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                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                    FORM 20-F

[_]      REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE
         SECURITIES EXCHANGE ACT OF 1934
                                       OR

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
                                       OR
[_]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the transition period from _________ to ___________

                         Commission file number 1-14396

                                 ASIA SATELLITE
                       TELECOMMUNICATIONS HOLDINGS LIMITED
             (Exact Name of Registrant as Specified in Its Charter)

N/A                                          Bermuda
(Translation of Registrant's Name            (Jurisdiction of Incorporation or
Into English)                                Organization)

                          23 Floor East Exchange Tower
                               38-40 Leighton Road
                                    Hong Kong
                                  852-2805-6666
          (Address and Telephone Number of Principal Executive Offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

                                                NAME OF EACH EXCHANGE
         TITLE OF EACH CLASS                     ON WHICH REGISTERED
         -------------------                     -------------------

         American Depositary Shares             The New York Stock Exchange
         Common Stock, par value HK$0.10 per    The New York Stock Exchange*
         share

*    Not for trading, but only in connection with the registration of American
     Depositary Shares. The Common Stock is also listed and traded on The Stock
     Exchange of Hong Kong Limited.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

                                      None
                                (Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:

                                      None
                                (Title of Class)

     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.

     As of December 31, 2002, 390,265,500 shares of Common Stock, par value
HK$0.10 per share, were issued and outstanding.

     Indicate by check mark whether the registrant: (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 filing requirements for the
past 90 days.   Yes [X]    No  [_]

     Indicate by check mark which financial statement item the registrant has
elected to follow.      Item 17 [_]    Item 18  [X]

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<PAGE>

                                TABLE OF CONTENTS

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

                                                                            PAGE
                                                                            ----

PART I.........................................................................1

   Item 1.    Identity of Directors, Senior Management and Advisors............1
   Item 2.    Offer Statistics and Expected Timetable..........................2
   Item 3.    Key Information..................................................2
   Item 4.    Information on the Company......................................10
   Item 5.    Operating and Financial Review and Prospects....................31
   Item 6.    Directors, Senior Management and Employees......................43
   Item 7.    Major Shareholders and Related Party Transactions...............51
   Item 8.    Financial Information...........................................54
   Item 9.    Stock Price History.............................................55
   Item 10.   Additional Information..........................................56
   Item 11.   Quantitative and Qualitative Disclosures About Market Risk......57
   Item 12.   Description of Securities Other than Equity Securities..........58

PART II.......................................................................58

   Item 13.   Defaults, Dividend Arrearages and Delinquencies.................58
   Item 14.   Material Modifications to the Rights of Security Holders
              and Use of Proceeds.............................................58

PART III......................................................................58

   Item 15.   Controls and Procedures.........................................58
   Item 16.   [Reserved.].....................................................58

PART IV.......................................................................59

   Item 17.   Financial Statements............................................59
   Item 18.   Financial Statements............................................59
   Item 19.   Financial Statements and Exhibits...............................59


<PAGE>

                   SUPPLEMENTAL INFORMATION AND EXCHANGE RATES

    All references to the "Company" herein are references to Asia Satellite
Telecommunications Holdings Limited, a Bermuda company incorporated on May 10,
1996, and, unless the context otherwise requires, its subsidiaries. All
references to "AsiaSat" herein are to Asia Satellite Telecommunications Company
Limited, a Hong Kong company and a wholly-owned indirect subsidiary of the
Company and, unless the context otherwise requires, its subsidiaries. Any
discrepancies in any table between totals and sums of the amounts listed are due
to rounding.

    The Company and AsiaSat publish their financial statements in Hong Kong
Dollars. In this Annual Report references to "US Dollars," "US$" or "$" are to
United States Dollars and references to "Hong Kong Dollars," "HK Dollars" or
"HK$" are to Hong Kong Dollars. Solely for the convenience of the reader, this
Annual Report contains translations of certain Hong Kong Dollar amounts into US
Dollars at specified rates. These translations should not be construed as
representations that the Hong Kong Dollar amounts actually represent such US
Dollar amounts or could be converted into US Dollars at the rates indicated or
at all. Unless otherwise stated, the translations of Hong Kong Dollars into US
Dollars have been made at the rate of HK$7.80 to US$1.00, the approximate rate
of exchange on December 31, 2002. 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 (the "Noon Buying Rate") was HK$7.7988 to
US$1.00 on December 31, 2002. The Noon Buying Rate on May 30, 2003 was HK$7.7987
to US$1.00.

    See "Glossary of Certain Terms" below for definitions of certain terms used
in this Annual Report.

              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

    This Annual Report on Form 20-F contains certain forward-looking statements.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. When used in this Annual Report on Form
20-F, the words "estimate," "project," "anticipate," "expect," "intend,"
"believe" and similar expressions are intended to identify forward-looking
statements and information. The Company identifies the following important
factors which could cause its actual results to differ materially from any
results which might be projected, forecast, estimated or budgeted by the Company
in forward-looking information. All of such factors are difficult to predict and
many are beyond the control of the Company. Accordingly, while the Company
believes that the assumptions underlying the forward-looking information are
reasonable, there can be no assurance that such assumptions will approximate
actual experience, and in such event, actual results could differ materially
from the predictions contained in this Annual Report on Form 20-F. These
important factors include, but are not limited to: (i) the continued operation
of the existing in-orbit satellites, (ii) future economic and competitive
conditions in the Asia-Pacific regional satellite market in which AsiaSat
competes, (iii) the Company's success in obtaining necessary regulatory
approvals and licenses, and (iv) the continued ability of the Company to meet
its debt obligations and fund its capital expenditure programs.

                                     PART I

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.

         Not applicable.


<PAGE>

ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE.

         Not applicable.

ITEM 3.  KEY INFORMATION

                         SELECTED FINANCIAL INFORMATION

         The summary income statement data of the Company for the years ended
December 31, 2000, 2001 and 2002 and the summary balance sheet data of the
Company as of December 31, 2001 and 2002 set forth below are derived from, and
are qualified in their entirety by reference to, the audited consolidated
financial statements of the Company, including the notes thereto, included
elsewhere herein and in "Operating and Financial Review and Prospects." The
summary income statement data for the years ended December 31, 1998 and 1999 and
the summary balance sheet data as of December 31, 1998, 1999 and 2000 set forth
below are derived from audited consolidated financial statements of the Company
not included herein. The consolidated financial statements of the Company are
prepared and presented in accordance with accounting principles generally
accepted in Hong Kong, or Hong Kong GAAP, which differ in certain material
respects from accounting principles generally accepted in the United States, or
U.S. GAAP. Note 15 to the Company's consolidated financial statements contains
descriptions of the significant differences between Hong Kong GAAP and U.S.
GAAP, a reconciliation of net income from Hong Kong GAAP to U.S. GAAP for the
years ended December 31, 2000, 2001 and 2002, and a reconciliation of
shareholders' equity from Hong Kong GAAP to U.S. GAAP as of December 31, 2001
and 2002. In addition, Note 15 to the Company's consolidated financial
statements contains additional disclosures required under U.S. GAAP, which are
not disclosed elsewhere in the notes to the Company's consolidated financial
statements.

<TABLE>
<CAPTION>
                                                          AS OF AND FOR THE YEAR ENDED DECEMBER 31,
                                          ---------------------------------------------------------------------------
                                            1998         1999          2000          2001          2002         2002
                                            ----         ----          ----          ----          ----         ----
                                             HK$          HK$           HK$           HK$           HK$          US$
                                                (in millions, except for percentages and per share amounts)
<S>                                        <C>          <C>         <C>             <C>           <C>          <C>
INCOME STATEMENT DATA:
Hong Kong GAAP:
   Revenues .....................          902.7        806.8       1,002.9         969.5         950.8        121.9

   Total operating expenses .....          408.7        383.7         307.4         310.9         324.4         41.6

   Operating income .............          494.0        423.1         695.5         658.6         626.4         80.3

   Other income (expenses) ......           27.2        (17.8)          4.6          16.3           6.5          0.8

   Equity in losses of affiliates             --           --         (43.9)        (41.3)          9.1          1.2

   Net income ...................          463.0        353.6         576.3         563.0         554.7         71.1
   Earnings per share
      Basic .....................           1.19         0.91          1.48          1.44          1.42         0.18
      Diluted ...................           1.19         0.91          1.47          1.44          1.42         0.18
   Earnings per ADS
      Basic .....................          11.87         9.07         14.77         14.40         14.21         1.82
      Diluted ...................            N/A         9.06         14.73           N/A           N/A          N/A
Dividend declared per share:
</TABLE>


                                       2
<PAGE>

<TABLE>
<CAPTION>
                                                          AS OF AND FOR THE YEAR ENDED DECEMBER 31,
                                          ---------------------------------------------------------------------------
                                            1998         1999          2000          2001          2002         2002
                                            ----         ----          ----          ----          ----         ----
                                             HK$          HK$           HK$           HK$           HK$          US$
                                                (in millions, except for percentages and per share amounts)
<S>                                      <C>          <C>           <C>           <C>           <C>          <C>
   Ordinary .....................           0.20         0.20          0.20          0.20          0.25         0.03
Number of shares outstanding (in
     thousands) .................        390,000      390,075       390,266       390,266       390,266      390,266
U.S. GAAP:
   Operating income .............          538.2        439.2         686.7         658.0         607.9         77.9
   Net income ...................          504.3        368.4         568.1         562.5         538.1         69.0
   Earnings per share
      Basic .....................           1.29         0.94          1.46          1.44          1.38         0.18
      Diluted ...................           1.29         0.94          1.45          1.44          1.38         0.18
   Earnings per ADS
      Basic .....................          12.93         9.44         14.56         14.41         13.79         1.77
      Diluted ...................            N/A         9.44         14.52           N/A           N/A          N/A
BALANCE SHEET DATA:
Hong Kong GAAP:
   Working capital ..............        1,189.0        144.2         (70.3)         86.8         239.0         30.6
   Property, plant and
        equipment ...............        1,976.3      2,210.7       2,521.2       2,942.3       3,232.4        414.4
Total assets ....................        3,567.3      3,137.7       2,902.5       3,384.7       3,936.4        504.7

   Long-term liabilities (1) ....        1,729.0        579.3         217.9         288.8         326.0         41.8
   Total liabilities (excluding .        2,003.1      1,308.2         516.9
        minority interests) .....          514.2        589.1          75.5
   Capital stock ................           39.0         39.0          39.0          39.0          39.0          5.0
   Total shareholders' equity
        (net assets) ............        1,552.1      1,829.0       2,385.2       2,870.1       3,346.7        429.1
U.S. GAAP:
   Property, plant and equipment         2,015.8      2,226.8       2,512.3       3,035.7       3,302.6        423.4
   Total assets .................        3,642.3      3,240.4       2,996.4       3,478.1       4,011.2        514.3

   Long-term liabilities (1) ....        1,728.0        591.3         229.2         300.1         335.4         43.0
   Total liabilities (excluding
        minority interests) .....        1,959.4      1,265.6         528.2         525.4         598.5         76.7
   Total shareholders' equity
        (net assets) ............        1,682.7      1,974.5       2,467.8       2,952.2       3,412.2        437.4
</TABLE>

----------

(1)  Excludes current portion of long-term liabilities.

         The Company declared a dividend of HK$0.20 per share of its Common
Stock for both years 2001 and 2002. The Company also proposed a final dividend
of HK$0.19 and a special dividend of HK$0.25 per share of its Common Stock for
the year 2002.

         HISTORICAL EXCHANGE RATE INFORMATION

         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 HK$7.80 to US$1.00. The central element
in the arrangements that gives effect to the link is an agreement between the
Hong Kong Government and the three Hong Kong banknote-issuing


                                       3
<PAGE>

banks, The Hong Kong and Shanghai Banking Corporation Limited, Standard
Chartered Bank and, since May 1, 1994, Bank of China. Under this agreement, the
Hong Kong Government 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 Hong Kong Government Exchange Fund and are
paid the equivalent US Dollars at the fixed exchange rate. Exchange transactions
in the Hong Kong Dollar against the US Dollar continue in the foreign exchange
market.

         The following table sets forth the average, high, low and period end
Noon Buying Rate between Hong Kong Dollars and US Dollars (in Hong Kong Dollars
per US Dollar) for the periods indicated. No representation is made that the
Hong Kong Dollar or US Dollar amounts referred to in this annual report have
been, could have been or could be converted into US Dollars or Hong Kong
Dollars, as the case may be, at the rates indicated below or at any other rate.


                                       HONG KONG DOLLAR/US DOLLAR
                                            NOON BUYING RATE
                        -------------------------------------------------------

                          AVERAGE (1)       HIGH          LOW       PERIOD END
                              HK$            HK$          HK$          HK$
                        --------------   ----------    ---------  -------------

1998..................      7.7465         7.7595        7.7355       7.7476

1999 .................      7.7599         7.7814        7.7210       7.7740

2000 .................      7.7924         7.8008        7.7767       7.7999

2001 .................      7.7997         7.8004        7.7970       7.7980

2002 .................      7.7997         7.8095        7.7970       7.7988

December 2002 ........      7.7988         7.7992        7.7980       7.7988

January 2003 .........      7.7994         7.8001        7.7988       7.8001

February 2003 ........      7.7995         7.8000        7.7989       7.7991

March 2003 ...........      7.7991         7.7995        7.7987       7.7995

April 2003 ...........      7.7996         7.7998        7.7991       7.7991

May 2003..............      7.7991         7.7995        7.7985       7.7987

(1)  The average of the Noon Buying Rates on the last day of each month during
     the period.

                                  RISK FACTORS

         RISK OF LAUNCH AND IN-ORBIT FAILURE, LOSS, REDUCED PERFORMANCE AND
SATELLITE DEFECTS

         Satellites are subject to significant risks, including launch and
in-orbit failure, satellite defects, destruction and damage that may result in
total or partial loss or incorrect orbital placement or may prevent proper
commercial operation. Approximately 12% of all commercial geosynchronous
satellites have experienced a total or constructive total loss. The failure rate
varies by launch vehicle, launch services provider and satellite manufacturer. A
total or constructive total loss of any of our satellites would adversely affect
the Company. In addition, any defects in AsiaSat 2, AsiaSat 3S or AsiaSat 4 may
also adversely affect the Company. See "Information on the Company -- Satellites
-- AsiaSat 2."


                                       4
<PAGE>

         RISK OF NOT SUCCESSFULLY RENEWING EXISTING SATELLITE CAPACITY
AGREEMENTS OR NOT RENEWING THEM ON TERMS SIMILAR TO THEIR CURRENT TERMS

         The Company's existing satellite capacity agreements have scheduled
termination dates. If the Company is unsuccessful in obtaining their renewal on
similar commercial terms, including price levels, and for similar duration, or
in identifying alternate users for returned capacity, the Company's revenues
will be adversely affected.

         LIMITED LIFE OF SATELLITES

         A number of factors affect the estimated useful life of a satellite,
including the quality of their construction, the durability of their component
parts, the amount of fuel on-board, the launch vehicle used and the skill with
which the satellite is monitored and operated. There can be no assurance as to
the specific longevity of AsiaSat 2, AsiaSat 3S or AsiaSat 4. The Company's
results of operations would be adversely affected in the event the useful life
of AsiaSat 2, AsiaSat 3S or AsiaSat 4 were significantly shorter than the
estimates stated in "Information on the Company -- Satellites." See "Information
on the Company -- Insurance."

         RISK OF LOSING SATELLITE SERVICE REVENUES IF OTHER SATELLITES INTERFERE
WITH THE COMPANY'S TRANSMISSIONS

         Satellites operating from orbital slots that are adjacent to, and using
the same band of frequencies as, the Company's satellites could interfere with
the transmissions made by its satellites. Such interference could lead to the
loss of satellite service revenues if customers migrate to competitors who
operate satellites without such interference. The Company has entered into
frequency coordination agreements with certain other operators to avoid any
material interference and pursuant to which the Company has agreed to certain
operating constraints. The Company's ability to use its orbital slots could be
further constrained in order to avoid material interference with other
satellites and the Company could enter into disputes over interference in the
future. See "Information on the Company -- AsiaSat 4" and "Information on the
Company -- Additional Orbital Slots and Use of Frequencies."

         RISK OF LOSS OR DAMAGE TO SATELLITES, GROUND BASED SATELLITE CONTROL
EQUIPMENT OR SATELLITE STATIONS FROM ACTS OF WAR, TERRORISM, ELECTROSTATIC
STORM, SPACE DEBRIS AND OTHER NATURAL DISASTERS

         The loss, damage or destruction of AsiaSat 2, AsiaSat 3S or AsiaSat 4,
or damage or destruction to AsiaSat's ground based satellite control equipment
and satellite stations, as a result of military actions or acts of war,
terrorism, anti-satellite devices, electrostatic storm, collision with space
debris, other natural disasters or other causes would have an adverse effect on
the Company. AsiaSat's insurance policies include standard commercial satellite
insurance provisions and customary exclusions from losses resulting from (i)
military or similar actions, (ii) terrorism, (iii) laser, directed energy or
nuclear anti-satellite devices, (iv) insurrection and similar acts or
governmental action to prevent such acts, (v) governmental confiscation, (vi)
nuclear reaction or radiation contamination or (vii) willful or intentional acts
of AsiaSat or its contractors. See "Information on the Company -- Insurance."

         RELIANCE UPON SIGNIFICANT CUSTOMER

         The Company's largest customer is STAR Group Limited ("STAR"), which is
a Hong Kong-based international satellite television broadcasting company that
broadcasts over the greater


                                       5
<PAGE>

Asian region and is wholly-owned by The News Corporation Limited, a leading
international media group. STAR accounted for approximately 22.8%, 23.0% and
23.5% of AsiaSat's revenues in the years ended December 31, 2000, 2001 and 2002,
respectively. See "Information on the Company - Services and Customers."

         The Company could be adversely affected by the loss of STAR as a
customer or if STAR failed to perform its obligations in accordance with the
terms of its transponder utilization agreements. There can be no assurance that
STAR will enter into additional transponder utilization agreements with the
Company upon the expiration of existing transponder utilization agreements.

         RISK OF TECHNOLOGICAL CHANGES

         Technology in the satellite broadcasting and telecommunications
industry is in a rapid and continuing state of change. Technological
developments may have an adverse impact on the Company. First, because the
Company's satellites have an estimated useful life of approximately 15 years,
the technology used in the Company's satellites may not be the most advanced at
some future date. As a consequence, customers could migrate to satellite
operators offering new generations of competing satellite systems that
incorporate more advanced technologies, or more suitable satellite capabilities
or configurations, after the expiration of the Company's initial contract term,
which would result in a loss of revenues. In addition, the Company might be
required to replace satellites earlier than expected to address these
developments. Second, increased transponder efficiency resulting from advances
in compression technology, if not offset by increased applications for satellite
capacity, may cause an overall decrease in demand for such capacity.

         RISKS RELATED TO U.S. EXPORT CONTROLS

         The United States tightly restricts the export of commercial
communications satellites and satellite-related components and technology. U.S.
export control policy toward Hong Kong and the Company is affected by U.S.-Sino
relations, which can vary substantially from time to time. AsiaSat has sourced
satellites in the United States in the past; for example, the construction of
AsiaSat 4 was completed in the United States. There can be no assurance that
U.S. policy will not change in ways that will have a negative effect on the
export of future satellites, including the timing of such export, nor can there
be any assurance that future U.S. sourcing by the Company will be unimpeded by
U.S. export restrictions.

         RISKS RELATING TO FUTURE SATELLITES

         The construction, launch and operation of any future satellites by the
Company would be subject to substantially the same risks as those set forth
herein relating to AsiaSat 2, AsiaSat 3S and AsiaSat 4. In addition, under
AsiaSat's existing loan facility, AsiaSat's ability to make capital expenditures
in connection with the construction and launch of satellites subsequent to
AsiaSat 4 are subject to certain conditions. See "Operating and Financial Review
and Prospects -- Planned Capital Expenditures."

         THE COMPANY IS SUBJECT TO REGULATION BY A NUMBER OF DIFFERENT BODIES

         The business in which the Company operates is highly regulated.
Satellite, broadcasting and telecommunications services are subject to
international and national law.


                                       6
<PAGE>

         HONG KONG. As an operator of privately owned satellites, AsiaSat is
subject to the regulatory authority of Hong Kong, the Office of the
Telecommunications Authority of Hong Kong, which in turn is subject to the
control and supervision of the People's Republic of China ("China"). The
business prospects of the Company could be adversely affected by the adoption of
new laws, policies or regulations, or changes in the administration,
interpretation or application of existing laws, policies and regulations that
modify the present regulatory environment in Hong Kong.

         Licenses granted to AsiaSat are subject to conditions specified
therein. The conditions may include basic orbital parameters (and requirements
to obtain advance approval for any intended deviations and to notify any
unintentional deviation), requirements to avoid interference with the activities
of other users of outer space and requirements not to cause actions which may
give rise to liabilities on the part of China or Hong Kong. Breach of any such
conditions can give rise to a right of revocation of the relevant license.

         The Company's operation of earth stations is subject to the
Telecommunications Ordinance (Chapter 106 of the Laws of Hong Kong) (the
"Telecommunications Ordinance"). The Telecommunications Ordinance contains
provisions for the taking of possession by the Hong Kong Government of
telecommunications stations if 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. See "Information on the Company - Regulation - Hong Kong Regulation."

         OTHER NATIONAL REGULATORY SCHEMES. The customers of the Company are
subject to the regulatory authority in the countries in which they operate. Many
of the Company's customers must have authorization from the countries in which
such customers are located in order to uplink to and communicate by means of the
Company's satellites. Although the Company does not believe these regulatory
schemes will prevent the Company from pursuing its business, there can be no
assurance that such licenses and approvals are or will remain sufficient in the
view of national regulatory authorities and that these authorities will not
discourage or prevent potential customers from utilizing transponders on the
Company's satellites.

         The laws of certain countries require television broadcasters and
satellite telecommunication users providing services in such countries generally
to use state-owned or locally-owned satellites. These legal requirements prevent
the Company and other satellite companies from competing to provide transponder
capacity to these potential customers. There can be no assurance that other
countries in the Asia-Pacific region, including countries in which the Company
already has customers, will not impose similar requirements to use state-owned
or locally-owned satellites in the future. The imposition of such requirements
could adversely affect the Company's results of operations. See "Information on
the Company - Competition."

         The Company could be adversely affected by changes in laws and
regulations, or in the interpretation and application of existing laws and
regulations, relating to taxation or licensing fees in countries that may assert
jurisdiction over the Company's activities, including countries where customers
of the Company are located or where signals transmitted by the Company's
satellites are received. See "Operating and Financial Review and Prospects -
Taxation."

         INTERNATIONAL TELECOMMUNICATION UNION. AsiaSat's use of orbital slots
and radio frequency is subject to regulation by the International
Telecommunication Union. Nations are required by treaty to make a filing of
their proposed use of satellite orbital slots for geostationary satellites with
the Radiocommunication Bureau of the International Telecommunication Union. When
a


                                       7
<PAGE>

conflict or potential conflict is noted, nations are obligated to negotiate in
an effort to coordinate the proposed uses and resolve any interference concerns.
The Radiocommunication Bureau, however, has no formal dispute resolution
mechanism, and if nations cannot agree on a resolution, a satellite system will
not be entitled to the full interference protection afforded under international
law. See "Information on the Company - Regulation - International
Telecommunication Union."

         POLITICAL AND ECONOMIC RISKS

         AsiaSat is a Hong Kong company. Substantially all of AsiaSat's revenues
are derived from its operations conducted in the Asia-Pacific region. In 2000,
2001 and 2002, approximately 58.6%, 61.0% and 58.2%, respectively, of AsiaSat's
revenues, were derived from customers from Greater China, which includes
mainland China, Hong Kong, Macau and Taiwan. Furthermore, during 2000, 2001 and
2002, approximately, 22.8%, 23.0% and 23.5%, respectively, of AsiaSat's revenues
were attributable to transponder utilization agreements with STAR, a Hong Kong
company. As a result, the Company's financial condition and results of
operations may be influenced by the political situation in the Asia-Pacific
region and by the general state of the economies in such region.

         CHINA. General economic conditions in China could have a significant
impact on the financial prospects of the Company. The economy of China has been
changing dramatically with a gradual reduction in the role of state economic
plans in the allocation of resources, pricing and management of assets and an
increased reliance on market forces. Any slowdown in economic growth or return
to non-market policies could adversely affect business in China.

         The Company may also be adversely affected by changes in the political
and social conditions in China, and by changes in governmental policies, with
respect to laws and regulations, inflationary measures, currency conversion or
the rates and methods of taxation, among other things. While the Chinese
government is expected to continue its economic reform policies, many of the
reforms are new or experimental and may be refined or changed.

         Almost all payments under AsiaSat's transponder utilization agreements
are made in US Dollars. Since China has extensive foreign exchange controls, the
ability of Chinese companies to convert Renminbi (the currency of China) into
foreign currency and to purchase foreign currency is subject to various Chinese
laws and regulations. China's current or future foreign exchange controls could
adversely affect the ability of the Company's customers to make payments to the
Company in US Dollars.

         HONG KONG. From July 1, 1997, Hong Kong ceased to be a Crown Colony of
the United Kingdom, and became a Special Administrative Region of China.
Although the Basic Law, which governs China's relationship with Hong Kong,
provides that Hong Kong will have a high degree of legislative, judicial and
economic autonomy, there can be no assurance that the Company's financial
condition and results of operations will not be adversely affected as a
consequence of the exercise of China's sovereignty over Hong Kong. In addition,
political and social developments in China have from time to time adversely
affected the Hong Kong economy.

         SARS. The Company's business could be adversely affected by the
continued effects of Severe Acute Respiratory Syndrome (or SARS) on the economic
and business climate in the Asian region. Restrictions on travel resulting from
the continued existence of SARS could


                                       8
<PAGE>

adversely affect the Company's ability to market and service new and existing
customers throughout the Asian region. In addition, the Company's results of
operations could be adversely affected to the extent that SARS harms the economy
in China or the Asian region generally.

         LIMITATIONS ON WARRANTIES AND INSURANCE

         Pursuant to AsiaSat's satellite construction contracts with Boeing
Satellite Systems, International, Inc. (formerly known as Hughes Space and
Communications International, Inc.) ("Boeing") and Lockheed Martin, AsiaSat is
the beneficiary of certain limited performance-based, operational warranties on
its satellites. However, the limited contractual warranties do not cover a
substantial portion of the risk inherent in satellite launches or satellite
operations. Furthermore, there has been a general rise in the cost of insurance
following a series of satellite failures. In addition, while the cost of
insurance has increased, insurance coverage has decreased as a result of the
increase in satellite in-orbit failures and the terrorist events on and after
September 11, 2001.

         AsiaSat has in-orbit insurance coverage for AsiaSat 2 and AsiaSat 3S.
AsiaSat's in-orbit insurance must be renewed annually. AsiaSat obtained launch
and initial in-orbit insurance coverage for AsiaSat 4 prior to its launch.

         There are circumstances in which AsiaSat's insurance will not fully
reimburse AsiaSat for its expenditures with respect to launching a replacement
satellite (for example, if the cost of replacement exceeds the sum insured), and
the insurance will not compensate AsiaSat for business interruption and similar
losses (including, among other things, loss of market share, loss of revenue and
incidental and consequential damages) which might arise from the failure of a
satellite launch and launch of a replacement satellite or a failure of a
satellite to perform to specifications. For a description of the amounts and
coverage of AsiaSat's launch, in-orbit and liability insurance, see "Information
on the Company -- Insurance."

         RISK OF LIMITED MARKET DEMAND AND INCREASING COMPETITION

         The business in which the Company operates is highly competitive. The
satellite services provided by the Company are used by its customers for point
to multipoint communication (principally television broadcasting, private
communication networks, Internet and multimedia services). The Company's
principal competitors are regional and domestic satellite companies operating in
the Asia-Pacific region. 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. See "Information on the
Company - Competition."

         TRANSPONDER OVERSUPPLY. It is expected that in 2003, the supply of
transponders will continue to exceed the demand for transponders. The Company
believes that this imbalance cannot be quickly corrected until global economic
conditions improve and new applications and services take up existing capacity.
See "Information on the Company - Competition - Transponder Oversupply."

         COMPETING SYSTEMS AND SATELLITES. AsiaSat competes with a number of
regional and domestic satellites and satellite systems such as APSTAR, Chinasat,
ChinaStar, INSAT, JSAT, Koreasat, MEASAT, New Skies Satellites, Palapa,
PanAmSat, Singtel Optus, SINOSAT, Superbird, Thaicom and others. The Company
believes that most of the domestic systems are planning to add at least some
regional transponders to their next generation of satellites. The


                                       9
<PAGE>

increased competition could adversely affect the Company's business
prospects. See "Information on the Company - Competition - Competition
Restriction from Domestic Systems."

         FIBER OPTIC SYSTEMS. Fiber optic systems have been widely installed
within the region for point to point trans-oceanic communications. In addition,
point to point fiber optic connections between major cities in Asia are common.
As fiber optic coverage increases, the competitiveness of satellites for point
to point communication will diminish.

         RISK OF LOSS OF ORBITAL SLOTS

         In addition to the three primary positions of 100.5 degrees East, 105.5
degrees East, and 122 degrees East, in which the Company's satellites currently
operate, China has filed requests with the International Telecommunication Union
on behalf of AsiaSat for a number of other operational locations including 77.5
degrees East, 85.5 degrees East, 90.5 degrees, East 98 degrees East and 116
degrees East. There is no assurance that AsiaSat will maintain its right to
operate satellites in its primary positions. There is also no assurance that
AsiaSat will obtain rights to launch satellites into the additional orbital
slots or that if it does obtain such rights, that it will be able to fully use
the allocated frequencies because of the limitations imposed by coordination
agreements with other satellite systems. See "Information on the Company -
Satellites - Additional Orbital Slots and Use of Frequencies" and "Information
on the Company - Satellites - AsiaSat 4."

         SUBSTANTIAL LEVERAGE

         AsiaSat may have borrowings under its existing loan facility. This loan
facility contains certain covenants, including debt to equity covenants, which
if the Company draws down on the loan facility would prevent the Company from
undertaking certain acquisitions and purchases that may be necessary to its
growth. See "Operating and Financial Review and Prospects - Liquidity and
Capital Resources."

         RISK OF NOT BEING ABLE TO HIRE AND RETAIN HIGH TECHNOLOGY EMPLOYEES IN
THE SATELLITE INDUSTRY

         The Company's continued success depends substantially on its ability to
hire, retain and motivate highly skilled technology specialists. Because the
number of people with such skills is limited, satellite operators compete
vigorously for their services. The potential consequences of the Company's loss
of, or its inability to attract, key workers could include delays or inability
to launch, monitor or control satellites, with a consequent reduction in sales
and profits. Alternatively, the Company may have to offer more attractive
remuneration packages than its competitors, which would increase the Company's
personnel expenses and could reduce its margins.

ITEM 4.  INFORMATION ON THE COMPANY.

         HISTORY AND DEVELOPMENT OF THE COMPANY

         The Company is an exempted company organized under the Companies Act
1981 of Bermuda (as amended) (the "Companies Act"). The Company was incorporated
on May 10, 1996. The Company's registered office is located at Cedar House, 41
Cedar Avenue, Hamilton, HM12, Bermuda (phone: 441-295-2244) and its principal
place of business is located at 23rd Floor, East Exchange Tower, 38-40 Leighton
Road, Hong Kong.


                                       10
<PAGE>

         ORGANIZATIONAL STRUCTURE

         The Company is the parent company of AsiaSat. AsiaSat holds a 45.3%
interest in SpeedCast Holdings Limited.

         ACQUISITIONS AND INVESTMENTS

o        In March 2000, the Company entered into an agreement to acquire a 36.5%
         interest in SpeedCast Holdings Limited, which wholly owns SpeedCast
         Limited (formerly known as PhoenixNet Limited) ("SpeedCast") by making
         contributions in-kind of HK$97.5 million (US$12.5 million), of which,
         HK$62.4 million (US$8 million) was contributed by means of the
         provision of one C-band transponder for use by SpeedCast for a fixed
         period of approximately thirty-eight months. The balance of HK$35.1
         million (US$4.5 million) was contributed by means of the provision of a
         Gen II Platform and other support for a fixed period of twenty-four
         months. In March 2002, the Company entered into a further agreement to
         acquire an additional 8.8% interest in SpeedCast Holdings Limited by
         making an aggregate contribution of HK$31.2 million (US$4.0 million),
         of which HK$19.5 million (US$2.5 million) was in cash and HK$11.7
         million (US$1.5 million) was by means of extending the usage of one
         C-band transponder by SpeedCast Holdings Limited for a further period
         of 219 days from February 4, 2003. See "- Services and Customers -
         Multimedia" and "Operating and Financial Review and Prospects -
         Introduction."

o        In September 2000, the Company entered into an agreement with each of
         Boeing and Lockheed Martin for the construction and launch of AsiaSat
         4. This satellite was successfully launched in April 2003. The
         aggregate investment for the construction, launch and launch insurance
         of AsiaSat 4 was approximately HK$1,747.2 million (US$224 million) and
         was financed completely through internal funds. See " - Satellites -
         AsiaSat 4" and "Operating Financial Review and Prospects - Planned
         Capital Expenditures."

o        In March 2001, AsiaSat entered into an agreement with respect to the
         lease of the Tai Po Site. For details with respect to the lease of the
         Tai Po Site, see "Additional Information - Material Contracts", "-
         Business Overview" and "- Property, Plants and Equipment - Land
         Facilities." In March 2002, AsiaSat entered into a construction
         agreement with Leighton Contractors Asia Limited with respect to the
         construction of a satellite control center on the Tai Po Site. In
         December 2002, AsiaSat entered into an agreement with Globecomm Systems
         Europe Limited for the procurement of the TT&C RF System to be
         installed at the satellite control center at the Tai Po Site at a cost
         of HK$39.0 million (US$5.0 million). The investment for the
         construction of the satellite control center on the Tai Po Site
         (including the TT&C RF System) is estimated to be approximately
         HK$243.2 million (US$31.2 million). As at December 31, 2002, a gross
         amount of HK$86.2 million (US$11.1 million) has been spent on the
         investment in the Tai Po Site. See "Additional Information - Material
         Contracts" and "Operating and Financial Review and Prospects -
         Liquidity and Capital Resources - Planned Capital Expenditures."

