Stock code: 66
Annual Report 2024
CONNECTING COMMUNITIES
BUILDING THE FUTURE
Our Vision
We aim to be an
internationally-recognised
company that connects and
grows communities with caring,
innovative and sustainable services.
Our Values
• Excellent Service
• Value Creation
• Mutual Respect
• Enterprising Spirit
Our Cultural Focus Areas
• Participative Communication
• Collaboration
• Effectiveness & Innovation
• Agility to Change
Our Purpose
Keep Cities Moving
Corporate Strategy 3 Strategic Pillars
Mainland China and
International Businesses
New Growth Engine
Annual Report
2024
Sustainability
Report 2024
Hong Kong Core
CONNECTING COMMUNITIES,
BUILDING THE FUTURE
Welcome to MTR Corporation Limited’s
2024 Annual Report, which recaps the major
accomplishments and events of the Company’s
45th year of railway service while also providing
a look into the future of railway infrastructure
development in Hong Kong.
Since 1979, the Company has steadfastly pursued
its mission to Keep Cities Moving, providing safe,
efficient and environmentally friendly rail transport
for passengers from all walks of life. Now, we are
turning the page to a new era – an exciting phase
of railway infrastructure development that will see
several important new projects come to fruition,
bringing communities together more closely
than ever and forging stronger links with growing
populations across the Greater Bay Area. This
report will offer a preview of what’s to come and
the investments MTR is making to turn these critical
plans into reality.
We also invite readers to learn more about our
comprehensive sustainability efforts by referring
to our Sustainability Report 2024, which details
how the Company strives to achieve robust
environmental, social and governance objectives in
order to build a better organisation and contribute
to the advancement of the communities it serves.
Attain Full Potential of
Hong Kong Core Business and
Advance our Social Objectives
Expand into New Hubs and New
Products across Mainland China
and International Business,
Maintaining a Steady Growth
Invest in New Technologies and
Mobility Services to Reinforce our
Core for Long-term Growth
MTR SHOP
CONTENTS
OVERVIEW
2
45th Anniversary
3
Highlights
4
ESG Highlights
5
Key Awards
6
Key Figures
8
Our Network
10
Chairman’s Letter
14
CEO’s Review and Outlook
BUSINESS REVIEW
AND ANALYSIS
18
The Year in Review
18
Business Performance
18
– Hong Kong Transport Services
Transport Operations
26
– Hong Kong Transport Services
Station Commercial Businesses
30
– Hong Kong Property Businesses
38
– Hong Kong Network Expansion
42
– Mainland China and International Businesses
50
Financial Performance
60
Ten-Year Statistics
62
Other Businesses
63
Environmental & Social Responsibility
68
Human Resources
70
Investor Relations
CORPORATE GOVERNANCE
72
Corporate Governance Report
106 Audit & Risk Committee Report
109 Risk Management
114
Capital Works Committee Report
115
Finance & Investment Committee Report
116
Remuneration Committee Report
121
Board and Executive Directorate
137
Key Corporate Management
138 Report of the Members of the Board
FINANCIALS AND
OTHER INFORMATION
173 Contents of Consolidated Financial Statements
and Notes
174
Independent Auditor’s Report
180 Consolidated Statement of Profit or Loss
181 Consolidated Statement of Comprehensive Income
182 Consolidated Statement of Financial Position
183 Consolidated Statement of Changes in Equity
184 Consolidated Statement of Cash Flows
185 Notes to the Consolidated Financial Statements
267 Glossary
1
ANNUAL REPORT 2024
Over the past 45 years, MTR has become one of the world’s top transit systems, committed to providing sustainable,
green and accessible public transportation services that are safe, efficient and reliable. In Hong Kong, we connect all
18 districts. MTR’s expertise and high-level management capabilities have also been recognised externally as the Company
has expanded its footprint into Mainland China and overseas, keeping Hong Kong and the cities MTR serves moving.
In future, MTR will continue to strive for more success, creating more milestones and building a brighter tomorrow with
our stakeholders, while upholding its mission to “Keep Cities Moving”. To celebrate its 45th anniversary, MTR launched
various activities early in 2024, allowing the public to reflect on MTR’s growth while engaging with the community.
MTR 45th Anniversary Cocktail Reception
Chill Fun
Trainival
Green T
Baby
Fun Day
MTR 45th
Anniversary
Themed Train
Station Rail
Voyage
Celebrate 45 Years
of Togetherness
2
MTR CORPORATION LIMITED
45TH ANNIVERSARY
HIGHLIGHTS
Hong Kong
Businesses
Awarded
Tung Chung East Station
Package 1
Property Development Project
99.9%
Passenger Journeys On-time
1.9+ billion
Total Patronage
Mainland China and
International Businesses
Opening of City Section of
Sydney Metro M1 Metro
North West &
Bankstown Line
Opening of
Shenzhen Metro Line 13
Phase 1 Initial Section
Growth and
Outlook
Signed the Project Agreement for
Hung Shui Kiu Station
Main Construction Works Continued for
Tung Chung Line Extension,
Oyster Bay Station,
Kwu Tung Station and
Tuen Mun South Extension
13 Residential Property
Projects under Development
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
3
ANNUAL REPORT 2024
KEY KPIS FOR 2024 ACHIEVED
Launched the
First Electric Bus
Completed a Research Study
on Hydrogen Fuelled
Light Rail Vehicle
Installed 8 Additional
Water Dispensers
in Stations in 2023 – 2024
Enhancements of
MTR • Care App
with the Expansion of
Navigation Function for
Visually Impaired Persons
10%+
of our Interns were
Persons with Disabilities
or Ethnically Diverse
150+
Diversity,
Equity and Inclusion
Training Events were
held for staff
Social Inclusion
200+
Employment and
Pre-employment
Opportunities
were provided for
Young Talents
Over 1,000
Students Participated in
“‘Train’ for Life’s
Journeys 2.0” Programme
30+ Suppliers
Attended Training
Sessions on Carbon
Accounting
Advancement &
Opportunities
Greenhouse Gas
Emissions
Reduction
4
MTR CORPORATION LIMITED
ESG HIGHLIGHTS
Hong Kong Transport Services
Environmental, Social
and Governance
Hong Kong Property Businesses
ELEMENTS
• Top 10 Shopping Mall Award,
Shopping Mall Awards 2023 – 2024
U Magazine
• Excellent Service Award,
Hong Kong Service Awards 2024
East Week
THE SOUTHSIDE
• Hong Kong New Shopping Mall Award,
Shopping Mall Awards 2023 – 2024
U Magazine
• True Living Supreme Brand Awards 2024,
Most Iconic New Shopping Mall
am730
The Wai
• Top 10 Shopping Mall Award,
Shopping Mall Awards 2023 – 2024
U Magazine
• Bronze Winner for Innovation in
Brand Development
2024 Asia-Pacific Stevie Awards
Finance and Investor Relations
Bronze Award – General Category,
2024 Best Annual Reports Awards
The Hong Kong Management Association
15 Years Plus Caring Company Logo
Hong Kong Council of Social Service
Received seven awards in Award for Excellence in
Training and Development 2024
Hong Kong Management Association
Received six Grand Awards in Best HR Awards 2024
CTgoodjobs
Corporate – Top 10 Highest Volunteer Hour Award,
Hong Kong Volunteer Award 2024
Agency for Volunteer Service
2024 Hong Kong Sustainability Award
• Grand Award (Large Organisation Category)
• Distinction Award (Large Organisation Category)
• Excellence in Economic Sustainability Initiative
• Excellence in Innovation
The Hong Kong Management Association
TVB ESG Awards 2024
• Greater Bay Area ESG Excellence Enterprise Award
• Best in ESG Practices
• ESG Social Innovative Technology Award
• ESG Environmental Innovative Technology Award
Television Broadcasts Limited
Mainland China and
International Businesses
BJMTR
2024 China Best Employers Award Top 100
Zhaopin.com
MTR (SZ)
2023/2024 Annual Awards for National Excellent
Foreign-Invested Enterprises
China Association of Enterprises with Foreign Investment and
Shenzhen Association of Enterprises with Foreign Investment
Elizabeth Line
Rail Businesses Awards 2024
• Rail Business of the Year
• Train Operator of the Year
• Rail Team of the Year – Customer Experience
Melbourne metropolitan rail service
Australasian Rail Industry Awards 2024
• Customer Service Excellence Award
• Sustainability Excellence Award
The Australasian Railway Association
Metro Trains Sydney
Australasian Rail Industry Awards 2024
• Employee Engagement Excellence Award
The Australasian Railway Association
Sydney Metro City & Southwest Project
Sydney Award 2024
• People’s Choice Award (Project)
Excellence in Living Smart Award 2024 Chill Out:
Excellence in Customer Experience Award
MingPao.com
HKACE Awards 2023
• Team – Internal Support Service – Gold Award
• Program – Outstanding Customer Service –
Silver Award
• Program – Digital Service Strategy Award –
Silver Award
• Program – Smart Service Award – Bronze Award
Hong Kong Association for Customer Service Excellence
Elite Brand Awards 2023
• Elite Brand Award (Public Transport Services)
Elite Listed Enterprise Awards 2023
• Elite Listed Enterprise Award (Public Services)
Oriental Daily News and on.cc
Received 21 awards in the 49th International
Exhibition of Inventions Geneva
Geneva Invention
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
5
ANNUAL REPORT 2024
KEY AWARDS
2024
2023
Favourable/
(Unfavourable)
Change %
HK$ million
%
HK$ million
%
Total revenue
Recurrent business revenue
– Hong Kong transport services
– Hong Kong transport operations
23,013
38.3
20,131
35.3
14.3
– Hong Kong station commercial businesses
5,343
8.9
5,117
9.0
4.4
– Total Hong Kong transport services
28,356
47.2
25,248
44.3
12.3
– Hong Kong property rental and management businesses
5,379
9.0
5,079
8.9
5.9
– Mainland China and international railway, property rental
and management subsidiaries
25,467
42.4
25,955
45.6
(1.9)
– Other businesses
809
1.4
700
1.2
15.6
60,011
100.0
56,982
100.0
5.3
Property development business revenue
– Mainland China property development
–
–
–
–
–
Total revenue
60,011
100.0
56,982
100.0
5.3
Total EBITDA(1)
Recurrent business EBITDA
– Hong Kong transport services
– Hong Kong transport operations
7,694
25.6
5,954
33.8
29.2
– Hong Kong station commercial businesses
4,658
15.5
4,557
25.8
2.2
– Total Hong Kong transport services
12,352
41.1
10,511
59.6
17.5
– Hong Kong property rental and management businesses
4,195
13.9
4,016
22.8
4.5
– Mainland China and international railway, property rental
and management subsidiaries
1,656
5.5
1,072
6.1
54.5
– Other businesses, project studies and business
development expenses
(296)
(1.0)
(276)
(1.6)
(7.2)
17,907
59.5
15,323
86.9
16.9
Property development business EBITDA
– Hong Kong property development
12,185
40.5
2,329
13.2
423.2
– Mainland China property development
(3)
–
(13)
(0.1)
76.9
12,182
40.5
2,316
13.1
426.0
Total EBITDA
30,089
100.0
17,639
100.0
70.6
Total EBIT(2)&(3)
Recurrent business EBIT
EBIT
– Hong Kong transport services
– Hong Kong transport operations
(63)
(0.3)
(1,111)
(10.6)
94.3
– Hong Kong station commercial businesses
3,773
16.9
3,792
36.3
(0.5)
– Total Hong Kong transport services
3,710
16.6
2,681
25.7
38.4
– Hong Kong property rental and management businesses
4,169
18.7
3,999
38.3
4.3
– Mainland China and international railway, property rental
and management subsidiaries(3)
1,223
5.5
524
5.0
133.4
– Other businesses, project studies and business
development expenses
(364)
(1.6)
(341)
(3.3)
(6.7)
Share of profit of associates and joint ventures
1,340
6.1
1,259
12.1
6.4
10,078
45.3
8,122
77.8
24.1
Property development business EBIT
– Hong Kong property development
12,185
54.7
2,329
22.3
423.2
– Mainland China property development
(3)
–
(13)
(0.1)
76.9
12,182
54.7
2,316
22.2
426.0
Total EBIT
22,260
100.0
10,438
100.0
113.3
(Loss)/gain from fair value measurement of investment properties
(1,703)
1,386
n/m
Interest and finance charges
(1,032)
(1,139)
9.4
Profit before taxation
19,525
10,685
82.7
Income tax
(3,458)
(1,575)
(119.6)
Profit for the year (before special loss provisions)
16,067
9,110
76.4
Special loss provisions
–
(1,022)
n/m
Profit for the year (after special loss provisions)
16,067
8,088
98.7
Non-controlling interests
(295)
(304)
3.0
Profit for the year attributable to shareholders
of the Company
15,772
7,784
102.6
Profit/(loss) for the year attributable to shareholders
of the Company arising from:
Recurrent businesses
– in Hong Kong
5,981
4,940
21.1
– outside Hong Kong
1,229
(659)
n/m
7,210
4,281
68.4
Property development businesses
– in Hong Kong
10,235
2,035
402.9
– outside Hong Kong
30
48
(37.5)
10,265
2,083
392.8
Underlying businesses
17,475
6,364
174.6
Fair value measurement of investment properties
(1,703)
1,420
n/m
Total profit for the year attributable to
shareholders of the Company
15,772
7,784
102.6
Notes
1
EBITDA represents operating profit/(loss) before fair value measurement of investment properties, depreciation, amortisation, provisions for onerous contracts, variable
annual payment, share of profit of associates and joint ventures, interest, finance charges and taxation.
2
EBIT represents profit/(loss) before fair value measurement of investment properties, interest, finance charges and taxation and after variable annual payment.
3
Excluding special loss provisions, being provisions for onerous contracts made for Stockholms pendeltåg and Mälartåg regional traffic totalling HK$1,022 million in 2023.
n/m: not meaningful
6
MTR CORPORATION LIMITED
KEY FIGURES
2024
2023
Favourable/
(Unfavourable)
Change %
Financial ratios
EBITDA margin(4) (in %)
29.8
26.9
2.9 % pts.
EBITDA margin(4) (excluding Mainland China and international subsidiariesδ ) (in %)
47.0
45.9
1.1 % pts.
EBIT margin(5) (in %)
14.6
10.2^
4.4 % pts.
EBIT margin(5) (excluding Mainland China and international subsidiariesφ ) (in %)
21.8
20.4
1.4 % pts.
Net debt-to-equity ratio(6) (in %)
31.6
26.5
(5.1)% pts.
Return on average equity attributable to shareholders of the Company arising from
underlying businesses (in %)
9.6
3.6
6.0 % pts.
Interest cover(7) (times)
15.1
9.8
5.3 times
Share information
Basic earnings per share (in HK$)
2.54
1.26
101.6
Basic earnings per share arising from underlying businesses (in HK$)
2.81
1.03
172.8
Ordinary dividend per share (in HK$)
1.31
1.31
–
Dividend payout ratio (based on underlying business profit) (in %)
47
127
(80)% pts.
Share price at 31 December (in HK$)
27.10
30.30
(10.6)
Market capitalisation at 31 December (in HK$ million)
168,693
188,381
(10.5)
Hong Kong Transport Operations
Total passenger boardings (in million)
Domestic Service
1,601.7
1,586.7
0.9
Cross-boundary Service
98.4
71.5
37.6
High Speed Rail
26.7
20.1~
33.0
Airport Express
13.1
10.8
21.1
Light Rail and Bus
213.6
207.7
2.8
Average number of passengers (in thousand)
Domestic Service (weekday)
4,683.8
4,669.8
0.3
Cross-boundary Service (daily)
268.8
195.9
37.2
High Speed Rail (daily)
73.0
57.3~
27.5
Airport Express (daily)
35.9
29.7
20.8
Light Rail and Bus (weekday)
615.4
601.8
2.3
Average fare (in HK$)
Domestic Service
8.67
8.44
2.7
Cross-boundary Service
32.12
30.85
4.1
High Speed Rail
79.68
81.45
(2.2)
Airport Express
61.12
61.19
(0.1)
Light Rail and Bus
3.27
3.17
3.2
Proportion of franchised public transport boardings (in %)
50.1
50.1
–
Notes
4
EBITDA margin represents total EBITDA (excluding Hong Kong property development profit from share of surplus, income and interest in unsold properties) as a
percentage of total revenue.
5
EBIT margin represents total EBIT (excluding Hong Kong property development profit from share of surplus, income and interest in unsold properties, and share of profit of
associates and joint ventures) as a percentage of total revenue.
6
Net debt-to-equity ratio represents loans and other obligations, short-term loans, obligations under service concession and loans from holders of non-controlling interests
net of cash, bank balances and deposits and investment in bank medium-term notes in the consolidated statement of financial position as a percentage of total equity.
7
Interest cover represents operating profit before fair value measurement of investment properties, depreciation, amortisation, provisions for onerous contracts, variable
annual payment and share of profit of associates and joint ventures divided by interest and finance charges before capitalisation.
δ
Excluding the relevant revenue and expenses of Mainland China and international subsidiaries of HK$25,467 million and HK$23,814 million (2023: HK$25,955 million and
HK$24,896 million) respectively.
φ
Excluding the relevant revenue, expenses, depreciation and amortisation, and provisions for onerous contracts of Mainland China and international subsidiaries of
HK$25,476 million, HK$23,814 million, HK$433 million, and HK$nil (2023: HK$25,955 million, HK$24,896 million, HK$548 million, and HK$1,022 million) respectively.
^
Excluding special loss provisions, being provisions for onerous contracts made for Stockholms pendeltåg and Mälartåg regional traffic totalling HK$1,022 million in 2023
the EBIT margin would have been 12.0% in 2023.
~
High Speed Rail service resumed on 15 January 2023. The number of passengers only counts the days from 15 January 2023 to 31 December 2023.
2020
2024
2023
2022
2021
15.8
7.8
(4.8)
(1.5)
(9.2)
5.5
10.3
(1.7)
1.2
6.0
1.4
(0.6)
2.1
4.9
9.8
10.4
(0.2)
0.4
(0.8)
9.6
9.4
0.8
1.0
(1.6)
0.4
Net Profit/(Loss) Attributable to
Shareholders of the Company
(HK$ billion)
Net Profit/(Loss) Attributable to Shareholders of
the Company
(Loss)/Gain from Fair Value Measurement of
Investment Properties
Property Development Profit
Recurrent Business Profit/(Loss) – outside
Hong Kong
Recurrent Business Profit/(Loss) – in Hong Kong
HK$15.8 billion
102.6%
11.2
1.1
2.2
22.3
9.4
14.5
6.7
6.5
12.2
1.9
0.5
(0.3)
8.2
2.3
7.1
13.5
11.6
0.4
1.5
2020
2024
2023
2022
2021
Recurrent Businesses – Hong Kong
Total EBIT
(HK$ billion)
Total EBIT
Property Development Businesses
Recurrent Businesses – Mainland China
and International*
HK$22.3 billion
136.4%
*
Including Provisions for Onerous Contracts and
Impairment Loss, Share of Profit from Associates and
Joint Ventures, and Project Studies and Business
Development Expenses from Mainland China and
International Businesseses
60.0
57.0
47.2
42.5
21.4
21.1
25.5
34.5
26.0
31.0
47.8
26.0
21.6
0.2
25.0
21.8
0.4
2020
2024
2023
2022
2021
Total Revenue
(HK$ billion)
Total Revenue
Mainland China Property Development
Recurrent Businesses – Mainland China
and International
Recurrent Businesses – Hong Kong
HK$60.0 billion
5.3%
7
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
28
29
30
41
39
56
47
58
19 52
Cable Car
Ngong Ping 360
Tung
Chung
Tung
Chung
West
Lantau Island
Tuen Mun South
A16
Siu Hong
Tin Shui Wai
Long
Ping
Airport
Tuen Mun
Hung Shui Kiu
AsiaWorld-Expo
Sydney
Melbourne
AUSTRALIA
Stockholm
London
EUROPE
MAINLAND
CHINA AND
MACAO
Chengdu
Macao
Shenzhen
Hangzhou
Tianjin
Beijing
Zhengzhou
MAINLAND CHINA AND
INTERNATIONAL BUSINESSES
01 Telford Gardens / Telford Plaza I and II
02 World-wide House
03 Admiralty Centre
04 Argyle Centre
05 Luk Yeung Sun Chuen / Luk Yeung Galleria
06 New Kwai Fong Gardens
07 Sun Kwai Hing Gardens
08 Fairmont House
09 Kornhill / Kornhill Gardens
10 Fortress Metro Tower
11 Hongway Garden / Infinitus Plaza
12 Perfect Mount Gardens
13 New Jade Garden
14 Southorn Garden
15 Heng Fa Chuen / Heng Fa Villa / Paradise Mall
16 Park Towers
17 Felicity Garden
18 Tierra Verde / Maritime Square 1 / Maritime Square 2
19 Tung Chung Crescent / Citygate / Novotel Citygate /
Seaview Crescent / Coastal Skyline / Caribbean Coast
20 Central Park / Island Harbourview / Park Avenue / Harbour
Green / Bank of China Centre / HSBC Centre / Olympian City
One / Olympian City Two
21 The Waterfront / Sorrento / The Harbourside / The Arch /
Elements / The Cullinan / The Harbourview Place / W Hong
Kong / International Commerce Centre / The Ritz-Carlton,
Hong Kong
22 One International Finance Centre / Two International
Finance Centre / IFC Mall / Four Seasons Hotel /
Four Seasons Place
23 Central Heights / The Grandiose / The Wings / PopCorn 1 /
PopCorn 2 / Crowne Plaza Hong Kong Kowloon East /
Holiday Inn Express Hong Kong Kowloon East / Vega Suites
24 Residence Oasis / The Lane
25 No.8 Clear Water Bay Road / Choi Hung Park & Ride
26 Metro Town
27 Royal Ascot / Plaza Ascot
28 Ocean Walk
29 Sun Tuen Mun Centre / Sun Tuen Mun Shopping Centre
30 Hanford Garden / Hanford Plaza
31 Citylink Plaza
32 MTR Hung Hom Building / Hung Hom Station Carpark
33 Trackside Villas
34 The Capitol / Le Prestige / Hemera / Wings at Sea / MALIBU /
LP6 / MONTARA / SEA TO SKY / MARINI / GRAND MONTARA /
GRAND MARINI / OCEAN MARINI / LP10 / The LOHAS
35 The Palazzo
36 Lake Silver
37 Festival City
38 The Riverpark
39 Century Gateway
40 THE PAVILIA FARM I / THE PAVILIA FARM II / The Wai
42 The Austin / Grand Austin
43 SOUTHLAND / La Marina / THE SOUTHSIDE
45 Ocean Pride / Ocean Supreme / PARC CITY /
THE PAVILIA BAY / City Point
46 Cullinan West
47 The Spectra / Sol City
48 The YOHO Hub
PROPERTY DEVELOPMENTS
UNDER CONSTRUCTION / PLANNING
34 LOHAS Park Packages
40 Tai Wai Station Packages
41 Tin Wing Stop
43 THE SOUTHSIDE Packages
44 Ho Man Tin Station Packages
51 Yau Tong Ventilation Building
52 Tung Chung Traction Substation
53 Pak Shing Kok Ventilation Building
54 Oyster Bay Packages
55 Tung Chung East Station Packages
56 A16 Station Packages
57 Kwu Tung Station Packages
58 Hung Shui Kiu Station Packages
WEST RAIL PROPERTY DEVELOPMENTS
(AS AGENT FOR THE RELEVANT
SUBSIDIARIES OF KCRC)
39 Century Gateway
45 Ocean Pride / Ocean Supreme / PARC CITY / THE PAVILIA BAY / City Point
46 Cullinan West
47 The Spectra / Sol City
48 The YOHO Hub
49 Kam Sheung Road Station Packages
50 Pat Heung Maintenance Centre
PROPERTIES OWNED / DEVELOPED / MANAGED BY THE CORPORATION
EXISTING NETWORK
Airport Express
Disneyland Resort Line
East Rail Line
High Speed Rail
Island Line
Kwun Tong Line
Light Rail
South Island Line
Tseung Kwan O Line
Tsuen Wan Line
Tuen Ma Line
Tung Chung Line
Northern Link
Northern Link Spur Line
South Island Line (West)
Tseung Kwan O Line Southern Extension
Pak Shek Kok Station
POTENTIAL FUTURE EXTENSIONS
LEGEND
Proposed Station
Proposed Interchange Station
Station
Interchange Station
Shenzhen Metro Network
*
Racing days only
PROJECTS IN PROGRESS
Tuen Mun South Extension
Kwu Tung Station
Hung Shui Kiu Station
Tung Chung Line Extension:
Tung Chung East and
Tung Chung West stations
Airport Railway Extended
Overrun Tunnel
Oyster Bay Station
8
MTR CORPORATION LIMITED
OUR NETWORK
16
42
01
02
03
04
44
05
07
48
45
49
27
31
33
35
36
38
40
23
26
24
53
34
09
12
13
15
17
08
11
14
22
20
46
25
32
37
18
06
43
55
51
10
50
54
21
57
Hong Kong Island
Whampoa
Kowloon
Lo Wu
Lok Ma
Chau Loop
Huanggang
Port
Lok Ma Chau
Yuen Long
Fo Tan
Sha Tin
Tai Wai
Racecourse*
Mong
Kok East
Jordan
Hong
Kong
Fortress Hill
New Territories
Shenzhen
Kam
Sheung
Road
Tsuen Wan West
Tsuen Wan
Kwai Hing
Kwai Fong
Mei Foo
Lai Chi Kok
Po Lam
Hang Hau
Yau Tong
Lam Tin
Kwun Tong
Ngau Tau Kok
Kowloon
Bay
Choi
Hung
Kai
Tak
Sung
Wong
Toi
To
Kwa
Wan
Ho
Man
Tin
Hung
Hom
East Tsim
Sha Tsui
Tseung
Kwan O
Tiu
Keng
Leng
LOHAS Park
Area 137
Lok Fu
Cheung Sha Wan
Sham Shui Po Kowloon
Tong
Wong
Tai Sin
Kwu Tung
San Tin
Chau Tau
Ngau
Tam
Mei
Au Tau
Sheung Shui
Fanling
Tai Wo
Tai Po Market
Pak Shek Kok
University
Tai Shui
Hang
Heng On
Shek Mun
City One
Che Kung
Temple
Hin Keng
Diamond Hill
Tai Wo Hau
Exhibition
Centre
Shek
Kip Mei
Prince
Edward
Tsim
Sha
Tsui
Austin
Yau Ma
Tei
Mong
Kok
Sha
Tin
Wai
Ma On Shan
Wu Kai Sha
Hong Kong
West Kowloon
Kowloon
Olympic
Nam
Cheong
Lai King
Tsing Yi
Disneyland
Resort
Sunny Bay
Tung Chung East
Chai Wan
Heng Fa Chuen
Shau Kei Wan
Sai Wan Ho
Quarry Bay
Admiralty
Central
Sheung Wan
Queen Mary
Hospital
South
Horizons
Wong
Chuk
Hang
Ocean
Park
Cyberport
Wah Fu
Tin Wan
Aberdeen
Lei Tung
Kennedy
Town
Sai Ying Pun
HKU
North
Point
Tin
Hau
Wan
Chai
Causeway
Bay
Tai Koo
Oyster Bay
HONG KONG OPERATING NETWORK WITH FUTURE EXTENSIONS
Route Length
271 km
Stations
99
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
9
ANNUAL REPORT 2024
Dear Shareholders and other Stakeholders,
At the inception of Hong Kong’s first metro service in 1979, few could have predicted just how much change was about
to come. Yet over the ensuing 45 years, the city rapidly transformed itself into a financial and logistics powerhouse and
an important cog in the machinery of global business. MTR is proud to have played a role in Hong Kong’s success story,
working tirelessly to build a comprehensive, world-class railway network designed to meet passengers’ always evolving
needs, foster economic growth and Keep Cities Moving.
Central to this mission is the Company’s ability to undertake new railway projects that will connect new and growing
areas of Hong Kong, make existing links even more efficient, and strengthen ties between the city and its neighbours in
the Greater Bay Area and other parts of Mainland China. Just two short years ago, we completed a remarkable phase of
development that culminated with the opening of the East Rail Line cross-harbour extension. Now we are in the midst
of the next stage of growth, embarking on an exciting series of new projects and initiatives that will form an important
part of Hong Kong’s long-term strategic economic growth plan and cement railways as the heart of the city’s green and
sustainable transport infrastructure.
10
MTR CORPORATION LIMITED
CHAIRMAN’S LET TER
In its dual role as a provider of essential public services
and a major publicly listed company, MTR’s mission is
to maintain, improve and expand its networks for the
benefit of the city and its people. Of equal importance is
for us to deliver shareholder value as a listed company.
MTR’s proven “Rail plus Property” business model is
vital to these efforts. It enables us to create thriving,
interlinked residential and commercial developments
along our rail lines and at the same time help generate
the necessary capital to fund future projects and finance
the asset management, maintenance and service upgrade
of the existing network. The year under review was
highlighted by steady growth in our transport and station
commercial businesses and a solid contribution from our
property business. We are also proud to have once again
employed strong operational and governance practices
to drive performance while meeting our fiduciary duties.
Such results demonstrate our unflagging commitment
to Hong Kong and its people as well as our shareholders.
However, it must be noted that there are several years
of considerable capital expenditure on the horizon as
we seek to participate in the next major phase of Hong
Kong’s growth, and that a substantial portion of the profit
generated during the year under review and in future
must be invested in these projects. The Corporation
acknowledges both the genuine challenges and the
multiple exciting opportunities that this will bring. With
our customary prudent and pragmatic approach to
financial management, MTR is preparing itself to be one
of the leading drivers of this growth story while paying
careful attention to the needs of all its stakeholders.
With the world continuing to face myriad economic and
geopolitical uncertainties, it is also more important than
ever to protect our assets and the value of our company
with exceptional diligence, not least as we plan the
funding both for the on-going upgrading of our existing
assets and for our home city’s coming infrastructural
development. These are significant challenges indeed,
but ones we feel MTR is more than capable – and
willing – to meet.
In addition to practising financial prudence and strong
corporate governance, we are in the midst of reviewing
our implementation of various aspects of our Corporate
Strategy, including how we are using innovation
and technology to make our operations better and
greener. The work we are doing through our innovation
investment company MTR Lab is an excellent example
of how we are pursuing cutting-edge solutions that
can support the long-term, sustainable growth of our
industry and communities. We are also laser-focused
on identifying and grooming the next generation of
leadership talent to guide MTR and Hong Kong through
this next phase of infrastructural development.
MTR’s 45th anniversary of railway operations in Hong
Kong in 2024 was a wonderful time to reflect on past
accomplishments and celebrate with the city we proudly
call home. I believe it has provided an even better
occasion to welcome the considerable opportunities that
lie ahead, join hands and journey together towards an
even brighter future.
BUSINESS PERFORMANCE
AND GROWTH
At MTR, we “Go Smart Go Beyond” to bring safe,
efficient, low-carbon railway transit services to people
of all walks of life in Hong Kong, Mainland China and
around the world, utilising the latest technologies to “Go
Beyond Boundaries” to improve and enhance our assets
and adhering to world-class standards in the design,
construction and maintenance of new lines and stations.
In 2024, we advanced several important projects related
to Government’s Railway Development Strategy 2014
and Northern Metropolis Development Strategy. Major
construction works continued for the Tung Chung Line
Extension, Oyster Bay Station, Kwu Tung Station on the
East Rail Line and the Tuen Mun South Extension. We also
signed the Project Agreement with Government for Hung
Shui Kiu Station.
11
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
Our property business delivered strong profit in
2024, a result that will directly benefit communities
through future railway projects funded by the “Rail plus
Property” business model. We awarded the tender for
Tung Chung East Station Package 1, and numerous
developments currently in progress are expected to add
approximately 10,000 units to Hong Kong’s housing
market. In 2024, we also celebrated the first anniversary
of THE SOUTHSIDE shopping mall in Wong Chuk Hang
serving the community. THE SOUTHSIDE shopping mall
has added about 47,000 square metres to the Company’s
retail portfolio.
Our Mainland China and international businesses
continue to form a core pillar under our Corporate
Strategy. In Australia, the City section of the Sydney Metro
M1 Metro North West and Bankstown Line opened in
August 2024, bringing added convenience to commuters.
In Shenzhen, the initial section of Phase 1 of Shenzhen
Metro Line 13 commenced service in December 2024.
There is no doubt that one of the highlights of the year
for MTR in 2024 was being able to celebrate our 45th
anniversary of metro rail operations in Hong Kong with
the local community. Highlights included the “Station
Rail Voyage” exhibition, an experiential railway gallery at
Hung Hom Station showcasing iconic retired trains, train
components and a remarkable collection of historical
artifacts; the “MTR 45th Anniversary Themed Train”,
which incorporated classic elements of first-generation
passenger trains to showcase the evolution of railway
service in Hong Kong and bring back fond memories for
passengers; and the five-day “Chill Fun Trainival”, MTR’s
first large-scale outdoor carnival, which drew about
80,000 attendees of all ages for railway-themed fun
along the Central Harbourfront. MTR Academy was also
proud to co-organise the “Belt and Road Railway Forum”,
an event where more than 200 industry leaders from
Mainland China and Belt and Road countries gathered to
discuss the future of the regional railway industry.
