42 42 MTRMTR CORPORATIONCORPORATION LIMITED GOING places growth strategy in 2006 We made steady progress in our international Overseas growth Executive management’sreport RMB4.6 billion, or 30% of the capital cost, is being borne This is a RMB15.3 billion project, of which approximately Progress of our investment in BJL4 has been good. Mainland of China exploration of opportunities in the UK and continental Europe. other projects in the Mainland of China, as well as further (BJL4) project and additional preparation work for our strategy in 2006, with the final approval for the Metro We made steady progress in our international growth

China and China Development Bank. loans provided by the Industrial and Commercial Bank of and 70% by two RMB1.6 billion 25-year non-recourse bank company will be financed 30% by equity from the partners civil construction. The RMB4.6 billion investment by the PPP Beijing Municipal Government to finance land acquisition and remaining 70% of the capital cost is being funded by the Investment Co. Ltd. and 49% by Beijing Capital Group. The 49% owned by MTR Corporation, 2% by Beijing Infrastructure by a Public-Private Partnership (PPP) company which is

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43 ANNUAL REPORT 20062006

Preparatory work for our projects Civil work for Shenzhen Metro Line 4 project MAIN IMAGE in the Mainland of China is in progress RIGHT is ready to begin 44 MTR CORPORATION LIMITED ABOVE to be completed by 2009. Programmes have been finalised. Construction is expected under construction. Operation Readiness Targets and Tasks construction programme is well on target with 23 stations awarded. The 29km line comprises 24 stations, and the stock, signalling and automatic fare collection systems were and Financing Agreement were signed. Contracts for the rolling and in April 2006 the Concession Agreement, Lease Agreement (NDRC), the business licence of the PPP company was granted approval of the National Development and Reform Commission were achieved during the year. In January 2006, following the operation of, the BJL4 for 30 years. A number of key milestones Municipal Government for investment in, and construction and The PPP company has a Concession Agreement with the Beijing Overseas growth Executive management’sreport Construction progress on Beijing Metro Line 4 is well on target, with 23 stations now under construction Wuhan and Suzhou. projects in key cities such as Shenzhen, Beijing, Hangzhou, The Company also made further progress on similar potential and Phase 1 take-over programmes are being finalised. completion and civil work is ready to begin. Operations Readiness resumption have begun. Initial preparatory work is near and Phase 2 for 30 years. Related utilities diversion and land build Phase 2 of Shenzhen Metro Line 4 and operate Phase 1 In Shenzhen we are awaiting approval from the NDRC to Guojiatushuguan Lingjinghutong Yuanmingyua Beijing MetroLine Renmindaxu Gongyixiqiao Beigongme Taorantin Pinganli Majiap g n n u e

Jiaomenx Beijingnan Xida Xinjiekou Dongwuyuan Weigongcu Haidianhuangzhuan Beijingdaxuedongme Xiyuan Anheqiaobei n i n 4 g n 45 ANNUAL REPORT 2006 The Concession, Lease and Financing Agreements Agreements Financing and Lease Concession, The LEFT April in signed were 4 Line Metro Beijing for In November 2006, MTR Corporation entered into a 50/50 joint joint 50/50 a into entered Corporation MTR 2006, November In state-owned a is which SJ, company railway Swedish with venture for bid joint a prepare to Sweden, in operator train passenger in concessions Öresundståg the for 2007 February in submission the over take will bidder successful The Denmark. and Sweden 2008. of end the at concessions was UK the in Franchise Western South the for bid earlier Our incumbent the to awarded was contract the and unsuccessful holder. franchise to submit a Best and Final Offer for the concession. A decision on on decision A concession. the for Offer Final and Best a submit to 2007. mid in expected is bidder preferred the miles in the Greater London region and carries approximately 23 23 approximately carries and region London Greater the in miles London for Transport December, In year. per passengers million bidders two the of one as Rail Laing with partnership our selected Rail Concession (LRC). LRC will use an inner suburban commuter commuter suburban inner an use will LRC (LRC). Concession Rail of extremities eastern and northern western, the serving network route 60 over stations 60 serves currently LRC London. Greater In October 2006, the Company and Laing Rail submitted a joint joint a submitted Rail Laing and Company the 2006, October In London formed newly the for contract service cost gross a for bid renewals, are coming up over the next few years. We will also also will We years. few next the over up coming are renewals, Germany, as such countries, European other in opportunities seek develop. to expected is privatisation where operating service contracts. The primary focus is in the UK and and UK the in is focus primary The contracts. service operating transport public of privatisation the where markets, Scandinavian franchise as well as franchises, new of number a and mature, is Europe “asset-light” pursue to continues Europe in strategy Our