##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934,
or
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934, or
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
 Date of event requiring this shell company report
 Commission file number 001-14564
 APT SATELLITE HOLDINGS LIMITED
 
  APT SATELLITE HOLDINGS LIMITED
 
  Bermuda
 
  22 Dai Kwai Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong
 
   Title
    
    Name of Each Exchange on Which QuotedOrdinary Shares 
American Depositary Shares
    
    The Stock Exchange of Hong Kong Limited
New York Stock Exchange
        o þ
  o þ
  þ o
  o o þ
  o
 þ
 o
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##### Table of Contents



PageGLOSSARY OF CERTAIN TERMS
    
    
    iiiSpecial Note on Our Financial Information and Certain Statistical Information Presented in This Annual Report
    
    
    8Item 1. Identity of Directors, Senior Management, and Advisers
    
    
    9Item 2. Offer Statistics and Expected Timetable
    
    
    9Item 3. Key Information
    
    
    9Selected Consolidated Financial Information
    
    
    9Risk Factors
    
    
    11Item 4. Information on the Company
    
    
    19History and Development of the Company
    
    
    19Business Overview
    
    
    19Industry and Market Overview
    
    
    21Broadcasting and Telecommunications Markets in Asia
    
    
    22Customers and Services
    
    
    23Operation of the APSTAR System
    
    
    26Competition
    
    
    32Regulation
    
    
    34Organizational Structure
    
    
    36Property, Plant and Equipment
    
    
    37Item 4A. Unresolved Staff Comments
    
    
    37Item 5. Operating and Financial Review and Prospects
    
    
    37Overview
    
    
    37Application of Critical Accounting Policies
    
    
    40Changes in accounting policies
    
    
    42Commitments and Contingencies
    
    
    42Off-Balance Sheet Arrangements
    
    
    43Results of Operations
    
    
    43Liquidity and Capital Resources
    
    
    45Forward Looking Statements
    
    
    46Other
    
    
    47
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PageItem 6. Directors, Senior Management and Employees
    
    
    48Compensation
    
    
    54Board Practices
    
    
    56Service Agreements
    
    
    57Employees
    
    
    59Share Option Schemes
    
    
    59Share Ownership
    
    
    59Item 7. Major Shareholders and Related Party Transactions
    
    
    60Major Shareholders
    
    
    60Related Party Transactions
    
    
    62Item 8. Financial Information
    
    
    63Item 9. The Offer and Listing
    
    
    64Item 10. Additional Information
    
    
    65Material Contracts
    
    
    70Exchange Controls and Other Limitations Affecting Security Holders
    
    
    70Taxation
    
    
    71Item 11. Quantitative and Qualitative Disclosures about Market Risk
    
    
    76Interest Rate Risk
    
    
    76Exchange Rate Sensitivity
    
    
    76Limitations
    
    
    76Item 12. Description of Securities Other Than Equity Securities
    
    
    76Item 13. Defaults, Dividend Arrearages, and Delinquencies
    
    
    77Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    77Item 15. Controls and Procedures
    
    
    77Item 16A. Audit Committee Financial Expert
    
    
    77Item 16B. Code of Ethics
    
    
    78Item 16C. Principal Accountant Fees and Services
    
    
    78Item 16D. Exemption from the Listing Standards for Audit Committees
    
    
    78Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    78Item 17. Financial Statements
    
    
    79Item 18. Financial Statements
    
    
    79Item 19. Exhibits
    
    
    79
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##### Table of Contents



GLOSSARY OF CERTAIN TERMS
  ADS
    
    An American Depositary Share representing ownership of eight shares of the Companys Ordinary
Shares, evidenced by American Depositary Receipts.analog
    
    A method of storing, processing or transmitting information through a continuously varied (rather
than pulsed) signal.APCN2
    
    Asia Pacific Cable Network 2, a submarine cable project under a consortium of telecommunication
companies. The project provides additional telecom capacity for designated Asian cities.APSTAR System
    
    The Companys current and future satellites, including APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V,
APSTAR VI , and any other satellites to be launched by the Company in the future.APT/APT HK
    
    APT Satellite Company Limited, a company incorporated in the HKSAR and a wholly-owned indirect
subsidiary of the Company.APT BVI
    
    APT Satellite Investment Company Limited, a company incorporated in the British Virgin Islands
with limited liability and a wholly-owned subsidiary of the Company.APT Group
    
    The Company and its subsidiaries and affiliates.APT International
    
    APT Satellite International Company Limited, a company incorporated in the British Virgin Islands
with limited liability and a shareholder of the Company.APTs Leases
    
    The Lease Agreement as supplemented and modified by the Cancelled Agreement for Lease, the Deed
of Cancellation, the Second Supplemental Agreement, the Fifth Modification of Lease and the Fifth
Modification Proposal.APT Telecom
    
    APT Satellite Telecommunications Limited, a jointly controlled entity of the Company which is
incorporated in the HKSAR.APT Telecom Lease
    
    The agreement for lease dated March 12, 2001 made between APT Telecom and Science and Technology
Parks Corporation in respect of the Remaining Portion of Section E of Tai Po Town Lot No. 13 and
Extension Thereto, Hong Kong, as modified by the Modification of Agreement for Lease and
Modification of Proposal Form.APT TS
    
    APT Telecom Services Limited, a company incorporated in the HKSAR and a wholly-owned subsidiary
of APT.bandwidth
    
    A range of frequencies occupied by a modulated carrier or the range of frequencies which can be
transmitted through a communications system. Bandwidth is one measure of the information
carrying capacity of a transponder. The wider the bandwidth, the more information can be
transmitted.Bank loan
    
    On December 16, 2002, APT Satellite Company Limited entered into a secured term facility of
US$240 million. It was amended by a Deed of Amendment and Restatement on October 27, 2004 and a
Second Deed of Amendment and Restatement on May 18, 2005.Basic Law
    
    The Basic Law of the Hong Kong Special Administrative Region (HKSAR) of the Peoples Republic of
China, effective as of July 1, 1997, is the constitutional document for the HKSAR.beam
    
    The directed electromagnetic rays emanating from a spacecraft or ground station. With respect to
satellites, it typically refers to aggregates of these rays such as a China (coverage) beam or
global (coverage) beam.Cancelled Agreement for Lease
    
    The agreement for lease dated June 19, 2000 made between APT and the Science and Technology Parks
Corporation in respect of the original Remaining Portion of Section E of Tai Po Town Lot No. 13
and Extensions Thereto.C2C
    
    C2C Pte. Ltd., a cable network provider under a consortium of telecommunication companies led by
Singapore Telecommunications Ltd.
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CCTV
    
    China Central Television, a PRC state-owned enterprise under the supervision and control of the
SARFT.CITV
    
    China International Television Corporation, a PRC state-owned enterprise under the supervision
and control of the SARFT.CLTC
    
    China Satellite Launch and Tracking Control General, a PRC state-owned enterprise subject to the
supervision and control of the Defense Commission.C-band
    
    In satellite communications (FSS) used to refer to downlink frequencies between 3.4 GHz and 4.2
GHz and uplink frequencies between 5.85 GHz and 7.075 GHz. It is often referred to as 4/6 GHz.cellular
    
    Domestic public cellular radio telecommunications service. Cellular systems are based on
multiple base stations, or cells, that permit efficient frequency reuse and on software that
permits the system to band mobile calls from cell to cell as subscribers move through the
cellular service area.China Aerospace
    
    China Aerospace Science & Technology Corporation (formerly China Aerospace Corporation or the PRC
Ministry of Aerospace Industry), a PRC state-owned enterprise engaged in the research, design,
testing and manufacturing of launch vehicles and satellites.ChinaSat
    
    China Telecommunications Broadcast Satellite Corporation, a PRC state-owned enterprise under the
supervision of the SASACDBS
    
    Direct broadcast satellite, a satellite capable of transmitting direct-to-home television
programming.dBW
    
    Decibel relative to one watt, a measure of a satellites power (e.g., 50 dBW is 10 times more
powerful than 40 dBW).Deed of Cancellation
    
    The deed of cancellation and surrender dated March 12, 2001 in respect of cancellation of the
Cancelled Agreement for Lease made between APT and Science and Technology Parks Corporation.digital
    
    Referring to a method of storing, processing, or transmitting information through a pulsed
(rather than continuously varied) signal.downlink
    
    The receiving portion of a satellite circuit extending from the satellite to the earth.Director(s)
    
    Director(s) of the Company,
including all executive director(s), all non-executive director(s)
and independent non-executive directors.earth station
    
    The antennae, receivers, transmitters and other equipment needed on the ground to transmit and
receive satellite communications signals.EBITDA
    
    Net income before taking into account: (i) interest expenses; tax; any share of the profit of any
associated company or undertaking, except for dividends received in cash by any member of the
Company; any share of the non-cash loss of any investment company of other associated company or
undertakings; and extraordinary and exceptional items; and (ii) without double-counting, after
adding back all amounts provided for as depreciation, amortization, impairment assets value or
other provision not involving an outflow of cash.EIRP
    
    Equivalent isotropic radiated power, the product of the power supplied to the antenna and the
antenna gain in a given direction relative to an isotropic antenna (absolute or isotropic gain).Eligible Employee(s)
    
    Employee(s) (whether full time or part time employee(s), including any executive director but not
any non-executive director) of the Company or its subsidiaries.Eligible Grantee(s)
    
    Persons who are eligible to accept the offer of the grant of an Option in accordance with the
Scheme 2001 or Scheme 2002, as the context requires.FCL
    
    Fixed Carrier Licence issued by OFTA for the provision of Facility-based External
Telecommunication Services.
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Fifth Modification of Lease
    
    The fifth modification of agreement for lease dated May 31, 2002 made between APT and Science and
Technology Parks Corporation in respect of modification of purpose of the lease contained in the
Lease Agreement.Fifth Modification Proposal
    
    The fifth modification to proposal form dated May 31, 2002 made between APT and Science and
Technology Parks Corporation in respect of modification of purpose in the proposal form in
relation to the Lease Agreement.footprint
    
    The geographic area covered by a satellites downlink or uplink beams, the outer edge of which is
generally defined as that area where the quality of communication degrades below an acceptable
commercial level due to the spacecraft antenna pattern, power of the signal or curvature of the
earth.4th G
    
    an abbreviation for Fourth-Generation Communications System, is a term used to
describe the next step in wireless communications. A 4G system will be able to provide a
comprehensive IP solution where voice, data and streamed multimedia can be given to users on
an Anytime, Anywhere basis, and at higher data rates than previous generations.frequency
    
    Number of repetitions in a given time. Typically it refers to the rate of variation per second
of the carrier wave or modulating signal. Communications satellite RF signals are typically in
the GHz frequency range. See C-band and Ku-band.FTNS/Fixed Carrier Licence
    
    Fixed telecommunications network services, presently known as Fixed Carrier Licence.GEO
    
    Geostationary orbit.geostationary orbit
    
    A geosynchronous orbit in which the orbital inclination and eccentricity of a satellite are zero
such that the satellite appears to hover over a fixed position on the earths equator.Global Offering
    
    The Companys initial world-wide public offering of Ordinary Shares and American Depositary
Shares, each representing eight shares of the Companys Ordinary Shares dated December 13, 1996.HDTV
    
    High definition television.HKFRS
    
    Hong Kong Financial Reporting Standards, which collectively includes all applicable individual
Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations
issued by the Hong Kong Institute of Certified Public Accountants, and Hong Kong GAAP.HKSAR
    
    Hong Kong Special Administrative Region of the PRC.Hong Kong GAAP
    
    Accounting principles generally accepted in Hong Kong.IAS
    
    International Accounting Standards.IASB
    
    International Accounting Standards Board.IFRS
    
    International Financial Reporting Standards.Interpretations
    
    Interpretations issued by the Hong Kong Institute of Certified Public Accountants.ISDN
    
    Integrated services data network.ITU or International Telecommunication Union
    
    The International Telecommunication Union, the telecommunications agency of the United Nations,
established to provide standardized communications procedures and practices, including frequency
allocation and radio regulations, on a world-wide basis.Joint Declaration
    
    The Joint Declaration of the Government of the United Kingdom and the Government of the PRC on
the Question of Hong Kong with Annexes signed on 19 December 1984.Ku-band
    
    In satellite communications (FSS), it is used to refer to downlink frequencies between 10.7 GHz
and 12.75 GHz and uplink frequencies between 13.75 GHz and 14.8 GHz. Often it is referred to as
11/14 or 12/14 GHz.
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Lease Agreements
    
    The agreement for lease dated February 26, 1993, made between APT and the Science and Technology
Parks Corporation in respect of Subsection 1 of Section E of Tai Po Town Lot No. 13 and Extension
Thereto, Hong Kong on which APTs satellite control center is developed.LEO
    
    Low-earth orbit of up to 1,500 miles above the earth.Master Registry
    
    The Master International Frequency Register of the ITU, which lists frequency assignments of
orbital slots upon notification.MEO
    
    Mid-earth orbit of up to 18,000 miles above the earth.megahertz (MHz)
    
    A measure of frequency, 1 million cycles per second.microwave
    
    Radio frequency carrier waves with wavelengths of less than one meter- frequencies above 300 MHz.MII
    
    formerly the Ministry of Information Industry of the PRC.mobile satellite services
    
    Services transmitted via satellites to provide mobile telephone, paging, messaging, facsimile,
data, and position location services directly to users.OFTA
    
    The Office of the Telecommunications Authority of Hong Kong or, where the context requires, the
Telecommunications Authority of Hong Kong.operational life
    
    The time for which a satellite is capable of operating in its allotted position. The expected
end of a satellites in-orbit operational life is mainly based on the period during which the
satellites on-board fuel permits proper station-keeping maneuvers for the satellite.Option(s)
    
    Options granted to the Eligible Grantees under the Scheme 2001 or to the Participants under the
Scheme 2002, as the context requires.paging
    
    A service designed to deliver a message to a person whose location is unknown; messages may be
received via an alphanumeric or character display or small speaker.Participant(s)
    
    Any person belonging to any of the following classes of persons: (a) any Eligible Employee; and
(b) any non-executive directors (including independent non-executive directors) of the Company or
any of its Subsidiaries, in accordance with the Scheme 2002.PRC
    
    The Peoples Republic of China.PSTN
    
    Public switched telephone networks which comprise the network infrastructure necessary for
providing basic telephone services.radio frequency
    
    A frequency that is higher than the audio frequencies but below the infrared frequencies, usually
above 20 KHz.Radio Regulations
    
    Radio Regulations of the ITU.Radio Regulatory Department
    
    Radio Regulatory Department of the MII.Radiocommunication Bureau
    
    Radiocommunication Bureau of the ITU.SARFT
    
    China State Administration of Radio Film and Television, a government office responsible for the
management of the provision of Radio, Film and Television in the PRC.SASAC
    
    State-owned Assets Supervision and Administration Commission of the State Council of the PRC.Satellite Control Center
    
    The earth station of the APT Group for the TT&C of APSTAR Systems and the provision of
broadcasting transmission and telecommunication services. It is located in Tai Po, New
Territories, Hong Kong.
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Science and Technology Parks Corporation
    
    Hong Kong Science and Technology Parks Corporation (formerly known as Hong Kong Industrial
Science and Technology Parks Corporation), the lessor of certain Lease Agreements with the
Company.scrambled programming
    
    Programming signals which require a decoder for purposes of viewing.Second Supplemental Agreement
    
    The second supplemental agreement for lease and grant of second extension area dated March 12,
2001 made between APT and the Science and Technology Parks Corporation in respect of Subsection 3
of Section E of Tai Po Town Lot No. 13 and Extensions Thereto.signal
    
    A physical, time-dependent energy value used for the purpose of conveying information through a
transmission line.switch
    
    A device that opens or closes circuits or selects the paths or circuits to be used for
transmission of information; switching is the process of interconnecting circuits to form a
transmission path between users.teledensity
    
    Telephone access lines per 100 persons.telemetry
    
    Radio transmission of coded or analog data from a satellite to a ground station.telephony
    
    Science of construction and operation of telephones and telephonic systems.transponder
    
    A microwave repeater which provides a discrete path to receive communications signals, translate
and amplify such signals and retransmit them to earth or another satellite.TT&C
    
    Telemetry, tracking and command.TT&C Station
    
    Telemetry, tracking and command station, a land-based facility that monitors and controls the
positioning, altitude and status of a satellite in orbit.uplink
    
    In satellite communications, the signal from the earth station to the space station (satellite).U.S. GAAP
    
    Accounting principles generally accepted in the United States.VSAT
    
    Very small aperture terminal.WiMax
    
    The Worldwide Interoperability for Microwave Access, is a telecommunications technology aimed at
providing wireless data over long distances in a variety of ways, from point-to-point links to
full mobile cellular type access.
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Special Note on Our Financial Information and
 Certain Statistical Information Presented in This Annual Report
     -8-




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PART I
 
 Item 1. Identity of Directors, Senior Management, and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 
 Selected Consolidated Financial Information
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2006
    
    
    2007
    
    
    2007HK$
    
    
    HK$
    
    
    US$Consolidated Statement of Operations Data:(in millions, except per share data)Turnover
    
    
    427.0
    
    
    
    451.6
    
    
    
    57.9Gross profit
    
    
    88.7
    
    
    
    136.8
    
    
    
    17.5Profit from operations
    
    
    37.5
    
    
    
    81.4
    
    
    
    10.4Finance costs
    
    
    (64.1
    )
    
    
    (55.3
    )
    
    
    (7.1
    )Profit/(loss) before taxation
    
    
    (24.5
    )
    
    
    25.2
    
    
    
    3.2Profit/(loss) for the year
    
    
    (80.6
    )
    
    
    4.7
    
    
    
    0.6Attributable to:Equity shareholders of the Company
    
    
    (79.5
    )
    
    
    5.6
    
    
    
    0.7Minority interests
    
    
    (1.1
    )
    
    
    (0.9
    )
    
    
    (0.1
    )Basic earnings/(loss) per share (cents)(1)
    
    
    (19
    )
    
    
    1
    
    
    
    0Basic earnings/(loss) per ADS (cents)(1)
    
    
    (152
    )
    
    
    11
    
    
    
    2Diluted earnings/(loss) per share
(cents) (1)
    
    
    (19
    )
    
    
    1
    
    
    
    0Diluted earnings/(loss) per ADS
(cents)(1)
    
    
    (152
    )
    
    
    11
    
    
    
    2Weighted average number of shares
outstanding(1)  Basic
    
    
    413.3
    
    
    
    413.3
    
    
    
    413.3Weighted average number of shares
outstanding(1)  Diluted
    
    
    413.3
    
    
    
    413.3
    
    
    
    413.3Dividend per share (cents)
    
    
    
    
    
    
    
    
    
    
    Consolidated Balance Sheet Data:(in millions)Working capital (2)
    
    
    206.8
    
    
    
    114.1
    
    
    
    14.6Property, plant and equipment, net
    
    
    2,721.6
    
    
    
    2,508.3
    
    
    
    321.6Total assets
    
    
    3,407.6
    
    
    
    3,135.6
    
    
    
    402.0Non-current liabilities (less current
portion)
    
    
    1,080.0
    
    
    
    755.9
    
    
    
    96.9Total liabilities
    
    
    1,425.3
    
    
    
    1,146.9
    
    
    
    147.0Total shareholders equity
    
    
    1,980.4
    
    
    
    1,987.8
    
    
    
    254.8
 (1)
    
    Per share and per ADS data is derived from the weighted average number of shares outstanding
during the applicable period. Diluted earnings per share was the same as the basic earnings
per share as there were no dilutive potential ordinary share in existence for two fiscal years
ended December 31, 2007.(2)
    
    Current assets minus current liabilities.  -10-




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2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007Average (1)
    
    
    7.7875
    
    
    
    7.7891
    
    
    
    7.7774
    
    
    
    7.7684
    
    
    
    7.8020High
    
    
    7.8001
    
    
    
    7.8010
    
    
    
    7.8000
    
    
    
    7.7933
    
    
    
    7.8299Low
    
    
    7.7085
    
    
    
    7.7632
    
    
    
    7.7519
    
    
    
    7.7509
    
    
    
    7.7501End of Period
    
    
    7.7640
    
    
    
    7.7723
    
    
    
    7.7545
    
    
    
    7.7778
    
    
    
    7.7994
 
 (1)
    
    The rate of exchange means the noon buying rate in New York City for cable transfer in
foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.
The average rate means the average of the exchange rates on the last day of each month during
the period.  December 2007
    
    
    January 2008
    
    
    February 2008
    
    
    March 2008
    
    
    April 2008
    
    
    May 2008High
    
    
    7.8068
    
    
    
    7.8142
    
    
    
    7.8027
    
    
    
    7.7906
    
    
    
    7.7945
    
    
    
    7.8066Low
    
    
    7.7898
    
    
    
    7.7964
    
    
    
    7.7815
    
    
    
    7.7640
    
    
    
    7.7868
    
    
    
    7.7927
 
 Risk Factors
 Prior to making an investment decision, prospective investors should carefully consider all of
the information set forth in this annual report, including the following risk factors. If any of
the following risks actually occur, the Companys business, financial condition and operating
results could be adversely affected. As a result, the trading price of the Companys ordinary
shares and ADSs could decline and all or part of a prospective investors investment could be lost.
 Technical Risks of satellite systems
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Risk of Satellite Defects or Failure
  Limited Life of Satellites
  TT&C Systems and Earth Station
  Risk of Interruption or harmful interference of APSTAR V
  Changes in Technology and Industry
  Regulatory Risks
 Regulatory Regime for Satellite Operations
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Priority for Orbital Slots
     -13-




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Possible Disputes Relating to Orbital Slots
      Regulatory Constraints on End-users
  th
 Export Restrictions
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1 2 1 2 1 2
  Business Risks
 Insurance
   -15-




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Competitive Nature of the Industry
    -16-




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Additional Financing Requirements
   Dependence on Key Customers
  Interference
  Political and Economic Risks
    -17-




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The Outbreak of Infectious Diseases
  Catastrophic Events
   -18-




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Item 4. Information on the Company
 
 History and Development of the Company
 st
 
 Business Overview
   Business segments:
    
    2006
    
    
    2007Revenue from external customers:Provision of satellite transponder capacity and related services
    
    
    363.1
    
    
    
    395.0Provision of satellite-based broadcasting and
telecommunications services
    
    
    63.8
    
    
    
    56.5Service income
    
    
    0.1
    
    
    
    0.1Total
    
    
    427.0
    
    
    
    451.6
 Provision of satellite transponder capacity and related services
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Satellite-based Broadcasting and Telecommunications Services
      -20-




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Industry and Market Overview
 Satellites
         -21-




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Broadcasting and Telecommunications Markets in Asia
 Increased Distribution of Television Programming
   Liberalization of the Television and Telecommunications Industries
   Continuing Technological Advancements
  High-powered Satellites.
  -22-




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Digital Communications.
 Compressed Digital Video.
  Increased Spending on Telecommunications Projects
  Growth of Information Services Markets
  
 Customers and Services
  Years Ended December 31,2006
    
    
    2007Broadcasting
    
    
    33.4
    %
    
    
    37.0
    %Telecommunications
    
    
    61.7
    %
    
    
    58.5
    %Other service
    
    
    4.9
    %
    
    
    4.5
    %
  -23-




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Broadcasting Customers
   Television Programming Distribution.
    Customer
    
    ProgrammingChina Central Television (CCTV)
    
    10 channels, such as CCTV-1, 2, 5China Education Television (CETV)
    
    3 CETV TV channels, and Educational
distance learning programs and
digital broadcasting businessesChina Broadcasting Film Television
Satellite Co., Ltd. (CBSAT)
    