FINANCIAL PERFORMANCE
During the year under review, our transport and station
commercial activities continued to recover slowly but
steadily from the difficulties of the COVID era, resulting in
profit attributable to equity shareholders from recurrent
businesses of HK$7,210 million, an increase of 68.4%
over 2023. Together with property development profit
of HK$10,265 million, profit from underlying businesses
increased to HK$17,475 million. Including the loss
arising from the fair value measurement of investment
properties, net profit attributable to shareholders of the
Company in 2024 was HK$15,772 million, equating to
earnings per share of HK$2.54. The Board has proposed
a final ordinary dividend of HK$0.89 per share, which
together with the interim dividend of HK$0.42 per share
brings the full-year dividend to HK$1.31 per share
(2023: HK$1.31 per share).
ENVIRONMENTAL, SOCIAL
AND GOVERNANCE
As a global leader in the provision of accessible,
affordable, low-carbon mass transit, we are passionate
about attaining the highest possible environmental, social
and governance (“ESG”) standards. For 2024, we set 43
ESG-related key performance indicators (“KPIs”) to gauge
how well MTR is doing in 10 focus areas covering three
primary environmental and social objectives: reducing
Greenhouse Gas (“GHG”) Emissions, promoting Social
Inclusion, and fostering Advancement & Opportunities.
Over the course of the year, we either met all of these KPIs
or were on track to do so.
Reducing Greenhouse Gas Emissions
While railway transport is comparatively low-carbon by
nature in Hong Kong, MTR is still always exploring ways
to further reduce GHG emissions across its operations.
During the year under review, we commenced our
first electric bus passenger service. Seven of our new
12
MTR CORPORATION LIMITED
CHAIRMAN’S LET TER
stations attained “BEAM Plus” New Buildings Version
2.0 Provisional Gold or above in 2024 in recognition of
their building sustainability performance. We increased
our generation of renewable energy by completing
installation works for solar photovoltaic systems at Kwun
Tong Station, Tuen Mun Depot and Tai Wai Depot. During
the year, we reinforced our commitment to sustainability
by raising HK$7.4 billion of funding under our Sustainable
Finance Framework, including our debut public
issuance of RMB4.5 billion in green bonds in the offshore
Renminbi market.
Promoting Social Inclusion
We strive to make our organisation as inclusive as
possible. In 2024, 348 volunteering projects were
organised under the “More Time Reaching Community”
Scheme, attracting a headcount of 5,847 participating
volunteers. The “EmpowerZ” traineeship pilot programme
was also introduced in 2024 to provide on-the-job
training for youths from diverse ethnic backgrounds or
those with disabilities.
Fostering Advancement & Opportunities
Talent development is critical to MTR’s success. Each year,
we groom our staff by offering a comprehensive range
of learning and development programmes that help
employees grow their careers while also ensuring that
our business is supported by a strong pipeline of talent.
We also provide training in future skills and innovation
as well as school outreach and attachment opportunities
for young talent. In 2024, over 1,000 secondary school
students participated in the upgraded “‘Train’ for Life’s
Journeys 2.0” youth programme. We also proudly
announced the introduction of the HK$5 million “Ride to
Success” scholarship programme for students who are
interested in pursuing careers in the railway sector.
Governance
MTR strives to attain world-class standards of corporate
governance, ethics and transparency to ensure that we
serve the best interests of our business, shareholders,
partners, suppliers and the wider community. We are
also committed to achieving high levels of inclusion and
diversity throughout the organisation.
ACKNOWLEDGEMENTS AND
APPRECIATION
I would like to welcome once again Mrs Ayesha
Macpherson Lau as an Independent Non-executive
Director (“INED”) of the Board, effective 22 May 2024.
I would also like to take this opportunity to thank
Dr Dorothy Chan Yuen Tak-fai and Ms Rose Lee Wai-mun,
who both retired as INEDs on 22 May 2024, for their many
years of valuable leadership and counsel. I would also like
to welcome Ms Mable Chan as a Non-executive Director
(“NED”) of the Board with effect from 5 December 2024 by
virtue of her appointment as the Secretary for Transport
and Logistics and thank Mr Lam Sai-hung, who ceased to
be an NED of the Board on 5 December 2024 at the same
time as he ceased to be the Secretary for Transport and
Logistics, for his valuable contributions to the Board and
the Company during his tenure.
Throughout its history, MTR has strived to serve all
members of the public with high-quality, green railway
transit services. We look forward to celebrating many
more anniversaries and milestones together as we
continue investing in the future of Hong Kong and
contributing our decades of expertise to help connect
communities around the world.
Dr Rex Auyeung Pak-kuen
Chairman
Hong Kong, 6 March 2025
13
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
Dear Shareholders and other Stakeholders,
MTR Corporation Limited’s 45th year of railway service in Hong Kong marked a memorable time for the Company
and the local community. It provided everyone with a chance to come together in celebration of one of Hong Kong’s
most remarkable achievements, its world-famous public rail network. It also gave us the opportunity to recognise the
phenomenal economic and social growth the city’s railways have helped facilitate. All of us at MTR are honoured to have
played a part in Hong Kong’s development, growing together with its people and communities.
Over the past four and a half decades, we have worked hand in hand with Government, the public, our shareholders and
partners to Keep Cities Moving. Hong Kong’s vast accomplishments in rail transit demonstrate what is possible when we
are all united through this common goal. We now have the opportunity to look towards the future: a major new phase
of infrastructural development that will see activity across the city as we build the networks of the future to support
sustainable, long-term economic growth.
14
MTR CORPORATION LIMITED
CEO’S REVIEW AND OUTLOOK
Much of MTR’s ability to design, construct, operate
and maintain high-quality railways is derived from its
effective “Rail plus Property” business model, through
which the Company develops residential and commercial
properties at sites near or adjacent to railways and applies
a substantial portion of resultant earnings towards
asset upgrades and replacement and future network
expansion. At the same time, the Corporation also builds
new communities for Hong Kong. In 2024, property
development profit saw an uptick due to recognition of
profits from existing as well as more recently launched
properties. MTR also generated satisfactory recurrent
revenue from its transport operations, station commercial
and investment property businesses, although patronage
and rentals still lag somewhat behind pre-COVID times.
There is no doubt that these are welcome results which
will help MTR fund future railway projects and maintain
and upgrade its existing network. That said, in order to
build the Hong Kong of tomorrow, MTR will have to plan
diligently so as to achieve its growth ambitions while still
retaining the requisite financial strength and balance
sheet robustness.
The year 2025 marks the 25th anniversary of the listing
of the Company. Since it went public in October 2000,
MTR has played a unique role in Hong Kong. As a listed
company, we abide strictly to the listing rules and market
mechanisms and are fully dedicated to creating value
and returns for our shareholders, amongst them the
HKSAR Government, institutional investors and individual
shareholders. We constantly seek to develop and grow
and have continued to innovate and raise our level of
efficiency. All this is done while we bring social benefits
to Hong Kong, not just in terms of economic growth, but
also in the areas of livelihood and the environment.
Over the past decades, the Company has thrived in
terms of business performance in favourable and
challenging operating environments alike, practising
financial prudence and adhering to strong principles of
governance. During the year under review, we continued
seeking ways to spur patronage and retail activity in
an operating environment marked by new consumer,
travel and tourism patterns. Enhanced adoption of smart
technologies and green initiatives helped keep our
railway assets in top form. Meanwhile, we continued to
invest in new railway projects that will be the backbone
infrastructure of Hong Kong’s future growth. More
importantly, the expanded network will bring new
impetus to our business growth.
BUSINESS PERFORMANCE
AND GROWTH
In 2024, MTR continued to “Go Smart Go Beyond” in its
efforts to enhance its world-class rail transit services.
Examples of new innovations and technologies included
upgrading the Automatic Fare Collection system to
provide passengers with even more e-payment options,
introducing a cloud-based AI platform to optimise train
mileage regulation and planning, and expanding use
of our “Virtual Service Ambassador”, an AI-enabled,
voice-controlled virtual assistant that answers customer
enquiries on train and station services. During the year,
we once again achieved 99.9% in passenger journeys
on-time and train service delivery, demonstrating the
Company’s steadfast commitment to deliver efficient
and convenient railway transit services. Growth in High
Speed Rail patronage was impressive, but growth in
Domestic Service showed only a continuation of the slow
improvement seen since the post-pandemic reopening.
In March 2024, we announced that the overall fare
adjustment rate would be capped at +3.09%, with the
remaining +0.11% adjustment rate to be recouped
in 2025/2026 and 2026/2027 and the +1.85% from
2023/2024 to be carried forward to 2025/2026 for
recoupment. The overall fare adjustment rate is
determined by the established fare mechanism with the
“Affordability Cap” arrangement, which balances the
Company’s need to generate revenue for maintaining and
improving the railway network with its ability to provide
affordable fares to the public.
15
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
As at the end of 2024, the Company had 13 residential
property developments in progress that will provide a
total of approximately 10,000 units to the local housing
market. Pre-sales activities continued throughout
the year, and the tender for Tung Chung East Station
Package 1 was awarded in December 2024. Our property
rental business continued to benefit from additional
contributions from our new shopping malls. These
include THE SOUTHSIDE, our new lifestyle shopping mall
above Wong Chuk Hang Station, which celebrated its first
anniversary of serving the community in December 2024.
MTR continues to offer its full support to Government
in the planning and construction of new railway
projects that will form the next phase of Hong Kong’s
infrastructure development. In September 2024, we
signed a Project Agreement with Government for Hung
Shui Kiu Station. Also during the year, major construction
works continued for the Tung Chung Line Extension,
Oyster Bay Station, Kwu Tung Station on the East Rail Line
and the Tuen Mun South Extension.
Our Mainland China and international businesses
generate geographically diversified revenue streams for
the Company and help promote the MTR and Hong Kong
brands abroad. In August 2024, the City section of the
Sydney Metro M1 Metro North West and Bankstown Line
opened with six new stations and new metro platforms
at Central and Sydenham stations to serve commuters.
The City section includes a 15.5-km twin tunnel running
underneath Sydney Harbour from Chatswood to
Sydenham. In Mainland China, the initial section of the
22.4-km Shenzhen Metro Line 13 Phase 1 commenced
passenger service in December 2024. Structural works
for the shopping mall at Tianjin Beiyunhe Station were
completed in December 2024, and preparation works
are now underway.
FINANCIAL PERFORMANCE
Following a combination of satisfactory results from our
transport, station commercial and investment property
rental activities together with property development
profit generated, net profit attributable to shareholders
of the Company was HK$15,772 million, representing
earnings per share of HK$2.54. The Company’s financial
performance in 2024 was marked by a notable
increase in profit derived from property developments,
demonstrating the “Rail plus Property” business model
in action. These profits relate to railway projects that
commenced several years ago, the capital expenditure
of which is now reimbursed by these gains. Such
one-off profits keep MTR in an adequate financial position
to prepare itself for the capital expenditure related to
future railway projects as well as asset upgrades and
replacements. Profit attributable to equity shareholders
from recurrent businesses was HK$7,210 million, an
increase of 68.4% from 2023, while property development
profit increased to HK$10,265 million. Profit attributable
to shareholders from underlying businesses was
HK$17,475 million.
Your Board has proposed a final ordinary dividend of
HK$0.89 per share, which together with the interim
dividend of HK$0.42 per share brings the full-year
dividend to HK$1.31 per share, same as that of 2023.
16
MTR CORPORATION LIMITED
CEO’S REVIEW AND OUTLOOK
OUTLOOK
While the Company’s operating results were satisfactory
during the year under review, it is important to
reiterate that much of these profits will be committed
to the substantial funding required for the upgrading
and renewal of existing lines as well as planning and
constructing new railway projects. We also must keep
adapting to the new realities of consumer behaviour
in the post-pandemic era, particularly the established
trends of Hong Kong people travelling north for
weekends and holidays and Mainland Chinese tourists
spending less time in local retail outlets. Revenues from
patronage, station shop and shopping mall rentals, and
station advertising are still dependent on an uncertain
global economic environment beset by volatile
geopolitical conditions and high interest rates. Prudent
cost controls and strict financial management of our
recurrent businesses and new projects will remain vital
moving forward.
Our property development business generated notable
profits in 2024, demonstrating the continued success
of the Company’s effective “Rail plus Property” business
model. However, we must keep monitoring market
sentiment, where economic concerns and high interest
rates may continue to have dampening effects moving
forward. Depending on market conditions, in the coming
12 months or so we expect to tender Tung Chung East
Station Package 2 and Tuen Mun A16 Station Package 1.
Application for pre-sale consent is also in progress for
THE SOUTHSIDE Package 6. Subject to the progress
of construction and sales, we also anticipate property
development profit from THE SOUTHSIDE packages 3
and 5, Ho Man Tin Station packages 1 and 2, and LOHAS
Park Package 12.
MTR has an important public responsibility to provide
world-class railways for people of all walks of life, and the
coming several years will be a very active period in terms
of extending the Company’s network to new and growing
population centres in Hong Kong. We are committed to
“Go Beyond Boundaries” in supporting Government’s
efforts to plan and build a network that will nurture the
city’s sustainable long-term growth. We look forward
to connecting communities through projects related
to Railway Development Strategy 2014, the Northern
Metropolis Development Strategy and the Hong Kong
Major Transport Infrastructure Development Blueprint, all
of which will bolster the role of railways as the backbone
of Hong Kong’s public transportation system. MTR will
also continue practising prudent financial management
as it works to secure funding for this next phase of
growth, a period that will see considerable demands
placed on our financial resources.
MTR’s track record as a world leader in railway transport
creates opportunities for the Company to extend its
business and brand to markets outside of Hong Kong,
including Mainland China and overseas. We will continue
to explore those that align with our Corporate Strategy
and offer the potential to generate revenue while
bringing high-quality transport services to markets all
across the globe.
I want to take this opportunity to thank Dr Tony Lee,
who will retire from his position as Operations and
Innovation Director immediately after 30 April 2025, for
his contributions to the Company. It was an honour to be
reappointed by the Board as CEO for a period extending
to 31 December 2025. I also want to express my gratitude
to the Board, Company management, and all our talented
and dedicated colleagues who have worked tirelessly
to help MTR succeed in this new era. There is significant
work ahead of us, but I believe we are on track to meet
these challenges. We will “Keep Cities Moving”.
Dr Jacob Kam Chak-pui
Chief Executive Officer
Hong Kong, 6 March 2025
17
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
Hong Kong Transport Services
Transport Operations
AIM
MTR’s transport operations Keep Cities Moving
for passengers from all walks of life, providing
safe and efficient mass transit services that are
also reliable and environmentally friendly. The
revenue they generate helps fund the upkeep
and expansion of the Company’s world-class
railway networks.
CHALLENGES
We continue to monitor economic and
demographic trends for their potential impacts
on patronage and operations. Meanwhile, we are
working hard to implement various asset upgrade
and renewal programmes without compromising
our dedication to safety and service excellence.
1.9+ billion
Total Patronage
99.9%
Passenger Journeys On-time
THE YEAR IN REVIEW
BUSINESS PERFORMANCE
18
MTR CORPORATION LIMITED
STRATEGIES
In 2024, we continued to upgrade our railway networks
and assets for improved safety and efficiency as well as
passenger experience. New technology and innovations
led to enhanced operations and customer service.
Meanwhile, our promotional and marketing efforts
proved effective once again in driving domestic and
cross-boundary patronage.
STAKEHOLDER ENGAGEMENT
New smart mobility features, a wider range of e-payment
options and on-going fare concession programmes
helped MTR address the accessibility needs of different
types of customers, while data analysis enabled us
to enhance personalisation and develop features for
individual segments. We also conducted regular customer
surveys to gauge feedback on service performance.
Meanwhile, we celebrated 45 years of service in Hong
Kong with the community by hosting the “Station Rail
Voyage” exhibition at Hung Hom Station and launching
the “MTR 45th Anniversary Themed Train”, among many
other special events and promotions.
OUTLOOK
MTR’s Domestic Service, Cross-boundary Service and High
Speed Rail (“HSR”) saw patronage growth in 2024, but
further increases will be subject to the state of the local
economy and macroeconomic factors.
The overall fare adjustment rate for 2024/2025 that
was announced in March 2024 will ensure our ability to
generate the funds necessary for maintaining, upgrading
and renewing our railway systems while still offering
affordable fares for the travelling public. Many such
initiatives are on-going, including our programmes
to replace older trains, upgrade our Automatic Fare
Collection system, replace the signalling system along
several lines and enhance station air conditioning systems
for greater passenger comfort.
Moving forward, we will also continue our award-winning
efforts to “Go Smart Go Beyond” as we seek ways to
enhance the passenger journey and improve railway
operations, which include adopting the latest innovations
and technologies for improved operations, maintenance,
customer service and sustainability.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
19
ANNUAL REPORT 2024
HONG KONG BUSINESSES
MTR’s Hong Kong businesses form the core of the
Company’s activities. They include “Hong Kong
Transport Services”, which involve the operation of
rail and bus transport services as well as commercial
activities at stations; property-related activities such
as the development, rental and management of the
Company’s railway-linked properties; and the design and
construction of new railway projects that expand and
enhance the city’s existing rail transport network. MTR
operates primarily through a “Rail plus Property” business
model that enables the Company to connect and grow
communities while also delivering shareholder value.
HK$ million
Year ended 31 December
Inc./(Dec.) %
2024
2023
Hong Kong Transport Operations
Total Revenue
23,013
20,131
14.3
Operating Profit before Depreciation, Amortisation and
Variable Annual Payment (“EBITDA”)
7,694
5,954
29.2
(Loss)/Profit before Interest, Finance Charges and Taxation and
after Variable Annual Payment (“EBIT”)
(63)
(1,111)
94.3
EBITDA Margin (in %)
33.4%
29.6%
3.8% pts.
EBIT Margin (in %)
(0.3)%
(5.5)%
5.2% pts.
In 2024, total revenue from Hong Kong transport
operations increased by 14.3% to HK$23,013 million
compared to 2023, leading to a considerable decrease
in loss before interest, finance charges and taxation
and after variable annual payment to Kowloon-Canton
Railway Corporation (“KCRC”) of HK$63 million. These
results were largely due to contributions from both
Domestic Service and Cross-boundary Service, the latter
of which enjoyed a full year of operations unlike in 2023,
when the service began resuming gradually in January
and February. Performance from High Speed Rail (“HSR”)
was also in line with expectations.
Patronage and Revenue
Patronage
In million
Revenue
HK$ million
2024
Inc./(Dec.) %
2024
Inc./(Dec.) %
Hong Kong Transport Operations
Domestic Service
1,601.7
0.9
14,507
3.7
Cross-boundary Service
98.4
37.6
3,562
61.5
HSR and Intercity
26.7
33.0
3,338
33.4
Airport Express
13.1
21.1
803
20.9
Light Rail and Bus
213.6
2.8
698
6.1
1,953.5
3.0
22,908
14.4
Others
105
–
Total
23,013
14.3
MTR’s rail and bus passenger services recorded
1,953.5 million passengers in 2024, a year on year increase
of 3.0%. Average weekday patronage increased by 2.0%
to 5.64 million.
Total Domestic Service patronage was 1,601.7 million in
2024, an increase of 0.9% compared to the previous year.
Average weekday Domestic Service patronage rose by
0.3% to 4.68 million. Cross-boundary Service to Lo Wu and
Lok Ma Chau had a full year of operations for the first time
since the pandemic and reached 98.4 million in patronage
for an increase of 37.6% from last year, mainly due to
increased northbound travel by Hong Kong residents.
HSR recorded 26.7 million in patronage, which was driven
in part by the addition of new destinations and services.
Airport Express patronage increased to 13.1 million, 21.1%
higher than 2023.
THE YEAR IN REVIEW
HONG KONG TRANSPORT SERVICES – TRANSPORT OPERATIONS
20
MTR CORPORATION LIMITED
2020
–
2
4
6
8
10
12
14
16
18
20
–
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2024
2023
2022
2021
7.82
7.64
8.44
1,601.7
14.5
8.06
8.67
Domestic Service – Patronage and
Average Fare
Patronage
(million)
(right scale)
Revenue
(HK$ billion)
(left scale)
Average Fare
(HK$)
(left scale)
1990
1995
2000
–
50
100
150
200
250
300
350
400
500
450
2024
2015
2020
2010
2005
Fare Trend
HK Payroll Index
(average 4.7%
growth p.a.)
Composite
Consumer Price
Index (average
2.8% growth p.a.)
Average Fare
(Domestic Service only)
(average 2.5% growth p.a.)
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
21
ANNUAL REPORT 2024
50.1
2.0
12.4
11.3
24.2
50.1
24.4
10.9
12.6 2.0
2
0
2
4
2
0
2
3
Market Shares of Major Transport
Operators in Hong Kong
(Percentage)
MTR
KMB
Other buses
Trams and ferries
Green minibuses
72.4
2.9
24.7
72.3
24.9
2.8
2
0
2
4
2
0
2
3
Market Shares of Major Transport
Operators Crossing the Harbour
(Percentage)
MTR
Buses
Ferries
Market Share
In 2024, our overall share of the franchised public
transport market in Hong Kong was 50.1%, same as that in
2023. Our share of cross-harbour traffic was 72.4% in 2024
compared with 72.3% in 2023.
Our share of the cross-boundary transport business in
2024 decreased to 50.4% from 53.0% in 2023, mainly due
to the increased number of land-based control points
such as Heung Yuen Wai after boundaries reopened in
early 2023. Our market share to and from the airport
decreased to 18.1% from 19.9%, which was mainly due to
increased competition from other modes of transport.
Fare Adjustment, Promotions
and Concessions
In March 2024, it was announced that the Overall Fare
Adjustment Rate for 2024/2025 would be capped at
+3.09%, with the remaining +0.11% adjustment rate
to be recouped in 2025/2026 and 2026/2027 and the
+1.85% from 2023/2024 carried forward to 2025/2026 for
recoupment. This is in line with the “Affordability Cap”
arrangement that limits the rate of overall fare adjustment
to the level of change in Median Monthly Household
Income for the corresponding year. This arrangement is
designed to balance fare affordability with the need to
generate steady recurrent revenue to maintain, upgrade
and renew railway systems.
In 2024, we continued to offer a number of on-going fare
concessions totalling approximately HK$3.1 billion for
the benefit of customers including the elderly, children,
eligible students, persons with disabilities and more.
We continued to provide City Saver and the HK$0.5
interchange discount with Green Minibus and extended
Monthly Passes, the Tuen Mun–Nam Cheong Day Pass
and the Early Bird Discount for another year. We also
launched numerous marketing initiatives supporting new
HSR routes and services as well as Airport Express.
Service Performance
Safety and efficiency are both hallmarks of MTR’s rail
service. In 2024, we achieved 99.9% in passenger
journeys on-time and train service delivery for our heavy
rail network, exceeding the targets in MTR’s Operating
Agreement and the Company’s own, even more
demanding Customer Service Pledges.
In 2024, we made over 1.85 million train trips on our
heavy rail network and over 0.91 million trips on our
light rail network. There were five delays on the heavy
rail network and none on the light rail network. Delays
are defined as those lasting 31 minutes or more and
attributable to factors within the Company’s control.
All incidents are carefully reviewed to prevent similar
situations from recurring.
THE YEAR IN REVIEW
HONG KONG TRANSPORT SERVICES – TRANSPORT OPERATIONS
22
MTR CORPORATION LIMITED
Operations Performance in 2024
Service Performance Item
Performance
Requirement
Customer
Service
Pledge Target
Actual
Performance
Train service delivery
– Island Line and South Island Line
99.0%
99.5%
99.9%
– Kwun Tong Line, Tsuen Wan Line and Tseung Kwan O Line
99.0%
99.5%
99.8%
– Tung Chung Line, Disneyland Resort Line and Airport Express
99.0%
99.5%
99.9%
– East Rail Line(1)
99.0%
99.5%
99.9%
– Tuen Ma Line
99.0%
99.5%
99.9%
– Light Rail
99.0%
99.5%
99.9%
Passenger journeys on-time
– Kwun Tong Line, Tsuen Wan Line, Island Line, Tseung Kwan O Line, South Island Line,
Tung Chung Line and Disneyland Resort Line
99.0%
99.5%
99.9%
– Airport Express
98.5%
99.0%
99.9%
– East Rail Line(1)
98.5%
99.0%
99.9%
– Tuen Ma Line
98.5%
99.0%
99.9%
Train punctuality
– Island Line and South Island Line
98.5%
99.0%
99.7%
– Kwun Tong Line, Tsuen Wan Line and Tseung Kwan O Line
98.5%
99.0%
99.7%
– Tung Chung Line, Disneyland Resort Line and Airport Express
98.5%
99.0%
99.9%
– East Rail Line(1)
98.5%
99.0%
99.9%
– Tuen Ma Line
98.5%
99.0%
99.9%
– Light Rail
98.5%
99.0%
99.9%
Train reliability: train car-km per train failure causing delays ≥5 minutes
– Kwun Tong Line, Tsuen Wan Line, Island Line, Tseung Kwan O Line, South Island Line,
Tung Chung Line, Disneyland Resort Line and Airport Express
N/A
1,000,000
2,672,748
– East Rail Line and Tuen Ma Line
N/A
1,000,000
6,974,375
Ticket reliability: smart ticket transactions per ticket failure
– Kwun Tong Line, Tsuen Wan Line, Island Line, Tseung Kwan O Line, South Island Line,
Tung Chung Line, Disneyland Resort Line, Airport Express, East Rail Line and Tuen Ma Line
N/A
18,000
55,615
Add value machine reliability
– Kwun Tong Line, Tsuen Wan Line, Island Line, Tseung Kwan O Line, South Island Line,
Tung Chung Line, Disneyland Resort Line and Airport Express
98.5%
99.0%
99.9%
– East Rail Line
98.5%
99.0%
99.9%
– Tuen Ma Line
98.5%
99.0%
99.9%
Ticket machine reliability
– Kwun Tong Line, Tsuen Wan Line, Island Line, Tseung Kwan O Line, South Island Line,
Tung Chung Line, Disneyland Resort Line and Airport Express
98.0%
99.0%
99.8%
– East Rail Line
98.0%
99.0%
99.9%
– Tuen Ma Line
98.0%
99.0%
99.9%
– Light Rail
N/A
99.0%
99.8%
Ticket gate reliability
– Kwun Tong Line, Tsuen Wan Line, Island Line, Tseung Kwan O Line, South Island Line,
Tung Chung Line, Disneyland Resort Line and Airport Express
98.0%
99.0%
99.9%
– East Rail Line
98.0%
99.0%
99.9%
– Tuen Ma Line
98.0%
99.0%
99.9%
Light Rail platform Octopus processor reliability
N/A
99.0%
99.9%
Escalator reliability
– Kwun Tong Line, Tsuen Wan Line, Island Line, Tseung Kwan O Line, South Island Line,
Tung Chung Line, Disneyland Resort Line and Airport Express
98.5%
99.0%
99.9%
– East Rail Line
98.5%
99.0%
99.9%
– Tuen Ma Line
98.5%
99.0%
99.9%
Passenger lift reliability
– Kwun Tong Line, Tsuen Wan Line, Island Line, Tseung Kwan O Line, South Island Line,
Tung Chung Line, Disneyland Resort Line and Airport Express
99.0%
99.5%
99.9%
– East Rail Line
99.0%
99.5%
99.9%
– Tuen Ma Line
99.0%
99.5%
99.9%
Temperature and ventilation
– Trains, except Light Rail: to maintain a cool, pleasant and comfortable train environment
generally at or below 26ºC
N/A
97.5%
99.9%
– Light Rail: on-train air-conditioning failures per month
N/A
<3
0
– Stations: to maintain a cool, pleasant and comfortable environment generally at or
below 27ºC for platforms and 29ºC for station concourses, except on very hot days
N/A
94.0%
99.8%
Cleanliness
– Train compartment: cleaned daily
N/A
99.0%
99.9%
– Train exterior: washed every two days (on average)
N/A
99.0%
100%
Northwest transit service area bus service
– Service Delivery
N/A
99.0%
99.5%
– Cleanliness: washed daily
N/A
99.0%
100%
Passenger enquiry response time within six working days
N/A
99.0%
100%
Note:
1
The figures reflect the actual performance of the East Rail Line for the period between 15 May and 31 December 2024.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
23
ANNUAL REPORT 2024
MTR conducts regular surveys and research to gauge
customer satisfaction levels regarding its services and
fares, the results of which are published in the Company’s
Service Quality Index and Fare Index, respectively.
Service Quality Index
2024
2023
Domestic and Cross-boundary services
72
70
Airport Express
82
83*
Light Rail
71
68
Bus
77
78
HSR
82
88*
Fare Index
2024
2023
Domestic and Cross-boundary services
63
65
Airport Express
74
74*
Light Rail
71
71
Bus
76
77
HSR
76
82*
*
The Voice of Customer surveys for Airport Express and HSR were resumed in the
second half of 2023 after the COVID-19 pandemic subsided.
MTR also belongs to the Community of Metros (“COMET”),
which establishes performance benchmarks from urban
metro systems around the world with the aim of
improving best practices in the industry. The 2023 COMET
benchmarking exercise assessed data from 45 metro
systems in 41 cities around the world. Results can be
found in the “Performance Metrics” section of our
sustainability website.
Safety Performance
Safety is our number one priority. As at 31 December
2024, the number of reportable events on our heavy rail
and light rail networks had decreased year on year by
25% and 6%, respectively. During the year, we launched
numerous safety initiatives on escalators – a primary
source of incidents – for the benefit of the general public,
especially youth and the elderly. We also implemented
the latest version of the “Integrated Speed and Position
Monitoring System”, a unique, award-winning integrated
digital solution for improving operational safety,
throughout our light rail network.
Enhancing the Customer Experience
MTR is committed to delivering a world-class customer
experience, regularly enhancing its railway assets, and
incorporating the latest innovations and technologies to
“Go Smart Go Beyond” in its provision of safe, efficient
and accessible rail transit.
Boosting Passenger Convenience
In 2024, we continued to enhance our HSR service by
adding a number of new destinations, bringing the total
number of Mainland cities served to 93. We introduced
new sleeper train services to Beijing and Shanghai. An
additional 112 weekly train trips were also added to the
East Rail, Tseung Kwan O and Tuen Ma lines in 2024.
Upgrade of Automatic Fare Collection System
Our HK$1.3 billion programme to replace more than 2,400
entry/exit gates for the Automatic Fare Collection System
throughout our stations continued during the year. The
new gates feature a slimmer body for more walkway
space, and they support more e-payment options for
greater passenger and tourist convenience. Starting
from August 2024, customers can use contactless Visa,
Mastercard and UnionPay cards at entry/exit gates.
New Trains
We are in the midst of our programme to replace existing
trains with newer, more comfortable Q-trains. Overall, we
have ordered 93 new heavy rail eight-car trains; as at
31 December 2024, a total of 24 new trains were in use on
the Island and Kwun Tong lines. Designs for new
Tung Chung Line and Airport Express trains are
progressing well. We are also targeting to have new
trains and a new signalling system for the Disneyland
Resort Line in 2028.
Replacement of Signalling System
We continued to advance the replacement of the
existing SACEM signalling system along the Tsuen Wan,
Island, Kwun Tong and Tseung Kwan O lines with a
communication-based train control signalling system
(“CBTC System”). This new system is expected to meet our
long-term operational needs by boosting overall carrying
capacity. The new signalling system is expected to be
implemented on the Tsuen Wan Line in 2026, followed
by implementation along the other lines. Overall project
completion is expected between 2028 and 2029.
Replacement of Air Conditioning Systems
Also underway is our stage 2 programme to replace
31 chillers with newer, more energy-efficient models, part
of our efforts to enhance passenger comfort at stations
while also reducing carbon emissions. It is targeted for
completion in 2025.
THE YEAR IN REVIEW
HONG KONG TRANSPORT SERVICES – TRANSPORT OPERATIONS
24
MTR CORPORATION LIMITED
Enhancing Station Facilities
Another of MTR’s major asset upgrade initiatives is the
Company’s programme to install automatic platform
gates along the East Rail Line for enhanced passenger
experience and safety. A total of about 1,600 gates are
being installed in 13 stations between Lo Wu/Lok Ma Chau
and Mong Kok East; as at 31 December 2024, works had
been completed at 10 stations. The project is expected
to be finished in 2025. More than 100 escalators in our
stations will be refurbished from 2025 to 2028, and more
than 30 escalators will be replaced from 2024 to 2026.
Smart Mobility, Operations
and Maintenance
“Go Smart Go Beyond” guides our approach towards all
facets of our operations, from employing cutting-edge
railway technology to ensuring a user-friendly customer
experience. For example, we were proud to introduce
the “Virtual Service Ambassador” to Kai Tak, Airport and
Austin stations in 2024 after successfully piloting it at
Quarry Bay Station. This AI-enabled, voice-controlled
virtual assistant responds to passenger enquiries and
provides station route guidance in real time. It is expected
that we will introduce the Virtual Service Ambassador
to more stations in the coming months and years.
