--------------------------------------------------------------------------------

                       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, 2003
                                       OR
|_|      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934
         For the transition period from _________ to ___________

                         Commission file number 1-14396

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

         N/A                                                  Bermuda
(Translation of Registrant's                     (Jurisdiction of Incorporation
     Name Into English)                                   or Organization)
                          23 Floor East Exchange Tower
                               38-40 Leighton Road
                                    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           The New York Stock Exchange*
   share

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

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

                                      None
                                (Title of Class)

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

                                      None
                                (Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report.

     As of December 31, 2003, 390,265,500 shares of Common Stock, par value
HK$0.10 per share, were issued and outstanding.

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such filing requirements for the
past 90 days. Yes  [X]   No [_]

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

--------------------------------------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

                                                                            Page
                                                                            ----

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

   Item 1.    Identity of Directors, Senior Management and Advisors............1
   Item 2.    Offer Statistics and Expected Timetable..........................2
   Item 3.    Key Information..................................................2
   Item 4.    Information on the Company......................................11
   Item 5.    Operating and Financial Review and Prospects....................32
   Item 6.    Directors, Senior Management and Employees......................45
   Item 7.    Major Shareholders and Related Party Transactions...............53
   Item 8.    Financial Information...........................................55
   Item 9.    Stock Price History.............................................56
   Item 10.   Additional Information..........................................57
   Item 11.   Quantitative and Qualitative Disclosures About Market Risk......59
   Item 12.   Description of Securities Other than Equity Securities..........59

PART II.......................................................................59

   Item 13.   Defaults, Dividend Arrearages and Delinquencies.................59
   Item 14.   Material Modifications to the Rights of Security Holders
              and Use of Proceeds.............................................59

PART III......................................................................59

   Item 15.   Controls and Procedures.........................................60
   Item 16.   [Reserved.].....................................................60

PART IV.......................................................................61

   Item 17.   Financial Statements............................................61
   Item 18.   Financial Statements............................................61
   Item 19.   Financial Statements and Exhibits...............................61


<PAGE>

                   SUPPLEMENTAL INFORMATION AND EXCHANGE RATES

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

     The Company and AsiaSat 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
Dollars at specified rates. These translations should not be construed as
representations that the Hong Kong Dollar amounts actually represent such US
Dollar amounts or could be converted into US Dollars at the rates indicated or
at all. Unless otherwise stated, the translations of Hong Kong Dollars into US
Dollars have been made at the rate of HK$7.80 to US$1.00, the approximate rate
of exchange on December 31, 2003. 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$7.7640 to
US$1.00 on December 31, 2003. The Noon Buying Rate on May 28, 2004 was HK$7.7941
to US$1.00.

              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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


                                       1
<PAGE>

ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE.

    Not applicable.

ITEM 3.  KEY INFORMATION

                         SELECTED FINANCIAL INFORMATION

     The summary income statement data of the Company for the years ended
December 31, 2001, 2002 and 2003 and the summary balance sheet data of the
Company as of December 31, 2002 and 2003 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, 1999 and 2000 and
the summary balance sheet data as of December 31, 1999, 2000 and 2001 set forth
below are derived from audited consolidated financial statements of the Company
not included herein. The consolidated financial statements of the Company are
prepared and presented in accordance with accounting principles generally
accepted in Hong Kong, or Hong Kong GAAP, which differ in certain material
respects from accounting principles generally accepted in the United States, or
U.S. GAAP. Note 30 to the Company's consolidated financial statements contains
descriptions of the significant differences between Hong Kong GAAP and U.S.
GAAP, a reconciliation of net income from Hong Kong GAAP to U.S. GAAP for the
years ended December 31, 2001, 2002 and 2003, and a reconciliation of
shareholders' equity from Hong Kong GAAP to U.S. GAAP as of December 31, 2002
and 2003. In addition, Note 30 to the Company's consolidated financial
statements contains additional disclosures required under U.S. GAAP, which are
not disclosed elsewhere in the notes to the Company's consolidated financial
statements.

<TABLE>
<CAPTION>
                                                          AS OF AND FOR THE YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------------------------------------
                                            1999         2000          2001          2002          2003          2003
                                             HK$          HK$           HK$           HK$           HK$           US$
                                                   (in millions, except for percentages and per share amounts)
<S>                                      <C>           <C>           <C>           <C>           <C>             <C>
INCOME STATEMENT DATA:
Hong Kong GAAP:
   Revenues .....................          806.8       1,002.9         969.5         950.8         896.2         114.9
   Cost of services .............         (286.0)       (245.8)       (240.0)       (243.1)       (313.3)        (40.2)
   Administrative expenses ......          (97.7)        (61.6)        (58.6)        (76.7)        (56.1)         (7.2)
   Profit from operations .......          485.2         745.5         687.2         637.4         532.6          68.3

   Share of results of associates
        (including goodwill
        amortization) ...........             --         (43.9)        (47.5)        (13.7)        (15.6)         (2.0)

   Impairment loss recognized in
        respect of goodwill of
        associates ..............             --            --          (0.6)           --          (1.9)         (0.2)

   Profit before taxation .......          405.4         656.2         633.6         623.8         512.1          65.7
   Taxation .....................          (51.5)        (79.9)        (70.6)        (69.1)        (87.6)        (11.2)

   Profit for the year ..........          353.6         576.3         563.0         554.7         424.5          54.4
</TABLE>


                                       2
<PAGE>

<TABLE>
<CAPTION>
                                                          AS OF AND FOR THE YEAR ENDED DECEMBER 31,
                                         -----------------------------------------------------------------------------
                                            1999         2000          2001          2002          2003          2003
                                             HK$          HK$           HK$           HK$           HK$           US$
                                                   (in millions, except for percentages and per share amounts)
<S>                                      <C>           <C>           <C>           <C>           <C>             <C>
   Earnings per share
      Basic .....................           0.91          1.48          1.44          1.42          1.09          0.14
      Diluted ...................           0.91          1.47          1.44          1.42          1.09          0.14
   Earnings per ADS
      Basic .....................           9.07         14.77         14.40         14.21         10.88          1.39
      Diluted ...................           9.06         14.73         14.40         14.21         10.88          1.39
Dividend declared per share:
   Ordinary .....................           0.20          0.20          0.20          0.25          0.32          0.04
Number of shares outstanding (in
     thousands) .................        390,075       390,266       390,266       390,266       390,266       390,266
U.S. GAAP:
   Profit for the year ..........          368.4         568.1         562.5         538.1         408.3          52.3
   Earnings per share
      Basic .....................           0.94          1.46          1.44          1.38          1.05          0.13
      Diluted ...................           0.94          1.45          1.44          1.38          1.05          0.13
   Earnings per ADS
      Basic .....................           9.44         14.56         14.41         13.79         10.46          1.34
      Diluted ...................           9.44         14.52         14.41         13.79         10.46          1.34
BALANCE SHEET DATA:
Hong Kong GAAP:
   Working capital ..............          144.2         (70.3)         86.8         239.0         529.9          67.9
   Property, plant and
        equipment ...............        2,210.7       2,521.2       2,942.3       3,232.4       3,165.4         405.8
Total assets ....................        3,137.7       2,902.5       3,384.7       3,936.4       4,157.2         533.0

   Long-term liabilities (1) ....          579.3         217.9         288.8         326.0         336.5          43.1
   Total liabilities (excluding
        minority interests) .....        1,308.2         516.9         514.2         589.1         588.5          75.4
   Capital stock ................           39.0          39.0          39.0          39.0          39.0           5.0
   Total shareholders' equity
        (net assets) ............        1,829.0       2,385.2       2,870.1       3,346.7       3,568.3         457.5
U.S. GAAP:

   Property, plant and equipment         2,226.8       2,512.3       3,035.7       3,302.6       3,223.9         413.3
   Total assets .................        3,240.4       2,996.4       3,478.1       4,011.2       4,215.7         540.5

   Long-term liabilities (1) ....          591.3         229.2         300.1         335.4         345.8          44.3
   Total liabilities (excluding
        minority interests) .....        1,265.6         528.2         525.4         598.5         597.7          76.6
   Total shareholders' equity
        (net assets) ............        1,974.5       2,467.8       2,952.2       3,412.2       3,617.5         463.8
</TABLE>
------------------------------------

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

     For financial year 2002, the Company declared regular dividends in the
amount of HK$0.25 per share of its Common Stock and a special dividend in the
amount of HK$0.25 per share of its Common Stock. For financial year 2003, the
Company declared a regular dividend in the amount of HK$0.32 per share of its
Common Stock.


                                       3
<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 Hongkong 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$
                                          ----------------     ------------      -----------    ---------------
<C>                                           <C>                <C>               <C>              <C>
1999 ..........................               7.7599             7.7814            7.7210           7.7740

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

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

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

2003 ..........................               7.7875             7.8001            7.7085           7.7640

December 2003 .................               7.7645             7.7670            7.7628           7.7640

January 2004 ..................               7.7775             7.7663            7.7632           7.7775

February 2004 .................               7.7748             7.7845            7.7686           7.7845

March 2004 ....................               7.7930             7.7980            7.7842           7.7930

April 2004 ....................               7.7970             7.8000            7.7870           7.7998

May 2004 ......................               7.7971             7.8010            7.7895           7.7941
</TABLE>

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


                                       4
<PAGE>

                                  RISK FACTORS

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

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

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

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

    LIMITED LIFE OF SATELLITES

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

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

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

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

    The loss, damage or destruction of AsiaSat 2, AsiaSat 3S or AsiaSat 4, or
damage or destruction to AsiaSat's ground based satellite control equipment and
satellite stations, as a


                                       5
<PAGE>

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

    RELIANCE UPON SIGNIFICANT CUSTOMER

    The Company's largest customer is STAR Group Limited ("STAR"), which is a
Hong Kong-based international satellite television broadcasting company that
broadcasts over the greater Asian region and is wholly-owned by The News
Corporation Limited, a leading international media group. STAR accounted for
approximately 23.0%, 23.5% and 24.9% of AsiaSat's revenues in the years ended
December 31, 2001, 2002 and 2003, 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 have long-standing customer
relationships and are substantially larger, and have financial resources that
are substantially greater, than those of the Company. See "Information on the
Company - Competition."


                                      6
<PAGE>

    TRANSPONDER OVERSUPPLY. It is expected that in 2004, the supply of
transponders will continue to exceed the demand for transponders. The Company
believes that this imbalance cannot be quickly corrected until global economic
conditions improve and new applications and services take up existing capacity.
See "Information on the Company - Competition - Transponder Oversupply."

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

    RISKS RELATING TO FUTURE SATELLITES

    The construction, launch and operation of any future satellites by the
Company would be subject to substantially the same risks as those set forth
herein relating to AsiaSat 2, AsiaSat 3S and AsiaSat 4. In addition, 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."

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

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

    The Company's operation of earth stations is subject to the
Telecommunications Ordinance (Chapter 106 of the Laws of Hong Kong) (the
"Telecommunications Ordinance").


                                       7
<PAGE>

The Telecommunications Ordinance contains provisions for the taking of
possession by the Hong Kong Government of telecommunications stations if the
Chief Executive in Council is of the opinion that an emergency has arisen in
which it is expedient for the public service that the Hong Kong Government
should have control over telecommunications stations. See "Information on the
Company - Regulation - Hong Kong Regulation."

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

    The laws of certain countries require television broadcasters and satellite
telecommunication users providing services in such countries generally to use
state-owned or locally-owned satellites. These legal requirements prevent the
Company and other satellite companies from competing to provide transponder
capacity to these potential customers. There can be no assurance that other
countries in the 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."

    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. Nations are required by treaty to make a filing of
their proposed use of satellite orbital slots for geostationary satellites with
the Radiocommunication Bureau of the International Telecommunication Union. When
a conflict or potential conflict is noted, nations are obligated to negotiate in
an effort to coordinate the proposed uses and resolve any interference concerns.
The Radiocommunication Bureau, however, has no formal dispute resolution
mechanism, and if nations cannot agree on a resolution, a satellite system will
not be entitled to the full interference protection afforded under international
law. See "Information on the Company - Regulation - International
Telecommunication Union."

    POLITICAL, 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 2001, 2002 and
2003, approximately 61.0%, 58.2% and 59.8%, respectively, of AsiaSat's revenues,
were derived from customers from Greater China, which includes mainland China,
Hong Kong, Macau and Taiwan.


                                       8
<PAGE>

Furthermore, during 2001, 2002 and 2003, approximately, 23.0%, 23.5% and 24.9%,
respectively, of AsiaSat's revenues were attributable to transponder utilization
agreements with STAR, a Hong Kong company. As a result, the Company's financial
condition and results of operations may be influenced by the political situation
in the 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 governmental policies, with
respect to laws and regulations, inflationary measures, currency conversion or
the rates and methods of taxation, among other things. While the Chinese
government is expected to continue its economic reform policies, many of the
reforms are new or experimental and may be refined or changed.

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

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

    SARS OR SIMILAR OCCURRENCE. The Company's business could be adversely
affected by the re-emergence of Severe Acute Respiratory Syndrome (or SARS) or a
similar type of regional occurrence. Restrictions on travel resulting from the
re-emergence of SARS or a similar type of regional occurrence 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 duty. The Company's
results of operations could be adversely affected to the extent that SARS 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") and Lockheed Martin, AsiaSat is the beneficiary
of certain limited performance-based, operational warranties on its satellites.
However, the limited contractual warranties do


                                       9
<PAGE>

not cover a substantial portion of the risk inherent in satellite launches or
satellite operations. Furthermore, there has been a general rise in the cost of
insurance following a series of satellite failures. In addition, while the cost
of insurance has increased, insurance coverage has decreased as a result of the
increase in satellite in-orbit failures and the terrorist events on and after
September 11, 2001.

    AsiaSat has in-orbit insurance coverage for AsiaSat 2, AsiaSat 3S and
AsiaSat 4. AsiaSat's in-orbit insurance must be renewed annually.

    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.-Sino relations,
which can vary substantially from time to time. AsiaSat has sourced all its
satellites in the United States. There can be no assurance that U.S. policy will
not change in ways that will have a negative effect on the export of future
satellites, including the timing of such export, nor can there be any assurance
that future U.S. sourcing by the Company will be unimpeded by U.S. export
restrictions.

    RISK OF LOSS OF ORBITAL SLOTS

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

    SUBSTANTIAL LEVERAGE

    AsiaSat may have borrowings under a future loan facility. Such a loan
facility could contain certain covenants, including debt to equity covenants,
which if the Company were to draw down on such loan facility could prevent the
Company from undertaking certain acquisitions and purchases that may be
necessary to its growth. See "Operating and Financial Review and Prospects -
Liquidity and Capital Resources."


                                       10
<PAGE>

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

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

ITEM 4.  INFORMATION ON THE COMPANY.

    HISTORY AND DEVELOPMENT OF THE COMPANY

    The Company is an exempted company organized under the Companies Act 1981 of
Bermuda (as amended) (the "Companies Act"). The Company was incorporated on May
10, 1996. The Company's registered office is located at Canon's Court, 22
Victoria Street, Hamilton, HM12, Bermuda (phone: 441-295-2244) and its principal
place of business is located at 23rd Floor, East Exchange Tower, 38-40 Leighton
Road, Hong Kong.

    ORGANIZATIONAL STRUCTURE

    The Company is the parent company of AsiaSat. AsiaSat holds a 47.3% interest
in SpeedCast Holdings Limited. See Note 13 to the Company's consolidated
financial statements.

    ACQUISITIONS AND INVESTMENTS

o        In March 2000, the Company entered into an agreement to acquire a 36.5%
         interest in SpeedCast Holdings Limited, which wholly owns SpeedCast
         Limited (formerly known as PhoenixNet Limited) ("SpeedCast") by making
         contributions in-kind of HK$97.5 million (US$12.5 million), of which,
         HK$62.4 million (US$8.0 million) was contributed by means of the
         provision of one C-band transponder for use by SpeedCast for a fixed
         period of approximately thirty-eight months. The balance of HK$35.1
         million (US$4.5 million) was contributed by means of the provision of a
         Gen II Platform and other support for a fixed period of twenty-four
         months. In March 2002, the Company entered into a further agreement to
         acquire an additional 8.8% interest in SpeedCast Holdings Limited by
         making an aggregate contribution of HK$31.2 million (US$4.0 million),
         of which HK$19.5 million (US$2.5 million) was in cash and HK$11.7
         million (US$1.5 million) was by means of extending the usage of one
         C-band transponder by SpeedCast Holdings Limited for a further period
         of 219 days from February 4, 2003. In 2003, the Company 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 - Multimedia and Internet."


                                       11
<PAGE>

o        In September 2000, the Company entered into an agreement with each of
         Boeing and Lockheed Martin for the construction and launch of AsiaSat
         4. This satellite was successfully launched in April 2003. The
         aggregate investment for the construction, launch and launch insurance
         of AsiaSat 4 was approximately HK$1,666.8 million (US$213.7 million)
         and was financed completely through internal funds. See " - Satellites
         - AsiaSat 4."

o        In March 2001, AsiaSat entered into an agreement with respect to the
         lease of the Tai Po Site. For details with respect to the lease of the
         Tai Po Site, see "Additional Information - Material Contracts", "-
         Business Overview" and "- Property, Plants and Equipment - Land
         Facilities." In March 2002, AsiaSat entered into a construction
         agreement with Leighton Contractors Asia Limited with respect to the
         construction of a satellite control center on the Tai Po Site. In
         December 2002, AsiaSat entered into an agreement with Globecomm Systems
         Europe Limited for the procurement of the TT&C RF System to be
         installed at the satellite control center at the Tai Po Site at a cost
         of HK$49.1 million (US$6.3 million). The investment for the
         construction of the satellite control center on the Tai Po Site
         (including the TT&C RF System) is estimated to be approximately
         HK$241.4 million (US$30.9 million). As at December 31, 2003, HK$192.1
         million (US$24.6 million) had been spent on the Tai Po Site. See
         "Additional Information - Material Contracts" and "Operating and
         Financial Review and Prospects - Liquidity and Capital Resources -
         Planned Capital Expenditures."

    BUSINESS OVERVIEW

    The Company, through its wholly-owned subsidiary, AsiaSat, is a leading
provider of high quality satellite transponder capacity in Asia. The Company's
satellites are positioned over the Asian landmass and offer its customers
comprehensive coverage of close to 70% of the world's population. The Company
operates three satellites -- AsiaSat 2, AsiaSat 3S and AsiaSat 4.

    AsiaSat 1, Asia's first privately owned commercial satellite covering the
Asian region, was launched in 1990. Traffic on AsiaSat 1 was transferred to
AsiaSat 3S in 1999, and AsiaSat 1 was moved from the 105.5 degrees East orbital
slot to the 122 degrees East orbital slot. AsiaSat 1 was retired in February
2003. AsiaSat 2, which provides increased footprint coverage over AsiaSat 1 with
a substantial gain in signal power, was launched in 1995 and began commercial
service in January 1996. AsiaSat 3S was launched from the Baikonur Cosmodrome in
the Republic of Kazakhstan and began commercial service in 1999. AsiaSat 3S has
a similar footprint coverage to AsiaSat 2. Together, 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 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 frequencies and fixed satellite services
frequencies for maximum flexibility. In June 2000, the Company received a
Telecommunication License from the Office of the


                                       12
<PAGE>

Telecommunications Authority of Hong Kong allowing AsiaSat to operate the
broadcast satellite services frequencies and the fixed satellite services
frequencies on AsiaSat 4. See "-- Telecommunications - Expanded Services."
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 a temporary occupation permit was obtained, in
August 2003. The final occupation permit was received in January 2004 from the
Hong Kong Building Authority. See "Additional Information - Material Contracts."

    As of December 31, 2003, the utilization rate for each of AsiaSat 2, AsiaSat
3S and AsiaSat 4 was approximately 54.3%, 59.0% and 10.3%, respectively, under
transponder utilization agreements and transponder purchase agreements.

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

    In 2001, 2002 and 2003, approximately 61.0%, 58.2% and 59.8%, 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 AsiaSat 3S is the leading satellite for regional
television programming distribution in Asia based on the number of viewers
watching programming distributed on AsiaSat 3S. The Company's largest customer,
STAR, is a Hong Kong-based international satellite television broadcasting
company that broadcasts over the Asian region.

    SERVICES AND CUSTOMERS

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

                                             2001          2002          2003
                                             ----          ----          ----

Broadcasting (video)........                 66.8%         68.3%         70.4%

Telecommunications, Internet                 33.2%         31.7%         29.6%
   and Multimedia...........


                                       13
<PAGE>

    Total revenue from the Company's five largest customers in each of the years
ended December 31, 2001, 2002 and 2003 was HK$429.8 million, HK$410.9 million
and HK$376.6 million respectively, which represented 44.3%, 43.2% and 42.0%
respectively, of total revenue. Revenues from the Company's largest customer
represented 23.0%, 23.5% and 24.9% of total revenue for the years ended December
31, 2001, 2002 and 2003, respectively.

    BROADCASTING

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

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

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

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

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


                                       14
<PAGE>

    In addition, governmental bodies seek to use satellites to expand their
coverage to remote and underdeveloped regions of their countries that would
otherwise be unserviced. The signals are received at rebroadcast centers and
retransmitted to viewers. The State Administration of Radio, Film and Television
of China (formerly, the Ministry of Radio, Film and Television) uses capacity on
AsiaSat 3S to distribute domestic and international television programming.
Currently 20 television channels from 20 provinces in China with one autonomous
region and three municipalities are broadcasting on AsiaSat's C-band and Ku-band
transponders.

    TELECOMMUNICATIONS

    The Company's telecommunications services include the provision of
transponder capacity for private communications networks for data and voice
communications and 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. China represents one of the world's largest potential markets
for satellite communications. Private communications networks in China are
numerous and growing. Approximately 30 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, two
Chinese entities have entered into transponder purchase agreements to use one
Ku-band transponder on AsiaSat 3S.

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

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

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


                                       15
<PAGE>

in Cyprus. The earth station is able to receive signals from European and Middle
East satellites and uplink the signals to AsiaSat 2.

