AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 2007
================================================================================

                       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, 2006
                                       OR
|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the transition period from _________ to ___________

|_|   SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      Date of event requiring this shell company report ____________________

                         COMMISSION FILE NUMBER 1-14396

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

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

                           17th Floor, The Lee Gardens
                                 33 Hysan Avenue
                                  Causeway Bay
                                    Hong Kong
                                  852-2500-0888
--------------------------------------------------------------------------------
          (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 share       The New York Stock Exchange*

* 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, 2006,  390,265,000 shares of Common Stock were issued
and outstanding

     Indicate by check mark if the registrant is a well-known  seasoned  issuer,
as defined in Rule 405 of the Securities Act.                  Yes [_]   No  [X]

     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 whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one):
Large accelerated filer [_]   Accelerated filer [X]    Non-accelerated filer [_]

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

     If this is an annual report,  indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
                                                               Yes [_]   No  [X]

================================================================================

<PAGE>

                                TABLE OF CONTENTS

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

                                                                            PAGE
EXCHANGE RATES................................................................1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS..........................2

PART I........................................................................2

   Item 1.    Identity of Directors, Senior Management and Advisors...........2
   Item 2.    Offer Statistics and Expected Timetable.........................2
   Item 3.    Key Information.................................................2
   Item 4.    Information on the Company.....................................14
   Item 5.    Operating and Financial Review and Prospects...................36
   Item 6.    Directors, Senior Management and Employees.......................
   Item 7.    Major Shareholders and Related Party Transactions..............59
   Item 8.    Financial Information..........................................61
   Item 9.    Stock Price History............................................62
   Item 10.   Additional Information.........................................64
   Item 11.   Quantitative and Qualitative Disclosures About Market Risk.....65
   Item 12.   Description of Securities Other than Equity Securities.........66

PART II......................................................................66

   Item 13.   Defaults, Dividend Arrearages and Delinquencies................66
   Item 14.   Material Modifications to the Rights of Security Holders
              and Use of Proceeds............................................66
   Item 15.   Controls and Procedures........................................66
   Item 16.   Other Information..............................................67

PART III.....................................................................69

   Item 17.   Financial Statements...........................................69
   Item 18.   Financial Statements...........................................69
   Item 19.   Financial Statements and Exhibits..............................69

<PAGE>

     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.

     On May 25, 2007,  Asiaco  Acquisitions Ltd.  ("Asiaco"),  a company jointly
owned   indirectly  by  CITIC  Group  ("CITIC")  and  General  Electric  Capital
Corporation  ("GECC"),  launched mandatory general offers (the "Offers") for our
outstanding  ordinary shares (the "Shares") not held by Bowenvale  Limited,  the
controlling shareholder of the Company whose indirect shareholders are CITIC and
GECC. The Offers are  structured as two separate  offers in order to comply with
differences  in U.S.  and Hong  Kong law in  respect  of  withdrawal  rights  of
shareholders  and settlement for tendered shares.  The mandatory  general offers
were triggered by an exchange transaction completed between SES S.A. ("SES") and
GECC on March 29, 2007, pursuant to which SES redeemed approximately 19 per cent
of the issued share  capital of SES held by GECC in exchange for shares of a new
company holding a number of assets and cash, including SES's entire shareholding
in  Bowenvale.  The  exchange  transaction  is  deemed to have  resulted  in the
formation  of a new  concert  group  between  CITIC and GECC that has  statutory
control over Bowenvale and thus AsiaSat.

     The Offers  followed  the  termination  of a  proposal  to  privatize  (the
"Privatization")  the Company by way of a scheme of  arrangement  (the "Scheme")
under  Bermuda  law.  The  Scheme  was  terminated  by  Asiaco by  invoking  the
authorization  condition to the Scheme after the U.S.  Department  of State (the
"State  Department") had in correspondence with GECC indicated that it would not
grant the  approval  necessary  to  implement  the  Privatization  by way of the
Scheme. In the opinion of Asiaco, the consequences of proceeding with the Scheme
without obtaining approval from the State Department would be materially adverse
to the business of AsiaSat as it would result in AsiaSat  being deemed in breach
of important approvals  previously granted to AsiaSat by the State Department in
relation to its satellites.

     In the documentation relating to the Privatization,  Asiaco cited the heavy
financial and administrative  burden imposed on the Company by its dual listings
on the Hong Kong Stock Exchange and the New York Stock Exchange.  If,  following
completion of the Offers,  the Company  becomes  eligible to delist from the New
York  Stock  Exchange  and to  terminate  its  reporting  obligations  under the
Securities  Exchange Act of 1934 (the "Exchange  Act"), the Company is likely to
seek the delisting and deregistration under the Exchange Act.

     If,  following  the Offers  the  Company's  public  float is less than 25%,
either the  Company  will issue  additional  Shares or the  Company's  principal
shareholders  will sell  Shares so that at least 25% of the  Shares  are held by
unaffiliated  shareholders  as required  by the  listing  rules of the Hong Kong
Stock Exchange.  See Item 4 "Information  on the Company - Privatization  Scheme
and Mandatory General Offers."

                                 EXCHANGE RATES

     The Company and AsiaSat  prepare  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

                                       1
<PAGE>

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, the  approximate  rate of
exchange on December 31,  2006.  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$7.7771  to US$1 on
December 31, 2006. The Noon Buying Rate on June 14, 2007 was HK$7.8169 to US$1.

              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 and success in constructing  and launching
new satellites as planned,  (ii) future economic and  competitive  conditions in
the  Asian  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.

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,  2004,  2005 and 2006 and the  summary  balance  sheet data of the
Company as of December 31, 2005 and 2006 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, 2002 and 2003 and
the summary  balance sheet data as of December 31, 2002, 2003 and 2004 set forth
below are derived from audited consolidated  financial statements of the Company
not included herein.  The consolidated  financial  statements of the Company are

                                       2
<PAGE>

prepared  and  presented  in  accordance  with  Hong  Kong  Financial  Reporting
Standards,  or HKFRS,  which differ in certain material respects from accounting
principles generally accepted in the United States, or U.S. GAAP. Note 32 to the
Company's   consolidated  financial  statements  contains  descriptions  of  the
significant  differences  between HKFRS and U.S. GAAP, a  reconciliation  of net
income from HKFRS to U.S. GAAP for the years ended  December 31, 2004,  2005 and
2006, and a reconciliation of shareholders' equity from HKFRS to U.S. GAAP as of
December 31, 2005 and 2006. In addition,  Note 32 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>
                                           2002            2003         2004          2005          2006          2006
                                          -------         -------      -------       -------       -------       -------
                                            HK$             HK$          HK$           HK$           HK$           US$
                                                    (in millions, except for percentages and per share amounts)
INCOME STATEMENT DATA:
HKFRS:
<S>                                       <C>            <C>          <C>           <C>           <C>           <C>
   Revenues........................         950.8          896.2      1,005.0         879.7         929.9         119.2
   Cost of services................        (243.1)        (313.3)      (420.5)       (419.0)       (410.6)        (52.6)
   Administrative expenses.........         (76.7)         (56.1)      (102.5)        (83.9)        (94.6)        (12.1)
   Operating profit................         637.4          532.6        504.0         420.5         517.5          66.3
   Share of results of
      associates (including
      goodwill amortization).......         (13.7)         (15.6)       (12.4)         (3.9)         (8.4)         (1.1)
   Impairment loss recognized in
      respect of goodwill of
      associates...................             -           (1.9)           -             -             -             -
   Profit before taxation                   623.8          512.1        491.6         416.6         508.9          65.2
   Minority Interests..............             -              -         (0.1)         (0.8)         (0.6)         (0.1)
   Taxation........................         (69.1)         (87.6)       (60.5)        (51.3)        (55.5)         (7.1)
   Profit for the year.............         554.7          424.5        431.1         365.4         453.4          58.1
   Earnings per share
      Basic........................          1.42           1.09         1.10          0.94          1.16          0.15
      Diluted......................          1.42           1.09         1.10          0.94          1.16          0.15
   Earnings per ADS
      Basic........................         14.21          10.88        11.05          9.38         11.62          1.49
      Diluted......................         14.21          10.88        11.05          9.38         11.62          1.49

Dividend declared per share:
   Ordinary........................          0.25           0.32         0.35          0.35          0.35          0.04
Number of shares outstanding
     (in thousands)................       390,266        390,266      390,266       390,266       390,266       390,266

U.S. GAAP:
   Profit for the year                      538.1          408.3        424.1         358.8         446.3          57.2
</TABLE>

                                                               3
<PAGE>

<TABLE>
<CAPTION>
<S>                                       <C>            <C>          <C>           <C>           <C>           <C>
   Earnings per share
      Basic........................          1.38           1.05         1.09          0.92          1.14          0.15
      Diluted......................          1.38           1.05         1.09          0.92          1.14          0.15
   Earnings per ADS
      Basic........................         13.79          10.46        10.86          9.19         11.43          1.46
      Diluted......................         13.79          10.46        10.86          9.19         11.43          1.46

<CAPTION>
                                           2002            2003         2004          2005          2006          2006
                                          -------         -------      -------       -------       -------       -------
                                            HK$             HK$          HK$           HK$           HK$           US$
<S>                                       <C>            <C>          <C>           <C>           <C>           <C>
BALANCE SHEET DATA:
HKFRS:

   Net current assets                       239.0          529.9      1,023.1       1,461.1       1,770.9         227.0
   Property, plant and
      equipment (1)................       3,206.4        3,140.0      2,894.5       2,620.9       2,630.8         337.3

Total assets.......................       3,936.4        4,157.2      4,549.2       4,683.5       5,091.2         652.7

   Long-term liabilities (2).......         326.0          336.5        317.1         280.3         336.1          43.1

   Total liabilities (excluding
      minority interests)..........         589.1          588.5        668.3         573.8         664.7          85.2
   Capital stock ..................          39.0           39.0         39.0          39.0          39.0           5.0

   Total shareholders' equity......       3,346.7        3,568.3      3,874.6       4,104.2       4,421.6         566.9

U.S. GAAP:
   Property, plant and equipment...       3,276.6        3,198.5      2,944.9       2,663.3       2,665.1         341.7

   Total assets....................       4,011.2        4,215.7      4,599.9       4,726.1       5,125.7         657.1

   Long-term liabilities (2).......         335.4          345.8        325.6         288.1         343.2          44.0

   Total liabilities (excluding
      minority interests)..........         598.5          597.7        676.8         581.6         671.8          86.1

   Total shareholders' equity......       3,412.2        3,617.5      3,916.7       4,138.9       4,448.7         570.3
</TABLE>

----------------
(1)  Excludes  leasehold  land and land use  rights  which are  reclassified  as
     prepaid  operating  lease  payments  with the adoption of revised Hong Kong
     Accounting Standard 17.
(2)  Excludes current portion of long-term liabilities.

                                       4
<PAGE>

     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  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.

<TABLE>
<CAPTION>
                                                   HONG KONG DOLLAR/US DOLLAR
                                                        NOON BUYING RATE

                                 AVERAGE (1)         HIGH              LOW             PERIOD END
                                     HK$             HK$               HK$                HK$
<S>                              <C>               <C>               <C>                <C>
2002 ......................        7.7996           7.8095            7.7970             7.7988

2003 ......................        7.7864           7.8001            7.7085             7.7640

2004 ......................        7.7891           7.8010            7.7632             7.7723

2005 ......................        7.7755           7.7999            7.7514             7.7533

2006.......................        7.7685           7.7928            7.7506             7.7771

December 2006..............        7.7723           7.7787            7.7665             7.7771

January 2007...............        7.8000           7.8112            7.7797             7.8078

February 2007..............        7.8114           7.8141            7.8041             7.8119

March 2007.................        7.8132           7.8177            7.8093             7.8137

April 2007.................        7.8154           7.8212            7.8095             7.8212

May 2007...................        7.8187           7.8236            7.8044             7.8087
</TABLE>

-------------
(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.  The failure rate varies by launch vehicle,  launch services provider

                                       5
<PAGE>

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."

     RISKS IN RELATION TO THE CONSTRUCTION AND LAUNCH OF ASIASAT 5

     AsiaSat has entered into a construction  contract and a launch contract for
the  commissioning  of AsiaSat 5. The Company plans to launch AsiaSat 5 in 2009.
AsiaSat 5 will replace  AsiaSat 2, which is tentatively  scheduled to be retired
in 2010. The Company  originally  planned for the launch of AsiaSat 5 in 2008 so
as to allow sufficient time for the construction and launch of another satellite
in the  event of an  unsuccessful  launch  of  AsiaSat  5.  However,  due to the
potential  delay in launch until 2009,  caused by a  production  shortage of the
Ukrainian  supplied Zenit rocket and the formal  investigation of the recent Sea
Launch  failure,  the Company will explore  other means to address the potential
negative impact of an AsiaSat 5 launch failure.  The total  consideration  under
the  construction  and launch  contracts,  together  with  insurance  costs,  is
estimated at approximately  HK$1,404.0 million (US$180.0 million).  There can be
no  assurance  that  alternative  means to address the risk will be available or
feasible.

     The construction contractor, Space Systems/Loral,  Inc., is a subsidiary of
Loral Space & Communications  Inc., which emerged from chapter 11 of the federal
bankruptcy  laws of the United  States in November  2005.  Any future  financial
difficulties of Space  Systems/Loral,  Inc. may adversely affect its performance
under the  construction  contract  and may  adversely  affect the success of, or
delay,  the launch of AsiaSat 5. In addition,  there can be no assurance  that a
launch  vehicle will be available or that the launch of AsiaSat 5 will otherwise
occur in 2009 as currently planned or that the subsequent  in-orbit testing will
be successful.  In the event AsiaSat 5 does not meet  specifications,  there are
limited opportunities for the Company to replace AsiaSat 5 (and hence AsiaSat 2)
and the failure to timely replace  AsiaSat 5 (and hence AsiaSat 2) may result in
interruption of services to our customers and adversely affect the operation and
financial  results of the Company.  The Company's legal right to use the orbital
location from which AsiaSat 5 was to operate may not be maintained. Furthermore,
a  significant  portion  of the total cost of the  construction  and launch of a
satellite is the cost of insurance,  which  generally will not be obtained until
several  months  prior to a scheduled  launch.  There can be no  assurance  that
sufficient  insurance can be obtained at a reasonable  price prior to the launch
of AsiaSat 5.

     RISK OF NOT SUCCESSFULLY  RENEWING EXISTING TRANSPONDER CAPACITY AGREEMENTS
OR NOT  RENEWING  THEM ON TERMS  SIMILAR  TO THEIR  CURRENT  TERMS OR  CUSTOMERS
SWITCHING TO OTHER PROVIDERS OF SATELLITE TRANSPONDER CAPACITY

     The  Company's  existing  transponder  capacity  agreements,  also known as
transponder  utilization  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.

     In order to  discourage  the  unlawful  interruption  and  interference  of
transmission of Chinese  television  programs,  the Chinese  government plans to
launch  and  operate  satellites  with  "anti-attack"  technology  that may help
prevent such unlawful  interruption  or  interference.  Two such  satellites are
scheduled  for launch in 2007.  Should those  satellites  be launched and tested
successfully,  Chinese television  broadcasters  presently  transmitting via the
Company's  satellites may switch to these  satellites.  If that occurs,  it will

                                       6
<PAGE>

have a  negative  impact  to the  revenue  of the  Company.  Chinese  television
broadcasters  accounted for approximately 8.8% of the Company's total revenue in
2006. AsiaSat 5, when launched in 2009, will also have  "anti-attack"  features,
but there can be no assurance that Chinese television broadcasters, if they have
switched to those satellites, will switch back to AsiaSat 5 after its launch.

     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."

     RISK OF LOSING  SATELLITE  SERVICE  REVENUES IF OTHER SATELLITES OR SIGNALS
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
signals transmitted 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.
Disputes over  interference  could arise with other operators in the future.  In
addition,   unintentional  or  intentional  signals  could  interfere  with  the
transmissions  of  the  Company's   customers  and  could  severely  damage  the
reputation of the Company.  If not remedied,  such interference  could lead to a
loss of satellite  service  revenues if customers  migrate to  competitors.  See
"Information on the Company -- Additional  Orbital Slots and Use of Frequencies"
and "Information on the Company - Satellites - AsiaSat 3S."

     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.  Uninsured  losses  are  likely to have a material
adverse effect on the Company. See "Information on the Company -- Insurance."

                                       7
<PAGE>

     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  Asian  region  and  is   wholly-owned  by  News
Corporation,   a  leading   international   media  group.   STAR  accounted  for
approximately  22.4%,  25.7% and 24.3% of AsiaSat's  revenues in the years ended
December 31, 2004, 2005 and 2006, 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.

     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  Asian  region.  Many  of  these  competitors  are  licensed  by  the  local
governments  and have de facto  monopolies  in  their  countries.  Many of these
competitors  also are  substantially  larger in fleet size,  and have  financial
resources  that  are  substantially  greater,  than  those of the  Company.  See
"Information on the Company - Competition."

     TRANSPONDER OVERSUPPLY.  The supply of transponders continues to exceed the
demand  for  transponders  and,  due to  persistent  oversupply  of  transponder
capacity  and the slow  introduction  of new  applications  in the  region,  the
Asia-Pacific  satellite  market remains  particularly  competitive.  The Company
believes that this imbalance  cannot be corrected  until global  economic growth
and new applications and services increase demand for the 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,
Indosat, INSAT, Intelsat, JSAT, Koreasat, MEASAT, New Skies Satellites,  Singtel
Optus, SINOSAT, Superbird, Thaicom and others. The Company believes that most of

                                       8
<PAGE>

the domestic systems are planning to add at least some regional  transponders to
their next generation of satellites.  The 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.  In addition,  the transmission of television
programming  via  Asymmetric   Digital  Subscriber  Line  ("ADSL")  and  Digital
Subscriber  Line  ("DSL")  technologies,  commonly  known as  Internet  Protocol
Television,  is also an alternative for  transmission of television  programming
via direct broadcasting satellite and cable.

     RISKS RELATING TO FUTURE SATELLITES

     The  construction,  launch  and  operation  of  AsiaSat  5 and  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,  AsiaSat's ability to make capital expenditures in connection with the
construction  and launch of future  satellites could be subject to conditions of
future financing arrangements. See "Operating and Financial Review and Prospects
-- Liquidity and Capital Resources -- Planned Capital Expenditures."

     OUR  CONTROLLING  SHAREHOLDERS  HAVE  INTERESTS  THAT MAY CONFLICT WITH THE
INTERESTS OF THE COMPANY OR OTHER SHAREHOLDERS

     The Company is controlled by Bowenvale  Limited  ("Bowenvale"),  which owns
68.75%  of the  outstanding  Shares.  As a result of the  Exchange  Transaction,
effective  March 29, 2007,  Bowenvale is jointly  owned  indirectly by CITIC and
GECC.  The  interests of CITIC and GECC as our  controlling  shareholders  could
conflict with our interests or with the interests of our other shareholders.  As
a result,  they may take  actions or cause the Company to take  actions that may
not be in the best interests of other shareholders. In addition, the business of
our controlling  shareholders may be in competition  with ours. For example,  as
part of the Exchange  Transaction,  GECC also acquired a new  satellite,  GE-23,
from SES  Global.  Part of the  footprint  of GE-23  overlaps  with  that of the
Company's satellites,  and as such competes or may compete with our business. We
cannot  assure  you that such  conflict  of  interests  and  competing  business
activities will not have a material  adverse effect on our business  operations,
financial condition or results of operations.

     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.

     HONG KONG. As an operator of privately owned satellites, AsiaSat is subject
to the regulatory authority of the Office of the Telecommunications Authority of
Hong Kong ("OFTA"),  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.

                                       9
<PAGE>

     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."

     The Company  has been  advised by OFTA that it is  considering  reassigning
part of the  satellite  extended  C-band  (specifically  3400 to 3600  MHz)  for
Broadband Wireless Access (BWA) applications.  Although the Company does not use
this part of the band,  the  Company  believes,  based on  analysis  and limited
testing,  that broad deployment of BWA transmitters in Hong Kong will disrupt or
interfere with all conventional  (3700 to 4200 MHz) and extended C band (3400 to
3700  MHz)  satellite  services  in Hong  Kong.  The  Company,  other  satellite
operators and users have raised objections to this allocation by OFTA, but there
can be no assurance that this  objection  will be successful.  While the initial
comment  by OFTA on the  objection  raised  towards  the  frequency  reassigning
proposal  was  positive,  OFTA has stated that it will  re-assess  the  position
following  the  upcoming  meeting  of the ITU (as  defined  below) on  frequency
assignment in October 2007.  This proposal by OFTA is part of a worldwide  trend
to assign more frequency spectrum to mobile and nomadic communications  services
users.   Should  this  trend  continue,   C  band  satellite  services  will  be
disadvantaged,  particularly  in  urban  areas  within  the  Company's  regional
coverage.

     OTHER  NATIONAL  REGULATORY  SCHEMES.  The  customers  of the  Company  are
regulated by 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.  Punitive  withholding taxes are often
applicable to payments made under non-domestic satellite contracts.  These legal
requirements  prevent the Company and other  satellite  companies from competing
freely and fairly to provide transponder  capacity to these potential customers.
There can be no assurance  that other  countries in the Asian 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."

                                       10
<PAGE>

     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  the   regulations   of  the   International
Telecommunication  Union  ("ITU").  Countries  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 ITU.  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 dispute resolution mechanism,
and if countries  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."

     FAILURE TO MAINTAIN EFFECTIVE INTERNAL CONTROL OVER FINANCIAL  REPORTING IN
ACCORDANCE  WITH SECTION 404 OF THE  SARBANES-OXLEY  ACT OF 2002 COULD RESULT IN
THE LOSS OF INVESTOR  CONFIDENCE  IN THE  RELIABILITY  OF THE COMPANY  FINANCIAL
STATEMENTS,  WHICH IN TURN  COULD HARM THE  COMPANY'S  BUSINESS  AND  NEGATIVELY
IMPACT THE TRADING PRICE OF THE SHARES AND ADSS

     The SEC,  as required  by Section  404 of the  Sarbanes-Oxley  Act of 2002,
adopted rules requiring  every public company to include a management  report on
such company's  internal control over financial  reporting in its annual report,
which contains  management's  assessment of the  effectiveness  of the company's
internal  controls  over  financial  reporting.   In  addition,  an  independent
registered  public  accounting  firm must  attest to and report on  management's
assessment  of  the  effectiveness  of  the  Company's  internal  controls  over
financial  reporting.  Based on the amended rules of the SEC, these requirements
will not  apply to the  Company  until  its  annual  report on Form 20-F for the
fiscal year of 2007. Nevertheless, the management has completed an assessment of
the  effectiveness  of its internal  controls over  financial  reporting and its
independent auditor has attested to the management's  assessment.  If management
fails to maintain the adequacy of the Company's internal  controls,  the Company
may  not be  able  to  conclude  that it has  effective  internal  control  over
financial  reporting on an ongoing basis in accordance  with the  Sarbanes-Oxley
Act.  Moreover,  effective  internal  control is necessary  to produce  reliable
financial  reports and are  important to help prevent  fraud.  As a result,  the
failure to maintain  effective  internal control over financial  reporting could
result in the loss of investor  confidence in the  reliability  of the Company's
financial  statements,  which in turn  could  harm the  Company's  business  and
negatively  impact  the  trading  price of the  Shares  and  ADSs.  Furthermore,
management anticipates that it will continue to incur considerable costs and use
significant  management  time and other  resources  in an effort to comply  with
Section 404 and other requirements of the Sarbanes-Oxley Act.

     POLITICAL, ECONOMIC AND OTHER REGIONAL RISKS

     AsiaSat is a Hong Kong company. Substantially all of AsiaSat's revenues are
derived from its  operations  conducted in the Asian region.  In 2004,  2005 and
2006, approximately 51.8%, 61.9% and 57.6%, respectively, of AsiaSat's revenues,
were derived from customers from Greater China,  which includes  mainland China,
Hong  Kong,  Macau  and  Taiwan.  Furthermore,   during  2004,  2005  and  2006,
approximately,  22.4%, 25.7% and 24.3%, respectively, of AsiaSat's revenues were
attributable  to  transponder  utilization  agreements  with  STAR,  a Hong Kong

                                       11
<PAGE>

company.  As  a  result,  the  Company's  financial  condition  and  results  of
operations may be influenced by the political  situation in the Asian 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 laws, regulations and governmental
policies,  with  respect  to  broadcast  media,   telecommunications   services,
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.  Also see " - Risk of Not  Successfully  Renewing  Existing
Transponder  Capacity  Agreements or Not Renewing Them on Terms Similar to Their
Current Terms or Customers Switching to Other Providers of Satellite Transponder
Capacity."

     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  in  China to make
payments to the Company in US Dollars.

     HONG KONG. Hong Kong is 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,  AVIAN FLU OR SIMILAR  OCCURRENCE.  The Company's  business  could be
adversely affected by the re-emergence of Severe Acute Respiratory  Syndrome (or
SARS) or the development of a possible pandemic such as the avian influenza or a
similar type of regional occurrence. Restrictions on travel resulting from these
possible  events  could  adversely  affect the  Company's  ability to market and
service new and existing  customers  throughout  the Asian region.  In addition,
sick employees or other employees who fear contracting such illness could decide
to not report for work. The Company's  results of operations  could be adversely
affected to the extent that SARS,  avian influenza or a similar type of regional
occurrence harms the economy in, or otherwise  negatively affects,  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"),  Lockheed  Martin  and  Space
Systems/Loral  Inc. with respect to AsiaSat 2, AsiaSat 3S, AsiaSat 4 and AsiaSat
5, AsiaSat is the beneficiary of certain limited performance-based,  operational

                                       12
<PAGE>

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 3S and AsiaSat 4 and
plans to obtain such coverage for AsiaSat 5. AsiaSat's  in-orbit  insurance must
be renewed annually.  AsiaSat 2 is no longer insured for in-orbit failures.  See
"Key Information - Satellites - AsiaSat 2".

     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."

     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.-PRC relations, which
can vary from time to time. AsiaSat has sourced all its satellites in the United
States,  including the new AsiaSat 5. 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.  The  Company  obtained  approvals  from the State  Department  in
connection  with its initial  sourcing  of  satellites.  The State  Department's
approval is required when there is a change in ownership of the  satellites.  In
connection with the Privatization,  the State Department  indicated to GECC that
it viewed the proposed  Privatization as causing a significant change of control
of a party owning and  controlling  previously  exported  satellites  that would
require its approval and that it was not prepared to grant such  approval in the
context of the Scheme. Asiaco is proceeding with the Offers on the understanding
that the Offers will not require similar approval, provided that if necessary to
maintain a public float of 25% either the Company will issue  additional  Shares
or its  controlling  shareholders  will sell  Shares so that at least 25% of the
Shares are held by public shareholders.  The State Department has not stated any
restriction on the ability of the Company to delist the Shares and ADSs from the
New York Stock Exchange or to deregister the Shares and ADSs with the SEC.

     RISK OF LOSS OF RIGHTS TO ORBITAL SLOTS

     In addition to the  frequency  bands  currently  used in the three  primary
positions of 100.5 degrees East,  105.5 degrees East, and 122.2 degrees East, in
which the Company's satellites currently operate,  China has filed requests with
the ITU on behalf of AsiaSat for a number of other  frequency  bands in the same
orbit locations and for enhanced  operating  parameters in the current frequency
bands. These filings are at different stages in the application  process.  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

                                       13
<PAGE>

rights to launch and operate  satellites with enhanced  parameters or additional
frequency  bands 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 - Orbital Slots and Use of Frequencies" and "Information on
the Company - Satellites - AsiaSat 4."

     POTENTIAL FUTURE LEVERAGE

     AsiaSat may incur  borrowings  under a loan facility in the future.  Such a
loan facility may contain covenants,  including financial covenants, which could
prevent the Company from undertaking certain acquisitions and purchases that may
be necessary for its growth. See "Operating and Financial Review and Prospects -
Liquidity and Capital Resources."

     RISK OF NOT BEING ABLE TO HIRE AND  RETAIN  TECHNOLOGY  SPECIALISTS  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 Canon's Court,  22
Victoria Street, Hamilton, HM12, Bermuda (phone: 441-295-2244) and its principal
place of business is located at 17th Floor,  The Lee Gardens,  33 Hysan  Avenue,
Causeway Bay, Hong Kong.

     ORGANIZATIONAL STRUCTURE

     The  Company  is the  parent  company  of  AsiaSat.  AsiaSat  holds a 47.3%
interest in SpeedCast  Holdings  Limited,  a 49.0%  interest in Beijing Asia Sky
Telecommunications  Technology  Company  Limited  ("Beijing  Asia") and an 80.0%
interest in Skywave TV Company  Limited as at 31 December  2006. See Notes 9 and
10 to the Company's consolidated financial statements.

     ACQUISITIONS, INVESTMENTS AND JOINT VENTURES

     o   In March 2002,  the Company  entered  into an  agreement  to acquire an
         additional 8.8% interest to increase its interest in SpeedCast Holdings
         Limited  from  36.5% to 45.3%,  which  wholly  owns  SpeedCast  Limited
         ("SpeedCast")  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. In 2003, the Company

                                       14
<PAGE>

         extended payment terms to SpeedCast  allowing a deferment with interest
         of up to HK$8.6 million (US$1.1 million) in transponder  payments until
         the end of April 2004. In May 2004, the Company  entered into a further
         agreement to acquire an  additional  2% interest in SpeedCast  Holdings
         Limited by making a contribution of HK$11.7 million (US$1.5 million) in
         cash.  See "-  Services  and  Customers - Expanded  Services  and Other
         Businesses."

     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  telemetry,  tracking  and
         control  ("TT&C")  radio  frequency  system  to  be  installed  at  the
         satellite  control center at the Tai Po Site. In January 2004,  AsiaSat
         entered into an agreement with Integral  Systems for satellite  control
         software.  In September  2006,  another  agreement  between AsiaSat and
         Integral  Systems was entered  into for the  procurement  of  satellite
         control  software  for AsiaSat 5. As at  December  31,  2006,  HK$223.4
         million  (US$28.6  million)  had been  spent  on the Tai Po  Site.  See
         "Additional Information - Material Contracts."

     o   In March 2004, the Company entered into a joint venture arrangement and
         formed Beijing Asia Sky  Telecommunications  Technology Company Limited
         ("Beijing  Asia") to provide  corporate  data  networks and services in
         China  using very  small  aperture  terminal  ("VSAT")  technology.  In
         exchange for a 49% interest in Beijing  Asia,  the Company  contributed
         HK$12.5  million  (US$1.6  million)  in cash to  Beijing  Asia  and has
         committed  to provide  Beijing  Asia with  transponder  capacity  in an
         amount of up to HK$13.0 million (US$1.7  million) payable on a deferred
         basis over the next three to five years.  As at December 31, 2006,  88%
         of the  HK$13.0  million  has  been  utilized.  See  "--  Services  and
         Customers - Expanded  Services and Other  Businesses"  and  "Additional
         Information - Material Contracts."

     o   In  November  2004,  the Company  entered  into an  agreement  with two
         strategic  partners  pursuant to which the Company agreed to contribute
         HK$24.0  million  (US$3.1  million)  in return for an 80%  interest  in
         Skywave  TV  Company  Limited  ("Skywave")  and  each of the  strategic
         partners agreed to make an in-kind contribution equal to HK$3.0 million
         (US$0.4 million) in return for a 10% interest each in Skywave.  See "--
         Services and Customers - Expanded  Services and Other  Businesses"  and
         "Additional Information - Material Contracts."

     o   In April 2006, AsiaSat entered into a construction  contract with Space
         Systems/Loral,  Inc.  ("Loral")  for the  design  and  construction  of
         AsiaSat 5. In May 2006, AsiaSat entered into a launch contract with Sea
         Launch  Limited  Partnership  ("Sea  Launch") which will provide launch
         services  related to the launch of  AsiaSat 5 from the  Baikonur  Space
         Center in  Kazakhstan.  The total  consideration  payable under the two
         contracts,   together   with  an  estimate  of  insurance   costs,   is
         approximately  HK$1,404.0  million  (US$180.0  million),  out of  which
         HK$298.0  million  was  paid in  2006.  See  "--  Business  Overview  -
         Satellites - AsiaSat 5."

                                       15
<PAGE>

     PRIVATIZATION SCHEME AND MANDATORY GENERAL OFFERS

     On February 13, 2007, Asiaco (formerly named Modernday Limited),  a company
jointly owned by Able Star (a  subsidiary  of CITIC ) and GE Equity  Investments
Inc. (a  subsidiary  of GECC) , submitted a proposal to the  Company's  Board of
Directors  to  privatize  the  Company by way of a scheme of  arrangement  under
Section 99 of the Companies Act of Bermuda.  Upon completion of the Scheme,  the
Company would become wholly owned by Asiaco and Bowenvale Limited and indirectly
owned by CITIC and GECC.

     On March 19, 2007, the Company  dispatched  Asiaco's proposal and the terms
and conditions of such proposal to its shareholders  (including ADS holders) and
holders of options.  In  connection  with the Scheme,  the Company,  among other
parties, filed a Schedule 13E-3 with the SEC.

     The Company obtained approvals from the State Department in connection with
its initial sourcing of satellites.  The State Department's approval is required
when there is a change in ownership of the  satellites.  In connection  with the
Privatization,  the  State  Department  indicated  to GECC  that it  viewed  the
proposed  Privatization  as causing a  significant  change of control of a party
owning and  controlling  previously  exported  satellites that would require its
approval and that it was not  prepared to grant such  approval in the context of
the Scheme.  The obtaining of relevant  authorizations was one of the conditions
to the implementation of the Scheme which had to be satisfied or waived.  Asiaco
did not waive this condition and the Scheme was discontinued.