We also extended coverage of our Train Car Loading
Indicator, which provides real-time passenger loading
information on Passenger Information Display Systems
in stations and the MTR Mobile app, to more lines
throughout our network.
Innovation also plays a key role in maintaining, upgrading
and operating our world-class railway networks. By using
the “dynamic simulation digital twin model” developed
by the joint research lab of MTR and the Hong Kong
University of Science and Technology, we can now
simulate and predict the travel patterns of Hong Kong
residents based on changes under various scenarios
to help the operations team implement appropriate
operational plans. We also launched data analytics and
performance dashboards for the Integrated Centralised
Platform for managing station facilities.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
25
ANNUAL REPORT 2024
AIM
We seek to create added value for
our customers, business partners and
shareholders by providing high-quality retail,
advertising and telecommunication services
throughout our network.
CHALLENGES
Economic concerns and low consumer sentiment
continue to impact our station commercial
businesses in various ways, including negative
rental reversions, lower tourist spending and
reduced advertising budgets. We are also in the
midst of upgrading our telecommunications
infrastructure to meet growing customer demand
for faster connections and wider coverage.
Hong Kong Transport Services
Station Commercial
Businesses
1,579
Station Shops covering
71,236 Square Metres
42,602
Advertising Units
26
MTR CORPORATION LIMITED
STRATEGIES
In 2024, we continued to review our tenant mix to ensure
that MTR Shops offerings are in line with retail trends.
New marketing initiatives helped draw interest from
prospective tenants and drive traffic to station retail
outlets. We continued to devise innovative solutions to
help advertisers reach consumers in targeted, cost-effective
ways. A new commercial system is also being developed
to deliver faster mobile communications for customers.
STAKEHOLDER ENGAGEMENT
We continued to optimise our trade mix at station
shops based on customer feedback and preferences.
Collecting and analysing advanced data enabled us to
serve customers and MTR Mobile app users with more
personalised retail information and offers. In community
outreach, we continued to lease station shops to various
NGOs at nominal rents.
OUTLOOK
MTR’s station retail and advertising businesses posted
year on year improvements in 2024 – the first full year of
Cross-boundary Service and HSR since the pandemic – largely
on the back of increased rail patronage and higher foot traffic.
Results also benefitted from the lower base of comparison
set in 2023. However, retail sales in Hong Kong are still
struggling to gain traction due to low consumer sentiment
and changing spending and travel patterns. Negative rental
reversions on renewed rentals and new leases continue
to impact the Company’s station commercial business.
Advertisers are also still cautious about spending in an
uncertain economic environment.
Moving forward, we will strive to maximise the value of
our retail rentals while still remaining cognizant of tenants’
difficulties in the current market. To help tenants, we will
continue rolling out attractive promotions designed to
generate foot traffic to station shops, especially via the MTR
Mobile app and MTR Points loyalty programme. As always,
we will regularly assess our tenant mix to ensure that it is
in line with current consumer expectations. Meanwhile,
our focus on digital technologies will continue to drive the
development of our advertising and telecommunications
offerings, including the rollout of robust telecommunications
infrastructure to enhance customer satisfaction.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
27
ANNUAL REPORT 2024
2020
2024
2023
2022
2021
3,077
3,269
92
640
516
2,021
836
1,544
81
616
3,208
894
1,594
89
631
5,343
1,021
3,616
124
582
5,117
981
3,429
104
603
Revenue from Hong Kong
Station Commercial Businesses
(HK$ million)
Station Retail
Advertising
Telecommunications Services
Others
HK$ million
Year ended 31 December
Inc./(Dec.) %
2024
2023
Hong Kong Station Commercial Businesses
Station Retail Rental Revenue
3,616
3,429
5.5
Advertising Revenue
1,021
981
4.1
Telecommunication Income
582
603
(3.5)
Other Station Commercial Income
124
104
19.2
Total Revenue
5,343
5,117
4.4
EBITDA
4,658
4,557
2.2
EBIT
3,773
3,792
(0.5)
EBITDA Margin (in %)
87.2%
89.1%
(1.9)% pts.
EBIT Margin (in %)
70.6%
74.1%
(3.5)% pts.
Station Retail
Station retail rental revenue rose by 5.5% to
HK$3,616 million in 2024, mostly from higher rentals for
Duty Free shops. This result was also due to the lower
base of comparison set in 2023, when Cross-boundary
Service and HSR were reopened in phases over the
first two months of the year. Negative rental reversions
continued to offset rental gains to a degree. Rental
reversion and average occupancy rates for our station
kiosks in 2024 were -9.8% and 99.0%, respectively.
We regularly review our tenant mix to ensure it is in
line with current trends. To appeal to new brands,
we launched a “smart leasing” platform in 2024 that
offers prospective tenants online VR tours of shop
environments. For existing tenants, we launched
numerous campaigns via the MTR Mobile app, advertising
and joint promotions to drive traffic and boost sales.
As at 31 December 2024, the lease expiry profile of
our station kiosks (including Duty Free shops) by
area occupied was such that approximately 36% will
expire in 2025, 29% in 2026, 32% in 2027, and 3% in
2028 and beyond.
Total revenue from all Hong Kong station commercial
activities increased by 4.4% to HK$5,343 million in 2024.
This was mainly due to improved rental revenue from the
station retail business.
THE YEAR IN REVIEW
HONG KONG TRANSPORT SERVICES – STATION COMMERCIAL BUSINESSES
28
MTR CORPORATION LIMITED
In terms of trade mix, food and beverage accounted for
approximately 38% of the leased area of our station kiosks
(excluding Duty Free shops), followed by cake shops at
13%, convenience stores at 13%, passenger services at
12% and others at 24% as at 31 December 2024.
As at 31 December 2024, there were 1,579 station
shops occupying 71,236 square metres of retail space,
representing a net increase of 10 shops and a net increase
of 733 square metres. There were 12 shops being let
at nominal rates under our “NGO & Social Enterprise
Support Programme”.
Advertising
In 2024, revenue from advertising increased by 4.1% to
HK$1,021 million. This was mainly attributed to higher
cross-boundary traffic as more Mainland Chinese cities
became eligible for individual travel and Government
ramped up tourism promotions – especially for mega
events – leading to more advertising spend in stations.
The uncertain local economy and sluggish retail
market still impacted advertising revenue despite the
introduction of new products and revenue streams, which
include new digital zones and networks.
As at 31 December 2024, the number of advertising units
in stations and trains had increased to 42,602, primarily
because of the revamp of advertising panels. During the
year, we introduced new advertising formats, including
digital pillars, new digital zones, and an expanded
network of digital portrait and landscape displays.
Additional “online-merge-offline” (“OMO”) offerings and
technology-driven advertising campaigns were also
launched during the year. In 2024, MTR provided free
advertising space to 82 non-profit organisations.
Telecommunications
In 2024, revenue from telecommunications decreased
by 3.5% to HK$582 million. All MTR stations now offer
5G services for an enhanced passenger experience, and
we are in the midst of developing a new commercial
telecommunication system for 24 stations that will
support additional 5G services while also providing faster
data throughput. Elsewhere, we continue to operate our
data centre business in Tseung Kwan O while pursuing
further data centre business opportunities.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
29
ANNUAL REPORT 2024
AIM
MTR seeks to contribute to the long-term
prosperity of Hong Kong and its communities
and create shareholder value through the
development, management and rental of quality,
integrated residential and commercial projects.
CHALLENGES
Uncertainties in the local and global economies
and current interest rate trends continue to affect
the residential real estate sector. Meanwhile, a
weak retail market and changing consumption
patterns are impacting mall traffic, resulting in
negative rental reversions.
Hong Kong
Property Businesses
16
Shopping Malls in
Our Portfolio
13 Projects to Supply
Approximately
10,000
Residential Units to the Market
30
MTR CORPORATION LIMITED
STRATEGIES
To drive mall traffic and spending in a sluggish retail
environment, we continued to roll out a variety of
innovative marketing campaigns while ensuring that
our tenant mix meets current trends. In property
development, we worked hard to ensure project
quality while continuing to identify new development
opportunities throughout our railway network. We also
strove to ensure efficient, effective and sustainable
operations in our property management business.
STAKEHOLDER ENGAGEMENT
In 2024, we rolled out a series of promotional activities
at MTR Malls, including sales-driven promotions, music
shows and festive decorations. We closely reviewed our
tenant mix and created targeted customer promotions
via data collection and analysis, ensuring that our
mall offerings are meeting customer expectations. We
also continued to monitor market conditions closely
and develop a property tendering and development
programme designed to help meet Hong Kong’s
long-term housing and economic development goals.
OUTLOOK
In the wake of the pandemic, budget-conscious Hong Kong
consumers have been making more cross-boundary trips
for shopping, dining and leisure, while Mainland Chinese
tourists are spending less in retail outlets and more on
experiential activities. It remains to be seen how long this
trend will continue. In the meantime, we will keep launching
promotional campaigns designed to boost traffic and
spending in MTR Malls, including digital promotions via the
MTR Mobile app and MTR Points loyalty programme. As the
populations around many of our malls continue to grow, the
full potential of these properties has yet to be unleashed.
Property market performance remains subject to the health
of the local and global economies as well as interest rates.
Depending on market conditions, we expect to tender
Tung Chung East Station Package 2 and Tuen Mun A16
Station Package 1 in the coming 12 months or so. Pre-sale
consents have been obtained for THE SOUTHSIDE Package 5,
LOHAS Park Package 13, Yau Tong Ventilation Building
property development and Tin Wing Stop Phase 2, while
an application is in place for THE SOUTHSIDE Package 6.
Subject to the progress of construction and sales, we expect
to book property development profit from THE SOUTHSIDE
packages 3 and 5, Ho Man Tin Station packages 1 and 2, and
LOHAS Park Package 12 in 2025.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
31
ANNUAL REPORT 2024
Property Rental and Management
Year ended 31 December
HK$ million
2024
2023
Inc./(Dec.) %
Hong Kong Property Rental and Management Businesses
Revenue from Property Rental
5,076
4,795
5.9
Revenue from Property Management
303
284
6.7
Total Revenue
5,379
5,079
5.9
EBITDA
4,195
4,016
4.5
EBIT
4,169
3,999
4.3
EBITDA Margin (in %)
78.0%
79.1%
(1.1)% pts.
EBIT Margin (in %)
77.5%
78.7%
(1.2)% pts.
Property Rental
In 2024, property rental revenue increased by 5.9% year
on year to HK$5,076 million. This was mainly due to
additional contributions from the Company’s two new
shopping malls, The Wai and THE SOUTHSIDE, which
commenced operation in the second half of 2023, and
lower amortisation of rental concessions charged to the
statement of profit or loss.
In December 2024, we celebrated the first anniversary of
THE SOUTHSIDE, our lifestyle mall located above Wong
Chuk Hang Station, serving the community. It features
about 130 merchants over five retail floors and a total
floor area of approximately 47,000 square metres.
During the year, we once again launched an array of
marketing promotions to help drive traffic and spending
at MTR Malls. To celebrate the 27th anniversary of the
establishment of the Hong Kong SAR, the Company
distributed 60,000 MTR Malls e-coupons to registered
MTR Mobile app users and gave away rewards worth
more than HK$23 million between June and September.
Driven by the weak retail market and changing
consumption patterns, MTR shopping malls in Hong Kong
recorded a rental reversion of -8.9% and an average
occupancy rate of 99% in 2024. The average occupancy
rate for the Company’s 18 floors in Two International
Finance Centre was 93%.
As at 31 December 2024, the lease expiry profile of
our shopping malls by area occupied was such that
approximately 26% will expire in 2025, 32% in 2026,
27% in 2027, and 15% in 2028 and beyond.
In terms of trade mix, as at 31 December 2024, food
and beverage accounted for approximately 31% of the
leased area of our shopping malls, followed by fashion,
beauty and accessories at 22%, services at 19%, leisure
and entertainment at 18%, and department stores and
supermarkets at 10%.
THE YEAR IN REVIEW
HONG KONG PROPERTY BUSINESSES
32
MTR CORPORATION LIMITED
Investment Property Portfolio in Hong Kong (as at 31 December 2024)
Location
Type
Lettable floor
area (sq. m)
No. of parking
spaces
Company’s
economic interest
Telford Plaza I, Kowloon Bay, Kowloon
Shopping Centre
Car Park
39,331
–
–
993
100%
100%
Telford Plaza II 7 – 8/F, Kowloon Bay, Kowloon
Shopping Centre
2,059
–
100%
Telford Plaza II 3 – 6/F, Kowloon Bay, Kowloon
Shopping Centre
Car Park
18,253
–
–
136
100%
100%
Luk Yeung Galleria, Tsuen Wan, New Territories
Shopping Centre
Car Park
11,143
–
–
651
100%
100%
Paradise Mall, Heng Fa Chuen, Hong Kong
Shopping Centre
Wet Market
Kindergarten
Car Park
15,484
1,216
2,497
–
–
–
–
415
100%
100%
100%
100%
Maritime Square 1, Tsing Yi
Shopping Centre
Kindergarten
Car Park
Motorcycle Park
28,606
920
–
–
–
–
220
50
100%
100%
100%
100%
Maritime Square 2, Tsing Yi
Shopping Centre
Car Park
Motorcycle Park
6,448
–
–
–
65
21
100%
100%
100%
The Lane, Hang Hau
Shopping Centre
Car Park
Motorcycle Park
2,629
–
–
–
16
1
100%
100%
100%
PopCorn 2, Tseung Kwan O
Shopping Centre
Car Park
8,456
–
–
50
100%
100%
PopCorn 1, Tseung Kwan O
Shopping Centre
Car Park
Motorcycle Park
12,174
–
–
–
115
16
50%
50%
50%
G/F, No. 308 Nathan Road, Kowloon
Shop Unit
70
–
100%
G/F, No. 783 Nathan Road, Kowloon
Shop Unit
36
–
100%
New Kwai Fong Gardens, Kwai Chung, New Territories
Kindergarten
Car Park
540
–
–
126
100%
100%
International Finance Centre (“ifc”), Central, Hong Kong
– Two ifc
– One and Two ifc
Office
Car Park
39,451
–
–
1,308
100%
51%
Phase I, Carpark Building, Kornhill, Quarry Bay, Hong Kong
Car Park
–
292
100%
Roof Advertising Signboard, Admiralty Centre, No. 18 Harcourt
Road, Hong Kong
Advertising
Signboard
–
–
100%
Ten Shop Units, First Floor Podium, Admiralty Centre, No. 18
Harcourt Road, Hong Kong
Shop Unit
286
–
50%
Olympian City One, Tai Kok Tsui, Kowloon
Indoor Sports Hall
13,512
–
100%
Olympian City Two, Tai Kok Tsui, Kowloon
Shop Unit
1,096
–
100%
Choi Hung Park & Ride Public Car Park, No. 8 Clear Water Bay Road,
Choi Hung, Kowloon
Car Park
Motorcycle Park
Park & Ride
–
–
–
54
10
450
100%
100%
100%
Elements, No. 1 Austin Road West, Kowloon
Shopping Centre
Car Park
45,090
–
–
898
81%
81%
Cross Border Coach Terminus, No. 1 Austin Road West, Kowloon
Coach Terminus
5,113
–
100%
Kindergarten, No. 1 Austin Road West, Kowloon
Kindergarten
1,045
–
81%
Plaza Ascot, Fo Tan
Shopping Centre
Car Park
7,720
–
–
67
100%
100%
Royal Ascot, Fo Tan
Residential
Car Park
2,356
–
–
20
100%
100%
Ocean Walk, Tuen Mun
Shopping Centre
Car Park
6,192
–
–
32
100%
100%
Sun Tuen Mun Shopping Centre, Tuen Mun
Shopping Centre
Car Park
9,022
–
–
421
100%
100%
Hanford Plaza, Tuen Mun
Shopping Centre
Car Park
1,924
–
–
22
100%
100%
Retail Floor and 1 – 6/F, Citylink Plaza, Shatin
Shopping Centre
12,127
–
100%
The Capitol, LOHAS Park, Tseung Kwan O
Shop Unit
Residential Care
Home for the
Elderly
391
2,571
–
–
100%
100%
Le Prestige, LOHAS Park, Tseung Kwan O
Kindergarten
Car Park
800
–
–
2
100%
100%
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
33
ANNUAL REPORT 2024
Location
Type
Lettable floor
area (sq. m)
No. of parking
spaces
Company’s
economic interest
The Riverpark, No. 8 Che Kung Miu Road, Shatin
Shop Unit
Kindergarten
Car Park
154
708
–
–
–
5
100%
100%
100%
Hemera, LOHAS Park, Tseung Kwan O
Kindergarten
985
–
100%
The LOHAS, Tseung Kwan O
Shopping Centre
Kindergarten
Car Park
Motorcycle Park
27,804
1,141
–
–
–
–
333
33
100%
100%
100%
100%
MONTARA, LOHAS Park, Tseung Kwan O
Car Park
–
162
100%
SEA TO SKY, LOHAS Park, Tseung Kwan O
Car Park
–
52
100%
MARINI, LOHAS Park, Tseung Kwan O
Kindergarten
Car Park
729
–
–
103
100%
100%
The Wai, 18 Che Kung Miu Road, Tai Wai
Shopping Centre
Car Park
Motorcycle Park
32,920
–
–
–
390
39
100%
100%
100%
THE SOUTHSIDE, Wong Chuk Hang
Shopping Centre
Car Park
Motorcycle Park
25,944
–
–
–
235
12
100%
100%
100%
All properties are held by the Company and its subsidiaries under Government Leases for over 50 years except for:
•
Telford Plaza I and II, Luk Yeung Galleria, Maritime Square 1 and 2, New Kwai Fong Gardens, ifc, Olympian City, Elements, Cross Border Coach Terminus and Kindergarten at
No. 1 Austin Road West, Plaza Ascot, Royal Ascot, Ocean Walk, Sun Tuen Mun Shopping Centre and Hanford Plaza where the Government Leases expire on 30 June 2047
•
Choi Hung Park & Ride where the Government Lease expires on 11 November 2051
•
The Lane where the Government Lease expires on 21 October 2052
•
PopCorn 2 where the Government Lease expires on 27 March 2052
•
LOHAS Park where the Government Lease expires on 15 May 2052
•
Citylink Plaza where the Government Leases expire on 1 December 2057
•
The Shop Units and Kindergarten of The Riverpark where the Government Lease expires on 21 July 2058
•
THE SOUTHSIDE where the Government Lease expires on 11 June 2067
Properties Held for Sale (as at 31 December 2024)
Location
Type
Gross floor
area (sq. m.)
No. of parking
spaces
Company’s
economic interest
Olympian City One, No. 11 Hoi Fai Road, Kowloon
Shopping Centre
Car Park
6,026*
–
–
330
40%
40%
Bank of China Centre, No. 11 Hoi Fai Road, Kowloon
Car Park
–
117
40%
The Arch, No. 1 Austin Road West, Kowloon
Residential
Car Park
–
–
–
11
1%
1%
Harbour Green, No. 8 Sham Mong Road, Kowloon
Kindergarten
1,299
–
50%
Residence Oasis, No. 15 Pui Shing Road, Hang Hau, Tseung Kwan O Motorcycle Park
–
4
71%
The Grandiose, No. 9 Tong Chun Street, Tseung Kwan O
Motorcycle Park
–
24
70%
Wings at Sea and Wings at Sea II, LOHAS Park, Tseung Kwan O
Residential
Car Park
700**
–
–
95
20.1%
20.1%
MALIBU, LOHAS Park, Tseung Kwan O
Car Park
–
26
47%
LP6, LOHAS Park, Tseung Kwan O
Car Park
–
171
63.3%
LP10, LOHAS Park, Tseung Kwan O
Residential
Car Park
8,671**
–
–
65
20%
20%
SOUTHLAND, THE SOUTHSIDE, Wong Chuk Hang
Residential
Car Park
Motorcycle Park
3,623**
–
–
–
68
4
35%
35%
35%
La Marina, THE SOUTHSIDE, Wong Chuk Hang
Residential
Car Park
Motorcycle Park
3,165**
–
–
–
29
–
30%
30%
30%
The Palazzo, No. 28 Lok King Street, Shatin
Retail
Car Park
Motorcycle Park
2,000
–
–
–
9
5
55%
55%
55%
Festival City, No. 1 Mei Tin Road, Shatin
Car Park
–
69
100%
Lake Silver, No. 599 Sai Sha Road, Shatin
Car Park
–
2
92.88%
The Riverpark, No. 8 Che Kung Miu Road, Shatin
Car Park
–
2
87%
THE PAVILIA FARM I, No. 18 Che Kung Miu Road, Shatin
Residential
Car Park
Motorcycle Park
925**
–
–
–
85
15
68.3%
68.3%
68.3%
THE PAVILIA FARM II, No. 18 Che Kung Miu Road, Shatin
Residential
Car Park
Motorcycle Park
765**
–
–
–
206
24
68.3%
68.3%
68.3%
*
Lettable floor area
** Saleable area
Investment Property Portfolio in Hong Kong (as at 31 December 2024) (continued)
THE YEAR IN REVIEW
HONG KONG PROPERTY BUSINESSES
34
MTR CORPORATION LIMITED
2020
–
10
20
30
40
50
60
70
80
90
100
–
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2024
2023
2022
2021
3,865
3,489
3,701
95.0
3,609
3,774
Investment Properties in Hong Kong
Value of Investment Properties
(HK$ billion) (left scale)
Net Rental Income
(HK$ million) (right scale)
72.1
3.4
9.1
15.4
2
0
2
4
2
0
2
3
72.8
3.6
9.2
14.4
Distribution of Hong Kong Property
Management Income
(Percentage)
Residential
Retail
Of f ice
Car Park
As at 2024 year-end, the Company’s attributable share of
investment properties in Hong Kong was 315,242 square
metres of lettable floor area for retail properties,
39,451 square metres of lettable floor area for offices
and 19,206 square metres of property for other use.
Property Management
Property management revenue in Hong Kong
increased by 6.7% to HK$303 million year on year.
As at 31 December 2024, MTR managed more than
122,000 residential units and over 920,000 square metres
of office and commercial space in Hong Kong.
Property Development and Tendering
Hong Kong property development profit (post-tax)
for 2024 was HK$10,235 million, mainly derived from
LOHAS Park Package 11, Ho Man Tin Station Package 1,
and THE SOUTHSIDE packages 1, 2, 4 and 5.
Pre-sales and Sales Activities
The year under review saw a number of presale launches.
For Ho Man Tin Station packages, pre-sales for ONMANTIN
(Package 1 phases IIA and IIB) were launched in April 2024
and were 72% sold as at 31 December 2024. Pre-sales also
continued for IN ONE (Package 2 phases IA, IB and IC),
which were 23%, 98% and 86% sold, respectively,
as at year-end.
For LOHAS Park packages, pre-sales for SEASONS PLACE
and PARK SEASONS (Package 12) were launched in
March and April 2024, respectively, and 90% and 54% of
units were sold, respectively, as at 31 December 2024.
Meanwhile, pre-sales continued for Villa Garda I, II and III
(Package 11), which were 79%, 24% and 35% sold,
respectively, as at year-end.
At THE SOUTHSIDE, pre-sales for Blue Coast and Blue
Coast II (Package 3 phases 3B and 3C) were launched in
April and October 2024, respectively, and 89% and 51%
of units were sold, respectively, as at 31 December 2024.
Pre-sales also continued for La Montagne (Package 4
Phase 4A), with 13% of units sold as at year-end.
SOUTHLAND (Package 1) and La Marina (Package 2) were
94% and 96% sold, respectively.
At YOHO WEST (Tin Wing Stop Phase 1), 87% of units were
sold as at the end of the reporting year. Presale consents
were obtained for THE SOUTHSIDE Package 5 (phases 5A
and 5B) in October 2024, LOHAS Park Package 13 (phases
XIIIA and XIIIB) in November 2024, Yau Tong Ventilation
Building property development and Tin Wing Stop
Phase 2 in February 2025, respectively. Application
for presale consent for THE SOUTHSIDE Package 6
is in progress.
For West Rail properties, where we act as agent for
relevant subsidiaries of KCRC, sales activities continued
for the Cullinan West development (Nam Cheong Station).
As at 31 December 2024, units of The YOHO Hub and
The YOHO Hub II (Yuen Long Station) were 43% and 80%
sold, respectively. Units of GRAND MAYFAIR I and II (Kam
Sheung Road Station Package 1) were 99% and 82% sold,
respectively, as at year-end.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
35
ANNUAL REPORT 2024
Property Development Packages Awarded and In Progress
Location
Developers
Type
Gross floor
area
(sq. m.)
Tender award
date
Expected
completion date
Ho Man Tin Station
ONMANTIN
Great Eagle Group
Residential
69,000
December 2016 By phases in 2025
IN ONE
Chinachem Group
Residential
59,400
October 2018 By phases in 2025
LOHAS Park Station
Villa Garda
Sino Land Company Limited,
K. Wah International Holdings Limited and
China Merchants Land Limited
Residential
88,858
April 2019
Completed
in 2024
SEASONS PLACE/
PARK SEASONS/
GRAND SEASONS
Wheelock and Company Limited
Residential
89,290
February 2020 By phases in 2025
Package 13
Sino Land Company Limited, Kerry Properties
Limited, K. Wah International Holdings
Limited and China Merchants Land Limited
Residential
143,694
October 2020 By phases in 2026
Tai Wai Station
THE PAVILIA FARM
New World Development Company Limited
Residential
190,480
October 2014
Phase I and II
completed
in 2022
Phase III to be
confirmed
Retail
60,620*
Completed
in 2022
Tin Wing Stop
YOHO WEST
Sun Hung Kai Properties Limited
Residential
Retail
91,051
205
February 2015
By phases from
2024 to 2025
Wong Chuk Hang Station (THE SOUTHSIDE)
Blue Coast/Blue Coast II
CK Asset Holdings Limited
Residential
Retail
92,900
47,000
August 2018 By phases in 2025
Completed
in 2023
La Montagne
Kerry Properties Limited, Swire Properties
Limited and Sino Land Company Limited
Residential
59,300
October 2019
Completed
in 2024
Package 5
New World Development Company Limited,
Empire Development Hong Kong (BVI)
Limited, CSI Properties Limited and Lai Sun
Development Company Limited
Residential
59,100
January 2021
2026
Package 6
Wheelock Properties Limited
Residential
46,800
April 2021
2028
Yau Tong Ventilation Building
Yau Tong Ventilation
Building
Sino Land Company Limited and
CSI Properties Limited
Residential
30,225
May 2018
2026
Pak Shing Kok Ventilation Building
Pak Shing Kok Ventilation
Building
New World Development Company Limited
and China Merchants Land Limited
Residential
27,006
April 2022
2031
Tung Chung Traction Substation
Tung Chung Traction
Substation
Chinachem Group
Residential
87,288
July 2022
2031
Tung Chung East Station
Package 1
Nan Fung Group Holdings Limited
Residential
30,000
December 2024
2031
Kam Sheung Road Station#
GRAND MAYFAIR
Sino Land Company Limited,
China Overseas Land & Investment Limited
and K. Wah International Holdings Limited
Residential
114,896
May 2017
By phases from
2024 to 2025
#
as a development agent for the relevant subsidiaries of KCRC
*
excluding a bicycle park with cycle track
THE YEAR IN REVIEW
HONG KONG PROPERTY BUSINESSES
36
MTR CORPORATION LIMITED
Property Development Packages to be Awarded(1)
Location
Type
Gross floor area
(sq. m.)
Period of
package tenders
Expected
completion date
Oyster Bay
Residential
Retail
Kindergarten
826,000
30,000
4,500
2026 – 2036
2030 – 2042
Tung Chung East Station
Mixed-use
Development
598,400
2025 – 2029
2032 – 2036
Tuen Mun A16 Station(2)
Mixed-use
Development
397,700
2025 – 2030
To be confirmed
Kwu Tung Station(2)
Mixed-use
Development
303,300
To be confirmed
To be confirmed
Hung Shui Kiu Station(2)
Mixed-use
Development
574,100
To be confirmed
To be confirmed
Notes:
1
Property development packages for which we are acting as development agent for the relevant subsidiaries of KCRC are not included.
2
These property development packages are subject to review in accordance with land grant conditions and completion of statutory processes.
West Rail Property Development Plan
The Company acts as development agent for West Rail property projects.
Station/Site
Site Area
(hectares)
Actual/Expected
tender award date
Actual/Expected
completion date
Property Development Packages Awarded
Tuen Mun
2.65
August 2006
By phases from 2012 – 2014
Tsuen Wan West (TW7)
2.37
September 2008
2014
Nam Cheong
6.18
October 2011
By phases from 2017 – 2019
Long Ping (North)
0.99
October 2012
2017
Tsuen Wan West (TW5) Cityside
1.34
January 2012
2018
Tsuen Wan West (TW5) Bayside
4.29
August 2012
2018
Tsuen Wan West (TW6)
1.38
January 2013
2018
Long Ping (South)
0.84
June 2013
2019
Yuen Long
3.91
August 2015
By phases from 2022 – 2023
Kam Sheung Road Package 1
4.17
May 2017
By phases from 2024 – 2025
28.12
Property Development Packages to be Awarded
Kam Sheung Road Package 2
About 5.17
Under review
Under review
Pat Heung Maintenance Centre
About 23.56
Under review
Under review
28.73
Total
56.85
Property Tendering
In December 2024, we awarded the Tung Chung East
Station Package 1 to a subsidiary of Nan Fung Group
Holdings Limited. Meanwhile, we continue to monitor
market conditions closely and review our tendering
programme as needed.
Expanding the Property Portfolio
As at 31 December 2024, the Company had 13 residential
projects that together will deliver approximately
10,000 units to the market. We are currently working
on development sites for railway expansion projects
including Oyster Bay Station, the Tung Chung Line
Extension, Kwu Tung Station on the East Rail Line, the
Tuen Mun South Extension and Hung Shui Kiu Station.
We also continue to explore other sites with development
potential along our existing and future railway lines. At
Government’s invitation, we submitted study reports on
the development potential of the proposed Pak Shek
Kok Station in the first half of 2024. Also at Government’s
invitation, we are conducting a study to develop the
waterfront and former pier sites to the south of Hung
Hom Station into a new harbourfront landmark. We
will continue to closely communicate with relevant
government departments and follow up as appropriate.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
37
ANNUAL REPORT 2024
AIM
MTR seeks to connect more communities, foster
sustainable economic development and ensure
the future success of its “Hong Kong Core”,
one of its strategic growth pillars, by designing
and building new, world-class railway projects
throughout the city.
CHALLENGES
We are currently working to progress Hong
Kong’s next phase of railway development,
including projects under Railway Development
Strategy 2014 (“RDS 2014”), the Northern
Metropolis Development Strategy and the
“Hong Kong Major Transport Infrastructure
Development Blueprint” (“the Blueprint”).
Challenges to these efforts include constructing
new extensions and stations on operating lines,
the need to carry out works at night during
non-traffic hours and interfacing with nearby
new developments.
Hong Kong
Network Expansion
Main Construction Works
Continued for
Tung Chung Line Extension,
Oyster Bay Station,
Kwu Tung Station on the East Rail Line
and Tuen Mun South Extension
Signed the Project Agreement for
Hung Shui Kiu Station
38
MTR CORPORATION LIMITED
STRATEGIES
MTR is committed to “Go Beyond Boundaries” to ensure
the delivery of safe, efficient, accessible and low-carbon
railway services. We continue to incorporate the latest
innovations and technologies in the industry to help
us meet or exceed globally established standards for
project design, construction and management as well as
sustainable operations.
STAKEHOLDER ENGAGEMENT
We are working closely with Government on current
and potential new railway projects designed to connect
communities with safe and reliable mass transit services
while also stimulating economic growth and opportunity.
We also regularly liaise with and offer support to local
communities regarding our railway development projects
in progress. Activities include organising community
and school liaison group meetings, stakeholder site
visits, exhibitions and game booths, and talks and
workshops for students.
OUTLOOK
We are now in the midst of an exciting new era for
railway development in Hong Kong. Construction works
are progressing on the Tung Chung Line Extension,
Oyster Bay Station, Kwu Tung Station on the East Rail
Line, the Tuen Mun South Extension and Hung Shui Kiu
Station. Each project is being funded through our “Rail
plus Property” business model, which is designed to
enable the simultaneous development of cost-efficient
infrastructure and railway-linked communities. In
these and other projects, we will continue to support
Government’s policy by connecting communities
and strengthening links between Hong Kong and the
Greater Bay Area.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
39
ANNUAL REPORT 2024
In 2024, MTR continued major construction works on a
number of strategic railway projects designed to promote
the sustainable, long-term growth of existing and
emerging population centres in Hong Kong. We strive to
“Go Beyond Boundaries” for all new projects, leveraging
our considerable expertise in railway development to
connect communities with world-class, environmentally
friendly mass transit services that also spur economic
development, integrate Hong Kong more closely with the
flourishing Greater Bay Area and support Government’s
strategy of using railways as the backbone of the public
transport system.