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

    AsiaSat now holds a 47.3% interest in SpeedCast Holdings Limited, which was
formed in 1999 to principally to 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. SpeedCast began trial operations on March 15, 2000.
In 2003, SpeedCast also launched a new service for two-way operation, which
provides more efficient connection for content delivery. Customers including
SpeedCast, Telstra Corporation and Pacific Century Matrix use AsiaSat 2 and
AsiaSat 4 to offer broadband (which refers to the provision of multiple channels
of data over a single communications channel), Internet and multimedia services.
In addition, Connexion by Boeing has entered into an agreement for the use of
Ku-band capacity on AsiaSat 3S to provide in-flight broadband communication
services on the Asia-to-Europe flight corridor commencing in the first quarter
of 2004.

         EXPANDED SERVICES. The Office of the Telecommunications Authority of
Hong Kong 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. Obtaining a FC license will enable AsiaSat to provide a one-stop
service to its customers, including the provision of transponder capacity and
uplinking or downlinking broadcasting programs, and telecommunication services
to audiences or operators outside Hong Kong. At the moment, AsiaSat's
broadcasting or telecommunications customers have to uplink their programs and
services by either establishing their own uplinking facilities or employing the
uplinking services of other licensed operators. This service would complement
AsiaSat's core business of providing high-quality satellite transponder capacity
by offering one-stop shop services.

    On June 27, 2000, the Company was granted a telecommunication license (the
"Telecommunication License") from the Office of the Telecommunications Authority
of Hong Kong allowing the broadcast satellite services frequencies to be
incorporated into the payload of AsiaSat 4 at the 122 degrees East orbital
position. Broadcast satellite services frequencies were assigned to Hong Kong by
the 1997 World Radiocommunication Conference ("WRC '97") of the International
Telecommunication Union. The 2000 World Radiocommunication Conference
("WRC-2000") later revised these assignments and further assigned more
frequencies to Hong Kong. These frequencies are designated for satellite
broadcasting uses and are receivable in Hong Kong and surrounding areas with
very small antennas. They can be used to provide Direct-to-Home satellite
broadcasting services, which refers to a satellite service that delivers
television programming directly to consumer homes using a small antenna and
related equipment. Adding the broadcast satellite services frequencies onto
AsiaSat 4 enables AsiaSat to offer high power and wide coverage for broadcasting
services in Hong Kong and the surrounding areas. To this end, in April 2004, the
Company formed a subsidiary for the purpose of holding a non-domestic television
program service license, which was granted by the Broadcasting Authority of Hong
Kong in May 2004. This new subsidiary will have the right to use the Company's
broadcast satellite


                                       16
<PAGE>

services frequencies. By installing a very small dish, viewers will be able to
enjoy a whole new range of programming.

    The Telecommunications License referenced above also allows the fixed
satellite services frequencies to be incorporated into the AsiaSat 4 payload.
Accordingly, the Company incorporated both the broadcast satellite services and
fixed satellite services frequencies into the AsiaSat 4 payload.

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

    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
cable operators and local television and radio stations for redistribution. In
Direct-to-Home 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 very small aperture


                                       17
<PAGE>

terminal network, connecting a large number of widely dispersed locations via
satellite, is an efficient and cost effective method for many organizations to
maintain communications with a network of offices.

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

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

    A beam represents one of the coverage patterns offered by a satellite. The
footprint of a satellite refers to the geographic area covered by a satellite,
the outer edge of which is generally defined as that area where the quality of
communication degrades below an acceptable commercial level due to the
spacecraft antenna pattern, power of the signal and curvature of the earth. The
primary transponder characteristic is power, which is expressed in terms of
EIRP. EIRP means equivalent isotropic radiated power and is a measure of radio
frequency power of each transponder. Transponder bandwidth, expressed in terms
of megahertz or MHz, a unit of frequency equal to one million cycles per second,
is a range of frequencies that can pass over a given transmission channel.
Generally, the greater the bandwidth, the more information that can be sent
through the circuit in a given amount of time.

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

    The following table sets forth certain satellite specifications in relation
to AsiaSat 2, AsiaSat 3S and AsiaSat 4. 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 -- 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."


                                       18
<PAGE>

<TABLE>
<CAPTION>
                                           SUMMARY SATELLITE DATA

                      ASIASAT 2               ASIASAT 3S                    ASIASAT 4
                      ---------               ----------                    ---------
<S>                   <C>                     <C>                           <C>
Region
  covered:
   C-band             Asia, Middle East,      Asia, Middle East, CIS and    Asia, Middle East, CIS,
                      CIS and Australia       Australia                     Australia and
                                                                            New Zealand
   Ku-band            China, Japan, Hong      East Asia Beam (from Japan    China Beam, Australia Beam
                      Kong, Taiwan and Korea  to Kazakhstan), South Asia    (Australia and New Zealand),
                                              Beam (from Bangladesh to      Hong Kong broadcast satellite
                                              the Middle East), Steerable   services Beam
                                              Beam(1)

Launch date           November 28, 1995       March 21, 1999                April 11, 2003

Manufacturer          Lockheed Martin         Boeing                        Boeing

Model                 Series 7000             BSS601HP                      BSS601HP

Stabilization         Three Axis Stabilized   Three Axis Stabilized         Three Axis Stabilized

Number of
  Transponders        33                      44                            48

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

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

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

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

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

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

Estimated
  Useful
  Life                13 years                16 years                      15 years

Estimated end
  of useful life      2008                    2015                          2018

Approximate
 Percentage of
 world population
 covered by           66%                     66%                           66%
 satellite
</TABLE>

-----------------
(1)  AsiaSat 3S has 16 Ku-band transponders divided into two fixed beams and a
     steerable beam.
(2)  AsiaSat 2 has experienced power reductions in its Ku-band transponders in
     relation to their design specifications. See "-- AsiaSat 2."

    ASIASAT 1

    Traffic on AsiaSat 1, a BSS (Boeing Satellite Systems) 376 satellite
manufactured by Boeing and launched by AsiaSat on April 7, 1990, was transferred
to AsiaSat 3S in 1999. AsiaSat 1 was operated in inclined orbit mode in order to
preserve its remaining fuel. AsiaSat moved AsiaSat 1 to the 122 degrees East
orbital slot in 1999, where it was used for occasional services. AsiaSat 1 was
retired in February 2003. There was no cost associated with the disposal of
AsiaSat 1.


                                       19
<PAGE>

    ASIASAT 2

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

    AsiaSat 2 is equipped with twenty 36 MHz C-band and four 72 MHz C-band
transponders with a maximum signal power of 40 dBW. It is also equipped with
nine 54 MHz Ku-band transponders with a maximum signal power of 53 dBW. However,
at the time of the launch, AsiaSat 2 experienced a Ku-band power reduction 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. 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 the former Soviet Union. The footprint of AsiaSat 2 covers approximately 66%
of the world's population. AsiaSat 2's C-band footprint provides coverage over a
large area with a single beam. The nine Ku-band transponders provide coverage
over China and the Korean peninsula and Japan.

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

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

    ASIASAT 3S

    In 1997, AsiaSat launched AsiaSat 3 from the Baikonur Cosmodrome in the
Republic of Kazakhstan. AsiaSat 3 failed as it did not reach its orbital slot
and was replaced by the successful launch of AsiaSat 3S in March 1999.

    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.


                                       20
<PAGE>

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

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

    ASIASAT 4

    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 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. 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 broadcast satellite service beam for
Direct-to-Home services in Hong Kong and the adjacent South China region.
AsiaSat 4 is designed to provide advanced satellite services including
Direct-to-Home television, broadband and IP solutions, and telecommunications
services such as private networks for business and rural telephony (which refers
to the construction and operation of telephones and telephonic systems). It has
an estimated useful life of 15 years, indicating that the estimated end of its
useful life will be in 2018.

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


                                       21
<PAGE>

orbit anomaly support for AsiaSat 4. See "-- Business Overview" and
"--Regulation - Export Regulation."

    AsiaSat previously had a dispute with Shin Satellite in relation to
AsiaSat's right to operate a satellite from 122 degree East. A resolution has
been reached whereby AsiaSat 4 will continue to operate at this location
according to original specification and without interference.

    ADDITIONAL ORBITAL SLOTS AND USE OF FREQUENCIES

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

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

    TRANSPONDER UTILIZATION AGREEMENTS

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

    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


                                       22
<PAGE>

entire useful life of a satellite and payment for the entire period of use is
typically completed by the commencement of the second year of the term of the
agreement.

    CUSTOMER TECHNICAL QUALIFICATIONS AND SUPPORT

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

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

    AsiaSat's Carrier Monitoring System ("CMS") was designed and implemented by
AsiaSat to monitor and measure communications parameters from AsiaSat's 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 2, AsiaSat 3S and
AsiaSat 4. 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
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


                                       23
<PAGE>

of transponders, power or ability to control the positioning of the satellite
and reduction in the useful life of the satellite.

    AsiaSat renewed the in-orbit insurance for AsiaSat 2 in the amount of
HK$429.0 million (US$55.0 million) at an annual cost of approximately HK$17.8
million (US$2.3 million) for the 12 month period beginning from November 28,
2003. AsiaSat obtained satellite in-orbit insurance for AsiaSat 3S covering the
launch and the first five years in-orbit of AsiaSat 3S in the amount of
HK$1,521.0 million (US$195.0 million), which provided coverage for (i) a total
failure of the launch of the satellite and (ii) the failure of the satellite to
obtain proper orbit or to perform in accordance with certain specifications once
in-orbit. AsiaSat renewed in-orbit insurance for AsiaSat 3S in the amount of
HK$951.6 million (US$122.0 million) at a cost of approximately HK$27.3 million
(US$3.5 million) for the twelve month period beginning from March 21, 2004.
AsiaSat obtained launch and the first year in-orbit insurance coverage for
AsiaSat 4 prior to its launch. The insurance amount was HK$1,443.0 million
(US$185.0 million) covering the total and partial loss of the satellite, and
HK$286.3 million (US$36.7 million) covering the cost of insurance premium in the
event of a total loss. The policy contained standard commercial satellite
insurance provisions and customary exclusions, as well as an exclusion of losses
in the event of a failure of XIPS (Xeon Ion Propulsion System) on the satellite.
A failure of XIPS could result in a reduction of the satellite's life to less
than 15 years. During the time when insurance for XIPS is unavailable, AsiaSat
has an alternative arrangement in place to cover the event of a XIPS failure.
Such arrangement will allow AsiaSat to purchase a replacement satellite for
AsiaSat 4 if XIPS fails at a pre-agreed price scaled relative to the time of
failure. The replacement satellite would be delivered in-orbit before the end of
life of AsiaSat 4. "See "Key Information - Risk Factors - Limited Life of
Satellites." AsiaSat renewed in-orbit insurance for AsiaSat 4 in the amount
HK$1583.4 million (US$203.0 million) at a cost of approximately HK$45.4 million
(US$5.8 million) for the twelve month period beginning from March 21, 2004.
AsiaSat has obtained satellite in-orbit third-party liability insurance for
AsiaSat 2, AsiaSat 3S and AsiaSat 4 in an aggregate amount of HK$780.0 million
(US$100.0 million).

    SALES AND MARKETING

    The Company's sales and marketing department, which had 24 employees
(including two general managers) as of December 31, 2003, is divided into two
groups, one of which serves China and the other serves the remainder of the
world. The senior executive officers of the Company, including the Chief
Executive Officer and Deputy Chief Executive Officer, are directly involved in
marketing to key broadcasting and telecommunications customers. Marketing
activities include customer visits, selected trade advertising and presentations
at industry conferences.

    EMPLOYEES

    As of December 31, 2003, the Company had 83 full-time employees, of which
eight employees were in management, 36 employees were in engineering and
operations and 23 employees were in sales and marketing. The remaining 16
employees were engaged in administrative, accounting, legal, regulatory and
clerical activities. The Company has 74 employees in Hong Kong and nine
employees in Beijing. The Company believes its relations with its employees are
good. See "Directors, Senior Management and Employees - Employees."


                                       24
<PAGE>

    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
Asian countries that had developed domestic satellite communications, there was
no supplier of Asian region-wide satellite communications. Since the launch of
AsiaSat 1, a number of international, regional and domestic satellite operators
have entered the Asian regional market. The Company's primary market is Asian
intra-regional broadcasting and telecommunications.

    INTERNATIONAL, REGIONAL AND DOMESTIC SYSTEMS

    The business in which the Company operates is highly competitive. The
satellite services provided by the Company are used by its customers primarily
for point to multipoint communication (principally television broadcasting,
private communication network, Internet and multimedia). The Company competes
with several international, regional and domestic satellite companies operating
in the Asian region. Many of these competitors have long-standing customer
relationships and are substantially larger, and have financial resources that
are substantially greater, than those of the Company. The Company believes that
its ability to compete with these organizations depends on its existing customer
relationships and the quality of its customer service, its reputation as a
reliable operator of commercial satellites and the technical advantages of its
satellites.

    COMPETITION RESTRICTION FROM DOMESTIC SYSTEMS

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


                                       25
<PAGE>

    FIBER OPTIC SYSTEMS

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

    TRANSPONDER OVERSUPPLY

    It is expected that in 2004, the supply of transponders in the region will
continue to exceed the demand for transponders. The Company believes that this
imbalance cannot be quickly corrected until global economic conditions improve
and new applications and services take up existing capacity. See "Key
Information - Risk Factors - Risk of Limited Market Demand and Increasing
Competition."

    REGULATION

    The international telecommunications industry is highly regulated. Satellite
services are subject to international space law while broadcasting and
telecommunications services are subject to international and national law. The
principal international law relating to the use of outer space is the Outer
Space Treaty. Countries that are party to the Outer Space Treaty or to other
treaties or conventions regulating outer space activities are responsible for
fulfilling their own obligations under these treaties or conventions. This often
results in the adoption by member countries of domestic laws to regulate the
activities of their own subjects in order to enable the country concerned to
comply with its international obligations.

    HONG KONG REGULATION

    As an operator of privately owned satellites, AsiaSat is subject to the
regulatory authority of Hong Kong through AsiaSat's principal regulator, the
Office of the Telecommunications Authority of Hong Kong.

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

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


                                       26
<PAGE>

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 the Office of the Telecommunications Authority of Hong Kong.

    In addition to the regulatory regime to which the Company's outer space
operations are subject, the Company's earth station operations involve the
operation and use of telecommunication apparatus at and from its earth stations
at Stanley 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
are regulated by the Telecommunications Ordinance. AsiaSat has the benefit of
licenses granted under the Telecommunications Ordinance covering all its TT&C
(telemetry, tracking and control) operations (which refers to a land based
facility that monitors and controls the position of the satellite in-orbit), as
well as monitoring and testing functions, for each of AsiaSat 2, AsiaSat 3S and
AsiaSat 4, subject to the terms and conditions of the respective licenses. The
licenses require AsiaSat, among other things, to avoid harmful interference to
other telecommunication apparatus operating within or outside Hong Kong and to
ensure compliance with all relevant requirements of the International
Telecommunication Convention (and any other international telecommunication
agreements which may from time to time be acceded to by or on behalf of, or
applied to, Hong Kong) as well as the agreement relating to Intelsat, Ltd. Such
licenses for AsiaSat 2 and AsiaSat 3S were formally granted contemporaneously
with the grant of the licenses under the Outer Space Ordinance. In contrast,
because the Company successfully won a bid for a Telecommunication License from
the Office of the Telecommunications Authority of Hong Kong allowing broadcast
satellite services frequencies to be incorporated into the payload of AsiaSat 4,
the license for AsiaSat 4 under the Telecommunications Ordinance was granted
prior to the completion of AsiaSat 4. See "--AsiaSat 4." For a further
discussion on the Telecommunication License, the FC license and the non-domestic
television program service license, see "-- Telecommunications - Expanded
Services."

    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.


                                       27
<PAGE>

Although AsiaSat does not believe these regulatory schemes will prevent it from
pursuing its business, there can be no assurance that such licenses and
approvals are or will remain sufficient in the view of foreign regulatory
authorities and that these authorities will not discourage or prevent potential
customers from utilizing transponders on AsiaSat's satellites.

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

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

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

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

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

    These legal requirements may prevent the Company and other satellite
companies from competing to provide transponder capacity to these potential
customers. There can be no assurance that other countries in the 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.


                                       28
<PAGE>

    INTERNATIONAL TELECOMMUNICATION UNION

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

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

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

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

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

    Nations are required by treaty to make a filing of their proposed use of
satellite orbital slots for geostationary satellites with the Radiocommunication
Bureau. After filing an orbital slot request with the Radiocommunication Bureau,
other nations are afforded the opportunity to inform the Radiocommunication
Bureau of any potential conflicts with their present or planned use of orbital
slots. When a conflict or potential conflict is noted, nations are obligated to
negotiate in an effort to coordinate the proposed uses and resolve any
interference concerns. The Radiocommunication Bureau, however, has no formal
enforcement


                                       29
<PAGE>

mechanism, and if nations cannot agree on a resolution, a satellite system will
not be entitled to the full interference protection afforded under international
law.

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

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

    EXPORT REGULATION

    In February 2001, Boeing obtained a Technical Assistance Agreement to
provide off-site support services for the life of AsiaSat 3S. On October 23,
2001, Boeing obtained a Technical Assistance Agreement to provide necessary
technical data and services to AsiaSat in connection with the AsiaSat 4 program.
In addition, Boeing has obtained a Technical Assistance Agreement from the U.S.
Department of State to provide technical data and service for in-orbit anomaly
support for AsiaSat 4. See "-- Satellites --AsiaSat 4."

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



                                       30
<PAGE>

    PROPERTY, PLANTS AND EQUIPMENT

    LAND FACILITIES

    The Company's executive offices are located in Causeway Bay, Hong Kong. The
Company's executive offices and the Stanley TT&C Facility are leased by the
Company from PCCW and Reach, respectively. See "-- Satellite Control
Facilities." The leases covering the Company's office space were renewed in May
2002 for a term of three years. The rental amount (excluding rates,
air-conditioning and management charges) under these leases is approximately
HK$3.7 million per year. The Company finances this cost from internal resources.
With the opening of the Tai Po Satellite Earth Station, all engineering and
operations employees were transferred to the Tai Po Site and the Company has
reduced its executive office space in Causeway Bay by one floor. See "--
Satellite Control Facilities."

    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 leased 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 has replaced the executive offices in Causeway Bay as the center
for coordination of all 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. In addition, the Tai Po
Satellite Earth Station allows AsiaSat to offer its customers additional and
improved services from the services previously offered in Causeway Bay. These
services also include uplink, technical support and other value added services.
Construction of the Tai Po Satellite Earth Station was completed, and a
temporary occupation permit was obtained, in August 2003. The final occupation
permit was received in January 2004 from the Hong Kong Building Authority. The
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.

    SATELLITE CONTROL FACILITIES

    Prior to the opening of the Tai Po Satellite Earth Station, AsiaSat
maintained a single satellite control center (the "Satellite Control Center")
manned 24-hours-a-day by AsiaSat's engineers at its executive headquarters in
Causeway Bay, Hong Kong. The Tai Po Satellite Earth Station has replaced the
Satellite Control Center. 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"). There are currently a total of
five C- band and two Ku-band antennas available to track the Company's satellite
fleet.

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

    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


                                       31
<PAGE>

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 stationkeeping
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.

    We expect that the remaining operational functions of the Stanley TT&C
Facility will be gradually transferred to the Tai Po Satellite Earth Station
over the next few years. The Stanley TT&C Facility will be retained indefinitely
to provide system redundancy in a back up role.

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

    OUR SATELLITES. The Company, through its wholly-owned subsidiary, AsiaSat,
is a leading provider of high quality satellite transponder capacity in the
Asian region. The Company launched the first privately owned commercial
satellite covering the Asian region in 1990. The Company launched additional
satellites in 1995, 1999 and 2003. As of May 31, 2004, the Company had three
satellites in operation:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                          POSITION                          UTILIZATION RATES(1)                 % CHANGE
-------------------------------------------------------------------------------------------------------------
                                                   2001            2002             2003
                                                   ----            ----             ----
<S>                    <C>                         <C>             <C>              <C>            <C>
AsiaSat 2              100.5(degree)East           61.8%           65.6%            54.3%          -17.2%

AsiaSat 3S             105.5(degree)East           67.3%           62.2%            59.0%           -5.2%

AsiaSat 4                122(degree)East            N/A             N/A             10.3%            N/A

System Utilization                                 64.4%           63.6%            39.0%            N/A
</TABLE>

    (1) There were 49 transponders leased or sold on all AsiaSat satellites at
each of the year-end 2002 and 2003.


    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. Global trends show that, despite continually falling cable prices,
demand for satellite capacity used for private multi-point networks continues to
rise, and the Company believes that this will be the case in the Asian region.

    OUTLOOK. The decline in the Company's revenue in previous years has been a
result of factors including a decline in the global telecommunications market
beginning in 2000, the prevailing general economic slowdown, competition from
new satellite operators and the


                                       32
<PAGE>

introduction of additional satellites into operation by existing satellite
operators, and the increased digitization of broadcast channels which have
decreased the overall demand for transponder capacity. See "--- Results of
Operations".

    Due to the factors described above and that the Company does not see
material signs of improvement among regional broadcast and telecommunications
operators, nor new entrants to the market that would enable the Company to
deliver stronger results in 2004, the Company does not expect to achieve
improvement in 2004. 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 slow growth in
new demand, business contraction of some existing customers and continuing price
pressure on new transponder utilization agreements have limited the Company's
growth. See "Information on the Company - Business Overview." 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. In addition, the Company has a strong existing
customer base with contracts representing approximately 91% of the Company's
2003 revenue remaining under contract for 2004. Furthermore, the Company has
expanded its satellite fleet with the successful launch of AsiaSat 4, and the
Company has an outstanding technical and customer service team as well as a
premium client base. Thus, operationally, 2004 will be another challenging year
requiring intense customer focus to maintain and expand existing businesses
where possible and to concentrate on identifying new opportunities for growth.
The Company will continue to investigate strategic opportunities that would
support and enhance the Company's core satellite business in order to position
itself to capitalize upon the economic recovery of the commercial satellite
industry in the Asian region.