     One of the  conditions  precedent to the  completion  of the Scheme was the
completion of a transaction  pursuant to which SES (a  shareholder of Bowenvale)
redeemed GECC's entire indirect  holding of SES shares in exchange for shares of
a new company holding assets and cash,  including  SES's entire  shareholding in
Bowenvale (the "Exchange  Transaction").  The Exchange Transaction was completed
on March 29,  2007 and,  upon such  completion,  Bowenvale  became  jointly  and
indirectly owned by CITIC (through Able Star) and GECC through GE Equity.

     By reason of a regulatory  position taken by the regulators in Hong Kong to
the effect that the  Exchange  Transaction  resulted in the  formation  of a new
concert  group thereby  triggering  an  obligation  to launch an  unconditional,
mandatory  offer,  on May 25, 2007 Asiaco launched the Offers for all Shares and
ADSs and outstanding options of the Company.

     If,  following  the Offers  the  Company's  public  float is less than 25%,
either the  Company  will issue  additional  Shares or the  Company's  principal
shareholders  will sell  Shares so that at least 25% of the  Shares  are held by
unaffiliated  shareholders,  as required  by the listing  rules of the Hong Kong
Stock Exchange.

     In addition,  the Company  understands that if,  following the Offers,  the
number of holders of AsiaSat  Shares  resident in the United  States falls below
300 or the Company  otherwise  becomes  eligible for  de-registration  under the
Exchange Act, the Company  intends to file a Form 15 or Form 15F with the SEC to
request  that the  Company's  reporting  obligations  under the  Exchange Act be
suspended or terminated.

                                       16
<PAGE>

     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 Asian  landmass  and  offer its  customers
comprehensive  coverage of approximately  two-thirds of the world's  population.
The Company operates three satellites -- AsiaSat 2, AsiaSat 3S and AsiaSat 4.

     AsiaSat 2 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 C-band
footprint coverage to AsiaSat 2. Together, these two 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,  launched from Cape  Canaveral,  United States in April 2003, is
located at the 122.2 degrees East orbital slot and began  commercial  service on
July 1, 2003.  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 ("BSS")  frequencies and fixed satellite services
("FSS") frequencies for maximum flexibility.  In June 2000, the Company received
a  Telecommunication  License from OFTA allowing  AsiaSat to operate four of the
twelve BSS  frequencies and the FSS frequencies on AsiaSat 4. In April 2005, the
Company obtained the right to make available the remaining eight BSS frequencies
on AsiaSat 4. See "--  Services  and  Customers  - Expanded  Services  and Other
Businesses."  Because  AsiaSat 4 is a newly  established  satellite  without  an
existing customer base and viewership, AsiaSat can currently offer its customers
the option to utilize AsiaSat 4's high powered  transponder  capacity at a lower
cost than the rate demanded for capacity on AsiaSat 2 and AsiaSat 3S. AsiaSat 3S
demands a higher rate for its  transponder  capacity  because it has the largest
viewership base of any commercial satellite in the Asian region.

     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 houses a new satellite control center (the
"Tai Po Satellite  Earth  Station")  that allows  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
Satellite  Earth  Station was  completed,  and the final  occupation  permit was
received in January 2004 from the Hong Kong Building Authority.  See "Additional
Information - Material Contracts."

     As of  December  31,  2006,  the  utilization  rate for each of  AsiaSat 2,
AsiaSat 3S and AsiaSat 4 was approximately 46.9%, 74.2% and 48.4%, respectively,
with  an  average  of  57.1%  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,  British  West  Indies,  China,  Hong  Kong,  India,  Korea,  Kuwait,
Pakistan, Singapore, Taiwan, the United Kingdom, the United States and Vietnam.

                                       17
<PAGE>

     In 2004, 2005 and 2006, approximately 51.8%, 61.9% and 57.7%, respectively,
of the Company's  revenues were derived from customers from Greater China, which
includes mainland China, Hong Kong, Macau and Taiwan.

     The  Company  believes  that both  AsiaSat 2 and AsiaSat 3S are the leading
satellites for regional television programming distribution in Asia based on the
number of viewers  watching  programming  distributed on these  satellites.  The
Company's largest customer,  STAR, is a Hong Kong-based  international satellite
television  broadcasting  company that  broadcasts to the Asian region via these
two satellites.

     SERVICES AND CUSTOMERS

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

                                         2004        2005        2006

Broadcasting (video).......              70.6%       65.7%       67.8%

Telecommunications, Internet
and Multimedia.................          29.4%       34.3%       32.2%

     Total  revenue from the  Company's  five  largest  customers in each of the
years ended  December 31, 2004,  2005 and 2006 was  HK$462.5  million,  HK$345.8
million and HK$391.4 million  respectively,  which represented 46.0%, 39.3%, and
42.1%  respectively,  of total  revenue.  Revenues  from the  Company's  largest
customer represented 22.4%, 25.7% and 24.3% of total revenue for the years ended
December 31, 2004, 2005 and 2006, 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.

     STAR offers a bouquet of digital services,  including both subscription and
free-to-air  television that,  according to STAR,  reaches more than 300 million
viewers across the Asian region.

     STAR entered into capacity  agreements for  transponders  on AsiaSat 3S. In
February  2004,  the  Company  entered  into an  agreement  with STAR to provide
facilities  at the Tai Po Site to house STAR's back up play out,  broadcast  and
radio frequency equipment for downlinking and uplinking to AsiaSat 3S, and other
related  services.  STAR also  utilizes  AsiaSat 2 C-band  capacity  to  provide
programming primarily as backup capacity.

     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

                                       18
<PAGE>

expiration of existing transponder utilization agreements.  See "Key Information
- Risk Factors - Reliance Upon Significant Customer."

     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,   Associated  Press  Television  News,  the  Ministry  of
Information of Kuwait, BBC World Service Radio, Voice of America, Deutsche Welle
of Germany,  TV5, RAI of Italy, RTVE of Spain, RTPi of Portugal,  RTR Planeta of
Russia,  Fashion  TV, TVB  Satellite  Broadcasting  of Hong Kong,  the  European
Broadcasting  Union,  Zee TV, Sahara TV,  Turner  Broadcasting  System,  Sun TV,
Bloomberg  TV, NOW TV,  Indus  Vision,  Muslim TV,  MATV,  Channel  NewsAsia 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 under served.  The signals are received at rebroadcast  centers and
retransmitted to viewers. The State Administration of Radio, Film and Television
of China uses  capacity on AsiaSat 3S to distribute  domestic and  international
television  programming.  A number of television channels from various provinces
and regions in China are broadcasting on AsiaSat's C-band transponders.

     TELECOMMUNICATIONS, INTERNET AND MULTIMEDIA

     The  Company's   telecommunications   services  include  the  provision  of
transponder  capacity  for private  communications  networks  for data and voice
communications  and for  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.  Organizations  in China in such  businesses  as  banking,  securities,
publishing  and  oil  have  established  private  networks  utilizing  AsiaSat's
satellites to link remote sites with their headquarters.

     AsiaSat's Chinese telecommunications customers 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,
Chinese   ministries  and  agencies  have  entered  into  transponder   purchase
agreements to use transponders on AsiaSat's satellites.

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

     Customers   including  Telstra  Corporation  and  SpeedCast  use  AsiaSat's
satellites  to offer  broadband  (which  refers  to the  provision  of  multiple
channels of data over a single communications channel),  Internet and multimedia
services.

                                       19
<PAGE>

     EXPANDED SERVICES AND OTHER BUSINESSES

     AsiaSat has launched digital  broadcast  platforms on AsiaSat 2 that offers
one stop shop  services  including  satellite  capacity  and  signal  turnaround
facilities  to  broadcast  customers  from  Europe and the Middle East for their
services  to Asia and  Australia.  The  turnaround  facilities  are  supplied by
teleport  partners  in Cyprus and Israel that are able to receive  signals  from
European and Middle East satellites and uplink the signals to AsiaSat 2 .

     OFTA granted AsiaSat a Fixed Carrier Services ("FC") license in May 2004. A
FC 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.  AsiaSat's  FC  license  has  enabled  AsiaSat to provide a one-stop
service to its customers, including high-quality satellite transponder capacity,
uplinking or downlinking  broadcasting programs, and telecommunication  services
to audiences or operators outside Hong Kong.

     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
47.3%  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 streaming
encryption  system.  In 2003,  SpeedCast also launched a new service for two-way
operation, which provides more efficient connection for content delivery.

     On June 27, 2000, the Company was granted a telecommunication  license (the
"Telecommunication  License") from OFTA allowing  certain BSS  frequencies to be
incorporated  into the payload of AsiaSat 4 at the 122.2  degrees  East  orbital
position.  It was  subsequently  granted  the right to make  available  four BSS
frequencies on AsiaSat 4 by OFTA.  These BSS  frequencies  were assigned to Hong
Kong by the 1997 World Radiocommunication Conference ("WRC '97") of the ITU. The
2000  World  Radiocommunication  Conference  ("WRC-2000")  later  revised  these
assignments  and further  assigned  eight more  frequencies  to Hong Kong.  OFTA
granted  AsiaSat the right in April 2005 to make available the additional  eight
frequencies  on  AsiaSat 4.  These  frequencies  are  designated  for  satellite
broadcasting  uses and are  receivable in Hong Kong and  surrounding  areas with
very  small  antennas.  They  can be  used  to  provide  Direct-to-Home  ("DTH")
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 BSS frequencies onto AsiaSat 4 enables AsiaSat
to offer high power and wide coverage for broadcasting services in Hong Kong and
the  surrounding  areas.  The  main  difference  between  the BSS and the FSS in
AsiaSat's case is that BSS gives access to additional  spectrum for the Company.
Moreover,  while the FSS  frequency  bands are used for a multitude of services,
the BSS frequency bands are normally used only for television  applications  and
with much more standardized parameters.

     In April 2004, the Company's  subsidiary Skywave applied for a non-domestic
television  program  service  license,  which  was  granted  for 12 years by the
Broadcasting  Authority  of  Hong  Kong in May  2004,  in  order  to use the BSS
frequencies on AsiaSat 4 to provide DTH satellite broadcasting services.

                                       20
<PAGE>

     In November 2004, the Company  entered into an agreement with two strategic
partners  pursuant  to which each of these  strategic  partners  made an in-kind
contribution  equal to HK$3.0  million in return for a 10%  interest in Skywave.
See  "--   Acquisitions,   Investments   and  Joint  Ventures"  and  "Additional
Information  - Material  Contracts."  Skywave has set up a low cost regional DTH
service,  providing  selected  programming  to the markets of Macau,  Hong Kong,
Taiwan  and to  subscribers  in  Southern  China  licensed  to  receive  foreign
television services.  This DTH service commenced trial services in December 2004
and uses the four BSS  transponders  on  AsiaSat 4. By  installing  a very small
dish, viewers can enjoy a wide range of programming.

     In March 2004,  the Company  formed joint  venture  Beijing Asia to provide
corporate  data  networks and services in China using VSAT  technology.  Beijing
Asia commenced operation in October 2004 and is providing technical services and
equipment  installation for the construction and operation of a trial network to
connect remote sites in rural China using VSAT technology.  See "--Acquisitions,
Investments  and  Joint   Ventures"  and  "Additional   Information  -  Material
Contracts."

     On March 18, 2005,  Auspicious Colour Limited, a wholly owned subsidiary of
the Company,  was established and was granted a non-domestic  television program
service  license on September  17, 2005 from the  Television  and  Entertainment
Licensing  Authority  of Hong  Kong.  Auspicious  Colour  Limited  was set up to
provide a one-stop service that combines the provision of satellite capacity and
uplink service to broadcasters.

     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
transmission  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. These high
powered  satellites  have the  ability to cover up to  approximately  42% of the
earth's surface at one time. With broad coverage capabilities,  these 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

                                       21
<PAGE>

cable operators and local television and radio stations for  redistribution.  In
DTH  applications,   a  high  powered   geostationary   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 VSAT
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  that spread  over a large  geographic
area.

     Satellite  transponders  receive signals from the uplink earth stations and
then change the frequency  of,  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)  electromagnetic 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) orbital  location,  (iii)  transponder
power (EIRP),  (iv)  interference  from  adjacent  satellites,  (v)  transponder
bandwidth,  (vi) frequency band and (vii) other features, such as beam switching
and linearizers.

     A beam represents one of the coverage  patterns  offered by a satellite.  A
steerable beam allows the area of coverage to be changed based on market demand.
The  footprint  of a  satellite  refers  to the  geographic  area  covered  by a
satellite,  the outer edge of which  defines  area  beyond  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 downlink  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.  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 in the context of satellite  communications are portions
of the radio frequency  spectrum  assigned for satellite  transmission,  and are
approximately  in the three to seven  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 fading 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.  To  compensate  for
fading caused by rain, Ku-band transmitters  generally have higher power margins
than C-band transmitters. Higher power, which permits the use of small antennas,
makes Ku-band transmission more suitable for DTH television.

     The following table sets forth certain satellite specifications in relation
to  AsiaSat  2,  AsiaSat  3S,  AsiaSat 4 and  AsiaSat  5, which is planned to be
launched in 2009. For a discussion on certain risks related to  satellites,  see
"Key Information -- Risk Factors -- Risk of Launch and In-orbit  Failure,  Loss,
Reduced Performance and Satellite Defects",  "Key Information -- Risk Factors --

                                       22
<PAGE>

Limited Life of Satellites" and "Key Information -- Risk Factors -- 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."

<TABLE>
<CAPTION>
                                                     SUMMARY SATELLITE DATA

                 ASIASAT 2                   ASIASAT 3S                    ASIASAT 4                     ASIASAT 5
                 ---------                   ----------                    ---------                     ---------
<S>              <C>                         <C>                           <C>                           <C>
Region Covered:
C-band           Asia, Middle East, CIS      Asia, Middle East, CIS,       Asia, Middle East, CIS,       Asia, Middle East, CIS,
                 and Australia               Australia and New Zealand     Australia and                 Australia, North East
                                                                           New Zealand                   Africa
Ku-band          China, Japan, Hong Kong,    East Asia Beam (from Japan    China Beam, Australia Beam    China Beam, South Asia Beam
                 Taiwan and Korea            to Kazakhstan), South Asia    (Australia and New Zealand    (inter alia, India,
                                             Beam (from Bangladesh to      (steerable)), Hong Kong BSS   Pakistan and Bangladesh)
                                             the Middle East), Steerable   Beam (steerable)              and Steerable Beam
                                             Beam(1)

Launch date      November 28, 1995           March 21, 1999                April 11, 2003                2009 (estimated)

Manufacturer     Lockheed Martin             Boeing                        Boeing                        Space Systems/Loral

Model            Series 7000                 BSS601HP                      BSS601HP                      FS 1300

Stabilization    Three Axis Stabilized       Three Axis Stabilized         Three Axis Stabilized         Three Axis Stabilized

Number of
Transponders     33                          44                            48                            40

C-band           20 @ 36 MHz                 28 @ 36 MHZ                   28 @ 36 MHZ                   24 @ 36 MHZ
                 4 @ 72 MHz                                                                              2 @ 72MHz

Ku-band          9 @ 54 MHZ                  16 @ 54 MHZ                   10 @ 54 MHz (FSS)             14 @ 54 MHz
                                                                           6 @ 33 MHz (FSS)
                                                                           4 @ 33 MHz (BSS)

Maximum          40 dBW (C-band)             41 dBW (C-band)               41 dBW (C-band)               42 dBW (C-band)
EIRP             53 dBW (Ku-band) ((2))      53 dBW (Ku-band)              53 dBW (Ku-band)              54 dBW (Ku-band)
                                                                           56 dBW (BSS Ku-band)

Payload          FSS                         FSS                           BSS / FSS                     FSS

Power output     55 W_TWTAs (C-band)         55 W_TWTAs (C-band)           55 W_TWTAs (C-band)           65 W_TWTAs (C-band)

                 115 W_ TWTAs                140 W_TWTAs (Ku-band)         140 W_TWTAs (Ku-band)         150 W_TWTAs (Ku-band)
                 (Ku-band)

Estimated
Useful
Life             13 years                    16 years                      15 years                      15 years

Estimated end
of useful life   2010                        2015                          2018                          2023
</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 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.

                                       23
<PAGE>

     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 at
certain points of its coverage area. Since 2002, 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. 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.  In December 2003,
AsiaSat 2 experienced two related short duration service outages.  These outages
caused  no  permanent  damage  to  AsiaSat 2 and  AsiaSat's  engineers  took the
appropriate action to restore AsiaSat 2's service. As a result of these outages,
some  customers  moved  to  other  AsiaSat  satellites,  while  three  customers
utilizing   capacity   representing  in  the  aggregate  less  than  one  C-band
transponder  moved to a  competitor's  satellite.  These  outages were the first
break in service of an  AsiaSat  satellite  in the  history of the  Company.  In
February  2005,  one of the two bus  power  transformers  on  AsiaSat  2  (which
provides  low  voltage to the  satellite)  changed to "off"  status.  While this
change of status does not necessarily indicate a failure of the transformer,  it
is  impossible  for the  Company to verify the  integrity  of this  transformer.
AsiaSat 2 can operate  normally  with only one bus power  transformer.  See "Key
Information  -- Risk  Factors  -- Risk of Launch  and  In-orbit  Failure,  Loss,
Reduced Performance and Satellite Defects."

     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 parts of  Africa.  The  footprint  of  AsiaSat  2 covers  approximately
two-thirds  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, 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 2010.

     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."

     As a result of a number of reported  mechanical failures of Lockheed Martin
series 7000 satellites, the same model as AsiaSat 2, the in-orbit insurance rate
for AsiaSat 2, without  exclusions  of coverage,  increased  significantly.  The
Company has decided not to procure  in-orbit  insurance  for AsiaSat 2 given the
low book value of AsiaSat 2 and the Company's cash  position.  In the event of a
failure  resulting in a total loss of AsiaSat 2, the Company  would incur a loss
that is equal to the net book  value of  AsiaSat 2 at the time of the total loss
as well as disruption of services carried out on AsiaSat 2.

     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, following the successful launch in March 1999, by AsiaSat 3S.

                                       24
<PAGE>

     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  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  transponders  can be  allocated  to 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 and off-site  support services for AsiaSat 3S until December 31,
2009. See "--Regulation - Export Regulation."

     In both  November  2004 and March  2005,  a  transponder  on AsiaSat 3S was
deliberately  interrupted by signals carrying Falun Gong-related  content.  As a
result,  the  Company  was  forced  to shut  down the  respective  transponder's
transmission for a short period of time on November 26, 2004 and March 14, 2005.
These  breaks in service  affected  normal  programming  of  certain  customers'
satellite television channels. The Company views these deliberate  interruptions
as "harmful  interference"  as such term is defined in the  constitution  of the
ITU, and accordingly, the Company has requested that OFTA report these incidents
to the  Radiocommunications  Sector of the ITU through the relevant authority in
China. Since then, there have been a few other occasions of harmful interference
detected.  For  a  general  discussion  on  the  ITU,  see  " --  Regulation  --
International  Telecommunication  Union."  Also,  see "Risk  Factors  -- Risk of
Losing Satellite  Service Revenues if Other Satellites or Signals Interfere with
the Company's Transmissions."

                                       25
<PAGE>

     ASIASAT 4

     AsiaSat 4 was launched on an Atlas IIIB launch vehicle on April 11, 2003 in
Cape Canaveral,  Florida. AsiaSat 4 commenced commercial service on July 1, 2003
and is operational at 122.2 degrees East.

     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.   Its  footprint  covers   approximately
two-thirds of the world's  population.  AsiaSat 4's pan-Asian  C-band  footprint
covers  more than 40  countries  and  regions  spanning  from New Zealand to the
Middle East. Its Ku-band coverage  consists of two high-power  focused beams for
East Asia and  Australasia,  as well as a new BSS beam for DTH  services in Hong
Kong and the  adjacent  South  China  region.  AsiaSat 4 is  designed to provide
advanced  satellite   services  including  DTH  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.

     AsiaSat 4 is equipped with four (4) on-board  Xenon Ion  Thrusters  (XITs);
two (2) on the north side and two (2) on the south side.  In October  2006,  one
XIT on the north side failed. There is no impact to the estimated useful life of
AsiaSat 4 with this  anomaly.  However,  if the  remaining XIT on the north side
also  failed in the  future,  there will be a  reduction  of the useful  life of
AsiaSat 4 by several years.  The exact magnitude of reduction  depends on if and
when the north side XIT failed.

     Under the AsiaSat 4  construction  contract  with Boeing,  Boeing agreed to
provide  off-site  support  services for the life of the  satellite.  On July 5,
2000, Boeing obtained a Technical  Assistance Agreement from the U.S. Department
of State to provide  technical  data for AsiaSat 4 until  December 31, 2010.  On
July 20, 2000, Boeing obtained another Technical  Assistance  Agreement from the
U.S. Department of State to provide in-orbit anomaly support for AsiaSat 4 until
December  31,  2010.  See "--  Business  Overview"  and  "--Regulation  - Export
Regulation."

     AsiaSat  previously  had a dispute with Shin  Satellite in relation to Shin
Satellite's  right to operate a satellite  from 120 degrees  East.  As part of a
comprehensive agreement to limit potential mutual interference between AsiaSat 4
and  the  IPStar   satellite   operated  by  Shin  Satellite,   the  responsible
administrations of China, OFTA and the Administration of the Kingdom of Thailand
(regulator  and ITU  notifying  administration  for Shin  Satellite)  agreed  to
increase the orbital  separation  of IPStar and AsiaSat 4. Both  satellites  are
required to change orbital  locations,  with AsiaSat 4 shifting from 122 degrees
East to 122.2  degrees  East.  For a  general  discussion  on  regulations,  see
"--Regulation  -  Hong  Kong  Regulation"  and   "--Regulation  -  International
Telecommunication Union."

     ASIASAT 5

     On April 28,  2006 and May 8, 2006,  AsiaSat  entered  into a  construction
contract and a launch contract,  respectively,  for the commissioning of AsiaSat
5.  Under  the  terms of the  construction  contract,  Loral,  the  construction
contractor,  shall complete the construction of AsiaSat 5 within 25 months after
April 28,  2006.  The launch  contractor,  Sea Launch,  shall  provide  services
associated  with the  launch of  AsiaSat  5 from the  Baikonur  Space  Centre in
Kazakhstan. Under the terms of the launch contract, the launch services shall be
completed upon the launch of AsiaSat 5, which was  originally  scheduled to take


                                       26
<PAGE>

place  between  July 1, 2008 and  December  31,  2008.  The launch date has been
extended to 2009 because of the limited availability of a launch vehicle.

     AsiaSat 5 is a new satellite  based on the well proven Space  Systems/Loral
1300 satellite bus. It will carry 26 C-band and 16 Ku-band  transponders  and is
intended to replace  AsiaSat 2 at the orbital  location of 100.5  degrees  East.
(AsiaSat 5 has the capability of operation across all of the available frequency
band, equivalent to 16 Ku-band transponders and 26 C-band transponders. However,
the power and thermal design of AsiaSat 5 may be just  sufficient for 14 Ku-band
transponders  and 26 C-band  transponders at the end of the  satellite's  useful
life.) It will replace all current functions of AsiaSat 2 in both C and Ku-bands
and will  provide  additional  coverage at  Ku-band.  This  additional  coverage
consists of a dedicated antenna for South Asia plus a steerable antenna that can
be pointed to other parts of Asia or Australia. AsiaSat 5 is expected to have an
estimated useful life of 15 years after launch.

     The C-band  payload of AsiaSat 5 will be similar to that of AsiaSat 2 other
than  certain  performance  upgrades.  The  Ku-band  coverage  for China will be
significantly  improved, and additional coverage will also be provided for South
Asia,  including India,  Pakistan,  Bangladesh and parts of the Middle East. The
steerable  antenna  will  allow  Ku-band  capacity  to be  deployed  in a manner
consistent with the market demand anywhere in Asia.

     ADDITIONAL ORBITAL SLOTS AND USE OF FREQUENCIES

     China  has  filed  on  behalf  of  AsiaSat  applications  with  the ITU for
additional  spectrum  capacity  and  enhanced  characteristics  in  the  current
frequency  bands for all three  orbital  slots where  AsiaSat's  satellites  are
currently  operating.  See "- Regulation."  The current capacity has significant
frequency and geographic  coverage  constraints  resulting from the coordination
process. No assurance can be given that the additional capacity will be obtained
by AsiaSat.

     AsiaSat has the option to co-locate  additional  satellites  in the orbital
slots located at 100.5  degrees East,  105.5 degrees East and 122.2 degrees East
in order  to  provide  additional  capacity  or  enhanced  performance  in these
locations and to support the existing  satellites with redundant  capacity.  See
"Key  Information - Risk Factors - Risk of Loss of Orbital Slot" and "Satellites
- AsiaSat 4."

     TRANSPONDER CAPACITY OR UTILIZATION AGREEMENTS

     A  typical  transponder  capacity  agreement,  also  known  as  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. 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  advance 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


                                       27
<PAGE>

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.

     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, AsiaSat 3S and AsiaSat 4 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  engineering  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 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 Tai Po
Satellite  Earth  Station.  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 3S and AsiaSat 4 and
plans to obtain such coverage for AsiaSat 5. AsiaSat 2 is no longer  insured for
in-orbit failures. See "Key  Information-Satellites-AsiaSat 2". AsiaSat also has
obtained  third-party  liability insurance for AsiaSat 2, AsiaSat 3S and 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 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


                                       28
<PAGE>

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.

     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  in-orbit  insurance  for  AsiaSat 3S and AsiaSat 4 in the
amount of HK$6.87 million  (US$0.88  million) and HK$1,255.8  million  (US$161.0
million),  respectively,  at a combined cost of  approximately  HK$25.0  million
(US$3.2  million) for the twelve month period beginning from March 21, 2007. The
policy for  AsiaSat 3S and  AsiaSat 4 contained  standard  commercial  satellite
insurance provisions and customary exclusions. In the case of AsiaSat 4, it also
contains  an  exclusion  of losses in the event of a failure  of XIPS  (Xeon Ion
Propulsion  System) on the satellite.  A failure of the XIPS system 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 risk of an XIPS  failure.  Such  arrangement  will  allow
AsiaSat to purchase a replacement  satellite for AsiaSat 4 at a pre-agreed price
scaled based on the time of XIPS 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."

     SALES AND MARKETING

     The  Company's  sales and  marketing  department,  which  had 24  employees
(including  two general  managers) as of December 31, 2006,  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 events and presentations at
industry conferences.

     EMPLOYEES

     As of December 31, 2006, the Company had 102 permanent employees,  of which
9 employees were in management,  41 employees were in engineering and operations
and 24 employees  were in sales and  marketing.  The remaining 28 employees were
engaged  in   administrative,   accounting,   legal,   regulatory  and  clerical
activities.  The Company has 85 employees in Hong Kong (including 1 employee for
Skywave) and 17 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 owned and operated a global  communications  satellite  system) and several

                                       29
<PAGE>

Asian countries that had developed domestic satellite communications,  there was
no supplier of Asian region-wide satellite  communications.  Since the launch of
AsiaSat's  first  satellite  in 1990,  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 Asian  region.  Many of these  competitors  have  long-standing  customer
relationships  and are  substantially  larger in fleet size,  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 freely and fairly 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 and Satellites."

     OTHER SATELLITE SYSTEMS

     Other existing and proposed  organizations  are competing or might consider
competing  in  the  Asian  regional  market.  Some  existing  competitors  offer
low-cost,  high performance  transponders  which compete directly with AsiaSat's
satellites,  while other 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.

     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.

                                       30
<PAGE>

     TRANSPONDER OVERSUPPLY

     The supply of transponders in the region continues to exceed the demand for
transponders. The Company believes that this imbalance cannot be corrected until
global economic growth and new applications and services increase demand for the
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, OFTA.

     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.  This 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 OFTA.  AsiaSat has the benefit of existing licenses covering current and
future  operation of each of AsiaSat 2, 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 OFTA.

     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  and Tai Po,  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 stations in Hong Kong

                                       31
<PAGE>

are regulated by the  Telecommunications  Ordinance.  AsiaSat has the benefit of
licenses granted under the  Telecommunications  Ordinance  covering all its TT&C
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).  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  OFTA
allowing BSS 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  "--AsiaSat 4." For a further  discussion on
the  Telecommunication  License, the FC license and the non-domestic  television
program service license,  see "--Services and Customers - Expanded  Services and
Other Businesses."

     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.

     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 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.

                                       32
<PAGE>

     There  are  no  specific  restrictions  on  satellite  operators  providing
services  in  Australia.  A radio  communications  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.  AsiaSat has  appointed  an
authorized  nominated  carrier  for  its  Ku-band  Australian   transponders  in
Australia.

     In Thailand,  Shin Satellite's  8-year monopoly (which is part of a 30 year
concession  from the  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 National
Telecom Commission 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
provide  transponder  capacity to domestic  companies that have been licensed to
operate  transponder  capacity  provision  businesses  or users  approved by the
Ministry of Information Industry. Foreign satellite operators are not allowed to
provide transponder  capacity 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 Asian 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.  See  Item 3  "Risk  Factors  - Risk  of Not  Successfully  Renewing
Existing  Transponder  Capacity Agreements or Not Renewing Them on Terms Similar
to Their  Current Terms or Customers  Switching to Other  Providers of Satellite
Transponder Capacity."

     INTERNATIONAL TELECOMMUNICATION UNION

     The ITU was  established  in 1865 and  became a  specialized  agency of the
United Nations in 1947. The ITU 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 ITU 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 ITU.

                                       33
<PAGE>

     The   ITU  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  radio  communication  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 Radio Conferences. In between the sessions of the World 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 radio communication 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 radio  communication  systems,
other users operating in accordance with these procedures are given the required
protection.

     Details of the ITU, its instruments and working methods can be found in the
Constitution  and Convention of the ITU, while radio  communication  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 may not be entitled to the full  interference  protection  afforded under
international law.

     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 OFTA. Use of the
orbital  slots  remains  subject to the  continuing  oversight  of OFTA and to a
variety  of  regulations   generally  applicable  to  all  satellite  and  radio
licensees.  OFTA 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  OFTA,  and OFTA in turn  notified the ITU,  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

                                       34
<PAGE>

authorized by OFTA. 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
ITU. 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 122.2  degrees East,
additional  filings have been submitted to, and are currently being  coordinated
with, the ITU.

     EXPORT REGULATION

     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.  In February
2001, Boeing obtained a Technical Assistance Agreement to provide technical data
and services  for in-orbit  anomaly  support and off-site  support  services for
AsiaSat 3S until 31 December 2009. On July 5, 2000,  Boeing obtained a Technical
Assistance  Agreement to provide necessary  technical data to AsiaSat 4 until 31
December 2010. On July 20, 2000,  Boeing obtained another  Technical  Assistance
Agreement from the U.S.  Department of State to provide in-orbit anomaly support
for AsiaSat 4. See "-- Satellites -AsiaSat 4."

     PROPERTY, PLANTS AND EQUIPMENT

     LAND FACILITIES

     The Company's executive offices are located in Causeway Bay, Hong Kong. The
lease covering the Company's  executive office space commenced in March 2005 for
a term of three years. The rental amount (excluding rates,  air-conditioning and
management  charges) under this lease is approximately  HK$2.7 million per year.
The  Company  finances  this  cost  from  internal  resources.  See  "Additional
Information - Material Contracts."

     In March  2000,  the  Company  opened a  representative  office in Beijing,
China.  The Company's  Beijing  office  entered into a new lease for a period of
four years  beginning  in June 2004.  The lease amount is  approximately  HK$0.7
million per year.

     The Company has entered into an agreement  with respect to the lease of the
Tai Po Site in Hong Kong to support the growth of the  Company's  business.  The
Tai Po Site houses the Tai Po Satellite  Earth Station,  which is the center for
coordination of all technical  customer-related  communication  on the Company's
satellite,  including station testing, outage and trouble shooting and real time
scheduling of ad hoc broadcasting services traffic.  These services also include
uplink,  technical support and other value added services.  The Tai Po Satellite
Earth  Station  became  fully  operational  in  December  2003,  and the complex
received its final  occupation  permit from the Hong Kong Building  Authority in
January 2004. The five full  performance  antennas  required for TT&C operations
have been installed and are operational.  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.

                                       35
<PAGE>

     SATELLITE CONTROL FACILITIES

     The Tai Po Satellite Earth Station has been fully operational for more than
three years and is now the Company's primary TT&C facility. The Tai Po Satellite
Earth  Station 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").
The  integrity of the  delivery of the  Company's  services is achieved  through
duplicating at the Tai Po Earth Station,  the Company's  circuits and facilities
provided at the  Stanley  TT&C  Facility.  A new  satellite  control and monitor
software program has been installed and is undergoing system testing.

     AsiaSat's  technical  personnel staff the Tai Po Satellite Earth Station 24
hours a day. 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.

     Once a satellite is placed at its orbital location, it is controlled by the
Tai Po Satellite  Earth  Station  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 Tai Po Satellite
Earth Station  periodically correct a satellite's attitude and conduct east-west
and  north-south  station  keeping  maneuvers,   thus  ensuring  that  AsiaSat's
satellites maintain their proper orientation and orbital position.  In addition,
commands from the Tai Po Satellite Earth Station can switch  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.

     OVERVIEW

     The Company,  through its wholly-owned  subsidiary,  AsiaSat,  is a leading
provider of high quality satellite  transponder capacity in the Asian region. As
of December 31, 2006, the Company had three satellites in operation:

<TABLE>
<CAPTION>
                             POSITION         UTILIZATION RATES(1)                           % CHANGE

                                                     2004           2005           2006
                                                     ----           ----           ----
<S>                     <C>                          <C>            <C>            <C>         <C>
AsiaSat 2               100.5(degree) East           36.4%          40.1%          46.9%       17.0%

AsiaSat 3S              105.5(degree) East           73.3%          72.7%          74.2%        2.1%

AsiaSat 4               122.2(degree) East           26.8%          46.5%          48.4%        4.1%

System Utilization                                   45.7%          54.0%          57.1%        5.7%
</TABLE>
-------------
(1) There  were 57 and 67  transponders  respectively  utilized  on all  AsiaSat
satellites at each of the year-end 2004 and 2005, and there were 71 transponders
utilized  on all  AsiaSat  satellites  at  year-end  2006.  See "---  Results of
Operations - Utilization Rates."

