UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
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o
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934,
or
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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
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FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2007
or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934, or
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o
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
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Date of event requiring this shell company report
Commission file number 001-14564
APT SATELLITE HOLDINGS LIMITED
(Exact Name of the Registrant Specified in its Charter)
APT SATELLITE HOLDINGS LIMITED
(Translation of Registrants Name into English)
Bermuda
(Jurisdiction of Incorporation or Organization)
22 Dai Kwai Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong
(Address of Principal Executive Offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
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Title
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Name of Each Exchange on Which Quoted
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Ordinary Shares
American Depositary Shares
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The Stock Exchange of Hong Kong Limited
New York Stock Exchange
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Securities registered or to be registered pursuant to Section 12(g) of the Act:
NONE
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
NONE
Indicate the number of outstanding shares of each of the issuers classes of capital or common
stock as of the close of the period covered by the annual report:
413,265,000 Ordinary Shares as of December 31, 2007.
Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.
YES
o
NO
þ
If this report is an annual or transition report, indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
YES
o
NO
þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES
þ
NO
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer.
Large Accelerated Filer
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Accelerated Filer
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Non-accelerated filer
þ
Indicate by check mark which basis of accounting the registrant has used to prepare the financial
statements included in this filing.
U.S. GAAP
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International Financial Reporting Standards as issued by the International Accounting
Standards Board
þ
Other
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If Other has been checked in response to the previous question, indicate by check mark which
financial statement item the registrant has elected to follow.
Item 17
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Item 18
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If this is an annual report, indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
YES
o
NO
þ
TABLE OF CONTENTS
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Page
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iii
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-ii-
GLOSSARY OF CERTAIN TERMS
In this Form 20-F, unless the context otherwise requires, the following expressions have the
following meanings:
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ADS
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An American Depositary Share representing ownership of eight shares of the Companys Ordinary
Shares, evidenced by American Depositary Receipts.
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analog
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A method of storing, processing or transmitting information through a continuously varied (rather
than pulsed) signal.
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APCN2
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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.
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APSTAR System
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The Companys 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.
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APT/APT HK
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APT Satellite Company Limited, a company incorporated in the HKSAR and a wholly-owned indirect
subsidiary of the Company.
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APT BVI
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APT Satellite Investment Company Limited, a company incorporated in the British Virgin Islands
with limited liability and a wholly-owned subsidiary of the Company.
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APT Group
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The Company and its subsidiaries and affiliates.
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APT International
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APT Satellite International Company Limited, a company incorporated in the British Virgin Islands
with limited liability and a shareholder of the Company.
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APTs Leases
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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.
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APT Telecom
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APT Satellite Telecommunications Limited, a jointly controlled entity of the Company which is
incorporated in the HKSAR.
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APT Telecom Lease
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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.
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APT TS
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APT Telecom Services Limited, a company incorporated in the HKSAR and a wholly-owned subsidiary
of APT.
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bandwidth
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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.
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Bank loan
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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.
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Basic Law
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The Basic Law of the Hong Kong Special Administrative Region (HKSAR) of the Peoples Republic of
China, effective as of July 1, 1997, is the constitutional document for the HKSAR.
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beam
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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.
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Cancelled Agreement for Lease
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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.
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C2C
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C2C Pte. Ltd., a cable network provider under a consortium of telecommunication companies led by
Singapore Telecommunications Ltd.
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CCTV
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China Central Television, a PRC state-owned enterprise under the supervision and control of the
SARFT.
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CITV
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China International Television Corporation, a PRC state-owned enterprise under the supervision
and control of the SARFT.
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CLTC
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China Satellite Launch and Tracking Control General, a PRC state-owned enterprise subject to the
supervision and control of the Defense Commission.
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C-band
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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.
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cellular
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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.
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China Aerospace
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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.
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ChinaSat
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China Telecommunications Broadcast Satellite Corporation, a PRC state-owned enterprise under the
supervision of the SASAC
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DBS
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Direct broadcast satellite, a satellite capable of transmitting direct-to-home television
programming.
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dBW
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Decibel relative to one watt, a measure of a satellites power (e.g., 50 dBW is 10 times more
powerful than 40 dBW).
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Deed of Cancellation
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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.
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digital
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Referring to a method of storing, processing, or transmitting information through a pulsed
(rather than continuously varied) signal.
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downlink
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The receiving portion of a satellite circuit extending from the satellite to the earth.
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Director(s)
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Director(s) of the Company,
including all executive director(s), all non-executive
director(s)
and independent non-executive directors.
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earth station
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The antennae, receivers, transmitters and other equipment needed on the ground to transmit and
receive satellite communications signals.
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EBITDA
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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.
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EIRP
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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).
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Eligible Employee(s)
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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.
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Eligible Grantee(s)
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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.
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FCL
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Fixed Carrier Licence issued by OFTA for the provision of Facility-based External
Telecommunication Services.
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-iv-
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Fifth Modification of Lease
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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.
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Fifth Modification Proposal
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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.
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footprint
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The geographic area covered by a satellites 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.
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4
th
G
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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.
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frequency
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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.
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FTNS/Fixed Carrier Licence
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Fixed telecommunications network services, presently known as Fixed Carrier Licence.
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GEO
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Geostationary orbit.
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geostationary orbit
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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 earths equator.
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Global Offering
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The Companys initial world-wide public offering of Ordinary Shares and American Depositary
Shares, each representing eight shares of the Companys Ordinary Shares dated December 13, 1996.
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HDTV
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High definition television.
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HKFRS
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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.
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HKSAR
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Hong Kong Special Administrative Region of the PRC.
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Hong Kong GAAP
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Accounting principles generally accepted in Hong Kong.
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IAS
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International Accounting Standards.
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IASB
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International Accounting Standards Board.
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IFRS
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International Financial Reporting Standards.
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Interpretations
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Interpretations issued by the Hong Kong Institute of Certified Public Accountants.
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ISDN
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Integrated services data network.
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ITU or International Telecommunication Union
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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.
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Joint Declaration
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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.
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Ku-band
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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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-v-
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Lease Agreements
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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 APTs satellite control center is developed.
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LEO
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Low-earth orbit of up to 1,500 miles above the earth.
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Master Registry
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The Master International Frequency Register of the ITU, which lists frequency assignments of
orbital slots upon notification.
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MEO
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Mid-earth orbit of up to 18,000 miles above the earth.
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megahertz (MHz)
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A measure of frequency, 1 million cycles per second.
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microwave
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Radio frequency carrier waves with wavelengths of less than one meter- frequencies above 300 MHz.
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MII
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formerly the Ministry of Information Industry of the PRC.
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mobile satellite services
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Services transmitted via satellites to provide mobile telephone, paging, messaging, facsimile,
data, and position location services directly to users.
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OFTA
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The Office of the Telecommunications Authority of Hong Kong or, where the context requires, the
Telecommunications Authority of Hong Kong.
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operational life
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The time for which a satellite is capable of operating in its allotted position. The expected
end of a satellites in-orbit operational life is mainly based on the period during which the
satellites on-board fuel permits proper station-keeping maneuvers for the satellite.
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Option(s)
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Options granted to the Eligible Grantees under the Scheme 2001 or to the Participants under the
Scheme 2002, as the context requires.
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paging
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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.
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Participant(s)
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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.
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PRC
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The Peoples Republic of China.
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PSTN
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Public switched telephone networks which comprise the network infrastructure necessary for
providing basic telephone services.
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radio frequency
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A frequency that is higher than the audio frequencies but below the infrared frequencies, usually
above 20 KHz.
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Radio Regulations
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Radio Regulations of the ITU.
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Radio Regulatory Department
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Radio Regulatory Department of the MII.
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Radiocommunication Bureau
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Radiocommunication Bureau of the ITU.
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SARFT
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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.
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SASAC
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State-owned Assets Supervision and Administration Commission of the State Council of the PRC.
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Satellite Control Center
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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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-vi-
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Science and Technology Parks Corporation
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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.
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scrambled programming
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Programming signals which require a decoder for purposes of viewing.
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Second Supplemental Agreement
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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.
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signal
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A physical, time-dependent energy value used for the purpose of conveying information through a
transmission line.
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switch
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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.
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teledensity
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Telephone access lines per 100 persons.
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telemetry
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Radio transmission of coded or analog data from a satellite to a ground station.
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telephony
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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.
|
-vii-
Special Note on Our Financial Information and
Certain Statistical Information Presented in This Annual Report
Our consolidated financial statements as of and for the years ended December 31, 2006 and 2007
included in this annual report on Form 20-F have been prepared in accordance with International
Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board,
or the IASB. These financial statements also comply with Hong Kong Financial Reporting Standards,
or HKFRS, which collective term 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 accounting principles generally accepted in Hong Kong, or Hong
Kong GAAP. HKFRS is consistent with IFRS in all material respects. Pursuant to the requirement
under IFRS 1: First-Time Adoption of International Financial Reporting Standards, or IFRS 1, the
date of our transition to IFRS was determined to be January 1, 2006, which is the beginning of the
earliest period for which we present full comparative information in our consolidated financial
statements. With due regard to our accounting policies in previous periods and the requirements of
IFRS 1, we have concluded that no adjustments were required to the amounts reported under HKFRS as
at January 1, 2006 or in respect of the year ended December 31, 2006. As such, we make an explicit
and unreserved statement of compliance with IFRS, as issued by the IASB, with respect to our
consolidated financial statements as of and for the years ended December 31, 2006 and 2007 included
in this annual report on Form 20-F.
In accordance with rule amendments adopted by the U.S. Securities and Exchange Commission, or
the SEC, which became effective on March 4, 2008, we are not required to provide a reconciliation
to generally accepted accounting principles in the United States, or U.S. GAAP. Furthermore,
pursuant to the transitional relief granted by the SEC in respect of the first-time application of
IFRS, we have omitted in this annual report on Form 20-F financial statements and financial
information prepared under IFRS for the year ended December 31, 2005.
The consolidated financial statements included in our annual reports on Form 20-F previously
filed with the SEC in respect of the year ended December 31, 2005 were prepared in accordance with
HKFRS. The consolidated financial statements included in our annual reports on Form 20-F previously
filed with the SEC in respect of the years ended December 31, 2004 and before were prepared in
accordance with Hong Kong GAAP.
-8-
PART I
Item 1. Identity of Directors, Senior Management, and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
Selected Consolidated Financial Information
The following tables present selected consolidated historical financial information for APT
Satellite Holdings Limited (the Company or APT Holding) as of and for each of the years in the
two-year period ended December 31, 2007. The selected consolidated historical statement of
operations data for the years ended December 31, 2006 and 2007 and the selected consolidated
historical balance sheet data as of December 31, 2006 and 2007 set forth below are derived from,
and should be read in conjunction with, and are qualified in their entirety by reference to, the
Companys Audited Consolidated Financial Statements (the Consolidated Financial Statements) and
with Item 5. Operating and Financial Review and Prospects, included elsewhere in this annual
report on Form 20-F. The financial information in the Consolidated Financial Statements as of and
for the years ended December 31, 2006 and 2007 has been prepared in accordance with the
International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs)
and Interpretations issued by the International Accounting Standards Board (IASB), which were
adopted by the Company in 2007. In this annual report on Form 20-F, we have translated certain Hong
Kong dollar amounts into U.S. dollars at the rate of HK$7.80 = US$ 1.00, which approximates the
noon buying rate in New York City for cable transfer in Hong Kong Dollars as certified for customs
purposes by the Federal Reserve Bank of New York on December 31, 2007. We translate these amounts
solely for your convenience, and these translations should not be construed as representations
that, on such or any other date, Hong Kong dollar amounts could actually be converted into U.S.
dollars at such rates or at all.
-9-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2007
|
|
|
|
HK$
|
|
|
HK$
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
|
|
427.0
|
|
|
|
451.6
|
|
|
|
57.9
|
|
Gross profit
|
|
|
88.7
|
|
|
|
136.8
|
|
|
|
17.5
|
|
Profit from operations
|
|
|
37.5
|
|
|
|
81.4
|
|
|
|
10.4
|
|
Finance costs
|
|
|
(64.1
|
)
|
|
|
(55.3
|
)
|
|
|
(7.1
|
)
|
|
Profit/(loss) before taxation
|
|
|
(24.5
|
)
|
|
|
25.2
|
|
|
|
3.2
|
|
Profit/(loss) for the year
|
|
|
(80.6
|
)
|
|
|
4.7
|
|
|
|
0.6
|
|
Attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity shareholders of the Company
|
|
|
(79.5
|
)
|
|
|
5.6
|
|
|
|
0.7
|
|
Minority interests
|
|
|
(1.1
|
)
|
|
|
(0.9
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings/(loss) per share (cents)(1)
|
|
|
(19
|
)
|
|
|
1
|
|
|
|
0
|
|
Basic earnings/(loss) per ADS (cents)(1)
|
|
|
(152
|
)
|
|
|
11
|
|
|
|
2
|
|
Diluted earnings/(loss) per share
(cents) (1)
|
|
|
(19
|
)
|
|
|
1
|
|
|
|
0
|
|
Diluted earnings/(loss) per ADS
(cents)(1)
|
|
|
(152
|
)
|
|
|
11
|
|
|
|
2
|
|
Weighted average number of shares
outstanding(1) Basic
|
|
|
413.3
|
|
|
|
413.3
|
|
|
|
413.3
|
|
|
Weighted average number of shares
outstanding(1) Diluted
|
|
|
413.3
|
|
|
|
413.3
|
|
|
|
413.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend per share (cents)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital (2)
|
|
|
206.8
|
|
|
|
114.1
|
|
|
|
14.6
|
|
Property, plant and equipment, net
|
|
|
2,721.6
|
|
|
|
2,508.3
|
|
|
|
321.6
|
|
Total assets
|
|
|
3,407.6
|
|
|
|
3,135.6
|
|
|
|
402.0
|
|
Non-current liabilities (less current
portion)
|
|
|
1,080.0
|
|
|
|
755.9
|
|
|
|
96.9
|
|
Total liabilities
|
|
|
1,425.3
|
|
|
|
1,146.9
|
|
|
|
147.0
|
|
Total 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-
The Hong Kong Dollar is freely convertible into other currencies (including the US Dollar).
Since October 17, 1983, the Hong Kong Dollar has been linked to the US Dollar at the rate of
approximately HK$7.80 to US$1.00. The central element in the arrangements which give effect to the
link is an agreement between the government of Hong Kong and the three Hong Kong banknote-issuing
banks, The Hongkong and Shanghai Banking Corporation Limited, Standard Chartered Bank and Bank of
China (Hong Kong) Limited. Under this agreement, the Government of the Hong Kong SAR Exchange Fund
issues certificates of its indebtedness to the banknote-issuing banks against payment in US Dollars
at the fixed exchange rate of HK$7.80 to US$1.00. The banknote-issuing banks hold the certificates
of indebtedness to cover the issuances of banknotes. When the banknotes are withdrawn from
circulation, the banknote-issuing banks surrender the certificates of indebtedness to the
Government of the Hong Kong SAR Exchange Fund and are paid the equivalent US Dollars at the fixed
rate.
The consolidated financial statements of the APT Group are expressed in Hong Kong dollars
(HK$). The translations of amounts from Hong Kong dollars into United States dollars for
convenience of the reader in this annual report have been made at the rate on December 31, 2006 and
2007 of HK$7.80 = US$1.00. No representation is made that the Hong Kong dollar amounts could have
been, or could be, converted into United States dollars at that rate or at any other certain rate
on December 31, 2006 and 2007, or any other date.
The market exchange rate of the Hong Kong Dollar against the US Dollar continues to be
influenced by the forces of supply and demand in the foreign exchange market. Exchange rates
between the Hong Kong Dollar and other currencies are influenced by the rate between the US Dollar
and the Hong Kong Dollar.
The exchange rates of the Hong Kong Dollar to the United States Dollar as of and during the
years ended December 31, 2003, 2004, 2005, 2006 and 2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
Average
(1)
|
|
|
7.7875
|
|
|
|
7.7891
|
|
|
|
7.7774
|
|
|
|
7.7684
|
|
|
|
7.8020
|
|
High
|
|
|
7.8001
|
|
|
|
7.8010
|
|
|
|
7.8000
|
|
|
|
7.7933
|
|
|
|
7.8299
|
|
Low
|
|
|
7.7085
|
|
|
|
7.7632
|
|
|
|
7.7519
|
|
|
|
7.7509
|
|
|
|
7.7501
|
|
End 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.
|
The exchange rates of the Hong Kong Dollar to the United States Dollar for each month during
the previous six months were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 2007
|
|
|
January 2008
|
|
|
February 2008
|
|
|
March 2008
|
|
|
April 2008
|
|
|
May 2008
|
|
High
|
|
|
7.8068
|
|
|
|
7.8142
|
|
|
|
7.8027
|
|
|
|
7.7906
|
|
|
|
7.7945
|
|
|
|
7.8066
|
|
Low
|
|
|
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 Companys business, financial condition and operating
results could be adversely affected. As a result, the trading price of the Companys ordinary
shares and ADSs could decline and all or part of a prospective investors investment could be lost.
Technical Risks of satellite systems
Satellite programs involve inherent technical risks. Given the intense competitiveness of
Asian satellite markets, any launch or in-orbit failure affecting any of the Companys present or
future satellites would have a material adverse effect on the Companys results of operations and
financial condition.
-11-
Risk of Satellite Defects or Failure
Satellite defects as well as possible damage from electrostatic storms or collisions with
space debris or other external causes may result in a partial or total loss of a satellites
communication capacity. APSTAR IIR and APSTAR V are FS-1300 models, and APSTAR VI is a SB-4100 C1
model, which is a new general satellite platform with heritage from previous SB series satellite
model. Although these models were chosen based on a number of factors, including risk management,
there can be no assurance that the Companys satellites will perform as designed and as
manufactured. Significant defects in or damage to any of the Companys satellites would adversely
affect the Companys results of operations and financial condition.
Limited Life of Satellites
All satellites have limited operational lives. 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. There can be no
assurance as to the actual operational life of APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V or
APSTAR VI. The Companys results of operations and financial condition would be adversely affected
if the operational lives of satellites in the APSTAR System or any other satellites it may operate
are significantly shorter than expected.
TT&C Systems and Earth Station
All satellites in the APSTAR System, except APSTAR V, are controlled with respective TT&C
systems, which are operated by the technical staff of the Company. All TT&C systems are installed
in the Satellite Control Center of the Company. The reliability and performance of the Satellite
Control Center has been good and comparable to that of the industry. However, there can be no
assurance that there will not be technical problems, accidents or disasters in the future in
respect of the operation of the TT&C systems or the Satellite Control Center. The Companys results
would be adversely affected in the event of the occurrence of any such technical problem, accident
or disaster.
Risk of Interruption or harmful interference of APSTAR V
APSTAR V is operated by Telesats Ottawa Satellite Control Centre starting from April 25, 2008
through the satellite antenna facility of the Company. Telesat is an experienced satellite
operator particularly in the operation of satellites such as APSTAR V. However, there can be no
assurance that the operation of APSTAR V will be free from interruption or harmful interference in
the future. The Companys operating results could be adversely affected by the occurrence of such
defect or problem.
Changes in Technology and Industry
Technology in the broadcasting and telecommunications industry is in a rapid and continuing
state of change, with new technological developments and innovations constantly emerging. If such
developments and innovations were to decrease general commercial demand for the use of satellites
of the type operated by the Company, the Companys results of operations and financial condition
could be materially adversely affected. Further, while the Company designs its satellites to
incorporate state-of-the-art technology, there can be no assurance that the technology used in the
Companys satellites will continue to be the most advanced throughout the entire operational life
of each satellite. Any technological lag which develops could result in lower rental fees after
the initial rental term for any given transponder, and could therefore have a material adverse
effect on the Companys results of operations and financial condition.
Regulatory Risks
Regulatory Regime for Satellite Operations
The business prospects of the Company (including the launch and the timing of the launch of
new satellites) could be adversely affected by laws, policies or regulations that modify the
present regulatory regime in HKSAR or elsewhere applicable to APT Group or the launch, operation
and commercial usage of its satellites.
-12-
Satellite services are subject to international space law. A country that is a party to the
International Outer Space Treaty or other treaties or conventions regulating outer space activities
is responsible for fulfilling its own obligations under such treaties or conventions. This often
results in the adoption by a member country of domestic laws to regulate the activities of their
own citizens or corporations in order to enable the country concerned to comply with its
international obligations. APTs satellite operations are principally regulated by the Outer Space
Ordinance 1997 (the Outer Space Ordinance). The Outer Space Ordinance prohibits any person from
launching or procuring the launch of a satellite, or operating a satellite, without obtaining the
appropriate license. The ultimate authority to grant licenses and otherwise to administer the
Outer Space Ordinance is vested in the Chief Executive of HKSAR acting in consultation with the
Executive Council of Hong Kong (Chief Executive in Council). In practice, all relevant matters
are dealt with on a regular basis by and through the OFTA.
Since July 1, 1997, HKSAR and its government and regulatory bodies have been subject to its
Basic Law and the principle of One country, two systems. However, the Outer Space Ordinance
states that where the Central Peoples Government of the PRC issues an instruction to the Chief
Executive in relation to any licence to be issued or revoked under the Outer Space Ordinance on the
ground that if the instruction were not complied with the national security or the international
obligations of the PRC would be significantly affected, the Chief Executive shall comply with such
instruction.
On November 1, 2003 and April 4, 2005, OFTA granted the Space Station Carrier Licence for the
TT&C operations of APSTAR V and APSTAR VI, respectively, to APT. In addition, on April 4, 2005 OFTA
also granted to APT the Outer Space Licence in relation to the launch and operation of APSTAR VI.
The Company currently has licenses for the operation of APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V
and APSTAR VI. Owing to the fact that APSTAR V is under the leasehold arrangement and is operated
by Telesat instead of the Company, there is no need for the Company to obtain the Outer Space
Licence for APSTAR V. However, there can be no assurance that existing laws and regulations
affecting the Company will remain applicable in the future, or whether any such applicable laws and
regulations are likely to be amended.
Priority for Orbital Slots
Satellites are entitled to protection from radio frequency interference by other satellites
and earth stations only upon the registration of the location, frequency and use of such satellites
with the Radiocommunication Bureau. Registration requires the successful completion of a
coordination process with other existing and potential users of locations and frequencies who have
commented on the application for registration. The coordination process is carried out in part at
the government-to-government level, which is beyond the control of the Company. The coordination
process has become increasingly complex and time-consuming in the Asia Pacific region because a
large number of operators have registered new systems operating at high power levels with very
broad coverage. The coordination process may result in modifications of proposed coverage areas or
satellite design to eliminate or minimize interference with other potential users.
Under the Radio Regulations, during the coordination process a country may request the
Radiocommunication Bureau to assist it in resolving disputes in connection with existing or
proposed uses of frequencies and orbital locations. However, should any such disputes remain
unresolved, and the coordination process therefore not be successfully completed, there is no
formal dispute resolution mechanism. Any country that nonetheless places a satellite or any earth
station into operation without coordination and notification may not be entitled to seek the
assistance of the Radiocommunication Bureau to resolve complaints relating to interference.
APT, through the PRC government, has requested the Radio Regulatory Department of the PRC via
OFTA of Hong Kong to file and coordinate applications by APT for orbital slots with the
Radiocommunication Bureau and for resolving interference concerns. The Radio Regulatory Department
has notified the Radiocommunication Bureau of the proposed use of several orbital slots, namely
76.5 degrees East, 89.5 degrees East, 92.2 degrees East, 96 degrees East, 102.8 degrees East, 131
degrees East, 131.8 degrees East, 134 degrees East, 138 degrees East and 140 degrees East. APT also
filed for the orbital slot at 142 degrees East but such filing has also been, for administration
purposes, transferred to ChinaSat in 2004 after liaising with OFTA. Pursuant to such transfer,
APSTAR I can be positioned at 142 degrees East under the existing licenses from OFTA. Under ITU
regulations, no assurance can be given as to whether substantial modifications to satellite
coverage or services may be required with respect to 142 degrees East, and no assurance can be
given whether the coordination process with the ITU, with respect to the orbital slot at 76.5
degrees East, where APSTAR IIR is currently positioned, or any other orbital slot to be used by the
Companys satellites will be completed or whether the Company will have any priority for any such
orbital slot.
-13-
Possible Disputes Relating to Orbital Slots
APSTAR V replaced APSTAR I on August 13, 2004. APSTAR V is utilizing certain designated
C-band, extended C-band frequencies and Ku-band frequencies in the orbital slot at 138 degrees
East. APSTAR VI replaced APSTAR IA on July 7, 2005. APSTAR VI is utilizing certain designated
C-band and extended C-band frequencies in the orbital slot at 134 degrees East. The right to use
these frequencies at such orbital slots has been licensed to the Company by the Kingdom of Tonga
(Tonga), which, through its agent namely Friendly Islands Satellite Communications Limited
(TongaSat), has responsibility for the ITU coordination process with respect to such orbital
slots and the frequencies covered by the Companys license.
APT and TongaSat entered into a license agreement on July 8, 2003, under which APT can utilize
certain designated C-band, extended C-band and Ku-band frequencies in the orbital slot at 138
degrees East for APSTAR V. APT and TongaSat also entered into an operator agreement on December
19, 2003 for the utilization of certain Ku-band frequencies in the same orbital slot for APSTAR V,
which operator agreement was approved by the corresponding administrations of both HKSAR and Tonga
on March 15, 2004.
APT and TongaSat also entered into a license agreement on April 15, 2005, under which APT can
utilize certain designated C-band, extended C-band and Ku-band frequencies in the orbital slot at
134 degrees East for APSTAR VI.
Tonga has confirmed to the Company that it has not granted rights to any third party that
would affect the Companys license or the Companys entitlement to use the frequencies at such
orbital slot covered by the license. Disputes may arise with respect to these and other orbital
slots used by or contemplated for the Companys satellites. Any such disputes or interference may
have a material adverse effect on the Companys business.
APSTAR I has been relocated to 142 degrees East and APSTAR IA is in the process of being
relocated to another orbital slot. APT is authorized by customers to locate and operate these two
satellites under inclined angle modes. Third parties liabilities insurance policies have been taken
out in respect of the relocation of APSTAR IA. No assurance can be given by the Company that these
two satellites will not cause any interferences or damages to any third parties leading to damages
of any third party, nor the insurance policy will be sufficient for any damage payments.
Regulatory Constraints on End-users
Many of the Companys existing and potential customers who may wish to use the APSTAR System
to broadcast into or provide telecommunications services for countries in Asia are subject to
government licensing. The applicable regulatory schemes in these countries vary considerably.
While the Company does not believe these regulatory schemes will prevent it from pursuing its
business, there can be no assurance that its customers licenses and approvals are or will remain
sufficient in the view of foreign regulatory authorities or that these authorities will not
discourage or prevent existing or potential customers from utilizing transponders on the APSTAR
System.
Many of the Companys customers must also have authorization from the countries in which they
are located in order to uplink to and communicate by means of the Companys satellites. While
obtaining such authorizations on behalf of its customers is not the Companys responsibility, the
Companys success may depend on the ability of its potential customers to obtain required
authorizations. The potential risk from regulatory constraints due to latest applications in
radiofrequencies such as WiMax or 4
th
G may have an adverse effect on our Extended C
band transponder business.
Export Restrictions
The United States government has imposed certain restrictions on technology transfers to
certain countries including the PRC. Export licenses for the deliveries of TT&C systems and
satellites are required to be obtained by the manufacturers of other satellites that the Company
may launch in the future in connection with launches in any country subject to restrictions on
technology transfers.
-14-
Under the APT-Loral Term Sheet dated September 23, 2002 and the agreements signed between
Loral Orion and APT HK in December 2003, Loral Orion agreed to participate in the development of
APSTAR V by investing up to 50% of the capital necessary for the APSTAR V project on a pro rata
basis in order to obtain rights to 27 transponders at a value of approximately US$115.0 million.
In March 2003, the parties agreed to lower the number of transponders to be purchased by Loral
Orion to 25, but Loral Orions capital commitment remains unchanged.
Because of the failure of Space Systems/Loral Inc., a subsidiary of Loral Space &
Communications (SS/Loral), to obtain the export license for the transfer of the title of APSTAR V
in time for launching, APT entered into a Satellite Procurement Amendment Agreement, a Satellite
Transponder Agreement and a Satellite Agreement (collectively the Definitive Agreements) with
SS/Loral and Loral Orion Inc. (Loral Orion) on August 26, 2003 for the purpose of minimizing any
further delay in the launch of the satellite. Under the Definitive Agreements, the title of APSTAR
V was transferred to Loral Orion upon intentional ignition of APSTAR V and simultaneously therewith
APT was granted an irrevocable lease of forty-one and one-half (41
1
/
2
) transponders for the lease
term commencing upon transfer of title from SS/Loral to Loral Orion until the end of operational
life of APSTAR V. Under the Satellite Agreement, APT will release the leasehold interest of twelve
and one-half (12
1
/
2
) transponders to Loral Orion in stages over a five years period from the
in-service date of APSTAR V subject to payment of installments by Loral Orion to APT. This will
result in APT having 29 transponders. Pursuant to the Settlement Agreement dated November 16, 2003
entered into between Loral Orion and APT, Loral Orion took up four and one-half (4
1
/
2
) transponders,
leaving eight transponders to be released by APT to Loral Orion at the anniversary of the fourth
and fifth year after the commencement of APSTAR V. Under the leasehold arrangement, Loral Orion has
committed to continue pursuing the necessary export license for title transfer of APSTAR V. The
Definitive Agreements were approved by the United States Bankruptcy Court on October 28, 2003. The
Company believes that entering into the Definitive Agreements facilitated the timely replacement of
APSTAR I so that satellite transponder services of the APT Group can be enhanced. The Definitive
Agreements will not adversely impact the business and future plans of the APT Group because the
leasehold interests under the Definitive Agreements will allow APT to carry on its business in a
normal commercial practice of leasing its transponders capacities to any third parties. Loral
Skynet has exercised the acceleration option and has taken up one standard C band transponder and
one extended C-band transponder on September 28, 2006.
Owing to the absence of export license for the delivery of the TT&C system of APSTAR V, the
satellite is currently controlled by Loral Skynet through the Satellite Control Centre of the APT
Group until the export license for the delivery of the TT&C system of APSTAR V is obtained by Loral
Skynet. Loral Orion has committed to continue pursuing the necessary export license for title
transfer of APSTAR V. However, there can be no assurance that the relevant vendor of any satellite
of the Company will be able to obtain all the necessary licenses or that such other licenses will
not be revoked by the relevant government or that the relevant government will not impose
additional restrictions or trade sanctions against the PRC or other countries that would
significantly delay the planned launch of the satellite in question or other satellites that the
Company or any of its subsidiary or associated company may launch in the future.
Business Risks
Insurance
The Company has in-orbit insurance coverage in respect of APSTAR V and APSTAR VI until July 6,
2009. The in-orbit insurance for the only transponder in APSTAR IIR was renewed up to April 30,
2006 and no renewal of in-orbit insurance was arranged for APSTAR IIR thereafter. No in-orbit
insurance is maintained in respect of APSTAR I and APSTAR IA as their design lives were already
expired. On April 30, 2004, OFTA granted the Company a waiver whereby the requirement of third
party liability insurance in respect of APSTAR I, IA and IIR, respectively, for in-orbit operation
is waived. There can be no assurance that the Company will not be subject to claims for third-party
liability in respect of satellites under the APSTAR System. As the title of APSTAR V has
transferred to Loral Skynet upon launch, there is no need for the Company to obtain an Outer Space
Ordinance Licence for APSTAR V and the Company is not required to secure third-party liability
insurance for APSTAR V. No assurance can be given with respect to the change of policy of OFTA.
Because of the drifting of APSTAR IA from its original geostationary orbital slots to new orbital
slots for the provision of services to customers under inclined modes, APSTAR IA was covered under
third-party liability insurance over drifting and operation through November 1, 2007. Similar
insurance will be arranged if new developments as to APSTAR IAs designated orbital slot are agreed
and drifting takes place.
-15-
After the World Trade Center event happened on September 11, 2001, the insurance industry
imposed unfavorable terms on satellite insurance with respect to both the launch insurance and
in-orbit insurance. Such impositions include a higher premium rate and additional exclusion
clauses. The Companys in-orbit insurance must be renewed annually. There can be no assurance
that the Company will be able to obtain future insurance on terms satisfactory to the Company, or
at all. The failure to secure adequate insurance coverage may result in the Company not being in
compliance with its Outer Space Ordinance License, and could adversely affect the Companys
financial condition if an event were to occur for which the Company was not adequately insured.
Due to Export License restrictions, there is no guarantee that in the event of an anomalous
condition, the satellite vendors will provide to the Company, in a timely manner, the necessary and
complete information by which the Company can satisfy its disclosure obligation under the insurance
policy.
The Companys launch insurance is unlikely to fully reimburse the Company for its expenditures
with respect to launching a replacement satellite, with uninsured expenses comprising legal and
other professional fees, interest and certain other expenses. It is the Companys policy to secure
in-orbit insurances to cover only the book value, rather than the replacement cost, of a satellite,
however, the Company may take into account the obligations under the Bank loan conditions and the
general industrial practice on a case by case basis. There is no assurance that the Company will
take in-orbit insurance to fully cover the book value of its satellites. Further, the Companys
insurance coverage does not compensate the Company for business interruption and similar losses
(including, among other things, loss of market share, loss of revenue and incidental and
consequential damages). In addition, the Companys insurance policies include customary exclusions
including, among other things, exclusions from losses resulting from (i) war or similar hostile
actions, (ii) anti-satellite, nuclear or laser or directed energy devices, (iii) insurrection and
similar acts or governmental action to prevent such acts, (iv) governmental confiscation,
(v) nuclear reaction or radiation contamination, (vi) electromagnetic or radio frequency
interference, except for damage directly caused by such interference, or (vii) willful or
intentional acts of the Company or its contractors except for the acts of the range safety officer
acting within the limit of his authority.
Competitive Nature of the Industry
The international satellite communications industry is highly competitive. The Company faces
competition from numerous international, regional and domestic satellite companies and from other
communications companies which offer competing services using satellites or land-based facilities
in the Asia Pacific region. Many of these competitors have substantially greater financial
resources than the Company. The Company expects that new satellites will be launched covering all
or part of the Asia Pacific region in the future. Assuming announced plans for such launches are
successfully implemented, there would be an increase of transponder capacity serving the region and
the increased supply of international telecommunications facilities, including those of the
Company, would likely exceed the demand for such services. Such overcapacity could have a negative
impact on the Companys results of operations and financial condition. Technological developments,
such as the use of digital video compression technology, and the proliferation of fiber optic
cables in the form of
land cables and submarine cables at comparatively lower cost for point-to-point
telecommunication services may also result in reduced demand for transponder capacity as such
advancements become commercially viable.