    REVENUE

    SOURCES. Substantially all of the Company's revenues during the years 1999
through 2003 were derived from payments made in respect of transponder
utilization agreements for AsiaSat 1 and transponder utilization 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, 2004
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) HK$3,478.8 million (US$446.0 million). The
Company expects that most of such committed revenue will be recognized over the
remaining terms of the relevant agreements up to 2014, assuming that customers
do not exercise their termination options. See "Information on the Company -
Transponder Utilization Agreements." In 2003, less than 2% 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 and higher power have
commanded a premium price. These factors will impact our ability to increase


                                       33
<PAGE>

charges for transponder capacity in future periods with respect to new
agreements and agreement rollovers, while our ability to increase charges for
transponder capacity for existing agreements depends on the terms of the
escalation provisions contained in those 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" and "Information on the Company -Services and Customers -
Telecommunications." The following table shows a breakdown of revenue by
segment:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                Year ended December 31,
----------------------------------------------------------------------------------------------------------------------
                                                        2001                    2002                     2003
                                                 -------------------     ---------------------    --------------------
                                                 AMOUNT    % OF          AMOUNT     % OF          AMOUNT      % OF
                                                           TOTAL                    TOTAL                     TOTAL
                                                 HK$M     REVENUE        HK$M      REVENUE        HK$M       REVENUE
                                                 ----     -------        ----      -------        ----       -------
<S>                                              <C>      <C>            <C>       <C>            <C>        <C>
Broadcasting (video)                             647.1      66.8%        649.0       68.3%        631.2        70.4%

Telecommunications,
Internet and
Multimedia                                       322.4      33.2%        301.8       31.7%        265.0        29.6%
                                                 -----     ------        -----      ------        -----       ------

Total Revenue                                    969.5     100.0%        950.8      100.0%        896.2       100.0%
                                                 -----     ------        -----      ------        -----       ------
</TABLE>


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

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                        2001                    2002                     2003
                                                 -------------------     ---------------------    --------------------
                                                 AMOUNT    % OF          AMOUNT     % OF          AMOUNT      % OF
                                                           TOTAL                    TOTAL                     TOTAL
                                                 HK$M     REVENUE        HK$M      REVENUE        HK$M       REVENUE
                                                 ----     -------        ----      -------        ----       -------
<S>                                              <C>      <C>            <C>       <C>            <C>        <C>
Hong Kong                                        351.0      36.2%        341.2       35.9%        323.2         36.1%

Greater China, including Macau and Taiwan        240.3      24.8%        212.1       22.3%        212.8         23.7%

United States of America                          75.8       7.8%         73.3        7.7%         71.2          7.9%

British Virgin Islands                            56.3       5.8%         40.4        4.3%         40.4          4.5%

Australia                                         24.6       2.5%         39.0        4.1%         37.6          4.2%

Others                                           221.5      22.9%        244.8       25.7%        211.0         23.6%

Total Revenue                                    969.5     100.0%        950.8      100.0%        896.2        100.0%
</TABLE>


    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


                                       34
<PAGE>

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 2001, 2002 and 2003, there was recognition of revenues under
the transponder utilization agreements in excess of payments due under those
agreements in the amounts of HK$31.2 million, HK$34.8 million and HK$16.6
million (US$2.1 million), respectively.

    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, 2001,
2002 and 2003, approximately 23.0%, 23.5% and 24.9%, 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."

    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 bad and 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.

    INTEREST IN ASSOCIATES

    The Company has accounted for its share of profit or loss arising from
SpeedCast on an equity accounting basis. In the case of a loss, the Company will
reflect its share in its income statement with a corresponding 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
2001, 2002 and 2003, the Company recorded a HK$53.6 million, HK$13.7 million and
HK$17.5 million (US$2.2 million) loss, respectively, with respect to its
investment in SpeedCast, 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 2002 and 2003, the Company recorded a positive
contribution to the Company's income statement in the amount of HK$6.5 million
and HK$3.3 million (US$0.4 million), respectively.


                                       35
<PAGE>

    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. (see Note 9 to the Company's consolidated
financial statements). 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 provision of
satellite transponder capacity to the Company's customers for purposes of those
customers carrying on business in India or earning income from any source in
India.

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

<TABLE>
<CAPTION>
                             ASSESSMENTS (HK$ IN MILLIONS) (APPROXIMATELY)
------------------------------------------------------------------------------------------------------------
    Assessment         1997-98        1998-99         1999-00        2000-01         2001-02          Total
    Year
<S>                    <C>            <C>             <C>            <C>             <C>             <C>
                        20.0            23.0            22.0           14.0           29.0            108.0
                        ----            ----            ----           ----           ----            -----

-------------------------------------------------------------------------------------------------------------
</TABLE>

    The Company has filed appeals for each of the assessment years 1997-98 to
2001-02. No assessment has yet been made for the 2002-03 or 2003-04 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:

<TABLE>
<CAPTION>
                    PAYMENT TO STAY RECOVERY PROCEEDINGS (HK$ IN MILLIONS) (APPROXIMATELY)
------------------------------------------------------------------------------------------------------------
    Assessment         1997-98        1998-99         1999-00        2000-01         2001-02          Total
    Year
<S>                    <C>            <C>             <C>            <C>             <C>             <C>

                        13.0            13.0            5.0            5.0            10.0             46.0
                        ----            ----            ---            ---            ----             ----

------------------------------------------------------------------------------------------------------------
</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. Accordingly, no provision
has been recognised 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.



                                       36
<PAGE>

    RESULTS OF OPERATIONS

    The Company's revenues decreased in 2003 as a result of the decrease in
revenue combined with the increase in operating expenses. Profit from operations
in 2003 decreased 16.4% in 2003 to HK$532.6 million (US$68.3 million) from
HK$637.4 million in 2002, which in turn decreased 7.2% from HK$687.2 million in
2001. Profit from operations as a percentage of revenues decreased in 2003 to
59.4% from 67.0% in 2002, which in turn decreased from 70.9% in 2001.

    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.

<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                                -------------------------------------------------------------
                                                       2001                  2002                 2003
                                                --------------------    ----------------     ----------------
<S>                                                <C>                     <C>                 <C>
Revenues                                               100%                    100%                100%

Cost of services                                      (24.8)                 (25.6)              (35.0)
                                                --------------------    ----------------     ----------------

                                                       75.2                   74.4                65.0

Other operating income                                  1.0                     --                 0.1

Interest income                                         0.7                    0.7                 0.6

Administrative expenses                                (6.0)                  (8.1)               (6.3)
                                                --------------------    ----------------     ----------------

Profit from operations                                 70.9                   67.0                59.4

Finance costs                                            --                     --                (0.3)

Share of results of associates (including              (4.9)                  (1.4)               (1.7)
   goodwill amortization)

Impairment loss recognized in respect of               (0.6)                    --                (0.2)
   goodwill of associates
                                                --------------------    ----------------     ----------------

Profit before taxation                                 65.4                   65.6                57.2

Taxation                                               (7.3)                  (7.3)               (9.8)
                                                --------------------    ----------------     ----------------

Profit for the year                                    58.1                   58.3                47.4
                                                --------------------    ----------------     ----------------
</TABLE>

    REVENUES

    Revenues in 2003 decreased 5.7% to HK$896.2 million from HK$950.8 million in
2002, which in turn decreased from HK$969.5 million in 2001. The decrease in
revenue in 2002 was primarily due to the non-renewal of some contracts upon
expiration. During 2003, the Company leased out a total of ten transponders at
lower lease rates for some new and existing contracts and lost a similar number
for non-renewal of some contracts upon expiration.

    UTILIZATION RATE. As of December 31, 2003, the overall total utilization
rate of AsiaSat 2, AsiaSat 3S and AsiaSat 4 decreased 24.6% over the prior year
from 63.6% to 39.0%. See "--Overview." There were 49 transponders leased or sold
on all AsiaSat's satellites at each of the year-ends 2002 and 2003. The decrease
in overall utilization rate in 2002 from the previous year is the result of the
non-renewal of some contracts upon expiry. The decrease in


                                       37
<PAGE>

2003 from the previous year is the result of the introduction of AsiaSat 4 to
AsiaSat's satellite fleet and the contraction of the business of certain of
AsiaSat's customers. However, while utilization rates decreased in 2003 from the
previous year, the total number of transponders leased or sold as at December
31, 2002 and December 31, 2003 remained unchanged at 49. See "Key Information -
Risk Factors - Risk of Technological Changes" and "Key Information - Risk
Factors - Risk of Limited Market Demand and Increasing Competition."

    Utilization rates of the Company's satellites and the fees derived from its
satellites are determined by the terms of the Company's transponder agreements
rather than as a result of the actual transponder capacity utilized by the
Company's customers. The fees 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 2003 increased 28.9% to HK$313.3
million (US$40.2 million) from HK$243.1 million which in turn increased 1.3%
from HK$240.0 million in 2001. Excluding depreciation, the increase in 2002 was
due to increases in the cost of satellite and other insurance which was a
result, in part, of increases in D&O insurance resulting from previous corporate
scandals in the United States, the terrorist events of September 11, 2001, and
past in-orbit failures affecting other global satellites in the industry. 7.4%
of the increase in 2003 was due to an increase in the cost of first-year
in-orbit satellite insurance directly associated with the launch of AsiaSat 4
and 0.3% of the increase was due to the reasons identified for the increase in
2002. First-year in-orbit satellite insurance is recorded by the Company as a
cost of services after commissioning of the satellite. 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 is included in cost of
services, increased in 2003 to HK$222.3 million from HK$166.6 million in 2002.
33.3% of the increase in depreciation expenses in 2003 was attributable to the
introduction of AsiaSat 4 and 0.1% of the increase was attributable to the
completion of the Tai Po Site.

    ADMINISTRATIVE EXPENSES. Administrative expenses in 2003 decreased 26.9% to
HK$56.1 million (US$7.2 million) from HK$76.7 million in 2002, which in turn
increased 30.9% from HK$58.6 million in 2001. The increase in administrative
expenses in 2002 was largely attributable to a provision for bad and doubtful
debts resulting from non-payment by customers (or late payments by customers in
which a provision for bad and doubtful debts was recorded in 2002). The decrease
in administrative expenses in 2003 was largely attributable to the recovery of
bad debt for late payments by customers in which a provision for bad and
doubtful debts was recorded in a previous year.

    INTEREST INCOME. Interest income in 2003 decreased 23.4% to HK$4.9 million
(US$0.6 million) from HK$6.4 million in 2002, which decreased 4.5% from HK$6.7
million in 2001. The decrease in interest income in 2002 and 2003 was primarily
due to lower interest rates on banks deposits.

    PROFIT BEFORE TAXATION

    Profit before taxation in 2003 decreased 17.9% to HK$512.1 million (US$65.7
million) from HK$623.8 million in 2002, which in turn decreased 1.5% from
HK$633.6 million in


                                       38
<PAGE>

2001. The decrease in income before taxes in 2003 resulted from lower revenues
combined with higher operating expenses.

    TAXATION

    Taxation in 2003 increased 26.8% to HK$87.6 million (US$11.2 million) from
HK$69.1 million in 2002, which in turn decreased 2.1% from HK$70.6 million in
2001. The decrease in income tax in 2002 resulted primarily from lower earnings
than in 2001. The increase in income tax in 2003 resulted primarily from an
additional provision of HK$17.4 million for deferred tax for prior years as a
result of the change in the corporate tax rate in Hong Kong. For the years 2003,
2002 and 2001, the effective tax rates were 16.5%, 10.8% and 10.3%,
respectively. The higher effective rate in 2003 was mainly due to the additional
provision for deferred tax for prior years and current year profit tax due to
the increase of the profits tax rate in Hong Kong by 1.5%.

    PROFIT FOR THE YEAR

    Profit for the year in 2003 decreased 23.5% to HK$424.5 million (US$54.4
million) from HK$554.7 million in 2002, which decreased 1.5% from HK$563.0
million in 2001.

    LIQUIDITY AND CAPITAL RESOURCES

    SOURCES OF FINANCING

    The Company's principal use of capital in 2002 and 2003 has been capital
expenditures related to the construction and launch of AsiaSat 4 and the
construction of the Tai Po Satellite Earth Station. Cash applied for the
acquisition of property, plant and equipment was HK$440.2 million in 2002 and
decreased to HK$162.2 million (US$20.8 million) in 2003. Cash applied for the
acquisition of property, plant and equipment has been financed through cash
flows generated from operations.

    As of December 31, 2003, the Company had no outstanding debt and HK$3,568.3
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."

         In 2000, the Company (as guarantor) and AsiaSat (as borrower) entered
into an agreement with a syndicate of banks to provide a secured term loan US
Dollar credit facility of US$250.0 million (the "Loan Facility"). Since no
drawdown was made, the Loan Facility automatically lapsed on November 24, 2003.
As of May 31, 2004, the Company has not entered into any new loan facility.

    PLANNED CAPITAL EXPENDITURES

    The Company anticipates the need for additional capital to fund a
replacement satellite for AsiaSat 2. 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.


                                       39
<PAGE>

<TABLE>
<CAPTION>
                                      PLANNED CAPITAL EXPENDITURES (IN MILLIONS)
----------------------------------------------------------------------------------------------------------------
                     2004         2005          2006        2007          2008           TOTAL          TOTAL
                      HK$          HK$           HK$         HK$           HK$            HK$            US$
----------------------------------------------------------------------------------------------------------------
<S>                  <C>         <C>            <C>         <C>           <C>           <C>             <C>
AsiaSat 2             0.0        344.4          677.0       694.6          0.0          1,716.0         220.0
Replacement
Satellite

Others               66.2          7.0            8.0        11.4         10.2            102.8          13.2
                    ------      -------        --------    -------      -------        ---------      --------

Total                66.2        351.4          685.0       706.0         10.2          1,818.8         233.2
                    ======      =======        ========    =======      =======        =========      ========
</TABLE>

    A replacement satellite for AsiaSat 2 will need to be constructed for launch
in 2007 in order to provide adequate opportunity to replace AsiaSat 2 in late
2008. The total costs for the construction and launch of a replacement satellite
for AsiaSat 2 is estimated to be approximately HK$1,716.0 million (US$220.0
million). The Company expects that it can finance a replacement satellite for
AsiaSat 2 through cash flows generated from operations. However, there can be no
assurance that any required additional financing, if any, for additional
satellites or an additional loan facility will be available or that, if
available, it will be available on terms satisfactory to the Company.

    The total cost for the construction of the Tai Po Site is estimated to be
approximately HK$241.4 million (US$30.9 million). As of December 31, 2003,
HK$192.1 million (US$24.6 million) had been spent on the Tai Po Site.

    CONTRACTUAL OBLIGATIONS

    As of December 31, 2003, the Company had various contractual obligations
which are more fully disclosed in Notes 24 and 25 to the consolidated financial
statements of the Company. The following table aggregates the contractual
obligations of the Company as of December 31, 2003:

<TABLE>
<CAPTION>
                                                        PAYMENTS (OR OTHER OBLIGATIONS WHICH MAY BECOME DUE)
                                                                         BY PERIOD (HK$ IN MILLIONS)
                                              ----------------------------------------------------------------------
                                                 TOTAL      LESS THAN 1    1-3 YEARS      4-5 YEARS     AFTER 5
                                                               YEAR                                      YEARS
<S>                                              <C>        <C>            <C>            <C>           <C>
Commitment for Capital Expenditures.....          21.3           21.3           --            --             --

Operating Lease Obligations.............           7.2            5.3          1.9            --             --

Total Contractual Obligations...........          28.3           26.6          1.9            --             --

Deferred Revenue
   Reflected on the Company's
   Balance Sheet(1).....................         279.4          156.5         35.3          35.2           52.4
</TABLE>

                                       40
<PAGE>

    (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, 2003, commitments for future minimum lease payments which fall due
in 2004 and 2005 are HK$5.3 million and HK$1.8 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$136.4 million, HK$406.2 million and HK$659.3 million (US$84.5 million) as of
December 31, 2001, 2002 and 2003, respectively. Since year end, the Company
entered into a financing arrangement with the Hongkong Shanghai Banking
Corporation pursuant to which HK$312.0 million (US$40.0 million) in cash is
restricted for a period of at least six months or longer depending on the level
of interest rates.

    Net cash generated from operating activities was HK$720.8 million, HK$809.6
million and HK$627.5 million (US$80.4 million) in 2001, 2002 and 2003,
respectively. In 2002, the increased level of net cash provided by operating
activities resulted primarily from increased amounts of lease rentals received
from customers. In 2003, the decreased level of net cash provided by operating
activities resulted primarily from lower turnover.

    Net cash used in investing activities was HK$599.1 million, HK$453.4 million
and HK$164.5 million (US$21.1 million) in 2001, 2002 and 2003, respectively.
Expenditures on the construction and launch of AsiaSat 3S and AsiaSat 4 were
HK$560.8 million, HK$388.3 million and HK$58.0 million (US$7.4 million) in 2001,
2002 and 2003, respectively. Expenditures on other property and equipment were
HK$29.9 million, HK$51.9 million and HK$104.2 million (US$13.4 million) in 2001,
2002 and 2003, respectively.

    Net cash used in financing activities was HK$94.3 million, HK$86.4 million
and HK$209.9 million (US$26.9 million) in 2001, 2002 and 2003, respectively. In
2001, 2002 and 2003, 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$86.8 million at December 31, 2001, a
working capital of HK$239.0 million at December 31, 2002, and a working capital
of HK$529.9 million (US$67.9 million) at December 31, 2003.

    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,


                                       41
<PAGE>

changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or resources that is material to investors.

    EXCHANGE RATES

    During the past three years almost all of the Company's revenues, premiums
for satellite insurance coverage and debt service and substantially all capital
expenditures were denominated in US Dollars. The Company's remaining expenses
were primarily denominated in HK Dollars during these periods. As of December
31, 2003, almost all of AsiaSat's transponder utilization agreements,
transponder purchase agreements, borrowings and obligations to construct and
launch satellites and to purchase TT&C equipment were denominated in US Dollars.

    INFLATION

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

    U.S. GAAP RECONCILIATION

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

<TABLE>
<CAPTION>
                                                               2001          2002          2003         2003
                                                                HK$           HK$           HK$          US$
                                                                               (in millions)
<S>                                                          <C>           <C>            <C>          <C>
Net income in accordance with:

  Hong Kong GAAP........................                       563.0         554.7           424.5       54.4

  U.S. GAAP.............................                       562.5         538.1           408.3       52.3

Shareholders' equity in accordance with:

  Hong Kong GAAP........................                     2,870.1       3,346.7         3,568.3      457.5

  U.S. GAAP.............................                     2,952.2       3,412.2         3,617.6      463.8
</TABLE>

    Note 30 to the Company's consolidated financial statements provides a
description of the principal differences between Hong Kong GAAP and U.S. GAAP as
they relate to the Company and a reconciliation to U.S. GAAP of certain items,
including net income and shareholders' equity. Differences between Hong Kong
GAAP and U.S. GAAP that have a material effect on the Company's net income and
shareholders' equity as reported under Hong Kong GAAP relate to capitalization
of interest, borrowing costs and deferred taxation.

    CRITICAL ACCOUNTING POLICIES

    The Company's consolidated financial statements are prepared in accordance
with Hong Kong GAAP. The preparation of these consolidated financial statements
requires the Company to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses as well as the disclosure
of contingent assets and liabilities. The Company continually evaluates these
estimates and judgments, including those related to estimated useful lives of
satellites, impairment losses on satellites, allowance for doubtful accounts,
and contingent liabilities related to tax assessments from Indian tax
authorities. The Company bases


                                       42
<PAGE>

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 50%, 39% and 72% of its total assets as of December 31,
2001, 2002 and 2003, 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
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 2.5% to 3.0% 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


                                       43
<PAGE>

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, 2003 does
not reflect the future ability to collect outstanding receivables, additional
provisions for doubtful accounts may be needed and the Company's future results
of operations could be adversely affected.

     CONTINGENCY RELATED TO INDIAN TAX ASSESSMENTS. As of May 31, 2004 the
Indian tax authorities have assessed the Company for income tax of approximately
HK$108.0 million (US$13.8 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 Statement of Financial Accounting Standards No. 5, "Accounting for
Contingencies" ("SFAS 5") and Hong Kong Statement of Standard Accounting
Practice No. 28 "Provisions, Contingent Liabilities and Contingent Assets" (SSAP
28) were not met. FAS 5 requires that "an estimated loss from a loss contingency
shall be accrued by a charge to income if both of the following conditions are
met: (a) information available prior to issuance of the financial statements
indicates that it is probable that an asset had been impaired or a liability had
been incurred at the date of the financial statements; and (b) the amount of
loss can be reasonably estimated. 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 nonoccurrence 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. If the information is made available to the Company in
the future and if the Company is finally held liable to Indian tax, the
Company's future results of operations could be adversely affected.

    NEW ACCOUNTING STANDARDS

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

    RESEARCH AND DEVELOPMENT

    The Company does not incur any significant material research expenditures.

    TREND INFORMATION AND PROSPECTS

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


                                       44
<PAGE>

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.

                         DIRECTORS AND SENIOR MANAGEMENT

    The directors of the Company as of May 31, 2004 are set forth below.

<TABLE>
<CAPTION>
                                                                     DATE FIRST ELECTED OR
                                                                     APPOINTED DIRECTOR OF
NAME                         AGE        POSITION                     ASIASAT (OR THE COMPANY)       TERM  OF OFFICE
-------------------------    ---        ----------------------       ------------------------------------------------
<S>                          <C>        <C>                          <C>                            <C>
Zengxin Mi (1)               53         Chairman and Director        February 28, 2001              May 14, 2007

Romain Bausch (2)            50         Deputy Chairman and          January 15, 1999               May 14, 2007
                                        Director

Robert Bednarek (2)          46         Director                     March 14, 2002                 May 17, 2005

Professor Edward Chen,       59         Director                     May 10, 1996                   May 16, 2006
C.B.E., J.P. (3)

Yu Cheng Ding (1)            38         Director                     January 15, 1999               May 14, 2007

R. Donald Fullerton (3)      72         Director                     May 10, 1996                   May 17, 2005

Peter Jackson                55         Director                     May 10, 1996                   May 16, 2006

Weimin Ju (1)                41         Director                     October 12, 1998               May 14, 2007

Jurgen Schulte (2)           60         Director                     January 15, 1999               May 17, 2005

Fai Wong Ko (1)              55         Director                     March 11, 2004                 May 14, 2007

Robert Sze (3)               63         Director                     May 10, 1996                   May 17, 2005

William Wade                 47         Director                     May 10, 1996                   May 16, 2006
</TABLE>

-------------
(1)  Appointed by CITIC.
(2)  Appointed by SES.
(3)  Independent.


The executive officers of the Company as of May 31, 2004 are set forth below.