         BUSINESS OVERVIEW

         The Company, through its wholly-owned subsidiary, AsiaSat, is a leading
provider of high quality satellite transponder capacity in Asia. The Company's
satellites are positioned over the


                                       11
<PAGE>

Asian landmass and offer its customers comprehensive coverage of close to 70% of
the world's population. The Company operates three satellites -- AsiaSat 2,
AsiaSat 3S and AsiaSat 4.

         AsiaSat 1, Asia's first privately owned commercial satellite covering
the Asian region, was launched in 1990. Traffic on AsiaSat 1 was transferred to
AsiaSat 3S in 1999, and AsiaSat 1 was moved from the 105.5 degrees East orbital
slot to the 122 degrees East orbital slot. AsiaSat 1 was retired in February
2003. AsiaSat 2, which provides increased footprint coverage over AsiaSat 1 with
a substantial gain in signal power, was launched in 1995 and began commercial
service in January 1996. AsiaSat 3S was launched from the Baikonur Cosmodrome in
the Republic of Kazakhstan and began commercial service in 1999. AsiaSat 3S has
a similar footprint coverage to AsiaSat 2. Together, the Company's current
satellites provide coverage to more than 50 countries, with approximately 3.3
billion people, from Siberia to Australia and from Japan to the Middle East.

         AsiaSat 4 has undergone in-orbit testing and is now operational at 122
degrees East. AsiaSat 4 is a high power satellite having C-band coverage and
power substantially similar to AsiaSat 2 and AsiaSat 3S. Because AsiaSat 4 has a
more easterly location, its C-band coverage favors the Pacific-Rim, Australia
and New Zealand to a greater degree than previous AsiaSat satellites. The
Ku-band coverage of AsiaSat 4 is designed to meet the requirements of both
broadcast satellite services frequencies and fixed satellite services
frequencies for maximum flexibility. In June 2000, the Company received a
Telecommunication License from the Office of the Telecommunications Authority of
Hong Kong allowing AsiaSat to operate the broadcast satellite services
frequencies and the fixed satellite services frequencies on AsiaSat 4. See "--
Telecommunications -- Telecommunication License."

         The Company has leased a site in Tai Po Industrial Estates, New
Territories, Hong Kong (the "Tai Po Site"), to support the growth of the
Company's business. The Tai Po Site will be used to build a new satellite
control center (the "Tai Po Earth Station") that will also allow AsiaSat to
offer its customers additional and improved services. These services include
uplink, technical support and other value added services. For a general
discussion on earth stations, see "--Regulation - Hong Kong Regulation."
Construction of the Tai Po Earth Station is currently progressing on schedule
and is expected to be completed in the second half of 2003. See "Additional
Information - Material Contracts."

         As of December 31, 2002, the utilization rate for AsiaSat 2 and AsiaSat
3S was approximately 66% and 62%, respectively, under transponder utilization
agreements and transponder purchase agreements.

         The Company provides transponder capacity primarily to the
broadcasting, telecommunications (including private communication networks),
Internet and multimedia markets. AsiaSat has entered into separate transponder
utilization agreements with over 100 customers from various countries and
regions, including Australia, China, Germany, Hong Kong, Japan, the Kingdom of
Saudi Arabia, Korea, Kuwait, Pakistan, Switzerland, Taiwan, the United Kingdom,
the United States and Vietnam.

         In 2000, 2001 and 2002, approximately 58.6%, 61.0% and 58.2%,
respectively, of the Company's revenues were derived from customers from Greater
China, which includes mainland China, Hong Kong, Macau and Taiwan.


                                       12
<PAGE>

         The Company believes that AsiaSat 3S is the leading satellite for
regional television programming distribution in Asia based on the number of
viewers watching programming distributed on AsiaSat 3S. The Company's largest
customer, STAR, is a Hong Kong-based international satellite television
broadcasting company that broadcasts over the Asian region.

         SERVICES AND CUSTOMERS

         During the last three years, the Company's revenues were derived from
the following markets:


                                          2000        2001        2002
                                        -------     -------    --------

Broadcasting.................            70.6%       66.8%       68.3%

Telecommunications, Internet             29.4%       33.2%       31.7%
   and Multimedia............

         Total revenue from the Company's five largest customers in each of the
years ended December 31, 2000, 2001 and 2002 was HK$428.3 million, HK$429.8
million and HK$410.9 million, respectively, which represented 42.9%, 44.3% and
43.2%, respectively, of total revenue. Revenues from the Company's largest
customer represented 22.8%, 23.0% and 23.5% of total revenue for the years ended
December 31, 2000, 2001 and 2002, respectively.

         BROADCASTING

         Local, national and international broadcasters use satellite
transponder capacity for television programming distribution, contribution
operations (i.e., the transmission of video feeds from one location to another)
and ad hoc services such as the transmission of special events and live news
reports from the scene of the event. The largest market for broadcasting
services is the full-time leasing of transponder capacity by programmers to
distribute programming to television stations, local cable operators, master
antenna systems and directly to homes.

         After migrating all traffic from AsiaSat 1 to AsiaSat 3S in 1999, STAR
now offers a bouquet of analog and digital services, including both subscription
and free-to-air television, that according to STAR reaches more than 300 million
viewers across the Asia-Pacific region.

         In 1998, STAR entered into leases for seven transponders on AsiaSat 3S,
six of which continue for the entire life of AsiaSat 3S and one of which will
expire in January 2008. In 1999, STAR entered into three year leases for two
additional transponders on AsiaSat 3S that commenced in 1999 when AsiaSat 3S
began commercial operations. These two short-term leases were terminated in
March and June 2000, respectively, and were replaced by two long-term leases
with terms equaling the period of AsiaSat 3S's remaining useful life. The leases
entered into by STAR for capacity on AsiaSat 3S are for a smaller number of
transponders than under the previous arrangements because of the consolidation
of all its services onto AsiaSat 3S, the footprint coverage of AsiaSat 3S as
well as the application of transmission technologies, such as digital
compression, which enhance the capacity of each transponder.

         The Company's results of operations could be adversely affected by the
loss of STAR as a customer or if STAR failed to perform its obligations in
accordance with the terms of its transponder utilization agreements. There can
be no assurance that STAR will enter into additional transponder utilization
agreements with the Company, either for AsiaSat 3S or other satellites, upon the
expiration of existing transponder utilization agreements. See "Key Information
- Risk Factors - Reliance Upon Significant Customer."


                                       13
<PAGE>

         AsiaSat currently is not subject to any exclusivity arrangement with
any of its customers. Other broadcasters on its satellite fleet using its
transponders include Pakistan TV, ZEE Telefilms, Associated Press Television
News, the Ministry of Information of Saudi Arabia, the Ministry of Information
of Kuwait, UAE Radio & TV, BBC World Service Radio, Voice of America, Worldnet,
Deutsche Welle of Germany, TV5, RAI of Italy, RTVE of Spain, RTPi of Portugal,
Fashion TV, TVB Satellite Broadcasting of Hong Kong, SABe TV, the European
Broadcasting Union, Arirang TV, Sahara TV, Turner Broadcasting System, Asia
Plus, Sun TV, Tech TV, Bloomberg TV, Network of the World and Reuters TV.

         In addition, governmental bodies seek to use satellites to expand their
coverage to remote and underdeveloped regions of their countries that would
otherwise be unserviced. The signals are received at rebroadcast centers and
retransmitted to viewers. The State Administration of Radio, Film and Television
of China (formerly, the Ministry of Radio, Film and Television) uses capacity on
AsiaSat 2 and AsiaSat 3S to distribute domestic and international television
programming. China's first digital compressed pay TV service is operated by the
State Administration of Radio, Film and Television of China on AsiaSat 2 via
links to China's cable network systems. Currently 22 television channels from 21
provinces in China with two autonomous regions and three municipalities are
broadcasting on AsiaSat 2 C-band and Ku-band transponders.

         TELECOMMUNICATIONS

         The Company's telecommunications services include the provision of
transponder capacity for private communications networks for data and voice
communications and to communications service providers in Asia. The Company
believes that there will continue to be opportunities in Asia to market
transponder capacity to certain end users that, due to poor telecommunications
infrastructure or high costs of local public networks, desire to operate their
own private network for data and voice transmission. These are often large
multinational companies or agencies such as financial news providers,
newspapers, banks, paging companies, airlines, oil companies and stock
exchanges.

         China represents one of the world's largest potential markets for
satellite communications. Private communications networks in China are numerous
and growing. Approximately 44 organizations in China in such businesses as
banking, securities, publishing and oil have established private networks
utilizing AsiaSat 2 or AsiaSat 3S to link remote sites with their central
headquarters.

         AsiaSat's Chinese telecommunications customers on AsiaSat 3S include
the People's Bank of China, the Shanghai Stock Exchange, the People's Daily,
CITIC Guoan Information Industry Company Limited and China Petrochemical
Corporation. In addition, two Chinese entities have entered into transponder
purchase agreements to use one Ku-band transponder on AsiaSat 3S.

         Five Chinese ministries and agencies have entered into transponder
purchase agreements to use a total of 1.7 Ku-band transponders on AsiaSat 2: the
Ministry of Water Resources, the Ministry of Commerce, the Ministry of Railways,
the China Meteorological Administration and Xinhua News Agency. These five
ministries and agencies are using this capacity for a variety of very small
aperture terminal network applications. Other Chinese organizations which are
utilizing Ku-band transponder capacity on AsiaSat 2 include the Bank of China,
China Unicom, Tsinghua University, Yinmore Telecommunication Technology Company
Limited and Beijing Asia Pacific East Communication Network Ltd.


                                       14
<PAGE>

         AsiaSat's telecommunications customers on AsiaSat 2 also include
Vietnam Telecom International, Reach, Corporate Access, Associated Press,
Reuters Asia, the International Air Transport Association, Korea Telecom,
Teleport Access Services and Pakistan Telecom.

         EUROPE. AsiaSat has launched a digital broadcast platform on AsiaSat 2
that offers one stop shop services including satellite capacity, signal
turnaround facilities and analog/digital conversion to broadcast customers from
Europe and the Middle East for their services to Asia and Australia. The
turnaround facilities are supplied pursuant to an agreement with IRIS Gateway
Satellite Services Limited through its Makarios earth station in Cyprus. The
earth station is able to receive signals from European and Middle East
satellites and uplink the signals to AsiaSat 2.

         MULTIMEDIA AND INTERNET. SpeedCast has installed a multimedia platform
that enables distribution of Internet services and other multimedia content.
Customers may use this format when distributing content on the AsiaSat satellite
system.

         AsiaSat now holds a 45.3% interest in SpeedCast Holdings Limited, which
was formed in 1999 to principally provide high speed Internet, multimedia
content delivery, and corporate broadcast services such as data packages
delivery and Internet streaming. SpeedCast, in addition to providing the
principal services, also launched on-line music distribution, on-line multimedia
services and revolutionary streaming encryption system. SpeedCast began trial
operations on March 15, 2000. During the year, SpeedCast also launched a new
service for two-way operation, which provides more efficient connection for
content delivery. See "Operating and Financial Review and Prospects -
Introduction." Customers including SpeedCast and Pacific Century Matrix use
AsiaSat 2 and AsiaSat 3S to offer broadband (which refers to the provision of
multiple channels of data over a single communications channel), Internet and
multimedia services.

         EFTNS LICENSE. The Office of the Telecommunications Authority of Hong
Kong accepted AsiaSat's application for an External Fixed Telecommunication
Network Services ("EFTNS") license on January 18, 2000. An EFTNS license allows
license holders to uplink broadcasting programs and to provide public
telecommunication services linking Hong Kong and other countries either on their
own business initiatives, or for and on behalf of their customers via
satellites. Obtaining an EFTNS license will enable AsiaSat to provide a one-stop
service to its customers, including the provision of transponder capacity and
uplinking or downlinking broadcasting programs, and telecommunication services
to audiences or operators outside Hong Kong. At the moment, AsiaSat's
broadcasting or telecommunications customers have to uplink their programs and
services by either establishing their own uplinking facilities or employing the
uplinking services of other licensed operators. This service would complement
AsiaSat's core business of providing high-quality satellite transponder capacity
by offering one-stop shop services. Recently, AsiaSat submitted an application
to the Office of the Telecommunications Authority of Hong Kong to enable the
commencement of the service using the teleport facilities at the Tai Po Facility
in October 2003.

         TELECOMMUNICATION LICENSE. On June 27, 2000, the Company was granted a
telecommunication license (the "Telecommunication License") from the Office of
the Telecommunications Authority of Hong Kong allowing the broadcast satellite
services frequencies to be incorporated into the payload of AsiaSat 4 at the 122
degrees East orbital position. Broadcast satellite services frequencies were
assigned to Hong Kong by the 1997 World Radiocommunication Conference ("WRC
'97") of the International Telecommunication Union. The 2000 World
Radiocommunication Conference ("WRC-2000") later revised these assignments and
further assigned more frequencies to Hong Kong. These frequencies are designated
for satellite broadcasting uses and are receivable in Hong Kong and surrounding
areas


                                       15
<PAGE>

with very small antennas. They can be used to provide Direct-to-Home satellite
broadcasting services, which refers to a satellite service that delivers
television programming directly to consumer homes using a small antenna and
related equipment. Adding the broadcast satellite services frequencies onto
AsiaSat 4 will enable AsiaSat to offer high power and wide coverage for
broadcasting services in Hong Kong and the surrounding areas. By installing a
very small dish, viewers will be able to enjoy a whole new range of programming.

         The license referenced above also allows the fixed satellite services
frequencies to be incorporated into the AsiaSat 4 payload. Accordingly, the
Company has incorporated the broadcast satellite services and fixed satellite
services frequencies as part of the AsiaSat 4 payload.

         The main difference between the broadcast satellite service and the
fixed satellite service in AsiaSat's case is that it gives access to additional
spectrum for the Company. Moreover, while the fixed satellite service frequency
bands are used for a multitude of services, the broadcast satellite service
frequency bands are normally used only for TV applications and with much more
standardized parameters. The broadcast satellite service frequency bands are
also used much less than the fixed satellite service frequency bands.

         The Telecommunication License for AsiaSat 4 sets out certain conditions
that AsiaSat must perform. In order to secure the due performance of these
conditions, AsiaSat was required to obtain a performance bond in the initial sum
of HK$20 million. AsiaSat has completed the four conditions, and the performance
bond has been eliminated.

         SATELLITES

         The global communications market has historically been shared among
three major transmission technologies - fiber optic and coaxial cable, microwave
systems and satellites. Satellites have been, and continue to be, used for
global communications applications. Each of these transmission technologies has
advantages over the other two in specific market segments.

         Although satellites initially were used for point to point long
distance telephone and television transmissions and continue to be used for
these applications, fiber optic cables have proven to be a more cost effective
delivery method for high volume point to point applications. Today, most
trans-oceanic transmissions are delivered via submarine fiber optic and coaxial
cables, which are ideally suited to carry large amounts of traffic between two
points. In developing countries, satellites carry a significant portion of point
to point traffic due to the lack of terrestrial fiber optic and coaxial network.
However, as more fiber optic and coaxial networks are established, less of this
traffic will be delivered via satellite. In many countries, satellites are also
used to supplement terrestrial transmission networks for the distribution of
television and radio programming.

         Geostationary satellites are located in-orbit approximately 22,300
miles above the Equator. When positioned in geostationary or geosynchronous
orbit, a satellite appears to hover over the same spot on the earth because it
is moving at a rate that matches the speed of the earth's rotation on its axis.
Today's high powered satellites have the ability to cover up to approximately
42% of the earth's surface at one time. With broad coverage capabilities,
satellites are well suited for point-to-multi-point applications (principally
television broadcasting, private communication network, Internet and multimedia
services). Satellites are commonly used for distribution of video and audio
signals to cable operators and local television and radio stations for


                                       16
<PAGE>

redistribution. In Direct-to-Home applications, a high powered satellite allows
video transmissions to be received directly from the satellite to homes using
very small dishes.

         A satellite can be accessed by an uplink for the transmission of a
satellite circuit extending from the earth to the satellite from virtually
anywhere within its coverage area. This flexibility makes satellites ideal for
private communications networks. Due to the high cost of local
telecommunications services or the lack of an adequate local telecommunications
infrastructure, an organization may wish to operate its own network. A very
small aperture terminal network, connecting a large number of widely dispersed
locations via satellite, is an efficient and cost effective method for many
organizations to maintain communications with a network of offices.

         Satellite transponders receive signals from the uplink earth stations
then convert, amplify and transmit the signals to the downlink earth stations.
Transponder subsystems include low-noise receivers, frequency converters,
channel amplifiers, high power amplifiers, input/output multipliers, various
switches and other electronic components. Frequency represents the measure of
how frequently a periodic (repetitious) wave form or signal regenerates itself
at a given amplitude.

         Communications satellites are of varying quality and usefulness
depending on (i) footprint, or coverage area, (ii) transponder power (EIRP),
(iii) transponder bandwidth, (iv) frequency band and (v) other features, such as
beam switching and linearizers.

         A beam represents one of the coverage patterns offered by a satellite.
The footprint of a satellite refers to the geographic area covered by a
satellite, 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 and curvature of the earth.
The primary transponder characteristic is power, which is expressed in terms of
EIRP. EIRP means equivalent isotropic radiated power and is a measure of radio
frequency power of each transponder. Transponder bandwidth, expressed in terms
of megahertz or MHz, a unit of frequency equal to one million cycles per second,
is a range of frequencies, that can pass over a given transmission channel.
Generally, the greater the bandwidth, the more information that can be sent
through the circuit in a given amount of time.

         C-band and Ku-band are portions of the radio frequency spectrum alloted
for satellite transmission, and are approximately in the 3 to 7 and 11 to 15
gigahertz (or GHz) ranges, respectively. Gigahertz is a measure of frequency
equal to one billion cycles per second. While Ku-band frequencies suffer from
some interference caused by rain, they are more suitable for small antenna
applications than C-band frequencies. Ku-band is generally used for the same
purposes as C-band as well as for satellite news-gathering (truck-mounted
antennas) and in some very small aperture terminal applications. Ku-band is
especially useful in areas with dense ground-based microwave systems. To
compensate for rain interference, Ku-band transmitters are generally
higher-powered than C-band transmitters and the footprints are smaller. This
combination of high-power and small antennas also makes Ku-band suitable for
Direct-to-Home television.

         The following table sets forth certain satellite specifications in
relation to AsiaSat 2, AsiaSat 3S and AsiaSat 4. However, see "Key Information
-- Risk Factors -- Risk of Launch and In-orbit Failure, Loss, Reduced
Performance and Satellite Defects", "Key Information -- Risk Factors -- Limited
Life of Satellites" and "Key Information -- Risk Factors -- Risk of Loss or


                                       17
<PAGE>

Damage to Satellites, Ground Based Satellite Control Equipment or Satellite
Stations from Acts of War, Terrorism, Electrostatic Storm, Space Debris and
Other Natural Disasters."

<TABLE>
<CAPTION>
                                           SUMMARY SATELLITE DATA

                      ASIASAT 2               ASIASAT 3S                    ASIASAT 4
                      ---------               ----------                    ---------
<S>                   <C>                     <C>                           <C>
Region
  covered:
   C-band             Asia, Middle East,      Asia, Middle East, CIS and    Asia, Middle East, CIS and
                      CIS and Australia       Australia                     Australia

   Ku-band            China, Japan, Hong      East Asia Beam (from Japan    China Beam, Australia Beam
                      Kong, Taiwan and Korea  to Kazakhstan), South Asia    (Australia and New Zealand),
                                              Beam (from Bangladesh to      Hong Kong broadcast satellite
                                              the Middle East), Steerable   services Beam
                                              Beam(1)

Launch date           November 28, 1995       March 21, 1999                April 11, 2003 (Cape Canaveral
                                                                            time)

Manufacturer          Lockheed Martin         Boeing                        Boeing

Model                 Series 7000             BSS601HP                      BSS601HP

Stabilization         Three Axis Stabilized   Three Axis Stabilized         Three Axis Stabilized

Number of
  Transponders        33                      44                            48

  C-band              20 @ 36 MHZ             28 @ 36 MHZ                   28 @ 36 MHZ
                      4 @ 72 MHZ

  Ku-band             9 @ 54 MHZ              16 @ 54 MHZ                   10 @ 54 MHz (fixed satellite
                                                                            services)
                                                                            6 @ 33 MHz (fixed satellite
                                                                            services)
                                                                            4 @ 33 MHz (broadcast satellite
                                                                            services)

Maximum               40 dBW (C-band)         41 dBW (C-band)               41 dBW (C-band)
  EIRP                53 dBW (Ku-band) (2)    53 dBW (Ku-band)              53 dBW (Ku-band)
                                                                            56 dBW (BSS Ku-band)

Payload               fixed satellite         fixed satellite services      broadcast satellite services /
                      services                                              fixed satellite services

Power output          55 W TWTAs (C-band)     55 W TWTAs (C-band)           55 W TWTAs (C-band)

                      115 W TWTAs             140 W TWTAs (Ku-band)         140 W TWTAs (Ku-band)
                      (Ku-band)

Estimated
  Useful
  Life                13 years                16 years                      15 years

Estimated end
  of useful life      2008                    2015                          2018

Approximate
 Percentage of
 world population
 covered by           66%                     66%                           66%
 satellite
</TABLE>
-----------
(1)  AsiaSat 3S has 16 Ku-band transponders divided into two fixed beams and a
     steerable beam.

(2)  AsiaSat 2 has experienced power reductions in its Ku-band transponders in
     relation to their design specifications. See "-- AsiaSat 2."


         ASIASAT 1

         Traffic on AsiaSat 1, a BSS (Boeing Satellite Systems) 376 satellite
manufactured by Boeing and launched by AsiaSat on April 7, 1990, was transferred
to AsiaSat 3S in 1999. AsiaSat 1 was operated in inclined orbit mode in order to
preserve its remaining fuel. AsiaSat moved AsiaSat 1


                                       18
<PAGE>

to the 122 degrees East orbital slot in 1999, where it was used for occasional
services. AsiaSat 1 was retired in February 2003. There was no cost associated
with the disposal of AsiaSat 1.

         ASIASAT 2

         AsiaSat 2 is located in the geostationary orbit at 100.5 degrees East.
It was designed and produced by Lockheed Martin and is a series 7000 model
satellite. It was launched on November 28, 1995 by a Long March 2E launch
vehicle under a contract with China Great Wall Industry Corporation. AsiaSat 2
commenced commercial service in January 1996.

         AsiaSat 2 is equipped with twenty 36 MHz C-band and four 72 MHz C-band
transponders with a maximum signal power of 40 dBW. It is also equipped with
nine 54 MHz Ku-band transponders with a maximum signal power of 53 dBW. However,
at the time of the launch, AsiaSat 2 experienced a Ku-band power reduction in
certain points of its coverage area. Recently, the back-up command receiver on
AsiaSat 2 (a component used to communicate with and control the satellite) has
experienced intermittent outages. AsiaSat 2 can operate normally on its primary
command receiver. See "Key Information -- Risk Factors -- Risk of Launch and
In-orbit Failure, Loss, Reduced Performance and Satellite Defects." The
satellite uses linear polarized beams, with the C-band and Ku-band having
distinct coverage areas. For the C-band transponders, there are four spare
amplifiers for each polarization of 12 C-band transponders in two separate 12
for 16 (12 working/16 total) redundancy ring configurations. For the Ku-band
transponders, there are three spare amplifiers connected in a 9 for 12 (9
working/12 total) single redundancy ring configuration.

         AsiaSat 2 has C-band coverage over virtually the entire Asian region,
with a footprint stretching from Russia to Australia and from Japan to the
Middle East and the former Soviet Union. The footprint of AsiaSat 2 covers
approximately 66% of the world's population. AsiaSat 2's C-band footprint
provides coverage over a large area with a single beam. The nine Ku-band
transponders provide coverage over China and the Korean peninsula and Japan.

         AsiaSat 2 has an estimated useful life of 13 years, indicating that the
estimated end of its useful life will be in 2008.

         In June 2000, Lockheed Martin obtained a Technical Assistance Agreement
from the U.S. Department of State to provide technical data and services for
in-orbit anomaly support for AsiaSat 2 until December 31, 2009. See " --
Regulation -- Export Regulations."

         ASIASAT 3S

         In 1997, AsiaSat launched AsiaSat 3 from the Baikonur Cosmodrome in the
Republic of Kazakhstan. AsiaSat 3 failed as it did not reach its orbital slot
and was replaced by the successful launch of AsiaSat 3S.

         AsiaSat 3S is located in the geostationary orbit at 105.5 degrees East.
AsiaSat 3S was constructed by Boeing and is a BSS-601HP model satellite. AsiaSat
3S was launched from the Baikonur Cosmodrome in the Republic of Kazakhstan and
commenced commercial service in 1999.

         AsiaSat 3S has multiple beam coverage and is equipped with twenty-eight
36 MHz C-band transponders with a maximum signal power of 41 dBW. It is also
equipped with sixteen 54 MHz Ku-band transponders with a maximum signal power of
53 dBW. AsiaSat 3S has transponder


                                       19
<PAGE>

power output of 55 Watts for C-band and 140 Watts for Ku-band. It has an
estimated useful life of 16 years, indicating that the estimated end of its
useful life will be in 2015.

         The footprint for AsiaSat 3S is similar to the footprint of AsiaSat 2
with two additional Ku-band beams designed to meet market demands. The C-band
footprint stretches from Japan to the Middle East and from Russia to Australia.
The footprint provides high powered service to the growing market areas in the
Greater China region, Japan and Korea and Southeast Asia. It covers about
two-thirds of the world's population.

         The 16 Ku-band transponder capacity is divided into two fixed beams and
a steerable beam. The first beam is an East Asia beam that includes coverage
from Japan to Kazakhstan. The second beam is a South Asia beam that has coverage
from Bangladesh to the Middle East. In order to compensate for rain fade, which
may occur in certain countries in this region, AsiaSat has designed the coverage
to direct higher power in heavy rain areas. The steerable Ku-band beam allows a
smaller, highly concentrated beam to be moved to any market region in the
coverage area. This beam could, for example, be placed over Australia or over a
specific region in Asia. Of the 16 Ku-band transponders on AsiaSat 3S, eight
transponders are fixed on East Asia and eight are switchable among the three
beams so that up to 16 transponders may be used for the East Asia beam, up to
eight transponders may be used for the South Asia beam and up to four
transponders may be used for the steerable beam.

         In February 2001, Boeing obtained a Technical Assistance Agreement from
the U.S. Department of State to provide technical data and services for in-orbit
anomaly support for AsiaSat 3S until December 31, 2009. See "--Regulation -
Export Regulation."

         ASIASAT 4

         The Company continues to plan ahead for future growth. The construction
of AsiaSat 4 was completed and the satellite was launched on an Atlas IIIB
launch vehicle on April 11, 2003 (Cape Canaveral time) in Cape Canaveral,
Florida. AsiaSat 4 is now operational at 122 degrees East. It has undergone
in-orbit testing and is ready to provide service.

         AsiaSat 4 was constructed by Boeing and is a BSS-601HP model satellite.
AsiaSat 4 is the most powerful member of AsiaSat's satellite fleet carrying 28
C-band and 20-Ku-band transponders. AsiaSat 4's pan-Asian C-band footprint will
cover more than 40 countries and regions spanning from New Zealand to the Middle
East. Its Ku-band coverage will consist of two high-power focused beams for East
Asia and Australasia, as well as a new broadcast satellite service beam for
Direct-to-Home services in Hong Kong and the adjacent South China region.
AsiaSat 4 is designed to provide advanced satellite services including
Direct-to-Home television, broadband and IP solutions, and telecommunications
services such as private networks for business and rural telephony (which refers
to the construction and operation of telephones and telephonic systems). It has
an estimated useful life of 15 years, indicating that the estimated end of its
useful life will be in 2018.

         Under the AsiaSat 4 construction contract with Boeing, Boeing agreed to
provide off-site support services for the life of the satellite. Boeing has
obtained a Technical Assistance Agreement from the U.S. Department of State to
provide technical data and service for in-orbit anomaly support for AsiaSat 4.
See "-- Business Overview" and "--Regulation - Export Regulation."


                                       20
<PAGE>

         Another satellite operator, Shin Satellite, that currently plans to
launch the iPStar satellite, claims the right to operate from 120 degrees East
and is disputing AsiaSat's right to operate from 122 degrees East. AsiaSat
believes it has fully complied with International Telecommunication Union's
regulations and has filing priority. AsiaSat is nevertheless required by the
International Telecommunication Union procedures to enter into coordination
discussions with this satellite operator. AsiaSat has held coordination
discussions on a number of occasions but has not fully resolved the dispute. The
Administration of Thailand has requested that the Radio Regulatory Board of the
International Telecommunication Union review the situation and make a ruling on
the filing priority. The Radio Regulatory Board has deferred action on this
request and instructed the operators involved to continue discussions. If the
dispute is not resolved and Shin Satellite launches the iPStar satellite at 120
degrees East, mutual interference could significantly limit the use of both
satellites. See "Key Information -- Risk Factors -- Risk of Loss of Orbital
Slot" and "-- Additional Orbital Slots and Use of Frequencies."

         ADDITIONAL ORBITAL SLOTS AND USE OF FREQUENCIES

         China has filed on behalf of AsiaSat applications with the
International Telecommunication Union for five additional orbital slots: 77.5
degrees East, 85.5 degrees East, 90.5 degrees East, 98 degrees East and 116
degrees East. See "- Regulation." These slots have significant frequency and
geographic coverage constraints resulting from the coordination process which
limit their value. These slots, however, could be used by satellites
specifically designed to meet the coordination requirements for these orbital
positions. No assurance can be given that these additional orbital slots will be
occupied by AsiaSat prior to the expiration of their filings.

         AsiaSat has the option to co-locate additional satellites in the
orbital slots located at 100.5 degrees East, 105.5 degrees East and 122 degrees
East in order to provide additional capacity in these locations and to support
the existing satellites with redundant capacity. See "Key Information - Risk
Factors - Risk of Loss of Orbital Slot" and "-- AsiaSat 4."

         TRANSPONDER UTILIZATION AGREEMENTS

         A typical transponder utilization agreement for AsiaSat 2, AsiaSat 3S
and AsiaSat 4 has a term of three years or more, requires utilization fees to be
paid quarterly or semi-annually in advance and provides for renewal options. The
majority of such agreements provide for utilization fee increases during the
agreement term according to an agreed escalation schedule. Generally, AsiaSat's
transponder utilization agreements require payment in US Dollars. Typically, the
customer may terminate the transponder utilization agreement at any time during
the term of the agreement without further obligation if AsiaSat fails to provide
a fully operational transponder or by giving not less than 12 months' notice to
AsiaSat. Upon termination (other than for cause), the customer is obligated to
pay AsiaSat termination fees based on the remaining contract period and the
specific contractual terms. In addition, the transponder utilization agreements
generally provide for a specified reduction in the utilization fees if
transponder service is interrupted for reasons not caused by the customer or by
outages due to the effects of the sun or other reasons beyond the control of
AsiaSat. If such service interruptions continue without correction and AsiaSat
is unable to provide suitable alternative capacity, the customer is entitled to
terminate the transponder utilization agreement without further obligation to
AsiaSat. Under the terms of the transponder utilization agreements, AsiaSat
generally is not liable for the lost profits or other indirect or consequential
damages of any customers.


                                       21
<PAGE>

         AsiaSat entered into transponder purchase agreements with ministries or
agencies of China under which the customer obtains the right to use Ku-band
capacity on AsiaSat 2 and AsiaSat 3S for the life of the transponder. The terms
of these transponder purchase agreements are substantially the same as those
found in transponder utilization agreements, except for certain differences such
as the term of a transponder purchase agreement is for the entire useful life of
a satellite and payment for the entire period of use is typically completed by
the commencement of the second year of the term of the agreement.