The laws of certain countries require domestic television broadcasters and domestic satellite
telecommunications operators providing services in their home countries generally to use
state-owned or locally-owned satellites to the extent capacity is available. These legal
requirements may prevent the Company and other satellite companies from competing in the provision
of transponder capacity to these potential customers. There can be no assurance that those
countries in the Asia Pacific region, including those countries within the footprints of APSTAR
System satellites and in which the Companys customers currently provide programming or
telecommunications services, such as PRC and Indonesia, will not impose similar requirements to use
state-owned or locally-owned satellites in the future on domestic broadcasters or operators. The
imposition of such requirements could adversely affect the Companys results of operations and
financial condition.
-16-
Additional Financing Requirements
On December 16, 2002, APT entered into a Bank loan which is secured by the assignment of the
construction, launching, and related equipment contracts relating to APSTAR V and APSTAR VI and
their related insurance claim proceeds, assignment of all present and fixed charges over certain
bank accounts which will hold receipts of transponder utilization income and termination payments
under construction, launching and related equipment contracts. As of December 31, 2006 and 2007,
the aggregate outstanding borrowing amount under the Bank loan was US$120.0 million and US$87.6
million, respectively.
The Bank loan contains financial covenants, including maintenance of collateral coverage
ratio, minimum net worth and minimum EBITDA. The Bank loan also contains customary limitations,
including those on dividends, investments, capital expenditures, changes of controlling
shareholders, creating liens and transactions with affiliates. No assurance can be given that APT
will be able to meet any financial and operating covenant. These covenants and limitations may
limit the Companys ability to raise additional funds when required and could significantly
restrict the Companys business expansion.
Dependence on Key Customers
Revenues from the Companys five largest customers for the years ended December 31, 2006, and
2007 were HK$127.9 million, and HK$148.8 million (US$19.1 million), respectively, which represented
30.0% and 32.9%, respectively, of total revenues. Revenues from the Companys largest customer
represented 8.4% and 8.8%, respectively, of total revenues during such periods. The Companys
results of operations could be materially and adversely affected by the loss of one or more of its
key customers. There can be no assurance that the key customers will renew the existing satellite
capacity utilization agreements on similar commercial terms, including price levels and for similar
capacity. In addition, to the extent the credit quality of key customers deteriorates or these
customers seek bankruptcy protection, we may not be able to collect our receivables from these
customers, which may adversely affect our operating results.
Interference
Adjacent satellites may use the same band of frequencies as the Companys satellites and the
transmission made by other satellites or other legal or illegal source of transmission which may
interfere with the transmissions of the Companys satellites. Such interference could lead to the
loss of revenues if customers migrate to competitors who operate satellites without such
interference. Further, there can be no assurance that the Company can avoid the material
interference with other satellites which may result in restriction of frequency bandwidth or loss
of revenues. The Company may also be in violation of the Outer Space Ordinance Licence, and the
affected parties may submit a complaint in the ITU.
Political and Economic Risks
Substantially all of the Companys revenues are derived from its operations conducted in the
Asia Pacific region, including the PRC and Hong Kong. As a result, the Companys results of
operations and financial condition may be influenced by the political situation in the PRC, Hong
Kong and elsewhere in the Asia Pacific region and by the general state of the various Asian
economies. For the years ended December 31, 2006, and 2007, approximately 48.6% and 37.8%,
respectively, of the Companys revenues were derived from customers based in the PRC, excluding
Hong Kong. In addition, due to the geographic coverage of the Companys satellites, the most
significant market for the Companys customers (whether or not such customers are based in the PRC)
has been, and is expected to continue to be, the PRC.
The economy of the PRC differs from the economies of most countries belonging to the
Organization for Economic Co-operation and Development in such respects as structure, government
involvement, level of development, growth rate, capital reinvestment, allocation of resources, rate
of inflation and balance of payments position. For over 50 years, the economy of the PRC has been
a planned economy subject to five-year state plans adopted by central PRC government authorities
and implemented, to a large extent, by provincial and local authorities, which set production and
development targets. Although the majority of productive assets in the PRC
are still owned by the government, in the past several years emphasis has been placed on
decentralization and the utilization of market mechanisms in the development of the PRC economy.
-17-
Since the late 1970s, the PRC government has been reforming its economic systems. Many of the
reforms are unprecedented or experimental, and are expected to be refined and improved. Other
political, economic and social factors could also lead to further readjustment of the reform
measures. This refining and readjustment process may not always have a positive effect on the
operations of the Company and its PRC customers. The Company and its PRC customers may be
adversely affected by changes in the PRCs political, economic and social conditions and by changes
in policies of the PRC government, such as changes in laws and regulations (or the interpretation
thereof), measures which may be introduced to control inflation or imposition of additional
restrictions on currency conversion.
Subsequent to the accession of the PRC into the World Trade Organization in November 2001,
there has been no immediate adverse impact on the satellite industry in the PRC market. However,
its long-term implications are uncertain.
The PRC government has mandated that international satellite channels must distribute their
channels in the PRC using a unified satellite platform different from the APSTAR System. The
implications of this requirement are not yet certain. There can be no assurance that the PRC
government will not further mandate part or all Chinese satellite channels to be distributed in
certain satellite platforms other than APSTAR System. Since nearly half of the Companys revenue is
derived from the PRC, there may be an adverse impact on the Companys business.
Most of the payments under the Companys transponder utilization agreements are required to be
made in US Dollars. The PRC currently has extensive foreign exchange controls. The ability of the
Companys PRC customers to convert Renminbi (the currency of the PRC) into foreign currency and to
purchase foreign currency is subject to various PRC laws and regulations. There can be no
assurance that in the future the PRCs foreign exchange controls will not adversely affect the
ability of the Companys PRC customers to make payments to the Company in US Dollars.
The Outbreak of Infectious Diseases
The past outbreak of a highly infectious deadly flu-like disease known as Severe Acute
Respiratory Syndrome (SARS) in the Asia Pacific region severely affected the economic environment
of most of Asia. In addition, there had been occasional incidences of avian flu reported in the
Asia Pacific region, including Indonesia, Vietnam, Thailand and the PRC, and deadly H5N1 was proved
in certain cases. Effective treatments and vaccination for such diseases are not yet available, and
therefore further outbreaks of SARS, avian flu or other similar diseases could adversely affect the
economies of the region.
Catastrophic Events
In early 2008, parts of Mainland China, experienced severe winter weather which resulted in
extensive damages to factories, electricity supplies, water suppliers, farmlands, transportation
and communications. On May 4, 2008, a tropical cyclone battered the Irrawaddy region of Burma
killing hundreds of people and leaving tens of thousands people homeless. On May 12, 2008, a
catastrophic earthquake reportedly at 8.0 on Richter scale struck Sichuan Province of China. The
earthquake has devastated a very wide region in Sichuan Province, killing tens of thousands of
people and causing widespread damage to houses, facilities, transportation and communications with
serious hazards of quake lakes bursting. Though a lot of terrestrial communication networks
including land cables and base stations were handicapped or destroyed by such catastrophic events,
the satellite telecommunication facilities of APT Group have remained fully operational and
unaffected. It is unable, at this stage, to have a clear assessment on the consequence and impact,
if any, on the APT Groups business. However, such catastrophic events may upset the economic
activities in those affected areas, which may in turn have material effect on the transponder
market over the coming years.
-18-
Item 4. Information on the Company
History and Development of the Company
The Company is a Bermuda company incorporated on October 17, 1996 with its principal place of
business originally at Rooms 3111-3112, 31
st
Floor, One Pacific Place, 88 Queensway,
Hong Kong (Telephone: 852 2526-2281) and subsequently moved to 22 Dai Kwai Street, Tai Po
Industrial Estate, Tai Po, New Territories, Hong Kong on December 8, 2003 (Telephone: 852
2600-2100). The Companys registered office is at Clarendon House, 2 Church Street, Hamilton, HM
11, Bermuda. APT is a Hong Kong company and a wholly-owned indirect subsidiary of the Company.
References herein to the Company include APT Holdings and its subsidiaries, except where the
context otherwise requires.
Business Overview
The Company, through its subsidiary, APT, is a leading provider of high quality satellite
services throughout the PRC and elsewhere in the Asia Pacific region. APSTAR System broadcasts
satellite TV channels of many prominent international broadcasters, and PRC, Taiwan and Hong Kong
broadcasters including CCTV, CETV-1, CBSAT, D-Sky and CableTV. The Companys strategy is to serve
as a preferred operator for these and other international and PRC, Taiwan, and Hong Kong
broadcasters. The Company also provides transponder service to telecommunications operators, among
others, Singapore Telecommunications Limited (SingTel), PCCW Global, China Telecom Corp. and
China Mobile. In addition, the Company also provides transponder service to certain major
telecommunication operators in newly emerging markets including Vietnam and Indonesia. Such
well-known customers include Viettel, PT Telkom, and PSN.
The Company comprised two main business segments, namely provision of satellite transponder
capacity and related services, and provision of satellite-based broadcasting and telecommunications
services. In order to reflect the segments of business affected by similar economic
conditions, the satellite control services income have been aggregated to the segment of provision
of satellite transponder capacity and related services. A summary of the Companys business
segments is provided below (in HK$ millions):
|
|
|
|
|
|
|
|
|
Business segments:
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Revenue from external customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision of satellite transponder capacity and related services
|
|
|
363.1
|
|
|
|
395.0
|
|
Provision of satellite-based broadcasting and
telecommunications services
|
|
|
63.8
|
|
|
|
56.5
|
|
Service income
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
427.0
|
|
|
|
451.6
|
|
|
|
|
|
|
|
|
Provision of satellite transponder capacity and related services
The Companys income from provision of satellite transponder capacity and related services is
derived from its operating satellites.
The Companys first satellite, APSTAR I, was launched in July 1994 and commenced commercial
service on September 15, 1994. APSTAR I was replaced by APSTAR V on August 13, 2004 at 138 degrees
East. APSTAR I currently has sufficient fuel to operate in an
inclined mode no later than 2010. APT has
entered into a utilization agreement with a customer to utilize APSTAR I at 142 degree East through
the end of its useful life. APSTAR I was drifted from 138 degrees East to 142 degrees East in
September 2004.
-19-
The Companys second satellite, APSTAR IA, was launched in July 1996 and commenced commercial
service on September 1, 1996. APSTAR IA was replaced by APSTAR VI on June 7, 2005 at 134 degree
East. APSTAR IA currently has sufficient fuel to operate at inclined mode no later than April 2013.
On May 30, 2005, APT entered into an agreement with NAOC to utilize APSTAR IA through its
remaining useful life. The agreement was terminated in January 2007 due to the default of payment.
Subsequent to agreement on a term sheet agreed in January 2007, APT had entered into a utilization
agreement with PSN on June 8, 2007 to utilize APSTAR IA through the end of its useful life, and
APSTAR IA will be drifted from its current orbital slot to an orbital slot designated by PSN.
The Company launched a third satellite, APSTAR IIR, in October 1997, and it commenced
commercial service on January 1, 1998 for the provision of high quality and high power transponder
capacity in the Asia Pacific region. APSTAR IIR is located at 76.5 degrees East.
In order to take advantage of the demand in the PRC and elsewhere in the Asia Pacific region
for varied television programming with superior picture and sound quality, the Company launched
high power satellites, APSTAR V and APSTAR VI, on June 29, 2004 and April 12, 2005, respectively,
as replacement satellites of APSTAR I and APSTAR IA, respectively. APSTAR V commenced its
commercial service on August 13, 2004 while APSTAR VI commenced its commercial operation on June 7,
2005.
As at December 31, 2007, the utilization rates of APSTAR V and APSTAR VI were 72% and 59%,
respectively.
APSTAR V is intended to satisfy demand in both Asia and Australia for transponder capacity.
The Company has focused its marketing efforts on developing a customer base of international and
PRC broadcasters and telecommunications providers. The Company has established close relationships
with its existing customers and believes that it is well-positioned to continue to provide capacity
on future satellites to its existing customers as well as to expand its customer base to include
other prominent broadcasting and telecommunications customers.
APSTAR VI provides broad Asia Pacific footprints. The Company mainly provides broadcasting
service to broadcasters in China, as well as provides telecommunication services to telecom
operators in other Asia Pacific regions. We believe that it will become one of the most popular
multilingual, multicultural and multi-application satellite platforms in the Asia Pacific region.
Satellite-based Broadcasting and Telecommunications Services
In order to fully tap the business potential arising from the telecommunications field in the
Asia Pacific region, including the PRC, APT Telecom Services Limited (APT TS) provides
telecommunication services with its FCL (formerly known as external satellite-based fixed
telecommunication network services), which was issued by the OFTA and transferred from APT
Satellite Telecommunications Limited (APTT) pursuant to the reorganization in 2003. Services
under the FCL include VSAT, wholesale voice and Internet POP gateway services.
APT Satellite TV Development Limited (APT TV) established a satellite TV broadcasting
platform based on the Satellite Television Uplink and Downlink License first granted by the
Government of HKSAR in 1999 and was further broadened in March and June 2005 to include APSTAR V
and APSTAR VI. To accommodate the future demand for satellite TV program services, enhance the
encoding capability of APT TV and further develop the Companys satellite broadcasting business,
APT increased investments in uplinks and downlinks and TV-program transmission and broadcasting
facilities. At December 31, 2007, there were 72 channels uplinked through APT TVs broadcasting
service.
CTIA VSAT Network Limited (CTIA) directly owns 60% of Beijing Asia Pacific East
Communication Network Limited which provides data broadcasting services for the PRC market.
Pursuant to a disposal agreement dated April 2, 2008, CTIA 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
holds a 35% equity interest in Beijing Zhong Guang Xin Da Data Broadcast Technology Co, Ltd. which
is a jointly controlled entity of the Company.
The revenue generated from provision of satellite-based broadcasting and telecommunications
services were approximately HK$63.8 million and HK$56.5 million (US$7.2 million) for the years
ended December 31, 2006 and 2007, respectively, which represented 15.0% and 12.5%, respectively, of
total revenues for such years.
-20-
Industry and Market Overview
Satellites
The global communications market for video, data and voice transmissions is served primarily
through terrestrial and submarine optical fiber and coaxial cable, microwave systems and
satellites.
Ground-based microwave systems disseminate signals in the form of radio waves from an antenna
on top of a building or a transmission tower. Microwave systems are well suited for use by local
television stations and cellular telephone systems because the reach of the transmission signal
typically is limited to one discrete area. Microwave systems are not suitable for long distance
communication or broadcasting, since transmission over long distances requires the construction of
a number of microwave relay stations to relay a signal, and repeated transmission can distort a
signal. Satellite systems require only two stations to cover long distances, one uplink station
and one downlink station. Most importantly, satellites can provide point to multipoint
transmissions while simultaneously transmitting signals over the entire region covered within the
satellites footprint.
Satellite systems generally operate in three main orbits low-earth orbit (LEO), mid-earth
orbit (MEO) and geostationary orbit (GEO). LEO systems operate in orbits at distances of
between a few hundred miles up to 1,000 miles from earth, whereas MEO systems operate from 1,000 up
to 20,000 miles from earth, although they will typically be in the range of 6,000 to 15,000 miles
high. Satellites in these systems are not geostationary, that is, they do not constantly overlook
the same area on earth. The inability to cover the same area on earth continuously makes these
systems impractical for broadcasting and traditional telecommunications usage. In general, LEO and
MEO systems comprise of a series of satellites that are used commercially primarily for mobile
satellite services. By contrast, GEO satellites are located in orbit approximately 22,300 miles
above earth and can blanket large geographic areas with signal coverage.
GEO satellites can be accessed through an uplink station virtually anywhere within the
satellites footprint. With broad coverage capability, GEO satellites have commonly been used for
(i) television broadcasting, principally to cable operators for redistribution and also to
households equipped with direct reception antennae as well as for supplementary terrestrial
transmission networks in remote areas, (ii) international and domestic trunk telephony
complementing optical fiber and coaxial cable and microwave backbone networks and (iii) business
services, principally for voice, data and video transmissions to private networks such as VSAT
networks and program exchanges between television broadcasters, including satellite news gathering.
Communications satellites typically are evaluated on (i) their coverage area or footprint,
(ii) the quality of the signal transmitted to the coverage area and (iii) the availability of the
transponders. Footprint is a measurement of the breadth of a satellites coverage. A key
measurement of signal quality is the intensity of transmission power in the coverage area. Higher
power signal enables a customer to use smaller, lower-cost antennae on the ground. Availability is
determined by considering a satellites operational lifetime as well as the number of
transponders capable of providing service. The Company considers all three factors in determining
whether a particular satellite is appropriate for its needs.
Commercial telecommunications and broadcast satellites typically transmit signals using either
C-band or Ku-band. C-band is used worldwide for satellite communications to transmit signals with
less interference from atmospheric conditions. C-band frequencies are also used by ground-based
microwave systems. In certain parts of the world, C-band satellite transmission antennae must be
located far from centers of population to avoid interference with ground-based systems. Since
there are fewer Ku-band systems in existence than C-band systems, more powerful Ku-band
transponders can be used in urban areas without similar interference concerns. Because of higher
available transmission power, Ku-band frequencies can be used in conjunction with antennae that are
smaller than antennae that are used in conjunction with C-band frequencies. Ku-band is generally
used for the
same purposes as C-band as well as for satellite news-gathering (transportable antennae) and
in some VSAT applications.
The combination of high power transmitters and small antennae also makes Ku-band suitable for
direct-to-home television.
-21-
Direct-to-home television did not become commercially viable until recently because available
satellite technology did not have the power to transmit to receivers and digital compression
technology had not been adequately developed. Today, DBS provides an efficient point-to-multipoint
delivery of video and audio transmissions. The advent of high-powered satellites allows for dishes
as small as 18 inches and digital compression technology permits the broadcast of up to 10 channels
of programming per transponder. In the United States, Europe and Japan, DBS operators have had
success in penetrating their respective markets.
APT provides one-stop solution to customers. For television programming distribution, these
services may consist of arranging satellite capacity and providing teleport transmission facilities
and other value-added services. Services for other broadcasting applications, such as live news
and sports reporting, may include the arrangement of satellite capacity, the provision of trucks
equipped for live news and sports broadcasts, transmission scheduling and signal monitoring.
Services for business communications networks are generally more extensive and may include
arranging satellite capacity, procurement and installation of on-site antennae and network design,
integration, management, operation and maintenance. The Company has chosen to focus on the
provision of satellite transponder service, based on the APSTAR System and new enhancement of
value-added services, in order to maximize the efficient use of its resources so as to provide the
highest quality service.
Broadcasting and Telecommunications Markets in Asia
Increased Distribution of Television Programming
The television market in Asia had been experiencing significant growth, both in terms of the
number of broadcasters creating programming and the number of channels available to viewers.
International television programmers have been seeking to provide entertainment in Asia.
Satellites are ideally suited for broadcasting to international, regional, and national audiences
and for delivering television programming to cable operators or microwave transmission stations for
local redistribution.
The television markets in Asia are not uniform, and among the nations of Asia, there are
numerous regional differences in language, culture, and ideology as well as in income levels and
income distribution. Programmers who wish to take full advantage of the entire Asian television
market must tailor their programming to be responsive to these regional differences. Access to
satellite transponder capacity from satellite operators provides opportunities to television
broadcasters to tailor programming for particular audiences. The Company believes that this will
stimulate demand for transponder capacity on its satellites.
Liberalization of the Television and Telecommunications Industries
Liberalization of the television industry in a number of countries in Asia has increased the
portion of programming on satellites that is broadcast by private television networks and
programmers which complement or compete with state-owned or state-sponsored broadcasters.
Most countries in Asia have been liberalizing their telecommunications markets to some degree
or another in order to permit private service providers, in addition to the traditional
state-sponsored telephone monopolies, to provide facilities and services. The PRC has begun to
liberalize its telecommunications markets by breaking the monopoly status of China Telecom as the
countrys sole telecommunications services provider and by allowing limited numbers of domestic
service providers in various service areas (such as mobile services, internet telephony and other
services). New telecommunications service providers stimulate demand for satellite capacity such
as that offered by the Company.
Continuing Technological Advancements
The Company believes that technological advances will increase information carrying capacity
and reduce transmission and equipment costs which may, in turn, stimulate demand for satellite
communications services. Such advances include the following:
High-powered Satellites.
New satellites, which are of higher power, can deliver improved
quality signals to antennae that are generally smaller and less expensive (and are therefore more
convenient for private and commercial use) and can cover a larger area than those used with
earlier-generation satellites. The increasing use of these smaller, less expensive antennae is
expanding the markets for public and private communications networks and video distribution
services.
-22-
Digital Communications.
Analog telephone systems carry relatively low volumes of information.
Globally, telephone companies are rebuilding their infrastructure to carry high-speed digital
communications, which permit new and enhanced business communications and consumer services.
Examples include video phones, video conferencing, video-on-demand, wide-area networks,
telecommuting and interactive TV. Many of these services use satellite transponder capacity within
their transmission circuits and, because of their high transmission rates, will require significant
transponder capacity. Furthermore, developments in digital technology for VSATs, which reduce
terminal size and increase transmission throughput, are encouraging the development of new,
cost-effective business and rural communications applications.
Compressed Digital Video.
Digital video compression technology is designed to compress
multiple high-quality video channels into the same transponder capacity that previously carried one
analog channel. This technology facilitates a significant increase in the number of available
video channels with improved transmission quality and allows satellite operators to provide
satellite transmission services using less bandwidth. Digital video compression technology is
expected to lower the costs of delivering programming via satellite and cable television systems,
thereby permitting more programming options to be provided to niche markets. Digital video
compression technology may also permit broadcasters, by lowering per channel costs, to offer local
broadcasting platforms including programming designed for particular national audiences and
particular cultures and languages. The Company believes that digital video compression technology
may facilitate the efforts of broadcasters to distribute their programming regionally to multiple
audiences.
Digital video compression technology may also in the future facilitate the introduction of
HDTV. Digital video compression technology is expected to permit HDTV signals with superior
picture quality to use an amount of bandwidth comparable to that used by a current analog channel
with a far inferior image since analog form typically consumes large amounts of bandwidth.
Increased Spending on Telecommunications Projects
A number of countries in Asia lack basic telephone services as well as the sophisticated
optical fiber and digital switching infrastructure required for large bandwidth, high speed data
applications for businesses. The governments of many of the developing countries in Asia have
recognized the effect of shortages of telecommunications services in their countries and are
responding by setting goals aimed at significantly increasing teledensity (measured in main
telephone lines per 100 inhabitants) in their countries. The Company believes that government
organizations in such countries and other less developed regions in Asia will depend significantly
on wireless communications, including satellites, to serve their communications needs because the
development of land-based infrastructure is more costly and time-consuming.
Growth of Information Services Markets
The Company believes that the market in Asia for information services still has the potential
to grow, both in terms of the numbers of providers and users of such services and the types of
services available. Satellite distribution is ideally suited for the provision of information
services supplied by global service providers.
Customers and Services
The Company provides satellite transponder capacity primarily to the broadcasting and
telecommunications markets. For the years ended December 31, 2006 and 2007, the Companys revenues
were derived from the following customer bases:
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2006
|
|
|
2007
|
|
Broadcasting
|
|
|
33.4
|
%
|
|
|
37.0
|
%
|
Telecommunications
|
|
|
61.7
|
%
|
|
|
58.5
|
%
|
Other service
|
|
|
4.9
|
%
|
|
|
4.5
|
%
|
-23-
Revenues from the Companys five largest customers for the years ended December 31, 2006 and
2007 were HK$127.9 million and HK$148.8 million (US$19.1 million), respectively, which represented
30.0% and 32.9%, respectively, of total revenues. Revenues from the Companys largest customer
represented 8.4% and 8.8%, respectively, of total revenues during such periods.
Broadcasting Customers
Local, national and international broadcasters use satellite transponder capacity for
(i) television programming distribution, (ii) contribution or backhaul operations (the
transmission of video feeds from one location to another) and (iii) ad hoc or spot services such
as the transmission of special events and live news reports from the scene of the event. At
present, most of APTs broadcasting customers utilize transponder capacity for distributing
programming to television stations, local cable operators and master antenna systems.
On July 6, 1999, the Company was first granted the Satellite Television Uplink and Downlink
License by the HKSAR government. According to this license, the Company 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
Companys APSTAR IIR (C & Ku-band), and APSTAR V (Ku-band only) and APSTAR VI (C & Ku-band) and
other approved satellite.
Television Programming Distribution.
The Companys strategy is to position the APSTAR System
as a preferred provider of satellite capacity covering the PRC and the Asia Pacific region. This
strategy has been implemented by targeting both international and domestic broadcasters as
customers for services on the APSTAR System.
More and more local cable television operators and over-the-air local broadcasters install and
position their downlink antennae to receive programming from programmers using a satellite in the
APSTAR System. Once such antennae have been installed and positioned to receive signals from a
particular programming provider on the relevant APSTAR System satellite, cable operators and local
broadcasters can receive programming using the same antenna from other providers using such
satellite. As a result, new programmers may seek to utilize transponder capacity on a satellite
with an established audience rather than utilising transponder capacity on a satellite with a
less-established audience.
The APSTAR System also offers a number of other benefits for domestic broadcasters. By using
one of the satellites in the APSTAR System, domestic broadcasters may, for example, purchase
certain segments of an international programmers feed using the same satellite for broadcast as
part of their own programming, without incurring the cost of adding a separate earth station to
receive the international programmers segments. In addition, domestic broadcasters can sell their
own programming regionally or internationally because the APSTAR System allows them to use the same
transmission antennae to relay their programming internationally as well as domestically to others
using the same satellite. Local cable and television station operators also benefit from using the
APSTAR System for television programming distribution because they need only one earth station
pointed at an APSTAR satellite to receive programming from both domestic and regional broadcasters
using the same satellite.
The following chart lists APTs typical broadcasting customers and the nature of their
programming:
|
|
|
Customer
|
|
Programming
|
China Central Television (CCTV)
|
|
10 channels, such as CCTV-1, 2, 5
|
|
|
|
China Education Television (CETV)
|
|
3 CETV TV channels, and Educational
distance learning programs and
digital broadcasting businesses
|
|
|
|
China 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-
Backhaul Services.
Broadcasters can use satellite capacity for backhaul operations, such as
transporting programming from a broadcasters foreign news bureau to its broadcast center for
simultaneous or later transmission.
Ad Hoc/Occasional Services.
Broadcasters can also use satellites to transmit coverage of live
scheduled special events to programmers on a short-term ad hoc basis as well as to relay live news
coverage, short duration video feeds and syndicated programming for broadcasters on a scheduled or
ad hoc basis.
Telecommunications Customers
The Companys telecommunications services include the provision of transponder capacity, VSAT
services, Teleport services for private communications networks for data and voice communications
and the provision of PSTN carrier services including the wholesale voice to telecom network
operators and other communications service providers in Asia. Owing to fierce market competition
and low profit margin, the APT Group terminated the wholesale voice services in late 2007.
Private Networks.
Many businesses and organizations utilize satellites rather than
ground-based transmission media for a variety of reasons, including (i) cost savings for large,
geographically dispersed networks, (ii) independence from telephone companies, (iii) predictability
of costs over a long period, (iv) flexibility in changing and adding remote locations to a network,
(v) integrated network management and control of remote locations and (vi) increased network
availability and lower transmission error rates.
For example, offshore communications use satellite business communications networks for
point-to-point and point-to-multipoint data transmission. Banks use satellite networks to connect
automatic teller machines to processing computers. News agencies use satellite networks to
distribute information to numerous locations and paging operators use satellite networks to
distribute paging information from a central switch to multiple remote transmitters for
retransmission to pagers. The Company believes that there will continue to be opportunities in
Asia to market transponder capacity to certain end users which, due to inadequate
telecommunications infrastructure or high costs of local public networks, desire to operate their
own private networks for data and voice transmission.
The Company offers satellite services for private business communications networks, including
VSAT networks. VSAT networks consist of small rooftop antennae and are utilized by customers that
need to send short bursts of data over a network for relatively short periods of time. Through the
use of VSAT technology and sophisticated software, these networks can be served with a relatively
small amount of satellite capacity. Networks using VSATs have been growing rapidly to meet the
specialized data requirements of particular industries.
Carrier services.
A portion of the Companys revenues in the telecommunications market is
derived from the provision of satellite capacity to domestic and regional communications carriers
in Asia, including telecom network operators in the PRC that use the capacity as part of their
communications network on a national or international basis.
Other Service Customers
Under the satellite services agreement, APT provides the necessary satellite control services
for APSTAR IIR to Loral Asia. This agreement will continue throughout the useful life of
APSTAR IIR unless terminated by Loral Asia with at least 120 days prior written notice. In
consideration of the services provided, APT receives a payment of approximately US$1 million per
year from Loral Asia.
On April 11, 2003, APT and SingTel entered into a new agreement (the New Agreement)
superseding the old agreement, which was entered on January 8, 2001 pursuant to which SingTel was
to use 15 C-band transponder services of APSTAR V. Pursuant to the New Agreement, APT agreed,
subject to certain conditions, to provide 6 C-band transponders services of APSTAR V to SingTel,
and upon SingTels written request within three years from the date on which APSTAR V commences
operation, to also make available 5 more C-band transponders services of APSTAR V to SingTel.
SingTel has not exercised its right to request additional C-band transponders. APT is obligated to
provide operational and maintenance services to SingTel through APSTAR Vs useful life, which is
expected to be not less than 13 years, in exchange for an annual management fee which will cover
all costs associated with operations and management of the transponders as well as tracking,
telemetry and command services, and all necessary maintenance. The fixed aggregate value of the
management fees for the 6 transponder capacity amounts to US$16.3 million (approximately HK$127.1
million), and the annual amounts of the management fees will range from US$0.8 million
(approximately HK$6.6 million) to US$1.4 million (approximately HK$11.0 million). If SingTel
exercises its rights to utilize additional transponder capacity, the fixed aggregate amount of the
management fees for the additional transponder capacity will be US$13.6 million (approximately
HK$105.9 million).
-25-
On September 1, 2004, APT and SingTel entered into an agreement to amend certain terminology
and to modify the New Agreement into the form of utilization agreement for clarification purpose.
The terms and conditions contained in the New Agreement remain unchanged.
On October 22, 2004, APT entered an agreement with National Astronomical Observatories of the
Chinese Academy of Sciences ( NAOC) to utilize APSTAR I through the end of its useful life.
Under the agreement with NAOC, APT provides the necessary satellite control services for APSTAR I
to NAOC. In consideration of the services provided, APT receives a payment of approximately US$300
thousand per year from NAOC.
On May 30, 2005, APT entered an agreement with NAOC to utilize APSTAR IA through the end of
its useful life. Under the agreement with NAOC, APT provided the necessary satellite control
services for APSTAR IA to NAOC. In consideration of the services provided, APT received a payment
of approximately US$300 thousand per year from NAOC. The agreement with NAOC was terminated in
January 2007 due to the default of payment by NAOC. On June 8, 2007, APT, subsequent to a term
sheet agreed in January 2007, entered into utilization agreement with another customer PSN, among
other things, APSTAR IA will be drifted from its current orbital slot to an orbital slot designated
by PSN.
Transponder Utilization Agreements
The Companys typical transponder utilization agreement allows for utilization of the capacity
of a transponder, either in whole or in part, on the APSTAR System. Most of these agreements
require service fees to be paid in advance and provide for renewal options, while some of them
require payment of a deposit. All of APTs transponder utilization agreements require payment of
all amounts due in US Dollars. Generally, upon a fixed number of months notice, a customer may
terminate its transponder utilization agreement without cause. In such a case, however, the
customer is obligated to pay to APT specified liquidated damages based on the terms of the
transponder utilization agreement. In addition, the transponder utilization agreements, in
general, provide for a specified reduction in the service fees if transponder service is
interrupted for reasons not caused by the customer or beyond the control of APT (such as mechanical
transponder failure). If such service interruptions continue without correction (within an
acceptable period of time) and APT is unable to provide suitable alternative capacity within an
agreed period thereafter, the customer is entitled to terminate the transponder utilization
agreement without further obligation to APT. Under the terms of the transponder utilization
agreements, APT is not liable for the lost profits or other indirect or consequential damages of
its customers.
Sales and Marketing
Marketing activities include customer visits, trade shows, advertisements, customer training,
event sponsorships, joint marketing programs and presentations at industry conferences. APTs
current sales and marketing efforts are focused on new business development so as to solicit
customers for unused or underutilized transponder capacity on APSTAR satellites. In addition,
APTs sales and marketing also focus on the creation of awareness resulting in lead generation of
APSTAR V and APSTAR VI. APTs sales and marketing staff maintain regular contact with customers
even after they have decided to utilize transponder capacity in order to ensure continuing customer
satisfaction.
Operation of the APSTAR System
The APSTAR System is an integrated satellite system that covers more than 100 countries from
Japan to South Africa and from Germany to Australia, encompassing approximately 75% of the worlds
population.
The APSTAR System is the product of an extensive strategic planning process. This planning
has been both internal to APT, such as the analysis and evaluation of satellite make-up, platform
choice and launch vehicle choice, and external, in the sense of designing the APSTAR System to meet
the practical and strategic needs of its customers.
-26-
The APSTAR System offers its customers the ability to relocate from one satellite to another
for strategic reasons of their own. The compatibility of the satellites in the APSTAR System also
permits APT to move customers programming from one transponder to another, intra-satellite, or
from one satellite to another, for technical reasons or to ensure continuity of service in the
event of any difficulties.
The APSTAR System is structured to provide flexibility for customers, which is a benefit that
the Company believes, is attractive to customers and provides APT with a competitive advantage.
Intra-satellite back-up capacity is manifested by the preemptible transponders located on each
satellite. These transponders are intended, in the ordinary course, to be provided to customers on
a preemptible basis (at reduced cost), under the understanding that the customers use will be
pre-empted if the transponder is needed by another customer as a result of a technical problem.
Additional back-up capacity will also be available to APSTAR System customers on an
inter-satellite basis. Preemptible transponder capacity on APSTAR satellites enables customers to
be re-routed on an as-needed basis to another satellite in APSTAR System. Similar back-up
capacity is available not only from satellite to satellite, but also from use to use.
The Companys TT&C facility, which enables the Company to monitor the status of its satellites
and respond to the technical demands of its customers, is an important part of the APSTAR System.
See Satellite Control Center.
SUMMARY OF SATELLITE DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APSTAR I
|
|
APSTAR 1A
|
|
APSTAR IIR
|
|
APSTAR V
|
APSTAR VI
|
|
Region covered
|
|
North and
Southeast
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, Hawaii
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Status
|
|
Operational
(inclined mode)
|
|
Operational
(inclined mode)
|
|
Operational
|
|
Operational
|
|
Operational
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Model
|
|
HS 376
|
|
HS 376
|
|
FS 1300
|
|
FS1300
|
|
SB4100C1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturers
|
|
Hughes
|
|
Hughes
|
|
SS/Loral
|
|
SS/Loral
|
|
Alcatel
|
|
|
|
|
|
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|
|
|
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|
|
|
|
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|
|
|
|
Transponders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ku-band
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
16*
|
|
|
|
12
|
|
C-band
|
|
|
24
|
|
|
|
24
|
|
|
|
28
|
|
|
|
38*
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected 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 IIRs expected operational life is adjusted to 2012 after review carried out in January
2007.
|
APSTAR Satellites
APSTAR I
APSTAR I, a Hughes HS-376 model satellite, was launched in July 1994 by a Long March 3 launch
vehicle from Xichang in the PRC. APSTAR I was placed into a geostationary orbit at 138 degrees
East and has a footprint that covers the PRC, Japan and Southeast Asia, reaching as far south as
Papua New Guinea and Indonesia. The total cost for the construction and launch of APSTAR I,
including launch insurance, ground facilities, related expenses and capitalized interest, was
approximately US$132.4 million, which was financed through a combination of shareholders loans and
a syndicated term loan. On May 31, 2001, the Company fully repaid the amount outstanding under the
syndicated term loan.