                                       36
<PAGE>

     Our  revenue  by  industry  "segments"  consist of video  broadcasting  and
telecommunications.  The  factors  that  drive  demand for  AsiaSat's  satellite
services across the Asian region include video distribution and the provision of
telecommunications  networks to users who need last mile  connectivity over wide
geographic coverage at a fixed cost.  Satellites can provide this coverage where
cable cannot, particularly across the widespread and disparate Asian region.

     MARKET REVIEW

     The effects of the growing strength of some of the Asian economies have not
yet improved the short-term  outlook of the Asia-Pacific  satellite market.  New
demand is being absorbed by existing  oversupply  that,  concurrently,  is being
increased  by  new  satellite  launches.   Additionally,  the  satellite  sector
typically  lags behind  other  sectors in  responding  to overall  shifts in the
economy.

     In 2006, nine new satellites that cover portions of Asia were launched, but
two suffered a total loss at launch.  After the retirement or relocation of five
other satellites,  the seven additional  satellites  brought the total number of
satellites  covering the region to 77, a net increase of two. The net effect was
a decrease of 13 C-band transponders and an increase of 34 Ku-band  transponders
that are in competition with AsiaSat.

     The Company is competing for contracts with new strategic customers and for
renewing existing customer contracts. In 2006, there was intense competition but
the Company  was able to  maintain  its  premium  pricing  over its  competitors
because of  outstanding  service  quality.  However,  the Company  entered  into
certain  shorter  and more  competitive  contracts  in order to secure or retain
strategic relationships.  This strategy did not enhance the Company's revenue or
significantly  increase its backlog, but the Company was successful in retaining
customers and raising overall utilization in the current difficult market.

     Emerging trends for the medium to long term are more positive.  Much of the
new  capacity  that has been or is  scheduled to be launched in the near term is
replacing existing satellites or is dedicated to specific domestic  initiatives.
New applications and deregulation are expected to increase demand.

     Short-term

     Due to the persistent  oversupply of transponder  overcapacity and the slow
introduction  of new  applications in the  Asia-Pacific  satellite  market,  the
Company does not see material  signs of  improvement in the short to medium term
and does not see new developments in the market that would enable the Company to
deliver  stronger  results in 2007.  Therefore,  the Company  does not expect to
achieve  significant  improvement  in  financial  results in the near  term.  In
addition,  the slow demand and the downward pressure on pricing continue to hold
back growth while only a few new video  channels  are  entering the market.  Few
operators of existing TV channels have made any  commitment to expand,  although
some are looking to do so.

     Demand in telecommunications is growing steadily but the strong competition
and competitive  pricing present  enormous  challenges to the Company.  See "Key
Information -- Risk Factors - Political,  Economic and Other Regional Risks" and
"Key  Information -- Risk Factors - Risk of Limited Market Demand and Increasing
Competition." In addition to this slower growth in new demand,  continuing price
pressure on new  transponder  utilization  agreements have limited the Company's

                                       37
<PAGE>

growth.  See "Information on the Company - Business  Overview." The year of 2007
is another  challenging  year requiring  intense  customer focus to maintain and
expand existing  businesses where possible and to concentrate on identifying new
opportunities for growth.

     Medium to Long-term

     However,  the Company's  business is long-term in nature,  and the positive
factors that drive demand  remain in place.  These  factors  include  television
distribution  (and  increasingly  in  more  developed  markets,  high-definition
television),  and  telecommunications  networks that need connectivity over wide
geographic  coverage,  at  a  fixed  cost.  Furthermore,   the  Company  has  an
outstanding  technical  and customer  service  team as well as a premium  client
base.

     There are signs of  positive  domestic  regulatory  activities  in  certain
markets,  and these bode well for the future.  New DTH services are also planned
for a  number  of  important  markets  over the next  few  years,  but  existing
regulations that limit foreign ownership and prevent new DTH services from using
non-domestic   satellites  are  discouraging  foreign  investment  and  creating
barriers for foreign satellite operators.  Nevertheless,  these developments are
positive as the overall  surplus  capacity in the region  reduces as a result of
domestic capacity being absorbed.  In addition, as markets over time slowly open
up to DTH, the eventual entry of foreign operators and investment is expected to
promote  competition with the local  operators.  The forecast for DTH systems in
the Asia-Pacific  region indicates that domestic satellite operators will not be
able to meet the demand for DTH  capacity.  This is  expected to have a positive
impact on the business of the Company.

     The  Asia-Pacific  region's  competing  television  platforms  also  have a
growing appetite for high quality  programming,  which will drive the demand for
greater  satellite  capacity  regardless of the delivery  methods,  which may be
cable,  DTH or Internet  Protocol  Television  (IPTV)  delivered  over broadband
services  offered  by  the  telephone  operator.  Competition  is  also  forcing
television   platform   operators  to  differentiate   themselves   through  new
applications and technology. In addition, economic development in countries that
lack  traditional  communications  infrastructure,  is  forcing  governments  to
examine the latest technology,  including  satellite  capacity.  There are early
positive  signs of increased  activity,  include many  associated  with the 2008
Beijing  Olympics.  There  is  some  progress  in the  area  of new  technology,
including HDTV, video to mobile,  and service bundling,  all of which will drive
demand  for  satellite  capacity.   Developments  in  China's  DTH  market  were
negatively  affected  by the launch  failure  of  SinoSat 2, which was  designed
exclusively for China's DTH. This failure and subsequent  delay in the launch of
DTH in China is expected  to delay the  lifting of the ban on private  satellite
dish ownership in China.

     The  extended  period of little  growth in the  satellite  industry  in the
Asia-Pacific  region is presenting  challenges as well as opportunities  for the
Company. 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 longer term recovery of the  commercial
satellite industry in the Asia-Pacific region.

     REVENUE

     SOURCES. Substantially all of the Company's revenues during the years under
review were derived from  payments  made in respect of  transponder  utilization

                                       38
<PAGE>

agreements  and  transponder  purchase  agreements for AsiaSat 2, AsiaSat 3S and
AsiaSat 4 and were almost entirely payable in US Dollars.

     AsiaSat's  transponder  utilization  agreements  and  transponder  purchase
agreements  in effect as of May 31, 2007  provided for total  committed  revenue
(including  a portion of the deposits  received by the Company in prior  periods
and that will be  recognized  as revenue  in the  applicable  future  period) of
HK$2,510.8  million  (US$321.9  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 the agreements are not terminated earlier.
See "Information on the Company - Transponder Utilization  Agreements." In 2006,
approximately  2.6% of the Company's  revenue from the provision of  transponder
capacity was derived from  transponder  purchase  agreements,  and the remaining
portion was derived from transponder utilization agreements.

     Payments under transponder  utilization agreements are negotiated with each
individual  customer and generally are influenced by various factors,  including
market conditions that drive demand,  satellite performance capabilities and the
reputation of AsiaSat as a reliable  service  provider.  See "Information on the
Company - Business Overview."  Generally,  in the satellite  transponder market,
transponders  with greater  coverage,  wider bandwidth,  more viewers and higher
power have commanded a premium  price.  These factors will impact our ability to
increase charges for transponder  capacity in future periods with respect to new
and existing agreements.

     SEGMENTS.  The  Company's  primary  industry  "segments"  consist  of video
broadcasting and  telecommunications.  The majority of the Company's  revenue is
attributable  to  video  broadcasting.  Due  to  the  contracted  nature  of the
Company's  revenue  stream,  year-to-year  fluctuations  are driven by  customer
contract  renewals and customer  movements.  See  "Information  on the Company -
Business  Overview,"  "Information  on the  Company  -Services  and  Customers -
Broadcasting,"   "Information   on  the  Company  -  Services  and  Customers  -
Telecommunications,"  "Information  on the  Company - Services  and  Customers -
Multimedia  and  Internet"  and  "Information  on the  Company  -  Services  and
Customers - Expanded Services and Other Businesses." The following table shows a
breakdown of revenue by segment:

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,

                                              2004                      2005                        2006
                                              (HK$)                     (HK$)                       (HK$)
                                                        (in millions, except for percentages)

                                                 % OF TOTAL                % OF TOTAL                   % OF TOTAL
                                      AMOUNT       REVENUE         AMOUNT    REVENUE           AMOUNT     REVENUE
<S>                                  <C>         <C>              <C>      <C>                 <C>      <C>
Broadcasting (video)                   709.4        70.6%           578.4     65.7%             630.3      67.8%

Telecommunications, Internet and       295.6        29.4%           301.3     34.3%             299.6      32.2%
Multimedia

Total Revenue                        1,005.0(1)    100.0%           879.7    100.0%             929.9      100.0%
</TABLE>

--------------
(1)  See "-- Results of Operations - Revenues."

                                       39
<PAGE>

     The  following  table  shows the place of  incorporation  of the  Company's
customers.  However,  due to the nature of the Company's business,  the place of
incorporation of its customers are not reflective of their market  activities as
broadcasting and telecommunication consumers may be located outside the coverage
area of AsiaSat's satellites.

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,

                                              2004                            2005                            2006
                                              (HK$)                           (HK$)                           (HK$)
                                                             (in millions, except for percentages)

                                                  % OF TOTAL                       % OF TOTAL                        % OF TOTAL
                                       AMOUNT       REVENUE             AMOUNT       REVENUE            AMOUNT         REVENUE
<S>                                  <C>          <C>                  <C>         <C>                 <C>           <C>
Hong Kong                              323.1          32.1%              341.7         38.8%             341.6           36.7%

Greater China, including
  Macau and Taiwan                     197.9          19.7%              202.7         23.0%             194.8           21.0%

United States of America               183.8(1)       18.3%               78.2          8.9%              79.8            8.6%

British Virgin Islands                  40.9           4.1%                9.7          1.1%               2.8            0.3%

United Kingdom                          46.1           4.6%               49.4          5.6%              53.2            5.7%

Others                                 213.2          21.2%              198.0         22.6%             257.7           27.7%
                                       -----         -----               -----        ------             -----           -----

Total Revenue                        1,005.0(1)      100.0%              879.7        100.0%             929.9          100.0%
                                    ========        ======               =====       ======              =====          ======
</TABLE>

-------------
(1)  See "-- Results of Operations - Revenues."

     REVENUE  RECOGNITION.  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 2004,  there was
recognition of revenues under the transponder  utilization  agreements in excess
of payments due under those agreements in the amounts of HK$9.3 million. In 2005
and 2006,  the total  amount of payments due under the  transponder  utilization
agreements was in excess of revenues  recognized  under those  agreements in the
amount of HK$0.7 million HK$3.5 million (US$0.5 million).

     The Company  recognizes  revenue on the sale of transponder  capacity under
transponder  purchase  agreements  on a  straight-line  basis  from  the date of
delivery of the capacity until the end of the design life of the satellite.

     RELIANCE UPON A SIGNIFICANT CUSTOMER. In the years ended December 31, 2004,
2005 and 2006,  approximately  22.4%,  25.7%  and  24.3%,  respectively,  of the
Company's revenues were attributable to transponder  utilization agreements with
STAR.  See  "Information  on the  Company -  Services  and  Customers"  and "Key
Information -- Risk Factors --Reliance upon Significant Customer."

                                       40
<PAGE>

     EXPENSES

     The components of operating expenses are cost of services, selling, general
and administrative expenses and depreciation.  Significant components of cost of
services  include  in-orbit  insurance,  staff costs,  satellite  operations and
turnaround  service  charges.  Significant  components  of selling,  general and
administrative  expenses include staff costs, office rental expenses,  provision
for doubtful debts, marketing and promotion expenses,  business travel expenses,
dual listing  expenses,  professional  fees and amortization of goodwill arising
from an acquisition of affiliates.

     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  decreased to HK$207  million,  which is similar to the
operating expense in 2005.

     INTEREST IN ASSOCIATES

     The  Company has  accounted  for its share of profit or loss  arising  from
associates on an equity  accounting  basis.  In the case of a loss,  the Company
will reflect its share in its income  statement with a corresponding  write down
of its investment in an affiliate.  Once the investment has been written down to
zero the Company will not account for any further loss beyond its investment. In
2004, 2005 and 2006, the Company recorded a HK$12.4 million,  HK$3.9 million and
HK$8.4  million  (US$1.1  million)  loss,  respectively,  with  respect  to  its
investment in associates, which includes amortization of goodwill and impairment
loss. In the case of a profit,  the Company will reflect its share of the profit
in its income  statement.  In 2004,  2005 and 2006,  the Company  recorded a net
positive contribution to the Company's income statement in the amount of, HK$6.4
million, HK$28.3 million and HK$37.9 (US$4.9 million), respectively.

     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 on its operations in
certain  of the  overseas  jurisdictions.  The Hong  Kong  profits  tax rate was
increased to 17.5% per annum with effect from April 2003.  Hong Kong profits tax
was previously charged at the rate of 16% per annum.

     Under Indian tax  regulations,  the Company may be subject to Indian income
tax on revenues  received by the Company in respect of income from the 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.

                                       41
<PAGE>

     The Indian tax  authorities  have  assessed  the  Company for income tax as
follows:

<TABLE>
<CAPTION>
                                          ASSESSMENTS (HK$ IN MILLIONS) (APPROXIMATELY)
-------------------------------------------------------------------------------------------------------------------------------
Assessment Year      1997-98      1998-99      1999-00      2000-01     2001-02     2002-03     2003-04      2004-05     Total

<S>                  <C>          <C>          <C>          <C>         <C>         <C>         <C>          <C>         <C>
                      20.0         23.0          22.0        14.0        29.0         38.0       50.0          58.0      254.0
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     The Company has filed appeals for each of the  assessment  years 1997-98 to
2004-05.  No assessment has yet been made for the 2005-06 or 2006-07  assessment
years.

     The Income Tax Appellate  Tribunal (the  "Tribunal")  in an earlier  appeal
filed against the original  assessment for the assessment year 1997-98 held that
the Company is liable for Indian  income tax under  certain  circumstances.  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.  Both
appeals have been admitted by the High Court.

     In order to obtain a stay of  recovery  proceedings,  the  Company has made
payments as follows and has recorded  these payments as an asset as they believe
that the amounts are recoverable:

<TABLE>
<CAPTION>
                             PAYMENT TO STAY RECOVERY PROCEEDINGS (HK$ IN MILLIONS) (APPROXIMATELY)
-------------------------------------------------------------------------------------------------------------------------------
Assessment Year      1997-98      1998-99      1999-00      2000-01     2001-02     2002-03     2003-04      2004-05     Total

<S>                  <C>          <C>          <C>          <C>         <C>         <C>         <C>          <C>         <C>
                       13.0         14.0        11.0          9.0         20.0        27.0       39.0          22.0      155.0
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     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 and therefore also cannot
estimate  the  amount of Indian  income  tax for which the  Company  may  become
liable.  Accordingly,  no provision has been recognized for Indian income tax in
the Company's financial  statements.  Furthermore,  as stated above, the Company
has filed an  appeal  against  the  Tribunal's  decision.  The  appeal  has been
admitted by the High Court and is pending before the High Court.

     RESULTS OF OPERATIONS

     The Company's  revenues for 2006 amounted to HK$929.9 million , an increase
of HK$50.2 million compared to that of 2005.

     Operating  profit  decreased  from  HK$504.0  million  in 2004 to  HK$420.5
million in 2005.  Operating  profit in 2006  increased to HK$517.5  million from
HK$420.5 million in 2005. Operating profit as a percentage of revenues increased
in 2006 to 55.6% from 47.8% in 2005, which in turn decreased from 50.1% in 2004.

     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.

                                       42
<PAGE>

<TABLE>
<CAPTION>
                                                               YEAR ENDED DECEMBER 31,

                                                        2004                 2005                2006
                                                    --------------      ---------------     -------------
<S>                                                 <C>                 <C>                 <C>
Revenues                                                 100%                  100%               100%

Cost of services                                       (41.9)                (47.6)             (44.2)
                                                    --------------      ---------------     -------------

                                                        58.1                  52.4               55.8

Other gains - net                                        2.2                   4.9               10.0

Administrative expenses                                (10.2)                 (9.5)             (10.2)
                                                    --------------      ---------------     -------------

Operating profit                                        50.1                  47.8               55.6

Finance costs                                              -                     -                  -

Share of results of associates (including
   goodwill amortization)                               (1.2)                 (0.5)              (0.9)

Impairment loss recognized in respect of
   goodwill of associates                                  -                     -                  -
                                                    --------------      ---------------     -------------

Profit before taxation                                  48.9                  47.3               54.7

Taxation                                                (6.0)                 (5.8)              (5.9)
                                                    --------------      ---------------     -------------

Profit for the year                                     42.9                  41.5               48.8
</TABLE>

     REVENUES

     Revenues in 2006 increased 5.7% to HK$929.9  million from HK$879.7  million
in 2005, which in turn decreased from HK$1,005.0  million in 2004.  During 2005,
the  Company   entered  into   transponder   utilization   agreements   totaling
approximately twenty transponders at lower rates for some new customers and lost
approximately  fifteen  transponders  on  non-renewal  of  some  contracts  upon
expiration or early termination. The higher revenue in 2004 was primarily due to
a one-time  contribution to revenues  resulting from the early  termination of a
transponder  utilization agreement. In 2005, excluding the one-time contribution
of  HK$107.6  million to the  revenues of 2004 upon the early  termination  of a
transponder  utilization  agreement,  revenues were down by HK$17.7 million. The
increase  in revenue in 2006 was due to one-time  receipts of HK$50  million for
early termination of contracts.  Excluding the receipts,  recurring revenue were
almost the same as 2005.

     UTILIZATION  RATE. As of December 31, 2006,  the overall total  utilization
rate of AsiaSat 2,  AsiaSat 3S and AsiaSat 4 increased  5.7% over the prior year
from 54.0% to 57.1%,  which in turn increased from the overall total utilization
rate of 45.7% as of December 31, 2004. See  "--Overview."  There were 57, 67 and
71 transponders  utilized on all AsiaSat's satellites at the year-end 2004, 2005
and 2006,  respectively.  This  utilization rate did not include the transponder
capacity used for occasional service on an ad-hoc basis and it was difficult for
the  Company  to  quantify   this  usage  and   translate  it  into   equivalent
transponders.  The revenue generated from occasional  service was US$37 million,
representing approximately 4% of the recurring revenue. The increase in 2005 and
2006  from the  previous  year  was the  result  of the  leasing  of  additional
transponders to new and existing customers.  See "Key Information - Risk Factors
- Risk of  Technological  Changes" and "Key Information - Risk Factors - Risk of
Limited Market Demand and Increasing Competition."

     Utilization  rates and the fees derived from its  satellites are determined
by the terms of the Company's transponder agreements rather than the transponder
capacity  actually used by the Company's  customers at any given time.  The fees

                                       43
<PAGE>

derived  from the  Company's  satellites  with  respect  to  video  broadcasting
services varies depending,  in part, on whether the satellite has an established
viewer base. See "Information on the Company - Business Overview."

     COST OF  SERVICES.  Cost of  services  in 2006  decreased  2.0% to HK$410.6
million  (US$52.6  million) from HK$419.0  million which in turn  decreased 0.4%
from  HK$420.5  million  in 2004.  HK$7.3  million of the  decrease  in 2005 was
primarily due to the decrease in insurance  costs  resulting  from the Company's
decision not to procure the in-orbit  insurance for AsiaSat 2. This decrease was
largely  offset by increase in  depreciation  expenses in 2005.  The decrease in
2006 was due  mainly  to  savings  in the  premium  on  self-insuring  AsiaSat 2
following the imposition of unacceptable exclusions upon renewal of the in-orbit
insurance.  See "Key  Information  - Risk  Factors  - 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 and Limitations on Warranties and Insurance."  Depreciation  expenses,
which are  included in cost of services,  increased in 2006 to HK$297.6  million
from HK$295.1  million in 2005 which in turn increased from HK$287.4  million in
2004,  which was mainly due to the increase in the depreciation of miscellaneous
assets.  The  increase in  depreciation  expenses in 2005  represented  expenses
associated  with the additional  facilities.  HK$55.6 million of the increase in
depreciation  expenses in 2004 was attributable to the full year depreciation of
AsiaSat 4 and HK$55.6  million of the  increase was  attributable  to the Tai Po
Earth Station.

     ADMINISTRATIVE EXPENSES. Administrative expenses in 2006 increased 12.8% to
HK$94.6 million  (US$12.1  million) from HK$83.9 million in 2005,  which in turn
decreased  18.1% from HK$102.5  million in 2004. The decrease in  administrative
expenses in 2005 was largely  attributable  to the decrease in the provision for
impairment of receivables and the total amount of performance  bonuses  compared
to 2004. The decrease in the provision for impairment of receivables  was due to
improvement in payment by trade customers, while the total amount of performance
bonuses  varies from year to year depending on whether  performance  targets are
achieved.  The increase in 2006 was due mainly to an increase of  headcount  and
salary revisions,  and provisions for performance  bonus, leave compensation and
long-term incentives.

     OTHER GAINS - NET.  Other  gains  primarily  consists  of interest  income.
Interest income in 2006 increased 112.6% to HK$92.7 million from HK$43.6 million
in 2005 which in turn increased 100% from HK$21.8  million in 2004. The increase
in  interest  income in 2006,  2005 and 2004 was  primarily  due to larger  cash
balances and higher interest rates on term deposits.

     PROFIT BEFORE INCOME TAX

     Profit  before  income  tax in 2006  increased  22.2% to  HK$508.9  million
(US$65.2  million) from HK$416.6  million in 2005, which in turn decreased 15.3%
from HK$491.6  million in 2004. The increase in profit before income tax in 2006
resulted from higher revenues and higher interest income in 2006.

     INCOME TAX EXPENSE

     Income  tax  expense in 2006  increased  8.2% to  HK$55.5  million  (US$7.1
million)  from  HK$51.3  million  in 2005,  which in turn  decreased  15.2% from
HK$60.5  million in 2004.  The  increase in income tax expense in 2006  resulted
primarily from higher assessable  profit. For the years 2004, 2005 and 2006, the
effective tax rates were 12.3%, 12.3% and 10.9%, respectively.

                                       44
<PAGE>

     PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

     Profit for the year in 2006 increased  24.0% to HK$454.0  million  (US$58.2
million)  from HK$366.2  million in 2005,  which  decreased  15.1% from HK$431.2
million in 2004. This increase was mainly attributable to one-time receipts with
the balance coming from interest income.

     LIQUIDITY AND CAPITAL RESOURCES

     SOURCES OF FINANCING

     The  Company's  principal  use of capital in 2006 was capital  expenditures
associated with the  construction of AsiaSat 5. Cash applied for the acquisition
of property,  plant and  equipment  was HK$47.7  million in 2004,  which in turn
decreased to HK$23.7 million in 2005 and increased to HK$306.7  million (US$39.3
million)  in 2006.  Cash  applied for the  acquisition  of  property,  plant and
equipment has been financed through cash flows generated from operations.

     As of December 31, 2006, the Company had no outstanding debt and HK$4,421.6
million of shareholders' equity.

     The satellite business is highly capital  intensive.  The Company's ability
to meet its future debt  obligations,  if any,  will be dependent on a number of
factors,  including its cash flow from operations,  its ability to secure future
financing, if needed, and the useful lives of the Company's satellites.  See "--
Planned Capital Expenditures."

     PLANNED CAPITAL EXPENDITURES

     The  Company  anticipates  the  need  for  additional  capital  to fund the
construction  and  launch of  AsiaSat 5 . 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.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                           PLANNED CAPITAL EXPENDITURES (IN MILLIONS)
----------------------------------------------------------------------------------------------------------------------------
                      2007             2008             2009            2010         2011         TOTAL            TOTAL
                       HK$              HK$              HK$             HK$          HK$           HK$             US$
<S>                   <C>              <C>              <C>           <C>            <C>          <C>              <C>
AsiaSat 5             501.7            269.4            264.3              -             -        1,035.4          132.7

Others                 11.2             12.3              8.8            9.9          10.4           52.6            6.7

Skywave TV               -               1.0                -            1.0            -             2.0            0.3

     Total            512.9      `     282.7            273.1            0.9          0.4         1,090.0          139.7
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
     ----------------
         AsiaSat 5 is currently  under  construction  for launch in 2009 to
     replace  AsiaSat 2 at the end of its useful life.  The total costs for
     the   construction  and  launch  of  AsiaSat  5  is  estimated  to  be
     approximately  HK$1,404.0  million  (US$180.0  million).  The  planned
     capital expenditures  indicated as "Others" in the table above consist
     of  those  planned  for  furniture  and  fixture,   office  equipment,
     equipment and building upgrade at the Tai Po site, motor vehicles, new
     business and test equipment and tools.

                                       45
<PAGE>

     CONTRACTUAL OBLIGATIONS

     As of December 31, 2006,  the Company had various  contractual  obligations
which  are  more  fully  disclosed  in  Note  30 to the  consolidated  financial
statements  of the Company.  The  following  table  aggregates  the  contractual
obligations of the Company as of December 31, 2006:

<TABLE>
<CAPTION>
                                                   -------------------------------------------------------------
                                                        PAYMENTS (OR OTHER OBLIGATIONS WHICH MAY BECOME DUE)
                                                                     BY PERIOD (HK$ IN MILLIONS)
                                                   -------------------------------------------------------------
                                                               LESS THAN        1-3           4-5        AFTER 5
                                                    TOTAL        1 YEAR        YEARS         YEARS        YEARS
                                                   --------    ---------      --------      -------      -------
<S>                                                <C>         <C>            <C>           <C>          <C>
Repairs and Maintenance and
  Capital Expenditure...................            1,106.7       820.4          286.3            -            -

Operating Lease Obligations.............                4.8          4.1           0.7            -            -
                                                   --------    ---------      --------      -------      -------

Total Contractual Obligations...........            1,111.5        824.5         287.0            -            -
                                                   ========    =========      ========      =======      =======

                                                   -------------------------------------------------------------
Deferred Revenue .......................              295.7        153.1          55.8         30.0         56.8
                                                   -------------------------------------------------------------
Asset Retirement Obligation.............                1.8            -           1.8            -            -
</TABLE>
-------------
(1)  Only reflects  deferred  revenue  associated  with the sale of  transponder
     capacity requiring the provision of on-going  transponder  capacity through
     the relevant period of the transponder purchase agreement.

     AsiaSat  leases its premises  under  non-cancelable  operating  leases.  At
December 31, 2006,  commitments for future minimum lease payments which fall due
in 2007,  2008 and  subsequent  years are HK$4.1  million  and  HK$0.7  million,
respectively.

     In the ordinary  course of its  business,  AsiaSat  enters into  commercial
commitments for various aspects of operations,  such as repair and  maintenance.
However,  the Company  believes that those  commitments will not have a material
effect on the  Company's  financial  condition,  results of  operations  or cash
flows.

     CASH FLOWS

     The  Company  has  generally   financed  its  short-term   working  capital
requirements from cash provided by operations.  The Company has not borrowed any
amounts for the last three years.  The Company had cash and cash  equivalents of
HK$1,234.4 million, HK$1,635.5 million and HK$1,979.5 million (US$253.8 million)
as of December 31, 2004, 2005 and 2006 respectively.

     Net cash generated from operating activities was HK$750.8 million, HK$514.4
million  and  HK$698.5  million  (US$89.6  million)  in  2004,  2005  and  2006,
respectively.  In 2004,  the level of net cash provided by operating  activities
resulted  primarily  from  lower  capital  expenditures  and  lower  amounts  of
dividends  paid. In 2005, the decreased  level of net cash provided by operating
activities  resulted from a lower level of cash generated from  operations and a
larger  payment of Hong Kong profits tax. In 2006,  the  increased  level of net
cash provided by operating  activities resulted primarily from a higher level of
cash generated from operations.

                                       46
<PAGE>

     Net cash used in investing activities was HK$50.9 million,  HK$23.4 million
and HK$218.0  million  (US$28.0  million) in 2004,  2005 and 2006  respectively.
Expenditures  on AsiaSat 5 was HK$297.4  million in 2006.  Expenditures on other
property and equipment were HK$47.7 million,  HK$23.7 million and HK$9.3 million
in 2004, 2005 and 2006, respectively.

     Net cash  used in  financing  activities  was  HK$124.9  million,  HK$136.6
million  and HK$  136.6  million  (US$17.5  million)  in 2004,  2005  and  2006,
respectively.  In 2004,  2005 and 2006,  net cash used in  financing  activities
primarily consisted of dividend payments.

     The Company has  sufficient  working  capital to cover its planned  capital
expenditures and other operating  needs. See "-- Planned Capital  Expenditures."
The Company had a working capital of HK$1,023.1  million at December 31, 2004, a
working capital of HK$1,461.1 million at December 31, 2005 and a working capital
of HK$1,770.9 million (US$227.0 million) at December 31, 2006.

     OFF-BALANCE SHEET ARRANGEMENTS

     The Company does not have any off-balance  sheet  arrangements that have or
are  reasonably  likely to have a  current  or  future  effect on the  Company's
financial  condition,  changes in  financial  condition,  revenues or  expenses,
results of operations,  liquidity,  capital  expenditures  or resources that are
material to investors.

     EXCHANGE RATES

     During the past three years almost all of the Company's revenues,  premiums
for satellite insurance coverage 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, 2006, almost
all  of  AsiaSat's  transponder  utilization  agreements,  transponder  purchase
agreements 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.

     U.S. GAAP RECONCILIATION

     The Company's  financial  statements are prepared in accordance with HKFRS,
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 HKFRS and U.S. GAAP.

<TABLE>
<CAPTION>
                                                     2004         2005               2006         2006
                                                      HK$          HK$                HK$          US$
                                                                     (IN MILLIONS)
<S>                                                 <C>          <C>                <C>           <C>
Net income in accordance with:

  HKFRS.................................              431.2        366.2              454.0        58.2
  U.S. GAAP.............................              424.1        358.8              446.3        57.2

Shareholders' equity in accordance with:

  HKFRS.................................            3,874.6      4,104.2            4,421.6       566.9
  U.S. GAAP.............................            3,916.7      4,138.9            4,448.7       570.3
</TABLE>

                                       47
<PAGE>

     Note 32 to the  Company's  consolidated  financial  statements  provides  a
description  of the  principal  differences  between HKFRS 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 HKFRS and
U.S.  GAAP  that  have  a  material  effect  on the  Company's  net  income  and
shareholders'  equity  as  reported  under  HKFRS  relate to  capitalization  of
interest, borrowing costs and deferred taxation.

     RECENT U.S. ACCOUNTING PRONOUNCEMENTS

     In June 2006, the FASB issued FASB  Interpretation  No. 48,  Accounting for
Uncertainty in Income Taxes (FIN 48), an Interpretation of SFAS 109,  Accounting
for Income Taxes. FIN 48 was issued to clarify the accounting for uncertainty in
tax positions  taken or expected to be taken in a tax return.  Under FIN 48, the
tax benefit from an uncertain tax position may be recognized  only if it is more
likely than not that the tax position will be sustained upon  examination by tax
authorities.  The  Group  plans to adopt  FIN 48 for  annual  periods  beginning
January 1, 2007. The Group is currently evaluating the potential impact that the
adoption of FIN 48 will have on its consolidated financial statements.

     In September  2006, the FASB issued FAS 157, Fair Value  Measurements.  FAS
157 provides  guidance on the  measurement  of fair value in US GAAP and expands
fair  value  measurement  disclosures.  FAS  157 is  applicable  whenever  other
accounting pronouncements require or permit fair value measurements and does not
expand the use of fair value in any new circumstances. The Group will apply this
standard for annual  periods  beginning  January 1, 2007. The Group is currently
evaluating  the  potential  impact that the adoption of FAS 157 will have on its
consolidated financial statements.

     In  February  2007,  the FASB  issued FAS 159,  The Fair  Value  Option for
Financial  Assets and  Financial  Liabilities,  Including  an  Amendment of FASB
Statement No. 115 (FAS 159). FAS 159 permits  entities to measure many financial
instruments  and  certain  other  assets  and  liabilities  at fair  value on an
instrument-by-instrument  basis.  The Group will apply this  standard for annual
periods  beginning  January  1,  2008.  The Group is  currently  evaluating  the
potential  impact  that the  adoption  of FAS 159 will have on its  consolidated
financial statements.

     CRITICAL ACCOUNTING POLICIES

     The Company's  consolidated financial statements are prepared in accordance
with HKFRS. 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  has   significant
investments  in  satellites.  The  carrying  value  of  the  Company's  in-orbit
satellites represented 59%, 52% and 43.6% of its total assets as of December 31,
2004,  2005 and 2006  respectively.  The Company  estimates  the useful lives of
satellites  in order to  determine  the  amount 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

                                       48
<PAGE>

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 estimates 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.  The recoverable  amount is the amount  recoverable over the remaining
lives of the assets through undiscounted future expected cash flows. If any such
indication  exists,  the Company should estimate the  recoverable  amount of the
long-lived  assets.  An impairment loss is recognized based on the excess of the
carrying amount of such long-lived  assets over their recoverable  amounts.  The
impairment  charge is calculated using 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").  Likewise,  changes in estimated  discount
rates that result in lower  recoverable  amounts  would result in an  impairment
loss being recognized.

     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 the
discount rate used is not changed);  which may, in turn,  result in the carrying
amounts  exceeding  the  recoverable  amounts,  which in turn would result in an
impairment loss being recognized.