<TABLE>
<CAPTION>
                                                                   DATE FIRST ELECTED OR
                                                                   APPOINTED DIRECTOR OF
NAME                         AGE        POSITION                   ASIASAT (OR THE COMPANY)       TERM  OF OFFICE
-------------------------    ---        ----------------------     ------------------------------------------------
<S>                          <C>        <C>                        <C>                            <C>
Peter Jackson                55         Chief Executive            July 1, 1993                   Indefinite
                                        Officer

William Wade                 47         Deputy Chief               April 15, 1994                 Indefinite
                                        Executive Officer

Catherine Chang              36         Legal Counsel              January 1, 2003                Indefinite
</TABLE>


                                       45

<PAGE>

<TABLE>
<CAPTION>
                                                                   DATE FIRST ELECTED OR
                                                                   APPOINTED DIRECTOR OF
NAME                         AGE        POSITION                   ASIASAT (OR THE COMPANY)       TERM  OF OFFICE
-------------------------    ---        ----------------------     ------------------------------------------------
<S>                          <C>        <C>                        <C>                            <C>
Liqun Chen                   53         General Manager, China     April 14, 1989                 Indefinite

Ya Hui Chiu                  54         General Manager,           February 13, 1989              Indefinite
                                        Operation

Sabrina Cubbon               42         General Manager,           December 1, 1993               Indefinite
                                        Marketing

Denis Lau                    64         Secretary and General      July 1, 1988                   Indefinite
                                        Manager, Finance and
                                        Administration

Barry Turner                 57         General Manager,           May 1, 1998                    Indefinite
                                        Engineering
</TABLE>

----------------

    The Board of Directors of the Company currently consists of 12 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
Bye-laws of the Company provide that any director may call a board meeting. The
directors of the Company all hold office until the next annual meeting of
shareholders and until their successors are elected and have qualified.

    ZENGXIN MI is currently the Chairman of the Board and a Non-Executive
Director of the Company. He is an Executive Director and a Vice President of
CITIC Group ("CITIC") (formerly known as China International Trust and
Investment Corporation). Prior to his appointment to the present position, he
held executive management positions with various subsidiaries of CITIC and was
the Chief Executive Officer of Citisteel USA Inc. in the United States from 1992
to 1997. He is also Chairman of the Board of CITIC USA Holdings and CITIC
Australia Pty Ltd. He joined CITIC in 1985 and holds a Master of Science degree.

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

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

                                       46
<PAGE>

    PROFESSOR EDWARD CHEN, C.B.E., J.P., is an Independent Non-Executive
Director of the Company. Professor Chen was educated at Hong Kong University
(Bachelor of Arts, Master of Social Science) and Oxford University (Doctor of
Philosophy) and is currently President of Lingnan University in Hong Kong. He
was a member of the Executive Council of Hong Kong, 1992-1997, and Chairman of
the Consumer Council, 1991-1997. He is now Chairman of the Press Council, a
Director of the First Pacific Company (Hong Kong), a Trustee of Eaton Vance
Management Funds (Boston), and also a Director of The Wharf (Holdings) Limited.

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

    R. DONALD FULLERTON is an Independent Non-Executive Director of the Company.
He was the Chairman and Chief Executive Officer of Canadian Imperial Bank of
Commerce ("CIBC") until his retirement in 1992 and is now a member of its Board
of Directors. Subsequently, he was Chairman of the Executive Committee of CIBC's
Board of Directors until 1999. He retired from CIBC's Board of Directors in
February 2004. During his career, he was a director of many national and
multinational companies as well as medical, cultural and educational institutes.
He currently sits on the Board of George Weston Limited, Partner Communications
Company Limited and Husky Energy Inc.

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

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

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

    FAI WONG KO is a Non-Executive Director of the Company. He is the Deputy
General Manager of Shortridge Limited ("Shortridge") and has over 20 years'
experience in banking and finance before joining Shortridge. He holds a Bachelor
and a Master Degree in Business Administration.

    PETER JACKSON is an Executive Director and Chief Executive Officer of the
Company. He has over 25 years experience in the telecommunications field. Prior
to his appointment as the Chief Executive Officer in 1996, he had been employed
by Cable & Wireless plc where he


                                       47
<PAGE>

held several engineering, marketing and management positions and was responsible
for several satellite telecommunications ventures.

    WILLIAM WADE is an Executive Director and Deputy Chief Executive Officer of
the Company. He has over 19 years experience in the satellite and cable
television industry. He speaks Mandarin Chinese and holds a Bachelor of Arts
(Honors) degree in Communications from the University of Utah and a Masters of
International Management from Thunderbird (the American Graduate School of
International Management).

    CATHERINE CHANG is Legal Counsel 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, Ms. Chang was a solicitor at Ebsworth & Ebsworth,
an Australian law firm. Ms. Chang graduated from the University of New South
Wales, Australia with a Bachelor's degree in Laws 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. Mr. Chen had been on secondment to AsiaSat from his
employer, CITIC, since 1989 and became a permanent employee of AsiaSat in
January 1997. Mr. Chen graduated with a Master degree in Business Administration
from the University of Leuven in Belgium and a Bachelor of Science degree in
Electronics and Industrial Automation from Qinghua University, China. Prior to
being seconded to the Company, Mr. Chen worked for CITIC.

    DR. YA HUI CHIU is General Manager, Operations, of AsiaSat, in which
capacity he is responsible for maintaining and operating the Company's
satellites. Dr. Chiu has 21 years experience in telecommunications engineering
and operations, with the last 17 years being in the satellite communications
area. Dr. Chiu received his Bachelor of Science degree from National Taiwan
University and his M. Phil and Ph.D. degrees from Yale University, all in
Physics.

    SABRINA CUBBON is General Manager, Marketing, of AsiaSat, in which capacity
she is responsible for sales and marketing, business development, corporate
affairs and market research. Mrs. Cubbon has over 19 years of marketing
experience in the telecommunications industry. Prior to joining AsiaSat in
August 1992, Mrs. Cubbon was employed by Case Communications, a Hong Kong
company, between 1987 and 1992 as Regional Manager Asia-Pacific responsible for
the sales and marketing activities to multinational clients. Mrs. Cubbon
graduated from the University of Manchester, United Kingdom with a Masters
degree in Electronic and Electrical Engineering, with a specialization in
cryptography.

    DENIS LAU is General Manager, Finance and Administration and the Secretary
of the Company. Mr. Lau joined Hong Kong Telecom (now known as PCCW) in 1974 and
held a number of senior positions, including the Assistant Group Chief
Accountant, before being seconded to AsiaSat in 1988. He became a permanent
employee of AsiaSat in September 1996. Mr. Lau is a qualified accountant and
secretary by profession and has over 33 years experience in the fields of
accounting and finance. Mr. Lau holds a Diploma in Management Executive
Development from the Chinese University of Hong Kong, a Fellowship of The
Association of Chartered Certified Accountants in the United Kingdom and the
Hong Kong Society of Accountants and an Associateship of The Chartered Institute
of Secretaries and Administrators in the United Kingdom. Prior to joining
Hongkong Telecom, Mr. Lau worked for Esso, Union Carbide and Shaw Brothers.


                                       48
<PAGE>

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

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

                                  COMPENSATION

    The aggregate compensation paid by AsiaSat to all directors and officers of
the Company for 2002 and 2003 was approximately HK$28.3 million and HK$23.2
million, respectively. This compensation included payments of HK$0.5 million
(2002: HK$0.4 million) and HK$0.5 million (2002: HK$0.4 million) to SES GLOBAL
S.A. and a subsidiary of CITIC, the major shareholders of the Company,
respectively, for certain Non-Executive Directors representing SES GLOBAL S.A.
and CITIC.

    CERTAIN SERVICE AGREEMENTS

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

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

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

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

    The Wade Service Agreement was for an initial fixed term of two years.
Following the initial fixed term, the Wade Service Agreement may be terminated
by either party giving not


                                       49
<PAGE>

less than six months' notice. Mr. Wade is entitled to a gross annual salary of
HK$2 million per annum, together with a housing allowance including utilities of
up to HK$1.1 million per annum, which is paid directly by the Company to the
landlord. Mr. Wade is also entitled to an additional discretionary annual bonus
based upon the Company's performance. Mr. Wade is eligible to participate in the
Share Option Scheme. He is also entitled to participate in the Company's medical
scheme and the Company's provident fund or any other AsiaSat pension scheme.

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

                                 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.

    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
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
non-executive directors and a majority of whom shall be independent
non-executive directors. The quorum for the committee shall be two. The chairman
of the committee shall be 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 full audit committee. The committee currently comprises of Messrs. Robert
Sze (Chairman), Edward Chen, R. Donald Fullerton, Weimin Ju and Jurgen Schulte.


                                       50
<PAGE>

    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 currently comprises of Messrs. R. Donald Fullerton
(Chairman), Weimin Ju and Jurgen Schulte.

    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), Romain Bausch and Zengxin 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. Robert Bednarek (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.

                                    EMPLOYEES

    As of December 31, 2003, the Company had 83 full-time employees, of which
eight employees were in management, 36 employees were in engineering and
operations and 23 employees were in sales and marketing. The remaining 16
employees were engaged in administrative, accounting, legal and regulatory
activities. The Company has 74 employees in Hong Kong and nine 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


                                       51
<PAGE>

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

    At December 31, 2003, outstanding options granted under the Share Option
Scheme (including those previously granted under the old scheme) were as
follows:

<TABLE>
<CAPTION>
         EXERCISE PERIOD                            OPTION PRICE HK$               NUMBER OF SHARES
----------------------------------------------------------------------------------------------------
<S>                                                 <C>                            <C>
Nov 26, 1999 to Nov 25, 2006                            17.48                        1,691,500

Oct 1, 2002 to Sept 30, 2009                            17.48                        1,768,000

Feb 4, 2004 to Feb 3, 2012                              14.35                        3,481,500
                                              -------------------------------------------------------

                                                                                     6,941,000
                                                                             ========================
</TABLE>

    As of May 31, 2004, Zengxin Mi, the 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, 2004, Romain Bausch, 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, 2004, 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, 2004, 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, 2004, R. Donald Fullerton, 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, 2004, Weimin 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, 2004, Jurgen Schulte, 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, 2004, 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.


                                       52
<PAGE>

    As of May 31, 2004, Peter Jackson, an Executive Director and the Chief
Executive Officer of the Company, has been granted 915,000 options, exercisable
from November 26, 1999 to February 3, 2012.

    As of May 31, 2004, William Wade, an Executive Director and the Deputy Chief
Executive Officer of the Company, has been granted 760,000 options, exercisable
from November 26, 1999 to February 3, 2012.

    Under SES company policy, the options granted to Messrs. Romain Bausch and
Jurgen Shulte are held for the benefit of SES.

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, 2004 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.

<TABLE>
<CAPTION>
TITLE OF CLASS             IDENTITY OF PERSON OR GROUP         SHARES OWNED             PERCENT OF CLASS
-----------------------    --------------------------------    --------------------     ---------------------
<S>                        <C>                                 <C>                      <C>
Common Stock               Bowenvale Limited                   268,905,000              68.90%

Common Stock               Commonwealth Bank of Australia      20,665,600               5.30%
                           and its subsidiaries

Common Stock               Aberdeen Asset Management Asia      21,373,000               5.48%
                           Limited

Common Stock               Directors and Officers              290,000                  0.07%
</TABLE>

    The Company is controlled by Bowenvale Limited, a limited liability company
incorporated in the British Virgin Islands ("Bowenvale Limited"), which owns
68.9% of the outstanding shares of Common Stock of the Company. Until January
15, 1999, Bowenvale Limited was owned by Cable & Wireless plc, Able Star
Limited, an indirect wholly-owned subsidiary of CITIC, and Dontech Limited, an
indirect wholly-owned subsidiary of Hutchison Whampoa Limited. On January 15,
1999, Cable & Wireless plc and Hutchison Whampoa Limited sold their holdings in
Bowenvale Limited to CITIC and SES. As a result of this transaction, CITIC
increased its ownership of the voting share capital of Bowenvale Limited from
41.67% to 49.5% and SES acquired the remaining 49.5%. Voting rights in Bowenvale
Limited are equally shared between CITIC and SES. CITIC also holds 1% of the
shares of Bowenvale Limited that are non-voting. CITIC is China's leading
state-owned investment corporation, with diversified holdings in banking,
securities, energy, telecommunications, real estate, manufacturing,
transportation and trading and extensive contact in China. The information
contained in this Item 7 does not include options granted to Directors appointed
by SES which are beneficially owned by SES pursuant to SES company policy. See
"Directors and Senior Management - Share Ownership." SES is based in Luxembourg
and is the largest private satellite service provider in the world. CITIC and
SES are each referred to


                                       53
<PAGE>

herein as a Shareholder and Cable & Wireless plc and Hutchison Whampoa Limited
are each referred to herein as a former Shareholder.

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

                            RELATED PARTY TRANSACTION

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

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

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

    (i) Since 1996, CITIC Guoan Information Industry Company Limited ("Guoan"),
    a subsidiary of CITIC, has leased 7 MHz of capacity on one 72 MHz C-band
    transponder on AsiaSat 2. The current agreement has an initial term of one
    year starting from January 1, 2004 for 2 MHz of capacity and later reduced
    to 0.5 MHz. The annual utilization fee is US$35,000 (HK$0.3 million),
    payable semi-annually. On April 28, 2001, Guoan has leased 5 MHz of capacity
    on one Ku-band transponder on AsiaSat 3S. During the same year, some of the
    AsiaSat 2 C-band capacity leased by Guoan was switched to the Ku-band
    capacity on AsiaSat 3S. The current capacity lease by Guoan on the AsiaSat
    3S Ku-band transponder is 9 MHz. The annual utilization fee is US$0.4
    million (HK$3.1 million), payable semi-annually. The transponder capacity
    under both agreements is used to provide domestic private network services
    within China. The total amount of revenue recognized by the Company during
    2001, 2002 and 2003, respectively, under these agreements was approximately
    HK$3.8 million, HK$4.1 million and HK$3.8 million.

    (ii) In 2002 and 2003, respectively, the Company paid an agency fee of
    HK$1.6 million and HK$0.7 million to CITIC Technology Company Limited, a
    subsidiary of CITIC, for collecting money from China customers on behalf of
    the Company.

    (iii) In 2002, the Company recognized rental income from leasing transponder
    capacity to SES Americom, a wholly-owned subsidiary of SES, amounting to
    HK$0.2 million.

    (iv) In 2002 and 2003, respectively, a consultancy fee, amounting to HK$0.7
    million and HK$0.4 million was paid to SES Astra S.A., a wholly-owned
    subsidiary of SES.


                                       54
<PAGE>

    (v) The Company has granted or agreed to grant each of the Shareholders
    demand and piggyback registration rights, exercisable under certain
    circumstances and subject to certain conditions, that require the Company to
    register under the Securities Act 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.

    (vi) In 2003, the Company recognized rental income from leasing satellite
    transponder capacity amounting to approximately HK$20.8 million and no
    maintenance and other services income from SpeedCast Holdings Limited. The
    total amount of such income recognized in 2002 and 2001 was HK$20.2 million
    and HK$19.5 million respectively.

    (vii) In 2003, the Company made payments to SES GLOBAL and a subsidiary of
    CITIC amounting to HK$0.5 million (2002: HK$0.4 million; 2001: HK$0.6
    million) and HK$0.5 million (2002: HK$0.4 million; 2001: HK$0.4 million)
    respectively, for certain Non-Executive Directors representing SES GLOBAL
    and CITIC.

    Except for the arrangements referred to in paragraph (vi), the transactions
mentioned above have been entered into in the ordinary course of business and on
normal commercial terms. Such transactions, which are of a continuing nature,
are expected to be continued in the future. Under the Listing Rules of the Hong
Kong Stock Exchange (the "HKSE Listing Rules"), such transactions are considered
to be "continuing connected transactions" and depending on their respective
value, may require full disclosure and/or prior independent shareholders'
approval on each occasion they arise. The Company has been granted a conditional
waiver by the Hong Kong Stock Exchange from these requirements in the past. As a
result of recent amendments to the HKSE Listing Rules which came into effect on
March 31, 2004, the Company is required to comply with the new disclosure and
shareholders' approval requirements (if applicable) on "continuing connected
transactions." The Company has applied to the Hong Kong Stock Exchange for
clarification and waivers with respect to the disclosure and shareholders'
approval requirements under the HKSE Listing Rules (as amended).

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

ITEM 8.  FINANCIAL INFORMATION.

    CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION.

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


                                       55
<PAGE>

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 2001,
2002 and 2003.

<TABLE>
<CAPTION>
                                                                                   FOR THE YEAR ENDED
                                                                                       DECEMBER 31
                                                                               2001       2002       2003
                                                                               ----       ----       ----
<S>                                                                            <C>        <C>        <C>
Net income (in HK Dollars in million)................................          563        555        424
Ordinary dividend paid (in HK Dollars in million)....................           78         78        105
Ordinary dividend paid per Share (in HK cents).......................           20         20         27
Ordinary dividend proposed (in HK Dollars in million)................           55         74         94
Ordinary dividend proposed per Share (in HK cents)                              14         19         24
Special dividend proposed (in HK Dollars in million).................           --         98         --
Special dividend proposed per Share (in HK cents)                               --         25         --
Special dividend paid (in HK Dollars in million)                                --         --         98
Special dividend paid per share (in HK cents)                                   --         --         25
</TABLE>

    LEGAL AND REGULATORY PROCEEDINGS

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

TAX DISPUTES

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

OTHER DISPUTES

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

    SIGNIFICANT CHANGES

    There have been no significant changes in the Company's business, operations
or financial condition since December 31, 2003.

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


                                       56
<PAGE>

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.

<TABLE>
<CAPTION>
                                                        NEW YORK STOCK EXCHANGE       HONG KONG STOCK EXCHANGE
                                                             (IN US DOLLARS)                (IN HK DOLLARS)
                                                         HIGH             LOW            HIGH           LOW
                                                         ----             ---            ----           ---
<S>                                                     <C>              <C>            <C>            <C>
1999 .........................................          35.00            13.75          24.55          10.80
2000 .........................................          45.00            18.25          35.10          13.80
2001 .........................................          26.25            11.00          20.25          8.35
2002 .........................................          18.90            10.95          15.00          8.90
Quarter Ending March 31, 2002.................          18.90            14.25          14.90          11.35
Quarter Ending June 30, 2002..................          18.65            14.83          15.00          11.80
Quarter Ending September 30, 2002.............          16.10            12.00          12.70          9.60
Quarter Ending December 31, 2002..............          14.15            10.95          11.15          8.90
2003 .........................................          19.43            11.66          14.90          9.25
Quarter Ending March 31, 2003.................          13.16            11.66          10.50          9.25
Quarter Ending June 30, 2003..................          17.00            12.75          13.40          10.00
Quarter Ending September 30, 2003.............          17.30            14.31          13.70          11.00
Quarter Ending December 31, 2003..............          19.43            14.60          14.90          11.25
December 2003 ................................          19.43            16.90          14.90          13.25
January 2004 .................................          22.11            19.01          17.30          14.70
February 2004 ................................          22.11            19.04          16.50          14.65
March 2004 ...................................          20.52            17.00          16.30          13.40
Quarter Ending March 31, 2004.................          21.20            17.00          17.30          13.40
April 2004 ...................................          18.35            16.41          14.25          13.00
May 2004 .....................................          17.00            15.20          13.50          11.70
</TABLE>

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

ITEM 10. ADDITIONAL INFORMATION.

    CHARTER DOCUMENTS.

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

    MATERIAL CONTRACTS.

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


                                       57
<PAGE>

     o  Construction Agreement between the Company and Boeing and Launch
        Agreement between the Company and Lockheed Martin, each entered into in
        September 2000. Pursuant to the Construction Agreement, Boeing agreed to
        construct, assemble, equip, test, supply and deliver AsiaSat 4, a
        satellite of BSS601HP with 28 C-band and 20 Ku-band transponders
        designed to serve telecommunications services providers and TV
        broadcasters, to the Company. Pursuant to the Launch Agreement, Lockheed
        Martin agreed to provide launch services for one launch of AsiaSat 4.
        The aggregate investment for the construction, launch and launch
        insurance of AsiaSat 4 is approximately US$213.7 million.

     o  Lease Agreement, dated March 12, 2001, between AsiaSat and the Hong Kong
        Industrial Estates Corporation (the "Lease Agreement"). Pursuant to the
        Lease Agreement, the Hong Kong Industrial Estates Corporation agreed to
        grant to AsiaSat rights to the Tai Po Site, for a period of sixty (60)
        months, for the purpose of constructing a satellite earth station and
        other structures, and thereafter to lease to AsiaSat the Tai Po Site up
        to 2047. AsiaSat paid a lump sum of HK$25.9 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  Amended and Restated Deposit Agreement, dated as of September 28, 2001,
        among the Company, The Bank of New York as Depositary and all holders
        from time to time of American Depositary Receipts issued thereunder.

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

    EXCHANGE CONTROLS.

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

    TAXATION.

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

    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


                                       58
<PAGE>

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.

    CURRENCY FLUCTUATIONS

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

    INTEREST RATE FLUCTUATIONS

    As of December 31, 2003, 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. The potential effect of a
hypothetical 0.5% increase in interest rate for one year on outstanding
indebtedness in the amount of US$100.0 million borrowed under a future loan
facility on similar terms to the Loan Facility would be a reduction in cash
flows of approximately US$0.5 and a reduction in net income of approximately
HK$3.9 million in each year.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

    Not applicable.

                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

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

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

    Not Applicable.



                                       59
<PAGE>

                                    PART III

ITEM 15. CONTROLS AND PROCEDURES

    DISCLOSURE CONTROLS AND PROCEDURES

    The Company's Chief Executive Officer and Chief Financial Officer have
reviewed the Company's disclosure controls and procedures 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.

    INTERNAL CONTROLS

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

ITEM 16. [RESERVED.]

    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).

    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

    AUDIT FEES

    The aggregate fees billed to the Company in each of 2002 and 2003 was HK$0.6
million and HK$0.7 million, respectively, for professional services rendered by
Deloitte Touche Tohmatsu, the Company's principal accountant (the "Principal
Accountant"), for the audit of the Company's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for such fiscal years.

    AUDIT-RELATED FEES

    The aggregate fees billed to the Company in each of 2002 and 2003 was
HK$53,000 and HK$0.2 million, respectively, for assurance and related services
by the Principal Accountant


                                       60
<PAGE>

that are reasonably related to the performance of the audit or review of the
Company's financial statements and are not otherwise reported under the
paragraph entitled "Audit Fees" above.