         CUSTOMER TECHNICAL QUALIFICATIONS AND SUPPORT

         Before uplink communication with its satellite is permitted, AsiaSat's
customers are required to meet AsiaSat's strict performance and operations
specifications. The purpose of these requirements is to confirm that the
customer's equipment operates within AsiaSat's specifications in order to
minimize interference with other customers on the same satellite or users on
neighboring satellites. AsiaSat's engineers meet with the customer to advise the
customer with respect to the adjustments required to be made to the customer's
equipment in order to minimize interference.

         AsiaSat provides technical support to its customers. AsiaSat helps
customers determine and evaluate their equipment configuration, carrier
modulation, bandwidth and power requirements, design their networks and
calculate link budgets.

         AsiaSat's Carrier Monitoring System ("CMS") was designed and
implemented by AsiaSat to monitor and measure communications parameters from
AsiaSat's headquarters in Causeway Bay, Hong Kong. The CMS is also used to
assist in customer earth station qualification and analysis of anomalies. The
CMS measures power, frequency, bandwidth, carrier-to-noise ratio and other
communications performance characteristics.

         INSURANCE

         AsiaSat has satellite in-orbit insurance for AsiaSat 2 and AsiaSat 3S
and first-year satellite in-orbit insurance for AsiaSat 4. AsiaSat also has
obtained third-party liability insurance for AsiaSat 2 and AsiaSat 3S and
first-year third party liability insurance for AsiaSat 4. There can be no
assurance that AsiaSat will be able to obtain insurance in the future on terms
satisfactory to AsiaSat. See "Key Information -- Risk Factors -- Limitations on
Warranties and Insurance."

         There are circumstances in which AsiaSat's insurance will not fully
reimburse AsiaSat for its expenditures with respect to launching a replacement
satellite, such as when the cost of the construction and launch of a replacement
satellite exceeds the aggregate amount of coverage provided by AsiaSat's
insurance policy. The amount of AsiaSat's insurance also will not fully
compensate it for business interruption and similar losses (including, among
other things, loss of market share, loss of revenue and incidental and
consequential damages) which might arise from a full or partial launch failure
or a failure of a satellite to perform to specifications. In addition, AsiaSat's
insurance policies include standard commercial satellite insurance provisions
and customary exclusions including, among other things, exclusions from losses
resulting from (i) military or similar actions, (ii) terrorism, (iii) laser,
directed energy, or nuclear anti-satellite devices, (iv) insurrection and
similar acts or governmental action to prevent such acts, (v) governmental
confiscation, (vi) nuclear reaction or radiation contamination or (vii) willful
or intentional acts of AsiaSat or its contractors.


                                       22
<PAGE>

         Satellite in-orbit insurance covering a specified period after launch
of a satellite is typically purchased together with launch insurance. Subsequent
satellite in-orbit insurance is typically purchased on an annual basis.
Satellite in-orbit insurance, which has historically cost less than three
percent of the insured value of a satellite on an annual basis, provides
protection against partial or total loss of a satellite's communications
capability, including loss of transponders, power or ability to control the
positioning of the satellite and reduction in the useful life of the satellite.

         AsiaSat renewed the in-orbit insurance for AsiaSat 2 in the amount of
HK$663 million (US$85 million) at an annual cost of approximately HK$27.3
million (US$3.5 million) for the 12 months beginning from November 28, 2002.
AsiaSat obtained satellite in-orbit insurance for AsiaSat 3S covering the launch
and the first five years in-orbit of AsiaSat 3S in the amount of HK$1,521
million (US$195 million), which provided coverage for (i) a total failure of the
launch of the satellite and (ii) the failure of the satellite to obtain proper
orbit or to perform in accordance with certain specifications once in-orbit.
AsiaSat obtained launch and the first year in-orbit insurance coverage for
AsiaSat 4 prior to its launch. The insurance amount isUS$185 million covering
the total and partial loss of the satellite, and US$35 million covering the cost
of insurance premium in the event of a total loss. The policy contains standard
commercial satellite insurance provisions and customary exclusions, as well as
an exclusion of losses in the event of a failure of XIPS (Xeon Ion Propulsion
System) on the satellite. A failure of XIPS could result in a reduction of the
satellite's life to less than 15 years. During the time when insurance for XIPS
is unavailable, AsiaSat has an alternative arrangement in place to cover the
event of a XIPS failure. Such arrangement will allow AsiaSat to purchase a
replacement satellite for AsiaSat 4 if XIPS fails at a pre-agreed price scaled
relative to the time of failure. The replacement satellite would be delivered
in-orbit before the end of life of AsiaSat 4. "See "Key Information - Risk
Factors - Limited Life of Satellites."

         AsiaSat has obtained satellite in-orbit third-party liability insurance
for AsiaSat 2 and AsiaSat 3S in the amount of HK$1,170 million (US$150 million)
and HK$2,340 million (US$300 million), respectively. AsiaSat also has first-year
satellite in-orbit third party liability insurance for AsiaSat 4 in the amount
of HK$1,162 million (US$149 million). This in-orbit third party liability
insurance is provided pursuant to the terms of the AsiaSat 4 launch contract
with Lockheed Martin Commercial Launch Services.

         SALES AND MARKETING

         The Company's sales and marketing department, which had 23 employees
(including two general managers) as of December 31, 2002, is divided into two
groups, one of which serves China and the other serves the remainder of the
world. The senior executive officers of the Company, including the Chief
Executive Officer and Deputy Chief Executive Officer, are directly involved in
marketing to key broadcasting and telecommunications customers. Marketing
activities include customer visits, selected trade advertising and presentations
at industry conferences.

         EMPLOYEES

         As of December 31, 2002, the Company had 83 full-time employees, of
which seven employees were in management, 36 employees were in engineering and
operations and 23 employees were in sales and marketing. The remaining 17
employees were engaged in administrative, accounting, legal, regulatory and
clerical activities. The Company has


                                       23
<PAGE>

75 employees in Hong Kong and eight employees in Beijing. The Company believes
its relations with its employees are good. See "Directors, Senior Management and
Employees - Employees."

         COMPETITION

         AsiaSat was founded in the late 1980s to serve the Asian regional
satellite communications market. While global satellite communications demand
was satisfied by Intelsat, Ltd. (the company formed in connection with the
privatization of the former International Telecommunications Satellite
Organization, an intergovernmental cooperative of more than 140 member nations
that owns and operates a global communications satellite system) and several
Asian countries that had developed domestic satellite communications, there was
no supplier of Asian region-wide satellite communications. Since the launch of
AsiaSat 1, a number of international, regional and domestic satellite operators
have entered the Asian regional market. The Company's primary market is Asian
intra-regional broadcasting and telecommunications.

         INTERNATIONAL, REGIONAL AND DOMESTIC SYSTEMS

         The business in which the Company operates is highly competitive. The
satellite services provided by the Company are used by its customers primarily
for point to multipoint communication (principally television broadcasting,
private communication network, Internet and multimedia). The Company competes
with several international, regional and domestic satellite companies operating
in the Asia-Pacific region. 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 and the technical
advantages of its satellites.

         COMPETITION RESTRICTION FROM DOMESTIC SYSTEMS

         In many cases customers are required by the laws of their countries to
use a state-owned or locally-owned satellite system for domestic communications.
These legal requirements prevent the Company and other satellite companies from
competing to provide transponder capacity to these potential customers. In
addition, AsiaSat currently has entered into transponder utilization agreements
for full transponders or partial transponders with various purely domestic users
in several countries. These customers could be lost if monopolies were granted
to state-owned or locally-owned satellite systems. All, or almost all, of the
domestic systems are planning to add at least some regional transponders to
their next generation of satellites. See "Key Information - Risk Factors - Risk
of Limited Market Demand and Increasing Competition - Competing Systems."

         OTHER SATELLITE SYSTEMS

         Other existing and proposed organizations have considered or might
consider competing in the Asian regional market. Some of the existing potential
competitors offer low-cost, low-performance transponders which do not compete
directly with AsiaSat's high-performance transponders. New organizations face
significant entry barriers including scarcity of orbital slots and high cost of
entry.


                                       24
<PAGE>

         FIBER OPTIC SYSTEMS

         Fiber optic systems have been widely installed within the region for
point to point trans-oceanic communications. In addition, point to point fiber
optic connections between major cities in Asia are common. As fiber optic
coverage increases, the competitiveness of satellites for point to point
communications will diminish.

         TRANSPONDER OVERSUPPLY

         It is expected that in 2003, the supply of transponders in the region
will continue to exceed the demand for transponders. The Company believes that
this imbalance cannot be quickly corrected until global economic conditions
improve and new applications and services take up existing capacity. See "Key
Information - Risk Factors - Risk of Limited Market Demand and Increasing
Competition."

         REGULATION

         The international telecommunications industry is highly regulated.
Satellite services are subject to international space law while broadcasting and
telecommunications services are subject to international and national law. The
principal international law relating to the use of outer space is the Outer
Space Treaty. Countries that 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 these treaties or conventions. This often
results in the adoption by 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.

         HONG KONG REGULATION

         As an operator of privately owned satellites, AsiaSat is subject to the
regulatory authority of Hong Kong through AsiaSat's principal regulator, the
Office of the Telecommunications Authority of Hong Kong, which in turn is
subject to the control and supervision of China.

         AsiaSat's satellite operations are principally regulated by the Outer
Space Ordinance (Chapter 523 of the Laws of Hong Kong) (the "Outer Space
Ordinance"). The Outer Space Ordinance applies to all Hong Kong nationals and
entities incorporated under the laws of Hong Kong, including AsiaSat, and
prohibits any such person from, among other things, launching or procuring the
launch of a satellite, or operating a satellite, without obtaining an
appropriate license. The Outer Space Ordinance stipulates that any such license
shall describe the activities authorized by it and also provides that licenses
may be granted subject to conditions specified therein. The conditions may
include, among other things, basic orbital parameters (which include
requirements to obtain advance approval for any intended deviations and to
notify any unintentional deviation), requirements to avoid interference with the
activities of other users of outer space and requirements not to cause actions
which may give rise to liabilities on the part of China and Hong Kong. Breach of
any such conditions can give rise to a right of revocation of the relevant
license.

         In Hong Kong, the ultimate authority to grant licenses and otherwise to
administer the Outer Space Ordinance is vested in the Chief Executive of Hong
Kong, acting in coordination with the Executive Council of Hong Kong. In
practice, all relevant matters are dealt with on a day-to-day basis by and
through the Office of the Telecommunications Authority of Hong Kong. AsiaSat has
the benefit of existing licenses covering current and future operation of each
of AsiaSat 2,


                                       25
<PAGE>

AsiaSat 3S and AsiaSat 4, subject to the conditions of the respective licenses.
Each of these licenses was formally granted shortly before or after launch of
the satellite concerned following a period of consultation between AsiaSat and
the Office of the Telecommunications Authority of Hong Kong.

         In addition to the regulatory regime to which the Company's outer space
operations are subject, the Company's earth station operations involve the
operation and use of telecommunication apparatus at and from its earth stations
at Stanley, Hong Kong. An earth station includes the antennas, receivers,
transmitters and other equipment needed on the ground to transmit and receive
satellite communications signals. Establishment, possession and use of such
telecommunication apparatus from the Company's earth station in Hong Kong are
regulated by the Telecommunications Ordinance. AsiaSat has the benefit of
licenses granted under the Telecommunications Ordinance covering all its TT&C
(telemetry, tracking and control) operations (which refers to a land based
facility that monitors and controls the position of the satellite in-orbit), as
well as monitoring and testing functions, for each of AsiaSat 2, AsiaSat 3S and
AsiaSat 4, subject to the terms and conditions of the respective licenses. The
licenses require AsiaSat, among other things, to avoid harmful interference to
other telecommunication apparatus operating within or outside Hong Kong and to
ensure compliance with all relevant requirements of the International
Telecommunication Convention (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) as well as the agreement relating to Intelsat, Ltd. Such
licenses for AsiaSat 2 and AsiaSat 3S were formally granted contemporaneously
with the grant of the licenses under the Outer Space Ordinance. In contrast,
because the Company successfully won a bid for a Telecommunication License from
the Office of the Telecommunications Authority of Hong Kong allowing broadcast
satellite services frequencies to be incorporated into the payload of AsiaSat 4,
the license for AsiaSat 4 under the Telecommunications Ordinance was granted
prior to the completion of AsiaSat 4. See "-- Telecommunications --
Telecommunication License" and "- AsiaSat 4."

         The Telecommunications Ordinance also contains provisions for the
taking of possession by the Hong Kong Government of telecommunications stations
if 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. In addition, the
Telecommunications Ordinance contains provisions for the payment of compensation
should such taking of possession occur.

         In addition, the Office of the Telecommunications Authority of Hong
Kong accepted AsiaSat's application for an EFTNS license on January 18, 2000.
See " - Telecommunications - EFTNS License."

         OVERSEAS NATIONAL TELECOMMUNICATIONS AUTHORITIES

         The Company's customers in many of the countries covered by the
Company's satellites must have authorization from the countries in which they or
their uplink facilities are located in order to use the Company's satellites.
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 monopolistic
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. Although AsiaSat believes its customers presently hold


                                       26
<PAGE>

the requisite licenses and approvals in all relevant countries, there may be
instances of non-compliance of which AsiaSat is not aware. Although AsiaSat does
not believe these regulatory schemes will prevent it from pursuing its business,
there can be no assurance that such licenses and approvals are or will remain
sufficient in the view of foreign regulatory authorities and that these
authorities will not discourage or prevent potential customers from utilizing
transponders on AsiaSat's satellites.

         The laws of certain countries require television broadcasters and
satellite telecommunication users providing services in such countries generally
to use state-owned or locally-owned satellites. For example, in Japan, domestic
broadcast using a foreign satellite is not permitted. In India, if suitable
capacity is available from a local satellite operator, operations using a
foreign satellite will not be permitted. The use of a foreign satellite is
subject to the authorization of the Department of Justice of India.

         There are no specific restrictions on satellite operators providing
services in Australia. A radiocommunications license may be issued to a
satellite operator specifically to authorize transmissions (a Space License) or
one may be issued specifically to authorize reception of transmissions (a Space
Receive License). The satellite itself must be either an Australian or foreign
space object as determined by the Australian Communications Authority. AsiaSat's
satellites are determined as foreign space objects by the Australian
Communications Authority. When the space stations are licensed via the space
segment, the operation of ubiquitous earth stations that are communicating with
them may be authorized by another class license.

         In Thailand, Shin Satellite's 8-year monopoly (which is part of a 30
year concession from the country's government) ended in 1999. There are no
specific laws to regulate the activities and operations of satellites in
Thailand. At present, satellite activities in Thailand are authorized and
controlled by the Communications Authority of Thailand.

         China requires that all foreign satellite television broadcasters that
have been licensed to be downlinked in China be uplinked to a state-owned
satellite and multiplexed and downlinked to designated recipients and cable
headends from that state-owned satellite. No such requirement applies to Chinese
domestic satellite television broadcasters. Foreign satellite operators are
required to lease transponders to domestic companies that have been licensed to
operate transponder leasing businesses or users approved by the Ministry of
Information Industry. Foreign satellite operators are not allowed to lease
transponders to domestic users directly without the approval of the Ministry of
Information Industry.

         With respect to telecommunications, Chinese regulations stipulate that
all matters relating to the lease or the procurement of the use of foreign
satellite transponders are under the Ministry of Information Industry's
jurisdiction. Domestic users must apply to the Ministry of Information Industry
to lease or procure the use of such transponders.

         These legal requirements may prevent the Company and other satellite
companies from competing to provide transponder capacity to these potential
customers. There can be no assurance that other countries in the Asia-Pacific
region, including countries in which the Company already has customers, will not
impose similar requirements to use state- or locally-owned satellites in the
future. The imposition of such requirements could adversely affect the Company's
results of operations.


                                       27
<PAGE>

         INTERNATIONAL TELECOMMUNICATION UNION

         The International Telecommunication Union was established in 1865 and
became a specialized agency of the United Nations in 1947. The International
Telecommunication Union is an organization of sovereign member states that aims
at maintaining and extending international cooperation among all its member
states for the improvement and rational use of telecommunications of all kinds.
For this purpose, the International Telecommunication Union has developed and
maintains international procedures and requirements for use of
telecommunications as well as technical standards and recommendations. As of
today, practically all countries in the world are members of the International
Telecommunication Union.

         The International Telecommunication Union is organized in three
sectors: the Telecommunication Standardization Sector, the Radiocommunication
Sector and the Telecommunication Development Sector. For satellite
communications, most of the activities and regulations of relevance take place
within the Radiocommunication Sector.

         The objectives of the Radiocommunication Sector are to ensure rational,
equitable, efficient and economical use of, and access to, the radio-frequency
spectrum by all radiocommunication services and all countries. The main
instrument of the Radiocommunication Sector is the Radio Regulations, which
establishes procedures for member states. The Radio Regulations are updated
regularly by World Administrative Radio Conferences. In between the sessions of
the World Administrative Radio Conferences, the Radio Regulations Board, a group
of elected members, develop Rules of Procedure on the application of the Radio
Regulations and also consider other matters that cannot be resolved through a
Rule of Procedure. The Radiocommunication Sector also carries out technical
studies and develops recommendations on radiocommunication matters to assist
member states and users of the radio-frequency spectrum. The Radiocommunication
Bureau was established to facilitate the work of the Radiocommunication Sector,
in particular, to facilitate the technical studies, meetings and conferences and
the application of the procedures contained in the Radio Regulations. The
Radiocommunication Bureau has a group of permanent staff with its headquarters
in Geneva, Switzerland.

         The Radio Regulations allocates certain frequency bands for various
kinds of satellite communication. It also contains procedures to be followed by
its member states to ensure that in bringing into use radiocommunication
systems, other users operating in accordance with these procedures are given the
required protection.

         Details of the International Telecommunication Union, its instruments
and working methods can be found in the Constitution and Convention of the
International Telecommunication Union, while radiocommunication matters are
dealt with in the Radio Regulations.

         Nations are required by treaty to make a filing of their proposed use
of satellite orbital slots for geostationary satellites with the
Radiocommunication Bureau. After filing an orbital slot request with the
Radiocommunication Bureau, other nations are afforded the opportunity to inform
the Radiocommunication Bureau of any potential conflicts with their present or
planned use of orbital slots. When a conflict or potential conflict is noted,
nations are obligated to negotiate in an effort to coordinate the proposed uses
and resolve any interference concerns. The Radiocommunication Bureau, however,
has no formal enforcement mechanism, and if nations cannot agree on a
resolution, a satellite system will not be entitled to the full interference
protection afforded under international law.


                                       28
<PAGE>

         The Hong Kong Special Administrative Region is mandated by China to
file and coordinate applications made by Hong Kong companies for orbital slots
with the Radiocommunication Bureau and to resolve interference concerns. The
Chief Executive of Hong Kong has delegated these responsibilities to the Office
of the Telecommunications Authority of Hong Kong. Use of the orbital slots
remains subject to the continuing oversight of the Office of the
Telecommunications Authority of Hong Kong and to a variety of regulations
generally applicable to all satellite and radio licensees. The Office of the
Telecommunications Authority of Hong Kong has fulfilled its obligation to notify
the Radiocommunication Bureau of the proposed use of the orbital slots for all
of AsiaSat's filings, which include filings for AsiaSat 2, AsiaSat 3S and
AsiaSat 4. After AsiaSat 2, AsiaSat 3S and AsiaSat 4 reached their orbital
positions and commenced operations, AsiaSat notified the Office of the
Telecommunications Authority of Hong Kong, and the Office of the
Telecommunications Authority of Hong Kong in turn notified the International
Telecommunication Union, that AsiaSat 2, AsiaSat 3S and AsiaSat 4, as
applicable, were on station and operating as filed with the Radiocommunication
Bureau, as coordinated and as authorized by the Office of the Telecommunications
Authority of Hong Kong. The orbital locations of all of AsiaSat's satellites
have been entered into or are waiting to be entered into the Master Register of
the International Telecommunication Union. This concludes the process for the
coordination of the orbital slots for AsiaSat 2, AsiaSat 3S and AsiaSat 4.
Moreover, to add more flexibility for the utilization of the payloads of the
current and future AsiaSat satellites in positions at 100.5 degrees East, 105.5
degrees East and 122 degrees East, additional filings have been submitted to,
and are currently being coordinated with, the International Telecommunication
Union.

         In addition to the three primary positions of 100.5 degrees East, 105.5
degrees East and 122 degrees East, China has filed on behalf of AsiaSat for five
other orbital slots at 77.5 degrees East, 85.5 degrees East, 90.5 degrees East,
98 degrees East and 116 degrees East. In contrast to the three primary slots
discussed above, the additional slots have significant frequency and geographic
coverage constraints resulting from coordination and negotiation. AsiaSat is
concentrating on the development of its three primary slots first but the
Company believes that the encumbered and/or constrained slots may prove valuable
in the future for specific applications.

         EXPORT REGULATION

         Boeing has agreed to provide certain on-site support services to
AsiaSat at AsiaSat's Satellite Control Center in order to assist AsiaSat in
correcting any problems that may occur in the operations of AsiaSat 3S during
the first six months following its launch and certain off-site support services
for the life of the satellite. Boeing determined that pursuant to United States
export control regulations, it needed an approved Technical Assistance Agreement
issued by the U.S. Department of State in order to provide such support
services. In February 2001, Boeing obtained a Technical Assistance Agreement to
provide off-site support services for the life of AsiaSat 3S. On October 23,
2001, Boeing obtained a Technical Assistance Agreement to provide necessary
technical data and services to AsiaSat in connection with the AsiaSat 4 program.
In addition, Boeing has obtained a Technical Assistance Agreement from the U.S.
Department of State to provide technical data and service for in-orbit anomaly
support for AsiaSat 4. See "-- Satellites --AsiaSat 4."

         In June 2000, Lockheed Martin obtained a Technical Assistance Agreement
from the U.S. Department of State to provide technical data and services for
in-orbit anomaly support for AsiaSat 2 until December 31, 2009.


                                       29
<PAGE>

         PROPERTY, PLANTS AND EQUIPMENT

         LAND FACILITIES

         The Company's executive offices are located in Causeway Bay, Hong Kong.
Coordination of all customer-related communication on the Company's satellites,
including initial station testing, outage and trouble reporting and real-time
scheduling of ad hoc broadcasting services traffic, is conducted through the
Company's Satellite Control Center at the Company's executive offices. The
Company's executive offices and the Stanley TT&C Facility are leased by the
Company from PCCW and Reach, respectively. See "-- Satellite Control
Facilities." The leases covering the Company's office space were renewed in May
2002 for a term of three years. The rental amount (excluding rates,
air-conditioning and management charges) under these leases is approximately
HK$3.7 million per year. The Company finances this cost from internal resources.

         In March 2000, the Company opened a representative office in Beijing,
China. The Company's Beijing office lease was renewed for a period of two years
beginning in February 2002. The lease amount is approximately HK$274,000 per
year.

         The Company has leased the Tai Po Site in Hong Kong to support the
growth of the Company's business. The Tai Po Site will be used to build the Tai
Po Earth Station, which will also allow AsiaSat to offer its customers
additional and improved services. These services include uplink, technical
support and other value added services. Construction of the Tai Po Earth Station
is currently progressing on schedule and is expected to be completed in the
second half of 2003. See "Additional Information - Material Contracts."

         The Company is not currently the subject of any actions or proceedings
for environmental liabilities. As AsiaSat's satellites reach their "end of life"
and are de-orbited, it is conceivable that the Company could be subject in the
future to actions for environmental or other liabilities resulting from damages
caused by these satellites.

         SATELLITE CONTROL FACILITIES

         AsiaSat maintains a satellite control center (the "Satellite Control
Center") that is manned 24-hours-a-day by AsiaSat's engineers at its executive
headquarters in Causeway Bay, Hong Kong. The Satellite Control Center is
connected by dual, diversely routed leased lines to the TT&C facility at the
Reach Network (Hong Kong) Limited's ("Reach") teleport located at Stanley on the
south side of Hong Kong Island (the "Stanley TT&C Facility"). There are
currently a total of five C- band and two Ku-band antennas available to track
the Company's satellite fleet. AsiaSat expects to initially have an additional
four receiving dishes at the Tai Po Earth Station.

         There are no full-time employees of AsiaSat located at the Stanley TT&C
Facility. Reach teleport technicians are responsible for the routine maintenance
of the antennas and other equipment located at this facility. AsiaSat expects to
staff the Tai Po Earth Station 24 hours a day by its technical personnel.

         Once a satellite is placed at its orbital location, it is controlled by
the Stanley TT&C Facility until the end of its in-orbit life. The TT&C subsystem
for each satellite makes it possible for ground control to monitor the position
of the satellite in-orbit. AsiaSat's engineers at the Satellite Control Center
periodically correct a satellite's attitude and conduct east-west and
north-south stationkeeping maneuvers, thus ensuring that AsiaSat's satellites
maintain their proper orientation and orbital position. In addition, commands
from the Satellite Control Center can switch


                                       30
<PAGE>

transponders in and out of service, position a steerable beam, control the
charging and discharging of the batteries, activate back-up equipment and engage
other control functions.

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS.

         The following discussion and analysis should be read in conjunction
with the consolidated financial statements of the Company and related notes
thereto included elsewhere herein.

         INTRODUCTION

         Substantially all of the Company's revenues during the years 1998
through 2002 were from payments made in respect of transponder utilization
agreements for AsiaSat 1 and transponder utilization agreements and transponder
purchase agreements for AsiaSat 2 and AsiaSat 3S and were almost entirely
payable in US Dollars. AsiaSat's transponder utilization agreements and
transponder purchase agreements in effect as of May 31, 2003 provided for total
committed revenue (including a portion of the deposits received by the Company
in prior periods and to be recognized as revenue in the applicable future
period) of US$488 million (HK$3,806 million). The Company expects that most of
such committed revenue will be recognized over the remaining terms of the
relevant agreements up to 2014, assuming that customers do not exercise their
termination options. See "Information on the Company - Transponder Utilization
Agreements."

         Payments under transponder utilization agreements are negotiated with
each individual customer and generally are influenced by various factors,
including market conditions, the satellite performance capabilities and the
reputation of AsiaSat as a reliable service provider. Generally, in the
satellite transponder market, transponders with greater coverage, wider
bandwidth and higher power have commanded a premium price. The Company believes
that its ability to increase charges for transponder capacity in future periods
will depend primarily on the terms of the escalation provisions of its existing
transponder utilization agreements and, with respect to new agreements and
agreement rollovers, the factors noted above.

         In addition to transponder utilization agreements, AsiaSat has existing
transponder purchase agreements under which as of May 31, 2002, six customers on
AsiaSat 2 and two customers on AsiaSat 3S have purchased the right to use a
total of 5.4 Ku-band transponders (out of a total of 25 Ku-band transponders)
for the life of the satellite. In 2002, revenue from all transponder purchase
agreements represented less than 2% of the Company's revenue. The Company
believes that in the future most of its transponder capacity will be provided to
customers pursuant to transponder utilization agreements rather than transponder
purchase agreements.

         The Company recognizes revenues from all transponder utilization
agreements on a straight line basis over the term of the agreements. As a result
of the utilization fee escalation clauses in the transponder utilization
agreements, in the early years of the term of any such agreement revenues are
recognized in respect of payments that are not yet due, and in the latter
portion of the term of such agreement revenues recognized will be less than
payments due under the contract terms. In the aggregate in 2000, 2001 and 2002,
there was recognition of revenues under the transponder utilization agreements
in excess of payments due under those agreements in the amounts of HK$44.5
million, HK$31.2 million and HK$34.8 million, respectively. In 1998 and 1999,
revenue recognized on the straight line basis was less than the payments due
under the terms of relevant agreements in the amounts of HK$(6.8) million and
HK$(43.6) million, respectively.


                                       31
<PAGE>

         The Company has accounted for its share of profit or loss arising from
SpeedCast on an equity accounting basis. In the case of a loss, the Company will
reflect its share in its income statement with a corresponding writing down of
its investment in an affiliate. Once the investment has been written down to
zero the Company will not account any further loss beyond its investment. In
2001 and 2002, the Company recorded a HK$41.3 million and HK$9.1 million (US$1.2
million) loss, respectively, with respect to its investment in SpeedCast.
Approximately 45% of SpeedCast's total loss for 2002 was due to the amortization
of the transponder capacity, platform software and subscriber management/billing
systems contributed by its founding shareholders.

         RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, the
percentage of revenues represented by certain income and expense items in the
Company's Consolidated Statement of Operations.


                                          YEAR ENDED DECEMBER 31,
                                       --------------------------
                                        2000      2001      2002
                                       ------    ------    ------

Revenues                                100%      100%      100%

Cost of services, excluding              7.7       7.6       8.0
depreciation

Selling, general and                     6.1       7.3       8.6
administrative

Depreciation                            16.8      17.2      17.5
                                       ------    ------    ------
Total operating expenses                30.6      32.1      34.1
                                       ------    ------    ------

Operating income                        69.4      67.9      65.9

Interest income                          4.0       0.7       0.7

Interest expense                        (3.8)       --        --

Maintenance and other service            1.1       0.9        --
income from affiliates

Other income (expense)                  (0.8)      0.1        --
                                       ------    ------    ------
Income before Equity in Losses of       69.9      69.6      66.6
Affiliates, Taxation and Minority
Interest

Equity in losses of affiliates          (4.4)     (4.2)      1.0

Income tax                              (8.0)     (7.3)     (7.3)
                                       ------    ------    ------

Net income                              57.5      58.1      58.3
                                       ======    ======    ======


         REVENUES

         AsiaSat provides satellite transponder capacity primarily to the
broadcasting and telecommunications markets. See "Information on the Company --
Services and Customers."


                                       32
<PAGE>

The following table sets forth the Company's revenues in each of its markets for
the periods indicated.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                          YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------------------
                                        2000                       2001                       2002
                               ----------------------      ---------------------     ------------------------
                                           % OF TOTAL                 % OF TOTAL                  % OF TOTAL
                               AMOUNT       REVENUE         AMOUNT     REVENUE         AMOUNT      REVENUE
                              -------      ----------       ------    ----------       ------      ---------
<S>                           <C>            <C>             <C>        <C>             <C>         <C>
Broadcasting                    707.8         70.6%          647.1       66.8%          649.0        68.3%

Telecommunications,             295.1         29.4%          322.4       33.2%          301.8        31.7%
                                -----         -----          -----       -----          -----        -----
Internet and Multimedia

Total Revenue                 1,002.9        100.0%          969.5      100.0%          950.8       100.0%
                              =======        ======          =====      ======          =====       ======
</TABLE>

         The Company's primary industry "sectors" consist of video broadcasting
and telecommunications, while the majority of the Company's revenue is
attributed to broadcasting. Also, due to the contracted nature of the Company's
revenue stream, year-to-year fluctuations are due to customer contract renewals
and customer movements.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                          YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------------------
                                        2000                       2001                       2002
                               ----------------------      ---------------------     ------------------------
                                           % OF TOTAL                 % OF TOTAL                  % OF TOTAL
                                AMOUNT       REVENUE         AMOUNT     REVENUE         AMOUNT      REVENUE
                               -------     ----------      --------    ----------       ------      ---------
<S>                            <C>            <C>             <C>        <C>             <C>         <C>
Hong Kong                        342.7         34.2%          351.0       36.2%          341.2        35.9%

Greater China, including         244.5         24.4%          240.3       24.8%          212.1        22.3%
Macau and Taiwan

United States of America          83.4          8.3%           75.8        7.8%           73.3        7.7%

British Virgin Islands            65.8          6.6%           56.3        5.8%           40.4        4.3%

Singapore                         33.6          3.3%           31.3        3.2%           20.4        2.1%

United Kingdom                    14.3          1.4%           24.0        2.5%           43.4        4.6%

Others                           218.6         21.8%          190.8       19.7%          220.0        23.1%

Total Revenue                  1,002.9        100.0%          969.5      100.0%          950.8       100.0%
                               =======        ======          =====      ======          =====       ======
</TABLE>

         The previous table set forth the location of the Company's customers.
However, due to the nature of the Company's business, the location of its
customers are not reflective of their market activities as broadcasting and
telecommunication consumers may be located throughout the coverage area of
AsiaSat's satellites.

         Revenues in 2002 decreased 1.9% to HK$950.8 million (US$121.9 million)
from HK$969.5 million in 2001, which in turn decreased from HK$1,002.9 million
in 2000. The increase in revenue in 2000 was primarily due to an upturn in
demand for C-band capacity on AsiaSat 3S at the popular orbital slot at 105.5
degrees East. The decrease in revenue in 2001 was primarily due to the uncertain
and difficult economic and market conditions. The decrease in revenue in 2002
was primarily due to the non-renewal of some contracts upon expiry.