    Television in provinces of the PRC,
including Chong Qing, Yunnan,
Sichuan and Hunan, totaling around
10 provinces and around 44
channels
  -24-




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Backhaul Services.
 Ad Hoc/Occasional Services.
 Telecommunications Customers
  Private Networks.
   Carrier services.
 Other Service Customers
    -25-




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Transponder Utilization Agreements
  Sales and Marketing
  
 Operation of the APSTAR System
    -26-




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##### Table of Contents



SUMMARY OF SATELLITE DATA
 APSTAR I
    
    APSTAR 1A
    
    APSTAR IIR
    
    APSTAR V
    APSTAR VIRegion covered
    
    North andSoutheast
Asia
    
    North and Southeast
Asia
    
    Europe, Asia,
Middle East, Africa
    
    Most of Asia,
Australia, New
Zealand, Pacific
region, Hawaii
    
    Most of Asia,
Australia, New
Zealand, Pacific
region, HawaiiStatus
    
    Operational
(inclined mode)
    
    Operational
(inclined mode)
    
    Operational
    
    Operational
    
    OperationalModel
    
    HS 376
    
    HS 376
    
    FS 1300
    
    FS1300
    
    SB4100C1Manufacturers
    
    Hughes
    
    Hughes
    
    SS/Loral
    
    SS/Loral
    
    AlcatelTranspondersKu-band
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    16*
    
    
    
    12C-band
    
    
    24
    
    
    
    24
    
    
    
    28
    
    
    
    38*
    
    
    
    38Expected end of
operational life
    
    not applicable**
    
    not applicable**
    
    
    2012#
    
    
    
    2019
    
    
    
    2021
 *
    
    As at August 13, 2004, APT has taken up 25 C-band and 12 Ku-band transponders of APSTAR V.
Two C-band were released to Loral Orion on September 28, 2006.**
    
    The design life of both APSTAR I and APSTAR IA had been over since 2004 and 2006.#
    
    APSTAR IIRs expected operational life is adjusted to 2012 after review carried out in January
2007. APSTAR Satellites
 APSTAR I
   -27-




---



##### Table of Contents



APSTAR IA
    APSTAR IIR
   APSTAR V
   -28-




---



##### Table of Contents



1 2 1 2
     -29-




---



##### Table of Contents



APSTAR VI (formerly APSTAR VB)
   Existing Orbital Slots
    Future Satellites
 APSTAR VIB
   -30-




---



##### Table of Contents



Insurance
  In-orbit Insurance.
 Third-Party Liability Insurance.
 Satellite and Ground Operation Facility
    -31-




---



##### Table of Contents



Customer Technical Qualifications and Support
   Additional Orbital Slots
  
 Competition
    -32-




---



##### Table of Contents



International Satellites
  Regional Satellites
    -33-




---



##### Table of Contents



Optical Fiber Systems
  
 Regulation
      -34-




---



##### Table of Contents



International Telecommunication Union
     Export Regulation
  Hong Kong Regulation
   -35-




---



##### Table of Contents



Overseas National Telecommunications Authorities
   
 Organizational Structure
    -36-




---



##### Table of Contents



Property, Plant and Equipment
    
 Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
  
 Overview
   -37-




---



##### Table of Contents




    
    providing transponder capacity to broadcast customers for the distribution of
programming to television audiences in the PRC and Asia Pacific region;
    
    providing telecommunications networks for data and voice communications; and
    
    providing satellite television uplink and downlink service through the APSTAR System.
      -38-




---



##### Table of Contents



2006
    
    
    2007Statement of Operations Data:Turnover
    
    
    100.0
    %
    
    
    100
    %Costs and expenses:Cost of services
    
    
    79.2
    %
    
    
    69.7
    %Administrative expenses
    
    
    20.9
    %
    
    
    18.1
    %Total costs and expenses
    
    
    100.1
    %
    
    
    87.8
    %(0.1
    %)
    
    
    12.2
    %Profit/(Loss) before taxation
    
    
    (5.7
    %)
    
    
    5.6
    %Profit/(Loss) for the year
    
    
    (18.9
    %)
    
    
    1.0
    %
  2006
    
    
    2007Amount
    
    
    % of
    
    
    Amount
    
    
    % of(HK$ in
    
    
    Total
    
    
    (HK$ in
    
    
    Totalmillions)
    
    
    Revenues
    
    
    millions)
    
    
    RevenuesThe Peoples
Republic of China:Hong Kong
    
    
    60.3
    
    
    
    14.1
    %
    
    
    65.1
    
    
    
    14.4
    %Other regions
    
    
    207.4
    
    
    
    48.6
    %
    
    
    170.7
    
    
    
    37.8
    %Singapore
    
    
    49.8
    
    
    
    11.7
    %
    
    
    61.5
    
    
    
    13.6
    %USA
    
    
    0.4
    
    
    
    0.1
    %
    
    
    0.4
    
    
    
    0.1
    %Indonesia
    
    
    50.4
    
    
    
    11.8
    %
    
    
    90.5
    
    
    
    20.1
    %Others
    
    
    58.7
    
    
    
    13.7
    %
    
    
    63.4
    
    
    
    14.0
    %427.0
    
    
    
    100
    %
    
    
    451.6
    
    
    
    100
    %
  -39-




---



##### Table of Contents



Application of Critical Accounting Policies
  Depreciation
   Trade receivables and other receivables
     -40-




---



##### Table of Contents



Impairment of property, plant and equipment
     Contingencies and provisions
      -41-




---



##### Table of Contents



Change in accounting policies
     
 Commitments and Contingencies
   Contractual Obligations:
 Payments due by periodLessthan 1
    
    
    13
    
    
    45
    
    
    After 5Total
    
    
    year
    
    
    years
    
    
    years
    
    
    yearsUS$240 million term Bank loan(1)
    
    
    683.1
    
    
    
    219.7
    
    
    
    458.8
    
    
    
    4.6
    
    
    
    Interest payment obligations (2)
    
    
    57.8
    
    
    
    32.7
    
    
    
    24.9
    
    
    
    0.2
    
    
    
    Purchase obligations of
the 
Company (3)
    
    
    3.4
    
    
    
    3.4
    
    
    
    
    
    
    
    
    
    
    
    Operating leases (4)
    
    
    3.3
    
    
    
    3.0
    
    
    
    0.3
    
    
    
    
    
    
    
    Total contractual obligations
    
    
    747.6
    
    
    
    258.8
    
    
    
    484.0
    
    
    
    4.8
    
    
    
    
 Other Commercial Commitments:
 Amount of commitment expiration per periodTotal
    
    
    Lessamounts
    
    
    than 1
    
    
    13
    
    
    45
    
    
    After 5committed
    
    
    year
    
    
    years
    
    
    years
    
    
    yearsDeposit received
    
    
    19.6
    
    
    
    
    
    
    
    19.6
    
    
    
    
    
    
    
    Rental received in advance
    
    
    33.7
    
    
    
    33.7
    
    
    
    
    
    
    
    
    
    
    
    Deferred income
    
    
    207.8
    
    
    
    
    
    
    
    59.1
    
    
    
    45.1
    
    
    
    103.6Total commercial
commitments
    
    
    261.1
    
    
    
    33.7
    
    
    
    78.7
    
    
    
    45.1
    
    
    
    103.6
 (1)
    
    This line item represents the cash obligations for principal payments of the
Bank loan. The Bank loan was secured by the assignment of the construction, launching
and related equipment contracts relating to satellites under construction and their
related insurance claim proceeds, assignment of all present and future utilization
agreements of their transponders of satellites under construction, launching and
related equipment contracts. The above Bank loan does not include the borrowing cost
amounting to HK$2.7 million (US$0.3 million).(2)
    
    This line item represents the contractual interest payable for the Bank loan.
The interest payable is calculated by using forward interest rate since the actual
interest payment depends on future LIBOR.  -42-




---



##### Table of Contents



(3)
    
    This line item represents various purchase commitments entered into with the
Companys suppliers due to the long lead times required before the satellites become
operational.(4)
    
    This line item represents future minimum payments under operating leases with
remaining terms of one year or more.  
 Off-Balance Sheet Arrangements
  
 Results of Operations
 Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
 Total Turnover.
 Cost of Services.
 Gross Profit.
  -43-




---



##### Table of Contents



Other net Income.
 Administrative Expenses.
 Impairment Loss Recognized for Property, Plant and Equipment.
 Finance Costs.
 Share of Results of Jointly Controlled Entities.
 Income Tax.
   -44-




---



##### Table of Contents



Profit/(Loss) for the year.
 
 Liquidity and Capital Resources
 Sources of Cash and Credit Available
  Capital Expenditures
    Contractual Obligations and Other Commercial Commitments
  Cash Flow Items
 Net Cash Provided by Operating Activities
  Net Cash Generated from Investing Activities
   -45-




---



##### Table of Contents



Net Cash Used in Financing Activities
  Financing
    
 Forward Looking Statements
   -46-




---



##### Table of Contents



Other
 Exchange Rates
  Inflation
  Taxation
   -47-




---



##### Table of Contents



Item 6. Directors, Senior Management and Employees
   Date FirstElected orName
    
    Age
    
    Position
    
    AppointedExecutive DirectorsCheng Guangren
    
    45
    
    Director and President (appointed June 20, 2008)
    
    2008Tong Xudong
    
    44
    
    Director and Vice President
    
    2004Qi Liang
    
    46
    
    Director and Vice President (appointed June 20, 2008)
    
    2008Non-executive DirectorsRui Xiaowu
    
    49
    
    Chairman
    
    2006Lim Toon
    
    65
    
    Director
    
    1993Yin Yen-liang
    
    57
    
    Director
    
    2003Wu Zhen Mu
    
    62
    
    Director
    
    1998Yong Foo Chong
    
    41
    
    Director
    
    2007Tseng Ta-mon
    
    50
    
    Alternate Director to Yin Yen-liang
    
    2003Independent
Non-executive
directorsHuan Guocang
    
    58
    
    Director
    
    2002Lui King Man
    
    53
    
    Director
    
    2004Lam Sek Kong
    
    48
    
    Director (appointed July 1, 2007)
    
    2007Cui Liguo
    
    38
    
    Director (appointed July 1, 2007)
    
    2007Executive OfficersDong Gang
    
    54
    
    Vice President
    
    2005Lo Kin Hang, Brian
    
    51
    
    Vice President & Company Secretary
    
    2002/1996Chen Xun
    
    37
    
    Vice President
    
    2004Yang Qing
    
    44
    
    Vice President
    
    2004
  -48-




---



##### Table of Contents



Executive Directors
 Mr. CHENG Guangren
 Mr. TONG Xudong
 Mr. QI Liang
  -49-




---



##### Table of Contents



Non-Executive Directors
 Mr. RUI Xiaowu
 Mr. LIM Toon
  -50-




---



##### Table of Contents



Dr. YIN Yen-liang
 Mr. WU Zhen Mu
 Mr. YONG Foo Chong
 Mr. TSENG Ta-mon
  -51-




---



##### Table of Contents



Independent Non-Executive Directors
 Dr. HUAN Guocang
 Dr. LUI King Man
 Dr. LAM Sek Kong
 Mr. CUI Liguo
  -52-




---



##### Table of Contents



Senior Management
 Mr. DONG Gang
 Dr. LO Kin Hang, Brian
 Mr. CHEN Xun
 Mr. YANG Qing
  -53-




---



##### Table of Contents



Compensation
   Salaries,
    
    
    RetirementDirectors
    
    
    allowances and
    
    
    scheme
    
    
    2006fees
    
    
    benefits in kind
    
    
    contributions
    
    
    TotalHK$
    
    
    HK$
    
    
    HK$
    
    
    HK$Executive directorsNi Yifeng
    
    
    50
    
    
    
    2,800
    
    
    
    165
    
    
    
    3,015Tong Xudong
    
    
    50
    
    
    
    2,263
    
    
    
    142
    
    
    
    2,455Non-executive directorsRui Xiaowu (note a)
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3Liu Ji Yuan
    
    
    47
    
    
    
    
    
    
    
    
    
    
    
    47Zhao Liqiang
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3Zhang Hainan
    
    
    47
    
    
    
    
    
    
    
    
    
    
    
    47Lim Toon
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    50Ho Siaw Hong
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    38Lan Kwai-chu
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12Yin Yen-liang
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    50Wu Zhen Mu
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    50Tseng Ta-mon (note b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Independent
non-executive
directorsYuen Pak Yiu, Philip
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    100Huan Guocang
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    100Lui King Man
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    100700
    
    
    
    5,063
    
    
    
    307
    
    
    
    6,070
  -54-




---



##### Table of Contents



PerformanceSalaries,
    
    
    Retirement
    
    
    relatedDirectors
    
    
    allowances and
    
    
    scheme
    
    
    incentive
    
    
    2007fees
    
    
    benefits in kind
    
    
    contributions
    
    
    payment
    
    
    TotalHK$
    
    
    HK$
    
    
    HK$
    
    
    HK$
    
    
    HK$Executive directorsNi Yifeng
    
    
    50
    
    
    
    2,840
    
    
    
    165
    
    
    
    78
    
    
    
    3,133Tong Xudong
    
    
    50
    
    
    
    2,331
    
    
    
    145
    
    
    
    68
    
    
    
    2,594Non-executive
directorsRui Xiaowu (note a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Zhao Liqiang
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Lim Toon
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Yoo Foo Chong
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41Ho Siaw Hong
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Yin Yen-liang
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Wu Zhen Mu
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Tseng Ta-mon (note b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Independent
non-executive
directorsHuan Guocang
    
    
    200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200Lui King Man
    
    
    200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200Yuen Pak Yiu, Philip
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99Lam Sek Kong
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101Cui Liguo
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1011,051
    
    
    
    5,171
    
    
    
    310
    
    
    
    146
    
    
    
    6,678
    (a)
    
    Mr. Rui Xiaowu, a non-executive director, has waived his directors fee
for 2007.(b)
    
    Mr. Tseng Ta-mon was re-designated from non-executive director to
alternate director on September 8, 2004.
  -55-




---



##### Table of Contents



Individuals with highest emoluments(in HK$ thousand)
  2006
    
    
    2007Salaries and other emoluments
    
    
    4,541
    
    
    
    4,839Performance related incentive payments
    
    
    154
    
    
    
    192Retirement benefits contributions
    
    
    303
    
    
    
    3304,998
    
    
    
    5,361
  Number of individuals2006
    
    
    2007$Nil to $1,000
    
    
    1
    
    
    
    $1,500 to $2,000
    
    
    
    
    
    
    1$2,001 to $2,500
    
    
    2
    
    
    
    2$2,501 to $3,000
    
    
    
    
    
    
    3
    
    
    
    3
 Key management personnel remuneration(in HK$ thousand)
  2006
    
    
    2007Short-term employee benefits
    
    
    10,591
    
    
    
    11,057Other long-term benefits
    
    
    687
    
    
    
    367Termination benefits
    
    
    
    
    
    
    70611,278
    
    
    
    12,130
  
 Board Practices
 Term of office
   -56-




---



##### Table of Contents



Service Agreements
     Audit Committee, Nomination Committee and Remuneration Committee
   
    
    to be primarily responsible for making recommendation to the Board of Directors
on the appointment, reappointment and removal of the external auditor, and to approve
the remuneration and terms of engagement of the external auditor;
    
    to monitor integrity of and review significant financial reporting judgments of
the half-year and annual financial statements;
    
    to discuss problems and reservations arising from the interim and final audits;
  -57-




---



##### Table of Contents




    
    to consider the major findings and internal investigations and managements
response;
    
    to review the Companys statement on financial controls, internal control
system and risk management systems (where one is included in the annual report) prior
to endorsement by the Board of Directors;
    
    to review and monitor the external auditors independence and objectivity and
effectiveness of the audit process in accordance with applicable standard, as well as
the nature and scope of other professional services provided to the Company by the
external auditor;
    
    to review APT Groups financial and accounting policies and practices;
    
    to review periodically Company policy statements to determine their adherence
to the Companys codes of conduct;
    
    to investigate any matter brought to its attention within the scope of its
duties, and to retain outside legal counsel or other professional advice for this
purpose if, in its judgment, that is appropriate; and
    
    to consider other topics, as determined by the Board of Directors.
   
    
    to review the structure, size and composition of the Board of Directors;
    
    to identify individuals suitably qualified to become directors;
    
    to assess the independence of Independent Non-executive directors;
    
    to make recommendations to the Board of Directors on matters relating to the
appointment or re-appointments of directors and succession planning for directors in
particular the Chairman and the President;
    
    to establish the nomination procedures; and
    
    to submit a work report to the Board of Directors yearly.
  
    
    to make recommendations to the Board on policy and structure for all
remuneration of directors and senior management and on the establishment of a formal
procedure for developing remuneration policy;
    
    to determine the specific remuneration packages of all directors and senior
management, including benefits in kind, pension rights and compensation payments;
    
    to review and approve the performance-based remuneration by reference to
corporate goals and objectives resolved by the Board of Directors;
    
    to review and approve the compensation payable to directors and senior management;
    
    to review and approve compensation arrangements relating to dismissal or removal of directors;
    
    to ensure that no director or any of his/her associates is involved in deciding his own remuneration;
  -58-




---



##### Table of Contents




    
    to formulate and review regularly the policy for the remuneration of directors,
assessing directors performance and approving the terms of directors service
contracts; and
    
    to submit a work report to the Board of Directors yearly.
 
 Employees
   
 Share Option Schemes
    Options grantedEmployees in
    
    on June 19, 2001
    
    
    
    
    
    
    
    
    
    
    Options remainaggregate
    
    and remain
    
    
    Options
    
    
    
    
    
    
    outstanding as at(including
    
    outstanding as at
    
    
    movement during
    
    
    Options exercised
    
    
    December 31,management)
    
    January 1, 2007
    
    
    the year
    
    
    during the year
    
    
    2007Employees under
employment
contracts
    
    
    3,390,000
    
    
    
    (20,000
    )
    
    
    
    
    
    
    3,370,000
 
 Share Ownership
  Lo Kin Hang, Brian
    
    (Vice President & Company Secretary)
    
    
    5,000Chen Xun
    
    (Vice President)
    
    
    6,000
    *
 *
    
    The capacity in which Chen Xun held 6,000 shares of the Company was as a trustee.  -59-




---



##### Table of Contents



Lo Kin Hang, Brian
    
    (Vice President & Company Secretary)
    
    
    800,000Chen Xun
    
    (Vice President)
    
    
    260,000Yang Qing
    
    (Vice President)
    
    
    130,000
  
 Item 7. Major Shareholders and Related Party Transactions
 
 Major Shareholders
   Identity of Person
    
    Number of
    
    
    Percent ofor Groups
    
    Shares
    
    
    Class (1)China Telecommunications Broadcast
Satellite Corporation (2) (3)
    
    
    67,200,000
    
    
    
    16.26
    %China Aerospace Science & Technology
Corporation (2) (4)
    
    
    36,600,000
    
    
    
    8.86
    %CASIL Satellite Holdings Limited (2)
(5)
    
    
    45,000,000
    
    
    
    10.89
    %SingaSat PTE Ltd. (2) (6)
    
    
    84,000,000
    
    
    
    20.33
    %Kwang Hua Development and Investment
Limited (2) (7)
    
    
    30,600,000
    
    
    
    7.40
    %Sinolike Investments Limited (5)
    
    
    16,800,000
    
    
    
    4.07
    %APT Satellite International Company
Limited (2)
    
    
    214,200,000
    
    
    
    51.83
    %All Directors and Officers as a Group (17
persons)
    
    
    11,000
    
    
    
    *
 
 *
    
    Less than 1%(1)
    
    As of March 31, 2008, the total number of issued Ordinary Shares is 413,265,000.  -60-




---



##### Table of Contents



(2)
    
    The Principal Shareholders collectively hold in aggregate underlying ownership interests of
51.83% indirectly through APT Satellite International Company Limited (APT International),
which holds 214,200,000 Ordinary Shares. The interest of each Principal Shareholder in APT
International as of December 31, 2007 is: ChinaSat
    
    200 shares
    
    
    28.57
    %China Aerospace Science & Technology Corporation
    
    100 shares
    
    
    14.28
    %CASIL Satellite Holdings Ltd.
    
    100 shares
    
    
    14.28
    %SingaSat Pte. Ltd.
    
    200 shares
    
    
    28.57
    %Kwang Hua Development and Investment Ltd.
    
    100 shares
    
    
    14.28
    %
 (3)
    
    China Telecommunications Broadcast Satellite Corporation (ChinaSat) is a PRC state-owned
enterprise under the supervision of the MII. ChinaSat is the satellite operation arm of the
MII. ChinaSat directly owns 6,000,000 Shares and indirectly owns, through its shareholdings
in APT International, 61,200,000 Shares.(4)
    
    China Aerospace Science & Technology Corporation (China Aerospace), formerly China
Aerospace Corporation or the PRC Ministry of Aerospace Industry, is a PRC state-owned
enterprise. China Aerospace is engaged in the research, design, testing and manufacturing of
launch vehicles and satellites. China Aerospace also supervises and controls China Great Wall
Industry Corporation, which is responsible for the sale to foreign customers of commercial
launch services effected by Long March launch vehicles. China Aerospace directly owns
6,000,000 Shares and indirectly owns, through its shareholdings in APT International,
30,600,000 Shares.(5)
    
    Chia Tai International Telecommunication Company Limited (Chia Tai) was wholly-owned by
Telecom Holding Company Limited (Telecom Holding), which managed the investment in the
Company of Telecom Asia Corporation Public Company Limited (TelecomAsia), a publicly listed
company in Thailand. Telecom Holding disposed of its Chai Tai holdings in the Company to
Sinolike Investments Limited (Sinolike) through a share transaction agreement on October 16,
1997. Chia Tai was renamed as CASIL Satellite Holdings Limited (CASIL Satellite) on May 6,
1998. Sinolike is a wholly owned subsidiary of China Aerospace International Holdings Limited
(CASIL), which is a conglomerate listed in Hong Kong and is an approximately 42.53% owned
subsidiary of China Aerospace. CASIL Satellite directly owns 14,400,000 Shares and indirectly
owns, through its shareholdings in APT International, 30,600,000 Shares. Sinolike also
directly owns 16,800,000 Shares.(6)
    
    SingaSat PTE Ltd. (SingaSat) is wholly-owned by Singapore Telecommunications Limited
(SingTel). SingTel is a telecommunications operating company and a holding company for
around 170 subsidiaries which provide a wide range of domestic, international and mobile
telecommunications as well as postal services. SingTel is a publicly listed company in
Singapore. SingaSat directly owns 22,800,000 Shares and indirectly owns, through its
shareholdings in APT International, 61,200,000 Shares.(7)
    
    Kwang Hua Development and Investment Limited (Kwang Hua) is a Hong Kong incorporated
venture capital company owned jointly by the Ruentex Group, one of the largest Taiwanese
conglomerates, and China Development, a prominent financial and investment company in Taiwan.
China Development is also an affiliate of the Ruentex Group. Kwang Hua indirectly owns,
through its shareholdings in APT International, 30,600,000 Shares.    -61-




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##### Table of Contents



Related Party Transactions
 ChinaSat and SingTel
       -62-




---



##### Table of Contents



Years ended December 31,Note
    
    
    2006
    
    
    2007HK$
    
    
    HK$Income from provision of satellite
transponder capacity to certain
shareholders and its subsidiary of the
Company
    
    
    (i
    )
    
    
    16,309
    
    
    
    11,975Income from provision of satellite
transponder capacity, provision of
satellite-based telecommunications services
and service income to a holding company
and its subsidiaries of a shareholder of the
Company
    
    
    (i
    )
    
    
    36,068
    
    
    
    32,630Management fee income from a jointly
controlled entity
    
    (ii)
    
    
    480
    
    
    
    580
  (i)
    
    The terms and conditions of these transponder capacity utilization agreements
are similar to those contracted with other customers of APT Group.(ii)
    
    Management fee income arose from a reimbursement of cost of service provided to
a jointly controlled entity under the agreement.  Amounts due from
    
    
    Amounts due from
    
    
    
    
    
    
    
    
    
    
    Deposits,
    
    
    
    
    
    
    
    
    
    
    Rentals received inimmediate holding
    
    
    a jointly controlled
    
    
    
    
    
    
    
    
    
    
    prepayments and
    
    
    Payables and
    
    
    advance andcompany
    
    
    entity
    
    
    Trade receivables
    
    
    other receivables
    
    
    accrued charges
    
    
    deferred income2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007HK$
    
    
    HK$
    
    
    HK$
    
    
    HK$
    
    
    HK$
    
    
    HK$
    
    
    HK$
    
    
    HK$
    
    
    HK$
    
    
    HK$
    
    
    HK$
    
    
    HK$Immediate holding company
    
    
    82
    
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Jointly controlled entities
    
    
    
    
    
    
    
    
    
    
    75,035
    
    
    
    75,369
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Certain shareholders and
its subsidiary
of the Company
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,037
    
    
    
    2,628
    
    
    
    
    
    
    
    
    
    
    
    228
    
    
    
    219
    
    
    
    
    
    
    
    2,540Holding company and
its subsidiaries of a
shareholder of the Company
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    908
    
    
    
    3,468
    
    
    
    123
    
    
    
    
    
    
    
    11
    
    
    
    15
    
    
    
    217,193
    
    
    
    197,692
 
 Item 8. Financial Information
 Consolidated Financial Statements
   -63-




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##### Table of Contents



Legal Proceedings
  Policy on Dividend Distributions
  Significant Changes.
  
