The Chief Executive Officer of MTR Corporation, C K Chow, discusses the organisation's sustainability journey in context of the major events and opportunities of the past year and how they will shape the Corporation's future. Following are the highlights of his remarks.

The Rail Merger

We enter the 2008 year as an empowered organisation. We have greater business capacity, broader capabilities, a greatly extended transport network and, critically, the opportunity to bring change that fosters social, economic and environmental benefits for the communities we serve.

The rail merger has established the means to better facilitate a major business objective, that is, to be the backbone of public transport in Hong Kong. Essentially, the intent has not changed but rather demands a higher degree of care and responsibility in stewardship. We continue our mission to serve as the premier public transport operator, to build or reinvigorate communities along our rail lines and to bring our expertise to mainland China and the international markets. The change comes in how we deliver; that is, how we have evolved sustainable competitive advantage to manage the increased risks and in parallel, optimise opportunities. Realising the economic and social benefits as a result of operational synergies is only the beginning.

The process of the merger itself demanded a high degree of stakeholder engagement both internally and externally, which continues today. In this latest stage involving the actual integration and implementation of systems and cultures, we recognise the need to have a more inspiring vision-mission-values set in order to move forward cohesively as an organisation. This supposition arises out of the apparent challenge to mobilise both corporate body and spirit as a single force powering forward to achieve common corporate and community benefits.

Growth

The rail merger is only a part, albeit of major strategic importance, of our 2007 story. Hong Kong is entering a phase of dynamic growth in which four new rail lines form part of the major territory-wide infrastructure planning announced under the year's HKSAR Government Policy Address. This poses an exciting future for MTR Corporation as it heralds the opportunity to expand our footprint within Hong Kong and to extend our services and capabilities into the Pearl River Delta and, by default, to greater mainland China.

Some 60 kilometres of rail line are expected to be added to our local network over the next decade, reaching into new communities and creating local hubs of social and commercial activity. The result will establish seamless cross-territory travel and enhance rail as the preferred mode of public transport. The new regional express link announced as part of this broad infrastructure plan integrates the Hong Kong network into mainland China's 12,000+ kilometres of national high-speed rail, designating Hong Kong as the southern terminus of this system. Following the example of existing high-speed railways worldwide, this express service brings together the broader regional communities while delivering on the social and economic aspirations of travel convenience, services accessibility and spacious, affordable living environments.

Community Rail

The evolving practices covering social, economic and environmental stewardship are paying dividends in our endeavour to be a true community railway. The West Island Line (WIL) is a prime example. The deliberate early-stage public consultation has revealed the overwhelming local community support for the line and has identified for us where investment can be leveraged to bring growth to the community, kick-start urban renewal while maintaining sensitivity to local heritage and, more importantly, provide connectivity and convenience through a series of network-linked escalators, elevators and passageways that serve to connect the entire community outside our stations. As we plan and build future lines the dynamics of such engagement will change, as each community has its vested interests to be considered. Their input, combined with our expertise and work ethos of continual improvement, can only further our vision to be a company that connects and grows communities with caring services.

Sustainability Report Card

In reviewing our progress for the 2007 year in context of sustainability development, we have steadily progressed. We are well advanced by way of addressing risks and including our stakeholders in decisions relevant to our enlarged businesses in rail and property. What we have put into practice over the years serves as a knowledge bank and foundation for new projects while we remain vigilant in responding to society's evolving aspirations and expectations.

As a member of the global rail community we continue to push forward with our work in the UITP (International Association of Public Transport) and most recently, in adopting a formal Climate Change Policy. We also pointedly continue to participate in the many benchmarking exercises to maintain our SEE profile amongst international stakeholders and standards organisations.

The 2008 year is a challenging one. We are on an uphill climb to maintain our high standards for sustainable development while working to successfully integrate two corporate cultures and operations into "One Company, One Team". At the same time, it presents the singular opportunity to review how we can effectively and efficiently implement best practice under the competitive advantage framework for the new organisation.

CK Chow
Chief Executive Officer
15 April 2008