（亞太衛星控股有限公司）*

The Board of Directors (the "Board") of APT Satellite Holdings Limited (the "Company") is pleased to announce the audited results of the Company and its subsidiaries (the "Group") in respect of the financial year ended 31 December 1999 prepared in accordance with accounting principles generally accepted in Hong Kong.

On 6 July 1999, the Group was granted the Satellite Television Uplink and Downlink License (the "License") by the government of the Hong Kong Special Administrative Region (the "SAR Government"), the conditions of which were extended by the SAR Government in January this year. According to the Licence, the Group is able to use the newly acquired uplink platform and downlink system, together with certain encryption and digital compression technologies, to provide satellite television uplink and downlink services through the Group's APSTAR-I, APSTAR-IA and APSTAR-IIR satellites. These services indicated that the Group was striving to pursue multi-faceted development born of the traditional transponder leasing business. Therefore, this triggered off another significant breakthrough for the Group subsequent to the development of the VSAT business.

The Group was dedicated to expanding its business in the past year, and the VSAT business was achieving good progress in the PRC market. In September 1999, an agreement was reached with the People's Bank of China, Guangzhou Branch, for the construction of a network providing VSAT television conference, TV-phone system and services. Through the system, the People's Bank of China, Guangzhou Branch, could conduct various types of television conference, telephoning, communications and two-way data transmission services with any of its branches in twenty cities throughout the Guangdong province. The Group expects good development prospects for VSAT services.

On 18 August 1999, APT Satellite Company Limited ("APT HK"), a wholly-owned subsidiary of the Group, entered into a lease agreement with Loral Asia Pacific Satellite (HK) Ltd. ("Loral Asia"), a wholly-owned subsidiary of the U.S. company Loral Space and Communications Limited, for the lease of 43 out of the 44 transponders of APSTAR-IIR. According to the agreement, Loral Asia was entitled to use the capacities of the relevant transponders until their service-span expired. The lease price was approximately US$298 million, payable by eighteen instalments in United States dollars within four years. As Loral Asia had later proposed to advance the date of payment, the Group had hence revised the lease price to approximately US$273 million, payable by three instalments, with the last installment of approximately US$181 million paid on 27 March 2000. This gave the Group an ample supply of cash to facilitate the development of new satellite and communications projects. Meanwhile, according to the lease agreement, APT HK would continue to be the legal owner of APSTAR-IIR. And, according to the existing operation licences issued by the Office of the Telecommunications Authority of the SAR Government to APSTAR-IIR, APT HK could exercise full control on the satellite and provide high-quality transmission services through the satellite control center of the Group located in Taipo, Hong Kong.

The average leasing rate of APSTAR satellite transponders was 81.1%, which was attributed to a 100% leasing rate for APSTAR-IIR, 58.6% for APSTAR-I and 69.0% for APSTAR-IA. Following the new surge of demand for transponders in the Asia-Pacific region, the gradual recovery of Asia-Pacific economies and expansion of the Group's business in the area of VSAT, satellite television uplink/downlink services, telecommunications network services and internet applications; the Group is ready to seize any opportunity of development, in order to further improve the utilization rate of the satellite transponders and boost economic return.

Moreover, the Group submitted a proposal to the Office of the Telecommunications Authority of Hong Kong in October 1999 for the construction of the APSTAR-IV satellite system, with a view to serve the Hong Kong region by the provision of four broadcasting satellite services channels. If the Group is granted an approval for the project, it is anticipated that APSTAR-IV will be launched between 2001 and 2002. Meanwhile, the Group is conducting active discussions with the relevant PRC authorities on the development of direct-broadcast satellites APSTAR-IIIA and IIIB, with a view to serve the PRC market.

The Group will proceed with the APSTAR-V project very soon, and the satellite is scheduled to be launched towards the end of 2002. APSTAR-V will consist of C, Ku and Ka-band high power transponders designated to replace APSTAR-I when it is due to retire in mid 2004.

The Group will make use of the lease income generated by APSTAR-IIR to continue the development of satellite-related businesses, such as VSAT, satellite television uplink/downlink services, and satellite-based internet network services. Also, the Group will proceed with other planned satellite projects in order to meet future market demands, including APSTAR-IIIA and APSTAR-IIIB, APSTAR-IV and APSTAR-V.

As early as February 1999, the Group had made full repayment of a bank loan in the amount of US$50 million, hence lowering the Group's gearing ratio (total liabilities/total assets) from 37% to 31%. After receiving the lease proceeds for APSTAR-IIR, the Group's financial position was further strengthened, its gearing ratio further declined to 29% by the end of 1999. Consequently, there was a considerable reduction in financial expenses, hence lowering operating costs and raising the profit margins.