 Item 9. The Offer and Listing
  High (HK$)
    
    
    Low (HK$)2003
    
    
    
    
    
    3.93
    
    
    
    1.022004
    
    
    
    
    
    2.83
    
    
    
    1.302005
    
    
    
    
    
    1.60
    
    
    
    1.102006Quarter ended March 31
    
    
    2.10
    
    
    
    1.36Quarter ended June 30
    
    
    1.88
    
    
    
    1.33Quarter ended September 30
    
    
    1.60
    
    
    
    1.30Quarter ended December 31
    
    
    1.89
    
    
    
    1.182007Quarter ended March 31
    
    
    2.60
    
    
    
    1.35Quarter ended June 30
    
    
    2.30
    
    
    
    1.75Quarter ended September 30
    
    
    2.20
    
    
    
    1.40Quarter ended December 31
    
    
    3.58
    
    
    
    1.70December
    
    
    2.18
    
    
    
    1.702008January
    
    
    2.15
    
    
    
    1.50February
    
    
    1.90
    
    
    
    1.50March
    
    
    1.72
    
    
    
    1.30April
    
    
    1.70
    
    
    
    1.31May
    
    
    1.77
    
    
    
    1.46
  -64-




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##### Table of Contents



High (US$)
    
    
    Low (US$)2003
    
    
    
    
    
    4.60
    
    
    
    1.102004
    
    
    
    
    
    3.50
    
    
    
    1.322005
    
    
    
    
    
    1.61
    
    
    
    1.122006Quarter ended March 31
    
    
    2.10
    
    
    
    1.30Quarter ended June 30
    
    
    1.84
    
    
    
    1.35Quarter ended September 30
    
    
    1.55
    
    
    
    1.28Quarter ended December 31
    
    
    1.69
    
    
    
    1.202007Quarter ended March 31
    
    
    2.60
    
    
    
    1.36Quarter ended June 30
    
    
    2.20
    
    
    
    1.75Quarter ended September 30
    
    
    3.20
    
    
    
    1.38Quarter ended December 31
    
    
    4.95
    
    
    
    1.80December
    
    
    2.50
    
    
    
    1.862008January
    
    
    2.25
    
    
    
    1.25February
    
    
    1.87
    
    
    
    1.50March
    
    
    1.70
    
    
    
    1.28April
    
    
    1.60
    
    
    
    1.35May
    
    
    1.68
    
    
    
    1.41
 
 Item 10. Additional Information
 Memorandum of Association and Bye-laws
  Incorporation and Registration Number
  -65-




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##### Table of Contents



Objects and Purposes
  1)
    
    to act and to perform all the functions of a holding company in all its
branches and to co-ordinate the policy and administration of any subsidiary company or
companies wherever incorporated or carrying on business or of any group of companies of
which the Company or any subsidiary company is a member or which are in any manner
controlled directly or indirectly by the Company;
 2)
    
    to act as an investment company and for that purpose to acquire and hold upon
any terms and, either in the name of the Company or that of any nominee, shares, stock,
debentures, debenture stock, annuities, notes, mortgages, bonds, obligations and
securities, foreign exchange, foreign currency deposits and commodities, issued or
guaranteed by any company wherever incorporated or carrying on business, or by any
government, sovereign, ruler, commissioners, public body or authority, supreme,
municipal, local or otherwise, by original subscription, tender, purchase, exchange,
underwriting, participation in syndicates or in any other manner and whether or not
fully paid up, and to make payments thereon as called up or in advance of calls or
otherwise and to subscribe for the same, whether conditionally or absolutely, and to
hold the same with a view to investment, but with the power to vary any investments,
and to exercise and enforce all rights and powers conferred by or incident to the
ownership thereof, and to invest and deal with the moneys of the Company not
immediately required upon such securities and in such manner as may be from time to
time determined;3)
    
    as set out in paragraphs (b) to (n) and (p) to (u) inclusive of the Second
Schedule to The Companies Act 1981.
 Directors
  (i)
    
    any contract or arrangement for the giving by the Company or any of its
subsidiaries of any security or indemnity to the Director or his associate(s) in
respect of money lent by him or any of his associates or obligations incurred or
undertaken by him or any of them at the request of or for the benefit of the Company or
any of its subsidiaries;(ii)
    
    any contract or arrangement for the giving by the Company or any of its
subsidiaries of any security or indemnity to a third party in respect of a debt or
obligation of the Company or any of its subsidiaries for which the Director or his
associate(s) has/have himself/themselves assumed responsibility in whole or in part
whether alone or jointly under a guarantee or indemnity or by the giving of security;(iii)
    
    any contract or arrangement by a Director or his associate(s) to subscribe for
 shares or debentures or other securities of the Company or any of its subsidiaries to
be issued pursuant to any offer or invitation to the members or debenture holders or to
the public which does not provide the Director or his associate(s) any privilege not
accorded to any other members or debenture holders or to the public;(iv)
    
    any contract, arrangement or proposal concerning an offer of the shares or
debentures or other securities of or by the Company or any other company which the
Company may promote or be interested in for subscription or purchase where the Director
or his associate(s) is/are or is/are to be interested as a participant in the
underwriting or sub-underwriting of the offer;(v)
    
    any contract or arrangement in which the Director or his associate(s) is/are
interested in the same manner as other holders of shares or debentures or other
securities of the Company by virtue only of his/their interest in shares or debentures
or other securities of the Company;(vi)
    
    any contract, arrangement or proposal concerning any company in which the
Director or his associate(s) is/are interested only, whether directly or indirectly,
as an officer or executive or a shareholder or in which the Director and any of his
associate(s) are not in aggregate beneficially
interested in five (5) per cent or more of the issued shares or of the voting rights
of any class of shares of such company (or of any third company through which his
interest or that of any of his associates is derived);
  -66-




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##### Table of Contents



(vii)
    
    any proposal or arrangement for the benefit of employees of the Company or its
subsidiaries including the adoption, modification or operation of a pension fund or
retirement, death or disability benefit scheme which relates both to directors, his
associates and employees of the Company or of any of its subsidiaries and does not give
the Director, or his associate(s), as such any privilege or advantage not accorded
generally to the class of persons to whom such scheme or fund relates; or(viii)
    
    any proposal concerning the adoption, modification or operation of any share scheme
involving the issue or grant of options over shares or other securities by the Company
to, or for the benefit of the employees of the Company or its subsidiaries under which
the Director or his associate(s) may benefit.
 associate(s)
      -67-




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Shareholders Rights
        -68-




---



##### Table of Contents



Actions Necessary to Change Shareholders Rights
  (a)
    
    the necessary quorum (other than at an adjourned meeting) shall be at least two
persons holding or representing by proxy or authorized representative not less than
one-third in nominal value of the issued shares of that class and at any adjourned
meeting of such holders, two holders present in person or by proxy (whatever the number
of shares held by them) shall be a quorum;(b)
    
    every holder of shares of the class shall be entitled on a poll to one vote for
every such share held by him/her; and(c)
    
    any holder of shares of the class present in person or by proxy or authorized
representative may demand a poll.
  General Meetings of Shareholders
   Limitation on Foreign Ownership
   -69-




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##### Table of Contents



Change in Control
  (a)
    
    the instrument of transfer is lodged at the Registration Office or such other
place in Bermuda at which the Register is kept in accordance with the Companies Act or
the Registration Office (as the case may be) accompanied by the relevant share
certificate(s) and such other evidence as the Board may reasonably require to show the
right of the transferor to make the transfer; and(b)
    
    if applicable, the instrument of transfer is duly and properly stamped.
 Ownership Threshold Disclosure
  Significant Differences in Applicable Law
  Changes in Capital
  
 Material Contracts
   
 Exchange Controls and Other Limitations Affecting Security Holders
    -70-




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##### Table of Contents



Taxation
 .
 Bermuda Taxation
   -71-




---



##### Table of Contents



Hong Kong Taxation
 Tax on Dividends
  Profits Tax
  United States Federal Income Taxation
    The Company
    -72-




---



##### Table of Contents



Taxation of Investor-United States Holders
   Ownership of ADSs and Shares
  Taxation of Dividends
     -73-




---



##### Table of Contents



Taxation of Dispositions of Shares or ADSs
   Passive Foreign Investment Company Rules
      -74-




---



##### Table of Contents



Taxation of Investors-Non-United States Holders
  United States Backup Withholding Tax and Information Reporting
   -75-




---



##### Table of Contents



Item 11. Quantitative and Qualitative Disclosures about Market Risk
  
 Interest Rate Risk
  
 Exchange Rate Sensitivity
    
 Limitations
  
 Item 12. Description of Securities Other Than Equity Securities
   -76-




---



##### Table of Contents



PART II
 
 Item 13. Defaults, Dividend Arrearages, and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15. Controls and Procedures
 Disclosure Controls and Procedures.
 Report of the Companys Management.
   Changes in Internal Control Over Financial Reporting.
 
 Item 16A. Audit Committee Financial Expert
   -77-




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##### Table of Contents



Item 16B. Code of Ethics
  
 Item 16C. Principal Accountant Fees and Services
  Years ended December 31,(in US$ thousands)
    
    2006
    
    
    2007Audit fees
    
    
    158
    
    
    
    158Audit-related fees
    
    
    
    
    
    
    Tax fees
    
    
    
    
    
    
    All other fees
    
    
    
    
    
    
    Total
    
    
    158
    
    
    
    158
   
 Item 16D. Exemption from the Listing Standards for Audit Committees
  
 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
   -78-




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##### Table of Contents



PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
  
 Item 19. Exhibits.
 Exhibit No.
    
    Description of Exhibit1.1
    

    
    Memorandum of Association and By-laws of the Company (incorporated by reference to the
Company Registration Statement, as filed with the Commission on December 9, 1996, Registration
Number 333-6044).1.2
    
    
    The amended Memorandum of Association and Bye-Laws of the Company (incorporated by reference
to the Companys 20-F filed with the Commission on June 29, 2004)4.1
    
    
    Satellite Procurement Agreement by and between APT Satellite Company Limited, a wholly owned
subsidiary of the Company, and Contractor, an independent third party not associated with the
Directors, chief executive officer and major shareholders of the Company or any of its
subsidiaries, dated January 8, 2001 (incorporated by reference to the Companys 6-K filed with
the Commission on January 9, 2001).4.2
    
    
    Launch Agreement by and between APT Satellite Company Limited, a wholly owned subsidiary of
the Company, and the Launch Contractor, a subsidiary of China Aerospace Science & Technology
Corporation, dated January 8, 2001 (incorporated by reference to the Companys 6-K filed with
the Commission on January 9, 2001).4.3
    
    
    Satellite Procurement Agreement by and between APT Satellite Company Limited, a wholly owned
subsidiary of the Company, and Contractor, an independent third party not associated with the
Directors, chief executive officer and major shareholders of the Company or any of its
subsidiaries, dated December 11, 2001 (incorporated by reference to the Companys 6-K filed
with the Commission on December 18, 2001).4.4
    
    
    Term Sheet executed by and between APT Satellite Company Limited, a wholly owned subsidiary
of the Company, Contractor and Loral Orion, Inc., both of which are independent third party
not associated with the Directors, chief executive officer and major shareholders of the
Company or any of its subsidiaries, dated September 20, 2002 (incorporated by reference to the
Companys 6-K filed with the Commission on September 30, 2002).4.5
    
    
    Transponder Utilization Agreement by and between APT Satellite Company Limited, a wholly
owned subsidiary of the Company, and Lessee, a connected person under the rules governing the
listing of securities on The Stock Exchange of Hong Kong Limited, dated April 11, 2003
(incorporated by reference to the Companys 6-K filed with the Commission on April 16, 2003).4.6
    
    
    Change of Auditors of the Company KPMG with effect from July 15, 2003 (incorporated by
reference to the Companys 6-K filed with the Commission on July 17, 2003).4.7
    
    
    Satellite Procurement Amendment Agreement by and between APT Satellite Company Limited, a
wholly owned subsidiary of the Company, and the Contractor, a party independent of the
Director, chief executive officer and substantial shareholder of the Company and its
subsidiaries and their
respective associates, dated August 26, 2003. The Satellite Transponder Agreement
and Satellite Agreement by and between APT Satellite Company Limited, a wholly owned
subsidiary of the Company, and the lessor, a party independent of the Director,
chief executive officer and substantial shareholder of the Company and its
subsidiaries and their respective associates, dated August 26, 2003 (incorporated
by reference to the Companys 6-K filed with the Commission on September 2, 2003).
  -79-




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit4.8
    
    
    Various on-going transactions in their ordinary course of business had entered into between
the APT Group of the Company and APT Telecom, a non-wholly owned subsidiary of the Company,
and the contracting party, a connected person under the rules governing the listing of
securities on The Stock Exchange of Hong Kong Limited, as announced August 28, 2003
(incorporated by reference to the Companys 6-K filed with the Commission on September 2,
2003).4.9
    
    
    Master Agreement by and between APT Satellite Telecommunications Limited, a non-wholly owned
subsidiary of the Company, Skywork Corporation, a wholly owned subsidiary of the Company, APT
Telecom Services Limited, a wholly owned subsidiary of the Company, and a connected person
under the rules governing the listing of securities on The Stock Exchange of Hong Kong
Limited, dated September 10, 2003 whereby the business of APT Satellite Telecommunications
Limited was being reorganized (incorporated by reference to the Companys 6-K filed with the
Commission on September 15, 2003).4.10
    
    
    The Agreement and the Amended Launch Agreement by and between APT Satellite Company Limited,
a wholly owned subsidiary of the Company, and the Contractor of APSTAR V, dated November 16,
2003 (incorporated by reference to the Companys 6-K filed with the Commission on September
17, 2003).4.11
    
    
    An utilization agreement for the remaining life of APSTAR I by and between APT Satellite
Company Limited, a wholly owned subsidiary of the Company, and the customer, dated October 22,
2004 (incorporated by reference to the Companys 6-K filed with the Commission on October 29,
2004).4.12
    
    
    An agreement by and between APT Satellite Company Limited, a wholly owned subsidiary of the
Company, and the grantor and contractor of APSTAR VIB dated November 10, 2004 (incorporated by
reference to the Companys 6-K filed with the Commission on November 15, 2004).4.13
    
    
    Two Master Agreements by and between the Company and Singapore Telecommunications Limited;
and the Company and C2C Pte Limited dated December 1, 2004 (incorporated by reference to the
Companys 6-K filed with the Commission on December 3, 2004).4.14
    
    
    The sum insured in respect of the launch of APSTAR VI by and between APT Satellite Company
Limited, a wholly owned subsidiary of the Company, and the joint insurance brokers announced
on March 15, 2005 (incorporated by reference to the Companys 6-K filed with the Commission on
March 16, 2005).4.15
    
    
    The arrangement of sum insured in respect of the in-orbit insurance of APSTAR V by and
between APT Satellite Company Limited, a wholly owned subsidiary of the Company, and the
insurance broker dated August 4, 2005 (incorporated by reference to the Companys 6-K filed
with the Commission on August 5, 2005).4.16
    
    
    Settlement Proposal in respect of the tax assessment on the gain of the transfer of
transponders of APSTAR IIR submitted with the Inland Revenue Department of Hong Kong on August
28, 2006 by APT Satellite Company Limited, a wholly owned subsidiary of the Company, and the
response received from the department (incorporated by reference to the Companys 6-K filed
with the Commission on September 25, 2006).
  -80-




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##### Table of Contents



Exhibit No.
    
    Description of Exhibit4.17
    
    
    The Supplemental Agreement by and between the Company and Singapore Telecommunications
Limited dated December 28, 2006 whereby extending the term of the Master Agreement as filed to
the Companys 6-K on December 3, 2004 (incorporated by reference to the Companys 6-K filed
with the Commission on December 29, 2006).4.18
    
    
    The Option Agreement by and among shareholders of APT Satellite Telecommunication Limited
(the Licensor, a jointly controlled entity owned as to 55% indirectly by the Company), the
Licensor and NTT Com Asia Limited (the Licensee) dated October 2, 2007 whereby granting the
Licensee a call option to purchase the entire equity interests in the Licensor with option
expiry date on December 31, 2008 and a right of first refusal in respect of any offer to
purchase equity interests in the Licensor during the period from January 1, 2009 to December
31, 2010. On the same date, the License Agreement and the Renewal Supplement by and between
the Licensor and Licensee whereby licensing certain premises of the Licensor to the Licensee
for a term of three years beginning October 1, 2007 and renewing the License Agreement subject
to certain conditions (incorporated by reference to the Companys 6-K filed with the
Commission on October 3, 2007).8.1
    
    
    List of subsidiaries of the Company and the jurisdictions under which each does business
(contained in Note 15 to the Consolidated Financial Statements filed herein under Item 18).11
    
    
    Code of Ethics (incorporated by reference to Exhibit 11.1 on the Form 20-F for the year ended
December 31, 2006).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.
 
 **
    
    Filed herewith.  -81-




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##### Table of Contents



SIGNATURES
  APT SATELLITE HOLDINGS LIMITED
 /s/
Cheng Guangren
Cheng
GuangrenExecutive Director and President
   -82-




---



##### Table of Contents



APT SATELLITE HOLDINGS LIMITED AND SUBSIDIARIES




---



##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Report of Independent Registered Public Accounting Firm
    
    
    F - 2Consolidated Statement of Operations for the year ended December 31, 2007
    
    
    F - 3Consolidated Balance Sheet at December 31, 2007
    
    
    F - 4 & 5Consolidated Statement of Changes in Equity
for the year ended December 31, 2007
    
    
    F - 6Consolidated Cash Flow Statement
for the year ended December 31, 2007
    
    
    F - 7 & 8Notes to the Consolidated Financial Statements
    
    
    F - 9  55
  F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    KPMG
 
  F-2




---



##### Table of Contents



Consolidated Statement of Operations
 For the year ended December 31, 2007
  Note
    
    
    2007
    
    
    2006$000
    
    
    $000Turnover
    
    
    3 & 11
    
    
    
    451,626
    
    
    
    426,988Cost of services
    
    
    
    
    
    
    (314,792
    )
    
    
    (338,259
    )Gross profit
    
    
    
    
    
    
    136,834
    
    
    
    88,729Other net income
    
    
    4
    
    
    
    26,334
    
    
    
    37,542Administrative expenses
    
    
    
    
    
    
    (81,896
    )
    
    
    (88,957
    )Revaluation gain on investment property
    
    
    14
    
    
    
    226
    
    
    
    156Impairment loss recognised in respect of
property, plant and equipment
    
    
    12
    (a)
    
    
    (98
    )
    
    
    Profit from operations
    
    
    
    
    
    
    81,400
    
    
    
    37,470Finance costs
    
    
    5
    (a)
    
    
    (55,345
    )
    
    
    (64,140
    )Share of results of jointly controlled entities
    
    
    16
    
    
    
    (894
    )
    
    
    2,182Profit/(Loss) before taxation
    
    
    5
    
    
    
    25,161
    
    
    
    (24,488
    )Income tax
    
    
    6
    (a)
    
    
    (20,445
    )
    
    
    (56,128
    )Profit/(Loss) for the year
    
    
    
    
    
    
    4,716
    
    
    
    (80,616
    )Attributable to:Equity shareholders of the Company
    
    
    9
    
    
    
    5,581
    
    
    
    (79,480
    )Minority interests
    
    
    
    
    
    
    (865
    )
    
    
    (1,136
    )Profit/(Loss) for the year
    
    
    
    
    
    
    4,716
    
    
    
    (80,616
    )Earnings/(Loss) per share
    
    
    10- Basic
    
    
    
    
    
    1 cent
        
    (19 cents
    )- Diluted
    
    
    
    
    
    1 cent
        
    (19 cents
    )
   F-3




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##### Table of Contents



Consolidated Balance Sheet at December 31, 2007
  Note
    
    
    2007
    
    
    2006$000
    
    

$000Non-current assetsProperty, plant and equipment
    
    
    12
    
    
    
    2,508,321
    
    
    
    2,721,582Interest in leasehold land held for own use
under an operating lease
    
    
    13
    
    
    
    14,820
    
    
    
    15,195Investment properties
    
    
    14
    
    
    
    5,171
    
    
    
    2,496Interest in jointly controlled entities
    
    
    16
    
    
    
    3,529
    
    
    
    4,423Amounts due from a jointly controlled entity
    
    
    16
    
    
    
    69,839
    
    
    
    72,294Club memberships
    
    
    
    
    
    
    5,537
    
    
    
    5,537Prepaid expenses
    
    
    17
    
    
    
    14,137
    
    
    
    25,207Deferred tax assets
    
    
    23
    (b)
    
    
    9,174
    
    
    
    8,7472,630,528
    
    
    
    2,855,481Current assetsTrade receivables
    
    
    18
    
    
    
    80,409
    
    
    
    80,261Deposits, prepayments and other receivables
    
    
    17
    
    
    
    23,240
    
    
    
    38,482Amount due from immediate holding company
    
    
    
    
    
    
    101
    
    
    
    82Amounts due from a jointly controlled entity
    
    
    16
    
    
    
    5,530
    
    
    
    2,741Pledged bank deposits
    
    
    28
    
    
    
    83,749
    
    
    
    89,190Cash and cash equivalents
    
    
    19
    
    
    
    312,025
    
    
    
    341,325505,054
    
    
    
    552,081Current liabilitiesPayables and accrued charges
    
    
    
    
    
    
    38,727
    
    
    
    53,777Rentals received in advance
    
    
    
    
    
    
    33,679
    
    
    
    34,155Loan from a minority shareholder
    
    
    
    
    
    
    7,488
    
    
    
    7,488Secured bank borrowings due within one year
    
    
    20
    
    
    
    217,961
    
    
    
    156,820Current taxation
    
    
    23
    (a)
    
    
    93,087
    
    
    
    93,080390,942
    
    
    
    345,320Net current assets
    
    
    
    
    
    
    114,112
    
    
    
    206,761Total assets less current liabilities carried forward
    
    
    
    
    
    
    2,744,640
    
    
    