         In the years ended December 31, 2000, 2001 and 2002, approximately
22.9%, 23.0% and 23.5%, respectively, of the Company's revenues were
attributable to transponder utilization agreements with STAR. See "Information
on the Company - Services and Customers."


                                       33
<PAGE>

         As of December 31, 2002, the overall total utilization rate of AsiaSat
2 and AsiaSat 3S decreased 1% over the prior year from 65% to 64%. As of
December 31, 1999, approximately 74% of AsiaSat 2's transponder capacity was
utilized under transponder utilization agreements and transponder purchase
agreements. The utilization rates for AsiaSat 2 as of December 31, 2000, 2001
and 2002 were 67%, 62% and 66%, respectively, and for AsiaSat 3S as of December
31, 2000, 2001 and 2002 were 62%, 67% and 62%, respectively. The decline in
utilization rates for AsiaSat's transponders since 1998 has resulted principally
from the effects of the Asian economic crises in 1997 and 1998 and subsequent
economic volatility and uncertainty, which have reduced demand for capacity; the
application and improvement of transmission technologies, such as digital
compression, that increased the transmission capacity of each transponder; and
the introduction of AsiaSat 3S into service in 1999. The increase in overall
utilization rate in 2001 from the previous year is the result of successful
leasing of additional Ku-band transponders on AsiaSat 3S. The decrease in
overall utilization rate in 2002 from the previous year is the result of the
non-renewal of some contracts upon expiry. Utilization rates of the Company's
satellites and the fees derived from its satellites are determined by the terms
of the Company's transponder agreements rather than as a result of the actual
transponder capacity utilized by the Company's customers. See "Key Information -
Risk Factors - Risk or Technological Changes" and "Key Information - Risk
Factors - Risk of Limited Market Demand and Increasing Competition."

         OPERATING EXPENSES

         The components of operating expenses are cost of services, selling,
general and administrative expenses and depreciation. Staff costs (and
associated travel expenses) and office rental expenses are allocated by the
Company between cost of services and selling, general and administrative
expenses depending on the function of such staff and use of the office space.
The cost of services category of operating expenses includes all operating
expenses incurred for engineering and the operation of the Company's satellites,
including the proportionate amount of office rental expense for the office space
used by the Company's engineers and the operations department. All staff, travel
and office space expenses not included in cost of services are allocated to
selling, general and administrative expenses. Operating expenses in 2002
increased 4.3% to HK$324.4 million (US$41.6 million) from HK$310.9 million in
2001, which in turn increased from HK$307.4 million in 2000. The increase in
2001 was largely due to amortization of goodwill and impairment loss of goodwill
in respect of investments in affiliates. The increase in 2002 was largely due to
a provision for bad and doubtful debts.

         COST OF SERVICES, EXCLUDING DEPRECIATION. Significant components of
cost of services include in-orbit insurance, staff costs, satellite operations
and turnaround service charges.

         Cost of services in 2002 increased 4.1% to HK$76.4 million (US$9.8
million) from HK$73.4 million in 2001, which in turn decreased 5.2% from HK$77.4
million in 2000. The decrease in 2001 was primarily due to a decrease in
maintenance cost. The increase in 2002 was due to increases in staff cost and
the cost of satellite insurance.

         SELLING, GENERAL AND ADMINISTRATIVE. Significant components of selling,
general and administrative expenses include staff costs, office rental expenses,
provision for bad and doubtful debts, marketing and promotion expenses, business
travel expenses, dual listing expenses, professional fees and amortization of
goodwill arising an acquisition of affiliates.


                                       34
<PAGE>

         Selling, general and administrative expenses in 2002 increased 14.7% to
HK$81.3 million (US$10.4 million) from HK$70.9 million, which in turn increased
15.3% from HK$61.5 million in 2000. The increases in selling, general and
administrative expenses in 2001 were largely attributable to the amortization of
goodwill and impairment loss in respect of investments in affiliates. The
increase in selling, general and administrative expenses in 2002 was largely
attributable to a provision for bad and doubtful debts.

         DEPRECIATION. Depreciation expenses in 2002 marginally decreased to
HK$166.6 million (US$21.4 million) from HK$166.7 million in 2001, which in turn
decreased 1.0% from HK$168.4 million in 2000.

         OPERATING INCOME

         As a result of the foregoing, operating income in 2002 decreased 4.9%
to HK$626.4 million (US$80.3 million) from HK$658.6 million in 2001, which in
turn decreased 5.3% from HK$695.5 million in 2000. Operating income as a
percentage of revenues decreased in 2002 to 65.9% from 67.9% in 2001, which in
turn decreased from 69.4% in 2000.

         OTHER INCOME (EXPENSES)

         INTEREST INCOME. Interest income in 2002 decreased 4.5% to HK$6.4
million (US$0.8 million) from HK$6.7 million in 2001, which decreased 82.8% from
HK$39.0 million in 2000. The decrease in interest income in 2001 is primarily
due to the decreased amount of average funds available to earn interest due to
the payments of capital expenditure for AsiaSat 4. The decrease in 2002 was
primarily due to lower interest rates on banks deposits.

         INTEREST EXPENSE. There was no interest expense in 2001 and 2002 due to
there being no outstanding loan balances during the year. Interest expense in
2000 was HK$37.1 million (US$4.8 million). The decrease in interest expense in
2001 was primarily due to early repayment of outstanding loan balances at the
end of August 2000. See "-- Liquidity and Capital Resources -- Sources of
Financing."

         MAINTENANCE AND OTHER SERVICE INCOME FROM AFFILIATES. Income from
affiliates in 2000 and 2001 was HK$10.8 million and HK$9.1 million,
respectively. There was no income from affiliates in 2002. The income from
affiliates in 2000 and 2001 primarily consisted of income from providing a Gen
II platform and other support to SpeedCast.

         OTHER INCOME (EXPENSES). Net other income in 2002 was HK$39,000
(US$5,000) compared to net other income and net other expenses of HK$0.5 million
and HK$8.2 million in 2001 and 2000, respectively. Net other expenses in 2000
primarily consisted of financing related costs, and net other income in 2001 and
2002 primarily consisted of miscellaneous income.

         INCOME BEFORE EQUITY IN LOSSES OF AFFILIATES, TAXATION AND MINORITY
INTEREST

         Income before taxes in 2002 decreased 6.2% to HK$632.8 million (US$81.1
million) from HK$674.9 million in 2001, which in turn decreased 3.6% from
HK$700.1 million in 2000.

         INCOME TAX

         Income tax in 2002 decreased 2.1% to HK$69.1 million (US$8.9 million)
from HK$70.6 million in 2001, which in turn decreased 11.6% from HK$79.9 million
in 2000. The


                                       35
<PAGE>

increase in income tax in 2000 resulted primarily from higher earnings. The
decrease in income tax in 2001 resulted primarily from lower earnings. See Note
11 to the Company's consolidated financial statements. The decrease in income
tax in 2002 resulted primarily from lower earnings than in 2001.

         NET INCOME

         Net income in 2002 decreased 1.5% to HK$554.7 million (US$71.1 million)
from HK$563.0 million in 2001, which decreased 2.3% from HK$576.3 million in
2000.

         LIQUIDITY AND CAPITAL RESOURCES

         SOURCES OF FINANCING

         The Company's principal use of capital in 2001 and 2002 has been
capital expenditures related to the construction and launch of AsiaSat 4 and the
construction of the Tai Po Earth Station. Net property, plant and equipment
increased by HK$421.1 million in 2001 and HK$290.0 million in 2002 to HK$3,232.4
million (US$414.4 million) as of December 31, 2002. This increase has been
financed through cash flows from operations.

         The satellite business is highly capital intensive. As of December 31,
2002, the Company had no outstanding debt and HK$3,346.7 million (US$429.1
million) of shareholders' equity. The Company's ability to meet its debt
obligations will be dependent on a number of factors, including its cash flow
from operations, its ability to secure future financing in addition to the
existing loan facility, if needed, and the useful lives of the Company's
satellites. See "-- Planned Capital Expenditures."

         In 2000, the Company and AsiaSat entered into an agreement with a
syndicate of banks to provide a secured term loan US Dollar credit facility of
US$250.0 million (the "Loan Facility") with AsiaSat as borrower and the Company
as guarantor. The Loan Facility is divided into two tranches, Tranche A for
US$100.0 million and Tranche B for US$150.0 million. The Loan Facility together
with cash flows from operations may be used to finance the construction,
insurance and launch costs of AsiaSat 4, to finance working capital and other
capital expenditure requirements of AsiaSat, to fund financing costs and, if any
balance remains, to finance future satellite construction. As of December 31,
2002, there were no outstanding borrowings under the Loan Facility.

         INTEREST AND REPAYMENT AND PREPAYMENT. The Loan Facility provides that
(i) borrowings shall bear interest at a rate based on the London Interbank
Offered Rate plus a margin determined with reference to certain financial ratios
achieved by AsiaSat, (ii) the Loan Facility will have a term of five years and
be repaid in five equal semi-annual repayments of principal together with
accrued interest commencing on November 24, 2003 and (iii) subject to certain
conditions, AsiaSat can, without premium or penalty, prepay all or part of its
borrowings under the Loan Facility. The Loan Facility provides that AsiaSat must
use a certain percentage of any Excess Cash Flow (as defined in the Loan
Facility) for the purpose of debt servicing under the Loan Facility, paying
costs in connection with the construction, launch and insurance of AsiaSat 4 or
any replacement satellite, if any, and fulfilling certain capital requirements.

         SECURITY. The Loan Facility is secured by AsiaSat's assets, including
its existing and future satellites, payments received in respect of transponder
utilization agreements on present and future satellites, assignments of
construction and launch contracts, TT&C contracts relating


                                       36
<PAGE>

to the Company's satellites and certain insurance claim proceeds. The Loan
Facility is also secured by way of a charge on the goodwill of AsiaSat, any
intellectual property rights held by AsiaSat, any uncalled capital of AsiaSat,
all amounts due to AsiaSat from any bank or financial institution and all
securities owned by AsiaSat. The Company entered into the Loan Facility as
guarantor of AsiaSat.

         COVENANTS. The Loan Facility includes covenants customary for
agreements of this type, including restrictions on AsiaSat's ability to incur
indebtedness, certain restrictions on the Company's ability to pay dividends,
restrictions on affiliated transactions, certain financial covenants, covenants
with respect to compliance with laws, maintenance of licenses and permits
required for AsiaSat's business and a requirement that all future transponder
utilization agreements be entered into on an arms-length basis.

         BORROWINGS. The Loan Facility provides that AsiaSat may not incur any
indebtedness other than (i) certain unsecured subordinated debt, (ii)
non-recourse debt used to finance the purchase of an additional satellite other
than AsiaSat 2, AsiaSat 3S and in certain circumstances, AsiaSat 4, (iii)
certain indebtedness in connection with the leveraged lease of a satellite or
transponders, (iv) certain indebtedness on arms-length terms with Shareholders
that is subordinate to amounts owed under the Loan Facility and (v) currency or
interest rate swaps or other hedging transactions entered into for the purpose
of prudent financial management.

         RESTRICTED DISTRIBUTIONS. The Loan Facility provides that the Company
may make aggregate annual dividend payments in an amount not exceeding 20% of
the Company's consolidated profits (excluding from its calculation items such as
interest expenses, taxes on income and profits, tax credits, depreciation,
amortization, exceptional items and any extraordinary items) for the relevant
financial year or, if lower, 25% of the net profit for the relevant financial
year. See "Financial Information - Dividends and Dividend Policy." The Company
may not declare any dividend or distribution at any time if an Event of Default
(as defined in the Loan Facility) has occurred and is continuing.

         FINANCIAL COVENANTS. The Loan Facility provides that certain earnings
and cash flow ratios of AsiaSat must be measured over various periods during the
term of the Loan Facility. AsiaSat undertakes to ensure that (i) it maintains
its aggregate Consolidated Tangible Net Worth (as defined in the Loan Facility),
(ii) the aggregate of secured and unsecured indebtedness and secured and
unsecured contingent indebtedness of AsiaSat and its subsidiaries shall not
exceed 150% of the Consolidated Tangible Net Worth, (iii) the aggregate
outstanding principal, capital or nominal amount of indebtedness for borrowed
money shall not exceed 100% of the Consolidated Tangible Net Worth, and (iv) its
ratio between the consolidated profit of itself and its subsidiaries shall be at
least 3.0:1.0.

         EVENTS OF DEFAULT. The Loan Facility includes customary events of
default including nonpayment of amounts due under the Loan Facility, breach of
obligations under the Loan Facility, a breach in the Financial Ratio (as defined
in the Loan Facility), a transfer or disposal of a substantial part of AsiaSat's
business or assets, the Company or any of its subsidiaries being wound up,
AsiaSat being in breach of any of its undertakings with regard to the insurance
obligations in the Loan Facility, default under certain other indebtedness for
an amount exceeding US$15.0 million (HK$117.0 million) in aggregate and a Change
of Control (as defined in a Loan Facility) of the Company.


                                       37
<PAGE>

         BLOCKED ACCOUNT/WITHDRAWAL CONDITIONS. Under the Loan Facility,
insurance proceeds obtained as a result of Total or Material Partial Loss (as
defined in the Loan Facility) of certain AsiaSat satellites must be deposited in
a designated account. Withdrawal of deposited amounts in such accounts may only
occur in accordance with provisions contained in the Loan Facility.

         PLANNED CAPITAL EXPENDITURES

         The Company anticipates the need for additional capital to fund the
construction of the Tai Po Earth Station. See "Information on the Company -
Acquisitions and Investments" and "Information on the Company - Property, Plants
and Equipment - Land Facilities." The following table sets forth the Company's
planned major capital expenditures for the periods indicated. Actual capital
expenditures may differ from the amounts indicated below.


                         YEAR ENDED AND AS OF DECEMBER 31,
--------------------------------------------------------------------------------
                 2003    2004    2005    2006        TOTAL   TOTAL
                  HK$     HK$     HK$     HK$          HK$     US$
                                   (in millions)

AsiaSat 4        83.7      --      --      --         83.7    10.7

AsiaSat 2         0.0   344.4   677.0   694.6      1,716.0   220.0
Replacement
Satellite

Tai Po Site     148.5      --      --      --       148.50    19.1

Others            8.9     4.3     4.1     4.7         22.0     2.8
                -----   -----   -----   -----     --------   -----
Total           241.1   348.7   681.1   699.3      1,970.2   252.6
                =====   =====   =====   =====     ========   =====


         The total costs for the construction and launch of AsiaSat 4, including
launch insurance, ground facilities, related expenses and capitalized interest,
is approximately US$224.0 million (HK$1,747.2 million). The Company financed
AsiaSat 4 entirely through internally generated funds. See "-- Sources of
Financing." In addition, a replacement satellite for AsiaSat 2 will need to be
constructed for launch in 2006 in order to provide adequate opportunity to
replace AsiaSat 2 in 2006. The total costs for the construction and launch of a
replacement satellite for AsiaSat 2 is estimated to be approximately US$220.0
million (HK$1716.0 million). There can be no assurance that any required
additional financing, if any, for additional satellites or an additional land
facility will be available or that, if available, it will be available on terms
satisfactory to the Company.

         The total cost for the construction of the Tai Po Site is estimated to
be approximately US$31.2 million (HK$243.2 million).

         In addition to the above capital commitment, AsiaSat leases its
premises under non-cancelable operating leases. At December 31, 2002,
commitments for future minimum lease payments which fall due in 2003, 2004 and
2005 are HK$5,689,000 (US$729,358), HK$4,417,000 (US$566,282) and HK$1,247,000
(US$159,871), respectively.

         CASH FLOWS


                                       38
<PAGE>

         The Company has generally financed its short-term working capital
requirements from cash provided by operations and borrowings. The Company has
not borrowed any amounts for the last three years. The Company had cash and cash
equivalents of HK$109 million, HK$136.4 million and HK$406.2 million (US$52.1
million) as of December 31, 2000, 2001 and 2002, respectively.

         Net cash provided by operating activities was HK$687.8 million,
HK$720.8 million and HK$809.6 million (US$103.8 million) in 2000, 2001 and 2002,
respectively. In 2000, the increasing level of net cash provided by operating
activities resulted primarily from increases in revenues and decreases in
expenses. See " -- Introduction." In 2001, the increasing level of net cash
provided by operating activities resulted from amounts received from the sale of
transponder capacity. In 2002, the increasing level of net cash provided by
operating activities resulted primarily from lease rentals received from
customers.

         Net cash used in investing activities was HK$419.9 million, HK$615.3
million and HK$461.7 million (US$59.2 million) in 2000, 2001 and 2002,
respectively. Expenditures on the construction and launch of AsiaSat 3, AsiaSat
3S and AsiaSat 4, as applicable, were HK$461.2 million, HK$577.1 million and
HK$396.7 million (US$50.9 million) in 2000, 2001 and 2002, respectively.
Expenditures on other property and equipment were HK$2.2 million, HK$29.9
million and HK$51.9 million (US$6.6 million) in 2000, 2001 and 2002,
respectively.

         Net cash used in financing activities was HK$948.3 million, HK$78.1
million and HK$78.1 million (US$10.0 million) in 2000, 2001 and 2002,
respectively. In 2000, cash used in financing activities consisted primarily of
loan repayments and dividend payments. In 2001, net cash used in financing
activities primarily consisted of dividend payments. In 2002, net cash used in
financing activities primarily consisted of dividend payments.

         The Company has sufficient capital to cover its planned capital
expenditures and other operating needs. See "-- Planned Capital Expenditures.
The Company had a working capital deficit (current assets minus current
liabilities) of HK$70.3 million at December 31, 2000, a working capital credit
of HK$86.8 million at December 31, 2001, and a working capital credit of
HK$239.0 million (US$30.6 million) at December 31, 2002.

         EXCHANGE RATES

         During the past three years almost all of the Company's revenues,
premiums for satellite insurance coverage and debt service and substantially all
capital expenditures were denominated in US Dollars. The Company's remaining
expenses were primarily denominated in HK Dollars during these periods. As of
December 31, 2002, almost all of AsiaSat's transponder utilization agreements,
transponder purchase agreements, borrowings and obligations to construct and
launch satellites and to purchase TT&C equipment were denominated in US Dollars.

         INFLATION

         Inflation has not materially affected the Company's operations during
the past three years.

         TAXATION

         The Company is subject to Hong Kong Profits Tax on its operations
deemed to be located in Hong Kong. It is also subject to overseas tax is on its
operations in certain of the overseas jurisdictions. (see Note 11 to the
Company's consolidated financial statements). Hong Kong


                                       39
<PAGE>

profits tax is currently charged at the rate of 16% per annum. The tax rate is
proposed to be increased to 17.5% per annum with effect from April 2003.

         Pursuant to a change, effective from April 1, 2001, in Indian tax
regulations, the Company may be subject to Indian income tax on revenues
received by the Company in respect of income from provision of satellite
transponder capacity to the Company's customers for purposes of those customers
carrying on business in India or earning income from any source in India.

         The Indian tax authorities assessed the Company (including interest as
of March 21, 2001) for income tax of approximately HK$21 million (US$2.7
million) for the assessment year 1997-1998 and approximately HK$23 million
(US$2.9 million) for the assessment year 1998-1999. No assessment has yet been
made for the 1999-2000, 2000-2001, 2001-2002 or 2002-2003 assessment years.

         The Indian tax authorities had initiated tax recovery measures against
the Company. The Company had filed appeals for each of the assessment years
1997-1998 and 1998-1999. In order to expedite the legal proceeding in India and
obtain a stay of the recovery measures, the Company made a tax payment totaling
approximately HK$19 million (US$2.4 million) to the Government of India.

         The Income Tax Appellate Tribunal (the "Tribunal") in the appeal filed
for the assessment year 1997-1998 held that the Company is liable for Indian
income tax under certain circumstances. The Tribunal directed Indian tax
authorities to make a fresh computation of the taxable income. Pursuant to the
order of the Tribunal, the tax authorities have prepared a revised computation
of tax due on May 30, 2003. The revised assessment is approximately HK$19
million (US$2.5 million). The Company does not believe that it is liable for the
Indian income tax as held by the Tribunal and has filed an appeal against the
Tribunal's decision. The tax authorities have also filed an appeal against the
Tribunal's decision.

         In addition, based on the general principles set forth by the Tribunal,
the amount of income taxable in India depends on the payments made by the
Company's customers to the Company for the purpose of those customers carrying
on business in India or earning income from any source in India. As such
information is proprietary in nature and has not been provided by the Company's
customers, the Company cannot reasonably estimate the taxable income.
Furthermore, the Company believes it has a reasonable likelihood of success with
respect to its appeal. Accordingly, no provision has been recognized for Indian
income tax in the Company's consolidated financial statements.

         U.S. GAAP RECONCILIATION

         The Company's financial statements are prepared in accordance with Hong
Kong GAAP, which differs in certain material respects from U.S. GAAP. The
following table sets forth a comparison of the Company's net income and
shareholders' equity in accordance with Hong Kong GAAP and U.S. GAAP.


                                       40
<PAGE>

                                                2000      2001      2002    2002
                                                 HK$       HK$       HK$     US$

Net income in accordance with:                           (in millions)

  Hong Kong GAAP .......................       576.3     563.0     554.7    71.1

  U.S. GAAP ............................       568.1     562.5     538.1    69.0

Shareholders' equity in accordance with:

  Hong Kong GAAP .......................     2,385.2   2,870.1   3,346.7   429.1

  U.S. GAAP ............................     2,467.8   2,952.2   3,412.2   437.4


         Note 15 to the Company's consolidated financial statements provides a
description of the principal differences between Hong Kong GAAP and U.S. GAAP as
they relate to the Company and a reconciliation to U.S. GAAP of certain items,
including net income and shareholders' equity. Differences between Hong Kong
GAAP and U.S. GAAP that have a material effect on the Company's net income and
shareholders' equity as reported under Hong Kong GAAP relate to capitalization
of interest, borrowing costs and deferred taxation.

         Under Hong Kong GAAP, interest on bank loans and related costs of
obtaining the loans (including costs incurred in connection with loan
facilities) taken out to finance construction of satellites is capitalized
during the period of construction. Under U.S. GAAP, the interest capitalized is
computed by applying an average borrowing rate of outstanding debt to the total
amount of qualifying assets under construction, not to exceed total interest
costs incurred. In addition, under U.S. GAAP, certain related borrowing costs
payable to lenders are excluded from the amounts capitalized.

         Under Hong Kong GAAP, goodwill is amortized on a systematic basis over
its useful life. Under U.S. GAAP, effective from January 1, 2002, goodwill is:
(i) no longer amortized, (ii) assigned to a reporting unit, and (iii) tested for
impairment at least annually using fair value. Prior to January 1, 2002,
goodwill was amortized under U.S. GAAP.

         CRITICAL ACCOUNTING POLICIES

         The Company's consolidated financial statements are prepared in
accordance with Hong Kong GAAP. The preparation of these consolidated financial
statements requires the Company to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses as well as the
disclosure of contingent assets and liabilities. The Company continually
evaluates these estimates and judgments, including those related to estimated
useful lives of satellites, impairment losses on satellites, allowance for
doubtful accounts, and contingent liabilities related to tax assessments from
Indian tax authorities. The Company bases these estimates and judgments on its
historical experience and other factors that it believes to be reasonable under
the circumstances. Actual results may differ from these estimates under
different assumptions or conditions. The Company has identified below the
accounting policies that are the most critical to its consolidated financial
statements.

         USEFUL LIVES OF IN-ORBIT SATELLITES. The Company's operations are
capital intensive and the Company has significant investments in satellites. The
carrying value of the Company's in-orbit satellites represented 64%, 50% and 39%
of its total assets as of December 31, 2000, 2001 and 2002, respectively. The
Company estimates the useful lives of satellites in order to determine the
amount


                                       41
<PAGE>

of depreciation expense to be recorded during the reported period. The useful
lives are estimated at the time satellites are put into orbit and are based on
historical experience with other satellites as well as the anticipated
technological evolution or other environmental changes. If technological changes
were to occur more rapidly than anticipated or in a different form than
anticipated, the useful lives assigned to these satellites may need to be
shortened, resulting in the recognition of increased depreciation in a future
period. Similarly, if the actual lives of satellites are longer than what the
Company has estimated, the Company would have a smaller depreciation expense. As
a result, if the Company's estimations of the useful lives of its satellites are
not accurate or are required to be changed in the future, the Company's net
income in future periods would be affected.

         REALIZABILITY OF THE CARRYING AMOUNTS OF LONG-LIVED ASSETS. The Company
is required to evaluate at each balance sheet date whether there is any
indication that the carrying amounts of long-lived assets (primarily its
satellites) may be impaired. If any such indication exists, the Company should
estimate the recoverable amount of the long-lived assets. An impairment loss is
recognized for the excess of the carrying amount of such long-lived assets over
their recoverable amounts. The value in use is the discounted present value of
the cash flows expected to arise from the continuing use of long-lived assets
and cash arising from its disposal at the end of its useful life. The estimates
of the cash flows are based on the terms and period of existing transponder
utilization agreements ("Existing Agreements").

         Modifications to the terms of the Existing Agreements that results in
shorter utilization period than previously agreed and/or those that result in
the reduction in agreed rates will result in a lower recoverable amounts (if
discount rate used is not changed); which may, in turn, result in a situation
wherein the recoverable amounts are less than the carrying amounts (therefore,
an impairment loss would need to be recognized).

         ALLOWANCE FOR DOUBTFUL ACCOUNTS. The Company maintains allowance for
doubtful accounts for estimated losses that result from the inability of its
customers to make the required payments. The Company bases its allowances on the
likelihood of recoverability of account receivables based on past experience and
current collection trends that are expected to continue. The Company's
evaluation also includes the length of time the receivables are past due and the
general business environment.

         If changes in these factors occur, or the historical data the Company
uses to calculate the allowance for doubtful accounts as of December 31, 2002
does not reflect the future ability to collect outstanding receivables,
additional provisions for doubtful accounts may be needed and the Company's
future results of operations could be adversely affected.

         CONTINGENCY RELATED TO INDIAN TAX ASSESSMENTS. The Indian tax
authorities had assessed the Company for income tax of approximately HK$44
million (see Note 6 to the Company's consolidated financial statements). The
Company did not recognize liabilities in connection with the foregoing
assessments as the Company believes that the criteria for recognition of a loss
contingency under Financial Accounting Standards No. 15, "Accounting for
Contingencies" ("FAS 5") were not met. FAS 5 requires that "an estimated loss
from a loss contingency shall be accrued by a charge to income if both of the
following conditions are met: (a) information available prior to issuance of the
financial statements indicates that it is probable that an asset had been
impaired or a liability had been incurred at the date of the financial
statements; and (b) the amount of loss can be reasonably estimated.


                                       42
<PAGE>

         The Company cannot reasonably estimate the loss that will arise from
the assessment since the information needed to calculate such loss (if any) is
proprietary to the Company's customers and was not provided to the Company.
Further, the Company believes it has a reasonable likelihood of success with
respect to its appeals. If the information is made available to the Company in
the future and if the Company is finally held liable to Indian tax, the
Company's future results of operations could be adversely affected.

         NEW ACCOUNTING STANDARDS

         For a discussion on new accounting standards, see Note 5 to the
Company's consolidated financial statements.

         RESEARCH AND DEVELOPMENT

         The Company does not incur any significant material research
expenditures.

         TREND INFORMATION AND PROSPECTS

         Due to the nature of the Company's business with long-term commitments
being made for the purchase of satellites and long-term contracts entered into
by AsiaSat's customers, there are no immediate changes from one period to the
next which impact AsiaSat's business. See "Information on the Company - Business
Overview."

         Due to the global and regional slow down of the economy, the Company
does not expect to achieve any significant growth, or even to maintain the same
level of results as in 2002, unless clear signs of economic improvement appear.
See "Key Information -- Risk Factors -- Political and Economic Risks." However,
the Company has a strong existing customer base and it is estimated that
approximately 80% of the Company's 2002 revenue is already contracted for 2003.
Furthermore, the Company has an expanding satellite fleet and an outstanding
technical and customer service team. Thus, operationally, 2003 will be a
challenging year requiring intense customer focus to maintain and expand
existing businesses where possible and to concentrate on identifying new
opportunities for growth. The Company will continue to investigate strategic
opportunities that would support and enhance the Company's core satellite
business in order to position itself to capitalize upon the economic recovery of
the Asian region.

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.

                         DIRECTORS AND SENIOR MANAGEMENT

         The directors of the Company as of May 31, 2003 are set forth below.

<TABLE>
<CAPTION>
                                                                     DATE FIRST ELECTED OR
                                                                     APPOINTED DIRECTOR OF
NAME                         AGE        POSITION                     ASIASAT (OR THE COMPANY)       TERM  OF OFFICE
-------------------------    -------    ------------------------     ------------------------       ----------------
<S>                          <C>        <C>                          <C>                            <C>
Zengxin Mi (1)               52         Chairman and Director        February 28, 2001              May 18, 2004

Romain Bausch (2)            49         Deputy Chairman of the       January 15, 1999               May 18, 2004
                                        Board and Director
</TABLE>


                                       43
<PAGE>

<TABLE>
<CAPTION>
                                                                     DATE FIRST ELECTED OR
                                                                     APPOINTED DIRECTOR OF
NAME                         AGE        POSITION                     ASIASAT (OR THE COMPANY)       TERM  OF OFFICE
-------------------------    -------    ------------------------     ------------------------       ----------------
<S>                          <C>        <C>                          <C>                            <C>
Robert Bednarek (2)          45         Director                     March 14, 2002                 May 17, 2005

Professor Edward Chen,       58         Director                     May 10, 1996                   May 19, 2003
C.B.E., J.P. (3)

Yu Cheng Ding (1)            37         Director                     January 15, 1999               May 18, 2004

R. Donald Fullerton (3)      71         Director                     May 10, 1996                   May 17, 2005

Peter Jackson                54         Director                     May 10, 1996                   May 19, 2003

Weimin Ju (1)                40         Director                     October 12, 1998               May 18, 2004

Tong Zhou Li (1)             63         Director                     December 5, 1989               May 19, 2003

Jurgen Schulte (2)           59         Director                     January 15, 1999               May 17, 2005

Robert Sze (3)               62         Director                     May 10, 1996                   May 17, 2005

William Wade                 46         Director                     May 10, 1996                   May 19, 2003

Fai Wong Ko (4)              54         Alternate Director           November 21, 2002              Not applicable
</TABLE>
-------------------------
(1)  Appointed by CITIC.
(2)  Appointed by SES.
(3)  Independent.
(4)  Alternate Director to Zengxi Mi, Tong Zhou Li, Weimin Ju and Yu Cheng Ding.


The executive officers of the Company as of May 31, 2002 are set forth below.

<TABLE>
<CAPTION>
                                                                     DATE FIRST ELECTED OR
                                                                     APPOINTED DIRECTOR OF
NAME                         AGE        POSITION                     ASIASAT (OR THE COMPANY)       TERM  OF OFFICE
-------------------------    -------    ------------------------     ------------------------       ----------------
<S>                          <C>        <C>                          <C>                            <C>
Peter Jackson                54         Chief Executive Officer      July 1, 1993                   Indefinite

William Wade                 46         Deputy Chief Executive       April 15, 1994                 Indefinite
                                        Officer

Liqun Chen                   52         General Manager, China       April 14, 1989                 Indefinite

Ya Hui Chiu                  53         General Manager,             February 13, 1989              Indefinite
                                        Operation
</TABLE>


                                       44
<PAGE>

<TABLE>
<CAPTION>
                                                                     DATE FIRST ELECTED OR
                                                                     APPOINTED DIRECTOR OF
NAME                         AGE        POSITION                     ASIASAT (OR THE COMPANY)       TERM  OF OFFICE
-------------------------    -------    ------------------------     ------------------------       ----------------
<S>                          <C>        <C>                          <C>                            <C>
Sabrina Cubbon               41         General Manager,             December 1, 1993               Indefinite
                                        Marketing

Denis Lau                    63         Secretary and General        July 1, 1988                   Indefinite
                                        Manager, Finance and
                                        Administration

Barry Turner                 56         General Manager,             May 1, 1998                    Indefinite
                                        Engineering
</TABLE>
--------------

         The Board of Directors of the Company currently consists of 12 regular
members and one alternate member. Action can be taken by a majority of directors
present at a meeting at which a quorum is present. Attendance by six directors,
or such other number as determined by the directors from time to time,
constitutes a quorum. The Bye-Laws of the Company provide that any director may
call a board meeting. The directors of the Company all hold office until the
next annual meeting of shareholders and until their successors are elected and
have qualified.

         ZENGXIN MI is the Chairman of the Board and a Non-Executive Director of
the Company. He is an Executive Director and a Vice President of China
International Trust and Investment Corporation ("CITIC"). Prior to his
appointment to the present position, he was the Chief Executive Officer of
Citisteel USA Inc. in the United States from 1992 to 1997. He joined CITIC in
1985 and holds a Master of Science degree.