     INSURANCE.  For  each of its  satellites,  the  Company  obtains  insurance
covering  launch and  first-year  in-orbit  loss at a blended  rate.  The launch
insurance  is a  one  time  charge  and  the  in-orbit  insurance  is  recurring
in-nature.  The Company  capitalizes a large  portion of the  insurance  premium
relating to the launch as a cost of satellite  and  amortizes  the cost over the
life of the  satellite  on a  straight-line  basis.  The  small  portion  of the
insurance premium relating to the first-year in-orbit is determined by reference
to an indicative rate obtained through an insurance broker in an open market for
satellites of similar type and configuration, and is recorded as part of cost of
services  after  commissioning  of the  satellite.  The in-orbit  insurance cost
usually represents 2% to 3% of the total amount insured for such satellite.

     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, 2006 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.

                                       49
<PAGE>

     CONTINGENCY RELATED TO INDIAN TAX ASSESSMENTS.  As of December 31, 2006 the
Indian tax authorities have assessed the Company for income tax of approximately
HK$254.0  million  (US$32.6  million).  See "--  Taxation."  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
the US SFAS 5,  "Accounting  for  Contingencies"  and  Hong  Kong  Statement  of
Standard  Accounting  Practice No. 28  "Provisions,  Contingent  Liabilities and
Contingent  Assets" ("SSAP 28") were not met. SFAS 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.  SSAP 28
states that a contingent  liability  is: (a) a possible  obligation  that arises
from past events and whose existence will be confirmed only by the occurrence or
non-occurrence  of one or more  uncertain  future  events not wholly  within the
control of the  enterprise;  or (b) a present  obligation  that arises from past
events but is not recognized because:  (i) it is not probable that an outflow of
resources embodying economic benefits will be required to settle the obligation:
or (ii)  the  amount  of the  obligation  cannot  be  measured  with  sufficient
reliability.

     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 against the Tribunal's decision.  Therefore,  the Company
believes that the criteria for recognition of a loss  contingency  under SSAP 28
or SFAS 5 were not met.  If the  Company is finally  held liable for such Indian
tax, the Company's future results of operations could be adversely affected.

     NEW ACCOUNTING STANDARDS

     For a discussion on the newly adopted accounting  standards,  see Note 2 to
the Company's consolidated financial statements.

     RESEARCH AND DEVELOPMENT

     The  Company  does not  incur  any  significant  research  and  development
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." For a further discussion on trends and prospects, see " -- Overview."

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.

     DIRECTORS AND SENIOR MANAGEMENT

     The directors of the Company ("Directors") as of May 31, 2007 are set forth
below.

                                       50
<PAGE>

<TABLE>
<CAPTION>
                                                                              DATE FIRST
                                                                          ELECTED OR APPOINTED
                                                                          DIRECTOR OF ASIASAT
NAME                          AGE        POSITION                           (OR THE COMPANY)           TERM  OF OFFICE
------------------------------------------------------------------------------------------------------------------------
<S>                            <C>       <C>                              <C>                          <C>
Zeng Xin Mi (1)                56        Chairman and Director            February 28, 2001            May 18, 2007
                                         (2006-2008)
                                         Deputy Chairman and Director
                                         (2005-2006)
Professor Edward Chen,
G.B.S., C.B.E., J.P. (3)       62        Director                         May 10, 1996                 May 15, 2009

Mark Chen (2)                  32        Director                         March 29, 2007               May 18, 2007

John Connelly (2)              63        Director                         March 29, 2007               May 18, 2007

Yu Cheng Ding (1)              41        Director                         January 15, 1999             May 18, 2007

Ronald Herman (2)              44        Director                         March 29, 2007               May 18, 2007

Peter Jackson                  58        Director                         May 10, 1996                 May 15, 2009

Wei Min Ju (1)                 44        Director                         October 12, 1998             May 18, 2007

Fai Wong Ko (1)                58        Director                         March 11, 2004               May 18, 2007

Nancy Ku (2)                   50        Director                         March 29, 2007               May 18, 2007

Robert Sze (3)                 66        Director                         May 10, 1996                 May 16, 2008

William Wade                   50        Director                         May 10, 1996                 May 15, 2009

James Watkins (3)              61        Director                         June 30, 2006                May 17, 2007
</TABLE>
-------------
(1)  Appointed by CITIC.
(2)  Appointed by GECC.
(3)  Independent.

     The  executive  officers  of the  Company as of May 31,  2007 are set forth
below.

<TABLE>
<CAPTION>
                                                                              DATE FIRST
                                                                          ELECTED OR APPOINTED
                                                                          DIRECTOR OF ASIASAT
NAME                          AGE        POSITION                           (OR THE COMPANY)           TERM  OF OFFICE
------------------------------------------------------------------------------------------------------------------------
<S>                           <C>        <C>                              <C>                          <C>
Peter Jackson                  58        Chief Executive Officer          July 1, 1993                 Indefinite

William Wade                   50        Deputy Chief Executive Officer   April 15, 1994               Indefinite

Catherine Chang                39        Legal Counsel                    January 1, 2003              Indefinite

Liqun Chen                     56        General Manager, China           April 14, 1989               Indefinite
</TABLE>

                                                 51
<PAGE>

<TABLE>
<CAPTION>
                                                                              DATE FIRST
                                                                          ELECTED OR APPOINTED
                                                                          DIRECTOR OF ASIASAT
NAME                          AGE        POSITION                           (OR THE COMPANY)           TERM  OF OFFICE
------------------------------------------------------------------------------------------------------------------------
<S>                           <C>        <C>                              <C>                          <C>
Ya Hui Chiu                    57        General Manager, Operation       February 13, 1989            Indefinite

Sabrina Cubbon                 45        General Manager, Marketing       December 1, 1993             Indefinite

Barry Turner                   60        General Manager, Engineering     May 1, 1998                  Indefinite

Sue Yeung                      43        General Manager Finance and      January 1, 2007              Indefinite
                                         Administration and Company
                                         Secretary
</TABLE>
----------------

     The Board of  Directors  of the Company  currently  consists of 13 members.
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 By-laws
of the Company provide that any Director may call a board meeting. The Directors
all hold office until the next annual  meeting of  shareholders  and until their
successors are elected and have qualified.

     In the annual general  meeting held on May 18, 2007,  some directors of the
Company  including Ronald Herman,  John Connelly,  Mark Chen, Yu Cheng Ding, Wei
Min Ju, Fai Wong Ko, Nancy Ku, Zeng Xin Mi and James Wakins  retired by rotation
in accordance with the Company's Bye-laws.  In the same meeting,  the resolution
for their re-election was approved.

     ZENG XIN MI was  appointed  a  Non-executive  Director  of the  Company  on
February 28, 2001. Since then, he acted as Deputy Chairman (2001-2002), Chairman
(2003-2004) and Deputy Chairman  (2005-2006) of the Board on a rotational  basis
biennially.  For the current term  (2007-2008),  he acts as  Chairman.  He is an
Executive  Director  and Vice  President  of  CITIC  Group  ("CITIC").  He is an
Executive  Director of CITIC Resources  Holdings Limited,  Chairman of CITIC USA
Holdings Limited, CITIC Australia Pty Ltd, CITIC Resources Australia Pty Limited
and  Karazhanbaemunai JSC (KBM), and a Director of CITIC United Asia Investments
Limited.  He  also  holds  executive   management  positions  in  several  other
subsidiaries  of  CITIC  He has  over 23  years'  experience  in  multi-national
business, corporate management and various other industries.

     PROFESSOR  EDWARD  CHEN,  G.B.S.,  C.B.E.,  J.P.,  has been an  Independent
Non-executive  Director of the Company  since May 1996.  He 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
from 1992 to 1997 and Chairman of the Consumer  Council from 1991 to 1997. He is
a Director  of the First  Pacific  Company  Limited  and a Director of The Wharf
(Holdings) Limited.

     MARK CHEN was  appointed  as the  Non-executive  Director of the Company on
March 29, 2007. He is the Managing  Director of GE Commercial  Finance - Equity,
Asia Pacific.  Since June 2006,  Mr. Mark Chen has been the business  leader and
subsequently Managing Director,  Asia Pacific of GE Commercial Finance - Equity.
Prior to this role, Mr. Mark Chen held positions as an associate, assistant vice
president,  vice president and senior vice president in GE Commercial  Finance -
Equity. Mr. Mark Chen has worked for GE for seven years.

                                       52
<PAGE>

     JOHN CONNELLY was appointed as the Non-executive Director of the Company on
March 29, 2007.  He served with GE for over 37 years in a variety of  positions.
From 1992 to 2001 he served as Chairman and CEO of GE Americom,  Inc., which was
subsequently  sold to SES. In 2001 he was named Vice Chairman of SES, a position
he held until March 2007.

     YU CHENG DING was  appointed  a  Non-executive  Director  of the Company on
January 15, 1999. He was the  Assistant  President of CITIC  Securities  Company
Limited  and was with the  company  from April  1998 to  September  2004.  CITIC
Securities  Company  Limited is a subsidiary of CITIC engaging in securities and
investment banking business. He has been an Independent  Non-executive  Director
of SEEC Media  Group  Limited  since June  2005.  He holds a Master of  Business
Administration  degree  from  the  University  of  Pittsburg  and  a  Doctor  of
Philosophy degree in Economics from Tsinghua University.

     RONALD HERMAN was appointed a  Non-executive  Director of the Company on 29
March 2007. Since May 2003, Mr. Ronald J. Herman, Jr. has been the President and
CEO of GE Commercial  Finance - Equity and Vice President of GECC. Prior to this
role,  Mr.  Ronald J. Herman spent 10 years,  starting in January  1993, in GE's
headquarters as the general manager of Mergers and  Acquisitions.  Mr. Ronald J.
Herman has worked for GE for 23 years, his entire business career.

     WEI MIN JU was appointed a Non-executive Director of the Company on October
12, 1998. He is a Director and the Chief  Financial  Officer of CITIC and also a
Non-executive  Director  of China  CITIC  Bank,  CITIC  International  Financial
Holdings  Limited,  CITIC  Ka Wah  Bank  and as  Chairman  of  CITIC  Trust  and
investment Co. Ltd. He served in various management positions in CITIC including
Deputy  Head  and  Head of the  Finance  Department.  He has  over 20  years  of
experience in finance and corporate management.

     MS. NANCY KU appointed a Non-executive  Director of the Company on 29 March
2007.  She is the  President  and  CEO,  Asia  Pacific  of  Corporate  Financial
Services,  GE Commercial  Finance and has held this  position  since March 2006.
Prior to this role, Ms. Nancy Ku was the Managing  Director,  Asia Pacific of GE
Equity. Ms. Ku has worked for GE for eight years.

     ROBERT SZE has been an  Independent  Non-executive  Director of the Company
since May 1996.  He is a fellow of the  Institute  of Chartered  Accountants  in
England and Wales and the Hong Kong Institute of Certified  Public  Accountants.
He was a partner in an international firm of accountants with which he practiced
for over 20 years  and 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 was appointed a Non-executive  Director of the Company on March
11,  2004.  He is the Deputy  General  Manager of CITIC  United Asia  Investment
Limited,  a wholly owned subsidiary of CITIC in Hong Kong and has over 20 years'
experience in banking and finance before joining CITIC.

     JAMES WATKINS was appointed as an Independent Non-executive Director of the
Company on June 30,  2006.  He  qualified  as a solicitor in 1969 and was for 20
years a Partner in Linklaters,  a leading  international  English law firm. From
1997-2003,  he was a Director and General Counsel of the Jardine  Matheson Group
in Hong  Kong.  He is a  non-executive  director  of a number  of Hong  Kong and
overseas  listed  companies.  He holds a degree  in Law from the  University  of
Leeds, United Kingdom.

                                       53
<PAGE>

     The board of directors (the "Board") of Asia  Satellite  Telecommunications
Holdings Limited (the "Company",  together with its  subsidiaries,  the "Group")
announces that Mr.  Watkins has been  appointed as an Independent  Non-executive
Director  ("INED"),  the Chairman of Remuneration  Committee and a member of the
Audit  Committee  with effect from 30 June 2006.  Mr.  Watkins does not hold any
other positions with the Company or any member of the Group.

     PETER  JACKSON  has been an  Executive  Director  and the  Chief  Executive
Officer of the  Company  since May 1996,  having  served in that  position  with
AsiaSat  since July 1993 prior to the  listing  of the  Company.  He has over 30
years' experience in the  telecommunications  field. Prior to his appointment as
the Chief  Executive  Officer in 1993,  he was  employed by Cable & Wireless plc
where  he  held  engineering,   marketing  and  management   positions  and  was
responsible  for  several  satellite   telecommunications   ventures.  He  is  a
Non-executive Director of Daum Communications Group, a company that is listed in
Korea.  He has  also  served  on  Board of the  Cable &  Satellite  Broadcasting
Association  of Asia (CASBAA) in various  positions  since 1997 and is currently
the Treasurer.

     WILLIAM WADE has been an Executive  Director and the Deputy Chief Executive
Officer of the  Company  since May 1996,  having  served in that  position  with
AsiaSat  since  April 1994 prior to the listing of the  Company.  He has over 22
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 Master of International Management degree from
Thunderbird - School of Global Management.

     CATHERINE  CHANG is Legal  Counsel and Assistant  Company  Secretary of the
Company.  She joined  AsiaSat in 1994 and  established  the legal  department to
manage the legal affairs of the Company. Prior to joining the Company, she was a
solicitor at Ebsworth & Ebsworth, an Australian law firm. She graduated from the
University of New South Wales,  Australia with a Bachelor's  degree in Law and a
Bachelor's degree in Commerce, majoring in Accountancy.

     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.  He was on secondment to AsiaSat from his employer,  CITIC,
since 1989 and became a  permanent  employee  of  AsiaSat  in January  1997.  He
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 Tsinghua University, China.

     DR.  YA HUI CHIU is  General  Manager,  Operations,  of  AsiaSat,  in which
capacity  he  is  responsible   for  maintaining  and  operating  the  Company's
satellites.  He has 23 years  experience in  telecommunications  engineering and
operations,  with the last 20 years being in the satellite  communications area.
He received his Bachelor of Science degree from the 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.  She has over 22 years of marketing  experience in
the  telecommunications  industry.  Prior to joining AsiaSat in August 1992, she
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.  She  graduated  from the  University of
Manchester,  United  Kingdom with a Master degree in Electronic  and  Electrical
Engineering,  specializing in cryptography. She is also a Non-executive Director
of our subsidiary, Skywave TV Company Limited.

                                       54
<PAGE>

     BARRY TURNER is General Manager,  Engineering of AsiaSat. He joined AsiaSat
in 1997 as Deputy  General  Manager  of  Engineering  and was  appointed  to his
present  position in May 1998.  He has 33 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. He holds a Bachelor's degree in Electrical
Engineering from the Technical  University of Nova Scotia,  Canada, and a Master
degree in Business Administration from the University of Ottawa, Canada.

     SUE YEUNG is General  Manager  Finance and  Administration  and the Company
Secretary  of AsiaSat on January 1, 2007.  She is a member of the  Institute  of
Chartered  Accountants  in  England  and  Wales.  In 1993,  she  joined  British
Telecommunications  (HK)  Limited  ("BT")  and  held  various  senior  positions
including  Chief  Financial  Officer of  Smartone  in 1999,  when BT acquired an
equity  interest in Smartone.  Subsequently,  she joined  Wavecome  Asia Pacific
Limited,  a company listed in Paris and NASDAQ, as the Regional Finance Director
for the Asia  Pacific  region.  Prior to joining  AsiaSat,  she was the Regional
Chief  Financial  Officer of Pearson  Education  Asia  Limited  with the overall
responsibilities of its Asia Operations.  She holds a Bachelor of Science Degree
in Chemical  Engineering  from London  University and is a fellow member of Hong
Kong Institute of Certified Public Accountants.

     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 2005 and 2006 was  approximately  HK$27.5  million and HK$40.2
million,  respectively.  This  compensation  included payments of HK$0.5 million
(2005: HK$0.5 million) and HK$0.5 million (2006: HK$0.5 million) to SES S.A. and
a subsidiary of CITIC, the major shareholders of the Company,  respectively, for
certain Non-Executive Directors representing SES 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$2.7  million per annum,
together with a housing  allowance  including  utilities of up to HK$1.5 million
per annum, which up to December 31, 2005 was paid directly by the Company to the
landlord.  Mr. Jackson is also entitled to an additional 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

                                       55
<PAGE>

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$2.1  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  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.

                                 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
has adopted certain corporate governance guidelines (the "Guidelines")  relating
to Board membership,  Board conduct and Board committee issues. A summary of the
significant differences between the Company's corporate governance practices and
those required by the NYSE Corporate Governance Standards for Domestic Companies
available at http://www.asiasat.com/eng/04_investor/governance/Comparison.pdf.

     The Company has established an audit committee.  The committee's  primarily
objective is to assist the Board in fulfilling its oversight responsibility with
respect to (a) the accounting and financial  reporting processes of the Company,
including  the  integrity  of  the  financial  statements  and  other  financial
information  provided  by the  Company to its  stockholders,  (b) the  Company's
compliance with legal and regulatory requirements, (c) the independent auditors'
qualifications  and  independence,  (d) the  audit  of the  Company's  financial
statements, and (e) the performance of the Company's internal audit function and
independent auditors.  The audit committee shall (x) have the sole authority and
responsibility  to  select,   evaluate  and,  where  appropriate,   replace  the
independent  auditors (or to nominate the  independent  auditors for stockholder
approval),  (y) approve all audit  engagement  fees and terms and all  non-audit
engagements with the independent auditors, and (z) perform such other duties and
responsibilities  set forth under the  Securities  Exchange  Act of 1934 and any
other applicable independence and regulatory  requirements.  The audit committee
shall  also  have the sole  authority  to  review  in  advance,  and  grant  any
appropriate  pre-approvals,  of (i) all auditing  services to be provided by the
independent  auditors  and (ii) all  non-audit  services  to be  provided by the
independent  auditors as permitted by Section 10A of the Securities Exchange Act
of 1934,  and, in connection  therewith,  to approve all fees and other terms of

                                       56
<PAGE>

engagement.  The audit  committee  shall  also  review and  approve  disclosures
required to be included in Securities and Exchange  Commission  periodic reports
filed under Section 13(a) of the Securities Exchange Act of 1934 with respect to
audit and non-audit services.

     The  audit  committee  shall  have  three  or more  members  who  shall  be
independent  non-executive directors unless an applicable exemption is available
under the rules promulgated by the U.S. Securities and Exchange Commission.  The
quorum  for the  committee  shall be two voting  members.  The  chairman  of the
committee  shall be appointed by the Board or, if it does not do so, the members
of the audit  committee  shall elect a chairman by a vote of the majority of the
voting members of the audit committee.  The committee  comprises Messrs.  Robert
Sze (Chairman),  Edward Chen, James Watkins,  Wei Min Ju and Mark Chen.  Messrs.
Wei Min Ju and Mark Chen have only  observer  status on the audit  committee and
are  non-voting  members  nominated by CITIC and GE Equity under an exemption to
the independence requirement.

     The Company has also established a remuneration committee. The committee is
responsible for, among other things,  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 shall
have three members and 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 comprises Messrs. James Watkins (Chairman), Wei Min Ju,
and Nancy Ku.

     The Company has also established a nomination  committee.  The committee is
responsible for, among other things, identifying individuals qualified to become
Board  members,  overseeing  the  evaluation  of the Board and  management,  and
developing  and  recommending  to  the  Board  a  set  of  corporate  governance
guidelines  applicable  to the  Company.  The  committee  also  develops a Chief
Executive  Officer  succession  plan. The committee shall have three members and
the quorum 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. Edward Chen (Chairman), Ronald Herman and Zeng Xin Mi.

     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. John Connelly (Chairman), Yu Cheng Ding
and Fai Wong Ko.

     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.

                                       57
<PAGE>

                                    EMPLOYEES

     As of December 31, 2006, the Company had 102 permanent employees,  of which
9 employees were in management,  41 employees were in engineering and operations
and 24 employees  were in sales and  marketing.  The remaining 28 employees were
engaged in  administrative,  accounting,  legal and regulatory  activities.  The
Company has 85 employees in Hong Kong and 17 employees in Beijing.

     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
"Hong Kong Stock Exchange")  daily  quotations sheet on the date of grant;  (ii)
the  average  closing  price of the  shares as  stated  in the Hong  Kong  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, 2006,  outstanding  options  granted under the Share Option
Scheme  (including  those  previously  granted  under  the old  scheme)  were as
follows:

                                      OPTION PRICE
       EXERCISE PERIOD                     HK$               NUMBER OF SHARES
------------------------------------------------------       -------------------
Oct 1, 2002 to Sept 30, 2009              17.48                   1,630,000

Feb 4, 2004 to Feb 3, 2012                14.35                   3,211,500
                                                             ------------------

                                                                  4,841,500
                                                             ==================

     As of March 31, 2007,  Romain Bausch,  the then Chairman and  Non-Executive
Director of the Company,  has been granted  100,000  options,  exercisable  from
February 4, 2004 to February 3, 2012. Such options lapsed in accordance with the
terms of the Share Option Scheme,  upon Mr. Bausch's  resignation from the Board
on March 29, 2007.

     Zeng Xin Mi,  the  Deputy  Chairman  and a  Non-Executive  Director  of the
Company, has been granted 100,000 options,  exercisable from February 4, 2004 to
February  3,  2012.  As of May 31,  2007,  Mr. Mi has not  exercised  any of his
options or accepted the Offers with respect to his options. Options that are not
exercised or accepted will lapse after June 26, 2007.

     Edward Chen, an Independent Non-Executive Director of the Company, has been
granted 50,000 options,  exercisable  from February 4, 2004 to February 3, 2012.
As of May 31, 2007,  Mr. Chen has not  exercised  any of his options or accepted
the Offers  with  respect to his  options.  Options  that are not  exercised  or
accepted will lapse after June 26, 2007.

                                       58
<PAGE>

     Yu Cheng Ding, a  Non-Executive  Director of the Company,  has been granted
50,000 options, exercisable from February 4, 2004 to February 3, 2012. As of May
31, 2007,  Mr. Ding has not  exercised any of his options or accepted the Offers
with respect to his options.  Options  that are not  exercised or accepted  will
lapse after June 26, 2007.

     Wei Min Ju, a  Non-Executive  Director  of the  Company,  has been  granted
50,000 options, exercisable from February 4, 2004 to February 3, 2012. As of May
31,  2007,  Mr. Ju has not  exercised  any of his options or accepted the Offers
with respect to his options.  Options  that are not  exercised or accepted  will
lapse after June 26, 2007.

     Robert Sze, an Independent  Non-Executive Director of the Company, has been
granted 75,000 options,  exercisable  from February 4, 2004 to February 3, 2012.
As of May 31, 2007, Mr. Sze has not exercised any of his options or accepted the
Offers with respect to his options.  Options that are not  exercised or accepted
will lapse after June 26, 2007.

     Peter Jackson, an Executive Director and the Chief Executive Officer of the
Company, has been granted 150,000 B options, exercisable from October 1, 2002 to
September  30, 2009 and 430,000 C options  exercisable  from February 4, 2004 to
February 3, 2012. As of May 31, 2007, Mr. Jackson has exercised 50,000 C options
and made an  acceptance  on all the  remaining  options  (150,000 B options  and
380,000 C options).

     William Wade, an Executive  Director and the Deputy Chief Executive Officer
of the Company,  has been granted114,000 B options,  exercisable from October 1,
2002 to September  30, 2009 and 330,000 C options  exercisable  from February 4,
2004 to February 3, 2011. As of May 31, 2007,  Mr. Wade has not exercised any of
his options but has made an acceptance of all his options.

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, 2007 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 number of any
class of the Company's voting  securities owned by the officers and directors of
the Company as a group.

                      IDENTITY OF PERSON                               PERCENT
TITLE OF CLASS             OR GROUP                SHARES OWNED       OF CLASS
--------------------------------------------------------------------------------
Common Stock          Bowenvale Limited             268,905,000        68.75%

Common Stock          Directors and Officers        704,500             0.18%

     The Company is controlled by Bowenvale Limited, a limited liability company
incorporated  in the British Virgin Islands  ("Bowenvale  Limited"),  which owns
68.75% of the  outstanding  Shares.  As a result of the  Exchange  Transactions,
effective  March 29, 2007,  Bowenvale is jointly  owned  indirectly by CITIC and
GECC.

     On May 25, 2007, Asiaco, which is owned indirectly by the same shareholders
that control  Bowenvale,  launched the Offers. As a result of the Offers,  CITIC
and  GECC  could  indirectly  hold  100% of the  Shares  (including  the  Shares
underlying the ADSs).  However, due to the position of the State Department,  in
the  event  that  less  than 25% of the  Shares  would  be held by  shareholders
unaffiliated  with CITIC or GECC,  it is expected  that either the Company would

                                       59
<PAGE>

issue additional Shares, or that the controlling shareholders would sell Shares,
such that at least 25% of the Shares would be held by shareholders  unaffiliated
with CITIC or GECC.

                            RELATED PARTY TRANSACTION

     The Company is  controlled by Bowenvale  Limited,  which owns 68.75% of the
outstanding shares of the Company. As at May 31, 2007, the ultimate  controlling
shareholder of Bowenvale Limited and the Company are CITIC Group and GECC.

     Certain  members of the Board of  Directors  of the  Company  also serve as
directors and executive officers of the controlling shareholders of the Company.
These  individuals  include Zeng Xin Mi, Wei Min Ju, and Fai Wong Ko in relation
to CITIC Group and Ronald J. Herman, Nancy Ku and Mark Chen in relation to GECC.
See "Directors, Senior Management and Employees."

     AsiaSat 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.


     (i)   Since  1996,  CITIC  Guoan   Information   Industry  Company  Limited
     ("Guoan"),  a subsidiary of CITIC, has entered into capacity  agreements to
     utilize transponder  capacity on the Company's satellites from time to time
     on normal  commercial  terms.  Two agreements have a term of one year until
     May 31, 2006 and June 30, 2006  respectively.  One  agreement has a term of
     half year from July 1, 2006 to December 31, 2006. The transponder  capacity
     utilized under both agreements is used to provide  domestic private network
     services  within  China.  The total  amount of  revenue  recognized  by the
     Company  during 2005 and 2006,  respectively,  under these  agreements  was
     approximately  HK$2.5 million  (US$0.3  million) and HK$1.4 million (US$0.2
     million).

     (ii)  In 2005 and 2006,  respectively,  the  Company  paid an agency fee of
     HK$0.7 million and HK$0.6 million to CITIC Technology  Company  Limited,  a
     subsidiary of CITIC, for collecting money from China customers on behalf of
     the Company.

     (iii) 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 Common Stock 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 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.

     (iv)  In 2005 and 2006, the Company  recognized  rental income from leasing
     satellite  transponder capacity amounting to approximately  HK$32.2 million
     and HK$46.3 million (US$5.9 million),  respectively, and no maintenance and
     other services income from SpeedCast Holdings Limited.

                                       60
<PAGE>

     (v)   In 2006,  the Company made  payments to SES and a subsidiary of CITIC
     amounting to HK$0.5 million (2005:  HK$0.5 million;  2004:  HK$0.5 million)
     and  HK$0.5  million  (2005:   HK$0.5   million;   2004:   HK$0.5  million)
     respectively,  for certain  Non-Executive  Directors  representing  SES and
     CITIC. During 2006, SES was still a shareholder of Bowenvale).

     (vi)  In 2004, AsiaSat entered into an agreement with Beijing Asia pursuant
     to which AsiaSat agreed to provide  Beijing Asia with up to HK$12.0 million
     (US$1.5 million) in transponder capacity payable on a deferred basis.

     The  transactions  mentioned  above have been  entered into in the ordinary
course of business and on normal commercial terms and have not exceeded the caps
allowed by the Hong Kong Stock  Exchange and such  transactions,  which are of a
continuing nature, are expected to be continued in the future.

     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,  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.

     The following  table  details the total amount of annual  dividends and the
gross dividends paid,  together with certain additional  information,  for 2004,
2005 and 2006.

<TABLE>
<CAPTION>
                                                                        FOR THE YEAR ENDED
                                                                           DECEMBER 31
                                                                 2004          2005           2006
                                                                 ----          ----           ----
<S>                                                              <C>           <C>            <C>
Net income (in HK Dollars in millions)........................    431           366            454
Ordinary dividend paid (in HK Dollars in millions)............    137           137            137
Ordinary dividend paid per Share (in HK cents)................     35            35             35
Ordinary dividend proposed (in HK Dollars in millions)........    105           105            105
Ordinary dividend proposed per Share (in HK cents)............     27            27             27
Special dividend paid (in HK Dollars in millions).............      -             -              -
Special dividend paid per share (in HK cents).................      -             -              -
</TABLE>

                                       61
<PAGE>

     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  capacity  agreement  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 operations of
the Company.

     SIGNIFICANT CHANGES

     None

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 closing  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.


                                       62
<PAGE>

<TABLE>
<CAPTION>
                                                          NEW YORK STOCK EXCHANGE                   HONG KONG STOCK EXCHANGE
                                                                  (IN US$)                                  (IN HK$)
                                                        HIGH                   LOW                  HIGH                 LOW
                                                        ----                   ---                  ----                 ---
<C>                                                     <C>                   <C>                  <C>                  <C>
2002 .........................................          18.90                 10.95                15.00                8.90
2003 .........................................          19.43                 11.66                14.90                9.25
2004 .........................................          22.11                 15.20                17.30                11.70
2005 .........................................          20.55                 16.50                18.00                12.40
Quarter Ending March 31, 2005.................          19.09                 18.20                15.10                14.15
Quarter Ending June 30, 2005..................          19.38                 17.11                15.15                13.50
Quarter Ending September 30, 2005.............          20.55                 17.60                16.40                13.60
Quarter Ending December 31, 2005..............          19.02                 16.50                18.00                12.40
2006..........................................          19.40                 16.15                14.85                12.20
Quarter Ending March 31 2006..................          19.40                 16.15                14.95                12.20
Quarter Ending June 30, 2006..................          18.35                 16.65                14.50                12.90
Quarter Ending September 30, 2006.............          17.19                 16.05                13.30                12.22
Quarter Ending December 31, 2006..............          18.85                 16.21                15.00                12.20
January 2007..................................          18.41                 17.50                14.36                13.30
February 2007(a)..............................          23.00                 17.60                18.10                13.88
March 2007....................................          23.55                 22.33                18.10                17.50
Quarter Ending March 31, 2007.................          23.55                 17.50                18.10                13.30
April 2007(b).................................          23.19                 20.69                17.90                15.80
May 2007(c)...................................          21.75                 20.89                17.10                15.00
</TABLE>

-------------
     (a)  On February 9, 2007, the  Privatization was announced at a share offer
          price of HK$18.30 per Share.
     (b)  On April 23,  2007,  the  Company  announced  the receipt of the State
          Department position and on April 24, 2007, the Scheme was terminated.
     (c)  On May 25,  2007,  the  Offers  were  launched  at an  offer  price of
          HK$16.00 per Share less the final dividend of $0.27 per share paid for
          the fiscal year of 2006.

     SIGNIFICANT TRADING SUSPENSION

     On 9  February  2007  (both  Hong  Kong and New  York  time),  the  Company
suspended  its  trading in its Shares on the Hong Kong  Stock  Exchange  and the
trading  in ADSs on the New York  Stock  Exchange,  pending  the  release  of an
announcement  in relation to the proposed  privatization  of the Company and the
possible mandatory general offers which were described earlier under the heading
"Privatization  Scheme and  Mandatory  General  Offers" in Item 4.  Trading  was
resumed on both stock  exchanges on the same day on 14 February  2007 (Hong Kong
and New York Time) after the publication of this announcement.

     On 23 April 2007 (both Hong Kong and New York time), the Company  suspended
its trading in its Shares on the Hong Kong Stock Exchange and trading in ADSs on
the New York Stock Exchange,  pending the release of an announcement in relation
to the indefinite  adjournment of the court meeting and special  general meeting
conducting for the approving of the Privatization Scheme. Trading was resumed on
both  exchanges  on the same day on 25 April  2007 (Hong Kong and New York Time)
after the publication of this announcement.


                                       63
<PAGE>

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 on Display."

     o   Lease  Agreement,  dated March 12, 2001,  between  AsiaSat and the Hong
         Kong Industrial  Estates  Corporation  (the "Tai Po Lease  Agreement").
         Pursuant  to the Tai Po  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
         a lump sum of HK$25.9 million (US$3.3 million) 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   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).

     o   Lease  Agreement,  dated January 26, 2005,  between AsiaSat and Perfect
         Win Properties Limited (the "Office Lease Agreement").  Pursuant to the
         Office Lease Agreement,  Perfect Win Properties Limited agreed to lease
         to AsiaSat the office  premises in Causeway Bay, Hong Kong for a period
         of  36  months   commencing  March  1,  2005  for  an  annual  rent  of
         approximately HK$2.7 million (US$0.3 million).

     o   Joint Venture Agreement,  dated March 29, 2004, between AsiaSat and Sky
         Networks  Communications Group Company Limited (the "Beijing Asia Joint
         Venture  Agreement").  Pursuant  to  the  Beijing  Asia  Joint  Venture
         Agreement,  the two parties  agreed to participate in the joint venture
         Beijing Asia, and AsiaSat agreed to contribute  HK$12.5 million (US$1.6
         million) in cash to Beijing  Asia and to provide  transponder  capacity
         payable on a deferred basis.

     o   Subscription  Agreement,  dated November 30, 2004, among AsiaSat, Macau
         Cable TV, Limited,  Pacific Satellite International Limited and Skywave
         (the  "Skywave  Subscription  Agreement").   Pursuant  to  the  Skywave
         Subscription  Agreement,  AsiaSat  agreed  to  make a  HK$24.0  million
         (US$3.1 million) contribution in return for an 80% interest in Skywave.