    3,062,242
  F-4




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##### Table of Contents



Consolidated Balance Sheet at December 31, 2007 (Continued)
 Note
    
    
    2007
    
    
    2006$000
    
    
    $000Total assets less current liabilities brought forward
    
    
    
    
    
    
    2,744,640
    
    
    
    3,062,242Non-current liabilitiesSecured bank borrowings due after one year
    
    
    20
    
    
    
    462,374
    
    
    
    773,534Deposits received
    
    
    21
    
    
    
    19,624
    
    
    
    20,419Deferred income
    
    
    22
    
    
    
    207,787
    
    
    
    222,141Deferred tax liabilities
    
    
    23
    (b)
    
    
    66,164
    
    
    
    63,915755,949
    
    
    
    1,080,009Net assets
    
    
    
    
    
    
    1,988,691
    
    
    
    1,982,233Capital and reservesShare capital
    
    
    24
    
    
    
    41,327
    
    
    
    41,327Share premium
    
    
    
    
    
    
    1,287,536
    
    
    
    1,287,536Contributed surplus
    
    
    26
    
    
    
    511,000
    
    
    
    511,000Capital reserve
    
    
    26
    
    
    
    9,557
    
    
    
    9,614Revaluation reserve
    
    
    26
    
    
    
    368
    
    
    
    Exchange reserve
    
    
    26
    
    
    
    4,007
    
    
    
    2,639Other reserves
    
    
    26
    
    
    
    115
    
    
    
    109Accumulated profits
    
    
    26
    
    
    
    133,855
    
    
    
    128,2171,987,765
    
    
    
    1,980,442Minority interests
    
    
    
    
    
    
    926
    
    
    
    1,791Total equity
    
    
    
    
    
    
    1,988,691
    
    
    
    1,982,233
  Ni Yifeng
    
    Tong XudongDIRECTOR
    
    DIRECTOR
   F-5




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##### Table of Contents



Consolidated Statement of changes in equity
 For the year ended December 31, 2007
  Attributable to equity shareholders of the CompanyShare
    
    
    Share
    
    
    Contributed
    
    
    Capital
    
    
    Revaluation
    
    
    Exchange
    
    
    Other
    
    
    Accumulated
    
    
    
    
    
    
    Minority
    
    
    Totalcapital
    
    
    premium
    
    
    surplus
    
    
    reserve
    
    
    reserve
    
    
    reserve
    
    
    reserves
    
    
    profits
    
    
    Total
    
    
    interests
    
    
    equity$000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000At January 1, 2006
    
    
    41,327
    
    
    
    1,287,536
    
    
    
    511,000
    
    
    
    11,996
    
    
    
    
    
    
    
    1,347
    
    
    
    104
    
    
    
    205,315
    
    
    
    2,058,625
    
    
    
    2,927
    
    
    
    2,061,552Exchange differences
on translation of
financial statements
of overseas
subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,292
    
    
    
    5
    
    
    
    
    
    
    
    1,297
    
    
    
    
    
    
    
    1,297Cancellation of
share options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,382
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,382
    
    
    
    
    
    
    
    
    
    
    
    Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,480
    )
    
    
    (79,480
    )
    
    
    (1,136
    )
    
    
    (80,616
    )Balance at
December 31, 2006
    
    
    41,327
    
    
    
    1,287,536
    
    
    
    511,000
    
    
    
    9,614
    
    
    
    
    
    
    
    2,639
    
    
    
    109
    
    
    
    128,217
    
    
    
    1,980,442
    
    
    
    1,791
    
    
    
    1,982,233At January 1, 2007
    
    
    41,327
    
    
    
    1,287,536
    
    
    
    511,000
    
    
    
    9,614
    
    
    
    
    
    
    
    2,639
    
    
    
    109
    
    
    
    128,217
    
    
    
    1,980,442
    
    
    
    1,791
    
    
    
    1,982,233Exchange differences
on translation of
financial statements
of overseas
subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,368
    
    
    
    6
    
    
    
    
    
    
    
    1,374
    
    
    
    
    
    
    
    1,374Revaluation Surplus
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    368
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    368
    
    
    
    
    
    
    
    368Cancellation of
share options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    57
    
    
    
    
    
    
    
    
    
    
    
    Net profit/(loss)
for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,581
    
    
    
    5,581
    
    
    
    (865
    )
    
    
    4,716Balance at
December 31, 2007
    
    
    41,327
    
    
    
    1,287,536
    
    
    
    511,000
    
    
    
    9,557
    
    
    
    368
    
    
    
    4,007
    
    
    
    115
    
    
    
    133,855
    
    
    
    1,987,765
    
    
    
    926
    
    
    
    1,988,691
   F-6




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##### Table of Contents



Consolidated Cash Flow Statement
 For the year ended December 31, 2007
  2007
    
    
    2006$000
    
    
    $000Operating activitiesProfit/(Loss) before taxation
    
    
    25,161
    
    
    
    (24,488
    )Adjustments for:Depreciation
    
    
    222,461
    
    
    
    231,347Amortisation of leasehold land held for own use
    
    
    375
    
    
    
    375Impairment loss recognised in respect of property, plant and equipment
    
    
    98
    
    
    
    Interest income
    
    
    (22,181
    )
    
    
    (17,559
    )Gain on disposal of property, plant and equipment
    
    
    (261
    )
    
    
    (17,630
    )Finance costs
    
    
    55,345
    
    
    
    64,140Surplus arising on revaluation of investment property
    
    
    (226
    )
    
    
    (156
    )Share of results of jointly controlled entities
    
    
    894
    
    
    
    (2,182
    )Impairment loss for trade and other receivables
    
    
    80
    
    
    
    8,347Operating profit before changes in working capital
    
    
    281,746
    
    
    
    242,194Increase in trade receivables
    
    
    (227
    )
    
    
    (38,622
    )Decrease in prepaid expenses
    
    
    11,070
    
    
    
    7,020Increase in amount due from immediate holding company
    
    
    (19
    )
    
    
    (82
    )Decrease/(Increase) in deposits, prepayments and other receivables
    
    
    14,992
    
    
    
    (2,302
    )(Decrease)/Increase in payables and accrued charges
    
    
    (4,188
    )
    
    
    4,787(Decrease)/Increase in rentals received in advance
    
    
    (476
    )
    
    
    2,741(Increase)/Decrease in amounts due from a jointly controlled entity
    
    
    (89
    )
    
    
    5,059Decrease in deferred income
    
    
    (14,354
    )
    
    
    (16,870
    )(Decrease)/Increase in deposits received
    
    
    (795
    )
    
    
    4,433Cash generated from operations
    
    
    287,660
    
    
    
    208,358Hong Kong profits tax refunded
    
    
    
    
    
    
    21,672Overseas tax paid
    
    
    (18,616
    )
    
    
    (15,129
    )Net cash generated from operating activities
    
    
    269,044
    
    
    
    214,901
  F-7




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##### Table of Contents



Consolidated Cash Flow Statement
For the year ended December 31, 2007 (Continued)
 2007
    
    
    2006$000
    
    
    $000Investing activitiesPayment for purchase of property, plant and equipment
    
    
    (11,426
    )
    
    
    (7,098
    )Proceeds from disposal of property, plant and equipment
    
    
    295
    
    
    
    70,898Advances/loans to jointly controlled entities
    
    
    (245
    )
    
    
    (7,518
    )Interest received
    
    
    22,431
    
    
    
    16,896Decrease/(Increase) in pledged bank deposits
    
    
    5,441
    
    
    
    (20,491
    )Net cash generated from investing activities
    
    
    16,496
    
    
    
    52,687Financing activitiesInterest paid
    
    
    (64,243
    )
    
    
    (63,514
    )Repayment of bank borrowings
    
    
    (253,013
    )
    
    
    (191,226
    )Net cash used in financing activities
    
    
    (317,256
    )
    
    
    (254,740
    )Net (decrease)/increase in cash and cash equivalents
    
    
    (31,716
    )
    
    
    12,848Cash and cash equivalents at January 1
    
    
    341,325
    
    
    
    326,440Effect of foreign exchange rates changes
    
    
    2,416
    
    
    
    2,037Cash and cash equivalents at December 31
    
    
    312,025
    
    
    
    341,325
   F-8




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##### Table of Contents



Notes to the consolidated financial statements
  1
    
    Significant accounting policies
 (a)
    
    Statement of complianceThese financial statements have been prepared in accordance with all applicable
International Financial Reporting Standards (IFRSs) issued by the International
Accounting Standards Board (IASB), which collective term includes all applicable
individual IFRSs, International Accounting Standards (IASs) and Interpretations issued
by the IASB. As Hong Kong Financial Reporting Standards (HKFRSs), which collective
term includes all applicable individual HKFRSs, Hong Kong Accounting Standards (HKASs)
and Interpretations issued by the Hong Kong Institute of Certified Public Accountants
(HKICPA) and accounting principles generally accepted in Hong Kong, are consistent
with IFRSs, these financial statements also comply with HKFRSs and the disclosure
requirements of the Hong Kong Companies Ordinance. These financial statements also
comply with the applicable disclosure provisions of the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited (listing rules). A summary of
the significant accounting policies adopted by the Group is set out below.Although HKFRSs have been fully converged with IFRSs in all material respects since
January 1, 2005, these financial statements are the first published financial
statements in which the Group makes an explicit and unreserved statement of compliance
with IFRSs. Therefore, in preparing these financial statements management has given due
consideration to the requirements of IFRS 1, First-time Adoption of International
Financial Reporting Standards. For this purpose the date of the Groups transition to
IFRSs was determined to be January 1, 2006, being the beginning of the earliest period
for which the Group presents full comparative information in these financial
statements.With due regard to the Groups accounting policies in previous periods and the
requirements of IFRS 1, management has concluded that no adjustments to the amounts
reported under HKFRSs as at the date of transition to IFRSs, or in respect of the year
ended December 31, 2006, were required in order to enable the Group to make an explicit
and unreserved statement of compliance with IFRSs in the first IFRS financial
statements which included these amounts as comparatives. Accordingly, these financial
statements continue to include a statement of compliance with HKFRSs as well including
for the first time a statement of compliance with IFRSs, without adjustment to the
Groups financial position, financial performance or cash flows either at the date of
transition to IFRSs or at the end of latest period presented in accordance with HKFRSs.(b)
    
    Basis of preparation of the financial statementsThe consolidated financial statements for the year ended December 31, 2007 comprise
the Company and its subsidiaries (together referred to as the Group) and the Groups
interest in jointly controlled entities.The measurement basis used in the preparation of the financial statements is the
historical cost basis except that investment property (see note 1(f)) is stated at
fair value as explained in the accounting policies set out below.The preparation of financial statements in conformity with IFRSs and HKFRSs requires
management judgements, estimates and assumptions that affect the application of
policies and reported amounts of assets, liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
  F-9




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##### Table of Contents



1
    
    Significant accounting policies (Continued)
 (b)
    
    Basis of preparation of the financial statements (Continued)The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which estimate is revised if
the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.Judgements made by management in the application of IFRSs and HKFRSs that have
significant effect on the financial statements and estimates with a significant risk
of material adjustment in the next year are discussed in note 36.(c)
    
    Subsidiaries and minority interestSubsidiaries are entities controlled by the Group. Control exists when the Group has
the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, potential voting rights that
presently are exercisable are taken into account.An investment in a subsidiary is consolidated into the consolidated financial
statements from the date that control commences until the date that control ceases.
Intra-group balances and transactions and any unrealised profits arising from
intra-group transactions are eliminated in full in preparing the consolidated
financial statements. Unrealised losses resulting from intra-group transactions are
eliminated in the same way as unrealised gains but only to the extent that there is no
evidence of impairment.Minority interests represent the portion of the net assets of subsidiaries
attributable to interests that are not owned by the Company, whether directly or
indirectly through subsidiaries, and in respect of which the Group has not agreed any
additional terms with the holders of those interests which would result in the Group
as a whole having a contractual obligation in respect of those interests that meets
the definition of a financial liability. Minority interests are presented in the
consolidated balance sheet within equity, separately from equity attributable to the
equity shareholders of the Company. Minority interests in the results of the Group
are presented on the face of the consolidated income statement as an allocation of the
total profit or loss for the year between minority interests and the equity
shareholders of the Company.Where losses applicable to the minority exceed the minoritys interest in the equity
of a subsidiary, the excess, and any further losses applicable to the minority, are
charged against the Groups interest except to the extent that the minority has a
binding obligation to, and is able to, make additional investment to cover the losses.
If the subsidiary subsequently reports profits, the Groups interest is allocated all
such profits until the minoritys share of losses previously absorbed by the Group has
been recovered.Loan from holder of minority interests is presented as financial liabilities in the
consolidated balance sheet in accordance with note 1(k).(d)
    
    Jointly controlled entitiesA jointly controlled entity is an entity which operates under a contractual
arrangement between the Group and other parties, where the contractual arrangement
establishes that the Group and one or more of the other parties share joint control
over the economic activity of the entity.An investment in a jointly controlled entity is accounted for in the consolidated
financial statements under the equity method and is initially recorded at cost and
adjusted thereafter for the post acquisition change in the Groups share of the
jointly controlled entitys net assets, unless it is classified as held for sale (or
included in a disposal group that is classified as held for sale). The consolidated
income statement includes the Groups share of the post-acquisition post-tax results
of the jointly controlled entities for the year, including any impairment loss on
goodwill relating to the investment in jointly controlled entities recognised for the
year (see note 1(e) and (i)).
  F-10




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##### Table of Contents



1
    
    Significant accounting policies (Continued)
 (d)
    
    Jointly controlled entities (Continued)When the Groups share of losses exceeds its interest in the jointly controlled
entity, the Groups interest is reduced to nil and recognition of further losses is
discontinued except to the extent that the Group has incurred legal or constructive
obligations or made payments on behalf of the jointly controlled entity. For this
purpose, the Groups interest in the jointly controlled entity is the carrying amount
of the investment under the equity method together with the Groups long-term
interests that in substance form part of the Groups net investment in the jointly
controlled entity.Unrealised profits and losses resulting from transactions between the Group and its
jointly controlled entities are eliminated to the extent of the Groups interest in
the jointly controlled entity, except where unrealised losses provide evidence of an
impairment of the asset transferred, in which case they are recognised immediately in
the income statement.(e)
    
    GoodwillGoodwill represents the excess of the cost of a business combination or an investment
in a jointly controlled entity over the Groups interest in the net fair value of the
acquirees identifiable assets, liabilities and contingent liabilities.Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated
to cash-generating units and is tested annually for impairment (see note 1(i)). In
respect of jointly controlled entities, the carrying amount of goodwill is included in
the carrying amount of the interest in the jointly controlled entity.Any excess of the Groups interest in the net fair value of the acquirees
identifiable assets, liabilities and contingent liabilities over the cost of a
business combination or an investment in a jointly controlled entity is recognised
immediately in the income statement.On disposal of a cash generating unit, or a jointly controlled entity during the year,
any attributable amount of purchased goodwill is included in the calculation of the
profit or loss on disposal.(f)
    
    Investment propertyInvestment properties are land and/or buildings which are owned or held under a
leasehold interest (see note 1(h)) to earn rental income and/or for capital
appreciation. These include land held for a currently undetermined future use.Investment properties are stated in the balance sheet at fair value. Any gain or loss
arising from a change in fair value or from the retirement or disposal of an
investment property is recognised in the income statements. Rental income from
investment properties is accounted for as described in note 1(q)(iv).When the Group holds a property interest under an operating lease to earn rental
income and/or for capital appreciation, the interest is classified and accounted for
as an investment property on a property-by-property basis. Any such property interest
which has been classified as an investment property is accounted for as if it were
held under a finance lease (see note 1(h)), and the same accounting policies are
applied to that interest as are applied to other investment properties leased under
finance leases. Lease payments are accounted for as described in note 1(h).Where other land and buildings is reclassified to investment property, the cumulative
increase in fair value of investment property at the date of reclassification is
included in the revaluation reserve, and will be transferred to retained profits upon
the retirement and disposal of the relevant property.
  F-11




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##### Table of Contents



1
    
    Significant accounting policies (Continued)
 (g)
    
    Other property, plant and equipmentThe following items of property, plant and equipment are stated in the balance sheet
at cost less accumulated depreciation and impairment losses (see note 1(i)):
 

    buildings held for own use which are situated on leasehold land,
where the fair value of the building could be measured separately from the fair
value of the leasehold land at the inception of the lease (see note 1(h)); and

    other items of plant and equipment.
 Gains or losses arising from the retirement or disposal of an item of property, plant
and equipment are determined as the difference between the net disposal proceeds and
the carrying amount of the item and are recognised in the income statement on the date
of retirement or disposal. Any related revaluation surplus is transferred from the
revaluation reserve to retained profits.Depreciation is calculated to write off the cost or valuation of items of property,
plant and equipment, less their estimated residual value, if any, using the straight
line method over their estimated useful lives as follows:
 

    Buildings situated on leasehold land are depreciated over the shorter
of the unexpired term of lease and their estimated useful lives, being no more
than 50 years after the date of completion.
 
    Leasehold improvement
    
    Over the lease term
    Furniture and equipment, motor vehicles, and computer equipment
    
    5 years
    Communication satellite equipment
    
    5 to 15 years
    Communication station
    
    5 years
    Communication satellites
    
    9 to 16 years
 Where parts of an item of property, plant and equipment have different useful lives,
the cost or valuation of the item is allocated on a reasonable basis between the parts
and each part is depreciated separately. Both the useful life of an asset and its
residual value, if any, are reviewed annually.(h)
    
    Leased assetsAn arrangement, comprising a transaction or a series of transactions, is or contains a
lease if the Group determines that the arrangement conveys a right to use a specific
asset or assets for an agreed period of time in return for a payment or a series of
payments. Such a determination is made on an evaluation of the substance of the
arrangement and is regardless of whether the arrangement takes the legal form of a
lease.
 (i)
    
    Classification of assets leased to the GroupAssets that are held by the Group under leases which transfer to the Group
substantially all the risks and rewards of ownership are classified as being held
under finance leases. Leases which do not transfer substantially all the risks and
rewards of ownership to the Group are classified as operating leases, with the
following exceptions:
 

    property held under operating leases that would otherwise
meet the definition of an investment property is classified as an investment
property on a property-by-property basis and, if classified as investment
property, is accounted for as if held under a finance lease (see note 1(f));
and

    land held for own use under an operating lease, the fair
value of which cannot be measured separately from the fair value of a
building situated thereon at the inception of the lease, is accounted for as
being held under a finance lease, unless the building is also clearly held
under an operating lease. For these purposes, the inception of the lease is
the time that the lease was first entered into by the Group, or taken over
from the previous lessee.
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##### Table of Contents



1
    
    Significant accounting policies (Continued)
 (h)
    
    Leased assets (Continued)
 (ii)
    
    Assets acquired under finance leasesWhere the Group acquires the use of assets under finance leases, the amounts
representing the fair value of the leased asset, or, if lower, the present value
of the minimum lease payments, of such assets are included in fixed assets and the
corresponding liabilities, net of finance charges, are recorded as obligations
under finance leases. Depreciation is provided at rates which write off the cost
of the assets in equal annual amounts, to residual values, over the term of the
relevant lease or, where it is likely the Group will obtain ownership of the
asset, the life of the asset, as set out in note 1(g). Impairment losses are
accounted for in accordance with the accounting policy as set out in note 1(i).
Finance charges implicit in the lease payments are charged to the income statement
over the period of the leases so as to produce an approximately constant periodic
rate of charge on the remaining balance of the obligations for each accounting
period. Contingent rentals are charged to the income statement in the accounting
period in which they are incurred.(iii)
    
    Operating lease chargesWhere the Group has the use of assets under operating leases, payments made under
the leases are charged to the income statement in equal instalments over the
accounting periods covered by the lease term, except where an alternative basis is
more representative of the pattern of benefits to be derived from the leased
asset. Lease incentives received are recognised in the income statement as an
integral part of the aggregate net lease payments made. Contingent rentals are
charged to the income statement in the accounting period in which they are
incurred.The cost of acquiring land held under an operating lease is amortised on a
straight-line basis over the period of the lease term except where the property is
classified as an investment property (see note 1(f)).
 (i)
    
    Impairment of assets
 (i)
    
    Impairment of assetsInternal and external sources of information are reviewed at each balance sheet
date to identify indications that the following assets may be impaired or, except
in the case of goodwill, an impairment loss previously recognised no longer exists
or may have decreased:
 

    property, plant and equipment;

    investments in subsidiaries and joint ventures;

    club memberships; and

    goodwill.
 If any such indication exists, the assets recoverable amount is estimated. In
addition, for goodwill, the recoverable amount is estimated annually whether or
not there is any indication of impairment.
 

    Calculation of recoverable amountThe recoverable amount of an asset is the greater of its net selling price and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of time value of money and the risks specific to
the asset. Where an asset does not generate cash inflows largely independent
of those from other assets, the recoverable amount is determined for the
smallest group of assets that generates cash inflows independently (i.e. a
cash-generating unit).
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##### Table of Contents



1
    
    Significant accounting policies (Continued)
 (i)
    
    Impairment of assets (Continued)
 
    Recognition of impairment lossesAn impairment loss is recognised in the income statement whenever the carrying
amount of an asset, or the cash-generating unit to which it belongs, exceeds
its recoverable amount. Impairment losses recognised in respect of
cash-generating units are allocated first to reduce the carrying amount of any
goodwill allocated to the cash-generating unit (or group of units) and then,
to reduce the carrying amount of the other assets in the unit (or group of
units) on a pro rata basis, except that the carrying value of an asset will
not be reduced below its individual fair value less costs to sell, or value in
use, if determinable.