         ROMAIN BAUSCH is the Deputy Chairman of the Board and a Non-Executive
Director of the Company. He is the President and CEO of SES GLOBAL S.A. He
started his career in the Luxembourg civil service. After subsequent promotions,
he became General Administrator of the Ministry of Finance. He occupied key
positions in the banking and media sectors and spent a five-year term as a
Director and Vice Chairman of SES. He graduated with a Master of Arts degree in
economics (specialization in business administration) from the University of
Nancy (France).

         ROBERT BEDNAREK is a Non-Executive Director of the Company. He is an
Executive Vice President Corporate Development and a member of the Executive
Committee of SES GLOBAL S.A. Prior to joining SES, he was the Executive
Vice-President and Chief Technology Officer of PanAmSat. He graduated with a
Bachelor of Science degree in Electronic Engineering from the University of
Florida.

         PROFESSOR EDWARD CHEN, C.B.E., J.P., is an Independent Non-Executive
Director of the Company. Professor Chen was educated at Hong Kong University
(Bachelor of Arts, Master of Social Science) and Oxford University (Doctor of
Philosophy) and is currently President of Lingnan University in Hong Kong. He
was a member of the Executive Council of Hong Kong, 1992-1997, and Chairman of
the Consumer Council, 1991-1997. He is now Chairman of the


                                       45
<PAGE>

Press Council, a Director of the First Pacific Company (Hong Kong), a Trustee of
Eaton Vance Management Funds (Boston), and also a Director of The Wharf
(Holdings) Limited.

         YU CHENG DING is a Non-Executive Director of the Company. He is the
Deputy Chief Economist of CITIC Securities Company Limited, which engages in
securities and investment banking. CITIC Securities Company Limited is a
wholly-owned subsidiary of CITIC. He holds a Master of Business Administration
degree from the University of Pittsburgh.

         R. DONALD FULLERTON is an Independent Non-Executive Director of the
Company. He was the Chairman and Chief Executive Officer of Canadian Imperial
Bank of Commerce until his retirement in 1992 and is now a member of its Board
of Directors. He is also a director of a number of Canadian and multinational
companies and medical, cultural and educational entities.

         WEIMIN JU is a Non-Executive Director of the Company. He is the Chief
Financial Officer of CITIC, Director of CITIC Ka Wah Bank Limited, a licensed
bank in Hong Kong and a Director of Shortridge Limited, which engages in
investment, trading and joint ventures in China and Hong Kong. Shortridge
Limited is a wholly-owned subsidiary of CITIC.

         TONG ZHOU LI is a Non-Executive Director of the Company. Mr. Li is a
Director of Macau Cement Manufacturing Company Limited.

         JURGEN SCHULTE is a Non-Executive Director of the Company. He is the
Chief Financial Officer of SES GLOBAL S.A. He joined SES in 1991 in that
position having worked previously for General Electric (USA) in various
financial management positions in both the United States and Europe. He
graduated with a degree in Business Administration from the University of
Munster (Germany).

         ROBERT SZE is an Independent Non-Executive Director of the Company. He
is a fellow of the Institute of Chartered Accountants in England and Wales and
the Hong Kong Society of Accountants and was a partner in an international firm
of accountants with which he practiced for over 20 years. He is a non-executive
director of a number of Hong Kong listed companies. He is also a member of the
Shanghai Committee of the Chinese People's Political Consultative Conference.

         FAI WONG KO is a Non-Executive Alternate Director of the Company. He is
the Deputy General Manager of Shortridge Limited.

         PETER JACKSON is an Executive Director and Chief Executive Officer of
the Company. He has over 24 years experience in the telecommunications field.
Prior to his appointment as the Chief Executive Officer in 1996, he had been
employed by Cable & Wireless plc where he held several engineering, marketing
and management positions and was responsible for several satellite
telecommunications ventures.

         WILLIAM WADE is an Executive Director and Deputy Chief Executive
Officer of the Company. He has over 18 years experience in the satellite and
cable television industry. He speaks Mandarin Chinese and holds a Bachelor of
Arts (Honors) degree in Communications from the University of Utah and a Masters
of International Management from Thunderbird (the American Graduate School of
International Management).

         LIQUN CHEN is General Manager, China, of AsiaSat, in which capacity he
is responsible for marketing transponder capacity and managing customer
relations in the China market. Mr. Chen


                                       46
<PAGE>

had been on secondment to AsiaSat from his employer, CITIC, since 1989 and
became a permanent employee of AsiaSat in January 1997. Mr. Chen graduated with
a Master degree in Business Administration from the University of Leuven in
Belgium and a Bachelor of Science degree in Electronics and Industrial
Automation from Qinghua University, China. Prior to being seconded to the
Company, Mr. Chen worked for CITIC.

         DR. YA HUI CHIU is General Manager, Operations, of AsiaSat, in which
capacity he is responsible for maintaining and operating the Company's
satellites. Dr. Chiu has 20 years experience in telecommunications engineering
and operations, with the last 16 years being in the satellite communications
area. Dr. Chiu received his Bachelor of Science degree from National Taiwan
University and his M. Phil and Ph.D. degrees from Yale University, all in
Physics.

         SABRINA CUBBON is General Manager, Marketing, of AsiaSat, in which
capacity she is responsible for sales and marketing, business development,
corporate affairs and market research. Mrs. Cubbon has over 18 years of
marketing experience in the telecommunications industry. Prior to joining
AsiaSat in August 1992, Mrs. Cubbon was employed by Case Communications, a Hong
Kong company, between 1987 and 1992 as Regional Manager Asia-Pacific responsible
for the sales and marketing activities to multinational clients. Mrs. Cubbon
graduated from the University of Manchester, United Kingdom with a Masters
degree in Electronic and Electrical Engineering, with a specialization in
cryptography.

         DENIS LAU is General Manager, Finance and Administration and the
Secretary of the Company. Mr. Lau joined Hong Kong Telecom (now known as PCCW)
in 1974 and held a number of senior positions, including the Assistant Group
Chief Accountant, before being seconded to AsiaSat in 1988. He became a
permanent employee of AsiaSat in September 1996. Mr. Lau is a qualified
accountant and secretary by profession and has over 32 years experience in the
fields of accounting and finance. Mr. Lau holds a Diploma in Management
Executive Development from the Chinese University of Hong Kong, a Fellowship of
The Association of Chartered Certified Accountants in the United Kingdom and the
Hong Kong Society of Accountants and an Associateship of The Chartered Institute
of Secretaries and Administrators in the United Kingdom. Prior to joining
Hongkong Telecom, Mr. Lau worked for Esso, Union Carbide and Shaw Brothers.

         BARRY TURNER is General Manager, Engineering for AsiaSat. Mr. Turner
joined AsiaSat in 1997 as Deputy General Manager of Engineering and was
appointed to his present position in May 1998. Mr. Turner has 29 years of
experience in the satellite communications industry and has held senior and
executive management positions in Engineering and in Sales and Marketing at
Telesat Canada and in Strategic Planning at TMI Communications Inc. Mr. Turner
holds a Bachelor's degree in Electrical Engineering from the Technical
University of Nova Scotia, Canada, and a Masters degree in Business
Administration from the University of Ottawa, Canada.

         There is no family relationship between any director or executive
officer and any other director or executive officer of the Company.

                                  COMPENSATION

         The aggregate compensation paid by AsiaSat to all directors and
officers of the Company for 2001 and 2002 was approximately HK$25.7 million
(US$3.3 million) and HK$29.7 million (US$3.8 million), respectively. This
compensation included payments of HK$400,000 (2001: HK$550,000) and HK$400,000
(2001: HK$400,000) to SES GLOBAL S.A. and a subsidiary of


                                       47
<PAGE>

CITIC, the major shareholders of the Company, respectively, for certain
Non-Executive Directors representing SES GLOBAL S.A. and CITIC.

         CERTAIN SERVICE AGREEMENTS

         PETER JACKSON. Mr. Jackson was seconded to the Company by Cable &
Wireless plc prior to June 1996, when he entered into a service agreement (the
"Jackson Service Agreement") with the Company pursuant to which he became its
Chief Executive Officer.

         The Jackson Service Agreement was for an initial fixed term of three
years. Following the initial fixed term, the Jackson Service Agreement may be
terminated by either party giving not less than 12 months' notice. Mr. Jackson
currently is entitled to a gross annual salary of HK$2.6 million per annum,
together with a housing allowance including utilities of up to HK$1.5 million
per annum, which is paid directly by the Company to the landlord. Mr. Jackson is
also entitled to an additional discretionary annual bonus based upon the
Company's performance. Mr. Jackson is eligible to participate in the Share
Option Scheme (as defined herein). He is also entitled to participate in the
Company's medical scheme and in the Company's provident fund or any other
AsiaSat pension scheme.

         Under the terms of the Jackson Service Agreement, Mr. Jackson is
restricted for a period of 12 months after the termination of his employment
with the Company from competing with the Company, attempting to deal with or
solicit any of the Company's customers with whom he had dealings during the last
12 months of his employment or employing or attempting to entice away any senior
employees of the Company. Mr. Jackson will not act in any capacity for Cable &
Wireless plc under the terms of the Jackson Service Agreement.

         WILLIAM WADE. Mr. Wade was seconded to the Company by Hutchison Whampoa
prior to June 1996, when he entered into a service agreement (the "Wade Service
Agreement") with the Company pursuant to which he became its Deputy Chief
Executive Officer of the Company.

         The Wade Service Agreement was for an initial fixed term of two years.
Following the initial fixed term, the Wade Service Agreement may be terminated
by either party giving not less than six months' notice. Mr. Wade is entitled to
a gross annual salary of HK$2 million per annum, together with a housing
allowance including utilities of up to HK$1.1 million per annum, which is paid
directly by the Company to the landlord. Mr. Wade is also entitled to an
additional discretionary annual bonus based upon the Company's performance. Mr.
Wade is eligible to participate in the Share Option Scheme. He is also entitled
to participate in the Company's medical scheme and the Company's provident fund
or any other AsiaSat pension scheme.

         Under the terms of Mr. Wade's service agreement, he is restricted for a
period of six months after the termination of his employment with the Company
from competing with the Company, attempting to deal with or solicit any of the
Company's customers with whom he had dealings during the last six months of his
employment or employing or attempting to entice away any senior employees of the
Company. Mr. Wade will not act in any capacity for Hutchison Whampoa under the
terms of the Wade Service Agreement.


                                       48
<PAGE>

                                 BOARD PRACTICES

         The Board of Directors of the Company (the "Board") is vested with the
broadest powers to perform all acts in the interest of the Company. The Board
may delegate any of its powers to individual directors or any other persons or
committees.

         The Company has established a remuneration committee. The committee is
responsible for considering and reviewing the remuneration packages of the
executive directors and the emoluments of the non-executive directors prior to
approval of award by the Board. The committee also reviews the remuneration
packages of the employees of the Company. The committee has no executive powers.
The committee shall have three members who shall be non-executive directors. The
quorum for the committee shall be two. The chairman of the committee shall be an
independent non-executive director and appointed by the Board. The committee
currently comprises of Messrs. Robert Fullerton (Chairman), Weimin Ju and Jurgen
Schulte.

         The Company has also established an audit committee. The committee is
responsible for considering the interim and annual financial statements of the
Company and any other major financial statements prior to approval by the Board,
and for reviewing standards of internal control and financial reporting. The
committee shall have no executive powers. The committee shall have five members
who shall be non-executive directors and a majority of whom shall be independent
non-executive directors. The quorum for the committee shall be two. The chairman
of the committee shall be an independent non-executive director and appointed by
the Board. The committee currently comprises of Messrs. Robert Sze (Chairman),
Edward Chen, Robert Fullerton, Weimin Ju and Jurgen Schulte.

         The Company has also established a business development committee. The
committee is responsible for reviewing all corporate plans, budgets and any new
and ongoing projects or ventures and make recommendations to the Board for
consideration and approval. The committee shall have no executive powers. The
committee shall have three members who shall be non-executive directors. The
committee currently comprises of Messrs. Robert Bednarek (Chairman), Tong Zhou
Li and Yu Cheng Ding.

         The execution of the policies and decisions of the Board and the daily
management of the Company are vested with the management that comprises of the
Chief Executive Officer, the Deputy Chief Executive Officer and the General
Managers in the functional areas of Engineering, Finance, Marketing and
Operations, respectively. Furthermore, the Board mandates the management with
the preparation and planning of overall policies and strategies of the Company
as well as decisions reaching beyond the daily management, for discussion and
decision by the Board. The management meets on a regular basis on daily business
and reports to the Board at every board meeting.

                                    EMPLOYEES

         As of December 31, 2002, the Company had 83 full-time employees, of
which seven employees were in management, 36 employees were in engineering and
operations and 23 employees were in sales and marketing. The remaining 17
employees were engaged in administrative, accounting, legal and regulatory
activities. The Company has 75 employees in Hong Kong and eight employees in
Beijing.


                                       49
<PAGE>

         The Company does not employ a significant number of temporary
employees. The Company is not party to any collective bargaining agreement. The
Company believes its relations with its employees are good.

                                 SHARE OWNERSHIP

         Pursuant to the Company's new share option scheme adopted on January
25, 2002 (the "Share Option Scheme"), the Board of Directors of the Company may
grant options to any employees (including officers and directors) of the Company
or any of its subsidiaries to subscribe for shares in the Company. The
subscription price shall be such price as the Board of Directors of the Company
may in its absolute discretion determine at the time of grant but the
subscription price shall not be less than whichever is higher of (i) the closing
price of the shares as stated in The Hong Kong Stock Exchange Limited's (the
"Stock Exchange") daily quotations sheet on the date of grant; (ii) the average
closing price of the shares as stated in the Stock Exchange's daily quotation
sheets for the five business days immediately preceding the date of the grant;
and (iii) the nominal value of a share.

         At December 31, 2002, outstanding options granted under the Share
Option Scheme (including those previously granted under the old scheme) were as
follows:


         EXERCISE PERIOD            OPTION PRICE      NUMBER OF SHARES
                                        HK$
--------------------------------- ----------------  --------------------

Nov 26, 1999 to Nov 25, 2006           17.48             1,718,500

Oct 1, 2002 to Sept 30, 2009           17.48             1,838,000

Feb 4, 2004 to Feb 3, 2012             14.35             3,593,000
                                  ----------------
                                                    --------------------
                                                         7,149,500
                                                    ====================

         As of May 31, 2003, Zengxin Mi, the Chairman and a Non-Executive
Director of the Company, held 100,000 options, exercisable from February 4, 2004
to February 3, 2012.

         As of May 31, 2003, Romain Bausch, the Deputy Chairman and a
Non-Executive Director of the Company, held 100,000 options, exercisable from
February 4, 2004 to February 3, 2012.

         As of May 31, 2003, Edward Chen, an Independent Non-Executive Director
of the Company, held 50,000 options, exercisable from February 4, 2004 to
February 3, 2012.

         As of May 31, 2003, Yu Cheng Ding, a Non-Executive Director of the
Company, held 50,000 options, exercisable from February 4, 2004 to February 3,
2012.

         As of May 31, 2003, Robert Fullerton, an Independent Non-Executive
Director of the Company, held 75,000 options, exercisable from February 4, 2004
to February 3, 2012.

         As of May 31, 2003, Weimin Ju, a Non-Executive Director of the Company,
held 50,000 options, exercisable from February 4, 2004 to February 3, 2012.

         As of May 31, 2003 Tong Zhou Li, a Non-Executive Director of the
Company, held 50,000 options, exercisable from February 4, 2004 to February 3,
2012.


                                       50
<PAGE>

         As of May 31, 2003, Jurgen Schulte, a Non-Executive Director of the
Company, held 50,000 options, exercisable from February 4, 2004 to February 3,
2012.

         As of May 31, 2003, Robert Sze, an Independent Non-Executive Director
of the Company, held 75,000 options, exercisable from February 4, 2004 to
February 3, 2012.

         As of May 31, 2003, Peter Jackson, an Executive Director and the Chief
Executive Officer of the Company, held 915,000 options, exercisable from
November 26, 1999 to February 3, 2012.

         As of May 31, 2003, William Wade, an Executive Director and the Deputy
Chief Executive Officer of the Company, held 760,000 options, exercisable from
November 26, 1999 to February 3, 2012.

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

                               MAJOR SHAREHOLDERS

         The following table sets forth certain information regarding ownership
of the Company's voting securities as of May 31, 2003 by (i) all persons who are
known by the Company to be the beneficial owner of more than five percent (5%)
of any class of the Company's voting securities and (ii) the total amount of any
class of the Company's voting securities owned by the officers and directors of
the Company as a group.


TITLE OF CLASS   IDENTITY OF PERSON OR GROUP   AMOUNT OWNED    PERCENT OF CLASS
---------------  ----------------------------  --------------  -----------------

Common Stock     Bowenvale Limited             268,905,000     68.90%

Common Stock     Colonial Limited and its      20,665,600      5.30%
                 subsidiaries

Common Stock     Directors and Officers        277,500         0.06%


         The Company is controlled by Bowenvale Limited, a limited liability
company incorporated in the British Virgin Islands ("Bowenvale Limited"), which
owns 68.9% of the outstanding shares of Common Stock of the Company. Until
January 15, 1999, Bowenvale Limited was owned by Cable & Wireless plc, Able Star
Limited, an indirect wholly-owned subsidiary of CITIC, and Dontech Limited, an
indirect wholly-owned subsidiary of Hutchison Whampoa Limited. On January 15,
1999, Cable & Wireless plc and Hutchison Whampoa Limited sold their holdings in
Bowenvale Limited to CITIC and SES. As a result of this transaction, CITIC
increased its ownership of the voting share capital of Bowenvale Limited from
41.67% to 49.5% and SES acquired the remaining 49.5%. Voting rights in Bowenvale
Limited are equally shared between CITIC and SES. CITIC also holds 1% of the
shares of Bowenvale Limited that are non-voting. CITIC is China's leading
state-owned investment corporation, with diversified holdings in banking,
securities, energy, telecommunications, real estate, manufacturing,
transportation and trading and extensive contact in China. SES is based in
Luxembourg and is the largest private satellite service provider in the world.
CITIC and SES are each referred to herein as a Shareholder and Cable & Wireless
plc and Hutchison Whampoa Limited are each referred to herein as a former
Shareholder.


                                       51
<PAGE>

         The Company is not aware of any arrangement that may at a subsequent
date result in a change of control of the Company.

                            RELATED PARTY TRANSACTION

         Certain members of the Board of Directors and the Alternate Director of
the Company also serve as directors and executive officers of the current
Shareholders. These individuals include Romain Bausch, Robert Bednarek, Yu Cheng
Ding, Zengxin Mi, Tong Zhou Li, Weimin Ju, Jurgen Schulte and Fai Wong Ko. See
"Directors, Senior Management and Employees."

         The Company has entered into transactions from time to time with its
current and former Shareholders, their affiliates and other connected persons
(as defined in the Listing Rules of the Hong Kong Stock Exchange). It is the
Company's policy that such transactions be effected on terms which the Company
believes to be comparable to those available with unaffiliated parties. For so
long as the Company is listed on the Hong Kong Stock Exchange, all transactions
between the Company and its directors or any of their respective affiliates (as
defined in the Listing Rules of the Hong Kong Stock Exchange) will constitute
connected transactions of the Company under the Listing Rules and unless
exemptions are applicable or waivers are granted, will be subject to independent
shareholders' approval in a general meeting.

         AsiaSat has from time to time conducted transactions as described below
with the Shareholders, their affiliates and other connected persons. Unless
otherwise indicated, the following arrangements will continue to be conducted on
the same basis:

         (i)      Since 1996, CITIC Guoan Information Industry Company Limited
         ("Guoan"), a subsidiary of CITIC, has leased 7 MHz of capacity on one
         72 MHz C-band transponder on AsiaSat 2. The current agreement has an
         initial term of three years starting from January 1, 2000 for 2 MHz of
         capacity. The annual utilization fee is US$120,000 (HK$0.9 million),
         payable semi-annually. On April 28, 2001, Guoan has leased 5 MHz of
         capacity on one Ku-band transponder on AsiaSat 3S. During the same
         year, some of the AsiaSat 2 C-band capacity leased by Guoan was
         switched to the Ku-band capacity on AsiaSat 3S. The current capacity
         lease by Guoan on the AsiaSat 3S Ku-band transponder is 9 MHz. The
         annual utilization fee is US$405,000 (HK$3.2 million), payable
         semi-annually. The transponder capacity under both agreements is used
         to provide domestic private network services within China. The total
         amount of revenue recognized by the Company during 2000, 2001 and 2002,
         respectively, under these agreements was approximately HK$3,276,000,
         HK$3,832,000 and HK$4,095,000.

         (ii)     In 2002, the Company paid an agency fee of HK$1,611,000 to
         CITIC Technology Company Limited, a subsidiary of CITIC, for collecting
         money from China customers on behalf of the Company.

         (iii)    In 2002, the Company recognized rental income from leasing
         transponder capacity to SES Americom, a wholly-owned subsidiary of SES,
         amounting to HK$162,000.

         (iv)     In 2002, a consultancy fee, amounting to HK$678,000 was paid
         to SES Astra S.A., a wholly-owned subsidiary of SES.

         (v)      The Company has granted or agreed to grant each of the
         Shareholders demand and piggyback registration rights, exercisable
         under certain circumstances and subject to certain conditions, that
         require the Company to register under the Securities Act Shares held by
         Bowenvale Limited, the Shareholders and their affiliates. Under the
         registration rights agreement, the Company will pay all expenses in
         connection with registrations made at the


                                       52
<PAGE>

         request of the Shareholders and the Company will pay all expenses in
         connection with any registration by the Shareholders incidental to a
         registration by the Company. The exercise by the Shareholders of their
         registration rights could adversely affect the market price of the
         Shares and the ADSs and could impair the Company's future ability to
         raise capital through an offering of its equity securities.

         (vi)     In 2002, the Company recognized rental income from leasing
         satellite transponder capacity amounting to approximately HK$20,177,000
         and no maintenance and other services income from SpeedCast Holdings
         Limited. The total amount of such income recognized in 2001 was
         HK$19,547,000 and HK$9,116,000, respectively, and in 2000 was
         HK$21,125,000 and HK$10,774,000, respectively.

         (vii)    Equipment Sale and Purchase, Software License, and Service
         Provision Agreement, dated February 13, 2000, between AsiaSat and SES,
         a major shareholder of the Company, pursuant to which SES agreed to
         sell the equipment, license the software and provide the services to
         AsiaSat for the purposes of establishing an Astra-Net Platform in Hong
         Kong, which is used to distribute IP (Internet Protocol) encoded
         information via satellite. The transaction was effected to allow rights
         to this platform to be contributed to SpeedCast by AsiaSat, which owns
         45.3% of SpeedCast Holdings Limited. The total consideration payable by
         AsiaSat is approximately US$1.95 million (HK$15.2 million) payable in
         three tranches upon certain contingencies, and subject to the
         acceptance of the equipment by AsiaSat and the compliance by AsiaSat
         with the terms of the limited, non-transferable and non-exclusive
         software license. The consideration was negotiated on an arm's-length
         basis taking into account the internal evaluation of the value of the
         equipment, license and services offered. This amount was fully settled
         in 2001.

         (viii)   The Company made payments to SES GLOBAL and a subsidiary of
         CITIC amounting to HK$400,000 (2001: HK$550,000) and HK$400,000 (2001:
         HK$400,000) respective, for certain Non-Executive Directors
         representing SES GLOBAL and CITIC.

         Except for the arrangements referred to in paragraph (vi), the
transactions mentioned above have been entered into in the ordinary course of
business and on normal commercial terms. Such transactions, which are of a
continuing nature, are expected to be continued in the future. Under the Listing
Rules of the Hong Kong Stock Exchange, such transactions are considered to be
"connected transactions" and would normally require full disclosure and prior
independent directors' approval on each occasion they arise. As the transactions
are expected to be continued in the normal course of business, the Directors of
the Company consider that such disclosure and approval would be impractical.
Accordingly, the Directors of the Company have requested the Hong Kong Stock
Exchange to grant a waiver from these requirements. The Hong Kong Stock Exchange
has indicated that a waiver would be granted on the following conditions:

         (i)      details of each of the transactions in each year as required
         by rule 14.25(1)(A) to (D) of the Listing Rules of the Hong Kong Stock
         Exchange shall be disclosed in the Company's annual report and accounts
         for that year;

         (ii)     In any financial year, the aggregate consideration payable in
         respect of the transactions referred to in paragraph (vii) above shall
         not exceed 3% of the audited book value of the net tangible assets of
         the Company as disclosed in the latest published audited accounts;

         (iii)    the Company's independent non-executive Directors shall review
         annually the transactions and confirm in the Company's annual report
         and accounts for the year in question item (ii) above has been complied
         with and that:


                                       53
<PAGE>

         (a)      the transactions have been entered into by the Company in the
         ordinary and usual course of its business;

         (b)      the transactions have been entered into either (A) on normal
         commercial terms or (B) on terms no less favorable than terms available
         to third parties; and

         (c)      the transactions have been entered into on terms that are fair
         and reasonable so far, as the shareholders of the Company are
         concerned; and

         (iv)     the auditors of the Company will be engaged to confirm to the
         Directors in writing in respect of such transactions occurring during
         each financial year that: (a) the relevant transactions received the
         approval of the Directors; and (b) the relevant transactions have been
         entered into on normal commercial terms or on terms no less favorable
         than terms available to or from independent third parties.

         In addition to the above-described requirements under the Listing Rules
relating to "connected transactions," the Companies Act subjects officers and
directors of the Company to certain fiduciary standards in the exercise of their
duties on behalf of the Company. Under the Companies Act, an officer of the
Company (which term includes directors of the Company) is subject to a duty of
care requiring him to act honestly and in good faith in the discharge of his
duties and to, among other things, give notice to the Board of Directors at the
first opportunity of any interest he has in any material contract or proposed
material contract with the Company or any of its subsidiaries. The Companies Act
also prohibits the Company from making loans to any Directors without obtaining
the consent of shareholders holding in the aggregate not less than nine-tenths
of the total voting rights of all the shareholders having the right to vote at
any shareholders meeting.

ITEM 8.  FINANCIAL INFORMATION.

         CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION.

         Information responsive to this Item is included in response to Item 18.

DIVIDENDS AND DIVIDEND POLICY

         The Company has distributed annual cash dividends to shareholders for
each fiscal year since it commenced operations in 1996 and anticipates
continuing to do so in the future. The Board has adopted a dividend policy to
distribute approximately 30-40% of net income as dividends. However, pursuant to
the Loan Facility, the Company may not declare any dividend or make any
distribution in excess of (1) 20% of consolidated profits (excluding items such
as interest expenses, taxes on income and profits, tax credits, depreciation,
amortization, exceptional items and any extraordinary items) or (2) if lower,
25% of net income for the relevant financial year. The Company was required to
obtain approval from the syndicate of banks providing the Loan Facility with
respect to the special dividend declared and paid in 2002 as it exceeded the
dividend limitation imposed under the Loan Facility. See "Operating and
Financial Review and Prospects -- Liquidity and Capital Resources -- Sources of
Financing." Furthermore, any future dividend payments are dependent on future
earnings, financial position, cash flow and levels of investments in the
satellite network and ground station equipment.


                                       54
<PAGE>

         The following table details the total amount of annual dividends and
the gross dividends paid, together with certain additional information, for
2000, 2001 and 2002.

                                                      FOR THE YEAR ENDED
                                                         DECEMBER 31
                                                       2000  2001  2002
                                                       ----  ----  ----
Net income (in HK Dollars in million) ...............   576   563   555
Ordinary dividend paid (in HK Dollars in million) ...    78    78    78
Ordinary dividend per Share (in HK cents) ...........    20    20    20
Ordinary dividend proposed (in HK Dollars in million)    55    55    74
Ordinary dividend per Share (in HK cents) ...........    14    14    19
Special dividend proposed (in HK Dollars in million)     --    --    98
Special dividend per Share (in HK cents) ............    --    --    25


         LEGAL AND REGULATORY PROCEEDINGS

         Other than as described below, the Company is not involved in any
significant legal or regulatory proceedings.

TAX DISPUTES

         The Indian tax authority has made assessments against the Company in
respect of certain lease payments for transponders used by the Company. See
"Operating and Financial Review and Prospects - Taxation."

OTHER DISPUTES

         In addition, the Company is subject to various claims and proceedings
in the ordinary course of business. None of these claims and proceedings will
have a material adverse effect on the financial condition or results of
operation of the Company.

         SIGNIFICANT CHANGES

    There have been no significant changes in the Company's business, operations
or financial condition since December 31, 2002.

ITEM 9.  STOCK PRICE HISTORY.

         SHARE PRICE HISTORY AND MARKETS

         The Company's American Depositary Shares ("ADS") representing its
shares (each ADS representing ten shares of the Company) are listed and traded
on the New York Stock Exchange (symbol: SAT) and the Company's shares are listed
and traded on the Hong Kong Stock Exchange (symbol: 1135.HK) since June 18, 1996
and June 19, 1996, respectively. The table below details, for the periods
indicated, the high and low market prices for its depositary receipts on each of
the New York Stock Exchange and the Hong Kong Stock Exchange, as reported by the
New York Stock Exchange and the Hong Kong Stock Exchange for the last five
fiscal years and the most recent six months. See "Key Information - Historical
Exchange Rate Information" with respect to rates of exchange between the US
Dollar and the HK Dollar applicable during the periods set forth below.


                                       55
<PAGE>

                            NEW YORK STOCK EXCHANGE     HONG KONG STOCK EXCHANGE
                                (IN US DOLLARS)              (IN HK DOLLARS)
                             HIGH             LOW          HIGH           LOW
                             ----             ---          ----           ---
1998 ...................    22.00             9.75        15.90           7.60
1999 ...................    36.00            13.75        24.60          10.50
2000 ...................    45.94            17.88        37.40          13.80
2001 ...................    26.30            10.95        20.55           7.65
2002 ...................    18.90            10.95        15.10           8.80
December 2002 ..........    14.15            11.22        11.25           9.15
January 2003 ...........    12.50            11.70         9.95           9.20
February 2003 ..........    13.16            12.11        10.70           9.70
March 2003 .............    12.80            11.66        10.25           9.10
April 2003 .............    14.45            12.75        11.10          10.00
May 2003 ...............    17.25            13.81        13.50          10.70

         There has been no significant trading suspension in the past three
years.


ITEM 10. ADDITIONAL INFORMATION.

         CHARTER DOCUMENTS.

         Information relating to the Company's charter documents is incorporated
herein by reference to the Company's Annual Report on Form 20-F for fiscal year
2000, File No.3334856.

         MATERIAL CONTRACTS.

         The following is a summary of the material contracts concluded outside
of the ordinary course of business to which the Company and other members of its
group were a party. Copies of these contracts are filed as exhibits to this Form
20-F. Directions on how to obtain copies of these contracts are provided under
"Item 10. -- Documents under Display."

         o        Construction Agreement between the Company and Boeing and
                  Launch Agreement between the Company and Lockheed Martin, each
                  entered into in September 2000. Pursuant to the Construction
                  Agreement, Boeing agreed to construct, assemble, equip, test,
                  supply and deliver AsiaSat 4, a satellite of BSS601 HP with 28
                  C-band and 20 Ku-band transponders designed to serve
                  telecommunications services providers and TV broadcasters, to
                  the Company. Pursuant to the Launch Agreement, Lockheed Martin
                  agreed to provide launch services for one launch of AsiaSat 4.
                  The aggregate investment for the construction, launch and
                  launch insurance of AsiaSat 4 is estimated to be approximately
                  US$224.0 million.

         o        US$250 million Syndicated Term Loan Facility, dated November
                  24, 2000. For a complete description of the Loan Facility, see
                  "Operating and Financial Review and Prospects -- Liquidity and
                  Capital Resources -- Sources of Financing."

         o        Lease Agreement, dated March 12, 2001, between AsiaSat and the
                  Hong Kong Industrial Estates Corporation (the "Lease
                  Agreement"). Pursuant to the Lease Agreement, the Hong Kong
                  Industrial Estates Corporation agreed to grant to AsiaSat
                  rights to the Tai Po Site, for a period of sixty (60) months,
                  for the purpose of constructing a satellite earth station and
                  other structures, and thereafter to lease to AsiaSat the Tai
                  Po Site up to 2047. AsiaSat paid


                                       56
<PAGE>

                  a lump sum of HK$25,912,200 for the lease of the Tai Po Site
                  and agreed to pay an annual rent of 3% of the ratable value of
                  the Tai Po Site as well as an annual sum of HK$36,824 for
                  management and maintenance charges.

         o        Amended and Restated Deposit Agreement, dated as of September
                  28, 2001, among the Company, The Bank of New York as
                  Depositary and all holders from time to time of American
                  Depositary Receipts issued thereunder.

         o        Construction Contract Agreement (the "Construction Contract"),
                  dated March 4, 2002, between AsiaSat and Leighton Contractors
                  (Asia) Limited (the "Contractor"). Pursuant to the
                  Construction Contract, the Contractor agreed to design and
                  construct a new satellite earth station on the Tai Po Site.
                  Costs related to the construction of the Tai Po Site
                  (including consultancy fees but excluding amounts paid under
                  the Lease Agreement) are estimated to be approximately
                  HK$119.7 million (US$15.3 million).

