Dear Stakeholder,

During this past year the Corporation focused efforts on its value proposition for both business and stakeholders. Such efforts enhanced the business case for sustainability and firmly strengthened our industry reputation for best practice. It has been a year of building and refining the corporate framework through initiatives that will drive long-term corporate strategy as well as purposefully bringing accountability to the front line of operations.

Our performance for the year progressed steadily, driven by the corporate culture of continuous improvement. We have successfully completed and delivered to the appointed operators the second of our tourist-related projects, Ngong Ping 360, and are now progressing with core rail projects that extend our mass transit network to the growing communities of Hong Kong. In these new projects we are working within an engagement architecture of more creative and earlier community inclusion and using more sophisticated risk management processes. Already, the positive impact on the end product is evident.

To ensure our customer services continue to deliver beyond patrons' expectations, a programme of numerous initiatives geared towards service improvement has been widely adopted across the organisation. These include programmes to differentiate our services, actively involve stakeholder participation and improve work skills and inspire collective social responsibility among staff. At the strategic level, changes are being instituted to consolidate governance of selected corporate-level management systems, and we have introduced a climate change policy to further align us with global sustainability commitment.

By design, all our initiatives are the steps taken to ensure that our people skills and business processes and systems are robust, scalable and able to meet the challenges in the years ahead. Our overall objective is to deliver value through performance excellence at all levels and in all markets in which we operate.

This value proposition is already benefiting our work in international markets where our reputation as an industry leader is gaining ground. Our work in mainland China is progressing with rail network construction, while our consultancy on rail services and new projects is extending across regional Asia and the Middle East.

We are the custodians of one of Hong Kong's most valuable assets and take this responsibility to the heart of all our services and work practices. It is our duty to build and manage for the communities we serve, and to leave for future generations a transport system and surrounding environments that enhance the social and environmental aspirations of our society.

CK Chow
Chief Executive Officer
18 April 2007