    Reversals of impairment lossesIn respect of assets other than goodwill, an impairment loss is reversed if
there has been a favourable change in the estimates used to determine the
recoverable amount. An impairment loss in respect of goodwill is not reversed.A reversal of impairment losses is limited to the assets carrying amount that
would have been determined had no impairment loss been recognised in prior
years. Reversals of impairment losses are credited to the income statement in
the year in which the reversals are recognised.
 (ii)
    
    Interim financial reporting and impairmentUnder the rule governing the listing of securities on the Stock Exchange of Hong
Kong Limited, the Group is required to prepare an interim financial report in
compliance with HKAS 34, Interim financial reporting, in respect of the first six
months of the financial year. At the end of the interim period, the Group applies
the same impairment testing, recognition, and reversal criteria as it would at the
end of the financial year (see notes 1(i)(i)).Impairment losses recognised in an interim period in respect of goodwill and
unquoted equity securities carried at cost are not reversed in a subsequent
period. This is the case even if no losses, or a smaller loss, would have been
recognised had the impairment been assessed only on at the end of the financial
year to which the interim period relates.
 (j)
    
    Trade and other receivablesTrade and other receivables are initially recognised at fair value and thereafter
stated at amortised cost less impairment losses for bad and doubtful debts, except
where the receivables are interest-free loans made to related parties without any
fixed repayment terms. In such cases, the receivables are stated at cost less
impairment losses for bad and doubtful debts. The impairment loss is measured as the
difference between the assets carrying amount and the present value of estimated
future cash flows, discounted at the financial assets original effective interest
rate (i.e. the effective interest rate computed at initial recognition of these
assets), where the effect of discounting is material.(k)
    
    Interest-bearing borrowingsInterest-bearing borrowings are recognised initially at fair value less attributable
transaction costs. Subsequent to initial recognition, interest-bearing borrowings are
stated at amortised cost with any difference between the amount initially recognised and
redemption value being recognised in the income statement over the period of the
borrowings, together with any interest and fees payable, using the effective interest
method.(l)
    
    Trade and other payablesTrade and other payables are initially recognised at fair value and thereafter stated
at amortised cost unless the effect of discounting would be immaterial, in which case
they are stated at cost.
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##### Table of Contents



1
    
    Significant accounting policies (Continued)
 (m)
    
    Cash and cash equivalentsCash and cash equivalents comprise cash at bank and on hand, demand deposits with
banks and other financial institutions, and short-term, highly liquid investments that
are readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value, having been within three months of maturity at
acquisition. Bank overdrafts that are repayable on demand and form an integral part of
the Groups cash management are also included as a component of cash and cash
equivalents for the purpose of the consolidated cash flow statement.(n)
    
    Employee benefits
 (i)
    
    Salaries, annual bonuses, paid annual leave, leave passage and the
cost to the Group of non-monetary benefits are accrued in the year in which the
associated services are rendered by employees of the Group. Where payment or
settlement is deferred and the effect would be material, these amounts are stated
at their present values.Contributions to Mandatory Provident Funds as required under the Hong Kong
Mandatory Provident Fund Schemes Ordinance, are recognised as an expense in the
income statement as incurred.The employees of the Group participate in retirement plans managed by respective
local governments of the municipalities in which the Group operates in the Peoples
Republic of China (the PRC). The Groups contributions to the plan are calculated
based on fixed rates of the employees salary costs and charged to the income
statement when incurred. The Group has no other obligation for the payment of
retirement and other post-retirement benefits of staff other than the contributions
described above.(ii)
    
    Share based paymentsThe fair value of share options granted to employees is recognised as an employee
cost with a corresponding increase in a capital reserve within equity. The fair
value is measured at grant date using the binomial lattice model, taking into
account the terms and conditions upon which the options were granted. Where the
employees have to meet vesting conditions before becoming unconditionally entitled
to the options, the total estimated fair value of the share options is spread over
the vesting period, taking into account the probability that the options will
vest.During the vesting period, the number of share options that is expected to vest is
reviewed. Any adjustment to the cumulative fair value recognised in prior years is
charged/credited to the income statement for the year of the review, unless the
original employee expenses qualify for recognition as an asset, with a corresponding
adjustment to the capital reserve. On vesting date, the amount recognised as an
expense is adjusted to reflect the actual number of share options that vest (with a
corresponding adjustment to the capital reserve) except where forfeiture is only due
to not achieving vesting conditions that relate to the market price of the Companys
 shares. The equity amount is recognised in the capital reserve until either the
option is exercised (when it is transferred to the share premium account) or the
option expires (when it is released directly to retained profits).(iii)
    
    Termination benefitsTermination benefits are recognised when, and only when,
the Group demonstrably commits itself to terminate employment or to
provide benefits as a result of voluntary redundancy by having a
detailed formal plan which is without realistic possibility of
withdrawal.
  F-15




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##### Table of Contents



1
    
    Significant accounting policies (Continued)
 (o)
    
    Income taxIncome tax for the year comprises current tax and movements in deferred tax assets and
liabilities. Current tax and movements in deferred tax assets and liabilities are
recognised in the income statement except to the extent that they relate to items
recognised directly in equity, in which case they are recognised in equity.Current tax is the expected tax payable on the taxable income for the year, using tax
rates enacted or substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.Deferred tax assets and liabilities arise from deductible and taxable temporary
differences respectively, being the differences between the carrying amounts of assets
and liabilities for financial reporting purposes and their tax bases. Deferred tax
assets also arise from unused tax losses and unused tax credits.Apart from certain limited exceptions, all deferred tax liabilities, and all deferred
tax assets to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised, are recognised. Future taxable
profits that may support the recognition of deferred tax assets arising from
deductible temporary differences include those that will arise from the reversal of
existing taxable temporary differences, provided those differences relate to the same
taxation authority and the same taxable entity, and are expected to reverse either in
the same period as the expected reversal of the deductible temporary difference or in
periods into which a tax loss arising from the deferred tax asset can be carried back
or forward. The same criteria are adopted when determining whether existing taxable
temporary differences support the recognition of deferred tax assets arising from
unused tax losses and credits, that is, those differences are taken into account if
they relate to the same taxation authority and the same taxable entity, and are
expected to reverse in a period, or periods, in which the tax loss or credit can be
utilised.The limited exceptions to recognition of deferred tax assets and liabilities are those
temporary differences arising from goodwill not deductible for tax purposes, the
initial recognition of assets or liabilities that affect neither accounting nor
taxable profit (provided they are not part of a business combination), and temporary
differences relating to investments in subsidiaries to the extent that, in the case of
taxable differences, the Group controls the timing of the reversal and it is probable
that the differences will not reverse in the foreseeable future, or in the case of
deductible differences, unless it is probable that they will reverse in the future.The amount of deferred tax recognised is measured based on the expected manner of
realisation or settlement of the carrying amount of the assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet date. Deferred tax
assets and liabilities are not discounted.The carrying amount of a deferred tax asset is reviewed at each balance sheet date and
is reduced to the extent that it is no longer probable that sufficient taxable profit
will be available to allow the related tax benefit to be utilised. Any such reduction
is reversed to the extent that it becomes probable that sufficient taxable profit will
be available.Additional income taxes that arise from the distribution of dividends are recognised
when the liability to pay the related dividends is recognised.
  F-16




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##### Table of Contents



1
    
    Significant accounting policies (Continued)
 (o)
    
    Income tax (Continued)Current tax balances and deferred tax balances, and movements therein, are presented
separately from each other and are not offset. Current tax assets are offset against
current tax liabilities, and deferred tax assets against deferred tax liabilities if,
and only if, the Company or the Group has the legally enforceable right to set off
current tax assets against current tax liabilities and the following additional
conditions are met:
 

    in the case of current tax assets and liabilities, the Company or the
Group intends either to settle on a net basis, or to realise the asset and settle
the liability simultaneously; or

    in the case of deferred tax assets and liabilities, if they relate to
income taxes levied by the same taxation authority on either:
 

    the same taxable entity; or

    different taxable entities, which, in each future period in
which significant amounts of deferred tax liabilities or assets are expected to
be settled or recovered, intend to realise the current tax assets and settle
the current tax liabilities on a net basis or realise and settle
simultaneously.
 (p)
    
    Provisions and contingent liabilitiesProvisions are recognised for liabilities of uncertain timing or amount when the
Company or Group has a legal or constructive obligation arising as a result of a past
event, it is probable that an outflow of economic benefits will be required to settle
the obligation and a reliable estimate can be made. Where the time value of money is
material, provisions are stated at the present value of the expenditures expected to
settle the obligation.Where it is not probable that an outflow of economic benefits will be required, or the
amount cannot be estimated reliably, the obligation is disclosed as a contingent
liability, unless the probability of outflow of economic benefits is remote. Possible
obligations, whose existence will only be confirmed by the occurrence or
non-occurrence of one or more future events are also disclosed as contingent
liabilities unless the probability of outflow of economic benefits is remote.(q)
    
    Revenue recognitionProvided it is probable that the economic benefits will flow to the Group and the
revenue and costs, if applicable, can be measured reliably, revenue is recognised in
the income statement as follows:
 (i)
    
    Transponder utilisation incomeIncome from provision of satellite transponder capacity and related services is
recognised in the income statement in equal instalments over the accounting
periods covered by the contract term, except where an alternative basis is more
representative of the pattern of benefits to be derived from the satellite
transponder capacity utilised.(ii)
    
    Service incomeService income in respect of provision of satellite-based broadcasting and
telecommunications services and other service is recognised when services are
provided.(iii)
    
    Interest incomeInterest income is recognised as if accrued using the effective interest method.(iv)
    
    Rental income from operating leasesRental income receivable under operating leases is recognised in the income
statement in equal instalments over the periods covered by the lease term, except
where an alternative basis is more representative of the pattern of benefits to be
derived from the use of the leased asset. Lease incentives granted are recognised
in the income statement as an integral part of the aggregate net lease payments
receivable. Contingent rentals are recognised as income in the accounting period
in which they are earned.
  F-17




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##### Table of Contents



1
    
    Significant accounting policies (Continued)
 (r)
    
    Translation of foreign currenciesForeign currency transactions during the year are translated at the foreign exchange
rates ruling at the transaction dates. Monetary assets and liabilities denominated in
foreign currencies are translated at the foreign exchange rates ruling at the balance
sheet date. Exchange gains and losses are recognised in the income statements, except
those arising from foreign currency borrowings used to hedge a net investment in a
foreign operation which are recognised directly in equity.Non-monetary assets and liabilities that are measured in terms of historical cost in a
foreign currency are translated using the foreign exchange rates ruling at the
transaction dates. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated using the foreign exchange
rates ruling at the dates the fair value was determined.The functional currency of the Groups main operations is the United States dollar
which is translated into Hong Kong dollar for reporting of the financial statements.
As the Hong Kong dollar is pegged to the United States dollar, the impact of foreign
currency exchange fluctuations is insignificant to the Group.The results of foreign operations are translated into Hong Kong dollars at the
exchange rates approximating the foreign exchange rates ruling at the dates of the
transactions. Balance sheet items are translated into Hong Kong dollars at the foreign
exchange rates ruling at the balance sheet date. The resulting exchange differences
are recognised directly in a separate component of equity.On disposal of a foreign operation, the cumulative amount of the exchange differences
recognised in equity which relate to that foreign operation is included in the
calculation of the profit and loss on disposal.(s)
    
    Borrowing costsBorrowing costs are expensed in the income statement in the period in which they are
incurred, except to the extent that they are capitalised as being directly
attributable to the acquisition or construction of an asset which necessarily takes a
substantial period of time to get ready for its intended use or sale.The capitalisation of borrowing costs as part of the cost of a qualifying asset
commences when expenditures for the asset are being incurred, borrowing costs are
being incurred and activities that are necessary to prepare the asset for its intended
use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases
when substantially all the activities necessary to prepare the qualifying asset for
its intended use or sale are interrupted or complete.(t)
    
    Related partiesFor the purposes of these financial statements, a party is considered to be related to
the Group if:
 (i)
    
    the party has the ability, directly or indirectly through one or more
intermediaries, to control the Group or exercise significant influence over the
Group in making financial and operating policy decisions, or has joint control
over the Group;
 (ii)
    
    the Group and the party are subject to common control;
 (iii)
    
    the party is an associate of the Group or a joint venture in which
the Group is a venturer;
 (iv)
    
    the party is a member of key management personnel of the Group or the
Groups parent, or a close family member of such an individual, or is an entity
under the control, joint control or significant influence of such individuals;
 (v)
    
    the party is a close family member of a party referred to in (i) or is
an entity under the control, joint control or significant influence of such
individuals; or
 (vi)
    
    the party is a post-employment benefit plan which is for the benefit
of employees of the Group or of any entity that is a related party of the Group.
 Close family members of an individual are those family members who may be expected to
influence, or be influenced by, that individual in their dealings with the entity.
  F-18




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##### Table of Contents



1
    
    Significant accounting policies (Continued)
 (u)
    
    Segment reportingA segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which is
subject to risks and rewards that are different from those of other segments.In accordance with the Groups internal financial reporting system, the Group has
chosen business segment information as the primary reporting format and geographical
segment information as the secondary reporting format for the purposes of these
financial statements.Segment revenue, expenses, results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on a reasonable basis
to that segment. Segment assets of the Group include trade receivables and property,
plant and equipment. Segment revenue, expenses, assets, and liabilities are determined
before intra-group balances and intra-group transactions are eliminated as part of the
consolidation process, except to the extent that such intra-group balances and
transactions are between Group entities within a single segment. Inter-segment pricing
is based on terms similar to those available to other external parties.Segment capital expenditure is the total cost incurred during the period to acquire
segment assets (both tangible and intangible) that are expected to be used for more
than one period.Unallocated items mainly comprise financial and corporate assets, tax balances,
corporate and financing expenses.
 2
    
    Changes in accounting policiesThe IASB has issued a number of new and revised IFRSs and Interpretations that are first
effective for the current accounting period commencing January 1, 2007 or available for early
adoption. The equivalent new and revised HKFRSs and Interpretations consequently issued by
HKICPA have the same effective date as those issued by the IASB and are in all material
respects identical to the pronouncements issued by the IASB. There have been no other
material changes to HKFRSs.These developments have not resulted in any significant changes to the accounting policies
applied in these financial statements compared to those applied in the Groups financial
statements for the year ended December 31, 2006. However, as a result of the adoption of
IFRS/HKFRS 7, Financial instruments: Disclosures and the amendments to IAS/HKAS 1,
Presentation of financial statements: Capital disclosures, these financial statements include
certain additional disclosures which are explained as follows.As a result of the adoption of IFRS/HKFRS 7, the financial statements include expanded
disclosure about the significance of the Groups financial instruments and the nature and
extent of risks arising from those instruments, compared with the information previously
required to be disclosed by IAS/HKAS 32, Financial instruments: Disclosure and presentation.
These disclosures are provided throughout these financial statements, in particular in note
27.The amendment to IAS/HKAS 1 introduces additional disclosure requirements to provide
information about the level of capital and the Groups objectives, policies and processes for
managing capital. These new disclosures are set out in
note 24(b).Both IFRS/HKFRS 7 and the amendments to IAS/HKAS 1 do not have any impact on the
classification, recognition and measurement of the amounts recognised in the financial
statements.The Group has not applied any new standard or interpretation that is not yet effective for the
current accounting period (see note 37).
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##### Table of Contents



3
    
    TurnoverThe principal activities of the Group are the maintenance, operation, and provision of
satellite transponder capacity and related services and satellite-based broadcasting and
telecommunications services and other services.Turnover represents income received and receivable from provision of satellite transponder
capacity and related services, satellite-based broadcasting and telecommunications services
and other service. The amount of each category of revenue recognised in turnover during the
year is as follows:
 2007
    
    
    2006$000
    
    
    $000Income from provision of satellite
transponder capacity and related services
    
    
    395,032
    
    
    
    363,074Income from provision of satellite-based
broadcasting and telecommunications services
    
    
    56,453
    
    
    
    63,817Service income
    
    
    141
    
    
    
    97451,626
    
    
    
    426,988
 4
    
    Other net income
 2007
    
    
    2006$000
    
    
    $000Other net income primarily includes the following:Interest income
    
    
    22,181
    
    
    
    17,559Rental income in respect of properties
    
    
    592
    
    
    
    536Gain on disposal of property, plant and equipment (note 12(c))
    
    
    261
    
    
    
    17,630
 5
    
    Profit/(Loss) before taxationProfit/(Loss) before taxation is arrived at after charging/(crediting):
 (a)
    
    Finance costs
 2007
    
    
    2006$000
    
    
    $000Interest on bank borrowings wholly repayable within five years
    
    
    52,254
    
    
    
    60,525Other borrowing costs
    
    
    3,091
    
    
    
    3,61555,345
    
    
    
    64,140
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5
    
    Profit/(Loss) before taxation (Continued)Profit/(Loss) before taxation is arrived at after charging/(crediting): (Continued)
 (b)
    
    Staff costs
 2007
    
    
    2006$000
    
    
    $000Staff costs (including directors emoluments)Pension contributions
    
    
    2,767
    
    
    
    2,399Less: Forfeited contributions
    
    
    
    
    
    
    (8
    )Net pension contributions
    
    
    2,767
    
    
    
    2,391Salaries, wages and other benefits
    
    
    47,222
    
    
    
    44,36349,989
    
    
    
    46,754
 (c)
    
    Other items
 2007
    
    
    2006$000
    
    
    $000Auditors remuneration- audit services
    
    
    1,266
    
    
    
    1,246- other services
    
    
    10
    
    
    
    10Depreciation
    
    
    222,461
    
    
    
    231,347Amortisation on leasehold land held for own use
    
    
    375
    
    
    
    375Foreign currency exchange gain
    
    
    (2,251
    )
    
    
    (302
    )Operating lease charges: minimum lease payments- land and buildings and equipment
    
    
    961
    
    
    
    1,021- satellite transponder capacity
    
    
    4,830
    
    
    
    7,461Impairment loss for trade and other receivables
    
    
    80
    
    
    
    8,347Impairment loss for property, plant and equipment
    
    
    98
    
    
    
    
 6
    
    Income tax
 (a)
    
    Taxation represents:
 2007
    
    
    2006$000
    
    
    $000Current tax  Hong Kong Profits TaxOverprovision in respect of prior years
    
    
    
    
    
    
    (21,771
    )Current tax  OverseasTax for the year
    
    
    18,623
    
    
    
    19,122Deferred tax  Hong KongOrigination of temporary differences
    
    
    1,822
    
    
    
    58,77720,445
    
    
    
    56,128
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##### Table of Contents



6
    
    Income tax (Continued)
 (a)
    
    Taxation represents: (Continued)Taxation is charged at the appropriate current rates of taxation ruling in the relevant
countries.No provision for Hong Kong Profits Tax has been made in the financial statements as the
Group operating in Hong Kong incurred tax losses for the year. Overseas tax includes the
withholding tax paid or payable in respect of Groups income from provision of satellite
transponder capacity to the customers which are located outside Hong Kong.In prior years, a subsidiary of the Company was in dispute with Hong Kongs Inland
Revenue Department (the IRD) in relation to the transfer of the entire business of
APSTAR IIR and substantially all of the satellite transponders of APSTAR IIR. Having
considered the advice from its independent tax advisor, management believed that it
would be in the best interest of the Company that the dispute be settled as soon as
practicable to avoid further incurrence of time, effort and professional cost. In 2006,
the subsidiary of the Company submitted a settlement proposal to the IRD, via its tax
advisor with a view to compromising on the tax assessment dispute. In September 2006,
the IRD accepted the proposal of treating sale proceeds from the disposal of APSTAR IIR
of $2,114,758,000 as taxable income arising over the remaining life of APSTAR IIR until
the tax assessment year of 2012/2013. In addition, the IRD accepted the Company
continuing to claim the deduction of statutory depreciation allowances in respect of
APSTAR IIR and other expenditures related to the transaction to offset such taxable
income.With the proposal accepted by the IRD, the tax dispute in respect of the years of
assessment of 1999/2000 and 2000/2001 is settled. The net assessable profit for
1999/2000 of the subsidiary was revised to zero and the profits tax previously paid of
$21,589,259 were refunded. In addition, as the subsidiary was in a tax loss position in
2000/2001, 2001/2002 and 2002/2003, the Tax Reserve Certificate in the amount of
$78,385,377 previously paid, with interest from the date of purchase in March 2006 until
the date of the IRD accepting the proposal was redeemed and the provisional tax paid for
2002/2003 of $82,868 was refunded.As a result of the proposal being accepted by the IRD, a deferred tax asset of
$123,239,000 has been recognised based on the total cumulative tax losses carried
forward and the depreciation allowances in respect of APSTAR IIR to be deducted in the
future. Furthermore, a deferred tax liability of $166,063,000 has been recognised for
the related deferred lease income to be taxed in the future.
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##### Table of Contents



6
    
    Income tax (Continued)
 (b)
    
    Reconciliation between tax expense and profit/(loss) before taxation at applicable
tax rates:
 2007
    
    
    2006$000
    
    
    $000Profit/(Loss) before taxation
    
    
    25,161
    
    
    
    (24,488
    )Notional tax on profit/(loss) before tax,
calculated at the rates applicable to losses
in the countries concerned
    
    
    4,056
    
    
    
    (4,710
    )Overseas withholding tax
    
    
    18,623
    
    
    
    19,122Tax effect of non-deductible expenses
    
    
    2,287
    
    
    
    2,967Tax effect of non-taxable revenue
    
    
    (4,629
    )
    
    
    (3,834
    )Tax effect of unused tax losses not recognised
    
    
    1,463
    
    
    
    1,767Tax effect of prior years unrecognised tax
losses utilised this year
    
    
    (1,355
    )
    
    
    (2,008
    )Others (note)
    
    
    
    
    
    
    42,824Actual tax expenses
    
    
    20,445
    
    
    
    56,128
 Note:
    
    This represents the net deferred tax expense recognised in connection with the
tax settlement of APSTAR IIR (See note 6(a)).(c)
    
    In November 2007, a subsidiary of the Company was requested to supply information to
the IRD in respect of the nature of the gain arising from the disposal of certain
transponders in 2006 (see note 12c(ii)) and as to whether such transaction should be
taxable. The directors believe they have sufficient grounds to support their contention
that such transaction should be treated as capital in nature and no profits tax provision
in respect of such transaction was made as of December 31, 2007. The management is in the
process of gathering the requested relevant information.  However, the final outcomes are
subject to uncertainties and the resulting tax exposure may differ from the reasonable
estimate made by the management.
  F-23




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##### Table of Contents



7
    
    Directors remunerationDirectors remuneration disclosed pursuant to section 161 of the Hong Kong Companies
Ordinance is as follows:
 Salaries,
    
    
    
    
    
    
    Performanceallowances and
    
    
    Retirement
    
    
    relatedDirectors
    
    
    benefits
    
    
    scheme
    
    
    incentive
    
    
    2007fees
    
    
    in kind
    
    
    contributions
    
    
    payments
    
    
    Total$000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Executive directorsNi Yifeng
    
    
    50
    
    
    
    2,840
    
    
    
    165
    
    
    
    78
    
    
    
    3,133Tong Xudong
    
    
    50
    
    
    
    2,331
    
    
    
    145
    
    
    
    68
    
    
    
    2,594Non-executive directorsRui Xiaowu (note a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Zhao Liqiang
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Lim Toon
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Yoo Foo Chong
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41Ho Siaw Hong
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9Yin Yen-liang
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Wu Zhen Mu
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Tseng Ta-mon (note b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Independent
non-executive
directorsHuan Guocang
    
    
    200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200Lui King Man
    
    
    200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200Yuen Pak Yiu, Philip
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99Lam Sek Kong
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101Cui Liguo
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1011,051
    
    
    
    5,171
    
    
    
    310
    
    
    
    146
    
    
    
    6,678
  F-24




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##### Table of Contents



7
    
    Directors remuneration (Continued)
 Salaries,
    
    
    
    
    
    
    Performanceallowances and
    
    
    Retirement
    
    
    relatedDirectors
    
    
    benefits
    
    
    scheme
    
    
    incentive
    
    
    2006fees
    
    
    in kind
    
    
    contributions
    
    
    payments
    
    
    Total$000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Executive directorsNi Yifeng
    
    
    50
    
    
    
    2,800
    
    
    
    165
    
    
    
    
    
    
    
    3,015Tong Xudong
    
    
    50
    
    
    
    2,263
    
    
    
    142
    
    
    
    
    
    
    
    2,455Non-executive directorsRui Xiaowu (note a)
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Liu Ji Yuan
    
    
    47
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47Zhao Liqiang
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Zhang Hainan
    
    
    47
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47Lim Toon
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Ho Siaw Hong
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38Lan Kwai-chu
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Yin Yen-liang
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Wu Zhen Mu
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50Tseng Ta-mon (note b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Independent
non-executive
directorsYuen Pak Yiu, Philip
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100Huan Guocang
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100Lui King Man
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100700
    
    
    
    5,063
    
    
    
    307
    
    
    
    
    
    
    
    6,070
 In addition to the above emoluments, certain Directors were granted share options under the
Companys share option scheme. The details of these benefits in kind are disclosed under the
paragraph Share option schemes in note 25.Notes:Alternate directors are not entitled to receive any directors fees:
 (a)
    
    Mr. Rui Xiaowu, a non-executive director, has waived his directors fees for 2007.(b)
    
    Mr. Tseng Ta-mon was re-designated from non-executive director to alternate director
on September 8, 2004.
  F-25




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##### Table of Contents



8
    
    Individuals with highest emolumentsOf the five highest paid individuals of the Group, two are directors (2006: two) whose
remuneration is disclosed in note 7. The aggregate of emoluments in respect of the other
three (2006: three) individuals are as follows:
 2007
    
