nbsp;2004. Dr.&nbsp;Lui is the Chairman of the Remuneration Committee of the Company and
also is the member of the Audit Committee and the Nomination Committee of the Company. Dr.&nbsp;Lui has
been a practising Certified Public Accountant in Hong Kong since 1989, and established his
accounting firm K.M. LUI &#038; CO in the same year. Before commencing his own practising, Dr.&nbsp;Lui had
worked with an international accounting firm and a listed commercial bank. Dr.&nbsp;Lui received the
accountancy education in United Kingdom in 1980 and attained professional accountant qualification
in 1985. He is a Fellow of The Chartered Association Of Certified Accountants and Associate member
of The Hong Kong Society Of Accountants. Dr.&nbsp;Lui obtained an MBA Degree from Heriot-Watt University
in 1997 and received a Doctoral Degree in Business Administration from The University of Hull in
2004. Dr.&nbsp;Lui has over 23&nbsp;years experience in accounting, finance, business acquisition and
auditing fields. He has been a consultant of a number of commercial and non-commercial
organizations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Senior Management</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;Dong Gang</B>, aged 52, has been the Vice President of the Company since July&nbsp;2005. He is also
the Director of Acme Star Investment Limited, APT Satellite Telewell Limited, Skywork Corporation,
Haslett Investments Limited, APT Telecom Services Limited and APT Communication Technology
Development (Shenzhen) Company Limited (&#147;APT Shenzhen&#148;), subsidiaries of the Company. He is also
the chairman and the general manager of APT Shenzhen. He is also the Director of APT Satellite
Telecommunications Limited, a jointly controlled entity between a wholly-owned subsidiary of the
Company and one of the shareholders of APT Satellite International Company Limited, the substantial
shareholder of the Company. Mr.&nbsp;Dong graduated with a Bachelor&#146;s degree in Beijing Post and
Telecommunications Institute (presently known as Beijing University of Post and
Telecommunications). He is accredited as Senior Engineer. He held the posts as Deputy Director of
Microwave Station, Deputy Director of Technical Department, Vice Chief Engineer, and Chief Engineer
of Beijing Wireless communication Bureau. He has been appointed as Vice President of China Space
Mobile Satellite Telecommunications Company Limited since May&nbsp;1995. He has plentiful experience in
telecommunication operation and management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Dr.&nbsp;LO Kin Hang, Brian</B>, aged 49, has been the Vice President of the Group since April&nbsp;2002 and
Company Secretary (since October&nbsp;1996) of the Company. Dr.&nbsp;Lo joined the Company in September&nbsp;1996
and had been the Assistant to the President from December&nbsp;1997 to April&nbsp;2002. Dr.&nbsp;Lo is also the
Director of Acme Star Investment Limited, APT Satellite Telewell Limited and Ying Fai Realty
(China) Limited, subsidiaries of the Company. He is also the Chief Executive Officer of APT
Satellite Telecommunications Limited, a jointly controlled entity between a wholly-owned subsidiary
of the Company and one of the shareholders of APT Satellite International Company Limited, the
substantial shareholder of the Company. He graduated with an Associateship in Production and
Industrial Engineering and an M.Sc. Degree in Information Technology from Hong Kong Polytechnic
University, and a MBA Degree from the University of Wales, UK and a Doctorate Degree in Business
Administration in University of Hull, UK. He has attained several professional qualifications
including Chartered Engineer, Member of the Institute of Electrical Engineers and is a Fellow of
the Institute of Chartered Secretaries and Administrators in the United Kingdom and a Fellow of the
Hong Kong Institute of Company Secretaries. Prior to joining the Group, he
</DIV>

<P align="center" style="font-size: 10pt">-52-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">was a Director and
senior management executive responsible for financial and investment management and the company
secretary of a publicly listed company in Hong Kong. Dr.&nbsp;Lo has about 18&nbsp;years of experience in
corporate and project management.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;CHEN Xun</B>, aged 35, has been the Assistant President of the Company since July&nbsp;2004. He
joined the Company in 2000 and had worked as the Director of Engineering and Technical Operations
Department and the Deputy Chief Engineer of the Group. Mr.&nbsp;Chen graduated from the Department of
Computer and Telecommunications of Chongqing Institute of Post &#038; Telecommunications. He had been
working for China Telecommunications Broadcast Satellite Corporation, one of the shareholders of
APT Satellite International Company Limited, the substantial shareholder of the Company, from 1992
to 1999 before joining the Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;YANG Qing</B>, aged 42, has been the Assistant President of the Company since July&nbsp;2004. He
joined the Company in 2000. He had worked as the Deputy Director of the Engineering and Technical
Operations Department of the Group. Mr.&nbsp;Yang graduated from the Department of Flight Vehicle
Engineering of Beijing Institute of Technology in June&nbsp;1985. During the period from July&nbsp;1985 to
December&nbsp;1999, he had been working for CALT (China Academy of Launch Vehicle Technology) and was
designated as Senior Engineer and the Deputy Director of systems designer of LM-2C launch vehicle
by CALT before joining the Group.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Mr.&nbsp;CUI Xinzheng</B>, aged 52, was appointed as the Executive Director and Vice President of the
Company in February&nbsp;2001. He had served as the Director of General Office, Deputy Director of China
Telecommunications Broadcast Satellite Corporation, one of the shareholders of APT Satellite
International Company Limited, the substantial shareholder of the Company; the Deputy Director of
Research Division of Beijing Micro-Electronics Technology Institute. He graduated from Graduate
School of Chinese of Social Sciences Academy. He has 30-year experience in economics management and
has much experience of the operation of satellite telecommunication. Mr.&nbsp;Cui resigned as the
Executive Director and Vice President of the Company on 8 September&nbsp;2004 and 31 July&nbsp;2005,
respectively.
</DIV>
<DIV align="left">
<A name="126"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the annual general meeting of the Company held on May&nbsp;22, 2001, a resolution was adopted,
terminating the Share Option Scheme which was originally adopted on December&nbsp;3, 1996 (&#147;Scheme
1996&#148;). No options have been granted under Scheme 1996. At the same annual general meeting, the
Company approved and adopted a new share option scheme (&#147;Scheme 2001&#148;). In compliance with the new
requirements of the Listing Rules in September&nbsp;2001, the Company adopted another new share option
scheme (&#147;Scheme 2002&#148;) at its 2002 annual general shareholders meeting, and the Company will only
grant new options under Scheme 2002. Since then, no further options have been granted under Scheme
2001, however, all the options that have been granted under Scheme 2001 shall remain valid until
their expiry.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Scheme 2001, on June&nbsp;19, 2001, the Company granted a total of 14,650,000 share options,
exercisable within the period from May&nbsp;22, 2003 to May&nbsp;21, 2011 and all at an exercise price of
HK$2.765. The grantees paid a nominal consideration of HK$1 each. No options have been granted
under Scheme 2002 since its adoption. Since the adoption of Scheme 2002, no options have been
granted under Scheme 2001, nor does the Company plan to grant any more options under such plan. As
at December&nbsp;31, 2005, the total number of outstanding options under the existing share option
schemes (including Scheme 2001 and Scheme 2002) that have been granted and not yet exercised equals
4,230,000, which represents 1.03% of the issued share capital of the Company. Furthermore, under
Scheme 2002, save for a substantial shareholder or an independent non-executive director of the
Company, or any of their respective associates according to the Listing Rules, the total number of
ordinary shares (the &#147;Shares&#148;) to be issued upon exercise of the options granted to each eligible
person (including both exercised and outstanding options) in any 12-month period may not exceed 1%
of the Shares in issue. The exercise price (subscription price) must be determined by the Board of
directors at the time of the making of the option grant, but in any case the exercise price cannot
be lower than the highest of (i)&nbsp;the closing price of the Shares as stated in The Stock Exchange of
Hong Kong Limited&#146;s (&#147;Stock Exchange&#148;) daily quotations sheet on the date of the grant, which must
be a trading day; (ii)&nbsp;the average closing price of the Shares as stated in the Stock Exchange&#146;s
daily quotations sheets for the five trading days immediately preceding the date of the offer of
grant; and (iii)&nbsp;the nominal value of a Share. Whereas under Scheme 2001, the maximum entitlement
of each eligible person was that the Shares issued or
</DIV>

<P align="center" style="font-size: 10pt">-53-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">issuable under all options granted to such
eligible person (including both exercised and outstanding options) upon such grant being made may
not exceed 25% of the Shares of the Company for the time being issued and issuable under Scheme
2001. In addition, the subscription price was determined by the Board of Directors on a
case-by-case basis and will not be less than the nominal value of the Shares nor at a
discount of more than 20% below the average closing price of the Shares on the Stock Exchange
as stated in the Stock Exchange&#146;s daily quotation sheets on the five dealing days immediately
preceding the date on which the invitation to apply for an option under Scheme 2001.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In an effort to continue to provide incentives or rewards to the employees of the Company and
in compliance with the new requirements in respect of a share option scheme under the Listing Rules
of the Stock Exchange, which took effect on September&nbsp;1, 2001, the Company proposed to the
shareholders the adoption of Scheme 2002. Scheme 2002 was approved at the annual general
shareholders meeting. Since its adoption, options are to be granted only Scheme 2002 and no longer
under Scheme 2001. Nevertheless, Scheme 2001 will remain effective and the options granted on June
19, 2001 under Scheme 2001 will remain valid.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Scheme 2002, the details of which were contained in the circular dispatched to the
shareholders of the Company and which was adopted in the annual general meeting on May&nbsp;22, 2002, is
substantially similar to the Scheme 2001 except for certain significant and important differences,
which are described in the Item&nbsp;6 of the Company&#146;s Annual Report on Form 20-F for the year ended
December&nbsp;31, 2001 and incorporated therein by reference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Scheme 2002 will remain in force for a period of 10&nbsp;years commencing from May&nbsp;22, 2002 until
May&nbsp;21, 2012. The shares allotted upon the exercise of options under Scheme 2002 will be subject to
all the provisions of the Bye-laws of the Company and will rank pari passu in all respects with all
the fully paid shares in issue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The particulars of the outstanding share options granted under Scheme 2001 are as
follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Options granted</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">on June 19, 2001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Options remain</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">and remain</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">outstanding as at</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">Name of director and</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">outstanding as at</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Options cancelled</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">Options exercised</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">chief executive</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">January 1, 2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">during the year</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">during the year</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">2005</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chen Zhaobin
(Executive Director
and President) *</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2,200,000</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2,200,000</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&#151;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cui Xinzheng
(Vice President)**</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1,200,000</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1,200,000</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&#151;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lo Kin Hang, Brian
(Vice President and
Company Secretary</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">800,000</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">800,000</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>resigned on July&nbsp;16, 2005,</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">**</TD>
    <TD>&nbsp;</TD>
    <TD>resigned on July&nbsp;31, 2005</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None of the Company&#146;s directors and officers or affiliates of such persons is or has been
indebted to the Company or any of its subsidiaries at any time since the beginning of the last
completed fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Director&#146; remuneration disclosed pursuant to section 161 of the Hong Kong Companies
Ordinance is as follows:
</DIV>

<P align="center" style="font-size: 10pt">-54-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Salaries,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>allowances</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Retirement</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Directors&#146;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>and benefits</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>scheme</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>fees</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>in kind</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>contributions</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$&#146;000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$&#146;000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$&#146;000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$&#146;000</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Executive directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ni Yifeng</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,526</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tong Xudong</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,316</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,508</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chen Zhaobin</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,671</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-executive directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Liu Ji Yuan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Zhang Hainan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lim Toon</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lan Kwai-chu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yin Yen-liang</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wu Zhen Mu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lim Wee Seng (note b)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>31</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tseng Ta-mon (note c)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kwok Kah Wai Victor (note a)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Independent non-executive directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yuen Pak Yiu, Philip</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>100</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Huan Guocang</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>100</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lui King Man</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>100</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>7,305</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Salaries,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>allowances</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Retirement</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Directors&#146;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>and benefits</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>scheme</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Fees</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>in kind</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>contributions</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$&#146;000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$&#146;000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$&#146;000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$&#146;000</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Executive directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chen Zhaobin</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,052</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tong Xudong</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,718</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">He Dongfeng</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">633</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">665</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cui Xinzheng</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,704</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-executive directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Liu Ji Yuan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Zhang Hainan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Zhou Ze He</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lim Toon</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yin Yen-liang</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-55-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Salaries,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>allowances</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Retirement</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Directors&#146;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>and benefits</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>scheme</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Fees</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>in kind</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>contributions</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$&#146;000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$&#146;000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$&#146;000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$&#146;000</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wu Zhen Mu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wu Hongju</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wu Jinfeng</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Wong Hung Khim</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lim Shyong</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tseng Ta-mon (note c)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lim Wee Seng (note b)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tay Chek Khoon</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chen Chi-chuan (note a)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kwok Kah Wai Victor (note a)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Independent non-executive directors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yuen Pak Yiu, Philip</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Huan Guocang</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Lui King Man</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
<TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,712</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;Wu Hongju, a non-executive director, and Dr.&nbsp;Huan Guocang, an independent non-executive
director, have waived their directors&#146; fees for the year 2004. Save as afore-mentioned, none of
the directors have waived the rights to receive their remuneration.
</DIV>


<P align="center" style="font-size: 10pt">-56-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Notes:

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Alternate directors are not entitled to receive any directors&#146; fees:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Mr.&nbsp;Chen Chi-chuan and Mr.&nbsp;Kwok Kah Wai Victor were alternate directors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Mr.&nbsp;Lim Wee Seng was re-designated from alternate director to non-executive director
on December&nbsp;20, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Mr.&nbsp;Tseng Ta-mon was re-designated from non-executive director to alternate director
on September&nbsp;8, 2004.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Key management personnel remuneration
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Remuneration for key management personnel is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$ million</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$ million</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term employee benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>13.3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other long-term benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>0.7</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Termination benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>14.0</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The provision for employee benefits was accrued at December&nbsp;31, 2004 and 2005 are HK$4.5
million (US$577 thousand) and HK$6.3&nbsp;million (US$808 thousand) respectively.
</DIV>
<DIV align="left">
<A name="127"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Board Practices</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Ni Yifeng and Mr.&nbsp;Tong Xudong have entered into service contracts with the Company for an
initial term of three years, commencing July&nbsp;16, 2005 and April&nbsp;20, 2004, respectively, and
continuing thereafter until terminated by either party giving to the other not less than six
months&#146; notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as disclosed above, no Director has a service contract with the Company or its
subsidiaries, which is not determinable by APT Group within one year without payment of
compensation (other than statutory compensation).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The term of office of all directors except the Chairman of the Board, Mr.&nbsp;Liu Ji Yuan, and the
President, Mr.&nbsp;Ni Yifeng, is the period up to their retirement in accordance with Article&nbsp;86(2) and
87 of the Company&#146;s Bye-laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee was formed by the Company on July&nbsp;31, 1999. The Audit Committee currently
consists of three non-executive directors, Mr.&nbsp;Yuen Pak Yiu, Philip (the Chairman of the Audit
Committee), Mr.&nbsp;Huan Guocang and Dr.&nbsp;Lui King Man. The Board of Directors has determined that each
of the members of the Audit Committee is currently independent under the rules of the New York
Stock Exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under its Charter (also known as terms of reference) as revised on April&nbsp;11, 2005 and
incorporated herein by reference, the Audit Committee is required to be composed of directors who
are independent of the management of the Company and are free of any relationship that, in the
opinion of the Company&#146;s Board of Directors, would interfere with their exercise of independent
judgment as Committee members. The Audit Committee is authorized by the Board of Directors to
investigate any activity within its terms of reference and to seek any information it requires from
any employee and all employees are directed to co-operate with any request made by the Audit
</DIV>

<P align="center" style="font-size: 10pt">-57-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Committee. It can also obtain support from outside legal or other independent professional
advisors and experts. The Audit Committee meets at least twice a year and its duties are
summarized as below:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to be primarily responsible for making recommendation to the Board of Directors on
the appointment, reappointment and removal of the external auditor, and to approve the
remuneration and terms of engagement of the external auditor;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to monitor integrity of and review significant financial reporting judgments of
the half-year and annual financial statements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to discuss problems and reservations arising from the interim and final audits;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to consider the major findings and internal investigations and management&#146;s
response;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to review the Company&#146;s statement on financial controls, internal control system
and risk management systems (where one is included in the annual report) prior to
endorsement by the Board of Directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to review and monitor the external auditors&#146; independence and objectivity and
effectiveness of the audit process in accordance with applicable standard, as well as
the nature and scope of other professional services provided to the Company by the
external auditor;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to review APT Group&#146;s financial and accounting policies and practices;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to review periodically Company policy statements to determine their adherence to
the Company&#146;s codes of conduct;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to investigate any matter brought to its attention within the scope of its duties,
and to retain outside legal counsel or other professional advice for this purpose if,
in its judgment, that is appropriate; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to consider other topics, as determined by the Board of Directors.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;11, 2005, Nomination Committee and Remuneration Committee were formed. Messrs.&nbsp;Tong
Xudong, Yuen Pak Yiu, Philip, Huan Guocang and Lui King Man were appointed as the members of these
two new committees. Mr.&nbsp;Yuen Pak Yiu, Philip and Dr.&nbsp;Lui King Man, the independent non-executive
directors of the Company, were appointed as the Chairman of the Nomination Committee and the
Remuneration Committee, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nomination Committee, under its Charter (also known as terms of reference) as incorporated
herein by reference and pursuant to the domestic corporate governance requirements, is required to
be composed of a majority of members who should be independent non-executive directors and are
independent of the management of the Company and are free of any relationship that, in the opinion
of the Company&#146;s Board of Directors, would interfere with their exercise of independent judgment as
Committee members. The Nomination Committee is authorized by the Board of Directors to provide
recommendations in respect of the composition of the Board of Directors, the appointments of
Directors and the independence of independent non-executive directors. It shall also be entitled
to access external professional advice whenever necessary. The Nomination Committee meets at least
once a year and its responsibilities are summarized as below:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to review the structure, size and composition of the Board of Directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to identify individuals suitably qualified to become directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to assess the independence of Independent Non-executive directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to make recommendations to the Board of Directors on matters relating to the
appointment or re-appointments of directors and succession planning for directors in
particular the Chairman and the President;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to establish the nomination procedures; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to submit a work report to the Board of Directors yearly.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Remuneration Committee, under its Charter (also known as terms of reference) as
incorporated herein by reference and pursuant to the domestic corporate governance requirements,
the Remuneration Committee is required to be composed of a majority of members who should be
independent non-executive directors and are independent of the management of the Company and are
free of any relationship that, in the opinion of the Company&#146;s Board of Directors, would interfere
with their exercise of independent judgment as Committee members. The Remuneration Committee is
authorized by the Board of Directors for providing recommendations in respect of the remuneration
of directors and senior management staff and related policies. It shall also be entitled to access
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">external professional advice whenever necessary. The Remuneration Committee meets at least once a
year and its responsibilities are summarized as below:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to make recommendations to the Board on policy and structure for all
remuneration of directors and senior management and on the establishment of a formal
procedure for developing remuneration policy;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to determine the specific remuneration packages of all directors and senior
management, including benefits in kind, pension rights and compensation payments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to review and approve the performance-based remuneration by reference to
corporate goals and objectives resolved by the Board of Directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to review and approve the compensation payable to directors and senior management;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to review and approve compensation arrangements relating to dismissal or removal of directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to ensure that no director or any of his/her associates is involved in deciding his own remuneration;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to formulate and review regularly the policy for the remuneration of directors,
assessing directors&#146; performance and approving the terms of directors&#146; service
contracts; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#151;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to submit a work report to the Board of Directors yearly.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left">
<A name="128"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Employees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Including the executive directors and senior management of the Company, as of December&nbsp;31,
2005, the Company had 161 full-time employees, of which 26 employees were in management, 135 were
in engineering and operations, marketing, accounting and administration. The management of the
Company will continue to closely monitor the number of employees ensuring that it is compatible and
in line with the development and needs in the corporate strategies of the APT Group. The Company
believes that its relations with its employees are good. A majority of APT&#146;s technical and
engineering staff employed at the satellite control center in Tai Po were originally seconded from
affiliates of ChinaSat and China Aerospace.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2000, the Company changed its retirement benefits scheme to a Mandatory Provident
Fund (&#147;MPF&#148;) pursuant to the MPF Legislation regulated by the Mandatory Provident Fund Schemes
Authority in Hong Kong, effective December&nbsp;1, 2000. In compliance with the MPF Legislation, the
Company is required to participate in the MPF Scheme operated by approved trustees in Hong Kong and
to make contributions for its eligible employees.
</DIV>
<DIV align="left">
<A name="129"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Share Option Schemes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;22, 2002, the Company adopted Scheme 2002 and, from the date of such adoption, no
further options are to be granted under Scheme 2001. Under Scheme 2001, on June&nbsp;19, 2001, a total
of 14,650,000 share options granted by the Company to the eligible employees, which are exercisable
during the vesting period from May&nbsp;22, 2003 to May&nbsp;21, 2011. During 2005, no options were granted
under Scheme 2002.
</DIV>
<DIV align="left">
<A name="130"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Share Ownership</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As at December&nbsp;31, 2005, Dr.&nbsp;Lo Kin Hang, Brian, Vice President and Company Secretary of the
Company had personal interests in 5,000 ordinary shares of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As at December&nbsp;31, 2005, the options granted under Scheme 2001 to directors and chief
executive were as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lo Kin Hang, Brian&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Vice President &#038; Company Secretary)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 800,000
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of the options indicated above, exercisable within the period from May&nbsp;22, 2003 to May&nbsp;21,
2011, were granted for a nominal consideration of HK$1 per grantee with an exercise price of
HK$2.765 per share for the ordinary shares of the Company. The options granted to Chen Zhaobin and
Cui Xinzheng were cancelled on July&nbsp;16, 2005 upon their resignations as Executive Director &#038;
President and Vice President, respectively.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;19, 2001, under Scheme 2001, the Company granted a total of 14,650,000 options to its
employees in order to provide incentives to employees for their contribution to APT Group. The
terms such as the exercise price and the expiration date of options are the same as the terms of
the options granted to directors and senior management indicated above.
</DIV>
<DIV align="left">
<A name="131"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Service Agreements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Ni Yifeng and Mr.&nbsp;Tong Xudong entered into service contracts with the Company for an
initial term of three years, commencing July&nbsp;16, 2005 and April&nbsp;20, 2004, respectively, and
continuing thereafter until terminated by either party giving to the other not less than six
months&#146; notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the service contracts, Mr.&nbsp;Chen and Mr.&nbsp;Tong (the &#147;Contracted Directors&#148;) are each
entitled to a basic salary payable monthly in arrears by the Company, with such basic salary
subject to annual review by the Company&#146;s board of directors. In addition, Mr.&nbsp;Chen is entitled to
receive an annual discretionary bonus of such amount as determined by the board of directors,
provided that the amount of discretionary bonus payable that the Contracted Directors by the
Company in respect of any financial year shall not exceed an agreed percentage of the audited
consolidated net income after taxation and minority interests but before extraordinary items of the
Company for the relevant financial year. Each of the Contracted Directors is provided with housing
allowance subject to an agreed maximum amount, which maximum amount may be revised from time to
time by the board of directors. Each of the Contracted Directors is also entitled to receive
certain other benefits such as the use a motor car, the provision of recreation club memberships
and medical and personal accident insurance, and participation in the Company&#146;s retirement scheme
and any share option scheme for its employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than the directors of the Company, the service contracts of senior executives have no
definite terms of office, and may be terminated by either party giving not less than 4&nbsp;months&#146; to 6
months&#146; notice or payment in lieu of notice. Under the service contracts, each of the executives
is entitled to a basic salary together with a housing allowance payable monthly in arrears by the
Company and one month double pay at the end of the calendar year, with such basic salary subject to
annual review by the Company. In addition, each of the executives is entitled to a discretionary
annual bonus based upon the Company&#146;s performance. Each of the executives is also entitled to
receive certain other benefits such as the provision of medical and personal accident insurance and
participation in the Company&#146;s retirement scheme and any share option scheme for its employees.
</DIV>
<DIV align="left">
<A name="132"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;7. Major Shareholders and Related Party Transactions</B>
</DIV>

<DIV align="left">
<A name="133"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Major Shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain principal shareholders of the Company (&#147;Principal Shareholders&#148;) have provided
substantial financial support since APT was founded, funding the design, construction and launch of
APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V and APSTAR VI through equity contributions,
shareholders&#146; loans and shareholder guarantees of the Bank loan used to finance or refinance the
costs of satellite design, construction and launch. The Principal Shareholders have also provided
significant human resources, technical and marketing support. When the Company was listed in
December&nbsp;1996, the Principal Shareholders of the Company were: CLTC, ChinaSat, China Aerospace,
CASIL Satellite (formerly known as Chia Tai International Company Limited), China Travel (Macau),
SingaSat, and Kwang Hua. Each Principal Shareholder held one-seventh of the total issued shares of
APT International pursuant to the corporate restructuring undertaken in connection with the
Company&#146;s initial public offering in December&nbsp;1996. The entire issued share capital of APT
International comprises 700 shares at US$1.00 each. China Travel (Macau) and CLTC disposed their
entire interest in APT International to ChinaSat on November&nbsp;30, 1999, and SingaSat on May&nbsp;30,
2000. The remaining Principal Shareholders that continue to hold Ordinary Shares are tabulated in
footnote 2 to the following table.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table describes the ownership of our Ordinary Shares as of March&nbsp;31, 2006 by (i)
each person or company known by us to own more than 5% of our Ordinary Shares, and (ii)&nbsp;all of our
directors and officers as a group.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Percent of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">

<TD nowrap align="center" style="border-bottom: 1px solid #000000">Identity of Person or Groups</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Class <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">China
Telecommunications Broadcast Satellite Corporation <SUP style="font-size: 85%; vertical-align: text-top">(2) (3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">16.26</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">China
Aerospace Science &#038; Technology Corporation <SUP style="font-size: 85%; vertical-align: text-top">(2) (4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.86</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CASIL Satellite Holdings Limited <SUP style="font-size: 85%; vertical-align: text-top">(2)
(5)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">10.89</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">SingaSat PTE Ltd. <SUP style="font-size: 85%; vertical-align: text-top">(2) (6)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">20.33</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kwang Hua Development and Investment
Limited <SUP style="font-size: 85%; vertical-align: text-top">(2) (7)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.40</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sinolike Investments Limited <SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,800,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.07</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">APT Satellite International Company
Limited <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">214,200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">51.83</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All Directors and Officers as a Group (17
persons)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Less than 1%</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>As of March&nbsp;31, 2006, the total number of issued Ordinary Shares is 413,265,000.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The Principal Shareholders collectively hold in aggregate underlying ownership interests of
51.83% indirectly through APT Satellite International Company Limited (&#147;APT International&#148;),
which holds 214,200,000 Ordinary Shares. The interest of each Principal Shareholder in APT
International as of December&nbsp;31, 2004 is:</TD>
</TR>

</TABLE>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ChinaSat</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">200 shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">28.57</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">China Aerospace Science &#038; Technology Corporation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center">100 shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14.28</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">CASIL Satellite Holdings Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center">100 shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14.28</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">SingaSat Pte. Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center">200 shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">28.57</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kwang Hua Development and Investment Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center">100 shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14.28</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 3pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>China Telecommunications Broadcast Satellite Corporation (&#147;ChinaSat&#148;) is a PRC state-owned
enterprise under the supervision of the MII. ChinaSat is the satellite operation arm of the
MII. ChinaSat directly owns 6,000,000 Shares and indirectly owns, through its shareholdings
in APT International, 61,200,000 Shares.</TD>
</TR>
<TR style="font-size:3pt">
    <TD>&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>China Aerospace Science &#038; Technology Corporation (&#147;China Aerospace&#148;), formerly China
Aerospace Corporation or the PRC Ministry of Aerospace Industry, is a PRC state-owned
enterprise. China Aerospace is engaged in the research, design, testing and manufacturing of
launch vehicles and satellites. China Aerospace also supervises and controls China Great Wall
Industry Corporation, which is responsible for the sale to foreign customers of commercial
launch services effected by Long March launch vehicles. China Aerospace directly owns
6,000,000 Shares and indirectly owns, through its shareholdings in APT International,
30,600,000 Shares.</TD>
</TR>
<TR style="font-size:3pt">
    <TD>&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Chia Tai International Telecommunication Company Limited (&#147;Chia Tai&#148;) was wholly-owned by
Telecom Holding Company Limited (&#147;Telecom Holding&#148;), which managed the investment in the
Company of Telecom Asia Corporation Public Company Limited (&#147;TelecomAsia&#148;), a publicly listed
company in Thailand. Telecom Holding disposed of its Chai Tai holdings in the Company to
Sinolike Investment Limited (&#147;Sinolike&#148;) through a share transaction agreement on October&nbsp;16,
1997. Chia Tai was renamed as CASIL Satellite Holdings Limited (&#147;CASIL Satellite&#148;) on May&nbsp;6,
1998. Sinolike is a wholly owned subsidiary of China Aerospace International Holdings Limited
(&#147;CASIL&#148;), which is a conglomerate listed in Hong Kong and is a 41.86% owned subsidiary of
China Aerospace. CASIL Satellite directly owns 14,400,000 Shares and indirectly owns, through
its shareholdings in APT International, 30,600,000 Shares. Sinolike also directly owns
16,800,000 Shares.</TD>
</TR>

<TR style="font-size:3pt">
    <TD>&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>SingaSat PTE Ltd. (&#147;SingaSat&#148;) is wholly-owned by Singapore Telecommunications Limited
(&#147;SingTel&#148;). SingTel is a telecommunications operating company and a holding company for over
forty subsidiaries which </TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">-61-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide a wide range of domestic, international and mobile
telecommunications as well as postal services. SingTel is a publicly listed company in
Singapore. SingaSat directly owns 22,800,000 Shares and indirectly owns, through its
shareholdings in APT International, 61,200,000 Shares.</TD>
</TR>

<TR style="font-size:3pt">
<TD>&nbsp;</TD>
</TR>


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Kwang Hua Development and Investment Limited (&#147;Kwang Hua&#148;) is a Hong Kong incorporated
venture capital company owned jointly by the Ruentex Group, one of the largest Taiwanese
conglomerates, and China Development, a prominent financial and investment company in Taiwan.
China Development is also an affiliate of the Ruentex Group. Kwang Hua indirectly owns,
through its shareholdings in APT International, 30,600,000 Shares.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Principal Shareholders have entered into an agreement (the &#147;Shareholders&#146; Agreement&#148;),
which governs their respective rights and obligations with respect to, among other things, their
shareholdings in APT International. The Shareholders&#146; Agreement contains (among other things)
provisions restricting the transfer or other disposal or encumbrance by any Principal Shareholder
of the Shares in APT International, and granting mutual rights of pre-emption among the Principal
Shareholders in the event of any proposed transfer by a Principal Shareholder of any share(s) in
APT International.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as disclosed above and to the knowledge of the Company, there are no persons or
entities that beneficially own, directly or indirectly, more than 5% of the Company&#146;s outstanding
Ordinary Shares or American Depositary Receipts.
</DIV>

<DIV align="left">
<A name="134"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Related Party Transactions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has used CGWIC&#145;s Long March launch vehicles to launch all of its satellites to
date except the launch of APSTAR V which was launched by Sea Launch on June&nbsp;29, 2004. The Company
may enter into further launch services contracts with CGWIC (or other affiliates of China
Aerospace) in respect of the Company&#146;s future satellites. Negotiations for each of the launch
services contracts with CGWIC have been conducted on an arm&#146;s length basis and any future
negotiations with China Great Wall Industry Corporation would be similarly conducted.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Apart from procuring launching service from CGWIC, on November&nbsp;10, 2004 an agreement for right
to design, construction, delivery and launch of APSTAR VIB was entered into between APT HK and
CGWIC as a contingency plan if the launch of APSTAR VI was unsuccessful. In the opinion of the
Directors such a transaction was conducted in the ordinary and usual course of business of APT HK,
on normal commercial terms and the terms of the transaction was fair and reasonable and in the
interests of the shareholders of the Company as a whole.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Two of the Principal Shareholders or their affiliates are currently customers of APT.
ChinaSat and SingTel have utilized several transponders for the transmission of television
programming, private networks and PSTN services on APSTAR I whereas SingTel entered into a new
utilization agreement with APT on April&nbsp;11, 2003 for the utilization of six transponders of APSTAR
V through its useful life which superseded the original agreement dated January&nbsp;8, 2001 for the
utilization of fifteen transponders for the remaining life of APSTAR V. Negotiations for
transponder utilization with these Principal Shareholders and their affiliates have been conducted
on an arm&#146;s length basis and any future negotiations would be similarly conducted. The value
attributed to the transponder for the purposes of determining the portion of the aggregate contract
price to be satisfied by the provision of such transponder is within the range representative of
the Company&#146;s pricing for its other customers. For details, please refer to &#147;Other service
customers&#148; under &#147;Item&nbsp;4-Information on the Company&#148;.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, as announced on August&nbsp;28, 2003, the APT Group and the Company&#146;s non wholly-owned
subsidiary namely APT Satellite Telecommunications Limited (&#147;APTT&#148;), which was owned as to 55% and
45% by Skywork Corporation (&#147;Skywork&#148;), a wholly-owned subsidiary of the Company, and by SingaSat
Private Limited (&#147;SingaSat&#148;), a wholly-owned subsidiary of SingTel, respectively, had in their
ordinary course of business entered into various transactions with SingTel and its subsidiaries
(collectively &#147;SingTel Group&#148;) for (a)&nbsp;provision of transponder capacity; (b)&nbsp;provision or purchase
of telecommunication services; and (c)&nbsp;secondment of executives from SingTel Group with the APT
Group and APTT. These various transactions have been reviewed by the
independent non-executive directors of the Company who confirmed that they were (i)&nbsp;entered into in
the ordinary
 </DIV>


<P align="center" style="font-size: 10pt">-62-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and usual course of business of the APT Group; (ii)&nbsp;conducted on normal commercial
terms; (iii)&nbsp;conducted on terms that were fair and reasonable to the shareholders of the Company;
(iv)&nbsp;carried out in accordance with the terms of the agreements governing these transactions; and
(v)&nbsp;the aggregate value of each type of these transactions entered into during the year of 2003 was
not exceeding the threshold subject to the Stock Exchange with reference to its latest published
financial statements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further, on September&nbsp;10, 2003, APTT entered into a master agreement with the Company&#146;s
wholly-owned subsidiary, APTTS, Skywork and SingaSat whereby the business of APTT was reorganized
through the transfer of APTT&#146;s FCL business together with the FCL to APTTS and the transfer of
APTT&#146;s cable interests related to FCL, including the transfer of the APCN and C2C interests to
SingTel. The former transfer was done pursuant to a transfer of business agreement between APTT and
APTTS at consideration of HK$6,800,000 with compensation of HK$13,500,000 payable by APTT in 5
equal annual installments commencing on February&nbsp;1, 2005 to APTTS&#146;s holding company, APT Satellite
Company Limited, for the surrender by APTT of the remaining term of a services and facilities lease
agreement in respect of a premises in Tai Po Industrial Estate. The latter transfer was done
pursuant to a cable interests transfer agreement between APTT and SingaSat, which subsequently
assigned it to its holding company SingTel, at considerations of HK$2,986,000 and HK$2,574,000 in
respect of the APCN interest and C2C interest, respectively. This reorganization was completed on
October&nbsp;10, 2003. The Company believes that the reorganization will allow the APT Group to
concentrate on the satellite-related telecom services business, which is in line with the APT
Group&#146;s core business in providing satellite transponder services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In relation to certain transactions conducted between APT Group and SingTel Group as announced
on August&nbsp;28, 2003 and September&nbsp;10, 2003 and mentioned in the foregoing paragraphs, for the
purposes of governing the continuing connected transactions (the &#147;Continuing Connected
Transactions&#148;) and ensuring the compliance with the listing rules in Hong Kong, on December&nbsp;1,
2004, two Master Agreements were entered into between the Company and SingTel in relation to the
provision of satellite transponder capacity and any other satellite related services by APT Group
to SingTel and Singapore Telecom Hong Kong Limited (an associate of SingTel), or vice versa
(&#147;Transponder Transactions&#148;); and between the Company and C2C Pte Limited (an associate of SingTel)
in relation to the provision of telecommunications related services by APT Group to C2C Pte Limited
and its subsidiary, or vice versa (&#147;Telecom Transactions&#148;). The duration of the Master Agreements
shall remain in force until December&nbsp;31, 2006. As recommended by an independent board committee
comprising three independent non-executive directors of the Company that the terms of the Master
Agreements and the annual caps as indicated below were fair and reasonable, on December&nbsp;30, 2004
the independent shareholders of the Company approved the Master Agreements and the annual caps for
the three years ending December&nbsp;31, 2004, December&nbsp;31, 2005 and December&nbsp;31, 2006 of the
Transponder Transactions will not exceed HK$15&nbsp;million, HK$18&nbsp;million and HK$32&nbsp;million,
respectively, and in the case of Telecom Transactions, their annual caps will not exceed HK$2
million, HK$9&nbsp;million and HK$11&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is aware that ChinaSat intends to operate a PRC domestic satellite network.
ChinaSat merged with OrientSat to form ChinaSat Group, which owns ChinaStar 1 and ChinaSat 6. In
addition, China Aerospace holds a substantial interest in SinoSat, which owns a satellite,
SinoSat-1, that is devoted largely to providing telecommunications services, data transmission and
TV broadcasting. Singapore Telecom, the parent company of SingaSat, has holdings in a number of
other satellite companies. As a result of satellite design and coverage, the Company does not
believe such satellite companies compete with the Company, other than the ST-1 satellite system
which Singapore Telecom operates and in which it has an ownership interest. The ST-1 satellite
system only has the ability to compete with the Company in C-band segments of the Asia Pacific
market. Through the Telecommunications Authority of Singapore, a signatory to the Intelsat treaty,
Singapore Telecom also has an interest in Intelsat.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than as described above, none of the directors, their associates (as defined in the
Rules&nbsp;Governing the Listing of Securities on the Hong Kong Stock Exchange (the &#147;Listing Rules&#148;)) or
any shareholder of the Company which to the knowledge of the Directors owns more than 5% of the
issued share capital of the Company has any interest in any of the Company&#146;s five largest suppliers
or five largest customers.
</DIV>

<P align="center" style="font-size: 10pt">-63-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Related party transactions carried out during the years ended December&nbsp;31, 2003, 2004 and 2005
with shareholders and affiliates (HK$ in thousands):
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Note</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from provision of satellite
transponder capacity to certain
shareholders and its subsidiary of the
Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(i</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,339</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from provision of satellite
transponder capacity, provision of
satellite-based telecommunications services
and service income to a holding company
and its subsidiaries of a shareholder of the
Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(i</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,335</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from provision of satellite
transponder capacity to a jointly controlled
entity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(i</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Management fee income from a jointly
controlled entity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(ii)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">480</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Management fee income from an
associate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(iii)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Facilities management services
income from a jointly controlled entity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(iv)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,386</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technical support services expenses
to a shareholder of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(v</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Management fee expenses to a holding
company of a shareholder of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(vi)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments of service fee in connection
with the satellite project to a fellow
subsidiary of a shareholder of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(vii)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">151,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138,727</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Compensation income from a jointly
controlled entity in connection with the
early termination of services and facilities
lease</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(viii)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase of certain fixed assets from a
jointly controlled entity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(ix)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD colspan="3">Notes :</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(i)</TD>
    <TD>&nbsp;</TD>
    <TD>The terms and conditions of these transponder capacity utilization agreements are
similar to those contracted with other customers of APT Group.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(ii)</TD>
    <TD>&nbsp;</TD>
    <TD>Management fee income arose from a reimbursement of cost of service provided to
a jointly controlled entity under the agreement.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(iii)</TD>
    <TD>&nbsp;</TD>
    <TD>Management fee income from an associate arose from the reimbursement of
expenses paid on behalf of an associate.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">-64-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Directors consider that the facilities management service income is charged
according to the terms and conditions similar to those offered to other customers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Directors consider that the technical support services expenses were
charged according to prices and conditions similar to those offered to other customers
by the service provider.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(vi)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Management fee expenses arose from a reimbursement of cost of services provided
from the holding company of a shareholder of the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(vii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Directors consider that the service fee is charged according to prices and
conditions similar to those offered to other customers by the launch service provider.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(viii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As a result of the reorganization of a jointly controlled entity, the jointly
controlled entity early terminated the services and facilities lease agreement and APT
Group received a compensation for the early termination of the agreement. The Directors
consider that the compensation is charged according to prices and conditions similar to
those offered to other customers by the termination.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(ix)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As a result of the reorganization of a jointly controlled entity, certain fixed
assets were purchased from the jointly controlled entity. The Directors consider that
the purchase consideration was arrived at after arm&#146;s length negotiation with reference
to the valuation conducted by an independent valuation company.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2004 and 2005, the APT Group had the following amounts included in the
consolidated balance sheet in respect of amounts owing by and to related parties (HK$ in
thousands):
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="16%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Deposits,</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Rentals received in</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Interest in jointly</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">prepayments and</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">Payables and</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">advance and</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Prepayment</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">controlled entities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">Trade receivables</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">other receivables</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">accrued charges</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">deferred income</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jointly controlled
entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,614</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Certain shareholders
and its subsidiary
of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Holding company and
its subsidiaries of a
shareholder of the
Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">390</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,425</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">A fellow subsidiary
of a
shareholder of the
Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<A name="135"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;8. Financial Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Item&nbsp;18 for presentation of the consolidated financial statements of the Company.
</DIV>


<DIV align="left">
<A name="136"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;9. The Offer and Listing</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Ordinary Shares are listed on The Stock Exchange of Hong Kong Limited (the &#147;Hong
Kong Stock Exchange&#148;). The Hong Kong Stock Exchange is the principal non-United States trading
market for the Company&#146;s Ordinary Shares. The table below details, for the periods indicated, the
high and low market prices of the Ordinary Shares on the Hong Kong Stock Exchange.
</DIV>

<P align="center" style="font-size: 10pt">-65-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">High (HK$)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Low (HK$)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">4.60</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2.20</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">3.60</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.39</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">3.93</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.02</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended March 31</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2.83</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2.00</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended June 30</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2.30</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.65</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended September 30</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.80</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.39</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended December 31</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.52</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.30</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended March 31</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.50</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.20</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended June 30</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.60</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.28</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended September 30</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.39</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.22</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended December 31</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.49</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.10</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;December</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.49</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.36</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;January</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.80</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.39</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;February</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.69</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.60</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;March</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.80</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.69</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;April</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.73</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.52</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;May</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.72</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.55</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the Company&#146;s ADSs are listed on the New York Stock Exchange (&#147;NYSE&#148;) under the
symbol ATS. Each ADS represents eight Ordinary Shares. The Bank of New York serves as depositary
(the &#147;Depositary&#148;) with respect to the ADSs trading on the NYSE. According to information
furnished to the Company by the Depositary, as of March&nbsp;31, 2005, there were 45 holders of records
of ADSs with addresses in the United States and such holders owned an aggregate of 8,442,839 ADSs.
The table below details, for the periods indicated, the high and low market prices of the ADSs on
the NYSE.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="11%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">High (US$)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Low (US$)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">4.35</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2.15</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">3.60</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.15</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">4.60</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.10</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended March 31</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">3.50</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.93</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended June 30</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2.15</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.59</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended September 30</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.99</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.32</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended December 31</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.68</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.32</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR><TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended March 31</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.61</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.25</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended June 30</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.42</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.25</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended September 30</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.29</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.18</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;Quarter ended December 31</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.46</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.14</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;December</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.46</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.29</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">&nbsp;</TD>
</TR><TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;January</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.90</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.32</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;February</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.93</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.60</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;March</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.90</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.73</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;April</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.76</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.56</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;May</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.69</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">1.51</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-66-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="137"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;10. Additional Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Memorandum of Association and Bylaws</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In compliance with the newly amended listing rules of the Stock Exchange which came into force
on March&nbsp;30, 2004, certain provisions of the Bye-laws of the Company were amended at the annual
general meeting of the Company held on May&nbsp;20, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Incorporation and Registration Number</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company was incorporated in Bermuda on October&nbsp;17, 1996 in accordance with the Companies
Act 1981 of Bermuda (the &#147;Companies Act&#148;). The Company is registered with the Bermuda Registrar
of Companies with registration number EC 22483.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Objects and Purposes</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The objects for which the Company is formed and incorporated as provided for in Clause 6 of
the Memorandum of Association are to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to act and to perform all the functions of a holding company in all its
branches and to co-ordinate the policy and administration of any subsidiary company or
companies wherever incorporated or carrying on business or of any group of companies of
which the Company or any subsidiary company is a member or which are in any manner
controlled directly or indirectly by the Company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to act as an investment company and for that purpose to acquire and hold upon
any terms and, either in the name of the Company or that of any nominee, shares, stock,
debentures, debenture stock, annuities, notes, mortgages, bonds, obligations and
securities, foreign exchange, foreign currency deposits and commodities, issued or
guaranteed by any company wherever incorporated or carrying on business, or by any
government, sovereign, ruler, commissioners, public body or authority, supreme,
municipal, local or otherwise, by original subscription, tender, purchase, exchange,
underwriting, participation in syndicates or in any other manner and whether or not
fully paid up, and to make payments thereon as called up or in advance of calls or
otherwise and to subscribe for the same, whether conditionally or absolutely, and to
hold the same with a view to investment, but with the power to vary any investments,
and to exercise and enforce all rights and powers conferred by or incident to the
ownership thereof, and to invest and deal with the moneys of the Company not
immediately required upon such securities and in such manner as may be from time to
time determined;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>as set out in paragraphs (b)&nbsp;to (n)&nbsp;and (p)&nbsp;to (u)&nbsp;inclusive of the Second
Schedule to The Companies Act 1981.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Directors</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Director who to his knowledge is in any way, whether directly or indirectly, interested in a
contract or arrangement or proposed contract or arrangement with the Company shall declare the
nature of his interest at the meeting of the Board of the Company (the &#147;Board&#148;) at which the
question of entering into the contract or arrangement is first considered, if he knows his interest
then exists, or in any case at the first meeting of the Board after he knows that he is or has
become so interested. A Director shall not vote nor be counted in the quorum on any resolution of
the Board in respect of any contract or arrangement or any other proposal in which he or any of his
associate(s) is materially interested, and if he shall do so his vote shall not be counted nor is
he to be counted in the quorum for the resolution. But this prohibition shall not apply to any of
the following matters namely:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any contract or arrangement for the giving by the Company or any of its
subsidiaries of any security or indemnity to the Director or his associate(s) in
respect of money lent by him or any of
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">-67-
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>his associates or obligations incurred or
undertaken by him or any of them at the request of or for the benefit of the Company or
any of its subsidiaries;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any contract or arrangement for the giving by the Company or any of its
subsidiaries of any security or indemnity to a third party in respect of a debt or
obligation of the Company or any of its subsidiaries for which the Director or his
associate(s) has/have himself/themselves assumed responsibility in whole or in part whether alone or jointly under a guarantee or
indemnity or by the giving of security;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any contract or arrangement by a Director or his associate(s) to subscribe for
 shares or debentures or other securities of the Company or any of its subsidiaries to
be issued pursuant to any offer or invitation to the members or debenture holders or to
the public which does not provide the Director or his associate(s) any privilege not
accorded to any other members or debenture holders or to the public;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any contract, arrangement or proposal concerning an offer of the shares or
debentures or other securities of or by the Company or any other company which the
Company may promote or be interested in for subscription or purchase where the Director
or his associate(s) is/are or is/are to be interested as a participant in the
underwriting or sub-underwriting of the offer;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any contract or arrangement in which the Director or his associate(s) is/are
interested in the same manner as other holders of shares or debentures or other
securities of the Company by virtue only of his/their interest in shares or debentures
or other securities of the Company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(vi)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any contract, arrangement or proposal concerning any company in which the
Director or his associate(s) is/are interested only, whether directly or indirectly,
as an officer or executive or a shareholder or in which the Director and any of his
associate(s) are not in aggregate beneficially interested in five (5)&nbsp;per cent or more
of the issued shares or of the voting rights of any class of shares of such company (or
of any third company through which his interest or that of any of his associates is
derived);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(vii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any proposal or arrangement for the benefit of employees of the Company or its
subsidiaries including the adoption, modification or operation of a pension fund or
retirement, death or disability benefit scheme which relates both to directors, his
associates and employees of the Company or of any of its subsidiaries and does not give
the Director, or his associate(s), as such any privilege or advantage not accorded
generally to the class of persons to whom such scheme or fund relates; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(viii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any proposal concerning the adoption, modification or operation of any share scheme
involving the issue or grant of options over shares or other securities by the Company
to, or for the benefit of the employees of the Company or its subsidiaries under which
the Director or his associate(s) may benefit.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A company shall be deemed to be a company in which a Director and/or his associate(s) has/have
an interest of five (5)&nbsp;per cent or more if and so long as (but only if and so long as) he and/or
his associate(s) (either directly or indirectly) is/are the holders of or beneficially interested
in five (5)&nbsp;per cent or more of any class of the equity share capital of such company or of the
voting rights available to members of such company (or of any third company through which his
interest or that of any of his associate(s) is derived). For the purpose of this paragraph there
shall be disregarded any shares held by a Director or his associate(s) as bare or custodian trustee
and in which he or any of them has no beneficial interest, any shares comprised in a trust in which
the interest of the Director and/or his associate(s) is/are in reversion or remainder if and so
long as some other person is entitled to receive the income thereof and any shares comprised in an
authorized unit trust scheme in which the Director and/or his associate(s) is/are interested only
as a unit holder.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Where a company in which a Director and/or his associate(s) has/have an interest of five (5)
per cent or more is materially interested in a transaction, then that Director and/or his
associate(s) shall also be deemed materially interested in such transaction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any question shall arise at any meeting of the Board as to the question of the materiality
of the interest of a Director (other than the chairman of the meeting) or as to the entitlement of
any Director (other than such chairman) to vote or be counted in the quorum and such question is
not resolved by his voluntarily agreeing to abstain from voting or not to be counted in the quorum,
such question shall be referred to the chairman of the meeting and his ruling in relation to such
other Director shall be final and conclusive except in a case where the nature or extent of the
interest of the Director concerned as known to such Director has not been fairly disclosed to the
Board. If any question as aforesaid shall arise in respect of the chairman of the meeting such
question shall be decided by a resolution of the Board (for which purpose such chairman shall not
vote thereon) and such resolution shall be final and conclusive except in a case where the nature
or extent of the interest of such chairman as known to such chairman has not been fairly disclosed
to the Board.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company may by ordinary resolution ratify any transaction not duly authorized by reason of
a contravention of Bye-Law 103 provided that no Director and/or his associate(s) who is/are
materially interested in such transaction shall vote upon such ordinary resolution in respect of
any shares in the Company in which they are interested.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ordinary remuneration of the Directors shall from time to time be determined by the
Company in general meeting. Each Director shall be entitled to be prepaid or repaid all traveling,
hotel and incidental expenses reasonably expected to be incurred or reasonably incurred by him in
attending meetings of the Board or committees of the Board or general meeting or separate meetings
of any class of shares of the Company or otherwise in connection with the discharge of his duties
as a Director. The Board shall obtain the approval of the Company in general meeting before making
any payment to any Director or past Director of the Company by way of compensation for loss of
office, or as consideration for or in connection with his retirement from office (not being payment
to which the Director is contractually entitled).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board may exercise all the powers of the Company to raise or borrow money or to secure the
payment or repayment of any sum or sums of money and to mortgage or charge all or any part of the
undertaking, property and assets and uncalled capital of the Company subject to the Companies Act,
in such manner and upon such terms and conditions in all respects as it thinks fit and in
particular by the issue of debentures, bonds and other securities, whether outright or as
collateral security for any debt, liability or obligation of the Company or of any third party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither a Director nor an alternate Director shall be required to vacate office or become
ineligible for re-election as Director of being beyond any age limitation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither a Director nor an alternate Director shall be required to hold any shares of the
Company by way of qualification.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Shareholders&#146; Rights</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, the Company&#146;s authorized share capital consists of one class of ordinary shares
only. Subject to any special rights conferred on the holders of any shares or class of shares, any
share in the Company may be issued
with or have attached thereto such rights or restrictions whether in regard to dividend, voting,
return of capital, distribution of assets or otherwise as the Company may by ordinary resolution
determine or, if there has not been any such determination or so far as the same shall not make
specific provision, as the Board may determine.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board may from time to time pay to the shareholders such interim dividends as appear to
the Board to be justified by the profits of the Company. Subject to the Companies Act, the Company
in general meeting may from time to time declare dividends in any currency to be paid to the
shareholders, but no dividend shall be declared in excess of the amount recommended by the Board.
The Company in general meeting may also make a distribution to the shareholders out of any
contributed surplus in accordance with the Companies Act. No dividend shall be paid or
distribution made out of contributed surplus if to do so would render the Company unable to pay its
liabilities as they
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">become due or the realizable value of its assets would thereby become less than
the aggregate of its liabilities and its issued share capital and share premium accounts. All
dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise
made use of by the Board for the benefit of the Company until claimed. Any dividend or bonuses
unclaimed after a period of six years from the date of declaration shall be forfeited and shall
revert to the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At any general meeting, subject to any special rights or restrictions attached to any shares
by or in accordance with the Bye-laws of the Company, every shareholder of the Company present in
person or by proxy, on a show of hands shall have one vote and on a poll shall have one vote for
every share which is fully paid or credited as fully paid of which he is the holder. A shareholder
entitled to attend and vote at the general meeting of the Company is entitled to appoint another
person as his proxy to attend and vote instead of him. A proxy need not be a member of the
Company. A resolution put to the vote of a general meeting shall be decided on a show of hands
unless a poll is demanded in accordance with the Bye-laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No business shall be transacted at any general meeting unless a required quorum is present.
All business shall be deemed special that is transacted at a special general meeting, and also all
business that is transacted at an annual general meeting, with the exception of sanctioning
dividends, the reading, considering and adopting of the accounts and balance sheet and the reports
of the Directors and Auditors and other documents required to be annexed to the balance sheet, the
election of Directors and appointment of Auditors and other officers in the place of those
retiring, the determination of the remuneration of the Auditors and of the Directors of the
Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of the Company being wound up, the surplus assets remaining after payment to all
creditors shall be divided among the Shareholders of the Company in proportion to the capital paid
up on the shares held by them respectively. But, if such surplus assets shall be insufficient to
repay the whole of the paid up capital, they shall be distributed subject to the rights of any
shares which may be issued on special terms and conditions, so that, as nearly as may be, the
losses shall be borne by the Shareholders of the Company in proportion to the capital paid up on
the shares held by them respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Bye-laws of the Company do not include any provisions in relation to redemption, sinking
fund, liability to further capital calls by the Company nor any provisions discriminating against
any existing or prospective holder of such securities as a result of such shareholder owning a
substantial number of shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B><I>Actions Necessary to Change Shareholders&#146; Rights</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the Companies Act and without prejudice to other provisions of the Bye-laws, all or
any of the special rights for the time being attached to the shares or any class of shares may,
unless otherwise provided by the terms of issue of the shares of that class, from time to time
(whether or not the Company is being would up) be varied, modified or abrogated either with the
consent in writing of the holders of not less than three-fourths of the issued shares of that class
or with the sanction of a special resolution passed at a separate general meeting of the holders of
the shares of that class. To every such separate general meeting all the provisions of the Bye-laws
relating to general meetings of the Company shall, mutatis mutandis, apply, but so that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the necessary quorum (other than at an adjourned meeting) shall be at least two
persons holding or representing by proxy or authorized representative not less than
one-third in nominal value of the issued shares of that class and at any adjourned
meeting of such holders, two holders present in person or by proxy (whatever the number
of shares held by them) shall be a quorum;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>every holder of shares of the class shall be entitled on a poll to one vote for
every such share held by him/her; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any holder of shares of the class present in person or by proxy or authorized
representative may demand a poll.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The special rights conferred upon the holders of any shares or class of shares shall not,
unless otherwise expressly provided in the rights attaching to or the terms of issue of such
shares, be deemed to be varied, modified or abrogated by the creation or issue of further shares
ranking pari passu therewith.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>General Meetings of Shareholders</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An annual general meeting of the Company shall be held in each year other than the year in
which its statutory meeting is convened at such time and place as may be determined by the Board.
Each general meeting, other than an annual general meeting, shall be called a special general
meeting. General meetings may be held in any part of the world as may be determined by the Board.
The Board may, in its discretion, call special general meetings, and shareholders holding at the
date of deposit of the requisition not less than one-tenth of the paid up capital of the Company
carrying the right of voting at general meetings of the Company shall at all times have the right,
by written requisition to the Board or the Secretary of the Company, to require a special general
meeting to be called by the Board for the transaction of any business specified in such
requisition; and such meeting shall be held within two (2)&nbsp;months after the deposit of such
requisition. An annual general meeting and any special general meeting at which the passing of a
special resolution is to be considered shall be called by not less than twenty-one (21)&nbsp;clear days&#146;
notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All other special general meetings may be called by not less than fourteen (14)&nbsp;clear days&#146;
notice but a general meeting may be called by shorter notice if it is so agreed by the shareholders
in the manner provided in the Bye-laws. Notice of every general meeting shall be given to all
shareholders of the Company other than to such shareholders as, under the provisions of the
Bye-laws or the terms of issue of the shares they hold, are not entitled to receive such notices
from the Company, to all persons entitled to a share in consequence of the death or bankruptcy or
winding-up of a shareholder and to each of the Directors and the Auditor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Limitation on Foreign Ownership</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no limitation on the rights of non-resident or foreign shareholders to hold or
exercise voting rights on the securities of the Company imposed by foreign law or by the Bye-laws
of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Change in Control</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Bye-laws of the Company do not contain any specific provision that may have an effect of
delaying, deferring or preventing a change in control of the company in the event of merger,
acquisition or corporate restructuring of the Company. However, the shareholders agreement of APT
Telecom (which is a joint-venture company formed by a wholly-owned subsidiary of the Company, APT
TV, and SingaSat Private Limited) requires that any merger, consolidation or amalgamation of the
Company must be approved by all the shareholders of APT Telecom. Subject to the Bye-laws of the
Company, any shareholder may transfer all or any of his/her shares by an instrument of transfer in
the usual or common form or in any other form approved by the Board. The Board may, in its absolute
discretion, and without giving any reason therefor, refuse to register a transfer of any share
under certain conditions such as, among the others, not being a fully paid up share. The Board may
also decline to recognize any instrument of transfer unless, among the others, the following
conditions have been satisfied:-
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the instrument of transfer is lodged at the Registration Office or such other
place in Bermuda at which the Register is kept in accordance with the Companies Act or
the Registration Office (as the case may be) accompanied by the relevant share
certificate(s) and such other evidence as the Board may reasonably require to show the
right of the transferor to make the transfer; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if applicable, the instrument of transfer is duly and properly stamped.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Ownership Threshold Disclosure</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Bye-laws of the Company do not provide any ownership threshold above which a shareholder
has to disclose such ownership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Significant Differences in Applicable Law</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to items 2 through 8 of the Exchange Act Forms, the law applicable to the Company
in these areas is not significantly different from that in Hong Kong.
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Changes in Capital</I></B>
</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Bye-laws of the Company governing changes in the capital does not contain any condition,
which are more stringent than is required by law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Material Contracts</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;8, 2001, APT, together with SS/Loral and CGWIC signed the Procurement and the
Launch Agreements of APSTAR V satellite, to confirm the commissioning of the APSTAR V which would
replace the APSTAR I. On October&nbsp;23, 2002, the launch services to be provided by CGWIC originally
for APSTAR V were transferred to APSTAR VI. In March&nbsp;2003, APT selected Sea Launch for the launch
of APSTAR V. APSTAR V was launched on June&nbsp;29, 2004 as a replacement satellite of APSTAR I. Upon
completion of IOT of APSTAR V, title of the APSTAR V remained with Loral Orion. The Company assumed
risks and rewards of 37 transponders (&#147;APT Transponders&#148;) for the entire operational life of APSTAR
V under finance leases while the risks and rewards relating to the other 17 transponders remained
with Loral Orion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;11, 2001, APT signed a procurement agreement for construction and delivery of
APSTAR VI (formerly APSTAR VB) with Alcatel Space Industries. APT secured the Satellite Launch
Service Agreement with CGWIC to launch APSTAR VI on the Long March 3B (&#147;LM-3B&#148;) launch vehicle on
October&nbsp;23, 2002 by the amending the Satellite Launch Service Agreement of APSTAR V. APSTAR VI was
launched successfully on April&nbsp;12, 2005 on a LM-3B launch vehicle and has been located at
geostationary orbital slot at 134 degrees East. Its commercial operation started on June&nbsp;7, 2005
and is expected to have an operation mission life over 15&nbsp;years. The customers of APSTAR IA have
been migrated to APSTAR VI successfully. Total capital expenditures for the design, construction
and launch of APSTAR VI amounted to US$227&nbsp;million, which has been funded by internal resources and
Bank loan.
</DIV>
<DIV align="left">
<A name="138"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Exchange Controls and Other Limitations Affecting Security Holders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has been designated as a non-resident for exchange control purposes by the Bermuda
Monetary Authority.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Permission has been obtained from the Bermuda Monetary Authority for the transfer of Shares of
the Company between persons regarded as non-resident of Bermuda for exchange control purposes and
the issue of Shares within the current authorized share capital of the Company of HK$100,000,000 to
such persons, subject to such Shares being listed on the Hong Kong Stock Exchange or the New York
Stock Exchange. Issues and transfers of Shares involving any person regarded as resident in
Bermuda for exchange control purposes require specific prior approval under the Exchange Control
Act 1972.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no limitations on the rights of holders of the Shares who are non-residents of
Bermuda for exchange control purposes to hold or vote their shares. Because the Company has been
designated as a non-resident for Bermuda exchange control purposes, there are no restrictions on
its ability to transfer funds, including remittance of interest or payment to non-resident holders
of Shares, if any, in and out of Bermuda or to pay dividends to United States residents who are
holders of the Shares, other than in respect of local Bermuda currency.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with Bermuda law, share certificates are only issued in the names of
corporations, partnerships, or individuals. In the case of an applicant acting in a special
capacity (for example, as trustee),
certificates may, at the request of the applicant, record the capacity in which the applicant is
acting. Notwithstanding the recording of any such special capacity, the Company is not bound to
investigate or incur any responsibility in respect of the proper administration of any such trust.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company will take no notice of any trust applicable to any of its Shares whether or not it
has notice of such trust.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As an exempted company, the Company is exempt from Bermuda laws which restrict the percentage
of share capital that may be held by non-Bermudians, but as an exempted company, the Company may
not participate in
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">certain business transactions including: (1)&nbsp;the acquisition or holding of land
in Bermuda (except that required for its business and held by way of lease or tenancy for terms of
not more than 50&nbsp;years or, with the consent of the Minister of Finance, land by way of lease or
tenancy agreement for a term not exceeding 21&nbsp;years in order to provide accommodation or
recreational facilities for its officers and employees), (2)&nbsp;the taking of mortgages on land in
Bermuda to secure an amount in excess of 50,000 Bermuda Dollars without the consent of the Minister
of Finance of Bermuda, (3)&nbsp;the acquisition of any bonds or debentures secured on any land in
Bermuda except bonds or debentures issued by the Bermuda government or a public authority or (4)
the carrying on of business of any kind in Bermuda, except in furtherance of the business of the
Company carried on outside Bermuda or under a license by the Minister of Finance of Bermuda.
</DIV>

<DIV align="left">
<A name="139"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion is a summary of the material Bermuda, Hong Kong, and United States
federal income tax considerations relevant to an investment decision with respect to the Company&#146;s
American Depositary Shares (&#147;ADSs&#148;) and Shares. This discussion does not purport to deal with the
tax consequences of owning ADSs and Shares to all categories of investors, some of which (such as,
dealers in securities, banks, tax-exempt organizations, certain insurance companies, investors
liable for alternative minimum tax, investors that actually or constructively own 10% or more of
the voting stock of the Company, investors who do not hold the Shares or ADSs as capital assets,
investors who hold ADSs or Shares that are part of a hedging, straddle, or conversion transaction
or US Holders whose functional currency is not the US Dollar) may be subject to special rules.
This discussion is not exhaustive of all possible tax considerations, including, specifically, the
consequences under United States federal, state, local, and other laws, of the acquisition,
ownership, and disposition of ADSs and the disposition of Shares<B>.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Bermuda Taxation</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is incorporated in Bermuda. Under current Bermuda law, the Company is not subject
to tax on income or capital gains, and no Bermuda withholding tax will be imposed upon payments of
dividends by the Company to its shareholders. Furthermore, the Company has received from the
Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act of 1966 an
assurance that, in the event that Bermuda enacts any legislation imposing any tax computed on
profits or income or on any capital asset, gain or appreciation, or any tax in the nature of an
estate duty or inheritance tax, the imposition of such tax shall not be applicable to the Company
or any of its operations, nor to the shares, debentures, or other obligations of the Company, until
March&nbsp;28, 2016. This assurance does not, however, prevent the imposition of any Bermuda tax
payable in relation to any land in Bermuda leased to the Company or to persons ordinarily resident
in Bermuda.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Hong Kong Taxation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Tax on Dividends</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the current law and practice of Hong Kong, no tax is payable in Hong Kong in respect of
dividends paid by the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Profits Tax</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No tax is imposed in Hong Kong in respect of capital gains from the sale of property (such as
the ADSs or Shares). Trading gains from the sale of property by persons carrying on a trade,
profession, or business in Hong Kong where such gains are derived from or arise in Hong Kong from
such trade, profession, or business will be chargeable to Hong Kong profits tax which is currently
imposed at the rate of 17.5%, 17.5% and 17.5% for 2003 and
2004 and 2005, respectively on corporations and at a maximum rate of 15.5%, 16% and 16% for 2003,
2004 and 2005, respectively, on individuals. Gains from sales of the Shares effected on the Stock
Exchange of Hong Kong Limited will be considered to be derived from or arise in Hong Kong.
Liability for Hong Kong profits tax would thus arise in respect of trading gains from sales of
Shares realized by persons carrying on a business in Hong Kong of trading or dealing in securities.
Gains from sales of the ADSs effected on the New York Stock Exchange will usually be considered to
be derived from or arise outside Hong Kong, and therefore, liability for Hong Kong profits tax
would not ordinarily arise in respect of trading gains from sales of ADSs.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>United States Federal Income Taxation</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summary describes certain United States federal income tax consequences of the
purchase, ownership, and disposition of Shares and ADSs (evidenced by American Depositary Receipts
(&#147;ADRs&#148;)), but it does not purport to be a comprehensive description of all of the tax
considerations that may be relevant to a decision to purchase, own, or dispose of Shares or ADSs.
In particular, this summary of United States federal income tax matters deals only with holders
that will hold Shares or ADSs as capital assets and does not address special tax situations, such
as the United States tax treatment of holders who are financial institutions, tax exempt
organizations, pension funds, insurance companies or securities dealers, who are holding Shares or
ADSs as part of a hedging or larger integrated financial or conversion transaction, who are
citizens or residents of a possession or territory of the United States, who are United States
holders (as defined below) with a currency other than the US Dollar as their functional currency or
who own, directly or indirectly, 10% or more of the voting stock of the Company. For this purpose,
the Shares and ADSs will constitute voting stock of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary is based upon (i)&nbsp;the income tax laws of the United States as currently in
effect, which are subject to change, possibly with retroactive effect, and (ii)&nbsp;in part, on
representations of The Bank of New York, as the Company&#146;s depositary (the &#147;Depositary&#148;) and on the
assumption that each obligation in the Deposit Agreement and any related agreement will be
performed in accordance with its terms. The Company has not sought any ruling from the United
States Internal Revenue Service (the &#147;IRS&#148;) with respect to the statements made and the conclusions
reached in the following summary, and there can be no assurance that the IRS will agree with such
statements and conclusions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This discussion is not exhaustive of the consequences of the purchase, ownership, and
disposition of Shares or ADSs, including the effect of any state or local tax laws or the laws of
any jurisdiction other than the United States, nor does it address the United States federal
estate, gift or alternative minimum tax consequences, if any, to an investor.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>The Company</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Shares and Shares represented by ADSs are characterized as equity interests in the
Company, and the Company will so characterize all such Shares for all United States federal income
tax purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company will be subject to United States federal income tax only to the extent that it
derives certain United States source income or income effectively connected with the conduct of a
trade or business within the United States. Currently, the Company does not have, intends and
anticipates that it will not have, and will conduct its affairs in a manner so that it will not
have, any United States source income subject to United States federal income or withholding tax or
income effectively connected with the conduct of a trade or business within the United States.
Thus, the Company intends and anticipates that it will not be subject to any United States federal
tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Taxation of Investor-United States Holders</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used herein, a &#147;United States holder&#148; means a beneficial owner of Shares or ADSs that is an
individual who is a citizen or resident of the United States; a corporation, partnership or other
entity created or organized in or under the laws of the United States or any State thereof; an
estate the income of which is subject to United States federal income tax regardless of its source,
or a trust subject to control of a United States person and the primary supervision of a United
States court, or a trust in existence on August&nbsp;20, 1996 that has elected to continue to be treated
as a United States trust. A &#147;resident&#148; of the United States includes an individual that (i)&nbsp;is
lawfully admitted for permanent residence in the United States, or (ii) (a)&nbsp;is present in the
United States for 31&nbsp;days or more during the calendar year, (b)&nbsp;is present in the United States for
an aggregate of 183&nbsp;days or more, on a weighted basis, over a 3-
year period ending in such calendar year, and (c)&nbsp;is present in the United States for less than 183
days during the calendar year and does not have a closer connection to a &#147;tax home&#148; that is located
outside the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A &#147;non-United States holder&#148; means a beneficial owner of Shares or ADSs that is not a United
States holder. It should be noted that certain &#147;single member entities&#148; are disregarded for United
States federal income tax
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">purposes. Thus, the income, gain, loss and deductions of such entity are
attributed to the owner of such single member entity for United States federal income tax purposes.
The discussion below for United States holders may not apply to certain single member noncorporate
entities that are treated as owned by a non-United States holder. Investors which are single
member noncorporate entities should consult with their own tax advisors to determine the United
States federal, state, local and other tax consequences that may be relevant to them.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Ownership of ADSs and Shares</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For United States federal income tax purposes, a United States holder of ADRs is generally
treated as the owner of the ADSs evidenced thereby and of the Shares represented by such ADSs.
Accordingly, no gain or loss will be recognized by a United States holder upon the exchange of ADRs
or the ADSs evidenced thereby for the Shares represented by such ADSs. A United States holder&#146;s
tax basis in the Shares received will be the same as its tax basis in the surrendered ADSs and the
holding period for Shares received will include the period during which the holder held such ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Taxation of Dividends</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the passive foreign investment company rules discussed below and to the extent
provided below, a United States holder will be required to include in gross income when paid,
actually or constructively, to the holder or, in the case of ADSs, to the Depositary, as a dividend
any cash or the fair market value of any property distributed by the Company out of its current or
accumulated earnings and profits (as determined for United States federal income tax purposes).
Distributions paid in any currency other than the US Dollar will be translated into US Dollars at
the spot rate on the date the dividends are paid, regardless of whether the dividends are in fact
converted on that date. Distributions in excess of the Company&#146;s current or accumulated earnings
and profits (as determined for United States federal income tax purposes) will be treated as a
non-taxable return of capital to the extent of the holder&#146;s basis in the Shares or ADSs, and
thereafter, as a taxable capital gain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends paid by the Company will not be eligible for the dividends received deduction
generally allowed to United States corporations in respect of dividends received from other United
States corporations under the United States Internal Revenue Code of 1986, as amended (the &#147;Code&#148;).
For purposes of the United States foreign tax credit limitation, dividends paid by the Company
generally will constitute foreign source &#147;passive income&#148; (or, in the case of a holder who is a
&#147;financial services entity&#148; as defined in regulations under the Code, &#147;financial services income&#148;).
The rules relating to foreign tax credits are extremely complex and the availability of a foreign
tax credit depends on numerous factors. All investors that are United States holders should
consult with their own tax advisors concerning the application of the United States foreign tax
credit rules to their particular circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to non-corporate U.S. holders, certain dividends received before January&nbsp;1, 2009
from a qualified foreign corporation may be subject to reduced rates of taxation. A foreign
corporation is treated as a qualified foreign corporation with respect to dividends paid by that
corporation on shares that are readily tradable on an established securities market in the U.S.
Management believes that the Company common shares, which are quoted on the New York Stock
Exchange, are readily tradable on an established securities market in the U.S. There can be no
assurance that the Company&#146;s common shares will be considered readily tradable on an established
securities market in later years. Non-corporate holders that do not meet a minimum holding period
requirement during which they are not protected from the risk of loss or that elect to treat the
dividend income as &#147;investment income&#148; pursuant to section 163(d)(4) of the Code will not
be eligible for the reduced rates of taxation regardless of our status as a qualified foreign
corporation. In addition, the rate reduction will not apply to dividends if the recipient of a
dividend is obligated to make related payments with respect to positions in substantially similar
or related property. This disallowance applies even if the minimum holding period has been met. You
should consult your own tax advisors regarding the application of this legislation to your
particular circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Taxation of Dispositions of Shares or ADSs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the passive foreign investment company rules discussed below, a gain or loss
realized by a United States holder on the sale or other disposition of a Share or an ADS will be
subject to United States federal
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">income tax, as a capital gain or loss, in an amount equal to the
difference between such United States holder&#146;s adjusted tax basis in the Share or ADS and the
amount realized on its disposition. Such capital gain or loss will be long-term if the United
States holder&#146;s holding period for the Share or ADS is more than one year and will be short-term if
the holding period is equal to or less than one year. Long-term capital gain of a non-corporate
United States holder is generally taxed at preferential rates. The deductibility of capital losses
is subject to limitations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of the United States foreign tax credit limitation, a recognized gain or loss
arising on the disposition of a Share or ADS generally will be United States source gain. There is
a risk, however, that a recognized loss may, however, be allocated against foreign source income by
reference to the source of income received under the Share or ADS based on, among other things,
whether or not the Share or ADS is attributable to a foreign office or other fixed place of
business of the holder. The IRS has issued Regulations on the sourcing of losses and holders of
Shares or ADSs should consult with their tax advisors regarding the application of such Regulations
to their specific situation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Passive Foreign Investment Company Rules</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The foregoing discussion assumes that the Company is not currently, and will not in the future
be, classified as a &#147;passive foreign investment company&#148; (&#147;PFIC&#148;) under the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special United States federal income tax rules apply to holders of equity interests in a PFIC.
A foreign corporation will constitute a PFIC for United States federal income tax purposes if 75%
or more of its gross income for a taxable year consist of passive income, or, on average, 50% or
more of the value of its assets held during a taxable year consist of assets that give rise, or
that reasonably could give rise during the reasonably foreseeable future, to passive income.
Passive income generally includes (i)&nbsp;rent and lease income (not including rent and lease income
derived from persons other than related persons and from the active conduct of a rental or leasing
trade or business), (ii)&nbsp;interest, (iii)&nbsp;dividends from shares of stock in a corporation in which
the foreign corporation directly or indirectly owns less than 25% of the value of the stock in the
corporation and (iv)&nbsp;gains from the sale of any (a)&nbsp;property that gives rise to passive income, (b)
partnership interests, or (c)&nbsp;shares of stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on the Company&#146;s existing and anticipated future operations, as well as the existing and
anticipated future operations of APT and APT BVI, the Company believes that it, APT and APT BVI are
not, and intends and anticipates that they will not become in the future, PFICs. However, it is
possible that certain lease income derived by the Company (or APT or APT BVI) might be viewed by
the IRS as passive income. In addition, because of the nature of the leasing business, and because
the determination of whether or not the Company, APT or APT BVI is a PFIC is a factual
determination based upon the composition of the annual income and assets of the entity, there can
be no assurance that the Company, APT or APT BVI will not be considered a PFIC for the current or
for any subsequent taxable year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because the Company&#146;s sole asset is its stock interest in APT BVI, and APT BVI&#146;s sole asset,
in turn, is its stock interest in APT, if APT is or becomes a PFIC, both the Company and APT BVI
will also be or become PFICs. If the Company, APT and APT BVI are or become PFICs, a United States
holder (whether direct, indirect or constructive) would be required to allocate to each day in its
holding period with respect to the Shares or ADSs a pro rata portion of any distribution received,
or deemed received under certain attribution rules, from the Company, APT or APT BVI that is
treated as an &#147;excess distribution.&#148; Generally, an excess distribution is that portion of the
total annual distributions (including the proceeds from a redemption of Shares or ADSs that is
treated as a distribution) from the Company, APT or APT BVI that exceeds 125% of the per share
average annual amount distributed (as measured in the currency of such distributions) by that
entity during the three preceding years (or such shorter period as the United States holder may
have held the Shares or ADSs). In addition, the full amount of any gain recognized on a
disposition or deemed disposition (including a liquidation, a redemption that is treated as an
exchange, or a pledge) of (i)&nbsp;Shares or ADSs by the United States holder, (ii)&nbsp;attributable shares
of APT by APT BVI, or (iii)&nbsp;attributable shares of APT BVI by the Company will be treated as an
excess distribution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of any excess distribution is allocated ratably over the United States holder&#146;s
entire holding period. The amount allocated to the current taxable year and to any period prior to
the first taxable year during which the Company, APT and APT BVI were PFICs is taxed as ordinary
income. Any amount of the excess
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">distribution allocable to a prior taxable year during which the Company, APT and APT BVI were PFICs
or after the first taxable year they were PFICs will be subject to a deferred United States federal
income tax charge, calculated as the sum of the amount of tax imposed on the allocable excess
distribution at the highest applicable rate in effect for each such year plus the accumulated
interest on the determined amount of tax. Given the distribution and investment policies of the
Company, if the Company, APT and APT BVI are or become PFICs, there is a substantial risk that any
distribution by the Company will be treated as an excess distribution. (See &#147;Item&nbsp;5. Operating and
Financial Review and Prospects&#151;Liquidity and Capital Resources&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of the PFIC rules, under certain circumstances, Shares or ADSs held by a
non-United States holder may be attributed to a United States person (as defined in Section
7701(a)(30) of the Code) owning an interest, directly or indirectly, in that non-United States
holder. In such event, dividends and other transactions in respect of the Shares or ADSs held by
the non-United States holder would be attributed to such United States person for purposes of
applying the above PFIC rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Company is a PFIC, a United States holder must file Internal Revenue Service Form&nbsp;8621
regarding distributions received with respect to Shares or ADSs and any gain realized on the
disposition or deemed disposition of Shares or ADSs for each taxable year in which the United
States holder owns Shares or ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Company, APT and APT BVI are or become PFICs, an investment in Shares or ADSs by a
United States holder could subject the holder to substantial, adverse United States federal income
tax consequences. Investors who are United States holders should consult their own tax advisers
regarding the potential application of the PFIC regime.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Taxation of Investors-Non-United States Holders</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the discussion of United States backup withholding tax below, a non-United States
holder will not be subject to United States federal income or withholding tax on income derived by
the Company, dividends paid to a holder by the Company or gains realized on the sale of Shares or
ADSs, provided that (i)&nbsp;such income is not effectively connected with the conduct by the non-United
States holder of a trade or business within the United States, (ii)&nbsp;the non-United States holder is
not or was not present in the United States in excess of statutorily established time periods, or
does not have or did not have a permanent establishment in the United States, (iii)&nbsp;there has not
been a present or former connection between the non-United States holder and the United States,
including, without limitation, such non-United States holder&#146;s status as a citizen or former
citizen thereof or resident or former resident thereof, subject to certain exceptions, or (iv)&nbsp;in
the case of a gain from the sale or disposition of Shares or ADSs by an individual, the non-United
States holder is not present in the United States for 183&nbsp;days or more during the taxable year of
the sale or certain other conditions are met. In addition, the provisions of certain bi-lateral
income tax treaties to which the United States is a party may shield a non-United States holder
from the imposition of United States federal income tax on income from Shares or ADSs or reduce the
applicable tax rate, even if such income or such holder falls in one of the categories listed
above. Investors who are non-United States holders should consult their tax advisors regarding the
taxability of income in respect of the Shares or ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>United States Backup Withholding Tax and Information Reporting</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a United States holder, a 28% &#147;backup withholding&#148; federal income tax and certain
information reporting requirements may apply to certain payments made on Shares or ADSs and to the
proceeds from the disposition of Shares or ADSs unless such holder (i)&nbsp;is a corporation or comes
within certain other exempt categories, provided the exemption from backup withholding is properly
established, or (ii)&nbsp;provides a correct taxpayer identification number, certifies that it is not
subject to backup withholding, and otherwise complies with applicable requirements of the backup
withholding rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-United States holders are generally exempt from backup withholding, provided such holders
certify in writing as to their non-United States holder status under penalties of perjury or
otherwise establish an exemption (provided neither the Company nor the Company&#146;s agent has actual
knowledge that the holder is a United States person (as defined in Section&nbsp;7701(a)(30) of the Code)
or that the conditions of any other exemption are not in fact satisfied).
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders should consult their tax advisors regarding their qualification for exemption from
backup withholding and the procedure for obtaining such exemption if applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any amounts withheld under the backup withholding tax rules from a payment to a holder will be
allowed as a refund or a credit against such holder&#146;s United States federal income tax, provided
that the required information is furnished to the IRS.
</DIV>
<DIV align="left">
<A name="140"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;11. Quantitative and Qualitative Disclosures about Market Risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s primary market risk exposures are interest rate risk and foreign currency risk.
</DIV>
<DIV align="left">
<A name="141"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Interest Rate Risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is subject to interest rate risk due to fluctuation in interest rates. As of
December&nbsp;31, 2005, the Company&#146;s outstanding Bank loans consist of variable interest rate loans
only. From time to time, the Company may enter into interest rate swap agreements designed to
mitigate our exposure to interest rate risks, although the Company did not consider it necessary to
do so in 2005. Upward fluctuations in interest rates increase the cost of new Bank loans and the
interest cost of outstanding Bank loans. As a result, a significant increase in interest rates
could have a material adverse effect on the financial position of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table contains information about the Company&#146;s Bank loan that are sensitive to
changes in interest rates, as of December&nbsp;31, 2005.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000">Expected Maturity Date</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>Thereafter</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15">(HK$ in million, except interest rates)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Variable rate Bank loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average interest rate <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5.965</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5.935</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5.98</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.00</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.02</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.02</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The interest rates are the implied future LIBOR rates calculated from US swap as proxy.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year ended December&nbsp;31, 2005, if the average interest rate for the variable rate Bank
loan had increased by 10%, additional interest expenses of HK$3.4million (US$435 thousand) would
have been incurred.
</DIV>
<DIV align="left">
<A name="142"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Exchange Rate Sensitivity</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s reporting currency is the Hong Kong Dollar. The Company&#146;s revenues, premiums
for satellite insurance coverage and debt service and substantially all capital expenditures were
denominated in U.S. Dollars. The Company&#146;s remaining expenses were primarily denominated in Hong
Kong Dollars. The Company does not hedge its exposure to foreign exchange risk. Gains and losses
resulting from the effects of changes in the U.S. Dollar to Hong Kong Dollar exchange rate are
recorded in the statements of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company does not utilize derivative financial instruments to hedge its interest rate or
foreign currency rate risks.
</DIV>