         EXCHANGE CONTROLS.

         There are, except in limited embargo circumstances, no legal
restrictions in Bermuda on international capital movements and foreign exchange
transactions. There can be no assurance that the government of Bermuda will
maintain the current foreign exchange policies.

         TAXATION.

         The Company is not required to make any tax withholding with respect to
its shareholders.

         DOCUMENTS ON DISPLAY

         As a result of registering shares, the Company is subject to the
informational reporting requirements of the Securities Exchange Act of 1934 and
will file reports and other information with the Securities and Exchange
Commission (SEC). You may examine the reports and other information that the
Company files, without charge, at the public reference facilities maintained by
the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C., 20549. You may
also receive copies of these materials by mail from the SEC's Public Reference
Branch at 450 Fifth Street, N.W., Washington, D.C., 20549. For more information
on the public reference rooms, call the SEC at 1-800-SEC-0330.

         SUBSIDIARY INFORMATION.

         Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         In the normal course of the Company's business, the Company's financial
position is routinely exposed to a variety of risks, including market risks
associated with interest rate movements on its outstanding debt. The Company
does not have significant exposure to commodity price risks or other market rate
or price risks.

         CURRENCY FLUCTUATIONS

         A substantial portion of the Company's capital expenditure is
denominated in US Dollars and HK Dollars. Revenues are denominated principally
in US dollars. See "Key Information -Historical Exchange Rates Information."


                                       57
<PAGE>

         INTEREST RATE FLUCTUATIONS

         As of December 31, 2002, no borrowings consisted of floating rate
borrowings.

         The Company will be exposed to interest rate fluctuations on any
borrowings under the Loan Facility and any change in interest rate could affect
its results of operations and cash flows. The potential effect of a hypothetical
0.5% increase in interest rate for one year on outstanding indebtedness in the
full amount of US$100 million Tranche A of the Loan Facility would be a
reduction in cash flows of approximately US$500,000 and a reduction in net
income of approximately HK$3.9 million in each year.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

         Not applicable.


                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

         The Company has not had any material default in the payment of
principal, interest, or sinking purchase fund installments. The Company has not
had any material default not cured within 30 days relating to indebtedness of
AsiaSat or any of its significant subsidiaries that exceeds 5% of the Company's
total assets on a consolidated basis.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
         PROCEEDS.

         Not Applicable.


                                    PART III

ITEM 15. CONTROLS AND PROCEDURES

         DISCLOSURE CONTROLS AND PROCEDURES

         The Company's Chief Executive Officer and Chief Financial Officer have
reviewed the Company's disclosure controls and procedures within 90 days prior
to the filing of this Annual Report on Form 20-F. Based upon this review, these
officers believe that the Company's disclosure controls and procedures are
effective in ensuring that material information related to the Company is made
known to them by others within the Company.

         INTERNAL CONTROLS

         There were no significant changes in the Company's internal controls or
in other factors that could significantly affect these controls during the
period covered by this Annual Report on Form 20-F or from the end of the fiscal
period to the date hereof, including any corrective actions with regard to
significant deficiencies and material weaknesses.

ITEM 16. [RESERVED.]

         None.


                                       58
<PAGE>

                                     PART IV

ITEM 17. FINANCIAL STATEMENTS.

         The Company has elected to provide the information required under Item
18 in lieu of Item 17.

ITEM 18. FINANCIAL STATEMENTS.

         See Index to Financial Statements for a list of all financial
statements filed as part of this Annual Report.

ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS.

         (a) Index to Financial Statements:

             Independent Auditors' Report....................................F-2

             Consolidated Statements of Operations...........................F-3

             Consolidated Balance Sheets.....................................F-4

             Consolidated Statement of Changes in Shareholders' Equity.......F-6

             Consolidated Statements of Cash Flows...........................F-6

             Notes to the Consolidated Financial Statements..................F-8

         (b) Exhibits to this Annual Report:

     NUMBER                              EXHIBIT
     ------                              -------
      1.1.        Memorandum of Association and Bye-Laws (incorporated by
                  reference to Exhibit 3.1 of the Company's Registration
                  Statement on Form F-1, File No.3334856).

      4.1.        Service Agreement, dated June 5, 1996, between the Company and
                  Peter Jackson (incorporated by reference to Exhibit 10.16 of
                  the Company's Registration Statement on Form F-1, File
                  No.3334856).

      4.2.        Service Agreement, dated June 3, 1996, between the Company and
                  William D. Wade (incorporated by reference to Exhibit 10.17 of
                  the Company's Registration Statement on Form F-1, File
                  No.3334856).

      4.3.        Amendment 9 to Contract No. AsiaSat-3-001/95, dated March 6,
                  1998, between Hughes Space and Communications International,
                  Inc. Asia Satellite Telecommunications Company Limited
                  (incorporated by reference to Exhibit 1 on Form 20-F for
                  fiscal year 1997, File No.3334856).

      4.4.        Contract for Launch Services, dated March 17, 1998, between
                  Lockheed-Khrunichev-Energia International, Inc. and Asia
                  Satellite Telecommunications Company Limited (incorporated by
                  reference to Exhibit 2 on Form 20-F for fiscal year 1997, File
                  No.3334856).

      4.5.        Subscription Agreement made on March 21, 2000, between Tech
                  System Limited, Asia Satellite Telecommunications Company
                  Limited and PhoenixNet Holdings Limited (incorporated by
                  reference to Exhibit 2 on Form 20-F for fiscal year 1999, File
                  No.3334856).

      4.6.        Shareholders' Agreement dated as of April 6, 2000, among Asia
                  Satellite


                                       59
<PAGE>

     NUMBER                              EXHIBIT
     ------                              -------
                  Telecommunications Company Limited, Tech System
                  Limited, TVG Asia Communications Fund II and PhoenixNet
                  Holdings Limited (incorporated by reference to Exhibit 3 on
                  Form 20-F for fiscal year 1999, File No.3334856).

      4.7.        Loan Agreement dated November 24, 2000, among Asia Satellite
                  Telecommunications Company Limited, Asia Satellite
                  Telecommunications Holdings Limited, HSBC Investment Bank Asia
                  Limited, The Hong Kong and Shanghai Banking Corporation
                  Limited and the banks and financial institutions named
                  therein.

      4.8.        Amendment 5 to Contract No. AsiaSat-3B/4 dated September 7,
                  2000, between Asia Satellite Telecommunications Company
                  Limited and Hughes Space and Communications International,
                  Inc. (incorporated by reference to Exhibit 4.9 on Form 20-F
                  for fiscal year 2000, File No.3334856)*

      4.9.        Contract for Launch Services LKEB-0009-0807 dated September
                  19, 2000, between AsiaSat and Lockheed Martin Commercial
                  Launch Services, Inc. (incorporated by reference to Exhibit
                  4.10 on Form 20-F for fiscal year 2000, File No.3334856)*

      4.10        Amended and Restated Deposit Agreement (incorporated by
                  reference to Exhibit A to the Registration Statement on Form
                  F-6, File No.333-13900, relating to the Company's American
                  Depositary Shares)

     4.11.        Share Option Scheme, dated January 25, 2002, of the Company.

     4.12.        Lease Agreement, dated March 12, 2001, between AsiaSat and the
                  Hong Kong Industrial Estates Corporation.

     4.13         Construction Contract Agreement, dated March 4, 2002, between
                  AsiaSat and Leighton Contractors (Asia) Limited.

      8.1.        Subsidiaries of the Registrant (included on page 11 of this
                  Annual Report).

     99.1         Certification pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

     99.2         Certification pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*  Confidential portions of this exhibit have been omitted and filed separately
with the Securities and Exchange Commission with a request for confidential
treatment pursuant to Rule 24B-2.


                                       60
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the requirements for
filing on Form 20-F and has duly caused this Annual Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                             Asia Satellite Telecommunications Holdings Limited

                             By:  /s/ Peter Jackson
                                 ---------------------------------------
                                 Peter Jackson
                                 Director and Chief Executive Officer



         Date: June 23, 2003



<PAGE>






                                ASIA SATELLITE TELECOMMUNICATIONS
                                HOLDINGS LIMITED
                                ------------------------------------

                                Consolidated Financial Statements
                                Years ended December 31, 2000, 2001 and 2002
                                and Independent Auditors' Report







<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

                          INDEX TO FINANCIAL STATEMENTS


Independent Auditors' Report ..............................................F - 2

Consolidated Statements of Operations for the years ended
  December 31, 2000, 2001 and 2002.........................................F - 3

Consolidated Balance Sheets at December 31, 2001 and 2002..................F - 4

Consolidated Statement of Changes in Shareholders' Equity..................F - 6

Consolidated Statements of Cash Flows for the years ended
  December 31, 2000, 2001 and 2002.........................................F - 7

Notes to Consolidated Financial Statements.................................F - 9



                                      F-1
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of
Asia Satellite Telecommunications Holdings Limited


We have audited the accompanying consolidated balance sheets of Asia Satellite
Telecommunications Holdings Limited and subsidiaries as of December 31, 2001 and
2002 and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2002, all expressed in Hong Kong dollars. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in Hong Kong and the United States of America. 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. An audit also includes 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Asia Satellite Telecommunications
Holdings Limited and subsidiaries as of December 31, 2001 and 2002, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2002, in conformity with accounting principles
generally accepted in Hong Kong.

Accounting principles generally accepted in Hong Kong vary in certain
significant respects from accounting principles generally accepted in the United
States of America. The application of the latter would have affected the
determination of net income for each of the three years in the period ended
December 31, 2002 and the determination of shareholders' equity and financial
position at December 31, 2001 and 2002, to the extent summarized in Note 15.




Deloitte Touche Tohmatsu
Hong Kong
March 14, 2003
(May 30, 2003 as to third paragraph of Note 6(c))


                                      F-2
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31,
                                                -----------------------------------------------------
                                                      2000          2001          2002          2002
                                                      ----          ----          ----          ----
                                                       HK$           HK$           HK$           US$
                                                     (dollars in thousands, except per share amounts)
<S>                                              <C>             <C>           <C>           <C>
Service Revenue (Note 4):
  Unaffiliated customers ....................      978,493       946,073       926,316       118,758
  Related parties (Note 12) .................       24,401        23,378        24,434         3,133
                                                ----------    ----------    ----------    ----------
                                                 1,002,894       969,451       950,750       121,891
                                                ----------    ----------    ----------    ----------
Operating expenses:
  Cost of services,
    excluding depreciation ..................       77,436        73,357        76,439         9,800
  Selling, general and administrative .......       61,531        70,861        81,315        10,425
  Depreciation ..............................      168,391       166,650       166,632        21,363
                                                ----------    ----------    ----------    ----------
Total operating expenses ....................      307,358       310,868       324,386        41,588
                                                ----------    ----------    ----------    ----------

Operating income ............................      695,536       658,583       626,364        80,303

Other income (expense):
  Interest income ...........................       39,043         6,725         6,423           823
  Interest expense ..........................      (37,054)           --            --            --
  Maintenance and other service income
    from affiliates (Note 12) ...............       10,774         9,116            --            --
  Other (expense) income (Note 10) ..........       (8,178)          488            39             5
                                                ----------    ----------    ----------    ----------
Income before equity in losses of affiliates,
  taxation and minority interest ............      700,121       674,912       632,826        81,131

Equity in losses of affiliates ..............      (43,928)      (41,349)       (9,075)       (1,163)
Income tax expense (Note 11) ................      (79,869)      (70,564)      (69,062)       (8,854)
Minority interest ...........................          (29)          (16)           --            --
                                                ----------    ----------    ----------    ----------
Net income ..................................      576,295       562,983       554,689        71,114
                                                ==========    ==========    ==========    ==========
Earnings per share:
  Basic .....................................         1.48          1.44          1.42          0.18
                                                ==========    ==========    ==========    ==========
  Diluted ...................................         1.47          1.44          1.42          0.18
                                                ==========    ==========    ==========    ==========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                               AT DECEMBER 31,
                                                                  --------------------------------------
                                                                       2001          2002          2002
                                                                       ----          ----          ----
                                                                        HK$           HK$           US$
                                                                            (dollars in thousands)
<S>                                                               <C>           <C>            <C>
ASSETS

Current assets:
  Cash and cash equivalents ..................................      136,428       406,228        52,081
  Accounts receivable (net of allowance for doubtful accounts:
    2001: HK$3,612; 2002: HK$15,012) .........................      101,015        74,430         9,542
  Other receivables ..........................................       25,488         1,335           171
  Prepaid in-orbit insurance .................................       45,891        14,301         1,833
  Other prepaid expenses and other current assets ............        3,351         5,903           757
                                                                 ----------    ----------    ----------

Total current assets .........................................      312,173       502,197        64,384

Property, plant and equipment:
  Satellite and tracking facilities (Note 8) .................    3,628,442     3,629,079       465,266
  Leasehold land .............................................       26,968        26,968         3,457
  Furniture, fixtures and fittings ...........................        9,066         9,151         1,173
  Office equipment ...........................................        5,420         5,637           723
  Motor vehicles .............................................        2,762         2,954           379
  Plant and machinery ........................................        1,690         1,690           217
  Accumulated depreciation ...................................   (1,954,849)   (2,121,191)     (271,947)
  Satellite and tracking facilities under construction .......    1,222,191     1,618,864       207,547
  Building under construction ................................          634        59,198         7,589
                                                                 ----------    ----------    ----------

Net property, plant and equipment (Note 5) ...................    2,942,324     3,232,350       414,404
Unbilled rental receivable (net of allowance for
  doubtful accounts: 2001: Nil; 2002: Nil) ...................      130,225       164,982        21,152
Investments in affiliates (Note 1) ...........................           --        17,521         2,246
Tax prepayment ...............................................           --        19,305         2,475
                                                                 ----------    ----------    ----------

TOTAL ........................................................    3,384,722     3,936,355       504,661
                                                                 ==========    ==========    ==========
</TABLE>



                                      F-4
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

                     CONSOLIDATED BALANCE SHEETS - CONTINUED

<TABLE>
<CAPTION>
                                                                           AT DECEMBER 31,
                                                              -----------------------------------
                                                                  2001        2002        2002
                                                                  ----        ----        ----
                                                                   HK$         HK$         US$
                                                               (dollars in thousands except share
                                                                       and par value amounts)
<S>                                                          <C>         <C>           <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Other payables and accrued expenses ....................       8,151      13,318       1,707
  Construction payable ...................................      13,050      20,585       2,639
  Deferred revenue .......................................     160,050     158,937      20,377
  Customer deposits ......................................       2,171       1,872         240
  Dividend payable .......................................         121         121          16
  Taxes payable ..........................................      41,782      68,346       8,762
                                                             ---------   ---------   ---------

     Total current liabilities ...........................     225,325     263,179      33,741

Long-term liabilities:
  Deferred revenue .......................................     113,101     140,019      17,951
  Deferred taxation (Note 11) ............................     175,724     185,949      23,840
                                                             ---------   ---------   ---------

Total long-term liabilities ..............................     288,825     325,968      41,791

Commitments and contingencies (Note 6)

Minority interest ........................................         492         492          63

Shareholders' equity:
  Common shares (HK$0.10 par value; 550,000,000 shares
    authorized; 390,265,500 shares issued and outstanding)      39,027      39,027       5,003
  Additional paid-in capital .............................       4,614       4,614         592
  Retained earnings ......................................   2,826,439   3,303,075     423,471
                                                             ---------   ---------   ---------

Total shareholders' equity ...............................   2,870,080   3,346,716     429,066
                                                             ---------   ---------   ---------

TOTAL ....................................................   3,384,722   3,936,355     504,661
                                                             =========   =========   =========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                           ADDITIONAL
                                                 COMMON      PAID-IN     RETAINED
                                                 SHARES      CAPITAL     EARNINGS         TOTAL
                                                 ------      -------     --------         -----
                                                   HK$          HK$         HK$            HK$
                                                             (dollars in thousands)

<S>                                              <C>           <C>      <C>           <C>
At January 1, 2000 .......................       39,008        1,303    1,843,266     1,883,577
Shares issued on exercise of share options           19        3,311           --         3,330
Final dividend for 1999 ..................           --           --      (54,611)      (54,611)
Interim dividend for 2000 ................           --           --      (23,441)      (23,441)
Net income for the year ..................           --           --      576,295       576,295
                                             ----------   ----------   ----------    ----------

At December 31, 2000 and January 1, 2001 .       39,027        4,614    2,341,509     2,385,150
Final dividend for 2000 ..................           --           --      (54,637)      (54,637)
Interim dividend for 2001 ................           --           --      (23,416)      (23,416)
Net income for the year ..................           --           --      562,983       562,983
                                             ----------   ----------   ----------    ----------

At December 31, 2001 and January 1, 2002 .       39,027        4,614    2,826,439     2,870,080
Final dividend for 2001 ..................           --           --      (54,637)      (54,637)
Interim dividend for 2002 ................           --           --      (23,416)      (23,416)
Net income for the year ..................           --           --      554,689       554,689
                                             ----------   ----------   ----------    ----------

At December 31, 2002 .....................       39,027        4,614    3,303,075     3,346,716
                                             ==========   ==========   ==========    ==========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                      ---------------------------------------------
                                                          2000        2001        2002        2002
                                                          ----        ----        ----        ----
                                                           HK$         HK$         HK$         US$
                                                                   (dollars in thousands)
<S>                                                    <C>         <C>         <C>          <C>
Cash flows from operating activities
Net income ........................................    576,295     562,983     554,689      71,114
Adjustments to reconcile net income
  to net cash provided by operating activities:
  Interest income .................................    (39,043)     (6,725)     (6,423)       (823)
  Interest expense on bank loans ..................     37,054          --          --          --
  Depreciation ....................................    168,391     166,650     166,632      21,363
  Amortization of deferred loan origination costs .      7,918          --          --          --
  Amortization of goodwill arising on acquisition
    of associates .................................         --       6,132       4,604         591
  Impairment loss of goodwill .....................         --       6,132          --          --
  Deferred taxes ..................................     30,555      46,734      10,225       1,311
  Minority interest ...............................         29          16          --          --
  Gain on disposal of property, plant and equipment       (130)        (98)        (39)         (5)
  (Reversal of) provision for doubtful debts ......     (6,066)         --      11,708       1,501
  Equity in losses of affiliates ..................     43,928      41,349       9,075       1,163
Changes in operating assets and liabilities:
  Accounts receivable .............................    (17,363)    (24,940)     14,877       1,907
  Other receivables ...............................     (6,151)    (19,258)     23,746       3,044
  Prepaid expenses and other current assets .......    (10,673)    (11,850)     29,038       3,723
  Unbilled lease rental receivable ................    (45,216)    (31,188)    (34,757)     (4,456)
  Accounts payable and accrued expenses ...........     24,783     (21,450)      5,145         659
  Deferred revenue ................................    (65,702)     21,215      14,105       1,809
  Customer deposits ...............................    (14,021)     (2,951)       (299)        (38)
  Tax payable .....................................     40,600     (11,969)      7,259         930
                                                      --------    --------    --------    --------

Net cash provided by operating activities .........    725,188     720,782     809,585     103,793
                                                      --------    --------    --------    --------

Cash flows from investing activities
Interest received .................................     43,423       6,789       6,291         807
Purchase of property, plant and equipment .........   (463,409)   (606,957)   (448,564)    (57,508)
Purchase of equipment and software for
  the Gen II platform .............................         --     (15,210)         --          --
Proceeds from disposal of property, plant and
  equipment .......................................        130         100          41           5
Acquisition of an investment in an affiliate ......         --          --     (19,500)     (2,500)
                                                      --------    --------    --------    --------

Net cash used in investing activities .............   (419,856)   (615,278)   (461,732)    (59,196)
                                                      --------    --------    --------    --------
</TABLE>



                                      F-7
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                    ---------------------------------------------
                                                        2000        2001        2002        2002
                                                        ----        ----        ----        ----
                                                         HK$         HK$         HK$         US$
                                                                 (dollars in thousands)
<S>                                                  <C>         <C>         <C>         <C>
Cash flows from financing activities
Interest paid on bank loans .....................    (37,396)         --          --          --
Repayment of bank loans .........................   (873,600)         --          --          --
Dividends paid ..................................    (78,052)    (78,053)    (78,053)    (10,007)
Proceeds from issuance of shares ................      3,330          --          --          --
                                                    --------    --------    --------    --------

Net cash used in financing activities ...........   (985,718)    (78,053)    (78,053)    (10,007)
                                                    --------    --------    --------    --------

(Decrease) increase in cash and cash equivalents    (680,386)     27,451     269,800      34,590

Cash and cash equivalents
At beginning of year ............................    789,363     108,977     136,428      17,491
                                                    --------    --------    --------    --------

At end of year ..................................    108,977     136,428     406,228      52,081
                                                    ========    ========    ========    ========

Supplemental disclosure of cash flow information:
  Income taxes paid .............................      8,714      35,798      51,578       6,613
                                                    ========    ========    ========    ========


Non-cash investing activities:
  Investment in affiliate by way of providing
    satellite transponder capacity and
    maintenance and other support services ......     97,500          --      11,700       1,500
                                                    ========    ========    ========    ========
</TABLE>


          See accompanying notes to consolidated financial statements.


                                      F-8
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (dollars in thousands)


1.       GENERAL

         Asia Satellite Telecommunications Holdings Limited (the "Company") is
         incorporated in Bermuda as an exempted company under the Companies Act
         of 1981 of Bermuda (as amended). The shares of the Company are listed
         on The New York Stock Exchange and The Stock Exchange of Hong Kong
         Limited.

         The Company, through its wholly-owned indirect subsidiary, Asia
         Satellite Telecommunications Company Limited ("AsiaSat"), is a provider
         of satellite transponder capacity. AsiaSat currently owns and operates
         two satellites - AsiaSat 2, and AsiaSat 3S which commenced commercial
         operations in January 1996 and May 1999, respectively.

         Details of subsidiary companies and a controlled partnership at
         December 31, 2002 are as follows:

<TABLE>
<CAPTION>
                                         PLACE OF
                                       INCORPORATION/                            PERCENTAGE OF
                                       REGISTRATION/                            NOMINAL VALUE OF
                  NAME OF             PRINCIPAL PLACE         CLASS OF         ISSUED CAPITAL HELD
         SUBSIDIARY/PARTNERSHIP        OF OPERATION          SHARES HELD         BY THE COMPANY         PRINCIPAL ACTIVITY
         ----------------------        ------------          -----------         --------------         ------------------
                                                                               DIRECTLY   INDIRECTLY
                                                                               --------   ----------
         <S>                          <C>                  <C>                   <C>         <C>        <C>
         AsiaSat BVI Limited          British Virgin       Ordinary shares       100%         --        Investment holding
                                          Islands

         Asia Satellite                  Hong Kong         Ordinary shares        --         100%       Provision of satellite
           Telecommunications                                                                             transponder
           Company Limited                                                                                capacity

         Hanbury International        British Virgin       Ordinary shares        --         100%       Inactive
           Limited                        Islands

         SAT Limited                    Republic of        Ordinary shares       100%         --        Inactive
                                         Mauritius

         Sornico Limited                 Hong Kong         Ordinary shares        --         100%       Investment holding

         The First Asian Satellite       Hong Kong               N/A              --          1%        Inactive
           Leasing Limited
           Partnership
           ("the Partnership")
</TABLE>

         The Company continues to control the Partnership as it is the general
         partner and accordingly continues to consolidate it.


                                      F-9
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (dollars in thousands)


1.       GENERAL - CONTINUED

         AsiaSat had a 36.5% equity interest in SpeedCast Holdings Limited
         ("SHL") as of December 31, 2001. AsiaSat increased its equity interest
         in SHL to 45.3% in 2002. The purchase consideration of the 36.5% equity
         interest was HK$97,500 while that of the additional 8.8% equity
         interest acquired in 2002 was HK$31,200. The entire HK$97,500 and a
         portion of HK$31,200 (amounting to HK$11,700) were paid in the form of
         satellite transponder capacity and maintenance and other support
         services to be provided under agreements (valued using prices with
         third parties with comparable terms and conditions). AsiaSat recorded
         goodwill from such acquisitions of HK$12,264 and HK$13,000,
         respectively, for the excess of the purchase consideration over the
         fair value of the SHL net assets acquired. SHL consolidates the
         accounts of SpeedCast Limited ("Speedcast"), a wholly owned subsidiary,
         and the Company's investment in SHL is accounted for using the equity
         method in the accompanying financial statements.

         The details of the Company's affiliates as at December 31, 2001 and
         2002 are as follows:

<TABLE>
<CAPTION>
                                        PLACE OF                                PERCENTAGE OF
                                     INCORPORATION/                             NOMINAL VALUE
                                      REGISTRATION/                               OF ISSUED
                                     PRINCIPAL PLACE         CLASS OF        CAPITAL INDIRECTLY
         NAME OF ENTITY               OF OPERATION          SHARE HELD        HELD THE COMPANY       PRINCIPAL ACTIVITY
         --------------               ------------          ----------        ----------------       ------------------
         <S>                         <C>                     <C>                    <C>              <C>
         SpeedCast Holdings          Cayman Islands          Ordinary               45.3%            Investment holding
           Limited

         SpeedCast Limited              Hong Kong            Ordinary               45.3%            Provision of Internet
                                                                                                       related services
                                                                                                       through satellite
                                                                                                       transponders
</TABLE>


2.       ADOPTION OF STATEMENTS OF STANDARD ACCOUNTING PRACTICE/CHANGES IN
         ACCOUNTING POLICIES

         During 2002, the Company has adopted a number of new and revised
         Statements of Standard Accounting Practice ("SSAPs") issued by the Hong
         Kong Society of Accountants. The adoption of these standards has
         resulted in a change in the format of the cash flows statement and the
         inclusion of a statement of changes in shareholders' equity, and had no
         material effect on the results for the current or prior accounting
         periods. Accordingly, no prior period adjustment has been required.
         Comparative amounts for the prior years have been restated in order to
         achieve a consistent presentation.


                                      F-10
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


         The accompanying financial statements have been prepared in conformity
         with accounting principles generally accepted in Hong Kong ("HK GAAP")
         which differ in certain material respects from accounting principles
         generally accepted in the United States of America ("US GAAP") - see
         Note 15.

         PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
         incorporate the financial statements of the Company and its
         majority-owned subsidiaries and a limited partnership, which it
         controls. All significant intragroup transactions and balances have
         been eliminated on consolidation. Affiliated companies (20% to 50%
         owned companies), in which the Company exercises significant influence,
         are accounted for using the equity method. The Company's share of
         losses of these companies is included in the accompanying consolidated
         statement of operations. The Company's share of losses amounted to
         HK$43,928, HK$41,349 and HK$9,075 in 2000, 2001 and 2002, respectively.

         GOODWILL - Goodwill arising on consolidation represents the excess of
         the cost of acquisition over the Company's interest in the fair value
         of the identifiable assets and liabilities of associates at the date of
         acquisition.

         Goodwill arising on acquisitions is capitalised within the carrying
         amount of the associate and is charged to the statement of operations
         on a straight line basis over its useful economic life (not exceeding
         two years) or at such time as it is determined to be impaired.

         On disposal of an associate, the attributable amount of unamortised
         goodwill is included in the determination of the profit or loss on
         disposal.

         The amortization of goodwill amounted to HK$6,132 and HK$4,604 for 2001
         and 2002, respectively. No goodwill has been amortized in 2000 because
         the related acquisition occurred close to December 31, 2000.

         REVENUE - Revenue from transponder utilization agreements (including
         those agreements that contain schedule rent increases) is recognized on
         a straight line basis over the period of the agreements. The excess
         revenue recognized over rentals received and receivable from customers
         in accordance with the contract terms is shown as unbilled rental
         receivable.

         Revenue under transponder purchase agreements is recognised on a
         straight line basis over estimated useful lives of the transponders.

         Rentals under transponder utilization agreements are generally billed
         quarterly in advance. Such amounts received in advance and amounts
         received under transponder purchase agreements in excess of amounts
         recognized as revenue are recorded as deferred revenue. Deferred
         revenue which will be recognized in the following year is classified
         under current liabilities and amounts which will be recognized after
         one year are classified as non-current.

         Interest income from bank deposits is accrued on a time basis, by
         reference to the principal outstanding and at the interest rate
         applicable.


                                      F-11
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

         FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION OF FINANCIAL STATEMENTS -
         All transactions in currencies other than the US dollars during the
         year are translated into US dollars at the exchange rates prevailing on
         the respective transaction dates. Monetary assets and liabilities
         existing at the balance sheet date denominated in currencies other than
         the US dollars are translated into US dollars at the exchange rates
         existing on that date. The resulting exchange differences are recorded
         in the consolidated statement of operations.

         The Company's financial statements are prepared using Hong Kong (the
         "HK") dollars. Assets and liabilities at the balance sheet date
         measured in US dollars are translated into HK dollars at the rate of
         exchange at the balance sheet date. Income and expenses are translated
         at the average exchange rates for the period. Any exchange rate
         differences arising from the translation into HK dollars is included in
         shareholders' equity. The rate of exchange between the US and HK
         dollars approximated HK$7.8 to US$1 for all periods presented.

         GAINS AND LOSSES ON SALE AND LEASEBACK TRANSACTIONS - Gains and losses
         arising in connection with sale and leaseback transactions that are
         accounted for as finance leases are deferred and amortized on a
         straight line basis over the shorter of the lease term and the expected
         useful lives of the assets. Where such assets are subsequently
         re-acquired by the Company, the relevant gains continue to be deferred
         and amortized on a straight line basis over the shorter of the lease
         term and the expected useful lives of the assets.

         PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is stated
         at cost. AsiaSat 2 and AsiaSat 3S are depreciated on a straight line
         basis over their estimated useful lives of 13 and 16 years,
         respectively. The transponders that are subject of transponder purchase
         agreements are depreciated on a straight line basis over the estimated
         useful life of the related satellite.

         Assets in the course of development for production, rental or
         administrative purposes or for purposes not yet determined, are carried
         at cost, less any identified impairment loss. Depreciation of these
         assets, on the same basis as other property assets, commences when the
         assets are ready for their intended use.

         Depreciation is provided to write off the cost of property, plant and
         equipment over the estimated useful lives on a straight line basis as
         follows:

         Leasehold land                               Over the term of the lease
         Satellite tracking facilities                5 years
         Furniture, fixtures and fittings             3 - 5 years
         Office equipment                             3 - 4 years
         Motor vehicles                               4 years
         Plant and machinery                          5 years

         The gain or loss arising from disposal or retirement of an asset is
         determined as the difference between the sales proceeds and the
         carrying amount of the asset and is recognised in the income statements
         of operations.


                                      F-12
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

         CAPITALIZATION OF BORROWING COSTS - Borrowing costs directly
         attributable to the acquisition, construction or production of
         qualifying assets, are capitalized as part of the cost of those assets.
         Capitalization of such borrowing costs ceases when the assets are
         substantially ready for their intended use or sale. All other borrowing
         costs are recognised as an expense in the period in which they are
         incurred. Borrowing costs capitalized in satellite and tracking
         facilities under construction of AsisSat 4 amounted to HK$32,191,
         HK$8,422 and HK$8,337 in 2000, 2001 and 2002, respectively.

         IMPAIRMENT - At each balance sheet date, the Company reviews the
         carrying amounts of its tangible and intangible 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. Impairment losses are recognised as
         an expense immediately.

         Where an impairment loss is subsequently reversed, the carrying amount
         of the asset is increased to the revised estimate of its recoverable
         amount, but so that the increased carrying amount does not exceed the
         carrying amount that would have been determined had no impairment loss
         been recognised for the asset in prior years. A reversal of an
         impairment loss is recognised as income immediately.

         An impairment loss on goodwill arising from the acquisition of an
         affiliate of HK$6,132 was recognized in 2001 (nil in 2000 and 2002).

         CUSTOMER DEPOSITS - Customer deposits represent deposits received in
         connection with transponder utilization agreements and transponder
         purchase agreements. The deposits are applied to the initial payments
         due under the transponder utilization agreements.

         CONCENTRATION OF CREDIT RISK - Financial instruments which potentially
         subject the Company to concentrations of credit risks consist
         principally of cash and cash equivalents and trade accounts receivable.
         The Company believes that no significant credit risk exists relative to
         cash and cash equivalents as substantially all of these financial
         instruments are held in the form of term deposits at a major bank.

         The Company performs on-going credit evaluations of its customers. The
         Company believes that no significant credit risk exists for these
         assets as credit losses, when realized, is expected to be within the
         range of management's expectations.

         INCOME TAXES - The charge for taxation is based on the results for the
         year as adjusted for items which are non-assessable or disallowed.
         Temporary differences arise from the recognition for tax purposes of
         certain items of income and expense in a different accounting period
         from that in which they are recognized in the financial statements. The
         tax effect of temporary differences, computed under the liability
         method, is recognized as deferred taxation in the financial statements
         to the extent that it is probable that a liability or an asset will be
         realized in the foreseeable future.