                                       64
<PAGE>

     o   Shareholders  Agreement,  dated November 30, 2004, among AsiaSat, Macau
         Cable TV,  Limited and Pacific  Satellite  International  Limited  (the
         "Skywave Shareholders  Agreement").  The Skywave Shareholders Agreement
         regulates the rights and obligations of each of the parties in relation
         to their  ownership  in Skywave,  including  the  transfer of shares in
         Skywave and the management and operation of Skywave.

     o   AsiaSat  5  Contract  for  One  Spacecraft   Delivered   On-Ground  and
         Associated Equipment and Services (the "Construction Agreement"), dated
         April 28, 2006,  between  AsiaSat and Space  Systems/Loral,  Inc.  (the
         "Construction Contractor"). Pursuant to the Construction Agreement, the
         Construction  Contractor will design, assemble and construct AsiaSat 5.
         The  estimated  total  consideration  for the project and the launch is
         HK$1,404.0 million (US$180.0 million).

     o   Contract for Land Launch Services (the "Launch Contract"), dated May 8,
         2006,  between AsiaSat and Sea Launch Limited  Partnership the ("Launch
         Contractor").  Pursuant to the Launch Contract,  the Launch  Contractor
         will provide  services  associated  with the launch of AsiaSat 5 in the
         Baikonur Space Centre in Kazakhstan.

     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.

     For an additional  discussion  on taxation,  see  "Operating  and Financial
Review and Prospects - Taxation."

     DOCUMENTS ON DISPLAY

     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, if any. The
Company does not have  significant  exposure to  commodity  price risks or other
market rate or price risks.

                                       65
<PAGE>

     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.  A  substantial  portion  of the cost of  services  and  administrative
expenses  of the Company is  incurred  in Hong Kong  dollars  and a  significant
portion is incurred in Renminbi,  the legal currency of the People's Republic of
China. There has been wide-spread  speculation about the potential  appreciation
of the  Renminbi  against the US Dollar in the near future and,  given the close
tie  between  Hong  Kong's  economy  and the  People's  Republic  of China,  the
potential  impact of such  appreciation on the link between the HK Dollar and US
Dollar that has been in place  since 1983.  See "Key  Information  -  Historical
Exchange Rates  Information."  In the event of an  appreciation  of the Renminbi
and, in  particular,  the HK Dollar,  against the US Dollar,  the profits of the
Company  will  likely  be  adversely  affected  as the  Company's  revenues  are
principally denominated in US Dollars.

     INTEREST RATE FLUCTUATIONS

     As  of  December  31,  2006,  no  borrowings  consisted  of  floating  rate
borrowings.

     The Company will be exposed to interest rate  fluctuations  in the event of
any borrowings  under a future loan  arrangement and any change in interest rate
could affect its results of operations  and cash flows.  As of December 31, 2006
the Company had no outstanding borrowings.

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.

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 as of the end of the
period covered by 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.

                                       66
<PAGE>

REPORT OF THE COMPANY'S MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

DISCLOSURE CONTROLS AND PROCEDURES

     The Company's Chief Executive  Officer and Chief Financial  Officer,  after
evaluating the effectiveness of the Company's disclosure controls and procedures
(as defined in the United States  Exchange Act Rules 13a-15(e) and 15d(e)) as of
the end of the period covered by this Annual Report on Form 20-F, have concluded
that, as of such date, the Company's  disclosure  controls and  procedures  were
effective to ensure that  material  information  required to be disclosed in the
reports that we file and furnish under the Exchange Act is recorded,  processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and regulations..

REPORT OF THE COMPANY'S MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

     The Company's  management is responsible for  establishing  and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(f)
and  15d-15(f)  under the  Securities  Exchange  Act of 1934,  as  amended.  The
Company's  internal control system is a process  designed to provide  reasonable
assurance  regarding the reliability of financial  reporting and the preparation
and  fair  presentation  in  accordance  with  generally   accepted   accounting
principles of its published consolidated financial statements.

     Because  of its  inherent  limitations,  internal  control  over  financial
reporting  may not prevent or detect  misstatements.  Also,  projections  of any
evaluation  of  effectiveness  to future  periods  are  subject to the risk that
controls may become  inadequate  because of changes in  conditions,  or that the
degree of compliance with the policies or procedures may deteriorate.

     The Company's  management,  including the Chief  Executive  Officer and the
Chief Financial  Officer,  assessed the effectiveness of the Company's  internal
control  over  financial  reporting  as of  December  31,  2006.  In making this
assessment,  it used the criteria  established  in INTERNAL  CONTROL--INTEGRATED
FRAMEWORK  issued by the Committee of Sponsoring  Organizations  of the Treadway
Commission  (COSO).  Based  on the  results  of the  assessment,  the  Company's
management has concluded  that, as of December 31, 2006, the Company's  internal
control over financial reporting is effective based on those criteria.

     The management's  assessment of the effectiveness of the Company's internal
control  over  financial  reporting  as of December 31, 2006 has been audited by
PricewaterhouseCoopers,  an independent  registered  public  accounting firm, as
stated in their report which is included under "Item 18.  Financial  Statements"
on page F-2.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

     There were no changes to the  Company's  internal  control  over  financial
reporting that occurred  during the period covered by this Annual Report on Form
20-F that have  materially  affected,  or are  reasonably  likely to  materially
affect, the Company's internal control over financial reporting.

ITEM 16. OTHER INFORMATION.

     AUDIT COMMITTEE FINANCIAL EXPERT

     The Board of Directors has determined  that Mr. Robert Sze, a member of the
Company's audit committee, is a "financial expert" (as such term is used in Item
16 of Form 20-F) and is an "independent" director (as such term is defined under
the listing rules of the NYSE).

                                       67
<PAGE>

     CODE OF ETHICS

     The  Company  has  adopted  a  code  of  ethics  that  requires  all of its
employees,  particularly  senior  officers and general  managers,  including the
principal financial officer, to maintain, at all times, the highest standards of
integrity and honesty in conducting the Company's  affairs.  This code of ethics
is posted on the Company's  website,  which is located at  www.asiasat.com.  The
Company intends to satisfy the disclosure requirement under Item 16 of Form 20-F
regarding an amendment to, or waiver from, a provision of this code of ethics by
posting  such  information  on its  website,  at the  address  specified  above.
Information  contained in the Company's  website,  whether  currently  posted or
posted in the future, is not part of this document or the documents incorporated
herein by reference in this document.

     PRINCIPAL ACCOUNTANT FEES AND SERVICES

     PricewaterhouseCoopers  served as the  principal  accountant of the Company
(the  "Principal  Accountant").  The fees incurred and  described  below for the
Principal Accountant.

     AUDIT FEES

     The  aggregate  fees  incurred by the Company in each of 2005 and 2006 were
HK$0.8  million  and HK$1.8  million  respectively,  for  professional  services
rendered by the Principal  Accountant,  for the audit or review of the Company's
financial  statements,  which  includes  the  audit of  internal  controls  over
financial  reporting in compliance  with the  requirements of Section 404 of the
Sarbanes-Oxley Act 2002.

     AUDIT-RELATED FEES

     The  aggregate  fees  incurred by the Company in each of 2005 and 2006 were
HK$142,000 and HK$12,000 respectively, for assurance and related services by the
Principal Accountant that are reasonably related to the performance of the audit
or review of the Company's financial  statements and were not otherwise reported
under the paragraph entitled "Audit Fees" above.

     TAX FEES

     The  aggregate  fees  incurred by the Company in each of 2005 and 2006 were
HK$89,000 and HK$85,000 respectively,  for professional services rendered by the
Principal Accountant for tax compliance, tax advice and tax planning.

     ALL OTHER FEES

     The  aggregate  fees  incurred by the Company in each of 2005 and 2006 were
HK$0.8  million and HK$0.1  million,  respectively,  for  products  and services
provided by the Principal  Accountant,  other than for services described in the
paragraphs above. Services comprising the fees disclosed involve principally the
consultation   services   rendered  in  connection   with  Section  404  of  the
Sarbanes-Oxley  Act of 2002 in 2005 and the performance of services  relating to
our  circular  for the  acquisition  of AsiaSat 5 filed with the Hong Kong Stock
Exchange in 2006.

     None of the services  described  above were  provided  under the de minimus
exception set forth in Rule 2-01(c)(7)(i)(c) under Regulation S-X.

                                       68
<PAGE>

     POLICY ON AUDIT COMMITTEE  PRE-APPROVAL OF AUDIT AND PERMISSIBLE  NON-AUDIT
SERVICES OF INDEPENDENT AUDITORS

     The audit  committee has adopted terms of reference  which  address,  among
other  matters,  pre-approval  of audit and non-audit  services  provided by the
independent  auditor.  The terms of reference  requires  that all services to be
provided by the independent auditors must be approved by the audit committee. To
facilitate  smaller  projects that may arise between  scheduled  meetings of the
audit committee,  the audit committee may pre-approve the provision of audit and
non-audit services by the independent auditors. For both types of pre-approvals,
the audit  committee  considers  whether such services are  consistent  with the
rules of the U.S. Securities and Exchange Commission on auditor independence.

     EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

     The audit committee of the Company  currently  comprises of Messrs.  Robert
Sze (Chairman),  Edward Chen,  James Watkins,  Mark Chen and Wei Min Ju. Messrs.
Mark Chen and Wei Min Ju have only  observer  status on the audit  committee and
are  non-voting   members  nominated  by  GE  Equity  and  CITIC  ,  controlling
shareholders  of the Company.  Their  appointment  to the audit  committee is in
reliance on an exemption from the audit committee independence requirements that
is  available  to  foreign  private   issuers  under  Rule   10A-3(b)(1)((iv)(D)
promulgated under the Securities Exchange Act of 1934, as amended.  Messrs. Mark
Chen and Wei Min Ju are not  executive  officers  of the Company and satisfy the
"no compensation" requirement under Rule 10A-3(b)(1(ii)(A). The Company believes
that their  appointment to the audit  committee  does not  materially  adversely
affect the ability of the audit  committee to act  independently  and to satisfy
the other requirements of Rule 10A-3.

                                    PART III

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 (PwC).............................F-2
             Consolidated Statements of Operations..........................F-3
             Consolidated Balance Sheets....................................F-4
             Consolidated Statement of Changes in Shareholders' Equity......F-5
             Consolidated Statements of Cash Flows..........................F-6
             Notes to the Consolidated Financial Statements.................F-7

                                       69
<PAGE>

     (b) Exhibits to this Annual Report:

NUMBER                                 EXHIBIT
--------------------------------------------------------------------------------
  1.1.     Memorandum of Association and By-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).
  4.9.     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).*
  4.10.    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).*
  4.11.    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).
  4.12.    Share  Option  Scheme,   dated  January  25,  2002,  of  the  Company
           (incorporated  by  reference  to Exhibit 4.11 on Form 20-F for fiscal
           year 2001).
  4.13.    Lease Agreement,  dated March 12, 2001,  between AsiaSat and the Hong
           Kong Industrial  Estates  Corporation  (incorporated  by reference to
           Exhibit 4.12 on Form 20-F for fiscal year 2002).
  4.14.    Construction Contract Agreement, dated March 4, 2002, between AsiaSat
           and Leighton Contractors (Asia) Limited (incorporated by reference to
           Exhibit 4.13 on Form 20-F for fiscal year 2002).
  4.15.    Lease  Agreement,  dated  January 26, 2005,  between  Asia  Satellite
           Telecommunications Company Limited and Perfect Win Properties Limited
           (incorporated  by  reference  to Exhibit 4.15 on Form 20-F for fiscal
           year 2004).
  4.16.    Equity Joint  Venture  Contract,  dated March 29, 2004,  between Asia
           Satellite   Telecommunications   Company  Limited  and  Sky  Networks
           Communications  Group Company Limited  (incorporated  by reference to
           Exhibit 4.16 on Form 20-F for fiscal year 2004).


                                       70
<PAGE>

NUMBER                                 EXHIBIT
--------------------------------------------------------------------------------
  4.17.    Subscription Agreement, dated November 30, 2004, among Asia Satellite
           Telecommunications  Company Limited, Macau Cable TV, Limited, Pacific
           Satellite  International  Limited  and  Skywave  TV  Company  Limited
           (incorporated  by  reference  to Exhibit 4.17 on Form 20-F for fiscal
           year 2004).
  4.18.    Shareholders Agreement, dated November 30, 2004, among Asia Satellite
           Telecommunications  Company  Limited,  Macau  Cable TV,  Limited  and
           Pacific Satellite International Limited (incorporated by reference to
           Exhibit 4.18 on Form 20-F for fiscal year 2004).
  4.19     AsiaSat  5  Contract  for  One  Spacecraft  Delivered  On-Ground  and
           Associated  Equipment  and  Services,  dated April 28,  2006  between
           AsiaSat and Space  Systems/Loral,  Inc  (incorporated by reference to
           Exhibit 4.19 on Form 20-F for fiscal year 2005).*
  4.20     Contract for Land Launch Services,  dated May 8, 2006 between AsiaSat
           and Sea Launch  Limited  Partnership  (incorporated  by  reference to
           Exhibit 4.20 on Form 20-F for fiscal year 2005)*
  8.1.     Subsidiaries  of the  Registrant  (included on page 14 of this Annual
           Report).
  12.1     Certification  of Chief Executive  Officer pursuant to Section 302 of
           the Sarbanes-Oxley Act of 2002.
  12.2     Certification  of Chief Financial  Officer pursuant to Section 302 of
           the Sarbanes-Oxley Act of 2002.
  13.1     Certification  of  Chief  Executive  Officer  pursuant  to 18  U.S.C.
           Section   1350,   as  adopted   pursuant   to  Section   906  of  the
           Sarbanes-Oxley Act of 2002.
  13.2     Certification  of  Chief  Financial  Officer  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.



                                       71
<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 15, 2007


<PAGE>


                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED










        ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

        CONSOLIDATED FINANCIAL STATEMENTS

        YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006 AND
        REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM










<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED




INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm for the years ended

  December 31, 2004, 2005 and 2006..........................................F-2

Consolidated Balance Sheets at December 31, 2005 and 2006...................F-4

Consolidated Statements of Operations for the years ended

  December 31, 2004, 2005 and 2006..........................................F-5

Consolidated Statements of Changes in Equity for the years ended

  December 31, 2004, 2005 and 2006..........................................F-6

Consolidated Statements of Cash Flows for the years ended

  December 31, 2004, 2005 and 2006..........................................F-7

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



                                      F-1
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED



Report of Independent Registered Public Accounting Firm

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

We have  completed an  integrated  audit of Asia  Satellite  Telecommunications
Holdings Limited's 2006 consolidated  financial  statements and of its internal
control over financial reporting as of December 31, 2006 and audits of its 2005
and 2004 consolidated  financial statements in accordance with the standards of
the Public Company  Accounting  Oversight Board (United States).  Our opinions,
based on our audits, are presented below.


CONSOLIDATED FINANCIAL STATEMENTS

In our opinion,  the accompanying  consolidated  balance sheets and the related
consolidated statements of operation,  changes in equity and cash flows present
fairly,  in all material  respects,  the financial  position of Asia  Satellite
Telecommunications  Holdings  Limited and its subsidiaries at December 31, 2006
and December 31, 2005, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 2006 in conformity
with accounting principles generally accepted in Hong Kong .

These   financial   statements  are  the   responsibility   of  Asia  Satellite
Telecommunications  Holdings  Limited's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits of these statements in accordance with the standards of
the Public Company Accounting Oversight Board (United States).  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 of
financial statements includes examining,  on a test basis,  evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,  assessing  the
accounting  principles used and significant  estimates made by management,  and
evaluating the overall financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

Accounting   principles  generally  accepted  in  Hong  Kong  vary  in  certain
significant  respects  from  accounting  principles  generally  accepted in the
United  States of America ("US GAAP").  Information  relating to the nature and
effect  of  such  differences  is  presented  in  Note  32 to the  consolidated
financial statements.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Also, in our opinion,  management's  assessment,  included in the  accompanying
"Report  of  the  Company's  Management  on  Internal  Control  Over  Financial
Reporting"  appearing  under item 15,  that Asia  Satellite  Telecommunications
Holdings Limited maintained effective internal control over financial reporting
as of December  31, 2006 based on criteria  established  in Internal  Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway  Commission (COSO), is fairly stated, in all material respects,  based
on   those   criteria.    Furthermore,   in   our   opinion,   Asia   Satellite
Telecommunications  Holdings  Limited  maintained,  in all  material  respects,
effective  internal  control over financial  reporting as of December 31, 2006,
based on criteria established in Internal Control - Integrated Framework issued
by the COSO.

Asia Satellite  Telecommunications Holdings Limited's management is responsible
for maintaining effective internal control over financial reporting and for its
assessment of the  effectiveness of internal control over financial  reporting.
Our responsibility is to express opinions on management's assessment and on the
effectiveness  of the  Asia  Satellite  Telecommunications  Holdings  Limited's
internal control over financial reporting based on our audit.

We  conducted  our  audit of  internal  control  over  financial  reporting  in
accordance with the standards of the Public Company Accounting  Oversight Board
(United States).  Those standards require that we plan and perform the audit to
obtain  reasonable  assurance  about whether  effective  internal  control over
financial  reporting  was  maintained  in all  material  respects.  An audit of
internal control over financial  reporting  includes obtaining an understanding
of  internal  control  over  financial   reporting,   evaluating   management's
assessment,  testing and evaluating the design and operating  effectiveness  of
internal control, and performing such other procedures as we consider necessary
in the circumstances. We believe that our audit provides a reasonable basis for
our opinions.

A company's internal control over financial  reporting is a process designed to
provide reasonable  assurance  regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally  accepted  accounting  principles.  A company's internal control
over  financial  reporting  includes  those  policies and  procedures  that (i)
pertain to the  maintenance of records that, in reasonable  detail,  accurately
and fairly  reflect  the  transactions  and  dispositions  of the assets of the
company;  (ii) provide  reasonable  assurance that transactions are recorded as
necessary to permit  preparation  of financial  statements in  accordance  with
generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management
and directors of the company;  and (iii) provide reasonable assurance regarding

                                      F-2
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED



prevention or timely detection of unauthorized acquisition, use, or disposition
of the  company's  assets  that could have a material  effect on the  financial
statements.

Because of its inherent limitations,  internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness  to future  periods  are  subject to the risk that  controls  may
become  inadequate  because  of changes  in  conditions,  or that the degree of
compliance with the policies or procedures may deteriorate.


/S/ PRICEWATERHOUSECOOPERS
HONG KONG
JUNE 15, 2007




                                     F-3-
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
                                                                              AS AT DECEMBER 31
                                                           ---------------------------------------------------------
                                                 NOTE             2006                2006                 2005
                                                               US$'000
<S>                                              <C>           <C>               <C>                  <C>
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment                      7           337,288           2,630,847            2,620,911
Leasehold land and land use rights                 6             3,028              23,616               24,199
Intangible assets                                  8               164               1,276                1,339
Unbilled receivable                                             21,929             171,047              174,563
Interests in associates                           10             1,289              10,057               14,294
Amount paid to tax authority                      11            19,860             154,911               93,666
                                                           ---------------     ---------------     -----------------
TOTAL NON-CURRENT ASSETS                                       383,558           2,991,754            2,928,972
                                                           ---------------     ---------------     -----------------

CURRENT ASSETS
Inventories                                       13                45                 354                  434
Trade and other receivables                       12            15,339             119,647              118,598
Cash and cash equivalents                         14           253,777           1,979,457            1,635,526
                                                           ---------------     ---------------     -----------------
TOTAL CURRENT ASSETS                                           269,161           2,099,458            1,754,558
                                                           ---------------     ---------------     -----------------
TOTAL ASSETS                                                   652,719           5,091,212            4,683,530
                                                           ===============     ===============     =================

EQUITY
Capital and reserves attributable to the
   Company's equity holders
Ordinary shares                                   15             5,003              39,027               39,027
Share premium                                     15               592               4,614                4,614
Retained earnings
-  Proposed final dividend                        26            13,509             105,372              105,372
-  Others                                                      547,768           4,272,591            3,955,175
                                                           ---------------     ---------------     -----------------
                                                               566,872           4,421,604            4,104,188
Minority interests                                                 632               4,933                5,537
                                                           ---------------     ---------------     -----------------

TOTAL EQUITY                                                   567,504           4,426,537            4,109,725
                                                           ---------------     ---------------     -----------------

LIABILITIES
NON-CURRENT LIABILITIES
Deferred income tax liabilities                   17            24,582             191,739              192,654
Deferred revenue                                  16            18,285             142,624               87,654
Other payables                                                     227               1,770                    -
                                                           ---------------     ---------------     -----------------
TOTAL NON-CURRENT LIABILITIES                                   43,094             336,133              280,308
                                                           ---------------     ---------------     -----------------

CURRENT LIABILITIES
Construction payables                                              223               1,736                3,096
Amount received from customer                                    7,500              58,500               46,800
Payroll related accruals                                         2,405              18,759                3,656
Other payables and accrued expenses                              2,466              19,236               13,662
Deferred revenue                                  16            19,628             153,101              151,982
Current income tax liabilities                                   9,883              77,089               74,180
Dividend payable                                                    16                 121                  121
                                                           ---------------     ---------------     -----------------
TOTAL CURRENT LIABILITIES                                       42,121             328,542              293,497
                                                           ---------------     ---------------     -----------------
TOTAL LIABILITIES                                               85,215             664,675              573,805
                                                           ---------------     ---------------     -----------------

TOTAL EQUITY AND LIABILITIES                                   652,719           5,091,212            4,683,530
                                                           ===============     ===============     =================

NET CURRENT ASSETS                                             227,040           1,770,916            1,461,061
                                                           ===============     ===============     =================

TOTAL ASSETS LESS CURRENT LIABILITIES                          610,598           4,762,670            4,390,033
                                                           ===============     ===============     =================

Commitments and contingencies                   28, 30
</TABLE>

The accompanying footnotes are an integral part of these consolidated financial
statements.

                                      F-4
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                 YEAR ENDED DECEMBER 31
                                                      ---------------------------------------------------------------------------
                                            NOTE            2006                2006                 2005                2004
                                                         US$'000
<S>                                         <C>          <C>                <C>                  <C>                <C>
Sales                                         5          119,218             929,902              879,705           1,004,982
Cost of services                             19          (52,646)           (410,640)            (419,029)           (420,490)
                                                      --------------     ----------------     ---------------     ---------------
GROSS PROFIT                                              66,572             519,262              460,676             584,492
Other gains - net                            18           11,896              92,793               43,711              21,982
Administrative expenses                      19          (12,126)            (94,585)             (83,880)           (102,477)
                                                      --------------     ----------------     ---------------     ---------------
OPERATING PROFIT                                          66,342             517,470              420,507             503,997
Finance costs                                21              (19)               (152)                   -                  (1)
Share of loss of associates                  10           (1,076)             (8,391)              (3,872)            (12,380)
                                                      --------------     ----------------     ---------------     ---------------
PROFIT BEFORE INCOME TAX                                  65,247             508,927              416,635             491,616
Income tax expense                           22           (7,118)            (55,522)             (51,270)            (60,536)
                                                      --------------     ----------------     ---------------     ---------------
PROFIT FROM CONTINUING OPERATIONS AND
   FOR THE YEAR                                           58,129             453,405              365,365             431,080
                                                      ==============     ================     ===============     ===============

ATTRIBUTABLE TO:
- equity holders of the Company              24           58,206             454,009              366,184             431,216
- minority interests                                         (77)               (604)                (819)               (136)
                                                      --------------     ----------------     ---------------     ---------------
                                                          58,129             453,405              365,365             431,080
                                                      ==============     ================     ===============     ===============

EARNINGS PER SHARE FOR PROFIT ATTRIBUTABLE
   TO THE EQUITY HOLDERS OF THE COMPANY
   DURING THE YEAR
   (expressed in US$/HK$ per share)

- basic                                      25          US$0.15             HK$1.16              HK$0.94             HK$1.10
                                                      ==============     ================     ===============     ===============

- diluted                                    25          US$0.15             HK$1.16              HK$0.94             HK$1.10
                                                      ==============     ================     ===============     ===============


DIVIDENDS                                    26           17,512               136,593              136,593             136,593
                                                      ================     ================     ===============     ===============
</TABLE>
The accompanying footnotes are an integral part of these consolidated financial
statements.

                                      F-5
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                                          ATTRIBUTABLE TO EQUITY HOLDERS
                                          NOTE                                    OF THE COMPANY
                                                                 ------------------------------------------
                                                    NUMBER OF      SHARE      SHARE    RETAINED               MINORITY
                                                       SHARES    CAPITAL    PREMIUM    EARNINGS       TOTAL  INTERESTS     TOTAL
                                                 (in thousand)
<S>                                       <C>         <C>         <C>         <C>     <C>         <C>           <C>    <C>
BALANCE AT JANUARY 1, 2004                            390,266     39,027      4,614   3,524,625   3,568,266       492  3,568,758

Profit/(Loss) for the year                                             -          -     431,216     431,216      (136)   431,080
Final dividend relating to 2003                                        -          -     (93,664)    (93,664)        -    (93,664)
Interim dividend relating to 2004          26                          -          -     (31,221)    (31,221)        -    (31,221)
Minority interests                         29                          -          -           -           -     6,000      6,000
                                                                -----------------------------------------------------------------
                                                                       -          -     306,331     306,331     5,864    312,195
                                                                -----------------------------------------------------------------

BALANCE AT DECEMBER 31, 2004                          390,266     39,027      4,614   3,830,956   3,874,597     6,356  3,880,953
                                                                =================================================================

BALANCE AT JANUARY 1, 2005, as per above
                                                      390,266     39,027      4,614   3,830,956   3,874,597     6,356  3,880,953

Profit/(Loss) for the year                                             -          -     366,184     366,184      (819)   365,365
Final dividend relating to 2004                                        -          -    (105,372)    (105,372)       -   (105,372)
Interim dividend relating to 2005          26                          -          -     (31,221)    (31,221)        -    (31,221)
                                                                -----------------------------------------------------------------
                                                                       -          -     229,591     229,591      (819)   228,772
                                                                -----------------------------------------------------------------

BALANCE AT DECEMBER 31, 2005                          390,266     39,027      4,614   4,060,547   4,104,188     5,537  4,109,725
                                                                =================================================================

BALANCE AT JANUARY 1, 2006, as per above
                                                      390,266     39,027      4,614   4,060,547   4,104,188     5,537  4,109,725

Profit/(Loss) for the year                                             -          -     454,009     454,009      (604)   453,405
Final dividend relating to 2005            26                          -          -    (105,372)   (105,372)        -   (105,372)
Interim dividend relating to 2006          26                          -          -     (31,221)    (31,221)        -    (31,221)
                                                                -----------------------------------------------------------------
                                                                       -          -     317,416     317,416      (604)   316,812
                                                                -----------------------------------------------------------------

BALANCE AT DECEMBER 31, 2006                          390,266     39,027      4,614   4,377,963   4,421,604     4,933  4,426,537
                                                                =================================================================
</TABLE>

The accompanying footnotes are an integral part of these consolidated financial
statements.

                                      F-6
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOW

                                                                                                 YEAR ENDED DECEMBER 31
                                                                          --------------------------------------------------------
                                                                 NOTE           2006            2006           2005         2004
                                                                             US$'000
<S>                                                              <C>         <C>            <C>             <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
- continuing operations                                           27          96,418         752,062        609,717      779,413
- Hong Kong Profits Tax paid                                                  (5,161)        (40,260)       (79,186)     (10,934)
- overseas tax paid                                                           (1,701)        (13,268)       (16,181)     (17,667)
                                                                          -------------   -------------  ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES - NET                                    89,556         698,534        514,350      750,812
                                                                          -------------   -------------  ------------ ------------

CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES:
- purchase of property, plant and equipment                                  (39,325)       (306,736)       (23,659)     (47,672)
- purchase of intangible assets                                                  (13)            (97)             -            -
- loan to an associate                                            31               -               -              -       (1,301)
- loan to an independent third party                                               -               -              -       (3,778)
- repayment of loan from an associate                             31               -               -          5,070        3,510
- repayment of loan from an independent third party                                -               -          2,062        1,716
- interest received                                                           11,378          88,747         39,833       20,290
- interest expense                                                                 -               -              -           (1)
- proceeds from disposal of property, plant and equipment
                                                                                  10              76            108          257
- purchase of interests in associates                                              -               -              -      (23,930)
                                                                          -------------   -------------  ------------ ------------
CASH FLOWS (USED IN)/FROM INVESTING ACTIVITIES - NET                         (27,950)       (218,010)        23,414      (50,909)
                                                                          -------------   -------------  ------------ ------------

CASH FLOWS USED IN FINANCING ACTIVITIES:
- dividends paid                                                  26         (17,512)       (136,593)      (136,593)    (124,885)
                                                                          -------------   -------------  ------------ ------------
CASH FLOWS USED IN FINANCING ACTIVITIES - NET                                (17,512)       (136,593)      (136,593)    (124,885)
                                                                          -------------   -------------  ------------ ------------


NET INCREASE IN CASH AND CASH EQUIVALENTS                                     44,094         343,931        401,171      575,018
Cash and cash equivalents at beginning of the year                           209,683       1,635,526      1,234,355      659,337
                                                                          -------------   -------------  ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF THE YEAR, REPRESENTING
   BANK BALANCES AND CASH                                         14         253,777       1,979,457      1,635,526    1,234,355
                                                                          =============   =============  ============ ============
</TABLE>

The accompany footnotes are an integral part of these consolidated financial
statements.

                                      F-7
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.  GENERAL INFORMATION

    Asia Satellite  Telecommunications  Holdings  Limited (the Company) and its
    subsidiaries   (together   the  Group)  is  engaged  in  the  provision  of
    transponder capacity.

    The Company is a limited  liability  company  incorporated in Bermuda as an
    exempted company under the Companies Act 1981 of Bermuda (as amended).  The
    address of its  registered  office is Canon's  Court,  22 Victoria  Street,
    Hamilton HM12, Bermuda.

    The  Company's  shares are listed on the New York  Stock  Exchange  and The
    Stock Exchange of Hong Kong Limited (hereafter  collectively referred to as
    the "Stock Exchange").

    These consolidated financial statements are presented in thousands of units
    of Hong Kong dollars (HK$'000), unless otherwise stated. These consolidated
    financial statements have been approved for issue by the Board of Directors
    on March 5, 2007 and signed on its behalf by Mr. JU Wei Min  (Director) and
    Mr. Peter JACKSON (Director).

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    The  principal  accounting  policies  applied in the  preparation  of these
    consolidated  financial  statements are set out below.  These policies have
    been  consistently  applied to all the years  presented,  unless  otherwise
    stated.

    2.1   BASIS OF PREPARATION

    The  consolidated  financial  statements of the Group have been prepared in
    accordance with Hong Kong Financial  Reporting  Standards (HKFRSs) and have
    been prepared under the historical cost convention.

    The preparation of financial  statements in conformity with HKFRSs requires
    the  use  of  certain  critical  accounting  estimates.  It  also  requires
    management  to exercise its judgment in the process of applying the Group's
    accounting  policies.  The areas  involving a higher  degree of judgment or
    complexity, or areas where assumptions and estimates are significant to the
    consolidated financial statements, are disclosed in note 4.

    NEW STANDARDS AND AMENDMENTS TO PUBLISHED STANDARDS
    The following new  standards,  amendments to standards and  interpretations
    are mandatory for the financial  year ended  December 31, 2006:
    o   Amendment to IAS/HKAS 19, 'Actuarial gains and losses,  group plans and
        disclosures',  effective  for  annual  periods  beginning  on or  after
        January 1, 2006. This amendment is not relevant for the Group;
    o   Amendment  to  IAS/HKAS  39,  Amendment  to 'The  fair  value  option',
        effective  for annual  periods  beginning on or after  January 1, 2006.
        This amendment is not relevant for the Group;
    o   Amendment  to  IAS/HKAS  21,  Amendment  'Net  investment  in a foreign
        operation',  effective for annual periods beginning on or after January
        1, 2006. This amendment has no impact on the Group;
    o   Amendment  to IAS/HKAS 39,  Amendment  'Cash flow hedge  accounting  of
        forecast  intragroup   transactions',   effective  for  annual  periods
        beginning on or after January 1, 2006.  This  amendment is not relevant
        for the Group;
    o   Amendment  to  IAS/HKAS  39  and  IFRS/HKFRS  4,  Amendment  'Financial
        guarantee  contracts',  effective  for annual  periods  beginning on or
        after January 1, 2006. This amendment is not relevant for the Group;
    o   IFRS/HKFRS 6,  'Exploration  for and evaluation of mineral  resources',
        effective  for annual  periods  beginning on or after  January 1, 2006.
        This standard is not relevant for the Group;
    o   IFRIC/HK(IFRIC)-Int  4, 'Determining  whether an arrangement contains a
        lease',  effective for annual periods  beginning on or after January 1,
        2006. The Group has reviewed its  contracts.  Some of them are required
        to be accounted for as leases in accordance with IAS/HKAS 17, 'Leases'.
        However,  these leases are operating leases, and their reclassification
        has had no impact on the expense recognized in respect of them;
    o   IFRIC/HK(IFRIC)-Int    5,   'Rights   to    interests    arising   from
        decommissioning,  restoration and environmental  rehabilitation funds',
        effective  for annual  periods  beginning on or after  January 1, 2006.
        This interpretation is not relevant for the Group; and
    o   IFRIC/HK(IFRIC)-Int  6,  'Liabilities  arising from  participating in a
        specific market - waste electrical and electronic equipment', effective
        for  annual  periods  beginning  on or after  December  1,  2005.  This
        interpretation is not relevant for the Group.

    The following new  standards,  amendments to standards and  interpretations
    have been  issued  but are not  effective  for 2006 and have not been early
    adopted:
    o   IFRIC/HK(IFRIC)-Int   7,  'Applying  the  restatement   approach  under
        IFRS/HKFRS  29',  effective  for annual  periods  beginning on or after
        March 1, 2006.  Management  does not expect this  interpretation  to be
        relevant for the Group;
    o   IFRIC/HK(IFRIC)-Int  8, 'Scope of IFRS/HKFRS  2',  effective for annual
        periods  beginning on or after May 1, 2006.  Management does not expect
        this interpretation to be relevant for the Group;
    o   IFRIC/HK(IFRIC)-Int   9,   'reassessment   of  embedded   derivatives',
        effective  for  annual  periods  beginning  on or after  June 1,  2006.
        Management does not expect this  interpretation  to be relevant for the
        Group;
    o   IFRIC/HK(IFRIC)-Int  10, 'Interim financial  reporting and impairment',
        effective for annual  periods  beginning on or after  November 1, 2006.
        Management is currently  assessing the impact of this interpretation on
        the Group's operations.