<P align="center" style="font-size: 10pt">-78-
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="143"></A>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Limitations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The above discussion includes only those exposures that exist as of December&nbsp;31, 2005 and as a
result, does not consider exposures or positions that could arise after that date. The Company&#146;s
ultimate realized gain or loss with respect to interest rate and exchange rate fluctuations would
depend on the exposures that arise during the period, the Company&#146;s hedging strategies at the time,
and interest and foreign exchange rates.
</DIV>
<DIV align="left">
<A name="144"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;12. Description of Securities Other Than Equity Securities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART II</B>
</DIV>

<DIV align="left">
<A name="145"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;13. Defaults, Dividend Arrearages, and Delinquencies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="146"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="147"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;15. Controls and Procedures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Disclosure Controls and Procedures. </I>The Company&#146;s Chief Executive Officer, or CEO, and Chief
Financial Officer, or CFO, are responsible for establishing and maintaining its disclosure controls
and procedures. These controls and procedures were designed to ensure that information required to
be disclosed in the reports that the Company files under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported within the time periods specified in the
rules and forms of the SEC. The Company evaluated these disclosure controls and procedures under
the supervision of its CEO and CFO as of December&nbsp;31, 2005. Based on this evaluation, the Company&#146;s
CEO and CFO concluded that the Company&#146;s disclosure controls and procedures are effective in timely
alerting them to information required to be disclosed in our periodic reports to the SEC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Internal Control Over Financial Reporting. </I>It is the Board&#146;s responsibility to ensure that
the Company maintains sound and effective internal controls over financial reporting. There were no
changes in the Company&#146;s internal control over financial reporting that occurred during the year
ended December&nbsp;31, 2005 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting. The top management, the internal control
committee and the Internal Audit team will continue to monitor and review regularly the
effectiveness of the internal control system of the Company and from time to time take action
whenever there is any weakness in the process.
</DIV>
<DIV align="left">
<A name="148"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16A. Audit Committee Financial Expert</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Board of Directors has determined that it has a member, Dr.&nbsp;Lui King Man, of its
Audit Committee, that qualifies as an &#147;audit committee financial expert&#148; as defined in subsection
(b)&nbsp;of Item&nbsp;16A of Form 20-F, and is &#147;independent&#148; under the rules and regulations of the New York
Stock Exchange.
</DIV>
<DIV align="left">
<A name="149"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16B. Code of Ethics</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company currently has a Code of Ethics. This Code of Ethics is made available at the
Company&#146;s website: www.apstar.com.
</DIV>

<P align="center" style="font-size: 10pt">-79-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="150"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16C. Principal Accountant Fees and Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aggregate fee billed to the APT Group for the fiscal years ended December&nbsp;31, 2004 and 2005 by
our principal accounting firm, KPMG, respectively and their respective affiliates are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>Years ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><I>(in US$ thousands)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All other fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Audit Fees&#148; are the aggregate fees billed (for the year) for the audit of the Company&#146;s
annual financial statements, reviews of interim financial statements and attestation services that
are normally provided in connection with statutory and regulatory filings or engagements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s Audit Committee oversees our independent auditors. See also the description
under the heading &#147;Board Practices&#148; in &#147;Item&nbsp;6. Directors, Senior Management and Employees.&#148; The
Company&#146;s Audit Committee&#146;s policy is to approve any audit or permitted non-audit services proposed
to be provided by its independent auditors before engaging its independent auditors to provide such
services. Pursuant to this policy, which is designed to assure that such engagements do not impair
the independence of the Company&#146;s auditors, the Chairperson of the Company&#146;s Audit Committee is
authorized to approve any such services between meetings of the Audit Committee, subject to
ratification by the Audit Committee, and to report any such approvals to the Audit Committee at its
next meeting.
</DIV>
<DIV align="left">
<A name="151"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16D. Exemption from the Listing Standards for Audit Committees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>

<DIV align="left">
<A name="152"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Not applicable.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART III</B>
</DIV>

<DIV align="left">
<A name="153"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;17. Financial Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has elected to provide financial statements for fiscal year 2005 and the related
information pursuant to Item&nbsp;18 in lieu of Item&nbsp;17.
</DIV>
<DIV align="left">
<A name="154"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;18. Financial Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reference is made to pages F-1 to F-65 for year-end financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APT Satellite Telecommunications Limited met the significant tests in 2003 which requires,
under SEC Rule&nbsp;3-09 of Regulation&nbsp;S-X the provision of separate financial statements. Such
financial statements are filed in exhibit 8.2 to this Annual Report.
</DIV>


<P align="center" style="font-size: 10pt">-80-
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left">
<A name="155"></A>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Item&nbsp;19. Exhibits.</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Exhibit No.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Description of Exhibit</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The amended Memorandum of Association and Bye-Laws of APT Satellite Holdings Limited which
was adopted at the Company&#146;s annual general meeting on May&nbsp;20, 2004.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Satellite Procurement Agreement by and between APT Satellite Company Limited, a wholly owned
subsidiary of the Company, and Contractor, an independent third party not associated with the
Directors, chief executive officer and major shareholders of the Company or any of its
subsidiaries, dated January&nbsp;8, 2001 (incorporated by reference to the Company&#146;s 6-K filed with
the Commission on January&nbsp;9, 2001).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Launch Agreement by and between APT Satellite Company Limited, a wholly owned subsidiary of
the Company, and the Launch Contractor, a subsidiary of China Aerospace Science &#038; Technology
Corporation, dated January&nbsp;8, 2001 (incorporated by reference to the Company&#146;s 6-K filed with
the Commission on January&nbsp;9, 2001).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Satellite Procurement Agreement by and between APT Satellite Company Limited, a wholly owned
subsidiary of the Company, and Contractor, an independent third party not associated with the
Directors, chief executive officer and major shareholders of the Company or any of its
subsidiaries, dated December&nbsp;11, 2001 (incorporated by reference to the Company&#146;s 6-K filed
with the Commission on December&nbsp;18, 2001).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Term Sheet executed by and between APT Satellite Company Limited, a wholly owned subsidiary
of the Company, Contractor and Loral Orion, Inc., both of which are independent third party
not associated with the Directors, chief executive officer and major shareholders of the
Company or any of its subsidiaries, dated September&nbsp;20, 2002 (incorporated by reference to the
Company&#146;s 6-K filed with the Commission on September&nbsp;30, 2002).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Transponder Utilization Agreement by and between APT Satellite Company Limited, a wholly
owned subsidiary of the Company, and Lessee, a connected person under the rules governing the
listing of securities on The Stock Exchange of Hong Kong Limited, dated April&nbsp;11, 2003
(incorporated by reference to the Company&#146;s 6-K filed with the Commission on April&nbsp;16, 2003<I>).</I></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.6
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Change of Auditors of the Company KPMG with effect from July&nbsp;15, 2003 (incorporated by
reference to the Company&#146;s 6-K filed with the Commission on July&nbsp;17, 2003).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.7
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Satellite Procurement Amendment Agreement by and between APT Satellite Company Limited, a
wholly owned subsidiary of the Company, and the Contractor, a party independent of the
Director, chief executive officer and substantial shareholder of the Company and its
subsidiaries and their respective associates, dated August&nbsp;26, 2003. The Satellite
Transponder Agreement and Satellite Agreement by and between APT Satellite Company Limited, a
wholly owned subsidiary of the Company, and the lessor, a party independent of the Director,
chief executive officer and substantial shareholder of the Company and its subsidiaries and
their respective associates, dated August&nbsp;26, 2003 (incorporated by reference to the
Company&#146;s 6-K filed with the Commission on September&nbsp;2, 2003).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.8
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Various on-going transactions in their ordinary course of business had entered into between
the APT Group of the Company and APT Telecom, a non-wholly owned subsidiary of the Company,
and the contracting party, a connected person under the rules governing the listing of
securities on The Stock Exchange of Hong Kong Limited, as announced August&nbsp;28, 2003
(incorporated by reference to the Company&#146;s 6-K filed with the Commission on September&nbsp;2,
2003).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.9
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Master Agreement by and between APT Satellite Telecommunications Limited, a non-wholly owned
subsidiary of the Company, Skywork Corporation, a wholly owned subsidiary of the Company, APT
Telecom Services Limited, a wholly owned subsidiary of the Company, and a connected person
under the rules governing the listing of securities on The Stock Exchange of Hong Kong
Limited, dated September&nbsp;10, 2003 whereby the business of APT Satellite</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">-81-
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Exhibit No.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Description of Exhibit</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telecommunications Limited was being reorganized (incorporated by reference to the
Company&#146;s 6-K filed with the Commission on September&nbsp;15, 2003).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.10
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Agreement and the Amended Launch Agreement by and between APT Satellite Company Limited,
a wholly owned subsidiary of the Company, and the Contractor of APSTAR V, dated November&nbsp;16,
2003 (incorporated by reference to the Company&#146;s 6-K filed with the Commission on September
17, 2003).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">An utilization agreement for the remaining life of APSTAR I by and between APT Satellite
Company Limited, a wholly owned subsidiary of the Company, and the customer, dated October&nbsp;22,
2004 (incorporated by reference to the Company&#146;s 6-K filed with the Commission on October&nbsp;29,
2004).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.12
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">An agreement by and between APT Satellite Company Limited, a wholly owned subsidiary of the
Company, and the grantor and contractor of APSTAR VIB dated November&nbsp;10, 2004 (incorporated by
reference to the Company&#146;s 6-K filed with the Commission on November&nbsp;15, 2004).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.13
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Two Master Agreements by and between the Company and Singapore Telecommunications Limited;
and the Company and C2C Pte Limited dated December&nbsp;1, 2004 (incorporated by reference to the
Company&#146;s 6-K filed with the Commission on December&nbsp;3, 2004).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">8.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">List of subsidiaries and the jurisdictions under which each does business (contained in Note
1 to the Consolidated Financial Statements in Item&nbsp;18 herein).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">8.2**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Financial statements of APT Satellite Telecommunications Limited</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">14.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended Charter of the Audit Committee.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">14.2*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Charter of the Nomination Committee</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">14.3*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Charter of the Remuneration Committee</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>


<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.1**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of CEO</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>



<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.2**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of CFO</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>


<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.3**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of CEO pursuant to 18 U.S.C. Section&nbsp;1350, as adopted pursuant to Section&nbsp;906
of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.4**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of CFO pursuant to 18 U.S.C. Section&nbsp;1350, as adopted pursuant to Section&nbsp;906
of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.5**
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Updated significant Differences in Corporate Governance Practices.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Exhibit is incorporated by reference to the exhibit of the
same number in the Company&#146;s 20-F filed with the Commission on June&nbsp;29, 2005.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">**</TD>
    <TD>&nbsp;</TD>
    <TD>Filed herewith.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">-82-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company hereby certifies that it meets all of the requirements for filing an Annual Report
on Form 20-F and has duly caused and authorized the undersigned to sign this Annual Report on its
behalf.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><BR><U>/s/
<FONT style="font-variant: small-caps">Ni</FONT>
<FONT style="font-variant: small-caps">Yifeng</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Ni Yifeng<BR>
Executive Director and President

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Date:
June&nbsp;30, 2006
</DIV>



<P align="center" style="font-size: 10pt">-83-
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>APT SATELLITE HOLDINGS LIMITED AND SUBSIDIARIES</U>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Consolidated Financial Statements<BR>
Years ended December&nbsp;31, 2003, 2004 and 2005<BR>
and Report of Independent Registered Public Accounting Firm</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#300">Report of Independent Registered Public Accounting Firm </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F - 2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#301">Consolidated Balance Sheets as of December&nbsp;31, 2004 and 2005 </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F - 3 &#038; 4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#302">Consolidated Statements of Operations for the years ended December&nbsp;31, 2003, 2004 and 2005 </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F - 5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#303">Consolidated Statements of Changes in Equity for the years ended December&nbsp;31, 2003, 2004 and 2005 </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F - 6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#304">Consolidated Statements of Cash Flows for the years ended December&nbsp;31, 2003, 2004 and 2005 </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F - 7 &#038; 8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#305">Notes to the Consolidated Financial Statements </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F - 9 &#150; 65</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><IMG src="h00612h0061201.gif" alt="(KPMG LOGO)">
</DIV>
<DIV align="left">
<A name="300"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B><BR>
The Board of Directors and<BR>
Shareholders of<BR>
APT Satellite Holdings Limited:

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have audited the accompanying consolidated balance sheets of APT Satellite Holdings Limited
and subsidiaries (the &#147;Group&#148;) as of December&nbsp;31, 2004 and 2005 and the related consolidated
statements of operations, changes in shareholders&#146; equity and cash flows for the years ended
December&nbsp;31, 2004 and 2005, all expressed in Hong Kong dollars. These consolidated financial
statements are the responsibility of the Group&#146;s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States) and generally accepted auditing standards in Hong Kong. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of APT Satellite Holdings Limited and subsidiaries as of
December&nbsp;31, 2004 and 2005, and the results of their operations and their cash flows for each of
the years in the three-year period ended December&nbsp;31, 2005 in conformity with accounting principles
generally accepted in Hong Kong.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As further described in Note 4 to the consolidated financial statements, in 2005 the Group adopted
all new applicable Hong Kong Financial Reporting Standards, which collective term includes all
applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards
(&#147;HKAS&#148;) and Interpretations, issued by the Hong Kong Institute of Certified Public Accountant.
Consequently, certain amounts for the years ended December&nbsp;31, 2003 and 2004 were required to and
have been restated to comply with the 2005 initial adoption provisions of those applicable HKAS&#146;s.
The Group adopted HKAS 32 &#147;Financial Instruments: Disclosure and Presentation&#148; and HKAS 39
&#147;Financial Instruments: Recognition and Measurement&#148;, prospectively as of January&nbsp;1, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Accounting principles generally accepted in Hong Kong vary in certain material respects from
accounting principles generally accepted in the United States of America. Information relating to
the nature and effect of such differences is presented in Note 28 to the consolidated financial
statements. As further described in Note 28 to the consolidated financial statements, the amounts
of certain differences between accounting principles generally accepted in Hong Kong and accounting
principles generally accepted in the United States of America for the years ended December&nbsp;31, 2004
and 2003 have been restated as a result of the adoption of certain HKAS&#146;s described in Note 4.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying consolidated financial statements as of and for the year ended December&nbsp;31, 2005
have been translated into United States dollars solely for the convenience of the reader. We have
audited the translation, and in our opinion, the consolidated financial statements expressed in
Hong Kong dollars have been translated into United States dollars on the basis set forth in Note 2
to the consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">KPMG<BR>
Hong Kong<BR>
April&nbsp;10, 2006

</DIV>

<P align="center" style="font-size: 10pt">F- 2
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>

<DIV align="left">
<A name="301"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED BALANCE SHEETS</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><B>AS OF DECEMBER 31, 2004 AND 2005</B></DIV>


<DIV align="center" style="font-size: 10pt">(Amounts stated in thousands)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">Note</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">US$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">673,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">326,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,852</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Pledged bank deposits </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,699</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,807</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Trade receivables, less allowance of HK$9,874
in 2004 and HK$10,291 in 2005 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,753</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,375</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amount due from a jointly controlled entitiy </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">654</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deposits, prepayments and other receivables, less
allowance of HK$10,219 in 2004 and
HK$10,219 in 2005 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,191</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,605</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">766,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">485,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,293</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property, plant and equipment, net </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,680,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,999,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">384,539</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest in leasehold land held for</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Own use under an operating lease</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,996</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Investment property </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest in jointly controlled entities </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Share of net assets </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">288</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Amounts due from a jointly controlled entity </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,476</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,651</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepayment for construction of a satellite </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other assets </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,842</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred tax assets </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">461</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">TOTAL ASSETS </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,620,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,614,289</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">463,370</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">See accompanying notes to the consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F- 3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED BALANCE SHEETS (continued)<BR>
AS OF DECEMBER 31, 2004 AND 2005</B><BR>
(Amounts stated in thousands)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">Note</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">US$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payables and accrued charges </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,614</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Rentals received in advance </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,027</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loan from a minority shareholder </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,488</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,488</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">960</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes payable </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,434</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bank loans &#151; current portion </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,098</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,133</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deposits received </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,607</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,986</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,049</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Bank loans &#150; non-current portion </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">904,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,244</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">261,380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239,011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,643</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred tax liabilities </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">TOTAL LIABILITIES </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,423,783</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,552,737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199,069</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contingencies and commitments </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Shareholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital stock &#151; Common stock </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,299</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional paid-in capital </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,798,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,798,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">230,581</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital reserve </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,538</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Translation reserve </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other reserves </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Retained earnings </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">329,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">205,315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,322</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,193,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,058,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">263,926</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Minority interests </B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">375</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">TOTAL LIABILITIES AND
EQUITY </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,620,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,614,289</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">463,370</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">See accompanying notes to the consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F- 4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>

<DIV align="left">
<A name="302"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED STATEMENTS OF OPERATIONS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B></DIV>


<DIV align="center" style="font-size: 10pt">(Amounts stated in thousands, except per share data)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">Note</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">US$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Provision of satellite transponder capacity to:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unaffiliated customers </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">212,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">243,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,183</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Related parties </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,084</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Provision of satellite-based telecommunications services to:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unaffiliated customers </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,248</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Related parties </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,592</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Service income received from:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Unaffiliated customers </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,614</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,562</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Related parties </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total revenues </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,143</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Costs and expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cost of service including depreciation
and amortization of 2003: HK$236,027,
2004: HK$177,692 and 2005: HK$197,880</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(280,319</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(244,755</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(301,193</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38,615</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling, general and administrative including
depreciation and amortization of 2003: HK$295,
2004: HK$300 and 2005: HK$301 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(73,994</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(78,680</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(77,199</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,897</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total costs and expenses </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(354,313</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(323,435</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(378,392</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(48,512</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(52,072</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(46,175</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(41,880</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,369</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other operating revenues</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income &#151; net </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,656</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Compensation income for late delivery
of the satellite</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,928</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Deficit)/surplus arising on revaluation of
investment property </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(70</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Impairment loss recognized in respect
of property, plant and equipment </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(129,098</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,800</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,512</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(963</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Impairment
loss recognized in respect of prepayment for construction of a satellite</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(59,904</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,680</TD>
    <TD nowrap>)</TD>
</TR>



<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gain on partial disposal of an associate </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from operations </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">21</TD>
    <TD nowrap>(d)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(148,189</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38,565</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(78,465</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10,059</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Borrowing costs </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">21</TD>
    <TD nowrap>(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,117</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(36,942</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,736</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share of losses of jointly controlled entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(57,133</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,709</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,995</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,025</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss before income taxes </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(205,322</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(45,391</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(123,402</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15,820</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for income taxes </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,721</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16,625</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,172</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,689</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss for the year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(217,043</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(62,016</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(136,574</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17,509</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Attributable to:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity shareholders of the Company </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(216,120</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(59,957</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(135,564</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17,380</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interests </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(923</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,059</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,010</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(129</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss for the year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(217,043</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(62,016</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(136,574</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17,509</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Basic </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(52 cents)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(15 cents)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(33 cents)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(4 cents)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Diluted </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(52 cents)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(15 cents)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(33 cents)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(4 cents)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">See accompanying notes to the consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F- 5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>

<DIV align="left">
<A name="303"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B></DIV>


<DIV align="center" style="font-size: 10pt">(Amounts stated in thousands)</DIV>


<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>paid -in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Revaluation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Translation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Retained</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Minority</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>reserve</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>reserve</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>reserve</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>reserves</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>earnings</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>interests</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Total equity</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000"><B>Note</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as
at January&nbsp;1,&nbsp;2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,794,520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">632,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,468,311</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,468,311</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interests (as
previously presented
separately from liabilities
and equity at 31 December)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4</TD>
    <TD nowrap>(d)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,838</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prior period adjustments
arising from changes in
accounting policies under:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">- HKFRS 2 share-based payment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4</TD>
    <TD nowrap>(a)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,392</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,639</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="39" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At 1 January&nbsp;2003 (Restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,794,520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">601,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,475,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,482,788</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares issued under the share
option scheme</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,607</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,518</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,518</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation
adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(282</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(282</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(282</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Transfer to other reserves</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(216,120</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(216,120</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(923</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(217,043</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="39" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at 31 December&nbsp;2003
(Restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,798,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,424</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">385,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,253,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,258,945</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="39" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At 1 January&nbsp;2004 as
previously reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,796,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">407,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,253,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,253,030</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interests (as
previously presented
separately from liabilities
and equity at 31 December)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4</TD>
    <TD nowrap>(d)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,915</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prior period adjustments
arising from changes in
accounting policies under:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">- HKAS 40 investment properties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4</TD>
    <TD nowrap>(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,700</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">- HKFRS 2 share-based payment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4</TD>
    <TD nowrap>(a)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,424</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(29,494</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="39" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At 1 January&nbsp;2004 (Restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,798,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,424</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(100</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">385,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,253,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,258,945</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation
adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancellation of share options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,460</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(59,957</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(59,957</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,059</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62,016</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="39" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at 31 December&nbsp;2004
(Restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,798,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">329,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,193,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,197,009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="39" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At 1 January&nbsp;2005 as
previously reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,796,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">349,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,193,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,193,153</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interests (as
previously presented
separately from liabilities
and equity at 31 December)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4</TD>
    <TD nowrap>(d)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,856</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prior period adjustments
arising from changes in
accounting policies under:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">- HKSA 39 financial instruments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4</TD>
    <TD nowrap>(e)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(333</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(333</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(333</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">- HKAS 40 investment properties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4</TD>
    <TD nowrap>(b)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,500</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">- HKFRS 2 share-based payment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4</TD>
    <TD nowrap>(a)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,034</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="39" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At 1 January&nbsp;2005 (Restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,798,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">328,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,192,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,196,676</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation
adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,450</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancellation of share options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,968</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(135,564</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(135,564</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,010</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(136,574</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="39" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at 31 December&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,798,536</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">205,315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,058,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,061,552</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="39" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 18pt">See accompanying notes to the consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F- 6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>

<DIV align="left">
<A name="304"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B></DIV>


<DIV align="center" style="font-size: 10pt">(Amounts stated in thousands)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">US$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(205,322</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(45,391</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(123,402</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15,820</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments for:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">235,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">177,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">197,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,360</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Amortisation of leasehold land held for own use</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Impairment loss recognized in respect of property,
property, plant and equipment </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">963</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Impairment loss recognised in respect of prepayment for
construction of a satellite</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,680</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Gain on partial disposal of an associate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,111</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,312</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12,916</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,656</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Borrowing cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,736</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Loss/(gain) on disposal of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(109</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Deficit/(surplus) arising on revaluation of investment property</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(78</TD>
    <TD nowrap>)</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Share of losses of jointly controlled entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,025</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Share-based payment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(898</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Allowance for doubtful receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Operating profit before changes in working capital </B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">217,682</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174,457</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,367</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Increase)/decrease in trade receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(47,055</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,393</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(563</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Increase) in other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(87</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(27,604</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,863</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,136</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Increase)/decrease in amount due from immediate
holding company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Increase)/decrease in deposits, prepayments and other
receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(240</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,815</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,472</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Decrease)/increase in payables and accrued charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(955</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,939</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Decrease)/increase in rentals received in advance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,789</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Increase)/decrease in amounts due from jointly controlled
entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12,731</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(768</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;Decrease in amount due from an associate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Decrease)/increase in deferred income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22,286</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">233,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">433</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Decrease) in deposits received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,582</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(25,353</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22,369</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,867</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Cash generated from operations </B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">353,841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163,966</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,021</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Hong Kong profits tax paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,541</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(108,135</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Overseas tax paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(18,313</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12,328</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14,438</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,851</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net cash from operating activities </B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">233,378</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,170</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Investing activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payment for purchase of property, plant and equipment and
construction of satellites</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(763,454</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(462,026</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(581,230</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(74,517</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from partial disposal of an associate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from disposal of property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advances/loans to jointly controlled entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(40,920</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,261</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(290</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,279</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,404</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,718</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Decrease/(increase) in pledged bank deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">205,823</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,723</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(47,559</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,097</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net cash used in investing activities </B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(589,259</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(364,492</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(617,468</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(79,163</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">See accompanying notes to the consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F- 7
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS &#151; continued<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts stated in thousands)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">US$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Financing activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest paid </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,681</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15,847</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(32,582</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,177</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">New bank borrowings </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">538,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,400</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repayment of bank borrowings </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(317,682</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(77,805</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,975</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from shares issued under the share option scheme </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net cash from financing activities </B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">218,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">257,933</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,933</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,248</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net (decrease)/increase in cash and cash equivalents </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(279,111</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">126,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(349,007</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(44,745</TD>
    <TD nowrap>)</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash and cash equivalents at January&nbsp;1, </B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">826,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">546,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">673,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,380</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Effect of foreign exchange rate changes </B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(282</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,684</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">216</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash and cash equivalents at December&nbsp;31, </B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">546,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">673,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">326,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,851</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Analysis of the balance of cash and cash equivalents:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deposits with banks </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">539,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">661,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">316,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,601</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash at bank and in hand </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,086</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,755</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at December&nbsp;31, </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">546,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">673,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">326,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,851</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">See accompanying notes to the consolidated financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F- 8
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>

<DIV align="left">
<A name="305"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>

</DIV>
<DIV align="center" style="font-size: 10pt">(Amounts stated in thousands, except share data)</DIV>



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ORGANIZATION AND PRINCIPAL ACTIVITIES</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>APT Satellite Holdings Limited (the &#147;Company&#148;) was incorporated under the laws of Bermuda on
October&nbsp;17, 1996 with limited liability. The Company owns all the issued shares of APT
Satellite Investment Company Limited, which, in turn, holds all the issued voting shares of
APT Satellite Company Limited.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company and its subsidiaries (hereafter collectively referred to as the &#147;Group&#148;)
currently operate five satellites. The Company&#146;s first satellite, APSTAR I, was launched in
July&nbsp;1994 and commenced commercial service in September&nbsp;1994. After the commencement of
commercial service of APSTAR V, APSTAR I was operated in an inclined orbital mode in October
2004. The Company&#146;s second satellite, APSTAR IA, was launched in July&nbsp;1996 and commenced
commercial service in September&nbsp;1996. The Company&#146;s third satellite, APSTAR IIR, was
launched in October&nbsp;1997 and commenced commercial service in January&nbsp;1998. In August&nbsp;1999, the Company provided substantially all of the transponders of
APSTAR IIR to a third party for the rest of its life. The Company&#146;s
fourth satellite, APSTAR V, was launched in June&nbsp;2004 and commenced commercial service in
August&nbsp;2004. In April&nbsp;2005, the Company&#146;s fifth
satellite, APSTAR VI, was successfully launched and commenced commercial service in June
2005. Both APSTAR I and APSTAR 1A were operated in an inclined orbital mode.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following list contains only the particulars of subsidiaries which principally affected
the results, assets or liabilities of the Group. The class of shares held is ordinary
unless otherwise stated.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All of these are controlled subsidiaries and have been consolidated into the Group financial
statements.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">F- 9
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>1.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 0px solid #000000"><B>Proportion of ownership interest</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>Place of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>Particulars of issued and</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>Group&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>incorporation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>paid up capital and debt</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>effective</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>held by the</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>held by</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom">
    <TD nowrap align="right"><B>Name of Company</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>and operation*</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>securities</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>interest</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>Company</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="3"><B>subsidiary</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>Principal activities</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT Satellite Investment<BR>
Company Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">British Virgin Islands
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">US$1,400
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Investment holding</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Acme Star Investment Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Hong Kong
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">HK$2
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Inactive</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT Satellite Company Limited<BR>
(&#147;APT&#148;)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Hong Kong
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Ordinary Class &#147;A&#148;
HK$100; Non-voting
Deferred Class &#147;B&#148;
HK$542,500,000
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Provision of
satellite
transponder
capacity</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT Satellite Enterprise Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Cayman Islands
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">US$2
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Provision of
satellite
transponder
capacity</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT Satellite Global Company<BR>
Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Cayman Islands
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">US$2
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Investment holding</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT Satellite Link Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Cayman Islands
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">US$2
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Provision of
satellite
transponder
capacity</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT Satellite Telewell Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Hong Kong
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">HK$2
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Inactive</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT Satellite TV Development<BR>
Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Hong Kong
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">HK$2
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Provision of
satellite
television uplink
and downlink
services</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT Satellite Vision Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Hong Kong
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">HK$2
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Satellite leasing</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT Telecom Services Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Hong Kong
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">HK$2
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Provision of
telecommunication
services</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Haslett Investments Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">British Virgin Islands
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">US$1
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Inactive</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Skywork Corporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">British Virgin<BR>
Islands
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">US$1
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Investment holding</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">The 138 Leasing Partnership<BR>
(&#147;Partnership&#148;)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Hong Kong
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Partners&#146; capital<BR>
HK$329,128,857
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">N/A</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">N/A</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">N/A</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Inactive</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ying Fai Realty (China) Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Hong Kong/ People&#146;s
Republic of China
(&#147;PRC&#148;)
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">HK$20
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Property holding</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">

<TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">APT
Communication Technology <BR>Development (Shenzhen) Co.,
Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Wholly-owned foreign enterprises, PRC</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Registered capital HK$5,000,000</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Provision of
satellite transponder
capacity</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>




<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">CTIA VSAT Network Limited<BR>
(&#147;CTIA&#148;)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Hong Kong
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">HK$5,000,000
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">60</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">60</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Investment holding</TD>
</TR>

<TR style="font-size: 6pt">
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="background: #cceeff">

<TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Beijing
Asia Pacific East <BR>Communication Network Limited (&#147;BAPE&#148;)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top" nowrap>Joint venture, PRC
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top" nowrap>Registered capital US$4,000,000
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">36</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">60</TD>
    <TD nowrap valign="top">%</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">Provision of data
transmission
services</TD>
</TR>





<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>The place of operation is the place of incorporation/establishment unless
otherwise stated.</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left" colspan=3>No loan capital has been issued by any of the subsidiaries.</TD>
</TR>

</TABLE>




<P align="center" style="font-size: 10pt">F- 10
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>2.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>BASIS OF PRESENTATION</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>These financial statements have been prepared in accordance with all applicable Hong
Kong Financial Reporting Standards (HKFRSs), which collective term includes all applicable
individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (HKASs)
and Interpretations issued by the Hong Kong Institute of Certified Public Accountants
(HKICPA), accounting principles generally accepted in Hong Kong(&#147;HK GAAP&#148;). Significant
differences between HK GAAP and accounting principles generally accepted in the United
States (&#147;US GAAP&#148;) are summarised in note 28.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The HKICPA has issued a number of new and revised HKFRSs that are effective or available
for early adoption for accounting periods beginning on or after January&nbsp;1, 2005.
Information on the changes in accounting policies resulting from initial application of
these new and revised HKFRSs for the current and prior accounting periods reflected in
these financial statements is provided in note 4.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The measurement basis used in the preparation of the consolidated financial
statements is historical cost modified by the revaluation of investment properties as
explained in the accounting policies set out below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The consolidated financial statements of the Group are expressed in Hong Kong dollars
(&#147;HK$&#148;). The translations of amounts from Hong Kong dollars into United States dollars for
convenience of the reader have been made at the rate on December&nbsp;31, 2005 of HK$7.80 =
US$1.00, which approximates the noon buying rate in New York City for cable transfers in
Hong Kong Dollars as certified for customs purposes by the Federal Reserve Bank of New York
on December&nbsp;31, 2005. No representation is made that the Hong Kong dollar amounts could
have been, or could be, converted into United States dollars at that rate or at any other
certain rate on December&nbsp;31, 2005, or any other certain date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Basis of consolidation</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The consolidated financial statements include the financial statements of the
Company and its subsidiaries. A subsidiary, is a company in which the Group, directly
or indirectly, holds more than half of the issued share capital or controls more than
half the voting powers or controls the composition of the board of directors.
Subsidiaries are considered to be controlled if the Group has the power, directly or
indirectly, to govern the financial and operating policies, so as to obtain benefits
from their activities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An investment in a controlled subsidiary is consolidated into the consolidated
financial statements from the date that control commences until the date that control
ceases.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Intra-group balances and transactions, and any unrealised profits arising from
intra-group transactions, are eliminated in full in preparing the consolidated
financial statements. Unrealised losses resulting from intra-group transactions are
eliminated in the same way as unrealised gains but only to the extent that there is no
evidence of impairment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Minority interests at the balance sheet date, being the portion of the net assets of
subsidiaries attributable to equity interests that are not owned by the Company,
whether directly or indirectly through subsidiaries, are presented in the consolidated
balance sheet and statement of changes in equity, separately from equity attributable
to shareholders of the company. Minority interests in the results of the Group are
presented on the face of the consolidated statement of operations as an allocation of
the total profit or loss for the year between minority interests and the equity
shareholders of the Company.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F- 11
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Basis of consolidation (continued)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Where losses attributable to the minority exceed the minority interest in the
equity of a subsidiary, the excess, and any further losses attributable to the
minority, are charged against the Group&#146;s interest except to the extent that the
minority has a binding obligation to, and is able to, fund the losses. If the
subsidiary subsequently reports profits, the Group&#146;s interest is allocated all such
profits until the minority&#146;s share of losses previously absorbed by the Group has been
recovered.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The particulars of the Group&#146;s principal subsidiaries are set out in note 1.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Associates and jointly controlled entities</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An associate is an entity in which the Group or Company has significant influence, but
not control or joint control, over its management, including participation in the
financial and operating policy decisions.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A jointly controlled entity is an entity which operates under a contractual
arrangement between the Group or Company and other parties, where the contractual
arrangement establishes that the Group or Company and one or more of the other parties
share joint control over the economic activity of the entity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An investment in an associate or a jointly controlled entity is accounted for in the
consolidated financial statements under the equity method and is initially recorded at
cost and adjusted thereafter for the post acquisition change in the Group&#146;s share of
the associate&#146;s or the jointly controlled entity&#146;s net assets, unless it is classified
as held for sale (or included in a disposal group that is classified as held for
sale). The consolidated statement of operations reflects the Group&#146;s share of the
post-acquisition results of the associates and jointly controlled entities for the
year, including any impairment loss on goodwill relating to the investment in
associates and jointly controlled entities recognised for the year (see note 3(c)).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>When the Group&#146;s share of losses exceeds its interest in the associate or the jointly
controlled entity, the Group&#146;s interest is reduced to nil and recognition of further
losses is discontinued except to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of the associate or the jointly
controlled entity. For this purpose, the Group&#146;s interest in the associate or the
jointly controlled entity is the carrying amount of the investment under the equity
method together with the Group&#146;s long-term interests that in substance from part of
the Group&#146;s net investment in the associate or the jointly controlled entity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unrealised profits and losses resulting from transactions between the Group and its
associates and jointly controlled entities are eliminated to the extent of the Group&#146;s
interest in the associate or jointly controlled entity, except where unrealised losses
provide evidence of an impairment of the asset transferred, in which case they are
recognised immediately in the statement of operations.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F- 12
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Goodwill</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Goodwill represents the excess of the cost of a business combination or an investment
in an associate or a jointly controlled entity over the Group&#146;s share in the net fair
value of the acquiree&#146;s identifiable assets, liabilities and contingent liabilities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated
to cash-generating units and is tested annually for impairment. In respect of
associates or jointly controlled entities, the carrying amount of goodwill is included
in the carrying amount of the interest in the associate or jointly controlled entity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any excess of the Group&#146;s interest in the net fair value of the acquiree&#146;s
identifiable assets, liabilities and contingent liabilities over the cost of a
business combination or an investment in an associate or a jointly controlled entity
is recognised immediately in profit or loss.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On disposal of a controlled subsidiary, an associate or a jointly controlled entity
during the year, any attributable amount of purchased goodwill is included in the
calculation of the profit or loss on disposal.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Investment property</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Investment properties are land and/or buildings which are owned or held under a
leasehold interest (see note 3(f)) to earn rental income and/or for capital
appreciation. These include land held for a currently undetermined future use.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Investment properties are stated in the balance sheet at fair value. Any gain or loss
arising from a change in fair value or from the retirement or disposal of an
investment property is recognised in profit or loss. Rental income from investment
properties is accounted for as described in (note 3(o)(iv)).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>When the Group holds a property interest under an operating lease to earn rental
income and/or for capital appreciation, the interest is classified and accounted for
as an investment property on a property-by-property basis. Any such property interest
which has been classified as an investment property is accounted for as if it were
held under a finance lease (see note 3(f)), and the same accounting policies are
applied to that interest as are applied to other investment properties leased under
finance leases. Lease payments are accounted for as described in note 3(f).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other property, plant and equipment</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following items of property, plant and equipment are stated in the balance sheet
at cost less accumulated depreciation and impairment losses:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>buildings held for own use which are situated on leasehold land,
where the fair value of the building could be measured separately from the fair
value of the leasehold land at the inception of the lease (see note 3(f)); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other items of plant and equipment</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">Gains or losses arising from the retirement or disposal of an item of property, plant
and equipment are determined as the difference between the net disposal proceeds and
the carrying amount of the item and are recognised in the statement of operations on
the date of retirement or disposal. Any related revaluation surplus is transferred
from the revaluation reserve to retained profits.
</DIV>

<P align="center" style="font-size: 10pt">F- 13
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other property, plant and equipment(continued)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Depreciation is calculated to write off the cost or valuation of items of property,
plant and equipment, less their estimated residual value, if any, using the straight
line method over their estimated useful lives as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Buildings situated on leasehold land are depreciated over the
shorter of the unexpired term of lease and their estimated useful lives, being no
more than 50&nbsp;years after the date of completion.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Leasehold improvements
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Over the lease term</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Furniture and equipment, motor vehicles,
and computer equipment
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">5&nbsp;years</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Communication satellite equipment
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">5 to 15&nbsp;years</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Communication stations
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">5&nbsp;years</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">-
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">Communication satellites
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">9 to 16&nbsp;years</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">Where parts of an item of property, plant and equipment have different useful lives,
the cost or valuation of the item is allocated on a reasonable basis between the parts
and each part is depreciated separately. Both the useful life of an asset and its
residual value, if any, are reviewed annually.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Leased assets</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Classification of assets leased to the Group</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Assets that are held by the Group under leases which transfer to the Group
substantially all the risks and rewards of ownership are classified as being
held under finance leases. Leases which do not transfer substantially all the
risks and rewards of ownership to the Group are classified as operating leases,
with the following exceptions:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>property held under operating leases that would
otherwise meet the definition of an investment property is classified as an
investment property on a property-by-property basis and, if classified as
investment property, is accounted for as if held under a finance lease (see
note 3(d)); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>land held for own use under an operating lease, the
fair value of which cannot be measured separately from the fair value of a
building situated thereon at the inception of the lease, is accounted for
as being held under a finance lease, unless the building is also clearly
held under an operating lease. For these purposes, the inception of the
lease is the time that the lease was first entered into by the Group, or
taken over from the previous lessee, or at the date of construction of
those buildings, if later.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Assets acquired under finance leases</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Where the Group acquires the use of assets under finance leases, the amounts
representing the fair value of the leased asset, or, if lower, the present value
of the minimum lease payments, of such assets are included in fixed assets and
the corresponding liabilities, net of finance charges, are recorded as
obligations under finance leases. Depreciation is provided at rates which write
off the cost of the assets in equal annual amounts, to residual values, over the
term of the relevant lease or, where it is likely the Company or Group will
obtain ownership of the asset, the life of the asset, as set out in note 3(e).
Impairment losses are accounted for in accordance with the accounting policy as
set out in note 3(g). Finance charges implicit in the lease payments are charged
to the statement of operations over the period of the leases so as to produce an
approximately constant periodic rate of charge on the remaining balance of the
obligations for each accounting period. Contingent rentals are reported as an
expense of the accounting period in which they are incurred.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F- 14
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Leased assets (continued)</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Operating lease charges</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Where the Group has the use of assets under operating leases, payments made
under the leases are charged to the statement of operations in equal instalments
over the accounting periods covered by the lease term, except where an
alternative basis is more representative of the pattern of benefits to be
derived from the leased asset. Lease incentives received are recognised in the
statement of operations as an integral part of the aggregate net lease payments
made. Contingent rentals are charged to the statement of operations in the
accounting period in which they are incurred.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The cost of acquiring land held under an operating lease is amortised on a
straight-line basis over the period of the lease term except where the property
is classified as an investment property.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Impairment of other assets</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Internal and external sources of information are reviewed at each balance sheet date
to identify indications that the following assets may be impaired or an impairment
loss previously recognised no longer exists or may have decreased:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>property, plant and equipment;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>investments in subsidiaries, associates and joint ventures;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>trade and other receivables; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>goodwill.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">If any such indication exists, the asset&#146;s recoverable amount is estimated. In
addition, for goodwill, intangible assets that are not yet available for use and
intangible assets that have indefinite useful lives, the recoverable amount is
estimated annually whether or not there is any indication of impairment.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Calculation of recoverable amount</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The recoverable amount of an asset is the greater of its net selling price
and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of time value of money and the risks specific to the
asset. Where an asset does not generate cash inflows largely independent of those
from other assets, the recoverable amount is determined for the smallest group of
assets that generates cash inflows independently (i.e. a cash-generating unit).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Recognition of impairment losses</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An impairment loss is recognised in the statement of operations whenever the
carrying amount of an asset, or the cash-generating unit to which it belongs,
exceeds its recoverable amount. Impairment losses recognised in respect of
cash-generating units are allocated first to reduce the carrying amount of any
goodwill allocated to the cash-generating unit (or group of units) and then, to
reduce the carrying amount of the other assets in the unit (or group of units) on
a pro rata basis, except that the carrying value of an asset will not be reduced
below its individual fair value less costs to sell, or value in use, if
determinable.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F- 15
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Impairment of other assets (continued)</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Reversals of impairment losses</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In respect of assets other than goodwill, an impairment loss is reversed if there
has been a favourable change in the estimates used to determine the recoverable
amount. An impairment loss in respect of goodwill is not reversed.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A reversal of impairment losses is limited to the asset&#146;s carrying amount that
would have been determined had no impairment loss been recognised in prior years.
Reversals of impairment losses are credited to the statement of operations in the
year in which the reversals are recognised.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(h)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Trade and other receivables</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Trade and other receivables are initially recognised at fair value and thereafter
stated at amortised cost less impairment losses for bad and doubtful debts (see note
3(g)), except where the receivables are interest-free loans made to related parties
without any fixed repayment terms. In such cases, the receivables are stated at cost
less impairment losses for bad and doubtful debts.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest-bearing borrowings</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest-bearing borrowings are recognised initially at fair value less attributable
transaction costs. Subsequent to initial recognition, interest-bearing borrowings are
stated at amortised cost with any difference between cost and redemption value being
recognised in the statement of operations over the period of the borrowings using the
effective interest method.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(j)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Trade and other payables</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Trade and other payables are initially recognised at fair value and thereafter stated
at amortised cost unless the effect of discounting would be immaterial, in which case
they are stated at cost.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(k)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cash and cash equivalents</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cash and cash equivalents comprise cash at bank and on hand, demand deposits with
banks and other financial institutions, and short-term, highly liquid investments that
are readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value, having been within three months of maturity at
acquisition. Bank overdrafts that are repayable on demand and form an integral part of
the Group&#146;s cash management are also included as a component of cash and cash
equivalents for the purpose of the consolidated cash flow statement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(l)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employee benefits</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Salaries, annual bonuses, paid annual leave, leave passage and
the cost to the Group of non-monetary benefits are accrued in the year in which
the associated services are rendered by employees of the Group. Where payment
or settlement is deferred and the effect would be material, these amounts are
stated at their present values.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Contributions to Mandatory Provident Funds as required under the
Hong Kong Mandatory Provident Fund Schemes Ordinance, are
recognised as an expense in the consolidated statement of operations as
incurred.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F- 16
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(l)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employee benefit (continued)</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The employees of the Group participate in retirement plans managed by respective
local governments of the municipalities in which the Group operates in the
People&#146;s Republic of China (the &#147;PRC&#148;). The Group&#146;s contributions to the plan
are calculated based on fixed rates of the employees&#146; salary costs and charged
to the statement of operations when incurred. The Group has no other obligation
for the payment of retirement and other post-retirement benefits of staff other
than the contributions described above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Share based payments</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The fair value of share options granted to employees is recognised as an
employee cost with a corresponding increase in a capital reserve within equity.
The fair value is measured at grant date using the binomial lattice model,
taking into account the terms and conditions upon which the options were
granted. Where the employees have to meet vesting conditions before becoming
unconditionally entitled to the share options, the total estimated fair value of
the share options is spread over the vesting period, taking into account the
probability that the options will vest.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the vesting period, the number of share options that is expected to vest
is reviewed. Any adjustment to the cumulative fair value recognised in prior
years is charged/credited to the statement of operations for the year of the
review, unless the original employee expenses qualify for recognition as an
asset, with a corresponding adjustment to the capital reserve. On vesting date,
the amount recognised as an expense is adjusted to reflect the actual number of
share options that vest (with a corresponding adjustment to the capital reserve)
except where forfeiture is only due to not achieving vesting conditions that
relate to the market price of the Company&#146;s shares. The equity amount is
recognised in the capital reserve until either the option is exercised (when it
is transferred to the share premium account) or the option expires (when it is
released directly to retained profits).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Termination benefits</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Termination benefits are recognised when, and only when, the Group demonstrably
commits itself to terminate employment or to provide benefits as a result of
voluntary redundancy by having a detailed formal plan which is without realistic
possibility of withdrawal.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(m)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income tax</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income tax for the year comprises current tax and movements in deferred tax assets and
liabilities. Current tax and movements in deferred tax assets and liabilities are
recognised in the statement of operations except to the extent that they relate to
items recognised directly in equity, in which case they are recognised in equity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Current tax is the expected tax payable on the taxable income for the year, using tax
rates enacted or substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Deferred tax assets and liabilities arise from deductible and taxable temporary
differences respectively, being the differences between the carrying amounts of assets
and liabilities for financial reporting purposes and their tax bases. Deferred tax
assets also arise from unused tax losses and unused tax credits.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F- 17
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(m)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income tax (continued)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Apart from certain limited exceptions, all deferred tax liabilities, and all deferred
tax assets to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised, are recognised. Future taxable
profits that may support the recognition of deferred tax assets arising from
deductible temporary differences include those that will arise from the reversal of
existing taxable temporary differences, provided those differences relate to the same
taxation authority and the same taxable entity, and are expected to reverse either in
the same period as the expected reversal of the deductible temporary difference or in
periods into which a tax loss arising from the deferred tax asset can be carried back
or forward. The same criteria are adopted when determining whether existing taxable
temporary differences support the recognition of deferred tax assets arising from
unused tax losses and credits, that is, those differences are taken into account if
they relate to the same taxation authority and the same taxable entity, and are
expected to reverse in a period, or periods, in which the tax loss or credit can be
utilised.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The limited exceptions to recognition of deferred tax assets and liabilities are those
temporary differences arising from goodwill not deductible for tax purposes, negative
goodwill treated as deferred income, the initial recognition of assets or liabilities
that affect neither accounting nor taxable profit (provided they are not part of a
business combination), and temporary differences relating to investments in
subsidiaries to the extent that, in the case of taxable differences, the Group
controls the timing of the reversal and it is probable that the differences will not
reverse in the foreseeable future, or in the case of deductible differences, unless it
is probable that they will reverse in the future.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The amount of deferred tax recognised is measured based on the expected manner of
realisation or settlement of the carrying amount of the assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet date. Deferred tax
assets and liabilities are not discounted.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The carrying amount of a deferred tax asset is reviewed at each balance sheet date and
is reduced to the extent that it is no longer probable that sufficient taxable profit
will be available to allow the related tax benefit to be utilised. Any such reduction
is reversed to the extent that it becomes probable that sufficient taxable profit will
be available.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Additional income taxes that arise from the distribution of dividends are recognised
when the liability to pay the related dividends is recognised.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Current tax balances and deferred tax balances, and movements therein, are presented
separately from each other and are not offset. Current tax assets are offset against
current tax liabilities, and deferred tax assets against deferred tax liabilities if,
and only if, the Company or the Group has the legally enforceable right to set off
current tax assets against current tax liabilities and the following additional
conditions are met:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in the case of current tax assets and liabilities, the Company or
the Group intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in the case of deferred tax assets and liabilities, if they relate
to income taxes levied by the same taxation authority on either:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the same taxable entity; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">-</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>different taxable entities, which, in each future period in
which significant amounts of deferred tax liabilities or assets are expected
to be settled or recovered, intend to realise the current tax assets and
settle the current tax liabilities on a net basis or realise and settle
simultaneously.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F- 18
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(n)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Provisions and contingent liabilities</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Provisions are recognised for liabilities of uncertain timing or amount when the
Company or Group has a legal or constructive obligation arising as a result of a past
event, it is probable that an outflow of economic benefits will be required to settle
the obligation and a reliable estimate can be made. Where the time value of money is
material, provisions are stated at the present value of the expenditures expected to
settle the obligation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Where it is not probable that an outflow of economic benefits will be required, or the
amount cannot be estimated reliably, the obligation is disclosed as a contingent
liability, unless the probability of outflow of economic benefits is remote. Possible
obligations, whose existence will only be confirmed by the occurrence or
non-occurrence of one or more future events are also disclosed as contingent
liabilities unless the probability of outflow of economic benefits is remote.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(o)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Revenue recognition</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Provided it is probable that the economic benefits will flow to the Group and the
revenue and costs, if applicable, can be measured reliably, revenue is recognized in
the statement of operations as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Transponder utilization income</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income from provision of satellite transponder capacity and related
services is recognised in the statement of operations in equal instalments over
the accounting periods covered by the contract term, except where an alternative
basis is more representative of the pattern of benefits to be derived from the
satellite transponder capacity utilised.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Service income</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Service income in respect of provision of satellite-based broadcasting and
telecommunications services and other service is recognised when services are
provided.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest income</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest income from bank deposits is accrued on a time-apportioned basis by
reference to the principal outstanding and the rate applicable.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Rental income from operating leases</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Rental income receivable under operating leases is recognised in the statement
of operations in equal instalments over the periods covered by the lease term,
except where an alternative basis is more representative of the pattern of
benefits to be derived from the use of the leased asset.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(p)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Translation of foreign currencies</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Foreign currency transactions during the year are translated at the foreign exchange
rates ruling at the transaction dates. Monetary assets and liabilities denominated in
foreign currencies are translated at the foreign exchange rates ruling at the balance
sheet date. Exchange gains and losses are recognised in the statement of operations,
except those arising from foreign currency borrowings used to hedge a net investment
in a foreign operation which are recognised directly in equity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Non-monetary assets and liabilities that are measured in terms of historical cost in a
foreign currency are translated using the foreign exchange rates ruling at the
transaction dates. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated using the foreign exchange
rates ruling at the dates the fair value was determined.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F- 19
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(p)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Translation of foreign currencies (continued)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The functional currency of the Group&#146;s main operations is the United States dollar
which is translated into Hong Kong dollar for reporting of the financial statements.
As the Hong Kong dollar is pegged to the United States dollar, foreign currency
exchange fluctuations have an insignificant impact to the Group.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The results of foreign operations are translated into Hong Kong dollars at the
exchange rates approximating the foreign exchange rates ruling at the dates of the
transactions. Balance sheet items are translated into Hong Kong dollars at the foreign
exchange rates ruling at the balance sheet date. The resulting exchange differences
are recognised directly in a separate component of equity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On disposal of a foreign operation, the cumulative amount of the exchange differences
recognised in equity which relate to that foreign operation is included in the
calculation of the profit or loss on disposal.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(q)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Borrowing costs</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Borrowing costs are expensed in the statement of operations in the period in which
they are incurred, except to the extent that they are capitalised as being directly
attributable to the acquisition or construction of an asset which necessarily takes a
substantial period of time to get ready for its intended use or sale.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The capitalisation of borrowing costs as part of the cost of a qualifying asset
commences when expenditures for the asset are being incurred, borrowing costs are
being incurred and activities that are necessary to prepare the asset for its intended
use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases
when substantially all the activities necessary to prepare the qualifying asset for
its intended use or sale are interrupted or complete.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(r)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Related parties</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the purposes of these financial statements, parties are considered to be related
to the Group if the Group has the ability, directly or indirectly, to control the
party or exercise significant influence over the party in making financial and
operating decisions, or vice versa, or where the Group and the party are subject to
common control or common significant influence. Related parties may be individuals
(being members of key management personnel, significant shareholders and/or their
close family members) or other entities and include entities which are under the
significant influence of related parties of the Group where those parties are
individuals, and post-employment benefit plans which are for the benefit of employees
of the Group or of any entity that is a related party of the Group.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(s)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Segment reporting</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which is
subject to risks and rewards that are different from those of other segments.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In accordance with the Group&#146;s internal financial reporting system, the Group has
chosen business segment information as the primary reporting format and geographical
segment information as the secondary reporting format for the purposes of these
financial statements.</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F- 20
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(s)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Segment reporting (continued)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Segment revenue, expenses, results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on a reasonable
basis to that segment. Segment assets of the Group include trade receivables and
property, plant and equipment. Segment revenue, expenses, assets, and liabilities are
determined before intra-group balances and intra-group transactions are eliminated as
part of the consolidation process, except to the extent that such intra-group
balances and transactions are between Group entities within a single segment.
Inter-segment pricing is based on terms similar to those available to other external
parties.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Segment capital expenditure is the total cost incurred during the period to acquire
segment assets (both tangible and intangible) that are expected to be used for more
than one period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(t)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Loss per share</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The calculation of the basic and diluted loss per share is based on the following data:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="92%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">HK$</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss for the purposes of calculating
basic and diluted loss per share
(net loss for the year) </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(216,120</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(59,957</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(135,564</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of shares
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average number of ordinary shares for
the purposes of calculating basis and diluted loss
per share </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">412,892</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413,265</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413,265</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">Options to purchase 8,450 shares and 4,230 shares of common stock at HK$2.765 per
share were outstanding during the year 2004 and 2005, respectively, but were not
included in the computation of diluted EPS because the options&#146; exercise price was
greater than the average market price of the common shares for the period. The
options, which expire on May&nbsp;21, 2011, were still outstanding at the end of year
2005.
</DIV>

<P align="center" style="font-size: 10pt">F-21
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(u)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Use of estimates</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The preparation of financial statements in conformity with HKFRSs requires management
judgements, estimates any assumptions that affect the application of policies and
reported amounts of assets, liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognized in the period in which estimate is revised if
the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Judgements made by management in the application of HKFRSs that have significant
effect on the financial statements and estimates are discussed in note 26.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CHANGES IN ACCOUNTING POLICIES</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The HKICPA has issued a number of new and revised HKFRSs that are effective for accounting periods beginning on or
after January&nbsp;1, 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The accounting policies of the Group after the adoption of
these new and revised HKFRSs have been summarised in note 3. The
following sets our information on the significant changes in
accounting policies for the current and prior accounting periods
reflected in these financial statements.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group has not applied any new standard or interpretation that is not yet effective
for the current accounting period (see note 27).</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(a)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Employee share option scheme (HKFRS 2, Share-based payment)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In prior years, no amounts were recognised when employees (which term includes
directors) were granted share options over shares in the Company. If the employees
chose to exercise the options, the nominal amount of share capital and share premium
were credited only to the extent of the option&#146;s exercise price receivable.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With effect from January&nbsp;1, 2005, in order to comply with HKFRS 2, the Group
recognises the fair value of such share options as an expense in the statement of
operations, or as an asset, if the cost qualifies for recognition as an asset under
the Group&#146;s accounting policies. A corresponding increase is recognised in a capital
reserve within equity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Where the employees are required to meet vesting conditions before they become
entitled to the options, the Group recognises the fair value of the options granted
over the vesting period. Otherwise, the Group recognises the fair value in the period
in which the options are granted.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If an employee chooses to exercise options, the related capital reserve is
transferred to share capital and share premium, together with the exercise price.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-22
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CHANGES IN ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(a)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Employee share option scheme (HKFRS 2, Share-based payment) (continued)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The new accounting policy has been applied retrospectively by decreasing the
opening balance of retained earnings as of January&nbsp;1, 2003, 2004 and 2005 by
HK$30,392, HK$27,424 and HK$23,964 respectively, with the corresponding amount
credited to capital reserve. The Group&#146;s loss before taxation for the year ended
December&nbsp;31, 2003 has decreased by HK$ 898. There is no effect on the Group&#146;s loss
before income taxes for the years ended December, 31 2004 and 2005 as a result of
this new accounting policy because no additional options were granted nor did any
options from previous grants vest during these periods.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Details of the employee share option scheme are set out in note 23.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(b)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Investment properties (HKAS 40, Investment property)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Changes in accounting policies relating to investment properties are as follows.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><I>&nbsp;</I></TD>
    <TD width="1%"><I>&nbsp;</I></TD>
    <TD><I>Timing of recognition of movements in fair value in the statement of operations</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In prior years, movements in the fair value of the Group&#146;s investment properties
were recognised directly in the investment properties revaluation reserve except
when, on a portfolio basis, the reserve was insufficient to cover a decline in the
fair value of the portfolio, when a decline previously recognised in the statement of
operations had reversed, or when an individual investment property was disposed of.
In these limited circumstances movements in the fair value were recognised in the
statement of operations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon adoption of HKAS 40 as of January&nbsp;1, 2005, all changes in the fair value of
investment properties are recognised directly in the statement of operations in
accordance with the fair value model in HKAS 40.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>These changes in accounting policy have been adopted retrospectively by
increasing the opening balance of retained earnings as of January&nbsp;1, 2004 and 2005
by HK$7,700 and HK$5,500 respectively, to include all of the Group&#146;s previous
investment properties revaluation reserve.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As a result of this new policy, the Group&#146;s loss before taxation for the years
ended December&nbsp;31, 2003, 2004 and 2005 has decreased by HK$7,700, increased by
HK$2,200 and HK$7,150 respectively, consisting of the Group&#146;s share of the net
increase or decrease in the fair value of the investment property held by the Group&#146;s
jointly controlled entity. The decrease is reflected in the share of results of
jointly controlled entities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(c)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Leasehold land and buildings held for own use (HKAS 17, Leases)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In prior years, leasehold land held for own use which was presented as part of &#147;Land
and buildings&#148; in &#147;Property, plant and equipment&#148; was stated at cost less accumulated
depreciation and accumulated impairment losses. Depreciation was calculated to
write-off the cost of leasehold land on a straight-line basis over their lease term.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-23
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CHANGES IN ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With effect from January&nbsp;1, 2005, in order to comply with HKAS 17, leasehold
land held for own use is accounted for as being held under an operating lease where
the fair value of the interest in any buildings situated on the leasehold land could
be separately identified from the fair value of the leasehold land at the time the
lease was first entered into by the Group, or taken over from the previous lessee, or
at the date of construction of those buildings, if later. Any pre-paid land premiums
for acquiring the leasehold land, or other lease payments, are stated at cost and are
amortized on a straight-line basis over the respective periods of the lease term.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any buildings held for own use which are situated on such land leases continue to be
presented as part of property, plant and equipment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The new accounting policy has been adopted retrospectively, but there is no
impact on the Group&#146;s net assets as at the year end and on the Group&#146;s loss for the
years presented. An additional line item &#147;Interest in leasehold land held for own use
under an operating lease&#148; , which was previously included in &#147;Property, plant and
equipment&#148; has been included on the face of the consolidated balance sheet. The
comparative figure for &#147;Property, plant and equipment&#148; has been reclassified to
conform with the current year&#146;s presentation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(d)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Minority interests (HKAS 1, Presentation of financial statements and HKAS 27,
Consolidated and separate financial statements)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In prior years, minority interests at the balance sheet date were presented in
the consolidated balance sheet separately from liabilities and as a deduction
from net assets. Minority interests in the results of the Group for the year were
also separately presented in the statement of operations as a deduction before
arriving at the profit attributable to shareholders.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With effect from January&nbsp;1, 2005, in order to comply with HKAS 1 and HKAS 27, minority
interests at the balance sheet date are presented in the consolidated balance sheet within equity, separately from the equity attributable to the equity holders of
the parent. Minority interests in the results of the Group for the year are presented on the
face of the consolidated statement of operations as an allocation of the total profit or loss
for the year between the minority interests and the equity holders of the parent.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The presentation of minority interests in the consolidated balance sheet,
consolidated statement of operations and consolidated statement of changes in equity
for the comparative years have been restated accordingly.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(e)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Financial instruments (HKAS 32, Financial instruments: Disclosure and
presentation and HKAS 39 Financial instruments: Recognition and measurement)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In prior years, loan arrangement fee was included as part of the &#147;Deposits,
prepayments and deferred expenses&#148; and was amortised on a straight line basis over
the terms of the relevant bank borrowings. With effect from January&nbsp;1, 2005, in order
to comply with HKAS 39, the unamortised balance of the loan arrangement fee previously included in deposits,
prepayments and other receivables under current assets and other assets of HK$1,561
and HK$4,679 respectively, is now presented as a deduction from the secured bank
borrowings in the consolidated balance sheet and amortised by using the effective
interest method.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The new accounting policy has been applied by decreasing the opening balance of
retained earnings as of January&nbsp;1, 2005 by HK$333, and the Group&#146;s loss before
taxation for the year ended December&nbsp;31, 2005 has increased by HK$504.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-24
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CHANGES IN ACCOUNTING POLICIES (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(f)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Definition of related parties (HKAS 24, Related party disclosures)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As a result of the adoption of HKAS 24, Related party disclosures, the
definition of related parties as disclosed in note 3(r) has been expanded to clarify
that related parties include entities that are under the significant influence of a
related party that is an individual (i.e. key management personnel, significant
shareholders and/or their close family members) and post-employment benefit plans
which are for the benefit of employees of the Group or of any entity that is a
related party of the Group. The clarification of the definition of related parties
has not resulted in any material changes to the previously reported disclosures of
related party transactions nor has it had any material effect on the disclosures made
in the current period, as compared to those that would have been reported had SSAP
20, Related party dislosures, still been in effect.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>PROPERTY, PLANT AND EQUIPMENT</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Furniture and</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">equipment, motor</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Commun-</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">vehicles, and</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">ication</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Commun-</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Commun-</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Land and</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Leasehold</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">computer</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">satellite</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">ication</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">ication</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Construction</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">buildings</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">improvements</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">equipment</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">equipment</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">stations</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">satellites</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">in progress</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Total</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At January&nbsp;1, 2004 (restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,092</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,251</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,678</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,100,129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,020,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,405,899</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">474</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,624</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">420,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">430,740</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Disposals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,344</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(472</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,818</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Transfer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,157,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,158,527</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At December&nbsp;31, 2004
(restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">130,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,258,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,283,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,833,821</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At January&nbsp;1, 2005 (restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">130,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,258,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,283,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,833,821</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exchange adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">562</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,017</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">151</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">521,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">524,464</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Disposals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(473</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(368</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(45</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(896</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Transfer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,770,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,803,338</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,028,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,357,951</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated depeciation:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At January&nbsp;1, 2004 (restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,973</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,874,281</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,976,859</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charge for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">676</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,893</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,565</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">151,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">177,617</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Impairment loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Written back on disposal</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,344</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(440</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,785</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At December&nbsp;31, 2004
(restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,025,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,153,491</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated depeciation:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At January&nbsp;1, 2005 (restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,025,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,153,491</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exchange adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charge for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,185</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,663</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">171,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">197,806</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Impairment loss transfer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,157</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,837</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Impairment loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,512</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Written back on disposal</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(105</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(361</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(492</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,289</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,944</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,767</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,891</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,197,381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,358,549</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net book value:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,944</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,344</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,831,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,999,402</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At December&nbsp;31, 2004
(restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,546</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,564</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,232,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,281,310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,680,330</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">Interest expense of HK$16,704 and HK$9,762 and other related cost of HK$3,598 and
HK$2,222 incurred for obtaining the loans were capitalized during the years ended
December&nbsp;31, 2004 and 2005, respectively.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 3pt">F-25</div>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>PROPERTY, PLANT AND EQUIPMENT (continued)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Fixed assets finance leases</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The fair value of the buildings held for own use, which are situated on
leasehold land as disclosed above cannot be measured separately from the fair value of
the leasehold land at the inception of the lease, and therefore is accounted for as
being held under a finance lease.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In August&nbsp;2004, the in-orbit tests of APSTAR V with 54 transponders was
completed and APSTAR V was put into service on August&nbsp;13, 2004. Based on the
arrangements entered into by the Group and the vendor, Loral Orion, Inc (&#147;Loral
Orion&#148;), the Group assumed risks and rewards of 37 transponders (&#147;APT Transponders&#148;)
for the entire operational life of APSTAR V under finance leases, while the risks and
rewards relating to the other 17 transponders remained with Loral Orion. As at December
31, 2004 and 2005, the net book value of communication satellites held under finance
leases in connection with APSTAR V amounted to HK$1,126,576 and HK$1,045,095,
respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pursuant to the various amended agreements with Loral Orion, Loral Orion has an option to
lease 4 APT Transponders from the fourth year and another 4 APT Transponders from the
fifth year after completion of in-orbit tests of APSTAR V to its remaining operational
lives at a total consideration of HK$282,865. The transponders subject to this option had
a net book value of HK$243,584 and HK$225,966 at 31 December&nbsp;2004 and 2005 respectively.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>Impairment loss</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">During the years ended December&nbsp;31, 2003, 2004 and 2005, the Group conducted a review of
the Group&#146;s property, plant and equipment and determined that certain assets were impaired as
the recoverable amount of these assets is estimated to be less than their carrying amount.
Accordingly, an impairment loss of HK$129,098 in respect of communication satellites,
HK$1,800 in respect of construction in progress and HK$7,512 in respect of communication
satellite equipment had been recognised and charged to the statement of operations in 2003,
2004 and 2005 respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>Communication satellites at an inclined mode operation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">During the year, the Group has entered into an utilisation agreement with a customer to
utilise the APSTAR IA communication satellite to work in an inclined orbital mode for at
least 5&nbsp;years. Accordingly, the residual value of APSTAR IA is now being amortised over the
above contract terms from July&nbsp;1, 2005. Other satellites have no change of their remaining
useful lives.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>The analysis of net book value of land and buildings held by the Group is as follows :</B>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" colspan="2">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Medium-term leases outside Hong Kong</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,584</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Medium-term leases in Hong Kong </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,624</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,794</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,944</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-26
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>INTEREST IN LEASEHOLD LAND HELD FOR OWN USE UNDER
AN OPERATING LEASE</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>HK$</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2">(restated)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">Cost:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">At 1 January&nbsp;2004 and 31 December&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,678</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">Accumulated depreciation:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">At 1 January&nbsp;2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,358</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">Charge for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">375</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">At 31 December&nbsp;2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,733</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">At 1 January&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,733</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">Charge for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">375</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">At 31 December&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,108</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">Net book value:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">At 31 December&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,570</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">At 31 December&nbsp;2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,945</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>INVESTMENT PROPERTY</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The investment property was revalued at December&nbsp;31, 2004 and 2005 at HK$2,340 by Savills
Valuation and Professional Services Limited (2004: Chesterton Petty Limited), an independent
professional property valuer, on an open market value basis by reference to net rental
income allowing for reversionary income potential. A revaluation deficit of HK$70,
revaluation surplus of HK$78 and no revaluation surplus or deficit, was charged or credited
to the consolidated statements of operations for the years ended December&nbsp;31, 2003, 2004 and
2005 respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The investment property, which is situated in the PRC under a medium-term lease, is rented
out under an operating lease and the rental income earned from the investment property for
the years ended December&nbsp;31, 2003 and 2004 and 2005 was HK$245, HK$250 and HK$254,
respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>8.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>INTEREST IN JOINTLY CONTROLLED ENTITIES</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">Share of net assets </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,241</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">Amounts due from a jointly controlled entity </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,476</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,717</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-27
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>8.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>INTEREST IN JOINTLY CONTROLLED ENTITIES (continued)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Details of the jointly controlled entities of the Group as at December&nbsp;31, 2005 are
set out below:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000"><B>Proportion of ownership interest</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2"><B>Form of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Place of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Particulars of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Group&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>held by</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>held by</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2"><B>business</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>incorporation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>issued and paid</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>effective</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>the</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>the</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Principal</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Name of joint venture</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="2"><B>structure</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>and operation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>up capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>interest</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Company</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>subsidiary</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>activity</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">APT Satellite
Telecommunications
Limited (&#147;APT
Telecom&#148;)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Incorporated</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">Hong Kong</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">HK$153,791,900</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">55</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">55</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" nowrap align="right">Property<br>holding</TD>    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Beijing Zhong Guang
Xin Da Data Broadcast
Technology Co.
Limited
(&#147;Zhong Guang Xin Da&#148;)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Joint venture, Incorporated</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">PRC</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="right">Registered capital RMB11,000,000</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">12.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">35</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" nowrap align="right">Provision of<br>data<br>transmission<br>services</TD>    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">APT Telecom is considered as a jointly controlled entity as the Group and the other
shareholder of APT Telecom both have the right to appoint an equal number of directors to
the board of directors.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">APT Telecom completed the reorganization on October&nbsp;10, 2003, whereby its entire cable
interests were sold to its shareholder for HK$5,560; while the Fixed Carrier Licence and
all its related businesses was sold to APT Telecom Services Limited, a subsidiary of the
Group for HK$6,800, respectively. A surrender of service and facilities leasing agreement
between APT Telecom and APT Satellite Company Limited, a subsidiary of the Group, was
executed on the same date in respect of an early termination of services and facilities
lease for compensation of HK$13,500. The summarized information of APT Telecom is set out
in note 28(h)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">Zhong Guang Xin Da is considered a jointly controlled entity as the Group and the
other shareholder of Zhong Guang Xin Da exercise joint control over it pursuant to a
shareholders&#146; resolution.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">The amounts due from a jointly controlled entity are unsecured and interest-free.
Except for an amount of HK$13,500 and HK$13,200 as at December&nbsp;31, 2004 and 2005
respectively, the amounts have no fixed repayment terms.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">At 31 December&nbsp;2005, the amount of HK$13,200 is repayable as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">Within one year or on demand</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">After one year but within five years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,200</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">The Group has agreed not to demand repayment of other amounts due from a jointly controlled
entity within the next twelve months from the balance sheet date and accordingly, the amount
is classified as non-current.
</DIV>

<P align="center" style="font-size: 10pt">F-28
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>9.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>PREPAYMENT FOR CONSTRUCTION OF A SATELLITE</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In 2004, the Group had entered into an agreement with a contractor on November&nbsp;10, 2004
pursuant to which the Group is granted a right to require the contractor to provide for the
design, construction, delivery and launch of a new satellite, APSTAR VIB at the total
option price of HK$59,904. If the option was exercised, the total consideration for the
procurement and launch of APSTAR VIB would be HK$936,780 and the option price would be
applied towards the total consideration.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>HK$</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At January&nbsp;1, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepayment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,454</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,454</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At January&nbsp;1, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,454</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepayment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,450</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Impairment loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(59,904</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">In view of the successful launch of APSTAR VI on April&nbsp;12, 2005, the Group did not
exercise the option before the expiry date of September&nbsp;30, 2005. According to the terms of
the option agreement, the option has expired and the option agreement is deemed to be
terminated. The Group was responsible for all reasonable costs and expenses incurred up to the
date of termination in respect of the preparation work for the design, construction, delivery
and launch of APSTAR VIB. The balance of option price (net of all reasonable costs and
expenses incurred) could be transferred to such other satellite project as designated by the
Group or the contractor within two years after the expiry date of the option. In the event
that the balance of option price would be transferred to another customer as designated by the
contractor, the balance of the option price would be refunded to the Group. Up to and
including the date hereof, the Group has no plan for the procurement and launch of a new
satellite in the coming two years due to the fact that the transponder market has remained
highly competitive and the current supply of transponders exceeds demand in the Asia Pacific
region, the possibility of transferring the preparation work of APSTAR VIB to another
satellite project of another customer as designated either by the Group or the contractor in
the coming two years is expected to be remote. Accordingly, as the Group does not currently
expect the option price to be applied towards any future satellite project within the required
time restriction or that the contractor will refund the balance of option price to the Group,
an impairment loss of HK$59,904 (2004: HK$nil) has been recognised in respect of the
prepayment for construction of a satellite.
</DIV>

<P align="center" style="font-size: 10pt">F-29
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>10.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>BANK LOANS</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="96%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">December 31, 2004 (restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">December 31, 2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Weighted</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Weighted</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">average</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">average</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">interest</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">interest</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Note</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Interest rate</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">rate</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">rate</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bank loans denominated
in US Dollars:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(a</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payable semi-annually from
2005 (secured)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">LIBOR&#043;0.73%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.27</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">351,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.04</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">315,900</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payable semi-annually with
the first instalment falling
due on September&nbsp;30, 2005 (secured)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">LIBOR&#043;0.73%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.41</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">624,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.25</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">811,395</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">975,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,127,295</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: borrowing cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,240</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,236</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">969,540</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,118,059</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(64,778</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(117,757</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">904,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000,302</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