-27-
APSTAR I carries 24 C-band transponders, 20 of which have a bandwidth of 36 MHz (suitable for
television broadcasting and telecommunications purposes) and four of which have a bandwidth of 72
MHz (suitable for telecommunications purposes). The transponders have a maximum EIRP value of 38.5
dBW.
APSTAR I started commercial operations on September 15, 1994 and was replaced by APSTAR V on
August 13, 2004. APSTAR I currently has sufficient fuel to work in an inclined orbital mode no
later than 2010. APT has entered into a utilization agreement with a customer to utilize APSTAR I
at 142 degree East through the end of its life.
APSTAR IA
APSTAR IA, a Hughes HS-376 satellite, was launched in July 1996 on a Long March 3 launch
vehicle from Xichang into a geostationary orbit at 134 degrees East. The cost for the construction
and launch of APSTAR IA, including launch insurance, ground facilities, related expenses and
capitalized interest, was approximately US$128.6 million, which was financed through a combination
of shareholders loans, a syndicated term loan and internally generated funds. As of December 23,
1996, the total amount due under the syndicated term loan was fully repaid using the proceeds from
the Global Offering.
The specifications of APSTAR IA are virtually identical to those of APSTAR I, except that
APSTAR IA provides enhanced coverage of India. As with APSTAR I, APSTAR IA carries 24 C-band
transponders with a maximum EIRP value of 39 dBW.
APSTAR IA started commercial operations on September 1, 1996. After successful launch and
completion of In-Orbit Testing of APSTAR VI, APSTAR IA was replaced on June 7, 2005. APSTAR IA
currently has sufficient fuel to work in an inclined orbital mode no later than April 2013.
Following the termination of the utilization agreement with NAOC to utilize APSTAR IA at 163
degrees East through the end of its life in January 2007, APT had entered into utilization
agreement subsequent to a term sheet with another customer, PSN, on June 8, 2007 to utilize APSTAR
IA and APSTAR IA will be drifted to an orbital slot designated by such customer.
APSTAR IIR
APSTAR IIR, an SS/Loral FS-1300 satellite, was successfully launched into its designated
orbital slot at 76.5 degrees East on October 17, 1997 and its expected operational life is adjusted
to 2012 after review carried out in January 2007. The total cost for construction and launch of
APSTAR IIR, including launch insurance, ground facilities, related expenses and capitalized
interest, was approximately US$233.5 million. APSTAR IIR commenced commercial operation on
January 1, 1998.
On August 18, 1999, APT entered into a lease agreement with Loral Asia for the provision of 43
out of the 44 transponders of APSTAR IIR. According to the agreement, Loral Asia is entitled to
use the capacities of these transponders until their service span expires. The price was
approximately US$298 million, payable by eighteen installments in US Dollars within four years.
Loral Asia later proposed to advance the date of payment and, as a result, the price was revised to
approximately US$273 million, payable in three installments, with the last installment of
approximately US$181 million paid on March 27, 2000. According to the agreement and all relevant
operating licenses, APT continues to be the legal owner of APSTAR IIR and is responsible for the
operational control of the satellite under the satellite service agreement with Loral Asia.
APSTAR V
APT together with SS/Loral and China Great Wall Industry Corporation, respectively, signed the
Procurement Agreement and the Launch Agreements of APSTAR V satellite on January 8, 2001, to
confirm the commissioning of the satellite. On October 23, 2002, the launch services to be
provided by China Great Wall Industry Corporation originally for APSTAR V were transferred to
APSTAR VI. In March 2003, APT selected Sea Launch for the launch of APSTAR V.
-28-
On September 20, 2002, APT entered into the APT-Loral Term Sheet and subsequently entered into
certain other agreements. Under the APT-Loral Term Sheet and the agreements, Loral Orion agreed to
jointly participate in the development of APSTAR V by investing up to 50% of the capital necessary
for the APSTAR V project on a pro rata basis in order to obtain rights to 27 transponders at a
value of approximately US$115 million, which is 50% of the initial projected costs of approximately
US$230 million for the construction, insuring and launch of APSTAR V. This amount was adjusted to
reflect 50% of the actual costs of construction, insuring and launch of APSTAR V, exclusive of the
costs of certain function modifications required by Loral Orion, which was borne solely by Loral
Orion. Loral Orion paid 25% of the project costs prior to launch of the satellite. The other 25%
of the project costs was paid to APT in four installments over a period of five years from the
in-service date of APSTAR V. The amount of the installments making up the remaining balance range
between US$10.7 million and US$17.1 million and no interest is payable on such amounts. Title to
the transponders attributable to Loral Orion and 25% of the common portions of the satellite will
pass to Loral Orion in installments corresponding to and subject to the payments made by it under
the term sheet and the agreements. As a result of discussions regarding a matter related to the
launch vehicle, the parties agreed to reduce the number of transponders attributable to Loral Orion
from 27 to 25 in March 2003 with no adjustment to consideration payable by APT and Loral Orion.
Because of the failure of SS/Loral to obtain the export license for the transfer of the title
of APSTAR V in time for launching, APT entered into a Satellite Procurement Amendment Agreement, a
Satellite Transponder Agreement and a Satellite Agreement (collectively the Definitive
Agreements) with SS/Loral and Loral Orion on
August 26, 2003 for the purpose of minimizing any further delay in the launch of the
satellite. Under the Definitive Agreements, the title of APSTAR V was transferred to Loral Orion
upon intentional ignition rather and simultaneously therewith. APT has entered into an irrevocable
lease with Loral Orion for forty-one and one-half (41
1
/
2
) transponders for the lease term commencing
upon transfer of title from SS/Loral to Loral Orion until the end of operational life of APSTAR V.
Therefore, the joint development of APSTAR V was converted to a lease. Under the Satellite
Agreement, APT will release the leasehold interest of twelve and one-half (12
1
/
2
) transponders to
Loral Orion in stages over a five years period from the in-service date of APSTAR V subject to
payment of installments by Loral Orion to APT. This will result in APT and Loral Orion having 29
and 25 transponders, respectively, at the end of the five years period from the in-service date.
Under the leasehold arrangement, Loral Orion has committed to continue pursuing the necessary
export license for title transfer of APSTAR V.
The delay in obtaining the Export License caused the postponement of the launch of APSTAR V.
To cope with the delay, APT entered into a Settlement Agreement with Loral Orion Inc. and the
Amended Launch Agreement with SS/Loral and Sea Launch Limited Partnership on November 16, 2003. The
Settlement Agreement made certain amendments to the Satellite Procurement Amendment Agreement, the
Satellite Transponder Agreement and the Satellite Agreement and the Launch Agreement to allow for
(i) a postponement of the date of launch of APSTAR V to April 28, 2004 (later on, due to the
partial failure of deployment of north solar array of EdS, a SS/L-made satellite that was launched
by Sea Launch in January 2004, the launch date of APSTAR V was further postponed to June 26, 2004);
and (ii) for Loral Orion to take an additional 4.5 transponders as Initial Loral Orion
Transponders, which are in aggregate 17 transponders to be taken up upon the completion of in-orbit
test of APSTAR V, resulting in Loral Orion assuming the payment of US$20.4 million that would
otherwise to be paid by APT HK for the construction, launch and insurance of APSTAR V. Such payment
significantly reduced the cash-flow pressure of APT HK. The total number of 25 transponders of
APSTAR V to be taken up by Loral Orion will remain unchanged.
The Settlement Agreement and the Amended Launch Agreement were approved by the United States
Bankruptcy Court on December 4, 2003 and the Export License of APSTAR V was issued by United States
government on November 25, 2003.
APSTAR V was launched by Sea Launch Limited Partnership on June 29, 2004. APSTAR V, a high
powered satellite based on an FS 1300 model satellite manufactured by SS/Loral, is comprised of 38
C-band and 16 Ku-band transponders. The satellite is located at the geostationary orbital slot of
138 degrees East, and the footprints of C-band transponders will cover a majority of the Asian
countries in the Asia Pacific region, including China, India, South East Asia, Australia, New
Zealand, and the Hawaiian Islands in the United States for provision of high quality and reliable
broadcasting and telecommunications services. The footprints of Ku-band transponders are spanning
across China (Beam One), and China and India (Beam Two). In-Orbit Test (IOT) was completed on
August 13, 2004 and the result showed that all satellite specifications are in line with design and
satellite useful life time is estimated to be 15.3 years. APSTAR V started commercial operations
upon completion of IOT. All customer carriers on APSTAR I have been successfully migrated to
APSTAR V on 138 degrees East. Based on the arrangements entered into by the Company and Loral
Orion, title of the APSTAR V remained with Loral Orion. The Company assumed 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.
The total cost for the communication satellites held under finance leases in connection with the
APT Transponders of APSTAR V amounted to US$148.4 million, which has been funded by internal
resources and the Bank loan. On September 28, 2006, Loral Orion acquired two additional C-band
transponders and therefore APT Transponders in APSTAR V have been reduced to 35 transponders.
-29-
APSTAR VI (formerly APSTAR VB)
On December 11, 2001, APT entered into a Satellite Procurement Agreement with Alcatel for the
design, construction, testing and delivery of APSTAR VI. APT had secured the Satellite Launch
Service Agreement with CGWIC to launch APSTAR VI on board the Long March 3B (LM-3B) launch
vehicle on October 23, 2002 by amending the Satellite Launch Service Agreement of APSTAR V.
APSTAR VI is a high powered satellite and is based on a SB-4100 C 1 model satellite of Alcatel with
38 C-band and 12 Ku-band transponders. The footprints of its C-band will cover substantially all
of the Asian countries in the Asia Pacific region including China, India, Southeast Asia,
Australia, Hawaii, Guam, and the South Pacific Islands, whereas its Ku-band will cover China
including Hong Kong, Macau and Taiwan and provide effective and reliable broadcasting and
telecommunications services.
APSTAR VI was launched successfully on April 12, 2005 on a LM-3B launch vehicle and has been
located at geostationary orbital slot at 134 degrees East. Its commercial operation started on June
7, 2005 and is expected to have an operation mission life over 15 years. The customers of APSTAR
IA have been migrated to APSTAR VI successfully. Total capital expenditures for the design,
construction and launch of APSTAR VI amounted to US$227 million, which has been funded by internal
resources and Bank loans.
Existing Orbital Slots
APSTAR V and APSTAR VI are utilizing certain designated C-band and Ku-band frequencies in the
orbital slots at 138 degrees East and 134 degrees East, respectively. The right to use these
frequencies at such orbital slots has been licensed to the Company by the Kingdom of Tonga
(Tonga), through TongaSat, which has responsibility for the ITU coordination process for the
orbital slots at 138 degrees East and 134 degrees East with respect to such orbital slots and the
frequencies covered by the Companys license. The license agreements for the orbital slots at 138
degrees East and 134 degrees East each cover a period of 15 years (approximately coterminous with
the expected operational life of the satellites).
APSTAR I is currently located at 142 degrees East under PRCs filing as approved by OFTA.
APSTAR IA is currently located at 130 degrees East under PRCs filing as approved by OFTA.
APT has obtained a priority position in the ITU filing process for the use of the orbital slot
located at 76.5 degrees East where APSTAR IIR is currently positioned. The coordination of the
satellite network have been completed and notified in accordance with ITU regulations, and the
frequency assignment has been recorded in the Master International Frequency Register and published
by ITU.
Future Satellites
APSTAR VIB
In view of the risk of satellite launch, it was necessary for APT to have a contingency plan
safeguarding the replacement arrangement of APSTAR IA and to lock a launching slot in case of
failure of the launching of APSTAR VI. APT therefore entered into an agreement with CGWIC on
November 10, 2004 (the Option Agreement) pursuant to which APT was granted a right to require
CGWIC to provide for the design, construction, delivery and launch of APSTAR VIB to a designated
orbit.
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In view of the successful launch of APSTAR VI on April 12, 2005, APT did not exercise the
option before the expiry date of September 30, 2005. According to the terms of the Option
Agreement, the option has expired and the Option Agreement is deemed to be terminated. APT was
responsible for all reasonable costs and expenses incurred up to the date of termination in respect
of the preparation works for the design, construction, delivery and launch of APSTAR VIB. The
balance of option price (net of all reasonable costs and expenses incurred) could be transferred to
such other satellite project as may be designated by the Company or the contractor within two years
after the expiry date of the option. In the event that the balance of option price would be
transferred to a satellite project for another customer as designated by the contractor, the
balance of the option price would be refunded to the Company. Up to and including the date hereof,
the Company has no plan for the procurement and launch of a new satellite in the coming years due
to the fact that the transponder market has remained highly competitive and the current supply of
transponders exceeds demand in the Asia Pacific region, the possibility of transferring the
preparation works of APSTAR VIB to another satellite project of another customer as designated
either by the Company or the contractor in the coming years is expected to be remote. Accordingly,
as the Company does not currently expect the option price to be applied towards any future
satellite project within the required time restriction or that the contractor will refund the
balance of option price to the Company, an impairment loss of HK$59.9 million has been recognised
in 2005 in respect of the prepayment for construction of a satellite.
Insurance
APT maintains in-orbit insurance for APSTAR V (for thirty-five transponders) and APSTAR VI.
The Company is not aware of any reason why it will not be able to renew the existing insurance for
APSTAR V and APSTAR VI. The Companys insurance policies have standard provisions and customary
exclusions. For 2006 and 2007, the Company spent HK$54.7 million and HK$45.4 million (US$5.8
million), respectively, on in-orbit insurance.
In-orbit Insurance.
Satellite in-orbit insurance is purchased on an annual basis. Such
insurance provides protection only against the total loss, destruction or failure of the satellite.
Total loss is defined as the loss of more than 75% of the satellites communications capacity for
insured satellites. The in orbit insurance of APSTAR V (thirty-five transponders only) and APSTAR
VI has already been renewed until July 6, 2009.
Third-Party Liability Insurance.
Third-party liability insurance offers protection against
liability to third parties for damage arising out of a particular launch and the operation of the
satellite. On April 30, 2004, OFTA granted the Company a waiver exempting the Company from
complying with the requirement of maintaining third-party liability insurance with respect to
APSTAR I, APSTAR IA and APSTAR IIR for in-orbit operation. The launch service provider of APSTAR
VI has taken the third party liability insurance until June 7, 2006, which covers, among others,
the Company, the governments of Hong Kong and PRC as additional insured. There is no need to take
third party liability insurance for APSTAR V as the title of APSTAR V is with Loral Orion. Because
of the drifting of APSTAR IA from its original geostationary orbital slot to a new orbital slot for
the provision of services to customer under inclined mode, APSTAR IA was covered by third-party
liability insurance over last drifting and operation until November 1, 2007. Similar insurance
will be arranged if new developments as to APSTAR IAs designated orbital slot are agreed and
drifting takes place.
Satellite and Ground Operation Facility
APT operates its ground facility of approximately 77,000 square feet consisting of the
Satellite Control Center, Network Operation Center and TV uplink Center on a property of
approximately 85,000 square feet erected at the Tai Po Industrial Estate, Tai Po, Hong Kong. For
details of the property, please refer to on the section entitled Property, plants and equipment
under Item 4. APT employs approximately 45 experienced satellite and communications specialists
and engineers to continuously control and monitor APTs satellites in geostationary orbit, as well
as to operate ground teleport and satellite TV uplink services.
To better support the operation of APSTAR V and APSTAR VI as well as the satellite television
uplink services, the Company has expanded its operating facilities since 2000 by purchasing
antennae, radio frequency and baseband equipment. The Company currently operates a number of
antennae ranging from 3 meter to 13 meter in diameter and transmission facilities, as well as the
related equipment and facilities, such as radio frequency equipment, baseband units, ground
monitoring systems, data processing systems and communication traffic monitoring systems. Each
antenna is capable of controlling any of the Companys satellites and is designed to withstand
winds of up to 150 miles per hour. The Company maintains its own power generator and uninterrupted
power supply to provide continuous electricity supply in case of a power outage.
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Satellite TT&C operations with the APT satellites are carried out at our Satellite Control
Center. Once a satellite is placed at its orbital location, it is controlled by the TT&C facility
on a 24-hour basis until the end of its in-orbit life. The Companys engineers at the Satellite
Control Center periodically correct each satellites attitude and conduct east-west and north-south
station keeping maneuvers, thus ensuring that the Companys satellites maintain their proper
orientation and orbital position. In addition, commands from the Satellite Control Center can
switch transponders in and out of service, control the charging and discharging of the batteries,
activate back-up equipment and engage other control functions.
APT has leased data and voice link in order to provide a direct data and voice communications
link between the Satellite Control Center and the satellite manufacturers.
The customer carrier monitoring and teleport services are carried out at our Network Operation
Center, which provides 24-hour support to customers via the Carrier Monitoring System. The Company
also provides external satellite-based FTNS such as VSAT, Wholesale Telecom Services, and Internet
POP Gateway under the external satellite-based FTNS license issued by OFTA on June 19, 2000.
The Company has completed the installation of satellite broadcasting facilities in the
Satellite TV Uplink Center, under the Satellite Television Uplink and Downlink License issued on
July 6, 1999. The Satellite TV Uplink Center provides one stop solution service to customers such
as playout, digital video broadcasting compression, turn around and radio frequency uplink
transmission service. As of December 31, 2007, there were up to 72 satellite TV channels being
uplink and broadcast for the region.
Customer Technical Qualifications and Support
Before uplink communication by a customers equipment with a satellite is permitted, the
Company ensures that each customer can meet the Companys strict performance and operations
specifications so that the customers equipment does not interfere with other customers on the same
satellite or users of neighboring satellites. The Companys engineers advise customers on any
adjustments required to the customers equipment in order to minimize interference.
The Company provides extensive technical support to its customers. It helps customers
determine and evaluate their equipment configurations, carrier modulations, bandwidths and power
requirements, design their networks and calculate link budgets.
Additional Orbital Slots
OFTA, on behalf of the PRC government, is responsible for the coordination of a number of
orbital slots for APT including the orbital slot at 76.5 degrees East in which APSTAR IIR is
located. The Company has filed an application for the orbital slot at 131 degrees East, 89.5 East,
92.2 degrees East, 96 degrees East, 102.8 degrees East, 131.8 degrees East, 134 degrees East, 138
degrees East and 140 degrees East. Those orbital slots could be used by future satellites.
Competition
APT currently serves the satellite communications market in Asia. A number of international
and domestic satellite operators also compete in this market. The Companys primary focus is Asian
intra-regional broadcasting, TV uplink and downlink, IP broadband and telecommunications, with
special emphasis on the PRC. The Company has not attempted to enter the international PSTN trunk
route market, which is dominated by the International Telecommunications Satellite Organization
(Intelsat).
In providing satellite capacity, the Company competes with major established companies and
organizations. The Companys competitors include government-owned and privately-owned
international, regional and domestic satellite companies. Many of these competitors have
long-standing customer relationships and are substantially larger and have financial resources that
are substantially greater than those of the Company. The Company believes that its ability to
compete with these organizations depends on its existing customer relationships and the quality of
its customer service, its reputation as a reliable operator of commercial satellites, flexible and
value pricing policy, and the technical advantages of its advance and powerful satellites.
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The Company faces competition in all its markets from one or more satellite systems. Other
than domestic satellite companies, the Company is currently aware of certain other international or
regional satellite companies with similar coverage in Asia: Intelsat, Asia Satellite
Telecommunications Holdings Limited (AsiaSat), PanAmSat Corporation (PanAmSat), Shin Satellite
(ShinSat), Sino Satellite Communications Company Limited (SinoSat), Measat Satellite System
(Measat), Jsat Corporation (JSAT) and Asia Broadcast Satellite (ABS-I). Due to the economic
slowdown in many Asian countries, many satellite-related projects have been delayed or cancelled
and the current supply of transponders is still greater than the demand. For such reasons, APT has
faced fierce market competition resulting in price-cutting and pressure on utilization rates.
Digital video compression technology may have the effect of increasing the overall supply of
transponder capacity in the satellite industry. Such technology permits programmers to use less
transponder capacity than is currently required to transmit the same amount of programming. At
present, however, digital integrated receivers-decoders which are necessary to unscramble digitally
compressed transmissions are not generally
available outside the more developed markets, and the Company believes that it may be some
time before they are commonplace in the developing markets of Asia. Customers who make significant
financial commitments to the use of satellites for broadcasting and telecommunications applications
often seek to secure back-up transponder capacity in order to protect their investment. The
Company believes that potential customers in Asia may, at some future point, prefer to use those
satellites that can provide backup capacity to help reduce customer risk.
International Satellites
The market for international satellite communications capacity has been dominated by Intelsat
for 30 years, and Intelsat can be expected to continue to dominate it for the foreseeable future.
Intelsat, established by international treaty in 1964, owns and operates the largest fleet of
commercial geosynchronous satellites in the world. On July 3, 2006, Intelsat announced the
completion of its merger with PanAmSat Holding Corporation. With the addition of PanAmSats video
market expertise, advanced satellite fleet and blue-chip media customer base to Intelsats
portfolio, Intelsat is now the largest provider of fixed satellite services (FSS) worldwide to each
of the media, network services/telecom and government customer sectors. The new Intelsat brings
the most extensive satellite communications network, integrating 51 satellites with the GXS
infrastructure of more than 20,000 miles of fiber optic, 8 teleports and more than 50 PoPs, the
global network enables clients to meet the communications requirements widely. Intelsat is the
largest provider of fixed satellite services worldwide and a leading provider of these services to
each of the media, network services and telecom and government customer sectors. It has a global
fleet of 51 satellites and eight teleports and terrestrial facilities. It supplies video, data and
voice connectivity in over 200 countries and territories. The television distribution and VSAT
operations of Intelsat could potentially compete directly with the Company.
Regional Satellites
Coverage, service and target customers of AsiaSat are very similar to those of APT. AsiaSat
2s footprint is smaller than that of APSTAR IIR, but AsiaSat 3S, which was successfully launched
in March 1999, has a footprint very similar to APSTAR IIRs footprint. AsiaSat 4 was also
successfully launched in April 2003 and provides footprints coverage across Asia and Australia.
AsiaSat 5, the replacement satellite of AsiaSat 2, is expected to be launched in early 2009. The
Company believes AsiaSat is and will continue to be a major competitor of APT in the Asia Pacific
market, including the PRC market.
The ST-1 satellite system, which is partly owned and operated by Singapore Telecom, was
successfully launched in September 1998. Its C-band coverage stretches from the Middle East to
Japan and Southeast Asia. Its Ku-band coverage focuses on the Indian subcontinent and Southeast
Asia. Due to the satellite design and coverage area, the ST-1 satellite system only has the
ability to compete with the Company in C-band segment of the Asia Pacific market.
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SinoSat, which was established in May 1994, is a state-owned telecommunications satellite
operator and has three major shareholders including China Aerospace Science & Technology
Corporation, CITIC Group and China Financial Computerization Company. Its first satellite,
SinoSat-1, was launched on July 18, 1998 carrying 24 C-band and 14 Ku-band transponders with
footprints including China and Asia Pacific regions for providing telecommunication, data
transmission and TV broadcasting whereas its future satellite is still in the planning and
development stage. In addition to SinoSat-1, a new communications satellite for radio and
television broadcasting, SinoSat-3, was launched on June 1, 2007 carrying 10 C-band transponders
with footprints including all of China and some of the neighboring countries and regions. Because
of their coverage and transponder capacity, SinoSat-1 and SinoSat-3 are the competing satellites in
the Asia Pacific region.
A number of companies located in various countries in the region have launched or are planning
to launch domestic satellites. These include ChinaSat, which is also a Principal Shareholder
(which term is defined below), Chinastar (merged with ChinaSat) and SinoSat of the PRC, INSAT of
India, JSAT and NSTAR of Japan, Koreasat of Korea, Measat of Malaysia, Optus of Australia, Thaicom
of Thailand, Mabuhay of the Philippines, and Telkom, IndoSat from Indonesia, GE-21 from Singapore,
VINASAT and ABS. In 2007, a new company named China DBSAT is formed by ChinaSat and SinoSat on
50-50 joint venture, China DBSAT will operate all existing ChinaSat and SinoSat satellites
including the new satellite ChinaSat-9 launched on 9 June 2008. Although these
satellites may be focused on their respective domestic markets, such companies may have the
ability, due to satellite design and coverage areas, to compete with the Company in segments of the
Asia Pacific market. In certain of these countries, domestic television broadcasters and domestic
satellite telecommunication operators providing services in their home countries are generally
required to use a state-owned or locally-owned satellite systems to the extent capacity is
available and therefore may not use APTs satellites. In addition, many of the domestic systems
are planning to add at least some regional transponders with substantial beam coverage to their
next generation of satellites, and therefore may in the future become competitors of APT in the
regional markets.
Optical Fiber Systems
Optical fiber systems have been widely installed for point-to-point trans-oceanic
communications. In addition, point-to-point optical fiber connections between major cities in Asia
are common. Optical fiber is being used in more developed markets for cable TV networks, telephony
services and more recently in broadband and internet users. Owing to the telecom-boom era legacy of
huge overcapacity in the market, prices for leasing wholesale cable have plummeted over the past
five years as supply has still outstripped overall demand. The abundant supply of cable capacities
and rock-bottom prices have led to the situations that satellite capacities are difficult to
compete with cable in point-to-point communications.
Regulation
The international telecommunications industry is highly regulated. Satellite services are
subject to international space law, and the principal body of international law relating to the use
of outer space is the Outer Space Treaty. Countries which are party to the Outer Space Treaty or
to other treaties or conventions regulating outer space activities are responsible for fulfilling
their own obligations under such treaties or conventions. This often results in the adoption by
such member countries of domestic laws to regulate the activities of their own subjects in order to
enable the country concerned to comply with its international obligations.
As an operator of privately-owned satellites in Hong Kong, APT is subject to the regulatory
authority of APTs principal regulator, OFTA.
Many of the Companys existing and potential customers who may wish to use the APSTAR System
to broadcast into or provide telecommunications services for countries in Asia are subject to
government licensing. The applicable regulatory schemes in these countries vary considerably.
While the Company does not believe these regulatory schemes will prevent it from pursuing its
business, there can be no assurance that its customers licenses and approvals are or will remain
sufficient in the view of foreign regulatory authorities and that these authorities will not
discourage or prevent existing or potential customers from utilizing transponders on the APSTAR
System.
Many of APTs customers must have authorization from the countries in which they are located
in order to uplink to and communicate by means of APTs satellites. While obtaining such
authorizations on behalf of its customers is not the Companys responsibility, the Companys
success may depend on the ability of its customers to obtain the required authorizations.
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International Telecommunication Union
Member nations are required by treaty to give notice of, coordinate and register radio
frequency assignments and any associated orbital locations in the geosynchronous satellite orbit
with the Radiocommunication Bureau. The purpose of such notice, coordination and registration is
to eliminate harmful interference between earth and space-based stations of different countries, to
improve the use of the radio frequency spectrum and the geosynchronous satellite orbit and to
accommodate, to the extent possible, a countrys needs. Pursuant to the Radio Regulations, after a
country gives notice to the Radiocommunication Bureau of its intent to use given frequencies in
connection with given orbital locations and for a particular type of service, the advance
publication stage commences during which other countries are afforded the opportunity to apprise
the Radiocommunication Bureau of any conflicts with any existing or intended satellite systems.
When a present or potential conflict is noted, countries are then obligated to negotiate (during
the coordination process) in an effort to coordinate the proposed uses and resolve any
interference concerns.
An orbital slot is a function of intended use, orbital location and frequency band. As
international coordinations vary in complexity, the time for their completion is uncertain and
depends on the number of countries involved and the extent to which there are competing uses for
the frequency bands that are the subject of the coordination. The coordination process may result
in modification of proposed coverage areas or satellite design to eliminate or minimize
interference with other potential users.
When coordination is completed and conflicts are resolved, the proposed users achieve
notification status with the Radiocommunication Bureau. The frequency assignments are then
recorded in the Master Registry, and such users are thereafter entitled under international law to
protection from interference from subsequent or nonconforming uses from other countries. The
failure to use an orbital slot within six years of advance publication (extendable for a further
three years) could result in loss of priority in the coordination process.
Under the Radio Regulations, during the coordination process, a country may request the
Radiocommunication Bureau to assist it in resolving disputes in connection with existing or
proposed uses of frequencies and orbital locations. However, should any such disputes remain
unresolved, and the coordination process therefore not be successfully completed, there is no
formal dispute resolution mechanism and any country that nonetheless places a satellite or any
earth station into operation may not be entitled to seek the assistance of the Radiocommunication
Bureau to resolve complaints relating to any interference.
Export Regulation
The United States government has imposed certain restrictions on transfers of US technology to
the PRC and certain other countries, such as Russia. The launch site for each of the existing
APSTAR satellites, other than APSTAR V, was located in the PRC and the launch provider was an
entity licensed by the PRC government. The launch sites for other satellites that the Company may
launch in the future may also be located in the PRC or other countries subject to such
restrictions. As a result, export licenses are required to be obtained by manufacturers of
satellites that the Company may launch in the future which contain US technology in connection with
launches in any country subject to such restrictions on technology transfers. The export of
US-origin commercial communications satellite equipment also requires a Presidential waiver of the
restrictions contained in the US Foreign Relations Authorization Act relating to such exports to
the PRC and of any sanctions that are then in effect under the US Arms Export Control Act or other
US laws and regulations.
Hong Kong Regulation
The Companys satellite operations are principally regulated by the Outer Space Ordinance.
The Outer Space Ordinance prohibits any person from launching or procuring the launch of a
satellite, or operating a satellite, without obtaining an appropriate license. The Outer Space
Ordinance further stipulates that any such license shall describe the activities authorized by it
and also provides that licenses may be granted subject to conditions specified therein. The
conditions may include basic orbital parameters and requirements to avoid interference with the
activities of other users of outer space. Breach of any such conditions can give rise to a right
of revocation of the relevant license.
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The ultimate authority to grant licenses and otherwise to administer the Outer Space Ordinance
is vested in the Chief Executive. In practice, all relevant matters are dealt with on a regular
basis by OFTA. Effective July 1, 1997, the regulation of satellite launch and operation by Hong
Kong companies has remained under the authority of OFTA. APT had previously been granted licenses
under the Outer Space Act 1986 (Hong Kong) Order 1990 (the Outer Space Order) by the Chief
Executive covering current and future operation of each of APSTAR I, APSTAR IA, APSTAR IIR and
APSTAR VI, subject to the conditions of the respective licenses and under the Outer Space
Ordinance, such licenses are valid and effective as if granted, maintained or made under the Outer
Space Ordinance. Each of these licenses requires the approval of the Hong Kong government for any
transfer of a beneficial interest in the satellite.
The Companys earth station operations involve the operation and use of telecommunications
apparatus at and from its earth station at Tai Po, Hong Kong. Establishment, possession and use of
such telecommunication apparatus in Hong Kong is regulated by the Telecommunication Ordinance and
the orders and regulations thereunder. APT has the benefit of licenses granted under the
Telecommunication Ordinance for each of
APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V and APSTAR VI covering all of its TT&C operations,
as well as monitoring and testing functions, subject to the terms and conditions of the respective
licenses. Such licenses have terms of 20 years, commencing on July 19, 1994, June 11, 1996,
October 13, 1997, November 1, 2003 and April 4, 2005, respectively. The licenses require APT
(among other things) to avoid harmful interference with other telecommunication apparatus operating
within or outside Hong Kong and to ensure compliance with all relevant requirements of the
International Telecommunication Convention, a complementary document to the ITUs constitution
document, and any other international telecommunication agreements which may from time to time be
acceded to by or on behalf of, or applied to, Hong Kong. These licenses were formally granted with
the grant of the licenses under the Outer Space Order referred to above.
The Telecommunication Ordinance also contains provisions for (i) the taking of possession by
the Hong Kong government of telecommunications stations where the Chief Executive in Council is of
the opinion that an emergency has arisen in which it is expedient for the public service that the
Hong Kong government should have control over telecommunications stations and (ii) the payment of
compensation should such taking of possession occur.
Overseas National Telecommunications Authorities
The laws and regulatory requirements regulating access to satellite systems vary from country
to country. Some countries have substantially deregulated satellite communications, making
customer access to the Companys satellites a relatively simple procedure, while other countries
have maintained strict monopoly regimes. The application procedure for access to satellite systems
can be time-consuming and costly, and the terms of the licenses vary among different countries.
Direct reception of satellite television is currently illegal in a number of countries in Asia
and the Middle East, and is subject to stringent restrictions in certain other countries in those
regions. Private ownership of dishes is currently prohibited in the PRC, although certain
tourist-grade hotels and apartments and other specified entities are permitted to operate dishes
upon application to the relevant authorities. In addition, regulations regarding content of
advertisements and advertising vary from country to country, making it difficult for broadcasters
to address advertisements to Asia and the Middle East as a whole.
Organizational Structure
The parent company of the APT Group is APT Satellite International Company Limited (APT
International), which directly controls approximately 51.83 % of the interest of the Company. APT
International is in turn jointly 100% owned by five principal shareholders. More information on
major shareholders is set forth in Item 7. Major Shareholders and Related Party Transactions.
The Company, through APT BVI, indirectly owns 100% of APT. The full list of subsidiaries of
APT Group is set forth in Note 15 to the Consolidated Financial Statements.
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Property, Plant and Equipment
The Companys executive offices are located in the Satellite Control Center in Tai Po
Industrial Estate, Hong Kong. Upon the removal of the Companys business office to its Satellite
Control Center in Tai Po on December 8, 2003, the lease of the Companys business office space
originally in Room 3107-3109 and 3111-3112, 31/F One Pacific Place, 88 Queensway, Hong Kong was
terminated on February 29, 2004.