                                      F-8
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    2.1 BASIS OF PREPARATION (CONTINUED)
    o   IFRS/HKFRS  7,  'Financial  instruments:  Disclosures',  effective  for
        annual  periods  beginning  on or after  January 1, 2007.  IAS/HKAS  1,
        'Amendments  to capital  disclosures',  effective  for  annual  periods
        beginning  on  or  after  January  1,  2007.  Management  is  currently
        assessing the impact of this standard on the Group's operations;
    o   IFRIC-Int 11-IFRS 2, 'Group and treasury share transactions', effective
        for annual  periods  beginning on or before  March 1, 2007.  Management
        does not expect this interpretation to be relevant for the Group;
    o   IFRIC-Int 12, 'Service concession  arrangements',  effective for annual
        periods beginning on or before January 1, 2008. Management is currently
        assessing the impact of this  interpretation on the Group's operations;
        and
    o   IFRS 8, 'Operating segments', effective for annual periods beginning on
        or before January 1, 2009. Management is currently assessing the impact
        of this standard on the Group's operations.
    o   Amendment to IAS 23,  'Borrowing  Costs',  effective for annual periods
        beginning on or before January 1, 2009. Management does not expect this
        amendment to affect the Group.

    2.2 CONSOLIDATION

    The consolidated  financial  statements include the financial statements of
    the Company and all its subsidiaries made up to December 31.

    (a) Subsidiaries
    Subsidiaries  are all entities  (including  special purpose  entities) over
    which  the  Group  has the power to  govern  the  financial  and  operating
    policies generally accompanying a shareholding of more than one half of the
    voting rights. The existence and effect of potential voting rights that are
    currently  exercisable or convertible are considered when assessing whether
    the Group controls another entity.

    Subsidiaries  are  fully  consolidated  from the date on which  control  is
    transferred  to the  Group.  They are  de-consolidated  from the date  that
    control ceases.

    The purchase method of accounting is used to account for the acquisition of
    subsidiaries.  The cost of an  acquisition is measured as the fair value of
    the assets given,  equity  instruments  issued and liabilities  incurred or
    assumed at the date of exchange,  plus costs directly  attributable  to the
    acquisition.  Identifiable  assets  acquired and liabilities and contingent
    liabilities  assumed in a business  combination  are measured  initially at
    their fair values at the  acquisition  date,  irrespective of the extent of
    any minority interest.  The excess of the cost of acquisition over the fair
    value of the  Group`s  share of the  identifiable  net assets  acquired  is
    recorded  as  goodwill.  If the cost of  acquisition  is less than the fair
    value of the net  assets of the  subsidiary  acquired,  the  difference  is
    recognized directly in the statement of operations.

    Inter-company  transactions,  balances and unrealized gains on transactions
    between  group  companies  are  eliminated.   Unrealized  losses  are  also
    eliminated unless the transaction provides evidence of an impairment of the
    asset  transferred.  Accounting  policies of subsidiaries have been changed
    where  necessary to ensure  consistency  with the  policies  adopted by the
    Group.

    In the Company's  balance sheet the investments in subsidiaries  are stated
    at cost less provision for impairment  losses.  The results of subsidiaries
    are  accounted  for by the Company on the basis of  dividends  received and
    receivable.

    (b) Associates
    Associates are all entities over which the Group has significant  influence
    but not control,  generally  accompanying a shareholding of between 20% and
    50% of the voting  rights.  Investments  in associates are accounted for by
    the equity method of accounting  and are initially  recognized at cost. The
    Group's investment in associates  includes goodwill (net of any accumulated
    impairment loss) identified on acquisition.

    The Group's share of its associates'  post-acquisition profits or losses is
    recognized   in  the   statement   of   operations,   and  its   share   of
    post-acquisition  movements  in reserves is  recognized  in  reserves.  The
    cumulative  post-acquisition  movements  are adjusted  against the carrying
    amount of the investment.  When the Group's share of losses in an associate
    equals or  exceeds  its  interest  in the  associate,  including  any other
    unsecured receivables,  the Group does not recognize further losses, unless
    it has incurred obligations or made payments on behalf of the associate.

    Unrealized  gains on transactions  between the Group and its associates are
    eliminated  to  the  extent  of the  Group's  interest  in the  associates.
    Unrealized  losses  are also  eliminated  unless the  transaction  provides
    evidence of an impairment of the asset transferred.  Accounting policies of
    associates have been changed where necessary to ensure consistency with the
    policies adopted by the Group.

    In the Company's balance sheet the investments in associated  companies are
    stated at cost  less  provision  for  impairment  losses.  The  results  of
    associated  companies  are  accounted  for by the  Company  on the basis of
    dividends received and receivable.

                                      F-9
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    2.3  SEGMENT REPORTING

    A business segment is a group of assets and operations engaged in providing
    products  or  services  that are  subject  to risks  and  returns  that are
    different from those of other business segments.  A geographical segment is
    engaged in  providing  products or services  within a  particular  economic
    environment  that are subject to risks and returns that are different  from
    those of segments operating in other economic environments.

    2.4  FOREIGN CURRENCY TRANSLATION

    (a)  Functional and presentation currency
    Items included in the financial  statements of each of the Group's entities
    are measured  using the  currency of the primary  economic  environment  in
    which the entity operates (`the  functional  currency').  The  consolidated
    financial  statements  are  presented  in Hong Kong  dollars,  which is the
    Company's functional and presentation currency.

    (b)  Transactions and balances
    Foreign currency  transactions are translated into the functional  currency
    using the  exchange  rates  prevailing  at the  dates of the  transactions.
    Foreign  exchange  gains and losses  resulting  from the settlement of such
    transactions  and  from  the  translation  at  year-end  exchange  rates of
    monetary  assets and  liabilities  denominated  in foreign  currencies  are
    recognized in the statement of operations.

    Translation  differences on non-monetary  items, such as equity instruments
    held at fair value through profit or loss, are reported as part of the fair
    value gain or loss.  Translation  difference on non-monetary items, such as
    equities classified as available-for-sale financial assets, are included in
    the fair value reserve in equity.

    (c)  Group companies
    The results and financial position of all the group entities (none of which
    has the  currency of a  hyperinflationary  economy)  that have a functional
    currency  different from the presentation  currency are translated into the
    presentation currency as follows:

    (i)   assets  and   liabilities   for  each  balance  sheet  presented  are
          translated at the closing rate at the date of that balance sheet;

    (ii)  income and expenses for each  statement of operations  are translated
          at average  exchange  rates  (unless this average is not a reasonable
          approximation of the cumulative effect of the rates prevailing on the
          transaction  dates,  in which case income and expenses are translated
          at the dates of the transactions); and

    (iii) all  resulting  exchange  differences  are  recognized  as a separate
          component of equity.

    2.5  PROPERTY, PLANT AND EQUIPMENT

    Property,   plant  and  equipment  are  stated  at  cost  less  accumulated
    depreciation and accumulated impairment losses.

    Buildings  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. Historical cost includes  expenditure that is
    directly attributable to the acquisition of the items.

    Subsequent  costs are included in the asset's carrying amount or recognized
    as a separate asset,  as appropriate,  only when it is probable that future
    economic  benefits  associated with the item will flow to the Group and the
    cost  of  the  item  can  be  measured  reliably.  All  other  repairs  and
    maintenance  are  expensed  in  the  statement  of  operations  during  the
    financial year in which they are incurred.

    Depreciation  of  property,  plant and  equipment is  calculated  using the
    straight-line method to allocate cost or revalued amounts to their residual
    values over their estimated useful lives, at the following rates per annum:

    Satellites:
    -   AsiaSat 2                        8%
    -   AsiaSat 3S                       6.25%
    -   AsiaSat 4                        6.67%
    Buildings                            4%
    Tracking facilities                 10%-20%
    Furniture, fixtures and fittings    20%-33%
    Other equipment                     25%-33%
    Motor vehicles                      25%
    Plant and machinery                 20%

                                     F-10
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    2.5  PROPERTY, PLANT AND EQUIPMENT (continued)

    The assets' residual values and useful lives are reviewed,  and adjusted if
    appropriate, at each balance sheet date.

    An asset's  carrying amount is written down  immediately to its recoverable
    amount  if the  asset's  carrying  amount  is  greater  than its  estimated
    recoverable amount.

    Gains and losses on disposals  are  determined  by comparing  proceeds with
    carrying amounts. These are included in the income statement. When revalued
    assets are sold, the amounts  included in other reserves are transferred to
    retained earnings.

    2.6  INTANGIBLE ASSETS - LICENCES

    The licences are shown at historical  cost. One licence has a finite useful
    life and is carried at cost less accumulated amortization.  Amortization is
    calculated  using  the  straight-line  method to  allocate  the cost of the
    licence over its estimated useful life (112 months). The other licence does
    not have a finite useful life.

    2.7  IMPAIRMENT OF ASSETS

    Assets that have an indefinite useful life are not subject to amortization,
    are tested at least annually for impairment and are reviewed for impairment
    whenever  events or changes in  circumstances  indicate  that the  carrying
    amount may not be recoverable.  Assets that are subject to amortization are
    reviewed  for  impairment  whenever  events  or  changes  in  circumstances
    indicate  that the carrying  amount may not be  recoverable.  An impairment
    loss is  recognized  for the amount by which the  asset's  carrying  amount
    exceeds its recoverable  amount. The recoverable amount is the higher of an
    asset's fair value less costs to sell and value in use. For the purposes of
    assessing  impairment,  assets are  grouped at the lowest  levels for which
    there are  separately  identifiable  cash  flows  (cash-generating  units).
    Non-financial  assets other than  goodwill that have suffered an impairment
    are reviewed  for possible  reversal of the  impairment  at each  reporting
    date.

    2.8  GOODWILL

    Goodwill  represents the excess of the cost of an investment  over the fair
    value of the Group's share of the net  identifiable  assets of the acquired
    associates at the date of investment.  Goodwill on investment of associates
    is included in interests  in  associates.  Goodwill is tested  annually for
    impairment and carried at cost less accumulated  impairment  losses.  Gains
    and losses on the  disposal  of an entity  include the  carrying  amount of
    goodwill relating to the entity sold.

    Goodwill  is  allocated  to  cash-generating   units  for  the  purpose  of
    impairment testing.

    2.9  INVENTORIES

    Inventories are stated at the lower of cost and net realizable  value. Cost
    is determined using the first-in, first-out (FIFO) method and comprises all
    costs of purchase and other costs  incurred in bringing the  inventories to
    their  present  locations  and  conditions.  Net  realizable  value  is the
    estimated selling price in the ordinary course of business, less applicable
    variable selling expenses.

    2.10  TRADE AND OTHER RECEIVABLES

    Trade and other  receivables  are  recognized  initially at fair value less
    provision for  impairment.  A provision  for  impairment of trade and other
    receivables is established when there is objective  evidence that the Group
    will not be able to collect all amounts due according to the original terms
    of  receivables.   Significant   financial   difficulties  of  the  debtor,
    probability   that  the  debtor   will  enter   bankruptcy   or   financial
    reorganisation,  and default or delinquency in payments (more than 180 days
    overdue) are considered  indicators that the trade  receivable is impaired.
    The amount of the  provision is  recognized  in the statement of operations
    within administrative expenses.

    2.11  CASH AND CASH EQUIVALENTS

    Cash and cash equivalents  include cash in hand, deposits held at call with
    banks, other short-term highly liquid investments with original  maturities
    of three months or less,  and bank  overdrafts.  Bank  overdrafts are shown
    within borrowings in current liabilities on the balance sheet.

                                     F-11
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    2.12  SHARE CAPITAL

    Ordinary shares are classified as equity.

    Incremental  costs  directly  attributable  to the  issue of new  shares or
    options are shown in equity as a deduction, net of tax, from the proceeds.

    2.13  BORROWINGS

    Borrowings are recognized initially at fair value, net of transaction costs
    incurred.  Transaction  costs  are  incremental  costs  that  are  directly
    attributable to the acquisition,  issue or disposal of a financial asset or
    financial  liability,  including  fees  and  commissions  paid  to  agents,
    advisers, brokers and dealers, levies by regulatory agencies and securities
    exchanges,  and  transfer  taxes and duties.  Borrowings  are  subsequently
    stated at amortized  cost;  any  difference  between the  proceeds  (net of
    transaction  costs) and the redemption value is recognized in the statement
    of  operations  over the  period  of the  borrowings  using  the  effective
    interest method.

    2.14  DEFERRED INCOME TAX

    Deferred  income tax is provided in full,  using the liability  method,  on
    temporary   differences  arising  between  the  tax  bases  of  assets  and
    liabilities  and  their  carrying  amounts  in the  consolidated  financial
    statements.  However,  if the  deferred  income  tax  arises  from  initial
    recognition of an asset or liability in a transaction other than a business
    combination that at the time of the transaction  affects neither accounting
    nor taxable profit or loss, it is not accounted for. Deferred income tax is
    determined   using  tax  rates  (and  laws)  that  have  been   enacted  or
    substantially  enacted by the balance  sheet date and are expected to apply
    when the related  deferred  income tax asset is  realized  or the  deferred
    income tax liability is settled.

    Deferred income tax assets are recognized to the extent that it is probable
    that future  taxable  profit will be available  against which the temporary
    differences can be utilized.

    Deferred  income  tax is  provided  on  temporary  differences  arising  on
    investments in subsidiaries,  associates and jointly  controlled  entities,
    except  where the timing of the  reversal of the  temporary  difference  is
    controlled by the Group and it is probable  that the  temporary  difference
    will not reverse in the foreseeable future.

    2.15  EMPLOYEE BENEFITS

    (a)   Pension obligations
    The Group  participates  in  defined  contribution  plans,  the Group  pays
    contributions to publicly or privately administered pension insurance plans
    on a mandatory,  contractual  or  voluntary  basis.  The pension  plans are
    generally  funded by payments  from  employees  and by the  relevant  Group
    companies.   The  Group  has  no  further  payment   obligations  once  the
    contributions  have been paid. The contributions are recognized as employee
    benefit  expense  when  they  are  due  and are  reduced  by  contributions
    forfeited by those employees who leave the scheme prior to vesting fully in
    the contributions.  Prepaid contributions are recognized as an asset to the
    extent  that  a cash  refund  or a  reduction  in the  future  payments  is
    available.

    (b)   Share-based compensation
    The Group operates an  equity-settled,  share-based  compensation plan. The
    fair value of the employee  services  received in exchange for the grant of
    the options is  recognized  as an expense.  The total amount to be expensed
    over the vesting period is determined by reference to the fair value of the
    options granted,  excluding the impact of any non-market vesting conditions
    (for example,  profitability and sales growth targets).  Non-market vesting
    conditions are included in assumptions about the number of options that are
    expected to become  exercisable.  At each  balance  sheet date,  the entity
    revises its  estimates of the number of options that are expected to become
    exercisable.   It  recognizes  the  impact  of  the  revision  of  original
    estimates, if any, in the income statement,  and a corresponding adjustment
    to equity over the remaining vesting period.

    (c)   Profit-sharing and bonus plans
    The expected cost of profit  sharing and bonus payments are recognized as a
    liability when the Group has a present legal or constructive  obligation as
    a result of services  rendered by employees and a reliable  estimate of the
    obligation can be made.

    Liabilities  for profit  sharing and bonus plans are expected to be settled
    within 12 months and are  measured at the amounts  expected to be paid when
    they are settled.

                                     F-12
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    2.16  PROVISIONS

    Provisions for  environmental  restoration,  asset retirement  obligations,
    restructuring  costs and legal claims are recognized  when: the Group has a
    present legal or constructive  obligation as a result of past events; it is
    more  likely  than not that an outflow of  resources  will be  required  to
    settle  the  obligation;  and  the  amount  has  been  reliably  estimated.
    Restructuring  provisions comprise lease termination penalties and employee
    termination  payments.  Provisions are not recognized for future  operating
    losses.

    Where there are a number of similar  obligations,  the  likelihood  that an
    outflow will be required in settlement is  determined  by  considering  the
    class of  obligations  as a whole.  A provision is  recognized  even if the
    likelihood  of an outflow with respect to any one item included in the same
    class of obligations may be small.

    2.17  REVENUE RECOGNITION

    Revenue from transponder utilization is recognized on a straight-line basis
    over the period of the  agreements.  The excess of revenue  recognized on a
    straight-line  basis over the amount received and receivable from customers
    in accordance with the contract terms is shown as unbilled receivable.

    Revenue from the sale of transponder  capacity under  transponder  purchase
    agreements is recognized on a straight-line basis from the date of delivery
    of the transponder  capacity until the end of the estimated  useful life of
    the satellite.

    Deposits   received  in  advance  in  connection   with  the  provision  of
    transponder capacity are deferred and included in other payables.

    Services under  transponder  utilization  agreements  are generally  billed
    quarterly in advance. Such amounts received in advance and amounts received
    from the sale of transponder capacity 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 is accrued on a time basis,  by reference to the principal
    amounts outstanding and at the interest rate applicable.

    2.18  OPERATING LEASES (AS THE LESSEE)

    Leases in which a significant portion of the risks and rewards of ownership
    are retained by the lessor are  classified  as operating  leases.  Payments
    made  under  operating  leases  (net of any  incentives  received  from the
    lessor) are expensed in the  statement  of  operations  on a  straight-line
    basis over the period of the lease.

    2.19  DIVIDEND DISTRIBUTION

    Dividend  distribution  to the Company's  equity holders is recognized as a
    liability in the financial  statements in the period in which the dividends
    are approved by the Company's equity holders.


                                     F-13
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


3.  FINANCIAL RISK MANAGEMENT

    3.1  FINANCIAL RISK FACTORS

    The Group's  activities expose it to a variety of financial risks:  foreign
    exchange risk,  credit risk and cash flow  interest-rate  risk. The Group's
    overall  risk  management  programme  focuses  on the  unpredictability  of
    financial  markets and seeks to minimise  potential  adverse effects on the
    Group's financial performance.

    (a)  Foreign exchange risk
    During the year, almost all of the Group's revenues, premiums for satellite
    insurance   coverage  and  substantially   all  capital   expenditure  were
    denominated in U.S. Dollars.  The Group's remaining expenses were primarily
    denominated  in Hong Kong  Dollars.  At December 31,  2006,  almost all the
    Group's transponder utilization agreements, transponder purchase agreement,
    loan agreements,  obligations to purchase  telemetry,  tracking and control
    equipment were denominated in U.S. Dollars.  Hence, the Group does not have
    any significant  currency  exposure as long as the Hong Kong dollars and US
    dollars remain linked and does not need to hedge.

    (b)  Credit risk
    The Group has no  significant  concentrations  of  credit  risk.  The Group
    maintains  provision for impairment of receivables and for estimated losses
    that  result  from the  inability  of its  customers  to make the  required
    payments. The Group bases its provision on the likelihood of recoverability
    of account  receivables  based on past  experience  and current  collection
    trends that are expected to continue.  The Group's evaluation also includes
    the length of time the  receivables  are past due and the general  business
    environment.

    (c)  Cash flow interest-rate risk
    The  Group  has no  significant  interest-bearing  assets  or  liabilities,
    however, the Group earns interest income from short term deposits which are
    affected by the changes in market interest rates.


                                     F-14
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


4.  CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

    Estimates  and  judgments  are  continually  evaluated  and  are  based  on
    historical experience and other factors,  including  expectations of future
    events that are believed to be reasonable under the circumstances.

    4.1  CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

    The Group makes  estimates  and  assumptions  concerning  the  future.  The
    resulting  accounting  estimates  will,  by  definition,  seldom  equal the
    related  actual  results.   The  estimates  and  assumptions  that  have  a
    significant  risk of causing a material  adjustment to the carrying amounts
    of assets and  liabilities  within the next  financial  year are  discussed
    below.

    (a)  Estimated impairment of goodwill
    The Group tests annually whether  goodwill has suffered any impairment,  in
    accordance  with the accounting  policy stated in note 2.8. The recoverable
    amounts of cash-generating units have been determined based on value-in-use
    calculations. These calculations require the use of estimates.

    (b)  Income taxes
    The Group is subject to income taxes in numerous jurisdictions. Significant
    judgment is required in  determining  the  worldwide  provision  for income
    taxes.  There are many transactions and calculations for which the ultimate
    tax determination is uncertain during the ordinary course of business.  The
    Group  recognizes  liabilities  for  anticipated  tax audit issues based on
    estimates  of whether  additional  taxes  will be due.  Where the final tax
    outcome of these matters is different  from the amounts that were initially
    recorded,  such  differences  will impact the income tax and  deferred  tax
    provisions in the period in which such determination is made.

    The issue of Indian tax is covered under Contingencies in note 28 below.

    (c)  Useful lives of in-orbit satellites
    The  Group's  operations  are  capital  intensive  and it  has  significant
    investments  in  satellites.  The  carrying  value of the Group's  in-orbit
    satellites  (AsiaSat 2,  AsiaSat 3S and AsiaSat 4)  represented  42% of its
    total assets as of December 31, 2006 (2005:  52%). The Group  estimates the
    useful lives of satellites in order to determine the amount 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
    the  Group  has  estimated,  the Group  would  have a smaller  depreciation
    expense. As a result, if the Group's estimations of the useful lives of its
    satellites  are not  accurate or are  required to be changed in the future,
    the Group's net income in future periods would be affected.

    (d)  Realizability of the carrying amounts of long-lived assets
    The Group 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 Group
    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  result  in
    shorter utilization periods than previously agreed and/or those that result
    in the reduction in agreed rates will result in a lower recoverable  amount
    (if the 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).

    (e)  Provision for impairment of receivables
    The issue is covered under credit risk in note 3.1 (b) above.


                                     F-15
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


5.  SALES AND SEGMENT INFORMATION

<TABLE>
<CAPTION>
    SALES:

    The Group's sales is analyzed as follows:

                                                                        2006               2005             2004
    <S>                                                              <C>                <C>            <C>
    Income from provision of satellite transponder capacity
         - recurring                                                 850,425            850,436          870,092
         - non-recurring                                              49,911                  -          112,372
    Sales of satellite transponder capacity                           24,491             24,491           20,518
    Other revenue                                                      5,075              4,778            2,000
                                                                 ----------------   --------------   ---------------
                                                                     929,902            879,705        1,004,982
                                                                 ================   ==============   ===============
</TABLE>

    The Group has only one business segment, namely the operation,  maintenance
    and provision of satellite  telecommunication  systems for broadcasting and
    telecommunications.  The  Group's  primary  reporting  format  for  segment
    reporting  purposes under HKAS 14 "Segment  Reporting" is the  geographical
    basis. For the purpose of classification, the country where the customer is
    incorporated  is deemed to be the  source of sales.  However,  the  Group'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  expenses,  assets and  liabilities  has been
    presented.

<TABLE>
<CAPTION>
    The  following   table  provides  an  analysis  of  the  Group's  sales  by
    geographical markets:

                                                                         2006              2005             2004
    <S>                                                               <C>               <C>              <C>
    Hong Kong                                                         341,567           341,698          323,133
    Greater China, including Taiwan                                   194,831           202,730          197,936
    United States of America                                           79,813            78,205          183,750
    United Kingdom                                                     53,211            49,401           46,073
    Australia                                                          37,317            27,927           37,605
    Others                                                            223,163           179,744          216,485
                                                                  ---------------   --------------   ---------------
                                                                      929,902           879,705        1,004,982
                                                                  ===============   ==============   ===============
</TABLE>

6.  LEASEHOLD LAND AND LAND USE RIGHTS - GROUP

    The  Group's  interests  in  leasehold  land and land use rights  represent
    prepaid  operating  lease payments and their net book value are analyzed as
    follows:

<TABLE>
<CAPTION>
                                                                                           2006            2005
       <S>                                                                               <C>             <C>
       In Hong Kong held on:
       Leases of over 50 years                                                                -               -
       Leases of between 10 to 50 years                                                  23,616          24,199
                                                                                    --------------   ---------------
                                                                                         23,616          24,199
                                                                                    ==============   ===============


                                                                                           2006            2005

       Opening                                                                           24,199          24,782
       Amortization of prepaid operating lease payment                                     (583)           (583)
                                                                                    --------------   ---------------
       Closing                                                                           23,616          24,199
                                                                                    ==============   ===============
</TABLE>

                                     F-16
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
7.  PROPERTY, PLANT AND EQUIPMENT - GROUP

                                      SATELLITES AND TRACKING FACILITIES

                                                                        FURNITURE,
                                                                         FIXTURES
                                            IN         UNDER                  AND      OFFICE     MOTOR   PLANT AND
                                     OPERATION  CONSTRUCTION  BUILDINGS  FITTINGS   EQUIPMENT  VEHICLES   EQUIPMENT       TOTAL
                                    ---------------------------------------------------------------------------------------------
    <S>                              <C>               <C>      <C>         <C>         <C>       <C>           <C>   <C>
    AT JANUARY 1, 2005
    Cost                             4,232,629         9,635    117,900    10,854       7,646     3,871       2,370   4,384,905
    Accumulated depreciation        (1,467,509)            -     (5,109)   (8,699)    (5,764)    (1,715)     (1,642)  (1,490,438)
                                    ---------------------------------------------------------------------------------------------
    Net book amount                  2,765,120         9,635    112,791     2,155       1,882     2,156         728   2,894,467
                                    =============================================================================================

    YEAR ENDED DECEMBER 31, 2005
    Opening net book amount          2,765,120         9,635    112,791     2,155       1,882     2,156         728   2,894,467
    Additions                            1,337        10,309         98     7,377       1,584       865           -      21,570
    Transfer                            19,539       (19,539)         -         -           -         -           -           -
    Disposals (note 27)                      -             -          -        (7)        (2)         -           -          (9)
    Depreciation                      (286,032)            -     (4,716)   (2,178)    (1,068)      (907)       (216)   (295,117)
                                    ---------------------------------------------------------------------------------------------
    Closing net book amount          2,499,964           405    108,173     7,347       2,396     2,114         512   2,620,911
                                    =============================================================================================

    AT DECEMBER 31, 2005
    Cost                             4,253,504           405    117,998    11,142       8,928     4,137       2,371   4,398,485
    Accumulated depreciation        (1,753,540)            -     (9,825)   (3,795)    (6,532)    (2,023)     (1,859)  (1,777,574)
                                    ---------------------------------------------------------------------------------------------
    Net book amount                  2,499,964           405    108,173     7,347       2,396     2,114         512   2,620,911
                                    =============================================================================================

    YEAR ENDED DECEMBER 31, 2006
    Opening net book amount          2,499,964           405    108,173     7,347       2,396     2,114         512   2,620,911
    Additions                            6,332       297,537         81     1,747         728     1,111           4     307,540
    Transfer                                 -          (538)       538         -           -         -           -           -
    Disposals (note 27)                      -             -          -        (5)          -         -          (1)         (6)
    Depreciation                      (286,448)            -     (4,743)   (3,951)    (1,196)    (1,077)       (183)   (297,598)
                                    ---------------------------------------------------------------------------------------------
    Closing net book amount          2,219,848       297,404    104,049     5,138       1,928     2,148         332   2,630,847
                                    =============================================================================================

    AT DECEMBER 31, 2006
    Cost                             4,259,836       297,404    118,617    12,879       9,198     4,806       2,372   4,705,112
    Accumulated depreciation        (2,039,988)            -    (14,568)   (7,741)    (7,270)    (2,658)     (2,040)  (2,074,265)
                                    ---------------------------------------------------------------------------------------------
    Net book amount                  2,219,848       297,404    104,049     5,138       1,928     2,148         332   2,630,847
                                    =============================================================================================
</TABLE>

    Depreciation expense of $297,598 (2005: $295,117) has been expensed in cost
    of services.

                                     F-17
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8.  INTANGIBLE ASSETS - GROUP

                                                                       LICENCES

    AT JANUARY 1, 2005 AND DECEMBER 31, 2005
    Cost                                                                 1,500
    Accumulated amortization and impairment                               (161)
                                                                       ---------
    Net book amount                                                      1,339
                                                                       =========

    YEAR ENDED DECEMBER 31, 2006
    Opening net book amount                                              1,339
    Additions (a)                                                           97
    Amortization expense (b) (note 19)                                    (160)
                                                                       ---------
    Closing net book amount                                              1,276
                                                                       =========

    AT DECEMBER 31, 2006
    Cost                                                                 1,597
    Accumulated amortization and impairment                               (321)
                                                                       ---------
    Net book amount                                                      1,276
                                                                       =========

    Notes:
    (a) Additions refer to the Direct-to-Home (DTH) broadcasting licence fee at
        Macau  which has an  infinite  useful  life,  as the  Macau  government
        granted a  broadcasting  right  until the end of the DTH project and is
        carried at cost.  The  carrying  value as at December  31, 2006 was $97
        (2005: Nil).

    (b) Amortization   expense  of  $160  (2005:   $161)  is  included  in  the
        administrative expenses in the statement of operations.

    (c) The estimated aggregate amortization expense is as follows:
        For the year ended December 31, 2007                               160
        For the year ended December 31, 2008                               161
        For the year ended December 31, 2009                               161
        For the year ended December 31, 2010                               161
        For the year ended December 31, 2011                               161
                                                                         -------
                                                                           804
                                                                         =======


9.  INVESTMENTS IN SUBSIDIARIES

    (a) Investments in subsidiaries
                                                               COMPANY
                                                    ----------------------------
                                                          2006           2005

    Unlisted shares in subsidiaries, at cost           429,054        429,054
                                                    ==============  ============


    The  cost  of the  unlisted  shares  is  based  on the  book  value  of the
    underlying net assets of the  subsidiaries  attributable to the Group as at
    the date on which the Company  became the ultimate  holding  company of the
    Group under the Group reorganization in 1996.


                                     F-18
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


9. INVESTMENTS IN SUBSIDIARIES (continued)

    The  following  is a list of the  principal  subsidiaries  and a controlled
    partnership at December 31, 2006:

<TABLE>
<CAPTION>
                                         PLACE OF                                         PARTICULARS OF ISSUED
    NAME                                 INCORPORATION AND     PRINCIPAL ACTIVITIES AND   SHARE CAPITAL AND DEBT
                                         KIND OF LEGAL         PLACE OF OPERATION         SECURITIES                 INTEREST HELD
                                         ENTITY
    ----------------------------------   -------------------   -------------------------  ------------------------   -------------
    <S>                                  <C>                   <C>                        <C>                          <C>
    AsiaSat BVI Limited                  British Virgin        Investment holding in      3,000 ordinary shares of     *100%
                                         Islands, limited      Hong Kong                  US$1 each
                                         liability company

    Asia Satellite Telecommunications    Hong Kong, limited    Provision of satellite     30,000 ordinary shares        100%
    Company Limited                      liability company     transponder capacity       and 20,000 non-voting
                                                               worldwide                  deferred shares of HK$10
                                                                                          each

    Hanbury International Limited        British Virgin        Inactive in Hong Kong      1 ordinary share of HK$1      100%
                                         Islands, limited                                 each
                                         liability company

    SAT Limited                          Republic of           Inactive in Republic of    100 ordinary shares of       *100%
                                         Mauritius, limited    Mauritius                  US$1 each
                                         liability company

    Skywave TV Company Limited           Hong Kong, limited    Provision of DTH           3,000,002 ordinary            80%
    (formerly known as Auspicious        liability company     broadcasting services in   shares of HK$10 each
    City Limited)                                              Hong Kong and Mainland
                                                               China

    Sornico Limited                      Hong Kong, limited    Inactive in Hong Kong      2 ordinary shares of          100%
                                         liability company                                HK$10 each

    The First Asian Satellite            Hong Kong, limited    Inactive in Hong Kong      N/A                           1%
    Leasing  Limited Partnership (the    liability
    "Partnership")                       partnership

    Auspicious Colour Limited            Hong Kong, limited    Inactive in Hong Kong      1 ordinary share of HK$1      100%
                                         liability company                                each

</TABLE>
    The Company continues to control the Partnership as it is a general partner
    and accordingly continues to consolidate it.

    *Shares held directly by the Company.

                                     F-19
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


10.  INTERESTS IN ASSOCIATES - GROUP

<TABLE>
<CAPTION>
                                                                                                          2006              2005
     <S>                                                                                                <C>               <C>
     Beginning of the year                                                                              14,294            13,397
     Share of associates' losses                                                                        (8,391)           (3,872)
     Additions                                                                                           4,154             4,769
                                                                                                   ---------------    ------------
     End of the year                                                                                    10,057            14,294
                                                                                                   ===============    ============
</TABLE>
    Note:
    Interests  in  associates  at December  31, 2006  include  goodwill of $442
    (2005: $442).