Projects in Progress
Tung Chung Line Extension
In February 2023, MTR signed the Project Agreement
with Government for the financing, design, construction,
operation and maintenance of the Tung Chung Line
Extension, a major project that will serve new town
extensions in the Tung Chung East new reclamation area
and Tung Chung West while also enhancing connectivity
in Lantau North and supporting sustainable long-term
population and economic growth. The year under review
saw on-going construction for Tung Chung East Station
and Tung Chung West Station. We also completed the
launching shaft in 2024 for commencement of tunnel
boring works for the Tung Chung West section in early
2025. This project is being funded by the financial
contribution from the “Rail plus Property” development
model and the Company’s internal resources. Completion
is targeted for 2029.
Tuen Mun South Extension
In September 2023, MTR signed the Project Agreement
with Government for the financing, design, construction,
operation and maintenance of the Tuen Mun South
Extension, a project that involves extending the
Tuen Ma Line southward by approximately 2.4 km from
Tuen Mun Station by way of a viaduct as well as building
two new stations: an intermediate station at Area 16
and a new terminal station at Tuen Mun South near the
Tuen Mun Ferry Terminal. In 2024, we continued to make
progress on foundation works for A16 Station, Tuen Mun
South Station and the connecting viaduct. Construction
is expected to be completed in 2030. The project is
being funded by financial contributions from the “Rail
plus Property” development model and the Company’s
internal resources.
Kwu Tung Station on the East Rail Line
In September 2023, the Company signed the Project
Agreement with Government for the financing, design,
construction, operation and maintenance of Kwu Tung
Station on the East Rail Line, which will be situated in the
centre of the future Kwu Tung North New Development
Area between Lok Ma Chau and Sheung Shui stations.
In 2024, we successfully completed main station
excavation works above the existing tunnel structure
and commenced construction of the station structure.
Completion of the station is expected in 2027. The project
is being funded by financial contributions from the “Rail
plus Property” development model and the Company’s
internal resources.
THE YEAR IN REVIEW
HONG KONG NETWORK EXPANSION
40
MTR CORPORATION LIMITED
Route
Length
Number of
Stations
2023
2029
Rail plus
Property
About
2.5 km
2
(Tung Chung East
Station and Tung
Chung West Station)
2023
2030
Rail plus
Property
About
2.4 km
2
(A16 Station and
Tuen Mun South
Station)
2023
2027
Rail plus
Property
–
1
Kwu Tung Station
on the East Rail Line
Tung Chung
Line Extension
Tuen Mun
South Extension
Project
Funding
Construction
Commencement
Year
Targeted
Completion
Year
2024
2030
Rail plus
Property
–
1
Hung Shui Kiu
Station
Hung Shui Kiu Station
In September 2024, the Company signed the Project
Agreement with Government for the financing, design,
construction, operation and maintenance of Hung Shui
Kiu Station. Hung Shui Kiu Station is a new station to be
located on the Tuen Ma Line between Tin Shui Wai and Siu
Hong stations, where it will serve the future Hung Shui Kiu/
Ha Tsuen New Development Area in the western part of
the Northern Metropolis. Modifications to the existing Tuen
Ma Line viaduct are currently underway to accommodate
construction of the new station, which is expected to
be completed in 2030. This project is being funded by
the financial contribution from the “Rail plus Property”
development model and the Company’s internal resources.
Oyster Bay Station
In September 2022, MTR entered into a project agreement
with Government for the financing, design, construction,
operation and maintenance of Oyster Bay Station, located
at Siu Ho Wan between Sunny Bay and Tung Chung
stations. We are currently carrying out cable diversion,
piling and railway protection works for the project, which
will enhance connectivity in Lantau North and cater to the
transport needs of the future population of Oyster Bay.
Supporting New Railway Projects
The scheme for the Northern Link Main Line was gazetted
under the Railways Ordinance in October 2023, and we
are now fulfilling pre-construction statutory procedures
with the target of project completion by 2034. The
Company is still in discussions with Government and
has yet to enter into a Project Agreement for the
Northern Link Main Line. Government has announced
its intention to proceed with MTR using the ownership
approach. Different funding models, including the “Rail
plus Property” development model, may be deployed
to ensure commercial returns on the Company’s
investments. We also continue to provide full support
to Government as required for the development of the
South Island Line (West) and Northern Link Spur Line.
Meanwhile, we continue to provide our full support
for the railway initiatives under the “Hong Kong Major
Transport Infrastructure Development Blueprint” (“the
Blueprint”), which was announced by Government in
2023. The Blueprint includes the Central Rail Link, Tseung
Kwan O Line Southern Extension and two additional new
railway projects, the Northern Link Eastern Extension
and Northeast New Territories Line. In addition, we are
carrying out research on construction works for the
proposed new Pak Shek Kok Station on the East Rail Line.
We are also closely monitoring the progress of the Hong
Kong–Shenzhen Western Rail Link and the smart and
green mass transit projects in areas such as East Kowloon,
Kai Tak, Hung Shui Kiu and Ha Tsuen and providing full
support where needed.
2023
2030
Rail plus
Property
–
1
Oyster Bay
Station
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
41
ANNUAL REPORT 2024
AIM
Our Mainland China and international
businesses support our future growth by
providing diversified revenue streams. They
are also valuable channels for exporting our
brand and railway know-how to geographies
outside of Hong Kong, and they enable us to
serve as an ambassador for the city and its
many achievements.
CHALLENGES
MTR works under different investment models
in Mainland China and international markets,
which can pose unique operational and financial
challenges. Meanwhile, competition in overseas
markets continues to increase.
Mainland China and
International Businesses
8
Railway Services
as at 31 December 2024
2.52 billion
Total Patronage
Outside of Hong Kong
42
MTR CORPORATION LIMITED
STRATEGY
We are working hard to deliver world-class service in all
the markets outside of Hong Kong where we operate,
generating revenue while bolstering the MTR and
Hong Kong brands globally. We also continue to pursue
growth in Mainland China – particularly the Greater
Bay Area – as well as overseas via new public-private
partnership (“PPP”) infrastructure projects, transit-oriented
development (“TOD”) opportunities and other
railway-related business, including asset replacement,
maintenance and station commercial business
opportunities.
STAKEHOLDER ENGAGEMENT
During the year under review, we regularly engaged with
local governments and stakeholders through a variety of
channels regarding our performance and the services we
provide. We continued to participate in conferences and
events around the world to gain the latest market insights
and promote MTR’s business model and extensive
experience in providing safe, reliable and efficient railway
services. We also worked closely with local suppliers to
ensure quality procurement that supports our global
operations efficiently, ethically and sustainably.
OUTLOOK
New line openings and extended service concessions
are expected to contribute additional revenue and profit
for our Mainland China and international businesses,
partially compensating for the impact brought by
those concessions that are expiring in the near term.
Meanwhile, patronage in the post-pandemic era
continues to rise, although the extent to which this
benefits us depends largely on the service agreements in
place for each market. Moving forward, we will continue
to explore opportunities outside Hong Kong, including
TOD and PPP projects as well as station commercial
opportunities, to maximise the potential of this important
business pillar.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
43
ANNUAL REPORT 2024
In addition to its Hong Kong businesses, MTR builds,
operates and maintains world-class railway networks in
Mainland China, Europe and Australia. In 2024, we along
with our subsidiaries, associates and joint ventures served
a total of approximately 2.52 billion passengers outside of
Hong Kong, averaging around 8 million per weekday.
Mainland China and International Businesses
Mainland China and Macao
Railway, Property Rental and
Property Management Businesses
International Railway Businesses
Total
Year ended 31 December
HK$ million
2024
2023 Inc./(Dec.) %
2024
2023 Inc./(Dec.) %
2024
2023 Inc./(Dec.) %
Recurrent Businesses
Subsidiaries
Revenue
2,589
1,974
31.2
22,878
23,981
(4.6)
25,467
25,955
(1.9)
EBITDA
171
286
(40.2)
1,485
786
88.9
1,656
1,072
54.5
EBIT
(88)
(42)
(109.5)
1,311
566
131.6
1,223
524
133.4
EBITDA Margin (in %)
6.6%
14.5%
(7.9)% pts.
6.5%
3.3%
3.2% pts.
6.5%
4.1%
2.4% pts.
EBIT Margin (in %)
(3.4)%
(2.1)%
(1.3)% pts.
5.7%
2.4%
3.3% pts.
4.8%
2.0%
2.8% pts.
Recurrent Business (Loss)/Profit
(Net of Non-controlling Interests)
(131)
(101)
(29.7)
743
(33)
n/m
612
(134)
n/m
Associates and Joint Ventures
Share of Profit
774
707
9.5
126
50
152.0
900
757
18.9
Total Recurrent Business Profit
(before Business
Development Expenses and
Special Loss Provisions*)
643
606
6.1
869
17
n/m
1,512
623
142.7
Profit/(Loss) Attributable to Shareholders of the Company for the Year
– Arising from Recurrent Businesses (before Business Development Expenses and
Special Loss Provisions*)
1,512
623
142.7
– Business Development Expenses
(283)
(260)
(8.8)
– Arising from Recurrent Businesses (after Business Development Expenses but before
Special Loss Provisions*)
1,229
363
238.6
– Special Loss Provisions*
–
(1,022)
n/m
– Arising from Recurrent Businesses (after Business Development Expenses and
Special Loss Provisions*)
1,229
(659)
n/m
– Arising from Mainland China Property Development
30
48
(37.5)
– Arising from Underlying Businesses
1,259
(611)
n/m
n/m: not meaningful
*
Special loss provisions represent provisions for onerous contracts made for Stockholms pendeltåg and Mälartåg regional traffic totalling HK$1,022 million in 2023
Excluding Mainland China property development, our
railway, property rental and management subsidiaries
(after business development expenses), together with
our associates and joint ventures outside of Hong Kong,
contributed a net after-tax profit of HK$1,229 million in
2024 on an attributable basis, an increase over the net
after-tax profit (before special loss provisions) of
HK$363 million recorded in 2023.
In Mainland China and Macao, recurrent business loss
from railway, property rental and property management
subsidiaries was HK$131 million in 2024. This was mainly
due to the one-time loss arising from the disposal of
the Ginza Mall operations in May 2024, which was
partially offset by improved performance in our railway
businesses. Our share of profits from our Mainland China
businesses associates and joint ventures increased by
9.5% to HK$774 million in 2024, primarily because of
improved patronage.
THE YEAR IN REVIEW
MAINLAND CHINA AND INTERNATIONAL BUSINESSES
44
MTR CORPORATION LIMITED
In our international businesses, recurrent business profit
from our railway subsidiaries was HK$743 million in 2024.
The improvement was mainly because of a reduction in
losses recognised for Stockholms pendeltåg and Mälartåg
in 2024 – as special loss provisions were recognised in
2023 in relation to the early termination of these services’
concessions in March and June 2024, respectively – as
well as improved contribution from our UK concessions.
Our share of profits from our international business
associates and joint ventures increased to HK$126 million
in 2024, mainly due to improved contributions from our
Australia businesses.
Railway Businesses in Mainland China
Beijing
In Beijing, our associate operates Beijing Metro Line 4,
the Daxing Line, Beijing Metro Line 14, Beijing Metro
Line 16 (“BJL16”), and the Southern and Northern Sections
of Beijing Metro Line 17 (“BJL17”). Patronage across these
lines increased to 742 million during the year compared
to 2023, and average weekday patronage was 2.25 million.
Average on-time performance was 99.9%, with all lines
achieving stable operations.
The openings of the final section of BJL16 and the
Northern Section of BJL17, both in December 2023, have
greatly enhanced connectivity for commuters. The full
48.9-km BJL16 is a backbone of Beijing’s metro network,
serving commuters in key development areas of the
city’s north and south. Following the opening of BJL17’s
24.9-km Northern Section, the line now connects Beijing
Future Science and Technology City with several large
residential areas and commercial districts. The remaining
middle section is under construction.
Shenzhen
Shenzhen Metro Line 4
Shenzhen Metro Line 4 (“SZL4”), including the SZL4
North Extension, is operated by our wholly owned
subsidiary. The line maintained stable operations in
2024, and on-time train service performance exceeded
99.9%. Patronage increased by 13% year on year
to 242 million passengers, while average weekday
patronage was 680,000.
As we have previously reported, there has been no fare
increase for SZL4 since we began operating the line in
2010. We expect that the mechanism and procedures
for fare adjustments will take time to implement and
that patronage will remain at a lower level for longer
than expected. If a suitable fare increase and adjustment
mechanism are not implemented soon, the long-term
financial viability of this line will be impacted.
Shenzhen Metro Line 13
The initial section of Shenzhen Metro Line 13 (“SZL13”)
Phase 1 commenced passenger service in December 2024.
This is the first metro line in Shenzhen to extend to
the Shenzhen Bay Checkpoint, enhancing connectivity
to the Shenzhen Hi-tech Industrial Park in Nanshan
District. Other sections of SZL13 remain under
construction as planned.
Hangzhou
Hangzhou Metro Line 1 and Its Extensions
Hangzhou Metro Line 1 (“HZL1”), the Xiasha Extension
and Airport Extension achieved stable operations in 2024
with on-time performance exceeding 99.9%. Patronage
for these lines increased by 5% year on year to 324 million,
while average weekday patronage was 890,000.
As previously mentioned, HZL1 has been loss-making
in recent years due to slow patronage growth and the
pandemic. Because there is no patronage protection
mechanism under this concession agreement, the line’s
long-term financial viability will be impacted if patronage
remains at a lower level over a further period of time,
especially when compounded by the lower average fare
resulting from the expanded network.
Hangzhou Metro Line 5
In 2024, total patronage for Hangzhou Metro Line 5
increased by 9% year on year to 244 million, while
average weekday patronage was 730,000. The line
maintained stable on-time performance in 2024.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
45
ANNUAL REPORT 2024
Property and Other Businesses in
Mainland China
Shopping Malls
As previously reported, the Company is studying possible
strategic options for its malls in Mainland China in light
of challenging retail market conditions. As a result of this
process, we exited the Ginza Mall business in Beijing in
May 2024. In Shenzhen, foot traffic at TIA Mall continued
its gradual recovery in 2024, and the mall’s average
occupancy rate was 59%. In Tianjin, structural works for
the shopping mall at Beiyunhe Station were completed
in December 2024, and preparation works commenced
for anticipated opening after 2026. We will continue to
evaluate appropriate options for these properties, taking
into consideration the prevailing market dynamics.
Transit-Oriented Development (“TOD”)
Projects and Consultancy
In 2024, we continued to make progress on the Hangzhou
West Station TOD project. We are also providing TOD
consultancy services for the Shenzhen Xili Station
Comprehensive Transportation Hub, Beijing Sub-Centre
Station Comprehensive Transportation Hub and Foshan
Exhibition Centre East Station.
Station Commercial Business
We continue to progress our station commercial business
in Chengdu as part of our joint venture with Chengdu
Rail Transit Group. Meanwhile, a joint venture with
Zhengzhou Metro Group was established in October 2024
for MTR to expand its station commercial business to
Zhengzhou. We are also exploring similar opportunities in
other cities, including Xian and Guangzhou.
Macao
Our service contract for the operations and maintenance
of the Macao Light Rapid Transit Taipa Line and the
corresponding service agreements ended in December
2024. Project management and technical support services
for the Taipa Line Extension to Barra, the Seac Pai Van Line
and Hengqin Line were completed at the end of 2024.
International Railway Businesses
United Kingdom
Elizabeth Line
The Elizabeth line achieved stable operations during
the year under review. Our concession for this line will
end in May 2025.
South Western Railway
The South Western Railway achieved stable operations
in 2024 despite industry-wide strike actions causing
occasional service interruptions. Under the existing
National Rail Contract for the South Western Railway, the
Department for Transport retains all revenue risk and
substantially all cost risk. This contract will end in May
THE YEAR IN REVIEW
MAINLAND CHINA AND INTERNATIONAL BUSINESSES
46
MTR CORPORATION LIMITED
2025 and will be returned to public ownership upon the
expiry of the current contract.
Sweden
Stockholm Metro (Stockholms tunnelbana) achieved
stable operations in 2024. The current contract for this
service will end in November 2025.
In March 2024, we completed the handover of operations
for Stockholms pendeltåg, the commuter rail service
serving the greater Stockholm area, to the new operator.
In May 2024, we completed our divestment of MTRX, the
intercity service between Stockholm and Gothenburg.
In June 2024, we handed over the operations for
Mälartåg, the regional traffic service connecting
Stockholm with all major towns in the Mälardalen region,
to the new operator.
Australia
Melbourne’s Metropolitan Rail Service
The Melbourne metropolitan rail network, operated
by our subsidiary, achieved stable operations in 2024.
The concession for this service has been extended to
November 2027. During the year under review, we
continued to support our client, the Victoria State
Government, on various network improvement initiatives.
These include the opening of the 9-km Metro Tunnel,
which will provide a new railway connection through
Melbourne’s central business district and boost capacity
by more than half a million passengers a week. It is
scheduled to open in 2025.
Sydney Metro M1 Metro North West & Bankstown Line
MTR, a member of the Northwest Rapid Transit (“NRT”)
Consortium, initially participated in the delivery of the
Sydney Metro Northwest Line under a PPP contract.
The contract was extended in late 2019 to include
new metro trains and core rail systems for the Central
Business District extension (Sydney Metro City &
Southwest sections) as well as a combined operations and
maintenance package up to 2034. The Northwest section
commenced passenger service in 2019. The opening of
the award-winning new City extension in August 2024
expanded the network to 21 stations and 51.5 km of
track, and an average of 1.3 million customers use over
2,000 services weekly. Following the opening of this
new extension, the Sydney Metro Northwest Line was
renamed the Sydney Metro M1 Metro North West and
Bankstown Line. Works are on-going on the Sydenham to
Bankstown section.
Growth Outside of Hong Kong
We continue to explore other growth opportunities in
Mainland China and overseas, including Belt and Road
countries. During the year, we submitted a bid for the
Sydney Metro West project.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
47
ANNUAL REPORT 2024
Mainland China and International Railway Businesses at a Glance
MTR
Corporation
Shareholding
Business Model
Commencement of
Franchise/Expected Date
of Commencement
of Operation
Franchise/Concession
Period
Total Number of
Stations
Route Length
(km)
Mainland China Railway Businesses
Beijing Metro Line 4
(“BJL4”)
49%
Public-Private-
Partnership (“PPP”)
September 2009
30 years
24
28
Daxing Line of BJL4
49%
Operations and
Maintenance
(“O&M”) Concession
December 2010
End together with
BJL4 concession
11
22
Beijing Metro Line 14
(“BJL14”)
49%
PPP
Full Line: by phases
from May 2013 to
December 2021
30 years from
December 2015
Full Line: 37(1)
Full Line: 50.8
Beijing Metro Line 16
(“BJL16”)
49%
Full Line: PPP
Full Line: by phases
from December 2016 to
December 2023
Full Line: 30 years
Full Line: 30(1)
Full Line: 48.9
Beijing Metro Line 17
(“BJL17”)
49%
O&M Concession
Phase 1: December 2021
Phase 2: December 2023
Subject to local
government arrangement
20 years from
December 2021
Phase 1: 7
Phase 2: 10
Full Line: 21
(1)
Phase 1: 15.8
Phase 2: 24.9
Full Line: 49.7
Shenzhen Metro Line 4
(“SZL4”)
100%
Build-Operate-
Transfer(2)
Phase 1 and 2: by phases
from July 2010 to
June 2011
30 years
Full Line: 15
Full Line: 19.9
SZL4 North Extension
100%
O&M Concession
October 2020
End together with
SZL4 concession
8
10.8
Shenzhen Metro Line 13
Phase 1
83%
PPP
Initial Section:
December 2024
30 years
Initial Section: 7
Full Line: 16
Initial Section: 6.4
Full Line: 22.4
Hangzhou Metro Line 1
(“HZL1”)
49%
PPP
November 2012
25 years
25(3)
35.6(3)
HZL1 Xiasha Extension
49%
O&M Concession
November 2015
End together with
HZL1 concession
3
5.6
HZL1 Phase 3 (Airport
Extension)
49%
O&M Concession
December 2020
End together with
HZL1 concession
5
11.2
Hangzhou Metro Line 5
(“HZL5”)
60%
PPP(4)
Initial Section: June 2019
Latter Section (Included
West Extension): April 2020
25 years
40(4)
56.2
Macao Light Rapid
Transit Taipa Line
100%
O&M
Service Contract
December 2019
80 months till
December 2024
13
12.5
International Railway Businesses
Elizabeth Line,
United Kingdom
100%
O&M Concession
May 2015
8 years till 2023,
2 years extension
till 2025
41
118
South Western Railway,
United Kingdom
30%
O&M Concession
May 2021
2 years till 2023,
2 years extension
till 2025
210
998
Stockholm Metro,
Sweden
100%
O&M Concession
November 2009
8 years till 2017,
6 years extension
till 2023 and 2 years
extension till 2025
100
108
MTRX, Sweden
100%
Open Access
Operation
Initial service: March 2015
Full schedule: August 2015
Divestment completed
in May 2024
10
462
Stockholm commuter
rail, Sweden
100%
O&M Concession
December 2016
Handover of
operations to the new
operator completed
in March 2024
54
247
Mälartåg, Sweden
100%
O&M Concession
December 2021
Handover of
operations to the new
operator completed
in June 2024
45
1,060
Melbourne’s
Metropolitan
Rail Service, Australia
60%
O&M Concession
November 2009
8 years till
November 2017,
7 years extension
till November 2024
and 36-month
extension (by 2 phases)
till November 2027
222
432
Sydney Metro
M1 Metro North West
& Bankstown Line,
Australia
Mixed
PPP (Operations,
Trains & Systems)
North West Line: May 2019
City Section: August 2024
15 years till 2034 North West Line: 13
City Section: 8
South West
Section: 10
Full Line: 31
Full Line: 66
Notes:
1
BJL14 Phase 2 East Section has 12 stations, 11 opened and one bypassed currently. BJL14 Phase 3 Middle Section has 13 stations, ten opened and three bypassed currently.
BJL16 Phase 3 has ten stations, nine opened and one bypassed currently. BJL17 Phase 2 has ten stations, nine opened and one bypassed currently.
2
SZL4 Phase 1 assets are owned by the Shenzhen Municipal Government, and MTR Corporation (Shenzhen) Limited took over the operation of Phase 1 in July 2010. SZL4
North Extension assets are owned by the Shenzhen Municipal Government, and MTR Corporation (Shenzhen) Limited was granted operations and maintenance.
3
HZL1 Linping Section became an independent operation under Hangzhou Metro Line 9 in July 2021.
4
HZL5 West Extension is out of PPP scope. One station of HZL5 is under construction.
THE YEAR IN REVIEW
MAINLAND CHINA AND INTERNATIONAL BUSINESSES
48
MTR CORPORATION LIMITED
ENVIRONMENTAL, SOCIAL
AND GOVERNANCE
MTR strives to conduct its businesses and operations
according to a robust environmental, social and
governance (“ESG”) framework. In 2024, we set 43 key
performance indicators (“KPIs”) to benchmark our
effectiveness in 10 focus areas across three environmental
and social objectives: Greenhouse Gas (“GHG”) Emissions
Reduction, Social Inclusion, and Advancement &
Opportunities. During the year, all of these KPIs had either
been achieved or were on track to be achieved.
Environmental Aspects
In 2024, we commenced passenger service for our first
electric bus, and we plan to introduce at least 30 into
use by the end of 2026. We also conducted a research
study of a hydrogen light rail vehicle. Both of these
initiatives are part of our long-term strategy to achieve
our GHG emissions reduction goals. Also during the year,
seven of our new stations attained “BEAM Plus” New
Buildings version 2.0 Gold rating or above in Provisional
Assessment, a designation that signifies achievement
in green design, and we increased our generation of
renewable energy by completing installation works for
solar photovoltaic systems at Kwun Tong Station, Tuen
Mun Depot and Tai Wai Depot. During the year, we
underlined our commitment to sustainable development
by raising HK$7.4 billion of funding under our Sustainable
Finance Framework, including our inaugural offshore
RMB4.5 billion green bond.
Social Aspects
MTR places great importance on being a caring and
engaged member of the wider community. In celebration
of MTR’s 45th anniversary in 2024, we organised a
record-high 348 volunteering projects under our well
established “More Time Reaching Community” Scheme
that together involved a participating headcount of 5,847
volunteers. Our “‘Train’ for Life’s Journeys 2.0” programme
attracted over 1,000 secondary students who helped
develop innovative solutions for various social inclusion
topics. During the year, we also launched “EmpowerZ”,
a traineeship pilot programme for youths from ethnically
diverse backgrounds or those with disabilities.
Over the years, we have utilised our stations for public
arts appreciation as part of our “Art in MTR” programme.
Of particular note in 2024 was “Railscape Reminiscence”,
an exhibition of photos at Central Station capturing
passenger journeys and dynamic MTR scenery from the
1990s to present day that was organised as part of our
45th anniversary campaign.
Governance
MTR prioritises strong corporate governance practices to
ensure that it operates ethically, transparently, and in the
best interests of its shareholders and stakeholders. Our
comprehensive enterprise risk management framework
helps protect the safety and health of the general public
and staff as we strive to deliver on our business objectives
while simultaneously managing strategic, operational,
financial, compliance and reputational risks. Top risks,
including emerging and ESG-related risks, are regularly
reviewed to help us respond to constantly evolving
business and operating environments. We also have a
“three lines of defence” framework in place to ensure
proactive and effective risk management.
HUMAN RESOURCES
As at 31 December 2024, the Company and its
subsidiaries employed 18,411 staff in Hong Kong and
13,411 staff outside Hong Kong. Our associates and joint
ventures employed an additional 21,779 staff in Hong
Kong and worldwide. In 2024, the voluntary staff turnover
rate in Hong Kong was 6.2%.
MTR strives to be an employer of choice by enhancing
its employer brand and offering competitive pay and
benefits as well as short- and long-term incentive
schemes under the Company’s total reward framework.
We provide career advancement and growth
opportunities through a wide range of training and
development programmes. Our graduate, apprenticeship
and summer internship recruitment initiatives provide a
wide range of career opportunities for youth. We also
care about employee wellness, promoting work-life
balance with a variety of well-being initiatives and
family-friendly practices. The introduction of “1 + 1
Octopus Card” for eligible full-time single staff to nominate
a person to enjoy the free MTR travel privilege, along
with the MTR 45th Anniversary Concerts exclusively for
staff, demonstrated our dedicated efforts to enhance
employee experience and foster a strong sense of
workplace pride at MTR.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
49
ANNUAL REPORT 2024
FINANCIAL PERFORMANCE
In addition to the above brief report of the Group’s results and operations, this section discusses and analyses such results
in more details.
CONSOLIDATED PROFIT OR LOSS
Year ended 31 December
Favourable/
(Unfavourable) Change
HK$ million
2024
2023
HK$ million
%
Total Revenue
60,011
56,982
3,029
5.3
Recurrent Business Profit
EBITε*
Hong Kong Transport Services
– Hong Kong Transport Operations
(63)
(1,111)
1,048
94.3
– Hong Kong Station Commercial Businesses
3,773
3,792
(19)
(0.5)
Total Hong Kong Transport Services
3,710
2,681
1,029
38.4
Hong Kong Property Rental and
Management Businesses
4,169
3,999
170
4.3
Mainland China and International Railway,
Property Rental and Management Subsidiaries*
1,223
524
699
133.4
Other Businesses, Project Study and
Business Development Expenses
(364)
(341)
(23)
(6.7)
Share of Profit of Associates and Joint Ventures
1,340
1,259
81
6.4
Total Recurrent EBIT (before Special Loss Provisions)
10,078
8,122
1,956
24.1
Interest and Finance Charges
(1,070)
(1,213)
143
11.8
Income Tax
(1,503)
(1,302)
(201)
(15.4)
Non-controlling Interests
(295)
(304)
9
3.0
Recurrent Business Profit (before Special Loss Provisions)
7,210
5,303
1,907
36.0
Provisions for Onerous Contracts
–
(1,022)
1,022
n/m
Recurrent Business Profit (after Special Loss Provisions)
7,210
4,281
2,929
68.4
Property Development Profit (Post-tax)
Hong Kong
10,235
2,035
8,200
402.9
Mainland China
30
48
(18)
(37.5)
Property Development Profit (Post-tax)
10,265
2,083
8,182
392.8
Underlying Business Profit
17,475
6,364
11,111
174.6
(Loss)/Gain from Fair Value Measurement of Investment
Properties (Post-tax)
(Loss)/Gain from Fair Value Remeasurement on Investment Properties
(3,821)
60
(3,881)
n/m
Gain from Fair Value Measurement of Investment Properties on
Initial Recognition from Property Development
2,118
1,360
758
55.7
(Loss)/Gain from Fair Value Measurement of Investment
Properties (Post-tax)
(1,703)
1,420
(3,123)
n/m
Net Profit Attributable to Shareholders of the Company
15,772
7,784
7,988
102.6
Total Recurrent EBIT Margin# (in %)
14.6%
10.3%
4.3%pts
Total Recurrent EBIT Margin#
(excluding Mainland China and International Subsidiaries) (in %)
21.8%
20.4%
1.4%pts
ε
: EBIT represents profit before interest, finance charges and taxation
*
: Excluding the special loss provisions, being the provisions for onerous contracts in respect of Stockholms pendeltåg and Mälartåg regional traffic totalling
HK$1,022 million in 2023
#
: Excluding share of profit of associates and joint ventures but including special loss provisions. If excluding the special loss provisions, the recurrent EBIT margin
(including Mainland China and International Subsidiaries) in 2023 would have been 12.0%
n/m : not meaningful
50
MTR CORPORATION LIMITED
THE YEAR IN REVIEW
FINANCIAL PERFORMANCE
47.2
13.2
3.2
5.0
25.0
0.4
0.4
2020
2024
2023
2022
2021
57.0
47.8
42.5
0.9
21.4
5.0
3.3
11.9
20.1
5.1
5.1
26.0
0.7
60.0
23.0
5.3
5.4
25.5
0.8
13.4
3.0
4.8
26.0
0.4
0.2
5.3%
Total Revenue
(HK$ billion)
Total Revenue
HK$60.0 billion
Mainland China
Property Development
Other Businesses
Mainland China and
International Railway,
Property Rental and
Management Subsidiaries
Hong Kong Property Rental
and Management Businesses
Hong Kong Station
Commercial Businesses
Hong Kong Transport
Operations
In 2024, the Group achieved satisfactory improvement in
its recurrent business profit as we continued to benefit
from the patronage recovery due to increased travel
activities following the boundary re-opening in early 2023.
Our property development has also made notable profit
contributions in 2024, mainly derived from LOHAS Park
Package 11, Ho Ma Tin Station Package 1 and THE
SOUTHSIDE packages 1, 2, 4 and 5. Much of these profits
will be committed to the substantial funding required
for the upgrading and renewal of existing lines as well as
planning and constructing new railway projects.
Total Revenue
The Group’s total revenue in 2024 increased moderately
by 5.3% to HK$60,011 million compared to 2023. This
was mainly attributable to (i) increased revenue in our
Hong Kong transport operations, which was driven by
continued recovery in patronage, particularly on the
Cross-boundary, AEL and HSR services, (ii) contributions
from The Wai and THE SOUTHSIDE, our two newly
opened malls in the second half of 2023, and (iii) higher
rental revenue from our Hong Kong station commercial
businesses. These favourable factors were partly offset by
(i) decreased revenue from Sweden following the early
termination of the Stockholms pendeltåg concession in
March 2024, and (ii) reduced project revenue from our
Melbourne operations.