The TT&C operations of APSTAR Systems are conducted through the Companys Satellite Control
Center. The 45,192 square foot site (Site 1) where the TT&C facility is located and the adjacent
39,902 square foot site (Site 2) where Phase II of the Satellite Control Center is located, are
held by the Company pursuant to a lease between APT and the Science and Technology Parks
Corporation. In early 2000, APT had leased from the Science and Technology Parks Corporation
property originally designated as The Remaining Portion of Section E of Tai Po Town Lot No. 13 and
Extensions Thereto with approximately 8,919.29 square meters (equivalent to 95,972 square feet)
adjacent to its Tai Po Satellite Control Center site for a term expiring June 30, 2047. On March
21, 2001, APT with the Science and Technology Parks Corporation entered into the Cancelled
Agreement, which divided the
interest of the property originally designated as The Remaining Portion of Section E of Tai Po
Town Lot No. 13 and Extensions Thereto between APT and APT Telecom. On March 21, 2001, the Science
and Technology Parks Corporation leased the majority portion of that piece of property, totaling
6,903.29 square meters (approximately 74,279 square feet) (Site 3A) (newly designated as the
Remaining Portion of Section E of Tai Po Town Lot No. 13 and Extension thereto), to APT Telecom for
telecommunications services, and granted a lease of the remaining portion of the property, totaling
2,016 square meters (approximately 21,692 square feet) (Site 3B) (newly designated as Subsection 3
of Section E of Tai Po Town Lot No. 13 and Extensions thereto) to APT by the Second Supplemental
Agreement and this piece of property was merged with the property originally leased, Site 1 and
Site 2. In order to expand the Companys satellite operations and control capabilities in
preparation for the launch of APSTAR V and APSTAR VI, as well as expand its capabilities with
respect to broadcasting and telecommunication services, APT Group completed the construction of
Phase II of the Satellite Control Center (Phase II) for APSTAR V and APSTAR VI on Site 3B and
Site 2. The Company commenced operation of Phase II in February 2002. Phase II, which has a total
floor area of approximately 55,540 square feet, is specially designed for providing satellite TV
broadcasting platform. Phase II also includes a new data center (approximately 14,700 square feet)
for the telecommunications services.
Under the satellite TV broadcasting license granted by the Government of HKSAR, the Companys
wholly-owned subsidiary, APT Satellite TV Development Limited, has developed a satellite television
broadcasting platform as part of Phase II. As at December 31, 2007, the Company has invested
HK$30.9 million (US$4.0 million) in the facilities. As a result, the Companys program transmission
capacity is increased, strengthening its capacity to meet future demand for satellite TV services.
Item 4A. Unresolved Staff Comments
The Company currently has no unresolved SEC Staff comments.
Item 5. Operating and Financial Review and Prospects
The following discussion and analysis should be read in conjunction with the Consolidated
Financial Statements of the Company. The Consolidated Financial Statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
Overview
The Companys existing satellites provide commercial service to broadcasting and
telecommunications customers in the Asia Pacific region. APTs transponder utilization agreements
typically require the payment of a deposit of one calendar quarters utilization fee upon signing
of the contract, provide for an escalation of utilization fees during the agreement term according
to an agreed upon schedule, require utilization fees to be paid in advance and provide for renewal
options.
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Certain aspects of the business of the Company are subject to governmental regulation,
including the coordination of orbital slots under the regulations of the ITU and the licensing of
the Companys satellite-related activities in Hong Kong by the HKSAR under the Outer Space
Ordinance. Licenses from the HKSAR must be obtained to launch or operate a satellite. APT has
obtained licenses covering current and future operation of each of APSTAR I, APSTAR IA, APSTAR IIR,
APSTAR V and APSTAR VI. The licenses each require the approval of the HKSAR for any transfer of a
beneficial interest in the satellite. Fees with respect to each of these licenses are payable
annually at fixed rates. The Company paid aggregate license fees with respect to its satellites of
HK$466 thousand (US$60 thousand) to the HKSAR in 2007. Although neither the Joint Declaration nor
the Basic Law makes express provision with respect to the Outer Space Ordinance or the regulation
of satellite launch and operation or other outer space activities, the Basic Law provides that the
laws previously in force in Hong Kong shall be maintained, except for any laws that contravene the
Basic Law, and subject to any amendment by the legislature of the HKSAR.
The Company believes that the market for satellite communications will not improve
significantly in the coming year due to the uncertain economic outlook of the Asia Pacific region
and increased competition in the transponder services market, which the Company believes will grow
increasingly intense. At the same time, the Company plans to develop new satellite broadcasting
and telecommunications businesses, with a view to maintaining business growth. The Company is
currently focusing its sales and marketing efforts on:
|
|
|
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.
|
The Companys future revenues will depend upon the success of the above business strategies,
and it cannot provide any assurances that it will be successful in implementing its strategies or
meeting its projections.
The APSTAR System, together with their corresponding telemetry, tracking and control systems,
have been operating under normal conditions. The Companys core business remains the provision of
satellite transponder capacity and broadcasting services in the Asia Pacific region. In the years
of 2006 and 2007, the transponder service market remained highly competitive. The market for
satellite communications in the Asia Pacific region remained highly competitive because of the
following reasons: (i) there was the increase in new satellite supplies in the region particularly
in the China market; and (ii) there was an over-supply in submarine cable capacities, particularly
with respect to telecommunication services. The APT Group has achieved significant growth in
utilization rates for APSTAR VI, despite the fierce market competition. As of December 31, 2007,
the utilization rates of APSTAR V and APSTAR VI were 72% and 59%, respectively.
The Company intends to continue focusing on its core-business of providing satellite
transponder capacity and satellite-based telecommunications services in the Asia Pacific region in
the near term. While there is no current indication that the over-supply in transponder capacities
and submarine cable capacities in the region will be reduced in the near term, the transponder
markets as well as the broadcasting and telecommunication services market began a limited recovery
at the end of 2007. APT continues to aggressively market the services of its new, state-of-the-art
satellites, APSTAR V and APSTAR VI, which were launched on June 29, 2004 and April 12, 2005,
respectively, in an attempt to gain market share as the economy improves. The Company believes
that the advantages of these two satellites include (i) higher power; (ii) broadened footprints;
(iii) smooth customer migration; (iv) linking northern and southern hemispheres and bridging major
cities between North America and Asia; (v) anti-jamming features (APSTAR VI only); and (vi) the
potential for strong neighborhood effects with such customers as CCTV and other renowned
broadcasters, which enjoy over 300 million TV-households.
APT Satellite TV Development Limited (APT TV) has established its satellite TV uplink and
broadcasting services platform (the Satellite TV Platform) for the provision of broadcasting
services under a Satellite TV Broadcasting Licence granted by HKSAR. The Company believes that the
Satellite TV Platform will help establish a neighborhood effect, whereby the APSTAR System will
stimulate more demand for transponder capacities for the APSTAR System. As at December 31, 2007,
APT TV has carried up to 72 satellite TV channels for the broadcasters in the region. APT Telecom
was re-organized on September 10, 2003 in response to the continued downturn in the market for
telecommunication services and the oversupply of submarine cable capacities. After the
reorganization, APT Telecom Services Limited continued to provide telecommunication services under
the Fixed Carrier License approved by OFTA in October 2003. The Company believes that the provision
of broadcasting service and telecommunication service offerings to its customers provides an
important competitive advantage with respect to customers who desire a one-stop shop in
communications services.
-38-
The Company projects that the broadcasting and telecommunication businesses in the Asia
Pacific region will see steady growth during 2008. The transponder service market will likely
still be highly competitive due to excess capacity in the transponder market in the region
particularly China market. As a result of the economic growth in the Asia Pacific region and the
continued rapid economic growth in the China, the Company anticipates that the demand for
transponders will grow steadily in 2008. The Company believes that there will be increases in
customers and transponder utilizations, and the increase in telecommunications or broadcasting
services. However,
the market competition will still be fierce due to supply over demand with keen price pressure. The
APT Group will endeavour to secure our foothold in the China market and expand in the overseas
market so as to further increased the satellite utilization and improve the APT Groups
performance.
An analysis of the sources of the Companys revenues by business segment for the two years
ended December 31, 2007 is shown in Item 4 Information on the Company Business Overview. The
following table sets forth, for the periods indicated, the percentage of revenues from continuing
operations represented by certain revenue and expense items in the Companys statements of
operations.
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Statement 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
|
%
|
An analysis of the source of the Companys turnover by geographical area for the years ended
December 31, 2006 and 2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
|
Amount
|
|
|
% of
|
|
|
Amount
|
|
|
% of
|
|
|
|
(HK$ in
|
|
|
Total
|
|
|
(HK$ in
|
|
|
Total
|
|
|
|
millions)
|
|
|
Revenues
|
|
|
millions)
|
|
|
Revenues
|
|
The Peoples
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-
The Company has not incurred any research and development expenditure for the years ended
December 31, 2006 or 2007.
Application of Critical Accounting Policies
The 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. The
following are some of the more critical judgment areas in the application of the Companys
accounting policies that currently affect the Companys financial condition and results of
operations.
Depreciation
Depreciation of satellite assets 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, to residual value. 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 Companys
satellites have been subjected to certain operational lives, the Company 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 Companys satellites
are reviewed using current engineering data. If a significant change in the estimated useful lives
of our satellites is identified, the Company accounts for the effects of such change as
depreciation expenses on a prospective basis.
Following a review undertaken by the APT 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 HK$587 thousand and
decreased the profit for the year by approximately HK$484 thousand. This change will also increase
the annual depreciation charge by approximately HK$640 thousand and decreased the profit after tax
by approximately HK$528 thousand throughout the remaining useful life of APSTAR IIR.
Trade receivables and other receivables
The management of the Company estimates the provision of allowances required for the potential
non-collectability of receivables at each balance sheet date based on the aging of its customer
accounts and its historical write-off experience, net of recoveries. The Company performs ongoing
credit evaluations of its customers and adjusts credit limits based upon payment history and the
customers current credit worthiness. The Company does not make a general provision on its trade
receivables and other receivables, but instead, makes a specific provision on its accounts
receivables and other receivables. Hence, the Company continuously monitors collections and
payments from customers and maintains allowances for 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 Company were to deteriorate, actual write-offs would be higher
than estimated.
As disclosed in Note 18(b) to the Consolidated Financial Statements for the years ended
December 31, 2006 and 2007, the Company has written off trade receivable at the amount of nil and
HK$5.2 million (US$0.7 million) respectively. For the years ended December 31, 2006 and 2007, the
Company made allowance for doubtful receivables in the amounts of HK$7.9 million and HK$80 thousand
(US$10.3 thousand), respectively. If the financial condition of the Companys customers were to
deteriorate, additional allowances may be required.
The Company periodically reviews the carrying amounts of provision for doubtful debts to
determine whether there is any indication that the provision needs to be written off. If the
Company becomes aware of a situation where a customer will not be 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 Company would write off the account receivable.
-40-
Impairment of property, plant and equipment
The Company periodically reviews the carrying amount of the assets to determine whether there
is any indication that those assets have suffered an impairment loss. If the recoverable amount of
an asset is estimated to be less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. In assessing the recoverable amount of these assets, the
Company is required to make assumptions regarding estimated future cash flows and other factors to
determine the net realizable value. If these estimates or their related assumptions change in the
future, the Company may be required to adjust the impairment charges
previously recorded. Under IFRS, the estimated future cash flows are discounted using a pre-tax
risk adjusted rate when assessing the recoverable amount of the assets.
The Company 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 Company operates and the resulting assumptions used in setting depreciable
lives on assets and judgment relating to the utilization 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 Company may be required
to record impairment loss for these assets not previously recorded.
The Company 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 Company 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 Company may be required to
record additional impairment loss not previously recognized.
During the years ended December 31, 2006 and 2007, the Company conducted a review of the
Companys property, plant and equipment and determined that certain assets were impaired as the
recoverable amount of these assets is estimated to be less than their carrying amount. For the year
ended December 31, 2006, the APT Group conducted an impairment review on those equipment and
concluded that no further impairment was required. For the year ended December 31, 2007,
impairment loss of HK$98 thousand in respect of communication satellite equipment had been
recognised and charged to the statement of operations.
Contingencies and provisions
Contingencies, 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 Company 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 Company is likely to bear in order to settle an
obligation, the management of the Company 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 of Consolidated Financial Statements of the Company.
-41-
Change in accounting policies
The 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.
These developments have not resulted in any significant changes to the accounting policies
applied in these financial statements compared to those applied in the APT Groups financial
statements for the year ended December 31, 2006. However, as a result of the adoption of IFRS 7,
Financial instruments: Disclosures and the amendments to IAS 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 7, the financial statements include expanded disclosure
about the significance of the APT Groups financial instruments and the nature and extent of risks
arising from those
instruments, compared with the information previously required to be disclosed by IAS 32,
Financial instruments: Disclosure and presentation. Please refer to Note 27 of Consolidated
Financial Statements.
The amendment to IAS 1 introduces additional disclosure requirements to provide information
about the level of capital and the APT Groups and the Companys objectives, policies and processes
for managing capital. These new disclosures are set out in Note 24(b) of Item 18. Both IFRS 7 and
the amendments to IAS 1 do not have any impact on the classification, recognition and measurement
of the amounts recognised in the financial statements. The APT Group has not applied any new
standard or interpretation that is not yet effective for the current accounting period (see Note 37
of Consolidated Financial Statements).
Commitments and Contingencies
In the ordinary course of its business, the Company enters into commercial commitments for
various aspects of operations, such as repair and maintenance. However, the Company believes that
those commitments will not have a material effect on the Companys financial condition, results of
operations or cash flows.
The following tables aggregate the contractual obligations and other commercial commitments of
the Company as of December 31, 2007 (HK$ in millions):
Contractual Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period
|
|
|
|
|
|
|
|
Less
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
than 1
|
|
|
13
|
|
|
45
|
|
|
After 5
|
|
|
|
Total
|
|
|
year
|
|
|
years
|
|
|
years
|
|
|
years
|
|
US$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 period
|
|
|
|
Total
|
|
|
Less
|
|
|
|
|
|
|
|
|
|
|
|
|
amounts
|
|
|
than 1
|
|
|
13
|
|
|
45
|
|
|
After 5
|
|
|
|
committed
|
|
|
year
|
|
|
years
|
|
|
years
|
|
|
years
|
|
Deposit received
|
|
|
19.6
|
|
|
|
|
|
|
|
19.6
|
|
|
|
|
|
|
|
|
|
Rental received in advance
|
|
|
33.7
|
|
|
|
33.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income
|
|
|
207.8
|
|
|
|
|
|
|
|
59.1
|
|
|
|
45.1
|
|
|
|
103.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total 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-
|
|
|
(3)
|
|
This line item represents various purchase commitments entered into with the
Companys 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.
|
Certain potential losses of a satellite or the satellites functionality may not be fully
covered by the Companys launch or in-orbit insurance policies. For example, APT Groups insurance
coverage would not compensate it for business interruption and similar losses (including, among
other things, loss of market share, loss of revenue and incidental and consequential damages). In
the event that the insurance proceeds exceed the carrying amount of the satellites, the excess of
the proceeds over the carrying value of the satellite would be recognized as income. Any shortfall
between the insurance proceeds and the carrying amount of the satellites would be recognized in the
statements of operations as expense.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements other than its operating leases.
The Company does not believe that such operating leases have or are reasonably likely to have a
current or future effect on the Companys financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that would be material to
investors.
Results of Operations
Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
Total Turnover.
Total turnover for the year ended December 31, 2007 were HK$451.6 million
(US$57.9 million), an increase of HK$24.6 million, or 5.8%, as compared to total revenues of
HK$427.0 million for the same period in 2006. The increase of revenues in 2007 was due to higher
income generating from the new customers for the provision of Satellite Transponder Capacity
Services during the year.
Cost of Services.
The major components of cost of services include depreciation and
amortization, orbital slot management fees, in-orbit insurance and satellite operations services
charges. The cost of services, including depreciation and amortization for the year ended December
31, 2007 was HK$314.8 million (US$40.4 million), a decrease of HK$23.5 million or 7.0% when
compared to the cost of HK$338.3 million for the year ended December 31, 2006. The decreased cost
of services is mainly due to a reduction of premium cost in satellite in-orbit insurance. Also,
depreciation and amortization for the year ended December 31, 2007 was HK$222.7 million (US$28.6
million), a decrease of HK$8.8 million or 3.8% as compared to depreciation and amortization of
HK$231.5 million for the year ended December 31, 2006. This decrease was mainly due to the
disposal of the two transponders in 2006. No such depreciation has been provided in 2007 and
therefore, the depreciation and cost of services have decreased for the year.
Gross Profit.
Gross profit for the year ended December 31, 2007 were HK$136.8 million (US$17.5
million), an increase of HK$48.1 million, or 54.2%, as compared to gross profit of HK$88.73 million
for the same period in 2006. The increase of gross profit in 2007 was due to all of the factors
discussed above.
-43-
Other net Income.
The major components of other operating income consist of interest income
and gain on disposal of property, plant and equipment. The other income for the year ended December
31, 2007 was HK$26.3 million (US$3.4 million), a decrease of HK$11.2 million as compared to the
revenues of HK$37.5 million for the year ended December 31, 2006. This decrease was mainly due to
the net effect of the increase in interest income and decrease in gain on disposal of property,
plant and equipment. The interest income was HK$22.2 million (US$2.8 million) in the year ended
December 31, 2007, an increase of HK$4.6 million, or 26.1%,
as compared to the interest income of HK$17.6 million for the year ended December 31, 2006,
which was largely as a result of increase in interest rates on bank deposits and bank balance for
the first half year of 2007. Gain on disposal of property, plant and equipment was HK$261 thousand
(US$33 thousand) in the year ended December 31, 2007, a decrease of HK$17.3 million, or 98.5%, as
compared to the gain on disposal of property, plant and equipment of HK$17.6 million for the year
ended December 31, 2006, which was due to the sale of two transponders to a vendor in 2006. There
was no such income in 2007.
Administrative Expenses.
The major components of administrative expenses include staff costs,
office rental expenses, office general expenses, provision for bad and doubtful receivables,
marketing and promotion expenses and professional fee. Administrative expenses for the year ended
December 31, 2007 were HK$81.9 million (US$10.5 million), a decrease of HK$7.1 million, or 8.0%, as
compared to administrative expenses of HK$89.0 million for the year ended December 31, 2006. The
decrease of administrative expense was mainly due to an impairment loss for trade and other
receivables provided for in the prior year.
Impairment Loss Recognized for Property, Plant and Equipment.
Impairment loss for
communication satellite equipment of HK$98 thousand was recognized for the year ended December 31,
2007 as the Company re-assessed the discounted expected future revenues of the telecommunication
business, which the Company expects to be lower than originally projected. In 2006, the Company
conducted an impairment review on those equipment and concluded that no impairment was required.
Finance Costs.
For the year ended December 31, 2007, the Company incurred finance costs of
HK$55.3 million (US$7.1 million) representing interest expenses of HK$52.2 million incurred under
the Bank loan and other related finance costs of HK$3.1 million. For the year ended December 31,
2006, the Company incurred finance costs of HK$64.1 million representing interest expenses of
HK$60.5 million incurred under the Bank loan and other related finance costs of HK$3.6 million. The
decrease of finance costs was due to a decrease in borrowing after repayment of the bank loan
during 2007.
Share of Results of Jointly Controlled Entities.
Share of losses of jointly controlled
entities was HK$0.9 million (US$0.1 million) for the year ended December 31, 2007, a decrease of
HK$3.1 million as compared to the share of incomes of jointly controlled entities of HK$2.2 million
for the year ended December 31, 2006. In 2006, a revaluation gain of HK$6.1 million caused by cost
adjustment on investment property held by a jointly controlled entity was recognised.
Income Tax.
Income tax expense was HK$20.4 million (US$2.6 million) for the year ended
December 31, 2007, a decrease of HK$35.7 million as compared to the income expense of HK$56.1
million for the year ended December 31, 2006. The decrease in income tax expenses was mainly due to
a net deferred tax liability of HK$42.8 million recognized as a result of settlement of tax dispute
with Hong Kongs Inland Revenue Department (the IRD) in 2006 in relation to APSTAR IIR. Please
refer to note 6a of the consolidated financial statements for details. The effective tax rate for
the year ended December 31, 2007 was 81.3% because foreign withholding tax (charged on certain
income from the foreign customers) of HK$18.6 million was included in income tax expenses.
Excluding this, the effective tax rate for the year ended December 31, 2007 was 7.2% which was
lower than the Hong Kong statutory rate of 17.5% because certain profits were earned by foreign
subsidiaries of the Company which were not subject to Hong Kong profits tax.
Pursuant to the PRC enterprise income tax law passed by the Tenth National Peoples Congress
on 16 March 2007, the new enterprise income tax rates for domestic and foreign enterprises are
unified at 25% and will be effective from 1 January 2008. Accordingly, the deferred tax of the
Group is recognised based on the tax rate that are expected to apply to the period when the asset
is realized or the liability is settled. The subsidiaries of the Company in the PRC are loss making
and incurred tax losses. The realization of these tax losses were considered not probable and
accordingly no deferred tax assets in respect of tax losses were recognised as at December 31,
2007.
-44-
Profit/(Loss) for the year.
Profit for the year ended December 31, 2007 was HK$4.7 million
(US$0.6 million), an increase of HK$85.3 million as compared to the net loss of HK$80.6 million for
the year ended December 31, 2006. This increase of profit for the year was due to all of the
factors discussed above.
Liquidity and Capital Resources
Sources of Cash and Credit Available
Since the Companys initial public offering, it has financed its operations primarily through
cash flows from operations. As of December 31, 2007, the Company had HK$312.0 million (US$40.0
million) of available cash, and HK$83.7 million (US$10.7 million) of restricted cash. It is
expected that the operations of the Company for the foreseeable future will be funded through cash
flows from operation. As of December 2007, no further amounts are available under our credit
facility.
Capital Expenditures
APTs principal use of capital in the last several years has been (and will for the
foreseeable future be) capital expenditures related to the construction and launch of its
satellites, construction of Phase II of the Satellite Control Centre and investment in its
satellite TV broadcasting platform. The Companys business is capital-intensive, requiring
substantial capital outlays before any given satellite is commissioned for commercial service and
can begin providing a return on capital.
The Company makes periodic satellite project progress payments relating to construction of
satellites, launching and related services, insurance costs and finance costs on amounts borrowed
to finance such expenses. Upon the commencement of commercial service of an APT satellite,
satellite project progress payments relating to the satellite are transferred in full to property,
plant and equipment.
In addition, if the Company was to consummate any strategic transactions or undertake any
other project requiring significant capital expenditures, it may be required to seek additional
financing. There can be no assurance that additional funds will be available at all or that, if
available, will be obtained at terms favorable to the Company.
Contractual Obligations and Other Commercial Commitments
For capital commitments in respect of capital expenditures, see Item 5. Contractual
Obligations and Commercial Commitments.
Cash Flow Items
Net Cash Provided by Operating Activities
Net cash provided by operating activities amounted to HK$269.0 million (US$34.5 million) for
the year ended December 31, 2007, an increase of HK$54.1 million, or 25.2%, compared to net cash
provided by operating activities of HK$214.9 million for the year ended December 31, 2006. The
increase in net cash provided by operating activities over the period was partly due to the
settlement of the trade receivables for 2007 is faster than that in 2006 as a result of tightening
internal control of the trade receivables in 2007.
Net Cash Generated from Investing Activities
Net cash generated from investing activities was HK$16.5 million (US$2.1 million) for the year
ended December 31, 2007, a decrease of HK$36.2 million (US$4.6 million), compared to net cash used
in investing activities of HK$52.7 million for the year ended December 31, 2006. Proceeds of
HK$70.9 million were received from the disposal of two C-band transponders to a vendor in 2006 with
no similar receipt in 2007.
-45-
Net Cash Used in Financing Activities
Net cash used in financing activities was HK$317.3 million (US$40.7 million) for the year
ended December 31, 2007, an increase of HK$62.6 million (US$8.0 million), compared to net cash
provided by financing activities of HK$254.7 million for the year ended December 31, 2006. The
increase in net cash used in financing activities over the period was primarily the result of
increased repayment of bank borrowings of HK$61.8 million (US$7.9 million) in 2007.
Financing
On December 16, 2002, APT entered into a US$240 million secured term bank loan with Industrial
and Commercial Bank of China and Bank of China (Hong Kong) Limited. The Bank loan was amended by a
Deed of Amendment and Restatement on October 27, 2004 and Second Deed of Amendment and Restatement
on May 18, 2005. The first amendment amended certain terms of the Bank loan for the purpose of
adjusting for the cancellation of the unutilized portion relating APSTAR V satellite and APSTAR VI
backup satellite. Accordingly, the maximum aggregate amount under the Bank loan was reduced to
US$165 million and certain financial covenants were amended. The second amendment extended the
availability period of drawing under the Bank loan with respect to APSTAR VI to June 30, 2005 and
amended the financial covenants. The Company was in compliance with these covenants as of December
31, 2007. For detail of the restrictive financial covenants, please refer to Note 24(b) of the
Consolidated Financial Statements of the Company. The availability period for draw down expired
on June 30, 2005. As at December 31, 2006 and 2007, the aggregate borrowings under the Bank loan
were HK$936.1 million and HK$683.1 million (US$87.6 million), respectively. At December 31, 2007,
APSTAR V and APSTAR VI with a net book value of approximately HK$2,317.2 million (US$297.1 million)
were pledged as security for the Bank loan and bank deposits of approximately HK$83.7 million
(US$10.7 million) were also pledged as security for the loan.
The Bank loan is secured by the assignment of the construction, launching and related
equipment contracts relating to APSTAR V, APSTAR VI and their related insurance claim proceeds,
assignment of all present and future utilization agreements of the transponders of satellites under
construction, assignment of all present and fixed charges over certain bank accounts which will
hold receipts of the transponder income and the termination payment under construction, launching
and related equipment contracts. Pursuant to the Bank loan, any insurance claim proceeds and
contract termination payments must be deposited in a designated account and withdrawal of any
amount from this designated account may only occur in accordance with the terms of the Bank loan.
The Bank loan limits the amount of annual dividends that the Company may pay its shareholders
which limit is tied to certain EBITDA and cash to debt service ratios contained therein. The Bank
loan includes covenants customary for agreements of this type, including restrictions on the
Companys and its subsidiaries ability to incur indebtedness, certain ownership restrictions,
certain restrictions on the Companys ability to pay dividends, restrictions on affiliated
transactions, certain financial covenants, covenants with respect of compliance with laws,
maintenance of licenses and permits required for APTs business and a requirement that all future
transponder utilization agreements be entered into on an arms-length basis. Among others, APT must
notify the lenders if its ultimate holding company, APT Satellite International Company, directly
owns less than 50.01% of the voting rights in the APT Group. The Bank loan also contains financial
covenants, including maintenance of collateral coverage ratio, minimum net worth and minimum
EBITDA. The Bank loan also contains customary limitations, including those on dividend,
investments, capital expenditures, change of controlling shareholders, creating liens and
transactions with affiliates. No assurance can be given that APT will continue to meet any of the
financial performance covenants contained in the Bank loan.
Forward Looking Statements
This report contains statements and other information made by or on behalf of the Company that
constitute forward-looking statements within the meaning of Private Securities Litigation Reform
Act of 1995. Statements that are not historical facts are forward-looking statements. By their
nature, forward-looking statements involve inherent risks and uncertainties, both general and
specific, and actual results could be materially different from those expressed or implied by
forward-looking statements.
-46-
Words such as believes, anticipates, expects, intends and plans and similar
expressions are intended to identify forward-looking statements but are not the exclusive means of
identifying such statements. Forward statements herein may include, without limitation, statements
relating to the Companys expectations, plans, objectives or goals relating to (i) its operations
and financial results; (ii) launch schedules and anticipated transponder utilization; (iii) the
technical capabilities of the APSTAR System; (iv) customer demand for the Companys system; (v)
strategic relationships that impact its operations; (vi) its funding needs and sources; (vii)
satellite communications regulatory matters; (viii) the pricing of its services; (ix) its
competitors and their services; and (x) actions of the Companys suppliers, vendors and service
providers.
The Company cautions you that a number of important factors could cause the Companys results
of operations to differ materially from the plans, objectives, expectations, estimates and
intentions expressed in such forward-looking statements. These factors include, but are not
limited to: (i) technological risks related to the development, operation and maintenance of
various components of the APSTAR System; (ii) delays and cost overruns related to the construction,
deployment and maintenance of the Companys APSTAR System; (iii) risks related to the operation and
maintenance of the Companys newer satellites, APSTAR V and APSTAR VI; (iv) competition from other
satellite operators and a number of existing satellite systems that provide similar services in
various markets; (v) actions taken by regulators with respect to the Companys business and
practices in one or more of the countries in which the Company conducts its operations; (vi) the
Companys capital structure and its ability to maintain sufficient liquidity and access capital
markets; (vii) customer demand for the services of the Companys satellite transponders and the
perceived overall value of these services by customers; (viii) the ability to increase market share
and control expenses; (ix) the ability of counterparties to meet their obligations to the Company;
(x) the possibility of foreign exchange controls, expropriation, nationalization or confiscation of
assets in countries in which the Company conducts its operations; (xi) the effects of changes in
laws, regulations or accounting policies or practices; (xii) the ability to retain and recruit
qualified personnel; (xiii) the strength of the global economy in general and the strength of the
economies of the countries in which the Company conducts its operations in particular; (xiv)
political and social developments, including war, civil unrest or terrorist activity; and (xv) the
Companys success at managing the risks involved in the foregoing.
The Company cautions you that the foregoing list of important factors is not exclusive. When
evaluating forward-looking statements, you should carefully consider the foregoing factors as well
as the risks identified herein and the Companys reports on Form 6-K furnished to the US Securities
and Exchange Commission. These and other factors could result in the forward-looking statements
proving to be inaccurate and may materially affect the Companys operations. The Company does not
undertake any obligation to publicly release any revisions to the forward-looking statements
contained in this report, or to update them to reflect events or circumstances occurring after the
date of this report, or to reflect the occurrence of unanticipated events.
Other
Exchange Rates
Substantially all of APTs historical revenues from transponder capacity utilization, premiums
for satellite launch and in-orbit insurance coverage, debt service and capital expenditures have
been denominated in US Dollars. The remaining revenues and expenses have been primarily
denominated in Hong Kong Dollars, which are fully convertible into US Dollars, and the exchange
rates for that currency against the US Dollar have been pegged since 1983. As the exchange rate
between the Hong Kong Dollar and the US Dollar has been pegged, the Company does not engage in or
plan to engage in hedging activities to offset risks of exchange rate fluctuations. There can be
no assurance that the exchange rates will remain stabilized in the future. See Exchange Rate
Information. On December 31, 2007, all of the Companys material contracts and obligations were
denominated in US Dollars.
Inflation
Inflation has not materially affected the Companys operations during its operating history.
Taxation
The Companys loss for the year ended December 31, 2006 and profit for the year ended December
31, 2007, which are deemed to be Hong Kong-sourced and subject to Hong Kong profits tax, was levied
at the rate of 17.5% and 17.5%, respectively. Offshore interest income and capital gains derived
by the Company are not subject to Hong Kong profits tax.
-47-
The overseas withholding tax is currently charged at the rate of 3.75% to 20% on transponder
utilization income during 2006 and 2007, respectively.
Subsidiaries of the Company in the PRC are currently subject to PRC income tax and charged at
the rates of 15% and 33% in Shenzhen and Beijing, respectively during 2006 and 2007. Pursuant to
the PRC enterprise income tax law passed by the Tenth National Peoples Congress on March 16, 2007,
the new enterprise income tax rates for domestic and foreign enterprises are unified at 25% and
will be effective from January 1, 2008. Accordingly, the deferred tax of the APT Group is
recognised based on the tax rate that are expected to apply to the period when the asset is
realized or the liability is settled. The subsidiaries of the Company in the PRC are loss making
and incurred tax losses. The realization of these tax losses were considered not probable and
accordingly no deferred tax assets in respect of tax losses were recognised as at December 31,
2007.
Item 6. Directors, Senior Management and Employees
A majority of the Companys current executive officers were originally seconded from
affiliates of the Principal Shareholders, principally affiliates of ChinaSat, SingaSat and China
Aerospace. A majority of APTs technical and engineering staff employed at the Satellite Control
Center in Tai Po were seconded from affiliates of ChinaSat, and China Aerospace and became
employees of the Company.
The directors and executive officers of APT Holdings as at June 24, 2008 are set forth below.
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Date First
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Elected or
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Name
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Age
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Position
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Appointed
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Executive Directors
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Cheng Guangren
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45
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Director and President (appointed June 20, 2008)
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2008
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Tong Xudong
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44
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Director and Vice President
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2004
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Qi Liang
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46
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Director and Vice President (appointed June 20, 2008)
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2008
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Non-executive Directors
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Rui Xiaowu
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49
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Chairman
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2006
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Lim Toon
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65
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Director
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1993
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Yin Yen-liang
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57
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Director
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2003
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Wu Zhen Mu
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62
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Director
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1998
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Yong Foo Chong
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41
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Director
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2007
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Tseng Ta-mon
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50
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Alternate Director to Yin Yen-liang
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2003
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Independent
Non-executive
directors
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Huan Guocang
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58
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Director
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2002
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Lui King Man
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53
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Director
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2004
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Lam Sek Kong
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48
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Director (appointed July 1, 2007)
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2007
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Cui Liguo
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38
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Director (appointed July 1, 2007)
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2007
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Executive Officers
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Dong Gang
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54
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Vice President
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2005
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Lo Kin Hang, Brian
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51
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Vice President & Company Secretary
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2002/1996
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Chen Xun
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37
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Vice President
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2004
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Yang Qing
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44
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Vice President
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2004
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-48-
Executive Directors
Mr. CHENG Guangren
, aged 45, was appointed as the Executive Director and President; and the
authorized representative of the Company on 20 June 2008. He is responsible for the overall
management of the Company. Mr. Cheng was also appointed as the Director of APT Satellite Company
Limited, APT Satellite Investment Company Limited, Acme Star Investment Limited, APT Satellite
Telewell Limited, APT Satellite Vision Limited, APT Satellite TV Development Limited, Skywork
Corporation, APT Telecom Services Limited, Ying Fai Realty (China) Limited, APT Satellite Global
Company Limited, APT Satellite Enterprise Limited, APT Satellite Link Limited and Middle East
Ventures Limited, subsidiaries of the Company. He is also the Chairman of the board of directors of
APT Satellite Telecommunications Limited, a jointly controlled entity between a wholly-owned
subsidiary of the Company and one of the shareholders of APT Satellite International Company
Limited (APT International), the substantial shareholder of the Company. Mr. Cheng was also
appointed as the Director of APT International. Mr. Cheng graduated from the Harbin Institute of
Technology in the Department of Management Science and Engineering in 1984 and accredited as Master
of Management and Senior Engineer. He is the Board Chairman of China Direct Broadcast Satellite
Company Limited and concurrently the Deputy Chief Economist of China Aerospace Science & Technology
Corporation. China Aerospace Science & Technology Corporation is one of the shareholders of APT
International, the substantial shareholder of the Company. China Direct Broadcast Satellite Company
Limited is an enterprise in China jointly established by China Satellite Communications Corporation
and Sino Satellite Communications Company Limited (Sinosat). Mr. Cheng had been working for the
former Ministry of Space Industry of PRC in respect of legal affairs and legal consultant for the
enterprises and institutions during the period from 1984 to 1988; he had been working for China
Great Wall Industry Corporation in respect of business and project management for the launching of
the Long March launch vehicle and satellite during the period from 1988 to 1993; he had been the
management for Sinosat from 1994 to April 2008 and had also been its Director of Board and
Executive Vice President since 1994 and had also been its Director of Board and President since
1999. He is one of the founders of Sinosat. He has been working in the field of space industry for
over 20 years and has professional skills and rich experience in the management of satellite
operation. In 2004, he won the 2nd session Excellent Young Entrepreneurs Award of Beijing.