Along with the economic recovery in the Asia-Pacific region, the Group manages to improve the utilization rate of its satellites in order to improve economic return. As to business strategies, with the objective of expanding business, heightening economic return and providing customers with high-quality, comprehensive "one-stop" telecommunications services, the Group will expand its business to the inclusion of satellite and television networks. In addition, the Group will continue to reinforce its investment and development in the satellite business to maintain broad development prospects, particularly with the new satellites APSTAR-IIIA and IIIB, APSTAR-IV and V. Basing on a sound and stable foundation, the Group is confident that it will make good use of the opportunities brought about by the deregulation of the IT industry.

Haikou, PRC, 2 May 2000

　

* For identification only

　

FINANCIAL HIGHLIGHTS

For the year ended 31 December 1999

　

		1999	1998
	Notes	HK$'000	HK$'000
Turnover	1	481,958	587,805
Cost of services		(355,527)	(388,876)
		126,432	198,929
Other income	2	436,016	14,605
Administrative expenses		(104,395)	(84,620)
Other operating expenses		(4,340)	(7,192)
profit from operating activities		453,713	121,722
Finance costs		(31,750)	(57,282)
Profit before tax		421,963	64,440
Tax	3	(47,424)	(5,223)
Net profit from ordinary activities　attributable to shareholders		374,539	59,217
Dividend		(147,000)	-
Retained profit for the year		227,539	59,217
Earnings per share - Basic	4	89.18¢	14.10¢
Dividend per share		35.00¢	Nil

　

There were no recognised gains or losses other than the net profit for the year.

　

Notes:

　

1. Turnover

　

Turnover represents the income on the leasing of satellite transponders; and the service income in respect of satellite control and leasing of satellite transponders.

　

Revenue from the following activities has been included in turnover:

　

	1999	1998
	HK$'000	HK$'000
Transponder lease income	478,972	587,805
Service income	2,986	-
Turnover	481,958	587,805

　

　

2. Other Income

　

During the year, agreements (the "Agreements") were entered into between APT Satellite Company Limited ("APT HK"), a wholly-owned subsidiary of the Company, and Loral Asia Pacific Satellite (HK) Limited ("Loral Asia"), an independent third party, in respect of the leasing by APT HK to Loral Asia of substantially all of the satellite transponder capacities (the "Transponders") of APSTAR-IIR, one of the three satellites of the Group, for the rest of its useful life for an aggregate lease price (the "Lease Price") of HK$2,114,755,000. Upon the completion of the Agreements on 28 September 1999, all the risks and rewards associated with the Transponders have been transferred to Loral Asia. The transaction contemplated under the Agreements constitutes a life lease of the Transponders and the net gain thereon, amounting to HK$389,744,000, calculated by deducting the costs of the Transponders and the expenses in relation to the Agreements from the Lease Price, was credited to other income for the year.

　

3. Tax

　

	1999	1998
	HK$'000	HK$'000
Provision for tax in respect of profits for the year:
Hong Kong	22,642	-
Elsewhere	24,831	116
Overprovision in prior year	-	(793)
Rebate received relating to prior year	(1,649)	-
Deferred	1,600	5,900
Tax charge for the year	47,424	5,223

　

Hong Kong profits tax has been provided at the rate of 16% on the estimated assessable profits arising in Hong Kong during the year. No provision for Hong Kong profits tax was made in the prior year as no assessable profits were earned in or derived from Hong Kong for that year.

　

Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

　

4. Earnings per share

　

The calculation of basic earnings per share is based on the net profit from ordinary activities attributable to shareholders for the year of HK$374,539,000 (1998: HK$59,217,000) and the 420,000,000 (1998: 420,000,000) shares in issue during the year.

　

Diluted earnings per share for the years ended 31 December 1999 and 1998 has not been calculated as no diluting events existed during these years.

　

PURCHASE, SALE OR REDEMPTION OF SHARES

　

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's shares during the year ended 31 December 1999.

　

AUDIT COMMITTEE

　

The Audit Committee held its second Meeting on 13 March 2000 by which the Committee reviewed the audited financial report of the Group for the year ended 31 December 1999. The minutes of the Meeting was tabled in this directors' meeting.

　

CODE OF BEST PRACTICE

　

In the opinion of the Directors, the Company has compiled with the Code of Best Practice as set out in Appendix 14 of the Listing Rules throughout the accounting period covered by the annual report, except that the non-executive Directors of the Company are not appointed for specific terms but are subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with the Bye-Laws of the Company.

　

　

　

Notice of Annual General meeting

　

NOTICE IS HEREBY GIVEN that the Annual General Meeting of APT Satellite Holdings Limited ("the Company") will be held at 22 Dai Kwai Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong on 2 June 2000 at 10:00 a.m. for the following purposes:

　

Ordinary Business

　

1. To receive and consider the audited consolidated financial statements and the reports of the Directors and the auditors for the year ended 31 December 1999.