 <DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; margin-left: 4%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 1pt; margin-left: 4%">Notes:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In December&nbsp;2002, the Group entered into a US$240&nbsp;million secured term loan
facility (the &#147;Loan Facility&#148;), which is secured by the assignment of the construction,
launching and related equipment contracts relating to APSTAR V, APSTAR VI under
construction and their related insurance claim proceeds, assignment of all present and
future utilisation agreements of their transponders of satellites under construction,
first fixed charge over certain bank accounts which will hold receipts of the
transponder income and the termination payments under construction, launching and
related equipment contracts. In October&nbsp;2004, the Group entered into a Deed of Amendment
and Restatement to amend certain terms of the Loan Facility for the purpose of adjusting
for the cancellation of the unutilised portion relating to APSTAR V satellite and APSTAR
VI backup satellite. Accordingly, the maximum aggregate amount under the Loan Facility
was reduced to US$165&nbsp;million and certain financial covenants were amended. In May&nbsp;2005,
the Company entered into a Second Deed of Amendment and Restatement. The second
amendment extended the availability period of drawing under the facility with respect to
APSTAR VI to June&nbsp;30, 2005 and amended the financial covenants. The Company was in
compliance with these covenants as of December&nbsp;31, 2005. At December&nbsp;31, 2004, APSTAR V
and APSTAR VI were reported as construction-in-progress with an aggregate carrying value
of approximately HK$2,398,169 and at December&nbsp;31, 2005, APSTAR V and APSTAR VI were
transferred to fixed assets with a net book value of approximately HK$2,752,162. As of
December&nbsp;31, 2004 and 2005, APSTAR V and APSTAR VI were pledged by the bank deposits of
approximately HK$20,750 and HK$68,699 respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Loan Facility agreement contains the following covenants:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Restricted Distributions </U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Loan Facility provides that the Company may make annual dividend payments only
when Projected EBITDA (as defined in the Loan Facility) plus Free Cash (as defined in
the Loan Facility) less capital expenditure for that year is less than (i)&nbsp;130% of
Project Debt Service (as defined in the Loan Facility) of that year before the
release of certain pledged assets and (ii)&nbsp;180% of Project Debt Service after the
release of certain pledged assets.</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-30
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>10.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>BANK LOANS (continued)</B></TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%"><U>Financial Covenants</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">The Loan Facility provides that certain earnings and cash flow ratios of APT and the
Group must be measured over various periods during its term. APT and the Group
undertakes to ensure that (i)&nbsp;it maintains its aggregate Consolidated Net Worth (as
defined in the Loan Facility) at not less than US$200&nbsp;million (other than that for
the years ending December&nbsp;31, 2002 and 2003, it will be not less than US$230
million), (ii)&nbsp;the aggregate of Consolidated Total Liabilities (as defined in the
Loan Facility) shall not exceed 120% of Consolidated Net Worth, (iii)&nbsp;Consolidated
EBITDA (as defined in the Loan Facility) shall not be less than US$25&nbsp;million, (other
than for the year ending December&nbsp;31, 2004 and 2005, it will not be less than US$17
million), (iv)&nbsp;the ratio of the aggregate outstanding principal under each tranche to
the value of the satellite financed by such tranche shall not exceed 50% and (v)
after the release of certain pledged assets, Borrower EBITDA (as defined in the Loan
Facility) shall be at least 180% of Debt Service (as defined in the Loan Facility).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%"><U>Block Account/Withdrawal Conditions</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">Under the Loan Facility, (i)&nbsp;insurance proceeds obtained as a result of Total or
Material Partial Loss (as defined in the Loan Facility) relating to APSTAR V and
APSTAR VI and (ii)&nbsp;Termination sum of related construction contracts must be deposited
in a designated account. The withdrawal of deposited amounts in such accounts may
only occur in accordance with provision contained in the Loan Facility.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%"><U>Others</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">The Loan Facility includes covenants customary for agreements of this type, including
restrictions on APT and the Company&#146;s ability to incur indebtedness, certain
ownership restrictions, restrictions on affiliated transactions, covenants with
respect of compliance with laws, maintenance of licenses and permits required for the
Group&#146;s business and a requirement that all future transponder utilization agreements
be entered into on an arms-length basis. Among others, APT undertakes to ensure that
its ultimate holding company, APT Satellite International Company Limited, directly
owns at least 50.01% of the voting rights in the Group.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">For the years presented, the Group complied with all the above covenants.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">The aggregate annual repayments of bank loans as at December&nbsp;31, 2005 are as follows:
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="90%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117,757</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">156,777</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">217,624</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255,315</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2010 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">272,402</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98,184</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,118,059</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">At December&nbsp;31, 2004 and 2005, certain of the Group&#146;s banking facilities were secured by the
Group&#146;s land and buildings with a net book value of HK$4,887 and HK$4,771, respectively and
bank deposits of approximately HK$390 and HK$nil, respectively.
</DIV>

<P align="center" style="font-size: 10pt">F- 31
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>11.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>DEPOSIT RECEIVED</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The amount represents deposits received in respect of provision of satellite transponder
capacity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>12.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>DEFERRED INCOME</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Deferred income represents unrecognized revenue received in respect of transponder
utilization income under which customers have obtained the right to use the transponder
capacity for future periods. Deferred income is recognised in the statement of operations
according to revenue recognition policy of transponder utilization income as mentioned in
note 3 (o)(i).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>13.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>PAYABLES AND ACCRUED CHARGES</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for employee benefits </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,349</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest payables </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,315</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrued expenses for operations </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,948</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other accrued expenses </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,981</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,593</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>14.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CONTINGENCIES AND COMMITMENTS</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Capital commitments:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At December&nbsp;31, 2004 and 2005, the Group had the following outstanding capital
commitments not provided for in the Group&#146;s financial statements:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="90%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Contracted for </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">286,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,290</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Authorized but not contracted for </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">340,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total commitments </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">626,599</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,290</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Leasing arrangements &#151; operating lease:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group as lessee</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the balance sheet date, the Group had commitments for future minimum lease
payments under non-cancellable operating leases which fall due as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="85%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Land and buildings:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">545</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F- 32
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>14.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CONTINGENCIES AND COMMITMENTS (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Leasing arrangements &#151; operating lease: (continued)</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group as lessee (continued)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Operating lease rental expenses were HK$3,650, HK$1,010 and HK$486 for the
years ended December&nbsp;31, 2003, 2004 and 2005, respectively.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="85%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Satellite transponder capacity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,108</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,122</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 15%">Operating lease rental expenses were HK$3,228, HK$4,948 and HK$3,779 for the
years ended December&nbsp;31, 2003, 2004 and 2005, respectively.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group as lessor</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Property rental income was HK$452, HK$513 and HK$538 for the years ended
December&nbsp;31, 2003, 2004 and 2005, respectively. At December&nbsp;31, 2004 and
2005, certain properties with an aggregate carrying value of HK$8,120 and
HK$8,896, respectively, were held for rental purpose. Depreciation charges
relating to these properties were HK$160, HK$138 and HK$160 for the years
ended December&nbsp;31, 2003, 2004 and 2005, respectively. At the balance sheet
date, the Group had contracted with tenants for the future minimum lease
payments under non-cancellable operating leases in respect of properties which
fall due as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="85%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">368</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">368</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F- 33
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>14.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CONTINGENCIES AND COMMITMENTS (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group as lessor (continued)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Service income earned relating to leasing of facilities equipment was HK$3,680,
HK$1,374 and HK$1,294 for the years ended December&nbsp;31, 2003, 2004 and 2005,
respectively. At the balance sheet date, the Group had contracted with
customers for the future minimum lease payments under non-cancellable operating
lease which fall due as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="85%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">542</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">650</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Contingent liabilities:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the years before 1999, overseas withholding tax was not
charged in respect of the Group&#146;s transponder utilization income derived from
the overseas customers. From 1999, overseas withholding tax has been charged
on certain transponder utilization income of the Group and full provision for
such withholding tax for the years from 1999 onwards has been made in the
financial statements. The Directors of the Company are of the opinion that the
new tax rules should take effect from 1999 onwards and, accordingly, no
provision for the withholding tax in respect of the years before 1999 is
necessary. The Group&#146;s withholding tax in respect of 1998 and before,
calculated at the applicable rates based on the relevant income earned in
those years, not provided for in the financial statements amounted to
approximately HK$75,864.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has given guarantees to banks in respect of the
secured term loan facility granted to its subsidiary. The extent of such
facility utilised by the subsidiary at 31 December&nbsp;2004 and 2005 amounted to
HK$975,780 and HK$1,127,295 respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Hong Kong Profits Tax returns of a subsidiary of the
Company for the years of assessment 1999/2000 and 2000/2001 are currently
under dispute with the Hong
Kong Inland Revenue Department (&#147;IRD&#148;). This subsidiary recognised a
disposal gain of HK$389,744 in 1999 in relation to the transfer of the
entire business of APSTAR IIR and substantially all of the satellite
transponders of APSTAR IIR. This subsidiary has claimed the gain on disposal
as a non-taxable capital gain in it 1999/2000 Profits Tax return. In 2003, IRD has proposed to treat the proceeds received as
taxable income to this subsidiary with a corresponding entitlement to
statutory depreciation allowance in respect of APSTAR IIR. On January&nbsp;23,
2006, IRD raised a Profits Tax assessment for the year of assessment
2000/2001 to include that portion of the proceeds from sale of the satellite
received during 2000/2001 as taxable income. The tax demanded for the year
of assessment 2000/2001 is HK$212,846.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F- 34
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>14.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CONTINGENCIES AND COMMITMENTS (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Contingent liabilities (continued):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On February&nbsp;20, 2006, the subsidiary lodged an objection
against the IRD&#146;s assessment on the grounds that it is excessive.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On February&nbsp;24, 2006, the subsidiary received a notice from the IRD
confirming that the entire tax in dispute would be held over on condition
that the subsidiary purchases HK$78,385 of Tax Reserve Certificate (&#147;TRC&#148;)
by March&nbsp;15, 2006 and the balance of the amount of HK$134,461 would be
held over unconditionally. Should any amount of tax held over on condition
of the purchases of TRC become payable upon the final determination of the
objection, the same amount of TRC would be used for settlement of tax due.
For that part of the TRC not utilized to offset the tax payable, interest
will accrue from the date of issue of the TRC to the date of determination
of the objection and be refunded to the subsidiary. In order to fulfill
the condition of hold over of tax payment, the subsidiary purchased TRC of
HK$78,385 on March&nbsp;15, 2006.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Since the receipt of the above mentioned notices, the Company has
obtainedlexternal legal and tax advice, and the Company continues to believe
that it has a reasonable likelihood of success in defending its position
that the gain derived from the transaction should be treated as non-taxable.
Accordingly, no provision for additional taxation has been made.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Insurance</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of December&nbsp;31, 2005, the Company did not have fully in-orbit insurance
coverage for its satellites. The in-orbit satellites had a net book value in
aggregate of HK$2,831,259 as of December&nbsp;31, 2005.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>15.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>COMMON STOCK</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Issued and</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">fully paid</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">of shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">capital stock</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ordinary shares of HK$0.10 each
Balance at January&nbsp;1, 2004 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413,265</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2004 and December&nbsp;31, 2005 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">413,265</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 5%">The Company&#146;s authorised share capital is 1,000,000,000 shares of HK$0.10 each.
There were no changes in the Company&#146;s authorised share capital during either year.
</DIV>

<P align="center" style="font-size: 10pt">F- 35
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>16.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ADDITIONAL PAID-IN CAPITAL/OTHER RESERVES</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The additional paid-in capital of the Group arose as a result of
the Group reorganization in 1996 and represented the excess of
the par value of the shares of the subsidiaries which the Company
acquired over the par value of the Company&#146;s shares issued in
consideration thereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other reserves represent Enterprise Expansion Fund and General Reserve Fund set aside by a
subsidiary in accordance with the relevant laws and regulations of the PRC, which are not
available for distribution.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>17.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>RETIREMENT BENEFIT SCHEMES</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group operates a Mandatory Provident Fund Scheme under the Hong
Kong Mandatory Provident Fund Schemes Ordinance for all qualified
employees in Hong Kong under the jurisdiction of the Hong Kong
Employment Ordinance. Under the scheme, the employer and its employees
are each required to make contributions to the scheme at 5% of the
employees&#146; relevant income, subject to a cap of monthly relevant
income of HK$20. Contributions to the scheme vest immediately. The
assets of the scheme are held separately from those of the Group, in
funds under the control of trustees.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group also joins the retirement insurance scheme operated by the
local government under the law of the PRC for all employees in the
PRC. Under the scheme, both the Group and employees are required to
contribute 8% and 5% of the monthly salary, respectively, to the
retirement insurance scheme.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The only obligation of the Group with respect to the Mandatory
Provident Fund Scheme and the retirement insurance scheme is to make
the specific contributions.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group&#146;s contributions to retirement benefit schemes during the
years ended December&nbsp;31, 2003, 2004 and 2005 amounted to HK$1,203,
HK$1,579 and HK$1,857, respectively.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F- 36
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>18.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>INCOME TAXES IN THE CONSOLIDATED STATEMENTS OF OPERATIONS</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The income taxes charged to the consolidated statements of operations are as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current tax &#151; Provision for
Hong Kong Profits Tax</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax for the year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current tax &#151; Overseas</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax for the year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Deferred tax &#151; Hong Kong</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Origination and reversal of
temporary differences </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(134,775</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(375</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,684</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of increase in tax rate on deferred tax
balance at January&nbsp;1, </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(123,013</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(375</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,684</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,172</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">The provisions for Hong Kong Profits Tax for the years ended December&nbsp;31, 2003, 2004 and
2005 were made by applying the tax rate of 17.5% to the estimated assessable profits
earned in Hong Kong.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">Taxation for overseas subsidiaries is charged at the appropriate current rates of
taxation ruling in the relevant countries.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">Overseas tax includes the withholding tax paid or payable in respect of Group&#146;s
income from provision of satellite transponder capacity to the customers which are
located outside Hong Kong. The provisions for the years ended December&nbsp;31, 2003, 2004
and 2005 were made by applying tax rates prevailing in respective jurisdictions.
</DIV>

<P align="center" style="font-size: 10pt">F- 37
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>18.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>INCOME TAXES IN THE CONSOLIDATED STATEMENTS OF OPERATIONS (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Reconciliation between tax expense and accounting loss at the applicable tax
rates:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss before income taxes </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(205,322</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(45,391</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(123,402</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Notional tax on loss before tax, calculated
at the rates applicable to losses in the
countries concerned </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(35,950</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,681</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(21,996</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Overseas withholding tax </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax effect of non-deductible expenses </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,113</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax effect of non-taxable revenue </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,099</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(27,852</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,552</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax effect of unused tax losses not recognized </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax effect of prior years&#146; unrecognized tax losses
utilized this year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,604</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(57</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect on opening deferred tax balances resulting
from an increase in tax rate during the year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Actual tax expenses </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,172</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>19.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>INCOME TAXES IN THE CONSOLIDATED BALANCE SHEET</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income taxes payable in the consolidated balance sheet represents:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="80%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Overseas tax payable </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,418</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance of overseas tax provision relating to prior years </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,997</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,669</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance of Hong Kong Profits tax provision relating to prior years </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,186</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F- 38
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" nowrap align="left"><B>19.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>INCOME TAXES IN THE CONSOLIDATED BALANCE SHEET (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The components of deferred tax (assets)/liabilities recognized in the
consolidated balance sheet and the movements during the years ended December&nbsp;31, 2004
and 2005 are as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Depreciation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>allowances</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>in excess of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>related</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>temporary</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">

<TD nowrap align="left"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred tax arising from:</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>depreciation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>differences</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Losses</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">At January&nbsp;1, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(281</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(34,855</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,450</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">Charged/(credited) to consolidated statements of operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(97,411</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(375</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">At December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(241</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(132,266</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,075</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">At January&nbsp;1, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(241</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(132,266</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,075</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">Charged/(credited) to consolidated statements of operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">241,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(155</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(247,369</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,684</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">At December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">376,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(396</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(379,635</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,609</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">Net deferred tax assets recognized in the
consolidated balance sheet </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10,134</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,609</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">Net deferred tax liabilities recognized in the
consolidated balance sheet </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,609</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Deferred tax assets not recognized:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group has not recognized deferred tax assets in respect of tax losses of HK$30,723
and HK$44,895 and other deductible temporary differences of HK$21,535 and HK$22,667, as
the realization of assets was considered not probable as at December&nbsp;31, 2004 and 2005,
respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group&#146;s share of unrecognized deferred tax assets in respect of tax losses of
jointly controlled entity amounted HK$31,753 and HK$35,791 and other deductible
temporary differences amounted HK$1,174 and HK$4,654 as at December&nbsp;31, 2004 and 2005,
respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The tax losses do not expire under current tax legislation.</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F- 39
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>20.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>MATERIAL RELATED PARTY TRANSACTIONS</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the years ended December&nbsp;31, 2003, 2004 and 2005, the Group entered into
the following transactions with related parties:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Note</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from provision of satellite
transponder capacity and provision of
satellite-based telecommunications
services to certain shareholders and its
subsidiary of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="center">(i)</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,259</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,339</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from provision of satellite
transponder capacity, provision of
satellite-based telecommunications services
to a holding company and its subsidiaries
of a shareholder of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="center">(i)</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,335</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from provision of satellite
transponder capacity to a jointly controlled
entity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="center">(i)</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Management fee income from a jointly
controlled entity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(ii)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">480</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Management fee income from an
associate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(iii)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Facilities management services
income from a jointly controlled entity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(iv)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,386</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technical support services expenses
to a shareholder of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="center">(v)</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Management fee expenses to a holding
company of a shareholder of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(vi)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments of service fee in connection
with the satellite project to a fellow
subsidiary of a shareholder of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(vii)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">151,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138,727</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Compensation income from a jointly
controlled entity in connection with the
early termination of services and facilities
lease</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(viii)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase of certain fixed assets from a
jointly controlled entity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(ix)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">F- 40
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>20.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>MATERIAL RELATED PARTY TRANSACTIONS (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At December&nbsp;31, 2004 and 2005, the Group had the following amounts included in the
consolidated balance sheet in respect of amounts owing by and to related parties:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Interest in</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">jointly</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Rentals received</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000">controlled</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000">Trade</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">Payables and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">in advance and</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Prepayment</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">entities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">receivables</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">accrued charges</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">deferred income</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jointly controlled entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,614</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,576</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Certain shareholders and its subsidiary of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Holding company and
its subsidiaries of a
shareholder of the Company (note (i))</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">390</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,425</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">A fellow subsidiary of a shareholder of the Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD>Notes:</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(i)</TD>
    <TD>&nbsp;</TD>
    <TD>The terms and conditions of these transponder capacity utilization agreements
are similar to those contracted with other customers of the Group.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(ii)</TD>
    <TD>&nbsp;</TD>
    <TD>Management fee income arose from a reimbursement of cost of service provided to
a jointly controlled entity under the agreement.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(iii)</TD>
    <TD>&nbsp;</TD>
    <TD>Management fee income from an associate arose from the reimbursement of
expenses paid on behalf of an associate.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(iv)</TD>
    <TD>&nbsp;</TD>
    <TD>The Directors consider that the facilities management service income is charged
according to the terms and conditions similar to those offered to other customers.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(v)</TD>
    <TD>&nbsp;</TD>
    <TD>The Directors consider that the technical support services expenses were
charged according to prices and conditions similar to those offered to other customers
by the service provider.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(vi)</TD>
    <TD>&nbsp;</TD>
    <TD>Management fee expenses arose from a reimbursement of cost of services provided
from the holding company of a shareholder of the Company.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(vii)</TD>
    <TD>&nbsp;</TD>
    <TD>The Directors consider that the service fee is charged according to prices and
conditions similar to those offered to other customers by the launch service provider.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">F- 41
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>20.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>MATERIAL RELATED PARTY TRANSACTIONS (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes &#151; continued
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(viii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As a result of the reorganization of a jointly controlled
entity, the jointly controlled entity early terminated the services
and facilities lease agreement and the Group received compensation
for the early termination of the agreement. The Directors consider
that the compensation is charged according to prices and
conditions similar to those offered to unrelated customers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ix)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As a result of the reorganization of a jointly controlled entity, certain fixed
assets were purchased from the jointly controlled entity. The Directors consider that
the purchase consideration is arrived at arm&#146;s length negotiation with reference to the
valuation conducted by an independent valuation company.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>21.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUPPLEMENTAL INFORMATION</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other operating revenues</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other operating revenues include the following:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Compensation income for early termination
of utilization agreements in respect of
provision of satellite transponder capacity </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Compensation income from a jointly
controlled entity for early termination of
services and facilities lease </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Compensation income for late delivery
of the satellite * </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,600</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>On December&nbsp;11, 2001, the Group entered into a Satellite Procurement Agreement with
a contractor for the design, construction, tests and delivery of APSTAR VI. APSTAR
VI was originally scheduled to be launched at the end of 2004/early 2005. The delay
in delivery of the satellite by the contractor has caused the postponement of the
launch of APSTAR VI until April&nbsp;12, 2005. To cope with the delay, the contractor
agreed and paid a lump sum payment to the Group for the liquidated damages due to the
late delivery of APSTAR VI.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">F- 42
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>21.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUPPLEMENTAL INFORMATION (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Borrowing costs</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-5px">Interest on bank borrowings wholly
repayable within five years </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,553</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,482</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-5px">Other borrowing costs </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,222</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-5px">Less: Amount capitalized into construction
in progress* </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,715</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,704</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,762</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,942</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>The borrowing costs have been capitalized at a rate of 4.04% to 4.25% per annum
(2004 : 2.27% to 2.41%).</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Borrowing costs capitalized during the years ended December&nbsp;31, 2004 and 2005 arose on
bank loans borrowed for the purpose of financing the construction and launching
of satellites.</TD>
</TR>

</TABLE>



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Staff costs</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-5px">Staff costs (including directors&#146; emoluments)
 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-5px">Pension contributions </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,878</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-5px">Less: Forfeited contributions </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(167</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(29</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21</TD>
    <TD nowrap>)</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-5px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-5px">Net pension contributions </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,203</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,579</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,857</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-5px">Salaries, wages and other benefits </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,264</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-5px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-5px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,121</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-5px">Less: Capitalized into construction in progress </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,326</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(772</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-5px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-5px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,065</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,121</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-5px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F- 43
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>21.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUPPLEMENTAL INFORMATION (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Loss from operations</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="88%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">HK$</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
   <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from operations has been arrived
at after charging/(crediting):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization on leasehold land held for own use</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">375</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bad debts written off </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">235,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">177,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">197,806</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exchange loss </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">584</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">(Gain)/loss on disposal of property, plant and
equipment </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(109</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for doubtful receivables </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Allowance for doubtful receivables</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="88%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at beginning of the year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,037</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,093</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charged to cost and expenses </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exchange difference </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at end of the year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,093</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,510</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F- 44
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>22.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SEGMENTAL REPORTING</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Segment information is presented in respect of the Group&#146;s business and geographical
segments. Business information is chosen as the primary reporting format because this is
more relevant to the Group&#146;s internal financial reporting.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Inter-segment pricing is based on similar terms as those available to other external
parties.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Business segments</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group comprises two main business segments, namely provision of satellite transponder
capacity and related services and provision of satellite-based broadcasting and
telecommunications services.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="16%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">Provision of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">Provision of satellite</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">satellite-based</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000">transponder capacity and related</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">broadcasting and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">Inter-segment</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000">services</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000">telecommunications services</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000">elimination</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000">Consolidated</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>


<TR style="font-size: 8pt" valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#146;000</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Turnover from
external customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">282,452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">238,418</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">290,683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">298,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336,235</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inter-segment
turnover</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(897</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,282</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,984</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">283,349</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">243,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">294,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,689</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(897</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,282</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,984</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">298,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336,235</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Service income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,386</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">302,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336,512</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment result</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(113,387</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(29,021</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,577</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,332</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,697</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(118,964</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,892</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,723</TD>
    <TD nowrap>)</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Service income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,386</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other
net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,831</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling and
Administrative
expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- staff costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(36,641</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(41,605</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(45,035</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- office expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(29,021</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(31,421</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(31,815</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(148,189</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(38,565</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(78,465</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Borrowing costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,117</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(36,942</TD>
    <TD nowrap>)</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share of losses of
jointly controlled
entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(57,133</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,709</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,995</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for
income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,721</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,625</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,172</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss for the years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(217,043</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62,016</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(136,574</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">F- 45
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>22.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SEGMENTAL REPORTING (continued)</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="16%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">Provision of satellite</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"> Provision of</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"> transponder capacity and related</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">satellite-based broadcasting and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10">Inter-segment</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="10">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000">services</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000"> telecommunications services</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000">elimination</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000">Consolidated</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 0px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2">(restated)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">$&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">$&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">$&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">$&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">$&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">$&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">$&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">$&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">$&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">$&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">$&#146;000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">$&#146;000</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and
amortisation for the
year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">228,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">167,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,361</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,839</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Impairment loss for
the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Significant non-cash
expenses (other than
depreciation)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,883</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">349</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,853,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,110,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52,284</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(56,666</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,853,854</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,104,462</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in and
amounts due form
jointly controlled
entities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,817</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,817</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">686,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">435,010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,620,792</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,614,289</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">399,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">384,044</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87,043</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52,284</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(56,666</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">421,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">414,421</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,001,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,138,316</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,423,783</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,552,737</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditure
incurred during the
year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">417,553</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">521,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,787</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="margin-left:45px; text-indent:-45px;font-size: 10pt; margin-top: 6pt">Note 1: In order to reflect the segments of business affected by similar economic
conditions, the satellite control services income have been aggregated to the segment of
provision of satellite transponder capacity and related services in 2005. Accordingly, the
amounts disclosed in 2003 and 2004 have been adjusted to conform to the 2005 composition of
reportable segments by HK$11,540 and HK$7,800 respectively.
</DIV>


<P align="center" style="font-size: 10pt">F-46
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>22.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SEGMENTAL REPORTING (continued)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Geographical segments</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group&#146;s operating assets consist primarily of its satellites which are used, or are
intended for use, for transmission to multiple countries but not located at a specific
geographical area. Accordingly, no segment analysis of the carrying amount of segment assets
by location of assets is presented.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In presenting information on the basis of geographical segments, segment revenue, segment
assets and capital expenditure is based on the geographical location of customers.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 6pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="8"  STYLE="BORDER-BOTTOM: 0PX SOLID #000000">Hong Kong</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000">Other regions in the PRC</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000"> Singapore</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000">Indonesia</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 0px solid #000000">Others</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>


    <TD nowrap align="center" colspan="13" style="border-bottom: 0px solid #000000">Unallocated</TD>

</TR>
<TR style="font-size: 6pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 6pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Trunover from
external customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,459</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">225,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">195,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">201,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,469</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,972</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,061</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,453</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,556,731</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,555,326</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditure
incurred during the
year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">428,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">523,048</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>23.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SHARE OPTION PLAN</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the annual general meeting on May&nbsp;22, 2001, the Company
adopted a share option scheme (&#147;Scheme 2001&#148;) and granted options
to its employees on June&nbsp;19, 2001. On May&nbsp;22, 2002, the Company
adopted a new share option scheme (&#147;Scheme 2002&#148;) at its 2002
annual general meeting. Thereafter, no further options can be
granted under the Scheme 2001. The options granted on June&nbsp;19,
2001 shall continue to be valid until their expiry.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The total number of shares which may be issued upon exercise of
all options to be granted under Scheme 2001 and Scheme 2002 shall
not in aggregate exceed 10% of the total number of shares of the
Company in issue on the adoption date of the Scheme 2002 (i.e.
412,720 shares). As at the date of this report, 413,265 shares of
the Company were in issue.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under Scheme 2002, the total number of shares to be issued upon
exercise of the options granted to each eligible person
(including both exercised and outstanding options) in any
12-month period shall not exceed 1% of the total number of shares
in issue. The exercise price (subscription price) shall be such
price as determined by the Board of Directors in its absolute
discretion at the time of the making of the offer but in any case
the exercise price shall not be lower than the highest of (i)&nbsp;the
closing price of the shares as stated in The Stock Exchange of
Hong Kong Limited&#146;s (the &#147;Exchange&#146;s&#148;) daily quotations sheet on
the date of the offer of grant, which must be a trading day; (ii)
the average closing price of the shares as stated in the
Exchange&#146;s daily quotations sheets for the five trading days
immediately preceding the date of the offer of grant; and (iii)
the nominal value of a share.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the year, no options were granted under the Scheme 2002.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-47
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>23.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SHARE OPTION PLAN (continued)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under the Scheme 2001, the maximum entitlement of each eligible person was that the total
number of shares issued or issuable under all options granted to such eligible person
(including both exercised and outstanding options) upon such grant being made shall not
exceed 25% of the total number of the shares for the time being issued and issuable under
the Scheme 2001. In addition, the subscription price was determined by the Board of
Directors on a case-by-case basis and would not be less than the nominal value of the shares
nor at a discount of more than 20% below the average closing price of the shares as stated
in the Exchange&#146;s daily quotation sheets on the five dealing days immediately preceding the
date on which the invitation to apply for an option under Scheme 2001.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Movements in share options</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The particulars of the share options granted under the Scheme 2001 outstanding during
the years ended December&nbsp;31, 2003, 2004 and 2005 are as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="92%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Number of</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">share options</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At January&nbsp;1, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,410,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,010,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(730,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At December&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,670,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,220,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,450,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancelled during the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,220,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">At December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,230,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The above granted options have an exercise price of HK$2.765 per share and are
exercisable within the period from May&nbsp;22, 2003 to May&nbsp;21, 2011.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Fair value of share options and assumptions</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The fair value of services received in return for share options granted
are measured by reference to the fair value of share option granted. The
estimated fair value of the services received is measured based on a binomial
lattice model. The contractual life of the option is used as an input into this
model. Expectations of early exercise are incorporated into the binomial lattice
model.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="92%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2"><B>2004 &#038; 2005</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fair value of share options and assumptions
Fair value at measurement date</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center"><B>HK$2.836</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share price at the date of issue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center"><B>HK$3.850</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercise price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center"><B>HK$2.765</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility (expressed as weighted average volatility
used in the modeling under binomial lattice model)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>47.00</B></TD>
    <TD nowrap><B>&nbsp;%</B></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Option life (expressed as weighted average life used in the
modeling under binomial lattice model)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="center"><B>9.93 years</B></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="0" nowrap align="right"><B>Nil</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate (based on Exchange Fund Notes)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>6.13</B></TD>
    <TD nowrap><B>&nbsp;%</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-48
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>23.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SHARE OPTION PLAN (continued)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The expected volatility is based on the historic volatility (calculated based on the weighted
average remaining life of the share options), adjusted for any expected changes to future
volatility due to publicly available information. Expected dividends are based on historical
dividends. Changes in the subjective input assumptions could materially affect the fair value
estimate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Share options were granted under a service condition. This condition has not been taken into
account in the grant date fair value measurement of the services received. There were no
market conditions associated with the share option grants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>24.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>FINANCIAL INSTRUMENTS</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Exposure to credit, liquidity, interest rate and currency risks arises in the normal course
of the Group&#146;s business. These risks are limited by the Group&#146;s financial management policies
and practices described below.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(a)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Credit risk</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group&#146;s credit risk is primarily attributable to trade and other receivables and
cash investments. Management has a credit policy in place and the exposures to these
credit risks are monitored on an ongoing basis.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In respect of trade and other receivables, periodic credit evaluations are performed
of its customers&#146; financial condition. The Group generally does not require
collateral because it usually receives trade deposits which represent a quarter of
utilization fees payable to the Group. The transponder utilization agreements are
subject to termination by the Group if utilization payments are not made on a timely
basis.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the balance sheet date, the Group has a certain concentration of credit risk as 33%
and 31% in 2004 and 2005 respectively of the total trade and other receivables was due
from the Group&#146;s largest customer, and as 60% and 65% in 2004 and 2005, respectively,
was due from the Group&#146;s five largest customers respectively within the satellite
transponder business segment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(b)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Liquidity risk</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Individual operating entities within the Group are responsible for their own cash
management, including the short term investment of cash surpluses and the raising of
loans to cover expected cash demands, subject to approval by the parent company&#146;s
board. The Group&#146;s policy is to regularly monitor current and expected liquidity
requirements and its compliance with lending covenants, to ensure that it maintains
sufficient reserves of cash and adequate committed lines of funding from major
financial institutions to meet its liquidity requirements in the short and longer
term.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-49
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>24.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>FINANCIAL INSTRUMENTS (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(c)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Interest rate risk</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group is subject to interest rate risk due to fluctuation in interest rates. As of
December&nbsp;31, 2005, the Group&#146;s outstanding bank loans consist of variable interest
rate loans only. From time to time, the Group may enter into interest rate swap
agreements designed to mitigate our exposure to interest rate risks, although the
Group did not consider it necessary to do so in 2005. Upward fluctuations in interest
rates increase the cost of new bank loans and the interest cost of outstanding bank
loans. As a result, a significant increase in interest rates could have a material
adverse effect on the financial position of the Group.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following table contains information about the Group&#146;s bank loans that are
sensitive to changes in interest rates, as of December&nbsp;31, 2005.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="92%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000">Expected Maturity Date</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">2006</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">2007</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">2008</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">2009</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">2010</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">Thereafter</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15">(HK$ in million, except interest rates)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Variable rate bank loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average interest rate<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5.965</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5.935</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5.98</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.00</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.02</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.02</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-left: 8%; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<DIV align="right">
<TABLE width="92%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The interest rates are the implied future LIBOR rates calculated from US swap
as proxy.</TD>
</TR>
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(d)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Foreign currency risk</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group&#146;s reporting currency is the Hong Kong Dollar. The Group&#146;s revenues, premiums
for satellite insurance coverage and debt service and substantially all capital
expenditures were denominated in United States Dollars. The Group&#146;s remaining expenses
were primarily denominated in Hong Kong Dollars. The Group does not hedge its exposure
to foreign exchange risk. Gains and losses resulting from the effects of changes in
the United States Dollar to Hong Kong Dollar exchange rate are recorded in the
consolidated statement of operations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group does not utilize derivative financial instruments to hedge its foreign
currency rate risks.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In respect of other trade receivables and payables held in currencies other than the
functional currency of the operations to which they relate, the Group ensures that the
net exposure is kept to an acceptable level, by buying or selling foreign currencies
at spot rates where necessary to address short-term imbalances.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group&#146;s borrowings are denominated in United States Dollars. Given substantially
the Group&#146;s revenues are denominated in United States Dollars, management does not
expect that there will be any significant currency risk associated with the Group&#146;s
borrowings.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(e)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Sensitivity analysis</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In managing interest rate and foreign currency risks the Group aims to reduce the
impact of short-term fluctuations on the Group&#146;s earnings. Over the longer term,
however, permanent changes in foreign exchange and interest rates would have an impact
on consolidated earnings.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At December&nbsp;31, 2005, it is estimated that a general increase of one percentage point
in interest rates would increase the Group&#146;s loss before income taxes by
approximately HK$7,578 and HK$11,076 respectively in 2004 and 2005 so far as the
effect on interest-bearing financial instruments is concerned.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-50
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>24.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>FINANCIAL INSTRUMENTS (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(f)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Fair values</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following financial assets and liabilities have their carrying amount
approximately equal to their fair value: trade receivables, other receivables, other
current assets, cash and cash equivalents, payables and accrued charges, and secured
bank borrowings.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>25.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>COMPARATIVE FIGURES</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Certain comparative figures have been adjusted or reclassified as a result of the
changes in accounting policies. Further details are disclosed in note 4.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>26.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ACCOUNTING ESTIMATES AND JUDGEMENTS</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(a)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Key sources of estimation uncertainty</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The financial statements are based on the selection and application of significant
accounting policies, which require management to make significant estimates and
assumptions that affect the reported amount of assets and liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities at the date of
the financial statements. Actual results may differ from these estimates under
different assumptions or conditions.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(b)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Critical accounting judgement in applying the group&#146;s accounting policies</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following are some of the more critical judgment areas in the application of the
Group&#146;s accounting policies that currently affect the Group&#146;s financial condition and
results of operations.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Depreciation</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Depreciation of communication satellites is provided for on the
straight-line method over the estimated useful life of the satellite, which is
determined by engineering analysis performed at the in-services date and
re-evaluated periodically. A number of factors affect the operational lives of
satellites, including construction quality, component durability, fuel usage,
the launch vehicle used and the skill with which the satellite is monitored and
operated. As the telecommunication industry is subject to rapid technological
change and the Group&#146;s satellites have been subjected to certain operational
lives, the Group may be required to revise the estimated useful lives of its
satellites and communication equipment or to adjust their carrying amounts
periodically. Accordingly, the estimated useful lives of the Group&#146;s satellites
are reviewed using current engineering data.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If a significant change in the estimated useful lives of our satellites is
identified, the Group accounts for the effects of such change as depreciation
expenses on a prospective basis. Details of the depreciation, of communication
satellites are disclosed in notes 3(e) and 5.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Depreciation for future satellites will depend on in-orbit testing on their
estimated useful lives after successful launch and, as the cost of the future
satellites is greater than the carrying value of the current satellites, the
depreciation charge is expected to increase in the coming years.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-51
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 0pt">(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>26.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(b)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Critical accounting judgement in applying the group&#146;s accounting policies
(continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Trade receivables and other receivables</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The management of the Group estimates the provision of bad and doubtful debts
required for the potential non-collectability of trade receivables and other
receivables at each balance sheet date based on the ageing of its customer
accounts and its historical write-off experience, net of recoveries. The
Group performs ongoing credit evaluations of its customers and adjusts credit
limits based upon payment history and the customers&#146; current credit
worthiness. The Group does not make a general provision on its trade
receivables and other receivables, but instead, makes a specific provision on
its trade receivables and other receivables. Hence, the Group continuously
monitors collections and payments from customers and maintains allowances for
bad and doubtful accounts for estimated losses resulting from the inability
of its customers to make required payments. If the financial condition of the
customers of the Group were to deteriorate, actual write-offs would be higher
than estimated. For the year ended December&nbsp;31, 2003, 2004 and 2005, the
Group made the provision for bad and doubtful debts in the amount of HK$
8,402, HK$5,654 and HK$350 respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group periodically reviews the carrying amounts of provision for bad and
doubtful debts to determine whether there is any indication that the
provision needs to be written off. If the Group becomes aware of a situation
where a customer is not be able to meet its financial obligations due to
change of contact information by the customer without notification or after
seeking professional advice from lawyers or debt collection agent that the
probability of recovery is remote, the Group will consider to write off the
debt.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Impairment of property, plant and equipment</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group periodically reviews internal or external resources to identify
indications that the assets may be impaired. If the recoverable amount of an
asset is estimated to be less than its carrying amount, the carrying amount
of the asset is reduced to its recoverable amount. In assessing the
recoverable amount of these assets, the Group is required to make assumptions
regarding estimated future cash flows and other factors to determine the net
realizable value. If these estimates or their related assumptions change in
the future, the Group may be required to adjust the impairment charges
previously recorded.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-52
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>26.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(b)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Critical accounting judgement in applying the group&#146;s accounting policies
(continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Impairment of property, plant and equipment (continued)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group applies the foregoing analysis in determining the timing of the
impairment test, the estimated useful lives of the individual assets, the
discount rate, future cash flows used to assess impairments and the fair
value of impaired assets. It is difficult to precisely estimate the price of
the transponder capacities and related satellite services and residual values
because the market prices for our assets are not readily available. The
estimates of future cash flows are based on the terms of existing transponder
capacity and service agreements. The dynamic economic environment in which
the Group operates and the resulting assumptions used in setting depreciable
lives on assets and judgment relating to the utilization rate of the assets,
price and amount of operating costs to estimate future cash flows impact the
outcome of all of these impairment tests. If these estimates or their related
assumptions change in the future, the Group may be required to record
impairment loss for these assets not previously recorded.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group periodically reviews the carrying amounts of its property, plant
and equipment through reference to its use value and fair market value as
assessed both by the Group and by an independent professional property
appraiser. If the use value or fair market value of the property, plant and
equipment are lower than their carrying amount, the Group may be required to
record additional impairment loss not previously recognised. Details of the
impairment loss of property, plant and equipment are disclosed in note 5.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Contingencies and provisions</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Contingencies, representing an obligation that are neither probable nor
certain at the date of the financial statements, or a probable obligation for
which the cash outflow is not probable, are not recorded.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Provisions are recorded when, at the end of period, there is an obligation of
the Group to a third party which is probable or certain to create an outflow
of resources to the third party, without at least an equivalent return
expected from the third party. This obligation may be legal, regulatory or
contractual in nature.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To estimate the expenditure that the Group is likely to bear in order to
settle an obligation, the management of the Group takes into consideration
all of the available information at the closing date for its consolidated
financial statements. If no reliable estimate of the amount can be made, no
provision is recorded. For details, please refer to note 14 of contingent
liabilities.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-53
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left"><B>27.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Possible impact of amendments, new standards and interpretations issued but not yet
effective for the annual accounting period ended December&nbsp;31, 2005</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Up to the date of issue of these financial statements, the HKICPA has issued the
following amendments, new standards and interpretations which are not yet effective for the
accounting period ending December&nbsp;31, 2005 and which have not been adopted in these
financial statements:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="97%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Effective for</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">accounting periods</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">beginning on or</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">after</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">HK(IFRIC)4, Determining whether an arrangement contains a lease</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">January 1, 2006</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">HK(IFRIC)6, Liabilities arising from participating in a specific
market &#150; Waste electrical and electronic equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center">December 1, 2005</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amendments to HKAS 19, Employee benefits &#150; Actuarial Gains and
Losses, Group Plans and Disclosures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">January 1, 2006</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amendments to HKAS 39, Financial instruments: Recognition and
measurement:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Cash flow hedge accounting of forecast intragroup transactions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">January 1, 2006</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- The fair value option</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">January 1, 2006</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- Financial guarantee contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">January 1, 2006</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amendments, as a consequence of the Hong Kong Companies
(Amendment) Ordinance 2005, to:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- HKAS 1, Presentation of financial statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">January 1, 2006</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- HKAS 27, Consolidated and separate financial statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">January 1, 2006</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- HKFRS 3, Business combinations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">January 1, 2006</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:0px">HKFRS 7, Financial instruments: disclosures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">January 1, 2007</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:0px">Amendment to HKAS 1, Presentation of financial statements:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">capital disclosures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">January 1, 2007</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition, the Hong Kong Companies (Amendment) Ordinance 2005 came into effect
on December&nbsp;1, 2005 and would be first applicable to the Group&#146;s financial statements for
the period beginning January&nbsp;1, 2006.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group is in the process of making an assessment of what the impact of these
amendments, new standards and new interpretations is expected to be in the period of initial
application. So far it has concluded that the adoption of amendments to HKAS 1, HKAS 27 and
HKFRS 3 made as a result of the Hong Kong Companies (Amendment) Ordinance 2005 are not
applicable to any of the Group&#146;s operations and that the adoption of the remaining standards
is unlikely to have a significant impact on the Group&#146;s results of operations and financial
position.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-54
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (&#147;US GAAP&#148;) AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Summary of Significant Differences Between HK GAAP and US GAAP</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group&#146;s accounting policies conform with generally accepted accounting
principles in Hong Kong (&#147;HK GAAP&#148;) which differ in certain material respects from
those applicable generally accepted accounting principles in the United States of
America (&#147;US GAAP&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As further described in note 4, the Group adopted all applicable HKASs that
required initial adoption in 2005. As a result, certain amounts under HK GAAP for
the years ended December&nbsp;31, 2003 and 2004 were required to and have been restated
to comply with those 2005 initial adoption requirements. Consequently, the amounts
of certain differences between HK GAAP and US GAAP for the years ended December
31, 2003 and 2004 have been restated as a result of the initial adoption of
certain HKASs in 2005 that required retrospective application as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="92%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">As</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">previously</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000">Effects of adopting</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">As</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Reconciliation of net income to US GAAP</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">reported</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">HKAS 40</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">HKFRS 2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">restated</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>2003</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss attributable to the equity shareholders in
accordance with HK GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(224,718</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">898</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(216,120</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments required under US GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Revaluation of investment properties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,700</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,630</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">344</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(898</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(554</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>2004</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss attributable to the equity shareholders in
accordance with HK GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(57,757</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,200</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(59,957</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments required under US GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Revaluation of investment properties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(78</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,122</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With the adoption of new accounting standards, all revaluation gains and
losses of investment properties are recognized in the profit and loss account.
Since revaluations are not permitted under US GAAP, adjustments under HK GAAP are
reversed and differences between HK GAAP and US GAAP for the years ended December
31, 2003 and 2004 are restated. The adoption of new HKFRS 2 has also resulted in a
change in accounting policy for employee share options and other shared-based
payments under HK GAAP. Since the accounting treatment under HK GAAP is different
from US GAAP, adjustment under HK GAAP is reversed under US GAAP.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-55
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (&#147;US GAAP&#148;) AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP
(continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Summary of Significant Differences Between HK GAAP and US GAAP
(continued)</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The significant differences relate principally to the following items and the
adjustments considered necessary to present the net loss and shareholders&#146; equity
in accordance with US GAAP are set out below.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(i)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Investment properties revaluation and depreciation</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In prior years under HKGAAP, movements in the fair value of the
Group&#146;s investment properties were recognised directly in the investment
properties revaluation reserve except when, on a portfolio basis, the
reserve was insufficient to cover a deficit on the portfolio, or when a
deficit previously recognised in the statement of operations had reversed,
or when an individual investment property was disposed of. In these limited
circumstances movements in the fair value were recognised in the statement
of operations. Upon adoption of new HK GAAP as from January&nbsp;1, 2005, all
changes in the fair value of investment properties are recognised directly
in the statement of operations in accordance with the fair value model.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under US GAAP, investment properties are stated at cost and depreciated
over the shorter of the useful life and the land lease terms. Accordingly,
the investment properties of the Group and its jointly controlled entity,
which are stated at open market value, have been restated at historical
cost less accumulated depreciation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Depreciation has been based on the historical cost of the properties held
by the Group and its jointly controlled entity and the useful lives of such
properties range from 44 to 46&nbsp;years. The gross historical cost of
properties held by the Group and its jointly controlled entity subject to
depreciation under US GAAP which are not depreciated under HK GAAP at
December&nbsp;31, 2005 amounted to HK$3,821 (2004: HK$3,821) and HK$140,000
(2004: HK$140,000), respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the US GAAP reconciliation of net loss for the year, the adjustments
with respect of investment properties represent: (i)&nbsp;the reversal of
revaluation gain in respect of the Group&#146;s properties of HK$nil (2004:
HK$78 and 2003: revaluation loss of HK$70), and the Group&#146;s proportionate
share of revaluation loss in respect of the property held by its jointly
controlled entity HK$7,150 (2004: revaluation loss of HK$2,200 and 2003:
revaluation gain of HK$7,700); and (ii)&nbsp;the depreciation in respect of the
properties held by the Group amounting to HK$83 (2004: HK$84 and 2003:
HK$83), and the Group&#146;s proportionate share of depreciation in respect of
the property held by jointly controlled entity amounting HK$1,750 (2004:
HK$1,750 and 2003: HK$875) which are not recongized under HK GAAP.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-56
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES (&#147;US GAAP&#148;) AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP
(continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Summary of Significant Differences Between HK GAAP and US GAAP
(continued)</U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(i)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Investment properties revaluation and depreciation (continued)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the US GAAP reconciliation of shareholders&#146; equity at December&nbsp;31, 2005,
the adjustments represent the reversal of revaluation gain in respect of
the investment properties of the Group of HK$nil (2004: HK$78), and the
Group&#146;s proportionate share of revaluation loss in respect of the property
held by its jointly controlled entity HK$1,650 (2004: revaluation gain of
HK$5,500).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(ii)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Share options</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group granted share options to directors and employees. Under HK GAAP
and prior to January&nbsp;1, 2005, the proceeds received are recognised as an
increase to capital upon the exercise of the share options. The Group does
not account for the issuance of stock options until they are exercised.
With effect from January&nbsp;1, 2005, in order to comply with HKFRS 2, the
Group recognises the fair value of such share options as an expense in the
consolidated statement of operations, or as an asset, if the cost qualifies
for recognition as an asset under the Group&#146;s accounting policies. A
corresponding increase is recognised in a capital reserve within equity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under US GAAP, the compensation expenses are based on the excess, if any,
of the quoted market price of the shares on the date of grant over the
exercise price of the stock options. Such amount is charged to the
consolidated statement of operations over the vesting period of the
options. Any expenses recognised based on the fair value of share options
under HK GAAP is reversed under US GAAP.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the US GAAP reconciliation of net loss for the year ended December&nbsp;31,
2003, the compensation expense of share options granted represents the
reversal of expense recongnised based on the fair value of the share option
under HK GAAP amounted to HK$898 and the amortization of compensation
expenses in relation to share options under US GAAP amounted to HK$ 344.
There has been no compensation expense of share options granted for the
year ended December&nbsp;31, 2004 and 2005 as no additional options of the
Group were granted nor did any options from previous grants vest during
2004 and 2005.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-57
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (&#147;US GAAP&#148;) AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP
(continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Summary of Significant Differences Between HK GAAP and US GAAP
(continued)</U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(iii)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Impairment of long-lived assets</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group periodically reviews the carrying amount of the assets to
determine whether there is any indication that those assets have suffered
an impairment loss. If the recoverable amount of an asset is estimated to
be less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. Under HK GAAP, the estimated future cash
flows are discounted at a discount rate when assessing the recoverable
amount of the asset.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under US GAAP, in accordance with SFAS 144 &#147;Accounting for the Impairment
or Disposal of Long-Lived Assets&#148;, recoverability of the assets is measured
by a comparison of the carrying amount of an asset to future undiscounted
net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognised is measured by
the amount by which the carrying amounts of the assets exceed the fair
value of the assets.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Given that the undiscounted cash flows expected to be generated by
certain long-lived assets were below the carrying amount of such assets
and subject to impairment under HK GAAP, the assets are also
considered impaired under US GAAP. Accordingly, the impairment loss
recognised under HK GAAP has not been reversed for US GAAP purpose.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(iv)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Minority interests</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In prior years under HK GAAP, minority interests at the balance sheet date
were presented in the consolidated balance sheet separately from
liabilities and as a deduction from net assets. Minority interests in the
results of the Group for the year were also separately presented in the
statement of operations as a deduction before arriving at the profit or
loss attributable to shareholders.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With effect from January&nbsp;1, 2005, under new HK GAAP, minority interests
become part of the total result for the year and total equity of the Group,
whereas under US GAAP, minority interests are excluded from the total
result for the year and shareholders&#146; equity of the Group. However, there
is no impact on net income and shareholders&#146; equity under US GAAP.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-58
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (&#147;US GAAP&#148;) AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP
(continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Summary of Significant Differences Between HK GAAP and US GAAP
(continued)</U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>(v)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Segment reporting</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under HK GAAP, the Group has reported business segment information as its
primary reporting segment in accordance with its internal financial reporting.
Segment information under HK GAAP includes data that can be directly
attributable to a segment and those items that can be reasonably allocated.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under US GAAP, segment information is based on the segmental operating results
regularly reviewed by the Group&#146;s chief operating decision maker applying
accounting policies consistent with those used in preparation of the Group&#146;s
consolidated HK GAAP financial statements.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Segment information, including revenues and results for these segments for
each of the three years ended December&nbsp;31, 2005 is presented in note 22. The
computation of segment results required by HK GAAP approximates measures of
performance used internally by the chief operating decision maker and
materially complies with US GAAP.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Please refer to note 22 for the Group&#146;s other segment information required by
the provisions of SFAS No.&nbsp;131 &#147;Segment Reporting&#148;.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Net loss</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The effect on net loss of significant differences between HK GAAP and US GAAP is as
follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="92%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"  colspan="14" STYLE="BORDER-BOTTOM: 1PX SOLID #000000">Years ended December 31,</TD>

    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">US$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss attributable to equity shareholders
in accordance with HK GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(216,120</TD>
    <TD nowrap>)&nbsp;<sup>(1)</sup></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(59,957</TD>
    <TD nowrap>)&nbsp;<sup>(1)</sup></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(135,564</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,380</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments required under US GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Revaluation of investment properties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,630</TD>
    <TD nowrap>)&nbsp;<sup>(1)</sup></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,122</TD>
    <TD>&nbsp;&nbsp;<sup>(1)</sup></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">917</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation of investment properties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(958</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,834</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,833</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(235</TD>
    <TD nowrap>)</TD>
</TR>

<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Compensation expenses of share
options granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(554</TD>
    <TD nowrap>)&nbsp;<sup>(1)</sup></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Impairment of long-lived assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss in accordance with US GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(225,262</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(58,589</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(130,247</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16,698</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic and diluted loss per share under US GAAP</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right"><B>(55 cents</B></TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right"><B>(14 cents</B></TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right"><B>(32 cents</B></TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right"><B>(4 cents</B></TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="LEFT">
<DIV style="font-size: 3pt; margin-left: 8%; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<DIV align="right">
<TABLE width="92%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>With effect from January&nbsp;1, 2005, HK GAAP has been converged in all material
respects with the international Financial Reporting Standards. Accordingly,
certain of the Group&#146;s accounting polices have been changed in line with
adoption of the new standards (see note 4 to the consolidated financial
statements). As a result, certain comparative figures for the year ended
December&nbsp;31, 2003 and 2004 have been restated.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">F-59
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (&#147;US GAAP&#148;) AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP
(continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Net loss (continued)</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Options to purchase 8,450,000 shares and 4,230,000 shares of common stock at HK$2.765
per share were outstanding during the years 2004 and 2005, respectively, but were not
included in the computation of diluted EPS because the options&#146; exercise price was
greater than the average market price of the common shares for the period. The
options, which expire on May&nbsp;21, 2011, were still outstanding at the end of year 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Shareholders&#146; equity</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The effect on shareholders&#146; equity of significant differences between HK GAAP and US
GAAP is as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="92%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">2005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">US$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total equity attributable to equity shareholders
in accordance with HK GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,193,153</TD>
    <TD>&nbsp;&nbsp;<SUP>(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,058,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">263,926</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments required under US GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Revaluation of investment properties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,500</TD>
    <TD nowrap>)&nbsp;<SUP>(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">212</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accumulated depreciation of
investment properties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,432</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,265</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(547</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Impairment of long-lived assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders equity in accordance with US GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,186,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,057,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">263,729</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The changes in shareholders&#146; equity in accordance with US GAAP is as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="92%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Capital</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Additional</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Retained</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">stock</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">paid-in capital</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">reserves</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">earnings</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">HK$</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at January&nbsp;1, 2003 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,806,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">621,002</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">New shares issued under the share
option scheme </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(282</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Compensation expense of share
options granted </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(344</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Transfer to other reserves </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss for the year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(225,262</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2003 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,807,749</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">395,732</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss for the year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(58,589</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2004 </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,807,749</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">337,143</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss for the year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(130,247</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(333</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,807,749</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">206,563</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">F-60
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
(Amounts stated in thousands, except share data)</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (&#147;US GAAP&#148;) AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Comprehensive income under US GAAP</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The comprehensive loss for the year ended December&nbsp;31, 2003 was HK$225,544, comprised
of net loss of HK$225,262 and a foreign currency translation loss of HK$282.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The comprehensive loss for the year ended December&nbsp;31, 2004 was HK$58,509, comprised
of net loss of HK$58,589 and a foreign currency translation gain of HK$80.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The comprehensive loss for the year ended December&nbsp;31, 2005 was
HK$128,878, comprised of net loss of HK$130,247 and a foreign currency
translation gain of HK$1,369.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Consolidated statements of operations and consolidated balance sheets under
US GAAP</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The compensation received from cancellation of transponder utilization agreements and
from early termination of services and facilities lease are classified as revenues
under US GAAP. In addition, the reversals of the allowance for doubtful receivables
and provision for regulatory matters, and the impairment loss on goodwill and
property, plant and equipment are presented as part of costs and expenses under US
GAAP.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under US GAAP, the interest expense on the loan borrowed by the Partnership and
the related interest income on the deposit by a fellow subsidiary are not offset.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The consolidated statements of operations under US GAAP is as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="83%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">US$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total revenues </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">316,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">277,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">336,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,142</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total costs and expenses </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(484,036</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(323,519</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(445,891</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(57,166</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from operations </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(167,745</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(46,259</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(109,379</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14,024</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income/(expenses)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Borrowing costs </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(35,771</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,117</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(36,942</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,736</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,656</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Others-net </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,297</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share of losses of jointly controlled
entities </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(65,708</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,259</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,595</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(333</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss before income taxes and
minority interests </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(214,464</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(43,303</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(118,085</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15,140</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for income taxes </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,721</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16,625</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,172</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,688</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interests </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">923</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(225,262</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(58,589</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(130,247</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16,699</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-61
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (&#147;US GAAP&#148;) AND ADDITIONAL
DISCLOSURES REQUIRED UNDER US GAAP (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Consolidated statements of operations and consolidated balance
sheets under US GAAP (continued)</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under US GAAP, the Company&#146;s consolidated current assets were HK$766,547
and HK$491,473 and total assets were HK$3,613,940 and HK$3,615,451 at December
31, 2004 and 2005, respectively, and consolidated current liabilities were
HK$232,825 and HK$297,438 and total liabilities were HK$1,423,783 and
HK$1,554,714 at December&nbsp;31, 2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Consolidated statements of cash flow</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Group applies Hong Kong Statement of Standard Accounting Practice No.&nbsp;15
(revised 2001) &#147;Cash Flow Statements&#148; (&#147;HK SSAP 15&#148;). Its objectives and principles
are similar to those set out in SFAS No.&nbsp;95, &#147;Statement of Cash Flows&#148; for US GAAP
purposes. The principal differences between the standards relate to classification.
Interest received is classified under investing activities and interest paid under
financing activities shown under HK SSAP 15. These items are classified under
operating activities under SFAS No.&nbsp;95.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A reconciliation of the major captions in the consolidated statements of cash flow
under HK GAAP and US GAAP is as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="83%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash from operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amount under HK GAAP </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">233,378</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149,528</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">US GAAP adjustment  &nbsp;&nbsp;&nbsp;&nbsp;&#151; interest received </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,279</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,404</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:70px">&nbsp;&nbsp;&#151; interest paid </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,681</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15,847</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(32,582</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amount under US GAAP </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">224,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">130,350</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amount under HK GAAP </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(589,259</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(364,492</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(617,468</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">US GAAP adjustment &#151; interest received </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,279</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,810</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,404</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amount under US GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(598,538</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(371,302</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(630,872</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash from financing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amount under HK GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">218,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">257,933</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,933</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">US GAAP adjustment &#151; interest paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,582</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amount under US GAAP</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">273,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">151,515</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-62
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCPLES (&#147;US GAAP&#148;) AND ADDITIONAL
DISCLOSURES REQUIRED UNDER US GAAP (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Income taxes</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A reconciliation of the expected income tax benefit, using the statutory tax rates of
the applicable countries, with the actual income taxes expense under US GAAP is as
follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="83%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Year ended December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss before tax and minority interests </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(214,464</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(43,303</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(118,085</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected income tax benefit </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(37,550</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,072</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(21,066</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Overseas withholding tax </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax effect of non-deductible expenses </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,183</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax effect of non-taxable revenue </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,159</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(27,852</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,552</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax effect of unused tax losses not recognized </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax effect of prior year&#146;s unrecognized tax
losses utilized this year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,604</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(57</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect on opening deferred tax balances resulting
from an increase in tax rate during the year </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Actual tax expenses </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,172</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">All but an insignificant amount of loss was generated from Hong Kong sources.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">Non-deductible expenses include losses incurred by several subsidiaries which do
not produce any taxable income and as such, the losses are not deductible against
future profits.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">As at December&nbsp;31, 2005, the Group had net operating loss carryforwards of
approximately HK$2,171&nbsp;million that it can carryforward indefinitely.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">The income taxes expense under US GAAP is presented below:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="92%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000">Years ended December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2003</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(123,013</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(375</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,684</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,172</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-63
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (&#147;US GAAP&#148;) AND ADDITIONAL
DISCLOSURES REQUIRED UNDER US GAAP (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Income taxes (continued)</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The principal components of the deferred tax liabilities/(assets) under US GAAP are as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="83%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">December 31,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2004</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2005</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">HK$</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Tax losses </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">388,328</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property, plant and equipment </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,378</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Trade and other receivables </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,705</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Others </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">693</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total deferred tax assets </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145,595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">396,104</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Valuation allowance </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,088</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16,073</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net deferred tax assets </DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132,507</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">380,031</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property, plant and equipment </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(134,582</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(376,422</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net deferred tax (liabilities)/assets </DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,075</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,609</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">At January&nbsp;1, 2003, the valuation allowance was HK$1,679. During 2003, 2004 and 2005,
the valuation allowance increased by HK$15,231, decreased by HK$3,822 and increased by
HK$2,985, respectively.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(h)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Summarized information on APT Telecom, a significant jointly controlled entity</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under US GAAP, APT Telecom&#146;s net losses were HK$119,469, HK$4,108 and
HK$3,772 for the years ended December&nbsp;31, 2003, 2004 and 2005, respectively,
total assets were HK$138,817 and HK$138,223 as at December&nbsp;31, 2004 and 2005,
respectively, and total liabilities were HK$135,925 and HK$139,103 as at December
31, 2004 and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During 2003, the directors of APT Telecom conducted a review of the company&#146;s fixed
assets and determined that property, plant and equipment, and other assets were
impaired due to the recoverable amount of these assets is estimated to be less
than their carrying amount. Accordingly, impairment loss of HK$89,018 has been
recognized and charged to the statements of operations for the year ended
December&nbsp;31, 2003. APT Telecom did not have any impairment in 2004 and 2005.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">F-64
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APT SATELLITE HOLDINGS LIMITED</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B><BR>
(Amounts stated in thousands, except share data)
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>28.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (&#147;US GAAP&#148;) AND ADDITIONAL
DISCLOSURES REQUIRED UNDER US GAAP (continued)</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Recent US accounting pronouncements</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%"><B><I>&nbsp;</I></B></TD>
    <TD><B><I>Statement of Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;123 (revised 2004)</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In December&nbsp;2004, the Financial Accounting Standards Board (the &#147;FASB&#148;) issued SFAS
No.&nbsp;123 (revised 2004), &#147;Share-Based Payment&#148; (&#147;SFAS No.&nbsp;123R&#148;), which requires
companies to measure and recognize compensation expense for all stock-based payments
at fair value. The Company will adopt this Statement on January&nbsp;1, 2006. The
Group does not believe that the adoption of SFAS 123R will have a significant effect
on its financial statements.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%"><B><I>&nbsp;</I></B></TD>
    <TD><B><I>SFAS No.&nbsp;153</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In December&nbsp;2004, the FASB issued SFAS No.&nbsp;153, &#147;Exchanges of Nonmonetary Assets&#148;,
which eliminates an exception in Accounting Principles Board Opinion No.&nbsp;29,
&#147;Accounting for Nonmonetary Transactions&#148;, for recognizing nonmonetary exchanges of
similar productive assets at fair value and replaces it with a general exception for
recognizing exchanges of nonmonetary assets at fair value that do not have commercial
substance. This Statement will be effective for the Group for nonmonetary asset
exchanges occurring on or after January&nbsp;1, 2006. The Group does not believe that the
adoption of SFAS 153 will have a significant effect on its financial statements.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B><I>&nbsp;</I></B></TD>
    <TD width="1%"><B><I>&nbsp;</I></B></TD>
    <TD><B><I>SFAS No.&nbsp;154</I></B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In May&nbsp;2005, the FASB issued SFAS No.&nbsp;154, &#147;Accounting Changes and Error
Corrections&#148;, which replaces APB 20 and SFAS No.&nbsp;3, &#147;Reporting Changes in Interim
Financial Statements&#148;. SFAS No.&nbsp;154 establishes, unless impracticable, retrospective
application as the required method for reporting a change in accounting principle in
the absence of explicit transition requirements specific to a newly adopted
accounting principle. This statement will be effective for the Group for all
accounting changes and any error corrections occurring after January&nbsp;1, 2006. The
impact on the consolidated financial statements will depend on new pronouncements
that are subsequently issued.</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-65
</DIV>