Recurrent Business Profit
The Group reported a recurrent business profit of
HK$7,210 million in 2024, compared to HK$4,281 million
in 2023. The increase in recurrent business profit was
mainly due to improvement of Hong Kong transport
operations due to the aforementioned recovery in
patronage as well as improved financial performance
in Sweden as no special loss provisions were booked
in 2024. In 2023, the Group recognised special loss
provisions totalling HK$1,022 million relating to the early
termination of the Stockholms pendeltåg and Mälartåg
regional traffic concessions effective 2 March and
16 June 2024 respectively.
Total Recurrent EBIT (before Special Loss Provisions)
by Businesses
The Group’s total recurrent EBIT (including share of
profit of associates and joint ventures as well as project
study and business development expenses) in 2024
was HK$10,078 million, an increase of HK$1,956 million
over 2023. Contributions from our respective businesses
were as follows:
Hong Kong Transport Operations: EBIT loss of
HK$63 million, compared to a loss of HK$1,111 million
in 2023. The improvement was mainly attributable to
(i) continued patronage recovery in Domestic Service,
(ii) rising patronage in Cross-boundary Service due to the
full year of operations in 2024 compared to 2023 when
the service began resuming gradually in January and
February, and (iii) continued strong performance from
HSR. These favourable results were partially offset by
(i) increased operating expenses from higher staff costs,
inflation, and railway support and maintenance expenses;
(ii) higher depreciation; and (iii) higher variable annual
payment to KCRC in line with increased revenue.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
51
ANNUAL REPORT 2024
2020
2024
2023
2022
2021
7.1
1.9
0.2
0.6
0.3
4.2
2.5
(5.4)
(2.0)
3.8
(0.3)
(1.1)
(0.5)
4.0
1.2
3.8
2.2
(4.7)
(0.5)
1.1
3.3 4.1
2.5
(4.3)
(0.6)
0.6
1.0
41.9%
10.1
3.8
(0.4)
(0.1)
1.4
4.2
1.2
Total Recurrent EBIT^
(HK$ billion)
Total Recurrent EBIT
^
Including share of profit of associates and joint ventures, project
study and business development expenses, and provisions for
onerous contracts in respect of Stockholms pendeltåg and Mälartåg
regional traffic totalling HK$1,022 million in 2023, and impairment
loss on Shenzhen Metro Line 4 of HK$962 million in 2022
Share of Profit of
Associates and Joint Ventures
Mainland China and
International Railway,
Property Rental and
Management Subsidiaries
Hong Kong Property Rental
and Management Businesses
Hong Kong Station
Commercial Businesses
Hong Kong Transport
Operations
Other Businesses,
Project Study and Business
Development Expenses
HK$10.1 billion
Hong Kong Station Commercial Businesses: EBIT decreased
slightly by HK$19 million or 0.5% to HK$3,773 million,
primarily due to the higher station retail rental revenue
being counteracted by increased operating expenses and
variable annual payment to KCRC owing to a higher level
of revenue subject to variable annual payment.
Rental revenue increased in 2024 as positively impacted
by (i) full-year resumption of Duty Free Shops and other
station kiosks operations and (ii) lower amortised rental
concessions in 2024. The result was tempered by the
negative rental reversions of 9.8% on renewals and new
lets for other station kiosks, owing to the challenging
operating environment.
Hong Kong Property Rental and Management
Businesses: EBIT increased by HK$170 million or 4.3% to
HK$4,169 million. This was mainly due to (i) additional
contributions from our two new malls, The Wai and
THE SOUTHSIDE, which commenced operations in the
second half of 2023 and (ii) lower rental concessions
amortised during the year. These favourable results were
partly offset by lower rental income from the Company’s
18 floors in Two International Finance Centre and the
overall negative rental reversion of 8.9% on renewals and
new lets for shopping malls due to the weak retail market
and changing consumption patterns.
Mainland China and International Railway, Property Rental
and Management Subsidiaries: Excluding the special loss
provisions of HK$1,022 million made in 2023 mentioned
above, EBIT increased by HK$699 million, or 133.4%, to
HK$1,223 million in 2024. This was mainly due to there
being no further losses booked for Stockholms pendeltåg
and Mälartåg regional traffic in 2024. The result was
tempered by the loss from the disposal of the Group’s
operation in Beijing Ginza Mall during the year.
Other Businesses, Project Study and Business
Development Expenses: EBIT loss was HK$364 million
in 2024, similar to 2023.
Share of Profit of Associates and Joint Ventures: Share
of profit of associates and joint ventures increased by
HK$81 million or 6.4% to HK$1,340 million in 2024. The
increase was mainly due to the improved patronage
of our Mainland China railway operations. The result
was partly offset by lower profit sharing from Octopus
Holdings Limited.
52
MTR CORPORATION LIMITED
THE YEAR IN REVIEW
FINANCIAL PERFORMANCE
2020
2021
2022
-10
–
10
20
30
2024
2023
21.8
14.6
4.8
Total Recurrent EBIT Margin#
(Percentage)
Total Recurrent EBIT Margin
(Excluding Mainland China and International Subsidiaries)
Total Recurrent EBIT Margin
Total Recurrent EBIT Margin
(Mainland China and International Subsidiaries)
#
Excluding share of profit of associates and joint ventures but
including provisions for onerous contracts in respect of
Stockholms pendeltåg and Mälartåg regional traffic totalling
HK$1,022 million in 2023, and impairment loss on Shenzhen
Metro Line 4 of HK$962 million in 2022
Total Recurrent EBIT Margin
In 2020, we were distressed by the pandemic. Following
the stabilisation in the number of pandemic cases, EBIT
margins rebounded in 2021. Due to the fifth wave of
COVID-19 in Hong Kong and other outbreaks in Mainland
China, EBIT margins declined to 3.7% and 1.7% in 2022,
before and after accounting for the impairment loss on
Shenzhen Metro Line 4, respectively. In 2023, following the
recovery from the pandemic and boundary re-opening,
EBIT margins increased to 12.0% and 10.3% respectively,
before and after accounting for the loss provisions on
Stockholms pendeltåg and Mälartåg regional traffic
in 2023. In 2024, following the gradual recovery from
COVID-19 amid the challenging operating environment,
EBIT margin increased to 14.6%.
Interest and Finance Charges
Interest and finance charges for recurrent businesses
were HK$1,070 million, representing a 11.8% decrease
compared to 2023. This was mainly due to higher interest
income generated. A detailed review of the Group’s
financing activities is featured in the ensuing section.
Income Tax
Income tax expenses for recurrent businesses were
HK$1,503 million, an increase of 15.4% over 2023 owing
to improved financial performance.
Since the Rail Merger in 2007, the Company has claimed
annual Hong Kong Profits Tax deductions in respect of
certain payments relating to the Rail Merger (collectively
“the Sums”). The total tax amount in respect of the
Sums for the years of tax assessment from 2007/2008 to
2024/2025 amounted to HK$5.8 billion. On 20 May 2022,
the Commissioner of Inland Revenue issued a
determination to the Company disagreeing that the
Sums are tax deductible. The Company lodged a notice
of appeal to the Inland Revenue Board of Review on
16 June 2022. After discussing with the external legal
counsel and tax advisor on the approach to the appeal,
the Company decided not to pursue its deduction claims
in respect of the amortisation of upfront payment and
cut-over liabilities during the opening submission before
Board of Review. As the Company had already made
the related tax provision for the amortisation of upfront
payment and cut-over liabilities in the past years taking
into account the uncertainty in their tax deductibility, no
additional tax provision is required. The hearing of appeal
was held before the Board of Review in early 2024.
On 6 August 2024, the Board of Review issued its decision
(“the Board of Review Decision”) and disagreed with
the deduction claims of the fixed annual payments and
variable annual payments for the years of assessment
from 2011/2012 to 2017/2018. It confirmed the relevant
profits tax assessment/additional profits tax assessments
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
53
ANNUAL REPORT 2024
11.2
9.4
1.8
2020
2024
2023
2022
2021
4.4
6.4
5.5
(1.1)
2.1
4.3
10.6
10.4
0.2
174.6%
17.5
10.3
7.2
Underlying Business Profit
(HK$ billion)
Underlying Business Profit
Property Development Profit
Recurrent Business (Loss)/Profit
HK$17.5 billion
in respect of the fixed annual payments and variable
annual payments being non-tax deductible.
The Company, external legal counsel and its tax advisor
have completed their review of the Board of Review
Decision and the advice obtained continues to be that
the Company has strong legal grounds to support its
position. Based on the strength of advice from external
legal counsel and its tax advisor, on 4 September 2024,
the Company lodged an application to the Court of First
Instance of the High Court of the Hong Kong Special
Administrative Region (“the Court of First Instance”) for
leave to appeal against the Board of Review Decision. The
hearing for the application of leave to appeal was held
before the Court of First Instance in late February 2025.
As at the date of the annual report, the Court of First
Instance has yet to hand down its decision on whether
to grant leave to appeal. The Company has conferred
with external legal counsel and its tax advisor and the
advice obtained is that the Company currently continues
to have strong legal grounds to support its position.
As such, no additional tax provision has been made.
Further details are set out in note 16 to the Consolidated
Financial Statements.
Property Development Profit (Post-tax)
The Group’s property development profit (post-tax) was
HK$10,265 million, marking a HK$8,182 million increase
over 2023. Property development profit for 2024 was
mainly derived from LOHAS Park Package 11, Ho Man Tin
Station Package 1 and THE SOUTHSIDE packages 1, 2, 4 and
5, whereas an initial profit from LOHAS Park Package 11
and residual profits from various completed projects were
recognised in 2023.
Underlying Business Profit
Underlying business profit increased from HK$6,364 million
in 2023 to HK$17,475 million in 2024, as a result of
considerable increases of HK$2,929 million in recurrent
business profit and HK$8,182 million in property
development profit.
Loss from Fair Value Measurement of
Investment Properties (Post-tax)
Loss from fair value measurement of investment
properties was HK$1,703 million in 2024, resulting from
(i) a loss of HK$3,821 million from fair value remeasurement
on investment properties, net of (ii) a further recognition
of HK$2,118 million valuation gain arising from the
reduction in outstanding risks and obligations for our
sharing-in-kind investment property received in 2023
(i.e., THE SOUTHSIDE shopping mall).
The fair value remeasurement on the Group’s investment
properties in Hong Kong and Mainland China, which were
performed by independent professional valuation firms,
resulted in a post-tax fair value remeasurement loss of
HK$3,821 million for the year ended 31 December 2024,
compared to a post-tax fair value remeasurement gain of
HK$60 million in 2023.
Net Profit Attributable to Shareholders of
the Company
Taking into account the Group’s recurrent businesses,
property development businesses and fair value
measurement of investment properties, the Group
reported a net profit attributable to shareholders of
the Company of HK$15,772 million for the year ended
31 December 2024, compared to HK$7,784 million for 2023.
54
MTR CORPORATION LIMITED
THE YEAR IN REVIEW
FINANCIAL PERFORMANCE
CONSOLIDATED FINANCIAL POSITION
At
31 December
2024
At
31 December
2023
Inc./(Dec.)
HK$ million
HK$ million
%
Fixed Assets
243,190
238,636
4,554
1.9
Railway Construction in Progress
11,375
4,256
7,119
167.3
Property Development in Progress
42,300
41,728
572
1.4
Interests in Associates and Joint Ventures
13,039
12,785
254
2.0
Debtors and Other Receivables
15,780
13,756
2,024
14.7
Cash, Bank Balances and Deposits
27,886
22,375
5,511
24.6
Other Assets
13,929
12,890
1,039
8.1
Total Assets
367,499
346,426
21,073
6.1
Total Loans and Other Obligations
77,568
59,491
18,077
30.4
Creditors and Other Liabilities
77,663
82,869
(5,206)
(6.3)
Obligations Under Service Concession
9,969
10,059
(90)
(0.9)
Deferred Tax Liabilities
16,166
15,151
1,015
6.7
Total Liabilities
181,366
167,570
13,796
8.2
Net Assets
186,133
178,856
7,277
4.1
Represented by:
Total Equity Attributable to Shareholders of the Company
185,625
178,344
7,281
4.1
Non-controlling Interests
508
512
(4)
(0.8)
Total Equity
186,133
178,856
7,277
4.1
Total liabilities increased by 8.2% to HK$181,366 million,
mainly due to (i) net drawdown of loans, partly offset by
(ii) decrease in deferred income from various property
development projects as the related income was
recognised in the consolidated profit or loss in 2024,
(iii) utilisation of provisions for Onerous Contracts for
Stockholms pendeltåg and Mälartåg, and (iv) utilisation of
government grant for Oyster Bay project.
As a result, the Group’s net assets increased by
HK$7,277 million or 4.1% to HK$186,133 million.
The Group’s total assets increased by 6.1% to
HK$367,499 million. This was mainly due to the increase
in (i) railway construction in progress for Tung Chung
Line Extension, Tuen Mun South Extension and Kwu
Tung Station, (ii) addition of fixed assets relating to the
renewal and upgrade works for our existing Hong Kong
railway network, (iii) cash, bank balances and deposits,
and (iv) debtors and other receivables relating to increase
in property development receivables upon recognition
of the property development profits, partly offset by
the reclassification of prepayment for Tianjin shopping
mall to investment properties upon completion of
structural works.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
55
ANNUAL REPORT 2024
CONSOLIDATED CASH FLOWS
Year ended 31 December
HK$ million
2024
2023
Net Cash Generated from Operating Activities
18,491
11,197
Net Receipts from Property Development
1,748
6,102
Fixed and Variable Annual Payments
(3,105)
(1,073)
Capital Expenditure
(19,416)
(12,576)
Other Net Cash (Outflow)/Inflow from Investing Activities
(244)
730
Net Cash Used in Investing Activities
(21,017)
(6,817)
Net Drawdown of Debts, Net of Lease Rental and Net Interest Payments
16,928
10,005
Dividends Paid to Shareholders of the Company
(7,946)
(7,595)
Other Net Cash Outflow from Financing Activities
(479)
(537)
Net Cash Generated from Financing Activities
8,503
1,873
Effect of Exchange Rate Changes
(466)
82
Cash, Bank Balances and Deposits reclassified as Disposal Group Held for Sale
–
(94)
(466)
(12)
Net Increase in Cash, Bank Balances and Deposits
5,511
6,241
Cash, Bank Balances and Deposits as at 1 January
22,375
16,134
Cash, Bank Balances and Deposits as at 31 December
27,886
22,375
Net Cash Generated from Operating Activities
Net cash generated from operating activities increased
by HK$7,294 million to HK$18,491 million in 2024 from
HK$11,197 million in 2023, resulting mainly from higher
recurrent business profit due to continued recovery.
Net Receipts from Property Development
Net receipts from property development were
HK$1,748 million, comprising (i) cash receipts of
HK$3,007 million mainly for various LOHAS Park packages
and THE SOUTHSIDE packages, which were partly offset
by (ii) cash payments of HK$1,259 million mainly for
Oyster Bay Project.
Capital Expenditure
In 2024, capital expenditure amounted to
HK$19,416 million. This comprised HK$11,486 million
for investments in additional assets such as station
renovation works, new trains and signalling systems for
existing Hong Kong railways and related operations;
HK$5,817 million for Hong Kong railway extension
projects; HK$1,447 million for Mainland China and
overseas subsidiaries such as Shenzhen Metro Line 13;
and HK$666 million for investment properties additions
and fitting out works.
2024
2023
19.4
11.5
5.8
0.7
1.4
12.6
8.5
2.3
1.2
0.6
54.4%
Total Capital Expenditure
(HK$ billion)
Total Capital Expenditure
Mainland China and
International Subsidiaries
Investment Property Projects
Hong Kong Railway
Extension Projects
Purchase of Assets for
Hong Kong Transport and
Related Operations
HK$19.4 billion
Net Drawdown of Debts, Net of Lease Rental
and Net Interest Payments
In 2024, net drawdown of debts, net of lease rental and
net interest payments of HK$16,928 million comprised
(i) proceeds of HK$45,842 million from loans and
capital market instruments; offset by (ii) repayment of
HK$27,594 million mainly relating to loans; and (iii) net
interest payment of HK$1,320 million.
Dividends Paid to Shareholders of the Company
The Group paid dividends of HK$7,946 million (2023:
HK$7,595 million) in cash, being the 2023 final dividend
of HK$0.89 per share and the 2024 interim dividend of
HK$0.42 per share.
56
MTR CORPORATION LIMITED
THE YEAR IN REVIEW
FINANCIAL PERFORMANCE
Global interest rates were volatile in the second half of
2024 as the US Federal Reserve started cutting interest
rate from September and the market tried to digest the
softening inflations projection and policy changes.
The 3-month HKD Hibor started the year at 5.15% p.a.
and fell to a low of 3.88% p.a. before reaching 4.37% p.a.
at the year end. Similarly, the 10-year US Treasury yield
started the year at 3.88% p.a. and fell to 3.62% p.a. before
rising back to 4.57% p.a. at the year end. The 10-year HKD
swap rate fell from 3.36% p.a. to 2.84% p.a. before rising
to 3.70% p.a.
The Company arranged HK$31.4 billion of financing in
2024, including HK$23.5 billion from bond issuances
with maturities ranging between two to thirty years,
and HK$7.9 billion bank loans with maturities ranging
between two to five years.
Approximately HK$7.4 billion in sustainable financing
was arranged under our Sustainable Finance
Framework, including the public issuance of an
offshore RMB3.0 billion 10-year green bond at coupon
of 2.75% p.a. and an offshore RMB1.5 billion 30-year
green bond at coupon of 3.05% p.a. The proceeds
raised from the sustainable financing are earmarked
for eligible investments. A number of bank loans were
arranged with sustainability linked clauses where the
Company will enjoy a modest economical benefit if
pre-agreed environmental KPIs are achieved at specific
observation times.
The Group’s consolidated gross debt position at the
end of December 2024 was HK$77.6 billion, with a cash
and deposit balance of HK$27.9 billion and undrawn
committed facilities of over HK$20.9 billion.
FINANCING ACTIVITIES
(85-100) 99
(0-15) 1
(45-80) 72
(20-55) 28
(15-45) 25
(55-85) 75
(0-35) 25
(25-65) 40
(20-55) 35
The Preferred Financing Model exemplifies the
Company’s approach to debt management and helps
ensure a prudent and well-balanced debt portfolio
(Preferred Financing Model) vs. Actual debt profile
as at 31 December 2024
Source
(Percentage)
Interest rate base
(Percentage)
Maturity
(Percentage)
Currency
(Percentage)
Financing Horizon
(Month)
Fixed rate
Average fixed rate debt maturity: 8.0 years
Preferred Financing Model
and Debt Profile
(Target of 9 months but not less than 6 months) 11
Bank facilities
Capital market instruments
Floating rate
Beyond 5 years
2 to 5 years
Unhedged
Within 2 years
Hedged
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
57
ANNUAL REPORT 2024
2020
–
20
40
60
80
–
5
10
15
20
2024
2023
2022
2021
8.2
22.5%
31.6%
26.5%
9.8
15.1
14.2
23.3%
14.4
18.1%
Net Debt-to-equity Ratio and
Interest Coverage
(Percentage)
(Times)
Net debt-to-equity ratio (left axis)
Interest cover (right axis)
2020
2024
2023
2022
2021
–
20
40
60
80
100
60.6
23.4
16.0
40.5
34.7
24.8
36.2
39.1
24.7
49.9
28.4
21.7
57.9
25.2
16.9
Maturity Profile
(Percentage)
2 to 5 years
Within 2 years
Beyond 5 years
2020
–
30
60
90
–
1
2
4
3
2024
2023
2022
2021
2.5%
47.8
3.7%
77.6
59.5
3.5%
2.3%
50.3
2.2%
43.8
Group’s Gross Debt Level and Weighted
Average Cost of Interest-bearing Borrowings
(HK$ billion)
(Percentage)
Weighted average cost of interest bearing borrowings (right axis)
Group’s gross debt level (left axis)
Maturity Profile
The Company diversifies refinancing risks by spreading
the maturities of borrowings. At the end of 2024, 24.8%,
34.7% and 40.5% of borrowings will mature within
2 years, in 2 to 5 years and beyond 5 years, respectively.
Net Debt-to-equity Ratio and Interest Coverage
The Group’s gearing ratio, as measured by net
debt-to-equity ratio, was 26.5% as at 31 December 2023,
27.5% as at 30 June 2024 and 31.6% as at 31 December
2024. The Group’s interest cover increased from 9.8 times
in 2023 to 15.1 times in 2024.
Gross Debt and Cost of Borrowing
The Group’s consolidated gross debt position increased
to HK$77,568 million as at year-end 2024 from
HK$59,491 million at year-end 2023. The weighted
average cost of the Group’s interest-bearing borrowings
increased to 3.7% p.a. in 2024 from 3.5% p.a. in 2023.
58
MTR CORPORATION LIMITED
THE YEAR IN REVIEW
FINANCIAL PERFORMANCE
Capital Expenditure and Investment
(2025 – 2027)
*
Including planning and design CAPEX, but excluding related
construction CAPEX of new railway projects which are subject to
the signing of project agreements
Estimated expenditure
2025: HK$33.8 billion
2026: HK$29.8 billion
2027: HK$27.2 billion
Total: HK$90.8 billion
HK$41.6 billion (46%)
HK$33.4
billion
(37%)
HK$13.2
billion
(14%)
HK$2.6 billion (3%)
Hong Kong Railway
Maintenance and
Renewal CAPEX
Hong Kong
New Railway Projects*
Hong Kong Property
Mainland China &
Overseas Investments
31 December 2024, and its ready access to both the
loan and debt capital markets, it will have sufficient
financing capacity to fund its capital expenditure and
investment programme.
Capital Expenditure and Investments
The Group’s capital expenditure and investments can
be categorised into the following: Hong Kong railway
projects (further classified into maintenance work for
existing railways and new projects), Hong Kong property
investments and development, and Mainland China and
overseas investments. Total spending from 2025 to 2027
is estimated at around HK$90.8 billion.
Capital expenditure on Hong Kong railway projects will
continue to constitute a significant portion of capital
expenditure in 2025-2027, following the signing of
project agreements for the Oyster Bay Project, the Tung
Chung Line Extension, the Tuen Mun South Extension, the
Kwu Tung Station and the Hung Shui Kiu Station. The
capital works expenditure and the funding terms of any
other projects can only be ascertained after entering into
the relevant project agreements with the Government.
The Group believes that based on its cash, bank balances
and deposits of HK$27.9 billion, total available committed
banking facilities of more than HK$20.9 billion as at
Credit Ratings (as of 6 March 2025)
Credit ratings
Short-term*
Long-term*
Standard & Poor’s
A-1+/A-1+
AA+/AA+
Moody’s
– / P-1
Aa3/Aa3
Rating & Investment Information, Inc. (R&I)
a–1+
AA+
*
Ratings for Hong Kong dollar/foreign currency – denominated debts respectively
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
59
ANNUAL REPORT 2024
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
Financial
Consolidated Profit or Loss (in HK$ million)
Total revenue
– Hong Kong transport services
– Hong Kong transport operations
23,013
20,131
13,404
13,177
11,896
19,938
19,490
18,201
17,655
16,916
– Hong Kong station commercial businesses
5,343
5,117
3,077
3,208
3,269
6,799
6,458
5,975
5,544
5,380
– Total Hong Kong transport services
28,356
25,248
16,481
16,385
15,165
26,737
25,948
24,176
23,199
22,296
– Hong Kong property rental and
management businesses
5,379
5,079
4,779
5,036
5,054
5,137
5,055
4,900
4,741
4,533
– Mainland China and international railway,
property rental and management subsidiaries
25,467
25,955
26,016
25,045
21,428
21,085
20,877
17,194
13,562
12,582
– Other businesses
809
700
363
383
894
1,545
1,990
2,174
2,339
2,290
– Recurrent businesses
60,011
56,982
47,639
46,849
42,541
54,504
53,870
48,444
43,841
41,701
– Mainland China property development
–
–
173
353
–
–
60
6,996
1,348
–
– Total
60,011
56,982
47,812
47,202
42,541
54,504
53,930
55,440
45,189
41,701
Total EBITDA
– Recurrent businesses
17,907
15,323
7,852
8,019
5,194
15,351
18,843
17,677
16,947
16,260
– Hong Kong property development
12,185
2,329
11,589
11,097
6,491
4,496
2,574
1,097
228
2,891
– Mainland China property development
(3)
(13)
59
129
(13)
(25)
25
2,314
366
(140)
– Total
30,089
17,639
19,500
19,245
11,672
19,822
21,442
21,088
17,541
19,011
Depreciation and amortisation
(6,144)
(6,105)
(5,769)
(5,430)
(5,365)
(5,237)
(4,985)
(4,855)
(4,127)
(3,849)
Provisions for onerous contracts and impairment loss
–
(1,022)
(962)
–
–
–
–
–
–
–
Variable annual payment
(3,025)
(2,355)
(323)
(260)
(238)
(2,583)
(2,305)
(1,933)
(1,787)
(1,649)
Total EBIT
– Recurrent business EBIT
EBIT
Hong Kong transport services
– Hong Kong transport operations
(63)
(1,111)
(4,733)
(4,262)
(5,408)
(591)
1,985
1,656
2,572
2,493
– Hong Kong station commercial businesses
3,773
3,792
2,270
2,488
2,502
5,122
5,025
4,722
4,362
4,230
Total Hong Kong transport services
3,710
2,681
(2,463)
(1,774)
(2,906)
4,531
7,010
6,378
6,934
6,723
Hong Kong property rental and
management businesses
4,169
3,999
3,800
4,048
4,185
4,264
4,225
4,082
3,912
3,650
Mainland China and international
railway, property rental and
management subsidiaries*
1,223
524
962
622
261
1,089
722
814
490
640
Other businesses
39
56
(213)
(255)
(1,670)
(2,077)
(81)
(53)
58
53
Project studies and business
development expenses
(403)
(397)
(326)
(312)
(279)
(276)
(323)
(332)
(361)
(304)
Provisions for onerous contracts and
impairment loss
–
(1,022)
(962)
–
–
–
–
–
–
–
Share of profit of associates and joint ventures
1,340
1,259
1,095
968
605
288
658
494
537
361
Sub-total
10,078
7,100
1,893
3,297
196
7,819
12,211
11,383
11,570
11,123
– Property development business EBIT
12,182
2,316
11,648
11,226
6,478
4,471
2,599
3,411
592
2,751
– Total
22,260
9,416
13,541
14,523
6,674
12,290
14,810
14,794
12,162
13,874
(Loss)/gain from fair value measurement of
investment properties
(1,703)
1,386
(810)
(1,616)
(9,190)
2,583
4,745
6,314
891
2,100
Profit/(loss) attributable to shareholders of
the Company arising from:
– Recurrent businesses
– in Hong Kong
5,981
4,940
384
979
(1,537)
4,455
8,460
7,949
8,717
8,352
– outside Hong Kong
1,229
(659)
(227)
829
411
525
560
631
199
213
7,210
4,281
157
1,808
(1,126)
4,980
9,020
8,580
8,916
8,565
– Property development businesses
– in Hong Kong
10,235
2,035
10,413
9,277
5,442
4,320
2,153
916
184
2,416
– outside Hong Kong
30
48
67
66
65
49
90
1,019
263
(87)
10,265
2,083
10,480
9,343
5,507
4,369
2,243
1,935
447
2,329
– Underlying businesses
17,475
6,364
10,637
11,151
4,381
9,349
11,263
10,515
9,363
10,894
– Fair value measurement of investment
properties
(1,703)
1,420
(810)
(1,599)
(9,190)
2,583
4,745
6,314
891
2,100
– Total
15,772
7,784
9,827
9,552
(4,809)
11,932
16,008
16,829
10,254
12,994
Profit/(loss) for the year
16,067
8,088
10,141
9,679
(4,821)
12,092
16,156
16,885
10,348
13,138
Share Information
Basic earnings/(loss) per share (in HK$)
2.54
1.26
1.59
1.55
(0.78)
1.94
2.64
2.83
1.74
2.22
Basic earnings per share arising from underlying
businesses (in HK$)
2.81
1.03
1.72
1.80
0.71
1.52
1.86
1.77
1.59
1.87
Ordinary dividend per share (in HK$)
1.31
1.31
1.31
1.27
1.23
1.23
1.20
1.12
1.07
1.06
Dividend payout ratio (based on underlying
business profit) (in %)
47
127
76
71
173
81
65
63
67
57
Ordinary dividends attributable to the year
(in HK$ million)
8,155
8,143
8,124
7,865
7,602
7,574
7,359
6,728
6,317
6,207
Share price at 31 December (in HK$)
27.10
30.30
41.35
41.85
43.35
46.05
41.20
45.80
37.70
38.40
Market capitalisation at 31 December
(in HK$ million)
168,693
188,381
256,455
259,196
267,943
283,574
252,947
275,156
222,629
224,956
Consolidated Financial Position (in HK$ million)
Total assets
367,499
346,426
327,081
292,082
290,574
289,214
274,687
263,768
257,340
241,103
Loans, other obligations and bank overdrafts
77,568
59,491
47,846
43,752
50,340
39,456
40,205
42,043
39,939
20,811
Obligations under service concession
9,969
10,059
10,142
10,231
10,295
10,350
10,409
10,470
10,507
10,564
Total equity attributable to shareholders
of the Company
185,625
178,344
179,286
179,714
176,788
186,606
180,447
166,304
149,461
170,055
Financial Ratios
EBITDA margin◊ (in %)
29.8
26.9
16.5
17.3
12.2
28.1
35.0
36.1
38.3
38.7
EBITDA margin◊
(excluding Mainland China and
international subsidiaries) (in %)
47.0
45.9
30.5
32.7
22.1
42.0
54.5
53.5
54.0
53.3
EBIT marginφ (in %)
14.6
10.2
1.8
5.2
(1.0)
13.8
21.5
23.8
25.2
25.5
EBIT marginφ
(excluding Mainland China and
international subsidiaries) (in %)
21.8
20.4
3.7
7.8
(3.2)
19.3
32.8
32.2
34.8
34.8
Net debt-to-equity ratio (in %)
31.6
26.5
23.3
18.1
22.5
15.4
18.1
20.6
20.2
11.3
Return on average equity attributable to
shareholders of the Company arising from
underlying businesses (in %)
9.6
3.6
5.9
6.3
2.4
5.1
6.5
6.7
5.9
6.5
Interest cover (times) **
15.1
9.8
14.2
14.4
8.2
14.4
13.6
15.0
12.6
14.4
*
Excluding special loss provisions, being provisions for onerous contracts made for Stockholms pendeltåg and Mälartåg regional traffic totalling HK$1,022 million in 2023 and
impairment loss made for Shenzhen Metro Line 4 of HK$962 million in 2022.
◊
Excluding Hong Kong property development profit from share of surplus, income and interest in unsold properties.
φ
Excluding Hong Kong property development profit from share of surplus, income and interest in unsold properties, and share of profit of associates and joint ventures.
** Excluding fair value measurement of investment properties.
60
MTR CORPORATION LIMITED
TEN-YEAR STATISTICS
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
Hong Kong Transport Operations
Revenue car-km operated (thousand)
Domestic and Cross-boundary services
298,180
291,212
265,209
268,050
268,492
301,552
308,742
301,541
287,828
284,487
Airport Express
23,274
19,681
12,328
10,165
12,631
22,971
23,190
23,202
23,276
23,242
Light Rail
10,683
10,316
9,727
10,245
10,385
10,592
11,139
11,145
11,152
11,034
Total number of passengers (thousand)
Domestic Service
1,601,690 1,586,646
1,334,591
1,421,737
1,145,035
1,568,196
1,669,973
1,637,898
1,586,522
1,577,457
Cross-boundary Service
98,386
71,518
429
486
7,647
104,183
117,448
112,549
113,274
114,241
High Speed Rail
26,729
20,100@@
–
–
1,033
16,923
5,302@
–
–
–
Airport Express
13,133
10,843
3,102
2,150
3,070
15,764
17,710
16,621
16,133
15,725
Light Rail
154,579
150,002
131,715
141,581
111,865
155,885
179,411
178,502
178,709
176,149
Bus
58,946
57,693
48,230
50,380
42,077
51,484
51,025
50,744
50,413
50,537
Intercity
–
–
–
–
103
1,880
3,630
3,698
3,739
4,080
Average number of passengers (thousand)
Domestic Service – weekday average
4,684
4,670
3,920
4,189
3,406
4,658
4,862
4,772
4,608
4,577
Cross-boundary Service – daily average
269
196
1
1
21
285
322
308
309
313
High Speed Rail – daily average
73
57@@
–
–
36#
46
53@
–
–
–
Airport Express – daily average
36
30
8
6
8
43
49
46
44
43
Light Rail – weekday average
445
434
377
403
317
448
506
503
500
493
Bus – weekday average
170
168
139
145
121
151
147
146
144
145
Intercity – daily average
–
–
–
–
4#
5
10
10
10
11
Average passenger km travelled
Domestic and Cross-boundary services
11.3
11.1
10.7
10.5
10.5
10.6
10.8
10.8
10.9
11.0
Airport Express
27.2
27.6
25.3
23.7
25.8
28.2
28.3
28.5
28.4
28.4
Light Rail
2.6
2.6
2.6
2.7
2.8
2.7
2.7
2.7
2.7
2.7
Bus
6.1
5.6
4.5
4.5
4.1
4.5
4.5
4.5
4.5
4.5
Average car occupancy (number of passengers)
Domestic and Cross-boundary services
65
63
54
56
45
59
62
63
64
65
Airport Express
15
15
6
5
6
19
22
20
20
19
Light Rail
38
38
36
37
30
40
44
44
44
44
Proportion of franchised public transport
boardings (%)
50.1
50.1
48.3
47.3
45.3
47.4
49.0&
49.1
48.4
48.5
HK$ per car-km operated
(Hong Kong Transport Operations***)
Total revenue
58.2
53.6
40.8
40.0
35.6
51.7
53.4
52.5
53.0
51.3
Operating costs
35.7
34.3
36.0
34.4
33.3
33.0
28.2
28.5
27.7
27.2
Operating profit
22.5
19.3
4.8
5.6
2.3
18.7
25.2
24.0
25.3
24.1
HK$ per passenger carried
(Hong Kong Transport Operations***)
Total revenue
10.25
9.39
7.91
7.31
8.11
9.40
9.26
9.10
9.06
8.73
Operating costs
6.29
6.00
6.98
6.28
7.60
5.99
4.89
4.93
4.73
4.63
Operating profit
3.96
3.39
0.93
1.03
0.51
3.41
4.37
4.17
4.33
4.10
Safety Performance
Domestic Service, Cross-boundary Service and
Airport Express
Number of reportable events^
917
1,220
823
760
656
1,164
1,056
1,148
1,134
1,246
Reportable events per million
passengers carried^
0.54
0.73
0.62
0.53
0.57
0.69
0.58
0.65
0.66
0.73
Number of staff and contractors’
staff accidents∆
57
52
59
56
51
81
50
46
61
64
Light Rail
Number of reportable events^
61
65
57
62
80
163
87
104
191
157
Reportable events per million
passengers carried^
0.39
0.43
0.43
0.44
0.72
1.05
0.48
0.58
1.07
0.89
Number of staff and contractors’
staff accidents∆
5
5
6
5
10
8
2
5
8
6
Employees
Hong Kong
Corporate management and
support departments
2,431
2,166
1,952
1,923
1,852
1,899
1,932
1,882
1,837
1,792
Station commercial businesses
214
206
186
188
224
234
204
191
192
182
Transport Operations
12,392
11,728
11,492
11,688
11,983
12,211
11,948
11,591
11,349
10,891
Capital Works
1,503
1,497
1,428
1,335
1,426
1,531
1,711
2,144
2,615
2,684
Property and other businesses
1,742
1,634
1,551
1,528
1,548
1,549
1,500
1,440
1,416
1,384
Mainland China and international businesses
129
174
195
201
255
318
331
276
230
194
Outside of Hong Kong
Employees outside of Hong Kong
13,411
16,000
15,504
15,105
16,921
16,521
14,270
10,781
9,866
8,157
Total
31,822
33,405
32,308
31,968
34,209
34,263
31,896
28,305
27,505
25,284
@
High Speed Rail service commenced on 23 September 2018. The number of passengers only counts the days from 23 September 2018 to 31 December 2018.