Mr. TONG Xudong
, aged 44, was appointed as the Executive Director and Vice President of the
Company in March and April 2004, respectively. Mr. Tong is also the member of the Nomination
Committee and the Remuneration Committee of the Company. Mr. Tong is also the Director of APT
Satellite Company Limited, APT Satellite Investment Company Limited, APT Satellite Vision Limited,
APT Satellite TV Development Limited, APT Satellite Global Company Limited, APT Satellite
Enterprise Limited, APT Satellite Link Limited, Middle East Ventures Limited, APT Communication
Technology Development (Shenzhen) Company Limited and CTIA Vsat Network Limited, subsidiaries of
the Company. He is also the Director of APT Satellite International Company Limited, the
substantial shareholder of the Company. Mr. Tong graduated from Nanjing Aeronautic Institute in
1985 and obtained a master degree from Beijing Institute of Space Mechanics and Electricity,
Chinese
Academy of Space Technology in 1988. Immediately after his graduation, he served for the
Beijing Institute of Space Mechanics and Electricity. In 1993, he further pursued his studies in
Samara University of Aeronautics and Astronautics, Russia. From May 1995 to June 2000, he served as
the Vice-Director of Beijing Institute of Space Mechanics and Electricity and was appointed as
professor in 1998. From June 2000 to December 2003, he was the Director of the same Institute. In
2003, he was appointed as the Vice-President of Chinese Academy of Space Technology. Mr. Tong is a
standing committee member of Chinese Society of Space Research and Chairman of the Committee of
Recovery and Reentry, Chinese Society of Astronautics.
Mr. QI Liang
, aged 46, was appointed as the Executive Director and Vice President of the
Company on 20 June 2008. He was also appointed as the Member of each Nomination Committee and
Remuneration Committee of the Company. Mr. Qi was also appointed as the Director of APT Satellite
Company Limited, APT Satellite Investment Company Limited, Acme Star Investment Limited, APT
Satellite Telewell Limited, APT Satellite Vision Limited, APT Satellite TV Development Limited,
Skywork Corporation, APT Telecom Services Limited, APT Satellite Global Company Limited, APT
Satellite Enterprise Limited and APT Satellite Link Limited, Middle East Ventures Limited and
Haslett Investments Limited, subsidiaries of the Company. He was also appointed as the Director of
APT Satellite Telecommunications Limited, a jointly controlled entity between a wholly-owned
subsidiary of the Company and one of the shareholders of APT Satellite International Company
Limited (APT International), the substantial shareholder of the Company. Mr. Qi was also
appointed as the Director of APT International. Mr. Qi graduated from the Beijing College of
Finance and Commerce in Finance major in 1986. He has been the Post-graduate of Monetary and
Banking, Finance Department from the Chinese Academy of Social Sciences since 1998 and accredited
as Senior Economist. Currently, he is the Deputy Chief Accountant for China Satellite
Communications Corporation (ChinaSat) and the Director of CASIL Clearing Limited.
-49-
ChinaSat and CASIL Clearing Limited are the holding company of one of the shareholders of APT International and
the affiliated company of one of the shareholder of APT International, the substantial shareholder
of the Company, respectively. Mr. Qi had been working for the Official of the Finance Department
of Beijing Planning Committee during the period from 1986 to 1988; he had been the Assistant
Economist of the Finance Department of National Agriculture Investment Co., the Economist of the
Finance and Equipment Planning Bureau of the Supreme Court, the Economist of the Beijing Stocks
Department of China Rural Development Trust & Investment Co. during the period from 1988 to 1994;
he had been the assistant to the director, deputy director, vice manager of the Administration
Department, vice president of the Changan Avenue Division and Wanshou Road Division, president,
and senior economist of the China Merchants Bank Beijing Branch during the period from 1994 to
2004; he had been the Assistant to the President, and concurrently the General Manager of the
Finance Department of China Aerospace International Holdings Limited.
Non-Executive Directors
Mr. RUI Xiaowu
, aged 49, was appointed as the Non-Executive Director and Chairman of the
Company in December 2006. Mr. Rui is also the Director of APT Satellite Company Limited and APT
Satellite Investment Company Limited, subsidiaries of the Company. He is also the Chairman of the
board of directors of APT Satellite International Company Limited (APT International), the
substantial shareholder of the Company. Mr. Rui is a Masters Postgraduate. He was accredited as a
Research Fellow in 1999 and was awarded by the State Council of China as the Winner of Government
Special Allowance in 1996. Currently, Mr. Rui is the General Manager of China Satellite
Communications Corporation, the holding company of one of the shareholders of APT International,
the substantial shareholder of the Company. In 1982 Mr. Rui graduated from the Science &
Technology University for National Defense of China in Computer Software Major and had been
studying Masters Degree in Computer Aided Engineering at the 710 Research Institute of the former
Ministry of Aerospace Industry of China during the period from 1982 to 1985, and participated works
at the 710 Research Institute in the same year. Thereafter, he had been the Engineer, Division
Director of the Business Marketing Division, Vice President, President of the 710 Research
Institute; he had been the Business Assistant to General Manager and Director General of the
Business Planning & Marketing Department, Business Assistant to General Manager and Director
General of the Marketing Department of China Aerospace Science & Technology Corporation since 2000;
he had also been appointed as the Vice Chairman of Sino Satellite Communications Company Limited
since 2001; he had been appointed as the Assistant to General Manager of China Aerospace Science &
Technology Corporation since 2002; he had also been appointed as the Chairman of China Spacesat
Company Limited (a corporation listed on the Shanghai Securities Exchange in China) during the
period from 2002 to 2005; he had been appointed as the Chairman & President and Chairman of China
Aerospace International Holdings Limited and CASIL
Telecommunications Holdings Limited, respectively (both of them are corporations listed on the
Stock Exchange of Hong Kong) during the period from 2002 to 2006; and he had been appointed as the
Deputy General Manager of China Aerospace Science & Technology Corporation during the period from
2005 to 2006.
Mr. LIM Toon
, aged 65, has been a Director of APT Satellite Company Limited since February
1993 and was appointed as the Non-Executive Director of the Company in October 1996. Mr. Lim is
also the Director of APT Satellite Company Limited and APT Satellite Investment Company Limited,
subsidiaries of the Company. He is also the Director of APT Satellite Telecommunications Limited, a
jointly controlled entity between a wholly-owned subsidiary of the Company and one of the
shareholders of APT Satellite International Company Limited, the substantial shareholder of the
Company. Mr. Lim is also the Director of APT Satellite International Company Limited. In 1966, Mr.
Lim graduated from the University of Canterbury in New Zealand, with a first class honours degree
in Engineering. In 1975, Mr. Lim obtained a Postgraduate Diploma in Business Administration from
the University of Singapore. He attended the Advanced Management Programme at Harvard Business
School in 1992. He has been the Chief Operating Officer of SingTel, the holding company of one of
the shareholders of APT Satellite International Company Limited, since April 1999 and has worked
for Singapore Telecom since 1970, serving in various appointments of engineering, radio services,
traffic operations, personnel & training and information systems departments. He was appointed
Executive Vice President of Network Services in April 1989 and Executive Vice President of
International Services in April 1994. He was awarded the Efficiency Medal in 1978 and the Public
Administration Medal (Gold) in 1991 by the Singapore government. He is presently a Director of a
number of overseas companies. Mr. Lim has retired from SingTel on 26 February 2006.
-50-
Dr. YIN Yen-liang
, aged 57, was appointed as the Non-Executive Director of the Company in
January 2003. Dr. Yin is also the Director of APT Satellite Company Limited and APT Satellite
Investment Company Limited, subsidiaries of the Company. Dr. Yin is also the Director of APT
Satellite International Company Limited, the substantial shareholder of the Company. Dr. Yin
graduated with an MBA Degree from National Taiwan University in 1983 and received the PhD Degree in
Business Administration from National Chengchi University in 1987. He has been President of the
Ruentex Group, the holding company of one of the shareholders of APT Satellite International
Company Limited, since 1994 and concurrently holding the position of Executive Director of SinoPac
Holdings Co., Ltd., Executive Director of Bank SinoPac, Director of Acer Incorporate, Chairman of
Aetna SinoPac Credit Card Company Limited.
Mr. WU Zhen Mu
, aged 62, was appointed as the Non-Executive Director of the Company in June
1998. Mr. Wu is also the Director of APT Satellite Company Limited and APT Satellite Investment
Company Limited, subsidiaries of the Company. Mr. Wu is also the Director of APT Satellite
International Company Limited, the substantial shareholder of the Company. Mr. Wu graduated in
Manufacturing Engineering of the Beijing Institute of Aeronautics in 1969 and obtained a Masters
degree in Electro-Mechanical Automation in the same institute in 1981. He was a lecturer in
Zhengzhou Institute of Aeronautics from 1970 and 1979 and had been a lecturer, associate Professor
and Professor in Beijing University of Aeronautics and Aerospace from 1982 to 1993. Since then, he
has been appointed as a Professor of the Commission of Science and Technology of China Aerospace
Corporation.
Mr. YONG Foo Chong
, aged 41, was appointed as the Non-Executive Director of the Company on 8
March 2007. Mr. Yong is also the Director of APT Satellite Company Limited and APT Satellite
Investment Company Limited, subsidiaries of the Company. He is also the Director of APT Satellite
Telecommunications Limited, a jointly controlled entity between a wholly owned subsidiary of the
Company and a shareholder of APT Satellite International Company Limited (APT International), the
substantial shareholder of the Company. Mr. Yong is also the Director of APT International. Mr.
Yong holds an Honours Degree in Electrical & Electronic Engineering from the National University of
Singapore, specializing in communication technology. Mr. Yong has worked for Singapore
Telecommunications Limited (SingTel), the holding company of one of the shareholders of APT
International which is the substantial shareholder of the Company since 1998, serving in various
appointments. Currently, Mr. Yong is the Head of Satellite for SingTel overseeing the fixed and
mobile satellite business and infrastructure and also the director of Singasat Private Limited, a
wholly owned subsidiary of SingTel, which is one of the shareholders of APT International. Prior to
the current appointment in 2006, he was the Senior Director of Corporate Business Marketing and was
responsible for the global marketing of B2B solutions. Mr. Yong had a 2-year stint as the Director
of SingTels Optus Business Marketing and Product Management based out of Sydney, Australia, whose
responsibility was to revamp the entire marketing and product
strategy, which included steering the B2B business towards new strategic directions such as IP
convergence and SME solutions investment. He was also responsible for strategic bid management
which secured many key government and Australian MNC contracts. In 2001, Mr. Yong also helped the
Corporate Business Group implement various strategic initiatives such as building a pan-Asian
network of managed hosting data centers and was later appointed as Chief Operation Officer of the
managed hosting business unit of SingTel. Before joining SingTel, Mr. Yong spent more than seven
years in the ICT industry and held specialist and management positions in leading MNCs gaining
significant successes and experiences in the area of Telecom Network Management. Apart from
holding the current appointment with SingTel, Mr. Yong is also a board member of Asia Pacific
Satellite Communications Council starting January 2007.
Mr. TSENG Ta-mon
, aged 50, was appointed as an Alternate Director to Dr. Yin Yen-liang, the
Non-Executive Director of the Company, in September 2004. He had been the Non-Executive Director of
the Company from July 2003 to September 2004. Mr. Tseng is also the Alternate Director to Dr. Yin
Yen-liang, the director of APT Satellite Company Limited and APT Satellite Investment Company
Limited, subsidiaries of the Company. Mr. Tseng is also the Alternate Director to Dr. Yin
Yen-liang, the director of APT Satellite International Company Limited, a substantial shareholder
of the Company. Mr. Tseng graduated with an LL.B. Degree from National Chengchi University in 1980
and subsequently received the LL.M. Degree from University College London in 1982 and the LL.B.
Degree from B.A. at University of Cambridge in 1984 respectively. He also graduated from the Inns
of Court School of Law of Middle Temple in 1985 and became Barrister-at-Law in the same year. He
was the Specialist of the Board of International Trade from 1985 to 1987. He was also the Partner
of Dong & Lee from 1987 to 1992. He has been the Counsel of the Ruentex Group, the holding company
of one of the shareholders of APT Satellite International Company Limited, since 1992.
-51-
Independent Non-Executive Directors
Dr. HUAN Guocang
, aged 58, was appointed as an Independent Non-executive Director of the
Company in August 2002. Dr. Huan is the member of the Audit Committee and the Remuneration
Committee of the Company. Dr. Huan was also re-designated from acting as the member of the
Nomination Committee of the Company to act as the Chairman of it on 1 July 2007. He is the Managing
Partner of Primus Pacific Partners Limited (Primus). Before joining Primus, he was the Head of
Investment Banking, Asia Pacific of The Hongkong and Shanghai Banking Corporation Limited and was
the Managing Director and Co-Head of Investment Banking, Asia Pacific of Salomon Smith Barney. Dr.
Huan has been joining investment banking sector since 1987 and has held senior positions at the
Brookings Institution, the Atlantic Council of the U.S., J.P. Morgan & Co., BZW Asia Limited, and
Columbia University. Dr. Huan holds a Ph.D. degree from Princeton University, Master of Arts from
Columbia University and Master of Arts from the University of Denver.
Dr. LUI King Man
, aged 53, was appointed as an Independent Non-Executive Director of the
Company in August 2004. Dr. Lui is the Chairman of the Remuneration Committee of the Company and
also is the member of the Nomination Committee of the Company. Dr. Lui was also re-designated from
acting as the member of the Audit Committee of the Company to act as the Chairman of it on 1 July
2007. Dr. Lui has been a practising Certified Public Accountant in Hong Kong since 1989, and
established his accounting firm K.M. LUI & CO in the same year. Before commencing his own
practising, Dr. Lui had worked with an international accounting firm and a listed commercial bank.
Dr. Lui received the accountancy education in United Kingdom in 1980 and attained professional
accountant qualification in 1985. He is a Fellow of The Chartered Association Of Certified
Accountants and Associate member of The Hong Kong Institute Of Certified Public Accountants. Dr.
Lui obtained an MBA Degree from Heriot-Watt University in 1997 and received a Doctoral Degree in
Business Administration from The University of Hull in 2004. Dr. Lui has over 27 years experience
in accounting, finance, business acquisition and auditing fields. He has been a consultant of a
number of commercial and non-commercial organizations.
Dr. LAM Sek Kong
, aged 48, was appointed as the Independent Non-Executive Director of the
Company on 1 July 2007. Dr. Lam is also the Member of each of the Audit Committee, Nomination
Committee and Remuneration Committee of the Company. Dr. Lam graduated from the University of Hong
Kong in 1984. He is a partner of Messrs. S.K. Lam, Alfred Chan & Co. He has been practicing law in
Hong Kong since 1987. Dr. Lam is a member of the Hong Kong Society of Notary Public, a member of
the China Appointed Attesting Officers Association in Hong Kong and a member of the Chartered
Institute of Arbitrators (UK). Dr. Lam is also admitted
as advocate and solicitor of the High Court of Singapore, barrister and solicitor of the
Supreme Court of Australian Capital Territory, legal practitioner of the Supreme Court of New South
Wales and barrister in federal court of Australia. Dr. Lam holds a bachelor degree and a master
degree in laws from the University of Hong Kong, a master degree in laws from the University of
Peking and a Ph.D. degree in laws from the Tsinghua University.
Mr. CUI Liguo
, aged 38, was appointed as the Independent Non-Executive Director of the Company
on 1 July 2007. Mr. Cui is also the Member of each of the Audit Committee, Nomination Committee and
Remuneration Committee of the Company. Mr. Cui graduated from the faculty of economic law of the
China University of Political Science and Law in 1991, and commenced his legal practice in PRC in
1993. He founded the Guantao Law Firm in 1994, and is acting a Founding Partner and the officer of
its Management Committee. Mr. Cui has over 14 years of experience in legal sector, and holds
independent directorships in the board of directors of several companies, such as UBS SDIC Fund
Management Co., Ltd., China Spacesat Technology Co., Ltd and SDIC Xinji Energy Co., Ltd
(corporations listed on the Shanghai Securities Exchange in China), SUFA Technology Industry Co.
Ltd, CNNC (a corporation listed on the Shenzhen Securities Exchange in China). He is also a member
of the Finance & Securities Committee of All China Lawyers Association; a director of Capital
Market and the Securities Committee of Beijing Bar Association; an executive director and vice
general secretary of the Chamber of Financial Street; and the legal counselor in internal control
group of security issuing of Guodu Securities Limited and Bohai Securities Co., Ltd.
-52-
Senior Management
Mr. DONG Gang
, aged 54, has been the Vice President of the Company since July 2005. He is also
the Director of Acme Star Investment Limited, APT Satellite Telewell Limited, Skywork Corporation,
Haslett Investments Limited, APT Telecom Services Limited and APT Communication Technology
Development (Shenzhen) Company Limited (APT Shenzhen), subsidiaries of the Company. He is also
the chairman and the general manager of APT Shenzhen. He is also the Director of APT Satellite
Telecommunications Limited, a jointly controlled entity between a wholly-owned subsidiary of the
Company and one of the shareholders of APT Satellite International Company Limited, the substantial
shareholder of the Company. Mr. Dong graduated with a Bachelors degree in Beijing Post and
Telecommunications Institute (presently known as Beijing University of Post and
Telecommunications). He is accredited as Senior Engineer. He held the posts as Deputy Director of
Microwave Station, Deputy Director of Technical Department, Vice Chief Engineer, and Chief Engineer
of Beijing Wireless communication Bureau. He has been appointed as Vice President of China Space
Mobile Satellite Telecommunications Company Limited since May 1995. He has plentiful experience in
telecommunication operation and management.
Dr. LO Kin Hang, Brian
, aged 51, has been the Vice President of the APT Group since April 2002
and Company Secretary (since October 1996) of the Company. Dr. Lo joined the Company in September
1996 and had been the Assistant to the President from December 1997 to April 2002. Dr. Lo is also
the Director of Acme Star Investment Limited, APT Satellite Telewell Limited and Ying Fai Realty
(China) Limited, subsidiaries of the Company. He is also the Chief Executive Officer of APT
Satellite Telecommunications Limited, a jointly controlled entity between a wholly-owned subsidiary
of the Company and one of the shareholders of APT Satellite International Company Limited, the
substantial shareholder of the Company. He graduated with an Associateship in Production and
Industrial Engineering and an M.Sc. Degree in Information Technology from Hong Kong Polytechnic
University, and a MBA Degree from the University of Wales, UK and a Doctorate Degree in Business
Administration in University of Hull, UK. He has attained several professional qualifications
including Chartered Engineer, Member of the Institute of Electrical Engineers and is a Fellow of
the Institute of Chartered Secretaries and Administrators in the United Kingdom and a Fellow of the
Hong Kong Institute of Company Secretaries. Prior to joining the APT Group, he was a Director and
senior management executive responsible for financial and investment management and the company
secretary of a publicly listed company in Hong Kong. Dr. Lo has about 18 years of experience in
corporate and project management.
Mr. CHEN Xun
, aged 37, has been appointed as the Vice President since 1 June 2007 and had been
the Assistant President of the Company since July 2004. He joined the Company in 2000 and had
worked as the Director of Engineering and Technical Operations Department and the Deputy Chief
Engineer of the APT Group. Mr. Chen graduated from the Department of Computer and
Telecommunications of Chongqing Institute of Post & Telecommunications and holds a MBA degree from
the University of South Australia. He had been working for
China Telecommunications Broadcast Satellite Corporation, one of the shareholders of APT Satellite
International Company Limited, the substantial shareholder of the Company, from 1992 to 1999 before
joining the APT Group.
Mr. YANG Qing
, aged 44, has been appointed as the Vice President since 1 June 2007 and had
been the Assistant President of the Company since July 2004. He joined the Company in 2000. He had
worked as the Deputy Director of the Engineering and Technical Operations Department of the APT
Group. Mr. Yang graduated from the Department of Flight Vehicle Engineering of Beijing Institute of
Technology in June 1985. During the period from July 1985 to December 1999, he had been working for
CALT (China Academy of Launch Vehicle Technology) and was designated as Senior Engineer and the
Deputy Director of systems designer of LM-2C launch vehicle by CALT before joining the APT Group.
-53-
Compensation
None of the Companys directors and officers or affiliates of such persons is or has been
indebted to the Company or any of its subsidiaries at any time since the beginning of the last
completed fiscal year.
Directors remuneration is as follows (in HK$ thousand):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries,
|
|
|
Retirement
|
|
|
|
|
|
|
Directors
|
|
|
allowances and
|
|
|
scheme
|
|
|
2006
|
|
|
|
fees
|
|
|
benefits in kind
|
|
|
contributions
|
|
|
Total
|
|
|
|
HK$
|
|
|
HK$
|
|
|
HK$
|
|
|
HK$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ni Yifeng
|
|
|
50
|
|
|
|
2,800
|
|
|
|
165
|
|
|
|
3,015
|
|
Tong Xudong
|
|
|
50
|
|
|
|
2,263
|
|
|
|
142
|
|
|
|
2,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-executive directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rui Xiaowu (note a)
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
Liu Ji Yuan
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
47
|
|
Zhao Liqiang
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
Zhang Hainan
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
47
|
|
Lim Toon
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Ho Siaw Hong
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
38
|
|
Lan Kwai-chu
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
Yin Yen-liang
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Wu Zhen Mu
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Tseng Ta-mon (note b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent
non-executive
directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yuen Pak Yiu, Philip
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
Huan Guocang
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
Lui King Man
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700
|
|
|
|
5,063
|
|
|
|
307
|
|
|
|
6,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-54-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
Salaries,
|
|
|
Retirement
|
|
|
related
|
|
|
|
|
|
|
Directors
|
|
|
allowances and
|
|
|
scheme
|
|
|
incentive
|
|
|
2007
|
|
|
|
fees
|
|
|
benefits in kind
|
|
|
contributions
|
|
|
payment
|
|
|
Total
|
|
|
|
HK$
|
|
|
HK$
|
|
|
HK$
|
|
|
HK$
|
|
|
HK$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ni Yifeng
|
|
|
50
|
|
|
|
2,840
|
|
|
|
165
|
|
|
|
78
|
|
|
|
3,133
|
|
Tong Xudong
|
|
|
50
|
|
|
|
2,331
|
|
|
|
145
|
|
|
|
68
|
|
|
|
2,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-executive
directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rui Xiaowu (note a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhao Liqiang
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Lim Toon
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Yoo Foo Chong
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41
|
|
Ho Siaw Hong
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
Yin Yen-liang
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Wu Zhen Mu
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Tseng Ta-mon (note b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent
non-executive
directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huan Guocang
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200
|
|
Lui King Man
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200
|
|
Yuen Pak Yiu, Philip
|
|
|
99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99
|
|
Lam Sek Kong
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
Cui Liguo
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,051
|
|
|
|
5,171
|
|
|
|
310
|
|
|
|
146
|
|
|
|
6,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The details of these benefits in kind are disclosed under the paragraph Share option
schemes in Note 25 of Consolidated Financial Statements of the Company.
Notes:
Alternate directors are not entitled to receive any directors fees:
(a)
|
|
Mr. Rui Xiaowu, a non-executive director, has waived his directors fee
for 2007.
|
|
(b)
|
|
Mr. Tseng Ta-mon was re-designated from non-executive director to
alternate director on September 8, 2004.
|
-55-
Individuals with highest emoluments(in HK$ thousand)
Of the five highest paid individuals of the APT Group, two are directors (2006: two)
whose remuneration is disclosed in Note 7 of Consolidated Financial Statements of the
Company. The aggregate of emoluments in respect of the other three (2006: three)
individuals are as follows:
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Salaries and other emoluments
|
|
|
4,541
|
|
|
|
4,839
|
|
Performance related incentive payments
|
|
|
154
|
|
|
|
192
|
|
Retirement benefits contributions
|
|
|
303
|
|
|
|
330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,998
|
|
|
|
5,361
|
|
|
|
|
|
|
|
|
The emoluments of the three (2006: three) individuals with the highest emoluments are
within the following bands:
|
|
|
|
|
|
|
|
|
|
|
Number of individuals
|
|
|
|
2006
|
|
|
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)
Remuneration for key management personnel is as follows:.
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Short-term employee benefits
|
|
|
10,591
|
|
|
|
11,057
|
|
Other long-term benefits
|
|
|
687
|
|
|
|
367
|
|
Termination benefits
|
|
|
|
|
|
|
706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,278
|
|
|
|
12,130
|
|
|
|
|
|
|
|
|
At December 31, 2007, the total amount accrued by the Company or its subsidiaries in respect
of provision for employee pension, retirement or similar benefits was HK$13.2 million (US$1.7
million) (2006: HK$10.0 million).
Board Practices
Term of office
The term of office of all directors except the Chairman of the Board, Mr. Rui Xiaowu, and the
President, Mr. Cheng Guangren, is normally not fixed for a specific term but they shall retire from
office by rotation once every three years in accordance with Bye-law 87 of the Companys Bye-laws
and shall be eligible for re-election,
while the director to whom is appointed to fill a casual vacancy shall hold office until the
next following annual general meeting of the Company for re-election at such meeting.
-56-
As long as the Chairman of the Board and the President also holds such offices are not subject
to retirement by rotation in accordance with Bye-law 87.
Service Agreements
Mr. Tong Xudong, Executive Director & Vice President, have entered into service contracts with
the Company for an initial term of three years, commencing April 20, 2004 and continuing
thereafter until terminated by either party giving to the other not less than six months notice.
Except as disclosed above, as of June 24, 2008 no Director has a service contract with the
Company or its subsidiaries, which is not determinable by APT Group within one year without payment
of compensation (other than statutory compensation).
Under the service contracts, Mr. Tong (the Contracted Director) is entitled to a basic
salary payable monthly in arrears by the Company, with such basic salary subject to annual review
by the Companys board of directors having regard to the recommendation from the Companys
Remuneration Committee. The Contracted Director is provided with housing allowance subject to an
agreed maximum amount, which maximum amount may be reviewed by the Companys board of directors
having regard to the recommendation from the Companys Remuneration Committee. The Contracted
Directors is also entitled to receive certain other benefits such as the use of a motor car, the
provision of recreation club memberships and medical and personal accident insurance, and
participation in the Companys retirement scheme, incentive bonus scheme and eligible to receiving
share option under Scheme 2002.
Other than the directors of the Company, the service contracts of senior executives have no
definite terms of office, and may be terminated by either party giving not less than 4 months to 6
months notice or payment in lieu of notice. Under the service contracts, the executive is
entitled to a basic salary together with a housing allowance payable monthly in arrears by the
Company and one month double pay at the end of the calendar year, with such basic salary subject to
annual review by the Company. In addition, the executive is entitled to a discretionary annual
bonus based upon the Companys performance. The executive is also entitled to receive certain
other benefits such as the provision of medical and personal accident insurance and participation
in the Companys retirement scheme and eligible to receiving share option.
Audit Committee, Nomination Committee and Remuneration Committee
The Audit Committee was formed by the Company on July 31, 1999. The Audit Committee currently
consists of four independent non-executive directors, Dr. Lui King Man (the Chairman of the Audit
Committee), Mr. Huan Guocang, Dr. Lam Sek Kong and Mr. Cui Liguo. The Board of Directors has
determined that each of the members of the Audit Committee is currently independent under the rules
of the New York Stock Exchange.
Under its Charter (also known as terms of reference) as revised on April 11, 2005 and
incorporated by reference, the Audit Committee is required to be composed of directors who are
independent of the management of the Company and are free of any relationship that, in the opinion
of the Companys Board of Directors, would interfere with their exercise of independent judgment as
Committee members. The Audit Committee is authorized by the Board of Directors to investigate any
activity within its Charter and to seek any information it requires from any employee and all
employees are directed to co-operate with any request made by the Audit Committee. It can also
obtain support from outside legal or other independent professional advisors and experts. The
Audit Committee meets at least twice a year and its duties are summarized as below:
|
|
|
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;
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|
|
to monitor integrity of and review significant financial reporting judgments of
the half-year and annual financial statements;
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|
to discuss problems and reservations arising from the interim and final audits;
|
-57-
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to consider the major findings and internal investigations and managements
response;
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|
to review the Companys 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;
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|
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;
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to review APT Groups financial and accounting policies and practices;
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|
to review periodically Company policy statements to determine their adherence
to the Companys codes of conduct;
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|
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
|
|
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|
to consider other topics, as determined by the Board of Directors.
|
On April 11, 2005, Nomination Committee and Remuneration Committee were formed. Currently,
Messrs. Tong Xudong, Qi Liang, Huan Guocang, Lui King Man, Lam Sek Kong and Cui Liguo are the
members of these two committees. Dr. Huan Guocang and Dr. Lui King Man, the independent
non-executive directors of the Company, are the Chairman of the Nomination Committee and the
Remuneration Committee, respectively.
The Nomination Committee, under its Charter (also known as terms of reference) as incorporated
by reference and pursuant to the domestic corporate governance requirements, is required to be
composed of a majority of members who should be independent non-executive directors and are
independent of the management of the Company and are free of any relationship that, in the opinion
of the Companys Board of Directors, would interfere with their exercise of independent judgment as
Committee members. The Nomination Committee is authorized by the Board of Directors to provide
recommendations in respect of the composition of the Board of Directors, the appointments of
Directors and the independence of independent non-executive directors. It shall also be entitled
to access external professional advice whenever necessary. The Nomination Committee meets at least
once a year and its responsibilities are summarized as below:
|
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|
to review the structure, size and composition of the Board of Directors;
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to identify individuals suitably qualified to become directors;
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to assess the independence of Independent Non-executive directors;
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|
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;
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|
to establish the nomination procedures; and
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|
to submit a work report to the Board of Directors yearly.
|
The Remuneration Committee, under its Charter (also known as terms of reference) as
incorporated by reference and pursuant to the domestic corporate governance requirements, the
Remuneration Committee is required to be composed of a majority of members who should be
independent non-executive directors and are independent of the management of the Company and are
free of any relationship that, in the opinion of the Companys Board of Directors, would interfere
with their exercise of independent judgment as Committee members. The Remuneration Committee is
authorized by the Board of Directors for providing recommendations in respect of the remuneration
of directors and senior management staff and related policies. It shall also be entitled to access
external professional advice whenever necessary. The Remuneration Committee meets at least once a
year and its responsibilities are summarized as below:
|
|
|
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;
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|
|
to determine the specific remuneration packages of all directors and senior
management, including benefits in kind, pension rights and compensation payments;
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|
to review and approve the performance-based remuneration by reference to
corporate goals and objectives resolved by the Board of Directors;
|
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|
to review and approve the compensation payable to directors and senior management;
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|
to review and approve compensation arrangements relating to dismissal or removal of directors;
|
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|
to ensure that no director or any of his/her associates is involved in deciding his own remuneration;
|
-58-
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|
|
to formulate and review regularly the policy for the remuneration of directors,
assessing directors performance and approving the terms of directors service
contracts; and
|
|
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|
|
to submit a work report to the Board of Directors yearly.
|
Employees
Including the executive directors and senior management of the Company, as of December 31,
2007, the Company had 147 full-time employees, of which 24 employees were in management, 123 were
in engineering and operations, marketing, accounting and administration. The management of the
Company will continue to closely monitor the number of employees ensuring that it is compatible and
in line with the development and needs in the corporate strategies of the APT Group. The Company
believes that its relations with its employees are good. A portion of APTs technical and
engineering staff employed at the satellite control center in Tai Po were originally seconded from
affiliates of ChinaSat and China Aerospace.
In December 2000, the Company changed its retirement benefits scheme to a Mandatory Provident
Fund (MPF) pursuant to the MPF Legislation regulated by the Mandatory Provident Fund Schemes
Authority in Hong Kong, effective December 1, 2000. In compliance with the MPF Legislation, the
Company is required to participate in the MPF Scheme operated by approved trustees in Hong Kong and
to make contributions for its eligible employees.
Share Option Schemes
The Company currently has two share option schemes, namely Scheme 2001 and Scheme 2002. The
Company will only grant new options under Scheme 2002 to the eligible employees including Directors
and no further options can be granted under Scheme 2001 save for the first grant taken place on
June 19, 2001. However, all the options that have been granted during the first grant under Scheme
2001 shall remain valid until their expiry.
Under Scheme 2001, on June 19, 2001, the Company granted a total of 14,650,000 share options,
exercisable within the period from May 22, 2003 to May 21, 2011 and all at an exercise price of
HK$2.765. The grantees paid a nominal consideration of HK$1 each.
During 2007, no option was granted under Scheme 2002. The particulars of the outstanding share
options granted under Scheme 2001 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options granted
|
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|
|
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|
|
|
|
|
|
|
|
Employees in
|
|
on June 19, 2001
|
|
|
|
|
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|
Options remain
|
|
aggregate
|
|
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
|
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|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees under
employment
contracts
|
|
|
3,390,000
|
|
|
|
(20,000
|
)
|
|
|
|
|
|
|
3,370,000
|
|
Share Ownership
As at December 31, 2007, the interests in the shares of the Company of directors and
management were as follows:
|
|
|
|
|
|
|
Lo Kin Hang, Brian
|
|
(Vice President & Company Secretary)
|
|
|
5,000
|
|
Chen Xun
|
|
(Vice President)
|
|
|
6,000
|
*
|
|
|
|
*
|
|
The capacity in which Chen Xun held 6,000 shares of the Company was as a trustee.
|
-59-
As at December 31, 2007, the options granted under Scheme 2001 to directors and management
were as follows:
|
|
|
|
|
|
|
Lo Kin Hang, Brian
|
|
(Vice President & Company Secretary)
|
|
|
800,000
|
|
Chen Xun
|
|
(Vice President)
|
|
|
260,000
|
|
Yang Qing
|
|
(Vice President)
|
|
|
130,000
|
|
All of the options indicated above, exercisable within the period from May 22, 2003 to May 21,
2011, were granted for a nominal consideration of HK$1 per grantee with an exercise price of
HK$2.765 per share for the ordinary shares of the Company. Please refer to Note 25 of the
consolidated financial statements.
Item 7. Major Shareholders and Related Party Transactions
Major Shareholders
Certain principal shareholders of the Company (Principal Shareholders) have provided
substantial financial support since APT was founded, funding the design, construction and launch of
APSTAR I, APSTAR IA, APSTAR IIR, APSTAR V and APSTAR VI through equity contributions,
shareholders loans and shareholder guarantees of the Bank loan used to finance or refinance the
costs of satellite design, construction and launch. The Principal Shareholders have also provided
significant human resources, technical and marketing support. When the Company was listed in
December 1996, the Principal Shareholders of the Company were: CLTC, ChinaSat, China Aerospace,
CASIL Satellite (formerly known as Chia Tai International Company Limited), China Travel (Macau),
SingaSat, and Kwang Hua. Each Principal Shareholder held one-seventh of the total issued shares of
APT International pursuant to the corporate restructuring undertaken in connection with the
Companys initial public offering in December 1996. The entire issued share capital of APT
International comprises 700 shares at US$1.00 each. China Travel (Macau) and CLTC disposed of
their entire interest in APT International to ChinaSat on November 30, 1999, and SingaSat on
May 30, 2000. The remaining Principal Shareholders that continue to hold Ordinary Shares are
tabulated in footnote 2 to the following table.