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APT SATELLITE HOLDINGS LIMITED
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or 12(g) OF THE SECURITIES EXCHANGE ACT OF
1934, or
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2005
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934.
or
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date
of event requiring this shell company report _________
Commission file number 001-14564
APT SATELLITE HOLDINGS LIMITED
(Exact Name of the Registrant Specified in its Charter)
Bermuda
( Jurisdiction of Incorporation or Organization)
22 Dai Kwai Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong
(Address of Principal Executive Offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
NONE
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Title
Name of Each Exchange on Which Quoted
Ordinary Shares
American Depositary Shares
The Stock Exchange of Hong Kong Limited
New York Stock Exchange
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
NONE
Indicate the number of outstanding shares of each of the issuer's classes of capital or common
stock as of the close of the period covered by the annual report:
413,265,000 Ordinary Shares as of December 31, 2005.
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.
YES
o
NO
þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
YES
o
NO
þ
Indicate by check mark whether the Company: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the Company was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
YES
þ
NO
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or
a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule
12b-2 of the Exchange Act. (Check one):
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
þ
Indicate by check mark which financial statement item the Company has elected to follow.
Item 17
o
Item 18
þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES
o
NO
þ
Table of Contents
TABLE OF CONTENTS
Page
GLOSSARY OF CERTAIN TERMS
iii
Item 1. Identity of Directors, Senior Management, and Advisers
1
Item 2. Offer Statistics and Expected Timetable
1
Item 3. Key Information
1
Selected Consolidated Financial Information
1
Risk Factors
4
The SARS Outbreak
10
Item 4. Information on the Company
11
History and Development of the Company
11
Business Overview
11
Industry and Market Overview
13
Broadcasting and Telecommunications Markets in Asia
14
Customers and Services
16
Competition
26
Regulation
28
Organizational Structure
30
Property, Plant and Equipment
31
Item 4A. Unresolved Staff Comments
31
Item 5. Operating and Financial Review and Prospects
32
Overview
32
Application
of Critical Accounting Matters
34
Contractual
Obligations and Commercial Commitments
37
Off-Balance Sheet Arrangements
38
Results of Operations
39
Liquidity and Capital Resources
43
Forward Looking Statements
45
Other
46
Item 6. Directors, Senior Management and Employees
47
Compensation
53
Board Practices
57
Employees
59
Share Option Schemes
59
Share Ownership
59
Service Agreements
60
Item 7. Major Shareholders and Related Party Transactions
60
Major Shareholders
60
Related Party Transactions
62
Item 8. Financial Information
65
Item 9. The Offer and Listing
65
Item 10. Additional Information
67
Exchange Controls and Other Limitations Affecting Security Holders
72
Taxation
73
Item 11. Quantitative and Qualitative Disclosures about Market Risk
78
Interest Rate Risk
78
Exchange Rate Sensitivity
78
Limitations
79
Item 12. Description of Securities Other Than Equity Securities
79
-i-
Table of Contents
Page
Item 13. Defaults, Dividend Arrearages, and Delinquencies
79
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
79
Item 15. Controls and Procedures
79
Item 16A. Audit Committee Financial Expert
79
Item 16B. Code of Ethics
79
Item 16C. Principal Accountant Fees and Services
80
Item 16D. Exemption from the Listing Standards for Audit Committees
80
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
80
Item 17. Financial Statements
80
Item 18. Financial Statements
80
Item 19. Exhibits
81
EX-8.2 FINANCIAL STATEMENTS OF APT SATELLITE TELECOMMUNICATIONS LIMITED
EX-99.1 CERTIFICATION OF CEO
EX-99.2 CERTIFICATION OF CFO
EX-99.3 CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350
EX-99.4 CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. SECTION 1350
EX-99.5 UPDATED SIGNIFICANT DIFFERENCES IN CORPORATE GOVERNANCE PRACTICES
-ii-
Table of Contents
GLOSSARY OF CERTAIN TERMS
In this Form 20-F, unless the context otherwise requires, the following expressions have the
following meanings:
ADS
An American Depositary Share representing
ownership of eight shares of the Company's Ordinary
Shares, evidenced by American Depositary Receipts.
analog
A method of storing, processing or transmitting
information through a continuously varied (rather
than pulsed) signal.
APCN2
Asia Pacific Cable Network 2, a submarine cable
project under a consortium of telecommunication
companies. The project provides additional telecom
capacity for designated Asian cities.
APSTAR System
The Company's current and future satellites,
including APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V,
APSTAR VI (formerly APSTAR VB), and any other
satellites to be launched by the Company in the
future.
APT/APT HK
APT Satellite Company Limited, a company
incorporated in the HKSAR and a wholly-owned indirect
subsidiary of the Company.
APT BVI
APT Satellite Investment Company Limited, a
company incorporated in the British Virgin Islands
with limited liability and a wholly-owned subsidiary
of the Company.
APT Group
The Company and its subsidiaries and affiliates.
APT International
APT Satellite International Company Limited, a
company incorporated in the British Virgin Islands
with limited liability and a shareholder of the
Company.
APT Telecom
APT Satellite Telecommunications Limited, a
jointly controlled entity of the Company which is
incorporated in the HKSAR that had been engaging in
the provision of telecommunication services.
APT Telecom Lease
The agreement for lease dated March 12, 2001 made
between APT Telecom and Science and Technology Parks
Corporation in respect of the Remaining Portion of
Section E of Tai Po Town Lot No. 13 and Extension
Thereto, Hong Kong, as modified by the Modification
of Agreement for Lease and Modification of Proposal
Form.
APT's Leases
The Lease Agreement as supplemented and modified
by the Cancelled Agreement for Lease, the Deed of
Cancellation, the Second Supplemental Agreement, the
Fifth Modification of Lease and the Fifth
Modification Proposal.
bandwidth
A range of frequencies occupied by a modulated
carrier or the range of frequencies which can be
transmitted through a communications system.
Bandwidth is one measure of the information carrying
capacity of a transponder. The wider the bandwidth,
the more information can be transmitted.
Bank loan
On December 16, 2002, APT Satellite Company
Limited entered into a secured term facility of
US$240 million, It was amended by a Deed of Amendment
and Restatement on October 27, 2004 and a Second Deed
of Amendment and Restatement on May 18, 2005.
Basic Law
The Basic Law of the Hong Kong Special
Administrative Region (HKSAR) of the People's
Republic of China, effective as of July 1, 1997, is
the constitutional document for the HKSAR.
beam
The directed electromagnetic rays emanating from a
spacecraft or ground station. With respect to
satellites, it typically refers to aggregates of
these rays such as a China (coverage) beam or global
(coverage) beam.
-iii-
Table of Contents
Cancelled Agreement
for Lease
The agreement for lease dated June 19, 2000 made
between APT and the Science and Technology Parks Corporation in respect of the
original Remaining Portion of Section E of Tai Po Town Lot No. 13 and
Extensions Thereto.
C2C
C2C Pte. Ltd., a cable network provider under a
consortium of telecommunication companies led by
Singapore Telecommunications Ltd.
CCTV
China Central Television, a PRC state-owned
enterprise under the supervision and control of the
SARFT.
CITV
China International Television Corporation, a PRC
state-owned enterprise under the supervision and
control of the SARFT.
CLTC
China Satellite Launch and Tracking Control
General, a PRC state-owned enterprise subject to the
supervision and control of the Defense Commission.
C-band
In satellite communications (FSS) used to refer to
downlink frequencies between 3.4 GHz and 4.2 GHz and
uplink frequencies between 5.85 GHz and 7.075 GHz.
It is often referred to as 4/6 GHz.
cellular
Domestic public cellular radio telecommunications
service. Cellular systems are based on multiple base
stations, or ''cells,'' that permit efficient
frequency reuse and on software that permits the
system to band mobile calls from cell to cell as
subscribers move through the cellular service area.
China Aerospace
China Aerospace Science & Technology Corporation
(formerly China Aerospace Corporation or the PRC
Ministry of Aerospace Industry), a PRC state-owned
enterprise engaged in the research, design, testing
and manufacturing of launch vehicles and satellites.
ChinaSat
China Telecommunications Broadcast Satellite
Corporation, a PRC state-owned enterprise under the
supervision of the MII and which is the satellite
operation arm of the MII.
DBS
Direct broadcast satellite, a satellite capable of
transmitting direct-to-home television programming.
dBW
Decibel relative to one watt, a measure of a
satellite's power (e.g., 50 dBW is 10 times more
powerful than 40 dBW).
Deed of Cancellation
The deed of cancellation and surrender dated March
12, 2001 in respect of cancellation of the Cancelled
Agreement for Lease made between APT and Science and
Technology Parks Corporation.
digital
Referring to a method of storing, processing, or
transmitting information through a pulsed (rather
than continuously varied) signal.
downlink
The receiving portion of a satellite circuit
extending from the satellite to the earth.
Director(s)
Director(s) of the Company, including all
executive director(s), all non-executive director(s)
and independent non-executive directors.
earth station
The antennae, receivers, transmitters and other
equipment needed on the ground to transmit and
receive satellite communications signals.
EBITDA
Net income before taking into account: (i) interest
expenses; tax; any share of the profit of any
associated company or undertaking, except for
dividends received in cash by any member of the
Company; any share of the non-cash loss
of any investment company of other associated company or undertakings; and extraordinary and exceptional items; and (ii) without
double-counting, after adding back all amounts provided for as depreciation, amortization, impairment assets value or other
provision not involving an outflow of cash.
-iv-
Table of Contents
EIRP
Equivalent isotropic radiated power, the product of the power supplied to the antenna and the
antenna gain in a given direction relative to an isotropic antenna (absolute or isotropic gain).
Eligible Employee(s)
Employee(s) (whether full time or part time employee(s), including any executive director but not
any non-executive director) of the Company or its subsidiaries.
Eligible Grantee(s)
Persons who are eligible to accept the offer of the grant of an Option in accordance with the
Scheme 2001 or Scheme 2002, as the context requires.
FCL
Fixed Carrier Licence issued by OFTA for the provision of Facility-based External
Telecommunication Services.
Fifth Modification of Lease
The fifth modification of agreement for lease dated May 31, 2002 made between APT and Science and
Technology Parks Corporation in respect of modification of purpose of the lease contained in the
Lease Agreement.
Fifth Modification Proposal
The fifth modification to proposal form dated May 31, 2002 made between APT and Science and
Technology Parks Corporation in respect of modification of purpose in the proposal form in
relation to the Lease Agreement.
footprint
The geographic area covered by a satellite's downlink or uplink beams, the outer edge of which is
generally defined as that area where the quality of communication degrades below an acceptable
commercial level due to the spacecraft antenna pattern, power of the signal or curvature of the
earth.
frequency
Number of repetitions in a given time. Typically it refers to the rate of variation per second
of the carrier wave or modulating signal. Communications satellite RF signals are typically in
the GHz frequency range. See C-band and Ku-band.
FTNS
Fixed telecommunications network services, presently known as Fixed Carrier Licence.
GEO
Geostationary orbit.
geostationary orbit
A geosynchronous orbit in which the orbital inclination and eccentricity of a satellite are zero
such that the satellite appears to hover over a fixed position on the earth's equator.
Global Offering
The Company's initial world-wide public offering of Ordinary Shares and American Depositary
Shares, each representing eight shares of the Company's Ordinary Shares dated December 13, 1996.
HDTV
High definition television.
HKSAR
Hong Kong Special Administrative Region of the PRC.
ISDN
Integrated services data network.
ITU or International
Telecommunication Union
The International Telecommunication Union, the telecommunications agency of the United Nations,
established to provide standardized communications procedures and practices, including frequency
allocation and radio regulations, on a world-wide basis.
Joint Declaration
The Joint Declaration of the Government of the United Kingdom and the Government of the PRC on
the Question of Hong Kong with Annexes signed on December 19, 1984.
Ku-band
In satellite communications (FSS), it is used to refer to downlink frequencies between 10.7 GHz
and 12.75 GHz and uplink frequencies between 13.75 GHz and 14.8 GHz. Often it is referred to as
11/14 or 12/14 GHz.
Lease Agreements
The agreement for lease dated February 26, 1993, made between APT and the Science and Technology
Parks Corporation in respect of Subsection 1 of Section E of Tai Po Town Lot No. 13 and Extension
Thereto, Hong Kong on which APT's satellite control center is developed.
-v-
Table of Contents
LEO
Low-earth orbit of up to 1,500 miles above the earth.
Master Registry
The Master International Frequency Register of the ITU, which lists frequency assignments of
orbital slots upon notification.
MEO
Mid-earth orbit of up to 18,000 miles above the earth.
megahertz (MHz)
A measure of frequency, 1 million cycles per second.
microwave
Radio frequency carrier waves with wavelengths of less than one meter- frequencies above 300 MHz.
MII
Ministry of Information Industry of the PRC.
mobile satellite services
Services transmitted via satellites to provide mobile telephone, paging, messaging, facsimile,
data, and position location services directly to users.
OFTA
The Office of the Telecommunications Authority of Hong Kong or, where the context requires, the
Telecommunications Authority of Hong Kong.
operational life
The time for which a satellite is capable of operating in its allotted position. The expected
end of a satellite's in-orbit operational life is mainly based on the period during which the
satellite's on-board fuel permits proper station-keeping maneuvers for the satellite.
Option(s)
Options granted to the Eligible Grantees under the Scheme 2001 or to the Participants under the
Scheme 2002, as the context requires.
paging
A service designed to deliver a message to a person whose location is unknown; messages may be
received via an alphanumeric or character display or small speaker.
Participant(s)
Any person belonging to any of the following classes of persons: (a) any Eligible Employee; and
(b) any non-executive directors (including independent non-executive directors) of the Company or
any of its Subsidiaries, in accordance with the Scheme 2002.
PRC
The People's Republic of China, other than HKSAR.
PSTN
Public switched telephone networks which comprise the network infrastructure necessary for
providing basic telephone services.
radio frequency
A frequency that is higher than the audio frequencies but below the infrared frequencies, usually
above 20 KHz.
Radio Regulations
Radio Regulations of the ITU.
Radio Regulatory Department
Radio Regulatory Department of the MII.
Radiocommunication Bureau
Radiocommunication Bureau of the ITU.
SARFT
China State Administration of Radio Film and Television, a government office responsible for the
management of the provision of Radio, Film and Television in the PRC.
Satellite Control Center
The earth station of the APT Group for the TT&C of APSTAR Systems and the provision of
broadcasting transmission and telecommunication services. It is located in Tai Po, New
Territories, Hong Kong.
Science and Technology
Parks Corporation
Hong Kong Science and Technology Parks Corporation (formerly known as Hong Kong Industrial
Science and Technology Parks Corporation), the lessor of certain Lease Agreements with the
Company.
scrambled programming
Programming signals which require a decoder for purposes of viewing.
-vi-
Table of Contents
Second Supplemental Agreement
The second supplemental agreement for lease and grant of second extension area dated March 12,
2001 made between APT and the Science and Technology Parks Corporation in respect of Subsection 3
of Section E of Tai Po Town Lot No. 13 and Extensions Thereto.
signal
A physical, time-dependent energy value used for the purpose of conveying information through a
transmission line.
switch
A device that opens or closes circuits or selects the paths or circuits to be used for
transmission of information; switching is the process of interconnecting circuits to form a
transmission path between users.
teledensity
Telephone access lines per 100 persons.
telemetry
Radio transmission of coded or analog data from a satellite to a ground station.
telephony
Science of construction and operation of telephones and telephonic systems.
transponder
A microwave repeater which provides a discrete path to receive communications signals, translate
and amplify such signals and retransmit them to earth or another satellite.
TT&C
Telemetry, tracking and command.
TT&C Station
Telemetry, tracking and command station, a land-based facility that monitors and controls the
positioning, altitude and status of a satellite in orbit.
uplink
In satellite communications, the signal from the earth station to the space station (satellite).
VSAT
Very small aperture terminal.
-vii-
Table of Contents
PART I
Item 1. Identity of Directors, Senior Management, and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
Selected Consolidated Financial Information
The following table presents selected consolidated financial information for APT Satellite
Holdings Limited (the "Company" or "APT Holdings") as of and for the five fiscal years ended
December 31, 2005. The financial statement information as of and for each of the years in the
five-year period ended December 31, 2005 has been derived from, and should be read in conjunction
with, and are qualified in their entirety by reference to, the Company's Audited Consolidated
Financial Statements (the "Audited Consolidated Financial Statements") and with "Item 5. Operating
and Financial Review and Prospects." The Audited Consolidated Financial Statements are prepared in
accordance with Hong Kong GAAP, which differs in certain significant respects from US GAAP. For a
discussion of the nature and effect of such differences between Hong Kong GAAP and US GAAP, see
Item 18 and Note 28 of the "Notes to the Audited Consolidated Financial Statements" of the Company,
which contain descriptions of the significant differences between Hong Kong GAAP and US GAAP, a
reconciliation of net loss from Hong Kong GAAP to US GAAP for the years ended December 31, 2003,
2004 and 2005, and reconciliation of shareholders' equity from Hong Kong GAAP to US GAAP as of
December 31, 2004 and 2005. In addition, Note 28 to the Audited Consolidated Financial Statements
of the Company contains additional disclosures required under US GAAP, which are not disclosed
elsewhere in the Audited Consolidated Financial Statements of the Company.
-1-
Table of Contents
2001
2002
2003
2004
2005
2005
HK$
HK$
HK$
HK$
HK$
US$
(restated)
(restated)
(restated)
(restated)
Statement
of Operations Data:
(in millions, except per share data)
Hong Kong GAAP:
Total revenues
374.2
351.4
302.2
277.3
336.5
43.1
Total costs and expenses
(348.6
)
(365.4
)
(354.3
)
(323.4
)
(378.4
)
(48.5
)
Income/(loss) from operations
104.0
49.7
(148.2
)
(38.6
)
(78.5
)
(10.1
)
Share of losses of jointly controlled
entities
(5.1
)
(10.6
)
(57.1
)
(2.7
)
(8.0
)
(1.0
)
Income/(loss) before income taxes
93.3
39.1
(205.3
)
(45.4
)
(123.4
)
(15.8
)
Net income/(loss)
67.3
2.3
(217.0
)
(62.0
)
(136.6
)
(17.5
)
Attributable to:
Minority interests
—
(2.3
)
(0.9
)
(2.0
)
(1.0
)
(0.1
)
Equity shareholders of the Company
67.3
4.6
(216.1
)
(60.0
)
(135.6
)
(17.4
)
Basic earnings/(loss) per share
(cents)
(1)
16
1
(52
)
(15
)
(33
)
(4
)
Basic earnings/(loss) per ADS
(cents)
(1)
128
8
(416
)
(120
)
(264
)
(32
)
Diluted earnings/(loss) per share
(cents)
(1)
16
1
(52
)
(15
)
(33
)
(4
)
Diluted earnings/(loss) per ADS
(cents)
(1)
128
8
(416
)
(120
)
(264
)
(32
)
Weighted average number of shares
outstanding
(1)
— Basic
413
413
413
413
413
413
Weighted average number of shares
outstanding
(1)
— Diluted
414
413
413
413
413
413
Dividend per share (cents)
5.0
—
—
—
—
—
US GAAP:
Total revenues
373.0
347.8
316.3
277.3
336.5
43.1
Total costs and expenses
(342.1
)
(314.6
)
(484.0
)
(323.6
)
(445.9
)
(57.2
)
Income/(loss) from operations
30.9
33.2
(167.7
)
(46.3
)
(109.4
)
(14.1
)
Share of losses of jointly controlled
entities
(5.1
)
(10.6
)
(65.7
)
(2.3
)
(2.6
)
(0.3
)
Income/(loss) before income taxes and
minority interests
98.3
47.6
(214.5
)
(43.3
)
(118.1
)
(15.1
)
Net income/(loss)
72.6
13.8
(225.3
)
(58.6
)
(130.2
)
(16.7
)
Basic earnings/(loss) per share
(cents)
(1)
18
3
(55
)
(14
)
(32
)
(4
)
Basic earnings/(loss) per ADS
(cents)
(1)
144
24
(440
)
(112
)
(256
)
(32
)
Diluted earnings/(loss) per share
(cents)
(1)
18
3
(55
)
(14
)
(32
)
(4
)
Diluted earnings/(loss) per ADS
(cents)
(1)
144
24
(440
)
(112
)
(256
)
(32
)
Weighted average number of shares
outstanding
(1)
— Basic
413
413
413
413
413
413
Weighted average number of shares
outstanding
(1)
— Diluted
414
413
413
413
413
413
Balance Sheet Data:
(in millions)
Hong Kong GAAP:
Working capital
1,478.9
739.5
482.8
533.7
188.4
24.2
Property, plant and equipment, net
1,132.9
2,002.0
2,429.0
2,680.3
2,999.4
386.5
Total assets
3,308.2
3,347.0
3,305.6
3,621.0
3,614.3
463.4
Long-term liabilities (less current
portion)
542.9
377.7
769.6
1,191.0
1,255.3
160.9
Total liabilities
816.1
864.2
1,046.6
1,423.8
1,552.7
199.1
Minority interests
—
6.8
5.9
3.9
2.9
0.4
Capital stock-common stock
41.3
41.3
41.3
41.3
41.3
41.3
Total shareholders' equity
2,492.1
2,482.7
2,253.1
2,193.1
2,058.6
263.9
US GAAP:
Working capital
1,454.5
739.5
482.8
533.7
194.0
24.2
Total assets
3,284.8
3,339.7
3,297.3
3,613.9
3,615.4
463.2
Total liabilities
816.7
864.2
1,046.6
1,423.8
1,554.7
199.1
Minority interests
—
6.8
5.9
4.6
3.6
0.5
Total shareholders' equity
2,468.1
2,468.7
2,244.8
2,186.3
2,057.1
263.7
-2-
Table of Contents
(1)
Per share and per ADS data is derived from the weighted average number of shares
outstanding during the applicable period. Diluted earnings per share was the same as the
basic earnings per share as there were no dilutive potential ordinary share in existence for
five fiscal years ended December 31, 2005.
(2)
The Hong Kong Institute of Certified Public Accountants (HKICPA) has issued a number of new
and revised Hong Kong Financial Reporting Standards (HKFRSs) that are effective for accounting
periods beginning on or after January 1, 2005. Information on the changes in accounting policies resulting from initial
application of these new and revised HKFRSs is provided in note 4 of the "Notes to the
Audited Consolidated Financial Statements" of the Company. Certain amounts for the years
before 2005 have been restated to the extent that the new accounting policies are adopted
retrospectively as disclosed in note 4.
The Hong Kong Dollar is freely convertible into other currencies (including the US
Dollar). Since October 17, 1983, the Hong Kong Dollar has been linked to the US Dollar at the rate
of approximately HK$7.80 to US$1.00. The central element in the arrangements which give effect to
the link is an agreement between the government of Hong Kong and the three Hong Kong
banknote-issuing banks, The Hongkong and Shanghai Banking Corporation Limited, Standard Chartered
Bank and Bank of China (Hong Kong) Limited. Under this agreement, the Government of the Hong Kong
SAR Exchange Fund issues certificates of its indebtedness to the banknote-issuing banks against
payment in US Dollars at the fixed exchange rate of HK$7.80 to US$1.00. The banknote-issuing banks
hold the certificates of indebtedness to cover the issuances of banknotes. When the banknotes are
withdrawn from circulation, the banknote-issuing banks surrender the certificates of indebtedness
to the Government of the Hong Kong SAR Exchange Fund and are paid the equivalent US Dollars at the
fixed rate.
The consolidated financial statements of the APT Group are expressed in Hong Kong
dollars ("HK$"). The translations of amounts from Hong Kong dollars into United States dollars for
convenience of the reader in this annual report have been made at the rate on December 31, 2003,
2004 and 2005 of HK$7.80 = US$1.00. No representation is made that the Hong Kong dollar amounts
could have been, or could be, converted into United States dollars at that rate or at any other
certain rate on December 31, 2003, 2004 and 2005, or any other date.
The market exchange rate of the Hong Kong Dollar against the US Dollar continues to be
influenced by the forces of supply and demand in the foreign exchange market. Exchange rates
between the Hong Kong Dollar and other currencies are influenced by the rate between the US Dollar
and the Hong Kong Dollar.
The exchange rates of the Hong Kong Dollar to the United States Dollar as of and during the
years ended December 31, 2001, 2002, 2003, 2004 and 2005 were as follows:
2001
2002
2003
2004
2005
Average
(1)
7.7994
7.7997
7.7875
7.7891
7.7774
High
7.8001
7.8000
7.8001
7.8010
7.8000
Low
7.7969
7.7936
7.7085
7.7632
7.7519
End of Period
7.7978
7.7981
7.7640
7.7723
7.7545
(1)
The rate of exchange means the noon buying rate in New York City for cable transfer in
foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.
The average rate means the average of the exchange rates on the last day of each month during
the period.
The exchange rates of the Hong Kong Dollar to the United States Dollar for each month during
the previous six months were as follows:
December 2005
January 2006
February 2006
March 2006
April 2006
May 2006
High
7.7552
7.7573
7.7617
7.7621
7.7600
7.7584
Low
7.7522
7.7509
7.7565
7.7572
7.7534
7.7513
-3-
Table of Contents
Risk Factors
Prior to making an investment decision, prospective investors should carefully consider all of
the information set forth in this annual report, including the following risk factors. If any of
the following risks actually occur, the Company's business, financial condition and operating
results could be adversely affected. As a result, the trading price of the Company's ordinary
shares and ADSs could decline and all or part of a prospective investor's investment could be lost.
Technical Risks of satellite systems
Satellite programs involve inherent technical risks. Given the intense competitiveness of
Asian satellite markets, any launch or in-orbit failure affecting any of the Company's present or
future satellites would have a material adverse effect on the Company's results of operations and
financial condition.
Risk of Satellite Defects or Failure
Satellite defects as well as possible damage from electrostatic storms or collisions with
space debris or other external causes may result in a partial or total loss of a satellite's
communication capacity. APSTAR IIR and APSTAR V are FS-1300 models, and APSTAR VI is a SB-4100 C1
model, which is a new general satellite platform with heritage from previous SB series satellite
model. Although these models were chosen based on a number of factors, including risk management,
there can be no assurance that the Company's satellites will perform as designed and as
manufactured. Significant defects in or damage to any of the Company's satellites would adversely
affect the Company's results of operations and financial condition.
Limited Life of Satellites
All satellites have limited operational lives. A number of factors affect the operational
lives of satellites, including construction quality, component durability, fuel usage, the launch
vehicle used and the skill with which the satellite is monitored and operated. There can be no
assurance as to the actual operational life of APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V or APSTAR
VI. The Company's results of operations and financial condition would be adversely affected if the
operational lives of satellites in the APSTAR System or any other satellites it may operate are
significantly shorter than expected.
TT&C Systems and Earth Station
All satellites in the APSTAR System, except APSTAR V, are controlled with respective TT&C
systems, which are operated by the technical staff of the Company. All TT&C systems are installed
in the Satellite Control Center of the Company. The reliability and performance of the Satellite
Control Center has been good and comparable to that of the industry. However, there can be no
assurance that there will not be technical problems, accidents or disasters in the future in
respect of the operation of the TT&C systems or the Satellite Control Center. The Company's results
would be adversely affected in the event of the occurrence of any such technical problem, accident
or disaster.
Risk of Interruption or harmful interference of APSTAR V
APSTAR V is operated by Loral Skynet through the satellite antenna facility of the Company.
Loral Skynet is an experienced satellite operator particularly in the operation of satellites based
on the FS1300 platform such as APSTAR V. However, there can be no assurance that the operation of
APSTAR V will be free from interruption or harmful interference in the future. The Company's
operating results could be adversely affected by the occurrence of such defect or problem.
Changes in Technology and Industry
Technology in the broadcasting and telecommunications industry is in a rapid and continuing
state of change, with new technological developments and innovations constantly emerging. If such
developments and
-4-
Table of Contents
innovations were to decrease general commercial demand for the use of satellites
of the type operated by the Company, the Company's results of operations and financial condition
could be materially adversely affected. Further, while the Company designs its satellites to
incorporate state-of-the-art technology, there can be no assurance that the technology used in the
Company's satellites will continue to be the most advanced throughout the entire operational life
of each satellite. Any technological lag which develops could result in lower rental fees after
the initial rental term for any given transponder, and could therefore have a material adverse
effect on the Company's results of operations and financial condition.
Regulatory Risks
Regulatory Regime for Satellite Operations
The business prospects of the Company (including the launch and the timing of the launch of
new satellites) could be adversely affected by laws, policies or regulations that modify the
present regulatory regime in HKSAR or elsewhere applicable to APT Group or the launch, operation
and commercial usage of its satellites.
Satellite services are subject to international space law. A country that is a party to the
International Outer Space Treaty or other treaties or conventions regulating outer space activities
is responsible for fulfilling its own obligations under such treaties or conventions. This often
results in the adoption by a member country of domestic laws to regulate the activities of their
own citizens or corporations in order to enable the country concerned to comply with its
international obligations. APT's satellite operations are principally regulated by the Outer Space
Ordinance 1997 (the "Outer Space Ordinance"). The Outer Space Ordinance prohibits any person from
launching or procuring the launch of a satellite, or operating a satellite, without obtaining the
appropriate license. The ultimate authority to grant licenses and otherwise to administer the
Outer Space Ordinance is vested in the Chief Executive of HKSAR acting in consultation with the
Executive Council of Hong Kong ("Chief Executive in Council"). In practice, all relevant matters
are dealt with on a regular basis by and through the OFTA.
Since July 1, 1997, HKSAR and its government and regulatory bodies have been subject to its
Basic Law and the principle of "One country, two systems". However, the Outer Space Ordinance
states that where the Central People's Government of the PRC issues an instruction to the Chief
Executive in relation to any licence to be issued or revoked under the Outer Space Ordinance on the
ground that if the instruction were not complied with the national security or the international
obligations of the PRC would be significantly affected, the Chief Executive shall comply with such
instruction.
On November 1, 2003 and April 4, 2005, OFTA granted the Space Station Carrier Licence for the
TT&C operations of APSTAR V and APSTAR VI, respectively, to APT. In addition, on April 4, 2005 OFTA
also granted to APT the Outer Space Licence in relation to the launch and operation of APSTAR VI.
The Company currently has licenses for the operation of APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V
and APSTAR VI. Owing to the fact that APSTAR V is under the leasehold arrangement and is operated
by Loral Skynet instead of the Company, there is no need for the Company to obtain the Outer Space
Licence for APSTAR V. However, there can be no assurance that existing laws and regulations
affecting the Company will remain applicable in the future, or whether any such applicable laws and
regulations are likely to be amended.
Priority for Orbital Slots
Satellites are entitled to protection from radio frequency interference by other satellites
and earth stations only upon the registration of the location, frequency and use of such satellites
with the Radiocommunication Bureau. Registration requires the successful completion of a
coordination process with other existing and potential users of locations and frequencies who have
commented on the application for registration. The coordination process is carried out in part at
the government-to-government level, which is beyond the control of the Company. The coordination
process has become increasingly complex and time-consuming in the Asia Pacific region because a
large number of operators have registered new systems operating at high power levels with very
broad coverage. The coordination process may result in modifications of proposed coverage areas or
satellite design to eliminate or minimize interference with other potential users.
-5-
Table of Contents
Under the Radio Regulations, during the coordination process a country may request the
Radiocommunication Bureau to assist it in resolving disputes in connection with existing or
proposed uses of frequencies and orbital locations. However, should any such disputes remain
unresolved, and the coordination process therefore not be successfully completed, there is no
formal dispute resolution mechanism. Any country that nonetheless places a satellite or any earth
station into operation without coordination and notification may not be entitled to seek the
assistance of the Radiocommunication Bureau to resolve complaints relating to interference.
APT, through the PRC government, has requested the Radio Regulatory Department of the PRC via
OFTA of Hong Kong to file and coordinate applications by APT for orbital slots with the
Radiocommunication Bureau and for resolving interference concerns. The Radio Regulatory Department
has notified the Radiocommunication Bureau the proposed use of several orbital slots, namely 76.5
degrees East, 89.5 degrees East, 92.2 degrees East, 96 degrees East, 102.8 degrees East, 131
degrees East, 131.8 degrees East, 134 degrees East, 138 degrees East and 140 degrees East. APT also
filed for the orbital slot at 142 degrees East but such filing has also been, for administration
purposes, transferred to ChinaSat in 2004 after liaising with OFTA. Pursuant to such transfer,
APSTAR I can be positioned at 142 degrees East under the existing licenses from OFTA. Under ITU
regulations, no assurance can be given as to whether substantial modifications to satellite
coverage or services may be required with respect to 142 degrees East, and no assurance can be
given whether the coordination process with the ITU, with respect to the orbital slot at 76.5
degrees East, where APSTAR IIR is currently positioned, or any other orbital slot to be used by the
Company's satellites will be completed or whether the Company will have any priority for any such
orbital slot.
Possible Disputes Relating to Orbital Slots
APSTAR V replaced APSTAR I on August 13, 2004. APSTAR V is utilizing certain designated
C-band, extended C-band frequencies and Ku-band frequencies in the orbital slot at 138 degrees
East. APSTAR VI replaced APSTAR IA on July 7, 2005. APSTAR VI is utilizing certain designated
C-band and extended C-band frequencies in the orbital slot at 134 degrees East. The right to use
these frequencies at such orbital slots has been licensed to the Company by the Kingdom of Tonga
("Tonga"), which, through its agent namely Friendly Islands Satellite Communications Limited
("TongaSat"), has responsibility for the ITU coordination process with respect to such orbital
slots and the frequencies covered by the Company's license.
APT and TongaSat entered into a license agreement on July 8, 2003, under which APT can utilize
certain designated C-band, extended C-band and Ku-band frequencies in the orbital slot at 138
degrees East for APSTAR V. APT and TongaSat also entered into an operator agreement on December
19, 2003 for the utilization of certain Ku-band frequencies in the same orbital slot for APSTAR V,
which operator agreement was approved by the corresponding administrations of both HKSAR and Tonga
on March 15, 2004.
APT and TongaSat also entered into a license agreement on April 15, 2005, under which APT can
utilize certain designated C-band, extended C-band and Ku-band frequencies in the orbital slot at
134 degrees East for APSTAR VI.
Tonga has confirmed to the Company that it has not granted rights to any third party that
would affect the Company's license or the Company's entitlement to use the frequencies at such
orbital slot covered by the license. Disputes may arise with respect to these and other orbital
slots used by or contemplated for the Company's satellites. Any such disputes or interference may
have a material adverse effect on the Company's business.
APSTAR I has been relocated to 142 degrees East and APSTAR IA is in the process of being
relocated to another orbital slot. APT is authorized by customers to locate and operate these two
satellites under inclined angle modes. Third parties liabilities insurance policies have been taken
out in respect of the relocation of APSTAR IA. No assurance can be given by the Company that these
two satellites will not cause any interferences or damages to any third parties leading to damages
of any third party, nor the insurance policy will be sufficient for any damage payments.
-6-
Table of Contents
Regulatory Constraints on End-users
Many of the Company's existing and potential customers who may wish to use the APSTAR System
to broadcast into or provide telecommunications services for countries in Asia are subject to
government licensing. The applicable regulatory schemes in these countries vary considerably.
While the Company does not believe these regulatory schemes will prevent it from pursuing its
business, there can be no assurance that its customers' licenses and approvals are or will remain
sufficient in the view of foreign regulatory authorities or that these authorities will not
discourage or prevent existing or potential customers from utilizing transponders on the APSTAR
System.
Many of the Company's customers must also have authorization from the countries in which they
are located in order to uplink to and communicate by means of the Company's satellites. While
obtaining such authorizations on behalf of its customers is not the Company's responsibility, the
Company's success may depend on the ability of its potential customers to obtain required
authorizations.
Export Restrictions
The United States government has imposed certain restrictions on technology transfers to
certain countries including the PRC. Export licenses for the deliveries of TT&C systems and
satellites are required to be obtained by the manufacturers of other satellites that the Company
may launch in the future in connection with launches in any country subject to restrictions on
technology transfers.
Under the APT-Loral Term Sheet dated September 23, 2002 and the agreements signed between
Loral Orion and APT HK in December 2003, Loral Orion agreed to participate in the development of
APSTAR V by investing up to 50% of the capital necessary for the APSTAR V project on a pro rata
basis in order to obtain rights to 27 transponders at a value of approximately US$115.0 million.
In March 2003, the parties agreed to lower the number of transponders to be purchased by Loral
Orion to 25, but Loral Orion's capital commitment remains unchanged.
Because of the failure of Space Systems/Loral Inc., a subsidiary of Loral Space &
Communications ("SS/Loral"), to obtain the export license for the transfer of the title of APSTAR V
in time for launching, APT entered into a Satellite Procurement Amendment Agreement, a Satellite
Transponder Agreement and a Satellite Agreement (collectively the "Definitive Agreements") with
SS/Loral and Loral Orion Inc. ("Loral Orion") on August 26, 2003 for the purpose of minimizing any
further delay in the launch of the satellite. Under the Definitive Agreements, the title of APSTAR
V was transferred to Loral Orion upon intentional ignition of APSTAR V and simultaneously therewith
APT was granted an irrevocable lease of forty-one and one-half (41-1/2) transponders for the lease
term commencing upon transfer of title from SS/Loral to Loral Orion until the end of operational
life of APSTAR V. Under the Satellite Agreement, APT will release the leasehold interest of twelve
and one-half (12-1/2) transponders to Loral Orion in stages over a five years period from the
in-service date of APSTAR V subject to payment of installments by Loral Orion to APT. This will
result in APT having 29 transponders. Under the leasehold arrangement, Loral Orion has committed to
continue pursuing the necessary export license for title transfer of APSTAR V. The Definitive
Agreements were approved by the United States Bankruptcy Court on October 28, 2003. The Company
believes that entering into the Definitive Agreements facilitated the timely replacement of APSTAR
I so that satellite transponder services of the APT Group can be enhanced. The Definitive
Agreements will not adversely impact the business and future plans of the APT Group because the
leasehold interests under the Definitive Agreements will allow APT to carry on its business in a
normal commercial practice of leasing its transponders capacities to any third parties.
Owing to the absence of export license for the delivery of the TT&C system of APSTAR V, the
satellite is currently controlled by Loral Skynet through the Satellite Control Centre of the APT
Group until the export license for the delivery of the TT&C system of APSTAR V is obtained by Loral
Skynet. Loral Orion has committed to continue pursuing the necessary export license for title
transfer of APSTAR V. However, there can be no assurance that the relevant vendor of any satellite
of the Company will be able to obtain all the necessary licenses or that such other licenses will
not be revoked by the relevant government or that the relevant government will not impose
additional restrictions or trade sanctions against the PRC or other countries that would
significantly delay the planned launch of the satellite in question or other satellites that the
Company or any of its subsidiary or associated company may launch in the future.
-7-
Table of Contents
Business Risks
Insurance
The Company has in-orbit insurance coverage in respect of APSTAR IIR, APSTAR V and APSTAR VI
until October 18, 2006, June 29, 2006 and April 12, 2007, respectively. No in-orbit insurance is
maintained in respect of APSTAR 1 and APSTAR IA as their remaining design lives are less than one
year. On April 30, 2004 OFTA granted the Company a waiver whereby the requirement of third party
liability insurance in respect of APSTAR I, IA and IIR, respectively, for in-orbit operation is waived. There can be no
assurance that the Company will not be subject to claims for third-party liability in respect of
satellites under the APSTAR System. CGWIC, the launch service provider of APSTAR VI, has secured
third-party liability insurance for the launch with a one year period after launch, which covers,
among others, the Company, the governments of Hong Kong and PRC as additional insured. As the title
of APSTAR V has transferred to Loral Skynet upon launch, there is no need for the Company to obtain
an Outer Space Ordinance Licence for APSTAR V and the Company is not required to secure third-party
liability insurance for APSTAR V. No assurance can be given with respect to the change of policy
of OFTA. Because of the drifting of APSTAR IA from its original geostationary orbital slots to new
orbital slots for the provision of services to customers under inclined modes, APSTAR IA is covered
under third-party liability insurance over drifting and operation until November 1, 2006.
After the World Trade Center event happened on September 11, 2001, the insurance industry
imposed unfavorable terms on satellite insurance with respect to both the launch insurance and
in-orbit insurance. Such impositions include a higher premium rate and additional exclusion
clauses. The Company's in-orbit insurance must be renewed annually. There can be no assurance
that the Company will be able to obtain future insurance on terms satisfactory to the Company, or
at all. The failure to secure adequate insurance coverage may result in the Company not being in
compliance with its Outer Space Ordinance License, and could adversely affect the Company's
financial condition if an event were to occur for which the Company was not adequately insured.
The Company's launch insurance is unlikely to fully reimburse the Company for its expenditures
with respect to launching a replacement satellite, with uninsured expenses comprising legal and
other professional fees, interest and certain other expenses. It is the Company's policy to secure
in-orbit insurances to cover only the book value, rather than the replacement cost, of a satellite,
however, the Company may take into account the obligations under the Bank loan conditions and the
general industrial practice on a case by case basis. There is no assurance that the Company will
take in-orbit insurance to fully cover the book value of its satellites. Further, the Company's
insurance coverage does not compensate the Company for business interruption and similar losses
(including, among other things, loss of market share, loss of revenue and incidental and
consequential damages). In addition, the Company's insurance policies include customary exclusions
including, among other things, exclusions from losses resulting from (i) war or similar hostile
actions, (ii) anti-satellite, nuclear or laser or directed energy devices, (iii) insurrection and
similar acts or governmental action to prevent such acts, (iv) governmental confiscation, (v)
nuclear reaction or radiation contamination, (vi) electromagnetic or radio frequency interference,
except for damage directly caused by such interference, or (vii) willful or intentional acts of the
Company or its contractors except for the acts of the range safety officer acting within the limit
of his authority.
Competitive Nature of the Industry
The international satellite communications industry is highly competitive. The Company faces
competition from numerous international, regional and domestic satellite companies and from other
communications companies which offer competing services using satellites or land-based facilities
in the Asia Pacific region. Many of these competitors have substantially greater financial
resources than the Company. The Company expects that new satellites will be launched covering all
or part of the Asia Pacific region in the future. Assuming announced plans for such launches are
successfully implemented, there would be an increase of transponder capacity serving the region and
the increased supply of international telecommunications facilities, including those of the
Company, would likely exceed the demand for such services. Such overcapacity could have a negative
impact on the Company's results of operations and financial condition. Technological developments,
such as the use of digital video compression technology, and the proliferation of fiber optic
cables in the form of land cables and submarine cables at
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comparatively lower cost for
point-to-point telecommunication services may also result in reduced demand for transponder
capacity as such advancements become commercially viable.
The laws of certain countries require domestic television broadcasters and domestic satellite
telecommunications operators providing services in their home countries generally to use
state-owned or locally-owned satellites to the extent capacity is available. These legal
requirements may prevent the Company and other satellite companies from competing in the provision
of transponder capacity to these potential customers. There can be no assurance that other
countries in the Asia Pacific or Middle East regions, including those countries within the
footprints of APSTAR System satellites and in which the Company's customers currently provide
programming or telecommunications services, will not impose similar requirements to use state-owned
or locally-owned satellites in the future on domestic broadcasters or operators. The imposition
of such requirements could adversely affect the Company's results of operations and financial
condition.
Additional Financing Requirements
On December 16, 2002, APT entered into a Bank loan which is secured by the assignment of the
construction, launching, and related equipment contracts relating to APSTAR V and APSTAR VI and
their related insurance claim proceeds, assignment of all present and fixed charges over certain
bank accounts which will hold receipts of transponder utilization income and termination payments
under construction, launching and related equipment contracts. As of December 31, 2004 and 2005,
the aggregate outstanding borrowing amount under the Bank loan was US$125.1 million and US$144.5
million, respectively.
The Bank loan contains financial covenants, including maintenance of collateral coverage
ratio, minimum net worth and minimum EBITDA. The Bank loan also contains customary limitations,
including those on dividends, investments, capital expenditures, changes of controlling
shareholders, creating liens and transactions with affiliates. No assurance can be given that APT
will be able to meet any financial and operating covenant. These covenants and limitations may
limit the Company's ability to raise additional funds when required and could significantly
restrict the Company's business expansion.
Dependence on Key Customers
Revenues from the Company's five largest customers for the years ended December 31, 2003,
2004, and 2005 were HK$119.2 million, HK$111.9 million and HK$ 112.9 million (US$14.5 million),
respectively, which represented 39.4%, 40.4% and 33.6%, respectively, of total revenues. Revenues
from the Company's largest customer represented 12.6%, 12.7% and 9.1%, respectively, of total
revenues during such periods. The Company's results of operations could be materially and
adversely affected by the loss of one or more of its key customers. There can be no assurance that
the key customers will renew the existing satellite capacity utilization agreements on similar
commercial terms, including price levels and for similar capacity. In addition, to the extent the
credit quality of key customers deteriorates or these customers seek bankruptcy protection, we may
not be able to collect our receivables from these customers, which may adversely affect our
operating results.
Interference
Adjacent satellites may use the same band of frequencies as the Company's satellites and the
transmission made by other satellites or other legal or illegal source of transmission which may
interfere with the transmissions of the Company's satellites. Such interference could lead to the
loss of revenues if customers migrate to competitors who operate satellites without such
interference. Further, there can be no assurance that the Company can avoid the material
interference with other satellites. If this occurs, the Company may be in violation of the Outer
Space Ordinance Licence, and the affected parties may submit a complaint in the ITU.
Political and Economic Risks
Substantially all of the Company's revenues are derived from its operations conducted in the
Asia Pacific region, including the PRC and Hong Kong. As a result, the Company's results of
operations and financial condition may be influenced by the political situation in the PRC, Hong
Kong and elsewhere in the Asia Pacific region and by
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the general state of the various Asian
economies. For the years ended December 31, 2003, 2004, and 2005, approximately 74.7% 70.4% and
60.0%, respectively, of the Company's revenues were derived from customers based in other regions
in the PRC. In addition, due to the geographic coverage of the Company's satellites, the most
significant market for the Company's customers (whether or not such customers are based in the PRC)
has been, and is expected to continue to be, the PRC.
The economy of the PRC differs from the economies of most countries belonging to the
Organization for Economic Co-operation and Development in such respects as structure, government
involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate
of inflation and balance of payments position. For over 50 years, the economy of the PRC has been
a planned economy subject to five-year state plans adopted by central PRC government authorities
and implemented, to a large extent, by provincial and local
authorities, which set production and development targets. Although the majority of
productive assets in the PRC are still owned by the government, in the past several years emphasis
has been placed on decentralization and the utilization of market mechanisms in the development of
the PRC economy.
Since the late 1970s, the PRC government has been reforming its economic systems. Many of the
reforms are unprecedented or experimental, and are expected to be refined and improved. Other
political, economic and social factors could also lead to further readjustment of the reform
measures. This refining and readjustment process may not always have a positive effect on the
operations of the Company and its PRC customers. The Company and its PRC customers may be
adversely affected by changes in the PRC's political, economic and social conditions and by changes
in policies of the PRC government, such as changes in laws and regulations (or the interpretation
thereof), measures which may be introduced to control inflation or imposition of additional
restrictions on currency conversion.
Subsequent to the accession of the PRC into the World Trade Organization in November 2001,
there has been no immediate adverse impact on the satellite industry in the PRC market. However,
its long-term implications are uncertain.
The PRC government has mandated that international satellite channels must distribute their
channels in the PRC using a unified satellite platform different from the APSTAR System. The
implications of this requirement are not yet certain, but since over 70% of the Company's revenue
is derived from the PRC, there may be an adverse impact on the Company's business.
Most of the payments under the Company's transponder utilization agreements are required to be
made in US Dollars. The PRC currently has extensive foreign exchange controls. The ability of the
Company's PRC customers to convert Renminbi (the currency of the PRC) into foreign currency and to
purchase foreign currency is subject to various PRC laws and regulations. There can be no
assurance that in the future the PRC's foreign exchange controls will not adversely affect the
ability of the Company's PRC customers to make payments to the Company in US Dollars.
The Outbreak of Infectious Diseases
In the first half of 2003, there was the outbreak of a highly infectious deadly flu-like
disease known as Severe Acute Respiratory Syndrome ("SARS") in the Asia Pacific region, including
the PRC. The SARS outbreak severely affected the economic environment of most of Asia. No vaccine
has yet been successfully developed, and therefore another outbreak of SARS could adversely affect
the economies of the region.
In addition to SARS, there were incidences of bird flu reported in the Asia Pacific region,
including Vietnam, Thailand and the PRC. Effective treatments for such bird flus have not yet been
successfully proved, and therefore further outbreaks of bird flu or other similar disease could
adversely affect the economies of the region.
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Item 4. Information on the Company
History and Development of the Company
The Company is a Bermuda company incorporated on October 17, 1996 with its principal place of
business originally at Rooms 3111-3112, 31
st
Floor, One Pacific Place, 88 Queensway,
Hong Kong (Telephone: 852 2526-2281) and subsequently removed to 22 Dai Kwai Street, Tai Po
Industrial Estate, Tai Po, New Territories, Hong Kong on December 8, 2003 (Telephone: 852
2600-2100). The Company's registered office is at Clarendon House, 2 Church Street, Hamilton, HM
11, Bermuda. APT is a Hong Kong company and a wholly-owned indirect subsidiary of the Company.
References herein to the Company include APT Holdings and its subsidiaries, except where the
context otherwise requires.
Business Overview
The Company, through its subsidiary, APT, is a leading provider of high quality satellite
services throughout the PRC and elsewhere in the Asia Pacific region. APSTAR System broadcasts
satellite TV channels of many prominent international broadcasters, and PRC, Taiwan and Hong Kong
broadcasters including CCTV, CETV-1, CBSAT, D-Sky and CableTV. The Company's strategy is to serve
as a preferred operator for these and other international and PRC, Taiwan, and Hong Kong
broadcasters. The Company also provides transponder service to telecommunications operators, among
others, Singapore Telecommunications Limited ("SingTel"), BtN Access, China Telecom Corp. and China
United Telecommunications Corp. ("China Unicom") and China Netcom. In additional, the Company has
made a breakthrough with its business development in the Indonesian market in 2005, and has been
providing transponder service to customers in Indonesia.
The Company is comprised of two main business segments, namely provision of satellite
transponder capacity and related services, and provision of satellite-based broadcasting and
telecommunications services. In order to reflect the segments of business affected by similar
economic conditions, the satellite control services income have been aggregated to the segment of
provision of satellite transponder capacity and related services. A summary of the Company's
business segments is provided below (in HK$ millions):
Business segments:
2003
2004
2005
(restated)
(restated)
Revenue from external customers:
Provision of satellite transponder capacity and related
services
282.4
238.4
290.7
Provision of satellite-based broadcasting and
telecommunications services
16.4
38.7
45.5
Service income
3.4
0.2
0.3
Total
302.2
277.3
336.5
Provision of satellite transponder capacity and related services
The Company's income from provision of satellite transponder capacity is derived from its
operating satellites.
The Company's first satellite, APSTAR I, was launched in July 1994 and commenced commercial
service on September 15, 1994. APSTAR I was replaced by APSTAR V on August 13, 2004 at 138 degrees
East. APSTAR I currently has sufficient fuel to operate in an inclined mode until mid to late 2007.
APT has entered into a utilization agreement with a customer to utilize APSTAR I at 142 degree East
through the end of its useful life. APSTAR I was drifted from 138 degrees East to 142 degrees
East.
The Company's second satellite, APSTAR IA, was launched in July 1996 and commenced commercial
service on September 1, 1996. APSTAR IA was replaced by APSTAR VI on June 7, 2005 at 134 degree
East. APSTAR IA currently has sufficient fuel to operate until mid 2010. APT has entered into a
utilization agreement
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with a customer to utilize APSTAR IA through the end of its useful life.
APSTAR IA was drifted from 134 degrees East to a new location.
The Company launched a third satellite, APSTAR IIR, in October 1997, and it commenced
commercial service on January 1, 1998 for the provision of high quality and high power transponder
capacity in the Asia Pacific region. APSTAR IIR is located at 76.5 degrees East.
In order to take advantage of the demand in the PRC and elsewhere in the Asia Pacific region
for varied television programming with superior picture and sound quality, the Company launched
high power satellites, APSTAR V and APSTAR VI, on June 29, 2004 and April 12, 2005, respectively,
as replacement satellites of APSTAR I and APSTAR IA, respectively. APSTAR V commenced its
commercial service on August 13, 2004 while APSTAR VI commenced its commercial operation on June 7,
2005.
As at December 31, 2005, the utilization rates of APSTAR V and APSTAR VI were 68.5% and 45.0%,
respectively (in 2004, the utilization rates of APSTAR V was 50.3%).
APSTAR V is intended to satisfy demand in both Asia and Australia for transponder capacity.
The Company has focused its marketing efforts on developing a customer base of international and
PRC broadcasters and telecommunications providers. The Company has established close relationships
with its existing customers and believes that it is well-positioned to continue to provide capacity
on future satellites to its existing customers as well as to expand its customer base to include
other prominent broadcasting and telecommunications customers.
APSTAR VI provides broad Asia Pacific footprints and has a strong neighborhood effect due to
the presences of CCTV and other renowned Chinese broadcasters and we anticipate that it will become
one of the most popular multilingual and multicultural satellite platforms in the Asia Pacific
region.
Satellite-based Broadcasting and Telecommunications Services
In order to fully tap the business potential arising from the telecommunications field in the
Asia Pacific region, including the PRC, APT Telecom Services Limited provides telecommunication
services with its FCL (formerly known as external satellite-based fixed telecommunication network
services), which was issued by the OFTA. Services under the FCL include VSAT, wholesale voice and
Internet POP gateway services.
On September 10, 2003, APT Satellite Telecommunications Limited ("APTT"), a jointly controlled
entity owned by the Company, entered into a master agreement with APT Telecom Services Limited, a
wholly-owned subsidiary of the Company ("APTTS"), Skywork and SingaSat, whereby the business of
APTT was reorganized through the transfer of APTT's FCL business together with the FCL to APTTS and
the transfer of APTT's cable interests related to FCL, including the transfer of the APCN and C2C
interests to SingTel. The former transfer was done pursuant to a transfer of business agreement
between APTT and APTTS at consideration of HK$6,800,000 together with compensation of HK$13,500,000
payable by APTT in 5 equal annual installments commencing on February 1, 2005 to APTTS's holding
company, APT Satellite Company Limited, and the surrender by APTT of the remaining term of a
services and facilities lease agreement in respect of a premises in Tai Po Industrial Estate. The
latter transfer was done pursuant to a cable interests transfer agreement between APTT and
SingaSat, which interests were subsequently assigned it to SingaSat's holding company, SingTel, at
considerations of HK$2,986,000 and HK$2,574,000in respect of the APCN interest and C2C interest,
respectively. This reorganization was completed on October 10, 2003. The Company believes that the
reorganization will allow the APT Group to concentrate on the satellite-related telecom services
business, which is in line with the APT Group's core business in providing satellite transponder
services.
APT Satellite TV Development Limited ("APT TV") established a satellite TV broadcasting
platform based on the Satellite Television Uplink and Downlink License first granted by the
Government of HKSAR in 1999 and was further broadened in March and June 2005 to include APSTAR V
and APSTAR VI. To accommodate the future demand for satellite TV program services, enhance the
encoding capability of APT TV and further develop the Company's satellite broadcasting business,
APT increased investments in uplinks and downlinks and
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TV-program transmission and broadcasting
facilities during the first half of 2002. At December 31, 2005, APT TV's DVB MPEG-2 encoding
capability was up to 53 channels.
In April 2002, APT TV and Eurosport, Societe Anonyme ("Eurosport") established an associate
venture in which APT TV owned 35% interest in the associate. Through this associate, APT TV and
Eurosport provide the Chinese market with satellite TV broadcasting services, and commenced
operation of the first sports news channel in the PRC in July 2002. In December 2002, the
associate venture signed an agreement with China International TV Corporation and obtained a permit
for limited broadcasting in PRC. Owing to the change in business strategy of the associate such
that the APSTAR System could not be used by the associate in establishing its business, APT TV
transferred a 33% interest in the venture and the amount due from the associate to Eurosport at a
consideration of HK$634 thousand (US$81 thousand). Although APT TV transferred a 33% interest in
that associate's total share capital to Eurosport in December 2003, the Company will continue to
pursue the establishment of the satellite TV platform as an overall strategy.
In April 2002, APT acquired an additional 20% interest in CTIA VSAT Network Limited ("CTIA"),
in which it previously had a 40% ownership interest. CTIA indirectly owns 21% of a PRC company
that provides data broadcasting services for the PRC market, Beijing Zhong Guang Xin Da Data
Broadcast Technology Co, Ltd. ("Beijing Zhong Guang Xin Da"). After the acquisition, the Company
indirectly holds a 12.6% effective interest in Beijing Zhong Guang Xin Da. The Company's
acquisition of an additional ownership interest in CTIA is in line with its strategic development
plan of shifting towards end-users in the value-chain of the broadcasting businesses.
The revenue generated from provision of satellite-based broadcasting and telecommunications
services were approximately HK$16.4 million, HK$38.7 million and HK$45.5 million (US$5.8 million)
for the years ended December 31, 2003, 2004 and 2005, respectively, which represented 5.4%, 14.0%
and 13.5%, respectively, of total revenues for such years.
Industry and Market Overview
Satellites
The global communications market for video, data and voice transmissions is served primarily
through terrestrial and submarine optical fiber and coaxial cable, microwave systems and
satellites.
Ground-based microwave systems disseminate signals in the form of radio waves from an antenna
on top of a building or a transmission tower. Microwave systems are well suited for use by local
television stations and cellular telephone systems because the reach of the transmission signal
typically is limited to one discrete area. Microwave systems are not suitable for long distance
communication or broadcasting, since transmission over long distances requires the construction of
a number of microwave relay stations to relay a signal, and repeated transmission can distort a
signal. Satellite systems require only two stations to cover long distances, one uplink station
and one downlink station. Most importantly, satellites can provide point to multipoint
transmissions while simultaneously transmitting signals over the entire region covered within the
satellite's footprint.
Satellite systems generally operate in three main orbits — low-earth orbit ("LEO"), mid-earth
orbit ("MEO") and geostationary orbit ("GEO"). LEO systems operate in orbits at distances of
between a few hundred miles up to 1,000 miles from earth, whereas MEO systems operate from 1,000 up
to 20,000 miles from earth, although they will typically be in the range of 6,000 to 15,000 miles
high. Satellites in these systems are not geostationary, that is, they do not constantly overlook
the same area on earth. The inability to cover the same area on earth continuously makes these
systems impractical for broadcasting and traditional telecommunications usage. In general, LEO and
MEO systems comprise of a series of satellites that are used commercially primarily for mobile
satellite services. By contrast, GEO satellites are located in orbit approximately 22,300 miles
above earth and can blanket large geographic areas with signal coverage.
GEO satellites can be accessed through an uplink station virtually anywhere within the
satellite's footprint. With broad coverage capability, GEO satellites have commonly been used for
(i) television broadcasting, principally to cable operators for redistribution and also to
households equipped with direct reception antennae as well as for
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supplementary terrestrial
transmission networks in remote areas, (ii) international and domestic trunk telephony
complementing optical fiber and coaxial cable and microwave backbone networks and (iii) business
services, principally for voice, data and video transmissions to private networks such as VSAT
networks and program exchanges between television broadcasters, including satellite news gathering.
Communications satellites typically are evaluated on (i) their coverage area or "footprint",
(ii) the quality of the signal transmitted to the coverage area and (iii) the availability of the
transponders. Footprint is a measurement of the breadth of a satellite's coverage. A key
measurement of signal quality is the intensity of transmission power in the coverage area. Higher
power signal enables a customer to use smaller, lower-cost antennae on the ground. Availability is
determined by considering a satellite's operational "lifetime" as well as the number of
transponders capable of providing service. The Company considers all three factors in determining
whether a particular satellite is appropriate for its needs.
Commercial telecommunications and broadcast satellites typically transmit signals using either
C-band or Ku-band. C-band is used worldwide for satellite communications to transmit signals with
less interference from atmospheric conditions. C-band frequencies are also used by ground-based
microwave systems. In certain parts of the world, C-band satellite transmission antennae must be
located far from centers of population to avoid interference with ground-based systems. Since
there are fewer Ku-band systems in existence than C-band systems, more powerful Ku-band
transponders can be used in urban areas without similar interference concerns. Because of higher
available transmission power, Ku-band frequencies can be used in conjunction with antennae that are
smaller than antennae that are used in conjunction with C-band frequencies. Ku-band is generally
used for the same purposes as C-band as well as for satellite news-gathering (transportable
antennae) and in some VSAT applications.
The combination of high power transmitters and small antennae also makes Ku-band suitable for
direct-to-home television.
Direct-to-home television did not become commercially viable until recently because available
satellite technology did not have the power to transmit to receivers and digital compression
technology had not been adequately developed. Today, DBS provides an efficient point-to-multipoint
delivery of video and audio transmissions. The advent of high-powered satellites allows for dishes
as small as 18 inches and digital compression technology permits the broadcast of up to 10 channels
of programming per transponder. In the United States, Europe and Japan, DBS operators have had
success in penetrating their respective markets.
Satellite operators such as APT provide satellite transponder capacity. For television
programming distribution, these services may consist of arranging satellite capacity and providing
teleport transmission facilities and other value-added services. Services for other broadcasting
applications, such as live news and sports reporting, may include the arrangement of satellite
capacity, the provision of trucks equipped for live news and sports broadcasts, transmission
scheduling and signal monitoring. Services for business communications networks are generally more
extensive and may include arranging satellite capacity, procurement and installation of on-site
antennae and network design, integration, management, operation and maintenance. Satellite
operators either provide these services or provide satellite capacity to other companies which
provide these services. The Company has chosen to focus on the provision of satellite transponder
capacity, through the establishment of the APSTAR System, in order to maximize the efficient use of
its resources so as to provide the highest quality service.
Broadcasting and Telecommunications Markets in Asia
Increased Distribution of Television Programming
Until the recent financial crisis and general economic downturn, the television market in Asia
had been experiencing significant growth, both in terms of the number of broadcasters creating
programming and the number of channels available to viewers. In particular, the number of
television broadcast networks has grown substantially since 1991. International television
programmers have been seeking to provide entertainment in Asia. Satellites are ideally suited for
broadcasting to international, regional, and national audiences and for delivering television
programming to cable operators or microwave transmission stations for local redistribution.
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The television markets in Asia are not uniform, and among the nations of Asia, there are numerous regional differences in
language, culture, and ideology as well as in income levels and income distribution. Programmers who wish to take full advantage
of the entire Asian television market must tailor their programming to be responsive to these regional differences. Access to
satellite transponder capacity from satellite operators provides opportunities to television broadcasters to tailor programming
for particular audiences. The Company believes that this will stimulate demand for transponder capacity on its satellites.
Liberalization of the Television and Telecommunications Industries
Liberalization of the television industry in a number of countries in Asia has increased the
portion of programming on satellites that is broadcast by private television networks and
programmers which complement or compete with state-owned or state-sponsored broadcasters.
Most countries in Asia have been liberalizing their telecommunications markets to some degree
or another in order to permit private service providers, in addition to the traditional
state-sponsored telephone monopolies, to provide facilities and services. The PRC has begun to
liberalize its telecommunications markets by breaking the monopoly status of China Telecom as the
country's sole telecommunications services provider and by allowing limited numbers of domestic
service providers in various service areas (such as mobile services, internet telephony and other
services). New telecommunications service providers stimulate demand for satellite capacity such
as that offered by the Company.
Continuing Technological Advancements
The Company believes that technological advances will increase information carrying capacity
and reduce transmission and equipment costs which may, in turn, stimulate demand for satellite
communications services. Such advances include the following:
High-powered Satellites.
New satellites, which are of higher power, can deliver improved
quality signals to antennae that are generally smaller and less expensive (and are therefore more
convenient for private and commercial use) and can cover a larger area than those used with
earlier-generation satellites. The increasing use of these smaller, less expensive antennae is
expanding the markets for public and private communications networks and video distribution
services.
Digital Communications.
Analog telephone systems carry relatively low volumes of information.
Globally, telephone companies are rebuilding their infrastructure to carry high-speed digital
communications, which permit new and enhanced business communications and consumer services.
Examples include video phones, video conferencing, video-on-demand, wide-area networks,
telecommuting and interactive TV. Many of these services use satellite transponder capacity within
their transmission circuits and, because of their high transmission rates, will require significant
transponder capacity. Furthermore, developments in digital technology for VSATs, which reduce
terminal size and increase transmission throughput, are encouraging the development of new,
cost-effective business and rural communications applications.
Compressed Digital Video.
Digital video compression technology is designed to compress
multiple high-quality video channels into the same transponder capacity that previously carried one
analog channel. This technology facilitates a significant increase in the number of available
video channels with improved transmission quality and allows satellite operators to provide
satellite transmission services using less bandwidth. Digital video compression technology is
expected to lower the costs of delivering programming via satellite and cable television systems,
thereby permitting more programming options to be provided to niche markets. Digital video
compression technology may also permit broadcasters, by lowering per channel costs, to offer local
broadcasting platforms including programming designed for particular national audiences and
particular cultures and languages. The Company believes that digital video compression technology
may facilitate the efforts of broadcasters to distribute their programming regionally to multiple
audiences.
Digital video compression technology may also in the future facilitate the introduction of
HDTV. Digital video compression technology is expected to permit HDTV signals with superior
picture quality to use an amount of
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bandwidth comparable to that used by a current analog channel
with a far inferior image since analog form typically consumes large amounts of bandwidth.
Increased Spending on Telecommunications Projects
Many countries in Asia lack basic telephone services as well as the sophisticated optical
fiber and digital switching infrastructure required for large bandwidth, high speed data
applications for businesses. The governments of many of the developing countries in Asia have
recognized the effect of shortages of telecommunications services in their countries and are
responding by setting goals aimed at significantly increasing teledensity (measured in main
telephone lines per 100 inhabitants) in their countries. The Company believes that government
organizations in such countries and other less developed regions in Asia will depend significantly
on wireless communications, including satellites, to serve their communications needs because the
development of land-based infrastructure is more costly and time-consuming.
Growth of Information Services Markets
The Company believes that the market in Asia for information services still has the potential
to grow, both in terms of the numbers of providers and users of such services and the types of
services available. Satellite distribution is ideally suited for the provision of information
services supplied by global service providers.
Customers and Services
The Company provides satellite transponder capacity primarily to the broadcasting and
telecommunications markets. For the years ended December 31, 2003, 2004 and 2005, the Company's
revenues were derived from the following customer bases:
Years Ended December 31,
2003
2004
2005
Broadcasting
49.5
%
51.2
%
41.5
%
Telecommunications
46.8
%
44.6
%
49.8
%
Other service
3.7
%
4.2
%
8.7
%
Revenues from the Company's five largest customers for the years ended December 31, 2003, 2004
and 2005 were HK$119.2 million, HK$111.9 million and 112.9 million (US$ 14.5 million),
respectively, which represented 39.4%, 40.4% and 33.6%, respectively, of total revenues. Revenues
from the Company's largest customer represented 12.6%, 12.7% and 9.1%, respectively, of total
revenues during such periods.
Broadcasting Customers
Local, national and international broadcasters use satellite transponder capacity for (i)
television programming distribution, (ii) contribution or "backhaul" operations (the transmission
of video feeds from one location to another) and (iii) ad hoc or "spot" services such as the
transmission of special events and live news reports from the scene of the event. At present, most
of APT's broadcasting customers utilize transponder capacity for distributing programming to
television stations, local cable operators and master antenna systems.
On July 6, 1999, the Company was first granted the Satellite Television Uplink and Downlink
License by the HKSAR government. According to this license, the Company is able to use the newly
acquired uplink platform and downlink system, together with certain encryption and digital
compression technologies, to provide satellite television uplink and downlink services through the
Company's APSTAR IIR (C & Ku-band), and APSTAR V (Ku-band only) and APSTAR VI (C & Ku-band) and
other approved satellite.
Television Programming Distribution.
The Company's strategy is to position the APSTAR System
as a preferred provider of satellite capacity covering the PRC and the Asia Pacific region. This
strategy has been
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implemented by targeting both international and domestic broadcasters as
customers for services on the APSTAR System.
Local cable television operators and over-the-air local broadcasters install and position
their downlink antennae to receive programming from programmers using a satellite in the APSTAR
System. Once such antennae have been installed and positioned to receive signals from a particular
programming provider on the relevant APSTAR System satellite, cable operators and local
broadcasters can receive programming using the same antenna from other providers using such
satellite. As a result, new programmers may seek to utilize transponder capacity on a satellite
with an established audience rather than leasing transponder capacity on a satellite with a
less-established audience.
For domestic Asian broadcasters, the APSTAR System offers the ability to create national
networks where, due to difficult terrain and the high costs of building the required
infrastructure, none was possible before. For example, China Broadcast Film Television Satellite
Co. Ltd. uses capacity on APSTAR VI (migrated from APSTAR IA) to distribute a variety of CCTV channels, its national television network, to
audiences throughout the PRC, including remote areas.
The APSTAR System also offers a number of other benefits for domestic broadcasters. By using
one of the satellites in the APSTAR System, domestic broadcasters may, for example, purchase
certain segments of an international programmer's feed using the same satellite for broadcast as
part of their own programming, without incurring the cost of adding a separate earth station to
receive the international programmer's segments. In addition, domestic broadcasters can sell their
own programming regionally or internationally because the APSTAR System allows them to use the same
transmission antennae to relay their programming internationally as well as domestically to others
using the same satellite. Local cable and television station operators also benefit from using the
APSTAR System for television programming distribution because they need only one earth station
pointed at an APSTAR satellite to receive programming from both domestic and regional broadcasters
using the same satellite.
The following chart lists APT's typical broadcasting customers and the nature of their
programming:
Customer
Programming
China Central Television ("CCTV")
National television in the PRC
including CCTV-1 to 12, CCTV New,
CCTV Cartoons except CCTV-4 and
CCTV-9
China Education Television ("CETV-1")
Educational television in the PRC
China Broadcasting Film Television
Satellite Co., Ltd. ("CBSAT")
Provisional television in the PRC,
including Yunnan, Xinjiang, Tibet
and Hainan, totally around 16
provinces and around 25 channels
Backhaul Services.
Broadcasters can use satellite capacity for "backhaul" operations, such as
transporting programming from a broadcaster's foreign news bureau to its broadcast center for
simultaneous or later transmission.
Ad Hoc Services.
Broadcasters can also use satellites to transmit coverage of live scheduled
special events to programmers on a short-term ad hoc basis as well as to relay live news coverage,
short duration video feeds and syndicated programming for broadcasters on a scheduled or ad hoc
basis.
Telecommunications Customers
The Company's telecommunications services include the provision of transponder capacity for
private communications networks for data and voice communications and the provision of PSTN carrier
services including the wholesale voice to telecom network operators and other communications
service providers in Asia.
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Private Networks.
Many businesses and organizations utilize satellites rather than
ground-based transmission media for a variety of reasons, including (i) cost savings for large,
geographically dispersed networks, (ii) independence from telephone companies, (iii) predictability
of costs over a long period, (iv) flexibility in changing and adding remote locations to a network,
(v) integrated network management and control of remote locations and (vi) increased network
availability and lower transmission error rates.
For example, retail chains use satellite business communications networks for rapid credit
card authorization and inventory control. Banks use satellite networks to connect automatic teller
machines to processing computers. News agencies use satellite networks to distribute information
to numerous locations and paging operators use satellite networks to distribute paging information
from a central switch to multiple remote transmitters for retransmission to pagers. The Company
believes that there will continue to be opportunities in Asia to market transponder capacity to
certain end users which, due to inadequate telecommunications infrastructure or high costs of local public networks, desire to operate their own private
networks for data and voice transmission.
The Company offers satellite services for private business communications networks, including
VSAT networks. VSAT networks consist of small rooftop antennae and are utilized by customers that
need to send short bursts of data over a network for relatively short periods of time. Through the
use of VSAT technology and sophisticated software, these networks can be served with a relatively
small amount of satellite capacity. Networks using VSATs have been growing rapidly to meet the
specialized data requirements of particular industries.
Carrier services.
A portion of the Company's revenues in the telecommunications market is
derived from the provision of satellite capacity to domestic and regional communications carriers
in Asia, including telecom network operators in the PRC that use the capacity as part of their
communications network on a national or international basis.
Other Service Customers
Under the satellite services agreement, APT provides the necessary satellite control services
for APSTAR IIR to Loral Asia. This agreement will continue throughout the useful life of APSTAR
IIR unless terminated by Loral Asia with at least 120 days' prior written notice. In consideration
of the services provided, APT receives a payment of approximately US$1 million per year from Loral
Asia.
On April 11, 2003, APT and SingTel entered into a new agreement (the "New Agreement")
superceding the old agreement, which was entered on January 8, 2001 pursuant to which SingTel was
to use 15 C-band transponder services of APSTAR V. Pursuant to the New Agreement, APT agreed,
subject to certain conditions, to provide 6 C-band transponders services of APSTAR V to SingTel,
and upon SingTel's written request within three years from the date on which APSTAR V commences
operation, to also make available 5 more C-band transponders services of APSTAR V to SingTel. APT
is obligated to provide operational and maintenance services to SingTel through APSTAR V's useful
life, which is expected to be not less than 13 years, in exchange for an annual management fee
which will cover all costs associated with operations and management of the transponders as well as
tracking, telemetry and command services, and all necessary maintenance. The fixed aggregate value
of the management fees for the 6 transponder capacity amounts to US$16.3 million (approximately
HK$127.1 million), and the annual amounts of the management fees will range from US$0.8 million
(approximately HK$6.6 million) to US$1.4 million (approximately HK$11.0 million). If SingTel
exercises its rights to utilize additional transponder capacity, the fixed aggregate amount of the
management fees for the additional transponder capacity will be US$13.6 million (approximately
HK$105.9 million).
On September 1, 2004, APT and SingTel entered into an agreement to amend certain terminology
and to modify the New Agreement into the form of utilization agreement for clarification purpose.
The term and condition contained in the New Agreement remain unchanged.
On October 22, 2004, APT entered an agreement with National Astronomical Observatories of the
Chinese Academy of Sciences ("NAOC") to utilize APSTAR I through the end of its useful life.
Under the agreement with NAOC, APT provides the necessary satellite control services for APSTAR I
to NAOC. In consideration of the services provided, APT receives a payment of approximately US$300
thousand per year from NAOC.
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On May 30, 2005, APT entered an agreement with NAOC to utilize APSTAR IA through the end of
its useful life. Under the agreement with NAOC, APT provides the necessary satellite control
services for APSTAR IA to NAOC. In consideration of the services provided, APT receives a payment
of approximately US$300 thousand per year from NAOC.
Transponder Utilization Agreements
The Company's typical transponder utilization agreement allows for utilization of the capacity
of a transponder, either in whole or in part, on the APSTAR System. These agreements require
service fees to be paid in advance and provide for renewal options. All of APT's transponder
utilization agreements require payment of all amounts due in US Dollars. Generally, upon a fixed number of months' notice, a customer
may terminate its transponder utilization agreement without cause. In such a case, however, the
customer is obligated to pay to APT specified liquidated damages based on the terms of the
transponder utilization agreement. In addition, the transponder utilization agreements, in
general, provide for a specified reduction in the service fees if transponder service is
interrupted for reasons not caused by the customer or beyond the control of APT (such as mechanical
transponder failure). If such service interruptions continue without correction (within an
acceptable period of time) and APT is unable to provide suitable alternative capacity within an
agreed period thereafter, the customer is entitled to terminate the transponder utilization
agreement without further obligation to APT. Under the terms of the transponder utilization
agreements, APT is not liable for the lost profits or other indirect or consequential damages of
its customers.
APT has also entered into several transponder utilization agreements under which its customers
have obtained the right to use transponder capacity on APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V or
APSTAR VI for the life of the transponder. Most of the commercial terms of such transponder
utilization agreements are substantially the same as those found in the typical transponder
utilization agreements, except that payment for the entire period of use is to be completed by the
end of the second year of the term of the agreement. APT provides a limited warranty for a period
of 96 months in the case of one transponder on APSTAR IIR commencing on the date the transponder is
made available for the customer's use. There is no warranty period for the 43 out of 44 of the
transponders on APSTAR IIR that are provided to Loral Asia. In respect of APSTAR I, which is being
utilized by NAOC
,
APT agreed to provide a limited warranty for utilizing at least 16 transponder
capacity for the first 2 years and at least 12 transponder capacity for the third year of the
utilization functioning properly. In respect of APSTAR IA, which is being utilized by NAOC
,
APT
agreed to provide a limited warranty for utilizing at least 16 transponder capacity for the first
4.57 years.
Sales and Marketing
Marketing activities include customer visits, trade shows, advertisements, customer training,
event sponsorships, joint marketing programs and presentations at industry conferences. APT's
current sales and marketing efforts are focused on new business development so as to solicit
customers for unused or underutilized transponder capacity on APSTAR satellites. In addition,
APT's sales and marketing also focus on the creation of awareness resulting in lead generation of
APSTAR V and APSTAR VI. APT's sales and marketing staff maintain regular contact with customers
even after they have decided to utilize transponder capacity in order to ensure continuing customer
satisfaction.
Operation of the APSTAR System
The APSTAR System is an integrated satellite system that covers more than 100 countries from
Japan to South Africa and from Germany to Australia, encompassing approximately 75% of the world's
population.
The APSTAR System is the product of an extensive strategic planning process. This planning
has been both internal to APT, such as the analysis and evaluation of satellite make-up, platform
choice and launch vehicle choice, and external, in the sense of designing the APSTAR System to meet
the practical and strategic needs of its customers.
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The APSTAR System offers its customers the ability to relocate from one satellite to another
for strategic reasons of their own. The compatibility of the satellites in the APSTAR System also
permits APT to move customers' programming from one transponder to another, intra-satellite, or
from one satellite to another, for technical reasons or to ensure continuity of service in the
event of any difficulties.
The APSTAR System is structured to provide flexibility for customers, which is a benefit that
the Company believes, is attractive to customers and provides APT with a competitive advantage.
Intra-satellite back-up capacity is manifested by the preemptible transponders located on each
satellite. These transponders are intended, in the ordinary course, to be provided to customers on
a preemptible basis (at reduced cost), under the understanding that the customers' use will be
pre-empted if the transponder is needed by another customer as a result of a technical problem.
Additional back-up capacity will also be available to APSTAR System customers on an
inter-satellite basis. Preemptible transponder capacity on APSTAR satellites enables customers to
be "re-routed" on an as-needed basis to another satellite in APSTAR System. Similar back-up
capacity is available not only from satellite to satellite, but also from use to use.
The Company's TT&C facility, which enables the Company to monitor the status of its satellites
and respond to the technical demands of its customers, is an important part of the APSTAR System.
See "Satellite Control Center."
SUMMARY OF SATELLITE DATA
APSTAR I
APSTAR 1A
APSTAR IIR
APSTAR V
APSTAR VI
Region covered
North and
North and
Europe, Asia,
Most of Asia,
Most of Asia,
Southeast Asia
Southeast Asia
Middle East,
Australia, New
Australia, New
Africa
Zealand, Pacific
Zealand,
region, Hawaii
Pacific region,
Hawaii
Status
Operational
Operational
Operational
Operational
Operational
(inclined mode)
(inclined mode)
Model
HS 376
HS 376
FS 1300
FS1300
SB4100C1
Manufacturers
Hughes
Hughes
SS/Loral
SS/Loral
Alcatel
Transponders
Ku-band
—
—
16
16
*
12
C-band
24
24
28
38
*
38
Expected end of
**
***
2013
2019
2021
operational life
*
As at August 13, 2004, APT has taken up 25 C-band and 12 Ku-band transponders of APSTAR V.
**
It is expected that APSTAR I will be operating for at least 3 years at an inclined mode from
October 2004.
***
It is expected that APSTAR IA will be operating for at least 4.57 years at an inclined mode
