"The Group will continue to dedicate itself to becoming the best provider of transponder services in the international and the Asia-Pacific telecommunication and broadcasting sectors."

Xie Gao Jue, Chairman of APT Satellite Holdings Limited

CHAIRMAN STATEMENT

APT Satellite Holdings Limited (the "Company") completed the listing and initial public offering of its shares in December 1996 (the "IPO"), with its shares now listed in Hong Kong and New York.

On behalf of the Board of Directors, I am pleased to present the first audited results of the Company and its subsidiaries (the "Group") since the listing in respect of the financial year ended 31 December 1996:

Result

On the whole, the Group performed satisfactorily. Turnover of the Group for the year ended 31 December 1996 was HK$367,628,000, an increase of 29% from that in 1995. The Group's turnover in 1996 also exceeded the forecast 1996 revenue of HK$366,100,000 stated in the Company's prospectus dated 10 December 1996 in connection with the IPO (the "Prospectus").

Net profit attributable to shareholders for the financial year 1996 was HK$76,520,000, a substantial increase of 418% from that in 1995. Such profit also exceeded the forecast 1996 profit after taxation but before extraordinary item of HK$74,900,000 stated in the Prospectus.

Dividend

Prior to the Group reorganisation and listing of the Company's shares in December 1996, a dividend in specie of HK$56,806,000 was paid by a subsidiary of the Company to its then shareholders.

Owing to the fact that the shares of the Company have only been recently listed, the Board of Directors does not recommend the payment of final dividend in respect of the financial year 1996. (Financial year 1995: Nil).

Closure of Register of Members

The register of members of the Company will be closed from Thursday, 15 May, 1997 to Tuesday, 20 May 1997, both dates inclusive, in order to determine entitlements of shareholders to attend and vote at the Annual General Meeting of the Company (the "AGM") to be held on 20 May 1997. During this closure period, no transfers of shares can be registered. In order to qualify for entitlement to attend and vote at the AGM, transfers of shares accompanied by the relevant share certificates and transfer forms should be lodged with the Company's branch registrars in Hong Kong, Tengis Limited of 1601 Hutchisn House, 10 Harcourt Road, Central, Hong Kong, not later than 4 p.m. on Wednesday, 14 May 1997.

Purchase, Redemption or Sale of Shares

Neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company's shares during the year ended 31 December 1996.

Global Offering

The shares of the Company were listed on The Stock Exchange of Hong Kong Limited and (in the form of American depositary shares) the New York Stock Exchange, Inc. in December 1996 in connection with the IPO, which comprised a global offering of the shares in North America, Europe, Hong Kong and elsewhere in Asia.

Review Of Operations

APSTAR-I, the Group's first in-orbit satellite, was a Hughes HS-376 model, and was launched in July 1994 on a Long March 3 launch vehicle from Xichang, People's Republic of China. Its transponders have been fully leased during the whole of 1996, and have not experienced any anomalies that have affected its operation. APSTAR-I has been able to provide customers of the Group with transponder services of high quality and reliability, and these services have generated a substantial amount of revenue for the Group.

APSTAR-IA, the Group's second in-orbit satellite, was also a Hughes HS-376 model, and was launched in July 1996 on a Long March 3 launch vehicle from Xiachang. It commenced commercial operations in September of the same year. As at the end of 1996, almost 80 per cent. of its transponders were leased to customers. It is expected that more transponders will be leased to customers. Over the next few years, APSTAR-IA will be a steady and significant contributor to the Group's revenue and profits.

APSTAR-IIR, the Group's proposed third satellite, will be an SS/Loral FS-1300 satellite. Total investment for the project amounted to approximately US$216 million. The manufacture of the satellite commenced in June 1995. It is expected to be launched from Xichang in mid-1997. The footprint of APSTAR-IIR will stretch over more than 100 countries, serving approximately 75 per cent. of the world's population. It is designed to provide satellite services on the bases of high power output C-band and Ku-band frequency, thereby further strengthening the competitive advantage of the Group. During the previous year, the progress on the production of that was smooth. It is expected that APSTAR-IIR will be launched as scheduled. As at the end of March 1997, before its launch, more than 30 per cent. of the transponders on APSTAR-IIR were already pre-leased or committed by customers.

As described in the Prospectus, a substantial part of the proceeds of the IPO was applied to repay bank loans for the financing of APSTAR-IA and APSTAR-IIR, thereby reducing interest costs and improving the gearing of the Group. The Group is provided with a good foundation for its future course of development.

Expansion of Business And Investing in Future

The Group's three satellites will form an integrated satellite system. The Group is equipped with strong technical advantages. Together with the advanced satellite control centre solely owned by the Group and experienced and well-trained technical experts, the Group is well conditioned for market competition.

The Group has dedicated, and will continue to dedicate, itself to becoming the best provider of transponder services in the international and the Asia-Pacific telecommunication and broadcasting sectors; and to try its best to exploring new service areas including services in relation to direct broadcasting satellites. At the same time, the Group plans to launch one more high power output satellite that is equipped with C-band and Ku-band transponders, in order to satisfy the expected market demand.

Appreciation

On behalf of all shareholders and the Board of Directors, I would like to thank all of our customers for their continuous support of the Group, and to express our sincere appreciation to the management and staff for their contribution to the Group during the year and for their commitment for the future.

Xie Gao Jue

Chairman

12 April 1997