ASIA SATELLITE TELECOMMUNICATIONS HOLDINGS ANNOUNCEMENT OF ANNUAL RESULTS

14 March 2013

Asia Satellite Telecommunications Holdings Limited announces its 2012 annual results for the year ended 31 December 2012.

AsiaSat’s Chairman, JU Wei Min, said, “As we look beyond 2012, we remain generally optimistic about our prospects. Our market position is strong, and we continue to be regarded as the industry leader in Asia. Although some of our customers faced budgetary constraintsduring the year, our clientele mostly remained loyal to us based on our ability to offer a full range of high quality satellite services and support their business development.”

“In the year ahead, achieving another record gain will be a challenge as we experienced some exceptional items during the year under review, which will not occur again in 2013. Approaching 2014, however, we can look forward to the launches of AsiaSat 6 and AsiaSat 8, which will give us the added capacity to serve new customers and to meet the expansion needs of our existing customers.”

Chairman’s Statement
A Year of Record Performance
As AsiaSat enters its 25th year, I am pleased to announce that we once again achieved record results for the year ended 31 December 2012. This was the fourth consecutive year of record performance for our Company, both in terms of profitability and revenue.

It should be noted, however, that 2012 was unique as there were two exceptional items that skewed our performance: a one-off revenue contribution from certain customers following the enactment of the Finance Act in India and the disposal of our wholly-owned subsidiary, SpeedCast Holdings Limited (SpeedCast), which positively impacted the Group’s performance.

The global economic climate did temper the performance of our business. As our business trails general economic trends, we began to see some impact among government customers who tightened budgets, despite the gradual recovery in worldwide markets. Some of our smaller customers who struggled to find funding were especially cautious when signing or renewing contracts, and certain deals were more difficult to conclude due to aggressive competition.

Nevertheless, we continued to see strong pent-up demand for our services in markets throughout the region, especially in India, and we do not anticipate any serious negative impact on our business unless there is a significant deterioration in the global economy.

Our Expanding Role Connecting People and the World
Over the years, AsiaSat has played a prominent role broadcasting live coverage of major sports tournaments and events to viewers across the Asia Pacific. During the year, we provided live transmission of the UEFA Euro 2012, the biggest international sporting event in Europe held every four years. AsiaSat also played a significant role delivering live television coverage of the world’s biggest and most viewed sporting event, the London Olympic Games, to broadcasting organisations and audiences throughout AsiaSat’s region-wide footprint. Thanks to the reliable, high quality service that was offered in both HD and SD television formats, billions of viewers from across the region were able to witness this historic sporting event in which more than 10,000 athletes from 205 countries participated.

Many news agencies and broadcasters also relied on AsiaSat for distributing breaking and special news across the region. In one of the most noteworthy events of the year, we provided video news coverage of China’s 18th National People’s Congress.

Turnover
Consolidated turnover in 2012 was HK$1,885 million (2011: HK$1,718 million), an increase of HK$167 million, representing a rise of 10% compared with the previous year.
In September 2012, the Group disposed of its entire interest in SpeedCast, its 100% wholly owned VSAT operation. In accordance with the Hong Kong Financial Reporting Standard 5, all the revenue earned by SpeedCast prior to the completion of the disposal, was treated as revenue from a discontinued operations and the revenue from the satellite operation, our core business, was treated as revenue from a continuing operations. After the disposal, SpeedCast continues to use AsiaSat’s capacity to provide broadband access and maritime services to its customers across Asia.

The turnover split between our continuing operations and discontinued operations was HK$1,780 million (2011: HK$1,580 million) and HK$183 million (2011: HK$240 million) respectively. The consolidated turnover of HK$1,885 million (2011: HK$1,718 million) was derived after the elimination of intersegment sales of HK$78 million (2011: HK$102 million). The growth from our continuing operations was HK$200 million greater than last year, owing substantially to the one-off revenue contribution of HK$311 million from customers resulting from the enactment of the Finance Act in India in 2012. With the retirement of AsiaSat 2 in 2012, no additional revenue from AsiaSat 2 was reported in the current year.