@@ High Speed Rail service resumed on 15 January 2023. The number of passengers only counts the days from 15 January 2023 to 31 December 2023.
#
Average of 1 to 29 January 2020.
&
Market share for 2018 was rebased to reflect the impact on the opening of Hong Kong – Zhuhai – Macao Bridge.
*** Does not include the High Speed Rail service.
^
Reportable events are occurrences affecting railway premises, plant and equipment, or directly affecting persons (with or without injuries), that are reportable to the
Secretary for Transport and Logistics and Director of Electrical and Mechanical Service, Government of the Hong Kong SAR under the Mass Transit Railway Regulations,
ranging from suicides/attempted suicides, trespassing onto tracks, to accidents on escalators, lifts and moving paths.
∆
Any accident connected with the operation of the railway or with the maintenance thereof, which is notifiable to Railway Branch, Electrical & Mechanical Services
Department according to Mass Transit Railway Regulations, as a result of which an employee of the Corporation or of a contractor with the Corporation is suffering
‘fatal injury’, ‘serious injury’, or unable to fully carry out his / her normal duties for a period exceeding 3 days immediately after the accident.
61
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
NGONG PING 360
Revenue for the Ngong Ping Cable Car and its associated
theme village (“Ngong Ping 360”) increased by 29.4% to
HK$489 million in 2024 on the back of higher visitation,
which rose by 13.4% to 1.56 million. These results were
due to the continued recovery of tourism and the traffic
generated from marketing promotions, many of which
were targeted at Mainland Chinese and overseas visitors.
In addition, Ngong Ping Village continued to revamp its
tenant mix this year by welcoming local delicacies and
thematic merchants as well as a new attraction, “Fengyun
Pavilion of Chinese Dynasty – The Three Kingdoms” to
further enhance guest experience and appeal.
OCTOPUS
In 2024, MTR’s share of profit from Octopus Holdings
Limited (“OHL”) decreased by 12.8% to HK$437 million.
OHL sustained strong transaction volumes in 2024 despite
economic headwinds and robust outbound spending.
It continued to invest in driving cross-border payment
innovation by opening its network to QR-based digital
wallets in Hong Kong taxis and launching the Octopus
China T-Union card, the world’s first dual-currency transit
card, enabling access to public transit in over 336 cities
nationwide. The beta launch of Octopus on Android has
further strengthened its investment in mobile payment
growth. As at 31 December 2024, Octopus was accepted
at over 190,000 points in Hong Kong and 34 million
globally, including Mainland China. Approximately
32 million Octopus cards and products were in circulation,
with average daily transaction volumes and value of
15.9 million and HK$331.5 million, respectively.
MTR ACADEMY
The MTR Academy (“MTRA”) is a leading institute for the
development of railway engineering and management
professionals as well as a vehicle for the Company to
promote its brand and industry expertise. In September
2024, MTRA co-organised the “MTR B&R Railway Forum
cum Gala Dinner”, an event that gathered more than
200 senior government officials, railway executives,
industry leaders, researchers and engineers from
Mainland China and Belt and Road countries. During
the year, MTRA continued to host talks and site visits for
secondary school students interested in pursuing careers
in the railway industry. MTRA is also actively working with
local and Mainland Chinese universities to incorporate
railway studies into relevant programmes and further
build the pipeline of future talent for the industry.
MTR LAB
MTR Lab is an important part of the Company’s
“New Growth Engine” strategic pillar. In 2024, MTR Lab
continued to invest in start-ups and funds specialising in
innovation and technology internationally. In October
2024, MTR Lab made its inaugural direct investment in
Mainland China by strategically investing in Ensonic,
a pioneering start-up focused on AI-powered acoustic
detection – a technology that is vital for applications
such as power grids, transportation and smart city
infrastructure. Also in the fourth quarter, MTR Lab
established a partnership with UrbanLab, a leading
property technology alliance in the Mainland that
promotes the development of sustainable and smart
building technologies. Jove, the electric vehicle charging
solution owned by a subsidiary of MTR Lab, expanded its
network to 20 service points covering over 300 charging
points across Hong Kong. Carbon Wallet, another
subsidiary of MTR Lab and a leading green lifestyle reward
platform in Hong Kong, more than doubled its user base
in 2024 to over 100,000 users, with year on year growth
of 67.5% in carbon savings and 156% in recyclables
collection through its platform.
62
MTR CORPORATION LIMITED
OTHER BUSINESSES
As a world leader in green railway transit services that
are readily accessible to people from all walks of life,
MTR emphasises strong environmental, social and
governance (“ESG”) practices to help it achieve the goals
of its Corporate Strategy for sustainable long-term growth
alongside the communities it serves. In addition to the
highlights detailed in this section, stakeholders may
also consult MTR’s dedicated sustainability website and
annual Sustainability Report for more information about
the Company’s ESG efforts and performance.
In 2024, we set 43 key performance indicators to guide
our progress in 10 focus areas spread across three
environmental and social objectives: GHG Emissions
Reduction, Social Inclusion, and Advancement &
Opportunities. All of these were either achieved or on
track to being achieved during the year.
SOCIAL INCLUSION
Universal Basic Mobility
Ensuring that MTR’s services are accessible to everyone,
regardless of age, ability or background, is one of the
Company’s core operating principles. In 2024, we
welcomed members of disability groups for site visits to
our stations to introduce facilities and special features
designed to make station navigation easier for them. In
2024, MTR malls ELEMENTS, The LOHAS and The Wai won
Gold Awards in the inaugural Universal Design Award
Scheme 2024/25 organised by the Equal Opportunities
Commission (“EOC”), which recognises outstanding
performance and contributions in providing accessible
built environments.
Diversity and Inclusion
MTR promotes diversity and inclusion in the workplace
and across the community to ensure equal opportunities.
In May 2024, we launched the “EmpowerZ” traineeship
pilot programme to offer career opportunities for
youths from diverse ethnic backgrounds or those
with disabilities. One of our recruitment strategies for
engaging ethnic minorities was promoting our inclusive
workplace culture and career growth opportunities
through multicultural job fairs, including recruitment days
held at the Kowloon Masjid (Mosque) & Islamic Centre
as well as the Sikh Temple. In October 2024, MTR also
joined the CareER Inclusive Recruitment Fair and was
proud to receive the CareER Disability Inclusive Employer
Badge once again.
Equal Opportunities
MTR continued to promote ethnic diversity by supporting
The Zubin Foundation’s Care Box Project, which provided
essential food supplies to more than 2,300 individuals
during Diwali. We were also delighted to partner with the
New Life Psychiatric Rehabilitation Association to launch
“dayday330 x MTR Mindful Journey”, a series of audio
exercises accessible through the MTR Mobile app that
were designed to help passengers practise mindfulness
during their journeys.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
63
ANNUAL REPORT 2024
ENVIRONMENTAL & SOCIAL RESPONSIBILITY
1
2
3
4
5
6
7
9
10
8
3 ENVIRONMENTAL AND SOCIAL OBJECTIVES AND 10 COMMITMENTS
Contribute to the
following UN SDGs:
Contribute to the
following UN SDGs:
Contribute to the following
United Nations Sustainable
Development Goals (“UN SDGs”):
Commitments
Commitments
Commitments
Social Inclusion
GHG Emissions
Reduction
Advancement &
Opportunities
As a provider of public transport
services for all, social inclusion lies
at the very heart of who we are
and what we do
As we fulfil our vision to connect
and grow communities, we create
opportunities for others to develop
themselves and grow alongside us
As a low-carbon transport provider,
we are committed to managing our
environmental footprint and achieving
carbon neutrality
Clean Energy and
Energy Efficiency
Green and Low-carbon
Designs
Carbon Emissions
Waste Management
Universal Basic
Mobility
Diversity & Inclusion
Business Partners
Future Skills &
Innovation
Equal Opportunities
Employees
In 2024, a record-high 348 volunteering projects were
organised under the “More Time Reaching Community”
Scheme in celebration of MTR’s 45th anniversary, involving
a participating headcount of 5,847 volunteers. During our
annual “MTR Volunteering Month” held across March and
April 2024, four specially designed volunteering activities
were organised in partnership with NGOs to support our
environmental and social objectives. During the year, MTR
donated and sponsored HK$17.3 million in support of
charitable and other organisations.
64
MTR CORPORATION LIMITED
ENVIRONMENTAL & SOCIAL RESPONSIBILITY
We were pleased to continue our “Art in MTR” programme,
promoting arts appreciation throughout our network and
hosting a diverse array of performances at Hong Kong
Station’s “Living Art Stage”. In July 2024, as part of our
45th anniversary campaign, we hosted a photo exhibition,
“Railscape Reminiscence” – curated by Hiuman Lam,
the founder of “Hong Kong Reminiscence” – at Central
Station to capture the journeys of passengers and dynamic
scenery of MTR from the 1990s to modern-day Hong
Kong. Another highlight of the year was the restoration
of a 5m-long ink inscription by the “King of Kowloon”,
Mr Tsang Tsou-choi, located on a bridge barrier near
Mong Kok East Station.
ADVANCEMENT & OPPORTUNITIES
Future Skills and Innovation
One of the many ways MTR contributes to society is
by leveraging the Company’s expertise to provide
opportunities for members of the community. For 2024,
we launched the upgraded “‘Train’ for Life’s Journeys
2.0” programme, which was created to help over 1,000
students develop valuable skills in AI, design thinking
and entrepreneurship and create innovative solutions in
addressing various societal needs. We also announced
the introduction of the HK$5 million “Ride to Success”
scholarship programme, which will offer 45 scholarships
– in honour of MTR’s 45th anniversary – for local students
interested in pursuing railway careers, to encourage them
to contribute to the future development of railways and
the community. We were also proud to support “She
Loves Tech”, the world’s largest startup competition for
female tech entrepreneurship, by sponsoring the East Asia
Regional Competition as well as its “SustainConnectMove
Award”, which is given to startups that strive to advance
human connection and sustainable urban mobility
through technology.
Enabling Development of our
Business Partners
MTR’s compulsory Supplier Code of Practice ensures
that the Company’s suppliers and contractors achieve
the highest levels of conduct in business ethics, human
and labour rights, and supply chain management. Our
Green Procurement Policy advocates for high standards
of environmental protection. Meanwhile, our Modern
Slavery and Human Trafficking Statement defines our
commitment to preventing any incidence of modern
slavery or human trafficking within our business and
supply chains.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
65
ANNUAL REPORT 2024
GREENHOUSE GAS
EMISSIONS REDUCTION
MTR always strives to minimise the impact of its operations
on the environment. On 16 March 2024, we held the
“Green T Baby Fun Day” community event to celebrate
the Company’s 45th anniversary and promote low-carbon
lifestyles for over 8,000 participants. The event featured
environmentally themed activities, games, performances
and workshops organised by MTR volunteers and more
than 30 organisations – including green groups and NGO
partners – as well as a six-metre-high “Green T Baby”
inflatable installation which was later on up-cycled into
reusable pouches. During the year, we also sponsored and
participated in the “One Earth Summit”, an event designed
to promote action-focused dialogues for achieving a
net-zero transition for the region, and “ReThink HK”, where
leaders from across the community discussed topics
including sustainable mobility, urban planning, social
inclusion, the circular economy and sustainable finance.
Carbon Emissions
As a leader in environmentally friendly mass transit,
reducing carbon emissions is one of MTR’s highest
priorities. The year under review featured the service
commencement of our first electric bus; we anticipate
having at least 30 more in service by the end of 2026.
We also conducted a research study of a new hydrogen
light rail vehicle.
Clean Energy and Energy Efficiency
We are also committed to combatting climate change by
increasing our generation of renewable energy to achieve
lower emissions. In 2024, we completed installation works
for solar photovoltaic systems at Kwun Tong Station,
Tuen Mun Depot and Tai Wai Depot. We also continued
to support the World Wide Fund For Nature’s “Earth
Hour” campaign by switching off lighting at various MTR
properties on event day.
Waste Management
The three “Rs” – reduce, reuse and recycle – are central
to MTR’s efforts to manage waste in an environmentally
friendly manner. Throughout the year, we continued
our Legacy Train Revitalisation Programme by donating
retired train cars and components to community groups
for upcycling. In June, we organised the “Waste Wise
June” campaign to further promote waste reduction and
recycling across the Company. This initiative included
a roadshow, two hybrid seminars and over 10 “Trash to
Treasure” upcycling workshops for over 1,200 staff. That
month, we also supported World Food Rescue Week 2024
by collecting over 100 kg of food for people in need. In
August, we supported Hong Kong Baptist University’s
workwear recycling campaign "SuitSwitcher" by collecting
more than 140 kg of second hand suits, workwear and
accessories for donation to students.
Green and Low-carbon Designs
In 2024, seven new stations attained a “BEAM Plus” New
Buildings version 2.0 Gold rating or above in Provisional
Assessment from the Hong Kong Green Building Council.
Such qualifications demonstrate the Company’s efforts
to incorporate principles of sustainability into every
aspect of station development, from planning, design and
construction to maintenance and operation.
Sustainable Finance
In 2024, we arranged approximately HK$7.4 billion in
green finance as governed by our sustainable finance
framework, including RMB4.5 billion from our first
public issuance of offshore Renminbi Green Bonds. The
majority of this sustainable financing will go into funding
the construction of new railway lines as well as various
railway-related energy saving and energy efficiency
projects. Further details of our sustainable investments
are provided in our annual Sustainable Finance Report,
which is published on our sustainability website. We also
expanded our sustainable financing with bank loans
that come with sustainability-linked clauses, where
the Company will enjoy a modest economic benefit
if pre-agreed environmental KPIs in carbon emissions
reduction are achieved at specific observation times.
INDICES AND RECOGNITION
MTR was once again included in S&P’s Sustainability
Yearbook for placing within the top 15% of its industry
in terms of sustainability performance. Criteria are
based on S&P Global ESG Scores calculated from S&P’s
Corporate Sustainability Assessment. The Company was
also included once again in S&P’s Sustainability Yearbook
(China Edition) and the FTSE4Good Index Series.
In 2024, MTR also continued to be a constituent company
in major indices, including the Hang Seng Corporate
Sustainability Index, Hang Seng (Mainland and HK)
Corporate Sustainability Index and Hang Seng Corporate
Sustainability Benchmark Index.
66
MTR CORPORATION LIMITED
ENVIRONMENTAL & SOCIAL RESPONSIBILITY
VALUE ADDED AND DISTRIBUTION STATEMENT IN 2024
(HK$ MILLION)
Notes:
1
Includes share of profit of associates and joint ventures.
2
Excludes staff costs related to Hong Kong railway system maintenance of HK$2,924 million, capitalised for asset creation of HK$3,330 million and recoverable of HK$690 million.
3
For simplicity reason, other operating costs include interest income of HK$1,241 million, netted with non-controlling interests of HK$295 million. Excludes operating costs
related to Hong Kong railway system maintenance of HK$2,628 million.
4
Excludes interest expenses capitalised for asset creation of HK$964 million.
5
Represents current tax and excludes deferred tax for the year.
6
Includes donations, sponsorships and other community engagement contributions, and excludes in-kind donations of HK$35 million given. In addition, there were
(i) ongoing fare concessions of approximately HK$3.1 billion and (ii) other fare promotions that have not been accounted for in this amount.
7
Economic value retained for reinvestment to generate future economic values. This represents underlying business profit attributable to shareholders of the Company
(before depreciation, amortisation and deferred tax) for the year retained, after the amounts distributed to our stakeholders and invested in maintenance, upgrade and
renewal of our Hong Kong railway system.
Total: 73,536
Revenue from
Other Businesses1
2,149
Revenue from Hong Kong
Station Commercial
Businesses
5,343
Revenue from Hong Kong
Transport Operations
23,013
Revenue from Hong Kong
Property Rental and
Management Businesses
5,379
Revenue from
Mainland China and
International Subsidiaries
25,467
Hong Kong Property
Development Profit from
Share of Surplus, Income and
Interest in Unsold Properties
12,185
Economic Value Retained
for Reinvestment7
Interest and
Finance Costs4
Lenders
1,605
Economic Value Generated
Staff Costs2
Other
Operating Costs3
Fixed and
Variable Annual
Payments
Employees
16,454
Suppliers &
Business Partners
19,038
KCRC
3,775
Ordinary
Dividends Paid
Taxes5
Governments
2,475
Community
Investment6
Community
35
68,567
4,969
HKSAR Government
6,071
Other Shareholders
2,076
Existing
Hong Kong
Railway System
17,038
Capital and Operating
Expenditures in
Maintaining, Upgrading
and Renewing the
Existing Hong Kong
Railway System
Total: 73,536
Economic Value Distributed
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
67
ANNUAL REPORT 2024
To ensure business sustainability and service quality
in a challenging labour market, we invest substantial
resources in employee engagement as well as learning
and development to help them achieve career growth
and workplace satisfaction. As at 31 December 2024, MTR
and its subsidiaries employed 18,411 staff in Hong Kong
and 13,411 staff outside of Hong Kong. The Company’s
associates and joint venture employed an additional
21,779 staff in Hong Kong and around the world.
RECRUITMENT, TALENT
MANAGEMENT AND RETENTION
MTR’s voluntary staff turnover rate in Hong Kong was
6.2% in 2024. We attract and retain staff by enhancing our
employer brand, offering competitive pay and benefits as
well as short- and long-term incentive schemes under our
total reward framework. Pay and benefits are regularly
reviewed to maintain market competitiveness. Staff are also
recognised and rewarded through a performance-based
pay review mechanism as well as various motivational
and awards schemes.
To promote career growth, we prioritise employee
engagement and offer comprehensive learning and
development programmes for staff. We also strive to foster
a caring and progressive workplace by implementing
family-friendly policies and promoting work-life balance.
To prepare for a comprehensive and resource-intensive
new phase of railway development in Hong Kong,
we put focus on succession planning and nurturing
the next generation of leadership. Our Management
Potential Development Programme and Management
Development Initiative help us identify and develop
supervisors and managers with leadership potential
through structured assessments and development
including cross-unit job rotations. In 2024, we also
welcomed 76 high-calibre graduates to join various
Corporate Graduate Development Programmes, and
202 apprentices and technician associates were recruited
to join the Apprenticeship Scheme. During the year, we
made conditional offer for eligible summer interns to join
the Graduate Development Programmes.
Elsewhere, we have expanded our recruitment channels
and outreach efforts to further build our pipeline of
talent. Participation in the CareerConnect Expo and
Global Talent Summit enabled the Company to engage
with exceptional talent globally. Other initiatives
include Employee Referral Programme, Joining Bonus
Programme, flexibility for deferred retirement, digital
and social media campaigns, and traditional media and
advertising campaigns. We also organise recruitment
days and career talks, partnership programmes with
government departments, ethnic minority groups and
local communities to offer job opportunities to people
with diverse background.
68
MTR CORPORATION LIMITED
HUMAN RESOURCES
57.9
4.0
8.0
8.0
52.1
21.0
14.4
7.1 5.4
2
0
2
4
2
0
2
3
22.1
Staff Distribution by
Geographical Location
(Percentage)
Hong Kong
Australia
Sweden
Mainland China
Others
2020
2024
2023
2022
2021
0.41
0.43
0.28
0.84
0.90
Staff Productivity –
Earnings Per Employee*
(HK$ million)
*
Hong Kong businesses excluding property development
STAFF MOTIVATION AND
ENGAGEMENT
MTR conducted a full-scale Employee Engagement
Survey in late 2023, which achieved an overall response
rate of 77% and higher employee engagement scores.
Results and insights were communicated to management
and staff in 2024 through a variety of channels. Ten
follow-up action planning taskforces have been formed
at the Corporate and Business Unit/Function levels
to design and execute action plans for addressing
identified focus areas.
To celebrate MTR 45th anniversary and build team
spirit, the Company organised numerous employee
engagement activities such as distribution of special
souvenirs, community volunteering programmes, Global
Photo Contest, staff priority sessions for the “Green T Baby
Fun Day”, the “Station Rail Voyage” exhibition at Hung
Hom Station, and the “Chill Fun Trainival”, as well as three
concerts exclusively for staff by pop singers in Hong Kong.
LISTENING AND RESPONDING
TO EMPLOYEES
We are committed to fostering close communications
with staff. Our Staff Consultation Mechanism enables
management to keep close connection with more
than 1,000 directly elected staff representatives and
discuss matters of common concern. We hold quarterly
meetings for the Staff Consultative Council and 50 Joint
Consultative Committees. In addition, we organised
eight communication sessions with staff representatives
and unions in 2024 to provide updates on the latest
developments in our business and address their concerns.
In 2024, we continued to communicate corporate
update with staff around the world through various
channels including CEO messages and blog posts, videos,
focus groups, site visits and council meetings. Five
management forums and meetings were organised to
connect with managers from Hong Kong, the Mainland of
China and overseas hubs.
A CULTURE OF
CONTINUOUS LEARNING
MTR invests significantly in staff training, development
and career advancement to ensure we grow and succeed
with our employees. In 2024, we provided an average of
7.7 training days per employee in Hong Kong.
We continue to emphasise innovation and technology
to strengthen staff’s future skills and ensure that we stay
up to date with technology relevant to our industry.
These include launching training courses on technology,
robotics and AI. To develop leadership capability and
support the Company’s succession planning goals, we
have a wide range of leadership and soft skills, training. In
particular, we introduced Leaders Connect, a programme
specifically designed to equip our senior leaders with
the essential skills needed to thrive in an ever-evolving
business landscape.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
69
ANNUAL REPORT 2024
70
80
90
100
110
120
20
35
25
30
SHARE PRICE PERFORMANCE
January 2024
December 2024
Baseline
MTR share price
(HK$)(right scale)
MTR share price
relative to HSI
(Relative Index)
(left scale)
MTR has developed a reputation as a leader in investor
relations that practises high standards of corporate
governance and disclosure. The Company believes in
enhancing shareholder value through transparent and
proactive communication of its strategies, business
development and future, and it prioritises regular
engagement of institutional and retail investors.
COMMUNICATING WITH
INVESTORS
Our continuous engagement with the investment
community has made MTR one of the most widely
covered listed companies in Hong Kong. We are followed
by many international and local brokers, research
analysts, and a wide range of institutional investors.
MTR management makes every effort to ensure that
investors have a thorough understanding of the
Company’s business. In 2024, we held approximately
310 meetings with institutional investors and
analysts globally.
The Company’s Annual General Meeting (“AGM”) is one
of its principal channels of shareholder communication.
Further details on the 2024 AGM are set out in the
“Annual General Meeting” section of the “Corporate
Governance Report” on page 104 of this Annual Report.
ACCESS TO INFORMATION
Our corporate website provides investors with equal
and timely access to Company information. The Investor
Information section provides details on our financial
performance in readily accessible form. Financial reports,
patronage figures, Notable Events/IR News and Stock
Exchange filings are all accessible on the website.
INDEX LISTING
AND RECOGNITIONS
MTR’s shares have been listed on the Stock Exchange
of Hong Kong since 2000, and the Company has
been included as a Hang Seng Index constituent
stock since 2001.
Our Annual Report achieves considerable recognition
each year for presenting a clear picture of the Company’s
performance and strategy. These recognitions are listed in
the “Key Awards” section on page 5 of this Annual Report.
70
MTR CORPORATION LIMITED
INVESTOR RELATIONS
FINANCIAL CALENDAR 2025
Announcement of 2024 annual results
6 March
Annual General Meeting
21 May
Ex-dividend date for 2024 final dividend
23 May
Book closure period for 2024 final dividend
27 May to 30 May
2024 final dividend payment date
13 June
Announcement of 2025 interim results
August
Ex-dividend date for 2025 interim dividend
August
Book closure period for 2025 interim dividend August
2025 interim dividend payment date
September
Financial year end
31 December
DIVIDEND INFORMATION
Dividend per Share
(in HK$)
2023 Total Ordinary Dividend
1.31
2024 Interim Ordinary Dividend
0.42
2024 Final Ordinary Dividend
0.89
Dividend history can be found in our
corporate website.
CONTACTS
Shareholder Services
Any matters relating to your shareholding, such as transfer of shares,
change of name or address, and loss of share certificates should be
addressed in writing to the Registrar:
Computershare Hong Kong Investor Services Limited
17M Floor, Hopewell Centre
183 Queen’s Road East, Wan Chai, Hong Kong
Telephone: (852) 2862 8628
Facsimile:
(852) 2529 6087
Website:
https://www.computershare.com/hk/en
Shareholder Enquiries
Shareholders are, at any time, welcome to raise questions and
request information (to the extent it is publicly available) from the
Board and management by writing to the Company Secretary,
MTR Corporation Limited, MTR Headquarters Building, Telford
Plaza, Kowloon Bay, Kowloon, Hong Kong. Any such letter from the
shareholders should be marked “Shareholders’ Communications” on
the envelope.
Our enquiry hotline is operational during normal office hours:
Telephone: (852) 2881 8888
Investor Relations
For enquiries from institutional investors and securities analysts,
please contact:
Investor Relations Department, MTR Corporation Limited
MTR Headquarters Building, Telford Plaza, Kowloon Bay,
Kowloon, Hong Kong
Email: investor@mtr.com.hk
Financial Reports
Shareholders can obtain copies of our annual/interim reports by
writing to:
Computershare Hong Kong Investor Services Limited
17M Floor, Hopewell Centre
183 Queen’s Road East, Wan Chai, Hong Kong
If you are not a shareholder, please write to:
Corporate Affairs Department, MTR Corporation Limited
MTR Headquarters Building, Telford Plaza,
Kowloon Bay, Kowloon, Hong Kong
Our annual/interim reports are also available
online at our corporate website.
Dividend Policy
The Company has a progressive ordinary dividend policy. The aim
of this policy is to steadily increase or at least maintain the Hong
Kong dollar value of ordinary dividends per share annually. In setting
the proposed level of dividend payable in respect of any period,
the Board considers, inter alia, the financial performance and future
funding needs of the Company.
SHAREHOLDINGS AS AT
31 DECEMBER 2024
Ordinary Shares
Shares outstanding
6,224,823,171 shares
Hong Kong SAR Government Shareholding
4,634,173,932 shares
(74.4%)
Free float
1,590,649,239 shares
(25.6%)
Market Capitalisation
As at 31 December 2024
HK$ 168,693 million
SHARE INFORMATION
Stock Codes
The Stock Exchange of Hong Kong
66
Reuters
0066.HK
Bloomberg
66 HK Equity
Principal Place of Business and
Registered Office
MTR Corporation Limited, incorporated and domiciled in Hong Kong.
MTR Headquarters Building, Telford Plaza, Kowloon Bay, Kowloon,
Hong Kong
Telephone: (852) 2993 2111
Facsimile:
(852) 2798 8822
71
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
Strong governance is critical for the Company in
achieving its vision and fulfilling its purpose, and doing
so in a way that delivers long term sustainable value for
all of its stakeholders. This Report describes the corporate
governance best practices that the Company has
adopted and highlights how the Company has applied
the principles of the code provisions set out in
Appendix C1 (Corporate Governance Code) to the
Listing Rules (the “CG Code”).
The Board has the overall responsibility for effective
corporate governance and for ensuring that the
Company’s governance framework (which is described
in this Report) enables it to oversee and address
environmental and social issues that are material to
the operations and businesses of the Company. The
Environmental & Social Responsibility Committee has
strategic oversight of the Company’s environmental
and social strategy and is also responsible for tracking
performance against the Company’s environmental and
social commitments and reporting to the Board on these
issues. For details of its principal responsibilities and the
work performed during the year, please refer to pages 79
to 80 of this Report.
To keep its stakeholders abreast of the Company’s
initiatives and performance in the environmental
and social arenas, a separate Sustainability Report is
published on an annual basis. The Sustainability Report
complies with the Environmental, Social and Governance
Reporting Code as set out in Appendix C2 to the Listing
Rules, has been prepared in accordance with the Global
Reporting Initiative Reporting Standards, and makes
reference to various international reporting guidelines and
requirements, including the International Association of
Public Transport (UITP) Sustainability Reporting Guide,
ISO 26000 Guidance on Social Responsibility and the World
Economic Forum’s (WEF) Stakeholder Capitalism Metrics.
The Company also discloses climate-related information
in line with the framework recommended by the Task
Force on Climate-related Financial Disclosures (TCFD). In
addition, the Report has been prepared with reference
to the International Financial Reporting Standards (IFRS)
S1 General Requirements for Disclosure of Sustainability-
related Financial Information and IFRS S2 Climate-related
Disclosures, and the recommendations of the Taskforce
on Nature-related Financial Disclosures (TNFD). The
Company’s Sustainability Report 2024 covering the period
from 1 January to 31 December 2024 is available, together
with this Annual Report, on the websites of both the
Company (www.mtr.com.hk) and the Stock Exchange.
The Company also issues an annual Sustainable Finance
Report, which is available on the Company’s website
(www.mtr.com.hk) and responds to CDP (previously
the Carbon Disclosure project) on climate related risks,
opportunities and disclosures.
VISION, PURPOSE,
CORPORATE STRATEGY,
VALUES AND CULTURE
The Company’s vision is to be an internationally recognised
company that connects and grows communities with
caring, innovative and sustainable services.
The Company’s Corporate Strategy – “Transforming
the Future” (the “Corporate Strategy”) was adopted by
the Board in mid-2020 and established clear business
priorities and environmental and social goals with a
view to maintaining competitiveness and driving the
sustainability of the Company’s businesses, as well as
creating healthy, long-term symbiotic relationships with
the communities in which the Company operates. With
a clearly defined purpose of “keeping cities moving”,
the Corporate Strategy defined a more fit-for-future
organisation, with a strengthened Hong Kong core,
steady growth in Mainland China and internationally and
powerful new growth engines – three strategic pillars so
that the Company can stay competitive in a fast-changing
business environment. Regular reports on the progress
of the implementation of the Corporate Strategy and the
associated enablers, both financial and non-financial,
were presented to the Board during the year ended 2024.
The Board also, periodically and on an ongoing basis,
reviews and adjusts the Corporate Strategy to take
account of, inter alia, changes in the external environment
to ensure that the Company is prepared to address
evolving challenges such as the delivery of the Company’s
new rail project portfolio and other future infrastructure
projects for Hong Kong, changing travel and retail
patterns and the new generation workforce.
A Board Strategy Workshop was organised in January
2024 aiming to align strategic development directions
and priorities at Board and Management levels for the
first of these challenges. The evolution of such challenges
and the progress made in addressing them in the pursuit
72
MTR CORPORATION LIMITED
CORPORATE GOVERNANCE REPORT
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of long-term sustainable business growth will be regularly tracked and reported in future reviews to the Members of the
Board and the Executive Directorate.
The Corporate Strategy is underpinned by a set of values (Excellent Service, Mutual Respect, Value Creation and
Enterprising Spirit), which help provide all staff with a clear indication of what is expected from them, from both a
performance and a competency perspective. To foster a corporate culture which is aligned with the Company’s vision,
purpose, strategy and values, and align the mindsets and behaviours of staff to support the delivery of the Corporate
Strategy, the Company has established four cultural focus areas and associated attributes.