The following table describes the ownership of our Ordinary Shares as of March 31, 2008 by
(i) each person or company known by us to own more than 5% of our Ordinary Shares, and (ii) all of
our directors and officers as a group.
|
|
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|
|
|
|
|
|
Identity of Person
|
|
Number of
|
|
|
Percent of
|
|
or 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-
|
|
|
(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.
|
The Principal Shareholders have entered into an agreement (the Shareholders Agreement),
which governs their respective rights and obligations with respect to, among other things, their
shareholdings in APT International. The Shareholders Agreement contains (among other things)
provisions restricting the transfer or other disposal or encumbrance by any Principal Shareholder
of the Shares in APT International, and granting mutual rights of pre-emption among the Principal
Shareholders in the event of any proposed transfer by a Principal Shareholder of any share(s) in
APT International.
Except as disclosed above and to the knowledge of the Company, there are no persons or
entities that beneficially own, directly or indirectly, more than 5% of the Companys outstanding
Ordinary Shares or American Depositary Receipts.
-61-
Related Party Transactions
ChinaSat and SingTel
Two of the Principal Shareholders or their affiliates are currently customers of APT.
ChinaSat and SingTel have utilized several transponders for the transmission of television
programming, private networks and PSTN services on APSTAR I whereas SingTel entered into a new
utilization agreement with APT on April 11, 2003 for the utilization of six transponders of APSTAR
V through its useful life which superseded the original agreement dated January 8, 2001 for the
utilization of fifteen transponders for the remaining life of APSTAR V. Negotiations for
transponder utilization with these Principal Shareholders and their affiliates have been conducted
on an arms length basis and any future negotiations would be similarly conducted. The value
attributed to the transponder for the purposes of determining the portion of the aggregate contract
price to be satisfied by the provision of such transponder is within the range representative of
the Companys pricing for its other customers. For details, please refer to Other service
customers under Item 4-Information on the Company.
In relation to certain transactions conducted between APT Group and SingTel Group as announced
on December 28, 2006, for the purposes of governing the continuing connected transactions (the
Continuing Connected Transactions) and ensuring the compliance with the listing rules in Hong
Kong, the Company entered into the supplemental agreement (Supplemental Agreement) with SingTel
thereby extending the term of the master agreement (Master Agreement) to December 31, 2009. The
Master Agreement was first entered into on December 1, 2004, between the Company and SingTel in
relation to the provision of satellite transponder (Transponder Transactions) and any other
satellite related services (Telecom Transactions) by APT Group to SingTel Group, or vice versa.
As recommended by an independent board committee comprising four independent non-executive
directors of the Company that the terms of the Master Agreement and the annual caps as indicated
below were fair and reasonable, the independent shareholders of the Company approved the Master
Agreement on February 13, 2007 and the annual caps for the three years ending December 31, 2007,
December 31, 2008 and December 31, 2009 of the Transponder Transactions will not exceed HK$9.5
million, HK$11.5 million and HK$13.2 million, respectively, and in the case of Telecom
Transactions, their annual caps will not exceed HK$1.2 million, HK$1.3 million and HK$1.3 million,
respectively.
The Company is aware that ChinaSat intends to operate a PRC domestic satellite network.
ChinaSat merged with OrientSat to form ChinaSat Group, which owns ChinaStar 1 and ChinaSat 6B. In
addition, China Aerospace holds a substantial interest in SinoSat, which owns satellites, SinoSat-1
and SinoSat-3, that is devoted largely to providing telecommunications services, data transmission
and TV broadcasting. In 2007, a new company named China DBSAT is formed by ChinaSat and SinoSat on
50-50 joint venture, China DBSAT will operate all existing ChinaSat and SinoSat satellites
including the new satellite ChinaSat-9 launched on 9 June 2008. Singapore Telecom, the parent
company of SingaSat, has holdings in a number of other satellite companies. As a result of supply
over demand of transponder capacities in the Asia Pacific region, the Company believes such
satellite companies compete with the Company. The ST-1 satellite system only has the ability to
compete with the Company in C-band segments of the Asia Pacific market. Through the
Telecommunications Authority of Singapore, a signatory to the Intelsat treaty, Singapore Telecom
also has an interest in Intelsat.
As announced on October 2, 2007, an option agreement (Option Agreement) was entered into
among APT Satellite Telecommunications Limited (the Licensor), a jointly controlled company
indirectly owned as to 55% by the Company; NTT Com Asia Limited (the Licensee), an independent
third party; and shareholders of the Licensor including SingaSat thereby giving the Licensee a call
option to purchase all equity interests in the Licensor at an agreed exercise price of HK$161
million on or before December 31, 2008 and a first right of refusal beginning January 1, 2009 until
December 31, 2010 in respect of offers made by other parties.
Other than as described above, none of the directors, their associates (as defined in the
Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (the Listing Rules)) or
any shareholder of the Company which to the knowledge of the Directors owns more than 5% of the
issued share capital of the Company has any interest in any of the Companys five largest suppliers
or five largest customers.
-62-
Related party transactions carried out during the years ended December 31, 2006 and 2007 with
shareholders and affiliates (HK$ in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
|
|
Note
|
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
HK$
|
|
|
HK$
|
|
Income from provision of satellite
transponder capacity to certain
shareholders and its subsidiary of the
Company
|
|
|
(i
|
)
|
|
|
16,309
|
|
|
|
11,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income 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
|
|
|
|
32,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fee income from a jointly
controlled entity
|
|
(ii)
|
|
|
480
|
|
|
|
580
|
|
Notes :
|
|
|
(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.
|
At December 31, 2006 and 2007, the APT Group had the following amounts included in the
consolidated balance sheet in respect of amounts owing by and to related parties (HK$ in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts due from
|
|
|
Amounts due from
|
|
|
|
|
|
|
|
|
|
|
Deposits,
|
|
|
|
|
|
|
|
|
|
|
Rentals received in
|
|
|
|
immediate holding
|
|
|
a jointly controlled
|
|
|
|
|
|
|
|
|
|
|
prepayments and
|
|
|
Payables and
|
|
|
advance and
|
|
|
|
company
|
|
|
entity
|
|
|
Trade receivables
|
|
|
other receivables
|
|
|
accrued charges
|
|
|
deferred income
|
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
|
HK$
|
|
|
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
|
|
|
|
|
|
|
|
2,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holding 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
Our audited consolidated financial statements are set forth beginning on page F-1. Other than
as disclosed elsewhere in this annual report on Form 20-F, no significant change has occurred since
the date of the annual financial statements.
-63-
Legal Proceedings
We are not involved in any material litigation, arbitration or administrative proceedings,
and, so far as we are aware, we do not have any pending or threatened litigation, arbitration or
administrative proceeding that is expected to have a material effect on our financial condition and
results of operations.
Policy on Dividend Distributions
We hold in the highest regard the interests of our shareholders and the returns achieved for
them, especially our minority shareholders. In consideration of our operating results in 2007 and
having taken into account our long-term development, our board of directors has resolved not to
declare any payment of final dividend for the financial year ended December 31, 2007.
Significant Changes.
None.
Item 9. The Offer and Listing
The Companys Ordinary Shares are listed on The Stock Exchange of Hong Kong Limited (the Hong
Kong Stock Exchange). The Hong Kong Stock Exchange is the principal non-United States trading
market for the Companys Ordinary Shares. The table below details, for the indicated periods, the
high and low market prices of the Ordinary Shares on the Stock Exchange of Hong Kong Limited.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High (HK$)
|
|
|
Low (HK$)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
|
|
|
|
|
3.93
|
|
|
|
1.02
|
|
|
2004
|
|
|
|
|
|
2.83
|
|
|
|
1.30
|
|
|
2005
|
|
|
|
|
|
1.60
|
|
|
|
1.10
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
1.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
1.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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-
In addition, the Companys ADSs are listed on the New York Stock Exchange (NYSE) under the
symbol ATS. Each ADS represents eight Ordinary Shares. The Bank of New York Mellon serves as
depositary (the Depositary) with respect to the ADSs trading on the NYSE. According to
information furnished to the Company by the Depositary, as of March 31, 2008, there were 45
registered holders of records of ADSs and such holders owned an aggregate of 7,297,086 ADSs. The
table below details, for the periods indicated, the high and low market prices of the ADSs on the
NYSE.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High (US$)
|
|
|
Low (US$)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
|
|
|
|
|
4.60
|
|
|
|
1.10
|
|
|
2004
|
|
|
|
|
|
3.50
|
|
|
|
1.32
|
|
|
2005
|
|
|
|
|
|
1.61
|
|
|
|
1.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
1.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
1.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
In compliance with the amended listing rules of the Stock Exchange which came into force on
March 30, 2004, certain provisions of the Bye-laws of the Company were amended at the annual
general meeting of the Company held on May 20, 2004.
Incorporation and Registration Number
The Company was incorporated in Bermuda on October 17, 1996 in accordance with the Companies
Act 1981 of Bermuda (the Companies Act). The Company is registered with the Bermuda Registrar of
Companies with registration number EC 22483.
-65-
Objects and Purposes
The objects for which the Company is formed and incorporated as provided for in Clause 6 of
the Memorandum of Association are to:
|
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
A Director who to his knowledge is in any way, whether directly or indirectly, interested in a
contract or arrangement or proposed contract or arrangement with the Company shall declare the
nature of his interest at the meeting of the Board of the Company (the Board) at which the
question of entering into the contract or arrangement is first considered, if he knows his interest
then exists, or in any case at the first meeting of the Board after he knows that he is or has
become so interested. A Director shall not vote nor be counted in the quorum on any resolution of
the Board in respect of any contract or arrangement or any other proposal in which he or any of his
associate(s) is materially interested, and if he shall do so his vote shall not be counted nor is
he to be counted in the quorum for the resolution. But this prohibition shall not apply to any of
the following matters namely:
|
(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-
|
(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.
|
A company shall be deemed to be a company in which a Director and/or his associate(s) has/have
an interest of five (5) per cent or more if and so long as (but only if and so long as) he and/or
his associate(s) (either directly or indirectly) is/are the holders of or beneficially interested
in five (5) per cent or more of any class of the equity share capital of such company or of the
voting rights available to members of such company (or of any third company through which his
interest or that of any of his associate(s) is derived). For the purpose of this paragraph there
shall be disregarded any shares held by a Director or his
associate(s)
as bare or custodian trustee
and in which he or any of them has no beneficial interest, any shares comprised in a trust in which
the interest of the Director and/or his associate(s) is/are in reversion or remainder if and so
long as some other person is entitled to receive the income thereof and any shares comprised in an
authorized unit trust scheme in which the Director and/or his associate(s) is/are interested only
as a unit holder.
Where a company in which a Director and/or his associate(s) has/have an interest of five (5)
per cent or more is materially interested in a transaction, then that Director and/or his
associate(s) shall also be deemed materially interested in such transaction.
If any question shall arise at any meeting of the Board as to the question of the materiality
of the interest of a Director (other than the chairman of the meeting) or as to the entitlement of
any Director (other than such chairman) to vote or be counted in the quorum and such question is
not resolved by his voluntarily agreeing to abstain from voting or not to be counted in the quorum,
such question shall be referred to the chairman of the meeting and his ruling in relation to such
other Director shall be final and conclusive except in a case where the nature or extent of the
interest of the Director concerned as known to such Director has not been fairly disclosed to the
Board. If any question as aforesaid shall arise in respect of the chairman of the meeting such
question shall be decided by a resolution of the Board (for which purpose such chairman shall not
vote thereon) and such resolution shall be final and conclusive except in a case where the nature
or extent of the interest of such chairman as known to such chairman has not been fairly disclosed
to the Board.
The Company may by ordinary resolution ratify any transaction not duly authorized by reason of
a contravention of Bye-Law 103 provided that no Director and/or his associate(s) who is/are
materially interested in such transaction shall vote upon such ordinary resolution in respect of
any shares in the Company in which they are interested.
The ordinary remuneration of the Directors shall from time to time be determined by the
Company in general meeting. Each Director shall be entitled to be prepaid or repaid all traveling,
hotel and incidental expenses reasonably expected to be incurred or reasonably incurred by him in
attending meetings of the Board or committees of the Board or general meeting or separate meetings
of any class of shares of the Company or otherwise in connection with the discharge of his duties
as a Director. The Board shall obtain the approval of the Company in general meeting before making
any payment to any Director or past Director of the Company by way of compensation for loss of
office, or as consideration for or in connection with his retirement from office (not being payment
to which the Director is contractually entitled).
-67-
The Board may exercise all the powers of the Company to raise or borrow money or to secure the
payment or repayment of any sum or sums of money and to mortgage or charge all or any part of the
undertaking, property and assets and uncalled capital of the Company subject to the Companies Act,
in such manner and upon such terms and conditions in all respects as it thinks fit and in
particular by the issue of debentures, bonds and other securities, whether outright or as
collateral security for any debt, liability or obligation of the Company or of any third party.
Neither a Director nor an alternate Director shall be required to vacate office or become
ineligible for re-election as Director of being beyond any age limitation.
Neither a Director nor an alternate Director shall be required to hold any shares of the
Company by way of qualification.
Shareholders Rights
Currently, the Companys authorized share capital consists of one class of ordinary shares
only. Subject to any special rights conferred on the holders of any shares or class of shares, any
share in the Company may be issued with or have attached thereto such rights or restrictions
whether in regard to dividend, voting, return of capital, distribution of assets or otherwise as
the Company may by ordinary resolution determine or, if there has not been any such determination
or so far as the same shall not make specific provision, as the Board may determine.
The Board may from time to time pay to the shareholders such interim dividends as appear to
the Board to be justified by the profits of the Company. Subject to the Companies Act, the Company
in general meeting may from time to time declare dividends in any currency to be paid to the
shareholders, but no dividend shall be declared in excess of the amount recommended by the Board.
The Company in general meeting may also make a distribution to the shareholders out of any
contributed surplus in accordance with the Companies Act. No dividend shall be paid or
distribution made out of contributed surplus if to do so would render the Company unable to pay its
liabilities as they become due or the realizable value of its assets would thereby become less than
the aggregate of its liabilities and its issued share capital and share premium accounts. All
dividends or bonuses unclaimed for one year after having been declared may be invested or otherwise
made use of by the Board for the benefit of the Company until claimed. Any dividend or bonuses
unclaimed after a period of six years from the date of declaration shall be forfeited and shall
revert to the Company.
At any general meeting, subject to any special rights or restrictions attached to any shares
by or in accordance with the Bye-laws of the Company, every shareholder of the Company present in
person or by proxy, on a show of hands shall have one vote and on a poll shall have one vote for
every share which is fully paid or credited as fully paid of which he is the holder. A shareholder
entitled to attend and vote at the general meeting of the Company is entitled to appoint another
person as his proxy to attend and vote instead of him. A proxy need not be a member of the
Company. A resolution put to the vote of a general meeting shall be decided on a show of hands
unless a poll is demanded in accordance with the Bye-laws.
No business shall be transacted at any general meeting unless a required quorum is present.
All business shall be deemed special that is transacted at a special general meeting, and also all
business that is transacted at an annual general meeting, with the exception of sanctioning
dividends, the reading, considering and adopting of the accounts and balance sheet and the reports
of the Directors and Auditors and other documents required to be annexed to the balance sheet, the
election of Directors and appointment of Auditors and other officers in the place of those
retiring, the determination of the remuneration of the Auditors and of the Directors of the
Company.
In the event of the Company being wound up, the surplus assets remaining after payment to all
creditors shall be divided among the Shareholders of the Company in proportion to the capital paid
up on the shares held by them respectively. But, if such surplus assets shall be insufficient to
repay the whole of the paid up capital, they shall be distributed subject to the rights of any
shares which may be issued on special terms and conditions, so that, as nearly as may be, the
losses shall be borne by the Shareholders of the Company in proportion to the capital paid up on
the shares held by them respectively.
The Bye-laws of the Company do not include any provisions in relation to redemption, sinking
fund, liability to further capital calls by the Company nor any provisions discriminating against
any existing or prospective holder of such securities as a result of such shareholder owning a
substantial number of shares.
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Actions Necessary to Change Shareholders Rights
Subject to the Companies Act and without prejudice to other provisions of the Bye-laws, all or
any of the special rights for the time being attached to the shares or any class of shares may,
unless otherwise provided by the terms of issue of the shares of that class, from time to time
(whether or not the Company is being would up) be varied, modified or abrogated either with the
consent in writing of the holders of not less than three-fourths of the issued shares of that class
or with the sanction of a special resolution passed at a separate general meeting of the holders of
the shares of that class. To every such separate general meeting all the provisions of the Bye-laws
relating to general meetings of the Company shall, mutatis mutandis, apply, but so that:
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(a)
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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;
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(b)
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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
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(c)
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any holder of shares of the class present in person or by proxy or authorized
representative may demand a poll.
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The special rights conferred upon the holders of any shares or class of shares shall not,
unless otherwise expressly provided in the rights attaching to or the terms of issue of such
shares, be deemed to be varied, modified or abrogated by the creation or issue of further shares
ranking pari passu therewith.
General Meetings of Shareholders
An annual general meeting of the Company shall be held in each year other than the year in
which its statutory meeting is convened at such time and place as may be determined by the Board.
Each general meeting, other than an annual general meeting, shall be called a special general
meeting. General meetings may be held in any part of the world as may be determined by the Board.
The Board may, in its discretion, call special general meetings, and shareholders holding at the
date of deposit of the requisition not less than one-tenth of the paid up capital of the Company
carrying the right of voting at general meetings of the Company shall at all times have the right,
by written requisition to the Board or the Secretary of the Company, to require a special general
meeting to be called by the Board for the transaction of any business specified in such
requisition; and such meeting shall be held within two (2) months after the deposit of such
requisition. An annual general meeting and any special general meeting at which the passing of a
special resolution is to be considered shall be called by not less than twenty-one (21) clear days
notice.
All other special general meetings may be called by not less than fourteen (14) clear days
notice but a general meeting may be called by shorter notice if it is so agreed by the shareholders
in the manner provided in the Bye-laws. Notice of every general meeting shall be given to all
shareholders of the Company other than to such shareholders as, under the provisions of the
Bye-laws or the terms of issue of the shares they hold, are not entitled to receive such notices
from the Company, to all persons entitled to a share in consequence of the death or bankruptcy or
winding-up of a shareholder and to each of the Directors and the Auditor.
Limitation on Foreign Ownership
There is no limitation on the rights of non-resident or foreign shareholders to hold or
exercise voting rights on the securities of the Company imposed by foreign law or by the Bye-laws
of the Company.
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Change in Control
The Bye-laws of the Company do not contain any specific provision that may have an effect of
delaying, deferring or preventing a change in control of the company in the event of merger,
acquisition or corporate restructuring of the Company. However, the shareholders agreement of APT
Telecom (which is a joint-venture company formed by a wholly-owned subsidiary of the Company and
SingaSat Private Limited) requires that any merger, consolidation or amalgamation of the Company
must be approved by all the shareholders of APT Telecom. Subject to the Bye-laws of the Company,
any shareholder may transfer all or any of his/her shares by an instrument
of transfer in the usual or common form or in any other form approved by the Board. The Board
may, in its absolute discretion, and without giving any reason therefor, refuse to register a
transfer of any share under certain conditions such as, among the others, not being a fully paid up
share. The Board may also decline to recognize any instrument of transfer unless, among the
others, the following conditions have been satisfied:-
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(a)
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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
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(b)
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if applicable, the instrument of transfer is duly and properly stamped.
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Ownership Threshold Disclosure
The Bye-laws of the Company do not provide any ownership threshold above which a shareholder
has to disclose such ownership.
Significant Differences in Applicable Law
With respect to items 2 through 8 of the Exchange Act Forms, the law applicable to the Company
in these areas is not significantly different from that in Hong Kong.
Changes in Capital
The Bye-laws of the Company governing changes in the capital does not contain any condition,
which are more stringent than is required by law.
Material Contracts
On October 2, 2007, an option agreement (Option Agreement) was entered into among APT
Satellite Telecommunications Limited (the Licensor), a jointly controlled company indirectly
owned as to 55% by the Company, NTT Com Asia Limited (the Licensee), an independent third party,
and shareholders of the Licensor including SingaSat thereby giving the Licensee a call option to
purchase all equity interests in the Licensor at an agreed exercise price of HK$161 million on or
before December 31, 2008 and a first right of refusal beginning January 1, 2009 until December 31,
2010 in respect of offers made by other parties.
Other than the above contract, no material contract has been entered into where the Company or
any member of the APT Group is a contracting party for the two years immediately preceding the
publication of this report.
Exchange Controls and Other Limitations Affecting Security Holders
The Company has been designated as a non-resident for exchange control purposes by the Bermuda
Monetary Authority.
Permission has been obtained from the Bermuda Monetary Authority for the transfer of Shares of
the Company between persons regarded as non-resident of Bermuda for exchange control purposes and
the issue of Shares by the Company to such persons, subject to such Shares being listed on the Hong
Kong Stock Exchange or the New York Stock Exchange. Issues and transfers of Shares involving any
person regarded as resident in Bermuda for exchange control purposes require specific prior
approval under the Exchange Control Act 1972.
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There are no limitations on the rights of holders of the Shares who are non-residents of
Bermuda for exchange control purposes to hold or vote their shares. Because the Company has been
designated as a non-resident for Bermuda exchange control purposes, there are no restrictions on
its ability to transfer funds, including remittance of interest or payment to non-resident holders
of Shares, if any, in and out of Bermuda or to pay dividends to United States residents who are
holders of the Shares, other than in respect of local Bermuda currency.
In accordance with Bermuda law, share certificates are only issued in the names of
corporations, partnerships, or individuals. In the case of an applicant acting in a special
capacity (for example, as trustee), certificates may, at the request of the applicant, record the
capacity in which the applicant is acting. Notwithstanding the recording of any such special
capacity, the Company is not bound to investigate or incur any responsibility in respect of the
proper administration of any such trust.
The Company will take no notice of any trust applicable to any of its Shares whether or not it
has notice of such trust.
As an exempted company, the Company is exempt from Bermuda laws which restrict the percentage
of share capital that may be held by non-Bermudians, but as an exempted company, the Company may
not participate in certain business transactions including: (1) the acquisition or holding of land
in Bermuda (except that required for its business and held by way of lease or tenancy for terms of
not more than 50 years or, with the consent of the Minister of Finance, land by way of lease or
tenancy agreement for a term not exceeding 21 years in order to provide accommodation or
recreational facilities for its officers and employees), (2) except as specifically authorized, the
taking of mortgages of land in Bermuda, (3) the acquisition of any bonds or debentures secured on
any land in Bermuda except bonds or debentures issued by the Bermuda government or a public
authority or (4) the carrying on of business of any kind in Bermuda save for certain exceptions
which include (aa) carrying on business with persons outside Bermuda, (bb) carrying on business in
Bermuda with another exempted company in furtherance only of the business of the company outside
Bermuda, (cc) carrying on business in Bermuda as manager or agent for, or consultant or adviser to
any exempted company or permit company which is affiliated, whether or not incorporated in Bermuda,
with the exempted company, and (dd) carrying on such business in relation to an exempted
partnership or an overseas partnership in which the exempted company is a partner.
Taxation
The following discussion is a summary of the material Bermuda, Hong Kong, and United States
federal income tax considerations relevant to an investment decision with respect to the Companys
American Depositary Shares (ADSs) and Shares. This discussion does not purport to deal with the
tax consequences of owning ADSs and Shares to all categories of investors, some of which (such as,
dealers in securities, banks, tax-exempt organizations, certain insurance companies, investors
liable for alternative minimum tax, investors that actually or constructively own 10% or more of
the voting stock of the Company, investors who do not hold the Shares or ADSs as capital assets,
investors who hold ADSs or Shares that are part of a hedging, straddle, or conversion transaction
or US Holders whose functional currency is not the US Dollar) may be subject to special rules.
This discussion is not exhaustive of all possible tax considerations, including, specifically, the
consequences under United States federal, state, local, and other laws, of the acquisition,
ownership, and disposition of ADSs and the disposition of Shares
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Bermuda Taxation
The Company is incorporated in Bermuda. Under current Bermuda law, the Company is not subject
to tax on income or capital gains, and no Bermuda withholding tax will be imposed upon payments of
dividends by the Company to its shareholders. Furthermore, the Company has received from the
Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act of 1966 an
assurance that, in the event that Bermuda enacts any legislation imposing any tax computed on
profits or income or on any capital asset, gain or appreciation, or any tax in the nature of an
estate duty or inheritance tax, the imposition of such tax shall not be applicable to the Company
or any of its operations, nor to the shares, debentures, or other obligations of the Company, until
March 28, 2016. This assurance does not, however, prevent the imposition of any Bermuda tax
payable in relation to any land in Bermuda leased to the Company or to persons ordinarily resident
in Bermuda.
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Hong Kong Taxation
Tax on Dividends
Under the current law and practice of Hong Kong, no tax is payable in Hong Kong in respect of
dividends paid by the Company.
Profits Tax
No tax is imposed in Hong Kong in respect of capital gains from the sale of property (such as
the ADSs or Shares). Trading gains from the sale of property by persons carrying on a trade,
profession, or business in Hong Kong where such gains are derived from or arise in Hong Kong from
such trade, profession, or business will be chargeable to Hong Kong profits tax which is currently
imposed at the rate of 17.5% and 17.5% for 2006 and 2007, respectively on corporations and at a
maximum rate of 16% and 16% for 2006 and 2007, respectively, on individuals. Gains from sales of
the Shares effected on the Stock Exchange of Hong Kong Limited will be considered to be derived
from or arise in Hong Kong. Liability for Hong Kong profits tax would thus arise in respect of
trading gains from sales of Shares realized by persons carrying on a business in Hong Kong of
trading or dealing in securities. Gains from sales of the ADSs effected on the New York Stock
Exchange will usually be considered to be derived from or arise outside Hong Kong, and therefore,
liability for Hong Kong profits tax would not ordinarily arise in respect of trading gains from
sales of ADSs.
United States Federal Income Taxation
The following summary describes certain United States federal income tax consequences of the
purchase, ownership, and disposition of Shares and ADSs (evidenced by American Depositary Receipts
(ADRs)) by a US Holder, but it does not purport to be a comprehensive description of all of the
tax considerations that may be relevant to a decision to purchase, own, or dispose of Shares or
ADSs. In particular, this summary of United States federal income tax matters deals only with
holders that will hold Shares or ADSs as capital assets and does not address special tax
situations, such as the United States tax treatment of holders who are financial institutions, tax
exempt organizations, pension funds, insurance companies or securities dealers, who are holding
Shares or ADSs as part of a hedging or larger integrated financial or conversion transaction, who
are citizens or residents of a possession or territory of the United States, who are United States
holders (as defined below) with a currency other than the US Dollar as their functional currency or
who own, directly or indirectly, 10% or more of the voting stock of the Company. For this purpose,
the Shares and ADSs will constitute voting stock of the Company.
This summary is based upon (i) the income tax laws of the United States as currently in
effect, which are subject to change, possibly with retroactive effect, and (ii) in part, on
representations of The Bank of New York, as the Companys depositary (the Depositary) and on the
assumption that each obligation in the Deposit Agreement and any related agreement will be
performed in accordance with its terms. The Company has not sought any ruling from the United
States Internal Revenue Service (the IRS) with respect to the statements made and the conclusions
reached in the following summary, and there can be no assurance that the IRS will agree with such
statements and conclusions.
This discussion is not exhaustive of the consequences of the purchase, ownership, and
disposition of Shares or ADSs, including the effect of any state or local tax laws or the laws of
any jurisdiction other than the United States, nor does it address the United States federal
estate, gift or alternative minimum tax consequences, if any, to an investor.
The Company
The Shares and Shares represented by ADSs are characterized as equity interests in the
Company, and the Company will so characterize all such Shares for all United States federal income
tax purposes.
The Company will be subject to United States federal income tax only to the extent that it
derives certain United States source income or income effectively connected with the conduct of a
trade or business within the United States. Currently, the Company does not have, intends and
anticipates that it will not have, and will conduct its affairs in a manner so that it will not
have, any United States source income subject to United States federal income or withholding tax or
income effectively connected with the conduct of a trade or business within the United States.
Thus, the Company intends and anticipates that it will not be subject to any United States federal
tax.
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Taxation of Investor-United States Holders
As used herein, a United States holder means a beneficial owner of Shares or ADSs that is an
individual who is a citizen or resident of the United States; a corporation, partnership or other
entity created or organized in or
under the laws of the United States or any State thereof; an estate the income of which is subject
to United States federal income tax regardless of its source, or a trust subject to control of a
United States person and the primary supervision of a United States court, or a trust in existence
on August 20, 1996 that has elected to continue to be treated as a United States trust. A
resident of the United States includes an individual that (i) is lawfully admitted for permanent
residence in the United States, or (ii) (a) is present in the United States for 31 days or more
during the calendar year, (b) is present in the United States for an aggregate of 183 days or more,
on a weighted basis, over a 3-year period ending in such calendar year, and (c) is present in the
United States for less than 183 days during the calendar year and does not have a closer connection
to a tax home that is located outside the United States.
A non-United States holder means a beneficial owner of Shares or ADSs that is not a United
States holder. It should be noted that certain single member entities are disregarded for United
States federal income tax purposes. Thus, the income, gain, loss and deductions of such entity are
attributed to the owner of such single member entity for United States federal income tax purposes.
The discussion below for United States holders may not apply to certain single member noncorporate
entities that are treated as owned by a non-United States holder. Investors which are single
member noncorporate entities should consult with their own tax advisors to determine the United
States federal, state, local and other tax consequences that may be relevant to them.
Ownership of ADSs and Shares
For United States federal income tax purposes, a United States holder of ADRs is generally
treated as the owner of the ADSs evidenced thereby and of the Shares represented by such ADSs.
Accordingly, no gain or loss will be recognized by a United States holder upon the exchange of ADRs
or the ADSs evidenced thereby for the Shares represented by such ADSs. A United States holders
tax basis in the Shares received will be the same as its tax basis in the surrendered ADSs and the
holding period for Shares received will include the period during which the holder held such ADSs.
Taxation of Dividends
Subject to the passive foreign investment company rules discussed below and to the extent
provided below, a United States holder will be required to include in gross income when paid,
actually or constructively, to the holder or, in the case of ADSs, to the Depositary, as a dividend
any cash or the fair market value of any property distributed by the Company out of its current or
accumulated earnings and profits (as determined for United States federal income tax purposes).
Distributions paid in any currency other than the US Dollar will be translated into US Dollars at
the spot rate on the date the dividends are paid, regardless of whether the dividends are in fact
converted on that date. Distributions in excess of the Companys current or accumulated earnings
and profits (as determined for United States federal income tax purposes) will be treated as a
non-taxable return of capital to the extent of the holders basis in the Shares or ADSs, and
thereafter, as a taxable capital gain.
Dividends paid by the Company will not be eligible for the dividends received deduction
generally allowed to United States corporations in respect of dividends received from other United
States corporations under the United States Internal Revenue Code of 1986, as amended (the Code).
For purposes of the United States foreign tax credit limitation, dividends paid by the Company
generally will constitute foreign source passive income (or, in the case of a holder who is a
financial services entity as defined in regulations under the Code, financial services income).
The rules relating to foreign tax credits are extremely complex and the availability of a foreign
tax credit depends on numerous factors. All investors that are United States holders should
consult with their own tax advisors concerning the application of the United States foreign tax
credit rules to their particular circumstances.
With respect to non-corporate U.S. holders, certain dividends received before January 1, 2011
from a qualified foreign corporation may be subject to reduced rates of taxation. A foreign
corporation is treated as a qualified foreign corporation with respect to dividends paid by that
corporation on shares that are readily tradable on an established securities market in the U.S.
Management believes that the Company common shares, which are quoted on the New York Stock
Exchange, are readily tradable on an established securities market in the U.S. There can be no
assurance that the Companys common shares will be considered readily tradable on an established
securities market in later years. Non-corporate holders that do not meet a minimum holding period
requirement during which they are not protected from the risk of loss or that elect to treat the
dividend income as investment income pursuant to section 163(d)(4) of the Code will not be
eligible for the reduced rates of taxation regardless of our status as a qualified foreign
corporation. In addition, the rate reduction will not apply to dividends if the recipient
of a dividend is obligated to make related payments with respect to positions in substantially
similar or related property. This disallowance applies even if the minimum holding period has been
met. You should consult your own tax advisors regarding the application of this legislation to your
particular circumstances.
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Taxation of Dispositions of Shares or ADSs
Subject to the passive foreign investment company rules discussed below, a gain or loss
realized by a United States holder on the sale or other disposition of a Share or an ADS will be
subject to United States federal income tax, as a capital gain or loss, in an amount equal to the
difference between such United States holders adjusted tax basis in the Share or ADS and the
amount realized on its disposition. Such capital gain or loss will be long-term if the United
States holders holding period for the Share or ADS is more than one year and will be short-term if
the holding period is equal to or less than one year. Long-term capital gain of a non-corporate
United States holder is generally taxed at preferential rates. The deductibility of capital losses
is subject to limitations.
For purposes of the United States foreign tax credit limitation, a recognized gain or loss
arising on the disposition of a Share or ADS generally will be United States source gain or loss.
There is a risk, however, that a recognized loss may be allocated against foreign source income by
reference to the source of income received under the Share or ADS based on, among other things,
whether or not the Share or ADS is attributable to a foreign office or other fixed place of
business of the holder. The IRS has issued Regulations on the sourcing of losses and holders of
Shares or ADSs should consult with their tax advisors regarding the application of such Regulations
to their specific situation.
Passive Foreign Investment Company Rules
The foregoing discussion assumes that the Company is not currently, and will not in the future
be, classified as a passive foreign investment company (PFIC) under the Code.
Special United States federal income tax rules apply to holders of equity interests in a PFIC.
A foreign corporation will constitute a PFIC for United States federal income tax purposes if 75%
or more of its gross income for a taxable year consist of passive income, or, on average, 50% or
more of the value of its assets held during a taxable year consist of assets that give rise, or
that reasonably could give rise during the reasonably foreseeable future, to passive income.
Passive income generally includes (i) rent and lease income (not including rent and lease income
derived from persons other than related persons and from the active conduct of a rental or leasing
trade or business), (ii) interest, (iii) dividends from shares of stock in a corporation in which
the foreign corporation directly or indirectly owns less than 25% of the value of the stock in the
corporation and (iv) gains from the sale of any (a) property that gives rise to passive income,
(b) partnership interests, or (c) shares of stock.
Based on the Companys existing and anticipated future operations, as well as the existing and
anticipated future operations of APT and APT BVI, the Company believes that it, APT and APT BVI are
not, and intends and anticipates that they will not become in the future, PFICs. However, it is
possible that certain lease income derived by the Company (or APT or APT BVI) might be viewed by
the IRS as passive income. In addition, because of the nature of the leasing business, and because
the determination of whether or not the Company, APT or APT BVI is a PFIC is a factual
determination based upon the composition of the annual income and assets of the entity, there can
be no assurance that the Company, APT or APT BVI will not be considered a PFIC for the current or
for any subsequent taxable year.