                                      F-13
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                (dollars in thousands, except per share amounts)


3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

         OPERATING LEASES - Rentals payable under operating leases are charged
         to the statement of operations on a straight line basis over the
         relevant lease terms.

         RETIREMENT BENEFIT COSTS - Payments to the defined contribution pension
         scheme and Mandatory Provident Fund Scheme are charged as expense as
         incurred.

         CASH AND CASH EQUIVALENTS - Cash and cash equivalents are defined as
         short-term, highly liquid investments which are readily convertible
         into known amounts of cash and which are subject to an insignificant
         risk of changes in value.

         EARNINGS PER SHARE - The calculation of the basic and diluted earnings
         per share is based on the following data:

<TABLE>
<CAPTION>
                                                                        2000       2001      2002
                                                                        ----       ----      ----
                                                                         HK$        HK$       HK$
         <S>                                                         <C>        <C>       <C>
         Earnings for the purpose of calculating basic
           and diluted earnings per share:

         Net income...............................................   576,295    562,983   554,689
                                                                     =======    =======   =======

         Weighted average number of shares for the
           purpose of calculating basic earnings per share
           (in thousands).........................................   390,241    390,266   390,266

         Effect of potentially dilutive shares:
           Share options (in thousands)...........................       914         --        --
                                                                     -------    -------   -------

         Weighted average number of shares for the
           purpose of calculating diluted earnings per share
           (in thousands).........................................   391,155    390,266   390,266
                                                                     =======    =======   =======
</TABLE>


         As of December 31, 2000, 2001 and 2002 the Company had share options
         outstanding of nil, 3,556,500 and 7,149,500, which could potentially
         dilute basic earnings per share in the future, but were excluded in the
         computation of diluted earnings per share in such periods, as their
         effect would have been antidilutive.

         USE OF ESTIMATES - The preparation of financial statements in
         conformity with generally accepted accounting principles requires the
         use of estimates. Actual results could differ from those estimates.

         CONVENIENCE TRANSLATION INTO US DOLLARS - The consolidated financial
         statements of the Company are expressed in HK dollars. The translation
         of HK dollar amounts into US dollars are for convenience only and have
         been made at a rate of HK$7.8 to US$1, the approximate rate of exchange
         at December 31, 2002. Such translations should not be construed as
         representations that the HK dollar amounts could be converted into US
         dollars at that rate or any other rate.


                                      F-14
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


4.       SEGMENTS

         The Company's primary reporting format for segment reporting purposes
         under SSAP 26, SEGMENT REPORTING, is the geographical basis. However,
         the Company's operating assets consist primarily of its satellites
         which are used, or are intended for use, for transmission to multiple
         geographical areas and therefore cannot be allocated between
         geographical segments. Accordingly, no geographical analysis of assets
         and liabilities has been presented.

         The business and geographical segments of the operations of the Group
         are as follows:

         Geographical segments

         The following table provides an analysis of the Company's sales and
         result by geographical market:

         Year ended December 31, 2000

<TABLE>
<CAPTION>
                                                  GREATER
                                                   CHINA,    UNITED    BRITISH
                                                 INCLUDING  STATES OF   VIRGIN                UNITED
                                      HONG KONG   TAIWAN     AMERICA    ISLANDS   SINGAPORE   KINGDOM    OTHERS  CONSOLIDATED
                                      ---------   ------     -------    -------   ---------   -------    ------  ------------
                                         HK$        HK$        HK$        HK$        HK$        HK$        HK$        HK$
         <S>                            <C>        <C>         <C>        <C>       <C>        <C>       <C>      <C>
         SERVICE REVENUE
         External sales.............    342,676    244,499     83,434     65,815    33,591     14,259    218,620  1,002,894
                                        -------    -------    -------    -------   -------    -------    -------   --------
         RESULT
         Segment result.............    237,656    169,567     57,864     45,645    23,296      9,889    151,619    695,536
                                        -------    -------    -------    -------   -------    -------    -------
         Interest income............                                                                                 39,043
         Other income...............                                                                                 10,904
         Finance costs..............                                                                                (45,362)
                                                                                                                   --------
         Income  before equity in losses
           of affiliates, taxation and
           minority interest........                                                                                700,121
         Equity in losses of affiliates                                                                             (43,928)
         Income tax expense.........                                                                                (79,869)
         Minority interest..........                                                                                    (29)
                                                                                                                   --------
         Net income.................                                                                                576,295
                                                                                                                   ========
</TABLE>


         OTHER INFORMATION
<TABLE>
<CAPTION>
                                                  GREATER
                                                   CHINA,     UNITED    BRITISH
                                                 INCLUDING  STATES OF   VIRGIN                UNITED
                                      HONG KONG   TAIWAN     AMERICA    ISLANDS   SINGAPORE   KINGDOM    OTHERS  CONSOLIDATED
                                      ---------   ------     -------    -------   ---------   -------    ------  ------------
                                         HK$        HK$        HK$        HK$        HK$        HK$        HK$        HK$
         <S>                            <C>        <C>         <C>        <C>       <C>         <C>      <C>        <C>
         Capital additions..........    163,628    116,748     39,840     31,427    16,040      6,809    104,391    478,883
         Depreciation and amortisation   57,537     41,053     14,009     11,051     5,640      2,394     36,707    168,391
         Provision for doubtful debts     1,234        881        301        237       121         51        787      3,612
</TABLE>


                                      F-15
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


4.       SEGMENTS - CONTINUED

         Year ended December 31, 2001

<TABLE>
<CAPTION>
                                                  GREATER
                                                   CHINA,     UNITED    BRITISH
                                                 INCLUDING  STATES OF   VIRGIN                UNITED
                                      HONG KONG   TAIWAN     AMERICA    ISLANDS   SINGAPORE   KINGDOM    OTHERS  CONSOLIDATED
                                      ---------   ------     -------    -------   ---------   -------    ------  ------------
                                         HK$        HK$        HK$        HK$        HK$        HK$        HK$        HK$
         <S>                            <C>        <C>         <C>        <C>       <C>        <C>       <C>        <C>
         SERVICE REVENUE
         External sales.............    351,037    240,279     75,759     56,293    31,275     23,987    190,821    969,451
                                        -------    -------    -------    -------   -------    -------    -------    -------
         RESULT
         Segment result.............    238,472    163,230     51,466     38,242    21,246     16,295    129,632    658,583
                                        -------    -------    -------    -------   -------    -------    -------
         Interest income............                                                                                  6,725
         Other income...............                                                                                  9,604
                                                                                                                    -------
         Income  before equity in losses
           of affiliates, taxation and
           minority interest........                                                                                674,912
         Equity in losses of affiliates                                                                             (41,349)
         Income tax expense.........                                                                                (70,564)
         Minority interest..........                                                                                    (16)
                                                                                                                    -------
         Net income.................                                                                                562,983
                                                                                                                    =======
</TABLE>


         OTHER INFORMATION
<TABLE>
<CAPTION>
                                                  GREATER
                                                   CHINA,     UNITED    BRITISH
                                                 INCLUDING  STATES OF   VIRGIN                UNITED
                                      HONG KONG   TAIWAN     AMERICA    ISLANDS   SINGAPORE   KINGDOM    OTHERS  CONSOLIDATED
                                      ---------   ------     -------    -------   ---------   -------    ------  ------------
                                         HK$        HK$        HK$        HK$        HK$        HK$        HK$        HK$
         <S>                            <C>        <C>         <C>        <C>       <C>        <C>       <C>        <C>
         Capital additions..........    215,252    147,337     46,455     34,518    19,177     14,709    117,009    594,457
         Depreciation and amortisation   62,564     42,824     13,502     10,033     5,574      4,275     34,010    172,782
         Impairment loss recognised in
           respect of investments in
           associates...............      2,220      1,520        479        356       198        152      1,207      6,132
</TABLE>


                                      F-16
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


4.       SEGMENTS - CONTINUED

         Year ended December 31, 2002

<TABLE>
<CAPTION>
                                                  GREATER
                                                   CHINA,     UNITED    BRITISH
                                                 INCLUDING  STATES OF   VIRGIN                UNITED
                                      HONG KONG   TAIWAN     AMERICA    ISLANDS   SINGAPORE   KINGDOM    OTHERS  CONSOLIDATED
                                      ---------   ------     -------    -------   ---------   -------    ------  ------------
                                         HK$        HK$        HK$        HK$        HK$        HK$        HK$        HK$
         <S>                            <C>        <C>         <C>        <C>       <C>        <C>       <C>        <C>
         SERVICE REVENUE
         External sales.............    341,224    212,103     73,282     40,351    20,385     43,432    219,973    950,750
                                        -------    -------    -------    -------   -------    -------    -------    -------
         RESULT
         Segment result.............    224,802    139,736     48,279     26,584    13,430     28,613    144,920    626,364
                                        -------    -------    -------    -------   -------    -------    -------
         Interest income............                                                                                  6,423
         Other income...............                                                                                     39
                                                                                                                    -------
         Income  before equity in losses
           of affiliates, taxation and
           minority interest........                                                                                632,826
         Equity in losses of affiliates                                                                              (9,075)
         Income tax expense.........                                                                                (69,062)
                                                                                                                    -------
         Net income.................                                                                                554,689
                                                                                                                    =======
</TABLE>


         OTHER INFORMATION
<TABLE>
<CAPTION>
                                                  GREATER
                                                   CHINA,     UNITED    BRITISH
                                                 INCLUDING  STATES OF   VIRGIN                UNITED
                                      HONG KONG   TAIWAN     AMERICA    ISLANDS   SINGAPORE   KINGDOM    OTHERS  CONSOLIDATED
                                      ---------   ------     -------    -------   ---------   -------    ------  ------------
                                         HK$        HK$        HK$        HK$        HK$        HK$        HK$        HK$
         <S>                            <C>        <C>         <C>        <C>        <C>       <C>       <C>        <C>
         Capital additions..........    163,895    101,876     35,199     19,381     9,791     20,861    105,657    456,660
         Depreciation and amortisation   61,457     38,201     13,199      7,267     3,671      7,822     39,619    171,236
         Provision for doubtful debts     4,202      2,612        902        497       251        535      2,709     11,708
</TABLE>

         Business segments:
                                                       2000       2001     2002
                                                       ----       ----     ----
                                                        HK$        HK$      HK$

         Income from provision of satellite
           transponder capacity                       956,049   956,695  936,114
         Sales of satellite transponder capacity       46,845    12,756   14,636
                                                    ---------   -------  -------

                                                    1,002,894   969,451  950,750
                                                    =========   =======  =======


         An analysis of carrying amount of segment assets and additions to
         property, plant and equipment and intangible assets, analysed by
         business segments is not presented as they cannot be allocated between
         business segments as the intention for use was not determined at time
         of acquisitions.


                                      F-17
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


5.       PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                             SATELLITES AND TRACKING FACILITIES
                             ----------------------------------
                                                                 BUILDINGS  FURNITURE,
                                   IN        UNDER    LEASEHOLD    UNDER    FIXTURES AND  OFFICE      MOTOR   PLANT AND
                               OPERATION CONSTRUCTION    LAND   DEVELOPMENT   FITTINGS   EQUIPMENT  VEHICLES  MACHINERY      TOTAL
                               --------- ------------    ----   -----------  ----------- ---------  --------  ---------      -----
                                  HK$         HK$         HK$       HK$          HK$        HK$        HK$       HK$          HK$
         <S>                   <C>        <C>          <C>        <C>          <C>        <C>        <C>       <C>       <C>
         COST
         At January 1, 2002..  3,628,442  1,222,191    26,968        634       9,066      5,420      2,762     1,690     4,897,173
         Additions ..........        637    396,673        --     58,564          86        258        442        --       456,660
         Disposals...........         --         --        --         --          (1)       (41)      (250)       --          (292)
                               ---------  ---------    ------     ------      ------      -----      -----     -----     ---------

         At December 31, 2002  3,629,079  1,618,864    26,968     59,198       9,151      5,637      2,954     1,690     5,353,541
                               ---------  ---------    ------     ------      ------      -----      -----     -----     ---------

         DEPRECIATION
         At January 1, 2002..  1,938,971         --       437         --       8,105      4,297      1,571     1,468     1,954,849
         Provided for the year   164,108         --       583         --         572        643        664        62       166,632
         Eliminated on disposals      --         --        --         --          (1)       (39)      (250)       --          (290)
                               ---------  ---------    ------     ------      ------      -----      -----     -----     ---------

         At December 31, 2002  2,103,079         --     1,020         --       8,676      4,901      1,985     1,530     2,121,191
                               ---------  ---------    ------     ------      ------      -----      -----     -----     ---------
         NET BOOK VALUES
         At December 31, 2002  1,526,000  1,618,864    25,948     59,198         475        736        969       160     3,232,350
                               =========  =========    ======     ======      ======      =====      =====     =====     =========

         At December 31, 2001  1,689,471 1,222,191     26,531        634         961      1,123      1,191       222     2,942,324
                               =========  =========    ======     ======      ======      =====      =====     =====     =========
</TABLE>


         The leasehold land is situated in Hong Kong and held under medium term
         lease.

         The net book value of the satellite and tracking facilities amounting
         to HK$1,674,756 and HK$1,024,556, are held for use under transponder
         utilisation agreements at December 31, 2001 and 2002, respectively.

         Cost of property, plant and equipment includes borrowing cost
         capitalised during construction of satellites and tracking facilities
         of approximately HK$48,950 (2001: HK$40,613).



                                      F-18
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


6.       COMMITMENTS AND CONTINGENCIES

         Commitments:

         (a)      AsiaSat leases premises under non-cancelable operating leases.
                  Future minimum lease payments at December 31, 2002 are
                  HK$5,689, HK$4,417 and HK$1,247 in 2003, 2004 and 2005,
                  respectively. Rental expenses under operating leases were
                  HK$4,520, HK$4,525 and HK$4,205 in 2000, 2001 and 2002,
                  respectively.

         (b)      At December 31, 2002, AsiaSat has commitments for the
                  construction, launch and insurance of AsiaSat 4 and other
                  assets totalling approximately HK$285,853.

         Contingencies:

         (c)      The Indian tax authorities had assessed the Company (including
                  interest as of March 21, 2001) for income tax of approximately
                  HK$21 million (US$2.7 million) for the assessment year
                  1997-1998 and approximately HK$23 million (US$2.9 million) for
                  the assessment year 1998-1999. No assessment has yet been made
                  for the 1999-2000, 2000-2001, 2001-2002 or 2002-2003
                  assessment years.

                  The Indian tax authorities had initiated tax recovery measures
                  against the Company. The Company had filed appeals for each of
                  the assessment years 1997-1998 and 1998-1999. In order to
                  expedite the legal proceeding in India and to obtain stay of
                  the recovery measures, the Company had made a tax payment
                  totalling approximately HK$19 million (US$2.4 million) to the
                  Government of India.

                  The Income Tax Appellate Tribunal ("the Tribunal") in the
                  appeal filed for the assessment year 1997-1998 held that the
                  Company is liable for Indian income tax under certain
                  circumstances. The Tribunal directed Indian tax authorities to
                  make a fresh computation of the taxable income. Pursuant to
                  the order of the Tribunal, the tax authorities have prepared
                  revised computation of tax due on May 30, 2003. The revised
                  assessment is approximately HK$19 million (US$2.4 million).
                  The Company does not believe that it is liable for the Indian
                  income tax as held by the Tribunal and has filed an appeal
                  against the Tribunal's decision. The tax authorities have also
                  filed an appeal against the Tribunal's decision.

                  In addition, based on the general principles set forth by the
                  Tribunal, the amount of income taxable in India depends on the
                  payments made by the Company's customers to the Company for
                  the purposes of those customers carrying on business in India
                  or earning income from any source in India. As such
                  information is proprietary in nature and has not been provided
                  by the Company's customers, the Company cannot reasonably
                  estimate the taxable income. Furthermore, the Company believes
                  it has a reasonable likelihood of success with respect to its
                  appeal. Accordingly, no provision has been recognized for
                  Indian income tax in these financial statements.


                                      F-19
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except exercise price)

6.       COMMITMENTS AND CONTINGENCIES - continued

         Contingencies: - continued

         (d)      Pursuant to the telemetry, tracking, control and monitoring
                  license granted by the Chief Executive in Council of Hong Kong
                  Special Administrative Region under the Telecommunication
                  Ordinance (Chapter 106), the Company was granted a
                  broadcasting satellite service ("BSS") licence (the "Licence")
                  on June 27, 2000 to maintain and operate a payload of four BSS
                  channels onboard AsiaSat 4. AsiaSat, as the Licensee, has
                  provided a performance bond of HK$5 million in favour of The
                  Government of The Hong Kong Special Administrative Region as a
                  condition of the grant of the Licence.

7.       SHARE OPTION SCHEME

         SCHEME ADOPTED ON JUNE 3, 1996 ("1996 SCHEME")

         The Board of Directors of the Company may at their discretion grant
         options to all permanent, full-time employees of the Company and its
         subsidiaries, to subscribe for shares in the Company. The primary
         purpose of the 1996 Scheme was to provide incentives to eligible
         employees.

         The total number of shares in respect of which options may be granted
         under the 1996 Scheme (including options already exercised) was not
         permitted to exceed 10% of the issued share capital of the Company at
         any point in time. The maximum number of share options issued to any
         employee shall not exceed four times the annual basic salary (excluding
         bonuses and allowances) of that employee.

         Options granted must be accepted within 28 days of the date of grant
         upon payment of HK$1 per each grant of share options. An option at any
         date of offer may be exercisable up to 50% on or after the third
         anniversary of the date of grant, up to 75% on or after the fourth
         anniversary and fully on or after the fifth anniversary but before the
         tenth anniversary unless the Board of Directors specifies other
         periods. The exercise price was determined by the Board of Directors,
         and was based on the average closing price of the shares for the five
         trading days immediately preceding the date of grant.

         The 1996 Scheme was terminated on January 25, 2002.


                                      F-20
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except exercise price)


7.       SHARE OPTION SCHEME - CONTINUED

         SCHEME ADOPTED ON JANUARY 25, 2002 ("2002 SCHEME")

         A new share option scheme (the "2002 Scheme") was adopted pursuant to a
         resolution passed on January 25, 2002 for the primary purpose of
         attracting and retaining the best personnel for the development of the
         Company's businesses, and providing incentives to employees, directors,
         consultants, agents, representatives and advisors, and promoting the
         long term financial success of the Company. The 2002 Scheme will expire
         on January 24, 2012.

         Under the 2002 Scheme, the Board of Directors of the Company may at
         their discretion grant options to the employees including directors of
         the Company or any company that directly, or indirectly through one or
         more intermediaries, controls or is controlled by, or is under common
         control with, the Company, to subscribe for shares in the Company.
         Options granted to a director, chief executive or substantial
         shareholder of the Company or any of their respective associates must
         be approved by the independent non-executive directors of the Company
         (excluding any independent non-executive director who is also the
         grantee).


         The total number of shares in respect of which options may be granted
         under the 2002 Scheme and any other schemes is not permitted to exceed
         30% of the issued share capital of the Company from time to time. In
         addition, the total number of shares in respect of which options may be
         granted under the 2002 Scheme and any other schemes (if any) must not,
         in aggregate, exceed 10% of the issued share capital of the Company at
         the adoption date of the 2002 Scheme, being 39,026,550 shares, without
         prior approval from the Company's shareholders.

         The number of shares in respect of which options may be granted to any
         individual in any one year is not permitted to exceed 1% of the shares
         of the Company in issue, without prior approval from the Company's
         shareholders. Options granted to a substantial shareholder, or an
         independent non-executive director of the Company, or any of their
         respective associates under the 2002 Scheme, and any other schemes in
         any one year in excess of 0.1% of the Company's issued share capital or
         with a value in excess of HK$5 million must be approved in advance by
         the Company's shareholders.

         Options granted must be accepted within 28 days from the date of grant
         upon payment of HK$1 per each grant of share options. The exercise
         period of the share options granted under the 2002 Scheme shall be
         determined by the Board of Directors when such options are granted,
         provided that such period shall not end later than 10 years from the
         date of grant. The exercise price is determined by the Board of
         Directors, and will not be less than the higher of the closing price of
         the Company's shares on the date of grant, or the average closing price
         of the shares for the five trading days immediately preceding the date
         of grant, or the nominal value of a share of the Company.

         No charge was recognized in the statement of operations in respect of
the value of options granted in the year.


                                      F-21
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except exercise price)


7.       SHARE OPTION SCHEME - CONTINUED

         The following are the details of the Company's share options held by
         employees (including Directors):

<TABLE>
<CAPTION>
             SHARE                   OUTSTANDING                                                                  OUTSTANDING
            OPTION                       AT              GRANTED         EXERCISED     CANCELLED        LAPSED         AT
            SCHEME      OPTION       JANUARY 1,          DURING           DURING        DURING          DURING    DECEMBER 31,
           CATEGORY      TYPE           2000              2000             2000          2000            2000         2000
           --------      ----           ----              ----             ----          ----            ----         ----

             <S>           <C>        <C>                   <C>          <C>                <C>       <C>           <C>
             1996          A          1,947,000             --           (190,500)          --         (38,000)     1,718,500
             1996          B          1,976,500             --               --             --        (113,500)     1,863,000
                                      ---------        ---------         --------      ---------      --------      ---------

                                      3,923,500             --           (190,500)          --        (151,500)     3,581,500
                                      =========        =========         ========      =========      ========      =========


             SHARE                   OUTSTANDING                                                                  OUTSTANDING
            OPTION                       AT              GRANTED         EXERCISED     CANCELLED        LAPSED         AT
            SCHEME      OPTION       JANUARY 1,          DURING           DURING        DURING          DURING    DECEMBER 31,
           CATEGORY      TYPE           2001              2001             2001          2001            2001         2001
           --------      ----           ----              ----             ----          ----            ----         ----

             1996          A          1,718,500             --               --             --            --        1,718,500
             1996          B          1,863,000             --               --             --         (25,000)     1,838,000
                                      ---------        ---------         --------      ---------      --------      ---------

                                      3,581,500             --               --             --         (25,000)     3,556,500
                                      =========        =========         ========      =========      ========      =========


             SHARE                   OUTSTANDING                                                                 OUTSTANDING
            OPTION                       AT              GRANTED         EXERCISED     CANCELLED        LAPSED         AT
            SCHEME      OPTION       JANUARY 1,          DURING           DURING        DURING          DURING    DECEMBER 31,
           CATEGORY      TYPE           2002              2002             2002          2002            2002         2002
           --------      ----           ----              ----             ----          ----            ----         ----

             1996          A          1,718,500             --               --        (1,718,500)        --              --
             1996          B          1,838,000             --               --        (1,838,000)        --              --
             2002          C               --           3,718,000            --              --       (125,000)     3,593,000
             2002          D               --           1,718,500            --              --            --       1,718,500
             2002          E               --           1,838,000            --              --            --       1,838,000
                                      ---------        ---------         --------      ---------      --------      ---------

                                      3,556,500        7,274,500            --        (3,556,500)     (125,000)     7,149,500
                                      =========        =========         ========      =========      ========      =========
</TABLE>


                                      F-22
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except exercise price)


7.       SHARE OPTION SCHEME - CONTINUED

         Details of the share options held by the Directors included in the
above table as follows:

<TABLE>
<CAPTION>
             SHARE                   OUTSTANDING                                                                   OUTSTANDING
            OPTION                       AT              GRANTED         EXERCISED     CANCELLED        LAPSED          AT
            SCHEME      OPTION       JANUARY 1,          DURING           DURING         DURING         DURING     DECEMBER 31,
           CATEGORY      TYPE           2000              2000             2000           2000           2000          2000
           --------      ----           ----              ----             ----           ----           ----          ----
             <S>           <C>          <C>             <C>                  <C>       <C>            <C>             <C>
             1996          A            651,000             --               --              --            --         651,000
             1996          B            264,000             --               --              --            --         264,000
                                        -------         --------         -------        -------       -------        -------

                                        915,000             --               --              --            --         915,000
                                        =======         ========         =======        =======       =======        =======


             SHARE                   OUTSTANDING                                                                   OUTSTANDING
            OPTION                       AT              GRANTED         EXERCISED     CANCELLED        LAPSED          AT
            SCHEME      OPTION       JANUARY 1,          DURING           DURING         DURING         DURING     DECEMBER 31,
           CATEGORY      TYPE           2001              2001             2001           2001           2001          2001
           --------      ----           ----              ----             ----           ----           ----          ----

             1996          A            651,000             --               --              --            --         651,000
             1996          B            264,000             --               --              --            --         264,000
                                        -------          -------         -------        -------      --------         -------

                                        915,000             --               --              --            --         915,000
                                        =======          =======         =======        =======      ========         =======


             SHARE                   OUTSTANDING                                                                   OUTSTANDING
            OPTION                       AT              GRANTED         EXERCISED     CANCELLED        LAPSED         AT
            SCHEME      OPTION       JANUARY 1,          DURING           DURING        DURING          DURING     DECEMBER 31,
           CATEGORY      TYPE           2002              2002             2002          2002            2002         2002
           --------      ----           ----              ----             ----          ----            ----         ----

             1996          A            651,000             --               --        (651,000)           --              --
             1996          B            264,000             --               --        (264,000)           --              --
             2002          C               --           1,485,000            --              --      (125,000)      1,360,000
             2002          D               --             651,000            --              --            --         651,000
             2002          E               --             264,000            --              --            --         264,000
                                      ---------         ---------         -------       -------       -------       ---------

                                        915,000         2,400,000            --        (915,000)     (125,000)      2,275,000
                                      =========         =========         =======       =======       =======       =========
</TABLE>



         Details of specific categories of options are as follows:

<TABLE>
<CAPTION>
OPTION TYPE     DATE OF GRANT               VESTING PERIOD                      EXERCISE PERIOD                   EXERCISE PRICE
-----------     -------------               --------------                      ---------------                   --------------
                                                                                      HK$
<S>          <C>                   <C>                                      <C>                                        <C>
A (Note a)    November 26, 1996     November 26, 1996 - November 25, 1999   November 26, 1999 - November 25, 2006      17.48
B (Note a)   September 20, 1999    September 20, 1999 - September 30, 2002   October 1, 2002 - September 30, 2009      17.48
C (Note b)     February 4, 2002      February 4, 2002 - February  3, 2004   February 4, 2004 - February 3, 2012        14.35
D (Note a)     February 4, 2002                       -                     February 4, 2002 - November 25, 2006       17.48
E (Note a)     February 4, 2002      February 4, 2002 - September 30, 2002   October 1, 2002 - September 30, 2009      17.48
</TABLE>


                                      F-23
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except exercise price)


7.       SHARE OPTION SCHEME - CONTINUED

         Notes:

         a.       All existing options were cancelled upon the termination of
                  the 1996 Scheme. The cancelled 1996 Scheme options were
                  replaced by an equivalent number of 2002 Scheme options on
                  February 4, 2002 with the same exercise price and exercise
                  periods as the original 1996 Scheme options.

                  Option Type A and Option Type D ("Options A and D") is
                  exercisable as follows: (i) 50% - from November 26, 1999; (ii)
                  additional 25% - from November 26, 2000 and (iii) remaining
                  25% - November 26, 2001. Options A and D are no longer
                  exercisable after November 25, 2006.

                  Option Type B and Option Type E ("Options B and E") are
                  exercisable as follows: (i) 50% - from October 1, 2002; (ii)
                  additional 25% - from October 1, 2003 and (iii) remaining 25%
                  - October 1, 2004. Options B and E are no longer exercisable
                  after September 30, 2009.

         b.       Option Type C ("Option C") was issued on February 4, 2002
                  under the 2002 Scheme and is exercisable as follows: (i) 25% -
                  from February 4, 2004; (ii) additional 50% - from February 4,
                  2005 and (iii) remaining 25% - from February 4, 2006. Option C
                  is no longer exercisable after February 3, 2012.



                                      F-24
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


8.       TRANSPONDER UTILIZATION AGREEMENTS

         At December 31, 2002, satellite and tracking facilities with a net book
         value of HK$1,024,556 were held for use under transponder utilization
         agreements. Generally, these transponder utilization agreements may be
         terminated by the customers by giving not less than six months notice.
         Upon termination, the customer is obligated to pay an amount equal to
         the greater of six months' transponder utilization fee or 20% of the
         aggregate amount of transponder utilization fees payable to the end of
         the agreed term.

         At December 31, 2002, future minimum transponder utilization fees
         receivable under transponder utilization agreements relating to AsiaSat
         2 and AsiaSat 3S (including deposits received by AsiaSat in prior
         periods and to be applied to payments due in future periods) were as
         follows:

                                                                 HK$

         2003........................................         786,157
         2004........................................         657,188
         2005........................................         504,396
         2006........................................         361,138
         2007........................................         329,463
         Thereafter..................................       1,390,753
                                                            ---------

         Total.......................................       4,029,095
                                                            =========


         On November 24, 2000, the Company signed an agreement for a US$250
         million loan facility with a consortium of banks to finance the
         construction of AsiaSat 4 and AsiaSat 5. The loan facility is secured
         by an assignment of all rights, title, benefits and interest in the
         insurance and transponder receipts of the existing satellites and a
         fixed and floating charge over the assets of AsiaSat. The interest rate
         of this loan is floating and based on London InterBank Offering Rate
         ("LIBOR") plus a margin between 1.00% to 1.25% per annum depending on
         certain financial ratios achieved by the Company. Borrowings under the
         loan are repayable in five equal bi-annual repayments of principal and
         interest commencing in November 2003. In addition, the loan agreement
         contains certain financial covenants, which, among other things,
         requires the Company to maintain a certain level of net assets and cash
         flow ratios, and restricts dividend payments and the Company's amount
         of borrowings and liabilities. The Company had not drawn against the
         loan facility at December 31, 2001 and 2002.


                                      F-25
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


9.       PENSION PLANS

         The Company participates in both a defined contribution pension scheme
         which is registered under the Occupational Retirement Ordinance (ORSO
         Scheme) and a Mandatory Provident Fund Scheme established under the
         Mandatory Provident Fund Ordinance (MPF Scheme). The schemes cover all
         eligible employees and all eligible employees are offered a choice of
         joining the ORSO Scheme or the MPF Scheme.

         The ORSO Scheme provides for participant contributions of 5% of salary
         and Company contributions of between 7.5% and 15% of salary depending
         on length of service and the participant's position in the Company. The
         Company's contributions are vested to the participants incrementally
         over 10 years.

         The MPF Scheme is available to all employees aged 18 to 64 with at
         least 60 days of service in the employment of the Company in Hong Kong.
         Contributions are made by the Company at 5% based on the participants'
         relevant income. The maximum relevant income for purposes of
         determining the contributions of a participant is 5% of the monthly
         income. The participants are entitled to 100% of the Company's
         contributions together with accrued returns irrespective of their
         length of service with the Company, but the benefits are required by
         law to be preserved until the retirement age of 65.

         The assets of the schemes are controlled by trustees and held
         separately from those of the Company. Total pension costs were
         HK$3,116, HK$3,859 and HK$4,104 in 2000, 2001 and 2002, respectively.
         The Company does not provide "post-retirement benefits other than
         pensions" and post-employment benefits.


10.      OTHER (EXPENSE) INCOME


         Other (expense) income consists of the following:

                                                    2000        2001      2002
                                                    ----        ----      ----
                                                     HK$         HK$       HK$

         Financing costs......................    (8,308)         --        --
         Other................................       130         488        39
                                                 -------     -------   -------
                                                  (8,178)        488        39
                                                 =======     =======   =======



                                      F-26
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


11.      INCOME TAX

         The Company is subject to Hong Kong Profits Tax on its operations
         deemed to be located in Hong Kong. It is also subject to an overseas
         tax on its operations in certain overseas jurisdictions.

         The components of income before equity in losses of affiliates,
         taxation and minority interest are as follows:

                                                    2000        2001      2002
                                                    ----        ----      ----
                                                     HK$         HK$       HK$

         Hong Kong.......................        239,222     244,385   227,121
         Overseas........................        460,899     430,527   405,705
                                                 -------     -------   -------

                                                 700,121     674,912   632,826
                                                 =======     =======   =======


         Income tax expense consists of the following:

                                                    2000        2001      2002
                                                    ----        ----      ----
                                                     HK$         HK$       HK$
         Hong Kong
           Current.......................         29,847      32,189    40,624
           Overprovision in prior years..             --     (28,503)       --
           Deferred......................         30,555      46,734    10,225
         Overseas........................         19,467      20,144    18,213
                                                 -------     -------   -------

                                                  79,869      70,564    69,062
                                                 =======     =======   =======


         A reconciliation between income tax expense shown in statement of
         operations and income tax expense computed by applying the statutory
         income tax rate (of 16% for all periods) to income before equity in
         losses of affiliates, taxation and minority interest is as follows:

<TABLE>
<CAPTION>
                                                                            2000        2001       2002
                                                                            ----        ----       ----
                                                                             HK$         HK$        HK$
         <S>                                                             <C>         <C>        <C>
         Statutory rate applied to income before equity in
           losses of affiliates, taxation and minority interest.....     112,019     107,986    101,252
         Income not subject to taxation:
           50% of AsiaSat 2 and 3S profits..........................     (50,495)    (53,770)   (51,610)
           50% of bad debt (recovery) expense.......................        (774)         --        912
         Overprovision in prior year................................          --     (28,503)        --
         Capital allowances on AsiaSat 4 in prior year..............          --      25,448         --
         Overseas tax...............................................      19,467      20,144     18,213
         Other......................................................        (348)       (741)       295
                                                                         -------     -------    -------
         Income tax expense.........................................      79,869      70,564     69,062
                                                                         =======     =======    =======
</TABLE>



                                      F-27
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


11.      INCOME TAX - CONTINUED

         The major components of deferred taxation as of December 31, 2001 and
         2002 are as follows:

                                                                2001      2002
                                                                ----      ----
                                                                 HK$       HK$

         Excess of tax depreciation expense over book
           depreciation expense...........................    177,743   185,949
         Other............................................     (2,019)       --
                                                              -------   -------

                                                              175,724   185,949
                                                              =======   =======


         There were no significant amounts of unrecognised deferred taxation.


