When we look back on 2006, I believe we will view it as a year of change for Modern Terminals. The good news is that we are getting good at embracing change, quickly and effectively taking on challenges and seizing opportunities as they arise. This is evidenced in our accomplishments this year, and bodes well for our competitiveness in the future.

We are well on our way to achieving the great majority of our 2006 Business Plan targets, as well as outperforming our financial goals for the year. Meeting our Business Plan objectives was particularly important this year, because we were very focused on resetting our companyˇ¦s fundamental management systems as we evolve into a group with multiple Business Units. We established a Strategy Management office and formalized our approach to Project Management. We enhanced our Business Planning process to allow deployment to Business Units, improve resourcing and tracking, and connect to Individual Performance Contracts. We adjusted our organizational structure and established Governance Charters to clarify accountabilities and relationships. We introduced the concept of Skill Communities to align functions and facilitate learning among Business Units. More work is required to solidify these changes, and we have made it a priority in our 2007 Business Plan to do this.
 
Mr. Sean A. Kelly
Managing Director
Modern Terminals Limited

allow deployment to Business Units, improve resourcing and tracking, and connect to Individual Performance Contracts. We adjusted our organizational structure and established Governance Charters to clarify accountabilities and relationships. We introduced the concept of Skill Communities to align functions and facilitate learning among Business Units. More work is required to solidify these changes, and we have made it a priority in our 2007 Business Plan to do this.

A sense of urgency about this work is still needed. In September, we began operations at the first berth of Phase II in Taicang. This facility is expected to handle in excess of 500,000 TEUs this year, and 1.2 million in 2007. In addition, we are now only one short year away from the opening of the first two berths in Da Chan Bay.

Our Hong Kong team continues to perform to our high standards, despite disruption caused by the extensive Terminals 1, 2 and 5 upgrade project. These challenges allow us to prove once again that we have the best operating team in the business.

It has been a great year; and our 2007 Business Plans are already in place to ensure next year will be as well.

On behalf of our Board and leadership team, I would like to take this opportunity to thank each of you for contributing to our success, and to wish you and your families a joyful holiday season and a healthy as well as prosperous New Year!

Sean A. Kelly