Because the Companys sole asset is its stock interest in APT BVI, and APT BVIs sole asset,
in turn, is its stock interest in APT, if APT is or becomes a PFIC, both the Company and APT BVI
will also be or become PFICs. If the Company, APT and APT BVI are or become PFICs, a United States
holder (whether direct, indirect or constructive) would be required to allocate to each day in its
holding period with respect to the Shares or ADSs a pro rata portion of any distribution received,
or deemed received under certain attribution rules, from the Company, APT or APT BVI that is
treated as an excess distribution. Generally, an excess distribution is that portion of the
total annual distributions (including the proceeds from a redemption of Shares or ADSs that is
treated as a distribution) from the Company, APT or APT BVI that exceeds 125% of the per share
average annual amount distributed (as measured in the currency of such distributions) by that
entity during the three preceding years (or such shorter period as the United States holder may
have held the Shares or ADSs). In addition, the full amount of any gain recognized on a
disposition or deemed disposition (including a liquidation, a redemption that is treated as an
exchange, or a
pledge) of (i) Shares or ADSs by the United States holder, (ii) attributable shares of APT by APT
BVI, or (iii) attributable shares of APT BVI by the Company will be treated as an excess
distribution.
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The amount of any excess distribution is allocated ratably over the United States holders
entire holding period. The amount allocated to the current taxable year and to any period prior to
the first taxable year during which the Company, APT and APT BVI were PFICs is taxed as ordinary
income. Any amount of the excess distribution allocable to a prior taxable year during which the
Company, APT and APT BVI were PFICs or after the first taxable year they were PFICs will be subject
to a deferred United States federal income tax charge, calculated as the sum of the amount of tax
imposed on the allocable excess distribution at the highest applicable rate in effect for each such
year plus the accumulated interest on the determined amount of tax. Given the distribution and
investment policies of the Company, if the Company, APT and APT BVI are or become PFICs, there is a
substantial risk that any distribution by the Company will be treated as an excess distribution.
(See Item 5. Operating and Financial Review and ProspectsLiquidity and Capital Resources).
For purposes of the PFIC rules, under certain circumstances, Shares or ADSs held by a
non-United States holder may be attributed to a United States person (as defined in Section
7701(a)(30) of the Code) owning an interest, directly or indirectly, in that non-United States
holder. In such event, dividends and other transactions in respect of the Shares or ADSs held by
the non-United States holder would be attributed to such United States person for purposes of
applying the above PFIC rules.
If the Company is a PFIC, a United States holder must file Internal Revenue Service Form 8621
regarding distributions received with respect to Shares or ADSs and any gain realized on the
disposition or deemed disposition of Shares or ADSs for each taxable year in which the United
States holder owns Shares or ADSs.
If the Company, APT and APT BVI are or become PFICs, an investment in Shares or ADSs by a
United States holder could subject the holder to substantial, adverse United States federal income
tax consequences. Investors who are United States holders should consult their own tax advisers
regarding the potential application of the PFIC regime.
Taxation of Investors-Non-United States Holders
Subject to the discussion of United States backup withholding tax below, a non-United States
holder will not be subject to United States federal income or withholding tax on income derived by
the Company, dividends paid to a holder by the Company or gains realized on the sale of Shares or
ADSs, provided that (i) such income is not effectively connected with the conduct by the non-United
States holder of a trade or business within the United States, (ii) the non-United States holder is
not or was not present in the United States in excess of statutorily established time periods, or
does not have or did not have a permanent establishment in the United States, (iii) there has not
been a present or former connection between the non-United States holder and the United States,
including, without limitation, such non-United States holders status as a citizen or former
citizen thereof or resident or former resident thereof, subject to certain exceptions, or (iv) in
the case of a gain from the sale or disposition of Shares or ADSs by an individual, the non-United
States holder is not present in the United States for 183 days or more during the taxable year of
the sale or certain other conditions are met. In addition, the provisions of certain bi-lateral
income tax treaties to which the United States is a party may shield a non-United States holder
from the imposition of United States federal income tax on income from Shares or ADSs or reduce the
applicable tax rate, even if such income or such holder falls in one of the categories listed
above. Investors who are non-United States holders should consult their tax advisors regarding the
taxability of income in respect of the Shares or ADSs.
United States Backup Withholding Tax and Information Reporting
For a United States holder, a 28% backup withholding federal income tax and certain
information reporting requirements may apply to certain payments made on Shares or ADSs and to the
proceeds from the disposition of Shares or ADSs unless such holder (i) is a corporation or comes
within certain other exempt categories, provided the exemption from backup withholding is properly
established, or (ii) provides a correct taxpayer identification number, certifies that it is not
subject to backup withholding, and otherwise complies with applicable requirements of the backup
withholding rules.
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Non-United States holders are generally exempt from backup withholding, provided such holders
certify in writing as to their non-United States holder status under penalties of perjury or
otherwise establish an exemption (provided neither the Company nor the Companys agent has actual
knowledge that the holder is a United States person (as defined in Section 7701(a)(30) of the Code)
or that the conditions of any other exemption are not in fact satisfied).
Holders should consult their tax advisors regarding their qualification for exemption from
backup withholding and the procedure for obtaining such exemption if applicable.
Any amounts withheld under the backup withholding tax rules from a payment to a holder will be
allowed as a refund or a credit against such holders United States federal income tax, provided
that the required information is furnished to the IRS.
Item 11. Quantitative and Qualitative Disclosures about Market Risk
The Companys primary market risk exposures are interest rate risk and foreign currency risk.
Interest Rate Risk
Please refer to Note 27 of the consolidated financial statements for the details of the
interest rate risk.
Exchange Rate Sensitivity
The APT Groups reporting currency is the Hong Kong Dollar. The Companys revenues, premiums
for satellite insurance coverage and debt service and substantially all capital expenditures were
denominated in U.S. Dollars. The Companys remaining expenses were primarily denominated in Hong
Kong Dollars. The Company does not hedge its exposure to foreign exchange risk. Gains and losses
resulting from the effects of changes in the U.S. Dollar to Hong Kong Dollar exchange rate are
recorded in the statements of operations.
The APT Group does not utilize derivative financial instruments to hedge its interest rate or
foreign currency rate risks.
Please refer to Note 27 of the Consolidated financial statements for the details of the
foreign currency risk.
Limitations
The above discussion includes only those exposures that exist as of December 31, 2007 and as a
result, does not consider exposures or positions that could arise after that date. The Companys
ultimate realized gain or loss with respect to interest rate and exchange rate fluctuations would
depend on the exposures that arise during the period, the Companys hedging strategies at the time,
and interest and foreign exchange rates.
Item 12. Description of Securities Other Than Equity Securities
Not applicable.
-76-
PART II
Item 13. Defaults, Dividend Arrearages, and Delinquencies
Not applicable.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Not applicable.
Item 15. Controls and Procedures
Disclosure Controls and Procedures.
The Company performed an evaluation under the supervision
and with the participation of its management, including its Chief Executive Officer and Chief
Financial Officer (together, the Certifying Officers), of the effectiveness of the design and
operation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Securities and Exchange Act of 1934, as amended). Based on their evaluation, as of the end of the
period covered by this Annual Report on Form 20-F, the Certifying Officers concluded that the
Companys disclosure controls and procedures are effective in providing reasonable assurance that
information required to be disclosed by the Company in its periodic reports filed with the
Securities and Exchange Commission is recorded, processed, summarized and reported within the time
periods specified by the Securities and Exchange Commissions rules and forms relating to the
Company, including its consolidated subsidiaries and was accumulated and communicated to the
Companys management, including its Certifying Officers, or persons performing similar functions as
appropriate, to allow timely decisions regarding disclosure.
Report of the Companys Management.
The Companys management is responsible for establishing
and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the U.S. Securities Exchange Act. The management, under the supervision and
with participation of our Chief Executive Officer and our Chief Financial Officer, assessed the
effectiveness of internal control over financial reporting based on the Internal Control Integrated
Framework issued by the Committee of Sponsoring Organization of the Treadway Commission (COSO).
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projection of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. Based on the evaluation
described above, the management concluded that our internal control over financial reporting is
effective as of December 31, 2007.
This annual report does not include an attestation report of an Independent Registered Public
Accounting Firm regarding internal control over financial reporting pursuant to a transition period
for smaller public companies.
Changes in Internal Control Over Financial Reporting.
There were no changes in the Companys
internal control over financial reporting that occurred during the year ended December 31, 2007
that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting. The Companys management, the Internal Control and Risk Management
Committee and the Internal Audit team will continue to monitor and review regularly the
effectiveness of the internal control system of the Company and from time to time take action
whenever there is any weakness in the process.
Item 16A. Audit Committee Financial Expert
The Companys Board of Directors has determined that it has a member, Dr. Lui King Man, of its
Audit Committee, that qualifies as an audit committee financial expert as defined in subsection
(b) of Item 16A of Form 20-F, and is independent under the rules and regulations of the New York
Stock Exchange.
-77-
Item 16B. Code of Ethics
The Company currently has a Code of Ethics. This Code of Ethics is made available at the
Companys website: www.apstar.com.
Item 16C. Principal Accountant Fees and Services
Aggregate fee billed to the APT Group for the fiscal years ended December 31, 2006 and 2007 by
our principal accounting firm, KPMG, respectively and their respective affiliates are as follows:
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31,
|
|
(in US$ thousands)
|
|
2006
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
Audit fees
|
|
|
158
|
|
|
|
158
|
|
|
|
|
|
|
|
|
|
|
Audit-related fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
158
|
|
|
|
158
|
|
|
|
|
|
|
|
|
Audit Fees are the aggregate fees billed (for the year) for the audit of the Companys
annual financial statements, reviews of interim financial statements and attestation services that
are normally provided in connection with statutory and regulatory filings or engagements.
The Companys Audit Committee oversees our independent auditors. See also the description
under the heading Board Practices in Item 6. Directors, Senior Management and Employees. The
Companys Audit Committees policy is to approve any audit or permitted non-audit services proposed
to be provided by its independent auditors before engaging its independent auditors to provide such
services. Pursuant to this policy, which is designed to assure that such engagements do not impair
the independence of the Companys auditors, the Chairperson of the Companys Audit Committee is
authorized to approve any such services between meetings of the Audit Committee, subject to
ratification by the Audit Committee, and to report any such approvals to the Audit Committee at its
next meeting.
Item 16D. Exemption from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
-78-
PART III
Item 17. Financial Statements
Not applicable.
Item 18. Financial Statements
Not applicable.
Item 19. Exhibits.
|
|
|
|
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
|
1.1
|
|
|
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 Companys 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 Companys 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 Companys 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 Companys 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
Companys 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 Companys 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 Companys 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 Companys 6-K filed with the Commission on September 2, 2003).
|
-79-
|
|
|
|
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
|
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 Companys 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 Companys 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 Companys 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 Companys 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 Companys 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
Companys 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 Companys 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 Companys 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 Companys 6-K filed
with the Commission on September 25, 2006).
|
-80-
|
|
|
|
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
|
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 Companys 6-K on December 3, 2004 (incorporated by reference to the Companys 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 Companys 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.
|
-81-
SIGNATURES
The Company hereby certifies that it meets all of the requirements for filing an Annual Report
on Form 20-F and has duly caused and authorized the undersigned to sign this Annual Report on its
behalf.
APT SATELLITE HOLDINGS LIMITED
|
|
|
/s/
Cheng Guangren
Cheng
Guangren
|
|
|
Executive Director and President
|
|
|
Date: June 27, 2008
-82-
APT SATELLITE HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Financial Statements
Years ended December 31, 2006 and 2007
and Report of Independent Registered Public Accounting Firm
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
F - 2
|
|
|
|
|
|
|
|
|
|
F - 3
|
|
|
|
|
|
|
|
|
|
F - 4 & 5
|
|
|
|
|
|
|
|
|
|
F - 6
|
|
|
|
|
|
|
|
|
|
F - 7 & 8
|
|
|
|
|
|
|
|
|
|
F - 9 55
|
|
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of
APT Satellite Holdings Limited:
We have audited the accompanying consolidated balance sheets of APT Satellite Holdings Limited (the
Company) and subsidiaries (together referred to as the Group) as of December 31, 2006 and 2007
and the related consolidated statements of operations, changes in equity and cash flows statement
for each of the years then ended. These consolidated financial statements are the responsibility
of the Companys management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of the Group as of December 31, 2006 and 2007, and the
results of their operations and their cash flows for each of the years then ended in conformity
with International Financial Reporting Standards as issued by the International Accounting
Standards Board.
KPMG
Hong Kong
April 8, 2008
F-2
Consolidated Statement of Operations
For the year ended December 31, 2007
(Expressed in Hong Kong dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover
|
|
|
3 & 11
|
|
|
|
451,626
|
|
|
|
426,988
|
|
Cost of services
|
|
|
|
|
|
|
(314,792
|
)
|
|
|
(338,259
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
136,834
|
|
|
|
88,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other net income
|
|
|
4
|
|
|
|
26,334
|
|
|
|
37,542
|
|
Administrative expenses
|
|
|
|
|
|
|
(81,896
|
)
|
|
|
(88,957
|
)
|
Revaluation gain on investment property
|
|
|
14
|
|
|
|
226
|
|
|
|
156
|
|
Impairment loss recognised in respect of
property, plant and equipment
|
|
|
12
|
(a)
|
|
|
(98
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from operations
|
|
|
|
|
|
|
81,400
|
|
|
|
37,470
|
|
Finance costs
|
|
|
5
|
(a)
|
|
|
(55,345
|
)
|
|
|
(64,140
|
)
|
Share of results of jointly controlled entities
|
|
|
16
|
|
|
|
(894
|
)
|
|
|
2,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(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
|
)
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages F-9 to F-55 form part of these financial statements.
F-3
Consolidated Balance Sheet at December 31, 2007
(Expressed in Hong Kong dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
12
|
|
|
|
2,508,321
|
|
|
|
2,721,582
|
|
Interest in leasehold land held for own use
under an operating lease
|
|
|
13
|
|
|
|
14,820
|
|
|
|
15,195
|
|
Investment properties
|
|
|
14
|
|
|
|
5,171
|
|
|
|
2,496
|
|
Interest in jointly controlled entities
|
|
|
16
|
|
|
|
3,529
|
|
|
|
4,423
|
|
Amounts due from a jointly controlled entity
|
|
|
16
|
|
|
|
69,839
|
|
|
|
72,294
|
|
Club memberships
|
|
|
|
|
|
|
5,537
|
|
|
|
5,537
|
|
Prepaid expenses
|
|
|
17
|
|
|
|
14,137
|
|
|
|
25,207
|
|
Deferred tax assets
|
|
|
23
|
(b)
|
|
|
9,174
|
|
|
|
8,747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,630,528
|
|
|
|
2,855,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
18
|
|
|
|
80,409
|
|
|
|
80,261
|
|
Deposits, prepayments and other receivables
|
|
|
17
|
|
|
|
23,240
|
|
|
|
38,482
|
|
Amount due from immediate holding company
|
|
|
|
|
|
|
101
|
|
|
|
82
|
|
Amounts due from a jointly controlled entity
|
|
|
16
|
|
|
|
5,530
|
|
|
|
2,741
|
|
Pledged bank deposits
|
|
|
28
|
|
|
|
83,749
|
|
|
|
89,190
|
|
Cash and cash equivalents
|
|
|
19
|
|
|
|
312,025
|
|
|
|
341,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
505,054
|
|
|
|
552,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables and accrued charges
|
|
|
|
|
|
|
38,727
|
|
|
|
53,777
|
|
Rentals received in advance
|
|
|
|
|
|
|
33,679
|
|
|
|
34,155
|
|
Loan from a minority shareholder
|
|
|
|
|
|
|
7,488
|
|
|
|
7,488
|
|
Secured bank borrowings due within one year
|
|
|
20
|
|
|
|
217,961
|
|
|
|
156,820
|
|
Current taxation
|
|
|
23
|
(a)
|
|
|
93,087
|
|
|
|
93,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
390,942
|
|
|
|
345,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current assets
|
|
|
|
|
|
|
114,112
|
|
|
|
206,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities carried forward
|
|
|
|
|
|
|
2,744,640
|
|
|
|
3,062,242
|
|
|
|
|
|
|
|
|
|
|
|
|
F-4
Consolidated Balance Sheet at December 31, 2007 (Continued)
(Expressed in Hong Kong dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities brought forward
|
|
|
|
|
|
|
2,744,640
|
|
|
|
3,062,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank borrowings due after one year
|
|
|
20
|
|
|
|
462,374
|
|
|
|
773,534
|
|
Deposits received
|
|
|
21
|
|
|
|
19,624
|
|
|
|
20,419
|
|
Deferred income
|
|
|
22
|
|
|
|
207,787
|
|
|
|
222,141
|
|
Deferred tax liabilities
|
|
|
23
|
(b)
|
|
|
66,164
|
|
|
|
63,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
755,949
|
|
|
|
1,080,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
|
|
|
|
|
1,988,691
|
|
|
|
1,982,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital and reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
24
|
|
|
|
41,327
|
|
|
|
41,327
|
|
Share premium
|
|
|
|
|
|
|
1,287,536
|
|
|
|
1,287,536
|
|
Contributed surplus
|
|
|
26
|
|
|
|
511,000
|
|
|
|
511,000
|
|
Capital reserve
|
|
|
26
|
|
|
|
9,557
|
|
|
|
9,614
|
|
Revaluation reserve
|
|
|
26
|
|
|
|
368
|
|
|
|
|
|
Exchange reserve
|
|
|
26
|
|
|
|
4,007
|
|
|
|
2,639
|
|
Other reserves
|
|
|
26
|
|
|
|
115
|
|
|
|
109
|
|
Accumulated profits
|
|
|
26
|
|
|
|
133,855
|
|
|
|
128,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,987,765
|
|
|
|
1,980,442
|
|
Minority interests
|
|
|
|
|
|
|
926
|
|
|
|
1,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
|
|
|
|
1,988,691
|
|
|
|
1,982,233
|
|
|
|
|
|
|
|
|
|
|
|
|
Approved and authorised for issue by the Board of Directors on April 8, 2008.
|
|
|
Ni Yifeng
|
|
Tong Xudong
|
DIRECTOR
|
|
DIRECTOR
|
The notes on pages F-9 to F-55 form part of these financial statements.
F-5
Consolidated Statement of changes in equity
For the year ended December 31, 2007
(Expressed in Hong Kong dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to equity shareholders of the Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share
|
|
|
Share
|
|
|
Contributed
|
|
|
Capital
|
|
|
Revaluation
|
|
|
Exchange
|
|
|
Other
|
|
|
Accumulated
|
|
|
|
|
|
|
Minority
|
|
|
Total
|
|
|
|
capital
|
|
|
premium
|
|
|
surplus
|
|
|
reserve
|
|
|
reserve
|
|
|
reserve
|
|
|
reserves
|
|
|
profits
|
|
|
Total
|
|
|
interests
|
|
|
equity
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
At January 1, 2006
|
|
|
41,327
|
|
|
|
1,287,536
|
|
|
|
511,000
|
|
|
|
11,996
|
|
|
|
|
|
|
|
1,347
|
|
|
|
104
|
|
|
|
205,315
|
|
|
|
2,058,625
|
|
|
|
2,927
|
|
|
|
2,061,552
|
|
Exchange differences
on translation of
financial statements
of overseas
subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,292
|
|
|
|
5
|
|
|
|
|
|
|
|
1,297
|
|
|
|
|
|
|
|
1,297
|
|
Cancellation 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
|
|
|
|
1,982,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2007
|
|
|
41,327
|
|
|
|
1,287,536
|
|
|
|
511,000
|
|
|
|
9,614
|
|
|
|
|
|
|
|
2,639
|
|
|
|
109
|
|
|
|
128,217
|
|
|
|
1,980,442
|
|
|
|
1,791
|
|
|
|
1,982,233
|
|
Exchange differences
on translation of
financial statements
of overseas
subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,368
|
|
|
|
6
|
|
|
|
|
|
|
|
1,374
|
|
|
|
|
|
|
|
1,374
|
|
Revaluation Surplus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
368
|
|
|
|
|
|
|
|
368
|
|
Cancellation of
share options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit/(loss)
for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,581
|
|
|
|
5,581
|
|
|
|
(865
|
)
|
|
|
4,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages F-9 to F-55 form part of these financial statements.
F-6
Consolidated Cash Flow Statement
For the year ended December 31, 2007
(Expressed in Hong Kong dollars)
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
Profit/(Loss) before taxation
|
|
|
25,161
|
|
|
|
(24,488
|
)
|
Adjustments for:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
222,461
|
|
|
|
231,347
|
|
Amortisation of leasehold land held for own use
|
|
|
375
|
|
|
|
375
|
|
Impairment 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
|
|
|
|
64,140
|
|
Surplus 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
|
|
|
|
8,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before changes in working capital
|
|
|
281,746
|
|
|
|
242,194
|
|
Increase in trade receivables
|
|
|
(227
|
)
|
|
|
(38,622
|
)
|
Decrease in prepaid expenses
|
|
|
11,070
|
|
|
|
7,020
|
|
Increase 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
|
)
|
|
|
5,059
|
|
Decrease in deferred income
|
|
|
(14,354
|
)
|
|
|
(16,870
|
)
|
(Decrease)/Increase in deposits received
|
|
|
(795
|
)
|
|
|
4,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations
|
|
|
287,660
|
|
|
|
208,358
|
|
Hong Kong profits tax refunded
|
|
|
|
|
|
|
21,672
|
|
Overseas tax paid
|
|
|
(18,616
|
)
|
|
|
(15,129
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash generated from operating activities
|
|
|
269,044
|
|
|
|
214,901
|
|
|
|
|
|
|
|
|
F-7
Consolidated Cash Flow Statement
For the year ended December 31, 2007 (Continued)
(Expressed in Hong Kong dollars)
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Payment for purchase of property, plant and equipment
|
|
|
(11,426
|
)
|
|
|
(7,098
|
)
|
Proceeds from disposal of property, plant and equipment
|
|
|
295
|
|
|
|
70,898
|
|
Advances/loans to jointly controlled entities
|
|
|
(245
|
)
|
|
|
(7,518
|
)
|
Interest received
|
|
|
22,431
|
|
|
|
16,896
|
|
Decrease/(Increase) in pledged bank deposits
|
|
|
5,441
|
|
|
|
(20,491
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash generated from investing activities
|
|
|
16,496
|
|
|
|
52,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Interest 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
|
)
|
|
|
12,848
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at January 1
|
|
|
341,325
|
|
|
|
326,440
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rates changes
|
|
|
2,416
|
|
|
|
2,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at December 31
|
|
|
312,025
|
|
|
|
341,325
|
|
|
|
|
|
|
|
|
The notes on pages F-9 to F-55 form part of these financial statements.
F-8
Notes to the consolidated financial statements
(Expressed in Hong Kong dollars unless otherwise indicated)
1
|
|
Significant accounting policies
|
|
(a)
|
|
Statement of compliance
|
|
|
|
|
These 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 Groups 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 Groups 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
Groups 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 statements
|
|
|
|
|
The consolidated financial statements for the year ended December 31, 2007 comprise
the Company and its subsidiaries (together referred to as the Group) and the Groups
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
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 interest
|
|
|
|
|
Subsidiaries 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 minoritys interest in the equity
of a subsidiary, the excess, and any further losses applicable to the minority, are
charged against the Groups 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 Groups interest is allocated all
such profits until the minoritys 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 entities
|
|
|
|
|
A 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 Groups share of the
jointly controlled entitys 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 Groups 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
1
|
|
Significant accounting policies (Continued)
|
|
(d)
|
|
Jointly controlled entities (Continued)
|
|
|
|
|
When the Groups share of losses exceeds its interest in the jointly controlled
entity, the Groups 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 Groups interest in the jointly controlled entity is the carrying amount
of the investment under the equity method together with the Groups long-term
interests that in substance form part of the Groups 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 Groups 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)
|
|
Goodwill
|
|
|
|
|
Goodwill represents the excess of the cost of a business combination or an investment
in a jointly controlled entity over the Groups interest in the net fair value of the
acquirees 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 Groups interest in the net fair value of the acquirees
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 property
|
|
|
|
|
Investment 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
1
|
|
Significant accounting policies (Continued)
|
|
(g)
|
|
Other property, plant and equipment
|
|
|
|
|
The 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 assets
|
|
|
|
|
An 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 Group
|
|
|
|
|
Assets 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.
|
F-12
1
|
|
Significant accounting policies (Continued)
|
|
(h)
|
|
Leased assets (Continued)
|
|
(ii)
|
|
Assets acquired under finance leases
|
|
|
|
|
Where 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 charges
|
|
|
|
|
Where 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
|
|
|
|
|
Internal 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 assets 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 amount
|
|
|
|
The 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).
|
F-13
1
|
|
Significant accounting policies (Continued)
|
|
(i)
|
|
Impairment of assets (Continued)
|
|
|
Recognition of impairment losses
|
|
|
|
An 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 losses
|
|
|
|
In 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 assets 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 impairment
|
|
|
|
|
Under 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 receivables
|
|
|
|
|
Trade 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 assets carrying amount and the present value of estimated
future cash flows, discounted at the financial assets 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 borrowings
|
|
|
|
|
Interest-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 payables
|
|
|
|
|
Trade 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.
|
F-14
1
|
|
Significant accounting policies (Continued)
|
|
(m)
|
|
Cash and cash equivalents
|
|
|
|
|
Cash 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 Groups 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 Peoples
Republic of China (the PRC). The Groups 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 payments
|
|
|
|
|
The 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 Companys
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 benefits
|
|
|
|
|
Termination 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
1
|
|
Significant accounting policies (Continued)
|
|
(o)
|
|
Income tax
|
|
|
|
|
Income 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
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 liabilities
|
|
|
|
|
Provisions 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 recognition
|
|
|
|
|
Provided 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 income
|
|
|
|
|
Income 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 income
|
|
|
|
|
Service income in respect of provision of satellite-based broadcasting and
telecommunications services and other service is recognised when services are
provided.
|
|
|
(iii)
|
|
Interest income
|
|
|
|
|
Interest income is recognised as if accrued using the effective interest method.
|
|
|
(iv)
|
|
Rental income from operating leases
|
|
|
|
|
Rental 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
1
|
|
Significant accounting policies (Continued)
|
|
(r)
|
|
Translation of foreign currencies
|
|
|
|
|
Foreign 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 Groups 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 costs
|
|
|
|
|
Borrowing 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 parties
|
|
|
|
|
For 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
Groups 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
1
|
|
Significant accounting policies (Continued)
|
|
(u)
|
|
Segment reporting
|
|
|
|
|
A 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 Groups 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 policies
|
|
|
|
The 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 Groups 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 Groups 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 Groups 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).
|
F-19
3
|
|
Turnover
|
|
|
|
The 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
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Income from provision of satellite
transponder capacity and related services
|
|
|
395,032
|
|
|
|
363,074
|
|
Income from provision of satellite-based
broadcasting and telecommunications services
|
|
|
56,453
|
|
|
|
63,817
|
|
Service income
|
|
|
141
|
|
|
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
451,626
|
|
|
|
426,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Other net income primarily includes the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
22,181
|
|
|
|
17,559
|
|
Rental income in respect of properties
|
|
|
592
|
|
|
|
536
|
|
Gain on disposal of property, plant and equipment (note 12(c))
|
|
|
261
|
|
|
|
17,630
|
|
|
|
|
|
|
|
|
5
|
|
Profit/(Loss) before taxation
|
|
|
|
Profit/(Loss) before taxation is arrived at after charging/(crediting):
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Interest on bank borrowings wholly repayable within five years
|
|
|
52,254
|
|
|
|
60,525
|
|
Other borrowing costs
|
|
|
3,091
|
|
|
|
3,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,345
|
|
|
|
64,140
|
|
|
|
|
|
|
|
|
F-20
5
|
|
Profit/(Loss) before taxation (Continued)
|
|
|
|
Profit/(Loss) before taxation is arrived at after charging/(crediting): (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Staff costs (including directors emoluments)
|
|
|
|
|
|
|
|
|
Pension contributions
|
|
|
2,767
|
|
|
|
2,399
|
|
Less: Forfeited contributions
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net pension contributions
|
|
|
2,767
|
|
|
|
2,391
|
|
Salaries, wages and other benefits
|
|
|
47,222
|
|
|
|
44,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,989
|
|
|
|
46,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Auditors remuneration
|
|
|
|
|
|
|
|
|
- audit services
|
|
|
1,266
|
|
|
|
1,246
|
|
- other services
|
|
|
10
|
|
|
|
10
|
|
Depreciation
|
|
|
222,461
|
|
|
|
231,347
|
|
Amortisation on leasehold land held for own use
|
|
|
375
|
|
|
|
375
|
|
Foreign 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
|
|
|
|
7,461
|
|
Impairment loss for trade and other receivables
|
|
|
80
|
|
|
|
8,347
|
|
Impairment loss for property, plant and equipment
|
|
|
98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Current tax Hong Kong Profits Tax
|
|
|
|
|
|
|
|
|
Overprovision in respect of prior years
|
|
|
|
|
|
|
(21,771
|
)
|
|
|
|
|
|
|
|
|
|
Current tax Overseas
|
|
|
|
|
|
|
|
|
Tax for the year
|
|
|
18,623
|
|
|
|
19,122
|
|
|
|
|
|
|
|
|
|
|
Deferred tax Hong Kong
|
|
|
|
|
|
|
|
|
Origination of temporary differences
|
|
|
1,822
|
|
|
|
58,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,445
|
|
|
|
56,128
|
|
|
|
|
|
|
|
|
F-21
|
(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 Groups 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 Kongs 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.
|
F-22
|
(b)
|
|
Reconciliation between tax expense and profit/(loss) before taxation at applicable
tax rates:
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Profit/(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
|
|
|
|
19,122
|
|
Tax effect of non-deductible expenses
|
|
|
2,287
|
|
|
|
2,967
|
|
Tax effect of non-taxable revenue
|
|
|
(4,629
|
)
|
|
|
(3,834
|
)
|
Tax effect of unused tax losses not recognised
|
|
|
1,463
|
|
|
|
1,767
|
|
Tax effect of prior years unrecognised tax
losses utilised this year
|
|
|
(1,355
|
)
|
|
|
(2,008
|
)
|
Others (note)
|
|
|
|
|
|
|
42,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual 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
7
|
|
Directors remuneration
|
|
|
|
Directors remuneration disclosed pursuant to section 161 of the Hong Kong Companies
Ordinance is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries,
|
|
|
|
|
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
allowances and
|
|
|
Retirement
|
|
|
related
|
|
|
|
|
|
|
Directors
|
|
|
benefits
|
|
|
scheme
|
|
|
incentive
|
|
|
2007
|
|
|
|
fees
|
|
|
in kind
|
|
|
contributions
|
|
|
payments
|
|
|
Total
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ni Yifeng
|
|
|
50
|
|
|
|
2,840
|
|
|
|
165
|
|
|
|
78
|
|
|
|
3,133
|
|
Tong Xudong
|
|
|
50
|
|
|
|
2,331
|
|
|
|
145
|
|
|
|
68
|
|
|
|
2,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-executive directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rui Xiaowu (note a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zhao Liqiang
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Lim Toon
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Yoo Foo Chong
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41
|
|
Ho Siaw Hong
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
Yin Yen-liang
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Wu Zhen Mu
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Tseng Ta-mon (note b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent
non-executive
directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Huan Guocang
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200
|
|
Lui King Man
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200
|
|
Yuen Pak Yiu, Philip
|
|
|
99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99
|
|
Lam Sek Kong
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
Cui Liguo
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,051
|
|
|
|
5,171
|
|
|
|
310
|
|
|
|
146
|
|
|
|
6,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-24
7
|
|
Directors remuneration (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries,
|
|
|
|
|
|
|
Performance
|
|
|
|
|
|
|
|
|
|
|
allowances and
|
|
|
Retirement
|
|
|
related
|
|
|
|
|
|
|
Directors
|
|
|
benefits
|
|
|
scheme
|
|
|
incentive
|
|
|
2006
|
|
|
|
fees
|
|
|
in kind
|
|
|
contributions
|
|
|
payments
|
|
|
Total
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ni Yifeng
|
|
|
50
|
|
|
|
2,800
|
|
|
|
165
|
|
|
|
|
|
|
|
3,015
|
|
Tong Xudong
|
|
|
50
|
|
|
|
2,263
|
|
|
|
142
|
|
|
|
|
|
|
|
2,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-executive directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rui Xiaowu (note a)
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
Liu Ji Yuan
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47
|
|
Zhao Liqiang
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
Zhang Hainan
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47
|
|
Lim Toon
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Ho Siaw Hong
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
|
|
Lan Kwai-chu
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
Yin Yen-liang
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Wu Zhen Mu
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
Tseng Ta-mon (note b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent
non-executive
directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yuen Pak Yiu, Philip
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
Huan Guocang
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
Lui King Man
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
700
|
|
|
|
5,063
|
|
|
|
307
|
|
|
|
|
|
|
|
6,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition to the above emoluments, certain Directors were granted share options under the
Companys 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
8
|
|
Individuals with highest emoluments
|
|
|
|
Of 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
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Salaries and other emoluments
|
|
|
4,839
|
|
|
|
4,541
|
|
Performance related incentive payments
|
|
|
192
|
|
|
|
154
|
|
Retirement benefits contributions
|
|
|
330
|
|
|
|
303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,361
|
|
|
|
4,998
|
|
|
|
|
|
|
|
|
|
|
The emoluments of the three (2006: three) individuals with the highest emoluments are within
the following bands:
|
|
|
|
|
|
|
|
|
|
|
|
Number of individuals
|
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
$Nil to $1,000,000
|
|
|
|
|
|
|
1
|
|
$1,000,001 to $1,500,000
|
|
|
1
|
|
|
|
|
|
$2,000,001 to $2,500,000
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
3
|
|
|
|
|
|
|
|
|
9
|
|
Profit/(Loss) attributable to shareholders
|
|
|
|
The 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 share
|
|
|
|
|
The 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 share
|
|
|
|
|
Diluted 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
11
|
|
Segmental reporting
|
|
|
|
Segment information is presented in respect of the Groups business and geographical
segments. Business information is chosen as the primary reporting format because this is
more relevant to the Groups internal financial reporting.
|
|
|
|
Inter-segment pricing is based on terms similar to those available to external third
parties.