    
    2006$000
    
    
    $000Salaries and other emoluments
    
    
    4,839
    
    
    
    4,541Performance related incentive payments
    
    
    192
    
    
    
    154Retirement benefits contributions
    
    
    330
    
    
    
    3035,361
    
    
    
    4,998
 The emoluments of the three (2006: three) individuals with the highest emoluments are within
the following bands:
 Number of individuals2007
    
    
    2006$Nil to $1,000,000
    
    
    
    
    
    
    1$1,000,001 to $1,500,000
    
    
    1
    
    
    
    $2,000,001 to $2,500,000
    
    
    2
    
    
    
    23
    
    
    
    3
 9
    
    Profit/(Loss) attributable to shareholdersThe consolidated profit/(loss) attributable to shareholders includes a loss of $884,000
(2006: $12,000) which has been dealt with in the financial statements of the Company.10
    
    Earnings/(Loss) per share
 (a)
    
    Basic earnings/(loss) per shareThe calculation of basic earnings/(loss) per share is based on the profit/(loss)
attributable to shareholders of $5,581,000 (2006: $79,480,000 loss attributable to
equity shareholders) and the weighted average of 413,265,000 ordinary shares (2006:
413,265,000 shares) in issue during the year ended December 31, 2007.(b)
    
    Diluted earnings/(loss) per shareDiluted earnings/(loss) per share is the same as the basic earnings/(loss) per share as
there were no dilutive potential ordinary shares in existence during the years 2007 and
2006.
  F-26




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##### Table of Contents



11
    
    Segmental reportingSegment information is presented in respect of the Groups business and geographical
segments. Business information is chosen as the primary reporting format because this is
more relevant to the Groups internal financial reporting.Inter-segment pricing is based on terms similar to those available to external third
parties.Business segmentsThe Group comprises two main business segments, namely provision of satellite transponder
capacity and related services and provision of satellite-based broadcasting and
telecommunications services.
 Provision ofsatellite-basedProvision of satellite
    
    
    broadcasting andtransponder capacity
    
    
    telecommunications
    
    
    Inter-segmentand related services
    
    
    services
    
    
    elimination
    
    
    Consolidated2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006$000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Turnover from external
customers
    
    
    395,032
    
    
    
    363,074
    
    
    
    56,453
    
    
    
    63,817
    
    
    
    
    
    
    
    
    
    
    
    451,485
    
    
    
    426,891Inter-segment turnover
    
    
    14,028
    
    
    
    19,193
    
    
    
    1,260
    
    
    
    1,128
    
    
    
    (15,288
    )
    
    
    (20,321
    )
    
    
    
    
    
    
    Total
    
    
    409,060
    
    
    
    382,267
    
    
    
    57,713
    
    
    
    64,945
    
    
    
    (15,288
    )
    
    
    (20,321
    )
    
    
    451,485
    
    
    
    426,891Service income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141
    
    
    
    97451,626
    
    
    
    426,988Segment result
    
    
    126,873
    
    
    
    71,809
    
    
    
    9,644
    
    
    
    8,481
    
    
    
    (2
    )
    
    
    (5
    )
    
    
    136,515
    
    
    
    80,285Service income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141
    
    
    
    97Unallocated other net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,560
    
    
    
    37,698Unallocated administrative
expenses- staff costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47,792
    )
    
    
    (44,940
    )- office expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,024
    )
    
    
    (35,670
    )Profit from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,400
    
    
    
    37,470Finance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,345
    )
    
    
    (64,140
    )Share of results of jointly
controlled entities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (894
    )
    
    
    2,182Profit/(loss) before taxation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,161
    
    
    
    (24,488
    )Income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,445
    )
    
    
    (56,128
    )Profit/(loss) for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,716
    
    
    
    (80,616
    )
  F-27




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##### Table of Contents



11
    
    Segmental reporting (Continued)Business segments (Continued)
 Provision ofsatellite-basedProvision of satellite
    
    
    broadcasting andtransponder capacity
    
    
    telecommunications
    
    
    Inter-segmentand related services
    
    
    services
    
    
    elimination
    
    
    Consolidated2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006$000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Depreciation for the year
    
    
    216,557
    
    
    
    224,501
    
    
    
    5,904
    
    
    
    6,846Impairment loss for the year
    
    
    
    
    
    
    
    
    
    
    98
    
    
    
    Significant non-cash
expenses (other than
depreciation)
    
    
    25
    
    
    
    7,886
    
    
    
    55
    
    
    
    460
 Provision ofsatellite-basedProvision of satellite
    
    
    broadcasting andtransponder capacity
    
    
    telecommunications
    
    
    Inter-segmentand related services
    
    
    services
    
    
    elimination
    
    
    Consolidated2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006$000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Segment assets
    
    
    2,629,907
    
    
    
    2,858,518
    
    
    
    36,272
    
    
    
    50,768
    
    
    
    (41,872
    )
    
    
    (51,922
    )
    
    
    2,624,307
    
    
    
    2,857,364Investment in and
amounts due from
jointly controlled
entities
    
    
    78,898
    
    
    
    79,458
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,898
    
    
    
    79,458Unallocated assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    432,377
    
    
    
    470,740Total assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,135,582
    
    
    
    3,407,562Segment liabilities
    
    
    330,908
    
    
    
    344,165
    
    
    
    76,449
    
    
    
    90,362
    
    
    
    (41,872
    )
    
    
    (51,922
    )
    
    
    365,485
    
    
    
    382,605Unallocated liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    781,406
    
    
    
    1,042,724Total liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,146,891
    
    
    
    1,425,329Capital expenditure
incurred during the
year
    
    
    9,343
    
    
    
    3,506
    
    
    
    1,340
    
    
    
    2,728
  F-28




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##### Table of Contents



11
    
    Segmental reporting (Continued)Geographical segmentsThe Groups operating assets consist primarily of its satellites which are used, or are
intended for use, for transmission to multiple countries but not located within a specific
geographical area. Accordingly, no segment analysis of the carrying amount of segment assets
by location of assets is presented.In presenting information on the basis of geographical segments, segment revenue, segment
assets and capital expenditure is based on the geographical location of customers.
 Other regionsHong Kong
    
    
    in the PRC
    
    
    Singapore
    
    
    Indonesia
    
    
    Others
    
    
    Unallocated2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006$000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Turnover from
external customers
    
    
    65,065
    
    
    
    60,340
    
    
    
    170,758
    
    
    
    207,389
    
    
    
    61,486
    
    
    
    49,821
    
    
    
    90,505
    
    
    
    50,420
    
    
    
    63,812
    
    
    
    59,018
    
    
    
    
    
    
    
    Segment assets
    
    
    6,794
    
    
    
    15,302
    
    
    
    39,070
    
    
    
    41,254
    
    
    
    3,894
    
    
    
    1,930
    
    
    
    16,499
    
    
    
    14,132
    
    
    
    14,152
    
    
    
    7,643
    
    
    
    3,055,173
    
    
    
    3,327,301Capital expenditure
incurred during the
year
    
    
    
    
    
    
    
    
    
    
    369
    
    
    
    844
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,314
    
    
    
    5,390
  F-29




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##### Table of Contents



12
    
    Property, plant and equipment
 Furniture andLand
    
    
    
    
    
    
    equipment, motor
    
    
    Communicationand
    
    
    Leasehold
    
    
    vehicles, and
    
    
    satellite
    
    
    Communication
    
    
    Communication
    
    
    Constructionbuildings
    
    
    improvements
    
    
    computer equipment
    
    
    equipment
    
    
    station
    
    
    satellites
    
    
    in progress
    
    
    Total$000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Cost:At January 1, 2006
    
    
    102,233
    
    
    
    7,621
    
    
    
    43,280
    
    
    
    161,175
    
    
    
    13,904
    
    
    
    5,028,640
    
    
    
    1,098
    
    
    
    5,357,951Exchange adjustments
    
    
    
    
    
    
    42
    
    
    
    109
    
    
    
    406
    
    
    
    556
    
    
    
    
    
    
    
    44
    
    
    
    1,157Additions
    
    
    
    
    
    
    491
    
    
    
    2,759
    
    
    
    2,743
    
    
    
    23
    
    
    
    
    
    
    
    218
    
    
    
    6,234Disposals
    
    
    
    
    
    
    
    
    
    
    (536
    )
    
    
    (824
    )
    
    
    
    
    
    
    (62,589
    )
    
    
    
    
    
    
    (63,949
    )At December 31, 2006
    
    
    102,233
    
    
    
    8,154
    
    
    
    45,612
    
    
    
    163,500
    
    
    
    14,483
    
    
    
    4,966,051
    
    
    
    1,360
    
    
    
    5,301,393At January 1, 2007
    
    
    102,233
    
    
    
    8,154
    
    
    
    45,612
    
    
    
    163,500
    
    
    
    14,483
    
    
    
    4,966,051
    
    
    
    1,360
    
    
    
    5,301,393Exchange adjustments
    
    
    
    
    
    
    71
    
    
    
    177
    
    
    
    699
    
    
    
    924
    
    
    
    
    
    
    
    87
    
    
    
    1,958Additions
    
    
    
    
    
    
    4,792
    
    
    
    903
    
    
    
    2,925
    
    
    
    8
    
    
    
    
    
    
    
    2,055
    
    
    
    10,683Disposals
    
    
    
    
    
    
    
    
    
    
    (2,270
    )
    
    
    (31,090
    )
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    (33,368
    )Transfer
    
    
    (3,222
    )
    
    
    
    
    
    
    
    
    
    
    (277
    )
    
    
    1,101
    
    
    
    
    
    
    
    (824
    )
    
    
    (3,222
    )At December 31, 2007
    
    
    99,011
    
    
    
    13,017
    
    
    
    44,422
    
    
    
    135,757
    
    
    
    16,516
    
    
    
    4,966,051
    
    
    
    2,670
    
    
    
    5,277,444Accumulated depreciation:At January 1, 2006
    
    
    17,289
    
    
    
    4,277
    
    
    
    33,944
    
    
    
    99,767
    
    
    
    5,891
    
    
    
    2,197,381
    
    
    
    
    
    
    
    2,358,549Exchange adjustments
    
    
    
    
    
    
    34
    
    
    
    84
    
    
    
    242
    
    
    
    236
    
    
    
    
    
    
    
    
    
    
    
    596Charge for the year
    
    
    2,075
    
    
    
    416
    
    
    
    7,435
    
    
    
    12,583
    
    
    
    2,582
    
    
    
    206,256
    
    
    
    
    
    
    
    231,347Written back on disposal
    
    
    
    
    
    
    
    
    
    
    (495
    )
    
    
    (810
    )
    
    
    
    
    
    
    (9,376
    )
    
    
    
    
    
    
    (10,681
    )At December 31, 2006
    
    
    19,364
    
    
    
    4,727
    
    
    
    40,968
    
    
    
    111,782
    
    
    
    8,709
    
    
    
    2,394,261
    
    
    
    
    
    
    
    2,579,811At January 1, 2007
    
    
    19,364
    
    
    
    4,727
    
    
    
    40,968
    
    
    
    111,782
    
    
    
    8,709
    
    
    
    2,394,261
    
    
    
    
    
    
    
    2,579,811Exchange adjustments
    
    
    
    
    
    
    68
    
    
    
    125
    
    
    
    479
    
    
    
    556
    
    
    
    
    
    
    
    
    
    
    
    1,228Charge for the year
    
    
    2,031
    
    
    
    496
    
    
    
    1,849
    
    
    
    12,078
    
    
    
    2,442
    
    
    
    203,565
    
    
    
    
    
    
    
    222,461Impairment loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98Transfer
    
    
    (1,141
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,141
    )Written back on disposal
    
    
    
    
    
    
    
    
    
    
    (2,244
    )
    
    
    (31,090
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,334
    )At December 31, 2007
    
    
    20,254
    
    
    
    5,291
    
    
    
    40,698
    
    
    
    93,347
    
    
    
    11,707
    
    
    
    2,597,826
    
    
    
    
    
    
    
    2,769,123Net book value:At December 31, 2007
    
    
    78,757
    
    
    
    7,726
    
    
    
    3,724
    
    
    
    42,410
    
    
    
    4,809
    
    
    
    2,368,225
    
    
    
    2,670
    
    
    
    2,508,321At December 31, 2006
    
    
    82,869
    
    
    
    3,427
    
    
    
    4,644
    
    
    
    51,718
    
    
    
    5,774
    
    
    
    2,571,790
    
    
    
    1,360
    
    
    
    2,721,582
 (a)
    
    Impairment lossDuring 2007, the Group conducted a review of the Groups property, plant and
equipment. Based on the results of the review, an impairment loss of $98,000 in
respect of communication satellite equipment has been recognised and charged to the
income statement and it was concluded that no further impairment is required. There
was no impairment loss recognised in respect of property, plant & equipment in 2006.
  F-30




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##### Table of Contents



12
    
    Property, plant and equipment (Continued)
 (b)
    
    The analysis of net book value of land and buildings held by the Group is as follows:
 Land and buildings2007
    
    
    2006$000
    
    
    $000Medium-term leases outside Hong Kong
    
    
    
    
    
    
    2,094Medium-term leases in Hong Kong
    
    
    78,757
    
    
    
    80,77578,757
    
    
    
    82,869
 (c)
    
    Fixed assets under finance leases
 (i)
    
    The fair value of the buildings held for own use, which are situated on
leasehold land as disclosed above cannot be measured separately from the fair value
of the leasehold land at the inception of the lease, and therefore is accounted for
as being held under a finance lease.(ii)
    
    In August 2004, the in-orbit tests of APSTAR V with 54 transponders were
completed and APSTAR V was put into service on August 13, 2004. Based on the
arrangements entered into by the Group and the vendor, Loral Orion, Inc (Loral
Orion), the Group assumed the risks and rewards of 37 transponders (APT
Transponders) for the entire operational life of APSTAR V under finance leases,
while the risks and rewards relating to the other 17 transponders remained with
Loral Orion. As at December 31, 2007, the net book value of communication
satellites held under finance leases in connection with APSTAR V amounted to
$834,448,000 (2006: $911,526,000).Pursuant to the various amended agreements with Loral Orion, Loral Orion has options
to take up 4 APT Transponders from the fourth year and another 4 APT Transponders
from the fifth year after completion of in-orbit tests of APSTAR V, for their
remaining operational lives at a total consideration of $282,865,000. On September
29, 2006, Loral Orion partially exercised its right to take up 2 APT Transponders
ahead of schedule, at a total consideration of $70,716,000. As a result, a gain of
$17,503,000 arising from disposal of the 2 APT Transponders was recognised in 2006.
The consideration in relation to the remaining 6 APT Transponders to be taken up by
Loral Orion is $212,149,000. The remaining APT transponders subject to this
arrangement had a net book value of $143,048,000 at December 31, 2007 (2006:
$156,262,000).
 (d)
    
    In-orbit insurance of satellitesAs of December 31, 2007, the Group did not have full in-orbit insurance coverage for its
satellites. The in-orbit satellites had a net book value in aggregate of $2,368,225,000
(2006: $2,571,790,000) as of December 31, 2007.
  F-31




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##### Table of Contents



12
    
    Property, plant and equipment (Continued)
 (e)
    
    Change in estimated useful life of a satelliteFollowing a review undertaken by the Group during the year, the expected useful life of
APSTAR IIR was revised with effect from February 1, 2007. The change in estimated
useful life of APSTAR IIR has increased the depreciation charges for the year by
approximately $587,000 and decreased the profit for the year by approximately $484,000.
This change will also increase the annual depreciation charge by approximately $640,000
and decrease the profit after tax by approximately $528,000 through out the remaining
useful life of APSTAR IIR.
 13
    
    Interest in leasehold land held for own use under an operating lease
 $000Cost:At January 1, 2006, December 31, 2006 and December 31, 2007
    
    
    18,678Accumulated depreciation:At January 1, 2006
    
    
    3,108Charge for the year
    
    
    375At December 31, 2006
    
    
    3,483At January 1, 2007Charge for the year
    
    
    375At December 31, 2007
    
    
    3,858Net book value:At December 31, 2007
    
    
    14,820At December 31, 2006
    
    
    15,195
 14
    
    Investment propertiesThe investment properties were revalued at December 31, 2007 at $5,171,000 (2006:
$2,496,000) by Savills Valuation and Professional Services Limited, an independent
professional property valuer, on an open market value basis by reference to net rental
income allowing for reversionary income potential. The revaluation surplus of $226,000
(2006: $156,000) has been recognised in the income statement during the year.In prior years, a property was held for office purpose and classified as property, plant and
equipment. During the year ended December 31, 2007, the directors changed the intended use
of this property from office purpose to rental purpose. Accordingly, this property with
carrying value of $2,081,000 has been transferred from property, plant and equipment to
investment properties.The investment properties, which are situated in the PRC under medium-term leases, are
rented out under operating lease and the rental income earned from the investment
properties during the year was $297,000 (2006: $254,000).
  F-32




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##### Table of Contents



15
    
    Interest in subsidiariesParticulars of subsidiariesThe following list contains only the particulars of subsidiaries which principally affected
the results, assets or liabilities of the Group. The class of shares held is ordinary unless
otherwise stated.All of these are controlled subsidiaries as defined under note 1(c) and have been
consolidated into the Group financial statements.
 Proportion of ownership interestPlace of
    
    
    Particulars of issued and
    
    
    Groupsincorporation
    
    
    paid up capital and debt
    
    
    effective
    
    
    held by the
    
    
    held byName of Company
    
    and operation*
    
    
    securities
    
    
    interest
    
    
    Company
    
    
    subsidiary
    
    
    Principal activitiesAPT Satellite Investment Company Limited
    
    
    British Virgin Islands
    
    
    
    US$1,400
    
    
    
    100
    %
    
    
    100
    %
    
    
    
    
    
    
    Investment holdingAcme Star Investment Limited
    
    
    Hong Kong
    
    
    
    HK$2
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    InactiveAPT Satellite Company Limited
    
    
    Hong Kong
    
    
    
    Ordinary Class A HK$100; Non-voting Deferred Class B HK$542,500,000
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    Provision of satellite transponder capacityAPT Satellite Enterprise Limited
    
    
    Cayman Islands
    
    
    
    US$2
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    Provision of satellite transponder capacityAPT Satellite Global Company Limited
    
    
    Cayman Islands
    
    
    
    US$2
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    Investment holdingAPT Satellite Link Limited
    
    
    Cayman Islands
    
    
    
    US$2
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    Provision of satellite transponder capacityAPT Satellite Telewell Limited
    
    
    Hong Kong
    
    
    
    HK$2
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    InactiveAPT Satellite TV Development Limited
    
    
    Hong Kong
    
    
    
    HK$2
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    Provision of satellite television uplink and downlink servicesAPT Satellite Vision Limited
    
    
    Hong Kong
    
    
    
    HK$2
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    Satellite leasingAPT Telecom Services Limited
    
    
    Hong Kong
    
    
    
    HK$2
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    Provision of telecommunication servicesHaslett Investments Limited
    
    
    British Virgin Islands
    
    
    
    US$1
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    InactiveSkywork Corporation
    
    
    British Virgin Islands
    
    
    
    US$1
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    Investment holdingThe 138 Leasing Partnership
    
    
    Hong Kong
    
    
    
    Partners capital HK$329,128,857
    
    
    
    N/A

    
    
    

    N/A
    
    
    
    N/A

    
    
    
    InactiveYing Fai Realty (China) Limited
    
    
    Hong Kong/PRC
    
    
    
    HK$20
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    Property holding(CHINEESE CHARACTERS)
(APT Communication Technology
Development (Shenzhen) Co., Ltd.)
    
    
    Wholly-owned foreign enterprises, PRC
    
    
    
    Registered capital HK$5,000,000
    
    
    
    100
    %
    
    
    
    
    
    
    100
    %
    
    
    Provision of satellite transponder capacityCTIA VSAT Network Limited
    
    
    Hong Kong
    
    
    
    HK$5,000,000
    
    
    
    60
    %
    
    
    
    
    
    
    60
    %
    
    
    Investment holding(CHINEESE CHARACTERS)
(Beijing Asia Pacific East
Communication Network Limited)
    
    
    Joint venture, PRC
    
    
    
    Registered capital US$4,000,000
    
    
    
    36
    %
    
    
    
    
    
    
    60
    %
    
    
    Provision of data transmission services
 *
    
    The place of operations is the place of incorporation/establishment unless otherwise
stated. No loan capital has been issued by any of the subsidiaries.
  F-33




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##### Table of Contents



16
    
    Interest in jointly controlled entities and amounts due from a jointly controlled entity
 2007
    
    
    2006$000
    
    
    $000Share of net assets
    
    
    3,529
    
    
    
    4,423
 Details of the jointly controlled entities of the Group as at December 31, 2007 are set out
below:
 Proportion of ownership interestForm of
    
    
    Place of
    
    
    Particulars of
    
    
    Groups
    
    
    held by
    
    
    held bybusiness
    
    
    incorporation
    
    
    issued and paid
    
    
    effective
    
    
    the
    
    
    the
    
    
    PrincipalName of joint venture
    
    structure
    
    
    and operation
    
    
    up capital
    
    
    interest
    
    
    Company
    
    
    subsidiary
    
    
    activityAPT Satellite
Telecommunications
Limited (APT
Telecom)
    
    
    Incorporated
    
    
    
    Hong Kong
    
    
    
    HK$153,791,900
    
    
    
    55
    %
    
    
    
    

    
    
    55
    %
    
    
    Property holding(CHINIES CHARACTER)(CHINIES CHARACTER)
(Beijing Zhong
Guang Xin Da Data
Broadcast
Technology Co.
Limited)
(Zhong Guang Xin
Da)
    
    
    Joint venture, Incorporated
    
    
    
    PRC
    
    
    
    Registered capital RMB11,000,000
    
    
    
    12.6
    %
    
    
    
    
    
    
    35
    %
    
    
    Provision of data transmission services
 APT Telecom is considered as a jointly controlled entity as the Group and the other
shareholder of APT Telecom both have the right to appoint an equal number of directors to
the board of directors.Zhong Guang Xin Da is considered as a jointly controlled entity as the Group and the other
shareholders of Zhong Guang Xin Da exercise joint control over it pursuant to a
shareholders resolution.The amounts due from a jointly controlled entity are unsecured and interest-free. Except for
an amount of $7,650,000 (2006: $8,100,000), the amounts have no fixed repayment terms.At December 31, 2007, the amount of $7,650,000 is repayable as follows:
 2007
    
    
    2006$000
    
    
    $000Within one year or on demand
    
    
    4,950
    
    
    
    2,700After one year but within five years
    
    
    2,700
    
    
    
    5,4007,650
    
    
    
    8,100
  F-34




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##### Table of Contents



16
    
    Interest in jointly controlled entities and amounts due from a jointly controlled entity
(Continued)The Group has agreed not to demand for repayment of other amounts due from a jointly
controlled entity within the next twelve months from the balance sheet date and accordingly,
the amount is classified as non-current.Summary financial information on jointly controlled entities  Groups effective interest:
 2007
    
    
    2006$000
    
    
    $000Non-current assets
    
    
    76,670
    
    
    
    75,350Current assets
    
    
    2,011
    
    
    
    969Non-current liabilities
    
    
    (68,624
    )
    
    
    (66,894
    )Current liabilities
    
    
    (6,528
    )
    
    
    (5,002
    )Net assets
    
    
    3,529
    
    
    
    4,423Income
    
    
    938
    
    
    
    3,553Expenses
    
    
    (1,832
    )
    
    
    (1,371
    )(Loss)/Profit for the year
    
    
    (894
    )
    