    The  Group's  interest  in  its  principal  associates,  all of  which  are
    unlisted, were as follows:

<TABLE>
                             PARTICULARS OF                                                                               %
                             ISSUED SHARES        COUNTRY OF                                                  PROFIT/     INTEREST
    NAME                     HELD                 INCORPORATION    ASSETS(2)     LIABILITIES(2) REVENUES(2)    (LOSS)(2)  HELD
    ---------------------    ----------------     -------------    ---------     -------------  -----------  -----------  --------
                                                                                                                             %
    2005
    <S>                      <C>                  <C>              <C>           <C>             <C>          <C>           <C>
    Beijing Asia Sky         N/A                  China            42,011        25,945           2,721       (7,909)       49
    Telecommunications
    Technology Company
    Limited

    SpeedCast Holdings       Ordinary             Cayman           39,392        25,345          82,673          368        47
    Limited                  shares of            Islands
                             US$0.0001 each

    SpeedCast Limited        Ordinary shares      Hong Kong           N/A           N/A             N/A          N/A        47
    (note 1)                 of HK$0.01 each

                                                                  ---------     ----------     -----------  -----------
                                                                   81,403        51,290          85,394       (7,541)
                                                                  =========     ==========     ===========  ===========
    2006

    Beijing Asia Sky         N/A                  China            25,829        26,406           9,235      (17,124)       49
    Telecommunications
    Technology Company
    Limited

    SpeedCast Holdings       Ordinary shares      Cayman           46,441        27,167         111,889        5,228        47
    Limited                  of US$0.0001 each    Islands

    SpeedCast Limited        Ordinary shares      Hong Kong           N/A           N/A             N/A          N/A        47
    (note 1)                 of HK$0.01 each

                                                                  ---------     ----------     -----------  -----------
                                                                   72,270        53,573         121,124      (11,896)
                                                                  =========     ==========     ===========  ===========
</TABLE>

    The Group has not recognized  profit  amounting to $2,473 (2005:  $174) for
    SpeedCast  Holdings  Limited  as the  Group's  share  of loss  exceeds  its
    interest in SpeedCast.  The  accumulated  losses not recognized were $9,561
    (2005: $12,034).

    Note:
    (1) SpeedCast Limited is the wholly-owned  subsidiary of SpeedCast Holdings
        Limited. Accordingly,  assets, liabilities,  revenues and profit/(loss)
        are not disclosed again.

    (2) Represents 100% of the associates operation and financial results.

11. AMOUNT PAID TO TAX AUTHORITY - GROUP

    At the  balance  sheet date,  an amount of  approximately  $154,911  (2005:
    $93,666) had been paid to the  Government  of India.  For  details,  please
    refer to note 28.

                                     F-20
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

12. TRADE AND OTHER RECEIVABLES - GROUP

                                                            2006        2005

    Trade receivables                                     81,888      90,653
    Trade receivables from related parties (note 31)      10,660       7,678
    Less: provision for impairment of receivables        (22,462)    (30,930)
                                                        ----------  -----------
    Trade receivables - net                               70,086      67,401
    Receivables from related parties (note 31)            14,629      15,503
    Other receivables                                     14,068      10,831
    Deposits and prepayments                              20,864      24,863
                                                        ----------  -----------
                                                         119,647     118,598
    Less non-current portion: loans to related parties         -           -
                                                        ----------  -----------
    Current portion                                      119,647     118,598
                                                        ==========  ===========


    The Group does not normally  provide  credit terms to its trade  customers.
    The  Company  usually  bills its trade  customers  quarterly  in advance in
    accordance with its agreements.  The aged analysis of trade  receivables is
    stated as follows:

                                                            2006        2005

    0 to 30 days                                          29,329      27,768
    31 to 60 days                                         15,967       8,652
    61 to 90 days                                         15,717      14,315
    91 to 180 days                                         7,884      10,074
    181 days or above                                      1,189       6,592
                                                        ----------  -----------
                                                          70,086      67,401
                                                        ==========  ===========

    There is no concentration of credit risk with respect to trade receivables,
    as the Group has a large number of customers, internationally dispersed.

    As of 31 December 2006, trade  receivables of $22,462 (2005:  $30,930) were
    impaired and fully  provided.  The impaired  receivables  mainly  relate to
    customers'  failure to make payment for more than six months. The ageing of
    these receivables is as follows:

                                                            2006        2005

    3 to 6 months                                          9,830       1,682
    Over 6 months                                         12,632      29,248
                                                        ----------  -----------
                                                          22,462      30,930
                                                        ==========  ===========

    Movements on the  provision  for  impairment  of trade  receivables  are as
    follows:

                                                            2006        2005

    At 1 January                                          30,930      23,230
    Provision for impairment of receivables                    -       7,700
    Unused amounts reversed                               (8,468)          -
                                                        ----------  -----------
    At 31 December                                        22,462      30,930
                                                        ==========  ===========

    The creation and release of provision  for impaired  receivables  have been
    included in administrative expenses in the income statement.

                                     F-21
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

13. INVENTORIES - GROUP

                                                               2006        2005

    Merchandise                                                 354         434
                                                         ============ ==========

    The cost of  inventories  recognized  as expense  and  included  in cost of
    services amounted to $87 (2005: $500).


14. CASH AND CASH EQUIVALENTS - GROUP

                                                               2006        2005

    Cash at bank and in hand                                  4,506      13,173
    Short-term bank deposits                              1,974,951   1,622,353
                                                         ------------ ----------
                                                          1,979,457   1,635,526
                                                         ============ ==========

    The effective  interest  rate on  short-term  bank deposits was 4.9% (2005:
    3.1%); these deposits have an average maturity of 21 days (2005: 17 days).

    Cash includes the following for the purposes of the cash flow statement:

                                                               2006        2005

    Cash and cash equivalents                             1,979,457   1,635,526
                                                         ============ ==========

<TABLE>
<CAPTION>
15. SHARE CAPITAL

                                                  NUMBER OF   ORDINARY    SHARE
                                                     SHARES     SHARES   PREMIUM     TOTAL
                                                 (thousands)
    <S>                                             <C>         <C>        <C>      <C>
    AT DECEMBER 31, 2006 AND DECEMBER 31, 2005      390,266     39,027     4,614    43,641
                                                 ===========  ========= ========== =======
</TABLE>

    The total authorized number of ordinary shares is 550,000,000 shares
    (2005: 550,000,000 shares) with a par value of HK$0.10 per share
    (2005: HK$0.10 per share). All issued shares are fully paid.


                                     F-22
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


15. SHARE CAPITAL (continued)

    SHARE OPTION SCHEME
    A share option  scheme is adopted to provide  incentives  to employees  and
    directors  and to promote the long term  financial  success of the Company.
    The details of the scheme are as follows:

    SCHEME ADOPTED ON JUNE 3, 1996

    In accordance  with the Company's  share option scheme (the "1996  Scheme")
    adopted  pursuant  to a  resolution  passed on June 3,  1996,  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,  based on the
    subscription  price of the options,  shall not exceed four times the annual
    basic salary (excluding bonuses and allowances) of that employee.

    Options granted must be taken up within 28 days from the date of grant upon
    payment  of HK$1  per  each  grant  of  share  options.  An  option  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 of the date of offer
    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 pursuant to a resolution
    passed on that date.

    SCHEME ADOPTED ON JANUARY 25, 2002

    A 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).

    No options have been granted during 2003 and onwards. At December 31, 2002,
    the number of shares in respect of which options had been granted under the
    2002 Scheme was 7,149,500  representing  1.83% of the shares of the Company
    in issue at that date. Total consideration  received in 2002 from employees
    for taking up the options granted amounted to HK$105.

    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 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 taken up 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.

    The  financial  impact of share  options  granted  is not  recorded  in the
    Company's or the Group's  balance  sheet until such time as the options are
    exercised,  and no charge is  recognised  in the statement of operations in
    respect of the value of options  granted in the year.  Upon the exercise of
    the share options,  the resulting shares issued are recorded by the Company
    as  additional  share  capital at the  nominal  value of the shares and the
    excess of the exercise price per share over the nominal value of the shares
    is recorded by the Company in the share premium account.  Options which are
    lapsed or are cancelled  prior to their exercise dates are deleted from the
    register of outstanding options.

                                     F-23
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


15. SHARE CAPITAL (continued)

    Movements  in the number of share  options  outstanding  and their  related
    weighted average exercise prices are as follows:

<TABLE>
<CAPTION>
    OPTION A:
                                       2006                            2005                             2004
                         ----------------------------     ---------------------------      ---------------------------
                                 AVERAGE                        AVERAGE                         AVERAGE
                                EXERCISE                       EXERCISE                        EXERCISE
                            PRICE IN HK$                   PRICE IN HK$                        PRICE IN
                               PER SHARE    OPTIONS           PER SHARE    OPTIONS              HK$ PER    OPTIONS
                                                                                                  SHARE
    <S>                            <C>    <C>                     <C>    <C>                      <C>    <C>
    AT JANUARY 1                   17.48  1,634,000               17.48  1,691,500                17.48  1,691,500
    Granted                            -          -                   -          -                    -          -
    Forfeited                          -          -                   -          -                    -          -
    Exercised                          -          -                   -          -                    -          -
    Lapsed                         17.48 (1,634,000)              17.48    (57,500)                   -          -
                                         ------------                    ------------                    -------------
    AT DECEMBER 31                 17.48         -                17.48  1,634,000                17.48  1,691,500
                                         ============                    ============                    =============


    OPTION B:
                                       2006                            2005                             2004
                         ----------------------------     ---------------------------     ----------------------------
                                 AVERAGE                        AVERAGE                         AVERAGE
                          EXERCISE PRICE                       EXERCISE                        EXERCISE
                              IN HK$ PER                   PRICE IN HK$                    PRICE IN HK$
                                   SHARE    OPTIONS           PER SHARE    OPTIONS            PER SHARE    OPTIONS

    AT JANUARY 1                   17.48  1,655,000               17.48  1,753,000                17.48  1,768,000
    Granted                            -          -     -             -          -                    -          -
    Forfeited                          -          -     -             -          -                    -          -
    Exercised                          -          -     -             -          -                    -          -
    Lapsed                         17.48    (25,000)              17.48    (98,000)               17.48    (15,000)
                                         ------------                   ------------                    -------------
    AT DECEMBER 31                 17.48  1,630,000               17.48  1,655,000                17.48  1,753,000
                                         ============                   ============                    =============

    OPTION C:
                                       2006                            2005                             2004
                         ----------------------------     ---------------------------     ----------------------------
                                 AVERAGE                        AVERAGE                         AVERAGE
                          EXERCISE PRICE                       EXERCISE                        EXERCISE
                              IN HK$ PER                   PRICE IN HK$                    PRICE IN HK$
                                   SHARE    OPTIONS           PER SHARE    OPTIONS           PER SHARE     OPTIONS

    AT JANUARY 1                   14.35  3,311,500               14.35  3,481,500                14.35  3,481,500
    Granted                            -          -     -             -          -                    -          -
    Forfeited                          -          -     -             -          -                    -          -
    Exercised                          -          -     -             -          -                    -          -
    Lapsed                         14.35   (100,000)    -         14.35   (170,000)                   -          -
                                         ------------                   ------------                    -------------
    AT DECEMBER 31                 14.35  3,211,500               14.35  3,311,500                14.35  3,481,500
                                         ============                   ============                    =============

    Out of the 4,841,500 options outstanding (2005:  6,600,500 options; 2004: 6,926,000 options), the number of
    exercisable options are as follows:

                                       2006                            2005                             2004
                         ----------------------------     ---------------------------     ----------------------------
                                 AVERAGE                        AVERAGE                         AVERAGE
                          EXERCISE PRICE                       EXERCISE                        EXERCISE
                              IN HK$ PER                   PRICE IN HK$                    PRICE IN HK$
                                   SHARE    OPTIONS           PER SHARE    OPTIONS          PER SHARE       OPTIONS

    Option A                       17.48          -               17.48  1,634,000                17.48  1,691,500
    Option B                       17.48  1,630,000               17.48  1,655,000                17.48  1,753,000
    Option C                       14.35  3,211,500               14.35  1,655,750                14.35    870,375
                                         ------------                   ------------                    -------------
    Total                                 4,841,500                      4,944,750                       4,314,875
                                         ============                   ============                    =============
</TABLE>

                                     F-24
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


15. SHARE CAPITAL (continued)

    Share options  outstanding at the end of the year have the following expiry
    date and exercise prices:

<TABLE>
<CAPTION>
                               EXERCISE PRICE
    EXPIRY DATE                IN HK$ PER SHARE                              SHARE OPTIONS
                                                      ----------------------------------------------------------
                                                              2006                2005                  2004
    <S>                                <C>               <C>                 <C>                   <C>
    November 25, 2006                  17.48                     -           1,634,000             1,691,500
    September 30, 2009                 17.48             1,630,000           1,655,000             1,753,000
    February 3, 2012                   14.35             3,211,500           3,311,500             3,481,500
                                                      ----------------    -----------------     ----------------
                                                         4,841,500           6,600,500             6,926,000
                                                      ================    =================     ================
</TABLE>
    Details of specific categories of options are as follows:

<TABLE>
<CAPTION>
    Option type   Date of grant          Vesting period                           Exercise period                        Exercise
                                                                                                                         price
    -----------------------------------------------------------------------------------------------------------------------------
    <S>           <C>                    <C>                                      <C>                                    <C>
    2002 Scheme                                                                                                          HK$
    A (note a)    February 4, 2002       -                                        February 4, 2002 - November 25, 2006   17.48
    B (note a)    February 4, 2002       February 4, 2002 - 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

    1996 Scheme                                                                                                          HK$
    D (note a)    November 26, 1996      November 26, 1996 - November 25, 1999    November 26, 1999 - November 25, 2006  17.48
    E (note a)    September 20, 1999     September 20, 1999 - September 30, 2002  October 1, 2002 - September 30, 2009   17.48
</TABLE>
    Notes:

    a.  Pursuant to a resolution  passed in the special  general meeting of the
        Company held on January 25, 2002,  the 1996 Scheme was  terminated  and
        all existing options under that scheme were cancelled. New options were
        issued on February 4, 2002 under the 2002 Scheme with the same exercise
        price and  exercise  periods to replace the options  granted  under the
        1996 Scheme.

        Option type A

        100% between February 4, 2002 and November 25, 2006

        The exercise  periods of the following  option types are divided into 3
        tranches, as detailed below:

        Option type D

        1.  Up to 50% between  November 26, 1999 and November 25, 2006
        2.  Up to 75% between November 26, 2000 and November 25, 2006
        3.  Up to 100% between November 26, 2001 and November 25, 2006

        Option types B and E

        1.  Up to 50% between  October 1, 2002 and  September 30, 2009
        2.  Up to 75% between October 1, 2003 and September 30, 2009
        3.  Up to 100% between October 1, 2004 and September 30, 2009

    b.  Additional share options were issued on February 4, 2002 under the 2002
        Scheme.

        The exercise period is divided into 3 tranches, as detailed below:

        Option type C

        1.  Up to 25% between  February  4, 2004 and  February 3, 2012
        2.  Up to 50% between February 4, 2005 and February 3, 2012
        3.  Up to 100% between February 4, 2006 and February 3, 2012

                                     F-25
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
16. DEFERRED REVENUE - GROUP

                                                                                        2006         2005
    <S>                                                                              <C>          <C>
    The maturity of deferred revenue is as follows:
    Within one year                                                                  153,101      151,982
    More than one year but not exceeding five years                                  142,624       87,654
                                                                                   -----------  ------------
                                                                                     295,725      239,636
    Less: amount shown as current                                                   (153,101)    (151,982)
                                                                                   -----------  ------------
                                                                                     142,624       87,654
                                                                                   ===========  ============
</TABLE>

17. DEFERRED INCOME TAX

    Deferred  income  tax  assets and  liabilities  are offset  when there is a
    legally  enforceable right to offset current tax assets against current tax
    liabilities  and when the  deferred  income taxes relate to the same fiscal
    authority. The offset amounts are as follows:

<TABLE>
<CAPTION>
                                                                                 2006      2005      2004
    <S>                                                                       <C>       <C>       <C>
    Deferred tax assets                                                             -         -         -

    Deferred tax liabilities:
    -  Deferred tax liabilities to be recovered after more than 12 months     191,739   192,654   205,258
                                                                             --------- --------- ----------
                                                                              191,739   192,654   205,258
                                                                             ========= ========= ==========

    The gross movement on the deferred income tax account is as follows:

                                                                                 2006      2005      2004

    Beginning of the year                                                     192,654   205,258   213,522
    Recognized in the statement of operations (note 22)                          (915)  (12,604)   (8,264)
                                                                             --------- --------- ----------
    End of the year                                                           191,739   192,654   205,258
                                                                             ========= ========= ==========
</TABLE>

    The  movement in deferred  tax  liabilities/(assets)  during the year is as
    follows:

<TABLE>
<CAPTION>
    DEFERRED TAX LIABILITIES/(ASSETS):

                                                              ACCELERATED
                                                                      TAX
                                                             DEPRECIATION      OTHERS  TAX LOSS      TOTAL
    <S>                                                           <C>           <C>         <C>    <C>
    AT JANUARY 1, 2004                                            213,909        (311)      (76)   213,522
    Recognized in the statement of operations                      (6,884)     (1,456)       76     (8,264)
                                                             ----------------------------------------------
    AT DECEMBER 31, 2004                                          207,025      (1,767)        -    205,258
    Recognized in the statement of operations                     (13,730)      1,126         -    (12,604)
                                                             ----------------------------------------------
    AT DECEMBER 31, 2005                                          193,295        (641)        -    192,654
    Recognized in the statement of operations                      (1,556)        641         -       (915)
                                                             ----------------------------------------------
    AT DECEMBER 31, 2006                                          191,739           -         -    191,739
                                                             ==============================================
</TABLE>

                                     F-26
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
18. OTHER GAINS - NET

                                                                                  2006       2005        2004
    <S>                                                                         <C>        <C>         <C>
    Interest income                                                             92,710     43,606      21,813
    Gain on disposal of property, plant and equipment other than
       transponders                                                                 70         99         169
    Others                                                                          13          6           -
                                                                              ----------  ----------  ----------
                                                                                92,793     43,711      21,982
                                                                              ==========  ==========  ==========


19. EXPENSES BY NATURE

    Expenses  included  in cost of services  and  administrative  expenses  are
    analyzed as follows:

                                                                                  2006       2005        2004

    Auditors' remuneration                                                       1,775        769         697
    Bad debts written off                                                       11,997      2,987           -
    (Write back)/provision for impairment of receivables made                   (8,468)     7,700      17,690
    Depreciation, amortization and impairment expenses                         297,758    295,278     287,382
         (notes 7 and 8)
    Employee benefit expense (note 20)                                          87,555     65,092      75,427
    Operating leases
         - premises                                                              4,383      5,872       5,380
         - leasehold land & land use rights                                        583        583         583
    Net exchange loss                                                              404        547         288
                                                                              ==========  ==========  ==========


20. EMPLOYEE BENEFIT EXPENSE

                                                                                  2006       2005        2004

    Salary and other benefits, including directors' remuneration                82,930     60,748      71,071
    Pension costs - defined contribution plans                                   4,625      4,344       4,356
                                                                              ----------  ----------  ----------
    Total staff costs                                                           87,555     65,092      75,427
                                                                              ==========  ==========  ==========

    Number of employees                                                            102         95          89
</TABLE>

    (a)  PENSIONS - DEFINED CONTRIBUTION PLANS

    Forfeited contributions totaling $268 (2005: $292; 2004: $37) were utilized
    during the year leaving $74 (2005: $43) available at the year-end to reduce
    future contributions.

    No  contributions  (2005 and 2004:  Nil)  were  payable  to the fund at the
    year-end.


                                     F-27
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


20. EMPLOYEE BENEFIT EXPENSE (continued)

<TABLE>
<CAPTION>
    (b)  DIRECTORS' EMOLUMENTS

    The  remuneration of every Director for the year ended December 31, 2006 is
    set out below:

                                                                                               EMPLOYER'S
                                                                                             CONTRIBUTION
                                                          DISCRETIONARY            OTHER       TO PENSION
    NAME OF DIRECTOR                FEES        SALARY          BONUSES      BENEFITS(A)           SCHEME           TOTAL
    <S>                             <C>         <C>       <C>                <C>             <C>                    <C>
    Romain BAUSCH (c)                200             -                -                -                -             200
    Robert BEDNAREK (c) & (e)        125             -                -                -                -             125
    Edward CHEN                      225             -                -                -                -             225
    Cynthia DICKINS (c)              100             -                -                -                -             100
    DING Yu Cheng (d)                100             -                -                -                -             100
    R. Donald FULLERTON (f)           83             -                -                -                -              83
    JU Wei Min (d)                   100             -                -                -                -             100
    KO Fai Wong (d)                  100             -                -                -                -             100
    MI Zeng Xin (d)                  200             -                -                -                -             200
    Mark RIGOLLE (c)                 100             -                -                -                -             100
    Robert SZE                       250             -                -                -                -             250
    James WATKINS (g)                113             -                -                -                -             113
    Peter JACKSON                      -         2,766            2,489            2,270              415           7,940
    William WADE                       -         2,146            1,931            1,631              322           6,030
                                ------------------------------------------------------------------------------------------
    Total                          1,696         4,912            4,420            3,901              737          15,666
                                ==========================================================================================

    The  remuneration of every Director for the year ended December 31, 2005 is set out below:

                                                                                              EMPLOYER'S
                                                                                            CONTRIBUTION
                                                         DISCRETIONARY            OTHER       TO PENSION
    NAME OF DIRECTOR               FEES        SALARY          BONUSES      BENEFITS(A)           SCHEME           TOTAL

    Romain BAUSCH (c)               200             -                -                -                -             200
    Robert BEDNAREK (c) & (e)       150             -                -                -                -             150
    Edward CHEN                     225             -                -                -                -             225
    Cynthia DICKINS (b) & (c)        12             -                -                -                -              12
    DING Yu Cheng (d)               100             -                -                -                -             100
    R. Donald FULLERTON             200             -                -                -                -             200
    JU Wei Min (d)                  100             -                -                -                -             100
    KO Fai Wong (d)                 100             -                -                -                -             100
    MI Zeng Xin (d)                 200             -                -                -                -             200
    Mark RIGOLLE (c)                100             -                -                -                -             100
    Robert SZE                      250             -                -                -                -             250
    Peter JACKSON                     -         2,672              390            1,961              401           5,424
    William WADE                      -         2,074              302            1,485              311           4,172
                                ------------------------------------------------------------------------------------------
    Total                         1,637         4,746              692            3,446              712          11,233
                                ==========================================================================================

    The  remuneration of every Director for the year ended December 31, 2004 is set out below:

                                                                                              EMPLOYER'S
                                                                                            CONTRIBUTION
                                                        DISCRETIONARY            OTHERS       TO PENSION
    NAME OF DIRECTOR               FEES        SALARY         BONUSES       BENEFITS(A)           SCHEME           TOTAL

    Romain BAUSCH (c)               200             -               -                 -                -             200
    Robert BEDNAREK (c) & (e)       150             -               -                 -                -             150
    Edward CHEN                     175             -               -                 -                -             175
    DING Yu Cheng (d)               100             -               -                 -                -             100
    R. Donald FULLERTON             175             -               -                 -                -             175
    JU Wei Min (d)                  125             -               -                 -                -             125
    KO Fai Wong (d)                  81             -               -                 -                -              81
    LI Ting Zhou (d) & (h)           19             -               -                 -                -              19
    MI Zeng Xin (d)                 200             -               -                 -                -             200
    Mark RIGOLLE (c) & (i)           15             -               -                 -                -              15
    Jurgen SCHULTE (c) & (j)        110             -               -                 -                -             110
    Robert SZE                      175             -               -                 -                -             175
    Peter JACKSON                     -         2,619           2,619             1,817              393           7,448
    William WADE                      -         2,033           2,033             1,405              305           5,776
                                ------------------------------------------------------------------------------------------
    Total                         1,525         4,652           4,652             3,222              698          14,749
                                ==========================================================================================
</TABLE>

                                     F-28
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


20. EMPLOYEE BENEFIT EXPENSE (continued)

    (b)  DIRECTORS' EMOLUMENTS (CONTINUED)

    Notes:
    (a) Other benefits  include  accommodation,  car, leave passage,  insurance
        premium and club membership and are short term in nature.
    (b) Appointed on November 17, 2005.
    (c) Paid to SES and its subsidiary.
    (d) Paid to a subsidiary of CITIC.
    (e) Resigned on October 31, 2006.
    (f) Resigned on May 30, 2006.
    (g) Appointed on June 30, 2006.
    (h) Resigned on March 11, 2004.
    (i) Appointed on November 17, 2004. (j) Resigned on November 17, 2004.

    (c) FIVE HIGHEST PAID INDIVIDUALS

    The five individuals whose emoluments were the highest in the Group for the
    year include two (2005:  two) directors  whose  emoluments are reflected in
    the analysis presented above. The emoluments payable to the remaining three
    (2005: three) individuals during the year are as follows:

<TABLE>
<CAPTION>
                                                                                  2006            2005             2004
    <S>                                                                          <C>             <C>              <C>
    Basic salaries, housing allowances, share options, other allowances and      9,189           8,450            8,313
       benefits in kind
    Contributions to retirement benefits scheme                                    726             701              687
    Performance related incentive payments                                       4,357             606            3,666
                                                                              -----------   --------------  -------------
                                                                                14,272           9,757           12,666
                                                                              ===========   ==============  =============

    The emoluments fell within the following bands:

                                                                                          NUMBER OF INDIVIDUALS
                                                                              -------------------------------------------
                                                                                 2006             2005            2004
    Emolument bands
    HK$2,500,001 - HK$3,000,000                                                     -                1               -
    HK$3,000,001 - HK$3,500,000                                                     -                1               -
    HK$3,500,001 - HK$4,000,000                                                     1                1               1
    HK$4,000,001 - HK$4,500,000                                                     -                -               1
    HK$4,500,001 - HK$5,000,000                                                     1                -               1
    HK$5,000,001 - HK$5,500,000                                                     -                -               -
    HK$5,500,001 - HK$6,000,000                                                     1                -               -
                                                                              -----------   --------------  -------------
                                                                                    3                3               3
                                                                              ===========   ==============  =============


21. FINANCE COSTS

                                                                                  2006            2005            2004
    Interest expense:
    - assets retirement obligation                                                 152               -               -
    - bank borrowings: bank loans and overdrafts                                     -               -               1
                                                                              -----------   --------------  -------------
                                                                                   152               -               1
                                                                              ===========   ==============  =============
</TABLE>

                                     F-29
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


22. INCOME TAX EXPENSE

    A significant  portion of the Group's  profit is treated as earned  outside
    Hong Kong and is not subject to Hong Kong  profits  tax.  Hong Kong profits
    tax has been  provided at the rate of 17.5% (2005:  17.5%) on the estimated
    assessable profit for the year.

    Overseas tax, including the Foreign  Enterprises Income Tax in the People's
    Republic of China,  is calculated at 5% to 20% of the gross revenue  earned
    in certain of the overseas jurisdictions.

    Details of deferred taxation are set out in note 17.

<TABLE>
<CAPTION>
    The  Group  currently  has a tax  case  in  dispute  with  the  Indian  tax
    authorities. Details of this are set out in note 28.

                                                                                   2006        2005        2004
    <S>                                                                          <C>         <C>         <C>
    Current income tax
    - Hong Kong profits tax                                                      38,856      45,056      49,574
    - Overseas taxation                                                          17,581      18,818      19,226
    Deferred income tax reversal (note 17)                                         (915)    (12,604)     (8,264)
                                                                              -----------  ----------  -----------
                                                                                 55,522      51,270      60,536
                                                                              ===========  ==========  ===========

    The tax on the  Group's  profit  before tax  differs  from the  theoretical amount that would arise using the
    weighted  average tax rate  applicable to profits of the consolidated companies as follows:

                                                                                   2006        2005        2004

    Profit before tax                                                           508,927     416,635     491,616
                                                                              ===========  ==========  ===========

    Tax calculated at tax rate of 17.5% (2005: 17.5%)                            89,062      72,911      86,033
    Tax effect of income not subject to tax                                     (96,999)    (84,164)    (91,475)
    Tax effect of expenses not deductible for tax purposes                       45,440      43,027      44,585
    Tax effect of tax losses of associates not recognized                           438         678       2,167
    Effect of income tax rate differential between Hong Kong and overseas
       locations                                                                 17,581      18,818      19,226
                                                                              -----------  ----------  -----------
    Tax expense                                                                  55,522      51,270      60,536
                                                                              ===========  ==========  ===========

    The effective tax rate of the Group was 10.9% (2005: 12.3%; 2004: 12.3%).


23. NET FOREIGN EXCHANGE LOSSES

    The exchange  differences  recognized in the  statement of  operations  are
    included as follows:

                                                                                  2006        2005        2004

    Administrative expenses                                                        404         547         288
                                                                              ==========  ==========  ===========
</TABLE>


24. PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

    The profit  attributable  to equity holders of the Company is dealt with in
    the financial  statements  of the Company to the extent of $137,225  (2005:
    $136,977; 2004: $125,358).

                                     F-30
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


25. EARNINGS PER SHARE

    BASIC
    Basic earnings per share is calculated by dividing the profit  attributable
    to equity holders of the Company by the weighted average number of ordinary
    shares in issue during the year.

<TABLE>
<CAPTION>
                                                                                2006        2005        2004
    <S>                                                                      <C>         <C>         <C>
    Profit attributable to equity holders of the Company                     454,009     366,184     431,216
                                                                           ==========  ==========  ==========

    Weighted average number of ordinary shares in issue (thousands)
                                                                             390,266     390,266     390,266
                                                                           ==========  ==========  ==========

    Basic earnings per share (HK$ per share)                                    1.16        0.94        1.10
                                                                           ==========  ==========  ==========


    DILUTED
    Diluted  earnings per share is calculated  adjusting  the weighted  average
    number of ordinary shares  outstanding to assume conversion of all dilutive
    potential  ordinary  shares.  The  Company  has share  options of  dilutive
    potential  ordinary shares. The calculation is done to determine the number
    of shares that could have been  acquired at fair value  (determined  as the
    average  annual  market share price of the  Company's  shares) based on the
    monetary value of the  subscription  rights  attached to outstanding  share
    options.  The number of shares  calculated  as above is  compared  with the
    number of shares that would have been issued  assuming  the exercise of the
    share options.

                                                                                2006        2005        2004

    Profit used to determine diluted earnings per share                      454,009     366,184     431,216
                                                                           ==========  ==========  ==========

    Weighted average number of ordinary shares in issue (thousands)          390,266     390,266     390,266
    Adjustments for  - share options (thousands)                                   -          26           -
                                                                           ----------  ----------  ----------
    Weighted average number of ordinary shares for diluted earnings
       per share (thousands)                                                 390,266     390,292     390,266
                                                                           ==========  ==========  ==========

    Diluted earnings per share (HK$ per share)                                  1.16        0.94       1.10
                                                                           ==========  ==========  ==========

26. DIVIDENDS

    The dividends paid during the years ended 2006, 2005 and 2004 were $136,593
    (HK$0.35 per share), $136,593 (HK$0.35 per share) and $124,885 (HK$0.32 per
    share)  respectively.  A dividend  in respect of 2006 of HK$0.27 per share,
    amounting  to a total  dividend of $105,372 is to be proposed at the Annual
    General Meeting on May 18, 2007. These financial  statements do not reflect
    this dividend payable.

                                                                                2006        2005        2004

    Interim dividend paid of HK$0.08 (2005: HK$0.08; 2004: HK$0.08) per       31,221      31,221      31,221
       ordinary share
    Proposed final dividend of HK$0.27 (2005: HK$0.27; 2004: HK$0.27)
       per ordinary share                                                    105,372     105,372     105,372
                                                                           ----------  ----------  ----------
                                                                             136,593     136,593     136,593
                                                                           ==========  ==========  ==========
</TABLE>

    PAYMENT OF FINAL DIVIDEND

    Reference  is made to the  joint  announcement  issued by the  Company  and
    AsiaCo  Acquisition Ltd.  (formerly known as Modernday Limited) in relation
    to the privatisation of the Company by way of a scheme of arrangement under
    Section 99 of the Companies Act of Bermuda dated 13 February 2007.

    The Board would like to bring to the attention of the  shareholders  of the
    Company that the final  dividend for the  financial  year ended 31 December
    2006 is declared by the Board subject to the  following:
    (i)   the amount of the final  dividend  shall not  affect the Share  Offer
          Price if the Scheme becomes effective and binding on or before 10 May
          2007;
    (ii)  the  amount of the final  dividend  will be  deducted  from the Share
          Offer Price if the Scheme becomes effective after 10 May 2007;
    (iii) if the Scheme becomes effective and binding on or before 10 May 2007,
          the final dividend shall not be paid; and
    (iv)  if the Scheme does not become effective, the dividend will be paid to
          shareholders of the Company on the register of members of the Company
          at 4:30 p.m. on 10 May 2007.


                                     F-31
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
27. CASH FLOWS FROM OPERATING ACTIVITIES - CONTINUING OPERATIONS

                                                                       2006         2006           2005          2004
                                                                    US$'000
    <S>                                                              <C>         <C>            <C>           <C>
    Profit for the year                                              58,129      453,405        365,365       431,080
    Adjustments for:
    -  Tax (note 22)                                                  7,118       55,522         51,270        60,536
    -  Bad debts written off                                          1,538       11,997          2,987             -
    -  (Write back)/provision for impairment of receivables made     (1,086)      (8,468)         7,700        17,690
    -  Depreciation (note 7)                                         38,154      297,598        295,117       287,382
    -  Amortization of prepaid operating lease payment (note 6)
                                                                         75          583            583           583
    -  Amortization of licence (note 8)                                  21          161            161             -
    -  Profit on sale of property, plant and equipment (see              (9)         (70)           (99)         (169)
       below)
    -  Interest income (note 18)                                    (11,886)     (92,710)       (43,606)      (21,813)
    -  Finance costs (note 21)                                           19          152              -             1
    -  Share of loss from associates (note 10)                        1,076        8,391          3,872        12,380
    Changes in working capital:
    -  Unbilled receivable                                              450        3,516            704         6,357
    -  Amount paid to tax authority                                  (7,852)     (61,245)       (26,643)      (42,535)
    -  Inventories                                                       10           80            (18)         (416)
    -  Trade and other receivables                                     (681)      (5,316)           779       (27,136)
    -  Other payables and accrued expenses                            4,151       32,377         (1,204)       47,964
    -  Deferred revenue                                               7,191       56,089        (47,251)        7,509
                                                                   ----------   -----------   ------------  ------------
    Cash flows from operating activities - continuing operations
                                                                     96,418      752,062        609,717       779,413
                                                                   ==========   ===========   ============  ============

    In the cash flow statement, proceeds from sale of property, plant and equipment comprise:

                                                                       2006         2006           2005          2004
                                                                    US$'000

    Net book amount (note 7)                                              1            6              9            88
    Profit on sale of property, plant and equipment                       9           70             99           169
                                                                   ----------    ----------    -----------   -----------
    Proceeds from sale of property, plant and equipment
                                                                         10           76            108           257
                                                                   ==========    ==========    ===========   ===========
</TABLE>


                                     F-32
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


28. CONTINGENCIES

    Under Indian tax regulations, the Group may be subject to Indian income tax
    on revenues  received by the Group in respect of income from  provision  of
    satellite  transponder  capacity to the Group's  customers  for purposes of
    those  customers  carrying on business in India or earning  income from any
    source in India.