|
|
|
|
Business segments
|
|
|
|
The 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 of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
satellite-based
|
|
|
|
|
|
|
|
|
|
Provision of satellite
|
|
|
broadcasting and
|
|
|
|
|
|
|
|
|
|
transponder capacity
|
|
|
telecommunications
|
|
|
Inter-segment
|
|
|
|
|
|
|
and related services
|
|
|
services
|
|
|
elimination
|
|
|
Consolidated
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover from external
customers
|
|
|
395,032
|
|
|
|
363,074
|
|
|
|
56,453
|
|
|
|
63,817
|
|
|
|
|
|
|
|
|
|
|
|
451,485
|
|
|
|
426,891
|
|
Inter-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
|
|
|
|
426,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
141
|
|
|
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
451,626
|
|
|
|
426,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment result
|
|
|
126,873
|
|
|
|
71,809
|
|
|
|
9,644
|
|
|
|
8,481
|
|
|
|
(2
|
)
|
|
|
(5
|
)
|
|
|
136,515
|
|
|
|
80,285
|
|
Service income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
141
|
|
|
|
97
|
|
Unallocated other net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,560
|
|
|
|
37,698
|
|
Unallocated administrative
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- staff costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(47,792
|
)
|
|
|
(44,940
|
)
|
- office expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34,024
|
)
|
|
|
(35,670
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit from operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81,400
|
|
|
|
37,470
|
|
Finance costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(55,345
|
)
|
|
|
(64,140
|
)
|
Share of results of jointly
controlled entities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(894
|
)
|
|
|
2,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before taxation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,161
|
|
|
|
(24,488
|
)
|
Income tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20,445
|
)
|
|
|
(56,128
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,716
|
|
|
|
(80,616
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-27
11
|
|
Segmental reporting (Continued)
|
|
|
|
Business segments (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
satellite-based
|
|
|
|
|
|
|
|
|
|
Provision of satellite
|
|
|
broadcasting and
|
|
|
|
|
|
|
|
|
|
transponder capacity
|
|
|
telecommunications
|
|
|
Inter-segment
|
|
|
|
|
|
|
and related services
|
|
|
services
|
|
|
elimination
|
|
|
Consolidated
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation for the year
|
|
|
216,557
|
|
|
|
224,501
|
|
|
|
5,904
|
|
|
|
6,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment loss for the year
|
|
|
|
|
|
|
|
|
|
|
98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant non-cash
expenses (other than
depreciation)
|
|
|
25
|
|
|
|
7,886
|
|
|
|
55
|
|
|
|
460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
satellite-based
|
|
|
|
|
|
|
|
|
|
Provision of satellite
|
|
|
broadcasting and
|
|
|
|
|
|
|
|
|
|
transponder capacity
|
|
|
telecommunications
|
|
|
Inter-segment
|
|
|
|
|
|
|
and related services
|
|
|
services
|
|
|
elimination
|
|
|
Consolidated
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
|
2,629,907
|
|
|
|
2,858,518
|
|
|
|
36,272
|
|
|
|
50,768
|
|
|
|
(41,872
|
)
|
|
|
(51,922
|
)
|
|
|
2,624,307
|
|
|
|
2,857,364
|
|
Investment in and
amounts due from
jointly controlled
entities
|
|
|
78,898
|
|
|
|
79,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,898
|
|
|
|
79,458
|
|
Unallocated assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
432,377
|
|
|
|
470,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,135,582
|
|
|
|
3,407,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities
|
|
|
330,908
|
|
|
|
344,165
|
|
|
|
76,449
|
|
|
|
90,362
|
|
|
|
(41,872
|
)
|
|
|
(51,922
|
)
|
|
|
365,485
|
|
|
|
382,605
|
|
Unallocated liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
781,406
|
|
|
|
1,042,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,146,891
|
|
|
|
1,425,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure
incurred during the
year
|
|
|
9,343
|
|
|
|
3,506
|
|
|
|
1,340
|
|
|
|
2,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-28
11
|
|
Segmental reporting (Continued)
|
|
|
|
Geographical segments
|
|
|
|
The Groups 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 regions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hong Kong
|
|
|
in the PRC
|
|
|
Singapore
|
|
|
Indonesia
|
|
|
Others
|
|
|
Unallocated
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Turnover 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
|
|
|
|
3,327,301
|
|
Capital expenditure
incurred during the
year
|
|
|
|
|
|
|
|
|
|
|
369
|
|
|
|
844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,314
|
|
|
|
5,390
|
|
F-29
12
|
|
Property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
|
|
|
|
equipment, motor
|
|
|
Communication
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
Leasehold
|
|
|
vehicles, and
|
|
|
satellite
|
|
|
Communication
|
|
|
Communication
|
|
|
Construction
|
|
|
|
|
|
|
buildings
|
|
|
improvements
|
|
|
computer equipment
|
|
|
equipment
|
|
|
station
|
|
|
satellites
|
|
|
in progress
|
|
|
Total
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2006
|
|
|
102,233
|
|
|
|
7,621
|
|
|
|
43,280
|
|
|
|
161,175
|
|
|
|
13,904
|
|
|
|
5,028,640
|
|
|
|
1,098
|
|
|
|
5,357,951
|
|
Exchange adjustments
|
|
|
|
|
|
|
42
|
|
|
|
109
|
|
|
|
406
|
|
|
|
556
|
|
|
|
|
|
|
|
44
|
|
|
|
1,157
|
|
Additions
|
|
|
|
|
|
|
491
|
|
|
|
2,759
|
|
|
|
2,743
|
|
|
|
23
|
|
|
|
|
|
|
|
218
|
|
|
|
6,234
|
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
|
5,301,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2007
|
|
|
102,233
|
|
|
|
8,154
|
|
|
|
45,612
|
|
|
|
163,500
|
|
|
|
14,483
|
|
|
|
4,966,051
|
|
|
|
1,360
|
|
|
|
5,301,393
|
|
Exchange adjustments
|
|
|
|
|
|
|
71
|
|
|
|
177
|
|
|
|
699
|
|
|
|
924
|
|
|
|
|
|
|
|
87
|
|
|
|
1,958
|
|
Additions
|
|
|
|
|
|
|
4,792
|
|
|
|
903
|
|
|
|
2,925
|
|
|
|
8
|
|
|
|
|
|
|
|
2,055
|
|
|
|
10,683
|
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
|
5,277,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2006
|
|
|
17,289
|
|
|
|
4,277
|
|
|
|
33,944
|
|
|
|
99,767
|
|
|
|
5,891
|
|
|
|
2,197,381
|
|
|
|
|
|
|
|
2,358,549
|
|
Exchange adjustments
|
|
|
|
|
|
|
34
|
|
|
|
84
|
|
|
|
242
|
|
|
|
236
|
|
|
|
|
|
|
|
|
|
|
|
596
|
|
Charge for the year
|
|
|
2,075
|
|
|
|
416
|
|
|
|
7,435
|
|
|
|
12,583
|
|
|
|
2,582
|
|
|
|
206,256
|
|
|
|
|
|
|
|
231,347
|
|
Written 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
|
|
|
|
|
|
|
|
2,579,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2007
|
|
|
19,364
|
|
|
|
4,727
|
|
|
|
40,968
|
|
|
|
111,782
|
|
|
|
8,709
|
|
|
|
2,394,261
|
|
|
|
|
|
|
|
2,579,811
|
|
Exchange adjustments
|
|
|
|
|
|
|
68
|
|
|
|
125
|
|
|
|
479
|
|
|
|
556
|
|
|
|
|
|
|
|
|
|
|
|
1,228
|
|
Charge for the year
|
|
|
2,031
|
|
|
|
496
|
|
|
|
1,849
|
|
|
|
12,078
|
|
|
|
2,442
|
|
|
|
203,565
|
|
|
|
|
|
|
|
222,461
|
|
Impairment loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98
|
|
Transfer
|
|
|
(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
|
|
|
|
|
|
|
|
2,769,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007
|
|
|
78,757
|
|
|
|
7,726
|
|
|
|
3,724
|
|
|
|
42,410
|
|
|
|
4,809
|
|
|
|
2,368,225
|
|
|
|
2,670
|
|
|
|
2,508,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2006
|
|
|
82,869
|
|
|
|
3,427
|
|
|
|
4,644
|
|
|
|
51,718
|
|
|
|
5,774
|
|
|
|
2,571,790
|
|
|
|
1,360
|
|
|
|
2,721,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Impairment loss
|
|
|
|
|
During 2007, the Group conducted a review of the Groups 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
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 buildings
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Medium-term leases outside Hong Kong
|
|
|
|
|
|
|
2,094
|
|
Medium-term leases in Hong Kong
|
|
|
78,757
|
|
|
|
80,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,757
|
|
|
|
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 satellites
|
|
|
|
|
As 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
12
|
|
Property, plant and equipment (Continued)
|
|
(e)
|
|
Change in estimated useful life of a satellite
|
|
|
|
|
Following 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
|
|
|
|
|
|
|
|
$000
|
|
|
|
|
|
|
Cost:
|
|
|
|
|
At January 1, 2006, December 31, 2006 and December 31, 2007
|
|
|
18,678
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation:
|
|
|
|
|
At January 1, 2006
|
|
|
3,108
|
|
Charge for the year
|
|
|
375
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2006
|
|
|
3,483
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2007
|
|
|
|
|
Charge for the year
|
|
|
375
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007
|
|
|
3,858
|
|
|
|
|
|
|
|
|
|
|
Net book value:
|
|
|
|
|
At December 31, 2007
|
|
|
14,820
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2006
|
|
|
15,195
|
|
|
|
|
|
14
|
|
Investment properties
|
|
|
|
The 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
15
|
|
Interest in subsidiaries
|
|
|
|
Particulars of subsidiaries
|
|
|
|
The 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 interest
|
|
|
|
|
|
|
Place of
|
|
|
Particulars of issued and
|
|
|
Groups
|
|
|
|
|
|
|
|
|
|
|
|
|
incorporation
|
|
|
paid up capital and debt
|
|
|
effective
|
|
|
held by the
|
|
|
held by
|
|
|
|
|
Name of Company
|
|
and operation*
|
|
|
securities
|
|
|
interest
|
|
|
Company
|
|
|
subsidiary
|
|
|
Principal activities
|
|
|
APT Satellite Investment Company Limited
|
|
|
British Virgin Islands
|
|
|
|
US$1,400
|
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
Investment holding
|
|
Acme Star Investment Limited
|
|
|
Hong Kong
|
|
|
|
HK$2
|
|
|
|
100
|
%
|
|
|
|
|
|
|
100
|
%
|
|
|
Inactive
|
|
APT 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 capacity
|
|
APT Satellite Enterprise Limited
|
|
|
Cayman Islands
|
|
|
|
US$2
|
|
|
|
100
|
%
|
|
|
|
|
|
|
100
|
%
|
|
|
Provision of satellite transponder capacity
|
|
APT Satellite Global Company Limited
|
|
|
Cayman Islands
|
|
|
|
US$2
|
|
|
|
100
|
%
|
|
|
|
|
|
|
100
|
%
|
|
|
Investment holding
|
|
APT Satellite Link Limited
|
|
|
Cayman Islands
|
|
|
|
US$2
|
|
|
|
100
|
%
|
|
|
|
|
|
|
100
|
%
|
|
|
Provision of satellite transponder capacity
|
|
APT Satellite Telewell Limited
|
|
|
Hong Kong
|
|
|
|
HK$2
|
|
|
|
100
|
%
|
|
|
|
|
|
|
100
|
%
|
|
|
Inactive
|
|
APT Satellite TV Development Limited
|
|
|
Hong Kong
|
|
|
|
HK$2
|
|
|
|
100
|
%
|
|
|
|
|
|
|
100
|
%
|
|
|
Provision of satellite television uplink and downlink services
|
|
APT Satellite Vision Limited
|
|
|
Hong Kong
|
|
|
|
HK$2
|
|
|
|
100
|
%
|
|
|
|
|
|
|
100
|
%
|
|
|
Satellite leasing
|
|
APT Telecom Services Limited
|
|
|
Hong Kong
|
|
|
|
HK$2
|
|
|
|
100
|
%
|
|
|
|
|
|
|
100
|
%
|
|
|
Provision of telecommunication services
|
|
Haslett Investments Limited
|
|
|
British Virgin Islands
|
|
|
|
US$1
|
|
|
|
100
|
%
|
|
|
|
|
|
|
100
|
%
|
|
|
Inactive
|
|
Skywork Corporation
|
|
|
British Virgin Islands
|
|
|
|
US$1
|
|
|
|
100
|
%
|
|
|
|
|
|
|
100
|
%
|
|
|
Investment holding
|
|
The 138 Leasing Partnership
|
|
|
Hong Kong
|
|
|
|
Partners capital HK$329,128,857
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Inactive
|
|
Ying Fai Realty (China) Limited
|
|
|
Hong Kong/PRC
|
|
|
|
HK$20
|
|
|
|
100
|
%
|
|
|
|
|
|
|
100
|
%
|
|
|
Property holding
|
|
![(CHINEESE CHARACTERS)](http://content.edgar-online.com/edgar_conv_img/2008/06/27/0001362310-08-003423_C73713C7371301.GIF)
(APT Communication Technology
Development (Shenzhen) Co., Ltd.)
|
|
|
Wholly-owned foreign enterprises, PRC
|
|
|
|
Registered capital HK$5,000,000
|
|
|
|
100
|
%
|
|
|
|
|
|
|
100
|
%
|
|
|
Provision of satellite transponder capacity
|
|
CTIA VSAT Network Limited
|
|
|
Hong Kong
|
|
|
|
HK$5,000,000
|
|
|
|
60
|
%
|
|
|
|
|
|
|
60
|
%
|
|
|
Investment holding
|
|
![(CHINEESE CHARACTERS)](http://content.edgar-online.com/edgar_conv_img/2008/06/27/0001362310-08-003423_C73713C7371302.GIF)
(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
16
|
|
Interest in jointly controlled entities and amounts due from a jointly controlled entity
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Share 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 interest
|
|
|
|
|
|
|
Form of
|
|
|
Place of
|
|
|
Particulars of
|
|
|
Groups
|
|
|
held by
|
|
|
held by
|
|
|
|
|
|
|
business
|
|
|
incorporation
|
|
|
issued and paid
|
|
|
effective
|
|
|
the
|
|
|
the
|
|
|
Principal
|
|
Name of joint venture
|
|
structure
|
|
|
and operation
|
|
|
up capital
|
|
|
interest
|
|
|
Company
|
|
|
subsidiary
|
|
|
activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APT Satellite
Telecommunications
Limited (APT
Telecom)
|
|
|
Incorporated
|
|
|
|
Hong Kong
|
|
|
|
HK$153,791,900
|
|
|
|
55
|
%
|
|
|
|
|
|
|
55
|
%
|
|
|
Property holding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
![(CHINIES CHARACTER)](http://content.edgar-online.com/edgar_conv_img/2008/06/27/0001362310-08-003423_C73713C7371304.GIF)
(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
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Within one year or on demand
|
|
|
4,950
|
|
|
|
2,700
|
|
After one year but within five years
|
|
|
2,700
|
|
|
|
5,400
|
|
|
|
|
|
|
|
|
|
|
|
|
7,650
|
|
|
|
8,100
|
|
|
|
|
|
|
|
|
F-34
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 Groups effective interest:
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
Non-current assets
|
|
|
76,670
|
|
|
|
75,350
|
|
Current assets
|
|
|
2,011
|
|
|
|
969
|
|
Non-current liabilities
|
|
|
(68,624
|
)
|
|
|
(66,894
|
)
|
Current liabilities
|
|
|
(6,528
|
)
|
|
|
(5,002
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
|
3,529
|
|
|
|
4,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
|
938
|
|
|
|
3,553
|
|
Expenses
|
|
|
(1,832
|
)
|
|
|
(1,371
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/Profit for the year
|
|
|
(894
|
)
|
|
|
2,182
|
|
|
|
|
|
|
|
|
17
|
|
Prepaid expenses, deposits, prepayments and other receivables
|
|
|
|
Prepaid 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
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31
|
|
|
25,057
|
|
|
|
36,127
|
|
Less: 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
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Due from third parties
|
|
|
74,313
|
|
|
|
78,316
|
|
Due from shareholders of the Company
|
|
|
2,628
|
|
|
|
1,037
|
|
Due from holding company and its subsidiaries of a shareholder
of the Company
|
|
|
3,468
|
|
|
|
908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,409
|
|
|
|
80,261
|
|
|
|
|
|
|
|
|
|
|
The trade receivables are expected to be recovered within one year.
|
|
(a)
|
|
Ageing analysis
|
|
|
|
|
The 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
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
0 30 days
|
|
|
53,923
|
|
|
|
52,616
|
|
31 60 days
|
|
|
8,276
|
|
|
|
8,414
|
|
61 90 days
|
|
|
4,032
|
|
|
|
6,568
|
|
91 120 days
|
|
|
3,001
|
|
|
|
2,201
|
|
Over 121 days
|
|
|
11,177
|
|
|
|
10,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,409
|
|
|
|
80,261
|
|
|
|
|
|
|
|
|
|
|
|
The Groups credit policy is set out in note 27(a).
|
|
|
(b)
|
|
Impairment of trade receivables
|
|
|
|
|
Impairment 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
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
At January 1
|
|
|
18,382
|
|
|
|
10,291
|
|
Impairment loss recognised
|
|
|
80
|
|
|
|
7,946
|
|
Uncollectible amounts written off
|
|
|
(5,229
|
)
|
|
|
|
|
Exchange difference
|
|
|
299
|
|
|
|
145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31
|
|
|
13,532
|
|
|
|
18,382
|
|
|
|
|
|
|
|
|
F-36
18
|
|
Trade receivables (Continued)
|
|
(b)
|
|
Impairment of trade receivables
|
|
|
|
|
At December 31, 2007, the Groups 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 impaired
|
|
|
|
|
The ageing analysis of trade receivables that are neither individually nor collectively
considered to be impaired are as follow:
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Less than 1 month past due
|
|
|
53,923
|
|
|
|
52,616
|
|
1 to 3 months past due
|
|
|
12,308
|
|
|
|
14,982
|
|
More than 3 months past due
|
|
|
14,178
|
|
|
|
12,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 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
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Deposits with banks and other financial
institutions
|
|
|
302,784
|
|
|
|
316,536
|
|
Cash at bank and on hand
|
|
|
9,241
|
|
|
|
24,789
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents in the balance
sheet and cash flow statement
|
|
|
312,025
|
|
|
|
341,325
|
|
|
|
|
|
|
|
|
F-37
20
|
|
Secured bank borrowings
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Bank loans
|
|
|
680,335
|
|
|
|
930,354
|
|
Less: Amount due within one year included under current
liabilities
|
|
|
(217,961
|
)
|
|
|
(156,820
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount due after one year
|
|
|
462,374
|
|
|
|
773,534
|
|
|
|
|
|
|
|
|
|
The bank borrowings are repayable as follows:
|
|
|
|
|
|
|
|
|
Within one year or on demand
|
|
|
217,961
|
|
|
|
156,820
|
|
After one year but within five years
|
|
|
462,374
|
|
|
|
773,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
680,335
|
|
|
|
930,354
|
|
|
|
|
|
|
|
|
|
|
The secured bank borrowings are subject to the fulfillment of covenants relating to certain of
the Groups 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 Groups 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 received
|
|
|
|
The amount represents deposits received in respect of provision of satellite transponder
capacity service, satellite-based broadcasting and telecommunications services and other
services.
|
|
22
|
|
Deferred income
|
|
|
|
Deferred 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
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Overseas tax payable
|
|
|
7,224
|
|
|
|
11,644
|
|
Balance of overseas tax provision relating to prior years
|
|
|
85,863
|
|
|
|
81,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,087
|
|
|
|
93,080
|
|
|
|
|
|
|
|
|
F-38
23
|
|
Income tax in the balance sheet (Continued)
|
|
(b)
|
|
Deferred tax assets and liabilities recognised
|
|
|
|
|
The components of deferred tax (assets)/liabilities recognised in the consolidated balance
sheet and the movements during the year are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
allowances in
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
excess of related
|
|
|
|
|
|
|
Deferred
|
|
|
temporary
|
|
|
|
|
Deferred tax arising from:
|
|
depreciation
|
|
|
Losses
|
|
|
lease income
|
|
|
differences
|
|
|
Total
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2006
|
|
|
376,422
|
|
|
|
(379,635
|
)
|
|
|
|
|
|
|
(396
|
)
|
|
|
(3,609
|
)
|
Charged/(credited) to
consolidated income
statement
|
|
|
(3,047
|
)
|
|
|
(104,093
|
)
|
|
|
166,063
|
|
|
|
(146
|
)
|
|
|
58,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2006
|
|
|
373,375
|
|
|
|
(483,728
|
)
|
|
|
166,063
|
|
|
|
(542
|
)
|
|
|
55,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2007
|
|
|
373,375
|
|
|
|
(483,728
|
)
|
|
|
166,063
|
|
|
|
(542
|
)
|
|
|
55,168
|
|
Charged/(credited) to
consolidated income
statement
|
|
|
(9,152
|
)
|
|
|
38,835
|
|
|
|
(27,652
|
)
|
|
|
(209
|
)
|
|
|
1,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007
|
|
|
364,223
|
|
|
|
(444,893
|
)
|
|
|
138,411
|
|
|
|
(751
|
)
|
|
|
56,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Net 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
|
|
|
|
63,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,990
|
|
|
|
55,168
|
|
|
|
|
|
|
|
|
|
(c)
|
|
Deferred tax assets not recognised
|
|
|
|
|
The 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.
|
|
(a)
|
|
Authorised and issued share capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued and
|
|
|
|
Number of
|
|
|
fully paid
|
|
|
|
shares
|
|
|
share capital
|
|
|
|
000
|
|
|
$000
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares of $0.10 each
|
|
|
|
|
|
|
|
|
At December 31, 2006 and December 31, 2007
|
|
|
413,265
|
|
|
|
41,327
|
|
|
|
|
|
|
|
|
F-39
24
|
|
Share capital (Continued)
|
|
(a)
|
|
Authorised and issued share capital (Continued)
|
|
|
|
|
The Companys authorised share capital is 1,000,000,000 shares of $0.10 each. There were no
changes in the Companys 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 Companys residual assets.
|
|
|
(b)
|
|
Capital management
|
|
|
|
|
The Groups primary objectives when managing capital are to safeguard the Groups 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 Groups 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
24
|
|
Share capital (Continued)
|
|
(b)
|
|
Capital management (Continued)
|
The net debt-to-adjusted capital ratio at December 31, 2007 and 2006 was as follows:
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables and accrued charges
|
|
|
38,727
|
|
|
|
53,777
|
|
|
|
|
|
|
|
|
|
|
Loan from a minority shareholder
|
|
|
7,488
|
|
|
|
7,488
|
|
|
|
|
|
|
|
|
|
|
Secured bank borrowings due within one year
|
|
|
217,961
|
|
|
|
156,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
264,176
|
|
|
|
218,085
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank borrowings due after one year
|
|
|
462,374
|
|
|
|
773,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
726,550
|
|
|
|
991,619
|
|
|
|
|
|
|
|
|
|
|
Less: Cash and cash equivalents
|
|
|
(312,025
|
)
|
|
|
(341,325
|
)
|
|
|
|
|
|
|
|
|
|
Pledged bank deposits
|
|
|
(83,749
|
)
|
|
|
(89,190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt
|
|
|
330,776
|
|
|
|
561,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
|
1,988,691
|
|
|
|
1,982,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted capital
|
|
|
1,988,691
|
|
|
|
1,982,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt-to-adjusted capital ratio
|
|
|
17
|
%
|
|
|
28
|
%
|
|
|
|
|
|
|
|
In December 2002, the Group entered into a US$240 million secured term loan facility (the
Loan Facility), which is secured by the assignment of the construction, launching and
related equipment contracts relating to APSTAR V and APSTAR VI under construction and their
related insurance claim proceeds, assignment of all present and future utilisation agreements
of the transponders of satellites under construction, first fixed charge over certain bank
accounts which will hold receipts of the transponder income and the termination payments
under construction, launching and related equipment contracts. In October 2004, the Group
entered into a Deed of Amendment and Restatement to amend certain terms of the Loan Facility
for the purpose of adjusting for the cancellation of the unutilised portion relating to
APSTAR V satellite and APSTAR VI backup satellite. Accordingly, the maximum aggregate amount
under the Loan Facility was reduced to US$165 million and certain financial covenants were
amended. In May 2005, the Group entered into a Second Deed of Amendment and Restatement. The
second amendment extended the availability period of drawing under the facility with respect
to APSTAR VI to June 30, 2005 and amended the financial covenants. The Group was in
compliance with these covenants as of December 31, 2007.
F-41
24
|
|
Share capital (Continued)
|
|
(b)
|
|
Capital management (Continued)
|
This Loan Facility agreement contains the following covenants:
|
(i)
|
|
Restricted Distributions
|
|
|
|
|
The 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 Covenants
|
|
|
|
|
The 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,
borrowers EBITDA shall be at least 180% of debt service.
|
|
|
(iii)
|
|
Block Account/Withdrawal Conditions
|
|
|
|
|
Under 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)
|
|
Others
|
|
|
|
|
The Loan Facility includes covenants customary for agreements of this type, including
restrictions on APT and the Companys 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 Groups
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.
|
For the years presented, the Group complied with all the above covenants.
25
|
|
Share options
|
|
|
|
At 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
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 Limiteds (the Exchanges) 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 Exchanges 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 Exchanges
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 options
|
|
|
|
The particulars of the share options granted under the Scheme 2001 outstanding during the year
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
Number
|
|
|
Number
|
|
|
At January 1
|
|
|
3,390,000
|
|
|
|
4,230,000
|
|
Cancelled during the year
|
|
|
(20,000
|
)
|
|
|
(840,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31
|
|
|
3,370,000
|
|
|
|
3,390,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options 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 assumptions
|
|
|
|
The 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
26
|
|
Reserves
|
|
|
|
The 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 Companys 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 Companys 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 Companys 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 instruments
|
|
|
|
Exposure to credit, liquidity, interest rate and currency risks arises in the normal course
of the Groups business. These risks are limited by the Groups financial management policies
and practices described below.
|
|
(a)
|
|
Credit risk
|
|
|
|
|
The Groups 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 Groups
largest customer and the five largest customers respectively within the satellite
transponder business segment.
|
F-44
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 risk
|
|
|
|
|
Individual 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 companys board. The
Groups 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 Groups 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contractual
|
|
|
Within 1
|
|
|
More than 1
|
|
|
More than 2
|
|
|
|
|
|
|
Carrying
|
|
|
undiscounted
|
|
|
year or on
|
|
|
year but less
|
|
|
year but less
|
|
|
More than 5
|
|
|
|
amount
|
|
|
cash flow
|
|
|
demand
|
|
|
than 2 years
|
|
|
than 5 years
|
|
|
years
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
Payables 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
27
|
|
Financial instruments (Continued)
|
|
(b)
|
|
Liquidity risk (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
contractual
|
|
|
Within 1
|
|
|
More than 1
|
|
|
More than 2
|
|
|
|
|
|
|
Carrying
|
|
|
undiscounted
|
|
|
year or on
|
|
|
year but less
|
|
|
year but less
|
|
|
More than 5
|
|
|
|
amount
|
|
|
cash flow
|
|
|
demand
|
|
|
than 2 years
|
|
|
than 5 years
|
|
|
years
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
Payables 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 risk
|
|
|
|
|
The Group is subject to interest rate risk due to fluctuation in interest rates. As of
December 31, 2007, the Groups 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
|
|
|
2006
|
|
|
|
Effective
|
|
|
|
|
|
|
Effective
|
|
|
|
|
|
|
interest
|
|
|
|
|
|
|
interest
|
|
|
|
|
|
|
rate
|
|
|
|
|
|
rate
|
|
|
|
|
|
|
%
|
|
|
$000
|
|
|
%
|
|
|
$000
|
|
|
Variable rate borrowings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank borrowings
|
|
|
6.13
|
%
|
|
|
680,335
|
|
|
|
5.76
|
%
|
|
|
930,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(ii)
|
|
Sensitivity analysis
|
|
|
|
|
At December 31, 2007, it is estimated that a general increase of one percentage
point in interest rates would decrease the Groups 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
27
|
|
Financial instruments (Continued)
|
|
(d)
|
|
Foreign currency risk
|
|
|
|
|
The Groups reporting currency is the Hong Kong Dollar. The Groups revenues, premiums
for satellite insurance coverage and debt service and substantially all capital
expenditures were denominated in the United States Dollars. The Groups 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 Groups borrowings are denominated in the United States Dollars. Given that all of
the Groups revenues are denominated substantially in the United States Dollars,
management does not expect that there will be any significant currency risk associated
with the Groups borrowings.
|
|
(i)
|
|
Exposure to currency risk
|
|
|
|
|
The following table details the Groups 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
|
|
|
2006
|
|
|
|
Renminbi
|
|
|
Renminbi
|
|
|
|
000
|
|
|
000
|
|
|
Trade and other receivable
|
|
|
16,085
|
|
|
|
3,920
|
|
|
Cash and cash equivalents
|
|
|
40,361
|
|
|
|
40,283
|
|
|
Trade and other payables
|
|
|
(4,714
|
)
|
|
|
(6,928
|
)
|
|
|
|
|
|
|
|
Overall net exposure
|
|
|
51,732
|
|
|
|
37,275
|
|
|
|
|
|
|
|
|
|
(i)
|
|
Sensitivity analysis
|
|
|
|
|
The following table indicates the approximate change in the Groups 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
|
|
|
2006
|
|
|
|
|
|
|
|
Effect on profit
|
|
|
|
|
|
|
Effect on profit
|
|
|
|
Increase in foreign
|
|
|
after tax and
|
|
|
Increase in foreign
|
|
|
after tax and
|
|
|
|
exchange rates
|
|
|
retained profits
|
|
|
exchange rates
|
|
|
retained profits
|
|
|
|
%
|
|
|
$000
|
|
|
%
|
|
|
$000
|
|
|
Renminbi
|
|
|
5
|
%
|
|
|
2,752
|
|
|
|
5
|
%
|
|
|
1,983
|
|
F-47
27
|
|
Financial instruments (Continued)
|
|
(e)
|
|
Fair values
|
|
|
|
|
The 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 liabilities
|
|
|
|
|
The 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 assets
|
|
|
|
At 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 Groups banking facilities are secured by the
Groups 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
Groups 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
Groups 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
|
|
Commitments
|
|
|
|
At December 31, 2007, the Group had the following outstanding capital commitments not
provided for in the Groups financial statements:
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
Contracted for
|
|
|
3,398
|
|
|
|
4,852
|
|
Authorised but not contracted for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,398
|
|
|
|
4,852
|
|
|
|
|
|
|
|
|
F-48
31
|
|
Leasing arrangements
|
|
|
|
The Group as lessee
|
|
|
|
At December 31, 2007, the Group had commitments for future minimum lease payments under
non-cancellable operating leases which fall due as follows:
|
|
|
|
|
|
|
|
|
|
|
|
The Group
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
Within one year
|
|
|
592
|
|
|
|
849
|
|
After one year but within five years
|
|
|
257
|
|
|
|
828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
849
|
|
|
|
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 Group
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
Within one year
|
|
|
2,414
|
|
|
|
3,825
|
|
After one year but within five years
|
|
|
|
|
|
|
1,797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,414
|
|
|
|
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 lessor
|
|
|
|
Property 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
32
|
|
Retirement benefits schemes
|
|
|
|
The 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
|
|
|
$000
|
|
|
Income 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
|
|
|
|
16,309
|
|
Income 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
|
|
|
|
36,068
|
|
Management fee income from a jointly controlled entity (note ii)
|
|
|
580
|
|
|
|
480
|
|
F-50
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 received
|
|
|
|
immediate holding
|
|
|
a jointly controlled
|
|
|
|
|
|
|
|
|
|
|
prepayments and
|
|
|
accrued
|
|
|
in advance and
|
|
|
|
company
|
|
|
entity
|
|
|
Trade receivables
|
|
|
other receivables
|
|
|
charges
|
|
|
deferred income
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
$000
|
|
|
Immediate 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
|
|
|
(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 remuneration
|
|
|
|
|
Remuneration for key management personnel, including amounts paid to the Companys directors
as disclosed in note 7 and certain of the highest paid employees as disclosed in note 8, is
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
|
$000
|
|
|
$000
|
|
|
Short-term employee benefits
|
|
|
11,057
|
|
|
|
10,591
|
|
Other long-term benefits
|
|
|
367
|
|
|
|
687
|
|
Termination benefits
|
|
|
706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,130
|
|
|
|
11,278
|
|
|
|
|
|
|
|
|
|
|
|
Total remuneration is included in staff costs (see note 5(b)).
|
F-51
34
|
|
Non-adjusting post balance sheet event
|
|
|
|
Pursuant 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 party
|
|
|
|
The 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 uncertainty
|
|
|
|
|
The 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 Groups accounting policies
|
|
|
|
|
The following are some of the more critical judgement areas in the application of the
Groups accounting policies that currently affect the Groups financial condition and
results of operations.
|
|
(i)
|
|
Depreciation
|
|
|
|
|
Depreciation 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 Groups 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 Groups 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.
|
F-52
36
|
|
Accounting estimates and judgements (Continued)
|
|
(b)
|
|
Critical accounting judgement in applying the Groups accounting policies (Continued)
|
|
(ii)
|
|
Trade receivables and other receivables
|
|
|
|
|
The 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 equipment
|
|
|
|
|
The 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.
|
F-53
36
|
|
Accounting estimates and judgements (Continued)
|
|
(b)
|
|
Critical accounting judgement in applying the Groups 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 provisions
|
|
|
|
|
Contingencies, 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.
|
F-54
37
|
|
Possible impact of amendments, new standards and interpretations issued but not yet effective
for the annual accounting period ended December 31, 2007
|
|
|
|
Up 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 Groups results of operations and financial position.
|
|
|
|
Of these developments, the following relate to matters that may be relevant to the Groups
operations and financial statements:
|
|
|
|
|
|
Effective for
|
|
|
accounting periods
|
|
|
beginning on or
|
|
|
after
|
|
Revised IAS/HKAS 1, Presentation of financial statements
|
|
January 1, 2009
|
Amendment to IAS/HKAS 23, Borrowing costs
|
|
January 1, 2009
|
Amendments to IAS 27, Consolidated and separate financial statements
|
|
July 1, 2009
|
Amendments to IAS 32, Financial instruments: Presentation and IAS
1, Presentation of financial statements
|
|
January 1, 2009
|
Amendment to IFRS 2, Share-based payment
|
|
January 1, 2009
|
Revised IFRS 3, Business combinations
|
|
July 1, 2009
|
IFRS/HKFRS 8, Operating segments
|
|
January 1, 2009
|
IFRIC/HK(IFRIC) Interpretation 12, Service concession arrangements
|
|
January 1, 2008
|
IFRIC/HK(IFRIC) Interpretation 13 Customer loyalty programmes
|
|
July 1, 2008
|
IFRIC/HK(IFRIC) Interpretation 14, IAS/HKAS19-The limit on a
defined benefit asset, minimum funding requirements and their interaction
|
|
January 1, 2008
|
F-55
EXHIBIT INDEX
|
|
|
|
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
1.1
|
|
|
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 Companys 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 Companys 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 Companys 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 Companys 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
Companys 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 Companys 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 Companys 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
Companys 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 Companys 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 Companys 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 Companys 6-K filed with the Commission on September
17, 2003).
|
F-56
|
|
|
|
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
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 Companys 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 Companys 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
Companys 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 Companys 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 Companys 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 Companys 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 Companys 6-K on December 3, 2004 (incorporated by reference to the Companys 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 Companys 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.
|
F-57
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