    
    2,182
 17
    
    Prepaid expenses, deposits, prepayments and other receivablesPrepaid expenses represents the advance payment of license fee for the right to use certain
designated transmission frequencies. Part of the prepaid expenses which fall due within one
year are included as part of deposits, prepayments and other receivables.
 2007
    
    
    2006$000
    
    
    $000Balance at December 31
    
    
    25,057
    
    
    
    36,127Less: current portion (included in deposits,
prepayments and other receivables under
current assets)
    
    
    (10,920
    )
    
    
    (10,920
    )Non-current portion
    
    
    14,137
    
    
    
    25,207
  F-35




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##### Table of Contents



18
    
    Trade receivables
 2007
    
    
    2006$000
    
    
    $000Due from third parties
    
    
    74,313
    
    
    
    78,316Due from shareholders of the Company
    
    
    2,628
    
    
    
    1,037Due from holding company and its subsidiaries of a shareholder
of the Company
    
    
    3,468
    
    
    
    90880,409
    
    
    
    80,261
 The trade receivables are expected to be recovered within one year.
 (a)
    
    Ageing analysisThe Group allows a credit period of 30 days to its trade customers. The following is an
ageing analysis of trade receivables (net of allowance for doubtful debts) at the
balance sheet date:
 2007
    
    
    2006$000
    
    
    $0000  30 days
    
    
    53,923
    
    
    
    52,61631  60 days
    
    
    8,276
    
    
    
    8,41461  90 days
    
    
    4,032
    
    
    
    6,56891  120 days
    
    
    3,001
    
    
    
    2,201Over 121 days
    
    
    11,177
    
    
    
    10,46280,409
    
    
    
    80,261
 The Groups credit policy is set out in note 27(a).(b)
    
    Impairment of trade receivablesImpairment losses in respect of trade receivables are recorded using an allowance
account unless the Group is satisfied that recovery of the amount is remote, in which
case the impairment loss is written off against trade receivables directly (see note
1(j)).The movement in the allowance for doubtful debts during the year, including both
specific and collective loss components, is as follow:
 2007
    
    
    2006$000
    
    
    $000At January 1
    
    
    18,382
    
    
    
    10,291Impairment loss recognised
    
    
    80
    
    
    
    7,946Uncollectible amounts written off
    
    
    (5,229
    )
    
    
    Exchange difference
    
    
    299
    
    
    
    145At December 31
    
    
    13,532
    
    
    
    18,382
  F-36




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##### Table of Contents



18
    
    Trade receivables (Continued)
 (b)
    
    Impairment of trade receivablesAt December 31, 2007, the Groups trade receivables of $13,532,000 (2006: $18,382,000)
were individually determined to be impaired. The individually impaired receivables
related to customers that were in financial difficulties and management assessed that
only a portion of the receivables is expected to be recovered. Consequently, specific
allowances for doubtful debts of $80,000 (2006: $7,946,000) respectively were
recognised. The Group does not hold any collateral over these balances.(c)
    
    Trade receivables that are not impairedThe ageing analysis of trade receivables that are neither individually nor collectively
considered to be impaired are as follow:
 2007
    
    
    2006$000
    
    
    $000Less than 1 month past due
    
    
    53,923
    
    
    
    52,6161 to 3 months past due
    
    
    12,308
    
    
    
    14,982More than 3 months past due
    
    
    14,178
    
    
    
    12,663At December 31
    
    
    80,409
    
    
    
    80,261
 Receivables that were past due but not impaired relate to a number of independent
customers that have a good track record with the Group. Based on past experience,
management believes that no impairment allowance is necessary in respect of these
balances as there has not been a significant change in credit quality and the balances
are still considered fully recoverable. The Group does not hold any collateral over
these balances.
 19
    
    Cash and cash equivalents
 2007
    
    
    2006$000
    
    
    $000Deposits with banks and other financial
institutions
    
    
    302,784
    
    
    
    316,536Cash at bank and on hand
    
    
    9,241
    
    
    
    24,789Cash and cash equivalents in the balance
sheet and cash flow statement
    
    
    312,025
    
    
    
    341,325
  F-37




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##### Table of Contents



20
    
    Secured bank borrowings
 2007
    
    
    2006$000
    
    
    $000Bank loans
    
    
    680,335
    
    
    
    930,354Less: Amount due within one year included under current
liabilities
    
    
    (217,961
    )
    
    
    (156,820
    )Amount due after one year
    
    
    462,374
    
    
    
    773,534The bank borrowings are repayable as follows:Within one year or on demand
    
    
    217,961
    
    
    
    156,820After one year but within five years
    
    
    462,374
    
    
    
    773,534680,335
    
    
    
    930,354
 The secured bank borrowings are subject to the fulfillment of covenants relating to certain of
the Groups balance sheet ratios, as are commonly found in lending arrangements with financial
institutions (see note 24(b)(ii)). If the Group were to breach the covenants the drawn down
facilities would become payable on demand. The Group regularly monitors its compliance with
these covenants. Further details of the Groups management of liquidity risk are set out in note
27(b). As at December 31, 2007 and 2006, none of the covenants relating to drawn down facilities
had been breached.21
    
    Deposits receivedThe amount represents deposits received in respect of provision of satellite transponder
capacity service, satellite-based broadcasting and telecommunications services and other
services.22
    
    Deferred incomeDeferred income represents unrecognised revenue received in respect of income for provision of
transponder utilisation service for future periods. Deferred income is recognised in the income
statement according to revenue recognition policy of transponder utilisation income as
mentioned in note 1(q)(i).23
    
    Income tax in the balance sheet
 (a)
    
    Current taxation in the balance sheet represents:
 2007
    
    
    2006$000
    
    
    $000Overseas tax payable
    
    
    7,224
    
    
    
    11,644Balance of overseas tax provision relating to prior years
    
    
    85,863
    
    
    
    81,43693,087
    
    
    
    93,080
  F-38




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##### Table of Contents



23
    
    Income tax in the balance sheet (Continued)
 (b)
    
    Deferred tax assets and liabilities recognisedThe components of deferred tax (assets)/liabilities recognised in the consolidated balance
sheet and the movements during the year are as follows:
 Depreciationallowances in
    
    
    
    
    
    
    
    
    
    
    Otherexcess of related
    
    
    
    
    
    
    Deferred
    
    
    temporaryDeferred tax arising from:
    
    depreciation
    
    
    Losses
    
    
    lease income
    
    
    differences
    
    
    Total$000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000At January 1, 2006
    
    
    376,422
    
    
    
    (379,635
    )
    
    
    
    
    
    
    (396
    )
    
    
    (3,609
    )Charged/(credited) to
consolidated income
statement
    
    
    (3,047
    )
    
    
    (104,093
    )
    
    
    166,063
    
    
    
    (146
    )
    
    
    58,777At December 31, 2006
    
    
    373,375
    
    
    
    (483,728
    )
    
    
    166,063
    
    
    
    (542
    )
    
    
    55,168At January 1, 2007
    
    
    373,375
    
    
    
    (483,728
    )
    
    
    166,063
    
    
    
    (542
    )
    
    
    55,168Charged/(credited) to
consolidated income
statement
    
    
    (9,152
    )
    
    
    38,835
    
    
    
    (27,652
    )
    
    
    (209
    )
    
    
    1,822At December 31, 2007
    
    
    364,223
    
    
    
    (444,893
    )
    
    
    138,411
    
    
    
    (751
    )
    
    
    56,990
 2007
    
    
    2006$000
    
    
    $000Net deferred tax assets recognised in the consolidated balance sheet
    
    
    (9,174
    )
    
    
    (8,747
    )Net deferred tax liabilities recognised in the consolidated balance sheet
    
    
    66,164
    
    
    
    63,91556,990
    
    
    
    55,168
 (c)
    
    Deferred tax assets not recognisedThe Group has not recognised deferred tax assets in respect of tax losses of $131,302,000
(2006: $83,662,000) and other deductible temporary differences of $36,221,000 (2006:
$24,759,000) as the realisation of the assets was considered less than probable. The tax
losses do not expire under current tax legislation.
 24
    
    Share capital
 (a)
    
    Authorised and issued share capital
 Issued andNumber of
    
    
    fully paidshares
    
    
    share capital000
    
    
    $000Ordinary shares of $0.10 eachAt December 31, 2006 and December 31, 2007
    
    
    413,265
    
    
    
    41,327
  F-39




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24
    
    Share capital (Continued)
 (a)
    
    Authorised and issued share capital (Continued)The Companys authorised share capital is 1,000,000,000 shares of $0.10 each. There were no
changes in the Companys authorised or issued share capital during either year.The holders of ordinary shares are entitled to receive dividends as declared from time to
time and are entitled to one vote per share at meetings of the Company. All ordinary shares
rank equally with regard to the Companys residual assets.(b)
    
    Capital managementThe Groups primary objectives when managing capital are to safeguard the Groups ability to
continue as a going concern, so that it can continue to provide returns for shareholders, by
pricing products and services commensurately with the level of risk and by securing access
to finance at a reasonable cost.The Group actively and regularly reviews and manages its capital structure to maintain a
balance between the higher shareholder returns that might be possible with higher levels of
borrowings and the advantages and security afforded by a sound capital position, and makes
adjustments to the capital structure in light of changes in economic conditions.Consistent with industry practice, the Group monitors its capital structure on the basis of
a net debt-to-adjusted capital ratio. For this purpose the Group defines net debt as total
debt (which includes interest-bearing loans and borrowings and trade and other payables)
less cash and cash equivalents and pledged deposits.During 2007, the Groups strategy, which was unchanged from 2006, was to maintain the net
debt-to-adjusted capital ratio at a percentage that is below 50%. In order to maintain or
adjust the ratio, the Group may adjust the amount of dividends paid to shareholders, issue
new shares, return capital to shareholders, raise new debt financing or sell assets to
reduce debt.
  F-40




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##### Table of Contents



24
    
    Share capital (Continued)
 (b)
    
    Capital management (Continued)
  2007
    
    
    2006$000
    
    
    $000Current Liabilities:Payables and accrued charges
    
    
    38,727
    
    
    
    53,777Loan from a minority shareholder
    
    
    7,488
    
    
    
    7,488Secured bank borrowings due within one year
    
    
    217,961
    
    
    
    156,820264,176
    
    
    
    218,085Non-current liabilities:Secured bank borrowings due after one year
    
    
    462,374
    
    
    
    773,534Total debt
    
    
    726,550
    
    
    
    991,619Less: Cash and cash equivalents
    
    
    (312,025
    )
    
    
    (341,325
    )Pledged bank deposits
    
    
    (83,749
    )
    
    
    (89,190
    )Net debt
    
    
    330,776
    
    
    
    561,104Total equity
    
    
    1,988,691
    
    
    
    1,982,233Adjusted capital
    
    
    1,988,691
    
    
    
    1,982,233Net debt-to-adjusted capital ratio
    
    
    17
    %
    
    
    28
    %
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##### Table of Contents



24
    
    Share capital (Continued)
 (b)
    
    Capital management (Continued)
  (i)
    
    Restricted DistributionsThe Loan Facility provides that the Group may make annual dividend payments only when
Projected EBITDA plus free cash less capital expenditure for that year is less than (i)
130% of project debt service (as defined in the Loan Facility) of that year before the
release of certain pledged assets and (ii) 180% of Project Debt Service after the release
of certain pledged assets.(ii)
    
    Financial CovenantsThe Loan Facility provides that certain earnings and cash flow ratios of APT Satellite
Company Limited (APT) and the Group must be measured over various periods during its
term. APT and the Group undertakes to ensure that (i) it maintains its aggregate
consolidated net worth at not less than US$200 million, (ii) the aggregate of
consolidated total liabilities shall not exceed 120% of consolidated net worth, (iii)
consolidated EBITDA shall not be less than US$25 million, (other than for the year ended
December 31, 2006, where it will not be less than US$20 million), (iv) the ratio of the
aggregate outstanding principal under each tranche to the value of the satellite financed
by such tranche shall not exceed 50% and (v) after the release of certain pledged assets,
borrowers EBITDA shall be at least 180% of debt service.(iii)
    
    Block Account/Withdrawal ConditionsUnder the Loan Facility, (i) insurance proceeds obtained as a result of total or material
partial loss relating to APSTAR V and APSTAR VI and (ii) Termination sum of related
construction contracts must be deposited in a designated account. The withdrawal of
deposited amounts in such accounts may only occur in accordance with provision contained
in the Loan Facility.(iv)
    
    OthersThe Loan Facility includes covenants customary for agreements of this type, including
restrictions on APT and the Companys ability to incur indebtedness, certain ownership
restrictions, restrictions on affiliated transactions, covenants with respect of
compliance with laws, maintenance of licenses and permits required for the Groups
business and a requirement that all future transponder utilisation agreements be entered
into on an arms-length basis. Among others, APT should notify the lender if its ultimate
holding company, APT Satellite International Company Limited, directly owns less than
50.01% of the voting rights in the Group.
  25
    
    Share optionsAt the annual general meeting on May 22, 2001, the Company adopted a share option scheme
(Scheme 2001) and granted options to its employees on June 19, 2001. On May 22, 2002, the
Company adopted a new share option scheme (Scheme 2002) at its 2002 annual general meeting.
Thereafter, no further options can be granted under the Scheme 2001. The options granted on
June 19, 2001 shall continue to be valid until their expiry.The total number of shares which may be issued upon exercise of all options to be granted under
Scheme 2001 and Scheme 2002 shall not in aggregate exceed 10% of the total number of shares of
the Company in issue on the adoption date of the Scheme 2002 (i.e. 412,720,000 shares). As at
the date of this report, 413,265,000 shares of the Company were in issue.
  F-42




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25
    
    Share options (Continued)Under Scheme 2002, the total number of shares to be issued upon exercise of the options granted
to each eligible person (including both exercised and outstanding options) in any 12-month
period shall not exceed 1% of the total number of shares in issue. The exercise price
(subscription price) shall be such price as determined by the Board of Directors in its
absolute discretion at the time of the making of the offer but in any case the exercise price
shall not be lower than the highest of (i) the closing price of the shares as stated in The
Stock Exchange of Hong Kong Limiteds (the Exchanges) daily quotations sheet on the date of
the offer of grant, which must be a trading day; (ii) the average closing price of the shares
as stated in the Exchanges daily quotations sheets for the five trading days immediately
preceding the date of the offer of grant; and (iii) the nominal value of a share.During the year, no options were granted under the Scheme 2002.Under the Scheme 2001, the maximum entitlement of each eligible person was that the total
number of shares issued or issuable under all options granted to such eligible person
(including both exercised and outstanding options) upon such grant being made shall not exceed
25% of the total number of the shares for the time being issued and issuable under the Scheme
2001. In addition, the subscription price was determined by the Board of Directors on a
case-by-case basis and would not be less than the nominal value of the shares nor at a discount
of more than 20% below the average closing price of the shares as stated in the Exchanges
daily quotation sheets on the five dealing days immediately preceding the date on which the
invitation to apply for an option under Scheme 2001.Movements in share optionsThe particulars of the share options granted under the Scheme 2001 outstanding during the year
are as follows:
 2007
    
    
    2006Number
    
    
    NumberAt January 1
    
    
    3,390,000
    
    
    
    4,230,000Cancelled during the year
    
    
    (20,000
    )
    
    
    (840,000
    )At December 31
    
    
    3,370,000
    
    
    
    3,390,000Options vested at December 31
    
    
    3,370,000
    
    
    
    3,390,000
 The above granted options have an exercise price of $2.765 per share and are exercisable
within the period from May 22, 2003 to May 21, 2011.Fair value of share options and assumptionsThe fair value of services received in return for share options granted are measured by
reference to the fair value of share options granted. The estimated fair value of the
services received is measured based on a binomial lattice model. The contractual life of the
option is used as an input into this model. Expectations of early exercise are incorporated
into the binomial lattice model. No share options were granted in 2007.
  F-43




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##### Table of Contents



26
    
    ReservesThe contributed surplus of the Group arose as a result of the Group reorganisation in 1996
and represented the excess of the par value of the shares of the subsidiaries which the
Company acquired over the par value of the Companys shares issued in consideration thereof.The contributed surplus of the Company also arose as a result of the Group reorganisation in
1996 and represented the excess of the value of the subsidiaries acquired over the par value
of the Companys shares issued for their acquisition. Under the Companies Act 1981 of Bermuda
(as amended), the Company may make distributions to its shareholders out of the contributed
surplus under certain circumstances.Capital reserve comprises the fair value of the actual or estimated number of unexercised
share options granted to employees of the Company recognised in accordance with accounting
policy adopted for share based payments in note 1(n)(ii).Revaluation reserve has been set up and is dealt with in accordance with the accounting
policy adopted in note 1(f).The exchange reserve comprises all foreign exchange differences arising from the translation
of the financial statements of foreign operations. The reserve is dealt with is accordance
with accounting policy adopted in note 1(r).Other reserves represent the Enterprise Expansion Fund and General Reserve Fund set aside by
a subsidiary in accordance with the relevant laws and regulations of the PRC, which are not
available for distribution.At December 31, 2007, the Companys reserves available for distribution amounted to
$613,755,000 (2006: $614,582,000) as computed in accordance with the Companies Act 1981 of
Bermuda (as amended).27
    
    Financial instrumentsExposure to credit, liquidity, interest rate and currency risks arises in the normal course
of the Groups business. These risks are limited by the Groups financial management policies
and practices described below.
 (a)
    
    Credit riskThe Groups credit risk is primarily attributable to trade and other receivables and cash
investments. Management has a credit policy in place and the exposures to these credit
risks are monitored on an ongoing basis.In respect of trade and other receivables, periodic credit evaluations are performed of
customers financial condition. The Group generally does not require collateral because it
usually receives trade deposits which represent a quarter of utilisation fees payable to
the Group. The transponder utilisation agreements are subject to termination by the Group
if utilisation payments are not made on a timely basis.At the balance sheet date, the Group has a certain concentration of credit risk as 15%
(2006: 28%) and 53% (2006: 62%) of the total trade receivables were due from the Groups
largest customer and the five largest customers respectively within the satellite
transponder business segment.
  F-44




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##### Table of Contents



27
    
    Financial instruments (Cotninued)
 (a)
    
    Credit risk (continued)The credit risk on liquid funds is limited because the majority of counter parties are
financial institutions with high credit ratings assigned by international credit-rating
agencies and state-controlled financial institutions with good reputation.(b)
    
    Liquidity riskIndividual operating entities within the Group are responsible for their own cash
management, including the short term investment of cash surpluses and the raising of loans
to cover expected cash demands, subject to approval by the parent companys board. The
Groups policy is to regularly monitor current and expected liquidity requirements and its
compliance with lending covenants, to ensure that it maintains sufficient reserves of cash
and adequate committed lines of funding from major financial institutions to meet its
liquidity requirements in the short and longer term.The following table details the remaining contractual maturities at the balance sheet date
of the Groups non-derivative financial liabilities and derivative financial liabilities,
which are based on contractual undiscounted cash flows (including interest payments
computed using contractual rates or, if floating, based on rates current at the balance
sheet date) and the earliest date the Group can be required to pay:
 2007Totalcontractual
    
    
    Within 1
    
    
    More than 1
    
    
    More than 2Carrying
    
    
    undiscounted
    
    
    year or on
    
    
    year but less
    
    
    year but less
    
    
    More than 5amount
    
    
    cash flow
    
    
    demand
    
    
    than 2 years
    
    
    than 5 years
    
    
    years$000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Payables and
accrued charges
    
    
    38,727
    
    
    
    (45,388
    )
    
    
    (45,131
    )
    
    
    (233
    )
    
    
    (24
    )
    
    
    Loan from a
minority
shareholder
    
    
    7,488
    
    
    
    (7,488
    )
    
    
    (7,488
    )
    
    
    
    
    
    
    
    
    
    
    Secured bank
borrowings
    
    
    680,335
    
    
    
    (763,331
    )
    
    
    (259,666
    )
    
    
    (284,113
    )
    
    
    (219,552
    )
    
    
    726,550
    
    
    
    (816,207
    )
    
    
    (312,285
    )
    
    
    (284,346
    )
    
    
    (219,576
    )
    
    
    
  F-45




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##### Table of Contents



27
    
    Financial instruments (Continued)
 (b)
    
    Liquidity risk (continued)
 2006Totalcontractual
    
    
    Within 1
    
    
    More than 1
    
    
    More than 2Carrying
    
    
    undiscounted
    
    
    year or on
    
    
    year but less
    
    
    year but less
    
    
    More than 5amount
    
    
    cash flow
    
    
    demand
    
    
    than 2 years
    
    
    than 5 years
    
    
    years$000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Payables and
accrued charges
    
    
    53,777
    
    
    
    (65,928
    )
    
    
    (63,303
    )
    
    
    (2,361
    )
    
    
    (264
    )
    
    
    Loan from a
minority
shareholder
    
    
    7,488
    
    
    
    (7,488
    )
    
    
    (7,488
    )
    
    
    
    
    
    
    
    
    
    
    Secured bank
borrowings
    
    
    930,354
    
    
    
    (1,083,443
    )
    
    
    (210,408
    )
    
    
    (262,391
    )
    
    
    (610,644
    )
    
    
    991,619
    
    
    
    (1,156,859
    )
    
    
    (281,199
    )
    
    
    (264,752
    )
    
    
    (610,908
    )
    
    
    
 (c)
    
    Interest rate riskThe Group is subject to interest rate risk due to fluctuation in interest rates. As of
December 31, 2007, the Groups outstanding bank loans consist of variable interest rate
loans only. From time to time, the Group may enter into interest rate swap agreements
designed to mitigate exposure to interest rate risks, although the Group did not
consider it necessary to do so in 2007. Upward fluctuations in interest rates increase
the cost of new bank loans and the interest cost of outstanding bank loans. As a result,
a significant increase in interest rates could have a material adverse effect on the
financial position of the Group.
 (i)
    
    Interest rate profile
 2007
    
    
    2006Effective
    
    
    
    
    
    
    Effectiveinterest
    
    
    
    
    
    
    interestrate
    
    
    
    
    
    rate%
    
    
    $000
    
    
    %
    
    
    $000Variable rate borrowings:Secured bank borrowings
    
    
    6.13
    %
    
    
    680,335
    
    
    
    5.76
    %
    
    
    930,354
 (ii)
    
    Sensitivity analysisAt December 31, 2007, it is estimated that a general increase of one percentage
point in interest rates would decrease the Groups profit after taxation and total
equity by approximately $5,613,000 (2006: $7,675,000) so far as the effect on
interest-bearing financial instruments is concerned.
  F-46




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##### Table of Contents



27
    
    Financial instruments (Continued)
 (d)
    
    Foreign currency riskThe Groups reporting currency is the Hong Kong Dollar. The Groups revenues, premiums
for satellite insurance coverage and debt service and substantially all capital
expenditures were denominated in the United States Dollars. The Groups remaining
expenses were primarily denominated in the Hong Kong Dollars. The Group does not hedge
its exposure to foreign exchange risk. Gains and losses resulting from the effects of
changes in the United States Dollar to the Hong Kong Dollar exchange rate are recorded
in the consolidated income statement.The Group does not utilise derivative financial instruments to hedge its foreign
currency rate risks.In respect of other trade receivables and payables and cash and cash equivalents held in
currencies other than the functional currency of the operations to which they relate,
the Group ensures that the net exposure is kept to an acceptable level, by buying or
selling foreign currencies at spot rates where necessary to address short-term
imbalances.The Groups borrowings are denominated in the United States Dollars. Given that all of
the Groups revenues are denominated substantially in the United States Dollars,
management does not expect that there will be any significant currency risk associated
with the Groups borrowings.
 (i)
    
    Exposure to currency riskThe following table details the Groups exposure at the balance sheet date to
currency risk arising from forecast transactions or recognised assets or
liabilities denominated in a currency other than the functional currency of the
entity to which they relate.
 2007
    