from December 2005.
APSTAR Satellites
APSTAR I
APSTAR I, a Hughes HS-376 model satellite, was launched in July 1994 by a Long March 3 launch
vehicle from Xichang in the PRC. APSTAR I was placed into a geostationary orbit at 138 degrees
East and has a footprint that covers the PRC, Japan and Southeast Asia, reaching as far south as
Papua New Guinea and Indonesia. The total
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cost for the construction and launch of APSTAR I, including launch insurance, ground facilities, related expenses and capitalized interest, was
approximately US$132.4 million, which was financed through a combination of shareholders' loans and
a syndicated term loan. On May 31, 2001, the Company fully repaid the amount outstanding under the
syndicated term loan.
APSTAR I carries 24 C-band transponders, 20 of which have a bandwidth of 36 MHz (suitable for
television broadcasting and telecommunications purposes) and four of which have a bandwidth of 72
MHz (suitable for telecommunications purposes). The transponders have a maximum EIRP value of 38.5
dBW.
APSTAR I started commercial operations on September 15, 1994 and was replaced by APSTAR V on
August 13, 2004. APSTAR I currently has sufficient fuel to work in an inclined orbital mode until
mid to late 2007. APT has entered into a utilization agreement with a customer to utilize APSTAR I at 142
degree East through the end of its life.
APSTAR IA
APSTAR IA, a Hughes HS-376 satellite, was launched in July 1996 on a Long March 3 launch
vehicle from Xichang into a geostationary orbit at 134 degrees East. The cost for the construction
and launch of APSTAR IA, including launch insurance, ground facilities, related expenses and
capitalized interest, was approximately US$128.6 million, which was financed through a combination
of shareholders' loans, a syndicated term loan and internally generated funds. As of December 23,
1996, the total amount due under the syndicated term loan was fully repaid using the proceeds from
the Global Offering.
The specifications of APSTAR IA are virtually identical to those of APSTAR I, except that
APSTAR IA provides enhanced coverage of India. As with APSTAR I, APSTAR IA carries 24 C-band
transponders with a maximum EIRP value of 39 dBW.
APSTAR IA started commercial operations on September 1, 1996. After successful launch and
completion of In-Orbit Testing of APSTAR VI, APSTAR IA has been replaced on June 7, 2005. APSTAR IA
currently has sufficient fuel to work in an inclined orbital mode until mid 2010. APT has entered
into a utilization agreement with a customer to utilize APSTAR IA through the
end of its life.
APSTAR IIR
APSTAR IIR, an SS/Loral FS-1300 satellite, was successfully launched into its designated
orbital slot at 76.5 degrees East on October 17, 1997. The total cost for construction and launch
of APSTAR IIR, including launch insurance, ground facilities, related expenses and capitalized
interest, was approximately US$233.5 million. APSTAR IIR commenced commercial operation on January
1, 1998.
On August 18, 1999, APT entered into a lease agreement with Loral Asia for the provision of 43
out of the 44 transponders of APSTAR IIR. According to the agreement, Loral Asia is entitled to
use the capacities of these transponders until their service span expires. The price was
approximately US$298 million, payable by eighteen installments in US Dollars within four years.
Loral Asia later proposed to advance the date of payment and, as a result, the price was revised to
approximately US$273 million, payable in three installments, with the last installment of
approximately US$181 million paid on March 27, 2000. According to the agreement and all relevant
operating licenses, APT continues to be the legal owner of APSTAR IIR and is responsible for the
operational control of the satellite under the satellite service agreement with Loral Asia.
APSTAR V
APT together with SS/Loral and China Great Wall Industry Corporation, respectively, signed the
Procurement Agreement and the Launch Agreements of APSTAR V satellite on January 8, 2001, to
confirm the commissioning of the satellite. On October 23, 2002, the launch services to be
provided by China Great Wall Industry Corporation originally for APSTAR V were transferred to
APSTAR VI. In March 2003, APT selected Sea Launch for the launch of APSTAR V.
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On September 20, 2002, APT entered into the APT-Loral Term Sheet and subsequently entered into
certain other agreements. Under the APT-Loral Term Sheet and the agreements, Loral Orion agreed to
jointly participate in the development of APSTAR V by investing up to 50% of the capital necessary
for the APSTAR V project on a pro rata basis in order to obtain rights to 27 transponders at a
value of approximately US$115 million, which is 50% of the initial projected costs of approximately
US$230 million for the construction, insuring and launch of APSTAR V. This amount was adjusted to
reflect 50% of the actual costs of construction, insuring and launch of APSTAR V, exclusive of the
costs of certain function modifications required by Loral Orion, which was borne solely by Loral
Orion. Loral Orion paid 25% of the project costs prior to launch of the satellite. The other 25%
of the project costs was paid to APT in four installments over a period of five years from the
in-service date of APSTAR V. The amount of the installments making up the remaining balance range
between US$10.7 million and US$17.1 million and no interest is payable on such amounts. Title to
the transponders attributable to Loral Orion and 25% of the common portions of the satellite will pass to Loral Orion in installments
corresponding to and subject to the payments made by it under the term sheet and the agreements.
As a result of discussions regarding a matter related to the launch vehicle, the parties agreed to
reduce the number of transponders attributable to Loral Orion from 27 to 25 in March 2003 with no
adjustment to consideration payable by APT and Loral Orion.
Because of the failure of SS/Loral to obtain the export license for the transfer of the title
of APSTAR V in time for launching, APT entered into a Satellite Procurement Amendment Agreement, a
Satellite Transponder Agreement and a Satellite Agreement (collectively the "Definitive
Agreements") with SS/Loral and Loral Orion on August 26, 2003 for the purpose of minimizing any
further delay in the launch of the satellite. Under the Definitive Agreements, the title of APSTAR
V was transferred to Loral Orion upon intentional ignition rather and simultaneously therewith.
APT has entered into an irrevocable lease with Loral Orion for forty-one and one-half (41 and 1/2)
transponders for the lease term commencing upon transfer of title from SS/Loral to Loral Orion
until the end of operational life of APSTAR V. Therefore, the joint development of APSTAR V was
converted to a lease. Under the Satellite Agreement, APT will release the leasehold interest of
twelve and one-half (12 and 1/2) transponders to Loral Orion in stages over a five years period
from the in-service date of APSTAR V subject to payment of installments by Loral Orion to APT.
This will result in APT and Loral Orion having 29 and 25 transponders respectively at the end of
the five years period from the in-service date. Under the leasehold arrangement, Loral Orion has
committed to continue pursuing the necessary export license for title transfer of APSTAR V.
The delay in obtaining the Export License caused the postponement of the launch of APSTAR V.
To cope with the delay, APT entered into a Settlement Agreement with Loral Orion Inc. and the
Amended Launch Agreement with SS/Loral and Sea Launch Limited Partnership on November 16, 2003. The
Settlement Agreement made certain amendments to the Satellite Procurement Amendment Agreement, the
Satellite Transponder Agreement and the Satellite Agreement and the Launch Agreement to allow for
(i) a postponement of the date of launch of APSTAR V to April 28, 2004 (later on, due to the
partial failure of deployment of north solar array of EdS, a SS/L-made satellite that was launched
by Sea Launch in January 2004, the launch date of APSTAR V was further postponed to June 26, 2004);
and (ii) for Loral Orion to take an additional 4.5 transponders as Initial Loral Orion
Transponders, which are in aggregate 17 transponders to be taken up upon the completion of in-orbit
test of APSTAR V, resulting in Loral Orion assuming the payment of US$20.4 million that would
otherwise to be paid by APT HK for the construction, launch and insurance of APSTAR V. Such payment
significantly reduced the cash-flow pressure of APT HK. The total number of 25 transponders of
APSTAR V to be taken up by Loral Orion will remain unchanged.
The Settlement Agreement and the Amended Launch Agreement were approved by the United States
Bankruptcy Court on December 4, 2003 and the Export License of APSTAR V was issued by United States
government on November 25, 2003.
APSTAR V was launched by Sea Launch Limited Partnership on June 29, 2004. APSTAR V, a high
powered satellite based on an FS 1300 model satellite manufactured by SS/Loral, is comprised of 38
C-band and 16 Ku-band transponders. The satellite is located at the geostationary orbital slot of
138 degrees East, and the footprints of C-band transponders will cover a majority of the Asian
countries in the Asia Pacific region, including China, India, South East Asia, Australia, New
Zealand, and the Hawaiian Islands in the United States for provision of high quality and reliable
broadcasting and telecommunications services. The footprints of Ku-band transponders are
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spanning across China (Beam One), and China and India (Beam Two). In-Orbit Test (IOT) was completed on
August 13, 2004 and the result showed that all satellite specifications are in line with design and
satellite useful life time is estimated to be 15.3 years. APSTAR V started commercial operations
upon completion of IOT. All customer carriers on APSTAR I have been successfully migrated to
APSTAR V on 138 degrees East. Based on the arrangements entered into by the Company and Loral
Orion, title of the APSTAR V remained with Loral Orion. The Company assumed risks and rewards of
37 transponders ("APT Transponders") for the entire operational life of APSTAR V under finance
leases while the risks and rewards relating to the other 17 transponders remained with Loral Orion.
The total cost for the communication satellites held under finance leases in connection with the
APT Transponders of APSTAR V amounted to US$148.4 million, which has been funded by internal
resources and the Bank loan.
Pursuant to the various amended agreements with Loral Orion, Loral Orion is to acquire and
terminate APT's right and interest in 4 APT Transponders on the fourth anniversary and 4 APT
Transponders on the fifth anniversary after completion of IOT of APSTAR V at a total consideration
of US$36.3 million.
APSTAR VI (formerly APSTAR VB)
On December 11, 2001, APT entered into a Satellite Procurement Agreement with Alcatel for the
design, construction, testing and delivery of APSTAR VI. APT had secured the Satellite Launch
Service Agreement with CGWIC to launch APSTAR VI on board the Long March 3B ("LM-3B") launch
vehicle on October 23, 2002 by amending the Satellite Launch Service Agreement of APSTAR V. APSTAR
VI is a high powered satellite and is based on a SB-4100 C 1 model satellite of Alcatel with 38
C-band and 12 Ku-band transponders. The footprints of its C-band will cover substantially all of
the Asian countries in the Asia Pacific region including China, India, Southeast Asia, Australia,
Hawaii, Guam, and the South Pacific Islands, whereas its Ku-band will cover China including Hong
Kong, Macau and Taiwan and provide effective and reliable broadcasting and telecommunications
services.
APSTAR VI was launched successfully on April 12, 2005 on a LM-3B launch vehicle and has been
located at geostationary orbital slot at 134 degrees East. Its commercial operation started on 7
June 2005 and is expected to have an operation mission life over 15 years. The customers of APSTAR
IA have been migrated to APSTAR VI successfully. Total capital expenditures for the design,
construction and launch of APSTAR VI amounted to US$227 million, which has been funded by internal
resources and Bank loans.
Existing Orbital Slots
APSTAR V and APSTAR VI are utilizing certain designated C-band and Ku-band frequencies in the
orbital slots at 138 degrees East and 134 degrees East. The right to use these frequencies at such
orbital slots has been licensed to the Company by the Kingdom of Tonga ("Tonga"), through TongaSat,
which has responsibility for the ITU coordination process for the orbital slots at 138 degrees East
and 134 degrees East with respect to such orbital slots and the frequencies covered by the
Company's license. The license agreements for the orbital slots at 138 degrees East and 134
degrees East each cover a period of 15 years (approximately coterminous with the expected
operational life of the satellites).
APSTAR I is currently located at 142 degrees East under PRC's filing as approved by OFTA.
APSTAR IA is currently located at 130 degrees East under PRC's filing as approved by OFTA.
APT has obtained a priority position in the ITU filing process for the use of the orbital slot
located at 76.5 degrees East, where APSTAR IIR is currently positioned. The Company is still in
the process of completing frequency coordination for this slot. The Company has filed with the ITU
to upgrade its status from the coordination stage to final stage and is awaiting the final result.
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Future Satellites
APSTAR VIB
In view of the risk of satellite launch, it was necessary for APT to have a contingency plan
safeguarding the replacement arrangement of APSTAR IA and to lock a launching slot in case of
failure of the launching of APSTAR VI. APT therefore entered into an agreement with CGWIC on
November 10, 2004 (the "Option Agreement") pursuant to which APT was granted a right to require
CGWIC to provide for the design, construction, delivery and launch of APSTAR VIB to a designated
orbit.
In view of the successful launch of APSTAR VI on April 12, 2005, APT did not exercise the
option before the expiry date of September 30, 2005. According to the terms of the Option
Agreement, the option has expired and the Option Agreement is deemed to be terminated. APT was
responsible for all reasonable costs and expenses incurred up to the date of termination in respect
of the preparation works for the design, construction, delivery and launch of APSTAR VIB. The
balance of option price (net of all reasonable costs and expenses incurred) could be transferred to
such other satellite project as may be designated by the Company or the contractor within two years
after the expiry date of the option. In the event that the balance of option price would be
transferred to a satellite project for another customer as designated by the contractor, the
balance of the option price would be refunded to the Company. Up to and including the date hereof,
the Company has no plan for the procurement and launch of a new satellite in the coming two years
due to the fact that the transponder market has remained highly competitive and the current supply
of transponders exceeds demand in the Asia Pacific region, the possibility of transferring the
preparation works of APSTAR VIB to another satellite project of another customer as designated
either by the Company or the contractor in the coming two years is expected to be remote.
Accordingly, as the Company does not currently expect the option price to be applied towards any
future satellite project within the required time restriction or that the contractor will refund
the balance of option price to the Company, an impairment loss of HK$59.9 million (2004: HK$nil)
that has been recognised in respect of the prepayment for construction of a satellite.
Insurance
APT maintains in-orbit insurance for thirty-seven transponders for APSTAR V, APSTAR IA, APSTAR
VI and one transponder for APSTAR IIR. The Company is not aware of any reason why it will not be
able to renew the existing insurance for APSTAR V, APSTAR VI and APSTAR IIR. The Company's
insurance policies have standard provisions and customary exclusions. For 2003, 2004 and 2005, the
Company spent HK$5.0 million, HK$12.6 million and HK$44.8 million (US$5.7 million), respectively,
on in-orbit insurance
In-orbit Insurance.
Satellite in-orbit insurance is purchased on an annual basis. Such
insurance provides protection only against the total loss, destruction or failure of the satellite.
Total loss is defined as the loss of more than 75% of the satellite's communications capacity for
insured satellites. The Company renewed its annual in-orbit insurance until April 30, 2006 for
APSTAR IIR. The in orbit insurance of APSTAR V (thirty-seven transponders only) and APSTAR VI has
already been renewed until June 29, 2006 and April 11, 2007, respectively. The Company is currently
negotiating the second renewal of in-orbit insurance of APSTAR V.
Third-Party Liability Insurance.
Third-party liability insurance offers protection against
liability to third parties for damage arising out of a particular launch and the operation of the
satellite. On April 30, 2004, OFTA granted the Company a waiver exempting the Company from
complying with the requirement of maintaining third-party liability insurance with respect to
APSTAR I, APSTAR IA and APSTAR IIR for in-orbit operation. The launch service provider of APSTAR
VI has taken the third party liability insurance for the launch with one year after launch, which
covers, among others, the Company, the governments of Hong Kong and PRC as additional insured.
There is no need to take third party liability insurance for APSTAR V as the title of APSTAR V is
with Loral Orion. Because of the drifting of APSTAR IA from its original geostationary orbital
slot to a new orbital slot for the provision of services to customer under inclined mode, APSTAR IA
is covered by third-party liability insurance over drifting and operation in its new orbital slot
until November 1, 2006.
Satellite and Ground Operation Facility
APT operates a 77,000 square foot facility consisting of the Satellite Control Center, Network
Operation Center and TV uplink Center on a 85,000 square feet property at the Tai Po Industrial
Estate, Tai Po, Hong Kong. APT employs approximately 35 experienced satellite and communications
specialists and engineers to continuously
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control and monitor APT's satellites in geostationary orbit, as well as to operate ground teleport and satellite TV uplink services.
To better support the operation of APSTAR V and APSTAR VI as well as the satellite television
uplink services, the Company has expanded its operating facilities since year 2000 by purchasing
antennae, radio frequency and baseband equipment. The Company currently operates a number of
antennae ranging from 3 meter to 13 meter in diameter and transmission facilities, as well as the
related equipment and facilities, such as radio frequency equipment, baseband units, ground
monitoring systems, data processing systems and communication traffic monitoring systems. Each
antenna is capable of controlling any of the Company's satellites and is designed to withstand
winds of up to 150 miles per hour. The Company maintains its own power generator and uninterrupted
power supply to provide continuous electricity supply in case of a power outage.
Satellite TT&C operations with the APT satellites are carried out at our Satellite Control
Center. Once a satellite is placed at its orbital location, it is controlled by the TT&C facility
on a 24-hour basis until the end of its in-orbit life. The Company's engineers at the Satellite
Control Center periodically correct each satellite's attitude and conduct east-west and north-south
station keeping maneuvers, thus ensuring that the Company's satellites maintain their proper
orientation and orbital position. In addition, commands from the Satellite Control Center can
switch transponders in and out of service, control the charging and discharging of the batteries,
activate back-up equipment and engage other control functions.
APT has leased data and voice link in order to provide a direct data and voice communications
link between the Satellite Control Center and the satellite manufacturers.
The customer carrier monitoring and teleport services are carried out at our Network Operation
Center, which provides 24-hour support to customers via the Carrier Monitoring System. The Company
also provides external satellite-based FTNS such as VSAT, Wholesale Telecom Services, and Internet
POP Gateway under the external satellite-based FTNS license issued by OFTA on June 19, 2000.
The Company has completed the installation of satellite broadcasting facilities in the
Satellite TV Uplink Center, under the Satellite Television Uplink and Downlink License issued on
July 6, 1999. The Satellite TV Uplink Center provides "one stop solution" service to customers such
as playout, digital video broadcasting compression, turn around and radio frequency uplink
transmission service. The Center's DVB MPEG-2 encoding capability is up to 28 channels.
Customer Technical Qualifications and Support
Before uplink communication by a customer's equipment with a satellite is permitted, the
Company ensures that each customer can meet the Company's strict performance and operations
specifications so that the customer's equipment does not interfere with other customers on the same
satellite or users of neighboring satellites. The Company's engineers advise customers on any
adjustments required to the customer's equipment in order to minimize interference.
The Company provides extensive technical support to its customers. It helps customers
determine and evaluate their equipment configurations, carrier modulations, bandwidths and power
requirements, design their networks and calculate link budgets.
Additional Orbital Slots
OFTA, on behalf of the PRC government, is responsible for the coordination of a number of
orbital slots for APT including the orbital slot at 76.5 degrees East in which APSTAR IIR is
located. The Company has filed an application and manage the filing for the orbital slot at 131
East, 89.5 East, 92.2 degrees East, 96 degrees East, 102.8 degrees East, 131.8 degrees East, 138
degrees East, 140 degrees East and 143 degrees East. Those orbital slots could be used by future
satellite which the design should meet the coordination requirement for each slot.
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Employees
Including the executive directors and senior management of the Company, as of December 31,
2005, the Company had 161 full-time employees, of which 26 employees were in management, 135 were in
engineering and operations, marketing, accounting and administration. The directors of the Company
will continue to closely monitor the number of employees, ensuring that the number is in line with
the needs and corporate strategies of the APT Group. The Company believes that its relations with
its employees are good. A majority of the Company's technical and engineering staff employed at
the Satellite Control Center were originally seconded from affiliates of ChinaSat and China
Aerospace.
The Group provides on the job training to employees to update and upgrade their knowledge on
related job fields.
Share Option Scheme
The Company adopted a new share option scheme ("Scheme 2002") at its 2002 annual general
meeting in response to new rules governing the listing of securities on The Stock Exchange of Hong
Kong Limited (the "Listing Rules") that took effect in September 2001. New options after the
adoption of Scheme 2002 are granted by the Company only pursuant to such scheme. Since the
adoption of Scheme 2002, no further options have been granted under the previous share option
scheme, which was adopted on May 22, 2001 ("Scheme 2001") which itself replaced the old Share
Option Scheme (See Item 6 below for a more detailed description of the old Share Option Scheme).
All of the options granted on June 19, 2001, a total of 14,650,000 share options, under Scheme 2001
to Eligible Employees will, however, remain valid until the expiration of their terms. By their
terms, all of the options granted on June 19, 2001 are exercisable from May 22, 2003 to May 21,
2011 for a nominal consideration of HK$1 per grantee. During 2002, 2003, 2004, and 2005 the
Company did not grant any options. The total number of outstanding options under the existing share
option schemes (including Scheme 2001 and Scheme 2002) that have been granted and not yet exercised
equals 4,230,000, which represents 1.03% of the issued share capital of the Company as at December
31, 2005.
Competition
APT currently serves the satellite communications market in Asia. A number of international
and domestic satellite operators also compete in this market. The Company's primary focus is Asian
intra-regional broadcasting, TV uplink and downlink, IP broadband and telecommunications, with
special emphasis on the PRC. The Company has not attempted to enter the international PSTN trunk
route market, which is dominated by the International Telecommunications Satellite Organization
("Intelsat").
In providing satellite capacity, the Company competes with major established companies and
organizations. The Company's competitors include government-owned and privately-owned
international, regional and domestic satellite companies. Many of these competitors have
long-standing customer relationships and are substantially larger and have financial resources that
are substantially greater than those of the Company. The Company believes that its ability to
compete with these organizations depends on its existing customer relationships and the quality of
its customer service, its reputation as a reliable operator of commercial satellites, flexible and
value pricing policy, and the technical advantages of its advance and powerful satellites.
The Company faces competition in all its markets from one or more satellite systems. Other
than domestic satellite companies, the Company is currently aware of five other international or
regional satellite companies with coverage of the PRC: Intelsat, Asia Satellite Telecommunications
Holdings Limited ("AsiaSat"), PanAmSat Corporation ("PanAmSat"), Satelindo-PT Satelit Palapa
Indonesia ("Palapa") and Sino Satellite Communications Company Limited ("SinoSat"). Due to the
economic slowdown in many Asian countries, many satellite-related projects have been delayed or
cancelled and the current supply of transponders is still greater than the demand. For such
reasons, APT has faced fierce market competition resulting in price-cutting and pressure on
utilization rates.
Digital video compression technology may have the effect of increasing the overall supply of
transponder capacity in the satellite industry. Such technology permits programmers to use less
transponder capacity than is currently required to transmit the same amount of programming. At
present, however, digital integrated
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receivers-decoders which are necessary to unscramble digitally compressed transmissions are not generally available outside the more developed markets, and the
Company believes that it may be some time before they are commonplace in the developing markets of
Asia. Customers who make significant financial commitments to the use of satellites for
broadcasting and telecommunications applications often seek to secure back-up transponder capacity
in order to protect their investment. The Company believes that potential customers in Asia may,
at some future point, prefer to use those satellites that can provide backup capacity to help
reduce customer risk.
International Satellites
The market for international satellite communications capacity has been dominated by Intelsat
for 30 years, and Intelsat can be expected to continue to dominate it for the foreseeable future.
Intelsat, established by international treaty in 1964, owns and operates the largest fleet of
commercial geosynchronous satellites in the world (over 20 satellites), and now comprises a
consortium of 143 countries. Intelsat has been operating communications satellites in the Asia Pacific region since the 1960s. Although the number
varies depending upon the exact criteria used to define Asia Pacific, Intelsat has several
satellites in the region. At present, however, Intelsat primarily uses beams which have a much
lower EIRP than the Company's satellites and therefore require larger diameter antennae for its
transmission to be received. Intelsat is traditionally seen as a "long-haul" carrier for PSTNs.
Intelsat has substantially completed a planned transition to a privatized entity which may
strengthen Intelsat's capabilities and competitive position. The television distribution and VSAT
operations of Intelsat could potentially compete directly with the Company.
PanAmSat was started in the 1980s to compete with the Intelsat monopoly. It currently
operates four satellites providing coverage over the Atlantic, Pacific and Indian Oceans and is one
of the Company's principal competitors in the Asia Pacific region. PanAmSat's PAS-4 has some
features similar to those of APT's satellites, including coverage of certain of the same geographic
areas. PanAmSat has announced that it intends to launch additional satellites to provide further
global coverage.
Regional Satellites
Coverage, service and target customers of AsiaSat are very similar to those of APT. AsiaSat
2's footprint is smaller than that of APSTAR IIR, but AsiaSat 3S, which was successfully launched
in March 1999, has a footprint very similar to APSTAR IIR's footprint. AsiaSat 4 was also
successfully launched in April 2003 and provides footprints coverage across Asia and Australia.
The Company believes AsiaSat is and will continue to be a major competitor of APT in the Asia
Pacific market, including the PRC market.
Satelindo's Palapa system began operations in the mid-to-late 1970s to support communications
in Indonesia and Southeast Asia. Satelindo is currently implementing its third generation of
communications satellites. Palapa has been successful in attracting international broadcasters to
its satellites and is planning to increase the coverage of its satellites to cover the entire Asia
Pacific region and to compete with Intelsat across the Pacific Ocean. Palapa is already servicing
a number of international broadcasting companies, and it is a major competitor of APT outside the
PRC market.
The ST-1 satellite system, which is partly owned and operated by Singapore Telecom, was
successfully launched in September 1998. Its C-band coverage stretches from the Middle East to
Japan and Southeast Asia. Its Ku-band coverage focuses on the Indian subcontinent and Southeast
Asia. Due to the satellite design and coverage area, the ST-1 satellite system only has the
ability to compete with the Company in C-band segment of the Asia Pacific market.
SinoSat, which was established in May 1994, has four major shareholders including China
Aerospace Science & Technology Corporation, State Development and Investment Corporation, China
Financial Computerization Company, and Shanghai Alliance Investment Limited. Its first satellite,
SinoSat-1, was launched on July 18, 1998 carrying 24 C-band and 14 Ku-band transponders with
footprints including China and Asia Pacific regions for providing telecommunication, data
transmission and TV broadcasting whereas its SinoSat-2 is still in the planning and development
stage. Because of its coverage and transponder capacity, SinoSat-1 is one of APT's competitors in
the China region.
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Domestic Satellites
A number of companies located in various countries in the region have launched or are planning
to launch domestic satellites. These include ChinaSat, which is also a Principal Shareholder
(which term is defined below), Chinastar (merged with ChinaSat) and SinoSat of the PRC, INSAT of
India, JSAT and NSTAR of Japan, Koreasat of Korea, Measat of Malaysia, Optus of Australia, Thaicom
of Thailand, Mabuhay of the Philippines, and GE-1A of the United States. Although these satellites
may be focused on their respective domestic markets, such companies may have the ability, due to
satellite design and coverage areas, to compete with the Company in segments of the Asia Pacific
market. In certain of these countries, domestic television broadcasters and domestic satellite
telecommunication operators providing services in their home countries are generally required to
use a state-owned or locally-owned satellite systems to the extent capacity is available and
therefore may not use APT's satellites. In addition, many of the domestic systems are planning to
add at least some regional transponders with substantial beam coverage to their next generation of satellites, and therefore may in the
future become competitors of APT in the regional markets.
Other Satellites
Other existing and proposed organizations have considered or might consider competing in the
Asia Pacific regional market. These include Russian systems, TongaSat, and others. Some of the
existing potential competitors offer low-cost, low-performance transponders, which do not compete
directly with the Company's high-performance transponders. New organizations face significant
competitive barriers including scarcity of orbital slots and high costs of entry.
Optical Fiber Systems
Optical fiber systems have been widely installed for point-to-point trans-oceanic
communications. In addition, point-to-point optical fiber connections between major cities in Asia
are common. Optical fiber is being used in more developed markets for cable TV networks, telephony
services and more recently in broadband and internet users. Owing to the telecom-boom era legacy of
huge overcapacity in the market, prices for leasing wholesale cable have plummeted over the past
five years as supply has still outstripped overall demand. The abundant supply of cable capacities
and rock-bottom prices have led to the situations that satellite capacities are difficult to
compete with cable in point-to-point communications.
Regulation
The international telecommunications industry is highly regulated. Satellite services are
subject to international space law, and the principal body of international law relating to the use
of outer space is the Outer Space Treaty. Countries which are party to the Outer Space Treaty or
to other treaties or conventions regulating outer space activities are responsible for fulfilling
their own obligations under such treaties or conventions. This often results in the adoption by
such member countries of domestic laws to regulate the activities of their own subjects in order to
enable the country concerned to comply with its international obligations.
As an operator of privately-owned satellites in Hong Kong, APT is subject to the regulatory
authority of APT's principal regulator, OFTA.
Many of the Company's existing and potential customers who may wish to use the APSTAR System
to broadcast into or provide telecommunications services for countries in Asia are subject to
government licensing. The applicable regulatory schemes in these countries vary considerably.
While the Company does not believe these regulatory schemes will prevent it from pursuing its
business, there can be no assurance that its customers' licenses and approvals are or will remain
sufficient in the view of foreign regulatory authorities and that these authorities will not
discourage or prevent existing or potential customers from utilizing transponders on the APSTAR
System.
Many of APT's customers must have authorization from the countries in which they are located
in order to uplink to and communicate by means of APT's satellites. While obtaining such
authorizations on behalf of its
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customers is not the Company's responsibility, the Company's success may depend on the ability of its customers to obtain the required authorizations.
International Telecommunication Union
Member nations are required by treaty to give notice of, coordinate and register radio
frequency assignments and any associated orbital locations in the geosynchronous satellite orbit
with the Radiocommunication Bureau. The purpose of such notice, coordination and registration is
to eliminate harmful interference between earth and space-based stations of different countries, to
improve the use of the radio frequency spectrum and the geosynchronous satellite orbit and to
accommodate, to the extent possible, a country's needs. Pursuant to the Radio Regulations, after a
country gives notice to the Radiocommunication Bureau of its intent to use given frequencies in
connection with given orbital locations and for a particular type of service, the "advance
publication" stage commences during which other countries are afforded the opportunity to apprise
the Radiocommunication Bureau of any conflicts with any existing or intended satellite systems.
When a present or potential conflict is noted, countries are then obligated to negotiate (during the
"coordination" process) in an effort to coordinate the proposed uses and resolve any interference
concerns.
An orbital slot is a function of intended use, orbital location and frequency band. As
international coordinations vary in complexity, the time for their completion is uncertain and
depends on the number of countries involved and the extent to which there are competing uses for
the frequency bands that are the subject of the coordination. The coordination process may result
in modification of proposed coverage areas or satellite design to eliminate or minimize
interference with other potential users.
When coordination is completed and conflicts are resolved, the proposed users achieve
"notification" status with the Radiocommunication Bureau. The frequency assignments are then
recorded in the Master Registry, and such users are thereafter entitled under international law to
protection from interference from subsequent or nonconforming uses from other countries. The
failure to use an orbital slot within six years of advance publication (extendable for a further
three years) could result in loss of priority in the coordination process.
Under the Radio Regulations, during the coordination process, a country may request the
Radiocommunication Bureau to assist it in resolving disputes in connection with existing or
proposed uses of frequencies and orbital locations. However, should any such disputes remain
unresolved, and the coordination process therefore not be successfully completed, there is no
formal dispute resolution mechanism and any country that nonetheless places a satellite or any
earth station into operation may not be entitled to seek the assistance of the Radiocommunication
Bureau to resolve complaints relating to any interference.
Export Regulation
The United States government has imposed certain restrictions on transfers of US technology to
the PRC and certain other countries, such as Russia. The launch site for each of the existing
APSTAR satellites, other than APSTAR V, was located in the PRC and the launch provider was an
entity licensed by the PRC government. The launch sites for other satellites that the Company may
launch in the future may also be located in the PRC or other countries subject to such
restrictions. As a result, export licenses are required to be obtained by manufacturers of
satellites that the Company may launch in the future which contain US technology in connection with
launches in any country subject to such restrictions on technology transfers. The export of
US-origin commercial communications satellite equipment also requires a Presidential waiver of the
restrictions contained in the US Foreign Relations Authorization Act relating to such exports to
the PRC and of any sanctions that are then in effect under the US Arms Export Control Act or other
US laws and regulations.
Hong Kong Regulation
The Company's satellite operations are principally regulated by the Outer Space Ordinance.
The Outer Space Ordinance prohibits any person from launching or procuring the launch of a
satellite, or operating a satellite, without obtaining an appropriate license. The Outer Space
Ordinance further stipulates that any such license shall describe the activities authorized by it
and also provides that licenses may be granted subject to conditions specified
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therein. The conditions may include basic orbital parameters and requirements to avoid interference with the
activities of other users of outer space. Breach of any such conditions can give rise to a right
of revocation of the relevant license.
The ultimate authority to grant licenses and otherwise to administer the Outer Space Ordinance
is vested in the Chief Executive. In practice, all relevant matters are dealt with on a regular
basis by OFTA. Effective July 1, 1997, the regulation of satellite launch and operation by Hong
Kong companies has remained under the authority of OFTA. APT had previously been granted licenses
under the Outer Space Act 1986 (Hong Kong) Order 1990 (the "Outer Space Order") by the Chief
Executive covering current and future operation of each of APSTAR I, APSTAR IA and APSTAR IIR,
subject to the conditions of the respective licenses and under the Outer Space Ordinance, such
licenses are valid and effective as if granted, maintained or made under the Outer Space Ordinance.
Each of these licenses requires the approval of the Hong Kong government for any transfer of a
beneficial interest in the satellite.
The Company's earth station operations involve the operation and use of telecommunications
apparatus at and from its earth station at Tai Po, Hong Kong. Establishment, possession and use of
such telecommunication apparatus in Hong Kong is regulated by the Telecommunication Ordinance and
the orders and regulations thereunder. APT has the benefit of licenses granted under the
Telecommunication Ordinance for each of APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V and APSTAR VI
covering all of its TT&C operations, as well as monitoring and testing functions, subject to the
terms and conditions of the respective licenses. Such licenses have terms of 20 years, commencing
on July 19, 1994, June 11, 1996, October 13, 1997, November 1, 2003 and April 4, 2005,
respectively. The licenses require APT (among other things) to avoid harmful interference with
other telecommunication apparatus operating within or outside Hong Kong and to ensure compliance
with all relevant requirements of the International Telecommunication Convention, a complementary
document to the ITU's constitution document, and any other international telecommunication
agreements which may from time to time be acceded to by or on behalf of, or applied to, Hong Kong.
These licenses were formally granted with the grant of the licenses under the Outer Space Order
referred to above.
The Telecommunication Ordinance also contains provisions for (i) the taking of possession by
the Hong Kong government of telecommunications stations where the Chief Executive in Council is of
the opinion that an emergency has arisen in which it is expedient for the public service that the
Hong Kong government should have control over telecommunications stations and (ii) the payment of
compensation should such taking of possession occur.
Overseas National Telecommunications Authorities
The laws and regulatory requirements regulating access to satellite systems vary from country
to country. Some countries have substantially deregulated satellite communications, making
customer access to the Company's satellites a relatively simple procedure, while other countries
have maintained strict monopoly regimes. The application procedure for access to satellite systems
can be time-consuming and costly, and the terms of the licenses vary among different countries.
Direct reception of satellite television is currently illegal in a number of countries in Asia
and the Middle East, and is subject to stringent restrictions in certain other countries in those
regions. Private ownership of dishes is currently prohibited in the PRC, although certain
tourist-grade hotels and apartments and other specified entities are permitted to operate dishes
upon application to the relevant authorities. In addition, regulations regarding content of
advertisements and advertising vary from country to country, making it difficult for broadcasters
to address advertisements to Asia and the Middle East as a whole.
Organizational Structure
The parent company of the APT Group is APT Satellite International Company Limited ("APT
International"), which directly controls approximately 51.83 % of the interest of the Company. APT
International is in turn jointly 100% owned by five principal shareholders. More information on
major shareholders is set forth in "Item 7. Major Shareholders and Related Party Transactions."
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The Company, through APT BVI, indirectly owns 100% of APT. The full list of subsidiaries of
APT Group is set forth in Note 1 to the Audited Consolidated Financial Statements.
Property, Plant and Equipment
The Company's executive offices are located in the Satellite Control Center in Tai Po
Industrial Estate, Hong Kong. Upon the removal of the Company's business office to its Satellite
Control Center in Tai Po on December 8, 2003, the lease of the Company's business office space
originally in Room 3107-3109 and 3111-3112, 31/F One Pacific Place, 88 Queensway, Hong Kong was
terminated on February 29, 2004. The rental amount (excluding rates and management charges) under
the lease was approximately HK$0 for 2005 and HK$530 thousand for 2004.
The TT&C operations of APSTAR Systems are conducted through the Company's Satellite Control
Center. The 45,192 square foot site (Site 1) where the TT&C facility is located and the adjacent
39,902 square foot site (Site 2) where Phase II of the Satellite Control Center is located, are held by the
Company pursuant to a lease between APT and the Science and Technology Parks Corporation. In early
2000, APT had leased from the Science and Technology Parks Corporation property originally
designated as The Remaining Portion of Section E of Tai Po Town Lot No. 13 and Extensions Thereto
with approximately 8,919.29 square meters (equivalent to 95,972 square feet) adjacent to its Tai Po
Satellite Control Center site for a term expiring June 30, 2047. On March 21, 2001, APT with the
Science and Technology Parks Corporation entered into the Cancelled Agreement, which divided the
interest of the property originally designated as The Remaining Portion of Section E of Tai Po Town
Lot No. 13 and Extensions Thereto between APT and APT Telecom. On March 21, 2001, the Science and
Technology Parks Corporation leased the majority portion of that piece of property, totaling
6,903.29 square meters (approximately 74,279 square feet) (Site 3A) (newly designated as the
Remaining Portion of Section E of Tai Po Town Lot No. 13 and Extension thereto), to APT Telecom for
telecommunications services, and granted a lease of the remaining portion of the property, totaling
2,016 square meters (approximately 21,692 square feet) (Site 3B) (newly designated as Subsection 3
of Section E of Tai Po Town Lot No. 13 and Extensions thereto) to APT by the Second Supplemental
Agreement and this piece of property was merged with the property originally leased, Site 1 and
Site 2. In order to expand the Company's satellite operations and control capabilities in
preparation for the launch of APSTAR V and APSTAR VI, as well as expand its capabilities with
respect to broadcasting and telecommunication services, APT Group completed the construction of
Phase II of the Satellite Control Center ("Phase II") for APSTAR V and APSTAR VI on Site 3B and
Site 2. The Company commenced operation of Phase II in February 2002. Phase II, which has a total
floor area of approximately 55,540 square feet, is specially designed for providing satellite TV
broadcasting platform. Phase II also includes a new data center (approximately 14,700 square feet)
for the telecommunications services.
Under the satellite TV broadcasting license granted by the Government of HKSAR, the Company's
wholly-owned subsidiary, APT Satellite TV Development Limited, has developed a satellite television
broadcasting platform as part of Phase II. As at December 31, 2005, the Company has invested
HK$28.8 million (US$3.7 million) in the facilities. As a result, the Company's program transmission
capacity is increased, strengthening its capacity to meet future demand for satellite TV services.
The Company assumed risks and rewards of thirty-seven transponders for the entire operational
life of APSTAR V under finance leases on August 13, 2004. The Company invested HK$1,157.9 million
(US$148.4 million) for the thirty-seven transponders of APSTAR V in 2004. No further cost
invested in such transponders after In-Orbit Test of APSTAR V on August 13, 2004. See Summary of
Satellite Data for further details related to the Company's satellite assets.
Item 4A. Unresolved Staff Comments
The Company currently has no unresolved SEC Staff comments.
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Item 5. Operating and Financial Review and Prospects
The following discussion and analysis should be read in conjunction with the Audited
Consolidated Financial Statements of the Company. The Audited Consolidated Financial Statements
have been prepared in accordance with Hong Kong GAAP, which differs in certain respects from US
GAAP. For a summary of significant differences between Hong Kong GAAP and US GAAP, see Item 18 and
Note 28 of the Notes to the Audited Consolidated Financial Statements.
Overview
The Company's existing satellites together with APSTAR I and APSTAR IA which were operated in
an inclined orbital mode, APSTAR IIR, APSTAR V and APSTAR VI provide commercial service to
broadcasting and telecommunications customers in the Asia Pacific region. APSTAR IIR began
commercial service on January 1, 1998, APSTAR V on August 13, 2004 and APSTAR VI on June 7, 2005.
APT's transponder utilization agreements typically require the payment of a deposit of one
calendar quarter's utilization fee upon signing of the contract, provide for an escalation of
utilization fees during the agreement term according to an agreed schedule, require utilization
fees to be paid in advance and provide for renewal options.
Certain aspects of the business of the Company are subject to governmental regulation,
including the coordination of orbital slots under the regulations of the ITU and the licensing of
the Company's satellite-related activities in Hong Kong by the HKSAR under the Outer Space
Ordinance. Licenses from the HKSAR must be obtained to launch or operate a satellite. APT has
obtained licenses covering current and future operation of each of APSTAR I, APSTAR IA, APSTAR IIR,
APSTAR V and APSTAR VI. The licenses each require the approval of the HKSAR for any transfer of a
beneficial interest in the satellite. Fees with respect to each of these licenses are payable
annually at fixed rates. The Company paid aggregate license fees with respect to its satellites of
HK$556 thousand (US$71 thousand) to the HKSAR in 2005. Although neither the Joint Declaration nor
the Basic Law makes express provision with respect to the Outer Space Ordinance or the regulation
of satellite launch and operation or other outer space activities, the Basic Law provides that the
laws previously in force in Hong Kong shall be maintained, except for any laws that contravene the
Basic Law, and subject to any amendment by the legislature of the HKSAR.
The Company believes that the market for satellite communications will not improve
significantly in the coming year due to the uncertain economic outlook of the Asia Pacific region
and increased competition in the transponder services market, which the Company believes will grow
increasingly intense. At the same time, the Company plans to develop new satellite broadcasting
and telecommunications businesses, with a view to maintaining business growth. The Company is
currently focusing its sales and marketing efforts on:
•
providing transponder capacity to broadcast customers for the distribution of
programming to television audiences in the PRC and Asia Pacific region;
•
providing telecommunications networks for data and voice communications; and
•
providing satellite television uplink and downlink service through the APSTAR System.
The Company's future revenues will depend upon the success of the above business strategies,
and it cannot provide any assurances that it will be successful in implementing its strategies or
meeting its projections.
APSTAR System, together with their corresponding telemetry, tracking and control systems, have
been operating under normal conditions. The Company's core business remains the provision of
satellite transponder capacity and broadcasting services in the Asia Pacific region. There has
been an increase of revenue contributed from the provision of satellite-based telecommunication
services. In the first half of 2003, the economic conditions in the Company's markets continued to
be sluggish due to SARS, which exacerbated an already weakened economic environment. Market
competition in the satellite broadcasting business was extremely fierce in 2003 as demand for
transponder capacities remained weak. In the second half of 2003, the economic outlook improved in
the Asia
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Pacific region as the SARS outbreak was brought under control and the economy in the PRC
continued to grow at an increased pace. In the year of 2005, the transponder service market
remained highly competitive. The market for satellite communications in the Asia Pacific region
remained highly competitive because of the following reasons: (i) there was a significant
oversupply in transponder capacities with respect to transponders operating on both the C-band and
Ku-band; and (ii) there was an over-supply in submarine cable capacities, particularly with respect
to telecommunication services. As of December 31, 2005, the utilization rates of APSTAR V and
APSTAR VI stood at 68.5% and 45.0%, respectively.
The Company intends to continue focusing on its core-business of providing satellite
transponder capacity and satellite-based telecommunications services in the Asia Pacific region in
the near term. While there is no current indication that the over-supply in transponder capacities
and submarine cable capacities in the region will be reduced in the near term, the transponder
markets as well as the broadcasting and telecommunication services market began a limited recovery
at the end of 2005. APT continues to aggressively market the services of its new, state-of-the-art
satellites, APSTAR V and APSTAR VI, which were launched on June 29, 2004 and April 12, 2005,
respectively, in an attempt to gain market share as the economy improves. The Company believes
that the advantages of these two satellites include (i) higher power; (ii) broadened footprints;
(iii) smooth customer migration; (iv) linking northern and southern hemispheres and bridging major
cities between North America and Asia; (v) anti-jamming features (APSTAR VI only); and (vi) the
potential for strong neighborhood effects with such customers as CCTV and other renowned
broadcasters, which enjoy over 300 million TV-households. Upon the completion of the Company's
satellite replacement program following the commencement of service of APSTAR VI, the Company
believes that its market competitiveness should be significantly strengthened.
APT Satellite TV Development Limited ("APT TV") has established its satellite TV uplink and
broadcasting services platform (the "Satellite TV Platform") for the provision of broadcasting
services under a Satellite TV Broadcasting Licence granted by HKSAR. The Company believes that the
Satellite TV Platform will help establish a neighborhood effect, whereby the APSTAR System will
stimulate more demand for transponder capacities for the APSTAR System. As at December 31, 2005,
APT TV has carried up to 53 satellite TV channels for the broadcasters in the region. APT Telecom
was re-organized on September 10, 2003 in response to the continued downturn in the market for
telecommunication services and the oversupply of submarine cable capacities. After the
reorganization, APT Telecom Services Limited continued to provide telecommunication services under
the Fixed Carrier License approved by OFTA in October 2003. The Company believes that the provision
of broadcasting service and telecommunication service offerings to its customers provides an
important competitive advantage with respect to customers who desire a "one-stop" shop in
communications services.
The Company projects that the broadcasting and telecommunication businesses in the Asia
Pacific region will see steady growth during 2006. The transponder service market will likely
still be highly competitive due to excess capacity in the transponder market in the region. While
the Company believes that the business climate in the next year will remain challenging, it
believes that the successful launch of APSTAR V and APSTAR VI will enhance its competitiveness in
the transponder services market. As a result of the economic growth in the Asia Pacific region and
the continued rapid economic growth in China, the Company anticipates that the demand for
transponders will grow steadily in 2006. The Company believes that there will be increases in
customers and transponder utilizations, and the increase in telecommunications or broadcasting
services. Meanwhile, the market competition will still be fierce due to supply over demand with
keen price pressure. The Group expects APSTAR V and APSTAR VI will continue to increase in
utilizations and expand market shares further in 2006.
An analysis of the sources of the Company's revenues by business segment for the three years
ended December 31, 2005 is shown in Item 4 "Information on the Company – Business Overview". The
following table sets forth, for the periods indicated, the percentage of revenues from continuing
operations represented by certain revenue and expense items in the Company's statements of
operations.
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2003
2004
2005
(restated)
(restated)
Statement of Operations Data:
Revenues
100.0
%
100.0
%
100.0
%
Costs and expenses:
Cost of services (excluding depreciation
and amortization)
14.6
%
24.1
%
30.7
%
Depreciation and amortization
78.1
%
64.2
%
58.9
%
Selling, general and administrative
(excluding depreciation and amortization)
24.8
%
28.4
%
22.9
%
Total costs and expenses
117.5
%
116.7
%
112.5
%
(17.5
%)
(16.7
%)
(12.5
%)
Loss before income taxes
(67.9
%)
(16.4
%)
(36.7
%)
Loss for the year
(71.8
%)
(22.4
%)
(40.6
%)
An analysis of the source of the Company's revenues by geographical area for the years ended
December 31, 2003, 2004 and 2005 is as follows:
Years Ended December 31,
2003
2004
2005
(HK$ in millions)
% of Total
% of Total
% of Total
Amount
Revenues
Amount
Revenues
Amount
Revenues
The People's
Republic of China:
Hong Kong
25.1
8.3
%
21.3
7.7
%
38.5
11.5
%
Other regions
225.8
74.7
%
195.2
70.4
%
201.9
60.0
%
Singapore
18.4
6.1
%
23.3
8.4
%
30.7
9.1
%
USA
18.9
6.3
%
8.4
3.0
%
0.4
0.1
%
Indonesia
0.5
0.2
%
6.0
2.2
%
32.3
9.6
%
Others
13.5
4.4
%
23.1
8.3
%
32.7
9.7
%
302.2
100.0
%
277.3
100.0
%
336.5
100.0
%
The Company has not incurred any research and development expenditure for the years ended
December 31, 2003, 2004 or 2005.
Application of Critical Accounting Policies
The financial statements are based on the selection and application of significant accounting
policies, which require management to make significant estimates and assumptions that affect the
reported amount of assets and liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities at the date of the financial statements. Actual results may
differ from these estimates under different assumptions or conditions. The following are some of
the more critical judgment areas in the application of the Company's accounting policies that
currently affect the Company's financial condition and results of operations.
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Depreciation
Depreciation of satellite assets is provided for on the straight-line method over the
estimated useful life of the satellite, which is determined by engineering analysis performed at
the in-services date and re-evaluated periodically, to residual value. A number of factors affect
the operational lives of satellites, including construction quality, component durability, fuel
usage, the launch vehicle used and the skill with which the satellite is monitored and operated. As
the telecommunication industry is subject to rapid technological change and the Company's
satellites have been subjected to certain operational lives, the Company may be required to revise
the estimated useful lives of its satellites and communication equipment or to adjust their
carrying amounts periodically. Accordingly, the estimated useful lives of the Company's satellites
are reviewed using current engineering data. If a significant change in the estimated useful lives
of our satellites is identified, the Company accounts for the effects of such change as
depreciation expenses on a prospective basis.
Depreciation for future satellites will depend on in-orbit testing on their estimated useful
lives after successful launch and, as the cost of the future satellites is greater than the
carrying value of the current satellites, the depreciation charge is expected to increase in the
coming years.
Accounts receivables and other receivables
The management of the Company estimates the provision of allowances required for the potential
non-collectability of receivables at each balance sheet date based on the aging of its customer
accounts and its historical write-off experience, net of recoveries. The Company performs ongoing
credit evaluations of its customers and adjusts credit limits based upon payment history and the
customers' current credit worthiness. The Company does not make a general provision on its
accounts receivables and other receivables, but instead, makes a specific provision on its accounts
receivables and other receivables. Hence, the Company continuously monitors collections and
payments from customers and maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the financial
condition of the customers of the Company were to deteriorate, actual write-offs would be higher
than estimated.
As disclosed in Note 21(e) to the Consolidated Financial Statements for the years ended
December 31, 2003, 2004, and 2005, the Company did not write off accounts receivable. For the
years ended December 31, 2003, 2004, and 2005, the Company made allowance for doubtful receivables
in the amounts of HK$8.4 million (US$1.1 million), HK$5.7 million (US$731 thousand) , and HK$0.4
million (US$53 thousand), respectively. If the financial condition of the Company's customers were
to deteriorate, additional allowances may be required.
The Company periodically reviews the carrying amounts of provision for doubtful debts to
determine whether there is any indication that the provision needs to be written off. If the
Company becomes aware of a situation where a customer will not be able to meet its financial
obligations due to change of contact information by the customer without notification or after
seeking professional advice from lawyers or debt collection agent that the probability of recovery
is remote, the Company would write off the account receivable.
Impairment of property, plant and equipment
The Company periodically reviews the carrying amount of the assets to determine whether there
is any indication that those assets have suffered an impairment loss. If the recoverable amount of
an asset is estimated to be less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. In assessing the recoverable amount of these assets, the
Company is required to make assumptions regarding estimated future cash flows and other factors to
determine the net realizable value. If these estimates or their related assumptions change in the
future, the Company may be required to adjust the impairment charges previously recorded. Under HK
GAAP, the estimated future cash flows are discounted at a discount rate when assessing the
recoverable amount of the assets. Under US GAAP, recoverability of assets is measured by a
comparison of the carrying amount of an asset or asset group to future undiscounted net cash flows
expected to be generated by the asset or asset group. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the carrying amounts
of the assets exceed the fair value of the assets.
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The Company applies the foregoing analysis in determining the timing of the impairment test,
the estimated useful lives of the individual assets, the discount rate, future cash flows used to
assess impairments and
the fair value of impaired assets. It is difficult to precisely estimate the price of the
transponder capacities and related satellite services and residual values because the market prices
for our assets are not readily available. The estimates of future cash flows are based on the
terms of existing transponder capacity and service agreements. The dynamic economic environment in
which the Company operates and the resulting assumptions used in setting depreciable lives on
assets and judgment relating to the utilization rate of the assets, price and amount of operating
costs to estimate future cash flows impact the outcome of all of these impairment tests. If these
estimates or their related assumptions change in the future, the Company may be required to record
impairment loss for these assets not previously recorded.
The Company periodically reviews the carrying amounts of its property, plant and equipment
through reference to its use value and fair market value as assessed both by the Company and by an
independent professional property appraiser. If the use value or fair market value of the
property, plant and equipment are lower than their carrying amount, the Company may be required to
record additional impairment loss not previously recognized.
During the years ended December 31, 2003, 2004 and 2005, the Company conducted a review of the
Company's property, plant and equipment and determined that certain assets were impaired as the
recoverable amount of these assets is estimated to be less than their carrying amount. An
impairment loss relating to Company's property plant and equipment of HK$129.1 million in respect
of communication satellites was recognized for the year ended December 31, 2003 while impairment
loss of HK$1.8 million in respect of construction in progress was recognized for the year ended
December 31, 2004. For the year ended December 31, 2005, HK$7.5 million in respect of
communication satellite equipment had been recognised and charged to the statement of operations.
Contingencies and provisions
Contingencies, representing an obligation that are neither probable nor certain at the date of
the financial statements, or a probable obligation for which the cash outflow is not probable, are
not recorded.
Provisions are recorded when, at the end of period, there is an obligation of the Company to a
third party which is probable or certain to create an outflow of resources to the third party,
without at least an equivalent return expected from the third party. This obligation may be legal,
regulatory or contractual in nature.
To estimate the expenditure that the Company is likely to bear in order to settle an
obligation, the management of the Company takes into consideration all of the available information
at the closing date for its consolidated financial statements. If no reliable estimate of the
amount can be made, no provision is recorded. For details, please refer to Item 18 and Note 14 of the "Notes to the Audited Consolidated
Financial Statements" of the Company.
Change in accounting policies
The Hong Kong Institute of Certified Public Accountants (HKICPA) has issued a number of new
and revised Hong Kong Financial Reporting Standards (HKFRSs) that are effective for accounting
periods beginning on or after January 1, 2005. Information on the changes in accounting policies
resulting from initial application of these new and revised HKFRSs is provided in Note 4 of the
"Notes to the Audited Consolidated Financial Statements of the
Company". Figures for 2004 and 2005
have been adjusted for these new and revised policies in accordance with the transitional
provisions and as disclosed in Note 4. Earlier years have only been restated to the extent that the
new accounting policies are adopted retrospectively as disclosed in the Note 4.
Recent US GAAP pronouncements
Please see item 18 and Note 28(i) to the Audited Consolidated Financial Statements of the
Company for recent US accounting pronouncements.
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Commitments and Contingencies
In the ordinary course of its business, the Company enters into commercial commitments for
various aspects of operations, such as repair and maintenance. However, the Company believes that
those commitments will not have a material effect on the Company's financial condition, results of
operations or cash flows.
The following tables aggregate the contractual obligations and other commercial commitments of
the Company as of December 31, 2005 (HK$ in millions):
Contractual Obligations:
Payments due by period
Less than
1—3
4—5
After 5
Total
1 year
years
years
Years
US$240 million term Bank
loan
(1)
1,127.2
120.5
379.1
529.4
98.2
Interest payment obligations
(2)
245.7
62.7
120.3
59.3
3.4
Purchase obligations
the Company
(3)
2.3
2.3
—
—
—
Operating leases
(4)
2.2
2.2
—
—
—
Total contractual obligations
1,377.4
187.7
499.4
588.7
101.6
Other Commercial Commitments:
Amount of commitment expiration per period
Total
amounts
Less than
1 — 3
4 — 5
After 5
committed
1 year
years
years
years
Other commercial
commitments
— the Company
(5)
—
—
—
—
—
Deposit received
16.0
9.2
5.5
1.3
—
Deferred income
239.0
—
67.8
45.1
126.1
Total commercial
commitments
255.0
9.2
73.3
46.4
126.1
(1)
This line item represents the cash obligations for principal payments of the
Bank loan. The Bank loan was secured by the assignment of the construction, launching
and related equipment contracts relating to satellites under construction and their
related insurance claim proceeds, assignment of all present and future utilization
agreements of their transponders of satellites under construction, launching and
related equipment contracts. The above Bank loan does not include the borrowing cost
amounting to HK$9.2 million (US$1.2 million).
(2)
This line item represents the contractual interest payable for the Bank loan.
The interest payable is calculated by using average interest rate since the actual
interest payment depends on future LIBOR.
(3)
This line item represents various purchase commitments entered into with the
Company's suppliers due to the long lead times required before the satellites become
operational.
(4)
This line item represents future minimum payments under operating leases with
remaining terms of one year or more.
(5)
This line item represents various purchase commitments authorized by the
Company with its suppliers but not contracted at the balance sheet date.
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Table of Contents
Contingencies:
APT's overseas withholding tax charged on certain transponder utilization income in respect
of 1998 and before, calculated at the applicable rates based on the relevant transponder income
earned in those years, and not provided for in the financial statements, amounted to
approximately HK$75.9 million (US$9.7 million). (See Note 14 of the Company's Consolidated
Financial Statements). APT did not recognize liabilities as the Company's position is that the
applicable tax rules are effective from 1999 onwards. If such tax charge is claimed for the
period from 1998 and before, it could result in a significant adverse effect on the Company's
financial condition.
In 2003, APT received a letter from the Hong Kong Inland Revenue Department ("IRD") in
connection with the Profits Tax Return that IRD disagreed with APT on the capital gain claim of
HK$389.7 million (US$50.0 million) in 1999 in relation to the transfer of substantially all of
the satellite transponder capacities of APSTAR IIR for the rest of its useful life. APT has
claimed the gain as a non-taxable capital gain in its 1999/2000 Profits Tax Return. The
non-taxable claim is under review by the IRD which has proposed to treat the proceeds received
as taxable income to APT with a corresponding entitlement to statutory depreciation allowance
in respect of APSTAR IIR. On January 23, 2006, IRD raised a Profits Tax assessment for the
year of assessment 2000/2001 to include that portion of the proceeds from sale of the satellite
received during 2000/2001 as taxable income. The tax demanded for the year of assessment
2000/2001 is HK$212.8 million (US$27.3 million). On February 20, 2006, APT lodged an objection
against the IRD's assessment on the grounds that it is excessive.
On February 24, 2006, APT received a notice from the IRD confirming that the entire tax in
dispute would be held over on condition that APT purchase HK$78.4 million of Tax Reserve
Certificate ("TRC") by March 15, 2006 and the balance of the amount of HK$134.5 million would
be held over unconditionally. Should any amount of tax held over on condition of the purchases
of TRC become payable upon the final determination of the objection, the same amount of TRC
would be used for settlement of tax due. For that part of the TRC not utilized to offset the
tax payable, interest will accrue from the date of issue of the TRC to the date of
determination of the objection and be refunded to APT. In order to fulfill the condition of
hold over of tax payment, APT purchased TRC of HK$78.4 million on March 15, 2006.
Since the receipt of the above mentioned notices, the Company has obtained external legal
and tax advice, and the Company continues to believe that it has a reasonable likelihood of
success in defending its position that the gain derived from the transaction should be treated
as non-taxable. Accordingly, no provision for additional taxation has been made.
In addition, certain potential losses of a satellite or the satellite's functionality may not
be fully covered by the Company's launch or in-orbit insurance policies. For example, APT Group's
insurance coverage would not compensate it for business interruption and similar losses (including,
among other things, loss of market share, loss of revenue and incidental and consequential
damages). In the event that the insurance proceeds exceed the carrying amount of the satellites,
the excess of the proceeds over the carrying value of the satellite would be recognized as income.
Any shortfall between the insurance proceeds and the carrying amount of the satellites would be
recognized in the statements of operations as expense.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements other than its operating leases.
The Company does not believe that such operating leases have or are reasonably likely to have a
current or future effect on the Company's financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that would be material to
investors.
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Table of Contents
Results of Operations
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
Total Revenues.
Total revenues for the year ended December 31, 2005 were HK$336.5 million
(US$43.1 million), an increase of HK$59.2 million (US$7.6 million), or 21.4%, as compared to total
revenues of HK$277.3 million (US$35.5 million) for the same period in 2004. The increase of
revenues in 2005 was due to commencement of new utilization contracts for APSTAR V and APSTAR VI in
the PRC and Indonesia.
Total Costs and Expenses.
The major components of total costs and expenses consist of cost of
services, depreciation and amortization, and selling, general and administrative expenses. Total
costs and expenses for the year ended December 31, 2005 were HK$378.4 million (US$48.5 million), an
increase of HK$55.0 million (US$7.1 million), or 17.0%, as compared to total costs and expenses in
the same period in 2004. This increase was primarily due to an increase in in-orbit insurance and
depreciation of the additional satellite of APSTAR VI which commenced service at the beginning of
June 2005 and an increase in costs of running the satellite-based external telecommunications
business.
Cost of Services, including Depreciation and Amortization
. The major components of cost of
services include depreciation and amortization, license fees, orbital slot management fees,
in-orbit insurance and satellite operations services charges. The cost of services, including
depreciation and amortization for the year ended December 31, 2005 was HK$301.1 million (US$38.6
million), an increase of HK$56.4 million (US$7.2 million) or 23.0% when compared to the cost of
HK$244.7 million (US$31.4 million) for the year ended December 31, 2004. This increase was due to
all of the factors discussed below.
Cost of Services, excluding Depreciation and Amortization
. Cost of services excluding
depreciation and amortization for the year ended December 31, 2005 was HK$103.3 million (US$13.2
million), an increase of HK$36.2 million (US$4.6 million) or 53.9% as compared to cost of services
of HK$67.1 million (US$8.6 million) for the year ended December 31, 2004. The increased cost of
services is mainly due to the payment of in-orbit insurance for APSTAR VI, which began operation on
June 7, 2005, while there were no such related expenses in 2004 for APSTAR VI.
Depreciation and Amortization.
Depreciation and amortization for the year ended December 31,
2005 was HK$197.9 million (US$25.4 million), an increase of HK$20.2 million (US$2.6 million) or
11.4% as compared to depreciation and amortization of HK$177.7 million (US$22.8 million) for the
year ended December 31, 2004. This increase was mainly due to an increase in depreciation of the
additional satellite of APSTAR VI which commenced service at the beginning of June 2005.
Selling, General and Administrative Expenses.
The major components of selling, general and
administrative expenses include staff costs, office rental expenses, office general expenses,
provision for bad and doubtful receivables, marketing and promotion expenses and professional fee.
Selling, general and administrative expenses for the year ended December 31, 2005 were HK$77.2
million (US$9.9 million), slightly decreased by HK$1.5 million (US$0.2 million), or 1.9%, as
compared to selling, general and administrative expenses of HK$78.7 million (US$10.1 million) for
the year ended December 31, 2004. The administrative expense decreased under the tight control in
expenses budget.
Other Operating Revenues.
The major components of other operating revenues consist of
interest income and other income and the reasons for such decrease are discussed below. Aggregate
non-operating items resulted in income of HK$30.8 million (US$3.9 million) in the year ended
December 31, 2005, an increase of HK$21.5 million (US$2.8 million) as compared to the revenues of
HK$9.3 million (US$1.2 million) for the year ended December 31, 2004.
Interest Income — Net.
Interest income — net was HK$12.9 million (US$1.7 million) in the year
ended December 31, 2005, an increase of HK$5.6 million (US$0.7 million), or 76.7%, as compared to
the interest income
-39-
Table of Contents
of HK$7.3 million (US$937 thousand) for the year ended December 31, 2004, which
was largely as a result of increase in interest rates on bank deposits.
Other Income.
Other income was HK$15.6 million (US$2.0 million) in the year ended December
31, 2005, which was the compensation income from a contractor for the late delivery of the
satellite while there were no such related other income in 2004.
Impairment Loss Recognized In Respect to Property, Plant and Equipment.
Impairment loss in
respect to communication satellite equipment of HK$7.5 million (US$1.0 million) was recognized for
the year ended December 31, 2005, as compared to impairment loss in respect of construction in
progress of HK$1.8 million (US$231 thousand) recognized for the year ended December 31, 2004. For
the year ended December 31, 2005, the Company re-assessed the discounted expected future revenues
of the broadcasting and telecommunication business, which the Company expects the future revenues
to be lower than originally projected.
Impairment Loss Recognized In Respect of prepayment for construction of a satellite
In view of the successful launch of APSTAR VI on April 12, 2005, the Company did not exercise
the option before the expiry date of September 30, 2005. According to the terms of the option
agreement, the option has expired and the option agreement is deemed to be terminated. The Company
was responsible for all reasonable costs and expenses incurred up to the date of termination in
respect of the preparation works for the design, construction, delivery and launch of APSTAR VIB.
The balance of option price (net of all reasonable costs and expenses incurred) should be
transferred to such other satellite project as may be designated by the Company or the contractor
within two years after the expiry date of the option. In the event that the balance of option price
would be transferred to a satellite project for another customer as designated by the contractor,
the balance of the option price would be refunded to the Company. Up to and including the date
hereof, the Company has no plan for the procurement and launch of a new satellite in the coming two
years due to the fact that the transponder market has remained highly competitive and the current
supply of transponders exceeds demand in the Asia Pacific region. The possibility of transferring
the preparation work of APSTAR VIB to another satellite project of another customer as designated
either by the Company or the contractor in the coming two years is expected to be remote.
Accordingly, as the Company does not currently expect the option price would be applied towards any
future satellite project within the required time restriction or the contractor will refund the
balance of option price to the Company, an impairment loss of HK$59.9 million (US$7.6 million) has
been recognised in respect of the prepayment for construction of a satellite. No such expenses were
recognized for the year ended December 31, 2004.
Borrowing Costs.
For the year ended December 31, 2005, the Company incurred finance costs of
HK$46.7 million (US$6.0 million) representing interest expenses of HK$44.5 million (US$5.7 million)
incurred under the Bank loan and other related finance costs of HK$2.2 million (US$282 thousand) as
part of satellite construction costs and including amount capitalized into construction in progress
of HK$9.8 million (US$1.3 million). For the year ended December 31, 2004, the Company incurred
finance costs of HK$20.8 million (US$2.7 million) representing interest expenses of HK$17.2 million
(US$2.2 million) incurred under the Bank loan and other related finance costs of HK$3.6 million
(US$461 thousand) as part of satellite construction costs and including amount capitalized into
construction in progress of HK$16.7 million (US$2.1 million). The increase of finance costs was
primarily due to new bank borrowings and an increase of interest rate in 2005.
Share of Losses of Jointly Controlled Entities.
Share of losses of jointly controlled
entities was HK$8.0 million (US$1.0 million) for the year ended December 31, 2005, an increase of
HK$5.3 million (US$0.7 million) as compared to the share of losses of jointly controlled entities
of HK$2.7 million (US$0.3 million) for the year ended December 31, 2004. The increase was mainly
due to the share of impairment loss of HK$7.2 million (US$1.0 million) from one of the jointly
controlled entities in respect of an investment property as compared to impairment loss of HK$2.2
million (US$ 282 thousand).
Under US GAAP there has been an adjustment to share of loss of jointly controlled entities as
a result of GAAP difference of depreciation of investment property of HK$1.8 million (US$231
thousand) for the year ended December 31, 2005 and 2004. For details, please refer to Item 18 and
Note 28(a)(i) to the Audited Consolidated Financial Statements of the Company.
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Table of Contents
Provision for Income Taxes.
Provision for income taxes was HK$13.2 million (US$1.7 million)
in the year ended December 31, 2005, a decrease of HK$3.4 million (US$436 thousand), as compared to
provision for income taxes of HK$16.6 million (US$2.1 million) for the year ended December 31,
2004. The decrease was mainly due to the utilization of deferred tax assets which partly offset the
increase in overseas withholding tax
provided in year 2005. For the year ended December 31, 2005, a brought forward tax loss from
a subsidiary was utilized to offset its assessable profit for the year. This resulted in the
deduction of deferred tax assets of the subsidiary. No provision for current Hong Kong profits tax
has been made, as the Company and its subsidiaries either had substantial accumulated tax losses
brought forward which are available for set off against current year's assessable profits or have
sustained tax losses as of year end.
Net Loss.
Net loss for the year ended December 31, 2005 was HK$136.6 million (US$17.5
million), an increase of HK$74.6 million (US$9.6 million) as compared to the net loss (restated) of
HK$62.0 million (US$7.9 million) for the year ended December 31, 2004. This increase of net loss
was due to all of the factors discussed above.
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
Total Revenues.
Total revenues for the year ended December 31, 2004 were HK$277.3 million
(US$35.5 million), a decrease of HK$24.9 million (US$3.2 million), or 8.3%, as compared to total
revenues of HK$302.2 million (US$38.7 million) for the same period in 2003. The decrease of
revenues in 2004 was due to continued intense market competition, which put further downward
pressure on transponder pricing, eroding the Company's profit margins and leading to a further drop
in revenues. The Company believes that the commencement of operations of APSTAR V and APSTAR VI
will enhance the Company's competitive position. By bundling broadcasting services and
telecommunication services into a "one-stop" shop for communications services, the Company aims to
further strengthen the utilization rates of its satellites as the regional economic outlook
improves, in an effort to increase its profit margins.
Total Costs and Expenses.
The major components of total costs and expenses consist of cost of
services, depreciation and amortization, and selling, general and administrative expenses. Total
costs and expenses for the year ended December 31, 2004 were HK$323.4 million (US$41.5 million), a
decrease of HK$30.9 million (US$4.0 million), or 8.7%, as compared to the same period in 2003.
This decrease was primarily due to the decrease of HK$35.6 million (US$4.6 million) in cost of
services, which was partially offset by an increase of HK$4.7 million (US$601 thousand) in selling,
general and administrative expenses. Total costs and expenses as a percentage of revenues were
116.7% in the year ended December 31, 2004, as compared to 117.2% in the year ended December 31,
2003, as further discussed as below.
Cost of Services, including Depreciation and Amortization
. The major components of cost of
services include depreciation and amortization, license fees, orbital slot management fees,
in-orbit insurance and satellite operations services charges. The cost of services, including
depreciation and amortization for the year ended December 31, 2004 was HK$244.7 million (US$31.4
million), a decrease of HK$35.6 million (US$4.6 million) or 12.7% when compared to the cost of
HK$280.3 million (US$35.9 million) for the year ended December 31, 2003. The decrease was due to
the decrease in depreciation and amortization incurred in running the business as further discussed
as below.
Cost of Services, excluding Depreciation and Amortization
. Cost of services excluding
depreciation and amortization for the year ended December 31, 2004 was HK$67.1 million (US$8.6
million), an increase of HK$22.8 million (US$2.9 million) or 51.2% as compared to cost of services
of HK$44.3 million (US$5.7 million) for the year ended December 31, 2003. The increased cost of
services is mainly due to the payment of in-orbit insurance for APSTAR V, which began operation on
August 13, 2004, while there were no such related expenses in 2003 for APSTAR V. Furthermore, a
full year's result is reflected in 2004 while only a 3-month result is reflected in 2003 in respect
of the Company's acquisition of the satellite-based external telecommunications business of a
jointly controlled entity on October 10, 2003.
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Table of Contents
Depreciation and Amortization.
Depreciation and amortization for the year ended December 31,
2004 was HK$177.7 million (US$22.8 million), a decrease of HK$58.3 million (US$7.5 million) or
24.7% as compared to depreciation and amortization of HK$236.0 million (US$30.2 million) for the
year ended December 31, 2003. This decrease was mainly due to firstly, an impairment loss that was
recognized in respect to communication satellites for the year ended December 31, 2003, secondly,
the Company revised its estimate of the remaining useful life of APSTAR IA by extending 6 months.
As a result, depreciation recorded for the year ended December 31, 2004 was decreased.
Selling, General and Administrative Expenses.
The major components of selling, general and
administrative expenses include depreciation and amortization, staff costs, office rental expenses,
office general expenses, provision for bad and doubtful receivables, and marketing and promotion
expenses. Selling, general and administrative expenses for the year ended December 31, 2004 were
HK$78.7 million (US$10.1 million), an increase of HK$4.7 million (US$601 thousand), or 6.3%, as
compared to selling, general and administrative expenses of HK$74.0 million (US$9.5 million) for
the year ended December 31, 2003. This increase was largely due to reflection of full year's
result in 2004 while only 3-month result in respect of the Company's acquisition made reflected in
2003 as discussed above.
Other Operating Revenues.
The major components of other operating revenues consist of
interest income and other income and the reasons for such decrease as discussed below. Aggregate
non-operating items resulted in income of HK$9.3 million (US$1.2 million) in the year ended
December 31, 2004, a decrease of HK$23.7 million (US$3.0 million), or 71.8%, as compared to the
revenues of HK$33.0 million (US$4.2 million) for the year ended December 31, 2003.
Interest Income — Net.
Interest income — net was HK$7.3 million (US$937 thousand) in the year
ended December 31, 2004, an increase of HK$201 thousand (US$26 thousand), or 2.8%, as compared to
the interest income of HK$7.1 million (US$912 thousand) for the year ended December 31, 2003.
Other Income.
Other income was HK$2.0 million (US$256 thousand) in the year ended December
31, 2004, decrease of HK$23.9 million (US$3.1 million), or 92.2%, as compared to other income of
HK$25.9 million (US$3.3 million) in the year ended December 31, 2003. The decrease was mainly due
to a compensation payment of HK$13.5 million (US$1.7 million) from a jointly controlled entity for
the early termination of services and a facilities lease as the result of the jointly controlled
entity's reorganization in October 2003 that was recognized in 2003, while there was no such income
recognition in 2004.
Impairment Loss Recognized In Respect to Property, Plant and Equipment.
Impairment loss
recognized in respect to property, plant and equipment of HK$1.8 million (US$0.2 million) was
recognized for the year ended December 31, 2004 with respect to the Company's construction in
progress as compared to impairment loss recognized in respect to communication satellites of
HK$129.1 million (US$16.6 million) for the year ended December 31, 2003. Impairment loss on
construction in progress and communication satellites was recognized for the excess of the carrying
value over the discounted expected future cash flow to be generated by the respective assets. For
the year ended December 31, 2004, the Company re-assessed the discounted expected future revenues
of the broadband project, which the Company expects the future revenues to be lower than originally
projected.
Borrowing Costs.
For the year ended December 31, 2004 the Company incurred finance costs of
HK$20.8 million (US$2.7 million) representing interest expenses of HK$17.2 million (US$2.2 million)
incurred under the Bank loan and other related finance costs of HK$3.6 million (US$462 thousand) as
part of satellite construction costs and including amount capitalized into construction in progress
of HK$16.7 million (US$2.1 million). As APSTAR V has commenced commercial operation on August 13,
2004, the Company no longer capitalized the finance costs of HK$4.1 million (US$529 thousand) from
that date but expensed it to the statements of operations. For the year ended December 31, 2003,
no interest expenses were recorded because the interest expenses incurred under the Loan Facility
were capitalized as part of satellite construction costs. The interest expenses of HK$6.6 million
(US$846 thousand) and other related cost of HK$1.2 million (US$154 thousand) incurred in obtaining
the loans were capitalized.
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Share of Losses of Jointly Controlled Entities.
Share of losses of jointly controlled
entities was HK$2.7 million (US$347 thousand) for the year ended December 31, 2004, a decrease of
HK$54.4 million (US$7.0 million) or 95.3% as compared to the share of losses of jointly controlled
entities of HK$57.1 million (US$7.3 million) for the year ended December 31, 2003. The decrease
was mainly due to the share of impairment loss from one of the jointly controlled entities in
respect of cables and satellite-based telecommunication equipment and property, and compensation
expense for early termination of services and facilities lease for the year ended December 31, 2003
while no such expenses were recognized for the year ended December 31, 2004. The impairment loss
recognized in 2003 on cable and satellite-based telecommunications equipment and property resulted
primarily from excess capacities in the cable and satellite-based communications services markets
during the continued downturn in the regional telecommunications sector, which exerted a downward
pressure on pricing and the ability of the jointly controlled entity to grow its customer base, and
partially due to write-downs in obsolete telecommunications
equipment. As a result, projected cash flow was lower than the carrying value of the property
and equipment and the shortfall was recognized as an impairment loss in 2003 consolidated
statements of operations. Share of the impairment loss was HK$49.0 million (US$6.3 million) and
share of the compensation expense was HK$7.4 million (US$949 thousand) in 2003. For results of
operations and financial position of the jointly controlled entity, please refer to Exhibit 8.2
"Financial Statements of APT Satellite Telecommunications Limited".
Under US GAAP there has been an adjustment to share of loss of jointly controlled entities as
a result of GAAP difference of depreciation of investment property of HK$1.8 million (US$231
thousand) for the year ended December 31, 2004, a decrease of HK$875 thousand (US$112 thousand)
when compared to the depreciation of HK$875 thousand (US$112 thousand) for the year ended December
31, 2003. The decrease was mainly due to full year depreciation charge accounted for in year 2004
while only half-year depreciation charge accounted for in year 2003. For details, please refer to
Item 18 and Note 28(a)(i) to the Audited Consolidated Financial Statements of the Company.
Provision for Income Taxes.
Provision for income taxes was HK$16.6 million (US$2.1 million)
in the year ended December 31, 2004, an increase of HK$4.9 million (US$628 thousand) or 41.9%, as
compared to provision for income taxes of HK$11.7 million (US$1.5 million) for the year ended
December 31, 2003. The increase was mainly due to the combined effect of decrease in both deferred
tax written back and overseas withholding tax provided in year 2004. The decrease in overseas
withholding tax provided in year 2004 is due to decrease in overseas income that is subject to tax
while the decrease in deferred tax written back is mainly due to a certain leasing arrangement that
is subject to tax was written back in year 2003 while no such written back in year 2004. The
leasing arrangements entered in year 1994 provided the Company with an initial cash inflow in
return for being responsible for the future obligations to make payments of taxation under the
arrangements. Any differences between the initial benefit and the eventual tax liability were
provided for over the lives to the relevant leases. The arrangement was completed in December
2003.
Net Loss.
Net loss for the year ended December 31, 2004 was HK$62.0 million (US$7.9 million),
a decrease of HK$155.0 million (US$19.9 million), or 71.4%, as compared to the net loss of HK$217.0
million (US$27.8 million) for the year ended December 31, 2003. This decrease of net loss was due
to all of the factors discussed above.
Liquidity and Capital Resources
Sources of Cash and Credit Available
Since the Company's initial public offering, it has financed its operations primarily through
cash flows from operations.
As of December 31, 2005, the Company had HK$326.4 million (US$41.9 million) of available cash,
HK$68.7 million (US$8.8 million) of restricted cash. It is expected that the operations of the
Company for the foreseeable future will be funded through cash flows from operation. Up to the end
of December 2005, no further credit facility was available to the Company