    The  Indian  tax  authorities  have  assessed  the Group for  income tax as
    follows:

    Assessment year                                Amount HK$        Amount INR
                                                (approximate)     (approximate)
    1997-98                                        20 million       115 million
    1998-99                                        23 million       141 million
    1999-00                                        22 million       127 million
    2000-01                                        14 million        84 million
    2001-02                                        29 million       171 million
    2002-03                                        38 million       210 million
    2003-04                                        50 million       316 million
    2004-05                                        58 million       330 million
                                               ---------------   ---------------
    Total                                         254 million     1,494 million
                                               ===============   ===============


    The Group has filed  appeals for each of the  assessment  years  1997-98 to
    2004-05.

    No  assessment  has yet been made for the  2005-06  or  2006-07  assessment
    years.

    The Income Tax Appellate  Tribunal (the  "Tribunal")  in an earlier  appeal
    filed against the original  assessment for the assessment year 1997-98 held
    that the Group is liable for Indian income tax under certain circumstances.
    The Group 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. Both the appeals have been admitted by the High Court.

    In order to  obtain a stay of  recovery  proceedings,  the  Group  has made
    payments  as follows  and has  recorded  these  payments as an asset on the
    assumption that the amounts are recoverable (refer to note 11):

    Assessment year                                Amount HK$        Amount INR
                                                (approximate)     (approximate)
    1997-98                                        13 million        78 million
    1998-99                                        14 million        88 million
    1999-00                                        11 million        62 million
    2000-01                                         9 million        50 million
    2001-02                                        20 million       119 million
    2002-03                                        27 million       148 million
    2003-04                                        39 million       226 million
    2004-05                                        22 million       125 million
                                               ---------------   ---------------
    Total                                         155 million       896 million
                                               ===============   ===============

    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
    Group's customers to the Group 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
    Group's customers,  the Group cannot reasonably estimate the taxable income
    and  therefore  also cannot  estimate the amount of income tax to which the
    Group may be assessed. Furthermore, as stated above, the Group has filed an
    appeal against the Tribunal's decision. The appeal has been admitted by the
    High Court and is pending before the Court.  Accordingly,  no provision has
    been recognized for Indian income tax in the Group's financial  statements.
    Any related legal costs are expensed as incurred.

29. MAJOR NON-CASH TRANSACTIONS

    On November 30, 2004, the Group decreased its equity interest in Skywave TV
    Company Limited  ("Skywave")  from 100% to 80% when two  independent  third
    parties made a contribution  in kind of HK$3 million each in return for 10%
    stake in the Skywave.  There was no major non-cash  transaction during 2005
    and 2006.


                                     F-33
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


30. COMMITMENTS - GROUP

    CAPITAL COMMITMENTS
    Capital  expenditure  at the balance  sheet date but not yet incurred is as
    follows:

                                                              2006        2005

    AsiaSat 5
       Contracted but not provided for                     810,048           -
       Authorized but not contracted for                   296,548           -
    Other investment projects
       Authorized but not contracted for                         -      10,140
    Other assets
       Contracted but not provided for                         111       5,750
                                                        ------------  ----------
                                                         1,106,707      15,890
                                                        ============  ==========


    OPERATING LEASE COMMITMENTS - WHERE THE GROUP IS THE LESSEE
    The Group  leases  certain  of its office and  residential  premises  under
    non-cancellable operating leases. Leases are negotiated for an average term
    of two to four years.  The lease  expenditure  expensed in the statement of
    operations during the year is disclosed in note 19.

    The future aggregate minimum lease payments under non-cancellable operating
    leases are as follows:

                                                              2006        2005

    Not later than 1 year                                    4,068       4,376
    Later than 1 year and not later than 5 years               745       4,773
    Later than 5 years                                           -           -
                                                        ------------  ----------
                                                             4,813       9,149
                                                        ============  ==========


    OPERATING LEASE COMMITMENTS - WHERE THE GROUP IS THE LESSOR
    The Group  leases  its  office  premises  under  non-cancellable  operating
    leases. The lease is negotiable for four years. The lease income recognized
    in the statement of operations during the year was $552 (2005: $552).

    The Group had contracted with the customer for the following future minimum
    lease payments:

                                                              2006        2005

    Within one year                                            552         552
    One to two years                                           184         552
    Two to three years                                           -         184
    Three to four years                                          -           -
                                                        ------------  ----------
                                                               736       1,288
                                                        ============  ==========

                                     F-34
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


31. RELATED-PARTY TRANSACTIONS

    The Group is  controlled  by  Bowenvale  Limited  (incorporated  in British
    Virgin Islands),  which owns 68.9% of the Company's  shares.  The remaining
    31.1% of the shares are widely held (refer to the updated  comments in note
    33). The  ultimate  parents of the Group are CITIC Group  (incorporated  in
    China) and SES S.A. (incorporated in Luxembourg).

    The following transactions were carried out with related parties:

    i)  INCOME FROM PROVISION OF SATELLITE TRANSPONDER CAPACITY

    The Group has entered into  agreements  for the  provision  of  transponder
    capacity to a subsidiary of CITIC, CITIC Guoan Information Industry Company
    Limited.  CITIC is a substantial  shareholder of the Company throughout the
    year.

    During the year,  the Group  recognized  income from provision of satellite
    transponder capacity from its associate, SpeedCast.

<TABLE>
<CAPTION>
                                                                               2006         2005          2004

    <S>                                                                      <C>          <C>           <C>
    CITIC Guoan Information Industry Company Limited                          1,424        2,461         3,101
    SpeedCast Limited (an associate)                                         46,264       32,202        18,793
                                                                           ----------   -----------   -----------
                                                                             47,688       34,663        21,894
                                                                           ==========   ===========   ===========

    ii) AGENCY FEE

    In addition,  the Group has entered into an agreement with CITIC Technology
    Company  Limited,  a subsidiary of CITIC,  for collecting  money from China
    customers on behalf of the Group.

                                                                               2006         2005          2004

    CITIC Technology Company Limited                                            564          723           686
                                                                           ==========   ===========   ===========

    iii) KEY MANAGEMENT COMPENSATION

                                                                               2006         2005          2004

    Salaries and other short-term employee benefits                          38,455       25,942        34,335
                                                                           ==========   ===========   ===========

    The Group made payments to SES and its subsidiary and a subsidiary of CITIC
    for certain Non-executive Directors representing SES and CITIC.

                                                                               2006         2005          2004

    SES and its subsidiary                                                      525          462           475
    A subsidiary of CITIC                                                       500          500           525
                                                                           ----------   -----------   -----------
                                                                              1,025          962         1,000
                                                                           ==========   ===========   ===========

    iv) INCOME FROM PROVISION OF UPLINK SERVICES AND CERTAIN EQUIPMENTS

    The  Group  has  entered  into an  agreement  for the  provision  of uplink
    services  and  certain  equipments  for  Ku-Band  monitoring  capacity to a
    subsidiary of SES, SES AMERICOM, Inc.

    The Group has also provided  temporary  uplink  services to its  associate,
    SpeedCast.

                                                                               2006         2005          2004

    SES AMERICOM, Inc.                                                          239            -             -
    SpeedCast Limited (an associate)                                              5            -             -
                                                                           ----------   -----------   -----------
                                                                                244            -             -
                                                                           ==========   ===========   ===========
</TABLE>

                                     F-35
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


31. RELATED-PARTY TRANSACTIONS (continued)

<TABLE>
<CAPTION>
    v) OTHER FEES
                                                                         2006      2005      2004
    <S>                                                                  <C>       <C>       <C>
    Licence fee:
    SES ASTRA S.A.                                                          -         -        49
                                                                      =========  ========  =========


    SES ASTRA S.A. is a  wholly-owned  subsidiary of SES. SES was a substantial
    shareholder of the Company throughout the years presented.

    vi) INTEREST INCOME ON LOAN RECEIVABLE FROM AN ASSOCIATE
                                                                         2006      2005      2004

    SpeedCast Limited (an associate)                                        -       176       419
                                                                      =========  ========  =========
</TABLE>

<TABLE>
<CAPTION>
    vii) YEAR-END BALANCES ARISING FROM THESE TRANSACTIONS
                                                                                 2006         2005
    <S>                                                                        <C>          <C>
    Trade receivables from related parties (note 12):
    CITIC Guoan Information Industry Company Limited                                -           39
    SpeedCast Limited (an associate)                                           10,660        7,639
                                                                             -----------  ----------
                                                                               10,660        7,678
                                                                             ===========  ==========

    Receivables from related parties (note 12):
    CITIC Technology Company Limited                                           14,629       15,503
                                                                             ===========  ==========

    Payables to related parties:
    CITIC Technology Company Limited                                              479          455
                                                                             ===========  ==========

    Deferred revenue to related parties:
    SES AMERICOM, Inc.                                                             22            -
                                                                             ===========  ==========

    The trade  receivables  from related parties are payable in accordance with
    the agreements.  The receivables  from and payables to related parties have
    no fixed terms of payment.  The  receivables  and payables are unsecured in
    nature and bear no interest.

    viii) LOAN RECEIVABLE FROM AN ASSOCIATE
                                                                                 2006        2005

    Loan receivable from SpeedCast Limited:
    Beginning of the year                                                           -       5,070
    Loans advanced during the year                                                  -           -
    Loan repayments received                                                        -      (5,070)
                                                                             -----------  ----------
    End of the year (note 12)                                                       -           -
                                                                             ===========  ==========
</TABLE>
    The  amount was  secured,  bearing  interest  at 6% per annum and was fully
    repaid as at December 31, 2005.

    The above transactions were entered into on commercial terms determined and
    agreed by the Group and the relevant parties.


                                     F-36
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


32. SUMMARY OF  DIFFERENCES  BETWEEN  HONG KONG ("HK") AND UNITED  STATES("US")
    GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP")

    The  accompanying   consolidated   financial  statements  are  prepared  in
    accordance with HKFRS, which differs in certain  significant  respects from
    US GAAP. The significant  differences relating principally to the following
    items and the  adjustments  considered  necessary to restate profit for the
    year  (net  income)  and  shareholders'  funds  (shareholders'  equity)  in
    accordance with US GAAP are shown in the tables set out below.

    The  following  table  summarizes  the  effect on profit  (net  income)  of
    differences between HKFRS and US GAAP for the years presented:

<TABLE>
<CAPTION>
                                                                              YEAR ENDED DECEMBER 31
                                                               -------------------------------------------------------

                                                                    2006          2006           2005          2004
                                                                 US$'000
     <S>                                                          <C>          <C>            <C>           <C>
    Profit for the year (net income) as reported under
      HKFRS                                                       58,206       454,009        366,184       431,216
    US GAAP adjustments:
       Amortization of interest and borrowing costs (a)
                                                                  (1,035)       (8,072)        (8,072)       (8,072)
       Amortization of goodwill (b)                                    -             -              -           221
       Stock compensation using the fair value method (c)
                                                                     (41)         (323)             -             -
       Tax effect on reconciling items (d)                            91           706            706           706
                                                               ------------  ------------  ------------   ------------
     Profit for the year (net income) under US GAAP               57,221       446,320        358,818       424,071
                                                               ============  ============  ============   ============

    Basic earnings per share under US GAAP                       US$0.15       HK$1.14        HK$0.92       HK$1.09
    Diluted earnings per share under US GAAP                     US$0.15       HK$1.14        HK$0.92       HK$1.09
    Basic earnings per American Depositary
      Share ("ADS") under US GAAP                                US$1.46      HK$11.43        HK$9.19      HK$10.86
    Diluted earnings per American Depositary
      Share ("ADS") under US GAAP                                US$1.46      HK$11.43        HK$9.19      HK$10.86
    Shares used in computation of basic earnings per
      share (in thousands)                                       390,266       390,266        390,266       390,266
    Shares used in computation of diluted earnings per
      share (in thousands)                                       390,266       390,266        390,292       390,266
</TABLE>

<TABLE>
    The following table  summarizes the effect on  shareholders'  equity of the
    differences between HKFRS and US GAAP:

                                                                                         AS AT DECEMBER 31
                                                                           -------------------------------------------
                                                                                 2006           2006           2005
                                                                              US$'000
    <S>                                                                       <C>          <C>            <C>
    Shareholders' equity as reported under                                    566,872      4,421,604      4,104,188
      HKFRS
    US GAAP adjustments:
       Capitalization of interest and borrowing costs (a)                      15,767        122,980        122,980
       Amortization of interest and borrowing costs (a)                       (11,370)       (88,689)       (80,617)
       Amortization of goodwill (b)                                             1,452         11,325         11,325
       Impairment loss of goodwill (b)                                         (1,424)       (11,104)       (11,104)
       Stock compensation using the fair value method (c)                         (41)          (323)             -
       Tax effect of reconciling items (d)                                       (914)        (7,125)        (7,831)
                                                                           -------------  -------------  -------------
    Shareholders' equity under US GAAP                                        570,342      4,448,668      4,138,941
                                                                           =============  =============  =============
</TABLE>

                                     F-37
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


32. SUMMARY OF  DIFFERENCES  BETWEEN  HONG KONG ("HK") AND UNITED  STATES("US")
    GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") (continued)

    (a) Capitalization of interest and borrowing costs

    Under  HKFRS,  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  cost  incurred  during the
    period of construction  that could have been avoided if the construction of
    satellites had not been made, is capitalized.  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 capitalized.


    (b) Amortization and impairment loss of goodwill

    Under  HKFRS,  HKFRS 3 requires  all  business  combinations  for which the
    agreement date is on or after January 1, 2005 to be accounted for using the
    purchase method. Goodwill acquired in a business combination will no longer
    be amortized but will be subject to impairment  tests at least  annually in
    accordance  with HKAS 36. Upon the  adoption  of HKFRS 3, the net  carrying
    amount of  goodwill  carried  on the  balance  sheet is frozen  and will be
    tested for impairment.  Goodwill previously taken directly to reserves will
    no longer be subject to  impairment  testing and will not be  recognized in
    the statement of  operations  when all or part of the business to which the
    goodwill  relates is disposed of.  Accordingly,  goodwill  previously taken
    directly to reserves  will not impact the  statement of  operations  in the
    future upon the adoption of HKAS 36.

    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.  Prior to  January 1,  2002,  goodwill  was
    amortized  over its estimated  useful life, not to exceed 40 years under US
    GAAP.


    (c) Stock compensation

    Under HKFRS,  it is not required to apply HKFRS 2 to share options  granted
    on or  before  November  7, 2002 and  vested  before  January  1, 2005 (the
    effective  date of HKFRS 2). The Company has chosen not to apply HKFRS 2 to
    share options issued prior to January 1, 2005.

    Under US GAAP,  effective  January 1, 2006,  the Company  adopted SFAS 123R
    using the modified  prospective approach and accordingly prior periods have
    not been  restated  to reflect  the  impact of SFAS 123R.  Under SFAS 123R,
    stock-based  awards granted prior to its adoption will be expensed over the
    remaining  portion of their vesting  period.  Under US GAAP,  fair value of
    unvested  options  using the  modified  prospective  method are expensed as
    compensation  cost for the  unrecognized  options,  taking into account the
    estimated  forfeiture  of  options.  The fair  value  options  granted  was
    estimated using the Black-Scholes option-pricing model.


    (d) The amounts included in the reconciliation  show the income tax effects
    of the differences between HKFRS and US GAAP as described above.


    (e) Interest income

    Under HKFRS,  interest income is included in profit from operations.  Under
    US GAAP,  interest income is excluded from operating income and is included
    in net income as other income.

                                     F-38
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


32. SUMMARY OF  DIFFERENCES  BETWEEN  HONG KONG ("HK") AND UNITED  STATES("US")
    GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") (continued)

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

                                                                          AS AT DECEMBER 31
                                                              --------------------------------------
                                                                   2006         2006          2005
                                                                US$'000
    <S>                                                         <C>        <C>           <C>
    Balance, beginning of year                                  530,633    4,138,941     3,916,716
    Transactions during the year:
       i)  Net income                                            57,221      446,320       358,818
      ii)  Dividend paid                                        (17,512)    (136,593)     (136,593)
                                                              ------------ ------------  -----------
    Balance, end of year                                        570,342    4,448,668     4,138,941
                                                              ============ ============  ===========

    Note: One ADS is equivalent to 10 ordinary shares.


    A reconciliation of the significant  balance sheet accounts under HKFRS and
    to the amounts determined under US GAAP is as follows:

                                                                           AS AT DECEMBER 31
                                                              ---------------------------------------

                                                                   2006         2006           2005
                                                                US$'000

    Property, plant and equipment
      Amount under HKFRS                                        337,288    2,630,847      2,620,911
      US GAAP adjustments:
         Capitalization of interest and borrowing costs          15,767      122,980        122,980
         Amortization of interest and borrowing costs           (11,370)     (88,689)       (80,617)
                                                              -----------  ------------   -----------
      Amount under US GAAP                                      341,685    2,665,138      2,663,274
                                                              ===========  ============   ===========

    Interests in associates
      Amount under HKFRS                                          1,289       10,057         14,294
      US GAAP adjustments:
         Amoritsation of goodwill                                 1,452       11,325         11,325
         Impairment loss of goodwill                             (1,424)     (11,104)       (11,104)
                                                              -----------  ------------   -----------
      Amount under US GAAP                                        1,317       10,278         14,515
                                                              ===========  ============   ===========

    Deferred income tax liabilities
      Amount under HKFRS                                         24,582      191,739        192,654
      US GAAP adjustments:
         Tax effect of reconciling items                            914        7,125          7,831
                                                              -----------  ------------   -----------
      Amount under US GAAP                                       25,496      198,864        200,485
                                                              ===========  ============   ===========
</TABLE>

    The amounts of total assets  determined  using US GAAP,  as a result of the
    foregoing adjustments, are $5,125,724 (US$657,144,000) and $4,726,114 as of
    December 31, 2006 and 2005, respectively.  The amounts of total liabilities
    (excluding minority interests) determined using US GAAP, as a result of the
    foregoing  adjustments,  are  $671,800  (US$86,129,000)  and $581,636 as of
    December 31, 2006 and 2005, respectively.


                                     F-39
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


32. SUMMARY OF  DIFFERENCES  BETWEEN  HONG KONG ("HK") AND UNITED  STATES("US")
    GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") (continued)

<TABLE>
                                                                     AS AT DECEMBER 31
                                                   -----------------------------------------------------
                                                        2006          2006          2005          2004
                                                     US$'000
      <S>                                            <C>           <C>           <C>           <C>
    Cash flows from operating activities - net
      Amount under HKFRS                              89,556       698,534       514,350       750,812
      US GAAP adjustments:
         Interest received                            11,378        88,747        39,833        20,290
                                                   ------------  ------------  ------------  -----------
      Amount under US GAAP                           100,934       787,281       554,183       771,102
                                                   ============  ============  ============  ===========

    Cash flows (used in)/from investing
      activities - net
      Amount under HKFRS                             (27,950)     (218,010)       23,414       (50,909)
      US GAAP adjustments:
         Interest received                           (11,378)      (88,747)      (39,833)      (20,290)
                                                   ------------  ------------  ------------  -----------
      Amount under US GAAP                           (39,328)     (306,757)      (16,419)      (71,199)
                                                   ============  ============  ============  ===========
</TABLE>

    The  reclassification  for US GAAP  consolidated  statements  of cash flows
    pertains to interest  received  which is presented as investing  activities
    under HKFRS, respectively (as opposed to operating activities and investing
    activities under US GAAP, respectively).

    Additional disclosures as required by US GAAP:

    (a)   US GAAP requires that all items that are required to be recognized as
          components  of  comprehensive   income  be  reported  in  a  separate
          financial statement.  There are no material differences between total
          recognized gains and losses for the periods shown in the consolidated
          statements of changes in Equity  presented under HKFRS  comprehensive
          income,  except for the differences  between HKFRS and US GAAP profit
          attributable to shareholders shown above.

    (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 20). No  compensation  cost has been
          recognized  on  options  granted  under the 1996  Scheme and the 2002
          Scheme.

          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,  2002,  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".  There  would  be no  impact  on the
          Company's 2003 consolidated financial statements and on 2004 and 2005
          consolidated  financial statements when the Company accounted for the
          option  modification  under a variable plan required  under FIN 44 as
          the fair value of the  underlying  shares was less than the  exercise
          price of the share  options as at December 31,  2003,  2004 and 2005,
          respectively.

          Effective  January 1, 2006,  the Company  adopted SFAS 123R using the
          modified  prospective approach and accordingly prior periods have not
          been restated to reflect the impact of SFAS 123R. Under SFAS 123R, as
          at the adoption date, any unvested  stock-based  awards granted prior
          to its adoption will be expensed over the remaining  portion of their
          vesting period.  Under US GAAP, fair value of unvested  options using
          the modified prospective method are expensed as compensation cost for
          the   unrecognized   options,   taking  into  account  the  estimated
          forfeiture of options.  The fair value options  granted was estimated
          using the Black-Scholes option-pricing model.

                                     F-40-
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


32. SUMMARY OF  DIFFERENCES  BETWEEN  HONG KONG ("HK") AND UNITED  STATES("US")
    GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") (continued)

          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:

                                                                2005       2004

          Net income as reported under US GAAP               358,818    424,071
          Add: Stock compensation as reported
          Less: Stock compensation determined using
             the fair value method                            (3,589)    (6,983)

                                                           ----------- ---------
          Pro forma net income under US GAAP                 355,229    417,088
                                                           =========== =========

          Shares used in computation of basic earnings
             per share (thousands)                           390,266    390,266
                                                           =========== =========

          Shares used in computation of diluted earnings
             per share (thousands)                           390,292    390,266
                                                           =========== =========

          Net income per share under US GAAP
          Basic, as reported (HK$ per share)                    0.92       1.09
          Diluted, as reported (HK$ per share)                  0.92       1.09

          Basic, pro forma (HK$ per share)                      0.91       1.07
          Diluted, pro forma (HK$ per share)                    0.91       1.07

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

          Expected life of options                                      10 years
          Expected volatility                                           51.00%
          Risk-free rate                                                5.99%
          Expected annual dividend yield                                1.62%

          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.

          Share  option  with  Option  Types A and B issued  in 2002  represent
          replacement  share  options  to Option  Types D and E,  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.


                                     F-41
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


32. SUMMARY OF  DIFFERENCES  BETWEEN  HONG KONG ("HK") AND UNITED  STATES("US")
    GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") (continued)

          A summary of the status of the Company's  2002 Scheme and 1996 Scheme
          as of December 31, 2006,  2005 and 2004, and changes during the years
          then ended is presented below:

<TABLE>
                                               2006                          2005                           2004
                                 ---------------------------  ---------------------------  ---------------------------
                                                WEIGHTED-                    WEIGHTED-                    WEIGHTED-
                                                  AVERAGE                      AVERAGE                      AVERAGE
                                                 EXERCISE                     EXERCISE                     EXERCISE
                                      SHARES        PRICE          SHARES        PRICE          SHARES        PRICE
                                      ------                       ------                       ------
                                                      HK$                          HK$                          HK$
          <S>                      <C>              <C>         <C>              <C>         <C>              <C>
          Outstanding,             6,600,500        15.91       6,926,000        15.91       6,941,000        15.91
          beginning of year
          Granted                          -         -                  -         -                  -           -
          Exercised                        -         -                  -         -                  -           -
          Forfeited/cancelled
          /lapsed                 (1,759,000)       17.30        (325,500)       15.85         (15,000)       17.48
                                 ------------  -------------  -------------  ------------  -----------   -------------
          Outstanding, end of
          year                     4,841,500        15.40       6,600,500        15.91       6,926,000        15.91
                                 ============  =============  =============  ============  ===========   =============

          Options exercisable
          at year-end
                                   4,841,500        15.40       4,944,750        16.43       4,314,875        16.85
                                 ============  =============  =============  ============  ===========   =============

          Weighted-average                            N/A                          N/A                          N/A
          fair value of
          options granted
          during the year
</TABLE>

          The following  table  summarizes  information  on the 2002 Scheme and
          1996 Scheme outstanding at December 31, 2006:

<TABLE>
<CAPTION>
                             Options outstanding                                      Options exercisable
          -------------------------------------------------------------     -------------------------------------
                                                             Weighted-
                                                               average
                                                             remaining
          Exercise Price       Number of Options      Contractual Life      Exercise Price     Number of Options
          --------------       -----------------                            --------------     -----------------
          <S>                          <C>                  <C>             <C>                        <C>
          HK$ 14.35                    3,211,500            5.09 years      HK$ 14.35                  3,211,500
          HK$ 17.48                    1,630,000            2.75 years      HK$ 17.48                  1,630,000
                             --------------------    ------------------                      --------------------
                                       4,841,500            4.30 years                                 4,841,500
                             ====================    ==================                      ====================
</TABLE>

          The aggregate  intrinsic value of options outstanding and exercisable
          was zero as at December 31, 2006.

    (c)   Recent changes in accounting standards

          In June 2006, the FASB issued FASB  Interpretation No. 48, Accounting
          for Uncertainty in Income Taxes (FIN 48), an  Interpretation  of SFAS
          109,  Accounting  for Income Taxes.  FIN 48 was issued to clarify the
          accounting for  uncertainty in tax positions  taken or expected to be
          taken  in a tax  return.  Under  FIN  48,  the  tax  benefit  from an
          uncertain  tax position may be  recognized  only if it is more likely
          than not that the tax position will be sustained upon  examination by
          tax  authorities.  The Group plans to adopt FIN 48 for annual periods
          beginning  January 1, 2007.  The Group is  currently  evaluating  the
          potential  impact  that  the  adoption  of FIN 48  will  have  on its
          consolidated financial statements.

          In September 2006, the FASB issued FAS 157, Fair Value  Measurements.
          FAS 157 provides guidance on the measurement of fair value in US GAAP
          and expands fair value measurement disclosures. FAS 157 is applicable
          whenever other accounting pronouncements require or permit fair value
          measurements  and does not  expand  the use of fair  value in any new
          circumstances.  The Group will apply this standard for annual periods
          beginning  January 1, 2007.  The Group is  currently  evaluating  the
          potential  impact  that  the  adoption  of FAS 157  will  have on its
          consolidated financial statements.

          In February  2007, the FASB issued FAS 159, The Fair Value Option for
          Financial Assets and Financial Liabilities, Including an Amendment of
          FASB Statement No. 115 (FAS 159). FAS 159 permits entities to measure
          many financial  instruments  and certain other assets and liabilities
          at fair value on an  instrument-by-instrument  basis.  The Group will
          apply this standard for annual periods beginning January 1, 2008. The
          Group is currently  evaluating the potential impact that the adoption
          of FAS 159 will have on its consolidated financial statements.

                                     F-42
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


32. SUMMARY OF  DIFFERENCES  BETWEEN  HONG KONG ("HK") AND UNITED  STATES("US")
    GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") (continued)

    (d)   Major customers

          The  Company  has  one  customer  accounting  for  10% or more of its
          service revenue. Service revenue from such customer represents 24.3%,
          25.7% and 22.4% of revenues in 2006, 2005 and 2004, respectively.

    (e)   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 Group'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 tax
          jurisdictions. Accordingly, no analysis of income tax and profit from
          operations by jurisdiction has been presented.

    (f)   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.

    (g)   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  receivables.  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.

    (h)   Concentration - industry and major customers

                                                            2006    2005    2004
                                                            ----    ----    ----

          Broadcasting                                     67.8%   65.7%   70.6%

          Telecommunications, Internet and Multimedia      32.2%   34.3%   29.4%


          The five largest  customers  accounted for 42.1%,  39.3% and 46.0% of
          the Company's  total  revenue for the years ended  December 31, 2006,
          2005 and 2004, respectively.

          The  trade  receivables  from the  five  customers  with the  largest
          receivables  balances  represent  59.7%  and  75.9%  of  total  trade
          receivables as of December 31, 2006 and 2005, respectively.


                                     F-43
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


32. SUMMARY OF  DIFFERENCES  BETWEEN  HONG KONG ("HK") AND UNITED  STATES("US")
    GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") (continued)

    (i)   Use of estimates

          The preparation of financial  statements in conformity with generally
          accepted accounting  principles requires management to make estimates
          and  assumptions  that  affect  the  reported  amounts  of assets and
          liabilities and certain  disclosures at the date of the  consolidated
          financial  statements  and  the  reported  amounts  of  revenues  and
          expenses. Actual results could differ from those estimates.

    (j)   Earnings per share

          As of December 31, 2006,  2005 and 2004 the Company had share options
          outstanding  of  4,841,500,  6,600,500  and  6,926,000,  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.

    (k)   Segment information

          SFAS No. 131 "Disclosures about Segments of an Enterprise and Related
          Information"  establishes  standards for reporting  information about
          operating  segments and related  disclosures  products and  services,
          geographic  areas,  and  major  customers.   Operating  segments  are
          components  of  an   enterprise   about  which   separate   financial
          information  is available  that is  evaluated  regularly by the chief
          operating decision-maker in deciding how to allocate resources and in
          assessing  performance.  The chief  operating  decision-maker  of the
          Company allocates  resources and assess  performance on the basis its
          consolidated  financial  statements.  No other financial  information
          that presents segment profit or loss is generated by the Company that
          is used by its chief operating decision-maker in allocating resources
          and assessing  performance.  Thus, the Company is a single  operating
          segment under SFAS No. 131 and the geographical segments disclosed in
          note 5 do not represent operating segments under SFAS No. 131.

33. SUBSEQUENT EVENTS

    On February 13, 2007, Asiaco (formerly named Modernday Limited),  a company
    jointly  owned  by  Able  Star  (a  subsidiary  of  CITIC)  and  GE  Equity
    Investments  Inc.  (a  subsidiary  of GECC),  submitted  a proposal  to the
    Company's Board of Directors to privatize the Company by way of a scheme of
    arrangement  under Section 99 of the Companies Act. Upon  completion of the
    Scheme,  the Company  would  become  wholly  owned by Asiaco and  Bowenvale
    Limited and indirectly owned by CITIC and GECC.

    On March 19, 2007, the Company  despatched  Asiaco's proposal and the terms
    and conditions of such proposal to its shareholders (including ADS holders)
    and holders of options.  In connection with the Scheme, the Company,  among
    other parties, filed a Schedule 13E-3 with the SEC.

    The Company obtained approvals from the U.S. State Department in connection
    with its initial sourcing of satellites. The State Department's approval is
    required  when  there  is a  change  in  ownership  of the  satellites.  In
    connection with the Privatization,  the State Department  indicated to GECC
    that it viewed the proposed  Privatization as causing a significant  change
    of control of a party owning and controlling previously exported satellites
    that would  require its approval and that it was not prepared to grant such
    approval  in  the  context  of  the  Scheme.   The  obtaining  of  relevant
    authorizations  was  one of the  conditions  to the  implementation  of the
    Scheme  which had to be  satisfied  or  waived.  Asiaco  did not waive this
    condition and the Scheme was discontinued.

    One of the  conditions  precedent to the  completion  of the Scheme was the
    completion  of a  transaction  pursuant  to  which  SES (a  shareholder  of
    Bowenvale)  redeemed  GECC's  entire  indirect  holding  of SES  shares  in
    exchange  for shares of a new company  holding  assets and cash,  including
    SES's entire  shareholding in Bowenvale (the "Exchange  Transaction").  The
    Exchange  Transaction  was  completed  on March  29,  2007  and,  upon such
    completion, Bowenvale became jointly and indirectly owned by CITIC (through
    Able Star) and GECC through GE Equity.

    By reason of a regulatory  position taken by the regulators in Hong Kong to
    the effect that the Exchange Transaction resulted in the formation of a new
    concert group thereby  triggering an obligation to launch an unconditional,
    mandatory  offer,  on May 25, 2007 Asiaco  launched  the  "offers"  for all
    Shares and ADSs and outstanding options of the Company.


                                     F-44
<PAGE>
                             ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED
            (ALL AMOUNTS IN HONG KONG DOLLAR THOUSANDS UNLESS OTHERWISE STATED)


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


33. SUBSEQUENT EVENTS (continued)

    If,  following  the Offers  the  Company's  public  float is less than 25%,
    either the Company will issue additional Shares or the Company's  principal
    shareholders  will sell  Shares so that at least 25% of the Shares are held
    by unaffiliated shareholders,  as required by the listing rules of the Hong
    Kong Stock Exchange.

    In addition,  the Company  understands that if,  following the Offers,  the
    number of holders of AsiaSat  Shares  resident in the United  States  falls
    below 300 or the Company  otherwise  becomes  eligible for  de-registration
    under the Exchange  Act, the Company  intends to file a Form 15 or Form 15F
    with the SEC to request that the Company's reporting  obligations under the
    Exchange Act be suspended or terminated.


34. CONVENIENT TRANSLATION TO UNITED STATES DOLLARS

    The  translation of Hong Kong dollar amounts into United States dollars are
    for  convenience  and have  been  made at a rate of  HK$7.8  to  US$1,  the
    approximate rate of exchange at December 31, 2006. Such transactions should
    not be construed  as  representations  that the Hong Kong  dollars  amounts
    represent,  or have keen, or could be converted  into United States dollars
    at that or any other rate.


                                     F-45