    TAX FEES

    The aggregate fees billed to the Company in each of 2002 and 2003 was HK$0.5
million and HK$0.8 million, respectively, for professional services rendered by
the Principal Accountant for tax compliance, tax advice and tax planning. The
nature of the services comprising the fees described in this paragraph include
services rendered in respect of tax in Hong Kong and India.

    ALL OTHER FEES

    The aggregate fees billed to the Company in each of 2002 and 2003 was Nil
and HK$45,000, respectively, for products and services provided by the Principal
Accountant, other than for services described in the paragraphs above. The
nature of the services comprising the fees described in this paragraph include
services rendered in respect of professional advice and authorized agent fees in
the United Kingdom.

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

    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.

                                     PART IV

ITEM 17. FINANCIAL STATEMENTS.

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

ITEM 18. FINANCIAL STATEMENTS.

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

ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS.

    (a)  Index to Financial Statements:

             Report of Independent Registered
             Public Accounting Firm..........................................F-2


                                       61
<PAGE>

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

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

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

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

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



    (b)  Exhibits to this Annual Report:

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

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

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

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

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

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

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

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

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


                                       62
<PAGE>

     NUMBER                                   EXHIBIT
--------------------------------------------------------------------------------
      8.1.        Subsidiaries of the Registrant (included on page 11 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.




                                       63
<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 29, 2004




                                       64
<PAGE>







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

                   Consolidated Financial Statements
                   Years ended 31st December, 2001, 2002 and 2003 and
                   Report of Independent Registered Public Accounting Firm







<PAGE>


               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

                          INDEX TO FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm.....................F-2

Consolidated Statements of Operations for the years ended
  31st December, 2001, 2002 and 2003........................................F-3

Consolidated Balance Sheets at 31st December, 2002 and 2003.................F-4

Consolidated Statements of Changes in Equity for the years ended
  31st December, 2001, 2002 and 2003........................................F-5

Consolidated Statements of Cash Flows for the years ended
  31st December, 2001, 2002 and 2003........................................F-6

Notes to the Consolidated Financial Statements..............................F-7






                                    F-1
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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


We have audited the accompanying consolidated balance sheets of Asia Satellite
Telecommunications Holdings Limited and subsidiaries as of 31st December, 2002
and 2003 and the related consolidated statements of operations, changes in
equity and cash flows for each of the three years in the period ended 31st
December, 2003, all expressed in Hong Kong dollars. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with 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 includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Asia Satellite Telecommunications
Holdings Limited and subsidiaries as of 31st December, 2002 and 2003, and the
results of their operations and their cash flows for each of the three years in
the period ended 31st December, 2003, in conformity with accounting principles
generally accepted in Hong Kong.

Accounting principles generally accepted in Hong Kong vary in certain
significant respects from accounting principles generally accepted in the United
States of America. The application of the latter would have affected the
determination of net income for each of the three years in the period ended 31st
December, 2003 and the determination of shareholders' equity and financial
position at 31st December, 2002 and 2003, to the extent summarised in Note 30.


Deloitte Touche Tohmatsu
Hong Kong
11th March, 2004, except for Note  27 as to which the date is 13th May, 2004




                                      F-2
<PAGE>

<TABLE>
<CAPTION>

                      ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED 31ST DECEMBER, 2003, 2002 AND 2001
--------------------------------------------------------------------------------------------------------------------------

                                          NOTES                  2003            2003              2002             2001
                                          -----                --------         --------          --------         --------
                                                                US$'000          HK$'000           HK$'000          HK$'000

<S>                                       <C>                  <C>              <C>               <C>              <C>
Turnover - service revenue                  4                   114,902          896,233           950,750          969,451
Cost of services                                                (40,162)        (313,265)         (243,071)        (240,007)


                                                                 74,740          582,968           707,679          729,444
Other operating income                                              109              848                39            9,604
Interest income                                                     634            4,945             6,423            6,725
Administrative expenses                                          (7,196)         (56,125)          (76,711)         (58,597)
                                                               --------         --------          --------         --------

Profit from operations                      5                    68,287          532,636           637,430          687,176
Finance costs                               6                      (388)          (3,029)               --               --
Share of results of associates
  (including goodwill amortisation
  of HK$6,500,000;
  2002: HK$4,604,000;
  2001: HK$6,132,000)                                            (2,003)         (15,625)          (13,679)         (47,481)
Impairment loss recognised in
  respect of goodwill of associates                                (243)          (1,896)               --           (6,132)
                                                               --------         --------          --------         --------

Profit before taxation                                           65,653          512,086           623,751          633,563
Taxation                                    9                   (11,231)         (87,598)          (69,062)         (70,564)
                                                               --------         --------          --------         --------

Profit before minority interest                                  54,422          424,488           554,689          562,999
Minority interest                                                    --               --                --              (16)
                                                               --------         --------          --------         --------

Profit for the year                                              54,422          424,488           554,689          562,983
                                                               ========         ========          ========         ========

Basic earnings per share                   11                   US$0.14          HK$1.09           HK$1.42          HK$1.44
                                                               ========         ========          ========         ========
</TABLE>


                                      F-3

<PAGE>

<TABLE>
<CAPTION>
               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS
AT 31ST DECEMBER, 2003 AND 2002

                                                                                   2003             2003              2002
                                                            NOTES                US$'000          HK$'000           HK$'000
                                                            -----                -------          -------           -------
<S>                                                         <C>                  <C>             <C>              <C>
NON-CURRENT ASSETS
Property, plant and equipment                                12                  405,820         3,165,399        3,232,350
Unbilled lease rental receivable                                                  23,285           181,625          164,982
Investments in associates                                    14                       --                --           17,521
Loan receivable from an associate                            15                      483             3,769               --
Tax prepayments                                              16                    3,139            24,487           19,305
Deferred tax asset                                           22                       10                76               --
                                                                               ---------         ---------        ---------

                                                                                 432,737         3,375,356        3,434,158
                                                                               ---------         ---------        ---------

CURRENT ASSETS
Trade and other receivables                                  17                   15,259           119,017           95,969
Loan receivable from an associate                            15                      450             3,510               --
Bank balances and cash                                                            84,530           659,337          406,228
                                                                               ---------         ---------        ---------

                                                                                 100,239           781,864          502,197
                                                                               ---------         ---------        ---------

CURRENT LIABILITIES
Construction payable                                                               1,392            10,854           20,585
Other payables and accrued expenses                                                2,413            18,829           15,190
Deferred revenue                                             18                   20,057           156,448          158,937
Taxation payable                                                                   8,421            65,684           68,346
Dividend payable                                                                      16               121              121
                                                                               ---------         ---------        ---------

                                                                                  32,299           251,936          263,179
                                                                               ---------         ---------        ---------

NET CURRENT ASSETS                                                                67,940           529,928          239,018
                                                                               ---------         ---------        ---------

                                                                                 500,677         3,905,284        3,673,176
                                                                               =========         =========        =========


CAPITAL AND RESERVES
Share capital                                                19                    5,003            39,027           39,027
Reserves                                                                         452,467         3,529,239        3,307,689
                                                                               ---------         ---------        ---------

                                                                                 457,470         3,568,266        3,346,716
                                                                               ---------         ---------        ---------

MINORITY INTEREST                                                                     63               492              492
                                                                               ---------         ---------        ---------

NON-CURRENT LIABILITIES
Deferred tax liabilities                                     22                   27,384           213,598          185,949
Deferred revenue                                             18                   15,760           122,928          140,019
                                                                               ---------         ---------        ---------

                                                                                  43,144           336,526          325,968
                                                                               ---------         ---------        ---------

                                                                                 500,677         3,905,284        3,673,176
                                                                               =========         =========        =========
</TABLE>


                                      F-4
<PAGE>

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31ST DECEMBER, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                SHARE             SHARE          RETAINED
                                                               CAPITAL           PREMIUM          PROFITS          TOTAL
                                                               HK$'000           HK$'000          HK$'000         HK$'000
                                                              ---------         --------        ----------       ----------
<S>                                                           <C>               <C>             <C>              <C>
At 1st January, 2001                                             39,027            4,614         2,341,509        2,385,150
Final dividend for 2000 paid                                       --               --             (54,637)         (54,637)
Interim dividend for 2001 paid                                     --               --             (23,416)         (23,416)
Profit for the year                                                --               --             562,983          562,983
                                                              ---------         --------        ----------       ----------

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

At 31st December, 2002 and 1st January, 2003                     39,027            4,614         3,303,075        3,346,716
Final dividend for 2002 paid                                       --               --             (74,151)         (74,151)
Special dividend for 2002 paid                                     --               --             (97,566)         (97,566)
Interim dividend for 2003 paid                                     --               --             (31,221)         (31,221)
Profit for the year                                                --               --             424,488          424,488
                                                              ---------         --------        ----------       ----------

At 31st December, 2003                                           39,027            4,614         3,524,625        3,568,266
                                                              =========         ========        ==========       ==========
</TABLE>



                                      F-5
<PAGE>

CONSOLIDATED CASH FLOW STATEMENTS
FOR THE YEARS ENDED 31ST DECEMBER, 2003, 2002 AND 2001
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                 2003             2003             2002              2001
                                                                US$'000          HK$'000          HK$'000           HK$'000
                                                                -------          -------          -------           -------
<S>                                                             <C>              <C>              <C>               <C>
OPERATING ACTIVITIES

Profit before taxation                                           65,653          512,086           623,751          633,563
Adjustments for:
  Allowance for bad and doubtful debts
    (written back) made                                            (805)          (6,279)           11,708               --
  Depreciation of property, plant and equipment                  28,497          222,277           166,632          166,650
  Finance costs                                                     388            3,029                --               --
  Gain on disposal of property, plant
    and equipment                                                   (10)             (76)              (39)             (98)
  Impairment loss recognised in respect of
    goodwill of associates                                          243            1,896                --            6,132
  Interest income                                                  (634)          (4,945)           (6,423)          (6,725)
  Share of results of associates                                  2,003           15,625            13,679           47,481
                                                                -------          -------          --------         --------

Operating cash flows before
  movements in working capital                                   95,335          743,613           809,308          847,003
Increase in unbilled lease rental
  receivable                                                     (2,133)         (16,643)          (34,757)         (31,188)
Increase in tax prepayments                                        (664)          (5,182)          (19,305)              --
(Increase) decrease in trade and
  other receivables                                              (2,105)         (16,416)           67,661          (56,048)
Increase (decrease) in other payables and
  accrued expenses                                                  589            4,597             4,846          (24,401)
(Decrease) increase in deferred revenue                          (2,511)         (19,580)           14,105           21,215
                                                                -------          -------          --------         --------

Cash generated from operations                                   88,511          690,389           841,858          756,581
                                                                -------          -------          --------         --------

Hong Kong Profits Tax paid                                       (6,279)         (48,977)          (28,513)         (27,536)
Overseas tax paid                                                (1,779)         (13,878)           (3,760)          (8,263)
                                                                -------          -------          --------         --------

                                                                 (8,058)         (62,855)          (32,273)         (35,799)
                                                                -------          -------          --------         --------

NET CASH GENERATED FROM
  OPERATING ACTIVITIES                                           80,453          627,534           809,585          720,782
                                                                -------          -------          --------         --------

INVESTING ACTIVITIES
Purchase of property, plant and equipment                       (20,795)        (162,196)         (440,227)        (590,740)
Loan to an associate                                               (933)          (7,279)               --               --
Interest received                                                   623            4,858             6,291            6,789
Proceeds from disposal of
  property, plant and equipment                                      10               81                41              100
Payment for Gen II platform                                          --               --                --          (15,210)
Purchase of interests in associates                                  --               --           (19,500)              --
                                                                -------          -------          --------         --------

NET CASH USED IN INVESTING ACTIVITIES                           (21,095)        (164,536)         (453,395)        (599,061)
                                                                -------          -------          --------         --------

FINANCING ACTIVITIES
Dividend paid                                                   (26,018)        (202,938)          (78,053)         (78,053)
Cost of raising bank borrowing facilities                          (891)          (6,951)           (8,337)         (16,217)
                                                                -------          -------          --------         --------

NET CASH USED IN FINANCING ACTIVITY                             (26,909)        (209,889)          (86,390)         (94,270)
                                                                -------          -------          --------         --------

INCREASE IN CASH AND CASH EQUIVALENTS                            32,449          253,109           269,800           27,451
CASH AND CASH EQUIVALENTS AT
  THE BEGINNING OF THE YEAR                                      52,081          406,228           136,428          108,977
                                                                -------          -------          --------         --------

CASH AND CASH EQUIVALENTS AT
  THE END OF THE YEAR, REPRESENTING
  BANK BALANCES AND CASH                                         84,530          659,337           406,228          136,428
                                                                =======          =======          ========         ========
</TABLE>


                                      F-6
<PAGE>

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER, 2003
--------------------------------------------------------------------------------


1.   GENERAL

     The Company is incorporated in Bermuda as an exempted company under the
     Companies Act 1981 of Bermuda (as amended) and its shares are listed on the
     New York Stock Exchange, Inc. and The Stock Exchange of Hong Kong Limited
     (hereafter collectively referred to as the "Stock Exchanges").

     The Group is engaged in the provision of transponder capacity.


2.   ADOPTION OF HONG KONG FINANCIAL REPORTING STANDARDS

     For the years presented, the Company and its subsidiaries (collectively
     "the Group") has adopted, for the first time, the following Hong Kong
     Financial Reporting Standards ("HKFRSs") issued by the Hong Kong Society of
     Accountants ("HKSA"), the term of HKFRS is inclusive of Statements of
     Standard Accounting Practice ("SSAPs") and Interpretations approved by the
     HKSA.

     For the year ended 31st December, 2001:

     DIVIDENDS PROPOSED OR DECLARED AFTER THE BALANCE SHEET DATE

     In accordance with SSAP 9 (Revised) EVENTS AFTER THE BALANCE SHEET DATE,
     dividends proposed or declared after the balance sheet date are not
     recognised as a liability at the balance sheet date, but are disclosed in
     the notes to the financial statements. This change in accounting policy has
     been applied retrospectively.

     LEASES

     SSAP 14 (Revised) LEASES has introduced some amendments to the basis of
     accounting for finance and operating leases, and to the disclosures
     specified for the Group's leasing arrangements. These changes have not had
     any material effect on the results for the current or prior accounting
     periods and, accordingly, no prior year adjustment has been required.
     Disclosures for all the Group's leasing arrangements have been modified so
     as to comply with requirements of SSAP 14 (Revised).

     For the year ended 31st December, 2003:

     INCOME TAXES

     In the current period, the Group has adopted SSAP 12 (Revised) INCOME
     TAXES. The principal effect of the implementation of SSAP 12 (Revised) is
     in relation to deferred tax. In previous years, partial provision was made
     for deferred tax using the income statement liability method, i.e. a
     liability was recognised in respect of timing differences arising, except
     where those timing differences were not expected to reverse in the
     foreseeable future. SSAP 12 (Revised) requires the adoption of a balance
     sheet liability method, whereby deferred tax is recognised in respect of
     all temporary differences between the carrying amounts of assets and
     liabilities in the financial statements and the corresponding tax bases
     used in the computation of taxable profit, with limited exceptions. In the
     absence of any specific transitional requirements in SSAP 12 (Revised), the
     new accounting policy has been applied retrospectively.

     The adoption of SSAP 12 (Revised) has had no material effect on the results
     for the current or prior accounting periods. Accordingly, no prior period
     adjustment has been required.


                                       F-7
<PAGE>

3.   SIGNIFICANT ACCOUNTING POLICIES

     The financial statements have been prepared under the historical cost
     convention and in accordance with accounting principles generally accepted
     in Hong Kong. The principal accounting policies adopted are as follows:

     BASIS OF CONSOLIDATION

     The consolidated financial statements incorporate the financial statements
     of the Company and its subsidiaries made up to 31st December each year.

     The results of subsidiaries and associates acquired or disposed of during
     the year are included in the consolidated statement of operations from the
     effective dates of acquisition or up to the effective dates of disposal, as
     appropriate.

     All significant intercompany transactions and balances within the Group
     have been eliminated on consolidation.

     GOODWILL

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

     Goodwill arising on acquisitions is capitalised within the carrying amount
     of the associate and is charged to the consolidated statement of operations
     on a straight-line basis over its useful economic life or at such time as
     it is determined to be impaired.

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

     INVESTMENTS IN SUBSIDIARIES

     Investments in subsidiaries are included in the Company's balance sheet at
     cost less any identified impairment loss. Results of subsidiaries are
     accounted for by the Company on the basis of dividends received or
     receivable during the year.

     INVESTMENTS IN ASSOCIATES

     The consolidated statement of operations includes the Group's share of the
     post-acquisition results of its associates for the year. In the
     consolidated balance sheet, investments in associates are stated at the
     Group's share of the net assets of the associates plus the goodwill in so
     far as it has not already been amortised, less any identified impairment
     loss.


                                      F-8
<PAGE>



3.   SIGNIFICANT ACCOUNTING POLICIES - continued

     REVENUE RECOGNITION

     Revenue from transponder utilisation agreements is recognised on a
     straight-line basis over the period of the agreements. The excess of lease
     rental revenue recognised on a straight-line basis over lease rentals
     received and receivable from customers in accordance with the contract
     terms is shown as unbilled lease rental receivable.

     Revenue from the sale of transponder capacity under transponder purchase
     agreements is recognised 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.

     Rentals under transponder utilisation 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 recognised as revenue are recorded as deferred
     revenue. Deferred revenue which will be recognised in the following year is
     classified under current liabilities and amounts which will be recognised
     after one year are classified as non-current.

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

     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.

     Depreciation is provided to write off the cost of property, plant and
     equipment, other than assets under construction, over their estimated
     useful lives, on a straight-line basis, at the following rates per annum:

     Satellites:
       AsiaSat 2                                  8%
       AsiaSat 3S                                 6.25%
       AsiaSat 4                                  6.67%
     Leasehold land                               Over the term of the lease
     Buildings                                    4%
     Tracking facilities                          20%
     Furniture, fixtures and fittings             20% - 33%
     Office equipment                             25% - 33%
     Motor vehicles                               25%
     Plant and machinery                          20%


                                      F-9
<PAGE>



3.   SIGNIFICANT ACCOUNTING POLICIES - continued

     PROPERTY, PLANT AND EQUIPMENT - continued

     Assets under construction are not depreciated until construction is
     complete and the assets are put into use.

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

     IMPAIRMENT

     At each balance sheet date, the Group reviews the carrying amounts of its
     tangible and intangible assets to determine whether there is any indication
     that those assets have suffered an impairment loss. If the recoverable
     amount of an asset is estimated to be less than its carrying amount, the
     carrying amount of the asset is reduced to its recoverable amount.
     Impairment losses are recognised as an expense immediately.

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

     TAXATION

     Income tax expense represents the sum of the tax currently payable and
     deferred tax.

     The tax currently payable is based on taxable profit for the year. Taxable
     profit differs from net profit as reported in the consolidated statements
     of operations because it excludes items of income or expense that are
     taxable or deductible in other years, and it further excludes items
     included in the consolidated statements of operations that are never
     taxable or deductible.

     Deferred tax is the tax expected to be payable or recoverable on
     differences between the carrying amounts of assets and liabilities in the
     financial statements and the corresponding tax bases used in the
     computation of taxable profit, and is accounted for using the balance sheet
     liability method. Deferred tax liabilities are generally recognised for all
     taxable temporary differences, and deferred tax assets are recognised to
     the extent that it is probable that taxable profits will be available
     against which deductible temporary differences can be utilised. Such assets
     and liabilities are not recognised if the temporary difference arises from
     goodwill (or negative goodwill) or from the initial recognition (other than
     in a business combination) of other assets and liabilities in a transaction
     that affects neither the tax profit nor the accounting profit.



                                      F-10
<PAGE>


3.   SIGNIFICANT ACCOUNTING POLICIES - continued

     TAXATION - continued

     Deferred tax liabilities are recognised for taxable temporary differences
     arising on investments in subsidiaries and associates, and interests in
     joint ventures, except where the Group is able to control the reversal of
     the temporary difference and it is probable that the temporary difference
     will not reverse in the foreseeable future.

     The carrying amount of deferred tax assets is reviewed at each balance
     sheet date and reduced to the extent that it is no longer probable that
     sufficient taxable profit will be available to allow all or part of the
     asset to be recovered.

     Deferred tax is calculated at the tax rates that are expected to apply in
     the period when the liability is settled or the asset is realised. Deferred
     tax is charged or credited in the consolidated statements of operations,
     except when it relates to items charged or credited directly to equity, in
     which case the deferred tax is also dealt with in equity.

     BORROWING COSTS

     Borrowing costs directly attributable to the acquisition, construction or
     production of qualifying assets, are capitalised as part of the cost of
     those assets. Capitalisation of such borrowing costs ceases when the assets
     are substantially ready for their intended use or sale.

     All other borrowing costs are recognised as an expense in the period in
     which they are incurred.

     FOREIGN CURRENCIES

     Transactions in foreign currencies are translated into Hong Kong Dollars at
     the rates ruling on the dates of the transactions or at the contracted
     settlement rate. Monetary assets and liabilities denominated in foreign
     currencies other than Hong Kong Dollars are re-translated at the rates
     ruling on the balance sheet date. Profits and losses arising on exchange
     are dealt with in the consolidated statements of operations.

     OPERATING LEASES

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

     RETIREMENT BENEFIT COSTS

     Payments to the defined contribution scheme and Mandatory Provident Fund
     Scheme are charged as an expense as they fall due.