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Capital Expenditures
APT's principal use of capital in the last several years has been (and will for the
foreseeable future be) capital expenditures related to the construction and launch of its
satellites, construction of Phase II of the Satellite Control Centre and investment in its
satellite TV broadcasting platform. The Company's business is capital-intensive, requiring
substantial capital outlays before any given satellite is commissioned for commercial service and
can begin providing a return on capital.
The Company makes periodic satellite project progress payments relating to construction of
satellites, launching and related services, insurance costs and finance costs on amounts borrowed
to finance such expenses. Upon the commencement of commercial service of an APT satellite,
satellite project progress payments relating to the satellite are transferred in full to property,
plant and equipment.
The total cost for the communication satellites held under finance leases in connection with
the APT transponders of APSTAR V amounted to US$148.4 million. The total capital expenditures for
the design, construction and launch of APSTAR VI amounted to US$227.0 million.
In addition, if the Company was to consummate any strategic transactions or undertake any
other project requiring significant capital expenditures, it may be required to seek additional
financing. There can be no assurance that additional funds will be available at all or that, if
available, will be obtained at terms favorable to the Company.
Contractual Obligations and Other Commercial Commitments
For capital commitments in respect of capital expenditures, see "Item 5. Contractual
Obligations and Commercial Commitments."
Cash Flow Items
Net Cash Provided by Operating Activities
Net cash provided by operating activities amounted to HK$149.5 million (US$19.2 million) for
the year ended December 31, 2005, a decrease of HK$83.9 million (US$10.75 million), or 35.9%,
compared to net cash provided by operating activities of HK$233.4 million (US$29.9 million) for the
year ended December 31, 2004. The decrease in net cash provided by operating activities over the
period was principally due to the prepayment by SingTel of transponder utilization income of
HK$231.3 million (US$29.7 million) for the remaining life of APSTAR V in 2004 and no similar
prepayment was made in 2005.
Net Cash Used in Investing Activities
Net cash used in investing activities was HK$617.5 million (US$79.2 million) for the year
ended December 31, 2005, an increase of HK$253.0 million (US$32.4 million), or 69.4%, compared to
net cash used in investing activities of HK$364.5 million (US$46.7 million) for the year ended
December 31, 2004. The increase in net cash used in investing activities over the period was
mainly due to the increase of progress payments for the construction of APSTAR VI, increase of the
pledged deposits for Bank loan due to restrict the funds for repayment of bank borrowings in the
coming year and was partially offset by an increase in interest received due to an increase of the
interest rate in 2005.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was HK$118.9 million (US$15.2 million) for the year
ended December 31, 2005, a decrease of HK$139.0 million (US$17.8 million), or 53.9%, compared to
net cash provided by financing activities of HK$257.9 million (US$33.1 million) for the year ended
December 31, 2004. The decrease in net cash provided by financing activities over the period was
primarily the result of less new borrowings under the secured Bank loans for APSTAR VI of HK$229.3
million (US$29.3 million) compared to net new borrowings of HK$273.8 million (US$35.1 million) in
2004 and repayment of bank borrowings of HK$77.8 million (US$10.0 million) in 2005.
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Financing
On December 16, 2002, APT entered into a US$240 million secured term bank loan. The Bank loan
was amended by a Deed of Amendment and Restatement on October 27, 2004 and Second Deed of Amendment
and Restatement on May 18, 2005. The first amendment amended certain terms of the Bank loan for the
purpose of adjusting for the cancellation of the unutilized portion relating APSTAR V satellite and
APSTAR VI backup satellite. Accordingly, the maximum aggregate amount under the Bank loan was
reduced to US$165 million and certain financial covenants were amended. The second amendment
extended the availability period of drawing under the Bank loan with respect to APSTAR VI to June
30, 2005 and amended the financial covenants. The Company was in compliance with these covenants
as of December 31, 2005. For detail of the restrictive financial covenants, please refer to Item 18
and Note 10 of the "Notes to the Audited Consolidated Financial Statements" of the Company.
The availability period for drawn down expired on June 30, 2005. As at December 31, 2004 and
2005, the aggregate borrowings under the Bank loan were HK$975.8 million (US$125.1 million) and
HK$1,127.3 million (US$144.5 million), respectively. At December 31, 2004, APSTAR V and APSTAR VI
were under construction with an aggregate carrying value of approximately HK$2,398.2 million (US$
307.5 million) and bank deposits of approximately HK$20.8 million (US$2.7 million). At December 31,
2005, APSTAR V and APSTAR VI
were reported under fixed assets with a net book value of approximately HK$2,752.2 million
(US$352.8 million) and the bank deposits of approximately HK$68.7 million (US$8.8million).
The Bank loan is secured by the assignment of the construction, launching and related
equipment contracts relating to APSTAR V, APSTAR VI and their related insurance claim proceeds,
assignment of all present and future utilization agreements of the transponders of satellites under
construction, assignment of all present and fixed charges over certain bank accounts which will
hold receipts of the transponder income and the termination payment under construction, launching
and related equipment contracts. Pursuant to the Bank loan, any insurance claim proceeds and
contract termination payments must be deposited in a designated account and withdrawal of any
amount from this designated account may only occur in accordance with the terms of the Bank loan.
The Bank loan limits the amount of annual dividends that the Company may pay its shareholders
which limit is tied to certain EBITDA and cash to debt service ratios contained therein. The Bank
loan includes covenants customary for agreements of this type, including restrictions on the
Company's and its subsidiaries' ability to incur indebtedness, certain ownership restrictions,
certain restrictions on the Company's ability to pay dividends, restrictions on affiliated
transactions, certain financial covenants, covenants with respect of compliance with laws,
maintenance of licenses and permits required for APT's business and a requirement that all future
transponder utilization agreements be entered into on an arms-length basis. Among other things,
APT has undertaken to ensure that APT International directly owns at least 50.01% of the voting
rights in the Company. The Bank loan also contains financial covenants, including maintenance of
collateral coverage ratio, minimum net worth and minimum EBITDA. The Bank loan also contains
customary limitations, including those on dividend, investments, capital expenditures, change of
controlling shareholders, creating liens and transactions with affiliates. No assurance can be
given that APT will be able to meet any of the financial performance covenants contained in the
Bank loan.
Forward Looking Statements
This report contains statements and other information made by or on behalf of the Company that
constitute "forward-looking" statements within the meaning of Private Securities Litigation Reform
Act of 1995. Statements that are not historical facts are forward-looking statements. By their
nature, forward-looking statements involve inherent risks and uncertainties, both general and
specific, and actual results could be materially different from those expressed or implied by
forward-looking statements.
Words such as "believes," "anticipates," "expects," "intends" and "plans" and similar
expressions are intended to identify forward-looking statements but are not the exclusive means of
identifying such statements. Forward statements herein may include, without limitation, statements
relating to the Company's expectations, plans, objectives or goals relating to (i) its operations
and financial results; (ii) launch schedules and anticipated transponder utilization; (iii) the
technical capabilities of the APSTAR System; (iv) customer demand for the Company's system; (v)
strategic relationships that impact its operations; (vi) its funding needs and sources; (vii)
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satellite communications regulatory matters; (viii) the pricing of its services, (ix) its
competitors and their services; and (x) actions of the Company's suppliers, vendors and service
providers.
The Company cautions you that a number of important factors could cause the Company's results
of operations to differ materially from the plans, objectives, expectations, estimates and
intentions expressed in such forward-looking statements. These factors include, but are not
limited to: (i) technological risks related to the development, operation and maintenance of
various components of the APSTAR System; (ii) delays and cost overruns related to the construction,
deployment and maintenance of the Company's APSTAR System; (iii) risks related to the operation and
maintenance of the Company's new satellites, APSTAR V and APSTAR VI; (iv) competition from other
satellite operators and a number of existing satellite systems that provide similar services in
various markets; (v) actions taken by regulators with respect to the Company's business and
practices in one or more of the countries in which the Company conducts its operations; (vi) the
Company's capital structure and its ability to maintain sufficient liquidity and access capital
markets; (vii) customer demand for the services of the Company's satellite transponders and the
perceived overall value of these services by customers; (viii) the ability to increase market share
and control expenses; (ix) the ability of counterparties to meet their obligations to the Company;
(x) the possibility of foreign exchange controls, expropriation, nationalization or confiscation of
assets in countries in which the Company conducts its operations; (xi) the effects of changes in
laws, regulations or accounting policies or practices; (xii) the ability to retain and recruit
qualified personnel; (xiii) the strength of the
global economy in general and the strength of the economies of the countries in which the
Company conducts its operations in particular; (xiv) political and social developments, including
war, civil unrest or terrorist activity; and (xv) the Company's success at managing the risks
involved in the foregoing.
The Company cautions you that the foregoing list of important factors is not exclusive. When
evaluating forward-looking statements, you should carefully consider the foregoing factors as well
as the risks identified herein and the Company's reports on Form 6-K furnished to the US Securities
and Exchange Commission. These and other factors could result in the forward-looking statements
proving to be inaccurate and may materially affect the Company's operations. The Company does not
undertake any obligation to publicly release any revisions to the forward-looking statements
contained in this report, or to update them to reflect events or circumstances occurring after the
date of this report, or to reflect the occurrence of unanticipated events.
Other
Exchange Rates
Substantially all of APT's historical revenues from transponder capacity utilization, premiums
for satellite launch and in-orbit insurance coverage, debt service and capital expenditures have
been denominated in US Dollars. The remaining revenues and expenses have been primarily
denominated in Hong Kong Dollars, which are fully convertible into US Dollars, and the exchange
rates for that currency against the US Dollar have been pegged since 1983. As the exchange rate
between the Hong Kong Dollar and the US Dollar has been pegged, the Company does not engage in or
plan to engage in hedging activities to offset risks of exchange rate fluctuations. There can be
no assurance that the exchange rates will remain stabilized in the future. See "Exchange Rate
Information." On December 31, 2005, all of the Company's material contracts and obligations were
denominated in US Dollars.
Inflation
Inflation has not materially affected the Company's operations during its operating history.
Taxation
The Company's loss for the years ended December 31, 2003, 2004 and 2005, which are deemed to
be Hong Kong-sourced are subject to Hong Kong profits tax, was levied at the rate of 17.5%, 17.5%
and 17.5%, respectively. Offshore interest income and capital gains derived by the Company is not
subject to Hong Kong profits tax.
The overseas withholding tax is currently charged at the rate of 10% on transponder
utilization income in 2003, 2004 and 2005, respectively.
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Subsidiaries of the Company in the PRC are currently subject to PRC income tax and
charged at the rates of 15% and 33% in Shenzhen and Beijing, respectively, during each of 2003,
2004 and 2005.
US GAAP Reconciliation
The Company's financial statements are prepared in accordance with Hong Kong GAAP, which
differ in certain significant respects from US GAAP. The differences impacting the Company are
presented in Note 28 to the Audited Consolidated Financial Statements of the Company.
Item 6. Directors, Senior Management and Employees
A majority of the Company's current executive officers were originally seconded from
affiliates of the Principal Shareholders, principally affiliates of ChinaSat, SingaSat and China
Aerospace. A majority of APT's technical and engineering staff employed at the Satellite Control
Center in Tai Po were seconded from affiliates of ChinaSat, and China Aerospace and became
employees of the Company.
The directors and executive officers of APT Holdings are set forth below.
Date First
Elected or
Name
Age
Position
Appointed
Executive Directors
Ni Yifeng
58
Director and President (appointed on July 16,
2005)
2005
Tong Xudong
42
Director and Vice President (appointed on March
29, 2004 and April 20, 2004 respectively)
2004
Chen Zhaobin
50
Director and President (Resigned on July 16, 2005)
2001
Non-executive Directors
Liu Ji Yuan
72
Chairman
1998
Zhang Hainan
61
Deputy Chairman
2004
Lim Toon
63
Director
1993
Wu Zhen Mu
60
Director
1998
Yin Yen-liang
55
Director
2003
Ho Siaw Hong
57
Director (appointed on March 27, 2006)
2006
Tseng Ta-mon
48
Alternate Director to Yin Yen-liang (appointed
September 8, 2004)
2003
Kwok Kah Wai Victor
50
Alternate Director to Lim Toon and Lim Wee Seng
(resigned on March 27, 2006)
2004
Lim Wee Seng
52
Director (resigned on August 16, 2005)
2004
Lan Kwai-chu
42
Director (appointed in August 2005 and resigned
on March 27, 2006)
2005
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Date First
Elected or
Name
Age
Position
Appointed
Independent
Non-executive directors
Yuen Pak Yiu, Philip
70
Director
1996
Huan Guocang
56
Director
2002
Lui King Man
51
Director
2004
Executive Officers
Dong Gang
52
Vice President (appointed in July 2005)
2005
Lo Kin Hang, Brian
49
Vice President & Company Secretary
2002/1996
Chen Xun
35
Assistant President
2004
Yang Qing
42
Assistant President
2004
Cui Xinzheng
52
Vice President (resigned on July 31, 2005)
2001
Executive Directors
Mr. NI Yifeng
, aged 58, was appointed as the Executive Director and President of the Company
in July 2005. He is responsible for the overall management of the Company. He is also the Director
of APT Satellite Company Limited, APT Satellite Investment Company Limited, Acme Star Investment
Limited, APT Satellite Telewell Limited, APT Satellite Vision Limited, APT Satellite TV Development
Limited, Skywork Corporation, APT Telecom Services Limited, Ying Fai Realty (China) Limited, APT
Satellite Global Company Limited, APT Satellite Enterprise Limited and APT Satellite Link Limited,
subsidiaries of the Company. He is also the Chairman of the board of directors of APT Satellite
Telecommunications Limited, a jointly controlled entity between a wholly-owned subsidiary of the
Company and one of the shareholders of APT Satellite International Company Limited ("APT
International"), the substantial shareholder of the Company. Mr. Ni is also the Director of APT
International. Mr. Ni graduated from the Research Institute of Chinese Academy of Social Science
and obtained a MBA degree from the Chinese University of Hong Kong and accredited as Senior
Accountant in China. He is currently Vice President of China Satellite Communications Corporation,
which is the holding company of one of the shareholders of APT International, the substantial
shareholder of the Company. He also is the Chairman of a listed company in Shanghai, China, namely
Chinasatcom Guomai Communications Co. Ltd. He held the posts of Deputy Director of Planning
Department, Deputy Director of Finance Department, and Deputy Director General of
Directorate-General of Telecommunications of Ministry of Post and Telecommunications (presently
known as Ministry of Information Industry). He was also President and Vice Chairman of Guoxin
Paging Company Limited and Deputy General Manager of China Telecommunications Broadcast Satellite
Corporation, which is one of the shareholders of APT International. Mr. Ni has over 30 years'
experience in post and telecommunication fields and abundant experience in corporate management.
Mr. TONG Xudong
, aged 42, was appointed as the Executive Director and Vice President of the
Company in March and April 2004, respectively. Mr. Tong is also the member of the Nomination
Committee and the Remuneration Committee of the Company. Mr. Tong is also the Director of APT
Satellite Company Limited, APT Satellite Investment Company Limited, APT Satellite Vision Limited,
APT Satellite TV Development Limited, APT Satellite Global Company Limited, APT Satellite
Enterprise Limited, APT Satellite Link Limited, APT Communication Technology Development (Shenzhen)
Company Limited, CTIA Vsat Network Limited and Beijing Asia Pacific East Communication Network
Limited ("BAPECN Limited"), subsidiaries of the Company. He is also the chairman of BAPECN Limited.
He is also the Director of APT Satellite International Company Limited, the substantial shareholder
of the Company. Mr. Tong graduated from Nanjing Aeronautic Institute in 1985 and obtained a master
degree from Beijing Institute of Space Mechanics and Electricity, Chinese Academy of Space
Technology in 1988. Immediately after his graduation, he served for the Beijing Institute of Space
Mechanics and Electricity. In 1993, he further pursued his studies in Samara University of
Aeronautics and Astronautics, Russia. From May 1995
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to June 2000, he served as the Vice-Director of
Beijing Institute of Space
Mechanics and Electricity and was appointed as professor in 1998. From June 2000 to December
2003, he was the Director of the same Institute. In 2003, he was appointed as the Vice-President of
Chinese Academy of Space Technology. Mr. Tong is a standing committee member of Chinese Society of
Space Research and Chairman of the Committee of Recovery and Reentry, Chinese Society of
Astronautics.
Mr. CHEN Zhaobin
, aged 50, was appointed as the Executive Director and President of the
Company in February 2001. He was responsible for the overall management of the Company. He
graduated with a Bachelor's Degree in Engineering from the Beijing University of Posts and
Telecommunications in 1982 and accredited as a Senior Engineer. He held the posts of Deputy General
Manager of China Telecommunications Broadcast Satellite Corporation, one of the shareholders of APT
Satellite International Company Limited, the substantial shareholder of the Company, Vice-Chairman
and President of China Telecom (Hong Kong) Limited (presently known as China Mobile (Hong Kong)
Limited) and China Telecom (Hong Kong) Group Limited, Director and Deputy President of Telpo
Communications (Group) Limited, and the Deputy Director of the Office of Coordination Production of
the Ministry of Posts and Telecommunications of the PRC (presently known as Ministry of Information
Industry). Mr. Chen has many years' of experience in post and telecommunication fields and in
corporate management. Mr. Chen resigned as Executive Director and President of the Company on July
16, 2005.
Non-Executive Directors
Mr. LIU Ji Yuan
, aged 72, was appointed as the Chairman of the Company in June 1998. Mr. Liu
is also the Director of APT Satellite Company Limited and APT Satellite Investment Company Limited,
subsidiaries of the Company. He is also the Director of APT Satellite International Company
Limited, the substantial shareholder of the Company. Mr. Liu graduated from Bowman Polytechnic
University, Moscow, USSR (presently known as Russia) majoring in automatic and remote control, and
obtained a Master's degree in 1960. After graduation, he was appointed consecutively as a Deputy
Director and Director of the Twelfth Research Institute of the Seventh Ministry of Machinery
Industry, Vice President of the China Academy of Launch Vehicle Technology under the Ministry of
Astronautics and accredited as a Senior Engineer from May 1983 to March 1984, the Vice Minister of
the Ministry of Astronautics and accredited as a Research Fellow from April 1984 to March 1988, and
the Vice Minister of the PRC Ministry of Aerospace Industry (later known as China Aerospace
Corporation) from April 1988 to April 1993. In April 1993, Mr. Liu was appointed as the
Administrator (Ministerial) of China National Space Administration (CNSA), as well as the President
of China Aerospace Corporation. In 1988, Mr. Liu was granted the award of National Outstanding
Young and Middle-aged Expert in the PRC. In the same year, he was appointed as a visiting professor
of Harbin Institute of Technology, Beijing University of Aeronautics and Astronautics, and Beijing
Information Control Institute. After 1993, Mr. Liu was also appointed as the President of the
Chinese Society of Astronautics, Member of International Academy of Astronautics, President
(third-term) of China Automatic Measurement and Control Association, and Honorary Chairman of China
Aerospace Industrial and Entrepreneurial Management Association.
Mr. ZHANG Hainan
, aged 61, was appointed as the Non-Executive Director and Deputy Chairman of
the Company in March 2004. Mr. Zhang is also the Director of APT Satellite Company Limited and APT
Satellite Investment Company Limited, subsidiaries of the Company. He is also the Director of APT
Satellite International Company Limited, the substantial shareholder of the Company. Mr. Zhang
graduated from the Northwestern Polytechnical University in 1968 and was accredited as a senior
engineer. Since 1984, he has been deputy director of Factory Number 782 and 762, the Ministry of
Electronics Industry of China; deputy head and head of the Bureau of Electronics Industry, Shanxi
Province; deputy head and head of Shanxi Economic and Trade Commission; and assistant to the
governor of the Shanxi Province government, among others. In 2001, he was transferred to China
Satellite Communications Corporation, the holding company of one of the shareholders of APT
Satellite International Company Limited, as deputy general manager and general manager. Mr. Zhang
has many years' experience in government and corporate management.
Mr. LIM Toon
, aged 63, has been a Director of APT Satellite Company Limited since February
1993 and was appointed as the Non-Executive Director of the Company in October 1996. Mr. Lim is
also the Director of APT Satellite Company Limited and APT Satellite Investment Company Limited,
subsidiaries of the Company. He is also the Director of APT Satellite Telecommunications Limited, a
jointly controlled entity between a wholly-owned
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subsidiary of the Company and one of the
shareholders of APT Satellite International Company Limited, the substantial shareholder of the
Company. Mr. Lim is also the Director of APT Satellite International Company
Limited. In 1966, Mr. Lim graduated from the University of Canterbury in New Zealand, with a
first class honours degree in Engineering. In 1975, Mr. Lim obtained a Postgraduate Diploma in
Business Administration from the University of Singapore. He attended the Advanced Management
Programme at Harvard Business School in 1992. He has been the Chief Operating Officer of SingTel,
the holding company of one of the shareholders of APT Satellite International Company Limited,
since April 1999 and has worked for Singapore Telecom since 1970, serving in various appointments
of engineering, radio services, traffic operations, personnel & training and information systems
departments. He was appointed Executive Vice President of Network Services in April 1989 and
Executive Vice President of International Services in April 1994. He was awarded the Efficiency
Medal in 1978 and the Public Administration Medal (Gold) in 1991 by the Singapore government. He is
presently a Director of a number of overseas companies. Mr. Lim has retired from SingTel on
February 26, 2006.
Mr. WU Zhen Mu
, aged 60, was appointed as the Non-Executive Director of the Company in June
1998. Mr. Wu is also the Director of APT Satellite Company Limited and APT Satellite Investment
Company Limited, subsidiaries of the Company. Mr. Wu is also the Director of APT Satellite
International Company Limited, the substantial shareholder of the Company. Mr. Wu graduated in
Manufacturing Engineering of the Beijing Institute of Aeronautics in 1969 and obtained a Master's
degree in Electro-Mechanical Automation in the same institute in 1981. He was a lecturer in
Zhengzhou Institute of Aeronautics from 1970 and 1979 and had been a lecturer, associate Professor
and Professor in Beijing University of Aeronautics and Aerospace from 1982 to 1993. Since then, he
has been appointed as a Professor of the Commission of Science and Technology of China Aerospace
Corporation.
Dr. YIN Yen-liang
, aged 55, was appointed as the Non-Executive Director of the Company in
January 2003. Dr. Yin is also the Director of APT Satellite Company Limited and APT Satellite
Investment Company Limited, subsidiaries of the Company. Dr. Yin is also the Director of APT
Satellite International Company Limited, the substantial shareholder of the Company. Dr. Yin
graduated with an MBA Degree from National Taiwan University in 1983 and received the PhD Degree in
Business Administration from National Chengchi University in 1987. He has been President of the
Ruentex Group, the holding company of one of the shareholders of APT Satellite International
Company Limited, since 1994 and concurrently holding the position of Executive Director of SinoPac
Holdings Co., Ltd., Executive Director of Bank SinoPac, Director of Acer Incorporate, Chairman of
Aetna SinoPac Credit Card Company Limited.
Mr. HO Siaw Hong
, aged 57, was appointed as the Non-Executive Director of the Company on March
27, 2006. He had been an Alternate Director to Mr. Wong Hung Khim and Mr. Lim Toon, the
non-executive director of the Company, from October 1996 to July 1999. Mr. Ho is also the Director
of APT Satellite Company Limited and APT Satellite Investment Company Limited, subsidiaries of the
Company. He is also the Director of APT Satellite Telecommunications Limited, a jointly controlled
entity between a wholly owned subsidiary of the Company and a shareholder of APT Satellite
International Company Limited ("APT International"), the substantial shareholder of the Company.
Mr. Ho is also the Director of APT International. Mr. Ho joined Singapore Telecommunications
Limited ("SingTel"), the holding company of one of the shareholders of APT International, the
substantial shareholder of the Company, in August 1972 after graduating from the then University of
Singapore, now known as the National University of Singapore, with a Bachelor of Engineering
(Electrical) degree. He has held managerial positions in areas including planning and operations of
transmission network, radio network, mobile network, telephone exchange equipment, switch software
management, etc. Mr. Ho is currently the Vice President for Fixed Networks Engineering of SingTel
and SingTel Optus Pty Limited ("Optus") responsible for the engineering and planning of the fixed
core networks for both SingTel and Optus. Before this appointment, he was seconded to SingTel's
Joint Venture company in Indonesia, PT Bukaka SingTel International ("BSI") as its President
Director from February 1999 to January 2001. He continued to oversee the operations of BSI upon his
return from Indonesia while concurrently holding the post of Vice President for Network Support in
the Networks directorate. He was also Assistant Vice President for Satellite Services of SingTel
between 1997 and 1999. Mr. Ho is also a board member of the BSI's Board of Commissioner.
Mr. TSENG Ta-mon
, aged 48, was appointed as an Alternate Director to Dr. Yin Yen-liang, the
Non-Executive Director of the Company, on September 8, 2004. He had been the Non-Executive Director
of the Company from July 2003 to September 2004. Mr. Tseng is also the Alternate Director to Dr.
Yin Yen-liang, the director of APT Satellite Company Limited and APT Satellite Investment Company
Limited, subsidiaries of the Company. Mr. Tseng is also the Alternate Director to Dr. Yin
Yen-liang, the
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director of APT Satellite
International Company Limited, a substantial shareholder of the Company. Mr. Tseng graduated
with an LL.B. Degree from National Chengchi University in 1980 and subsequently received the LL.M.
Degree from University College London in 1982 and the LL.B. Degree from B.A. at University of
Cambridge in 1984 respectively. He also graduated from the Inns of Court School of Law of Middle
Temple in 1985 and became Barrister-at-Law in the same year. He was the Specialist of the Board of
International Trade from 1985 to 1987. He was also the Partner of Dong & Lee from 1987 to 1992. He
has been the Counsel of the Ruentex Group, the holding company of one of the shareholders of APT
Satellite International Company Limited, since 1992.
Mr. LIM Wee Seng
, aged 52, was appointed as the Non-Executive Director of the Company on 20
December 2004. Mr. Lim had been an Alternate Director to Mr. Lim Toon and Mr. Tay Chek Khoon, the
non-executive directors of the Company, from September to December in 2004. He also had been an
Alternate Director to Mr. Lim Shyong, the non-executive director of the Company, from September
2003 to September 2004. Mr. Lim graduated from the University of Singapore with a First Class
Honours Degree in Bachelor of Engineering (Electrical and Electronics) in 1979 and subsequently
obtained a Master of Science (Electrical Engineering) Degree in 1985. He has been with Singapore
Telecommunications Limited ("SingTel"), the holding company of one of the shareholders of APT
Satellite International Company Limited, since 1979 and has held management positions in various
areas including engineering, radio services, network, carrier wholesale business and strategic
investment. From 1998 to 2000, he was the Managing Director of SingTel's subsidiary company in UK,
responsible for the setting up and running of SingTel's voice and data business in Europe. He was
also a member of the Singapore ST-1 satellite planning team in 1991 to 1993. Mr. Lim is currently
Director of Strategic Investment in SingTel and is responsible for mergers, acquisitions and
monitoring of SingTel's joint venture companies. Mr. Lim resigned as the Non-Executive Director of
the Company on August 16, 2005.
Ms. LAN Kwai-chu
, aged 42, was appointed as the Non-Executive Director of the Company in
August 2005. Ms. Lan is currently the head of the Mergers & Acquisition Unit of Singapore
Telecommunications Limited ("SingTel"), the holding company of one of the shareholders of APT
Satellite International Company Limited, the substantial shareholder of the Company. Ms. Lan's
experience includes corporate planning and strategy, and management of SingTel's sales and
representative offices around the world. Ms. Lan holds a Bachelor of Economics and a Master in
Business Administration. Ms. Lan is also a Chartered Accountant. Ms. Lan resigned as the
Non-Executive Director of the Company on March 27, 2006.
Mr. KWOK Kah Wai Victor
, aged 50, was appointed as an Alternate Director to Mr. Lim Toon and
Ms. Lan Kwai-chu, Non-Executive Directors of the Company, in December 2004 and August 2005,
respectively. Mr. Kwok had been the Alternate Director to Mr. Lim Wee Seng, Non-Executive Director
of the Company, from December 2004 to August 2005. He had also been the Vice President of the
Company from March 2001 to June 2004 responsible for Marketing and Sales division of the Company.
Prior to joining the Company, Mr. Kwok was the Managing Director of Global Services Development in
Singapore Telecommunications Limited ("SingTel"), the holding company of one of the shareholders of
APT Satellite International Company Limited, the substantial shareholder of the Company. Mr. Kwok
has been with SingTel for the last twenty years and has held management positions in Corporate
Product Marketing and Corporate Account Management. Mr. Kwok is currently the Director of
Partnership and Strategic Planning of Corporate Business Marketing of SingTel. Mr. Kwok graduated
from National University of Singapore with an Honors Degree in Electrical Engineering and an MBA
degree in 1981 and 1987, respectively. Mr. Kwok also attended the Harvard Business School's
International Senior Management Program in May, 1993. Mr. Kwok resigned as the Alternate Director
to Mr. Lim Toon and Ms. Lan Kwai-chu, the Non-Executive Directors of the Company, on March 27,
2006.
Independent Non-Executive Directors
Mr. YUEN Pak Yiu, Philip
, aged 70, was appointed as an Independent Non-executive Director of
the Company in October 1996. Mr. Yuen is the Chairman of the Audit Committee and the Nomination
Committee of the Company and also is the member of the Remuneration Committee of the Company. He
graduated from Law School in England in 1961 and commenced the practice of law in Hong Kong in
1962. In 1965, he established his solicitors' firm, Yung, Yu, Yuen & Co., and now is the principal
partner in the firm. Mr. Yuen has over 30 years' experience in
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the legal field and has been a
Director of a number of listed companies including Henderson Investment Limited, Henderson China
Holdings Limited and Melbourne Enterprises Limited. He is a member of the China Appointed Attesting
Officers Association in Hong Kong, a Member of the National Committee of
Chinese Peoples' Political Consultative Conference and an Arbitrator at the China
International Economic & Trade Arbitration Commission.
Dr. HUAN Guocang
, aged 56, was appointed as an Independent Non-executive Director of the
Company in August 2002. Dr. Huan is the member of the Audit Committee, the Nomination Committee and
the Remuneration Committee of the Company. He is the Managing Partner of Primus Pacific Partners
Limited ("Primus"). Before joining Primus, he was the Head of Investment Banking, Asia Pacific of
The Hongkong and Shanghai Banking Corporation Limited and was the Managing Director and Co-Head of
Investment Banking, Asia Pacific of Salomon Smith Barney. Dr. Huan has been joining investment
banking sector since 1987 and has held senior positions at the Brookings Institution, the Atlantic
Council of the U.S., J.P. Morgan & Co., BZW Asia Limited, and Columbia University. Dr. Huan holds a
Ph.D. degree from Princeton University, Master of Arts from Columbia University and Master of Arts
from the University of Denver.
Dr. LUI King Man
, aged 51, was appointed as an Independent Non-Executive Director of the
Company in August 2004. Dr. Lui is the Chairman of the Remuneration Committee of the Company and
also is the member of the Audit Committee and the Nomination Committee of the Company. Dr. Lui has
been a practising Certified Public Accountant in Hong Kong since 1989, and established his
accounting firm K.M. LUI & CO in the same year. Before commencing his own practising, Dr. Lui had
worked with an international accounting firm and a listed commercial bank. Dr. Lui received the
accountancy education in United Kingdom in 1980 and attained professional accountant qualification
in 1985. He is a Fellow of The Chartered Association Of Certified Accountants and Associate member
of The Hong Kong Society Of Accountants. Dr. Lui obtained an MBA Degree from Heriot-Watt University
in 1997 and received a Doctoral Degree in Business Administration from The University of Hull in
2004. Dr. Lui has over 23 years experience in accounting, finance, business acquisition and
auditing fields. He has been a consultant of a number of commercial and non-commercial
organizations.
Senior Management
Mr. Dong Gang
, aged 52, has been the Vice President of the Company since July 2005. He is also
the Director of Acme Star Investment Limited, APT Satellite Telewell Limited, Skywork Corporation,
Haslett Investments Limited, APT Telecom Services Limited and APT Communication Technology
Development (Shenzhen) Company Limited ("APT Shenzhen"), subsidiaries of the Company. He is also
the chairman and the general manager of APT Shenzhen. He is also the Director of APT Satellite
Telecommunications Limited, a jointly controlled entity between a wholly-owned subsidiary of the
Company and one of the shareholders of APT Satellite International Company Limited, the substantial
shareholder of the Company. Mr. Dong graduated with a Bachelor's degree in Beijing Post and
Telecommunications Institute (presently known as Beijing University of Post and
Telecommunications). He is accredited as Senior Engineer. He held the posts as Deputy Director of
Microwave Station, Deputy Director of Technical Department, Vice Chief Engineer, and Chief Engineer
of Beijing Wireless communication Bureau. He has been appointed as Vice President of China Space
Mobile Satellite Telecommunications Company Limited since May 1995. He has plentiful experience in
telecommunication operation and management.
Dr. LO Kin Hang, Brian
, aged 49, has been the Vice President of the Group since April 2002 and
Company Secretary (since October 1996) of the Company. Dr. Lo joined the Company in September 1996
and had been the Assistant to the President from December 1997 to April 2002. Dr. Lo is also the
Director of Acme Star Investment Limited, APT Satellite Telewell Limited and Ying Fai Realty
(China) Limited, subsidiaries of the Company. He is also the Chief Executive Officer of APT
Satellite Telecommunications Limited, a jointly controlled entity between a wholly-owned subsidiary
of the Company and one of the shareholders of APT Satellite International Company Limited, the
substantial shareholder of the Company. He graduated with an Associateship in Production and
Industrial Engineering and an M.Sc. Degree in Information Technology from Hong Kong Polytechnic
University, and a MBA Degree from the University of Wales, UK and a Doctorate Degree in Business
Administration in University of Hull, UK. He has attained several professional qualifications
including Chartered Engineer, Member of the Institute of Electrical Engineers and is a Fellow of
the Institute of Chartered Secretaries and Administrators in the United Kingdom and a Fellow of the
Hong Kong Institute of Company Secretaries. Prior to joining the Group, he
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was a Director and
senior management executive responsible for financial and investment management and the company
secretary of a publicly listed company in Hong Kong. Dr. Lo has about 18 years of experience in
corporate and project management.
Mr. CHEN Xun
, aged 35, has been the Assistant President of the Company since July 2004. He
joined the Company in 2000 and had worked as the Director of Engineering and Technical Operations
Department and the Deputy Chief Engineer of the Group. Mr. Chen graduated from the Department of
Computer and Telecommunications of Chongqing Institute of Post & Telecommunications. He had been
working for China Telecommunications Broadcast Satellite Corporation, one of the shareholders of
APT Satellite International Company Limited, the substantial shareholder of the Company, from 1992
to 1999 before joining the Group.
Mr. YANG Qing
, aged 42, has been the Assistant President of the Company since July 2004. He
joined the Company in 2000. He had worked as the Deputy Director of the Engineering and Technical
Operations Department of the Group. Mr. Yang graduated from the Department of Flight Vehicle
Engineering of Beijing Institute of Technology in June 1985. During the period from July 1985 to
December 1999, he had been working for CALT (China Academy of Launch Vehicle Technology) and was
designated as Senior Engineer and the Deputy Director of systems designer of LM-2C launch vehicle
by CALT before joining the Group.
Mr. CUI Xinzheng
, aged 52, was appointed as the Executive Director and Vice President of the
Company in February 2001. He had served as the Director of General Office, Deputy Director of China
Telecommunications Broadcast Satellite Corporation, one of the shareholders of APT Satellite
International Company Limited, the substantial shareholder of the Company; the Deputy Director of
Research Division of Beijing Micro-Electronics Technology Institute. He graduated from Graduate
School of Chinese of Social Sciences Academy. He has 30-year experience in economics management and
has much experience of the operation of satellite telecommunication. Mr. Cui resigned as the
Executive Director and Vice President of the Company on 8 September 2004 and 31 July 2005,
respectively.
Compensation
In the annual general meeting of the Company held on May 22, 2001, a resolution was adopted,
terminating the Share Option Scheme which was originally adopted on December 3, 1996 ("Scheme
1996"). No options have been granted under Scheme 1996. At the same annual general meeting, the
Company approved and adopted a new share option scheme ("Scheme 2001"). In compliance with the new
requirements of the Listing Rules in September 2001, the Company adopted another new share option
scheme ("Scheme 2002") at its 2002 annual general shareholders meeting, and the Company will only
grant new options under Scheme 2002. Since then, no further options have been granted under Scheme
2001, however, all the options that have been granted under Scheme 2001 shall remain valid until
their expiry.
Under Scheme 2001, on June 19, 2001, the Company granted a total of 14,650,000 share options,
exercisable within the period from May 22, 2003 to May 21, 2011 and all at an exercise price of
HK$2.765. The grantees paid a nominal consideration of HK$1 each. No options have been granted
under Scheme 2002 since its adoption. Since the adoption of Scheme 2002, no options have been
granted under Scheme 2001, nor does the Company plan to grant any more options under such plan. As
at December 31, 2005, the total number of outstanding options under the existing share option
schemes (including Scheme 2001 and Scheme 2002) that have been granted and not yet exercised equals
4,230,000, which represents 1.03% of the issued share capital of the Company. Furthermore, under
Scheme 2002, save for a substantial shareholder or an independent non-executive director of the
Company, or any of their respective associates according to the Listing Rules, the total number of
ordinary shares (the "Shares") to be issued upon exercise of the options granted to each eligible
person (including both exercised and outstanding options) in any 12-month period may not exceed 1%
of the Shares in issue. The exercise price (subscription price) must be determined by the Board of
directors at the time of the making of the option grant, but in any case the exercise price cannot
be lower than the highest of (i) the closing price of the Shares as stated in The Stock Exchange of
Hong Kong Limited's ("Stock Exchange") daily quotations sheet on the date of the grant, which must
be a trading day; (ii) the average closing price of the Shares as stated in the Stock Exchange's
daily quotations sheets for the five trading days immediately preceding the date of the offer of
grant; and (iii) the nominal value of a Share. Whereas under Scheme 2001, the maximum entitlement
of each eligible person was that the Shares issued or
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issuable under all options granted to such
eligible person (including both exercised and outstanding options) upon such grant being made may
not exceed 25% of the Shares of the Company for the time being issued and issuable under Scheme
2001. In addition, the subscription price was determined by the Board of Directors on a
case-by-case basis and will not be less than the nominal value of the Shares nor at a
discount of more than 20% below the average closing price of the Shares on the Stock Exchange
as stated in the Stock Exchange's daily quotation sheets on the five dealing days immediately
preceding the date on which the invitation to apply for an option under Scheme 2001.
In an effort to continue to provide incentives or rewards to the employees of the Company and
in compliance with the new requirements in respect of a share option scheme under the Listing Rules
of the Stock Exchange, which took effect on September 1, 2001, the Company proposed to the
shareholders the adoption of Scheme 2002. Scheme 2002 was approved at the annual general
shareholders meeting. Since its adoption, options are to be granted only Scheme 2002 and no longer
under Scheme 2001. Nevertheless, Scheme 2001 will remain effective and the options granted on June
19, 2001 under Scheme 2001 will remain valid.
Scheme 2002, the details of which were contained in the circular dispatched to the
shareholders of the Company and which was adopted in the annual general meeting on May 22, 2002, is
substantially similar to the Scheme 2001 except for certain significant and important differences,
which are described in the Item 6 of the Company's Annual Report on Form 20-F for the year ended
December 31, 2001 and incorporated therein by reference.
Scheme 2002 will remain in force for a period of 10 years commencing from May 22, 2002 until
May 21, 2012. The shares allotted upon the exercise of options under Scheme 2002 will be subject to
all the provisions of the Bye-laws of the Company and will rank pari passu in all respects with all
the fully paid shares in issue.
The particulars of the outstanding share options granted under Scheme 2001 are as
follows:
Options granted
on June 19, 2001
Options remain
and remain
outstanding as at
Name of director and
outstanding as at
Options cancelled
Options exercised
December 31,
chief executive
January 1, 2005
during the year
during the year
2005
Chen Zhaobin
(Executive Director
and President) *
2,200,000
2,200,000
—
—
Cui Xinzheng
(Vice President)**
1,200,000
1,200,000
—
—
Lo Kin Hang, Brian
(Vice President and
Company Secretary
800,000
—
—
800,000
*
resigned on July 16, 2005,
**
resigned on July 31, 2005
None of the Company's directors and officers or affiliates of such persons is or has been
indebted to the Company or any of its subsidiaries at any time since the beginning of the last
completed fiscal year.
Director' remuneration disclosed pursuant to section 161 of the Hong Kong Companies
Ordinance is as follows:
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Salaries,
allowances
Retirement
Directors'
and benefits
scheme
2005
fees
in kind
contributions
Total
HK$'000
HK$'000
HK$'000
HK$'000
Executive directors
Ni Yifeng
23
1,427
76
1,526
Tong Xudong
50
2,316
142
2,508
Chen Zhaobin
27
2,595
49
2,671
Non-executive directors
Liu Ji Yuan
50
—
—
50
Zhang Hainan
50
—
—
50
Lim Toon
50
—
—
50
Lan Kwai-chu
19
—
—
19
Yin Yen-liang
50
—
—
50
Wu Zhen Mu
50
—
—
50
Lim Wee Seng (note b)
31
—
—
31
Tseng Ta-mon (note c)
—
—
—
—
Kwok Kah Wai Victor (note a)
—
—
—
—
Independent non-executive directors
Yuen Pak Yiu, Philip
100
—
—
100
Huan Guocang
100
—
—
100
Lui King Man
100
—
—
100
700
6,338
267
7,305
Salaries,
allowances
Retirement
Directors'
and benefits
scheme
2004
Fees
in kind
contributions
Total
HK$'000
HK$'000
HK$'000
HK$'000
Executive directors
Chen Zhaobin
50
2,909
93
3,052
Tong Xudong
38
1,629
51
1,718
He Dongfeng
12
633
20
665
Cui Xinzheng
35
1,618
51
1,704
Non-executive directors
Liu Ji Yuan
50
—
—
50
Zhang Hainan
38
—
—
38
Zhou Ze He
12
—
—
12
Lim Toon
50
—
—
50
Yin Yen-liang
50
—
—
50
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Salaries,
allowances
Retirement
Directors'
and benefits
scheme
2004
Fees
in kind
contributions
Total
HK$'000
HK$'000
HK$'000
HK$'000
Wu Zhen Mu
50
—
—
50
Wu Hongju
—
—
—
—
Wu Jinfeng
34
—
—
34
Wong Hung Khim
34
—
—
34
Lim Shyong
34
—
—
34
Tseng Ta-mon (note c)
34
—
—
34
Lim Wee Seng (note b)
2
—
—
2
Tay Chek Khoon
48
—
—
48
Chen Chi-chuan (note a)
—
—
—
—
Kwok Kah Wai Victor (note a)
—
—
—
—
Independent non-executive directors
Yuen Pak Yiu, Philip
100
—
—
100
Huan Guocang
—
—
—
—
Lui King Man
37
—
—
37
708
6,789
215
7,712
Mr. Wu Hongju, a non-executive director, and Dr. Huan Guocang, an independent non-executive
director, have waived their directors' fees for the year 2004. Save as afore-mentioned, none of
the directors have waived the rights to receive their remuneration.
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Notes:
Alternate directors are not entitled to receive any directors' fees:
(a)
Mr. Chen Chi-chuan and Mr. Kwok Kah Wai Victor were alternate directors.
(b)
Mr. Lim Wee Seng was re-designated from alternate director to non-executive director
on December 20, 2004.
(c)
Mr. Tseng Ta-mon was re-designated from non-executive director to alternate director
on September 8, 2004.
Key management personnel remuneration
Remuneration for key management personnel is as follows:
2004
2005
HK$ million
HK$ million
Short-term employee benefits
11.3
13.3
Other long-term benefits
0.5
0.7
Termination benefits
1.7
—
13.5
14.0
The provision for employee benefits was accrued at December 31, 2004 and 2005 are HK$4.5
million (US$577 thousand) and HK$6.3 million (US$808 thousand) respectively.
Board Practices
Mr. Ni Yifeng and Mr. Tong Xudong have entered into service contracts with the Company for an
initial term of three years, commencing July 16, 2005 and April 20, 2004, respectively, and
continuing thereafter until terminated by either party giving to the other not less than six
months' notice.
Except as disclosed above, no Director has a service contract with the Company or its
subsidiaries, which is not determinable by APT Group within one year without payment of
compensation (other than statutory compensation).
The term of office of all directors except the Chairman of the Board, Mr. Liu Ji Yuan, and the
President, Mr. Ni Yifeng, is the period up to their retirement in accordance with Article 86(2) and
87 of the Company's Bye-laws.
The Audit Committee was formed by the Company on July 31, 1999. The Audit Committee currently
consists of three non-executive directors, Mr. Yuen Pak Yiu, Philip (the Chairman of the Audit
Committee), Mr. Huan Guocang and Dr. Lui King Man. The Board of Directors has determined that each
of the members of the Audit Committee is currently independent under the rules of the New York
Stock Exchange.
Under its Charter (also known as terms of reference) as revised on April 11, 2005 and
incorporated herein by reference, the Audit Committee is required to be composed of directors who
are independent of the management of the Company and are free of any relationship that, in the
opinion of the Company's Board of Directors, would interfere with their exercise of independent
judgment as Committee members. The Audit Committee is authorized by the Board of Directors to
investigate any activity within its terms of reference and to seek any information it requires from
any employee and all employees are directed to co-operate with any request made by the Audit
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Committee. It can also obtain support from outside legal or other independent professional
advisors and experts. The Audit Committee meets at least twice a year and its duties are
summarized as below:
—
to be primarily responsible for making recommendation to the Board of Directors on
the appointment, reappointment and removal of the external auditor, and to approve the
remuneration and terms of engagement of the external auditor;
—
to monitor integrity of and review significant financial reporting judgments of
the half-year and annual financial statements;
—
to discuss problems and reservations arising from the interim and final audits;
—
to consider the major findings and internal investigations and management's
response;
—
to review the Company's statement on financial controls, internal control system
and risk management systems (where one is included in the annual report) prior to
endorsement by the Board of Directors;
—
to review and monitor the external auditors' independence and objectivity and
effectiveness of the audit process in accordance with applicable standard, as well as
the nature and scope of other professional services provided to the Company by the
external auditor;
—
to review APT Group's financial and accounting policies and practices;
—
to review periodically Company policy statements to determine their adherence to
the Company's codes of conduct;
—
to investigate any matter brought to its attention within the scope of its duties,
and to retain outside legal counsel or other professional advice for this purpose if,
in its judgment, that is appropriate; and
—
to consider other topics, as determined by the Board of Directors.
On April 11, 2005, Nomination Committee and Remuneration Committee were formed. Messrs. Tong
Xudong, Yuen Pak Yiu, Philip, Huan Guocang and Lui King Man were appointed as the members of these
two new committees. Mr. Yuen Pak Yiu, Philip and Dr. Lui King Man, the independent non-executive
directors of the Company, were appointed as the Chairman of the Nomination Committee and the
Remuneration Committee, respectively.
The Nomination Committee, under its Charter (also known as terms of reference) as incorporated
herein by reference and pursuant to the domestic corporate governance requirements, is required to
be composed of a majority of members who should be independent non-executive directors and are
independent of the management of the Company and are free of any relationship that, in the opinion
of the Company's Board of Directors, would interfere with their exercise of independent judgment as
Committee members. The Nomination Committee is authorized by the Board of Directors to provide
recommendations in respect of the composition of the Board of Directors, the appointments of
Directors and the independence of independent non-executive directors. It shall also be entitled
to access external professional advice whenever necessary. The Nomination Committee meets at least
once a year and its responsibilities are summarized as below:
—
to review the structure, size and composition of the Board of Directors;
—
to identify individuals suitably qualified to become directors;
—
to assess the independence of Independent Non-executive directors;
—
to make recommendations to the Board of Directors on matters relating to the
appointment or re-appointments of directors and succession planning for directors in
particular the Chairman and the President;
—
to establish the nomination procedures; and
—
to submit a work report to the Board of Directors yearly.
The Remuneration Committee, under its Charter (also known as terms of reference) as
incorporated herein by reference and pursuant to the domestic corporate governance requirements,
the Remuneration Committee is required to be composed of a majority of members who should be
independent non-executive directors and are independent of the management of the Company and are
free of any relationship that, in the opinion of the Company's Board of Directors, would interfere
with their exercise of independent judgment as Committee members. The Remuneration Committee is
authorized by the Board of Directors for providing recommendations in respect of the remuneration
of directors and senior management staff and related policies. It shall also be entitled to access
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external professional advice whenever necessary. The Remuneration Committee meets at least once a
year and its responsibilities are summarized as below:
—
to make recommendations to the Board on policy and structure for all
remuneration of directors and senior management and on the establishment of a formal
procedure for developing remuneration policy;
—
to determine the specific remuneration packages of all directors and senior
management, including benefits in kind, pension rights and compensation payments;
—
to review and approve the performance-based remuneration by reference to
corporate goals and objectives resolved by the Board of Directors;
—
to review and approve the compensation payable to directors and senior management;
—
to review and approve compensation arrangements relating to dismissal or removal of directors;
—
to ensure that no director or any of his/her associates is involved in deciding his own remuneration;
—
to formulate and review regularly the policy for the remuneration of directors,
assessing directors' performance and approving the terms of directors' service
contracts; and
—
to submit a work report to the Board of Directors yearly.
Employees
Including the executive directors and senior management of the Company, as of December 31,
2005, the Company had 161 full-time employees, of which 26 employees were in management, 135 were
in engineering and operations, marketing, accounting and administration. The management of the
Company will continue to closely monitor the number of employees ensuring that it is compatible and
in line with the development and needs in the corporate strategies of the APT Group. The Company
believes that its relations with its employees are good. A majority of APT's technical and
engineering staff employed at the satellite control center in Tai Po were originally seconded from
affiliates of ChinaSat and China Aerospace.
In December 2000, the Company changed its retirement benefits scheme to a Mandatory Provident
Fund ("MPF") pursuant to the MPF Legislation regulated by the Mandatory Provident Fund Schemes
Authority in Hong Kong, effective December 1, 2000. In compliance with the MPF Legislation, the
Company is required to participate in the MPF Scheme operated by approved trustees in Hong Kong and
to make contributions for its eligible employees.
Share Option Schemes
On May 22, 2002, the Company adopted Scheme 2002 and, from the date of such adoption, no
further options are to be granted under Scheme 2001. Under Scheme 2001, on June 19, 2001, a total
of 14,650,000 share options granted by the Company to the eligible employees, which are exercisable
during the vesting period from May 22, 2003 to May 21, 2011. During 2005, no options were granted
under Scheme 2002.
Share Ownership
As at December 31, 2005, Dr. Lo Kin Hang, Brian, Vice President and Company Secretary of the
Company had personal interests in 5,000 ordinary shares of the Company.
As at December 31, 2005, the options granted under Scheme 2001 to directors and chief
executive were as follows:
Lo Kin Hang, Brian                (Vice President & Company Secretary)                800,000
All of the options indicated above, exercisable within the period from May 22, 2003 to May 21,
2011, were granted for a nominal consideration of HK$1 per grantee with an exercise price of
HK$2.765 per share for the ordinary shares of the Company. The options granted to Chen Zhaobin and
Cui Xinzheng were cancelled on July 16, 2005 upon their resignations as Executive Director &
President and Vice President, respectively.
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On June 19, 2001, under Scheme 2001, the Company granted a total of 14,650,000 options to its
employees in order to provide incentives to employees for their contribution to APT Group. The
terms such as the exercise price and the expiration date of options are the same as the terms of
the options granted to directors and senior management indicated above.
Service Agreements
Mr. Ni Yifeng and Mr. Tong Xudong entered into service contracts with the Company for an
initial term of three years, commencing July 16, 2005 and April 20, 2004, respectively, and
continuing thereafter until terminated by either party giving to the other not less than six
months' notice.
Under the service contracts, Mr. Chen and Mr. Tong (the "Contracted Directors") are each
entitled to a basic salary payable monthly in arrears by the Company, with such basic salary
subject to annual review by the Company's board of directors. In addition, Mr. Chen is entitled to
receive an annual discretionary bonus of such amount as determined by the board of directors,
provided that the amount of discretionary bonus payable that the Contracted Directors by the
Company in respect of any financial year shall not exceed an agreed percentage of the audited
consolidated net income after taxation and minority interests but before extraordinary items of the
Company for the relevant financial year. Each of the Contracted Directors is provided with housing
allowance subject to an agreed maximum amount, which maximum amount may be revised from time to
time by the board of directors. Each of the Contracted Directors is also entitled to receive
certain other benefits such as the use a motor car, the provision of recreation club memberships
and medical and personal accident insurance, and participation in the Company's retirement scheme
and any share option scheme for its employees.
Other than the directors of the Company, the service contracts of senior executives have no
definite terms of office, and may be terminated by either party giving not less than 4 months' to 6
months' notice or payment in lieu of notice. Under the service contracts, each of the executives
is entitled to a basic salary together with a housing allowance payable monthly in arrears by the
Company and one month double pay at the end of the calendar year, with such basic salary subject to
annual review by the Company. In addition, each of the executives is entitled to a discretionary
annual bonus based upon the Company's performance. Each of the executives is also entitled to
receive certain other benefits such as the provision of medical and personal accident insurance and
participation in the Company's retirement scheme and any share option scheme for its employees.
Item 7. Major Shareholders and Related Party Transactions
Major Shareholders
Certain principal shareholders of the Company ("Principal Shareholders") have provided
substantial financial support since APT was founded, funding the design, construction and launch of
APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V and APSTAR VI through equity contributions,
shareholders' loans and shareholder guarantees of the Bank loan used to finance or refinance the
costs of satellite design, construction and launch. The Principal Shareholders have also provided
significant human resources, technical and marketing support. When the Company was listed in
December 1996, the Principal Shareholders of the Company were: CLTC, ChinaSat, China Aerospace,
CASIL Satellite (formerly known as Chia Tai International Company Limited), China Travel (Macau),
SingaSat, and Kwang Hua. Each Principal Shareholder held one-seventh of the total issued shares of
APT International pursuant to the corporate restructuring undertaken in connection with the
Company's initial public offering in December 1996. The entire issued share capital of APT
International comprises 700 shares at US$1.00 each. China Travel (Macau) and CLTC disposed their
entire interest in APT International to ChinaSat on November 30, 1999, and SingaSat on May 30,
2000. The remaining Principal Shareholders that continue to hold Ordinary Shares are tabulated in
footnote 2 to the following table.
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The following table describes the ownership of our Ordinary Shares as of March 31, 2006 by (i)
each person or company known by us to own more than 5% of our Ordinary Shares, and (ii) all of our
directors and officers as a group.
Number of
Percent of
Identity of Person or Groups
Shares
Class
(1)
China
Telecommunications Broadcast Satellite Corporation
(2) (3)
67,200,000
16.26
%
China
Aerospace Science & Technology Corporation
(2) (4)
36,600,000
8.86
%
CASIL Satellite Holdings Limited
(2)
(5)
45,000,000
10.89
%
SingaSat PTE Ltd.
(2) (6)
84,000,000
20.33
%
Kwang Hua Development and Investment
Limited
(2) (7)
30,600,000
7.40
%
Sinolike Investments Limited
(5)
16,800,000
4.07
%
APT Satellite International Company
Limited
(2)
214,200,000
51.83
%
All Directors and Officers as a Group (17
persons)
5,000
*
*
Less than 1%
(1)
As of March 31, 2006, the total number of issued Ordinary Shares is 413,265,000.
(2)
The Principal Shareholders collectively hold in aggregate underlying ownership interests of
51.83% indirectly through APT Satellite International Company Limited ("APT International"),
which holds 214,200,000 Ordinary Shares. The interest of each Principal Shareholder in APT
International as of December 31, 2004 is:
ChinaSat
200 shares
28.57
%
China Aerospace Science & Technology Corporation
100 shares
14.28
%
CASIL Satellite Holdings Ltd.
100 shares
14.28
%
SingaSat Pte. Ltd.
200 shares
28.57
%
Kwang Hua Development and Investment Ltd.
100 shares
14.28
%
(3)
China Telecommunications Broadcast Satellite Corporation ("ChinaSat") is a PRC state-owned
enterprise under the supervision of the MII. ChinaSat is the satellite operation arm of the
MII. ChinaSat directly owns 6,000,000 Shares and indirectly owns, through its shareholdings
in APT International, 61,200,000 Shares.
(4)
China Aerospace Science & Technology Corporation ("China Aerospace"), formerly China
Aerospace Corporation or the PRC Ministry of Aerospace Industry, is a PRC state-owned
enterprise. China Aerospace is engaged in the research, design, testing and manufacturing of
launch vehicles and satellites. China Aerospace also supervises and controls China Great Wall
Industry Corporation, which is responsible for the sale to foreign customers of commercial
launch services effected by Long March launch vehicles. China Aerospace directly owns
6,000,000 Shares and indirectly owns, through its shareholdings in APT International,
30,600,000 Shares.
(5)
Chia Tai International Telecommunication Company Limited ("Chia Tai") was wholly-owned by
Telecom Holding Company Limited ("Telecom Holding"), which managed the investment in the
Company of Telecom Asia Corporation Public Company Limited ("TelecomAsia"), a publicly listed
company in Thailand. Telecom Holding disposed of its Chai Tai holdings in the Company to
Sinolike Investment Limited ("Sinolike") through a share transaction agreement on October 16,
1997. Chia Tai was renamed as CASIL Satellite Holdings Limited ("CASIL Satellite") on May 6,
1998. Sinolike is a wholly owned subsidiary of China Aerospace International Holdings Limited
("CASIL"), which is a conglomerate listed in Hong Kong and is a 41.86% owned subsidiary of
China Aerospace. CASIL Satellite directly owns 14,400,000 Shares and indirectly owns, through
its shareholdings in APT International, 30,600,000 Shares. Sinolike also directly owns
16,800,000 Shares.
(6)
SingaSat PTE Ltd. ("SingaSat") is wholly-owned by Singapore Telecommunications Limited
("SingTel"). SingTel is a telecommunications operating company and a holding company for over
forty subsidiaries which
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provide a wide range of domestic, international and mobile
telecommunications as well as postal services. SingTel is a publicly listed company in
Singapore. SingaSat directly owns 22,800,000 Shares and indirectly owns, through its
shareholdings in APT International, 61,200,000 Shares.
(7)
Kwang Hua Development and Investment Limited ("Kwang Hua") is a Hong Kong incorporated
venture capital company owned jointly by the Ruentex Group, one of the largest Taiwanese
conglomerates, and China Development, a prominent financial and investment company in Taiwan.
China Development is also an affiliate of the Ruentex Group. Kwang Hua indirectly owns,
through its shareholdings in APT International, 30,600,000 Shares.
The Principal Shareholders have entered into an agreement (the "Shareholders' Agreement"),
which governs their respective rights and obligations with respect to, among other things, their
shareholdings in APT International. The Shareholders' Agreement contains (among other things)
provisions restricting the transfer or other disposal or encumbrance by any Principal Shareholder
of the Shares in APT International, and granting mutual rights of pre-emption among the Principal
Shareholders in the event of any proposed transfer by a Principal Shareholder of any share(s) in
APT International.
Except as disclosed above and to the knowledge of the Company, there are no persons or
entities that beneficially own, directly or indirectly, more than 5% of the Company's outstanding
Ordinary Shares or American Depositary Receipts.
Related Party Transactions
The Company has used CGWIC's Long March launch vehicles to launch all of its satellites to
date except the launch of APSTAR V which was launched by Sea Launch on June 29, 2004. The Company
may enter into further launch services contracts with CGWIC (or other affiliates of China
Aerospace) in respect of the Company's future satellites. Negotiations for each of the launch
services contracts with CGWIC have been conducted on an arm's length basis and any future
negotiations with China Great Wall Industry Corporation would be similarly conducted.
Apart from procuring launching service from CGWIC, on November 10, 2004 an agreement for right
to design, construction, delivery and launch of APSTAR VIB was entered into between APT HK and
CGWIC as a contingency plan if the launch of APSTAR VI was unsuccessful. In the opinion of the
Directors such a transaction was conducted in the ordinary and usual course of business of APT HK,
on normal commercial terms and the terms of the transaction was fair and reasonable and in the
interests of the shareholders of the Company as a whole.
Two of the Principal Shareholders or their affiliates are currently customers of APT.
ChinaSat and SingTel have utilized several transponders for the transmission of television
programming, private networks and PSTN services on APSTAR I whereas SingTel entered into a new
utilization agreement with APT on April 11, 2003 for the utilization of six transponders of APSTAR
V through its useful life which superseded the original agreement dated January 8, 2001 for the
utilization of fifteen transponders for the remaining life of APSTAR V. Negotiations for
transponder utilization with these Principal Shareholders and their affiliates have been conducted
on an arm's length basis and any future negotiations would be similarly conducted. The value
attributed to the transponder for the purposes of determining the portion of the aggregate contract
price to be satisfied by the provision of such transponder is within the range representative of
the Company's pricing for its other customers. For details, please refer to "Other service
customers" under "Item 4-Information on the Company".
In addition, as announced on August 28, 2003, the APT Group and the Company's non wholly-owned
subsidiary namely APT Satellite Telecommunications Limited ("APTT"), which was owned as to 55% and
45% by Skywork Corporation ("Skywork"), a wholly-owned subsidiary of the Company, and by SingaSat
Private Limited ("SingaSat"), a wholly-owned subsidiary of SingTel, respectively, had in their
ordinary course of business entered into various transactions with SingTel and its subsidiaries
(collectively "SingTel Group") for (a) provision of transponder capacity; (b) provision or purchase
of telecommunication services; and (c) secondment of executives from SingTel Group with the APT
Group and APTT. These various transactions have been reviewed by the
independent non-executive directors of the Company who confirmed that they were (i) entered into in
the ordinary
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and usual course of business of the APT Group; (ii) conducted on normal commercial
terms; (iii) conducted on terms that were fair and reasonable to the shareholders of the Company;
(iv) carried out in accordance with the terms of the agreements governing these transactions; and
(v) the aggregate value of each type of these transactions entered into during the year of 2003 was
not exceeding the threshold subject to the Stock Exchange with reference to its latest published
financial statements.
Further, on September 10, 2003, APTT entered into a master agreement with the Company's
wholly-owned subsidiary, APTTS, Skywork and SingaSat whereby the business of APTT was reorganized
through the transfer of APTT's FCL business together with the FCL to APTTS and the transfer of
APTT's cable interests related to FCL, including the transfer of the APCN and C2C interests to
SingTel. The former transfer was done pursuant to a transfer of business agreement between APTT and
APTTS at consideration of HK$6,800,000 with compensation of HK$13,500,000 payable by APTT in 5
equal annual installments commencing on February 1, 2005 to APTTS's holding company, APT Satellite
Company Limited, for the surrender by APTT of the remaining term of a services and facilities lease
agreement in respect of a premises in Tai Po Industrial Estate. The latter transfer was done
pursuant to a cable interests transfer agreement between APTT and SingaSat, which subsequently
assigned it to its holding company SingTel, at considerations of HK$2,986,000 and HK$2,574,000 in
respect of the APCN interest and C2C interest, respectively. This reorganization was completed on
October 10, 2003. The Company believes that the reorganization will allow the APT Group to
concentrate on the satellite-related telecom services business, which is in line with the APT
Group's core business in providing satellite transponder services.
In relation to certain transactions conducted between APT Group and SingTel Group as announced
on August 28, 2003 and September 10, 2003 and mentioned in the foregoing paragraphs, for the
purposes of governing the continuing connected transactions (the "Continuing Connected
Transactions") and ensuring the compliance with the listing rules in Hong Kong, on December 1,
2004, two Master Agreements were entered into between the Company and SingTel in relation to the
provision of satellite transponder capacity and any other satellite related services by APT Group
to SingTel and Singapore Telecom Hong Kong Limited (an associate of SingTel), or vice versa
("Transponder Transactions"); and between the Company and C2C Pte Limited (an associate of SingTel)
in relation to the provision of telecommunications related services by APT Group to C2C Pte Limited
and its subsidiary, or vice versa ("Telecom Transactions"). The duration of the Master Agreements
shall remain in force until December 31, 2006. As recommended by an independent board committee
comprising three independent non-executive directors of the Company that the terms of the Master
Agreements and the annual caps as indicated below were fair and reasonable, on December 30, 2004
the independent shareholders of the Company approved the Master Agreements and the annual caps for
the three years ending December 31, 2004, December 31, 2005 and December 31, 2006 of the
Transponder Transactions will not exceed HK$15 million, HK$18 million and HK$32 million,
respectively, and in the case of Telecom Transactions, their annual caps will not exceed HK$2
million, HK$9 million and HK$11 million, respectively.
The Company is aware that ChinaSat intends to operate a PRC domestic satellite network.
ChinaSat merged with OrientSat to form ChinaSat Group, which owns ChinaStar 1 and ChinaSat 6. In
addition, China Aerospace holds a substantial interest in SinoSat, which owns a satellite,
SinoSat-1, that is devoted largely to providing telecommunications services, data transmission and
TV broadcasting. Singapore Telecom, the parent company of SingaSat, has holdings in a number of
other satellite companies. As a result of satellite design and coverage, the Company does not
believe such satellite companies compete with the Company, other than the ST-1 satellite system
which Singapore Telecom operates and in which it has an ownership interest. The ST-1 satellite
system only has the ability to compete with the Company in C-band segments of the Asia Pacific
market. Through the Telecommunications Authority of Singapore, a signatory to the Intelsat treaty,
Singapore Telecom also has an interest in Intelsat.
Other than as described above, none of the directors, their associates (as defined in the
Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (the "Listing Rules")) or
any shareholder of the Company which to the knowledge of the Directors owns more than 5% of the
issued share capital of the Company has any interest in any of the Company's five largest suppliers
or five largest customers.
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Related party transactions carried out during the years ended December 31, 2003, 2004 and 2005
with shareholders and affiliates (HK$ in thousands):
Years ended December 31,
Note
2003
2004
2005
HK$
HK$
HK$
Income from provision of satellite
transponder capacity to certain
shareholders and its subsidiary of the
Company
(i
)
35,921
38,259
36,339
Income from provision of satellite
transponder capacity, provision of
satellite-based telecommunications services
and service income to a holding company
and its subsidiaries of a shareholder of the
Company
(i
)
19,741
24,163
31,335
Income from provision of satellite
transponder capacity to a jointly controlled
entity
(i
)
6,160
—
—
Management fee income from a jointly
controlled entity
(ii)
1,121
480
480
Management fee income from an
associate
(iii)
65
—
—
Facilities management services
income from a jointly controlled entity
(iv)
3,386
—
—
Technical support services expenses
to a shareholder of the Company
(v
)
75
—
—
Management fee expenses to a holding
company of a shareholder of the Company
(vi)
2,280
1,135
—
Payments of service fee in connection
with the satellite project to a fellow
subsidiary of a shareholder of the Company
(vii)
87,604
151,895
138,727
Compensation income from a jointly
controlled entity in connection with the
early termination of services and facilities
lease
(viii)
13,500
—
—
Purchase of certain fixed assets from a
jointly controlled entity
(ix)
6,800
—
—
Notes :
(i)
The terms and conditions of these transponder capacity utilization agreements are
similar to those contracted with other customers of APT Group.
(ii)
Management fee income arose from a reimbursement of cost of service provided to
a jointly controlled entity under the agreement.
(iii)
Management fee income from an associate arose from the reimbursement of
expenses paid on behalf of an associate.
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(iv)
The Directors consider that the facilities management service income is charged
according to the terms and conditions similar to those offered to other customers.
(v)
The Directors consider that the technical support services expenses were
charged according to prices and conditions similar to those offered to other customers
by the service provider.
(vi)
Management fee expenses arose from a reimbursement of cost of services provided
from the holding company of a shareholder of the Company.
(vii)
The Directors consider that the service fee is charged according to prices and
conditions similar to those offered to other customers by the launch service provider.
(viii)
As a result of the reorganization of a jointly controlled entity, the jointly
controlled entity early terminated the services and facilities lease agreement and APT
Group received a compensation for the early termination of the agreement. The Directors
consider that the compensation is charged according to prices and conditions similar to
those offered to other customers by the termination.
(ix)
As a result of the reorganization of a jointly controlled entity, certain fixed
assets were purchased from the jointly controlled entity. The Directors consider that
the purchase consideration was arrived at after arm's length negotiation with reference
to the valuation conducted by an independent valuation company.
At December 31, 2004 and 2005, the APT Group had the following amounts included in the
consolidated balance sheet in respect of amounts owing by and to related parties (HK$ in
thousands):
Deposits,
Rentals received in
Interest in jointly
prepayments and
Payables and
advance and
Prepayment
controlled entities
Trade receivables
other receivables
accrued charges
deferred income
2004
2005
2004
2005
2004
2005
2004
2005
2004
2005
2004
2005
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
Jointly controlled
entities
—
—
70,614
72,576
—
—
—
—
—
—
—
—
Certain shareholders
and its subsidiary
of the Company
—
—
—
—
18,237
22,992
—
—
24
528
—
—
Holding company and
its subsidiaries of a
shareholder of the
Company
—
—
—
—
2,226
390
—
—
6
325
255,105
236,425
A fellow subsidiary
of a
shareholder of the
Company
38,454
—
—
—
—
—
—
—
—
—
—
—
Item 8. Financial Information
See Item 18 for presentation of the consolidated financial statements of the Company.
Item 9. The Offer and Listing
The Company's Ordinary Shares are listed on The Stock Exchange of Hong Kong Limited (the "Hong
Kong Stock Exchange"). The Hong Kong Stock Exchange is the principal non-United States trading
market for the Company's Ordinary Shares. The table below details, for the periods indicated, the
high and low market prices of the Ordinary Shares on the Hong Kong Stock Exchange.
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High (HK$)
Low (HK$)
2001
4.60
2.20
2002
3.60
1.39
2003
3.93
1.02
2004
—Quarter ended March 31
2.83
2.00
—Quarter ended June 30
2.30
1.65
—Quarter ended September 30
1.80
1.39
—Quarter ended December 31
1.52
1.30
2005
—Quarter ended March 31
1.50
1.20
—Quarter ended June 30
1.60
1.28
—Quarter ended September 30
1.39
1.22
—Quarter ended December 31
1.49
1.10
—December
1.49
1.36
2006
—January
1.80
1.39
—February
1.69
1.60
—March
1.80
1.69
—April
1.73
1.52
—May
1.72
1.55
In addition, the Company's ADSs are listed on the New York Stock Exchange ("NYSE") under the
symbol ATS. Each ADS represents eight Ordinary Shares. The Bank of New York serves as depositary
(the "Depositary") with respect to the ADSs trading on the NYSE. According to information
furnished to the Company by the Depositary, as of March 31, 2005, there were 45 holders of records
of ADSs with addresses in the United States and such holders owned an aggregate of 8,442,839 ADSs.
The table below details, for the periods indicated, the high and low market prices of the ADSs on
the NYSE.
High (US$)
Low (US$)
2001
4.35
2.15
2002
3.60
1.15
2003
4.60
1.10
2004
—Quarter ended March 31
3.50
1.93
—Quarter ended June 30
2.15
1.59
—Quarter ended September 30
1.99
1.32
—Quarter ended December 31
1.68
1.32
2005
—Quarter ended March 31
1.61
1.25
—Quarter ended June 30
1.42
1.25
—Quarter ended September 30
1.29
1.18
—Quarter ended December 31
1.46
1.14
—December
1.46
1.29
2006
—January
1.90
1.32
—February
1.93
1.60
—March
1.90
1.73
—April
1.76
1.56
—May
1.69
1.51
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Item 10. Additional Information
Memorandum of Association and Bylaws
In compliance with the newly amended listing rules of the Stock Exchange which came into force
on March 30, 2004, certain provisions of the Bye-laws of the Company were amended at the annual
general meeting of the Company held on May 20, 2004.
Incorporation and Registration Number
The Company was incorporated in Bermuda on October 17, 1996 in accordance with the Companies
Act 1981 of Bermuda (the "Companies Act"). The Company is registered with the Bermuda Registrar
of Companies with registration number EC 22483.
Objects and Purposes
The objects for which the Company is formed and incorporated as provided for in Clause 6 of
the Memorandum of Association are to:
1)
to act and to perform all the functions of a holding company in all its
branches and to co-ordinate the policy and administration of any subsidiary company or
companies wherever incorporated or carrying on business or of any group of companies of
which the Company or any subsidiary company is a member or which are in any manner
controlled directly or indirectly by the Company;
2)
to act as an investment company and for that purpose to acquire and hold upon
any terms and, either in the name of the Company or that of any nominee, shares, stock,
debentures, debenture stock, annuities, notes, mortgages, bonds, obligations and
securities, foreign exchange, foreign currency deposits and commodities, issued or
guaranteed by any company wherever incorporated or carrying on business, or by any
government, sovereign, ruler, commissioners, public body or authority, supreme,
municipal, local or otherwise, by original subscription, tender, purchase, exchange,
underwriting, participation in syndicates or in any other manner and whether or not
fully paid up, and to make payments thereon as called up or in advance of calls or
otherwise and to subscribe for the same, whether conditionally or absolutely, and to
hold the same with a view to investment, but with the power to vary any investments,
and to exercise and enforce all rights and powers conferred by or incident to the
ownership thereof, and to invest and deal with the moneys of the Company not
immediately required upon such securities and in such manner as may be from time to
time determined;
3)
as set out in paragraphs (b) to (n) and (p) to (u) inclusive of the Second
Schedule to The Companies Act 1981.
Directors
A Director who to his knowledge is in any way, whether directly or indirectly, interested in a
contract or arrangement or proposed contract or arrangement with the Company shall declare the
nature of his interest at the meeting of the Board of the Company (the "Board") at which the
question of entering into the contract or arrangement is first considered, if he knows his interest
then exists, or in any case at the first meeting of the Board after he knows that he is or has
become so interested. A Director shall not vote nor be counted in the quorum on any resolution of
the Board in respect of any contract or arrangement or any other proposal in which he or any of his
associate(s) is materially interested, and if he shall do so his vote shall not be counted nor is
he to be counted in the quorum for the resolution. But this prohibition shall not apply to any of
the following matters namely:
(i)
any contract or arrangement for the giving by the Company or any of its
subsidiaries of any security or indemnity to the Director or his associate(s) in
respect of money lent by him or any of
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his associates or obligations incurred or
undertaken by him or any of them at the request of or for the benefit of the Company or
any of its subsidiaries;
(ii)
any contract or arrangement for the giving by the Company or any of its
subsidiaries of any security or indemnity to a third party in respect of a debt or
obligation of the Company or any of its subsidiaries for which the Director or his
associate(s) has/have himself/themselves assumed responsibility in whole or in part whether alone or jointly under a guarantee or
indemnity or by the giving of security;
(iii)
any contract or arrangement by a Director or his associate(s) to subscribe for
 shares or debentures or other securities of the Company or any of its subsidiaries to
be issued pursuant to any offer or invitation to the members or debenture holders or to
the public which does not provide the Director or his associate(s) any privilege not
accorded to any other members or debenture holders or to the public;
(iv)
any contract, arrangement or proposal concerning an offer of the shares or
debentures or other securities of or by the Company or any other company which the
Company may promote or be interested in for subscription or purchase where the Director
or his associate(s) is/are or is/are to be interested as a participant in the
underwriting or sub-underwriting of the offer;
(v)
any contract or arrangement in which the Director or his associate(s) is/are
interested in the same manner as other holders of shares or debentures or other
securities of the Company by virtue only of his/their interest in shares or debentures
or other securities of the Company;
(vi)
any contract, arrangement or proposal concerning any company in which the
Director or his associate(s) is/are interested only, whether directly or indirectly,
as an officer or executive or a shareholder or in which the Director and any of his
associate(s) are not in aggregate beneficially interested in five (5) per cent or more
of the issued shares or of the voting rights of any class of shares of such company (or
of any third company through which his interest or that of any of his associates is
derived);
(vii)
any proposal or arrangement for the benefit of employees of the Company or its
subsidiaries including the adoption, modification or operation of a pension fund or
retirement, death or disability benefit scheme which relates both to directors, his
associates and employees of the Company or of any of its subsidiaries and does not give
the Director, or his associate(s), as such any privilege or advantage not accorded
generally to the class of persons to whom such scheme or fund relates; or
(viii)
any proposal concerning the adoption, modification or operation of any share scheme
involving the issue or grant of options over shares or other securities by the Company
to, or for the benefit of the employees of the Company or its subsidiaries under which
the Director or his associate(s) may benefit.
A company shall be deemed to be a company in which a Director and/or his associate(s) has/have
an interest of five (5) per cent or more if and so long as (but only if and so long as) he and/or
his associate(s) (either directly or indirectly) is/are the holders of or beneficially interested
in five (5) per cent or more of any class of the equity share capital of such company or of the
voting rights available to members of such company (or of any third company through which his
interest or that of any of his associate(s) is derived). For the purpose of this paragraph there
shall be disregarded any shares held by a Director or his associate(s) as bare or custodian trustee
and in which he or any of them has no beneficial interest, any shares comprised in a trust in which
the interest of the Director and/or his associate(s) is/are in reversion or remainder if and so
long as some other person is entitled to receive the income thereof and any shares comprised in an
authorized unit trust scheme in which the Director and/or his associate(s) is/are interested only
as a unit holder.
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Where a company in which a Director and/or his associate(s) has/have an interest of five (5)
per cent or more is materially interested in a transaction, then that Director and/or his
associate(s) shall also be deemed materially interested in such transaction.
If any question shall arise at any meeting of the Board as to the question of the materiality
of the interest of a Director (other than the chairman of the meeting) or as to the entitlement of
any Director (other than such chairman) to vote or be counted in the quorum and such question is
not resolved by his voluntarily agreeing to abstain from voting or not to be counted in the quorum,
such question shall be referred to the chairman of the meeting and his ruling in relation to such
other Director shall be final and conclusive except in a case where the nature or extent of the
interest of the Director concerned as known to such Director has not been fairly disclosed to the
Board. If any question as aforesaid shall arise in respect of the chairman of the meeting such
question shall be decided by a resolution of the Board (for which purpose such chairman shall not
vote thereon) and such resolution shall be final and conclusive except in a case where the nature
or extent of the interest of such chairman as known to such chairman has not been fairly disclosed
to the Board.
The Company may by ordinary resolution ratify any transaction not duly authorized by reason of
a contravention of Bye-Law 103 provided that no Director and/or his associate(s) who is/are
materially interested in such transaction shall vote upon such ordinary resolution in respect of
any shares in the Company in which they are interested.
The ordinary remuneration of the Directors shall from time to time be determined by the
Company in general meeting. Each Director shall be entitled to be prepaid or repaid all traveling,
hotel and incidental expenses reasonably expected to be incurred or reasonably incurred by him in
attending meetings of the Board or committees of the Board or general meeting or separate meetings
of any class of shares of the Company or otherwise in connection with the discharge of his duties
as a Director. The Board shall obtain the approval of the Company in general meeting before making
any payment to any Director or past Director of the Company by way of compensation for loss of
office, or as consideration for or in connection with his retirement from office (not being payment
to which the Director is contractually entitled).
The Board may exercise all the powers of the Company to raise or borrow money or to secure the
payment or repayment of any sum or sums of money and to mortgage or charge all or any part of the
undertaking, property and assets and uncalled capital of the Company subject to the Companies Act,
in such manner and upon such terms and conditions in all respects as it thinks fit and in
particular by the issue of debentures, bonds and other securities, whether outright or as
collateral security for any debt, liability or obligation of the Company or of any third party.
Neither a Director nor an alternate Director shall be required to vacate office or become
ineligible for re-election as Director of being beyond any age limitation.
Neither a Director nor an alternate Director shall be required to hold any shares of the
Company by way of qualification.
Shareholders' Rights
Currently, the Company's authorized share capital consists of one class of ordinary shares
only. Subject to any special rights conferred on the holders of any shares or class of shares, any
share in the Company may be issued
with or have attached thereto such rights or restrictions whether in regard to dividend, voting,
return of capital, distribution of assets or otherwise as the Company may by ordinary resolution
determine or, if there has not been any such determination or so far as the same shall not make
specific provision, as the Board may determine.
The Board may from time to time pay to the shareholders such interim dividends as appear to
the Board to be justified by the profits of the Company. Subject to the Companies Act, the Company
in general meeting may from time to time declare dividends in any currency to be paid to the
shareholders, but no dividend shall be declared in excess of the amount recommended by the Board.
The Company in general meeting may also make a distribution to the shareholders out of any
contributed surplus in accordance with the Companies Act. No dividend shall be paid or
distribution made out of contributed surplus if to do so would render the Company unable to pay its
liabilities as they
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become due or the realizable value of its assets would thereby become less than
the aggregate of its liabilities and its issued share capital and share premium accounts. All
dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise
made use of by the Board for the benefit of the Company until claimed. Any dividend or bonuses
unclaimed after a period of six years from the date of declaration shall be forfeited and shall
revert to the Company.
At any general meeting, subject to any special rights or restrictions attached to any shares
by or in accordance with the Bye-laws of the Company, every shareholder of the Company present in
person or by proxy, on a show of hands shall have one vote and on a poll shall have one vote for
every share which is fully paid or credited as fully paid of which he is the holder. A shareholder
entitled to attend and vote at the general meeting of the Company is entitled to appoint another
person as his proxy to attend and vote instead of him. A proxy need not be a member of the
Company. A resolution put to the vote of a general meeting shall be decided on a show of hands
unless a poll is demanded in accordance with the Bye-laws.
No business shall be transacted at any general meeting unless a required quorum is present.
All business shall be deemed special that is transacted at a special general meeting, and also all
business that is transacted at an annual general meeting, with the exception of sanctioning
dividends, the reading, considering and adopting of the accounts and balance sheet and the reports
of the Directors and Auditors and other documents required to be annexed to the balance sheet, the
election of Directors and appointment of Auditors and other officers in the place of those
retiring, the determination of the remuneration of the Auditors and of the Directors of the
Company.
In the event of the Company being wound up, the surplus assets remaining after payment to all
creditors shall be divided among the Shareholders of the Company in proportion to the capital paid
up on the shares held by them respectively. But, if such surplus assets shall be insufficient to
repay the whole of the paid up capital, they shall be distributed subject to the rights of any