Operating expenses
Operating expenses for continuing operations in 2012, excluding depreciation and amortisation, were HK$248 million (2011: HK$274 million). The decrease was mainly the result of a reversal of impairment provisions previously made on certain customer debts, which we were able to recover during the year.

Depreciation
Depreciation for continuing operations in 2012 was HK$345 million (2011: HK$333 million), slightly more than last year due to the commencement of depreciation on the newly-extended Tai Po Earth Station during the year.

Profit
Profit attributable to shareholders for 2012 was HK$914 million (2011: HK$823 million), representing an increase of 11% compared with 2011. This includes a gain of HK$119 million (2011: Nil) on the disposal of our entire interest in SpeedCast.

Cash flow
During 2012, the Group experienced a net cash outflow of HK$162 million (2011: outflow of HK$20 million) after capital expenditure of HK$1,669 million (2011: HK$975 million) and dividends of HK$47 million (2011: HK$207 million). As of 31 December 2012, the Group reported a cash and bank balance of HK$2,105 million (2011: HK$2,266 million).
The Group continues to be debt free.

Dividend
The directors will recommend the payment of a final dividend of HK$0.80 per share (2011: Nil) and a special dividend of HK$1.00 per share (2011: Nil) in the forthcoming annual general meeting to be held on 19 June 2013. This together with the interim dividend of HK$0.12 per share (2011: HK$0.08 per share), gives a total dividend of HK$1.92 per share (2011: HK$0.08 per share) for the year ended 31 December 2012.

Core Business Performance
During the year under review, our Company continued to provide reliable and uninterrupted service to our customers serving end-users in more than 50 countries and nearly two-thirds of the world’s population.

The total number of transponders leased or sold as of 31 December 2012 was 105 (31 December 2011: 108) with an overall year end utilisation rate of 79% (31 December 2011: 82%).

New contracts won during the year under review amounted to a total value of HK$162 million (2011: HK$551 million), while renewed contracts were worth HK$2,434 million (2011: HK$607 million). New and renewed contracts combined amounted to HK$2,596 million (2011: HK$1,158 million). The increase in total new and renewed contract value was mainly the result of renewals by major long-term customers during 2012.

Indian Finance Act
In previous reports, I mentioned that the Finance Act enacted by the Indian Parliament in May 2012, could have unfavourable consequences on our current tax proceedings in the Indian Courts.

The implications of this Act would see revenues received from the provision of satellite transponder capacity with coverage including India or income earned from any source dealing in India, charged tax in India. What remains unresolved is the portion of revenue earned by the Group that might be deemed to be Indian sourced. Our case is currently before the Indian Supreme Court, and a decision has yet to be made. In the meantime, our position in regard to what revenues are taxable has not changed, and we are awaiting the outcome of the case.

AsiaSat 7 and AsiaSat 3S
Following the launch in November 2011 of AsiaSat 7, the replacement satellite for AsiaSat 3S, we completed in-orbit testing to verify its performance and integrity in early January 2012.
The launch of this satellite, which will ultimately replace AsiaSat 3S in 2014, was well ahead of schedule allowing us to provide a smooth service transition for our customers when the latter satellite is decommissioned. AsiaSat 7 is now co-located with AsiaSat 3S at the 105.5ºE orbital slot.

During the interim period, AsiaSat 7 will be used for exploring short-term revenue opportunities and other temporary uses.

This approach of replacing our existing satellites early, underlines our strategy of providing service continuity and our commitment of not putting our customers’ businesses at risk.

Progress on AsiaSat 6 and AsiaSat 8
During the year, Space Systems/Loral commenced construction of two new satellites for the AsiaSat fleet: AsiaSat 6 and AsiaSat 8. Both SS/L 1300 satellites were on track during the year under review for their launch in the first half of 2014.

These additions to our fleet will take us from four satellites to six and will expand our capability to meet the increasing demand for quality satellite capacity in the Asia-Pacific region. As our existing operating satellites are now nearing full capacity, the launches of AsiaSat 6 and AsiaSat 8 are key to our continuing development as a company, and offer further scope for growth once they come on line.

Once in operation, AsiaSat 6 will have 28 high-powered C-band transponders, and AsiaSat 8 will have 24 Ku-band transponders and a Ka-band beam. The two satellites will be able to offer exceptional power and additional beam coverage across Asia, the Middle East and Australasia.