                                      F-11
<PAGE>


4.   TURNOVER AND SEGMENT INFORMATION

     Turnover:

     The Group's turnover is analysed as follows:

<TABLE>
<CAPTION>
                                                                               2003              2002             2001
                                                                              HK$'000           HK$'000          HK$'000
                                                                              -------           -------          -------
<S>                                                                          <C>               <C>              <C>
      Income from provision of satellite transponder capacity                 880,375           936,114          956,695
      Sales of satellite transponder capacity                                  15,858            14,636           12,756
                                                                             --------          --------         --------
                                                                              896,233           950,750          969,451
                                                                             ========          ========         ========
</TABLE>

     Geographical segments:

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

<TABLE>
<CAPTION>
     Year ended 31st December, 2003

                                                          GREATER
                                                           CHINA,      UNITED    BRITISH
                                                         INCLUDING   STATES OF   VIRGIN
                                             HONG KONG    TAIWAN      AMERICA    ISLANDS   AUSTRALIA    OTHERS   CONSOLIDATED
                                             ---------    ------      -------    -------   ---------    ------   ------------
                                              HK$'000     HK$'000     HK$'000    HK$'000    HK$'000     HK$'000     HK$'000
<S>                                           <C>         <C>          <C>        <C>        <C>        <C>         <C>
         TURNOVER
         External sales                       323,187     212,847      71,164     40,351     37,598     211,086     896,233
                                              -------     -------      ------     ------     ------     -------     -------

         RESULT
         Segment result                       189,983     125,120      41,833     23,720     22,101     124,086     526,843
                                              -------     -------      ------     ------     ------     -------

         Other operating income                                                                                         848
         Interest income                                                                                              4,945
                                                                                                                    -------

         Profit from operations                                                                                     532,636
         Finance costs                                                                                               (3,029)
         Share of results of associates                                                                             (15,625)
         Impairment loss recognised in
           respect of goodwill of associates                                                                         (1,896)
                                                                                                                    -------

         Profit before taxation                                                                                     512,086
         Taxation                                                                                                   (87,598)
                                                                                                                    -------

         Profit for the year                                                                                        424,488
                                                                                                                    =======
<CAPTION>
         OTHER INFORMATION
                                                          GREATER
                                                           CHINA,      UNITED    BRITISH
                                                         INCLUDING   STATES OF   VIRGIN
                                             HONG KONG    TAIWAN      AMERICA    ISLANDS   AUSTRALIA    OTHERS   CONSOLIDATED
                                             ---------   ---------   ---------   -------   ---------    ------   ------------
                                              HK$'000     HK$'000     HK$'000    HK$'000    HK$'000     HK$'000     HK$'000
<S>                                          <C>         <C>         <C>         <C>       <C>         <C>        <C>
         Capital additions                     56,013      36,890      12,334      6,993      6,516      36,585     155,331

         Depreciation of property, plant
           and equipment                       80,154      52,789      17,650     10,008      9,325      52,351     222,277

         Write back of allowance for bad
           and doubtful debts                  (2,264)     (1,491)       (499)      (283)      (263)     (1,479)     (6,279)
</TABLE>


                                      F-12
<PAGE>


4.   TURNOVER - continued

<TABLE>
<CAPTION>
     Year ended 31st December, 2002
                                                          GREATER
                                                           CHINA,      UNITED    BRITISH
                                                         INCLUDING   STATES OF   VIRGIN
                                             HONG KONG    TAIWAN      AMERICA    ISLANDS   AUSTRALIA    OTHERS   CONSOLIDATED
                                             ---------   ---------   ---------   -------   ---------    ------   ------------
<S>                                          <C>         <C>         <C>         <C>       <C>         <C>        <C>
                                              HK$'000     HK$'000     HK$'000    HK$'000    HK$'000     HK$'000     HK$'000
         TURNOVER
         External sales                        341,224     212,103      73,282    40,351     39,040     244,750     950,750
                                             ---------   ---------   ---------   -------   ---------   --------    --------

         RESULT
         Segment result                       226,454     140,763      48,634     26,779     25,909     162,429     630,968
                                             ---------   ---------   ---------   -------   ---------   --------    --------

         Other operating income                                                                                          39
         Interest income                                                                                              6,423
                                                                                                                   --------

         Profit from operations                                                                                     637,430
         Share of results of associates                                                                             (13,679)
                                                                                                                   --------

         Profit before taxation                                                                                     623,751
         Taxation                                                                                                   (69,062)
                                                                                                                   --------

         Profit for the year                                                                                        554,689
                                                                                                                   ========

<CAPTION>
         OTHER INFORMATION
                                                          GREATER
                                                           CHINA,      UNITED    BRITISH
                                                         INCLUDING   STATES OF   VIRGIN
                                             HONG KONG    TAIWAN      AMERICA    ISLANDS   AUSTRALIA    OTHERS   CONSOLIDATED
                                             ---------   ---------   ---------   -------   ---------    ------   ------------
                                              HK$'000     HK$'000     HK$'000    HK$'000    HK$'000     HK$'000     HK$'000
<S>                                          <C>         <C>         <C>         <C>       <C>         <C>        <C>
         Capital additions                    163,895     101,876      35,199     19,381     18,752     117,557     456,660

         Depreciation of property, plant
           and equipment                       59,804      37,174      12,844      7,072      6,842      42,896     166,632

         Allowance for bad and doubtful
           debts                                3,378       4,397         725        399        386       2,423      11,708
</TABLE>


                                      F-13
<PAGE>

<TABLE>
<CAPTION>
4.   TURNOVER - continued

     Year ended 31st December, 2001
                                                      GREATER
                                                       CHINA,      UNITED    BRITISH
                                                     INCLUDING   STATES OF   VIRGIN
                                         HONG KONG    TAIWAN      AMERICA    ISLANDS   AUSTRALIA    OTHERS   CONSOLIDATED
                                         ---------   ---------   ---------   -------   ---------    ------   ------------
                                          HK$'000     HK$'000     HK$'000    HK$'000    HK$'000     HK$'000     HK$'000
<S>                                      <C>         <C>         <C>         <C>       <C>         <C>       <C>
     Revenue
     External sales                       351,037     240,279      75,759     56,293     24,558     221,525     969,451
                                          -------     -------    --------    -------    -------     -------     -------

     RESULT
     Segment result                       242,913     166,270      52,424     38,954     16,994     153,292     670,847
                                          -------     -------    --------    -------    -------     -------

     Other operating income                                                                                       9,604
     Interest income                                                                                              6,725
                                                                                                                -------

     Profit from operations                                                                                     687,176
     Share of results of associates                                                                             (47,481)
     Impairment loss recognised in
       respect of goodwill of associates                                                                         (6,132)
                                                                                                               --------

     Profit before taxation                                                                                     633,563
     Taxation                                                                                                   (70,564)
     Minority interest                                                                                              (16)
                                                                                                               --------

     Profit for the year                                                                                        562,983
                                                                                                               ========

<CAPTION>
     OTHER INFORMATION
                                                      GREATER
                                                       CHINA,      UNITED    BRITISH
                                                     INCLUDING   STATES OF   VIRGIN
                                         HONG KONG    TAIWAN      AMERICA    ISLANDS   AUSTRALIA    OTHERS   CONSOLIDATED
                                         ---------   ---------   ---------   -------   ---------    ------   ------------
                                          HK$'000     HK$'000     HK$'000    HK$'000    HK$'000     HK$'000     HK$'000

<S>                                       <C>         <C>         <C>        <C>       <C>         <C>        <C>
     Capital additions                    215,252     147,337      46,455     34,518     15,059     135,836     594,457

     Depreciation of property, plant
       and equipment                       60,344      41,304      13,023      9,677      4,222      38,080     166,650
</TABLE>

     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 assets
     and liabilities has been presented.


                                      F-14
<PAGE>

<TABLE>
<CAPTION>
5.   PROFIT FROM OPERATIONS
                                                                             2003              2002             2001
                                                                            HK$'000           HK$'000          HK$'000
                                                                            -------           -------          -------
<S>                                                                         <C>               <C>              <C>
     Profit from operations has been arrived at after charging:

     Salary and other benefits, including directors' remuneration             55,214            63,606           55,564
     Contributions to retirement benefits scheme                               4,011             4,104            3,859
                                                                             -------           -------          -------

     Total staff costs                                                        59,225            67,710           59,423
                                                                             -------           -------          -------

     Auditors' remuneration                                                      679               635              585
     Allowance for bad and doubtful debts                                         --            11,708               --
     Depreciation of property, plant and equipment                           222,277           166,632          166,650

     and after crediting:

     Write-back of allowance for bad and doubtful debts                        6,279                --               --
     Gain on disposal of property, plant and equipment other
       than transponders                                                          76                39               98
                                                                             =======           =======          =======

6.   FINANCE COSTS
                                                                              2003              2002             2001
                                                                             HK$'000           HK$'000          HK$'000
                                                                             -------           -------          -------

     Cost of raising bank borrowing facilities                                 6,951             8,337            8,422
     Less: Amount capitalised in assets under construction                    (3,922)           (8,337)          (8,422)
                                                                             -------           -------          -------

                                                                               3,029                --               --
                                                                             =======           =======          =======

7.   DIRECTORS' EMOLUMENTS
                                                                              2003              2002             2001
                                                                             HK$'000           HK$'000          HK$'000
     Fees:
       Executive                                                                  --                --               --
       Non-executive                                                              --               134               --
       Independent non-executive                                                 475               400              400
                                                                             -------           -------          -------

                                                                                 475               534              400
                                                                             -------           -------          -------

     Other emoluments:
       Executive
         Salaries and other benefits                                           7,831             8,095            8,193
         Contributions to retirement benefits scheme                             698               698            1,135
         Performance-related incentive payments                                   --             2,900              664
                                                                             -------           -------          -------

                                                                               8,529            11,693            9,992
                                                                             -------           -------          -------

     Total emoluments                                                          9,004            12,227           10,392
                                                                             =======           =======          =======
</TABLE>


                                      F-15
<PAGE>


7.   DIRECTORS' EMOLUMENTS - continued

     Their emoluments were within the following bands:

                                                No. of directors
                                          2003          2002         2001
                                          ----          ----         ----
      HK$Nil to HK$1,000,000                11            13           12
      HK$3,500,001 to HK$4,000,000           1             -            -
      HK$4,000,001 to HK$4,500,000           -             -            1
      HK$4,500,001 to HK$5,000,000           1             -            -
      HK$5,000,001 to HK$5,500,000           -             1            -
      HK$5,500,001 to HK$6,000,000           -             -            1
      HK$6,500,001 to HK$7,000,000           -             1            -
                                          ----          ----         ----
                                            13            15           14
                                          ====          ====         ====


     In addition to the remuneration listed above, the Group made payments to
     SES GLOBAL S.A. ("SES GLOBAL") and a subsidiary of CITIC Group ("CITIC",
     formerly known as China International Trust and Investment Corporation) the
     substantial shareholders of the Company throughout the year, amounting to
     HK$475,000 (2002: HK$400,000; 2001: HK$550,000) and HK$525,000 (2002:
     HK$400,000; 2001: HK$400,000) respectively, for certain Non-Executive
     Directors representing SES GLOBAL and CITIC.


8.   EMPLOYEES' EMOLUMENTS

     Of the five individuals with the highest emoluments in the Group, two (2002
     and 2001: two) were Directors of the Company whose emoluments are included
     in note 7 above. The emoluments of the remaining three (2002 and 2001:
     three) individuals were as follows:

                                                    2003       2002       2001
                                                   HK$'000    HK$'000   HK$'000

     Salaries and other benefits                     8,268      8,053     7,996
     Contributions to retirement benefits scheme       687        687       671
     Performance-related incentive payments             --      2,286       896
                                                   -------    -------   -------
                                                     8,955     11,026     9,563
                                                   =======    =======   =======


     Their emoluments are within the following bands:

                                                No. of employees
                                          2003          2002         2001
                                          ----          ----         ----

     HK$2,500,001 to HK$3,000,000            1             -            1
     HK$3,000,001 to HK$3,500,000            2             1            1
     HK$3,500,001 to HK$4,000,000            -             1            1
     HK$4,000,001 to HK$4,500,000            -             1            -
                                          ----          ----         ----
                                             3             3            3
                                          ====          ====         ====


                                      F-16

<PAGE>

<TABLE>
<CAPTION>
9.   TAXATION
                                                                2003            2002              2001
                                                                ----            ----              ----
                                                              HK$'000          HK$'000           HK$'000
<S>                                                           <C>              <C>               <C>
     The charge comprises:

     Hong Kong Profits Tax
       Current year                                            38,516            40,624           32,189
       Overprovided in prior year                                  --                --          (28,503)
                                                              -------           -------          -------
                                                               38,516            40,624            3,686
                                                              -------           -------          -------

     Deferred taxation (note 22)
       Current year                                            10,140            10,225           46,734
       Attributable to a change in tax rate in Hong Kong       17,433                --               --
                                                              -------           -------          -------
                                                               27,573            10,225           46,734
                                                              -------           -------          -------
                                                               66,089            50,849           50,420
     Overseas tax                                              21,509            18,213           20,144
                                                              -------           -------          -------
                                                               87,598            69,062           70,564
                                                              =======           =======          =======
</TABLE>

     A significant portion of the Group's profit is treated as earned outside of
     Hong Kong and is not subject to Hong Kong Profits Tax. Hong Kong Profits
     Tax is calculated at 17.5% (2002 and 2001: 16%) of the estimated assessable
     profit for 2003. The Profits Tax rate was increased from 16% to 17.5% with
     effect from the 2003/2004 year of assessment. The effect of this increase
     has been reflected in the calculation of current and deferred tax balances
     at 31st December, 2003.

     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 22.

     The Group currently has a tax case in dispute with the Indian tax
     authorities. Details of this are set out in note 27.

     A reconciliation between taxation shown in the consolidated statements of
     operations and the multiple of the applicable Hong Kong Profits Tax rate of
     17.5% (2002 and 2001: 16%) and profit before taxation is as follows:

<TABLE>
<CAPTION>
                                                                   2003              2002           2001
                                                                  HK$'000           HK$'000        HK$'000
<S>                                                               <C>               <C>           <C>
     Tax at applicable tax rate                                     89,615            99,800        101,370
     Tax effect of income not taxable for tax purpose              (78,454)          (76,135)       (77,556)
     Tax effect of expenses not deductible for tax purpose          34,429            24,700         22,805
     Tax effect of tax losses of associates not recognised           2,734             2,189          7,597
     Overprovision in prior year                                      --                --          (28,503)
     Capital allowances on AsiaSat 4 in prior year                    --                --           25,448
     Overseas tax                                                   21,509            18,213         20,144
     Increase in opening deferred tax liability resulting
       from an increase in Hong Kong Profits Tax rate               17,433              --             --
     Other                                                             332               295           (741)
                                                                   -------           -------       --------
     Tax expense                                                    87,598            69,062         70,564
                                                                   ========          ========      ========
</TABLE>


                                      F-17
<PAGE>

<TABLE>
<CAPTION>
10.  DIVIDENDS
                                                                   2003           2002            2001
                                                                   ----           ----            ----
                                                                  HK$'000        HK$'000         HK$'000
<S>                                                               <C>            <C>             <C>
     Interim, paid - HK$0.08 per share (2002: HK$0.06;
       2001: HK$0.06)                                              31,221         23,416         23,416

     Final, proposed - HK$0.24 per share
       (2002: HK$0.19; 2001: HK$0.14)                              93,664         74,151         54,637

     Special, proposed - Nil per share (2002: HK$0.25;
       2001: Nil)                                                      --         97,566             --
                                                                  -------        -------        -------
                                                                  124,885        195,133         78,053
                                                                  =======        =======        =======
</TABLE>

      The final dividend of HK$0.24 per share has been proposed by the
      Directors and is subject to approval by the shareholders in the Annual
      General Meeting.


11.   EARNINGS PER SHARE

     The calculation of the basic earnings per share is based on the net profit
     for 2003 of HK$424,488,000 (2002: HK$554,689,000; 2001: HK$562,983,000) and
     on 390,265,500 (2002 and 2001: 390,265,500) shares in issue during the
     year.

     No diluted earnings per share was presented for either 2003, 2002 or 2001
     as the exercise price of the Company's share options was higher than the
     average market price for shares for 2003, 2002 and 2001.


<TABLE>
<CAPTION>
12.  PROPERTY, PLANT AND EQUIPMENT

     2003
     ----                                                        SATELLITES AND TRACKING FACILITIES
                                            ------------------------------------------------------------------------------------
                                                                                                    BUILDINGS
                                                 IN              UNDER                                UNDER
                                             OPERATION        CONSTRUCTION           LAND          DEVELOPMENT     BUILDINGS
                                              HK$'000           HK$'000             HK$'000           HK$'000        HK$'000
           COST
<S>                                          <C>              <C>                  <C>           <C>            <C>
     At 1st January, 2003                    3,629,079          1,618,864             26,968          59,198             --
     Additions                                   2,155             89,768                 --          58,668             --
     Transfer                                1,666,795         (1,666,795)                --        (117,866)       117,866
     Disposals                              (1,131,000)                --                 --              --             --
                                            ----------         ----------         ----------        --------     ----------

     At 31st December, 2003                  4,167,029             41,837             26,968              --        117,866
                                            ----------         ----------         ----------        --------     ----------

     DEPRECIATION
     At 1st January, 2003                    2,103,079                 --              1,020              --             --
     Provided for the year                     219,640                 --                583              --            393
     Eliminated on disposals                (1,131,000)                --                 --              --             --
                                            ----------         ----------         ----------        --------     ----------

     At 31st December, 2003                  1,191,719                 --              1,603              --            393
                                            ----------         ----------         ----------        --------     ----------

     NET BOOK VALUES
     At 31st December, 2003                  2,975,310             41,837             25,365              --        117,473
                                            ----------         ----------         ----------        --------     ----------

<CAPTION>
                                             FURNITURE,
                                            FIXTURES AND          OFFICE              MOTOR        PLANT AND
                                              FITTINGS           EQUIPMENT           VEHICLES       MACHINERY       TOTAL
                                               HK$'000           HK$'000           HK$'000          HK$'000       HK$'000
     <S>                                     <C>                 <C>               <C>             <C>            <C>
     COST
     At 1st January, 2003                       9,151               5,637               2,954          1,690      5,353,541
     Additions                                  1,416               1,439               1,051            834        155,331
     Transfer                                      --                  --                  --             --             --
     Disposals                                     (9)               (151)               (578)            --     (1,131,738)
                                             --------           ---------          ----------       --------     ----------

     At 31st December, 2003                    10,558               6,925               3,427          2,524      4,377,134
                                             --------           ---------          ----------       --------     ----------

     DEPRECIATION
     At 1st January, 2003                       8,676               4,901               1,985          1,530      2,121,191
     Provided for the year                        292                 583                 718             68        222,277
     Eliminated on disposals                       (6)               (149)               (578)            --     (1,131,733)
                                             --------           ---------          ----------       --------     ----------

     At 31st December, 2003                     8,962               5,335               2,125          1,598      1,211,735
                                             --------           ---------          ----------       --------     ----------

     NET BOOK VALUES
     At 31st December, 2003                     1,596               1,590               1,302            926      3,165,399
                                             ========           =========          ==========       ========     ==========
</TABLE>


                                      F-18
<PAGE>

12. PROPERTY, PLANT AND EQUIPMENT - continued

<TABLE>
<CAPTION>
     2002
     ----                                                       SATELLITES AND TRACKING FACILITIES
                                            ------------------------------------------------------------------------------------
                                                                                                            BUILDINGS
                                                 IN                 UNDER              LEASEHOLD              UNDER
                                             OPERATION          CONSTRUCTION              LAND             DEVELOPMENT
                                              HK$'000             HK$'000               HK$'000               HK$'000
<S>                                          <C>                <C>                    <C>                 <C>
     COST
     At 1st January, 2002                    3,628,442            1,222,191               26,968                  634
     Additions                                     637              396,673                   --               58,564
     Disposals                                      --                   --                   --                   --
                                            ----------           ----------           ----------            ---------

     At 31st December, 2002                  3,629,079            1,618,864               26,968               59,198
                                            ----------           ----------           ----------            ---------

     DEPRECIATION
     At 1st January, 2002                    1,938,971                   --                  437                   --
     Provided for the year                     164,108                   --                  583                   --
     Eliminated on disposals                        --                   --                   --                   --
                                            ----------           ----------           ----------            ---------

     At 31st December, 2002                  2,103,079                   --                1,020                   --
                                            ----------           ----------           ----------            ---------

     NET BOOK VALUES
     At 31st December, 2002                  1,526,000            1,618,864               25,948               59,198
                                            ----------           ----------           ----------            ---------

<CAPTION>
                                            FURNITURE,
                                           FIXTURES AND          OFFICE            MOTOR         PLANT AND
                                             FITTINGS          EQUIPMENT          VEHICLES        MACHINERY           TOTAL
                                              HK$'000           HK$'000           HK$'000          HK$'000           HK$'000
     <S>                                     <C>                 <C>               <C>             <C>            <C>
     At 1st January, 2002                      9,066             5,420             2,762            1,690          4,897,173
     Additions                                    86               258               442               --            456,660
     Disposals                                    (1)              (41)             (250)              --               (292)
                                            --------          --------          --------         --------          ---------

     At 31st December, 2002                    9,151             5,637             2,954            1,690          5,353,541
                                            --------          --------          --------         --------          ---------

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

     At 31st December, 2002                    8,676             4,901             1,985            1,530          2,121,191
                                            --------          --------          --------         --------          ---------

     NET BOOK VALUES
     At 31st December, 2002                      475               736               969              160          3,232,350
                                            --------          --------          --------         --------          ---------
</TABLE>

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

     The net book value of the satellite and tracking facilities that are held
     for use under transponder utilisation agreements amounted to
     HK$2,953,547,000 (2002:HK$1,505,312,000). Depreciation charged in respect
     of those assets during 2003 amounted to HK$217,821,000 (2002:
     HK$162,670,000; 2001: HK$163,215,000) and accumulated depreciation in
     respect of those assets amounted to HK$1,187,634,000 (2002:
     HK$2,100,812,000), respectively.

     The cost of property, plant and equipment includes borrowing cost
     capitalised during construction of satellites and tracking facilities of
     approximately HK$52,872,000 (2002: HK$48,950,000).


13.  INVESTMENTS IN SUBSIDIARIES
                                                                 THE COMPANY
                                                                 -----------

                                                               2003       2002
                                                               ----       ----
                                                             HK$'000    HK$'000

         Unlisted shares in subsidiary companies, at cost    429,053    429,053
                                                            ========   ========

         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 reorganisation in 1996.