The alignment of the Company’s values with cultural focus areas (and their associated attributes) is illustrated in the
diagram below:
To continue promoting the desired corporate culture, a
series of actions have been undertaken by the Company
during the year including:
•
demonstrating “participative communication” as
leaders actively engage with colleagues’ needs
through multi-dimensional communication channels,
ranging from Chief Executive Officer (“CEO”) focus
groups, Employee Engagement Surveys and Business
Unit/Function-specific townhalls. These two-way
communications help improve mutual understanding
amongst colleagues from diverse backgrounds,
enhancing employee engagement and collaboration,
thereby facilitating the achievement of organisational
goals and values;
•
putting “effectiveness and innovation” into practice
by challenging the status quo and developing various
innovative projects through the adoption of advanced
technology related to smart railway operations and
maintenance. These efforts enhance not only the
monitoring of railway assets but also the Company’s
customer service and incident handling. In 2024,
the Company’s research and development efforts in
smart railway gained international recognition by
winning 21 awards at the 49th International Exhibition
of Inventions of Geneva, setting a new record
for the Company;
•
demonstrating “agility to change” and commitment
to build an inclusive workplace by launching a new
Job Sharing Scheme. The scheme helps maximise
manpower utilisation and attracts job applicants
who seek more flexibility on work arrangements.
In addition, new recruitment channels have been
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ANNUAL REPORT 2024
established to reach broader and more diverse groups
of potential applicants, such as job fairs held at the
Kowloon Mosque and Islamic Centre, Sikh Temple,
MTR Malls, and the use of recruitment buses;
•
providing regular training sessions to strengthen
different aspects of the corporate culture, with over
2,000 participants attending in 2024; and
•
building cultural awareness on an ongoing basis
through (a) the Living the MTR Values Award Scheme
which aims at honouring colleagues from different
business units and functions who have lived out the
Company’s values in their day to day work; and (b) the
MTR Grand Awards for Outstanding Contribution to
recognise individuals and teams who have displayed
exemplary performance or behaviour in line with the
Company’s culture and values.
The Company has also continued to embed its
Environmental and Social (“E&S”) Objectives and the
three lines of defence model into its daily operations. On
the E&S front, a set of Key Performance Indicators (“KPIs”)
are developed annually, consisting of short-, mid- and
long-term initiatives to gauge and drive the Company’s
performance under its three E&S Objectives: (i) Social
Inclusion; (ii) Greenhouse Gas Emissions Reduction; and
(iii) Advancement and Opportunities, further details
of which are set out in the Sustainability section of the
Company’s website (www.mtr.com.hk).
For more details about the Company’s approach
to human capital management, including how the
corporate culture is nurtured, as well as how the
Company approaches equal employment opportunities
and diversity and inclusion, please refer to the
Sustainability Report 2024.
CORPORATE GOVERNANCE
PRACTICES
Corporate governance is the collective responsibility of
the Members of the Board and the Board firmly believes
that good corporate governance is fundamental in
ensuring the proper management of the Company in
the interests of all of its stakeholders. The Board actively
seeks opportunities for continuous improvement in the
area of corporate governance and takes prompt action in
responding to identified improvement opportunities.
The Company’s efforts and achievements in corporate
governance and environmental, social and governance
(“ESG”) were recognised by the Hong Kong Institute of
Certified Public Accountants (“HKICPA”), which honoured
the Company with a Gold Award in the Most Sustainable
Companies/Organizations Awards in the Hang Seng Index
category under HKICPA’s 2024 Best Corporate Governance
and ESG Awards. This award recognises companies that
have performed to a high standard in both corporate
governance and ESG and have taken steps to integrate
these two elements into their values, strategies and
operations. The Company also received a KPMG ESG 50
Awards’ Corporate Governance Pioneers Award. This
award recognised the Company’s strong performance
in terms of governance structures, decision making
mechanisms, internal controls and information disclosure.
According to the Consultation Conclusion of the Review
of Corporate Governance Code and Related Lising Rules
issued in December 2024, the revised CG Code and
related Listing Rules will come into effect from 1 July 2025.
As at the date of this Report, the Company already
complies with many of the revised CG Code requirements,
including (1) no Independent Non-executive Director
(“INED”) concurrently holds directorships in more than
six listed issuers; (2) no INED has served on the Board for
more than nine years; and (3) the Nominations Committee
conducts an annual review of the Board Diversity Policy
and has done so since 2021. For compliance with the
revised CG Code, the Company updated the terms of
reference of the Nominations Committee in January 2025
to add a number of additional requirements including
assisting the Board in maintaining a skills matrix,
reviewing the time commitment and contribution of
each Member of the Board on at least an annual basis
and supporting the Company’s regular evaluation of the
Board’s performance. In March 2025, the Nomination
Policy and Board Diversity Policy were also updated and
a new Workforce Diversity Policy was adopted. Work is
ongoing to ensure that the Company will be ready to
comply with all remaining new or updated requirements.
The Company continues to monitor developments in the
arena of corporate governance externally to ensure the
suitability and robustness of its corporate governance
framework in light of the evolving business and regulatory
environment and to meet the expectations of stakeholders.
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CORPORATE GOVERNANCE REPORT
CORPORATE GOVERNANCE CODE COMPLIANCE
During the year ended 31 December 2024, the Company has complied with the code provisions as set out the CG Code.
In the following corporate governance areas, the Company’s practices have exceeded the relevant CG Code/Listing
Rules requirements:
Corporate Governance Areas
Details of Exceedance by the Company
Number of INEDs
The number of INEDs represents two-thirds of the Board, which exceeds the
independence requirement under the Listing Rules
Number of INEDs in
Audit & Risk Committee
The Audit & Risk Committee consists of five INEDs, which exceeds the
independence requirement under the Listing Rules
Professional qualifications or
accounting or related financial
management expertise
There are three INEDs who have professional qualifications or accounting
or related financial management expertise, which exceeds the number
required under the Listing Rules
Number of Regular Board Meetings
The Company holds seven Regular Board Meetings each year and Special
Board Meetings are held as and when required, which exceeds the
requirement under the CG Code
Notice of Regular Board Meetings
The dates of Regular Board Meetings for the following year are usually fixed
in the third quarter of the preceding year
Notice of Annual General Meeting
(“AGM”)
A notice period of at least 20 clear business days before the date of AGM is
given, which exceeds the requirement under the Listing Rules
Model Code Confirmation
•
Confirmation of Compliance with the Model Code is obtained from
each Director and Model Code Manager (as defined under the section
“Model Code for Securities Transactions by Directors of Listed Issuers”)
every half-year
•
An electronic platform has been established to give one-stop access to
the relevant key processes to support compliance with the Model Code
Evaluation of the effectiveness of
risk management system
•
The Company reviews not only the effectiveness of the risk management
system of the Company and its subsidiaries, but also that of its key
associates operating in Mainland China and overseas
•
The Company has established a risk-based three lines of defence
framework to ensure appropriate focus is applied to relevant risks and
provide recommendations to address identified gaps and inefficiencies
Gender diversity at Board Committees/
Advisory Panel
As at the date of this Report, five out of the seven Board Committees/
Advisory Panel of the Company have members of different genders. The
Audit & Risk Committee is chaired by a female member
THE BOARD OF DIRECTORS
Overall Management
The overall management of the Company’s business is vested in the Board. Pursuant to the Articles of Association and the
“Protocol: Matters Reserved for the Board” (the “Protocol”) adopted by the Board, the Board has delegated the day-to-day
management of the Company’s business to the Executive Committee and focuses its attention on matters affecting
the Company’s overall strategic policies, corporate governance, finances and shareholders. These include financial
statements, dividend policy, significant changes in accounting policies, annual operating budget, certain material
contracts, strategies for future growth, major financing arrangements and major investments, corporate governance
functions, risk management and internal control systems, treasury policies and fare structures. The Board reviews the
delegation arrangement periodically.
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Operations of the Group
Note 2
To enable the Board to maintain adequate oversight, the Board receives updates and briefings on matters that have a
significant impact on the Company’s operations and businesses on a regular basis, supplemented by ad hoc reporting as
and when required.
Below is a diagram of the governance structure of the Company:
Notes:
1. All Board Committees/Advisory Panel are provided with sufficient resources to discharge their duties and can seek independent professional advice (as and when
required) at the Company’s expense to perform their responsibilities. The terms of reference of each Board Committee/Advisory Panel are available on the respective
websites of the Company (www.mtr.com.hk) and the Stock Exchange.
2. The Executive Committee is delegated by the Board to handle the day-to-day management of the Company’s business pursuant to the Articles of Association and the
Protocol and is chaired by the CEO and made up of nine other Members of the Executive Directorate.
3. Business/Functional Management Committees are set up to assist the Executive Committee in the management and control of the Company’s various core businesses
and functions.
Board of Directors
Note 1
Audit & Risk
Committee
Capital Works
Committee
Nominations
Committee
Technology
Advisory
Panel
Environmental
& Social
Responsibility
Committee
Remuneration
Committee
Finance &
Investment
Committee
Executive Committee
Business/Functional
Management Committees Note 3
Note 2
Board Committees/Advisory Panel
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CORPORATE GOVERNANCE REPORT
Head of the Executive Directorate;
Chairman of the Executive Committee;
Responsible to the Board for managing the business
of the Company; and
Responsible for performing a bridging function
between the Board and the Executive Directorate.
Chairing and managing the operations of the Board;
Monitoring the performance of the CEO and other
Members of the Executive Directorate;
Making sure that adequate information about the
Company’s business is provided to the Board on
a timely basis;
Providing leadership for the Board and promoting a
culture of openness;
Ensuring views on all issues are exchanged by all
Members of the Board in a timely manner;
Encouraging Members of the Board to make a full
and effective contribution to the discussion at
Board Meetings; and
Establishing good corporate governance practices
and procedures.
Chairman
(Non-executive Director)
CEO
(Executive Director)
Composition of the Board
A list of Members of the Board and the Executive Directorate and their roles and functions is available on the respective
websites of the Company (www.mtr.com.hk) and the Stock Exchange. Biographical details of each of the Members of the
Board and the Executive Directorate are set out on pages 121 to 134 of this Annual Report.
As at the date of this Report, the Board has 18 Members, made up of 12 INEDs, five Non-executive Directors (“NEDs”) and
one Executive Director (“ED”). This structure ensures that the Board is comprised of a majority of independent members,
which is conducive to maintaining an independent and objective decision-making process.
Government, through The Financial Secretary Incorporated, held approximately 74.45% of the issued shares of the
Company as at 31 December 2024, and is a substantial shareholder of the Company. The Chief Executive of the HKSAR, in
the exercise of his right under Section 8 of the MTR Ordinance, has appointed three persons as “additional directors” of
the Company (the “Additional Directors”). They are:
•
The office of the Secretary for Transport and Logistics (currently held by Ms Mable Chan);
•
The office of the Permanent Secretary for Development (Works) (currently held by Mr Ricky Lau Chun-kit); and
•
The office of the Commissioner for Transport (currently held by Ms Angela Lee Chung-yan).
The Additional Directors are all NEDs and are treated for all purposes (other than the requirement to retire by rotation
according to the Articles of Association) in the same way as other Members of the Board and are, therefore, subject to the
usual common law duties of directors, including the requirement to act in the best interests of the Company.
Mr Christopher Hui Ching-yu, the Secretary for Financial Services and the Treasury, is another NED of the Company.
Coming from diverse business and professional backgrounds, Members of the Board actively bring their valuable
experience to the Board for promoting the best interests of the Company and its shareholders. In addition, the INEDs also
contribute to ensuring that the interests of all stakeholders of the Company are taken into account by the Board and that
relevant issues are subject to objective and dispassionate consideration by the Board.
Chairman and CEO
The posts of the Chairman and the CEO are distinct and separate. Their respective roles and responsibilities are set out below:
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Board Committees/Advisory Panel(s)
As mentioned in the section headed “Overall
Management” above, pursuant to the Articles of
Association and the Protocol, the Board has delegated
the day-to-day management of the Company’s business
to the Executive Committee and focuses its attention on
matters affecting the Company’s overall strategic policies,
corporate governance, finances and shareholders.
The Board discharges some of its said responsibilities
through delegation, with appropriate oversight, to
respective Board Committees and Advisory Panel(s).
The memberships of the Company’s existing Board
Committees and Advisory Panel and the attendance
record of each Member of the Board in 2024 are set out
on pages 92 to 93 of this Report.
The duties and work performed by the Audit & Risk
Committee, Capital Works Committee, Finance &
Investment Committee and Remuneration Committee
during the year are set out in their respective reports in
this Annual Report:
•
“Audit & Risk Committee Report” on pages 106 to 108;
•
“Capital Works Committee Report” on page 114;
•
“Finance & Investment Committee Report” on
page 115; and
•
“Remuneration Committee Report” on pages 116 to 120.
Nominations Committee
The Nominations Committee consists of five NEDs,
three of whom are INEDs. The Chairman is an INED. The
Committee currently has two female members.
During the year, the Company amended the terms
of reference of the Nominations Committee to allow
more flexibility in its membership composition and, in
January 2025, the terms of reference were further amended
to comply with certain new provisions of the revised CG
Code to be implemented on 1 July 2025. Further updates
to the terms of reference will be made in the future when
the additional new provisions of the revised CG Code
take effect. The terms of reference are available on the
respective websites of the Company (www.mtr.com.hk)
and the Stock Exchange.
Principal responsibilities (with effect from January 2025):
•
Assisting the Board in maintaining a skills matrix (the
“Board Skills Matrix”) and reviewing the structure,
size and composition (including the perspectives,
skills, diversity, knowledge and experience) of the
Board, the appropriateness and effectiveness of the
Board Diversity Policy (the “BD Policy”) (including
any gender diversity targets therein) and Nomination
Policy, as well as the adequacy and appropriateness of
the Board Skills Matrix, at least annually and making
recommendations on any proposed changes to the
Board to complement the Company’s corporate
strategy and for succession planning purposes;
•
Identifying individuals suitably qualified to become
Members of the Board and putting forward
nominations or recommendations to the Board for
proposed appointments to the Board;
•
Assessing the independence of INEDs;
•
Reviewing annually the time commitment and
contribution of each director to the Board, as well as
the director’s ability to discharge his/her responsibility
effectively, taking into account their professional
qualifications and work experience, existing
directorships of issuers listed on the Main Board or
GEM and other significant external time commitments
and other factors or circumstances relevant to the
director’s character, integrity, independence and
experience; and to conduct other assessments in
accordance with the Listing Rules;
•
Supporting the Company’s regular evaluation of the
Board’s performance;
•
Making recommendations to the Board on the
appointment or re-appointment of Members of
the Board and succession planning for Members of
the Board; and
•
Nominating and recommending to the Board
candidates for filling the positions of CEO, Finance
Director and Chief Operating Officer (provided that
the Chief Operating Officer position exists).
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During the year, the Committee conducted reviews,
discussed and, where applicable, made corresponding
recommendations to the Board in respect of the
following matters:
•
2023 annual review of the structure, size and
composition of the Board, the Nomination Policy, the
BD Policy and the list of skillsets;
•
Annual assessment of the independence of each INED;
•
Re-election of Members of the Board retiring at
the Company’s Annual General Meeting held on
22 May 2024 (the “2024 AGM”);
•
Proposed nomination of a new Member of the Board
for election by shareholders at the 2024 AGM;
•
Succession planning for the Board;
•
Preview of potential changes to the Corporate
Governance Code and related Listing Rules and
associated implications; and
•
Commencement of the process to recruit a new CEO.
Board succession is an on-going process for the Company
and is discussed by the Nominations Committee on a
regular basis. The Nominations Committee manages
Board succession and considers prospective candidates
based on merit and taking a long-term, strategic view
of the competencies and experience necessary to
complement the Corporate Strategy, as well as the
other factors highlighted in the Company’s Nominations
and BD Policies.
After the end of 2024 and up to the date of this Report,
the Nominations Committee has, inter alia, (i) conducted
the 2024 annual review of the size, structure and
composition (including skills/experience/perspectives)
of the Board and considered the same is appropriate in
light of the Company’s strategy and business needs and
the list of skillsets of the Board; (ii) conducted an annual
assessment of the independence of each INED; and
(iii) assessed and recommended the re-election of the
retiring Members of the Board and proposed nomination
of a new Member of the Board for election at the
2025 Annual General Meeting of the Company (the
“2025 AGM”). The Nominations Committee has also
concluded that the Board (1) currently possesses a
balanced mix of skills, experience and diversity of
perspectives; (2) is in line with the Company’s BD Policy;
and (3) is appropriate for continuing to support the
execution of the Company’s business strategies in an
efficient and effective manner.
Environmental & Social Responsibility Committee
The Environmental & Social Responsibility Committee
consists of seven members, made up of two INEDs, two
NEDs and three Members of the Executive Directorate.
The Environmental & Social Responsibility Committee
is chaired by the Chairman of the Company. Its terms of
reference are available on the respective websites of the
Company (www.mtr.com.hk) and the Stock Exchange.
Principal responsibilities:
•
Engaging in any activity and acting as an advisor
to the Board in respect of matters falling within the
Committee’s terms of reference;
•
Approving the Company’s E&S strategy;
•
Overseeing the setting and achievement of targets
under the Company’s E&S strategy;
•
Monitoring and overseeing the Company’s E&S
(including safety) performance and the related
frameworks and initiatives;
•
Approving E&S investments by the Company in excess
of the thresholds set by the Board, in accordance with
the Company’s E&S investment framework;
•
Overseeing the Company’s stakeholder engagement
strategy;
•
Identifying emerging corporate responsibility and
sustainability issues arising from external trends;
•
Reviewing the Company’s annual Sustainability Report
and recommending endorsement by the Board; and
•
Providing updates to the Board on matters falling
within the Committee’s remit as required.
Please also refer to the “Environmental & Social
Responsibility” section (pages 63 to 67) of this
Annual Report.
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ANNUAL REPORT 2024
Work performed during the year:
•
Monitored the advancement of the E&S Objectives of
Social Inclusion, Greenhouse Gas Emissions Reduction
and Advancement & Opportunities;
•
Reviewed and recommended the Sustainability Report
2023 to the Board for approval;
•
Considered the Company’s performance on various
local and international sustainability indices;
•
Reviewed the progress made towards meeting the
Company’s E&S key performance indicators;
•
Reviewed the allocation of the ESG Fund to eligible
projects; and
•
Monitored the progress of various community
programmes and investment programmes.
As at the date of this Report, the Environmental & Social
Responsibility Committee has conducted, inter alia,
an annual review of the adequacy of the Company’s
resources for ESG performance and reporting. For
more information, please refer to the “Evaluation of the
Adequacy of Resources of the Company’s Accounting,
Financial Reporting and Internal Audit Functions and
for ESG Performance and Reporting” under the section
headed the “Risk Management and Internal Control
Systems” (page 100) of this Report.
Technology Advisory Panel
The Technology Advisory Panel consists of two INEDs,
one NED and an external advisor. The Chairman of the
Panel is an INED. The terms of reference of the Panel are
available on the respective websites of the Company
(www.mtr.com.hk) and the Stock Exchange.
Principal responsibilities:
•
Reviewing and providing input and direction to the
setting and implementation of the Company’s digital
strategy and “Engine 2” strategy, the Company’s
long-term technological development plans and
implementation schemes, as well as the Group’s cyber
security positioning; and
•
Reviewing relevant digital trends, new technologies
and cyber security developments and incidents
and making recommendations to the Company’s
Executive Directorate and, where appropriate, the
Board on further developing the Company’s digital
strategy and cyber security positioning.
Work performed during the year:
The Panel reviewed and provided guidance on the
following key matters:
•
the technology governance model of the Company;
•
the technology plan of a major business unit;
•
the digital plan of a business unit;
•
the progress of cyber security work, including
initiatives, security audits and horizon scanning
of incidents;
•
the digital and enterprise architecture strategy; and
•
updates on major digital and innovation projects.
Company Secretary
Ms Gillian Elizabeth Meller, being the Legal and
Governance Director and a Member of the Executive
Directorate, reports to the CEO. Her role as the Company
Secretary includes:
•
Providing access to advice and services for Members
of the Board;
•
Ensuring the correct Board procedures are followed;
•
Advising the Board on all corporate governance
matters;
•
Arranging pre-appointment legal advice for new
Members of the Board, their Alternate Directors and
Members of the Executive Directorate, providing
a comprehensive, formal and tailored induction
programme on key areas of business operations and
practices of the Company, as well as the general
and specific duties of directors under general law
(common law and legislation) and the Listing Rules;
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CORPORATE GOVERNANCE REPORT
•
Recommending Members of the Board, their Alternate
Directors and Members of the Executive Directorate to
attend relevant seminars and courses; and
•
Arranging for training on relevant new or amended
legislation or other regulations to be provided at
Board meetings.
In 2024, Ms Meller undertook over 15 hours of
professional training to update her skills and knowledge.
Appointment, Re-election and
Removal of Members of the Board
A person may be appointed as a Member of the Board at
any time either by:
•
the shareholders at general meeting in accordance
with the “Appointment Procedures for Members of
the Board of the Company”, which is available on the
website of the Company (www.mtr.com.hk); or
•
the Board upon the recommendation of the
Nominations Committee of the Company; or
•
the Chief Executive of the HKSAR in the case of the
Additional Directors.
Members of the Board who are appointed by the Board
during a year must retire at the first annual general
meeting after their appointment and are eligible for
election at that meeting.
Except for the Additional Directors, all other Members
of the Board are required to retire by rotation. At each
annual general meeting of the Company, Members of the
Board who were last elected or re-elected at the annual
general meeting which was held in the third calendar year
prior to the annual general meeting in question, are those
who will retire by rotation.
The Additional Directors may not be removed from office
except by the Chief Executive of the HKSAR and are not
subject to any requirement to retire by rotation.
The Company has a service contract with each of the
NEDs (with the exception of the Additional Directors) and
the INEDs, specifying the terms of his/her continuous
appointment as a NED or an INED and as the chairman
or a member of the relevant Board Committee(s)/
Advisory Panel.
Nomination Policy
The Nomination Policy (the “Nomination Policy”) sets
out the process and procedures for governing the
nomination of Members of the Board applicable to
both new appointments and re-appointments, except
for appointments made by the Chief Executive of the
HKSAR pursuant to Section 8 of the MTR Ordinance
and nomination by shareholders of the Company
in accordance with the Articles of Association. The
Nomination Policy was last updated in March 2025
to comply with certain new provisions of the revised
CG Code, which will be implemented on 1 July 2025.
Further updates to the Nomination Policy will be made
in the future when the additional new provisions of the
revised CG Code take effect. The latest Nomination Policy
adopted by the Company is posted on the Company’s
website (www.mtr.com.hk).
The Board has delegated to the Nominations Committee
the authority to identify and assess potential candidates
for appointment to the Board through different means
and channels, including recommendations from Members
of the Board, use of external search firms and any other
means or channels that it deems appropriate.
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Nomination Procedures
The following diagram demonstrates the nomination procedures for new appointments and re-elections of Members of
the Board (except for the Additional Directors):
Re-election
Review the profile of the Member of the
Board (including independence in case of INED)
who has offered himself/herself for
re-appointment to consider his/her suitability
in light of the strategy of the Company as well
as the structure, size and composition of the Board
at that time
Make recommendation for the Board’s
consideration
New Appointment
Request the candidate to provide his/her
biographical information and other information
deemed necessary
Review and take reasonable steps to verify the
information obtained from the candidate and seek
clarification, where required
Invite the candidate to meet with the Nominations
Committee members, at their discretion, to assist
them in their consideration of the proposed
nomination or recommendation
For INED appointment, the independence of a
candidate would be assessed by reference to the
independence requirements under the Listing Rules
Submit nomination proposal to the Board
for consideration and approval or to make
recommendation to the shareholders for approval
Approve the election and/or re-election of new/existing Member of
the Board at the Company’s annual general meeting
Consider recommendation from the Nominations Committee and
make recommendation to the shareholders
for election (re-election) of the Member of the Board
Consider recommendation from
the Nominations Committee
and approve the appointment
during the year
Note: Save for the Additional Directors, any Member of the Board appointed during the year is subject to election by the shareholders at the next
following annual general meeting.
Note
Re-election
New Appointment
Nominations Committee
Board
Shareholders
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Selection Parameters
In evaluating a proposed candidate, including a Member
of the Board eligible for re-appointment, the Nominations
Committee will consider the following factors (which are
by no means exhaustive):
•
the strategy of the Company;
•
the structure, size, diversity profile, composition,
skills matrix and needs of the Board and its respective
Board Committees at the time (including the
number of INEDs on the Board), taking into account
succession planning and the diversity of the Board,
where appropriate;
•
the required skills, which should be complementary to
those of the existing Members of the Board;
•
the BD Policy of the Company as adopted/amended
by the Board from time to time;
•
any information obtained through third party
references or background checks;
•
any other factors that may be used as reference in
assessing the suitability of a proposed candidate,
including but not limited to the candidate’s reputation
for integrity, qualifications, accomplishments, likely
commitment in terms of time and interest and
expected contribution to the Company;
•
the candidate’s ability to devote sufficient time
to the Board;
•
the need for a strong independent element on
the Board; and
•
the independence of a candidate proposed to be
appointed as an INED, in particular by reference to the
independence requirements under the Listing Rules.
The Nominations Committee is vested with discretion
to take into account such other factors that it may
consider appropriate.
The Nominations Committee will review the
implementation of the Nomination Policy at least
annually, including the mechanisms for ensuring
independent views and input are available to the Board,
and make recommendations on any proposed changes to
the Board for the Board’s review and approval to ensure
its effectiveness.
Diversity
The Company is well aware of the benefits of diversity
from the perspectives of, inter alia, creativity, innovation
and decision making, and has a number of initiatives
underway as part of the social inclusion pillar of
its E&S strategy.
Board Level
Recognising the importance of maintaining gender
diversity on the Board, in 2022, the Company made a
pledge to maintain not less than 20% female members
on the Board and set a target of achieving 25% female
members on the Board by 2025, as noted in the
Company’s BD Policy. Since 2022, the Board has had
more than 20% female members and, as at the date
of this Report, has five female members, representing
over 27% of the Board and exceeding the 2025 target.
All appointments will continue to be made in
accordance with the Company’s Nomination Policy
and on a merit basis taking into account available and
suitable candidates.
As at the date of this Report, five Board Committees of the
Company have at least one female member and the Audit
& Risk Committee is chaired by a female member.
Reflecting on the achievement of its 2025 gender diversity
target (as noted above), in March 2025, the Company
updated its BD Policy, with the latest version posted on
the Company’s website (www.mtr.com.hk). The BD Policy
provides that the Company should endeavour to ensure
that the Members of the Board have the appropriate
balance of skills, experience and diversity of perspectives
that are required to support the execution of its business
strategy and in order for the Board to be effective.
A summary of the updated BD Policy is set out below:
•
the Company is committed to equality of opportunity
in all aspects of its business and does not discriminate
on the grounds of race, gender, disability, nationality,
religious or philosophical belief, age, sexual
orientation, family status or any other factor;
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ANNUAL REPORT 2024
•
a diversity of perspectives can be achieved through consideration of a number of factors, including but not
limited to skills, regional and industry experience, background, race, gender and other qualities. In informing the
Company’s perspective on diversity, its own business model and specific needs from time to time will also be taken
into account; and
•
the Company is committed to maintaining a Board made up with INEDs as the majority, together with an appropriate
balance of gender diversity. The Board will seek opportunities to increase the proportion of female Members over time
and will actively seek to ensure that, at any time, no less than 25% of its Members of the Board are female.
The Nominations Committee reviews the implementation of the BD Policy at least annually and makes recommendations
on any proposed changes to the Board for the Board’s review and approval to ensure its continued appropriateness
and effectiveness. As at the date of this Report, the Board, through the Nominations Committee, has reviewed the
implementation of the BD Policy and confirmed its appropriateness and effectiveness.
The BD Policy and the list of skillsets were taken into account by the Nominations Committee and the Board in
considering the appointment of Mrs Ayesha Macpherson Lau as an INED during the year.
The Nominations Committee and the Board formed the view that, with Mrs Lau’s extensive experience in the financial and
public sectors, she would be a valuable addition to the Board and would further enrich the spectrum of skills, experience
and diversity of perspectives on the Board, thereby enhancing the diversity and effectiveness of the Board.
As at the date of this Report, the diversity of the Board is illustrated in the diagram below:
Male (13)
INED (12)
<50 (1)
0-1 (5)
0 (10)
1-2 (8)
2-3 (5)
4-5 (6)
Female (5)
≥70 (4)
≥6 (2)
Gender
Designation
Age Group
Number of Years as Board Members (Years)
Outside Directorships (Number of listed companies)
ED (1)
NED (5)
50-54 (2)
65-69 (5)
60-64 (2)
55-59 (4)
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Board Skills
During the year, the Nominations Committee reviewed
the appropriateness of the list of skillsets and considered
that Board Members’ individual experience (past and
current) spanning across different sectors (including
public bodies, private companies, charitable organisations
and Government authorities) has enriched the diverse
perspectives of the Board, while collectively providing a
reservoir of balanced skills that supports the Company’s
strategic needs.
The list of skillsets of the Members of the Board covers the
following key areas:
•
business related experiences including risk
management, human resources management,
strategic planning, multi-national companies
experience, and passenger/customer perspectives;
•
compliance related experiences including listed
company experience, and ESG matters;
•
industry related experiences including railway
operations, engineering, construction and
infrastructure, property development, planning/urban
development, commercial/business operations and
overseas business growth and management;
•
professional expertise including accounting and
finance, engineering, legal and regulatory;
•
public administration including Government liaison,
Hong Kong political environment, government
relations in Mainland China, and public affairs/
communications; and
•
technology, particularly in the areas of artificial
intelligence, digital and cyber security.
Workforce Level
“Diversity and Inclusion” (“D&I”) is one of the ten focus
areas under the Company’s E&S Objectives, under which
the Company commits to eliminating discrimination in
our practices and policies and to increasing the diversity
of its workforce.
The Company achieved several D&I related KPIs in 2024. For
instance, a D&I survey was conducted and about 400 DEI
(diversity, equity and inclusion) training events were
organised for staff. Also, a new one-year traineeship
pilot programme “EmpowerZ” was launched, supporting
the employment of people with disabilities or from
ethnically diverse backgrounds. 15% of the Company’s
summer interns were ethnically diverse or persons with
disabilities. The Company has also participated in the
CareER Disability Inclusion Index and has been awarded
the “CareER Disability Inclusive Employer Badge”.
In March 2025, the Company adopted a new Workforce
Diversity Policy in early compliance with the requirements
of the revised CG Code. A summary of the Workforce
Diversity Policy is set out below:
•
Commitment to Equality and Diversity: The
Company is dedicated to ensuring equality of
opportunity and does not discriminate based on
race, skin colour, gender, disability, religious or
philosophical belief, age, sexual orientation, family
status, or any other factor. It values diversity in its
workforce, considering various factors such as skills,
experience, background, race, and gender.
•
Inclusive Work Environment: The Company aims to
create an inclusive and respectful work environment
where employees feel comfortable and can realise
their full potential. It is committed to eliminating
discrimination, increasing workforce diversity, and
providing equal employment opportunities based on
merit and objective criteria.
•
Targets and Reporting: The Company prioritises
efforts to achieve workforce diversity through setting
and monitoring its performance against annual
KPIs. Any KPIs set and the progress of the Company
towards meeting them will be disclosed in the
Company’s Sustainability Report.
For the gender distribution of the workforce (including
the senior management) in 2024, please refer to the
information disclosed in the Sustainability Report 2024.
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INED INDEPENDENCE
For the year ended 31 December 2024, each INED has provided a written confirmation to the Company about his/her
independence and, where applicable, the interests of his/her immediate family member(s) (as defined under the Listing
Rules). The Nominations Committee has reviewed the said confirmations and assessed the independence of the INEDs
and continues to consider each of them to be independent.
As at the date of this Report, the Board, through the Nominations Committee, has reviewed the implementation and
effectiveness of the below mechanisms to ensure that independent views and input are available to the Board.
Structure
The number of INEDs represents two-thirds of the Board, which exceeds the independence
requirement under the Listing Rules.
INED’s tenure
•
Currently, for an INED who has completed more than three consecutive terms of service
(i.e. nine years), the recommendation for his/her re-appointment should state why the
Nominations Committee believes he/she is still independent and should be re-appointed,
including the factors considered, the process and the discussion of the Nominations
Committee in arriving at such determination. Going forward, the Company will comply
with the provisions of the revised CG Code as they take effect.
•
As at the date of this Report, none of the INEDs has been serving on the Board for over nine
years. For details, please refer to the table of length of tenure and period of appointment of
Members of the Board (excluding Additional Directors) on page 87 of this Report.
Time commitment
Each Member of the Board is required to ensure that he/she can give sufficient time and
attention to the affairs of the Company and contribute to the development of the Company’s
strategy and policies through independent, constructive and informed comments. The
attendance record of each Member of the Board during the year is set out on pages 92 to 93
of this Report.