    
    2006Renminbi
    
    
    Renminbi000
    
    
    000Trade and other receivable
    
    
    16,085
    
    
    
    3,920Cash and cash equivalents
    
    
    40,361
    
    
    
    40,283Trade and other payables
    
    
    (4,714
    )
    
    
    (6,928
    )Overall net exposure
    
    
    51,732
    
    
    
    37,275
 (i)
    
    Sensitivity analysisThe following table indicates the approximate change in the Groups profit after tax
(and retained profits) and other components of consolidated equity in response to
reasonably possible changes in the foreign exchange rates to which the Group has
significant exposure at the balance sheet date.
 2007
    
    
    2006Effect on profit
    
    
    
    
    
    
    Effect on profitIncrease in foreign
    
    
    after tax and
    
    
    Increase in foreign
    
    
    after tax andexchange rates
    
    
    retained profits
    
    
    exchange rates
    
    
    retained profits%
    
    
    $000
    
    
    %
    
    
    $000Renminbi
    
    
    5
    %
    
    
    2,752
    
    
    
    5
    %
    
    
    1,983
  F-47




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##### Table of Contents



27
    
    Financial instruments (Continued)
 (e)
    
    Fair valuesThe following financial assets and liabilities have their carrying amount approximately
equal to their fair value: trade receivables, deposits, prepayments and other
receivables, cash and cash equivalents, payables and accrued charges, and secured bank
borrowings.
 (i)
    
    Interest-bearing loans and borrowings and finance lease liabilitiesThe fair value is estimated as the present value of future cash flows, discounted at
current market interest rates for similar financial instruments.
 28
    
    Pledge of assetsAt December 31, 2007, the assets under fixed charge were APSTAR V and APSTAR VI, which had
carrying value of approximately $2,317,238,000 (2006: $2,506,454,000), and bank deposits of
approximately $83,749,000 (2006: $89,190,000 ).At the balance sheet date, certain of the Groups banking facilities are secured by the
Groups land and buildings with a net book value of $4,538,000 (2006: $4,655,000).29
    
    Contingent liabilities
 (i)
    
    In the years before 1999, overseas withholding tax was not charged in respect of the
Groups transponder utilisation income derived from the overseas customers. From 1999,
overseas withholding tax has been charged on certain transponder utilisation income of
the Group and full provision for such withholding tax for the years from 1999 onwards has
been made in the financial statements. The Directors of the Company are of the opinion
that the new tax rules should take effect from 1999 onwards and, accordingly, no
provision for the withholding tax in respect of the years before 1999 is necessary. The
Groups withholding tax in respect of 1998 and before, calculated at the applicable rates
based on the relevant income earned in those years, not provided for in the financial
statements amounted to approximately $75,864,000.(ii)
    
    The Company has given guarantees to banks in respect of the secured term loan
facility granted to its subsidiary. The extent of such facility utilised by the
subsidiary at December 31, 2007 amounted to $683,056,000 (2006: $936,069,000).
 30
    
    CommitmentsAt December 31, 2007, the Group had the following outstanding capital commitments not
provided for in the Groups financial statements:
 2007
    
    
    2006$000
    
    
    $000Contracted for
    
    
    3,398
    
    
    
    4,852Authorised but not contracted for
    
    
    
    
    
    
    3,398
    
    
    
    4,852
  F-48




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31
    
    Leasing arrangementsThe Group as lesseeAt December 31, 2007, the Group had commitments for future minimum lease payments under
non-cancellable operating leases which fall due as follows:
 (i)
    
    Land and buildings:
 The Group2007
    
    
    2006$000
    
    
    $000Within one year
    
    
    592
    
    
    
    849After one year but within five years
    
    
    257
    
    
    
    828849
    
    
    
    1,677
 Operating lease payments represent rental payable by the Group for its office properties.
Leases are negotiated for a period of one to three years and rentals are fixed for the whole
lease term.(ii)
    
    Satellite transponder capacity:
 The Group2007
    
    
    2006$000
    
    
    $000Within one year
    
    
    2,414
    
    
    
    3,825After one year but within five years
    
    
    
    
    
    
    1,7972,414
    
    
    
    5,622
 Operating lease payments represent rental payable by the Group for the leasing of satellite
transponders for a period of one to three years and rentals are fixed for the whole lease
term.
 The Group as lessorProperty rental income earned during the year was $592,000 (2006: $536,000). At the balance
sheet date, certain properties with an aggregate carrying value of $11,407,000 (2006:
$8,892,000) were held for rental purposes and the Group had contracted with tenants for the
future minimum lease payments under non-cancellable operating leases which fall due within one
year amounting to $442,563 (2006: $442,563) and after one but within five years amounting to
$66,924 (2006: $334,620). Depreciation charged for the year in respect of these properties was
$160,000 (2006: $160,000).Service income earned relating to leasing of facilities equipment during the year was $440,170
(2006: $734,000). At the balance sheet date, the Group had contracted with customers for the
future minimum lease payments under non-cancellable operating leases which fall due within one
year amounting to $96,504 (2006: $324,094).
  F-49




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32
    
    Retirement benefits schemesThe Group operates a Mandatory Provident Fund Scheme under the Hong Kong Mandatory Provident
Fund Schemes Ordinance for all qualifying employees in Hong Kong under the jurisdiction of the
Hong Kong Employment Ordinance. Under the scheme, the employer and its employees are each
required to make contributions to the scheme at 5% of the employees relevant income, subject
to a cap of monthly relevant income of $20,000 and thereafter contributions are voluntary.
Contributions to the scheme vest immediately. The assets of the scheme are held separately from
those of the Group, in funds under the control of trustees.As stipulated by the regulations of the PRC, the subsidiaries in the PRC participate in basic
defined contribution pension plans organised by their respective Municipal Governments under
which they are governed. Employees in the PRC are entitled to retirement benefits equal to
fixed proportion of their salary at their normal retirement age. The Group has no other
material obligation for payment of basic retirement benefits beyond the annual contributions
which are calculated at a rate on the salaries, bonuses and certain allowances of its
employees.33
    
    Material related party transactions
 (a)
    
    During the year, the Group entered into the following transactions with related parties:
 2007
    
    
    2006$000
    
    
    $000Income from provision of satellite transponder capacity and
provision of satellite-based telecommunication services to
certain shareholders and its subsidiary of the Company (note i)
    
    
    11,975
    
    
    
    16,309Income from provision of satellite transponder capacity and
provision of satellite-based telecommunication services to a
holding company and its subsidiaries of a shareholder of the
Company (note i)
    
    
    32,630
    
    
    
    36,068Management fee income from a jointly controlled entity (note ii)
    
    
    580
    
    
    
    480
  F-50




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##### Table of Contents



33
    
    Material related party transactions (Continued)
 (b)
    
    At the balance sheet date, the Group had the following amounts included in the
consolidated balance sheet in respect of amounts owing by and to related parties:
 Amounts due from
    
    
    Amounts due from
    
    
    
    
    
    
    
    
    
    
    Deposits,
    
    
    Payables and
    
    
    Rentals receivedimmediate holding
    
    
    a jointly controlled
    
    
    
    
    
    
    
    
    
    
    prepayments and
    
    
    accrued
    
    
    in advance andcompany
    
    
    entity
    
    
    Trade receivables
    
    
    other receivables
    
    
    charges
    
    
    deferred income2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006$000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000
    
    
    $000Immediate holding
company
    
    
    101
    
    
    
    82
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Jointly controlled
entities
    
    
    
    
    
    
    
    
    
    
    75,369
    
    
    
    75,035
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Certain
shareholders and
its subsidiary of
the Company
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,628
    
    
    
    1,037
    
    
    
    
    
    
    
    
    
    
    
    219
    
    
    
    228
    
    
    
    2,540
    
    
    
    Holding company and
its subsidiaries of
a shareholder of
the Company (note (i))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,468
    
    
    
    908
    
    
    
    
    
    
    
    123
    
    
    
    15
    
    
    
    11
    
    
    
    197,692
    
    
    
    217,193
 Notes:
 (i)
    
    The terms and conditions of these transponder capacity utilisation agreements
are similar to those contracted with other customers of the Group.(ii)
    
    Management fee income arose from a reimbursement of cost of service provided
to a jointly controlled entity under the agreement.
 (c)
    
    Key management personnel remunerationRemuneration for key management personnel, including amounts paid to the Companys directors
as disclosed in note 7 and certain of the highest paid employees as disclosed in note 8, is
as follows:
 2007
    
    
    2006$000
    
    
    $000Short-term employee benefits
    
    
    11,057
    
    
    
    10,591Other long-term benefits
    
    
    367
    
    
    
    687Termination benefits
    
    
    706
    
    
    
    12,130
    
    
    
    11,278
 Total remuneration is included in staff costs (see note 5(b)).
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34
    
    Non-adjusting post balance sheet eventPursuant to a disposal agreement dated April 2, 2008, CTIA VSAT Network Limited, a subsidiary
of the Company, agreed to dispose of its entire equity interest in Beijing Asia Pacific East
Communication Network Limited to an independent third party at a total consideration of
RMB4,800,000. Beijing Asia Pacific East Communication Network Limited has direct holding of
35% equity interest in Zhong Guang Xin Da which is a jointly controlled entity of the Company.35
    
    Ultimate controlling partyThe Directors consider the controlling party of the Group December 31, 2007 to be APT Satellite
International Company Limited, which is incorporated in the British Virgin Islands. This
entity does not produce financial statements available for public use.36
    
    Accounting estimates and judgements
 (a)
    
    Key sources of estimation uncertaintyThe financial statements are based on the selection and application of significant
accounting policies, which require management to make significant estimates and assumptions
that affect the reported amount of assets and liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities at the date of the financial
statements. Actual results may differ from these estimates under different assumptions or
conditions.(b)
    
    Critical accounting judgement in applying the Groups accounting policiesThe following are some of the more critical judgement areas in the application of the
Groups accounting policies that currently affect the Groups financial condition and
results of operations.
 (i)
    
    DepreciationDepreciation of communication satellites is provided for on the straight-line method
over the estimated useful life of the satellite, which is determined by engineering
analysis performed at the in-services date and re-evaluated periodically. A number of
factors affect the operational lives of satellites, including construction quality,
component durability, fuel usage, the launch vehicle used and the skill with which the
satellite is monitored and operated. As the telecommunication industry is subject to
rapid technological change and the Groups satellites have been subjected to certain
operational lives, the Group may be required to revise the estimated useful lives of
its satellites and communication equipment or to adjust their carrying amounts
periodically. Accordingly, the estimated useful lives of the Groups satellites are
reviewed using current engineering data. If a significant change in the estimated
useful lives of our satellites is identified, the Group accounts for the effects of
such change as depreciation expenses on a prospective basis. Details of the
depreciation of communication satellites are disclosed in notes 1(g) and 12.Depreciation for future satellites will depend on in-orbit testing on their estimated
useful lives after successful launch and, as the cost of the future satellites is
greater than the carrying value of the current satellites, the depreciation charge is
expected to increase in the coming years.
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36
    
    Accounting estimates and judgements (Continued)
 (b)
    
    Critical accounting judgement in applying the Groups accounting policies (Continued)
 (ii)
    
    Trade receivables and other receivablesThe management of the Group estimates the provision of bad and doubtful debts required
for the potential non-collectability of trade receivables and other receivables at
each balance sheet date based on the ageing of its customer accounts and its
historical write-off experience, net of recoveries. The Group performs ongoing credit
evaluations of its customers and adjusts credit limits based upon payment history and
the customers current credit worthiness. The Group does not make a general provision
on its trade receivables and other receivables, but instead, makes a specific
provision on its trade receivables and other receivables. Hence, the Group
continuously monitors collections and payments from customers and maintains allowances
for bad and doubtful accounts for estimated losses resulting from the inability of its
customers to make required payments. If the financial condition of the customers of
the Group were to deteriorate, actual write-offs would be higher than estimated. For
the year ended December 31, 2007, the Group had made provisions for bad debts in the
amount of $80,000 (2006: $8,347,000).The Group periodically reviews the carrying amounts of provision for bad and doubtful
debts to determine whether there is any indication that the provision needs to be
written off. If the Group becomes aware of a situation where a customer is not able to
meet its financial obligations due to change of contact information by the customer
without notification or after seeking professional advice from lawyers or debt
collection agent that the probability of recovery is remote, the Group will consider
to write off the debt.(iii)
    
    Impairment of property, plant and equipmentThe Group periodically reviews internal or external resources to identify indications
that the assets may be impaired. If the recoverable amount of an asset is estimated to
be less than its carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. In assessing the recoverable amount of these assets, the Group is
required to make assumptions regarding estimated future cash flows and other factors
to determine the net realisable value. If these estimates or their related assumptions
change in the future, the Group may be required to adjust the impairment charges
previously recorded.The Group applies the foregoing analysis in determining the timing of the impairment
test, the estimated useful lives of the individual assets, the discount rate, future
cash flows used to assess impairments and the fair value of impaired assets. It is
difficult to precisely estimate the price of the transponder capacities and related
satellite services and residual values because the market prices for our assets are
not readily available. The estimates of future cash flows are based on the terms of
existing transponder capacity and service agreements. The dynamic economic environment
in which the Group operates and the resulting assumptions used in setting depreciable
lives on assets and judgement relating to the utilisation rate of the assets, price
and amount of operating costs to estimate future cash flows impact the outcome of all
of these impairment tests. If these estimates or their related assumptions change in
the future, the Group may be required to record impairment loss for these assets not
previously recorded.
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36
    
    Accounting estimates and judgements (Continued)
 (b)
    
    Critical accounting judgement in applying the Groups accounting policies (Continued)
 (iii)
    
    Impairment of property, plant and equipment (continued)The Group periodically reviews the carrying amounts of its property, plant and
equipment through reference to its use value and fair market value as assessed both by
the Group and by an independent professional property appraiser. If the use value or
fair market value of the property, plant and equipment are lower than their carrying
amount, the Group may be required to record additional impairment loss not previously
recognised. Details of the impairment loss of property, plant and equipment are
disclosed in note 12.(iv)
    
    Contingencies and provisionsContingencies, representing an obligation that are neither probable nor certain at the
date of the financial statements, or a probable obligation for which the cash outflow
is not probable, are not recorded.Provisions are recorded when, at the end of period, there is an obligation of the
Group to a third party which is probable or certain to create an outflow of resources
to the third party, without at least an equivalent return expected from the third
party. This obligation may be legal, regulatory or contractual in nature.To estimate the expenditure that the Group is likely to bear in order to settle an
obligation, the management of the Group takes into consideration all of the available
information at the closing date for its consolidated financial statements. If no
reliable estimate of the amount can be made, no provision is recorded. For details,
please refer to note 29 on contingent liabilities.
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##### Table of Contents



37
    
    Possible impact of amendments, new standards and interpretations issued but not yet effective
for the annual accounting period ended December 31, 2007Up to the date of issue of these financial statements, the IASB/HKICPA have issued a number of
amendments, new standards and interpretations which are not yet effective for the year ended
December 31, 2007 and which have not been adopted in these financial statements.The Group is in the process of making an assessment of what the impact of these amendments,
new standards and new interpretations is expected to be in the period of initial application.
So far it has conducted that the adoption of them is unlikely to have a significant impact on
the Groups results of operations and financial position.Of these developments, the following relate to matters that may be relevant to the Groups
operations and financial statements:
 Effective foraccounting periodsbeginning on orafterRevised IAS/HKAS 1, Presentation of financial statements
    
    January 1, 2009Amendment to IAS/HKAS 23, Borrowing costs
    
    January 1, 2009Amendments to IAS 27, Consolidated and separate financial statements
    
    July 1, 2009Amendments to IAS 32, Financial instruments: Presentation and IAS
1, Presentation of financial statements
    
    January 1, 2009Amendment to IFRS 2, Share-based payment
    
    January 1, 2009Revised IFRS 3, Business combinations
    
    July 1, 2009IFRS/HKFRS 8, Operating segments
    
    January 1, 2009IFRIC/HK(IFRIC) Interpretation 12, Service concession arrangements
    
    January 1, 2008IFRIC/HK(IFRIC) Interpretation 13 Customer loyalty programmes
    
    July 1, 2008IFRIC/HK(IFRIC) Interpretation 14, IAS/HKAS19-The limit on a
defined benefit asset, minimum funding requirements and their interaction
    
    January 1, 2008
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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description of Exhibit1.1
    
    
    Memorandum of Association and By-laws of the Company (incorporated by reference to the
Company Registration Statement, as filed with the Commission on December 9, 1996, Registration
Number 333-6044).1.2
    
    
    The amended Memorandum of Association and Bye-Laws of the Company (incorporated by reference
to the Companys 20-F filed with the Commission on June 29, 2004)4.1
    
    
    Satellite Procurement Agreement by and between APT Satellite Company Limited, a wholly owned
subsidiary of the Company, and Contractor, an independent third party not associated with the
Directors, chief executive officer and major shareholders of the Company or any of its
subsidiaries, dated January 8, 2001 (incorporated by reference to the Companys 6-K filed with
the Commission on January 9, 2001).4.2
    
    
    Launch Agreement by and between APT Satellite Company Limited, a wholly owned subsidiary of
the Company, and the Launch Contractor, a subsidiary of China Aerospace Science & Technology
Corporation, dated January 8, 2001 (incorporated by reference to the Companys 6-K filed with
the Commission on January 9, 2001).4.3
    
    
    Satellite Procurement Agreement by and between APT Satellite Company Limited, a wholly owned
subsidiary of the Company, and Contractor, an independent third party not associated with the
Directors, chief executive officer and major shareholders of the Company or any of its
subsidiaries, dated December 11, 2001 (incorporated by reference to the Companys 6-K filed
with the Commission on December 18, 2001).4.4
    
    
    Term Sheet executed by and between APT Satellite Company Limited, a wholly owned subsidiary
of the Company, Contractor and Loral Orion, Inc., both of which are independent third party
not associated with the Directors, chief executive officer and major shareholders of the
Company or any of its subsidiaries, dated September 20, 2002 (incorporated by reference to the
Companys 6-K filed with the Commission on September 30, 2002).4.5
    
    
    Transponder Utilization Agreement by and between APT Satellite Company Limited, a wholly
owned subsidiary of the Company, and Lessee, a connected person under the rules governing the
listing of securities on The Stock Exchange of Hong Kong Limited, dated April 11, 2003
(incorporated by reference to the Companys 6-K filed with the Commission on April 16, 2003).4.6
    
    
    Change of Auditors of the Company KPMG with effect from July 15, 2003 (incorporated by
reference to the Companys 6-K filed with the Commission on July 17, 2003).4.7
    
    
    Satellite Procurement Amendment Agreement by and between APT Satellite Company Limited, a
wholly owned subsidiary of the Company, and the Contractor, a party independent of the
Director, chief executive officer and substantial shareholder of the Company and its
subsidiaries and their respective associates, dated August 26, 2003. The Satellite
Transponder Agreement and Satellite Agreement by and between APT Satellite Company Limited, a
wholly owned subsidiary of the Company, and the lessor, a party independent of the Director,
chief executive officer and substantial shareholder of the Company and its subsidiaries and
their respective associates, dated August 26, 2003 (incorporated by reference to the
Companys 6-K filed with the Commission on September 2, 2003).4.8
    
    
    Various on-going transactions in their ordinary course of business had entered into between
the APT Group of the Company and APT Telecom, a non-wholly owned subsidiary of the Company,
and the contracting party, a connected person under the rules governing the listing of
securities on The Stock Exchange of Hong Kong Limited, as announced August 28, 2003
(incorporated by reference to the Companys 6-K filed with the Commission on September 2,
2003).4.9
    
    
    Master Agreement by and between APT Satellite Telecommunications Limited, a non-wholly owned
subsidiary of the Company, Skywork Corporation, a wholly owned subsidiary of the Company, APT
Telecom Services Limited, a wholly owned subsidiary of the Company, and a connected person
under the rules governing the listing of securities on The Stock Exchange of Hong Kong
Limited, dated September 10, 2003 whereby the business of APT Satellite Telecommunications
Limited was being reorganized (incorporated by reference to the Companys 6-K filed with the
Commission on September 15, 2003).4.10
    
    
    The Agreement and the Amended Launch Agreement by and between APT Satellite Company Limited,
a wholly owned subsidiary of the Company, and the Contractor of APSTAR V, dated November 16,
2003 (incorporated by reference to the Companys 6-K filed with the Commission on September
17, 2003).
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##### Table of Contents



Exhibit No.
    
    Description of Exhibit4.11
    
    
    An utilization agreement for the remaining life of APSTAR I by and between APT Satellite
Company Limited, a wholly owned subsidiary of the Company, and the customer, dated October 22,
2004 (incorporated by reference to the Companys 6-K filed with the Commission on October 29,
2004).4.12
    
    
    An agreement by and between APT Satellite Company Limited, a wholly owned subsidiary of the
Company, and the grantor and contractor of APSTAR VIB dated November 10, 2004 (incorporated by
reference to the Companys 6-K filed with the Commission on November 15, 2004).4.13
    
    
    Two Master Agreements by and between the Company and Singapore Telecommunications Limited;
and the Company and C2C Pte Limited dated December 1, 2004 (incorporated by reference to the
Companys 6-K filed with the Commission on December 3, 2004).4.14
    
    
    The sum insured in respect of the launch of APSTAR VI by and between APT Satellite Company
Limited, a wholly owned subsidiary of the Company, and the joint insurance brokers announced
on March 15, 2005 (incorporated by reference to the Companys 6-K filed with the Commission on
March 16, 2005).4.15
    
    
    The arrangement of sum insured in respect of the in-orbit insurance of APSTAR V by and
between APT Satellite Company Limited, a wholly owned subsidiary of the Company, and the
insurance broker dated August 4, 2005 (incorporated by reference to the Companys 6-K filed
with the Commission on August 5, 2005).4.16
    
    
    Settlement Proposal in respect of the tax assessment on the gain of the transfer of
transponders of APSTAR IIR submitted with the Inland Revenue Department of Hong Kong on August
28, 2006 by APT Satellite Company Limited, a wholly owned subsidiary of the Company, and the
response received from the department (incorporated by reference to the Companys 6-K filed
with the Commission on September 25, 2006).4.17
    
    
    The Supplemental Agreement by and between the Company and Singapore Telecommunications
Limited dated December 28, 2006 whereby extending the term of the Master Agreement as filed to
the Companys 6-K on December 3, 2004 (incorporated by reference to the Companys 6-K filed
with the Commission on December 29, 2006).4.18
    
    
    The Option Agreement by and among shareholders of APT Satellite Telecommunication Limited
(the Licensor, a jointly controlled entity owned as to 55% indirectly by the Company), the
Licensor and NTT Com Asia Limited (the Licensee) dated October 2, 2007 whereby granting the
Licensee a call option to purchase the entire equity interests in the Licensor with option
expiry date on December 31, 2008 and a right of first refusal in respect of any offer to
purchase equity interests in the Licensor during the period from January 1, 2009 to December
31, 2010. On the same date, the License Agreement and the Renewal Supplement by and between
the Licensor and Licensee whereby licensing certain premises of the Licensor to the Licensee
for a term of three years beginning October 1, 2007 and renewing the License Agreement subject
to certain conditions (incorporated by reference to the Companys 6-K filed with the
Commission on October 3, 2007).8.1
    
    
    List of subsidiaries of the Company and the jurisdictions under which each does business
(contained in Note 15 to the Consolidated Financial Statements filed herein under Item 18).11
    
    
    Code of Ethics (incorporated by reference to Exhibit 11.1 on the Form 20-F for the year ended
December 31, 2006).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.
  **
    
    Filed herewith.
  F-57