                                      F-19
<PAGE>

13.  INVESTMENTS IN SUBSIDIARIES - continued

     Details of subsidiary companies and a controlled partnership at 31st
     December, 2003 are as follows:

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

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

     Auspicious City Limited                Hong Kong     Ordinary shares       --         100%      Inactive

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

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

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

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

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


14.  INVESTMENTS IN ASSOCIATES
                                                   2003            2002
                                               ----            ----
                                              HK$'000         HK$'000

     Share of net assets                           --            9,125
     Goodwill (note a)                             --            8,396
                                              -------         --------
                                                   --           17,521
                                              =======         ========


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


                                      F-20
<PAGE>


14.  INVESTMENTS IN ASSOCIATES - continued

     Details of the Group's associates as at 31st December, 2003 are as follows:

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

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

     Included in investments in associates is goodwill arising on acquisition of
     associates:

     2003                                                              HK$'000
     ----                                                              -------

     COST
     At 1st January, 2003 and at 31st December, 2003                    25,264
                                                                       -------

     AMORTISATION AND IMPAIRMENT
     At 1st January, 2003                                               16,868
     Charge for the year                                                 6,500
     Impairment loss recognised during the year                          1,896
                                                                       -------

     At 31st December, 2003                                             25,264
                                                                       -------

     CARRYING VALUE
     At 31st December, 2003                                                 --
                                                                       -------


     2002
     ----

     COST
     At 1st January, 2002                                               12,264
     Arising on acquisition during the year                             13,000
                                                                       -------

     At 31st December, 2002                                             25,264
                                                                       -------

     AMORTISATION AND IMPAIRMENT
     At 1st January, 2002                                               12,264
     Charge for the year                                                 4,604
                                                                       -------

     At 31st December, 2002                                             16,868
                                                                       -------

     CARRYING VALUE
     At 31st December, 2002                                              8,396
                                                                       =======


                                      F-21
<PAGE>


14.  INVESTMENTS IN ASSOCIATES - continued

     Included in investments in associates is goodwill arising on acquisition of
     associates: - continued

     The goodwill is amortised over a period of 2 years.

     Amortisation charged to income in 2003 amounting to HK$6,500,000 (2002:
     HK$4,604,000; 2001: HK$6,132,000) has been included in the amount reported
     as share of results of associates in the consolidated statements of
     operations.


15.  LOAN RECEIVABLE FROM AN ASSOCIATE

     The amount is secured, interest bearing at 6% per annum and is repayable as
     follows:

                                                          2003         2002
                                                          ----         ----
                                                         HK$'000      HK$'000

     Within one year                                       3,510         --
     More than one year but not exceeding two years        3,769         --
                                                        --------     -------

                                                           7,279         --
     Less: amount shown under current assets              (3,510)        --
                                                        --------     -------

                                                           3,769          --
                                                        ========     =======

16.  TAX PREPAYMENTS

     At 31st December, 2003, tax prepayments amounting to approximately
     HK$24,487,000 (2002: HK$19,305,000) had been paid to the Government of
     India. For details, please refer to note 27.



                                      F-22
<PAGE>


17.  TRADE AND OTHER RECEIVABLES

                                                          2003        2002
                                                          ----        ----
                                                         HK$'000     HK$'000

     Trade receivables                                    68,118      74,430
     Other receivables                                    12,361       1,335
     Deposits and prepayments                             38,538      20,204
                                                        --------     -------

                                                         119,017      95,969
                                                        ========     =======

     The Group does not normally provide credit terms to its trade customers.
     The Group usually bills its trade customers quarterly in advance in
     accordance with its agreement. The aged analysis of trade receivables is
     stated as follows:
                                                          2003         2002
                                                          ----         ----
                                                         HK$'000      HK$'000

     0 to 30 days                                         32,130       32,525
     31 to 60 days                                         9,438        7,671
     61 to 90 days                                         7,443        3,619
     91 to 180 days                                       11,652       18,949
     181 days or above                                     7,455       11,666
                                                        --------      -------

     Total trade receivables                              68,118       74,430
                                                        ========      =======



18.  DEFERRED REVENUE
                                                         2003         2002
                                                        HK$'000      HK$'000
     The maturity of deferred revenue is as follows:

     Within one year                                     156,448      158,937
     More than one year but not exceeding five years     122,928      140,019
                                                        --------      -------

                                                         279,376      298,956
     Less: amount shown as current                      (156,448)    (158,937)
                                                        --------      -------

                                                         122,928      140,019
                                                        ========      =======


19.  SHARE CAPITAL
                                                                   Issued and
                                                      Authorised   fully paid
                                                      2003 & 2002  2003 & 2002
                                                        HK$'000      HK$'000

     Ordinary shares of HK$0.10 each                      55,000       39,027
                                                        ========      =======


                                      F-23
<PAGE>


20.  SHARE OPTION SCHEME

     SCHEME ADOPTED ON 3RD JUNE, 1996

     In accordance with the Company's share option scheme (the "1996 Scheme")
     adopted pursuant to a resolution passed on 3rd June, 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 25th January, 2002 pursuant to a
     resolution passed on that date.

     SCHEME ADOPTED ON 25TH JANUARY, 2002

     A new share option scheme (the "2002 Scheme") was adopted pursuant to a
     resolution passed on 25th January, 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 24th
     January, 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 has been granted during 2003. At 31st December, 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.


                                      F-24
<PAGE>


20.  SHARE OPTION SCHEME - continued

     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.

     No options were granted during 2003 and 2001. Total consideration received
     in 2002 from employees for taking up the options granted amounted to
     HK$105.

     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 consolidated statements 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 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.

     The following table discloses details of the Company's share options held
     by employees (including Directors) and movements in such holdings during
     years presented:

<TABLE>
<CAPTION>
       SHARE                   OUTSTANDING                                                                  OUTSTANDING
      OPTION                       AT              GRANTED       EXERCISED     CANCELLED       LAPSED           AT
      SCHEME      OPTION      1ST JANUARY,         DURING         DURING        DURING         DURING     31ST DECEMBER,
     CATEGORY      TYPE           2003              2003           2003          2003           2003           2003
     --------     ------      ------------         -------       ---------     ---------       ------     --------------
<S>               <C>         <C>                  <C>           <C>           <C>           <C>          <C>
       2002          A          1,718,500             -              --             --         (27,000)       1,691,500
       2002          B          1,838,000            --              --             --         (70,000)       1,768,000
       2002          C          3,593,000            --              --             --        (111,500)       3,481,500
                                ---------         ---------       --------      --------      --------        ---------
                                7,149,500            --              --             --        (208,500)       6,941,000
                                =========         =========       ========      ========      ========        =========
</TABLE>


                                      F-25
<PAGE>


20.  SHARE OPTION SCHEME - continued

<TABLE>
<CAPTION>
        SHARE                   OUTSTANDING                                                                OUTSTANDING
       OPTION                       AT              GRANTED       EXERCISED     CANCELLED       LAPSED         AT
       SCHEME      OPTION      1ST JANUARY,         DURING         DURING        DURING         DURING   31ST DECEMBER,
      CATEGORY      TYPE           2002              2002           2002          2002           2002         2002
      --------      ----       ------------      ----------       ---------     ---------       ------   --------------
<S>               <C>         <C>                  <C>           <C>           <C>           <C>          <C>
        2002          A              --           1,718,500           --             --           --         1,718,500
        2002          B              --           1,838,000           --             --           --         1,838,000
        2002          C              --           3,718,000           --             --        (125,000)     3,593,000
        1996          D          1,718,500            --              --        (1,718,500)       --             --
        1996          E          1,838,000            --              --        (1,838,000)       --             --
                                ----------       ----------         -------     ----------     --------     ----------
                                 3,556,500        7,274,500           --        (3,556,500)    (125,000)     7,149,500
                                ==========       ==========         =======     ==========     ========     ==========

<CAPTION>
        SHARE                   OUTSTANDING                                                                OUTSTANDING
       OPTION                       AT              GRANTED       EXERCISED     CANCELLED       LAPSED         AT
       SCHEME      OPTION      1ST JANUARY,         DURING         DURING        DURING         DURING   31ST DECEMBER,
      CATEGORY      TYPE           2001              2001           2001          2001           2001         2001
      --------     ------      ------------      ----------       ---------     ---------       ------   --------------
<S>                <C>         <C>               <C>              <C>           <C>           <C>        <C>
        1996          D          1,718,500            --              --             --           --         1,718,500
        1996          E          1,863,000            --              --             --         (25,000)     1,838,000
                                ----------       ----------         -------     ----------     --------     ----------
                                 3,581,500            --              --             --         (25,000)     3,556,500
                                ==========       ==========         =======     ==========     ========     ==========
</TABLE>

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

<TABLE>
<CAPTION>
       SHARE                   OUTSTANDING                                                                 OUTSTANDING
      OPTION                       AT              GRANTED       EXERCISED     CANCELLED       LAPSED          AT
      SCHEME      OPTION      1ST JANUARY,         DURING         DURING        DURING         DURING    31ST DECEMBER,
     CATEGORY      TYPE           2003              2003           2003          2003           2003          2003
     --------      ----       ------------      ----------       ---------     ---------       ------   --------------
<S>                <C>         <C>               <C>              <C>           <C>           <C>        <C>
       2002          A            651,000            --              --             --           --           651,000
       2002          B            264,000            --              --             --           --           264,000
       2002          C          1,360,000            --              --             --           --         1,360,000
                               -----------       ----------       -------      ----------     --------     ----------
                                2,275,000            --              --             --           --         2,275,000
                               -----------       ----------       -------      ----------     --------     ----------

<CAPTION>
       SHARE                   OUTSTANDING                                                                OUTSTANDING
      OPTION                       AT              GRANTED       EXERCISED     CANCELLED       LAPSED         AT
      SCHEME      OPTION      1ST JANUARY,         DURING         DURING        DURING         DURING   31ST DECEMBER,
     CATEGORY      TYPE           2002              2002           2002          2002           2002         2002
     --------      ----       ------------      ----------       ---------     ---------       ------   --------------
<S>                <C>         <C>               <C>              <C>           <C>           <C>        <C>
       2002          A              --             651,000           --             --           --           651,000
       2002          B              --             264,000           --             --           --           264,000
       2002          C              --           1,485,000           --             --        (125,000)     1,360,000
       1996          D            651,000            --              --          (651,000)       --             --
       1996          E            264,000            --              --          (264,000)       --             --
                               ----------        ---------        -------      ----------     --------     ----------
                                  915,000        2,400,000           --          (915,000)    (125,000)     2,275,000
                               ==========        =========        =======      ==========     ========     ==========
</TABLE>


                                      F-26
<PAGE>


<TABLE>
<CAPTION>
20.  SHARE OPTION SCHEME - continued

       SHARE                   OUTSTANDING                                                                 OUTSTANDING
      OPTION                       AT              GRANTED       EXERCISED     CANCELLED       LAPSED          AT
      SCHEME      OPTION      1ST JANUARY,         DURING         DURING        DURING         DURING    31ST DECEMBER,
     CATEGORY      TYPE           2001              2001           2001          2001           2001          2001
     --------      ----       ------------      ----------       ---------     ---------       ------   --------------
<S>                <C>         <C>               <C>              <C>           <C>           <C>        <C>
       1996          D            651,000            --              --             --           --           651,000
       1996          E            264,000            --              --             --           --           264,000
                               ----------        ---------        -------      ----------     --------     ----------
                                  915,000            --              --             --           --           915,000
                               ==========        =========        =======      ==========     ========     ==========
<CAPTION>

     Details of specific categories of options are as follows:
                                                                                                                          EXERCISE
     OPTION TYPE     DATE OF GRANT               VESTING PERIOD                             EXERCISE PERIOD                PRICE
     -----------     -------------               --------------                             ---------------                -----
                                                                                                                            HK$
     2002 SCHEME
     -----------
<S>               <C>                   <C>                                       <C>                                      <C>
     A (Note a)   4th February, 2002              -                               4th February, 2002-25th November, 2006   17.48
     B (Note a)   4th February, 2002    4th February, 2002-30th September, 2002   1st October, 2002-30th September, 2009   17.48
     C (Note b)   4th February, 2002    4th February, 2002-3rd February, 2004     4th February, 2004-3rd February, 2012    14.35

     1996 SCHEME
     -----------
     D (Note a)   26th November, 1996   26th November, 1996-25th November, 1999   26th November, 1999-25th November, 2006  17.48
     E (Note a)   20th September, 1999  20th September, 1999-30th September, 2002 1st October, 2002-30th September, 2009   17.48
</TABLE>

     Notes:


     a.   Pursuant to a resolution passed in the special general meeting of the
          Company held on 25th January, 2002, the 1996 Scheme was terminated and
          all existing options under that scheme were cancelled. New options
          were issued on 4th February, 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 4th February, 2002 and 25th November, 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 26th November, 1999 and 25th November, 2006
          2. Up to 75% between 26th November, 2000 and 25th November, 2006
          3. Up to 100% between 26th November, 2001 and 25th November, 2006

          OPTION TYPES B AND E

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


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

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

          OPTION TYPE C

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


                                      F-27
<PAGE>

21. RESERVES - THE COMPANY

<TABLE>
<CAPTION>
                                              SHARE         CONTRIBUTED      RETAINED
                                             PREMIUM          SURPLUS         PROFITS         TOTAL
                                             -------         --------        --------        --------
                                             HK$'000          HK$'000         HK$'000         HK$'000
<S>                                          <C>             <C>            <C>              <C>
     At 1st January, 2001                      4,614          390,053            323          394,990
     Final dividend for 2000 paid               -                -           (54,637)         (54,637)
     Interim dividend for 2001 paid             -                -           (23,416)         (23,416)
     Profit for the year                        -                -            79,489           79,489
                                             -------         --------       --------         --------

     At 31st December 2001 and
       1st January, 2002                       4,614          390,053          1,759          396,426
     Final dividend for 2001 paid               -                -           (54,637)         (54,637)
     Interim dividend for 2002 paid             -                -           (23,416)         (23,416)
     Profit for the year                        -                -            79,130           79,130
                                             -------         --------       --------         --------

     At 31st December, 2002 and
       1st January, 2003                       4,614          390,053          2,836          397,503
     Final dividend for 2002 paid               -                -           (74,151)         (74,151)
     Special dividend for 2002 paid             -                -           (97,566)         (97,566)
     Interim dividend for 2003 paid             -                -           (31,221)         (31,221)
     Profit for the year                        -                -           202,578          202,578
                                             -------         --------       --------         --------
     At 31st December, 2003                    4,614          390,053          2,476          397,143
                                             =======         ========       ========         ========
</TABLE>

     The contributed surplus represents the difference between the consolidated
     shareholders' funds of the subsidiaries at the date at which they were
     acquired by the Company and the nominal amount of the Company's shares
     issued for the acquisition at the time of the Group reorganisation prior to
     the listing of the Company's shares in 1996.

     Under the Companies Act 1981 of Bermuda (as amended), the contributed
     surplus account of the Company is available for distribution. However, the
     Company cannot declare or pay a dividend, or make a distribution out of the
     contributed surplus if:

     (a)  it is, or would after the payment be, unable to pay its liabilities as
          they become due; or

     (b)  the realisable value of its assets would thereby be less than the
          aggregate of its liabilities and its issued share capital.

     In the opinion of the Directors, as at 31st December, 2003, the Company's
     reserves available for distribution consisted of the contributed surplus of
     HK$390,053,000 (2002: HK$390,053,000) and retained profits of HK$2,476,000
     (2002: HK$2,836,000).


                                      F-28
<PAGE>


22.  DEFERRED TAXATION

     The following are the major deferred tax liabilities and asset recognised
     by the Group and movements thereon during the current and prior reporting
     periods:

<TABLE>
<CAPTION>
                                                    ACCELERATED
                                                         TAX
                                                    DEPRECIATION          OTHERS         TAX LOSS           TOTAL
                                                    ------------         --------         --------        ---------
                                                       HK$'000            HK$'000         HK$'000           HK$'000

<S>                                                 <C>                  <C>             <C>            <C>
     Balance at 1st January, 2001                      128,990                --             --            128,990
     Charge (credit) to income (note 9)                 48,753            (2,019)            --             46,734
                                                     ---------          --------         ---------        --------

     Balance at 31st December, 2001
       and at 1st January, 2002                        177,743            (2,019)            --            175,724
     Charge to income (note 9)                           8,206             2,019             --             10,225
                                                     ---------          --------         ---------        --------

     Balance at 31st December, 2002
       and at 1st January, 2003                        185,949                --             --            185,949
     Charge (credit) to income (note 9)                 10,527              (311)           (76)            10,140
     Effect of change in tax rate charge
       to income (note 9)                               17,433                --             --             17,433
                                                     ---------          --------         ---------        --------

     Balance at 31st December, 2003                    213,909              (311)           (76)           213,522
                                                     =========          ========         =========        ========
</TABLE>

     For the purposes of balance sheet presentation, certain deferred tax assets
     and liabilities have been offset in accordance with the conditions set out
     in SSAP 12 (Revised). The following is the analysis of the deferred tax
     balances for financial reporting purposes:

                                                       2003              2002
                                                       ----              ----
                                                     HK$'000           HK$'000

     Deferred tax liabilities                        213,598           185,949
     Deferred tax asset                                  (76)                -
                                                     -------           -------
                                                     213,522           185,949
                                                     =======           =======


23.  MAJOR NON-CASH TRANSACTIONS

     In 2002, the Company increased its interest in SpeedCast Holdings Limited,
     which is the holding company of SpeedCast Limited, from 36.5% to 45.3% for
     HK$31,200,000 (US$4,000,000), of which HK$11,700,000 (US$1,500,000) was in
     the form of the provision of transponder capacity.

     There was no major non-cash transaction during 2003 and 2001.


                                      F-29
<PAGE>


24.  OPERATING LEASES

     THE GROUP AS LESSEE

     Minimum lease payment paid under operating leases during the years
     presented:

                                   2003              2002             2001
                                   ----              ----             ----
                                  HK$'000           HK$'000          HK$'000

     Premises                       5,965             6,390            6,793


     At the balance sheet dates, the Group had commitments for future
     minimum lease payments under non-cancellable operating leases which
     fall due as follows:

                                                    2003               2002
                                                    ----               ----
                                                   HK$'000            HK$'000

     Within one year                                5,339               5,689
     One to two years                               1,847               4,417
     Two to three years                                --               1,247
                                                  -------             -------
                                                    7,186              11,353
                                                  =======             =======


     Operating lease payments represent rental payable by the Group for
     certain of its office and residential premises. Leases are negotiated
     for an average term of two years.

     THE GROUP AS LESSOR

     Income from the provision of satellite transponder capacity during 2003 was
     HK$880,375,000 (2002: HK$936,114,000; 2001: HK$956,695,000). The satellite
     transponder capacity held has committed tenants for a range of one to ten
     years.

     At the balance sheet dates, the Group had contracted with customers for the
     following future minimum lease payments:

                                                    2003               2002
                                                    ----               ----
                                                   HK$'000            HK$'000

     Within one year                                815,641            786,157
     One to two years                               658,364            657,188
     Two to three years                             482,654            504,396
     Three to four years                            375,300            361,138
     Four to five years                             295,014            329,463
     Thereafter                                   1,093,010          1,390,753
                                                 ----------         ----------
                                                  3,719,983          4,029,095
                                                 ==========         ==========



                                      F-30
<PAGE>

25.  CAPITAL COMMITMENTS

     In 2002, the Group entered into agreements with independent third parties
     for the construction of a satellite earth station. The estimated total cost
     for the satellite earth station is HK$241,379,000. At 31st December, 2003,
     the capital commitments in respect of the satellite earth station and other
     assets were as follows:

<TABLE>
<CAPTION>
                                                                            2003              2002
                                                                            ----              ----
                                                                          HK$'000           HK$'000
<S>                                                                     <C>                <C>
     AsiaSat 4
       Contracted for but not provided in the financial statements             --           116,473
       Authorised but not contracted for                                       --            11,863
     A satellite earth station
       Contracted for but not provided in the financial statements         21,130           101,665
       Authorised but not contracted for                                   28,114            55,369
     Other assets
       Contracted for but not provided in the financial statements            168               483
                                                                         --------          --------
                                                                           49,412           285,853
                                                                         ========          ========
</TABLE>

26.  RETIREMENT BENEFITS SCHEME

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

     The ORSO Scheme provides for participant contributions of 5% of salary and
     Group contributions of between 7.5% and 15% of salary depending on length
     of service and the participant's position in the Group. Participants vest
     in Group contributions incrementally over 10 years.

     The MPF Scheme is available to all employees aged 18 to 64 with at least 60
     days of service in the employment of the Group in Hong Kong. Contributions
     are made by the Group at 5% based on the staff's relevant income with a cap
     of HK$1,000 per month. The maximum relevant income for contribution
     purposes contributed by employee is 5% of the monthly income. Staff members
     are entitled to 100% of the Group's contributions together with accrued
     returns irrespective of their length of service with the Group, but the
     benefits are required by law to be preserved until the retirement age of
     65.

     The assets of the schemes are held separately from those of the Group, in
     funds under the control of trustees.



                                      F-31
<PAGE>

27.  CONTINGENT LIABILITIES

     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 (including interest as
     of 21st March, 2001) for income tax for each of the following assessment
     years:

                               APPROXIMATE INCOME TAX ASSESSED
                               -------------------------------

     ASSESSMENT YEAR         AMOUNT (HK$ MILLION)         AMOUNT (INR MILLION)
     ---------------         --------------------         --------------------
         1997-98                      20                            115
         1998-99                      23                            141
         1999-00                      22                            127
         2000-01                      14                            84
         2001-02                      29                            171

     No assessment has yet been made for the 2002-2003 or 2003-2004 assessment
     years.

     The Indian tax authorities initiated tax recovery measures against the
     Group in January 2002. In order to expedite the legal proceedings in India
     and obtain a stay of recovery measures, the Group made a tax payment
     totalling approximately HK$19 million (INR120 million) to the Government of
     India in 2002.

     The Income Tax Appellate Tribunal ("the Tribunal") in the appeal filed for
     the assessment year 1997-1998 held that the Group is liable for Indian
     income tax under certain circumstances. The Tribunal directed Indian tax
     authorities to make a fresh computation of the taxable income. Pursuant to
     the order of the Tribunal, the tax authorities have prepared a revised
     computation of tax due on 30th May, 2003. The revised assessment is
     approximately HK$20 million (INR115 million). 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 addition, the Group has filed appeals
     of each of the assessment years 1998-99 to 2001-02.

     In order to obtain a stay of recovery proceedings, the Group made a further
     payment of approximately HK$5 million (INR30 million) during 2003. An
     additional payment of approximately HK$22 million (INR128 million) was made
     subsequent to 31st December, 2003.