12.      RELATED PARTY TRANSACTIONS


         China International Trust and Investment Corporation ("CITIC") is a
         major shareholder of the Company during all the years presented.

         AsiaSat recognized revenues under transponder utilization agreements
         with CITIC Guoan Information Industry Company Limited (a subsidiary of
         CITIC) amounting to HK$3,276 in 2000, HK$3,832 in 2001 and HK$4,095 in
         2002. In addition, in 2002, AsiaSat paid agency fee of HK$1,611 (nil in
         2000 and 2001) to CITIC Technology Company Limited (a subsidiary of
         CITIC) for collecting money from China customers on behalf of AsiaSat.

         AsiaSat recognized revenues under transponder utilization agreements
         with SHL amounting to HK$21,125 in 2000, HK$19,547 in 2001 and
         HK$20,177 in 2002. It also recognized maintenance and other services
         income from SHL amounting to HK$10,774 and HK$9,116 in 2000 and 2001,
         respectively.

         AsiaSat, in 2000, purchased certain assets from SES GLOBAL ("SES
         GLOBAL"), a major shareholder of the Company, for a total consideration
         of approximately HK$15,210.

         In addition, in 2002, AsiaSat recognized revenues under transponder
         utilization agreement with SES AMERICOM (a wholly-owned subsidiary of
         SES GLOBAL) amounting to HK$162.

         The Company, in 2002, paid consultancy fee amounting to HK$678 to SES
         ASTRA S.A. (a wholly-owned subsidiary of SES GLOBAL).

         In addition to the above, the Company made payments to SES GLOBAL and a
         subsidiary of CITIC amounting to HK$400 (2001: HK$550) and HK$400
         (2001: HK$400) respectively, for certain Non-Executive Directors
         representing SES GLOBAL and CITIC.

         The above transactions are entered into on terms determined and agreed
         by the Company and the relevant parties.


                                      F-28
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


13.      FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying value of cash and cash equivalents, other receivables,
         other payables and customer deposits approximates fair value because of
         the relatively short maturities of these financial instruments. It is
         not practical to determine the fair value of unbilled rental receivable
         as it involves high volume of transactions.

14.      CONCENTRATION - INDUSTRY AND MAJOR CUSTOMERS

         The Company's revenues were derived from the following markets:

                                                    2000        2001      2002
                                                    ----        ----      ----

         Broadcasting ..........................    70.6%       66.8%     68.3%

         Telecommunications,
           Internet and Multimedia..............    29.4%       33.2%     31.7%

         The five largest customers accounted for 42.9%, 44.3% and 43.2% of the
         Company's total revenue for the years ended December 31, 2000, 2001 and
         2002, respectively.

         The accounts receivable from the five customers with the largest
         receivables balances represents 60.4% and 81.5% of total accounts
         receivable as of December 31, 2001 and 2002, respectively.



                                      F-29
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


15.      SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES

         The accompanying consolidated financial statements are prepared in
         accordance with HK GAAP, which differs in the significant respects from
         US GAAP as follows:

         (a)      Capitalization of interests and other borrowing costs

                  Under HK GAAP, interest on bank loans and related costs of
                  obtaining the loans (including costs incurred in connection
                  with loan facilities) taken out to finance construction of
                  satellites is capitalized during the period of construction.
                  Under US GAAP, the interest capitalized is computed by
                  applying an average borrowing rate of outstanding debt to the
                  total amount of qualifying assets under construction, not to
                  exceed total interest costs incurred.

                  In addition, under US GAAP, certain related borrowing costs
                  payable to lenders are excluded from the amounts capitalised.

         (b)      Goodwill

                  Under HK GAAP, goodwill is amortized on a systematic basis
                  over its useful life. Under US GAAP, effective from January 1,
                  2002, goodwill is: (i) no longer amortized, (ii) assigned to a
                  reporting unit, and (iii) tested for impairment at least
                  annually using fair value. Prior to January 1, 2002, goodwill
                  was amortized under US GAAP.


                                      F-30
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                             (dollars in thousands)


15.      SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES - CONTINUED

         The following table summarizes the effect on net income of differences
         between HK GAAP and US GAAP:

<TABLE>
<CAPTION>
                                                                                      YEAR
                                                                                      ENDED
                                                                                    DECEMBER
                                                                                       31,
                                                                     2000             2001          2002           2002
                                                                     ----             ----          ----           ----
                                                                     HK$              HK$            HK$            US$
                                                                                                                 (Note 1)
         <S>                                                      <C>              <C>           <C>             <C>
         Net income under HK GAAP.........................        576,295          562,983       554,689         71,114
         US GAAP material adjustments:
           Capitalization of interest and
             borrowing costs including effects
             of its amortization..........................         (8,862)            (577)      (23,051)        (2,955)
           Amortization of goodwill.......................             --               --         4,604            591
           Tax effect of reconciling items................            709               46         1,844            236
                                                                  -------          -------       -------        -------

         Net income under US GAAP.........................        568,142          562,452       538,086         68,986
                                                                  =======          =======       =======        =======

         Earnings per share (US GAAP)
           Basic..........................................           1.46             1.44          1.38           0.18
                                                                  =======          =======       =======        =======

           Diluted........................................           1.45             1.44          1.38           0.18
                                                                  =======          =======       =======        =======

         Earnings per American Depository
           Share ("ADS") under US GAAP
           Basic..........................................          14.56            14.41         13.79           1.77
                                                                  =======          =======       =======        =======

           Diluted........................................          14.52            14.41         13.79           1.77
                                                                  =======          =======       =======        =======

         Shares used in computation of
           earnings per share (in thousands)
           Basic..........................................        390,241          390,266       390,266        390,266
                                                                  =======          =======       =======        =======

           Diluted........................................        391,155          390,266       390,266        390,266
                                                                  =======          =======       =======        =======
</TABLE>


                                      F-31
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except per share data)


15.      SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES - CONTINUED

         The following table summarizes the effect on shareholders' equity of
         the differences between HK GAAP and US GAAP:

<TABLE>
<CAPTION>
                                                                                                 AT DECEMBER 31,
                                                                                                 ---------------
                                                                                      2001             2002            2002
                                                                                      ----             ----            ----
                                                                                       HK$              HK$             US$
                                                                                         (dollars in thousands)
                                                                                                                    (Note 1)

         <S>                                                                     <C>               <C>              <C>
         Shareholders' equity under HK GAAP................................      2,870,080         3,346,716        429,066

         US GAAP adjustments:
           Capitalization of interest and other borrowing costs............         93,338            70,287          9,011
           Amortization of goodwill........................................             --             4,604            591
           Tax effect......................................................        (11,238)           (9,394)        (1,205)
                                                                                 ---------         ---------        -------

         Shareholders' equity under US GAAP................................      2,952,180         3,412,213        437,463
                                                                                 =========         =========        =======


         The changes in shareholders' equity based on US GAAP are as follows:

         Balance, beginning of year........................................      2,467,781         2,952,180        378,484
         Transactions during the year:
           i) Net income...................................................        562,452           538,086         68,986
          ii) Dividends paid...............................................        (78,053)          (78,053)       (10,007)
                                                                                 ---------         ---------        -------

         Balance, end of year..............................................      2,952,180         3,412,213        437,463
                                                                                 =========         =========        =======
</TABLE>


         Notes:

         1.       The translations of Hong Kong dollar amounts into United
                  States dollars are for convenience only and have been made at
                  a rate of HK$7.8 to US$1, the approximate rate of exchange at
                  December 31, 2002. Such translations should not be construed
                  as representations that Hong Kong dollar amounts could be
                  converted into United States dollars at that or any other
                  rate.

         2.       One ADS is equivalent to 10 common shares.


                                      F-32
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except per share data)


15.      SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES - CONTINUED

         A reconciliation of the significant balance sheet accounts under HK
         GAAP and to the amounts determined under US GAAP is as follows:
<TABLE>
<CAPTION>
                                                                                                AS AT DECEMBER 31,
                                                                                                ------------------
                                                                                      2001              2002           2002
                                                                                      ----              ----           ----
                                                                                      HK$               HK$            US$
                                                                                         (dollars in thousands)
         <S>                                                                     <C>               <C>              <C>
         Property, plant and equipment
           Amount under HK GAAP............................................      2,942,324         3,232,350        414,404
           US GAAP adjustment - Capitalization of interest.................         93,338            70,287          9,011
                                                                                 ---------         ---------        -------

           Amount under US GAAP............................................      3,035,662         3,302,637        423,415
                                                                                 =========         =========        =======


         Investments in affiliates
           Amount under HK GAAP............................................             --            17,521          2,246
           US GAAP adjustment - Amortisation of goodwill ..................             --             4,604            591
                                                                                 ---------         ---------        -------

           Amount under US GAAP............................................             --            22,125          2,837
                                                                                 =========         =========        =======


         Deferred taxation
           Amount under HK GAAP............................................        175,724           185,949         23,840
           US GAAP adjustment - Tax effect of reconciling items............         11,238             9,394          1,205
                                                                                 ---------         ---------        -------

           Amount under US GAAP............................................        186,962           195,343         25,045
                                                                                 =========         =========        =======
</TABLE>


         The amounts of total assets determined using US GAAP, as a result of
         the foregoing adjustments, are HK$3,478,060 and HK$4,011,246 as of
         December 31, 2001 and 2002, respectively. The amounts of total
         liabilities (excluding minority interests) determined using US GAAP, as
         a result of the foregoing adjustments, are HK$525,388 and HK$598,541 as
         of December 31, 2001 and 2002, respectively.


                                      F-33
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except per share data)


15.      SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES - CONTINUED

         A reconciliation of major caption of cash flows under HK GAAP to US
         GAAP is as follows:

<TABLE>
<CAPTION>
                                                                                        AS AT DECEMBER 31,
                                                                                        ------------------
                                                                     2000             2001              2002           2002
                                                                     ----             ----              ----           ----
                                                                     HK$               HK$               HK$            US$
                                                                                  (dollars in thousands)
         <S>                                                      <C>              <C>               <C>
         Net cash provided by operating activities
           Amount under HK GAAP...........................        725,188          720,782           809,585        103,793
           US GAAP adjustment:
             Interest received............................         43,423            6,789             6,291            807
             Interest paid................................        (37,396)              --                --             --
                                                                  -------          -------           -------        -------
           Amount under US GAAP...........................        731,215          727,571           815,876        104,600
                                                                  =======          =======           =======        =======

         Net cash used in investing activities
           Amount under HK GAAP...........................       (419,856)        (615,278)         (461,732)       (59,196)
           US GAAP adjustment:
             Interest received............................        (43,423)          (6,789)           (6,291)          (807)
                                                                  -------          -------           -------        -------
           Amount under US GAAP...........................       (463,279)        (622,067)         (468,023)       (60,003)
                                                                  =======          =======           =======        =======

         Net cash used in financing activities
           Amount under HK GAAP...........................       (985,718)         (78,053)          (78,053)       (10,007)
           US GAAP adjustment:
             Interest paid................................         37,396               --                --             --
                                                                  -------          -------           -------        -------
           Amount under US GAAP...........................       (948,322)         (78,053)          (78,053)       (10,007)
                                                                  =======          =======           =======        =======
</TABLE>


         The reclassification for US GAAP cash flows statement pertains to
         interest received and paid which is presented as investing and
         financing activities under HK GAAP, respectively (as opposed to
         operating activities under US GAAP).


                                      F-34
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except per share data)

15.      SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES - CONTINUED

         The following are additional disclosures as required by US GAAP:

         (a)      The Company's comprehensive income represents its net income
                  for all the years presented.

         (b)      The Company applies Accounting Principles Board ("APB")
                  Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO Employees",
                  and related Interpretations in accounting for options granted
                  under the 1996 Scheme and 2002 Scheme (see Note 7). No
                  compensation cost has been recognized on options granted under
                  the 1996 Scheme and the 2002 Scheme. No options were granted
                  in 2000 and 2001.

                  The Company, on September 8, 1999, cancelled 2,161,000 share
                  options (granted under the 1996 Scheme) exercisable from
                  November 26, 1999 to November 25, 2006 at an exercise price of
                  HK$19.00 per share. The Company had, simultaneous to the
                  cancellation, issued 2,022,000 replacement share options to
                  the same employees with similar exercise period but at a lower
                  exercise price of HK$17.48 per share. The 139,000 share
                  options cancelled but not replaced were those share options
                  held by resigned employees. There was no change in the number
                  of shares to be issued to satisfy the exercise of the
                  replacement share options. The Company, through December 31,
                  2001, did not account for the option modification under a
                  variable plan accounting that would have been required under
                  Financial Accounting Standards Board Interpretation No. 44,
                  "ACCOUNTING FOR CERTAIN TRANSACTIONS INVOLVING STOCK
                  COMPENSATION". However, the impact on net income of applying
                  variable plan accounting to those share options would not be
                  material in 2000. There would be no impact on the Company's
                  2001 and 2002 consolidated financial statements as the fair
                  value of the underlying shares was less than the exercise
                  price of the share options as of December 31, 2001 and 2002.

                  Had compensation cost for the Company's share option schemes
                  been determined based on the fair value at the grant dates for
                  awards under the share option schemes consistent with the
                  method of Statement of Financial Accounting Standards ("SFAS")
                  No. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION", the
                  Company's net income and earnings per share would have been as
                  follows:

<TABLE>
<CAPTION>
                                                                              2000         2001         2002
                                                                              ----         ----         ----
                                                                               HK$          HK$          HK$

                  <S>                                  <C>                  <C>          <C>         <C>
                  Net income                           As reported          568,142      562,452     538,086
                                                       Pro forma            560,380      555,483     523,735

                  Basic earnings per share             As reported             1.46         1.44        1.38
                                                       Pro forma               1.44         1.42        1.34

                  Diluted earnings per share           As reported             1.45         1.44        1.38
                                                       Pro forma               1.43         1.42        1.34
</TABLE>

                  Share option with Option Type D and E issued in 2002 represent
                  replacement share options to Option Type A and B respectively.
                  There would be no impact on pro forma net income, assuming
                  SFAS No. 123 is used with respect to issuance of the
                  replacement share options as the fair value of share options
                  prior to and subsequent to the replacement remained the same.

                  Compensation expense resulting from the fair value method of
                  SFAS No. 123 may not be representative of compensation expense
                  to be incurred on a pro forma basis in future years.


                                      F-35
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except per share data)


15.      SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES - CONTINUED

         A summary of the status of the Company's 2002 Scheme and 1996 Scheme as
         of December 31, 2000, 2001 and 2002, and changes during the years then
         ended is presented below:

<TABLE>
<CAPTION>
                                                         2000                        2001                     2002
                                                -----------------------   -------------------------  ------------------------
                                                             WEIGHTED-                    WEIGHTED-                 WEIGHTED-
                                                              AVERAGE                      AVERAGE                   AVERAGE
                                                             EXERCISE                     EXERCISE                  EXERCISE
                                                  SHARES       PRICE         SHARES         PRICE        SHARES       PRICE

         <S>                                     <C>            <C>        <C>              <C>        <C>            <C>
         Outstanding, beginning of year.....     3,923,500      17.48      3,581,500        17.48      3,556,500      17.48
         Granted............................            --         --             --           --      7,274,500      15.88
         Exercised..........................      (190,500)     17.48             --           --             --         --
         Forfeited/cancelled/lapsed.........      (151,500)     17.48        (25,000)       17.48     (3,681,500)     17.37
                                                 ---------      -----      ---------        -----      ---------      -----
         Outstanding, end of year ..........     3,581,500      17.48      3,556,500        17.48      7,149,500      15.91
                                                 =========      =====      =========        =====      =========      =====

         Options exercisable at year-end....     1,288,875      17.48      1,718,500        17.48      2,637,500      17.48
                                                 =========      =====      =========        =====      =========      =====
         Weighted-average fair value of
           options granted during the year..                      N/A                         N/A                      HK$8
</TABLE>

         The following table summarizes information on the 2002 Scheme and 1996
         Scheme outstanding at December 31, 2002:

<TABLE>
<CAPTION>
                             OPTIONS OUTSTANDING                                   OPTIONS EXERCISABLE
         -------------------------------------------------------      ----------------------------------
                                                      WEIGHTED
                                                      AVERAGE
                                                     REMAINING
                                        NUMBER       CONTRACTUAL                                 NUMBER
         EXERCISE PRICE              OF OPTIONS        LIFE           EXERCISE PRICE          OF OPTIONS
         --------------              ----------        ----           --------------          ----------
         <S>                          <C>           <C>                <C>                    <C>
         HK$14.35................     3,593,000     9.09 years         HK$14.35...........           --
         HK$17.48................     3,556,500     5.37 years         HK$17.48...........    2,637,500
                                      ---------     ----------                                ---------
                                      7,149,500     7.24 years                                2,637,500
                                      =========     ==========                                =========
</TABLE>



                                      F-36
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except per share data)


15.      SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES - CONTINUED

                  The weighted average fair value of options granted during
                  1996, 1999 and 2002 (Option Type A, B and C) was HK$6, HK$13
                  and HK$8, respectively, using the Black-Scholes option-pricing
                  model based on the following assumptions:

<TABLE>
<CAPTION>
                                                                  SHARE OPTIONS GRANTED IN
                                                            1996             1999           2002
                                                            ----             ----           ----
                  Option type                                 A                B             C
                  <S>                                    <C>             <C>              <C>
                  Expected life of options               5 to 7 years    5 to 7 years     10 years
                  Expected volatility                             21%             49%          51%
                  Risk-free rate                               6.115%           5.92%        5.99%
                  Expected annual dividend yield                 1.3%           0.96%        1.62%
</TABLE>

                  The Black-Scholes option pricing model requires the input of
                  highly subjective assumptions, including the volatility of
                  share price. Because changes in subjective input assumptions
                  can materially affect the fair value estimate, in the
                  directors' opinion, the existing model does not necessarily
                  provide a reliable single measure of the fair value of the
                  share options.

         (c)      Recent changes in accounting standards

                  In June 2001, the Financial Accounting Standard Board (the
                  "FASB") issued SFAS No. 141, "BUSINESS COMBINATIONS", and SFAS
                  No. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS". SFAS No. 141
                  requires that, among other things, all business combinations
                  entered into subsequent to June 30, 2001, be accounted for
                  using the purchase method of accounting. SFAS No. 142 provides
                  that goodwill and other intangible assets with indefinite
                  lives not be amortized, but will be tested for impairment on
                  an annual basis. SFAS No. 142 is effective for fiscal years
                  beginning after December 15, 2002. The Company adopted SFAS
                  No. 141 during the year ended December 31, 2001 and it did not
                  impact the Company's financial statements. The Company has
                  adopted SFAS No. 142 on January 1, 2002. Adoption of the
                  non-amortization provisions of SFAS No. 142 in 2000 and 2001
                  would not have impacted net income.

                  In August 2001, the FASB issued SFAS No. 143, "ACCOUNTING FOR
                  ASSET RETIREMENT OBLIGATIONS". This statement addresses the
                  diverse accounting practices for obligations associated with
                  the retirement of tangible long-lived assets and the
                  associated asset retirement costs. The Company will be
                  required to adopt this standard on January 1, 2003. Management
                  had assessed that the impact of the adoption of SFAS No. 143
                  is not material to its financial position and results of
                  operations.


                                      F-37
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except per share data)


15.      SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES - CONTINUED

                  The FASB also issued SFAS No. 144, "ACCOUNTING FOR THE
                  IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS", that is
                  applicable to financial statements issued for fiscal years
                  beginning after December 15, 2001. The FASB's new rules on
                  asset impairment supersede SFAS No. 121, "ACCOUNTING FOR THE
                  IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO
                  BE DISPOSED OF", and portions of APB Opinion No. 30,
                  "REPORTING THE RESULTS FOR Operations". The statement requires
                  a single accounting model for long-lived assets to be disposed
                  of and significantly changes the criteria that would have to
                  be met to classify an asset as held-for-sale. Classification
                  as held-for-sale is an important distinction since such assets
                  are not depreciated and are stated at the lower of fair value
                  and carrying amount. The statement also requires expected
                  future operating losses from discontinued operations to be
                  recorded in the periods in which the losses are incurred,
                  rather than as of the measurement date as previously required.
                  The Company has adopted SFAS No. 144 on January 1, 2002. There
                  was no significant impact on the Company's financial position
                  and results of operations.

                  On April 30, 2002, the FASB issued SFAS No. 145, "RESCISSION
                  OF SFAS NO. 4, 44, AND 64, AMENDMENT OF SFAS NO. 13, AND
                  TECHNICAL CORRECTIONS", to update, clarify, and simplify
                  certain existing accounting pronouncements. Specifically, SFAS
                  145:

                  o        Rescinds SFAS No. 4, "REPORTING GAINS AND LOSSES FROM
                           EXTINGUISHMENT OF DEBT", an amendment of APB Opinion
                           No. 30, and SFAS No. 64, "EXTINGUISHMENTS OF DEBT
                           MADE TO SATISFY SINKING-FUND REQUIREMENTS", which
                           amended SFAS 4, as these two standards required that
                           all gains and losses from the extinguishment of debt
                           be aggregated and, if material, classified as an
                           extraordinary item. Consequently, such gains and
                           losses will now be classified as extraordinary only
                           if they meet the criteria for extraordinary treatment
                           set forth in APB Opinion 30, "Reporting the Results
                           of Operations - REPORTING THE EFFECTS OF DISPOSAL OF
                           A SEGMENT OF A BUSINESS, AND EXTRAORDINARY, UNUSUAL
                           AND INFREQUENTLY OCCURRING EVENTS AND TRANSACTIONS".

                 o         Rescinds SFAS No. 44, "ACCOUNTING FOR INTANGIBLE
                           ASSETS OF MOTOR CARRIERS", an amendment of Chapter 5
                           of ARB No. 43 and an interpretation of APB Opinions
                           17 and 30, because the discrete event to which that
                           statement relates is no longer relevant.

                 o         Amends SFAS No. 13, "ACCOUNTING FOR LEASES", to
                           require that certain lease modifications that have
                           economic effects similar to sale-leaseback
                           transactions be accounted for in the same manner as
                           such transactions.


                                      F-38
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except per share data)


15.      SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES - CONTINUED

                  The provisions of SFAS No. 145 related to the rescission of
                  SFAS No. 4 and No. 64 are effective for fiscal years beginning
                  after May 15, 2002. The provisions related to the amendment of
                  SFAS No. 13 are effective for transactions occurring after May
                  15, 2002. All other provisions of SFAS No. 145 are effective
                  for financial statements issued on or after May 15, 2002.
                  Early application of all provisions of SFAS No. 145 is
                  encouraged. For those provisions that become effective during
                  the year, there was no significant impact on the Company's
                  financial position and results of operations; for the
                  remaining provisions under SFAS No. 145, management is
                  assessing, but has not yet determined, the impact such
                  provisions will have, if any, on the consolidated financial
                  statements.

                  In June 2002, the FASB issued SFAS No. 146, "ACCOUNTING FOR
                  COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES". This
                  statement requires that a liability for a cost associated with
                  an exit or disposal activity be recognized when the liability
                  is incurred. Under Emerging Issue Task Force ("EITF") Issue
                  94-3, a liability for an exit cost was recognized at the date
                  of an entity's commitment to an exit plan. A fundamental
                  conclusion reached by the Board in this statement is that an
                  entity's commitment to a plan, by itself, does not create a
                  present obligation to others that meets the definition of a
                  liability. Therefore, this statement eliminates the definition
                  and requirements for recognition of exit costs in EITF Issue
                  94-3. This statement also established that fair value is the
                  objective for initial measurement of the liability and the
                  liability should be measured initially at fair value only when
                  the liability is incurred. The provisions of this statement
                  are effective for exit or disposal activities that are
                  initiated after December 31, 2002, with early application
                  encouraged. The Company will adopt SFAS No. 146 prospectively
                  in 2003.


                                      F-39
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except per share data)


15.      SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES - CONTINUED

                  On December 31, 2002, the FASB issued SFAS No. 148,
                  "ACCOUNTING FOR STOCK-BASED COMPENSATION--TRANSITION AND
                  DISCLOSURE - AN AMENDMENT OF FASB STATEMENT NO. 123 ", which
                  amends SFAS No. 123, "ACCOUNTING FOR STOCK-BASED
                  COMPENSATION". SFAS No. 148 provides alternative methods of
                  transition for a voluntary change to the fair value based
                  method of accounting for stock-based employee compensation. In
                  addition, SFAS No. 148 amends the disclosure requirements of
                  SFAS No. 123 to require more prominent and more frequent
                  disclosures in financial statements of the effects of
                  stock-based compensation. The transition guidance and annual
                  disclosure provisions of SFAS No. 148 are effective for fiscal
                  years ending after December 15, 2002, with earlier application
                  permitted in certain circumstances. The interim disclosure
                  provisions are effective for financial reports containing
                  financial statements for interim periods beginning after
                  December 15, 2002. This statement will only impact the
                  Company' financial statements if it will change from stock
                  compensation accounting under APB No. 25 to SFAS No. 123.

                  In November 2002, the FASB issued FASB Interpretation ("FIN")
                  No. 45, "GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS
                  FOR GUARANTEES, INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS
                  OF OTHERS". The interpretation elaborates on the existing
                  disclosure requirements for most guarantees, including loan
                  guarantees such as standby letters of credit. It also
                  clarifies that at the time a company issues a guarantee, the
                  company must recognize an initial liability for the fair
                  value, or market value, of the obligations it assumes under
                  the guarantee and must disclose that information on its
                  interim and annual financial statements. The provisions
                  related to recognizing a liability at inception of the
                  guarantee for the fair value of the guarantor's obligations
                  does not apply to product warranties or to guarantees
                  accounted for as derivatives. The initial recognition and
                  initial measurement provisions apply on a prospective basis to
                  guarantees issued or modified after December 31, 2002. The
                  Company believes the adoption of recognition and initial
                  measurement requirements of FIN No. 45 will not have a
                  material impact on the consolidated financial statements.


                                      F-40
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                  (dollars in thousands except per share data)


15.      SUMMARY OF DIFFERENCES BETWEEN HONG KONG AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES - CONTINUED

         (d)      Details of the movements of the allowance for doubtful
                  accounts for the years ended December 31, 2000, 2001 and 2002
                  are as follows:

                                                    2000        2001       2002
                                                    ----        ----       ----
                                                     HK$         HK$        HK$

                  At beginning of year..........   75,364       3,612     3,612
                  Bad debt expense..............    3,612          --    11,708
                  Bad debt recovered............   (9,678)         --        --
                  Amount written off............  (65,686)         --      (308)
                                                  -------     -------   -------

                  At end of year................    3,612       3,612    15,012
                                                  =======     =======   =======


         (e)      Major customers

                  The Company has one customer accounting for 10% or more of its
                  service revenue. Service revenue from such customer represents
                  22.8%, 23.0% and 23.5% of revenues in 2000, 2001 and 2002,
                  respectively.

--------------------------------------------------------------------------------



                                      F-41
<PAGE>

                                  EXHIBIT INDEX

     NUMBER                              EXHIBIT
     ------                              -------
      1.1.        Memorandum of Association and Bye-Laws (incorporated by
                  reference to Exhibit 3.1 of the Company's Registration
                  Statement on Form F-1, File No.3334856).

      4.1.        Service Agreement, dated June 5, 1996, between the Company and
                  Peter Jackson (incorporated by reference to Exhibit 10.16 of
                  the Company's Registration Statement on Form F-1, File
                  No.3334856).

      4.2.        Service Agreement, dated June 3, 1996, between the Company and
                  William D. Wade (incorporated by reference to Exhibit 10.17 of
                  the Company's Registration Statement on Form F-1, File
                  No.3334856).

      4.3.        Amendment 9 to Contract No. AsiaSat-3-001/95, dated March 6,
                  1998, between Hughes Space and Communications International,
                  Inc. Asia Satellite Telecommunications Company Limited
                  (incorporated by reference to Exhibit 1 on Form 20-F for
                  fiscal year 1997, File No.3334856).

      4.4.        Contract for Launch Services, dated March 17, 1998, between
                  Lockheed-Khrunichev-Energia International, Inc. and Asia
                  Satellite Telecommunications Company Limited (incorporated by
                  reference to Exhibit 2 on Form 20-F for fiscal year 1997, File
                  No.3334856).

      4.5.        Subscription Agreement made on March 21, 2000, between Tech
                  System Limited, Asia Satellite Telecommunications Company
                  Limited and PhoenixNet Holdings Limited (incorporated by
                  reference to Exhibit 2 on Form 20-F for fiscal year 1999, File
                  No.3334856).

      4.6.        Shareholders' Agreement dated as of April 6, 2000, among Asia
                  Satellite Telecommunications Company Limited, Tech System
                  Limited, TVG Asia Communications Fund II and PhoenixNet
                  Holdings Limited (incorporated by reference to Exhibit 3 on
                  Form 20-F for fiscal year 1999, File No.3334856).

      4.7.        Loan Agreement dated November 24, 2000, among Asia Satellite
                  Telecommunications Company Limited, Asia Satellite
                  Telecommunications Holdings Limited, HSBC Investment Bank Asia
                  Limited, The Hong Kong and Shanghai Banking Corporation
                  Limited and the banks and financial institutions named
                  therein.

      4.8.        Amendment 5 to Contract No. AsiaSat-3B/4 dated September 7,
                  2000, between Asia Satellite Telecommunications Company
                  Limited and Hughes Space and Communications International,
                  Inc. (incorporated by reference to Exhibit 4.9 on Form 20-F
                  for fiscal year 2000, File No.3334856)*

      4.9.        Contract for Launch Services LKEB-0009-0807 dated September
                  19, 2000, between AsiaSat and Lockheed Martin Commercial
                  Launch Services, Inc. (incorporated by reference to Exhibit
                  4.10 on Form 20-F for fiscal year 2000, File No.3334856)*

      4.10        Amended and Restated Deposit Agreement (incorporated by
                  reference to Exhibit A to the Registration Statement on Form
                  F-6, File No.333-13900, relating to the Company's American
                  Depositary Shares)

     4.11.        Share Option Scheme, dated January 25, 2002, of the Company.

     4.12.        Lease Agreement, dated March 12, 2001, between AsiaSat and the
                  Hong Kong Industrial Estates Corporation.

     4.13         Construction Contract Agreement, dated March 4, 2002, between
                  AsiaSat and Leighton Contractors (Asia) Limited.

      8.1.        Subsidiaries of the Registrant (included on page 11 of this
                  Annual Report).

     99.1         Certification pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

     99.2         Certification pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


<PAGE>

*  Confidential portions of this exhibit have been omitted and filed separately
with the Securities and Exchange Commission with a request for confidential
treatment pursuant to Rule 24B-2.



<PAGE>

                                 CERTIFICATIONS

I, Peter Jackson, certify that:

1.   I have reviewed this annual report on Form 20-F of Asia Satellite
     Telecommunications Holdings Limited;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)   designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this annual report is being
     prepared;

b)   evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     annual report (the "Evaluation Date"); and

c)   presented in this annual report our conclusions about the effectiveness of
     the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):

a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether there were significant changes in internal controls
     or in other factors that could significantly affect internal controls
     subsequent to the date of our most recent evaluation, including any
     corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: June 23, 2003

                                          /s/ Peter Jackson
                                         --------------------------------
                                         Peter Jackson
                                         Chief Executive Officer



<PAGE>

                                 CERTIFICATIONS

I, Denis Lau, certify that:

1.   I have reviewed this annual report on Form 20-F of Asia Satellite
     Telecommunications Holdings Limited;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)   designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this annual report is being
     prepared;

b)   evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     annual report (the "Evaluation Date"); and

c)   presented in this annual report our conclusions about the effectiveness of
     the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):

a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether there were significant changes in internal controls
     or in other factors that could significantly affect internal controls
     subsequent to the date of our most recent evaluation, including any
     corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: June 23, 2003

                                         /s/ Denis Lau
                                        ---------------------------------
                                        Denis Lau
                                        Chief Financial Officer