AsiaSat 6 is expected to open new market opportunities for AsiaSat, following a unique arrangement signed with Thaicom Public Company Limited (Thaicom) that enables us to share certain frequencies in the 120ºE orbital slot.

AsiaSat 8 will be co-located with AsiaSat 5 and will provide additional Ku-band capacity to provide services such as DTH television, private networks and data distribution.

Expansion of Tai Po Earth Station in Hong Kong
In the first half of 2012, we completed the expansion of our Earth Station at Tai Po, Hong Kong. This facility supports the Telemetry, Tracking and Control (TT&C) activities of AsiaSat's fleet of satellites, enabling us to enhance value-added service offerings such as C-band and Ku-band traffic uplink, shared hub services, MCPC (Multiple Channels per Carrier) distribution platforms, equipment hosting and backup services to customers.

The expansion of our Earth Station with these services further increases our competitiveness and complements our existing core business of transponder capacity leasing.

SpeedCast
In September, we signed an agreement with SpeedCast Acquisitions Limited to dispose of our entire interest in SpeedCast.

The reason for our disposal of SpeedCast was based simply on the fact that it lies outside our core business. Having invested substantially to grow this company, we felt that we had reached a point where a new investor running the company would be better placed to take SpeedCast to the next level of its development. Continuing to provide services for broadband applications in areas not adequately served by terrestrial infrastructure and at sea, SpeedCast will remain one of our major customers.

Failure of Privatisation Proposal
As we described in our interim report, the proposal by Asia Satellite Management Stock Ownership Trust (MSOT) and AsiaSat MSOT (PTC) Limited (acting in its capacity as trustee of MSOT) for the privatisation of the Company, was not approved by the requisite majority of independent shareholders.

Outlook
As we look beyond 2012, we remain generally optimistic about our prospects. Our market position is strong, and we continue to be regarded as the industry leader in Asia.

Although some of our customers faced budgetary constraints during the year, our clientele mostly remained loyal to us based on our ability to offer a full range of high quality satellite services and support their business development.

In the year ahead, however, achieving another record gain will be a challenge as we experienced some exceptional items during the year under review, which will not occur again in 2013. With the disposal of SpeedCast and the loss of its revenue contribution, our revenue will inevitably decrease in 2013, although we do not expect this to have a significant impact on our profit as SpeedCast’s margins were relatively low. Additionally, the contract with one of our longest-running customers was renegotiated at terms considerably lower than the previous contract due to the change in prevailing market rates. The new terms will take effect in mid-2013, and we will subsequently face a drop in revenue from this customer.

However, with our operating satellite fleet nearing full capacity, it will be difficult for us to make up this anticipated revenue decrease in 2013. Approaching 2014, however, we can look forward to the launches of AsiaSat 6 and AsiaSat 8, which will give us the added capacity to serve new customers and to meet the expansion needs of our existing customers.

During the intervening period, we will continue focusing on our core business of transponder leasing and exploring acquisition opportunities beyond our organic growth. We will also continue to work closely with our existing customers, helping them to identify new ways to benefit from our value proposition as a provider of premium satellite services in Asia Pacific.

Directors and Senior Management
In order to remain fully compliant with best practices in corporate governance, the Company has appointed two more Independent Non-executive Directors to our Board on 6 March 2013. With these appointments, we fully comply with the requirement in the Listing Rules that the Independent Non-executive Directors should represent at least one third of the Board.
I would like to take this opportunity to welcome Mr. Stephen Hoi Yin LEE and Mr. Kenneth McKELVIE to the Board, and I look forward to working with them closely in the years ahead.

As both Professor Edward CHEN and Mr. Robert SZE will retire as Directors and not offer themselves up for re-election at the upcoming annual general meeting, on behalf of the Board I would like to thank them both for their many years of dedicated service to the Company and wish them well in their future endeavours.

I would also like to thank our customers and equity holders for their ongoing support of our Company, as well as our existing Board members and staff for their untiring commitment to AsiaSat’s success.

JU Wei Min
Chairman
Hong Kong, 14 March 2013