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




                                      F-32
<PAGE>


               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

28.  PLEDGE OF ASSETS

     On 24th November, 2000, the Group signed an agreement for a US$250 million
     loan facility with a consortium of banks to finance the construction of
     AsiaSat 4 and AsiaSat 5. The loan facility is secured by an assignment of
     all rights, title, benefits and interest in the insurance and transponder
     receipts of the existing satellites and a fixed and floating charge over
     the assets of the Group. The interest rate of this loan is floating and
     based on London InterBank Offered Rate ("LIBOR") plus margin between 1.00%
     to 1.25% per annum depending on certain financial ratios achieved by the
     Group. Borrowings under the loan are repayable in five equal bi-annual
     repayments of principal and interest commencing in November 2003. In
     addition, the loan agreement contains certain financial covenants, which,
     among other things, requires the Group to maintain a certain level of net
     assets and cash flow ratios, and restricts dividend payments and the
     Group's amount of borrowings and liabilities.

     The loan facility had a period of three years for drawdown that expired on
     24th November, 2003. Since no drawdown was ever made, the loan facility
     automatically lapsed on 24th November, 2003. Accordingly, the securities
     pledged to the loan facility are being released.


29.  RELATED PARTY TRANSACTIONS

     The Group has entered into an agreement for provision of transponder
     capacity to a subsidiary of CITIC. CITIC is a substantial shareholder of
     the Company throughout the years presented. The total amount of revenue
     recognised by the Group for 2003 under this agreement was approximately
     HK$3,782,000 (2002: HK$4,095,000; 2001: HK$$3,832,000). 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 Company. During 2003, the Group has recognised an agency fee of
     approximately HK$719,000 (2002: HK$1,611,000; 2001: Nil) under this
     agreement. Included in trade and other receivables was an amount of
     approximately HK$11,826,000 (2002: HK$983,000) due from CITIC Technology
     Company Limited, and included in other payables and accrued expenses was an
     amount of approximately HK$433,000 (2002: HK$519,000) due to CITIC
     Technology Company Limited.

     Other than that disclosed in note 15, during 2003, the Group recognised
     income from provision of satellite transponder capacity from its associate,
     SpeedCast, amounting to approximately HK$20,829,000 (2002: HK$20,177,000;
     2001: HK$19,547,000). In addition, the Group recognised interest income on
     the loan receivable from SpeedCast amounting to approximately HK$86,000
     (2002 and 2001: Nil). At 31st December, 2003, trade and other receivables
     included an amount of approximately HK$1,951,000 (2002: Nil) due from
     SpeedCast.

     During 2003, a consultancy fee, amounting to HK$390,000 (2002: HK$678,000;
     2001: Nil) was paid to SES Astra S.A., a wholly-owned subsidiary of SES
     GLOBAL. SES GLOBAL was a substantial shareholder of the Company throughout
     the years presented. In addition, in 2002, the Group recognised income from
     provision of satellite transponder capacity amounting to approximately
     HK$162,000 (2001: Nil) from SES AMERICOM, a wholly-owned subsidiary of SES
     GLOBAL.

     In addition to the above, the Group made payments to SES GLOBAL and a
     subsidiary of CITIC amounting to HK$475,000 (2002: HK$400,000; 2001:
     HK$559,000) and HK$525,000 (2002 and 2001: HK$400,000) respectively, for
     certain non-executive directors representing SES GLOBAL and CITIC.

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


                                      F-33
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

30.  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 HK GAAP, which differs in significant respects from US GAAP
     as follows:

     (a)    Capitalisation of interest and other borrowing costs

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

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

     (b)    Amortisation and impairment loss of goodwill

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

     (c)    Interest income

            Under HK GAAP, 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-34
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

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

     The following table summarises the effect on profit of differences between
     HK GAAP and US GAAP:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED 31ST DECEMBER,
                                                                 -------------------------
                                                      2003           2003           2002        2001
                                                      ----           ----           ----        ----
                                                     US$'000       HK$'000        HK$'000     HK$'000
                                                    (Note 1)
   <S>                                                <C>          <C>            <C>         <C>
   Profit for the year as reported under
     HK GAAP                                          54,422       424,488        554,689     562,983
   US GAAP material adjustments:
     Capitalisation of interest and
       borrowing costs including effects
       of its amortisation                            (1,510)      (11,780)       (23,051)       (577)
     Amortisation and impairment loss
       of goodwill                                      (591)       (4,604)         4,604          --
     Tax effect of material adjustments                   19           151          1,844          46
                                                      ------       -------        -------     -------

   Profit for the year under US GAAP                  52,340       408,255        538,086     562,452
                                                      ======       =======        =======     =======

   Basic and diluted earnings per share
     under US GAAP                                      0.13          1.05           1.38        1.44
                                                      ======       =======        =======     =======

   Basic and diluted earnings per
     American Depository Share ("ADS")
     under US GAAP (Note 2)                             1.34         10.46          13.79       14.41
                                                      ======       =======        =======     =======

   Shares used in computation of basic
     and diluted earnings per share
     (in thousands)                                  390,266       390,266        390,266     390,266
                                                      ======       =======        =======     =======
</TABLE>


                                      F-35
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

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

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

<TABLE>
<CAPTION>
                                                                          AT 31ST DECEMBER,
                                                                          -----------------
                                                                  2003          2003        2002
                                                                  ----          ----        ----
                                                                 US$'000       HK$'000     HK$'000
                                                                 (Note 1)
   <S>                                                           <C>          <C>         <C>
   Shareholders' equity as reported under HK GAAP                457,470      3,568,266   3,346,716

   US GAAP material adjustments:
     Capitalisation of interest and borrowing costs
       including effect of its amortisation                        7,501         58,507      70,287
     Amortisation and impairment loss of goodwill                     --             --       4,604
     Tax effect of material adjustments                           (1,186)        (9,243)     (9,394)
                                                                 -------      ---------   ---------

   Shareholders' equity under US GAAP                            463,785      3,617,530   3,412,213
                                                                 =======      =========   =========

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

   Balance, beginning of year                                    437,463      3,412,213   2,952,180
   Transactions during the year:
     i) Net income                                                52,340        408,255     538,086
    ii) Dividends paid                                           (26,018)      (202,938)    (78,053)
                                                                 -------      ---------   ---------

   Balance, end of year                                          463,785      3,617,530   3,412,213
                                                                 =======      =========   =========
</TABLE>


   Notes:

   1.   The translations of Hong Kong dollar amounts into United
        States dollars are for convenience only and have been made at
        a rate of HK$7.8 to US$1, the approximate rate of exchange at
        31st December, 2003. Such translations should not be construed
        as representations that Hong Kong dollar amounts could be
        converted into United States dollars at that or any other
        rate.

   2.   One ADS is equivalent to 10 ordinary shares.


                                      F-36
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

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

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

<TABLE>
<CAPTION>
                                                                           AS AT 31ST DECEMBER,
                                                                           --------------------
                                                                     2003         2003         2002
                                                                     ----         ----         ----
                                                                    US$'000      HK$'000      HK$'000
   <S>                                                              <C>         <C>          <C>
   Property, plant and equipment
     Amount under HK GAAP                                           405,820     3,165,399    3,232,350
     US GAAP adjustments - Capitalisation of interest and
       borrowing costs including effect of its amortisation           7,501        58,507       70,287
                                                                    -------     ---------    ---------

     Amount under US GAAP                                           413,321     3,223,906    3,302,637
                                                                    =======     =========    =========

   Investments in associates
     Amount under HK GAAP                                                --            --       17,521
     US GAAP adjustments - Amortisation and
       impairment loss of goodwill                                       --            --        4,604
                                                                    -------     ---------    ---------

     Amount under US GAAP                                                --            --       22,125
                                                                    =======     =========    =========

   Deferred tax liabilities
     Amount under HK GAAP                                            27,384       213,598      185,949
     US GAAP adjustments - Tax effect of material
       adjustments                                                    1,185         9,243        9,394
                                                                    -------     ---------    ---------

     Amount under US GAAP                                            28,569       222,841      195,343
                                                                    =======     =========    =========
</TABLE>


     The amounts of total assets determined using US GAAP, as a result of the
     foregoing adjustments, are HK$4,215,727,000 (US$540,478,000) and
     HK$4,011,246,000 as of 31st December, 2003 and 2002, respectively. The
     amounts of total liabilities (excluding minority interests) determined
     using US GAAP, as a result of the foregoing adjustments, are HK$597,705,000
     (US$76,629,000) and HK$598,541,000 as of 31st December, 2003 and 2002,
     respectively.


                                      F-37
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

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

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

<TABLE>
<CAPTION>
                                                                                AS AT 31ST DECEMBER,
                                                                                --------------------
                                                             2003              2003              2002           2001
                                                             ----              ----              ----           ----
                                                           US$'000           HK$'000           HK$'000        HK$'000
  <S>                                                        <C>             <C>               <C>            <C>
   Net cash generated from operating activities
       Amount under HK GAAP                                  80,453          627,534           809,585        720,782
       US GAAP adjustments:
         Interest received                                      623            4,858             6,291          6,789
         Cost of raising bank borrowing facilities             (891)          (6,951)           (8,337)       (16,217)
                                                            -------         --------           -------        -------

     Amount under US GAAP                                    80,185          625,441           807,539        711,354
                                                            =======         ========           =======        =======

   Net cash used in investing activities
     Amount under HK GAAP                                   (21,095)        (164,536)         (453,395)      (599,061)
     US GAAP adjustment:
       Interest received                                       (623)          (4,858)           (6,291)        (6,789)
                                                            -------         --------           -------        -------

     Amount under US GAAP                                   (21,718)        (169,394)         (459,686)      (605,850)
                                                            =======         ========           =======        =======

   Net cash used in financing activities
     Amount under HK GAAP                                   (26,909)        (209,889)          (86,390)       (94,270)
     US GAAP adjustment:
       Cost of raising bank borrowing facilities                891            6,951             8,337         16,217
                                                            -------         --------           -------        -------

     Amount under US GAAP                                   (26,018)        (202,938)          (78,053)       (78,053)
                                                            =======         ========           =======        =======
</TABLE>


     The reclassification for US GAAP consolidated statements of cash flows
     pertains to interest received and costs for bank borrowing facilities which
     are presented as investing and financing activities under HK GAAP,
     respectively (as opposed to operating activities and investing activities
     under US GAAP, respectively).


                                      F-38
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

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

     Additional disclosures as required by US GAAP:

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

     (b)   The Company applies Accounting Principles Board ("APB") Opinion No.
           25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES", and related
           Interpretations in accounting for options granted under the 1996
           Scheme and 2002 Scheme (see Note 20). No compensation cost has been
           recognised on options granted under the 1996 Scheme and the 2002
           Scheme.

           The Company, on 8th September, 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 31st December, 2001, did not
           account for the option modification under a variable plan accounting
           that would have been required under Financial Accounting Standards
           Board Interpretation No. 44, "ACCOUNTING FOR CERTAIN TRANSACTIONS
           INVOLVING STOCK COMPENSATION". There would be no impact on the
           Company's 2001 consolidated financial statements and on 2002 and 2003
           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 31st December, 2001, 2002 and 2003,
           respectively.


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

<TABLE>
<CAPTION>
                                                               2003             2002              2001
                                                               ----             ----              ----
                                                              HK$'000          HK$'000           HK$'000

           <S>                                             <C>               <C>              <C>
           Net income as reported under US GAAP                408,255           538,086          562,452
           Add: Stock compensation as reported                      --                --               --
           Less: Stock compensation determined using
                      the fair value method                    (10,952)          (14,351)          (6,969)
                                                           -----------       -----------      -----------

           Pro forma net income under US GAAP                  397,303           523,735          555,483
                                                           ===========       ===========      ===========

           Shares used in computation                      390,265,500       390,265,500      390,265,500
                                                           ===========       ===========      ===========

           Net income per share under US GAAP:
             Basic and diluted, as reported                       1.05              1.38             1.44
                                                           ===========       ===========      ===========

             Basic and diluted, pro forma                         1.02              1.34             1.42
                                                           ===========       ===========      ===========
</TABLE>


                                     F-39
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

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

           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%
           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.

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

           A summary of the status of the Company's 2002 Scheme and 1996 Scheme
           as of 31st December, 2003, 2002 and 2001, and changes during the
           years then ended is presented below:

<TABLE>
<CAPTION>
                                                    2003                        2002                     2001
                                            ---------------------   --------------------------   -----------------------
                                                        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, beginning of year   7,149,500      15.91      3,556,500        17.48      3,581,500       17.48
           Granted                                 --         --      7,274,500        15.88             --          --
           Exercised                               --         --             --           --             --          --
           Forfeited/cancelled/lapsed        (208,500)     15.81     (3,681,500)       17.37        (25,000)      17.48
                                            ---------      -----      ---------        -----      ---------       -----
           Outstanding, end of year         6,941,000      15.91      7,149,500        15.91      3,556,500       17.48
                                            =========      =====      =========        =====      =========       =====

           Options exercisable at year-end  3,017,500      17.48      2,637,500        17.48      1,718,500       17.48
                                            =========      =====      =========        =====      =========       =====

           Weighted-average fair value of
             options granted during the year                 N/A                        8.00                        N/A
</TABLE>


                                      F-40
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

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

           The following table summarises information on the 2002 Scheme and
           1996 Scheme outstanding at 31st December, 2003:

<TABLE>
<CAPTION>
                            OPTIONS OUTSTANDING                             OPTIONS EXERCISABLE
           ------------------------------------------------      -------------------------------
                                                 WEIGHTED
                                                  AVERAGE
                                                 REMAINING
                                NUMBER          CONTRACTUAL                             NUMBER
           EXERCISE PRICE     OF OPTIONS           LIFE          EXERCISE PRICE       OF OPTIONS
           --------------     ----------           ----          --------------       ----------
           <S>                 <C>              <C>              <C>                  <C>
           HK$14.35            3,481,500        8.09 years       HK$14.35                    --
           HK$17.48            3,459,500        4.36 years       HK$17.48             3,017,500
                               ---------        ----------                            ---------

                               6,941,000        6.23 years                            3,017,500
                               =========        ==========                            =========
</TABLE>

     (c)   Recent changes in accounting standards

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

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

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

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


                                      F-41
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

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

            The provisions of SFAS No. 145 related to the rescission of SFAS No.
            4 and No. 64 are effective for fiscal years beginning after May 15,
            2002. The provisions related to the amendment of SFAS No. 13 are
            effective for transactions occurring after May 15, 2002. All other
            provisions of SFAS No. 145 are effective for financial statements
            issued on or after May 15, 2002. For those provisions that become
            effective during the year, there was no significant impact on the
            Company's financial position and results of operations.

            In June 2002, the FASB issued SFAS No. 146, "ACCOUNTING FOR COSTS
            ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES". This statement
            requires that a liability for a cost associated with an exit or
            disposal activity be recognised when the liability is incurred.
            Under Emerging Issue Task Force ("EITF") Issue 94-3, a liability for
            an exit cost was recognised at the date of an entity's commitment to
            an exit plan. A fundamental conclusion reached by the Board in this
            statement is that an entity's commitment to a plan, by itself, does
            not create a present obligation to others that meets the definition
            of a liability. Therefore, this statement eliminates the definition
            and requirements for recognition of exit costs in EITF Issue 94-3.
            This statement also established that fair value is the objective for
            initial measurement of the liability and the liability should be
            measured initially at fair value only when the liability is
            incurred. The Company adopted SFAS No. 146 on 1st January, 2003, and
            determined that there was no significant impact on the Company.

            On 31st December, 2002, the FASB issued SFAS No. 148, "ACCOUNTING
            FOR STOCK-BASED COMPENSATION--TRANSITION AND DISCLOSURE - AN
            AMENDMENT OF FASB STATEMENT NO. 123 ", which amends SFAS No. 123,
            "ACCOUNTING FOR STOCK-BASED COMPENSATION". SFAS No. 148 provides
            alternative methods of transition for a voluntary change to the fair
            value based method of accounting for stock-based employee
            compensation. In addition, SFAS No. 148 amends the disclosure
            requirements of SFAS No. 123 to require more prominent and more
            frequent disclosures in financial statements of the effects of
            stock-based compensation. The transition guidance and annual
            disclosure provisions of SFAS No. 148 are effective for fiscal years
            ending after 15th December, 2002, with earlier application permitted
            in certain circumstances. The interim disclosure provisions are
            effective for financial reports containing financial statements for
            interim periods beginning after 15th December, 2002. The Company
            adopted this SFAS on 1st January, 2003 and determined that there was
            no significant impact on the Company's financial statements.

            In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
            No. 133 on Derivative Instruments and Hedging Activities". The
            statement amends and clarifies accounting for derivative
            instruments, including certain derivatives instruments embedded in
            other contracts and for hedging activities under SFAS No. 133. This
            Statement is generally effective for contracts entered into or
            modified after June 30, 2003. The Company adopted SFAS No. 149 on
            1st July, 2003, and determined that there was no significant impact
            on the Company.


                                      F-42
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

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

            In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
            Financial Instruments with Characteristics of both Liabilities and
            Equity". The statement establishes standards for how an issuer
            classifies and measures certain financial instruments. This
            statement is effective for financial instruments entered into or
            modified after 31st May, 2003 and otherwise is effective at the
            beginning of the first interim period beginning after 15th June,
            2003. The statement requires that certain financial instruments
            that, under previous guidance, could be accounted for as equity is
            classified as liabilities, or assets in some circumstances. This
            statement does not apply to features embedded in a financial
            instrument that is not a derivative in its entirety. The statement
            also requires disclosures about alternative ways of settling the
            instruments and the capital structure of entities whose shares are
            mandatorily redeemable. The Company will be required to adopt this
            standard during the year ending 31st December, 2004. Management is
            assessing, but has not yet determined, the impact that SFAS No. 150
            will have, if any, on its financial position and results of
            operations.

            In November 2002, the FASB issued FASB Interpretation ("FIN") No.
            45, "GUARANTOR'S ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR
            GUARANTEES, INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF
            OTHERS". The interpretation elaborates on the existing disclosure
            requirements for most guarantees, including loan guarantees such as
            standby letters of credit. It also clarifies that at the time a
            company issues a guarantee, the company must recognise an initial
            liability for the fair value, or market value, of the obligations it
            assumes under the guarantee and must disclose that information on
            its interim and annual financial statements. The provisions related
            to recognising a liability at inception of the guarantee for the
            fair value of the guarantor's obligations does not apply to product
            warranties or to guarantees accounted for as derivatives. The
            initial recognition and initial measurement provisions apply on a
            prospective basis to guarantees issued or modified after 31st
            December, 2002. The Company adopted FIN No. 45 on 1st January, 2003.
            There is no material impact on the consolidated financial
            statements.

            In January 2003, the FASB released FIN No. 46 "Consolidation of
            Variable Interest entities". FIN No. 46 requires that an entity
            meeting the definition of a variable interest entity ("VIE") be
            consolidated by any entity that meets the definition of being the
            primary beneficiary. The primary beneficiary is the entity that will
            absorb a majority of the entity's expected losses, receive a
            majority of the entity's expected residual returns or both. In order
            to make that determination, an entity needs to consider the rights
            and obligations conveyed by its variable interests and their
            relationship to the variable interests held by other parties.

            This Interpretation applies immediately to variable interest
            entities created after 31st January, 2003, and to variable interest
            entities in which an enterprise obtains an interest after that date.
            It applies in the first fiscal year or interim period beginning
            after 15th June, 2003, to variable interest entities in which an
            enterprise holds a variable interest that it acquired before 1st
            February, 2003. The Interpretation applies to public enterprises as
            of the beginning of the applicable interim or annual period or
            annual period, and it applies to nonpublic enterprises as of the end
            of the applicable annual period.


                                      F-43
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

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

             This Interpretation may be applied prospectively with a
            cumulative-effect adjustment as of the date on which it is first
            applied or by restating previously issued financial statements for
            one or more years with a cumulative-effect adjustment as of
            beginning of the first year restated. The Company will be required
            to adopt this standard for the year ending 31st December, 2004.
            Management is assessing, but has not yet determined, the impact that
            FIN No. 46 will have, if any, on its financial position and results
            of operations.

     (d)    Details of the movements of the allowance for doubtful accounts for
            the years ended 31st December, 2003, 2002 and 2001 are as follows:

                                                 2003         2002        2001
                                                 ----         ----        ----
                                                HK$'000      HK$'000     HK$'000


            At beginning of year                 15,012         3,612      3,612
            Bad debt expense                         --        11,708         --
            Bad debt recovered                   (6,279)           --         --
            Amount written off                   (3,193)         (308)        --
                                                 ------        ------      -----

            At end of year                        5,540        15,012      3,612
                                                 ======        ======      =====


     (e)    Major customers

            The Company has one customer accounting for 10% or more of its
            service revenue. Service revenue from such customer represents
            24.9%, 23.5% and 23.0% of revenues in 2003, 2002 and 2001,
            respectively.

     (f)    Income tax

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

            The components of profit from operations are as follows:

                                                 2003         2002        2001
                                                 ----         ----        ----
                                                HK$'000     HK$'000     HK$'000


            Hong Kong                           195,776     232,916    259,242
            Overseas                            336,860     404,514    427,934
                                                -------     -------    -------
                                                532,636     637,430    687,176
                                                =======     =======    =======

     (g)    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.


                                      F-44
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

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

     (h)    Concentration of credit risk

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

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

     (i)    Concentration - industry and major customers

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

                                                        2003       2002     2001
                                                        ----       ----     ----

            Broadcasting                                70.4%      68.3%   66.8%

            Telecommunications,
              Internet and Multimedia                   29.6%      31.7%   33.2%

            The five largest customers accounted for 42.0%, 43.2% and 44.3% of
            the Company's total revenue for the years ended 31st December, 2003,
            2002 and 2001, respectively.

            The accounts receivable from the five customers with the largest
            receivables balances represents 67.1% and 81.5% of total accounts
            receivable as of 31st December, 2003 and 2002, respectively.

     (j)    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.

     (k)    Earnings per share

            As of 31st December, 2003, 2002 and 2001 the Company had share
            options outstanding of 6,941,000, 7,149,500 and 3,556,500, which
            could potentially dilute basic earnings per share in the future, but
            were excluded in the computation of diluted earnings per share in
            such periods, as their effect would have been antidilutive.


                                      F-45
<PAGE>

               ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS LIMITED

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

     (l)    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 4 do not represent operating segments under SFAS
            No. 131.

--------------------------------------------------------------------------------


                                      F-46