shares which may be issued on special terms and conditions, so that, as nearly as may be, the
losses shall be borne by the Shareholders of the Company in proportion to the capital paid up on
the shares held by them respectively.
The Bye-laws of the Company do not include any provisions in relation to redemption, sinking
fund, liability to further capital calls by the Company nor any provisions discriminating against
any existing or prospective holder of such securities as a result of such shareholder owning a
substantial number of shares.
Actions Necessary to Change Shareholders' Rights
Subject to the Companies Act and without prejudice to other provisions of the Bye-laws, all or
any of the special rights for the time being attached to the shares or any class of shares may,
unless otherwise provided by the terms of issue of the shares of that class, from time to time
(whether or not the Company is being would up) be varied, modified or abrogated either with the
consent in writing of the holders of not less than three-fourths of the issued shares of that class
or with the sanction of a special resolution passed at a separate general meeting of the holders of
the shares of that class. To every such separate general meeting all the provisions of the Bye-laws
relating to general meetings of the Company shall, mutatis mutandis, apply, but so that:
(a)
the necessary quorum (other than at an adjourned meeting) shall be at least two
persons holding or representing by proxy or authorized representative not less than
one-third in nominal value of the issued shares of that class and at any adjourned
meeting of such holders, two holders present in person or by proxy (whatever the number
of shares held by them) shall be a quorum;
(b)
every holder of shares of the class shall be entitled on a poll to one vote for
every such share held by him/her; and
(c)
any holder of shares of the class present in person or by proxy or authorized
representative may demand a poll.
The special rights conferred upon the holders of any shares or class of shares shall not,
unless otherwise expressly provided in the rights attaching to or the terms of issue of such
shares, be deemed to be varied, modified or abrogated by the creation or issue of further shares
ranking pari passu therewith.
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General Meetings of Shareholders
An annual general meeting of the Company shall be held in each year other than the year in
which its statutory meeting is convened at such time and place as may be determined by the Board.
Each general meeting, other than an annual general meeting, shall be called a special general
meeting. General meetings may be held in any part of the world as may be determined by the Board.
The Board may, in its discretion, call special general meetings, and shareholders holding at the
date of deposit of the requisition not less than one-tenth of the paid up capital of the Company
carrying the right of voting at general meetings of the Company shall at all times have the right,
by written requisition to the Board or the Secretary of the Company, to require a special general
meeting to be called by the Board for the transaction of any business specified in such
requisition; and such meeting shall be held within two (2) months after the deposit of such
requisition. An annual general meeting and any special general meeting at which the passing of a
special resolution is to be considered shall be called by not less than twenty-one (21) clear days'
notice.
All other special general meetings may be called by not less than fourteen (14) clear days'
notice but a general meeting may be called by shorter notice if it is so agreed by the shareholders
in the manner provided in the Bye-laws. Notice of every general meeting shall be given to all
shareholders of the Company other than to such shareholders as, under the provisions of the
Bye-laws or the terms of issue of the shares they hold, are not entitled to receive such notices
from the Company, to all persons entitled to a share in consequence of the death or bankruptcy or
winding-up of a shareholder and to each of the Directors and the Auditor.
Limitation on Foreign Ownership
There is no limitation on the rights of non-resident or foreign shareholders to hold or
exercise voting rights on the securities of the Company imposed by foreign law or by the Bye-laws
of the Company.
Change in Control
The Bye-laws of the Company do not contain any specific provision that may have an effect of
delaying, deferring or preventing a change in control of the company in the event of merger,
acquisition or corporate restructuring of the Company. However, the shareholders agreement of APT
Telecom (which is a joint-venture company formed by a wholly-owned subsidiary of the Company, APT
TV, and SingaSat Private Limited) requires that any merger, consolidation or amalgamation of the
Company must be approved by all the shareholders of APT Telecom. Subject to the Bye-laws of the
Company, any shareholder may transfer all or any of his/her shares by an instrument of transfer in
the usual or common form or in any other form approved by the Board. The Board may, in its absolute
discretion, and without giving any reason therefor, refuse to register a transfer of any share
under certain conditions such as, among the others, not being a fully paid up share. The Board may
also decline to recognize any instrument of transfer unless, among the others, the following
conditions have been satisfied:-
(a)
the instrument of transfer is lodged at the Registration Office or such other
place in Bermuda at which the Register is kept in accordance with the Companies Act or
the Registration Office (as the case may be) accompanied by the relevant share
certificate(s) and such other evidence as the Board may reasonably require to show the
right of the transferor to make the transfer; and
(b)
if applicable, the instrument of transfer is duly and properly stamped.
Ownership Threshold Disclosure
The Bye-laws of the Company do not provide any ownership threshold above which a shareholder
has to disclose such ownership.
Significant Differences in Applicable Law
With respect to items 2 through 8 of the Exchange Act Forms, the law applicable to the Company
in these areas is not significantly different from that in Hong Kong.
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Changes in Capital
The Bye-laws of the Company governing changes in the capital does not contain any condition,
which are more stringent than is required by law.
Material Contracts
On January 8, 2001, APT, together with SS/Loral and CGWIC signed the Procurement and the
Launch Agreements of APSTAR V satellite, to confirm the commissioning of the APSTAR V which would
replace the APSTAR I. On October 23, 2002, the launch services to be provided by CGWIC originally
for APSTAR V were transferred to APSTAR VI. In March 2003, APT selected Sea Launch for the launch
of APSTAR V. APSTAR V was launched on June 29, 2004 as a replacement satellite of APSTAR I. Upon
completion of IOT of APSTAR V, title of the APSTAR V remained with Loral Orion. The Company assumed
risks and rewards of 37 transponders ("APT Transponders") for the entire operational life of APSTAR
V under finance leases while the risks and rewards relating to the other 17 transponders remained
with Loral Orion.
On December 11, 2001, APT signed a procurement agreement for construction and delivery of
APSTAR VI (formerly APSTAR VB) with Alcatel Space Industries. APT secured the Satellite Launch
Service Agreement with CGWIC to launch APSTAR VI on the Long March 3B ("LM-3B") launch vehicle on
October 23, 2002 by the amending the Satellite Launch Service Agreement of APSTAR V. APSTAR VI was
launched successfully on April 12, 2005 on a LM-3B launch vehicle and has been located at
geostationary orbital slot at 134 degrees East. Its commercial operation started on June 7, 2005
and is expected to have an operation mission life over 15 years. The customers of APSTAR IA have
been migrated to APSTAR VI successfully. Total capital expenditures for the design, construction
and launch of APSTAR VI amounted to US$227 million, which has been funded by internal resources and
Bank loan.
Exchange Controls and Other Limitations Affecting Security Holders
The Company has been designated as a non-resident for exchange control purposes by the Bermuda
Monetary Authority.
Permission has been obtained from the Bermuda Monetary Authority for the transfer of Shares of
the Company between persons regarded as non-resident of Bermuda for exchange control purposes and
the issue of Shares within the current authorized share capital of the Company of HK$100,000,000 to
such persons, subject to such Shares being listed on the Hong Kong Stock Exchange or the New York
Stock Exchange. Issues and transfers of Shares involving any person regarded as resident in
Bermuda for exchange control purposes require specific prior approval under the Exchange Control
Act 1972.
There are no limitations on the rights of holders of the Shares who are non-residents of
Bermuda for exchange control purposes to hold or vote their shares. Because the Company has been
designated as a non-resident for Bermuda exchange control purposes, there are no restrictions on
its ability to transfer funds, including remittance of interest or payment to non-resident holders
of Shares, if any, in and out of Bermuda or to pay dividends to United States residents who are
holders of the Shares, other than in respect of local Bermuda currency.
In accordance with Bermuda law, share certificates are only issued in the names of
corporations, partnerships, or individuals. In the case of an applicant acting in a special
capacity (for example, as trustee),
certificates may, at the request of the applicant, record the capacity in which the applicant is
acting. Notwithstanding the recording of any such special capacity, the Company is not bound to
investigate or incur any responsibility in respect of the proper administration of any such trust.
The Company will take no notice of any trust applicable to any of its Shares whether or not it
has notice of such trust.
As an exempted company, the Company is exempt from Bermuda laws which restrict the percentage
of share capital that may be held by non-Bermudians, but as an exempted company, the Company may
not participate in
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certain business transactions including: (1) the acquisition or holding of land
in Bermuda (except that required for its business and held by way of lease or tenancy for terms of
not more than 50 years or, with the consent of the Minister of Finance, land by way of lease or
tenancy agreement for a term not exceeding 21 years in order to provide accommodation or
recreational facilities for its officers and employees), (2) the taking of mortgages on land in
Bermuda to secure an amount in excess of 50,000 Bermuda Dollars without the consent of the Minister
of Finance of Bermuda, (3) the acquisition of any bonds or debentures secured on any land in
Bermuda except bonds or debentures issued by the Bermuda government or a public authority or (4)
the carrying on of business of any kind in Bermuda, except in furtherance of the business of the
Company carried on outside Bermuda or under a license by the Minister of Finance of Bermuda.
Taxation
The following discussion is a summary of the material Bermuda, Hong Kong, and United States
federal income tax considerations relevant to an investment decision with respect to the Company's
American Depositary Shares ("ADSs") and Shares. This discussion does not purport to deal with the
tax consequences of owning ADSs and Shares to all categories of investors, some of which (such as,
dealers in securities, banks, tax-exempt organizations, certain insurance companies, investors
liable for alternative minimum tax, investors that actually or constructively own 10% or more of
the voting stock of the Company, investors who do not hold the Shares or ADSs as capital assets,
investors who hold ADSs or Shares that are part of a hedging, straddle, or conversion transaction
or US Holders whose functional currency is not the US Dollar) may be subject to special rules.
This discussion is not exhaustive of all possible tax considerations, including, specifically, the
consequences under United States federal, state, local, and other laws, of the acquisition,
ownership, and disposition of ADSs and the disposition of Shares
.
Bermuda Taxation
The Company is incorporated in Bermuda. Under current Bermuda law, the Company is not subject
to tax on income or capital gains, and no Bermuda withholding tax will be imposed upon payments of
dividends by the Company to its shareholders. Furthermore, the Company has received from the
Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act of 1966 an
assurance that, in the event that Bermuda enacts any legislation imposing any tax computed on
profits or income or on any capital asset, gain or appreciation, or any tax in the nature of an
estate duty or inheritance tax, the imposition of such tax shall not be applicable to the Company
or any of its operations, nor to the shares, debentures, or other obligations of the Company, until
March 28, 2016. This assurance does not, however, prevent the imposition of any Bermuda tax
payable in relation to any land in Bermuda leased to the Company or to persons ordinarily resident
in Bermuda.
Hong Kong Taxation
Tax on Dividends
Under the current law and practice of Hong Kong, no tax is payable in Hong Kong in respect of
dividends paid by the Company.
Profits Tax
No tax is imposed in Hong Kong in respect of capital gains from the sale of property (such as
the ADSs or Shares). Trading gains from the sale of property by persons carrying on a trade,
profession, or business in Hong Kong where such gains are derived from or arise in Hong Kong from
such trade, profession, or business will be chargeable to Hong Kong profits tax which is currently
imposed at the rate of 17.5%, 17.5% and 17.5% for 2003 and
2004 and 2005, respectively on corporations and at a maximum rate of 15.5%, 16% and 16% for 2003,
2004 and 2005, respectively, on individuals. Gains from sales of the Shares effected on the Stock
Exchange of Hong Kong Limited will be considered to be derived from or arise in Hong Kong.
Liability for Hong Kong profits tax would thus arise in respect of trading gains from sales of
Shares realized by persons carrying on a business in Hong Kong of trading or dealing in securities.
Gains from sales of the ADSs effected on the New York Stock Exchange will usually be considered to
be derived from or arise outside Hong Kong, and therefore, liability for Hong Kong profits tax
would not ordinarily arise in respect of trading gains from sales of ADSs.
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United States Federal Income Taxation
The following summary describes certain United States federal income tax consequences of the
purchase, ownership, and disposition of Shares and ADSs (evidenced by American Depositary Receipts
("ADRs")), but it does not purport to be a comprehensive description of all of the tax
considerations that may be relevant to a decision to purchase, own, or dispose of Shares or ADSs.
In particular, this summary of United States federal income tax matters deals only with holders
that will hold Shares or ADSs as capital assets and does not address special tax situations, such
as the United States tax treatment of holders who are financial institutions, tax exempt
organizations, pension funds, insurance companies or securities dealers, who are holding Shares or
ADSs as part of a hedging or larger integrated financial or conversion transaction, who are
citizens or residents of a possession or territory of the United States, who are United States
holders (as defined below) with a currency other than the US Dollar as their functional currency or
who own, directly or indirectly, 10% or more of the voting stock of the Company. For this purpose,
the Shares and ADSs will constitute voting stock of the Company.
This summary is based upon (i) the income tax laws of the United States as currently in
effect, which are subject to change, possibly with retroactive effect, and (ii) in part, on
representations of The Bank of New York, as the Company's depositary (the "Depositary") and on the
assumption that each obligation in the Deposit Agreement and any related agreement will be
performed in accordance with its terms. The Company has not sought any ruling from the United
States Internal Revenue Service (the "IRS") with respect to the statements made and the conclusions
reached in the following summary, and there can be no assurance that the IRS will agree with such
statements and conclusions.
This discussion is not exhaustive of the consequences of the purchase, ownership, and
disposition of Shares or ADSs, including the effect of any state or local tax laws or the laws of
any jurisdiction other than the United States, nor does it address the United States federal
estate, gift or alternative minimum tax consequences, if any, to an investor.
The Company
The Shares and Shares represented by ADSs are characterized as equity interests in the
Company, and the Company will so characterize all such Shares for all United States federal income
tax purposes.
The Company will be subject to United States federal income tax only to the extent that it
derives certain United States source income or income effectively connected with the conduct of a
trade or business within the United States. Currently, the Company does not have, intends and
anticipates that it will not have, and will conduct its affairs in a manner so that it will not
have, any United States source income subject to United States federal income or withholding tax or
income effectively connected with the conduct of a trade or business within the United States.
Thus, the Company intends and anticipates that it will not be subject to any United States federal
tax.
Taxation of Investor-United States Holders
As used herein, a "United States holder" means a beneficial owner of Shares or ADSs that is an
individual who is a citizen or resident of the United States; a corporation, partnership or other
entity created or organized in or under the laws of the United States or any State thereof; an
estate the income of which is subject to United States federal income tax regardless of its source,
or a trust subject to control of a United States person and the primary supervision of a United
States court, or a trust in existence on August 20, 1996 that has elected to continue to be treated
as a United States trust. A "resident" of the United States includes an individual that (i) is
lawfully admitted for permanent residence in the United States, or (ii) (a) is present in the
United States for 31 days or more during the calendar year, (b) is present in the United States for
an aggregate of 183 days or more, on a weighted basis, over a 3-
year period ending in such calendar year, and (c) is present in the United States for less than 183
days during the calendar year and does not have a closer connection to a "tax home" that is located
outside the United States.
A "non-United States holder" means a beneficial owner of Shares or ADSs that is not a United
States holder. It should be noted that certain "single member entities" are disregarded for United
States federal income tax
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purposes. Thus, the income, gain, loss and deductions of such entity are
attributed to the owner of such single member entity for United States federal income tax purposes.
The discussion below for United States holders may not apply to certain single member noncorporate
entities that are treated as owned by a non-United States holder. Investors which are single
member noncorporate entities should consult with their own tax advisors to determine the United
States federal, state, local and other tax consequences that may be relevant to them.
Ownership of ADSs and Shares
For United States federal income tax purposes, a United States holder of ADRs is generally
treated as the owner of the ADSs evidenced thereby and of the Shares represented by such ADSs.
Accordingly, no gain or loss will be recognized by a United States holder upon the exchange of ADRs
or the ADSs evidenced thereby for the Shares represented by such ADSs. A United States holder's
tax basis in the Shares received will be the same as its tax basis in the surrendered ADSs and the
holding period for Shares received will include the period during which the holder held such ADSs.
Taxation of Dividends
Subject to the passive foreign investment company rules discussed below and to the extent
provided below, a United States holder will be required to include in gross income when paid,
actually or constructively, to the holder or, in the case of ADSs, to the Depositary, as a dividend
any cash or the fair market value of any property distributed by the Company out of its current or
accumulated earnings and profits (as determined for United States federal income tax purposes).
Distributions paid in any currency other than the US Dollar will be translated into US Dollars at
the spot rate on the date the dividends are paid, regardless of whether the dividends are in fact
converted on that date. Distributions in excess of the Company's current or accumulated earnings
and profits (as determined for United States federal income tax purposes) will be treated as a
non-taxable return of capital to the extent of the holder's basis in the Shares or ADSs, and
thereafter, as a taxable capital gain.
Dividends paid by the Company will not be eligible for the dividends received deduction
generally allowed to United States corporations in respect of dividends received from other United
States corporations under the United States Internal Revenue Code of 1986, as amended (the "Code").
For purposes of the United States foreign tax credit limitation, dividends paid by the Company
generally will constitute foreign source "passive income" (or, in the case of a holder who is a
"financial services entity" as defined in regulations under the Code, "financial services income").
The rules relating to foreign tax credits are extremely complex and the availability of a foreign
tax credit depends on numerous factors. All investors that are United States holders should
consult with their own tax advisors concerning the application of the United States foreign tax
credit rules to their particular circumstances.
With respect to non-corporate U.S. holders, certain dividends received before January 1, 2009
from a qualified foreign corporation may be subject to reduced rates of taxation. A foreign
corporation is treated as a qualified foreign corporation with respect to dividends paid by that
corporation on shares that are readily tradable on an established securities market in the U.S.
Management believes that the Company common shares, which are quoted on the New York Stock
Exchange, are readily tradable on an established securities market in the U.S. There can be no
assurance that the Company's common shares will be considered readily tradable on an established
securities market in later years. Non-corporate holders that do not meet a minimum holding period
requirement during which they are not protected from the risk of loss or that elect to treat the
dividend income as "investment income" pursuant to section 163(d)(4) of the Code will not
be eligible for the reduced rates of taxation regardless of our status as a qualified foreign
corporation. In addition, the rate reduction will not apply to dividends if the recipient of a
dividend is obligated to make related payments with respect to positions in substantially similar
or related property. This disallowance applies even if the minimum holding period has been met. You
should consult your own tax advisors regarding the application of this legislation to your
particular circumstances.
Taxation of Dispositions of Shares or ADSs
Subject to the passive foreign investment company rules discussed below, a gain or loss
realized by a United States holder on the sale or other disposition of a Share or an ADS will be
subject to United States federal
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income tax, as a capital gain or loss, in an amount equal to the
difference between such United States holder's adjusted tax basis in the Share or ADS and the
amount realized on its disposition. Such capital gain or loss will be long-term if the United
States holder's holding period for the Share or ADS is more than one year and will be short-term if
the holding period is equal to or less than one year. Long-term capital gain of a non-corporate
United States holder is generally taxed at preferential rates. The deductibility of capital losses
is subject to limitations.
For purposes of the United States foreign tax credit limitation, a recognized gain or loss
arising on the disposition of a Share or ADS generally will be United States source gain. There is
a risk, however, that a recognized loss may, however, be allocated against foreign source income by
reference to the source of income received under the Share or ADS based on, among other things,
whether or not the Share or ADS is attributable to a foreign office or other fixed place of
business of the holder. The IRS has issued Regulations on the sourcing of losses and holders of
Shares or ADSs should consult with their tax advisors regarding the application of such Regulations
to their specific situation.
Passive Foreign Investment Company Rules
The foregoing discussion assumes that the Company is not currently, and will not in the future
be, classified as a "passive foreign investment company" ("PFIC") under the Code.
Special United States federal income tax rules apply to holders of equity interests in a PFIC.
A foreign corporation will constitute a PFIC for United States federal income tax purposes if 75%
or more of its gross income for a taxable year consist of passive income, or, on average, 50% or
more of the value of its assets held during a taxable year consist of assets that give rise, or
that reasonably could give rise during the reasonably foreseeable future, to passive income.
Passive income generally includes (i) rent and lease income (not including rent and lease income
derived from persons other than related persons and from the active conduct of a rental or leasing
trade or business), (ii) interest, (iii) dividends from shares of stock in a corporation in which
the foreign corporation directly or indirectly owns less than 25% of the value of the stock in the
corporation and (iv) gains from the sale of any (a) property that gives rise to passive income, (b)
partnership interests, or (c) shares of stock.
Based on the Company's existing and anticipated future operations, as well as the existing and
anticipated future operations of APT and APT BVI, the Company believes that it, APT and APT BVI are
not, and intends and anticipates that they will not become in the future, PFICs. However, it is
possible that certain lease income derived by the Company (or APT or APT BVI) might be viewed by
the IRS as passive income. In addition, because of the nature of the leasing business, and because
the determination of whether or not the Company, APT or APT BVI is a PFIC is a factual
determination based upon the composition of the annual income and assets of the entity, there can
be no assurance that the Company, APT or APT BVI will not be considered a PFIC for the current or
for any subsequent taxable year.
Because the Company's sole asset is its stock interest in APT BVI, and APT BVI's sole asset,
in turn, is its stock interest in APT, if APT is or becomes a PFIC, both the Company and APT BVI
will also be or become PFICs. If the Company, APT and APT BVI are or become PFICs, a United States
holder (whether direct, indirect or constructive) would be required to allocate to each day in its
holding period with respect to the Shares or ADSs a pro rata portion of any distribution received,
or deemed received under certain attribution rules, from the Company, APT or APT BVI that is
treated as an "excess distribution." Generally, an excess distribution is that portion of the
total annual distributions (including the proceeds from a redemption of Shares or ADSs that is
treated as a distribution) from the Company, APT or APT BVI that exceeds 125% of the per share
average annual amount distributed (as measured in the currency of such distributions) by that
entity during the three preceding years (or such shorter period as the United States holder may
have held the Shares or ADSs). In addition, the full amount of any gain recognized on a
disposition or deemed disposition (including a liquidation, a redemption that is treated as an
exchange, or a pledge) of (i) Shares or ADSs by the United States holder, (ii) attributable shares
of APT by APT BVI, or (iii) attributable shares of APT BVI by the Company will be treated as an
excess distribution.
The amount of any excess distribution is allocated ratably over the United States holder's
entire holding period. The amount allocated to the current taxable year and to any period prior to
the first taxable year during which the Company, APT and APT BVI were PFICs is taxed as ordinary
income. Any amount of the excess
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distribution allocable to a prior taxable year during which the Company, APT and APT BVI were PFICs
or after the first taxable year they were PFICs will be subject to a deferred United States federal
income tax charge, calculated as the sum of the amount of tax imposed on the allocable excess
distribution at the highest applicable rate in effect for each such year plus the accumulated
interest on the determined amount of tax. Given the distribution and investment policies of the
Company, if the Company, APT and APT BVI are or become PFICs, there is a substantial risk that any
distribution by the Company will be treated as an excess distribution. (See "Item 5. Operating and
Financial Review and Prospects—Liquidity and Capital Resources").
For purposes of the PFIC rules, under certain circumstances, Shares or ADSs held by a
non-United States holder may be attributed to a United States person (as defined in Section
7701(a)(30) of the Code) owning an interest, directly or indirectly, in that non-United States
holder. In such event, dividends and other transactions in respect of the Shares or ADSs held by
the non-United States holder would be attributed to such United States person for purposes of
applying the above PFIC rules.
If the Company is a PFIC, a United States holder must file Internal Revenue Service Form 8621
regarding distributions received with respect to Shares or ADSs and any gain realized on the
disposition or deemed disposition of Shares or ADSs for each taxable year in which the United
States holder owns Shares or ADSs.
If the Company, APT and APT BVI are or become PFICs, an investment in Shares or ADSs by a
United States holder could subject the holder to substantial, adverse United States federal income
tax consequences. Investors who are United States holders should consult their own tax advisers
regarding the potential application of the PFIC regime.
Taxation of Investors-Non-United States Holders
Subject to the discussion of United States backup withholding tax below, a non-United States
holder will not be subject to United States federal income or withholding tax on income derived by
the Company, dividends paid to a holder by the Company or gains realized on the sale of Shares or
ADSs, provided that (i) such income is not effectively connected with the conduct by the non-United
States holder of a trade or business within the United States, (ii) the non-United States holder is
not or was not present in the United States in excess of statutorily established time periods, or
does not have or did not have a permanent establishment in the United States, (iii) there has not
been a present or former connection between the non-United States holder and the United States,
including, without limitation, such non-United States holder's status as a citizen or former
citizen thereof or resident or former resident thereof, subject to certain exceptions, or (iv) in
the case of a gain from the sale or disposition of Shares or ADSs by an individual, the non-United
States holder is not present in the United States for 183 days or more during the taxable year of
the sale or certain other conditions are met. In addition, the provisions of certain bi-lateral
income tax treaties to which the United States is a party may shield a non-United States holder
from the imposition of United States federal income tax on income from Shares or ADSs or reduce the
applicable tax rate, even if such income or such holder falls in one of the categories listed
above. Investors who are non-United States holders should consult their tax advisors regarding the
taxability of income in respect of the Shares or ADSs.
United States Backup Withholding Tax and Information Reporting
For a United States holder, a 28% "backup withholding" federal income tax and certain
information reporting requirements may apply to certain payments made on Shares or ADSs and to the
proceeds from the disposition of Shares or ADSs unless such holder (i) is a corporation or comes
within certain other exempt categories, provided the exemption from backup withholding is properly
established, or (ii) provides a correct taxpayer identification number, certifies that it is not
subject to backup withholding, and otherwise complies with applicable requirements of the backup
withholding rules.
Non-United States holders are generally exempt from backup withholding, provided such holders
certify in writing as to their non-United States holder status under penalties of perjury or
otherwise establish an exemption (provided neither the Company nor the Company's agent has actual
knowledge that the holder is a United States person (as defined in Section 7701(a)(30) of the Code)
or that the conditions of any other exemption are not in fact satisfied).
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Holders should consult their tax advisors regarding their qualification for exemption from
backup withholding and the procedure for obtaining such exemption if applicable.
Any amounts withheld under the backup withholding tax rules from a payment to a holder will be
allowed as a refund or a credit against such holder's United States federal income tax, provided
that the required information is furnished to the IRS.
Item 11. Quantitative and Qualitative Disclosures about Market Risk
The Company's primary market risk exposures are interest rate risk and foreign currency risk.
Interest Rate Risk
The Company is subject to interest rate risk due to fluctuation in interest rates. As of
December 31, 2005, the Company's outstanding Bank loans consist of variable interest rate loans
only. From time to time, the Company may enter into interest rate swap agreements designed to
mitigate our exposure to interest rate risks, although the Company did not consider it necessary to
do so in 2005. Upward fluctuations in interest rates increase the cost of new Bank loans and the
interest cost of outstanding Bank loans. As a result, a significant increase in interest rates
could have a material adverse effect on the financial position of the Company.
The following table contains information about the Company's Bank loan that are sensitive to
changes in interest rates, as of December 31, 2005.
Expected Maturity Date
2006
2007
2008
2009
2010
Thereafter
(HK$ in million, except interest rates)
Variable rate Bank loan
121
159
220
256
273
98
Average interest rate
(1)
5.965
%
5.935
%
5.98
%
6.00
%
6.02
%
6.02
%
(1)
The interest rates are the implied future LIBOR rates calculated from US swap as proxy.
For the year ended December 31, 2005, if the average interest rate for the variable rate Bank
loan had increased by 10%, additional interest expenses of HK$3.4million (US$435 thousand) would
have been incurred.
Exchange Rate Sensitivity
The Company's reporting currency is the Hong Kong Dollar. The Company's revenues, premiums
for satellite insurance coverage and debt service and substantially all capital expenditures were
denominated in U.S. Dollars. The Company's remaining expenses were primarily denominated in Hong
Kong Dollars. The Company does not hedge its exposure to foreign exchange risk. Gains and losses
resulting from the effects of changes in the U.S. Dollar to Hong Kong Dollar exchange rate are
recorded in the statements of operations.
The Company does not utilize derivative financial instruments to hedge its interest rate or
foreign currency rate risks.
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Limitations
The above discussion includes only those exposures that exist as of December 31, 2005 and as a
result, does not consider exposures or positions that could arise after that date. The Company's
ultimate realized gain or loss with respect to interest rate and exchange rate fluctuations would
depend on the exposures that arise during the period, the Company's hedging strategies at the time,
and interest and foreign exchange rates.
Item 12. Description of Securities Other Than Equity Securities
Not applicable.
PART II
Item 13. Defaults, Dividend Arrearages, and Delinquencies
Not applicable.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Not applicable.
Item 15. Controls and Procedures
Disclosure Controls and Procedures.
The Company's Chief Executive Officer, or CEO, and Chief
Financial Officer, or CFO, are responsible for establishing and maintaining its disclosure controls
and procedures. These controls and procedures were designed to ensure that information required to
be disclosed in the reports that the Company files under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported within the time periods specified in the
rules and forms of the SEC. The Company evaluated these disclosure controls and procedures under
the supervision of its CEO and CFO as of December 31, 2005. Based on this evaluation, the Company's
CEO and CFO concluded that the Company's disclosure controls and procedures are effective in timely
alerting them to information required to be disclosed in our periodic reports to the SEC.
Internal Control Over Financial Reporting.
It is the Board's responsibility to ensure that
the Company maintains sound and effective internal controls over financial reporting. There were no
changes in the Company's internal control over financial reporting that occurred during the year
ended December 31, 2005 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting. The top management, the internal control
committee and the Internal Audit team will continue to monitor and review regularly the
effectiveness of the internal control system of the Company and from time to time take action
whenever there is any weakness in the process.
Item 16A. Audit Committee Financial Expert
The Company's Board of Directors has determined that it has a member, Dr. Lui King Man, of its
Audit Committee, that qualifies as an "audit committee financial expert" as defined in subsection
(b) of Item 16A of Form 20-F, and is "independent" under the rules and regulations of the New York
Stock Exchange.
Item 16B. Code of Ethics
The Company currently has a Code of Ethics. This Code of Ethics is made available at the
Company's website: www.apstar.com.
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Item 16C. Principal Accountant Fees and Services
Aggregate fee billed to the APT Group for the fiscal years ended December 31, 2004 and 2005 by
our principal accounting firm, KPMG, respectively and their respective affiliates are as follows:
Years ended December 31,
(in US$ thousands)
2004
2005
Audit fees
103
111
All other fees
1
—
Total
104
111
"Audit Fees" are the aggregate fees billed (for the year) for the audit of the Company's
annual financial statements, reviews of interim financial statements and attestation services that
are normally provided in connection with statutory and regulatory filings or engagements.
The Company's Audit Committee oversees our independent auditors. See also the description
under the heading "Board Practices" in "Item 6. Directors, Senior Management and Employees." The
Company's Audit Committee's policy is to approve any audit or permitted non-audit services proposed
to be provided by its independent auditors before engaging its independent auditors to provide such
services. Pursuant to this policy, which is designed to assure that such engagements do not impair
the independence of the Company's auditors, the Chairperson of the Company's Audit Committee is
authorized to approve any such services between meetings of the Audit Committee, subject to
ratification by the Audit Committee, and to report any such approvals to the Audit Committee at its
next meeting.
Item 16D. Exemption from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
PART III
Item 17. Financial Statements
The Company has elected to provide financial statements for fiscal year 2005 and the related
information pursuant to Item 18 in lieu of Item 17.
Item 18. Financial Statements
Reference is made to pages F-1 to F-65 for year-end financial statements.
APT Satellite Telecommunications Limited met the significant tests in 2003 which requires,
under SEC Rule 3-09 of Regulation S-X the provision of separate financial statements. Such
financial statements are filed in exhibit 8.2 to this Annual Report.
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Item 19. Exhibits.
Exhibit No.
Description of Exhibit
3.2
The amended Memorandum of Association and Bye-Laws of APT Satellite Holdings Limited which
was adopted at the Company's annual general meeting on May 20, 2004.
4.1
Satellite Procurement Agreement by and between APT Satellite Company Limited, a wholly owned
subsidiary of the Company, and Contractor, an independent third party not associated with the
Directors, chief executive officer and major shareholders of the Company or any of its
subsidiaries, dated January 8, 2001 (incorporated by reference to the Company's 6-K filed with
the Commission on January 9, 2001).
4.2
Launch Agreement by and between APT Satellite Company Limited, a wholly owned subsidiary of
the Company, and the Launch Contractor, a subsidiary of China Aerospace Science & Technology
Corporation, dated January 8, 2001 (incorporated by reference to the Company's 6-K filed with
the Commission on January 9, 2001).
4.3
Satellite Procurement Agreement by and between APT Satellite Company Limited, a wholly owned
subsidiary of the Company, and Contractor, an independent third party not associated with the
Directors, chief executive officer and major shareholders of the Company or any of its
subsidiaries, dated December 11, 2001 (incorporated by reference to the Company's 6-K filed
with the Commission on December 18, 2001).
4.4
Term Sheet executed by and between APT Satellite Company Limited, a wholly owned subsidiary
of the Company, Contractor and Loral Orion, Inc., both of which are independent third party
not associated with the Directors, chief executive officer and major shareholders of the
Company or any of its subsidiaries, dated September 20, 2002 (incorporated by reference to the
Company's 6-K filed with the Commission on September 30, 2002).
4.5
Transponder Utilization Agreement by and between APT Satellite Company Limited, a wholly
owned subsidiary of the Company, and Lessee, a connected person under the rules governing the
listing of securities on The Stock Exchange of Hong Kong Limited, dated April 11, 2003
(incorporated by reference to the Company's 6-K filed with the Commission on April 16, 2003
).
4.6
Change of Auditors of the Company KPMG with effect from July 15, 2003 (incorporated by
reference to the Company's 6-K filed with the Commission on July 17, 2003).
4.7
Satellite Procurement Amendment Agreement by and between APT Satellite Company Limited, a
wholly owned subsidiary of the Company, and the Contractor, a party independent of the
Director, chief executive officer and substantial shareholder of the Company and its
subsidiaries and their respective associates, dated August 26, 2003. The Satellite
Transponder Agreement and Satellite Agreement by and between APT Satellite Company Limited, a
wholly owned subsidiary of the Company, and the lessor, a party independent of the Director,
chief executive officer and substantial shareholder of the Company and its subsidiaries and
their respective associates, dated August 26, 2003 (incorporated by reference to the
Company's 6-K filed with the Commission on September 2, 2003).
4.8
Various on-going transactions in their ordinary course of business had entered into between
the APT Group of the Company and APT Telecom, a non-wholly owned subsidiary of the Company,
and the contracting party, a connected person under the rules governing the listing of
securities on The Stock Exchange of Hong Kong Limited, as announced August 28, 2003
(incorporated by reference to the Company's 6-K filed with the Commission on September 2,
2003).
4.9
Master Agreement by and between APT Satellite Telecommunications Limited, a non-wholly owned
subsidiary of the Company, Skywork Corporation, a wholly owned subsidiary of the Company, APT
Telecom Services Limited, a wholly owned subsidiary of the Company, and a connected person
under the rules governing the listing of securities on The Stock Exchange of Hong Kong
Limited, dated September 10, 2003 whereby the business of APT Satellite
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Exhibit No.
Description of Exhibit
Telecommunications Limited was being reorganized (incorporated by reference to the
Company's 6-K filed with the Commission on September 15, 2003).
4.10
The Agreement and the Amended Launch Agreement by and between APT Satellite Company Limited,
a wholly owned subsidiary of the Company, and the Contractor of APSTAR V, dated November 16,
2003 (incorporated by reference to the Company's 6-K filed with the Commission on September
17, 2003).
4.11
An utilization agreement for the remaining life of APSTAR I by and between APT Satellite
Company Limited, a wholly owned subsidiary of the Company, and the customer, dated October 22,
2004 (incorporated by reference to the Company's 6-K filed with the Commission on October 29,
2004).
4.12
An agreement by and between APT Satellite Company Limited, a wholly owned subsidiary of the
Company, and the grantor and contractor of APSTAR VIB dated November 10, 2004 (incorporated by
reference to the Company's 6-K filed with the Commission on November 15, 2004).
4.13
Two Master Agreements by and between the Company and Singapore Telecommunications Limited;
and the Company and C2C Pte Limited dated December 1, 2004 (incorporated by reference to the
Company's 6-K filed with the Commission on December 3, 2004).
8.1
List of subsidiaries and the jurisdictions under which each does business (contained in Note
1 to the Consolidated Financial Statements in Item 18 herein).
8.2**
Financial statements of APT Satellite Telecommunications Limited
14.1*
Amended Charter of the Audit Committee.
14.2*
Charter of the Nomination Committee
14.3*
Charter of the Remuneration Committee
99.1**
Certification of CEO
99.2**
Certification of CFO
99.3**
Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
99.4**
Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
99.5**
Updated significant Differences in Corporate Governance Practices.
*
Exhibit is incorporated by reference to the exhibit of the
same number in the Company's 20-F filed with the Commission on June 29, 2005.
**
Filed herewith.
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SIGNATURES
The Company hereby certifies that it meets all of the requirements for filing an Annual Report
on Form 20-F and has duly caused and authorized the undersigned to sign this Annual Report on its
behalf.
APT SATELLITE HOLDINGS LIMITED
/s/
Ni
Yifeng
Ni Yifeng
Executive Director and President
Date:
June 30, 2006
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APT SATELLITE HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Financial Statements
Years ended December 31, 2003, 2004 and 2005
and Report of Independent Registered Public Accounting Firm
Table of Contents
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
F - 2
Consolidated Balance Sheets as of December 31, 2004 and 2005
F - 3 & 4
Consolidated Statements of Operations for the years ended December 31, 2003, 2004 and 2005
F - 5
Consolidated Statements of Changes in Equity for the years ended December 31, 2003, 2004 and 2005
F - 6
Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2004 and 2005
F - 7 & 8
Notes to the Consolidated Financial Statements
F - 9 – 65
Table of Contents
APT SATELLITE HOLDINGS LIMITED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and
Shareholders of
APT Satellite Holdings Limited:
We have audited the accompanying consolidated balance sheets of APT Satellite Holdings Limited
and subsidiaries (the "Group") as of December 31, 2004 and 2005 and the related consolidated
statements of operations, changes in shareholders' equity and cash flows for the years ended
December 31, 2004 and 2005, all expressed in Hong Kong dollars. These consolidated financial
statements are the responsibility of the Group's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States) and generally accepted auditing standards in Hong Kong. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of APT Satellite Holdings Limited and subsidiaries as of
December 31, 2004 and 2005, and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 2005 in conformity with accounting principles
generally accepted in Hong Kong.
As further described in Note 4 to the consolidated financial statements, in 2005 the Group adopted
all new applicable Hong Kong Financial Reporting Standards, which collective term includes all
applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards
("HKAS") and Interpretations, issued by the Hong Kong Institute of Certified Public Accountant.
Consequently, certain amounts for the years ended December 31, 2003 and 2004 were required to and
have been restated to comply with the 2005 initial adoption provisions of those applicable HKAS's.
The Group adopted HKAS 32 "Financial Instruments: Disclosure and Presentation" and HKAS 39
"Financial Instruments: Recognition and Measurement", prospectively as of January 1, 2005.
Accounting principles generally accepted in Hong Kong vary in certain material respects from
accounting principles generally accepted in the United States of America. Information relating to
the nature and effect of such differences is presented in Note 28 to the consolidated financial
statements. As further described in Note 28 to the consolidated financial statements, the amounts
of certain differences between accounting principles generally accepted in Hong Kong and accounting
principles generally accepted in the United States of America for the years ended December 31, 2004
and 2003 have been restated as a result of the adoption of certain HKAS's described in Note 4.
The accompanying consolidated financial statements as of and for the year ended December 31, 2005
have been translated into United States dollars solely for the convenience of the reader. We have
audited the translation, and in our opinion, the consolidated financial statements expressed in
Hong Kong dollars have been translated into United States dollars on the basis set forth in Note 2
to the consolidated financial statements.
KPMG
Hong Kong
April 10, 2006
F- 2
Table of Contents
APT SATELLITE HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2004 AND 2005
(Amounts stated in thousands)
December 31,
Note
2004
2005
2005
(restated)
HK$
HK$
US$
ASSETS
Current assets
Cash and cash equivalents
673,763
326,440
41,852
Pledged bank deposits
10
21,140
68,699
8,807
Trade receivables, less allowance of HK$9,874
in 2004 and HK$10,291 in 2005
45,753
49,730
6,375
Amount due from a jointly controlled entitiy
2,700
5,100
654
Deposits, prepayments and other receivables, less
allowance of HK$10,219 in 2004 and
HK$10,219 in 2005
23,191
35,918
4,605
Total current assets
766,547
485,887
62,293
Property, plant and equipment, net
5
2,680,330
2,999,402
384,539
Interest in leasehold land held for
Own use under an operating lease
6
15,945
15,570
1,996
Investment property
7
2,340
2,340
300
Interest in jointly controlled entities
8
Share of net assets
10,226
2,241
288
Amounts due from a jointly controlled entity
67,914
67,476
8,651
Prepayment for construction of a satellite
9
38,454
—
—
Other assets
28,902
37,764
4,842
Deferred tax assets
19
10,134
3,609
461
TOTAL ASSETS
3,620,792
3,614,289
463,370
See accompanying notes to the consolidated financial statements.
F- 3
Table of Contents
APT SATELLITE HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS (continued)
AS OF DECEMBER 31, 2004 AND 2005
(Amounts stated in thousands)
December 31,
Note
2004
2005
2005
(restated)
HK$
HK$
US$
LIABILITIES AND EQUITY
Current liabilities
Payables and accrued charges
13
45,139
51,593
6,614
Rentals received in advance
30,652
31,414
4,027
Loan from a minority shareholder
7,488
7,488
960
Income taxes payable
19
84,768
89,186
11,434
Bank loans — current portion
10
64,778
117,757
15,098
Total current liabilities
232,825
297,438
38,133
Deposits received
11
12,607
15,986
2,049
Bank loans – non-current portion
10
904,762
1,000,302
128,244
Deferred income
12
261,380
239,011
30,643
Deferred tax liabilities
19
12,209
—
—
TOTAL LIABILITIES
1,423,783
1,552,737
199,069
Contingencies and commitments
14
Shareholders' equity
Capital stock — Common stock
15
41,327
41,327
5,299
Additional paid-in capital
16
1,798,536
1,798,536
230,581
Capital reserve
23,964
11,996
1,538
Translation reserve
(20
)
1,347
173
Other reserves
16
102
104
13
Retained earnings
329,244
205,315
26,322
2,193,153
2,058,625
263,926
Minority interests
3,856
2,927
375
TOTAL LIABILITIES AND
EQUITY
3,620,792
3,614,289
463,370
See accompanying notes to the consolidated financial statements.
F- 4
Table of Contents
APT SATELLITE HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts stated in thousands, except per share data)
Years ended December 31,
Note
2003
2004
2005
2005
(restated)
(restated)
HK$
HK$
HK$
US$
Operating revenues
Provision of satellite transponder capacity to:
Unaffiliated customers
212,830
168,611
243,228
31,183
Related parties
20
61,822
58,267
47,455
6,084
Provision of satellite-based telecommunications services to:
Unaffiliated customers
16,403
37,665
25,333
3,248
Related parties
20
—
1,018
20,219
2,592
Service income received from:
Unaffiliated customers
6,614
8,562
277
36
Related parties
20
4,572
3,137
—
Total revenues
302,241
277,260
336,512
43,143
Costs and expenses
Cost of service including depreciation
and amortization of 2003: HK$236,027,
2004: HK$177,692 and 2005: HK$197,880
(280,319
)
(244,755
)
(301,193
)
(38,615
)
Selling, general and administrative including
depreciation and amortization of 2003: HK$295,
2004: HK$300 and 2005: HK$301
(73,994
)
(78,680
)
(77,199
)
(9,897
)
Total costs and expenses
(354,313
)
(323,435
)
(378,392
)
(48,512
)
(52,072
)
(46,175
)
(41,880
)
(5,369
)
Other operating revenues
Interest income — net
7,111
7,312
12,916
1,656
Compensation income for late delivery
of the satellite
—
—
15,600
2,000
Other income
25,928
2,020
2,315
297
(Deficit)/surplus arising on revaluation of
investment property
7
(70
)
78
—
—
Impairment loss recognized in respect
of property, plant and equipment
5
(129,098
)
(1,800
)
(7,512
)
(963
)
Impairment
loss recognized in respect of prepayment for construction of a satellite
—
—
(59,904
)
(7,680
)
Gain on partial disposal of an associate
12
—
—
Loss from operations
21
(d)
(148,189
)
(38,565
)
(78,465
)
(10,059
)
Borrowing costs
21
(b)
—
(4,117
)
(36,942
)
(4,736
)
Share of losses of jointly controlled entities
(57,133
)
(2,709
)
(7,995
)
(1,025
)
Loss before income taxes
(205,322
)
(45,391
)
(123,402
)
(15,820
)
Provision for income taxes
18
(11,721
)
(16,625
)
(13,172
)
(1,689
)
Loss for the year
(217,043
)
(62,016
)
(136,574
)
(17,509
)
Attributable to:
Equity shareholders of the Company
(216,120
)
(59,957
)
(135,564
)
(17,380
)
Minority interests
(923
)
(2,059
)
(1,010
)
(129
)
Loss for the year
(217,043
)
(62,016
)
(136,574
)
(17,509
)
Loss per share
- Basic
(52 cents)
(15 cents)
(33 cents)
(4 cents)
- Diluted
(52 cents)
(15 cents)
(33 cents)
(4 cents)
See accompanying notes to the consolidated financial statements.
F- 5
Table of Contents
APT SATELLITE HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts stated in thousands)
Additional
Capital
paid -in
Capital
Revaluation
Translation
Other
Retained
Minority
stock
capital
reserve
reserve
reserve
reserves
earnings
Total
interests
Total equity
Note
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
Balance as
at January 1, 2003
41,254
1,794,520
—
—
182
94
632,261
2,468,311
—
2,468,311
Minority interests (as
previously presented
separately from liabilities
and equity at 31 December)
4
(d)
—
—
—
—
—
—
—
—
6,838
6,838
Prior period adjustments
arising from changes in
accounting policies under:
- HKFRS 2 share-based payment
4
(a)
—
—
38,031
—
—
—
(30,392
)
7,639
—
7,639
At 1 January 2003 (Restated)
41,254
1,794,520
38,031
—
182
94
601,869
2,475,950
6,838
2,482,788
Shares issued under the share
option scheme
73
4,016
(10,607
)
—
—
—
—
(6,518
)
—
(6,518
)
Foreign currency translation
adjustment
—
—
—
—
(282
)
—
—
(282
)
—
(282
)
Transfer to other reserves
—
—
—
—
—
8
(8
)
—
—
—
Net loss for the year
—
—
—
—
—
—
(216,120
)
(216,120
)
(923
)
(217,043
)
Balance at 31 December 2003
(Restated)
41,327
1,798,536
27,424
—
(100
)
102
385,741
2,253,030
5,915
2,258,945
At 1 January 2004 as
previously reported
41,327
1,796,466
—
7,700
(100
)
102
407,535
2,253,030
—
2,253,030
Minority interests (as
previously presented
separately from liabilities
and equity at 31 December)
4
(d)
—
—
—
—
—
—
—
—
5,915
5,915
Prior period adjustments
arising from changes in
accounting policies under:
- HKAS 40 investment properties
4
(b)
—
—
—
(7,700
)
—
—
7,700
—
—
—
- HKFRS 2 share-based payment
4
(a)
—
2,070
27,424
—
—
—
(29,494
)
—
—
—
At 1 January 2004 (Restated)
41,327
1,798,536
27,424
—
(100
)
102
385,741
2,253,030
5,915
2,258,945
Foreign currency translation
adjustment
—
—
—
—
80
—
—
80
—
80
Cancellation of share options
—
—
(3,460
)
—
—
—
3,460
—
—
—
Net loss for the year
—
—
—
—
—
—
(59,957
)
(59,957
)
(2,059
)
(62,016
)
Balance at 31 December 2004
(Restated)
41,327
1,798,536
23,964
—
(20
)
102
329,244
2,193,153
3,856
2,197,009
At 1 January 2005 as
previously reported
41,327
1,796,466
—
5,500
(20
)
102
349,778
2,193,153
—
2,193,153
Minority interests (as
previously presented
separately from liabilities
and equity at 31 December)
4
(d)
—
—
—
—
—
—
—
—
3,856
3,856
Prior period adjustments
arising from changes in
accounting policies under:
- HKSA 39 financial instruments
4
(e)
—
—
—
—
—
—
(333
)
(333
)
—
(333
)
- HKAS 40 investment properties
4
(b)
—
—
—
(5,500
)
—
—
5,500
—
—
—
- HKFRS 2 share-based payment
4
(a)
—
2,070
23,964
—
—
—
(26,034
)
—
—
—
At 1 January 2005 (Restated)
41,327
1,798,536
23,964
—
(20
)
102
328,911
2,192,820
3,856
2,196,676
Foreign currency translation
adjustment
—
—
—
—
1,367
2
—
1,369
81
1,450
Cancellation of share options
—
—
(11,968
)
—
—
—
11,968
—
—
—
Net loss for the year
—
—
—
—
—
—
(135,564
)
(135,564
)
(1,010
)
(136,574
)
Balance at 31 December 2005
41,327
1,798,536
11,996
—
1,347
104
205,315
2,058,625
2,927
2,061,552
See accompanying notes to the consolidated financial statements.
F- 6
Table of Contents
APT SATELLITE HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts stated in thousands)
Years ended December 31,
2003
2004
2005
2005
(restated)
(restated)
HK$
HK$
HK$
US$
Operating activities
Loss before income taxes
(205,322
)
(45,391
)
(123,402
)
(15,820
)
Adjustments for:
Depreciation
235,947
177,617
197,806
25,360
Amortisation of leasehold land held for own use
375
375
375
48
Impairment loss recognized in respect of property,
property, plant and equipment
129,098
1,800
7,512
963
Impairment loss recognised in respect of prepayment for
construction of a satellite
—
—
59,904
7,680
Gain on partial disposal of an associate
(12
)
—
—
—
Interest income
(7,111
)
(7,312
)
(12,916
)
(1,656
)
Borrowing cost
—
4,117
36,942
4,736
Loss/(gain) on disposal of property, plant and equipment
—
32
(109
)
(14
)
Deficit/(surplus) arising on revaluation of investment property
70
(78
)
—
—
Share of losses of jointly controlled entities
57,133
2,709
7,995
1,025
Share-based payment
(898
)
—
—
—
Allowance for doubtful receivables
8,402
5,654
350
45
Operating profit before changes in working capital
217,682
139,523
174,457
22,367
(Increase)/decrease in trade receivables
(47,055
)
16,957
(4,393
)
(563
)
(Increase) in other assets
(87
)
(27,604
)
(8,863
)
(1,136
)
(Increase)/decrease in amount due from immediate
holding company
(20
)
20
—
—
(Increase)/decrease in deposits, prepayments and other
receivables
(240
)
16,815
19,293
2,472
(Decrease)/increase in payables and accrued charges
(955
)
(8,939
)
1,400
178
(Decrease)/increase in rentals received in advance
(13,789
)
9,691
762
98
(Increase)/decrease in amounts due from jointly controlled
entities
(12,731
)
(768
)
300
39
Decrease in amount due from an associate
209
—
—
—
(Decrease)/increase in deferred income
(22,286
)
233,499
3,379
433
(Decrease) in deposits received
(1,582
)
(25,353
)
(22,369
)
(2,867
)
Cash generated from operations
119,146
353,841
163,966
21,021
Hong Kong profits tax paid
(9,541
)
(108,135
)
—
—
Overseas tax paid
(18,313
)
(12,328
)
(14,438
)
(1,851
)
Net cash from operating activities
91,292
233,378
149,528
19,170
Investing activities
Payment for purchase of property, plant and equipment and
construction of satellites
(763,454
)
(462,026
)
(581,230
)
(74,517
)
Proceeds from partial disposal of an associate
12
—
—
—
Proceeds from disposal of property, plant and equipment
1
1
178
23
Advances/loans to jointly controlled entities
(40,920
)
—
(2,261
)
(290
)
Interest received
9,279
6,810
13,404
1,718
Decrease/(increase) in pledged bank deposits
205,823
90,723
(47,559
)
(6,097
)
Net cash used in investing activities
(589,259
)
(364,492
)
(617,468
)
(79,163
)
See accompanying notes to the consolidated financial statements.
F- 7
Table of Contents
APT SATELLITE HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS — continued
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts stated in thousands)
Years ended December 31,
2003
2004
2005
2005
HK$
HK$
HK$
US$
Financing activities
Interest paid
(3,681
)
(15,847
)
(32,582
)
(4,177
)
New bank borrowings
538,200
273,780
229,320
29,400
Repayment of bank borrowings
(317,682
)
—
(77,805
)
(9,975
)
Proceeds from shares issued under the share option scheme
2,019
—
—
—
Net cash from financing activities
218,856
257,933
118,933
15,248
Net (decrease)/increase in cash and cash equivalents
(279,111
)
126,819
(349,007
)
(44,745
)
Cash and cash equivalents at January 1,
826,257
546,864
673,763
86,380
Effect of foreign exchange rate changes
(282
)
80
1,684
216
Cash and cash equivalents at December 31,
546,864
673,763
326,440
41,851
Analysis of the balance of cash and cash equivalents:
Deposits with banks
539,916
661,677
316,685
40,601
Cash at bank and in hand
6,948
12,086
9,755
1,250
Cash and cash equivalents at December 31,
546,864
673,763
326,440
41,851
See accompanying notes to the consolidated financial statements.
F- 8
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
1.
ORGANIZATION AND PRINCIPAL ACTIVITIES
APT Satellite Holdings Limited (the "Company") was incorporated under the laws of Bermuda on
October 17, 1996 with limited liability. The Company owns all the issued shares of APT
Satellite Investment Company Limited, which, in turn, holds all the issued voting shares of
APT Satellite Company Limited.
The Company and its subsidiaries (hereafter collectively referred to as the "Group")
currently operate five satellites. The Company's first satellite, APSTAR I, was launched in
July 1994 and commenced commercial service in September 1994. After the commencement of
commercial service of APSTAR V, APSTAR I was operated in an inclined orbital mode in October
2004. The Company's second satellite, APSTAR IA, was launched in July 1996 and commenced
commercial service in September 1996. The Company's third satellite, APSTAR IIR, was
launched in October 1997 and commenced commercial service in January 1998. In August 1999, the Company provided substantially all of the transponders of
APSTAR IIR to a third party for the rest of its life. The Company's
fourth satellite, APSTAR V, was launched in June 2004 and commenced commercial service in
August 2004. In April 2005, the Company's fifth
satellite, APSTAR VI, was successfully launched and commenced commercial service in June
2005. Both APSTAR I and APSTAR 1A were operated in an inclined orbital mode.
The following list contains only the particulars of subsidiaries which principally affected
the results, assets or liabilities of the Group. The class of shares held is ordinary
unless otherwise stated.
All of these are controlled subsidiaries and have been consolidated into the Group financial
statements.
F- 9
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
1.
ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)
Proportion of ownership interest
Place of
Particulars of issued and
Group's
incorporation
paid up capital and debt
effective
held by the
held by
Name of Company
and operation*
securities
interest
Company
subsidiary
Principal activities
APT Satellite Investment
Company Limited
British Virgin Islands
US$1,400
100
%
100
%
—
Investment holding
Acme Star Investment Limited
Hong Kong
HK$2
100
%
—
100
%
Inactive
APT Satellite Company Limited
("APT")
Hong Kong
Ordinary Class "A"
HK$100; Non-voting
Deferred Class "B"
HK$542,500,000
100
%
—
100
%
Provision of
satellite
transponder
capacity
APT Satellite Enterprise Limited
Cayman Islands
US$2
100
%
—
100
%
Provision of
satellite
transponder
capacity
APT Satellite Global Company
Limited
Cayman Islands
US$2
100
%
—
100
%
Investment holding
APT Satellite Link Limited
Cayman Islands
US$2
100
%
—
100
%
Provision of
satellite
transponder
capacity
APT Satellite Telewell Limited
Hong Kong
HK$2
100
%
—
100
%
Inactive
APT Satellite TV Development
Limited
Hong Kong
HK$2
100
%
—
100
%
Provision of
satellite
television uplink
and downlink
services
APT Satellite Vision Limited
Hong Kong
HK$2
100
%
—
100
%
Satellite leasing
APT Telecom Services Limited
Hong Kong
HK$2
100
%
—
100
%
Provision of
telecommunication
services
Haslett Investments Limited
British Virgin Islands
US$1
100
%
—
100
%
Inactive
Skywork Corporation
British Virgin
Islands
US$1
100
%
—
100
%
Investment holding
The 138 Leasing Partnership
("Partnership")
Hong Kong
Partners' capital
HK$329,128,857
N/A
N/A
N/A
Inactive
Ying Fai Realty (China) Limited
Hong Kong/ People's
Republic of China
("PRC")
HK$20
100
%
—
100
%
Property holding
APT
Communication Technology
Development (Shenzhen) Co.,
Ltd.
Wholly-owned foreign enterprises, PRC
Registered capital HK$5,000,000
100
%
—
100
%
Provision of
satellite transponder
capacity
CTIA VSAT Network Limited
("CTIA")
Hong Kong
HK$5,000,000
60
%
—
60
%
Investment holding
Beijing
Asia Pacific East
Communication Network Limited ("BAPE")
Joint venture, PRC
Registered capital US$4,000,000
36
%
—
60
%
Provision of data
transmission
services
*
The place of operation is the place of incorporation/establishment unless
otherwise stated.
No loan capital has been issued by any of the subsidiaries.
F- 10
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
2.
BASIS OF PRESENTATION
These financial statements have been prepared in accordance with all applicable Hong
Kong Financial Reporting Standards (HKFRSs), which collective term includes all applicable
individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (HKASs)
and Interpretations issued by the Hong Kong Institute of Certified Public Accountants
(HKICPA), accounting principles generally accepted in Hong Kong("HK GAAP"). Significant
differences between HK GAAP and accounting principles generally accepted in the United
States ("US GAAP") are summarised in note 28.
The HKICPA has issued a number of new and revised HKFRSs that are effective or available
for early adoption for accounting periods beginning on or after January 1, 2005.
Information on the changes in accounting policies resulting from initial application of
these new and revised HKFRSs for the current and prior accounting periods reflected in
these financial statements is provided in note 4.
The measurement basis used in the preparation of the consolidated financial
statements is historical cost modified by the revaluation of investment properties as
explained in the accounting policies set out below.
The consolidated financial statements of the Group are expressed in Hong Kong dollars
("HK$"). The translations of amounts from Hong Kong dollars into United States dollars for
convenience of the reader have been made at the rate on December 31, 2005 of HK$7.80 =
US$1.00, which approximates the noon buying rate in New York City for cable transfers in
Hong Kong Dollars as certified for customs purposes by the Federal Reserve Bank of New York
on December 31, 2005. No representation is made that the Hong Kong dollar amounts could
have been, or could be, converted into United States dollars at that rate or at any other
certain rate on December 31, 2005, or any other certain date.
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of consolidation
The consolidated financial statements include the financial statements of the
Company and its subsidiaries. A subsidiary, is a company in which the Group, directly
or indirectly, holds more than half of the issued share capital or controls more than
half the voting powers or controls the composition of the board of directors.
Subsidiaries are considered to be controlled if the Group has the power, directly or
indirectly, to govern the financial and operating policies, so as to obtain benefits
from their activities.
An investment in a controlled subsidiary is consolidated into the consolidated
financial statements from the date that control commences until the date that control
ceases.
Intra-group balances and transactions, and any unrealised profits arising from
intra-group transactions, are eliminated in full in preparing the consolidated
financial statements. Unrealised losses resulting from intra-group transactions are
eliminated in the same way as unrealised gains but only to the extent that there is no
evidence of impairment.
Minority interests at the balance sheet date, being the portion of the net assets of
subsidiaries attributable to equity interests that are not owned by the Company,
whether directly or indirectly through subsidiaries, are presented in the consolidated
balance sheet and statement of changes in equity, separately from equity attributable
to shareholders of the company. Minority interests in the results of the Group are
presented on the face of the consolidated statement of operations as an allocation of
the total profit or loss for the year between minority interests and the equity
shareholders of the Company.
F- 11
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(a)
Basis of consolidation (continued)
Where losses attributable to the minority exceed the minority interest in the
equity of a subsidiary, the excess, and any further losses attributable to the
minority, are charged against the Group's interest except to the extent that the
minority has a binding obligation to, and is able to, fund the losses. If the
subsidiary subsequently reports profits, the Group's interest is allocated all such
profits until the minority's share of losses previously absorbed by the Group has been
recovered.
The particulars of the Group's principal subsidiaries are set out in note 1.
(b)
Associates and jointly controlled entities
An associate is an entity in which the Group or Company has significant influence, but
not control or joint control, over its management, including participation in the
financial and operating policy decisions.
A jointly controlled entity is an entity which operates under a contractual
arrangement between the Group or Company and other parties, where the contractual
arrangement establishes that the Group or Company and one or more of the other parties
share joint control over the economic activity of the entity.
An investment in an associate or a jointly controlled entity is accounted for in the
consolidated financial statements under the equity method and is initially recorded at
cost and adjusted thereafter for the post acquisition change in the Group's share of
the associate's or the jointly controlled entity's net assets, unless it is classified
as held for sale (or included in a disposal group that is classified as held for
sale). The consolidated statement of operations reflects the Group's share of the
post-acquisition results of the associates and jointly controlled entities for the
year, including any impairment loss on goodwill relating to the investment in
associates and jointly controlled entities recognised for the year (see note 3(c)).
When the Group's share of losses exceeds its interest in the associate or the jointly
controlled entity, the Group's interest is reduced to nil and recognition of further
losses is discontinued except to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of the associate or the jointly
controlled entity. For this purpose, the Group's interest in the associate or the
jointly controlled entity is the carrying amount of the investment under the equity
method together with the Group's long-term interests that in substance from part of
the Group's net investment in the associate or the jointly controlled entity.
Unrealised profits and losses resulting from transactions between the Group and its
associates and jointly controlled entities are eliminated to the extent of the Group's
interest in the associate or jointly controlled entity, except where unrealised losses
provide evidence of an impairment of the asset transferred, in which case they are
recognised immediately in the statement of operations.
F- 12
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(c)
Goodwill
Goodwill represents the excess of the cost of a business combination or an investment
in an associate or a jointly controlled entity over the Group's share in the net fair
value of the acquiree's identifiable assets, liabilities and contingent liabilities.
Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated
to cash-generating units and is tested annually for impairment. In respect of
associates or jointly controlled entities, the carrying amount of goodwill is included
in the carrying amount of the interest in the associate or jointly controlled entity.
Any excess of the Group's interest in the net fair value of the acquiree's
identifiable assets, liabilities and contingent liabilities over the cost of a
business combination or an investment in an associate or a jointly controlled entity
is recognised immediately in profit or loss.
On disposal of a controlled subsidiary, an associate or a jointly controlled entity
during the year, any attributable amount of purchased goodwill is included in the
calculation of the profit or loss on disposal.
(d)
Investment property
Investment properties are land and/or buildings which are owned or held under a
leasehold interest (see note 3(f)) to earn rental income and/or for capital
appreciation. These include land held for a currently undetermined future use.
Investment properties are stated in the balance sheet at fair value. Any gain or loss
arising from a change in fair value or from the retirement or disposal of an
investment property is recognised in profit or loss. Rental income from investment
properties is accounted for as described in (note 3(o)(iv)).
When the Group holds a property interest under an operating lease to earn rental
income and/or for capital appreciation, the interest is classified and accounted for
as an investment property on a property-by-property basis. Any such property interest
which has been classified as an investment property is accounted for as if it were
held under a finance lease (see note 3(f)), and the same accounting policies are
applied to that interest as are applied to other investment properties leased under
finance leases. Lease payments are accounted for as described in note 3(f).
(e)
Other property, plant and equipment
The following items of property, plant and equipment are stated in the balance sheet
at cost less accumulated depreciation and impairment losses:
-
buildings held for own use which are situated on leasehold land,
where the fair value of the building could be measured separately from the fair
value of the leasehold land at the inception of the lease (see note 3(f)); and
-
other items of plant and equipment
Gains or losses arising from the retirement or disposal of an item of property, plant
and equipment are determined as the difference between the net disposal proceeds and
the carrying amount of the item and are recognised in the statement of operations on
the date of retirement or disposal. Any related revaluation surplus is transferred
from the revaluation reserve to retained profits.
F- 13
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e)
Other property, plant and equipment(continued)
Depreciation is calculated to write off the cost or valuation of items of property,
plant and equipment, less their estimated residual value, if any, using the straight
line method over their estimated useful lives as follows:
-
Buildings situated on leasehold land are depreciated over the
shorter of the unexpired term of lease and their estimated useful lives, being no
more than 50 years after the date of completion.
-
Leasehold improvements
Over the lease term
-
Furniture and equipment, motor vehicles,
and computer equipment
5 years
-
Communication satellite equipment
5 to 15 years
-
Communication stations
5 years
-
Communication satellites
9 to 16 years
Where parts of an item of property, plant and equipment have different useful lives,
the cost or valuation of the item is allocated on a reasonable basis between the parts
and each part is depreciated separately. Both the useful life of an asset and its
residual value, if any, are reviewed annually.
(f)
Leased assets
(i)
Classification of assets leased to the Group
Assets that are held by the Group under leases which transfer to the Group
substantially all the risks and rewards of ownership are classified as being
held under finance leases. Leases which do not transfer substantially all the
risks and rewards of ownership to the Group are classified as operating leases,
with the following exceptions:
-
property held under operating leases that would
otherwise meet the definition of an investment property is classified as an
investment property on a property-by-property basis and, if classified as
investment property, is accounted for as if held under a finance lease (see
note 3(d)); and
-
land held for own use under an operating lease, the
fair value of which cannot be measured separately from the fair value of a
building situated thereon at the inception of the lease, is accounted for
as being held under a finance lease, unless the building is also clearly
held under an operating lease. For these purposes, the inception of the
lease is the time that the lease was first entered into by the Group, or
taken over from the previous lessee, or at the date of construction of
those buildings, if later.
(ii)
Assets acquired under finance leases
Where the Group acquires the use of assets under finance leases, the amounts
representing the fair value of the leased asset, or, if lower, the present value
of the minimum lease payments, of such assets are included in fixed assets and
the corresponding liabilities, net of finance charges, are recorded as
obligations under finance leases. Depreciation is provided at rates which write
off the cost of the assets in equal annual amounts, to residual values, over the
term of the relevant lease or, where it is likely the Company or Group will
obtain ownership of the asset, the life of the asset, as set out in note 3(e).
Impairment losses are accounted for in accordance with the accounting policy as
set out in note 3(g). Finance charges implicit in the lease payments are charged
to the statement of operations over the period of the leases so as to produce an
approximately constant periodic rate of charge on the remaining balance of the
obligations for each accounting period. Contingent rentals are reported as an
expense of the accounting period in which they are incurred.
F- 14
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(f)
Leased assets (continued)
(iii)
Operating lease charges
Where the Group has the use of assets under operating leases, payments made
under the leases are charged to the statement of operations in equal instalments
over the accounting periods covered by the lease term, except where an
alternative basis is more representative of the pattern of benefits to be
derived from the leased asset. Lease incentives received are recognised in the
statement of operations as an integral part of the aggregate net lease payments
made. Contingent rentals are charged to the statement of operations in the
accounting period in which they are incurred.
The cost of acquiring land held under an operating lease is amortised on a
straight-line basis over the period of the lease term except where the property
is classified as an investment property.
(g)
Impairment of other assets
Internal and external sources of information are reviewed at each balance sheet date
to identify indications that the following assets may be impaired or an impairment
loss previously recognised no longer exists or may have decreased:
-
property, plant and equipment;
-
investments in subsidiaries, associates and joint ventures;
-
trade and other receivables; and
-
goodwill.
If any such indication exists, the asset's recoverable amount is estimated. In
addition, for goodwill, intangible assets that are not yet available for use and
intangible assets that have indefinite useful lives, the recoverable amount is
estimated annually whether or not there is any indication of impairment.
-
Calculation of recoverable amount
The recoverable amount of an asset is the greater of its net selling price
and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of time value of money and the risks specific to the
asset. Where an asset does not generate cash inflows largely independent of those
from other assets, the recoverable amount is determined for the smallest group of
assets that generates cash inflows independently (i.e. a cash-generating unit).
-
Recognition of impairment losses
An impairment loss is recognised in the statement of operations whenever the
carrying amount of an asset, or the cash-generating unit to which it belongs,
exceeds its recoverable amount. Impairment losses recognised in respect of
cash-generating units are allocated first to reduce the carrying amount of any
goodwill allocated to the cash-generating unit (or group of units) and then, to
reduce the carrying amount of the other assets in the unit (or group of units) on
a pro rata basis, except that the carrying value of an asset will not be reduced
below its individual fair value less costs to sell, or value in use, if
determinable.
F- 15
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g)
Impairment of other assets (continued)
-
Reversals of impairment losses
In respect of assets other than goodwill, an impairment loss is reversed if there
has been a favourable change in the estimates used to determine the recoverable
amount. An impairment loss in respect of goodwill is not reversed.
A reversal of impairment losses is limited to the asset's carrying amount that
would have been determined had no impairment loss been recognised in prior years.
Reversals of impairment losses are credited to the statement of operations in the
year in which the reversals are recognised.
(h)
Trade and other receivables
Trade and other receivables are initially recognised at fair value and thereafter
stated at amortised cost less impairment losses for bad and doubtful debts (see note
3(g)), except where the receivables are interest-free loans made to related parties
without any fixed repayment terms. In such cases, the receivables are stated at cost
less impairment losses for bad and doubtful debts.
(i)
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable
transaction costs. Subsequent to initial recognition, interest-bearing borrowings are
stated at amortised cost with any difference between cost and redemption value being
recognised in the statement of operations over the period of the borrowings using the
effective interest method.
(j)
Trade and other payables
Trade and other payables are initially recognised at fair value and thereafter stated
at amortised cost unless the effect of discounting would be immaterial, in which case
they are stated at cost.
(k)
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits with
banks and other financial institutions, and short-term, highly liquid investments that
are readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value, having been within three months of maturity at
acquisition. Bank overdrafts that are repayable on demand and form an integral part of
the Group's cash management are also included as a component of cash and cash
equivalents for the purpose of the consolidated cash flow statement.
(l)
Employee benefits
(i)
Salaries, annual bonuses, paid annual leave, leave passage and
the cost to the Group of non-monetary benefits are accrued in the year in which
the associated services are rendered by employees of the Group. Where payment
or settlement is deferred and the effect would be material, these amounts are
stated at their present values.
Contributions to Mandatory Provident Funds as required under the
Hong Kong Mandatory Provident Fund Schemes Ordinance, are
recognised as an expense in the consolidated statement of operations as
incurred.
F- 16
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(l)
Employee benefit (continued)
The employees of the Group participate in retirement plans managed by respective
local governments of the municipalities in which the Group operates in the
People's Republic of China (the "PRC"). The Group's contributions to the plan
are calculated based on fixed rates of the employees' salary costs and charged
to the statement of operations when incurred. The Group has no other obligation
for the payment of retirement and other post-retirement benefits of staff other
than the contributions described above.
(ii)
Share based payments
The fair value of share options granted to employees is recognised as an
employee cost with a corresponding increase in a capital reserve within equity.
The fair value is measured at grant date using the binomial lattice model,
taking into account the terms and conditions upon which the options were
granted. Where the employees have to meet vesting conditions before becoming
unconditionally entitled to the share options, the total estimated fair value of
the share options is spread over the vesting period, taking into account the
probability that the options will vest.
During the vesting period, the number of share options that is expected to vest
is reviewed. Any adjustment to the cumulative fair value recognised in prior
years is charged/credited to the statement of operations for the year of the
review, unless the original employee expenses qualify for recognition as an
asset, with a corresponding adjustment to the capital reserve. On vesting date,
the amount recognised as an expense is adjusted to reflect the actual number of
share options that vest (with a corresponding adjustment to the capital reserve)
except where forfeiture is only due to not achieving vesting conditions that
relate to the market price of the Company's shares. The equity amount is
recognised in the capital reserve until either the option is exercised (when it
is transferred to the share premium account) or the option expires (when it is
released directly to retained profits).
(iii)
Termination benefits
Termination benefits are recognised when, and only when, the Group demonstrably
commits itself to terminate employment or to provide benefits as a result of
voluntary redundancy by having a detailed formal plan which is without realistic
possibility of withdrawal.
(m)
Income tax
Income tax for the year comprises current tax and movements in deferred tax assets and
liabilities. Current tax and movements in deferred tax assets and liabilities are
recognised in the statement of operations except to the extent that they relate to
items recognised directly in equity, in which case they are recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax
rates enacted or substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Deferred tax assets and liabilities arise from deductible and taxable temporary
differences respectively, being the differences between the carrying amounts of assets
and liabilities for financial reporting purposes and their tax bases. Deferred tax
assets also arise from unused tax losses and unused tax credits.
F- 17
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m)
Income tax (continued)
Apart from certain limited exceptions, all deferred tax liabilities, and all deferred
tax assets to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised, are recognised. Future taxable
profits that may support the recognition of deferred tax assets arising from
deductible temporary differences include those that will arise from the reversal of
existing taxable temporary differences, provided those differences relate to the same
taxation authority and the same taxable entity, and are expected to reverse either in
the same period as the expected reversal of the deductible temporary difference or in
periods into which a tax loss arising from the deferred tax asset can be carried back
or forward. The same criteria are adopted when determining whether existing taxable
temporary differences support the recognition of deferred tax assets arising from
unused tax losses and credits, that is, those differences are taken into account if
they relate to the same taxation authority and the same taxable entity, and are
expected to reverse in a period, or periods, in which the tax loss or credit can be
utilised.
The limited exceptions to recognition of deferred tax assets and liabilities are those
temporary differences arising from goodwill not deductible for tax purposes, negative
goodwill treated as deferred income, the initial recognition of assets or liabilities
that affect neither accounting nor taxable profit (provided they are not part of a
business combination), and temporary differences relating to investments in
subsidiaries to the extent that, in the case of taxable differences, the Group
controls the timing of the reversal and it is probable that the differences will not
reverse in the foreseeable future, or in the case of deductible differences, unless it
is probable that they will reverse in the future.
The amount of deferred tax recognised is measured based on the expected manner of
realisation or settlement of the carrying amount of the assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet date. Deferred tax
assets and liabilities are not discounted.
The carrying amount of a deferred tax asset is reviewed at each balance sheet date and
is reduced to the extent that it is no longer probable that sufficient taxable profit
will be available to allow the related tax benefit to be utilised. Any such reduction
is reversed to the extent that it becomes probable that sufficient taxable profit will
be available.
Additional income taxes that arise from the distribution of dividends are recognised
when the liability to pay the related dividends is recognised.
Current tax balances and deferred tax balances, and movements therein, are presented
separately from each other and are not offset. Current tax assets are offset against
current tax liabilities, and deferred tax assets against deferred tax liabilities if,
and only if, the Company or the Group has the legally enforceable right to set off
current tax assets against current tax liabilities and the following additional
conditions are met:
-
in the case of current tax assets and liabilities, the Company or
the Group intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously; or
-
in the case of deferred tax assets and liabilities, if they relate
to income taxes levied by the same taxation authority on either:
-
the same taxable entity; or
-
different taxable entities, which, in each future period in
which significant amounts of deferred tax liabilities or assets are expected
to be settled or recovered, intend to realise the current tax assets and
settle the current tax liabilities on a net basis or realise and settle
simultaneously.
F- 18
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(n)
Provisions and contingent liabilities
Provisions are recognised for liabilities of uncertain timing or amount when the
Company or Group has a legal or constructive obligation arising as a result of a past
event, it is probable that an outflow of economic benefits will be required to settle
the obligation and a reliable estimate can be made. Where the time value of money is
material, provisions are stated at the present value of the expenditures expected to
settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the
amount cannot be estimated reliably, the obligation is disclosed as a contingent
liability, unless the probability of outflow of economic benefits is remote. Possible
obligations, whose existence will only be confirmed by the occurrence or
non-occurrence of one or more future events are also disclosed as contingent
liabilities unless the probability of outflow of economic benefits is remote.
(o)
Revenue recognition
Provided it is probable that the economic benefits will flow to the Group and the
revenue and costs, if applicable, can be measured reliably, revenue is recognized in
the statement of operations as follows:
(i)
Transponder utilization income
Income from provision of satellite transponder capacity and related
services is recognised in the statement of operations in equal instalments over
the accounting periods covered by the contract term, except where an alternative
basis is more representative of the pattern of benefits to be derived from the
satellite transponder capacity utilised.
(ii)
Service income
Service income in respect of provision of satellite-based broadcasting and
telecommunications services and other service is recognised when services are
provided.
(iii)
Interest income
Interest income from bank deposits is accrued on a time-apportioned basis by
reference to the principal outstanding and the rate applicable.
(iv)
Rental income from operating leases
Rental income receivable under operating leases is recognised in the statement
of operations in equal instalments over the periods covered by the lease term,
except where an alternative basis is more representative of the pattern of
benefits to be derived from the use of the leased asset.
(p)
Translation of foreign currencies
Foreign currency transactions during the year are translated at the foreign exchange
rates ruling at the transaction dates. Monetary assets and liabilities denominated in
foreign currencies are translated at the foreign exchange rates ruling at the balance
sheet date. Exchange gains and losses are recognised in the statement of operations,
except those arising from foreign currency borrowings used to hedge a net investment
in a foreign operation which are recognised directly in equity.
Non-monetary assets and liabilities that are measured in terms of historical cost in a
foreign currency are translated using the foreign exchange rates ruling at the
transaction dates. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated using the foreign exchange
rates ruling at the dates the fair value was determined.
F- 19
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(p)
Translation of foreign currencies (continued)
The functional currency of the Group's main operations is the United States dollar
which is translated into Hong Kong dollar for reporting of the financial statements.
As the Hong Kong dollar is pegged to the United States dollar, foreign currency
exchange fluctuations have an insignificant impact to the Group.
The results of foreign operations are translated into Hong Kong dollars at the
exchange rates approximating the foreign exchange rates ruling at the dates of the
transactions. Balance sheet items are translated into Hong Kong dollars at the foreign
exchange rates ruling at the balance sheet date. The resulting exchange differences
are recognised directly in a separate component of equity.
On disposal of a foreign operation, the cumulative amount of the exchange differences
recognised in equity which relate to that foreign operation is included in the
calculation of the profit or loss on disposal.
(q)
Borrowing costs
Borrowing costs are expensed in the statement of operations in the period in which
they are incurred, except to the extent that they are capitalised as being directly
attributable to the acquisition or construction of an asset which necessarily takes a
substantial period of time to get ready for its intended use or sale.
The capitalisation of borrowing costs as part of the cost of a qualifying asset
commences when expenditures for the asset are being incurred, borrowing costs are
being incurred and activities that are necessary to prepare the asset for its intended
use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases
when substantially all the activities necessary to prepare the qualifying asset for
its intended use or sale are interrupted or complete.
(r)
Related parties
For the purposes of these financial statements, parties are considered to be related
to the Group if the Group has the ability, directly or indirectly, to control the
party or exercise significant influence over the party in making financial and
operating decisions, or vice versa, or where the Group and the party are subject to
common control or common significant influence. Related parties may be individuals
(being members of key management personnel, significant shareholders and/or their
close family members) or other entities and include entities which are under the
significant influence of related parties of the Group where those parties are
individuals, and post-employment benefit plans which are for the benefit of employees
of the Group or of any entity that is a related party of the Group.
(s)
Segment reporting