　

2. To declare a final dividend for the year ended 31 December 1999.

　

3. To elect Directors and to authorise the Board of Directors to fix the Directors' remuneration.

　

4. To appoint the auditors of the Company and to authorise the Board of Directors to fix the remuneration.

　

Special Business

　

5. To consider and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

　

“THAT

　

(a) subject to paragraph (b) of this Resolution, the exercise by the Directors during the Relevant Period (as defined in paragraph (c) of this Resolution) of all the powers of the Company to purchase shares of HK$0.10 each in the capital of the Company be and is hereby generally and unconditionally approved;

　

(b) the total nominal amount of the share to be purchased to the approval in paragraph (a) above shall not exceed 10% of the total nominal amount of the share capital of the Company in issue on the date of this Resolution, and the said approval shall be limited accordingly; and

　

(c) for the purpose of this Resolution, "Relevant Period" means the period from the passing of this Resolution until whichever is the earlier of:

　

(i) the conclusion of the next annual general meeting of the Company;

　

(ii) the revocation or variation of the authority given under this Resolution by ordinary resolution of the shareholders in general meeting; and

　

(iii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-Laws of the Company or any applicable laws to be held.”

　

6. To consider and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

　

“THAT

　

(a) subject to paragraph (b) of this Resolution, the exercise by the Directors of the Company during the Relevant Period (as defined in paragraph (c) of this resolution) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements or options which may require the exercise of such powers either during or after the Relevant Period, be and is hereby generally and unconditionally approved;

　

(b) the aggregate nominal amount of the share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors pursuant to the approval in paragraph (a) of this Resolution, otherwise than pursuant to:

　

(i) a Right Issue (as defined in paragraph (d) of this resolution); or

　

(ii) any exercise of subscription or conversion rights under any warrants of the Company, or any securities which are convertible into shares of the Company, or any share option scheme or similar arrangement for the time being adopted by the Company for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries of shares or rights to acquire shares in the Company; or

　

(iii) any scrip dividend or similar arrangement providing for the allotment of shares in lieu of the whole or part of a dividend on shares of the Company in accordance with the Bye-Laws of the Company, shall not exceed 20% of the aggregate nominal amount of the share capital of the Company in issue at the date of the passing of this Resolution and the said approval shall be limited accordingly;

　

(c) for the purpose of this Resolution, "Relevant Period" means the period from the date of the passing of this resolution until whichever is the earlier of:

　

(i) the conclusion of the next annual general meeting of the Company;

　

(ii) the revocation or variation of the authority given under this Resolution by an ordinary resolution of the shareholders of the Company in general meeting; and

　

(iii) the expiration of the period within which the next annual general meeting is required by the Bye-Laws of the Company or any other applicable laws to be held, and

　

(d) for the purpose of this Resolution, "Right Issue" means an offer of shares open for a period fixed by the Directors to shareholders on the register of members of the Company on a fixed record date in proportion to their then holding of shares (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any restrictions or obligations under the laws of any relevant jurisdiction, or the requirements of any recognised regulatory body or any stock exchange).”

　

7. To consider and, if thought fit, pass with or without amendments, the following resolution as an ordinary resolution:

　

“THAT the general mandate granted to the Directors of the Company to exercise the powers of the Company to issue, allot and dispose of shares pursuant to Resolution 6 above be and is hereby extended by the addition to the total nominal amount of share capital and any shares which may be issued, allotted or agreed conditionally or unconditionally to be allotted by the Directors of the Company pursuant to such general mandate an amount representing the total nominal amount of shares in the capital of the Company which has been purchased by the Company since the granting of such general mandate pursuant to Resolution 5 above, provided that such amount shall not exceed 10% of the total nominal amount of the share capital of the Company in issue at the date of this Resolution.”

　

By Order of the Board

Lo Kin Hang, Brian

Company Secretary

Haikou, PRC, 2 May 2000

　

　

　

Notes:

　

1. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint one or more proxies to attend and vote in his stead. A proxy need not be a member of the Company.

　

2. In order to be valid, the form of proxy must be deposited with the Company's branch share registrars in Hong Kong, Tengis Limited at 1601 Hutchison House, 10 Harcourt Road, Central, Hong Kong, together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of attorney or other authority, not less than 48 hours before the time appointed for the meeting or adjourned meeting (as the case may be).

　

3. The Register of Members of the Company will be closed from Saturday, 27 May 2000 to Friday, 2 June 2000, both days inclusive, during which period no transfers of shares can be registered.

　

4. In order to qualify for the proposed final dividend, all transfer forms accompanied by the relevant share certificate must be lodged with the Company's branch share registrars in Hong Kong, Tengis Limited at 1601 Hutchison House, 10 Harcourt Road, Central, Hong Kong not later than 4:00 p.m. on Friday, 26 May 2000.

　

5. An explanatory statement containing further details as regarding Resolutions 5 to 7 above will be sent together with the Annual Report.