A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which is
subject to risks and rewards that are different from those of other segments.
In accordance with the Group's internal financial reporting system, the Group has
chosen business segment information as the primary reporting format and geographical
segment information as the secondary reporting format for the purposes of these
financial statements.
F- 20
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(s)
Segment reporting (continued)
Segment revenue, expenses, results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on a reasonable
basis to that segment. Segment assets of the Group include trade receivables and
property, plant and equipment. Segment revenue, expenses, assets, and liabilities are
determined before intra-group balances and intra-group transactions are eliminated as
part of the consolidation process, except to the extent that such intra-group
balances and transactions are between Group entities within a single segment.
Inter-segment pricing is based on terms similar to those available to other external
parties.
Segment capital expenditure is the total cost incurred during the period to acquire
segment assets (both tangible and intangible) that are expected to be used for more
than one period.
(t)
Loss per share
The calculation of the basic and diluted loss per share is based on the following data:
2003
2004
2005
HK$
HK$
HK$
(restated)
(restated)
Loss
Loss for the purposes of calculating
basic and diluted loss per share
(net loss for the year)
(216,120
)
(59,957
)
(135,564
)
Number of shares
'000
'000
'000
Weighted average number of ordinary shares for
the purposes of calculating basis and diluted loss
per share
412,892
413,265
413,265
Options to purchase 8,450 shares and 4,230 shares of common stock at HK$2.765 per
share were outstanding during the year 2004 and 2005, respectively, but were not
included in the computation of diluted EPS because the options' exercise price was
greater than the average market price of the common shares for the period. The
options, which expire on May 21, 2011, were still outstanding at the end of year
2005.
F-21
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(u)
Use of estimates
The preparation of financial statements in conformity with HKFRSs requires management
judgements, estimates any assumptions that affect the application of policies and
reported amounts of assets, liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognized in the period in which estimate is revised if
the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
Judgements made by management in the application of HKFRSs that have significant
effect on the financial statements and estimates are discussed in note 26.
4.
CHANGES IN ACCOUNTING POLICIES
The HKICPA has issued a number of new and revised HKFRSs that are effective for accounting periods beginning on or
after January 1, 2005.
The accounting policies of the Group after the adoption of
these new and revised HKFRSs have been summarised in note 3. The
following sets our information on the significant changes in
accounting policies for the current and prior accounting periods
reflected in these financial statements.
The Group has not applied any new standard or interpretation that is not yet effective
for the current accounting period (see note 27).
(a)
Employee share option scheme (HKFRS 2, Share-based payment)
In prior years, no amounts were recognised when employees (which term includes
directors) were granted share options over shares in the Company. If the employees
chose to exercise the options, the nominal amount of share capital and share premium
were credited only to the extent of the option's exercise price receivable.
With effect from January 1, 2005, in order to comply with HKFRS 2, the Group
recognises the fair value of such share options as an expense in the statement of
operations, or as an asset, if the cost qualifies for recognition as an asset under
the Group's accounting policies. A corresponding increase is recognised in a capital
reserve within equity.
Where the employees are required to meet vesting conditions before they become
entitled to the options, the Group recognises the fair value of the options granted
over the vesting period. Otherwise, the Group recognises the fair value in the period
in which the options are granted.
If an employee chooses to exercise options, the related capital reserve is
transferred to share capital and share premium, together with the exercise price.
F-22
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
4.
CHANGES IN ACCOUNTING POLICIES (continued)
(a)
Employee share option scheme (HKFRS 2, Share-based payment) (continued)
The new accounting policy has been applied retrospectively by decreasing the
opening balance of retained earnings as of January 1, 2003, 2004 and 2005 by
HK$30,392, HK$27,424 and HK$23,964 respectively, with the corresponding amount
credited to capital reserve. The Group's loss before taxation for the year ended
December 31, 2003 has decreased by HK$ 898. There is no effect on the Group's loss
before income taxes for the years ended December, 31 2004 and 2005 as a result of
this new accounting policy because no additional options were granted nor did any
options from previous grants vest during these periods.
Details of the employee share option scheme are set out in note 23.
(b)
Investment properties (HKAS 40, Investment property)
Changes in accounting policies relating to investment properties are as follows.
Timing of recognition of movements in fair value in the statement of operations
In prior years, movements in the fair value of the Group's investment properties
were recognised directly in the investment properties revaluation reserve except
when, on a portfolio basis, the reserve was insufficient to cover a decline in the
fair value of the portfolio, when a decline previously recognised in the statement of
operations had reversed, or when an individual investment property was disposed of.
In these limited circumstances movements in the fair value were recognised in the
statement of operations.
Upon adoption of HKAS 40 as of January 1, 2005, all changes in the fair value of
investment properties are recognised directly in the statement of operations in
accordance with the fair value model in HKAS 40.
These changes in accounting policy have been adopted retrospectively by
increasing the opening balance of retained earnings as of January 1, 2004 and 2005
by HK$7,700 and HK$5,500 respectively, to include all of the Group's previous
investment properties revaluation reserve.
As a result of this new policy, the Group's loss before taxation for the years
ended December 31, 2003, 2004 and 2005 has decreased by HK$7,700, increased by
HK$2,200 and HK$7,150 respectively, consisting of the Group's share of the net
increase or decrease in the fair value of the investment property held by the Group's
jointly controlled entity. The decrease is reflected in the share of results of
jointly controlled entities.
(c)
Leasehold land and buildings held for own use (HKAS 17, Leases)
In prior years, leasehold land held for own use which was presented as part of "Land
and buildings" in "Property, plant and equipment" was stated at cost less accumulated
depreciation and accumulated impairment losses. Depreciation was calculated to
write-off the cost of leasehold land on a straight-line basis over their lease term.
F-23
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
4.
CHANGES IN ACCOUNTING POLICIES (continued)
With effect from January 1, 2005, in order to comply with HKAS 17, leasehold
land held for own use is accounted for as being held under an operating lease where
the fair value of the interest in any buildings situated on the leasehold land could
be separately identified from the fair value of the leasehold land at the time the
lease was first entered into by the Group, or taken over from the previous lessee, or
at the date of construction of those buildings, if later. Any pre-paid land premiums
for acquiring the leasehold land, or other lease payments, are stated at cost and are
amortized on a straight-line basis over the respective periods of the lease term.
Any buildings held for own use which are situated on such land leases continue to be
presented as part of property, plant and equipment.
The new accounting policy has been adopted retrospectively, but there is no
impact on the Group's net assets as at the year end and on the Group's loss for the
years presented. An additional line item "Interest in leasehold land held for own use
under an operating lease" , which was previously included in "Property, plant and
equipment" has been included on the face of the consolidated balance sheet. The
comparative figure for "Property, plant and equipment" has been reclassified to
conform with the current year's presentation.
(d)
Minority interests (HKAS 1, Presentation of financial statements and HKAS 27,
Consolidated and separate financial statements)
In prior years, minority interests at the balance sheet date were presented in
the consolidated balance sheet separately from liabilities and as a deduction
from net assets. Minority interests in the results of the Group for the year were
also separately presented in the statement of operations as a deduction before
arriving at the profit attributable to shareholders.
With effect from January 1, 2005, in order to comply with HKAS 1 and HKAS 27, minority
interests at the balance sheet date are presented in the consolidated balance sheet within equity, separately from the equity attributable to the equity holders of
the parent. Minority interests in the results of the Group for the year are presented on the
face of the consolidated statement of operations as an allocation of the total profit or loss
for the year between the minority interests and the equity holders of the parent.
The presentation of minority interests in the consolidated balance sheet,
consolidated statement of operations and consolidated statement of changes in equity
for the comparative years have been restated accordingly.
(e)
Financial instruments (HKAS 32, Financial instruments: Disclosure and
presentation and HKAS 39 Financial instruments: Recognition and measurement)
In prior years, loan arrangement fee was included as part of the "Deposits,
prepayments and deferred expenses" and was amortised on a straight line basis over
the terms of the relevant bank borrowings. With effect from January 1, 2005, in order
to comply with HKAS 39, the unamortised balance of the loan arrangement fee previously included in deposits,
prepayments and other receivables under current assets and other assets of HK$1,561
and HK$4,679 respectively, is now presented as a deduction from the secured bank
borrowings in the consolidated balance sheet and amortised by using the effective
interest method.
The new accounting policy has been applied by decreasing the opening balance of
retained earnings as of January 1, 2005 by HK$333, and the Group's loss before
taxation for the year ended December 31, 2005 has increased by HK$504.
F-24
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
4.
CHANGES IN ACCOUNTING POLICIES (continued)
(f)
Definition of related parties (HKAS 24, Related party disclosures)
As a result of the adoption of HKAS 24, Related party disclosures, the
definition of related parties as disclosed in note 3(r) has been expanded to clarify
that related parties include entities that are under the significant influence of a
related party that is an individual (i.e. key management personnel, significant
shareholders and/or their close family members) and post-employment benefit plans
which are for the benefit of employees of the Group or of any entity that is a
related party of the Group. The clarification of the definition of related parties
has not resulted in any material changes to the previously reported disclosures of
related party transactions nor has it had any material effect on the disclosures made
in the current period, as compared to those that would have been reported had SSAP
20, Related party dislosures, still been in effect.
5.
PROPERTY, PLANT AND EQUIPMENT
Furniture and
equipment, motor
Commun-
vehicles, and
ication
Commun-
Commun-
Land and
Leasehold
computer
satellite
ication
ication
Construction
buildings
improvements
equipment
equipment
stations
satellites
in progress
Total
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
Cost:
At January 1, 2004 (restated)
100,092
9,251
41,678
125,600
8,425
2,100,129
2,020,724
4,405,899
Additions
2,414
474
1,624
5,264
51
—
420,913
430,740
Disposals
—
(2,344
)
(472
)
(2
)
—
—
—
(2,818
)
Transfer
—
—
75
24
529
1,157,899
(1,158,527
)
—
At December 31, 2004
(restated)
102,506
7,381
42,905
130,886
9,005
3,258,028
1,283,110
4,833,821
Cost:
At January 1, 2005 (restated)
102,506
7,381
42,905
130,886
9,005
3,258,028
1,283,110
4,833,821
Exchange adjustments
—
21
58
152
187
—
144
562
Additions
200
229
685
2,017
151
—
521,182
524,464
Disposals
(473
)
(10
)
(368
)
(45
)
—
—
—
(896
)
Transfer
—
—
—
28,165
4,561
1,770,612
(1,803,338
)
—
At December 31, 2005
102,233
7,621
43,280
161,175
13,904
5,028,640
1,098
5,357,951
Accumulated depeciation:
At January 1, 2004 (restated)
13,229
5,503
18,973
63,430
1,443
1,874,281
—
1,976,859
Charge for the year
2,069
676
8,167
13,893
1,565
151,247
—
177,617
Impairment loss
—
—
—
—
—
—
1,800
1,800
Written back on disposal
—
(2,344
)
(440
)
(1
)
—
—
—
(2,785
)
At December 31, 2004
(restated)
15,298
3,835
26,700
77,322
3,008
2,025,528
1,800
2,153,491
Accumulated depeciation:
At January 1, 2005 (restated)
15,298
3,835
26,700
77,322
3,008
2,025,528
1,800
2,153,491
Exchange adjustments
—
13
35
84
63
—
37
232
Charge for the year
2,096
439
7,570
14,185
1,663
171,853
—
197,806
Impairment loss transfer
—
—
—
680
1,157
—
(1,837
)
—
Impairment loss
—
—
—
7,512
—
—
7,512
Written back on disposal
(105
)
(10
)
(361
)
(16
)
—
—
—
(492
)
At December 31, 2005
17,289
4,277
33,944
99,767
5,891
2,197,381
—
2,358,549
Net book value:
At December 31, 2005
84,944
3,344
9,336
61,408
8,013
2,831,259
1,098
2,999,402
At December 31, 2004
(restated)
87,208
3,546
16,205
53,564
5,997
1,232,500
1,281,310
2,680,330
Interest expense of HK$16,704 and HK$9,762 and other related cost of HK$3,598 and
HK$2,222 incurred for obtaining the loans were capitalized during the years ended
December 31, 2004 and 2005, respectively.
F-25
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
5.
PROPERTY, PLANT AND EQUIPMENT (continued)
Fixed assets finance leases
(i)
The fair value of the buildings held for own use, which are situated on
leasehold land as disclosed above cannot be measured separately from the fair value of
the leasehold land at the inception of the lease, and therefore is accounted for as
being held under a finance lease.
(ii)
In August 2004, the in-orbit tests of APSTAR V with 54 transponders was
completed and APSTAR V was put into service on August 13, 2004. Based on the
arrangements entered into by the Group and the vendor, Loral Orion, Inc ("Loral
Orion"), the Group assumed risks and rewards of 37 transponders ("APT Transponders")
for the entire operational life of APSTAR V under finance leases, while the risks and
rewards relating to the other 17 transponders remained with Loral Orion. As at December
31, 2004 and 2005, the net book value of communication satellites held under finance
leases in connection with APSTAR V amounted to HK$1,126,576 and HK$1,045,095,
respectively.
Pursuant to the various amended agreements with Loral Orion, Loral Orion has an option to
lease 4 APT Transponders from the fourth year and another 4 APT Transponders from the
fifth year after completion of in-orbit tests of APSTAR V to its remaining operational
lives at a total consideration of HK$282,865. The transponders subject to this option had
a net book value of HK$243,584 and HK$225,966 at 31 December 2004 and 2005 respectively.
Impairment loss
During the years ended December 31, 2003, 2004 and 2005, the Group conducted a review of
the Group's property, plant and equipment and determined that certain assets were impaired as
the recoverable amount of these assets is estimated to be less than their carrying amount.
Accordingly, an impairment loss of HK$129,098 in respect of communication satellites,
HK$1,800 in respect of construction in progress and HK$7,512 in respect of communication
satellite equipment had been recognised and charged to the statement of operations in 2003,
2004 and 2005 respectively.
Communication satellites at an inclined mode operation
During the year, the Group has entered into an utilisation agreement with a customer to
utilise the APSTAR IA communication satellite to work in an inclined orbital mode for at
least 5 years. Accordingly, the residual value of APSTAR IA is now being amortised over the
above contract terms from July 1, 2005. Other satellites have no change of their remaining
useful lives.
The analysis of net book value of land and buildings held by the Group is as follows :
2004
2005
(restated)
HK$
HK$
Medium-term leases outside Hong Kong
2,584
2,150
Medium-term leases in Hong Kong
84,624
82,794
87,208
84,944
F-26
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
6.
INTEREST IN LEASEHOLD LAND HELD FOR OWN USE UNDER
AN OPERATING LEASE
HK$
(restated)
Cost:
At 1 January 2004 and 31 December 2005
18,678
Accumulated depreciation:
At 1 January 2004
2,358
Charge for the year
375
At 31 December 2004
2,733
At 1 January 2005
2,733
Charge for the year
375
At 31 December 2005
3,108
Net book value:
At 31 December 2005
15,570
At 31 December 2004
15,945
7.
INVESTMENT PROPERTY
The investment property was revalued at December 31, 2004 and 2005 at HK$2,340 by Savills
Valuation and Professional Services Limited (2004: Chesterton Petty Limited), an independent
professional property valuer, on an open market value basis by reference to net rental
income allowing for reversionary income potential. A revaluation deficit of HK$70,
revaluation surplus of HK$78 and no revaluation surplus or deficit, was charged or credited
to the consolidated statements of operations for the years ended December 31, 2003, 2004 and
2005 respectively.
The investment property, which is situated in the PRC under a medium-term lease, is rented
out under an operating lease and the rental income earned from the investment property for
the years ended December 31, 2003 and 2004 and 2005 was HK$245, HK$250 and HK$254,
respectively.
8.
INTEREST IN JOINTLY CONTROLLED ENTITIES
2004
2005
HK$
HK$
Share of net assets
10,226
2,241
Amounts due from a jointly controlled entity
67,914
67,476
78,140
69,717
F-27
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
8.
INTEREST IN JOINTLY CONTROLLED ENTITIES (continued)
Details of the jointly controlled entities of the Group as at December 31, 2005 are
set out below:
Proportion of ownership interest
Form of
Place of
Particulars of
Group's
held by
held by
business
incorporation
issued and paid
effective
the
the
Principal
Name of joint venture
structure
and operation
up capital
interest
Company
subsidiary
activity
APT Satellite
Telecommunications
Limited ("APT
Telecom")
Incorporated
Hong Kong
HK$153,791,900
55
%
—
55
%
Property
holding
Beijing Zhong Guang
Xin Da Data Broadcast
Technology Co.
Limited
("Zhong Guang Xin Da")
Joint venture, Incorporated
PRC
Registered capital RMB11,000,000
12.6
%
—
35
%
Provision of
data
transmission
services
APT Telecom is considered as a jointly controlled entity as the Group and the other
shareholder of APT Telecom both have the right to appoint an equal number of directors to
the board of directors.
APT Telecom completed the reorganization on October 10, 2003, whereby its entire cable
interests were sold to its shareholder for HK$5,560; while the Fixed Carrier Licence and
all its related businesses was sold to APT Telecom Services Limited, a subsidiary of the
Group for HK$6,800, respectively. A surrender of service and facilities leasing agreement
between APT Telecom and APT Satellite Company Limited, a subsidiary of the Group, was
executed on the same date in respect of an early termination of services and facilities
lease for compensation of HK$13,500. The summarized information of APT Telecom is set out
in note 28(h)
Zhong Guang Xin Da is considered a jointly controlled entity as the Group and the
other shareholder of Zhong Guang Xin Da exercise joint control over it pursuant to a
shareholders' resolution.
The amounts due from a jointly controlled entity are unsecured and interest-free.
Except for an amount of HK$13,500 and HK$13,200 as at December 31, 2004 and 2005
respectively, the amounts have no fixed repayment terms.
At 31 December 2005, the amount of HK$13,200 is repayable as follows:
2004
2005
HK$
HK$
Within one year or on demand
2,700
5,100
After one year but within five years
10,800
8,100
13,500
13,200
The Group has agreed not to demand repayment of other amounts due from a jointly controlled
entity within the next twelve months from the balance sheet date and accordingly, the amount
is classified as non-current.
F-28
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
9.
PREPAYMENT FOR CONSTRUCTION OF A SATELLITE
In 2004, the Group had entered into an agreement with a contractor on November 10, 2004
pursuant to which the Group is granted a right to require the contractor to provide for the
design, construction, delivery and launch of a new satellite, APSTAR VIB at the total
option price of HK$59,904. If the option was exercised, the total consideration for the
procurement and launch of APSTAR VIB would be HK$936,780 and the option price would be
applied towards the total consideration.
HK$
At January 1, 2004
—
Prepayment
38,454
At December 31, 2004
38,454
At January 1, 2005
38,454
Prepayment
21,450
Impairment loss
(59,904
)
At December 31, 2005
—
In view of the successful launch of APSTAR VI on April 12, 2005, the Group did not
exercise the option before the expiry date of September 30, 2005. According to the terms of
the option agreement, the option has expired and the option agreement is deemed to be
terminated. The Group was responsible for all reasonable costs and expenses incurred up to the
date of termination in respect of the preparation work for the design, construction, delivery
and launch of APSTAR VIB. The balance of option price (net of all reasonable costs and
expenses incurred) could be transferred to such other satellite project as designated by the
Group or the contractor within two years after the expiry date of the option. In the event
that the balance of option price would be transferred to another customer as designated by the
contractor, the balance of the option price would be refunded to the Group. Up to and
including the date hereof, the Group has no plan for the procurement and launch of a new
satellite in the coming two years due to the fact that the transponder market has remained
highly competitive and the current supply of transponders exceeds demand in the Asia Pacific
region, the possibility of transferring the preparation work of APSTAR VIB to another
satellite project of another customer as designated either by the Group or the contractor in
the coming two years is expected to be remote. Accordingly, as the Group does not currently
expect the option price to be applied towards any future satellite project within the required
time restriction or that the contractor will refund the balance of option price to the Group,
an impairment loss of HK$59,904 (2004: HK$nil) has been recognised in respect of the
prepayment for construction of a satellite.
F-29
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
10.
BANK LOANS
December 31, 2004 (restated)
December 31, 2005
Weighted
Weighted
average
average
interest
interest
Note
Interest rate
rate
rate
HK$
HK$
Bank loans denominated
in US Dollars:
(a
)
Payable semi-annually from
2005 (secured)
LIBOR+0.73%
2.27
%
351,000
4.04
%
315,900
Payable semi-annually with
the first instalment falling
due on September 30, 2005 (secured)
LIBOR+0.73%
2.41
%
624,780
4.25
%
811,395
975,780
1,127,295
Less: borrowing cost
(6,240
)
(9,236
)
969,540
1,118,059
Current portion
(64,778
)
(117,757
)
Non-current portion
904,762
1,000,302
Notes:
(a)
In December 2002, the Group entered into a US$240 million secured term loan
facility (the "Loan Facility"), which is secured by the assignment of the construction,
launching and related equipment contracts relating to APSTAR V, APSTAR VI under
construction and their related insurance claim proceeds, assignment of all present and
future utilisation agreements of their transponders of satellites under construction,
first fixed charge over certain bank accounts which will hold receipts of the
transponder income and the termination payments under construction, launching and
related equipment contracts. In October 2004, the Group entered into a Deed of Amendment
and Restatement to amend certain terms of the Loan Facility for the purpose of adjusting
for the cancellation of the unutilised portion relating to APSTAR V satellite and APSTAR
VI backup satellite. Accordingly, the maximum aggregate amount under the Loan Facility
was reduced to US$165 million and certain financial covenants were amended. In May 2005,
the Company entered into a Second Deed of Amendment and Restatement. The second
amendment extended the availability period of drawing under the facility with respect to
APSTAR VI to June 30, 2005 and amended the financial covenants. The Company was in
compliance with these covenants as of December 31, 2005. At December 31, 2004, APSTAR V
and APSTAR VI were reported as construction-in-progress with an aggregate carrying value
of approximately HK$2,398,169 and at December 31, 2005, APSTAR V and APSTAR VI were
transferred to fixed assets with a net book value of approximately HK$2,752,162. As of
December 31, 2004 and 2005, APSTAR V and APSTAR VI were pledged by the bank deposits of
approximately HK$20,750 and HK$68,699 respectively.
This Loan Facility agreement contains the following covenants:
Restricted Distributions
The Loan Facility provides that the Company may make annual dividend payments only
when Projected EBITDA (as defined in the Loan Facility) plus Free Cash (as defined in
the Loan Facility) less capital expenditure for that year is less than (i) 130% of
Project Debt Service (as defined in the Loan Facility) of that year before the
release of certain pledged assets and (ii) 180% of Project Debt Service after the
release of certain pledged assets.
F-30
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
10.
BANK LOANS (continued)
Financial Covenants
The Loan Facility provides that certain earnings and cash flow ratios of APT and the
Group must be measured over various periods during its term. APT and the Group
undertakes to ensure that (i) it maintains its aggregate Consolidated Net Worth (as
defined in the Loan Facility) at not less than US$200 million (other than that for
the years ending December 31, 2002 and 2003, it will be not less than US$230
million), (ii) the aggregate of Consolidated Total Liabilities (as defined in the
Loan Facility) shall not exceed 120% of Consolidated Net Worth, (iii) Consolidated
EBITDA (as defined in the Loan Facility) shall not be less than US$25 million, (other
than for the year ending December 31, 2004 and 2005, it will not be less than US$17
million), (iv) the ratio of the aggregate outstanding principal under each tranche to
the value of the satellite financed by such tranche shall not exceed 50% and (v)
after the release of certain pledged assets, Borrower EBITDA (as defined in the Loan
Facility) shall be at least 180% of Debt Service (as defined in the Loan Facility).
Block Account/Withdrawal Conditions
Under the Loan Facility, (i) insurance proceeds obtained as a result of Total or
Material Partial Loss (as defined in the Loan Facility) relating to APSTAR V and
APSTAR VI and (ii) Termination sum of related construction contracts must be deposited
in a designated account. The withdrawal of deposited amounts in such accounts may
only occur in accordance with provision contained in the Loan Facility.
Others
The Loan Facility includes covenants customary for agreements of this type, including
restrictions on APT and the Company's ability to incur indebtedness, certain
ownership restrictions, restrictions on affiliated transactions, covenants with
respect of compliance with laws, maintenance of licenses and permits required for the
Group's business and a requirement that all future transponder utilization agreements
be entered into on an arms-length basis. Among others, APT undertakes to ensure that
its ultimate holding company, APT Satellite International Company Limited, directly
owns at least 50.01% of the voting rights in the Group.
For the years presented, the Group complied with all the above covenants.
The aggregate annual repayments of bank loans as at December 31, 2005 are as follows:
HK$
2006
117,757
2007
156,777
2008
217,624
2009
255,315
2010
272,402
Thereafter
98,184
Total
1,118,059
At December 31, 2004 and 2005, certain of the Group's banking facilities were secured by the
Group's land and buildings with a net book value of HK$4,887 and HK$4,771, respectively and
bank deposits of approximately HK$390 and HK$nil, respectively.
F- 31
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
11.
DEPOSIT RECEIVED
The amount represents deposits received in respect of provision of satellite transponder
capacity.
12.
DEFERRED INCOME
Deferred income represents unrecognized revenue received in respect of transponder
utilization income under which customers have obtained the right to use the transponder
capacity for future periods. Deferred income is recognised in the statement of operations
according to revenue recognition policy of transponder utilization income as mentioned in
note 3 (o)(i).
13.
PAYABLES AND ACCRUED CHARGES
2004
2005
HK$
HK$
Provision for employee benefits
4,492
6,349
Interest payables
4,366
16,315
Accrued expenses for operations
20,758
20,948
Other accrued expenses
15,523
7,981
45,139
51,593
14.
CONTINGENCIES AND COMMITMENTS
(a)
Capital commitments:
At December 31, 2004 and 2005, the Group had the following outstanding capital
commitments not provided for in the Group's financial statements:
2004
2005
HK$
HK$
Contracted for
286,048
2,290
Authorized but not contracted for
340,551
—
Total commitments
626,599
2,290
(b)
Leasing arrangements — operating lease:
(i)
The Group as lessee
At the balance sheet date, the Group had commitments for future minimum lease
payments under non-cancellable operating leases which fall due as follows:
2004
2005
HK$
HK$
Land and buildings:
2005
545
—
2006
31
109
Total
576
109
F- 32
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
14.
CONTINGENCIES AND COMMITMENTS (continued)
(b)
Leasing arrangements — operating lease: (continued)
(i)
The Group as lessee (continued)
Operating lease rental expenses were HK$3,650, HK$1,010 and HK$486 for the
years ended December 31, 2003, 2004 and 2005, respectively.
2004
2005
HK$
HK$
Satellite transponder capacity:
2005
3,464
—
2006
—
2,108
2007
—
14
Total
3,464
2,122
Operating lease rental expenses were HK$3,228, HK$4,948 and HK$3,779 for the
years ended December 31, 2003, 2004 and 2005, respectively.
(ii)
The Group as lessor
Property rental income was HK$452, HK$513 and HK$538 for the years ended
December 31, 2003, 2004 and 2005, respectively. At December 31, 2004 and
2005, certain properties with an aggregate carrying value of HK$8,120 and
HK$8,896, respectively, were held for rental purpose. Depreciation charges
relating to these properties were HK$160, HK$138 and HK$160 for the years
ended December 31, 2003, 2004 and 2005, respectively. At the balance sheet
date, the Group had contracted with tenants for the future minimum lease
payments under non-cancellable operating leases in respect of properties which
fall due as follows:
2004
2005
HK$
HK$
2005
1,294
—
2006
209
368
Total
1,503
368
F- 33
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
14.
CONTINGENCIES AND COMMITMENTS (continued)
(ii)
The Group as lessor (continued)
Service income earned relating to leasing of facilities equipment was HK$3,680,
HK$1,374 and HK$1,294 for the years ended December 31, 2003, 2004 and 2005,
respectively. At the balance sheet date, the Group had contracted with
customers for the future minimum lease payments under non-cancellable operating
lease which fall due as follows:
2004
2005
HK$
HK$
2005
886
—
2006
267
542
2007
108
108
Total
1,261
650
(c)
Contingent liabilities:
(i)
In the years before 1999, overseas withholding tax was not
charged in respect of the Group's transponder utilization income derived from
the overseas customers. From 1999, overseas withholding tax has been charged
on certain transponder utilization income of the Group and full provision for
such withholding tax for the years from 1999 onwards has been made in the
financial statements. The Directors of the Company are of the opinion that the
new tax rules should take effect from 1999 onwards and, accordingly, no
provision for the withholding tax in respect of the years before 1999 is
necessary. The Group's withholding tax in respect of 1998 and before,
calculated at the applicable rates based on the relevant income earned in
those years, not provided for in the financial statements amounted to
approximately HK$75,864.
(ii)
The Company has given guarantees to banks in respect of the
secured term loan facility granted to its subsidiary. The extent of such
facility utilised by the subsidiary at 31 December 2004 and 2005 amounted to
HK$975,780 and HK$1,127,295 respectively.
(iii)
The Hong Kong Profits Tax returns of a subsidiary of the
Company for the years of assessment 1999/2000 and 2000/2001 are currently
under dispute with the Hong
Kong Inland Revenue Department ("IRD"). This subsidiary recognised a
disposal gain of HK$389,744 in 1999 in relation to the transfer of the
entire business of APSTAR IIR and substantially all of the satellite
transponders of APSTAR IIR. This subsidiary has claimed the gain on disposal
as a non-taxable capital gain in it 1999/2000 Profits Tax return. In 2003, IRD has proposed to treat the proceeds received as
taxable income to this subsidiary with a corresponding entitlement to
statutory depreciation allowance in respect of APSTAR IIR. On January 23,
2006, IRD raised a Profits Tax assessment for the year of assessment
2000/2001 to include that portion of the proceeds from sale of the satellite
received during 2000/2001 as taxable income. The tax demanded for the year
of assessment 2000/2001 is HK$212,846.
F- 34
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
14.
CONTINGENCIES AND COMMITMENTS (continued)
(c)
Contingent liabilities (continued):
(iii)
On February 20, 2006, the subsidiary lodged an objection
against the IRD's assessment on the grounds that it is excessive.
On February 24, 2006, the subsidiary received a notice from the IRD
confirming that the entire tax in dispute would be held over on condition
that the subsidiary purchases HK$78,385 of Tax Reserve Certificate ("TRC")
by March 15, 2006 and the balance of the amount of HK$134,461 would be
held over unconditionally. Should any amount of tax held over on condition
of the purchases of TRC become payable upon the final determination of the
objection, the same amount of TRC would be used for settlement of tax due.
For that part of the TRC not utilized to offset the tax payable, interest
will accrue from the date of issue of the TRC to the date of determination
of the objection and be refunded to the subsidiary. In order to fulfill
the condition of hold over of tax payment, the subsidiary purchased TRC of
HK$78,385 on March 15, 2006.
Since the receipt of the above mentioned notices, the Company has
obtainedlexternal legal and tax advice, and the Company continues to believe
that it has a reasonable likelihood of success in defending its position
that the gain derived from the transaction should be treated as non-taxable.
Accordingly, no provision for additional taxation has been made.
(d)
Insurance
As of December 31, 2005, the Company did not have fully in-orbit insurance
coverage for its satellites. The in-orbit satellites had a net book value in
aggregate of HK$2,831,259 as of December 31, 2005.
15.
COMMON STOCK
Issued and
Number
fully paid
of shares
capital stock
'000
HK$
Ordinary shares of HK$0.10 each
Balance at January 1, 2004
413,265
41,327
Balance at December 31, 2004 and December 31, 2005
413,265
41,327
The Company's authorised share capital is 1,000,000,000 shares of HK$0.10 each.
There were no changes in the Company's authorised share capital during either year.
F- 35
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
16.
ADDITIONAL PAID-IN CAPITAL/OTHER RESERVES
The additional paid-in capital of the Group arose as a result of
the Group reorganization in 1996 and represented the excess of
the par value of the shares of the subsidiaries which the Company
acquired over the par value of the Company's shares issued in
consideration thereof.
Other reserves represent Enterprise Expansion Fund and General Reserve Fund set aside by a
subsidiary in accordance with the relevant laws and regulations of the PRC, which are not
available for distribution.
17.
RETIREMENT BENEFIT SCHEMES
The Group operates a Mandatory Provident Fund Scheme under the Hong
Kong Mandatory Provident Fund Schemes Ordinance for all qualified
employees in Hong Kong under the jurisdiction of the Hong Kong
Employment Ordinance. Under the scheme, the employer and its employees
are each required to make contributions to the scheme at 5% of the
employees' relevant income, subject to a cap of monthly relevant
income of HK$20. Contributions to the scheme vest immediately. The
assets of the scheme are held separately from those of the Group, in
funds under the control of trustees.
The Group also joins the retirement insurance scheme operated by the
local government under the law of the PRC for all employees in the
PRC. Under the scheme, both the Group and employees are required to
contribute 8% and 5% of the monthly salary, respectively, to the
retirement insurance scheme.
The only obligation of the Group with respect to the Mandatory
Provident Fund Scheme and the retirement insurance scheme is to make
the specific contributions.
The Group's contributions to retirement benefit schemes during the
years ended December 31, 2003, 2004 and 2005 amounted to HK$1,203,
HK$1,579 and HK$1,857, respectively.
F- 36
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
18.
INCOME TAXES IN THE CONSOLIDATED STATEMENTS OF OPERATIONS
(a)
The income taxes charged to the consolidated statements of operations are as follows:
Years ended December 31,
2003
2004
2005
HK$
HK$
HK$
Current tax — Provision for
Hong Kong Profits Tax
Tax for the year
114,487
—
—
Current tax — Overseas
Tax for the year
20,247
17,000
18,856
134,734
17,000
18,856
Deferred tax — Hong Kong
Origination and reversal of
temporary differences
(134,775
)
(375
)
(5,684
)
Effect of increase in tax rate on deferred tax
balance at January 1,
11,762
—
—
(123,013
)
(375
)
(5,684
)
11,721
16,625
13,172
The provisions for Hong Kong Profits Tax for the years ended December 31, 2003, 2004 and
2005 were made by applying the tax rate of 17.5% to the estimated assessable profits
earned in Hong Kong.
Taxation for overseas subsidiaries is charged at the appropriate current rates of
taxation ruling in the relevant countries.
Overseas tax includes the withholding tax paid or payable in respect of Group's
income from provision of satellite transponder capacity to the customers which are
located outside Hong Kong. The provisions for the years ended December 31, 2003, 2004
and 2005 were made by applying tax rates prevailing in respective jurisdictions.
F- 37
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
18.
INCOME TAXES IN THE CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(b)
Reconciliation between tax expense and accounting loss at the applicable tax
rates:
Years ended December 31,
2003
2004
2005
HK$
HK$
HK$
(restated)
(restated)
Loss before income taxes
(205,322
)
(45,391
)
(123,402
)
Notional tax on loss before tax, calculated
at the rates applicable to losses in the
countries concerned
(35,950
)
(8,681
)
(21,996
)
Overseas withholding tax
20,237
17,000
18,856
Tax effect of non-deductible expenses
6,111
41,106
27,113
Tax effect of non-taxable revenue
(3,099
)
(27,852
)
(13,552
)
Tax effect of unused tax losses not recognized
12,660
2,656
2,808
Tax effect of prior years' unrecognized tax losses
utilized this year
—
(7,604
)
(57
)
Effect on opening deferred tax balances resulting
from an increase in tax rate during the year
11,762
—
—
Actual tax expenses
11,721
16,625
13,172
19.
INCOME TAXES IN THE CONSOLIDATED BALANCE SHEET
(a)
Income taxes payable in the consolidated balance sheet represents:
2004
2005
HK$
HK$
Overseas tax payable
4,672
4,418
Balance of overseas tax provision relating to prior years
79,997
84,669
Balance of Hong Kong Profits tax provision relating to prior years
99
99
84,768
89,186
F- 38
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
19.
INCOME TAXES IN THE CONSOLIDATED BALANCE SHEET (continued)
(b)
The components of deferred tax (assets)/liabilities recognized in the
consolidated balance sheet and the movements during the years ended December 31, 2004
and 2005 are as follows:
Depreciation
allowances
in excess of
Other
related
temporary
Deferred tax arising from:
depreciation
differences
Losses
Total
HK$
HK$
HK$
HK$
At January 1, 2004
37,586
(281
)
(34,855
)
2,450
Charged/(credited) to consolidated statements of operations
96,996
40
(97,411
)
(375
)
At December 31, 2004
134,582
(241
)
(132,266
)
2,075
At January 1, 2005
134,582
(241
)
(132,266
)
2,075
Charged/(credited) to consolidated statements of operations
241,840
(155
)
(247,369
)
(5,684
)
At December 31, 2005
376,422
(396
)
(379,635
)
(3,609
)
2004
2005
HK$
HK$
Net deferred tax assets recognized in the
consolidated balance sheet
(10,134
)
(3,609
)
Net deferred tax liabilities recognized in the
consolidated balance sheet
12,209
—
2,075
(3,609
)
(c)
Deferred tax assets not recognized:
The Group has not recognized deferred tax assets in respect of tax losses of HK$30,723
and HK$44,895 and other deductible temporary differences of HK$21,535 and HK$22,667, as
the realization of assets was considered not probable as at December 31, 2004 and 2005,
respectively.
The Group's share of unrecognized deferred tax assets in respect of tax losses of
jointly controlled entity amounted HK$31,753 and HK$35,791 and other deductible
temporary differences amounted HK$1,174 and HK$4,654 as at December 31, 2004 and 2005,
respectively.
The tax losses do not expire under current tax legislation.
F- 39
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
20.
MATERIAL RELATED PARTY TRANSACTIONS
(a)
During the years ended December 31, 2003, 2004 and 2005, the Group entered into
the following transactions with related parties:
Years ended December 31,
Note
2003
2004
2005
HK$
HK$
HK$
Income from provision of satellite
transponder capacity and provision of
satellite-based telecommunications
services to certain shareholders and its
subsidiary of the Company
(i)
35,921
38,259
36,339
Income from provision of satellite
transponder capacity, provision of
satellite-based telecommunications services
to a holding company and its subsidiaries
of a shareholder of the Company
(i)
19,741
24,163
31,335
Income from provision of satellite
transponder capacity to a jointly controlled
entity
(i)
6,160
—
—
Management fee income from a jointly
controlled entity
(ii)
1,121
480
480
Management fee income from an
associate
(iii)
65
—
—
Facilities management services
income from a jointly controlled entity
(iv)
3,386
—
—
Technical support services expenses
to a shareholder of the Company
(v)
75
—
—
Management fee expenses to a holding
company of a shareholder of the Company
(vi)
2,280
1,135
—
Payments of service fee in connection
with the satellite project to a fellow
subsidiary of a shareholder of the Company
(vii)
87,604
151,895
138,727
Compensation income from a jointly
controlled entity in connection with the
early termination of services and facilities
lease
(viii)
13,500
—
—
Purchase of certain fixed assets from a
jointly controlled entity
(ix)
6,800
—
—
F- 40
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
20.
MATERIAL RELATED PARTY TRANSACTIONS (continued)
(b)
At December 31, 2004 and 2005, the Group had the following amounts included in the
consolidated balance sheet in respect of amounts owing by and to related parties:
Interest in
jointly
Rentals received
controlled
Trade
Payables and
in advance and
Prepayment
entities
receivables
accrued charges
deferred income
2004
2005
2004
2005
2004
2005
2004
2005
2004
2005
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
Jointly controlled entities
—
—
70,614
72,576
—
—
—
—
—
—
Certain shareholders and its subsidiary of the Company
—
—
—
—
18,237
22,992
24
528
—
—
Holding company and
its subsidiaries of a
shareholder of the Company (note (i))
—
—
—
—
2,226
390
6
325
255,105
236,425
A fellow subsidiary of a shareholder of the Company
38,454
—
—
—
—
—
—
—
—
—
Notes:
(i)
The terms and conditions of these transponder capacity utilization agreements
are similar to those contracted with other customers of the Group.
(ii)
Management fee income arose from a reimbursement of cost of service provided to
a jointly controlled entity under the agreement.
(iii)
Management fee income from an associate arose from the reimbursement of
expenses paid on behalf of an associate.
(iv)
The Directors consider that the facilities management service income is charged
according to the terms and conditions similar to those offered to other customers.
(v)
The Directors consider that the technical support services expenses were
charged according to prices and conditions similar to those offered to other customers
by the service provider.
(vi)
Management fee expenses arose from a reimbursement of cost of services provided
from the holding company of a shareholder of the Company.
(vii)
The Directors consider that the service fee is charged according to prices and
conditions similar to those offered to other customers by the launch service provider.
F- 41
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
20.
MATERIAL RELATED PARTY TRANSACTIONS (continued)
Notes — continued
(viii)
As a result of the reorganization of a jointly controlled
entity, the jointly controlled entity early terminated the services
and facilities lease agreement and the Group received compensation
for the early termination of the agreement. The Directors consider
that the compensation is charged according to prices and
conditions similar to those offered to unrelated customers.
(ix)
As a result of the reorganization of a jointly controlled entity, certain fixed
assets were purchased from the jointly controlled entity. The Directors consider that
the purchase consideration is arrived at arm's length negotiation with reference to the
valuation conducted by an independent valuation company.
21.
SUPPLEMENTAL INFORMATION
(a)
Other operating revenues
Other operating revenues include the following:
Years ended December 31,
2003
2004
2005
HK$
HK$
HK$
Compensation income for early termination
of utilization agreements in respect of
provision of satellite transponder capacity
550
—
—
Compensation income from a jointly
controlled entity for early termination of
services and facilities lease
13,500
—
—
Compensation income for late delivery
of the satellite *
—
—
15,600
*
On December 11, 2001, the Group entered into a Satellite Procurement Agreement with
a contractor for the design, construction, tests and delivery of APSTAR VI. APSTAR
VI was originally scheduled to be launched at the end of 2004/early 2005. The delay
in delivery of the satellite by the contractor has caused the postponement of the
launch of APSTAR VI until April 12, 2005. To cope with the delay, the contractor
agreed and paid a lump sum payment to the Group for the liquidated damages due to the
late delivery of APSTAR VI.
F- 42
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
21.
SUPPLEMENTAL INFORMATION (continued)
(b)
Borrowing costs
Years ended December 31,
2003
2004
2005
HK$
HK$
HK$
Interest on bank borrowings wholly
repayable within five years
6,553
17,223
44,482
Other borrowing costs
1,162
3,598
2,222
Less: Amount capitalized into construction
in progress*
(7,715
)
(16,704
)
(9,762
)
—
4,117
36,942
*
The borrowing costs have been capitalized at a rate of 4.04% to 4.25% per annum
(2004 : 2.27% to 2.41%).
Borrowing costs capitalized during the years ended December 31, 2004 and 2005 arose on
bank loans borrowed for the purpose of financing the construction and launching
of satellites.
(c)
Staff costs
Years ended December 31,
2003
2004
2005
HK$
HK$
HK$
Staff costs (including directors' emoluments)
Pension contributions
1,370
1,608
1,878
Less: Forfeited contributions
(167
)
(29
)
(21
)
Net pension contributions
1,203
1,579
1,857
Salaries, wages and other benefits
36,764
40,258
44,264
37,967
41,837
46,121
Less: Capitalized into construction in progress
(1,326
)
(772
)
—
36,641
41,065
46,121
F- 43
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
21.
SUPPLEMENTAL INFORMATION (continued)
(d)
Loss from operations
Years ended December 31,
2003
2004
2005
HK$
HK$
HK$
(restated)
(restated)
Loss from operations has been arrived
at after charging/(crediting):
Amortization on leasehold land held for own use
375
375
375
Bad debts written off
153
—
19
Depreciation
235,947
177,617
197,806
Exchange loss
—
458
584
(Gain)/loss on disposal of property, plant and
equipment
—
32
(109
)
Allowance for doubtful receivables
8,402
5,654
350
(e)
Allowance for doubtful receivables
Years ended December 31,
2003
2004
2005
HK$
HK$
HK$
Balance at beginning of the year
6,037
14,439
20,093
Charged to cost and expenses
8,402
5,654
350
Exchange difference
—
—
67
Balance at end of the year
14,439
20,093
20,510
F- 44
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
22.
SEGMENTAL REPORTING
Segment information is presented in respect of the Group's business and geographical
segments. Business information is chosen as the primary reporting format because this is
more relevant to the Group's internal financial reporting.
Inter-segment pricing is based on similar terms as those available to other external
parties.
Business segments
The Group comprises two main business segments, namely provision of satellite transponder
capacity and related services and provision of satellite-based broadcasting and
telecommunications services.
Provision of
Provision of satellite
satellite-based
transponder capacity and related
broadcasting and
Inter-segment
services
telecommunications services
elimination
Consolidated
2003
2004
2005
2003
2004
2005
2003
2004
2005
2003
2004
2005
(restated)
(restated)
$
'000
$
'000
$
'000
$
'000
$
'000
$
'000
$
'000
$
'000
$
'000
$
'000
$
'000
$
'000
Turnover from
external customers
282,452
238,418
290,683
16,403
38,683
45,552
—
—
—
298,855
277,101
336,235
Inter-segment
turnover
897
5,276
4,264
—
6
720
(897
)
(5,282
)
(4,984
)
—
—
—
Total
283,349
243,694
294,947
16,403
38,689
46,272
(897
)
(5,282
)
(4,984
)
298,855
277,101
336,235
Service income
3,386
159
277
302,241
277,260
336,512
Segment result
(113,387
)
28,230
(29,021
)
(5,577
)
(3,332
)
(3,697
)
—
(6
)
(5
)
(118,964
)
24,892
(32,723
)
Service income
3,386
159
277
Other
net income
33,051
9,410
30,831
Selling and
Administrative
expenses
- staff costs
(36,641
)
(41,605
)
(45,035
)
- office expenses
(29,021
)
(31,421
)
(31,815
)
Loss from operations
(148,189
)
(38,565
)
(78,465
)
Borrowing costs
—
(4,117
)
(36,942
)
Share of losses of
jointly controlled
entities
(57,133
)
(2,709
)
(7,995
)
Provision for
income taxes
(11,721
)
(16,625
)
(13,172
)
Loss for the years
(217,043
)
(62,016
)
(136,574
)
F- 45
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
22.
SEGMENTAL REPORTING (continued)
Provision of satellite
Provision of
transponder capacity and related
satellite-based broadcasting and
Inter-segment
services
telecommunications services
elimination
Consolidated
2003
2004
2005
2003
2004
2005
2003
2004
2005
2003
2004
2005
(restated)
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
$'000
Depreciation and
amortisation for the
year
228,961
167,896
188,342
7,361
10,096
9,839
Impairment loss for
the year
129,098
—
59,904
—
1,800
7,512
Significant non-cash
expenses (other than
depreciation)
4,792
2,883
—
3,610
2,771
349
Segment assets
2,853,269
3,110,958
52,869
50,170
(52,284
)
(56,666
)
2,853,854
3,104,462
Investment in and
amounts due form
jointly controlled
entities
80,330
74,817
510
—
80,840
74,817
Corporate assets
686,098
435,010
Total assets
3,620,792
3,614,289
Segment liabilities
399,229
384,044
74,994
87,043
(52,284
)
(56,666
)
421,939
414,421
Corporate liabilities
1,001,844
1,138,316
Total liabilities
1,423,783
1,552,737
Capital expenditure
incurred during the
year
417,553
521,677
13,187
2,787
Note 1: In order to reflect the segments of business affected by similar economic
conditions, the satellite control services income have been aggregated to the segment of
provision of satellite transponder capacity and related services in 2005. Accordingly, the
amounts disclosed in 2003 and 2004 have been adjusted to conform to the 2005 composition of
reportable segments by HK$11,540 and HK$7,800 respectively.
F-46
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
22.
SEGMENTAL REPORTING (continued)
Geographical segments
The Group's operating assets consist primarily of its satellites which are used, or are
intended for use, for transmission to multiple countries but not located at a specific
geographical area. Accordingly, no segment analysis of the carrying amount of segment assets
by location of assets is presented.
In presenting information on the basis of geographical segments, segment revenue, segment
assets and capital expenditure is based on the geographical location of customers.
Hong Kong
Other regions in the PRC
Singapore
Indonesia
Others
Unallocated
2003
2004
2005
2003
2004
2005
2003
2004
2005
2003
2004
2005
2003
2004
2005
2003
2004
2005
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
HK$
Trunover from
external customers
25,082
21,287
38,459
225,786
195,155
201,851
18,376
23,339
30,657
535
6,010
32,262
32,462
31,469
33,283
—
—
Segment assets
1,666
4,009
55,492
44,972
2,226
468
155
4,061
4,522
5,453
3,556,731
3,555,326
Capital expenditure
incurred during the
year
—
—
2,253
1,416
—
—
—
—
—
—
428,487
523,048
23.
SHARE OPTION PLAN
At the annual general meeting on May 22, 2001, the Company
adopted a share option scheme ("Scheme 2001") and granted options
to its employees on June 19, 2001. On May 22, 2002, the Company
adopted a new share option scheme ("Scheme 2002") at its 2002
annual general meeting. Thereafter, no further options can be
granted under the Scheme 2001. The options granted on June 19,
2001 shall continue to be valid until their expiry.
The total number of shares which may be issued upon exercise of
all options to be granted under Scheme 2001 and Scheme 2002 shall
not in aggregate exceed 10% of the total number of shares of the
Company in issue on the adoption date of the Scheme 2002 (i.e.
412,720 shares). As at the date of this report, 413,265 shares of
the Company were in issue.
Under Scheme 2002, the total number of shares to be issued upon
exercise of the options granted to each eligible person
(including both exercised and outstanding options) in any
12-month period shall not exceed 1% of the total number of shares
in issue. The exercise price (subscription price) shall be such
price as determined by the Board of Directors in its absolute
discretion at the time of the making of the offer but in any case
the exercise price shall not be lower than the highest of (i) the
closing price of the shares as stated in The Stock Exchange of
Hong Kong Limited's (the "Exchange's") daily quotations sheet on
the date of the offer of grant, which must be a trading day; (ii)
the average closing price of the shares as stated in the
Exchange's daily quotations sheets for the five trading days
immediately preceding the date of the offer of grant; and (iii)
the nominal value of a share.
During the year, no options were granted under the Scheme 2002.
F-47
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
23.
SHARE OPTION PLAN (continued)
Under the Scheme 2001, the maximum entitlement of each eligible person was that the total
number of shares issued or issuable under all options granted to such eligible person
(including both exercised and outstanding options) upon such grant being made shall not
exceed 25% of the total number of the shares for the time being issued and issuable under
the Scheme 2001. In addition, the subscription price was determined by the Board of
Directors on a case-by-case basis and would not be less than the nominal value of the shares
nor at a discount of more than 20% below the average closing price of the shares as stated
in the Exchange's daily quotation sheets on the five dealing days immediately preceding the
date on which the invitation to apply for an option under Scheme 2001.
(a)
Movements in share options
The particulars of the share options granted under the Scheme 2001 outstanding during
the years ended December 31, 2003, 2004 and 2005 are as follows:
Number of
share options
At January 1, 2003
13,410,000
Cancelled during the year
(3,010,000
)
Exercised
(730,000
)
At December 31, 2003
9,670,000
Cancelled during the year
(1,220,000
)
At December 31, 2004
8,450,000
Cancelled during the year
(4,220,000
)
At December 31, 2005
4,230,000
The above granted options have an exercise price of HK$2.765 per share and are
exercisable within the period from May 22, 2003 to May 21, 2011.
Fair value of share options and assumptions
The fair value of services received in return for share options granted
are measured by reference to the fair value of share option granted. The
estimated fair value of the services received is measured based on a binomial
lattice model. The contractual life of the option is used as an input into this
model. Expectations of early exercise are incorporated into the binomial lattice
model.
2004 & 2005
Fair value of share options and assumptions
Fair value at measurement date
HK$2.836
Share price at the date of issue
HK$3.850
Exercise price
HK$2.765
Expected volatility (expressed as weighted average volatility
used in the modeling under binomial lattice model)
47.00
%
Option life (expressed as weighted average life used in the
modeling under binomial lattice model)
9.93 years
Expected dividends
Nil
Risk-free interest rate (based on Exchange Fund Notes)
6.13
%
F-48
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
23.
SHARE OPTION PLAN (continued)
The expected volatility is based on the historic volatility (calculated based on the weighted
average remaining life of the share options), adjusted for any expected changes to future
volatility due to publicly available information. Expected dividends are based on historical
dividends. Changes in the subjective input assumptions could materially affect the fair value
estimate.
Share options were granted under a service condition. This condition has not been taken into
account in the grant date fair value measurement of the services received. There were no
market conditions associated with the share option grants.
24.
FINANCIAL INSTRUMENTS
Exposure to credit, liquidity, interest rate and currency risks arises in the normal course
of the Group's business. These risks are limited by the Group's financial management policies
and practices described below.
(a)
Credit risk
The Group's credit risk is primarily attributable to trade and other receivables and
cash investments. Management has a credit policy in place and the exposures to these
credit risks are monitored on an ongoing basis.
In respect of trade and other receivables, periodic credit evaluations are performed
of its customers' financial condition. The Group generally does not require
collateral because it usually receives trade deposits which represent a quarter of
utilization fees payable to the Group. The transponder utilization agreements are
subject to termination by the Group if utilization payments are not made on a timely
basis.
At the balance sheet date, the Group has a certain concentration of credit risk as 33%
and 31% in 2004 and 2005 respectively of the total trade and other receivables was due
from the Group's largest customer, and as 60% and 65% in 2004 and 2005, respectively,
was due from the Group's five largest customers respectively within the satellite
transponder business segment.
(b)
Liquidity risk
Individual operating entities within the Group are responsible for their own cash
management, including the short term investment of cash surpluses and the raising of
loans to cover expected cash demands, subject to approval by the parent company's
board. The Group's policy is to regularly monitor current and expected liquidity
requirements and its compliance with lending covenants, to ensure that it maintains
sufficient reserves of cash and adequate committed lines of funding from major
financial institutions to meet its liquidity requirements in the short and longer
term.
F-49
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
24.
FINANCIAL INSTRUMENTS (continued)
(c)
Interest rate risk
The Group is subject to interest rate risk due to fluctuation in interest rates. As of
December 31, 2005, the Group's outstanding bank loans consist of variable interest
rate loans only. From time to time, the Group may enter into interest rate swap
agreements designed to mitigate our exposure to interest rate risks, although the
Group did not consider it necessary to do so in 2005. Upward fluctuations in interest
rates increase the cost of new bank loans and the interest cost of outstanding bank
loans. As a result, a significant increase in interest rates could have a material
adverse effect on the financial position of the Group.
The following table contains information about the Group's bank loans that are
sensitive to changes in interest rates, as of December 31, 2005.
Expected Maturity Date
2006
2007
2008
2009
2010
Thereafter
(HK$ in million, except interest rates)
Variable rate bank loan
121
159
220
256
273
98
Average interest rate
(1)
5.965
%
5.935
%
5.98
%
6.00
%
6.02
%
6.02
%
(1)
The interest rates are the implied future LIBOR rates calculated from US swap
as proxy.
(d)
Foreign currency risk
The Group's reporting currency is the Hong Kong Dollar. The Group's revenues, premiums
for satellite insurance coverage and debt service and substantially all capital
expenditures were denominated in United States Dollars. The Group's remaining expenses
were primarily denominated in Hong Kong Dollars. The Group does not hedge its exposure
to foreign exchange risk. Gains and losses resulting from the effects of changes in
the United States Dollar to Hong Kong Dollar exchange rate are recorded in the
consolidated statement of operations.
The Group does not utilize derivative financial instruments to hedge its foreign
currency rate risks.
In respect of other trade receivables and payables held in currencies other than the
functional currency of the operations to which they relate, the Group ensures that the
net exposure is kept to an acceptable level, by buying or selling foreign currencies
at spot rates where necessary to address short-term imbalances.
The Group's borrowings are denominated in United States Dollars. Given substantially
the Group's revenues are denominated in United States Dollars, management does not
expect that there will be any significant currency risk associated with the Group's
borrowings.
(e)
Sensitivity analysis
In managing interest rate and foreign currency risks the Group aims to reduce the
impact of short-term fluctuations on the Group's earnings. Over the longer term,
however, permanent changes in foreign exchange and interest rates would have an impact
on consolidated earnings.
At December 31, 2005, it is estimated that a general increase of one percentage point
in interest rates would increase the Group's loss before income taxes by
approximately HK$7,578 and HK$11,076 respectively in 2004 and 2005 so far as the
effect on interest-bearing financial instruments is concerned.
F-50
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
24.
FINANCIAL INSTRUMENTS (continued)
(f)
Fair values
The following financial assets and liabilities have their carrying amount
approximately equal to their fair value: trade receivables, other receivables, other
current assets, cash and cash equivalents, payables and accrued charges, and secured
bank borrowings.
25.
COMPARATIVE FIGURES
Certain comparative figures have been adjusted or reclassified as a result of the
changes in accounting policies. Further details are disclosed in note 4.
26.
ACCOUNTING ESTIMATES AND JUDGEMENTS
(a)
Key sources of estimation uncertainty
The financial statements are based on the selection and application of significant
accounting policies, which require management to make significant estimates and
assumptions that affect the reported amount of assets and liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities at the date of
the financial statements. Actual results may differ from these estimates under
different assumptions or conditions.
(b)
Critical accounting judgement in applying the group's accounting policies
The following are some of the more critical judgment areas in the application of the
Group's accounting policies that currently affect the Group's financial condition and
results of operations.
(i)
Depreciation
Depreciation of communication satellites is provided for on the
straight-line method over the estimated useful life of the satellite, which is
determined by engineering analysis performed at the in-services date and
re-evaluated periodically. A number of factors affect the operational lives of
satellites, including construction quality, component durability, fuel usage,
the launch vehicle used and the skill with which the satellite is monitored and
operated. As the telecommunication industry is subject to rapid technological
change and the Group's satellites have been subjected to certain operational
lives, the Group may be required to revise the estimated useful lives of its
satellites and communication equipment or to adjust their carrying amounts
periodically. Accordingly, the estimated useful lives of the Group's satellites
are reviewed using current engineering data.
If a significant change in the estimated useful lives of our satellites is
identified, the Group accounts for the effects of such change as depreciation
expenses on a prospective basis. Details of the depreciation, of communication
satellites are disclosed in notes 3(e) and 5.
Depreciation for future satellites will depend on in-orbit testing on their
estimated useful lives after successful launch and, as the cost of the future
satellites is greater than the carrying value of the current satellites, the
depreciation charge is expected to increase in the coming years.
F-51
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
26.
ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
(b)
Critical accounting judgement in applying the group's accounting policies
(continued)
(ii)
Trade receivables and other receivables
The management of the Group estimates the provision of bad and doubtful debts
required for the potential non-collectability of trade receivables and other
receivables at each balance sheet date based on the ageing of its customer
accounts and its historical write-off experience, net of recoveries. The
Group performs ongoing credit evaluations of its customers and adjusts credit
limits based upon payment history and the customers' current credit
worthiness. The Group does not make a general provision on its trade
receivables and other receivables, but instead, makes a specific provision on
its trade receivables and other receivables. Hence, the Group continuously
monitors collections and payments from customers and maintains allowances for
bad and doubtful accounts for estimated losses resulting from the inability
of its customers to make required payments. If the financial condition of the
customers of the Group were to deteriorate, actual write-offs would be higher
than estimated. For the year ended December 31, 2003, 2004 and 2005, the
Group made the provision for bad and doubtful debts in the amount of HK$
8,402, HK$5,654 and HK$350 respectively.
The Group periodically reviews the carrying amounts of provision for bad and
doubtful debts to determine whether there is any indication that the
provision needs to be written off. If the Group becomes aware of a situation
where a customer is not be able to meet its financial obligations due to
change of contact information by the customer without notification or after
seeking professional advice from lawyers or debt collection agent that the
probability of recovery is remote, the Group will consider to write off the
debt.
(iii)
Impairment of property, plant and equipment
The Group periodically reviews internal or external resources to identify
indications that the assets may be impaired. If the recoverable amount of an
asset is estimated to be less than its carrying amount, the carrying amount
of the asset is reduced to its recoverable amount. In assessing the
recoverable amount of these assets, the Group is required to make assumptions
regarding estimated future cash flows and other factors to determine the net
realizable value. If these estimates or their related assumptions change in
the future, the Group may be required to adjust the impairment charges
previously recorded.
F-52
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
26.
ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
(b)
Critical accounting judgement in applying the group's accounting policies
(continued)
(iv)
Impairment of property, plant and equipment (continued)
The Group applies the foregoing analysis in determining the timing of the
impairment test, the estimated useful lives of the individual assets, the
discount rate, future cash flows used to assess impairments and the fair
value of impaired assets. It is difficult to precisely estimate the price of
the transponder capacities and related satellite services and residual values
because the market prices for our assets are not readily available. The
estimates of future cash flows are based on the terms of existing transponder
capacity and service agreements. The dynamic economic environment in which
the Group operates and the resulting assumptions used in setting depreciable
lives on assets and judgment relating to the utilization rate of the assets,
price and amount of operating costs to estimate future cash flows impact the
outcome of all of these impairment tests. If these estimates or their related
assumptions change in the future, the Group may be required to record
impairment loss for these assets not previously recorded.
The Group periodically reviews the carrying amounts of its property, plant
and equipment through reference to its use value and fair market value as
assessed both by the Group and by an independent professional property
appraiser. If the use value or fair market value of the property, plant and
equipment are lower than their carrying amount, the Group may be required to
record additional impairment loss not previously recognised. Details of the
impairment loss of property, plant and equipment are disclosed in note 5.
(v)
Contingencies and provisions
Contingencies, representing an obligation that are neither probable nor
certain at the date of the financial statements, or a probable obligation for
which the cash outflow is not probable, are not recorded.
Provisions are recorded when, at the end of period, there is an obligation of
the Group to a third party which is probable or certain to create an outflow
of resources to the third party, without at least an equivalent return
expected from the third party. This obligation may be legal, regulatory or
contractual in nature.
To estimate the expenditure that the Group is likely to bear in order to
settle an obligation, the management of the Group takes into consideration
all of the available information at the closing date for its consolidated
financial statements. If no reliable estimate of the amount can be made, no
provision is recorded. For details, please refer to note 14 of contingent
liabilities.
F-53
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
27.
Possible impact of amendments, new standards and interpretations issued but not yet
effective for the annual accounting period ended December 31, 2005
Up to the date of issue of these financial statements, the HKICPA has issued the
following amendments, new standards and interpretations which are not yet effective for the
accounting period ending December 31, 2005 and which have not been adopted in these
financial statements:
Effective for
accounting periods
beginning on or
after
HK(IFRIC)4, Determining whether an arrangement contains a lease
January 1, 2006
HK(IFRIC)6, Liabilities arising from participating in a specific
market – Waste electrical and electronic equipment
December 1, 2005
Amendments to HKAS 19, Employee benefits – Actuarial Gains and
Losses, Group Plans and Disclosures
January 1, 2006
Amendments to HKAS 39, Financial instruments: Recognition and
measurement:
- Cash flow hedge accounting of forecast intragroup transactions
January 1, 2006
- The fair value option
January 1, 2006
- Financial guarantee contracts
January 1, 2006
Amendments, as a consequence of the Hong Kong Companies
(Amendment) Ordinance 2005, to:
- HKAS 1, Presentation of financial statements
January 1, 2006
- HKAS 27, Consolidated and separate financial statements
January 1, 2006
- HKFRS 3, Business combinations
January 1, 2006
HKFRS 7, Financial instruments: disclosures
January 1, 2007
Amendment to HKAS 1, Presentation of financial statements:
capital disclosures
January 1, 2007
In addition, the Hong Kong Companies (Amendment) Ordinance 2005 came into effect
on December 1, 2005 and would be first applicable to the Group's financial statements for
the period beginning January 1, 2006.
The Group is in the process of making an assessment of what the impact of these
amendments, new standards and new interpretations is expected to be in the period of initial
application. So far it has concluded that the adoption of amendments to HKAS 1, HKAS 27 and
HKFRS 3 made as a result of the Hong Kong Companies (Amendment) Ordinance 2005 are not
applicable to any of the Group's operations and that the adoption of the remaining standards
is unlikely to have a significant impact on the Group's results of operations and financial
position.
F-54
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
28.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES ("US GAAP") AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP
(a)
Summary of Significant Differences Between HK GAAP and US GAAP
The Group's accounting policies conform with generally accepted accounting
principles in Hong Kong ("HK GAAP") which differ in certain material respects from
those applicable generally accepted accounting principles in the United States of
America ("US GAAP").
As further described in note 4, the Group adopted all applicable HKASs that
required initial adoption in 2005. As a result, certain amounts under HK GAAP for
the years ended December 31, 2003 and 2004 were required to and have been restated
to comply with those 2005 initial adoption requirements. Consequently, the amounts
of certain differences between HK GAAP and US GAAP for the years ended December
31, 2003 and 2004 have been restated as a result of the initial adoption of
certain HKASs in 2005 that required retrospective application as follows:
As
previously
Effects of adopting
As
Reconciliation of net income to US GAAP
reported
HKAS 40
HKFRS 2
restated
HK$
HK$
HK$
HK$
2003
Loss attributable to the equity shareholders in
accordance with HK GAAP
(224,718
)
7,700
898
(216,120
)
Adjustments required under US GAAP
Revaluation of investment properties
70
(7,700
)
—
(7,630
)
Stock based compensation
344
—
(898
)
(554
)
2004
Loss attributable to the equity shareholders in
accordance with HK GAAP
(57,757
)
(2,200
)
—
(59,957
)
Adjustments required under US GAAP
Revaluation of investment properties
(78
)
2,200
—
2,122
Stock based compensation
—
—
—
—
With the adoption of new accounting standards, all revaluation gains and
losses of investment properties are recognized in the profit and loss account.
Since revaluations are not permitted under US GAAP, adjustments under HK GAAP are
reversed and differences between HK GAAP and US GAAP for the years ended December
31, 2003 and 2004 are restated. The adoption of new HKFRS 2 has also resulted in a
change in accounting policy for employee share options and other shared-based
payments under HK GAAP. Since the accounting treatment under HK GAAP is different
from US GAAP, adjustment under HK GAAP is reversed under US GAAP.
F-55
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
28.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES ("US GAAP") AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP
(continued)
(a)
Summary of Significant Differences Between HK GAAP and US GAAP
(continued)
The significant differences relate principally to the following items and the
adjustments considered necessary to present the net loss and shareholders' equity
in accordance with US GAAP are set out below.
(i)
Investment properties revaluation and depreciation
In prior years under HKGAAP, movements in the fair value of the
Group's investment properties were recognised directly in the investment
properties revaluation reserve except when, on a portfolio basis, the
reserve was insufficient to cover a deficit on the portfolio, or when a
deficit previously recognised in the statement of operations had reversed,
or when an individual investment property was disposed of. In these limited
circumstances movements in the fair value were recognised in the statement
of operations. Upon adoption of new HK GAAP as from January 1, 2005, all
changes in the fair value of investment properties are recognised directly
in the statement of operations in accordance with the fair value model.
Under US GAAP, investment properties are stated at cost and depreciated
over the shorter of the useful life and the land lease terms. Accordingly,
the investment properties of the Group and its jointly controlled entity,
which are stated at open market value, have been restated at historical
cost less accumulated depreciation.
Depreciation has been based on the historical cost of the properties held
by the Group and its jointly controlled entity and the useful lives of such
properties range from 44 to 46 years. The gross historical cost of
properties held by the Group and its jointly controlled entity subject to
depreciation under US GAAP which are not depreciated under HK GAAP at
December 31, 2005 amounted to HK$3,821 (2004: HK$3,821) and HK$140,000
(2004: HK$140,000), respectively.
In the US GAAP reconciliation of net loss for the year, the adjustments
with respect of investment properties represent: (i) the reversal of
revaluation gain in respect of the Group's properties of HK$nil (2004:
HK$78 and 2003: revaluation loss of HK$70), and the Group's proportionate
share of revaluation loss in respect of the property held by its jointly
controlled entity HK$7,150 (2004: revaluation loss of HK$2,200 and 2003:
revaluation gain of HK$7,700); and (ii) the depreciation in respect of the
properties held by the Group amounting to HK$83 (2004: HK$84 and 2003:
HK$83), and the Group's proportionate share of depreciation in respect of
the property held by jointly controlled entity amounting HK$1,750 (2004:
HK$1,750 and 2003: HK$875) which are not recongized under HK GAAP.
F-56
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
28.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES ("US GAAP") AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP
(continued)
(a)
Summary of Significant Differences Between HK GAAP and US GAAP
(continued)
(i)
Investment properties revaluation and depreciation (continued)
In the US GAAP reconciliation of shareholders' equity at December 31, 2005,
the adjustments represent the reversal of revaluation gain in respect of
the investment properties of the Group of HK$nil (2004: HK$78), and the
Group's proportionate share of revaluation loss in respect of the property
held by its jointly controlled entity HK$1,650 (2004: revaluation gain of
HK$5,500).
(ii)
Share options
The Group granted share options to directors and employees. Under HK GAAP
and prior to January 1, 2005, the proceeds received are recognised as an
increase to capital upon the exercise of the share options. The Group does
not account for the issuance of stock options until they are exercised.
With effect from January 1, 2005, in order to comply with HKFRS 2, the
Group recognises the fair value of such share options as an expense in the
consolidated statement of operations, or as an asset, if the cost qualifies
for recognition as an asset under the Group's accounting policies. A
corresponding increase is recognised in a capital reserve within equity.
Under US GAAP, the compensation expenses are based on the excess, if any,
of the quoted market price of the shares on the date of grant over the
exercise price of the stock options. Such amount is charged to the
consolidated statement of operations over the vesting period of the
options. Any expenses recognised based on the fair value of share options
under HK GAAP is reversed under US GAAP.
In the US GAAP reconciliation of net loss for the year ended December 31,
2003, the compensation expense of share options granted represents the
reversal of expense recongnised based on the fair value of the share option
under HK GAAP amounted to HK$898 and the amortization of compensation
expenses in relation to share options under US GAAP amounted to HK$ 344.
There has been no compensation expense of share options granted for the
year ended December 31, 2004 and 2005 as no additional options of the
Group were granted nor did any options from previous grants vest during
2004 and 2005.
F-57
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
28.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES ("US GAAP") AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP
(continued)
(a)
Summary of Significant Differences Between HK GAAP and US GAAP
(continued)
(iii)
Impairment of long-lived assets
The Group periodically reviews the carrying amount of the assets to
determine whether there is any indication that those assets have suffered
an impairment loss. If the recoverable amount of an asset is estimated to
be less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. Under HK GAAP, the estimated future cash
flows are discounted at a discount rate when assessing the recoverable
amount of the asset.
Under US GAAP, in accordance with SFAS 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets", recoverability of the assets is measured
by a comparison of the carrying amount of an asset to future undiscounted
net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognised is measured by
the amount by which the carrying amounts of the assets exceed the fair
value of the assets.
Given that the undiscounted cash flows expected to be generated by
certain long-lived assets were below the carrying amount of such assets
and subject to impairment under HK GAAP, the assets are also
considered impaired under US GAAP. Accordingly, the impairment loss
recognised under HK GAAP has not been reversed for US GAAP purpose.
(iv)
Minority interests
In prior years under HK GAAP, minority interests at the balance sheet date
were presented in the consolidated balance sheet separately from
liabilities and as a deduction from net assets. Minority interests in the
results of the Group for the year were also separately presented in the
statement of operations as a deduction before arriving at the profit or
loss attributable to shareholders.
With effect from January 1, 2005, under new HK GAAP, minority interests
become part of the total result for the year and total equity of the Group,
whereas under US GAAP, minority interests are excluded from the total
result for the year and shareholders' equity of the Group. However, there
is no impact on net income and shareholders' equity under US GAAP.
F-58
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
28.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES ("US GAAP") AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP
(continued)
(a)
Summary of Significant Differences Between HK GAAP and US GAAP
(continued)
(v)
Segment reporting
Under HK GAAP, the Group has reported business segment information as its
primary reporting segment in accordance with its internal financial reporting.
Segment information under HK GAAP includes data that can be directly
attributable to a segment and those items that can be reasonably allocated.
Under US GAAP, segment information is based on the segmental operating results
regularly reviewed by the Group's chief operating decision maker applying
accounting policies consistent with those used in preparation of the Group's
consolidated HK GAAP financial statements.
Segment information, including revenues and results for these segments for
each of the three years ended December 31, 2005 is presented in note 22. The
computation of segment results required by HK GAAP approximates measures of
performance used internally by the chief operating decision maker and
materially complies with US GAAP.
Please refer to note 22 for the Group's other segment information required by
the provisions of SFAS No. 131 "Segment Reporting".
(b)
Net loss
The effect on net loss of significant differences between HK GAAP and US GAAP is as
follows:
Years ended December 31,
2003
2004
2005
2005
HK$
HK$
HK$
US$
Net loss attributable to equity shareholders
in accordance with HK GAAP
(216,120
)
(1)
(59,957
)
(1)
(135,564
(17,380
)
Adjustments required under US GAAP
Revaluation of investment properties
(7,630
)
(1)
2,122
(1)
7,150
917
Depreciation of investment properties
(958
)
(1,834
)
(1,833
)
(235
)
Compensation expenses of share
options granted
(554
)
(1)
—
—
—
Impairment of long-lived assets
—
1,080
—
—
Net loss in accordance with US GAAP
(225,262
)
(58,589
)
(130,247
)
(16,698
)
Basic and diluted loss per share under US GAAP
(55 cents
)
(14 cents
)
(32 cents
)
(4 cents
)
(1)
With effect from January 1, 2005, HK GAAP has been converged in all material
respects with the international Financial Reporting Standards. Accordingly,
certain of the Group's accounting polices have been changed in line with
adoption of the new standards (see note 4 to the consolidated financial
statements). As a result, certain comparative figures for the year ended
December 31, 2003 and 2004 have been restated.
F-59
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APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
28.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES ("US GAAP") AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP
(continued)
(b)
Net loss (continued)
Options to purchase 8,450,000 shares and 4,230,000 shares of common stock at HK$2.765
per share were outstanding during the years 2004 and 2005, respectively, but were not
included in the computation of diluted EPS because the options' exercise price was
greater than the average market price of the common shares for the period. The
options, which expire on May 21, 2011, were still outstanding at the end of year 2005.
(c)
Shareholders' equity
The effect on shareholders' equity of significant differences between HK GAAP and US
GAAP is as follows:
Years ended December 31,
2004
2005
2005
HK$
HK$
US$
Total equity attributable to equity shareholders
in accordance with HK GAAP
2,193,153
(1)
2,058,625
263,926
Adjustments required under US GAAP
Revaluation of investment properties
(5,500
)
(1)
1,650
212
Accumulated depreciation of
investment properties
(2,432
)
(4,265
)
(547
)
Impairment of long-lived assets
1,080
1,080
138
Shareholders equity in accordance with US GAAP
2,186,301
2,057,090
263,729
The changes in shareholders' equity in accordance with US GAAP is as follows:
Capital
Additional
Other
Retained
stock
paid-in capital
reserves
earnings
HK$
HK$
HK$
HK$
Balance at January 1, 2003
41,254
1,806,147
276
621,002
New shares issued under the share
option scheme
73
1,946
—
—
Foreign currency translation adjustment
—
—
(282
)
—
Compensation expense of share
options granted
—
(344
)
—
—
Transfer to other reserves
—
—
8
(8
)
Net loss for the year
—
—
—
(225,262
)
Balance at December 31, 2003
41,327
1,807,749
2
395,732
Foreign currency translation adjustment
—
—
80
—
Net loss for the year
—
—
—
(58,589
)
Balance at December 31, 2004
41,327
1,807,749
82
337,143
Foreign currency translation adjustment
—
—
1,369
—
Net loss for the year
—
—
—
(130,247
)
Others
—
—
—
(333
)
Balance at December 31, 2005
41,327
1,807,749
1,451
206,563
F-60
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
28.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("US GAAP") AND ADDITIONAL DISCLOSURES REQUIRED UNDER US GAAP (continued)
(d)
Comprehensive income under US GAAP
The comprehensive loss for the year ended December 31, 2003 was HK$225,544, comprised
of net loss of HK$225,262 and a foreign currency translation loss of HK$282.
The comprehensive loss for the year ended December 31, 2004 was HK$58,509, comprised
of net loss of HK$58,589 and a foreign currency translation gain of HK$80.
The comprehensive loss for the year ended December 31, 2005 was
HK$128,878, comprised of net loss of HK$130,247 and a foreign currency
translation gain of HK$1,369.
(e)
Consolidated statements of operations and consolidated balance sheets under
US GAAP
The compensation received from cancellation of transponder utilization agreements and
from early termination of services and facilities lease are classified as revenues
under US GAAP. In addition, the reversals of the allowance for doubtful receivables
and provision for regulatory matters, and the impairment loss on goodwill and
property, plant and equipment are presented as part of costs and expenses under US
GAAP.
Under US GAAP, the interest expense on the loan borrowed by the Partnership and
the related interest income on the deposit by a fellow subsidiary are not offset.
The consolidated statements of operations under US GAAP is as follows:
Years ended December 31,
2003
2004
2005
2005
HK$
HK$
HK$
US$
Total revenues
316,291
277,260
336,512
43,142
Total costs and expenses
(484,036
)
(323,519
)
(445,891
)
(57,166
)
Loss from operations
(167,745
)
(46,259
)
(109,379
)
(14,024
)
Other income/(expenses)
Borrowing costs
(35,771
)
(4,117
)
(36,942
)
(4,736
)
Interest income
42,882
7,312
12,916
1,656
Others-net
11,878
2,020
17,915
2,297
Share of losses of jointly controlled
entities
(65,708
)
(2,259
)
(2,595
)
(333
)
Loss before income taxes and
minority interests
(214,464
)
(43,303
)
(118,085
)
(15,140
)
Provision for income taxes
(11,721
)
(16,625
)
(13,172
)
(1,688
)
Minority interests
923
1,339
1,010
129
Net loss
(225,262
)
(58,589
)
(130,247
)
(16,699
)
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Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
28.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("US GAAP") AND ADDITIONAL
DISCLOSURES REQUIRED UNDER US GAAP (continued)
(e)
Consolidated statements of operations and consolidated balance
sheets under US GAAP (continued)
Under US GAAP, the Company's consolidated current assets were HK$766,547
and HK$491,473 and total assets were HK$3,613,940 and HK$3,615,451 at December
31, 2004 and 2005, respectively, and consolidated current liabilities were
HK$232,825 and HK$297,438 and total liabilities were HK$1,423,783 and
HK$1,554,714 at December 31, 2004 and 2005, respectively.
(f)
Consolidated statements of cash flow
The Group applies Hong Kong Statement of Standard Accounting Practice No. 15
(revised 2001) "Cash Flow Statements" ("HK SSAP 15"). Its objectives and principles
are similar to those set out in SFAS No. 95, "Statement of Cash Flows" for US GAAP
purposes. The principal differences between the standards relate to classification.
Interest received is classified under investing activities and interest paid under
financing activities shown under HK SSAP 15. These items are classified under
operating activities under SFAS No. 95.
A reconciliation of the major captions in the consolidated statements of cash flow
under HK GAAP and US GAAP is as follows:
Years ended December 31,
2003
2004
2005
HK$
HK$
HK$
Net cash from operating activities:
Amount under HK GAAP
91,292
233,378
149,528
US GAAP adjustment      — interest received
9,279
6,810
13,404
— interest paid
(3,681
)
(15,847
)
(32,582
)
Amount under US GAAP
96,890
224,341
130,350
Net cash used in investing activities:
Amount under HK GAAP
(589,259
)
(364,492
)
(617,468
)
US GAAP adjustment — interest received
(9,279
)
(6,810
)
(13,404
)
Amount under US GAAP
(598,538
)
(371,302
)
(630,872
)
Net cash from financing activities:
Amount under HK GAAP
218,856
257,933
118,933
US GAAP adjustment — interest paid
3,681
15,847
32,582
Amount under US GAAP
222,537
273,780
151,515
F-62
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
28.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCPLES ("US GAAP") AND ADDITIONAL
DISCLOSURES REQUIRED UNDER US GAAP (continued)
(g)
Income taxes
A reconciliation of the expected income tax benefit, using the statutory tax rates of
the applicable countries, with the actual income taxes expense under US GAAP is as
follows:
Year ended December 31,
2003
2004
2005
HK$
HK$
HK$
Loss before tax and minority interests
(214,464
)
(43,303
)
(118,085
)
Expected income tax benefit
(37,550
)
(8,072
)
(21,066
)
Overseas withholding tax
20,237
17,000
18,856
Tax effect of non-deductible expenses
7,618
40,497
26,183
Tax effect of non-taxable revenue
(3,159
)
(27,852
)
(13,552
)
Tax effect of unused tax losses not recognized
12,813
2,656
2,808
Tax effect of prior year's unrecognized tax
losses utilized this year
—
(7,604
)
(57
)
Effect on opening deferred tax balances resulting
from an increase in tax rate during the year
11,762
—
—
Actual tax expenses
11,721
16,625
13,172
All but an insignificant amount of loss was generated from Hong Kong sources.
Non-deductible expenses include losses incurred by several subsidiaries which do
not produce any taxable income and as such, the losses are not deductible against
future profits.
As at December 31, 2005, the Group had net operating loss carryforwards of
approximately HK$2,171 million that it can carryforward indefinitely.
The income taxes expense under US GAAP is presented below:
Years ended December 31,
2003
2004
2005
HK$
HK$
HK$
Current
134,734
17,000
18,856
Deferred
(123,013
)
(375
)
(5,684
)
11,721
16,625
13,172
F-63
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
28.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("US GAAP") AND ADDITIONAL
DISCLOSURES REQUIRED UNDER US GAAP (continued)
(g)
Income taxes (continued)
The principal components of the deferred tax liabilities/(assets) under US GAAP are as follows:
December 31,
2004
2005
HK$
HK$
Deferred tax assets:
Tax losses
138,252
388,328
Property, plant and equipment
4,295
4,378
Trade and other receivables
2,537
2,705
Others
511
693
Total deferred tax assets
145,595
396,104
Valuation allowance
(13,088
)
(16,073
)
Net deferred tax assets
132,507
380,031
Deferred tax liabilities
Property, plant and equipment
(134,582
)
(376,422
)
Net deferred tax (liabilities)/assets
(2,075
)
3,609
At January 1, 2003, the valuation allowance was HK$1,679. During 2003, 2004 and 2005,
the valuation allowance increased by HK$15,231, decreased by HK$3,822 and increased by
HK$2,985, respectively.
(h)
Summarized information on APT Telecom, a significant jointly controlled entity
Under US GAAP, APT Telecom's net losses were HK$119,469, HK$4,108 and
HK$3,772 for the years ended December 31, 2003, 2004 and 2005, respectively,
total assets were HK$138,817 and HK$138,223 as at December 31, 2004 and 2005,
respectively, and total liabilities were HK$135,925 and HK$139,103 as at December
31, 2004 and 2005, respectively.
During 2003, the directors of APT Telecom conducted a review of the company's fixed
assets and determined that property, plant and equipment, and other assets were
impaired due to the recoverable amount of these assets is estimated to be less
than their carrying amount. Accordingly, impairment loss of HK$89,018 has been
recognized and charged to the statements of operations for the year ended
December 31, 2003. APT Telecom did not have any impairment in 2004 and 2005.
F-64
Table of Contents
APT SATELLITE HOLDINGS LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts stated in thousands, except share data)
28.
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN HONG KONG AND UNITED STATES
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("US GAAP") AND ADDITIONAL
DISCLOSURES REQUIRED UNDER US GAAP (continued)
(i)
Recent US accounting pronouncements
Statement of Financial Accounting Standards ("SFAS") No. 123 (revised 2004)
In December 2004, the Financial Accounting Standards Board (the "FASB") issued SFAS
No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R"), which requires
companies to measure and recognize compensation expense for all stock-based payments
at fair value. The Company will adopt this Statement on January 1, 2006. The
Group does not believe that the adoption of SFAS 123R will have a significant effect
on its financial statements.
SFAS No. 153
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets",
which eliminates an exception in Accounting Principles Board Opinion No. 29,
"Accounting for Nonmonetary Transactions", for recognizing nonmonetary exchanges of
similar productive assets at fair value and replaces it with a general exception for
recognizing exchanges of nonmonetary assets at fair value that do not have commercial
substance. This Statement will be effective for the Group for nonmonetary asset
exchanges occurring on or after January 1, 2006. The Group does not believe that the
adoption of SFAS 153 will have a significant effect on its financial statements.
SFAS No. 154
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections", which replaces APB 20 and SFAS No. 3, "Reporting Changes in Interim
Financial Statements". SFAS No. 154 establishes, unless impracticable, retrospective
application as the required method for reporting a change in accounting principle in
the absence of explicit transition requirements specific to a newly adopted
accounting principle. This statement will be effective for the Group for all
accounting changes and any error corrections occurring after January 1, 2006. The
impact on the consolidated financial statements will depend on new pronouncements
that are subsequently issued.
F-65