Overboarding
•
All Members of the Board (including INEDs) have disclosed to the Company in a timely
manner the number and nature of offices held by them in public companies or organisations
and other significant commitments, as well as their identity and the time involved.
•
There is no overboarding issue (i.e. holding of more than six listed company directorships).
Cross-directorship
Certain Members of the Board have common directorships as NEDs or INEDs in the Company and
other companies/bodies. The Nominations Committee has assessed the said cross-directorships
and confirmed that they should not undermine the independence of the relevant INEDs.
Interest in the shares
of the Company
None of the INEDs, nor any of their family members, holds more than 1% of the total number
of the issued shares of the Company.
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Below are the length of tenure (up to the 2025 AGM) and the period of appointment of the Members of the Board
(excluding the Additional Directors):
Length of Tenure
up to the 2025 AGM
Period of Appointment
(Approx. No. of Year(s))
Start Date
End Date
Non-executive Directors
Dr Rex Auyeung Pak-kuen (Chairman)
6
7 March 2019
31 December 2025
Christopher Hui Ching-yu
(Secretary for Financial Services and the Treasury)
5
1 June 2020
31 May 2026
Independent Non-executive Directors
Andrew Clifford Winawer Brandler
8
17 May 2017
16 May 2026
Dr Bunny Chan Chung-bun
5
20 May 2020
19 May 2026
Walter Chan Kar-lok
6
22 May 2019
21 May 2025
Cheng Yan-kee
6
22 May 2019
21 May 2025
Hui Siu-wai
4
26 May 2021
21 May 2027
Ayesha Macpherson Lau
1
22 May 2024
21 May 2027
Sunny Lee Wai-kwong
3
25 May 2022
24 May 2025
Jimmy Ng Wing-ka
6
22 May 2019
21 May 2025
Dr Carlson Tong
3
25 May 2022
24 May 2025
Sandy Wong Hang-yee
2
24 May 2023
23 May 2026
Adrian Wong Koon-man
4
26 May 2021
21 May 2027
Professor Anna Wong Wai-kwan
2
24 May 2023
23 May 2026
Executive Director
Dr Jacob Kam Chak-pui (CEO)
6
1 April 2019
31 December 2025
Save as disclosed in this Annual Report, none of the
Members of the Board or the Executive Directorate has
any relationship (including financial, business, family or
other material or relevant relationships) with another
Member of the Board or the Executive Directorate or holds
any cross-directorships. In addition, none of the Members
of the Board holds more than six directorships in listed
companies (including the Company) or has significant links
with other Members of the Board through involvements in
other companies or bodies as at 31 December 2024.
MODEL CODE FOR SECURITIES
TRANSACTIONS BY DIRECTORS
OF LISTED ISSUERS
The Company has adopted the Model Code set out in
Appendix C3 to the Listing Rules (the “Model Code”).
After having made specific enquiry, the Company
confirms that all Members of the Board (save for the
disclosure made in relation to an INED below) and (where
applicable) their Alternate Directors and all Members of
the Executive Directorate have complied with the Model
Code throughout the year.
In February 2024, an INED (the “Concerned INED”) notified
the Company in writing that, due to an inadvertent
oversight, the Concerned INED had made a subscription
for certain fixed rate notes issued by the Company (the
“Concerned Notes”) during the Company’s “blackout
period” and without having obtained the requisite written
acknowledgement under the Model Code. Upon realising
the aforesaid inadvertence, the Concerned INED promptly
notified the Company and disposed of the Concerned
Notes. The matter was reported to the Stock Exchange. To
strengthen compliance with the Model Code, the Company
has enhanced its processes in reminding Directors of
the requirements relating to dealings in the Company’s
securities. The Concerned INED also attended a refresher
training session on the Model Code requirements.
Senior managers, other nominated managers and staff
who, because of their office in the Company, may be
in possession of Inside Information (which term shall
bear the same meaning as in the Securities and Futures
Ordinance (Cap. 571 of the Laws of Hong Kong)) of the
Company (collectively the “Model Code Managers”), have
also been requested to comply with the provisions of
the Model Code.
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ANNUAL REPORT 2024
For enhanced monitoring and effectiveness, the
Company has implemented an electronic platform
“Model Code Managers Management System” to provide
one-stop access to the relevant key processes to support
compliance with the Model Code. Periodic training is also
required to be completed by Model Code Managers, with
the latest training being provided in December 2024.
DIRECTORS’ INSURANCE
As permitted under the Articles of Association, it has been
the practice of the Company to arrange Directors’ and
Officers’ (“D&O”) Liability Insurance for which Members
of the Board and officers of the Company do not have to
bear any excess. To ensure sufficient cover is provided,
the Company undertakes an annual review of the
Company’s D&O insurance policy in light of recent trends
in the insurance market and other relevant factors. The
review benchmarks the amount of cover against other
similar companies and considers whether separate cover
will be required for Members of the Executive Directorate
or Members of the Board. The conclusion of the review
in year 2024 was that the level of cover was adequate
and, given this, together with the indemnity provided by
the Company to Members of the Board, the broad policy
wording and the financial strength of the insurance panel,
no additional cover was required.
CORPORATE GOVERNANCE
FUNCTIONS REVIEW
During the year, the Board conducted an annual review
of its Corporate Governance duties in accordance with its
terms of reference on Corporate Governance Functions.
Below is a summary of the work performed during the
year ended 31 December 2024:
•
Reviewed the purpose, values and strategy
established by the Company;
•
Developed and reviewed the Company’s policies and
practices on corporate governance, including the
corporate governance framework, the BD Policy and
the Nomination Policy;
•
Reviewed and monitored the training and continuous
professional development of Members of the Board
and senior management;
•
Reviewed and monitored the Company’s policies and
practices on compliance with legal and regulatory
requirements;
•
Developed and reviewed and monitored the Code of
Conduct and Directors’ Manual; and
•
Reviewed the Company’s compliance with the
CG Code.
As at the date of this Report, the Board has reviewed
the Company’s culture to ensure alignment with the
Company’s purpose, values and strategy and has also
reviewed the implementation and effectiveness of the
Shareholders’ Communication Policy.
The Board considers that, overall, the Company’s
Corporate Governance Functions remain adequate
and appropriate for the Company in light of its current
corporate strategy. They will be kept under review in light
of the changing legal and regulatory environment and
any changes to the Company’s business.
The terms of reference on Corporate Governance
Functions are available on the websites of the Company
(www.mtr.com.hk) and the Stock Exchange.
BOARD PROCEEDINGS
The Board generally meets in person regularly while
electronic means have also been provided to Members
of the Board to facilitate them to participate in meetings
virtually, which is permissible under the Articles of
Association. The same arrangements are also applied
to meetings of Board Committees/Advisory Panel
and Executive Committee meetings. The Company’s
introduction of an electronic meeting solution for Board
meetings and Executive Committee meetings since 2017,
which has subsequently been expanded to meetings
of Board Committees/Advisory Panel, has also enabled
all Members of the Board, Board Committees/Advisory
Panel and the Executive Committee to access meeting
documents and join virtual meetings remotely in a secure,
efficient and convenient manner.
All Members of the Board have full and timely access
to relevant information and may take independent
professional advice at the Company’s expense, if
necessary. Members of the Board also have full access to
Members of the Executive Directorate as and when they
consider necessary.
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The draft agenda for Board meetings is prepared by
the Company Secretary and approved by the Chairman
of the Company. Members of the Board are advised to
inform the Chairman or the Company Secretary not less
than one week before the relevant Board meeting if they
wish to include a matter in the agenda of the meeting.
The agenda, together with Board Papers, are usually
sent at least three days before the intended date of the
Board meeting.
The Board meeting dates for the following year are usually
fixed by the Company Secretary with the agreement
of the Chairman, before communicating with other
Members of the Board, in the third quarter of each year.
At regular Board meetings, Members of the Executive
Directorate together with senior managers report to the
Board on their respective areas of business.
The CEO Report, provided to the Board on a monthly
basis, covers the overall strategies, progress updates
on the Company’s Corporate Strategy implementation,
as well as innovation and technology implementation,
principal issues and key events of the Company for the
relevant month and provides key information in areas
such as the Group’s safety performance in different
business sectors, financial activities, contingent liabilities,
human resources developments, the programme and cost
status of new railway projects and the progress of major
asset management projects, as well as a look ahead to
key issues or events in the following three to six months.
This CEO Report together with the discussions at Board
meetings, ensures that Members of the Board have an
overall understanding of the Company’s business and
other key information about the Company, and provides
up-to-date information to enable them to make informed
decisions for the benefit of the Company.
MATERIAL INTERESTS
AND VOTING
All Members of the Board and the Executive Directorate
are required to comply with their common law duty to act
in the best interests of the Company and have particular
regard to the interest of the Company’s shareholders as
a whole. To this end, all of them are required to declare
the nature and extent of their interests, if any, in any
contract, transaction, arrangement or other proposal to
be considered by the Board at Board meetings.
In addition, before each regular Board meeting, the
Company reminds each Member of the Board to update
his/her “Declaration of Other Directorships, Major
Appointments and Interests” (the “Declaration”). The
Declaration of each Alternate Director is sent to him/her
for update on a quarterly basis. Also, each Member of the
Board and each Alternate Director is required to confirm
his/her other directorships, major appointments and
interests to the Company twice a year.
Unless specifically permitted by the Articles of
Association, a Member of the Board cannot cast a vote on
any contract, transaction, arrangement or any other kind
of proposal in which he/she has an interest which he/
she knows is material. For this purpose, the interests of
a person who is connected with a Member of the Board
(including any of his/her associates) are treated as the
interests of the Member of the Board himself/herself.
Interests purely as a result of an interest in the Company’s
shares, debentures or other securities are disregarded.
A Member of the Board may not be included in the quorum
for such part of a meeting that relates to a resolution he
or she is not allowed to vote on but he or she shall be
included in the quorum for all other parts of that meeting.
This reduces potential conflicts which might otherwise
arise between the Company’s business and an individual
Member of the Board’s other interests or appointments.
If a conflict arises between the interests of the Company
and those of Government, each Government-nominated
Director and any Director holding a senior Government
position, is not included in the quorum for that part of
the meeting which relates to the contract, transaction,
arrangement or other proposal being considered by the
Board and in relation to which the conflict exists and
is not allowed to vote on the related resolution. Where
appropriate, Government-nominated Directors and any
Directors holding a senior Government position will be
excused from attendance for discussion of a particular item.
There are a number of contractual arrangements that
have been entered into between the Company and
Government (and/or its related entities), some of
which are continuing in nature. As Government is a
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ANNUAL REPORT 2024
substantial shareholder of the Company, such contractual
arrangements are connected transactions (and in
some cases continuing connected transactions) for
the purposes of the Listing Rules. The sections headed
“Connected Transaction” and “Continuing Connected
Transactions” (pages 147 to 170) of this Annual Report
explain how, in accordance with the Listing Rules, these
transactions have been treated.
Matters to be decided at Board meetings are decided by
a majority of votes from Members of the Board allowed to
vote, although the usual practice is that decisions reflect
the consensus of the Board.
BOARD MEETINGS
The Board held 10 meetings in 2024 (seven Regular
Meetings, one Special Meeting and two Private Meetings),
well exceeding the requirement of the CG Code which
requires every listed issuer to hold board meetings at
least four times a year.
In addition and as required by the Listing Rules, the
Chairman met with the INEDs only without the presence
of other Members of the Board during the year, at
which meeting the following matters were discussed:
the sustainability of the Company’s business model,
potential funding models and financing solutions for
future new lines, the Company’s investment property,
Mainland China and international businesses, people
challenges, operational challenges posed by the local
ageing population and the continued deployment of
technology as a business solution, senior management
succession planning and the working relationship with
major stakeholders.
Regular Meetings
At each Regular Meeting, the Board reviewed, discussed
and, where appropriate, approved matters relating to
the Company’s different businesses and financial and
operational performance.
In addition, other key matters discussed at the Regular
Board meetings held in 2024 included:
•
Corporate Strategy:
–
Receipt of periodic updates on the
implementation of the Corporate Strategy;
•
Environmental, Social and Governance:
–
Annual review of the size, structure and
composition of the Board and the Company’s
corporate governance functions for 2023;
annual assessment of (i) the independence
of the INEDs; and (ii) the effectiveness of the
Company’s risk management and internal control
systems for 2023;
–
Recommendation of the appointment of a new
Member of the Board and the re-election of
various retiring Members of the Board for approval
by shareholders at the 2024 AGM;
–
Approval of (i) changes in the composition of
Board Committees/Advisory Panel; (ii) update
to the terms of reference of the Nominations
Committee of the Company; and (iii) annual
update to the Directors’ Manual;
–
Approval of Sustainability Report 2023; and
–
Receipt and consideration of periodic reports
from Management on key matters such as
corporate safety governance and enterprise
risk management;
•
Hong Kong Transport Services:
–
Receipt of quarterly updates on Hong Kong
Transport Services;
–
Approval of the principles for adjusting the
controlled fares for 2024 under the Company’s
Fare Adjustment Mechanism; and
–
Approval of award of a major contract;
•
Capital Works:
–
Review of the progress of, and approval of, the
Project Agreement for Hung Shui Kiu Station; and
–
Approval of the award of construction contracts
for the Siu Ho Wan Depot, Tuen Mun South
Extension and Hung Shui Kiu Station projects;
•
Property:
–
Review of the interim business proposal for a
prospective project; and
–
Approval of tender arrangements and property
project costs budget for Tung Chung East Station
Package 1 Property Development;
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•
Mainland China and International Businesses:
–
Receipt of 2023 annual update on the Mainland China and Macao businesses;
–
Review and receipt of updates on the Company’s international business;
–
Approval of tender submissions for overseas projects; and
–
Approval of the refined strategy for the Company’s international business with expanded scope on Belt and
Road Initiatives;
•
Financial:
–
Review and approval of 2023 Annual Report and 2024 Interim Report and the respective financial statements;
–
Receipt of the annual shareholder analysis and investor feedback;
–
Receipt of updates on the implementation of a major enterprise resource planning system;
–
Approval of the annual update of the Debt Issuance Programme; and
–
Approval of the 2025 Budget and 10-Year Forecast;
•
Human Resources:
–
Review of performance targets under the Company’s staff incentive scheme;
–
Approval for renewal of the Group Medical Insurance Scheme;
–
Review of employee engagement survey results and proposed actions; and
–
Approval of 2024 Annual Pay Review;
•
Innovation and Technology:
–
Approval of the Corporate Innovation and Technology blueprint; and
•
Corporate Affairs:
–
Receipt of quarterly updates on corporate communications and reputation management.
Special Meeting
During 2024, a Special Meeting was held to approve the tender award for the Tung Chung East Station Package 1 Property
Development in Hong Kong.
Private Meetings
During 2024, two Private Meetings were held to discuss the Company’s senior management succession planning.
The minutes of Board meetings are prepared by the Company Secretary or her delegate with details of the matters
considered by the Board and decisions reached, including any concerns raised by Members of the Board or dissenting
views expressed. The draft minutes are circulated to all Members of the Board for their comments within a reasonable
time after the meeting. The approval procedure is that the Board formally adopts the draft minutes at the subsequent
meeting. If Members of the Board have any comments on the draft minutes, they will discuss it at that meeting and any
agreed changes will be reflected in the formal minutes of the relevant meeting. Minutes of Board meetings are kept by the
Company Secretary and are open for inspection by all Members of the Board at the Company’s registered office.
The attendance record of each Member of the Board (and each Member of the Executive Directorate) during the year is
set out on pages 92 to 93 of this Report.
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Members of the Board and the Executive Directorate
Attendance of Meetings and Training in 2024
Attendance
Board Meetings
Board Committees/Advisory Panel Meetings
2024 AGM TrainingΩ
RM
SM
PM
A&RC
NC
RC
CWC
E&SRC
F&IC
TAP
Total Number of Meetings
7
1
2
4
2
2
6
2
7
3
1
Members of the Board
Non-executive Directors (“NED”)
Dr Rex Auyeung Pak-kuen (Chairman)
7/7
1/1
2/2
2/2
2/2
2/2C
1/1
√
Christopher Hui Ching-yu(1)#
(Secretary for Financial Services and the Treasury)
2/7
1/1
1/2
2/2
2/7
0/1
√
Secretary for Transport and Logistics
(Mable Chan)(2)
N/A*
0/1
N/A*
N/A*
N/A*
N/A*
√
Permanent Secretary for Development (Works)
(Ricky Lau Chun-kit)(3)#
6/7
1/1
1/2
0/1
4/6
0/2
0/1
√
Commissioner for Transport
(Angela Lee Chung-yan)(4)#
6/7
1/1
1/2
3/4
0/1
1/1
0/1
√
Independent Non-executive Directors (“INED”)
Andrew Clifford Winawer Brandler
5/7
1/1
1/2
4/4
7/7C
1/1
√
Dr Bunny Chan Chung-bun(5)
7/7
1/1
2/2
1/1
2/2
2/2
1/1
√
Walter Chan Kar-lok
7/7
1/1
2/2
2/2C
6/6
1/1
√
Cheng Yan-kee
7/7
1/1
2/2
1/2
6/6C
1/1
√
Hui Siu-wai(6)
7/7
1/1
2/2
2/2
1/1
6/6
1/1
√
Ayesha Macpherson Lau(7)
4/4
1/1
2/2
2/2
5/5
N/A*
√
Sunny Lee Wai-kwong(8)
7/7
0/1
2/2
1/1
3/4
3/3C
1/1
√
Jimmy Ng Wing-ka(9)
6/7
1/1
2/2
2/2
1/1
2/2
1/1
√
Dr Carlson Tong(10)
7/7
1/1
2/2
4/4C
5/7
1/1
√
Sandy Wong Hang-yee(11)
7/7
1/1
2/2
0/1
2/2
1/1
1/1
√
Adrian Wong Koon-man(12)
7/7
1/1
2/2
4/4
2/2C
1/1
√
Professor Anna Wong Wai-kwan(13)
7/7
1/1
2/2
4/4C
1/1
5/5
1/1
√
Executive Director
Dr Jacob Kam Chak-pui (CEO)(14)
7/7
1/1
0/2
2/2
1/1
√
Members of the Executive Directorate
& the Executive Committee
Dr Jacob Kam Chak-pui (CEO)(14)
7/7
1/1
0/2
2/2
1/1
√
Jeny Yeung Mei-chun
1/1
√
Margaret Cheng Wai-ching
2/2
1/1
√
Linda Choy Siu-min
1/1
√
Carl Michael Devlin
1/1
√
Michael George Fitzgerald(15)
1/1
√
Dr Tony Lee Kar-yun
1/1
√
Gillian Elizabeth Meller
2/2
1/1
√
David Tang Chi-fai
1/1
√
Sammy Wong Kwan-wai
1/1
√
Members departing during 2024
NED
Secretary for Transport and Logistics
(Lam Sai-hung)(16)#
4/7
N/A*
0/2
2/2
2/2
0/1
√
INED
Dr Dorothy Chan Yuen Tak-fai(17)
3/3
N/A*
N/A*
1/1C
1/2
1/1
√
Rose Lee Wai-mun(18)
3/3
N/A*
N/A*
1/1
2/2
0/1
√
92
MTR CORPORATION LIMITED
CORPORATE GOVERNANCE REPORT
Legend:
Board Meetings
RM – Regular Meeting(s)
SM – Special Meeting
PM – Private Meeting(s)
2024 AGM – Annual General Meeting of the Company held on 22 May 2024
N/A – Not applicable
* – Appointed/ceased after the conclusion of the 2024 AGM
C – Current chairperson
C – Ceased to be chairperson during 2024
Ω – This includes (i) continuous professional development through attending
expert briefings/seminars/conferences/visits relevant to the Company’s business or
directors’ duties arranged by the Company or external organisations, and reading
regulatory/corporate governance or industry related updates; and (ii) induction and
familiarisation programmes attended by newly appointed Directors
# – For the avoidance of any actual or perceived conflicts of interest, Government
Directors or their alternate director(s) were not present at meetings or portions of
meeting(s), where applicable, at which discussions were related to business proposals,
projects and/or matters in which Government is or will be interested
Board Committees/Advisory Panel
A&RC – Audit & Risk Committee
NC – Nominations Committee
RC – Remuneration Committee
CWC – Capital Works Committee
E&SRC – Environmental & Social
Responsibility Committee
F&IC – Finance & Investment Committee
TAP – Technology Advisory Panel
Notes:
1. The alternate directors of Mr Christopher Hui Ching-yu (Secretary for Financial Services and the Treasury), acting on his behalf, attended five RM, one PM and four
F&IC meetings.
2. Ms Mable Chan took up the post of the Secretary for Transport and Logistics (“S for T&L”) on 5 December 2024 and, by virtue of holding such post, became a NED at the
same time. Ms Chan also became a member of each of the NC and the RC of the Company, both with effect from the same date.
The alternate director of S for T&L (Ms Mable Chan), acting on her behalf, attended one SM.
3. The Permanent Secretary for Development (Works) (“PS for D(W)”) (Mr Ricky Lau Chun-kit) was appointed by the Board as a member of the TAP of the Company and
ceased to be a member of the NC of the Company, both with effect from the conclusion of the 2024 AGM.
The alternate director of the PS for D(W) (Mr Ricky Lau Chun-kit), acting on his behalf, attended one RM, one PM, one NC meeting, and two meetings of each of the CWC
and the TAP.
4. The Commissioner for Transport (“C for T”) (Ms Angela Lee Chung-yan) was appointed by the Board as a member of the E&SRC of the Company and ceased to be a
member of the TAP of the Company, both with effect from the conclusion of the 2024 AGM.
The alternate directors of the C for T (Ms Angela Lee Chung-yan), acting on her behalf, attended one RM, one PM, one A&RC meeting and one E&SRC meeting.
5. Dr Bunny Chan Chung-bun was appointed by the Board as a member of the RC of the Company and ceased to be a member of the F&IC of the Company, both with effect
from the conclusion of the 2024 AGM.
6. Mr Hui Siu-wai was appointed by the Board as a member of the RC of the Company and ceased to be a member of the A&RC of the Company, both with effect from the
conclusion of the 2024 AGM.
7. Mrs Ayesha Macpherson Lau was elected as a Member of the Board and became an INED with effect from the conclusion of the 2024 AGM, and was appointed by the
Board as a member of each of the A&RC and the F&IC of the Company at the same time.
8. Mr Sunny Lee Wai-kwong was appointed by the Board as a member of the CWC of the Company and ceased to be a member of the NC of the Company, both with effect
from the conclusion of the 2024 AGM.
9. Mr Jimmy Ng Wing-ka was appointed by the Board as a member of the TAP of the Company and ceased to be a member of the E&SRC of the Company, both with effect
from the conclusion of the 2024 AGM.
10. Dr Carlson Tong stepped down as the chair but remained as a member of the A&RC of the Company with effect from the conclusion of the 2024 AGM.
11. Ms Sandy Wong Hang-yee was appointed by the Board as a member of the NC of the Company and ceased to be a member of the TAP of the Company, both with effect
from the conclusion of the 2024 AGM.
12. Mr Adrian Wong Koon-man was appointed by the Board as the chair of the RC of the Company with effect from the conclusion of the 2024 AGM.
13. Professor Anna Wong Wai-kwan was appointed by the Board as the chair of the A&RC of the Company and a member of the F&IC of the Company, and ceased to be a
member of the NC of the Company, all with effect from the conclusion of the 2024 AGM.
14. Dr Jacob Kam Chak-pui was re-appointed by the Board as the CEO of the Company commencing from 1 April 2025 to 31 December 2025 (both dates inclusive). For the
avoidance of any actual or perceived conflict of interests, Dr Kam was not present at two PMs at which discussions were related to senior management succession planning.
15. Mr Michael George Fitzgerald was appointed as the Finance Director and became a Member of the Executive Directorate of the Company, both with effect from
1 January 2024.
16. Mr Lam Sai-hung ceased to be a NED at the same time as he ceased to be the holder of the post of S for T&L with effect from 5 December 2024. Mr Lam also ceased to be a
member of each of the NC and the RC of the Company, both with effect from the same date.
The alternate directors of the then S for T&L (Mr Lam Sai-hung), acting on his behalf, attended three RM and two PM.
17. Dr Dorothy Chan Yuen Tak-fai retired as an INED and ceased to be the chairman of the RC and a member of the CWC of the Company, all with effect from the conclusion
of the 2024 AGM.
18. Ms Rose Lee Wai-mun retired as an INED and ceased to be a member of each of the F&IC and the RC of the Company, all with effect from the conclusion of the 2024 AGM.
19. Mr Herbert Hui Leung-wah retired from the Company upon completion of his service agreement with the Company immediately after 31 December 2023 and ceased to be
the Finance Director and a Member of the Executive Directorate of the Company at the same time.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
93
ANNUAL REPORT 2024
INDUCTION PROGRAMME AND OTHER TRAINING
Induction Programme
Before appointment, all new Members of the Board (including Government-nominated Directors), Alternate Directors and
Members of the Executive Directorate are required to be given pre-appointment legal advice (the “Legal Advice”) from a
firm of solicitors qualified to advise on Hong Kong law pursuant to Rule 3.09D of the Listing Rules. Hence, the induction
programme provided by the Company covers:
•
the roles of a director from the strategic, planning and management perspectives, as well as the essence of corporate
governance and the trends in these areas;
•
the general and specific duties of a director under general law (common law and legislation) and the Listing Rules; and
•
the possible legal consequences of making a false declaration or giving false information to the Stock Exchange.
The following new Directors appointed during the year received the Legal Advice on the respective dates set out below
and have acknowledged and confirmed in writing their understanding of their obligations as a Director of the Company.
Name
Position
Date of Receipt of
the Legal Advice
Date of Appointment
Ayesha Macpherson Lau
Member of the Board
17 April 2024
22 May 2024
S for T&L (Mable Chan)
Member of the Board
23 December 2024
5 December 2024
Andrew Lai Chi-wah
Alternate Director
11 July 2024
23 July 2024
Candy Kwok Wai-ying
Alternate Director
26 July 2024
29 July 2024
Bruno Luk Kar-kin
Alternate Director
20 August 2024
5 September 2024
Kirk Yip Hoi-ying
Alternate Director
20 December 2024
30 December 2024
Michael George Fitzgerald
Member of the
Executive Directorate
21 November 2023
1 January 2024
In addition to the above, a familiarisation programme to understand the key areas of the Company’s business
and operations is also provided. Most of the new Directors appointed during the year have already received the
familiarisation programme.
All Members of the Board, Alternate Directors and Members of the Executive Directorate are also provided with a
Directors’ Manual on their appointment which sets out, amongst other things, directors’ roles and responsibilities, their
key obligations from both a statutory and a regulatory perspective, the terms of reference of the Board on its Corporate
Governance Functions and the terms of reference of the Board Committees and Advisory Panel. The Directors’ Manual
is updated regularly to keep the contents up to date so that the Directors are kept abreast of changes and latest
developments in the laws and regulations that are relevant to Directors and the Company. The latest updates to the
Directors’ Manual, approved by the Board in January 2025, covered (i) the relevant changes in the CG Code and the Listing
Rules which will take effect on 1 July 2025 subsequent to the Stock Exchange’s consultation conclusions on the “Review
of Corporate Governance Code and Related Listing Rules”; (ii) insertion of a guideline published by the Stock Exchange on
ESG reporting for the new climate disclosure requirements; and (iii) miscellaneous housekeeping updates.
Training and Continuous Professional Development
Members of the Board and the Executive Directorate
Board Visits
During the year, certain Members of the Board and/or the Executive Directorate joined the following visits for the
purposes of gaining first-hand understanding of the new malls operated by the Company, the Company’s rail operations
and insights into the project works that are being undertaken by the Capital Works Business Unit:
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MTR CORPORATION LIMITED
CORPORATE GOVERNANCE REPORT
Date
Activities
January and February
•
Visited the newly revamped MTR Gallery at Kowloon Station in Hong Kong
June
•
Visited the Lantau Portfolio Office and certain work sites in Hong Kong
•
Visited a new shopping mall at THE SOUTHSIDE in Hong Kong
October
•
Visited the work site of Kwu Tung Station in Hong Kong
November
•
Visited the Shenzhen Line 4 Headquarters and 13 stations of Shenzhen Line 13 in Shenzhen
FINANCIAL REPORTING
Members of the Board are responsible for preparing
the consolidated financial statements of the Group.
The consolidated financial statements are prepared on
a going concern basis and give a true and fair view of
the consolidated financial position of the Group as at
31 December 2024, and of the Group’s consolidated
financial performance and consolidated cash flows for
the year then ended. In preparing the consolidated
financial statements for the year ended 31 December
2024, Members of the Board have selected appropriate
accounting policies and have applied them consistently
with previous financial periods, apart from those new and
amended accounting policies effective from 1 January
2024 as disclosed in the notes to the consolidated
financial statements for the year ended 31 December
2024. Judgments and estimates that have been made are
prudent and reasonable. The reporting responsibilities
of the external auditor of the Company (the “External
Auditor”) are set out on page 102 of this Report.
In support of the above, the consolidated financial
statements presented to the Board have been reviewed
by Members of the Executive Directorate. For both the
annual and interim reports and consolidated financial
statements, the Finance Function of the Company is
responsible for clearing them with the External Auditor
and the Audit & Risk Committee. In addition, all new and
amended accounting standards and requirements, as well
as any changes in accounting policies adopted by the
Group, have been discussed and reviewed by the Audit &
Risk Committee before adoption by the Group.
Members of the Board endeavour to ensure a balanced,
clear and coherent assessment of the Group’s
consolidated financial position and performance in
annual reports, interim reports, inside information
announcements, and other financial disclosures required
under the Listing Rules and other statutory requirements.
Training
To assist Members of the Board and the Executive
Directorate in continuing their professional development,
the Company Secretary recommends them to attend
relevant seminars and courses at the cost of the
Company. In addition, briefings on the Stock Exchange’s
Consultation Paper relating to the Review of Corporate
Governance Code and Related Listing Rules and the newly
proposed cybersecurity law relating to the Protection of
Critical Infrastructure (Computer System) Bill 2024 were
provided to Members of the Board in July 2024.
Materials on the subject of corporate governance and
e-learning provided by the Stock Exchange and other
professional firms and institutes are also provided/
notified to Members of the Board, Alternate Directors
and Members of the Executive Directorate from time to
time to keep them abreast of the latest developments
on this front.
Each Member of the Board and the Executive Directorate
has provided to the Company a record of the training
he/she has received during the year, which is set out on
pages 92 to 93 of this Report.
Senior Executives
On-going learning programmes are offered for the
Company’s Senior Executives to support their continuous
growth in the areas of business leadership, people
leadership and self leadership. The sharing of the latest
trends and insights are implemented via online and
offline programmes supported by the inhouse team,
consultants and renowned business schools.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
95
ANNUAL REPORT 2024
RISK MANAGEMENT AND INTERNAL CONTROL SYSTEMS
The Company has adopted a three lines of defence model (“3LoD”), pursuant to which the first line owns and manages
risks, the second line of defence (“2LoD”) carries out assurance and provides advisory support in key risk areas and the
third line of defence (i.e. Internal Audit) provides the highest degree of independent assurance. The below diagram
illustrates the roles played by the three lines of defence.
The Board is responsible for the risk management and
the internal control systems of the Company and its
subsidiaries and reviewing their effectiveness on an
annual basis. With the assistance of the Audit & Risk
Committee as mentioned in the Audit & Risk Committee
Report on pages 106 to 108 of this Annual Report, the
Board oversees the Company’s risk management system
(the “ERM” system) and internal control system on an
on-going basis, sets appropriate policies and reviews the
effectiveness of the systems at least annually.
Throughout 2024, the Company continued
demonstrating its commitment to robust governance
and effective risk management across all Business Units
by implementing its 3LoD model. Pursuant to this model,
2LoD activities are managed by the Legal & Governance
function with its Centres of Excellence in technical,
engineering, safety, quality, risk and commercial
disciplines. 2LoD Assurance activities span across all
Business Units of the Company as well as critical corporate
projects and initiatives.
Oversight
Supported by
Conducts Assurance
and Advisory Reviews
Oversight
Conducts
audits
Supervision
Reporting
Reporting
Reporting
Accountable to
Reporting
Reporting
Executive Committee
Third Line
(Internal
Audit)
Board
Audit & Risk Committee
First Line (Business Units/Operations)
Second
Line
Business/Functional
Management Committees
The ERM system and the internal control system, with
processes put in place by the Board, management and
other personnel, are designed to manage (as opposed
to eliminate) risk and provide reasonable assurance,
not absolute assurance, against material misstatement
or loss, regarding the achievement of objectives in the
following areas:
•
Effectiveness and efficiency of operations
•
Reliability of financial reporting
•
Compliance with applicable laws and regulations
•
Effectiveness of risk management
Systems Overview
The Executive Committee is responsible for:
•
Implementing the Board’s policies on risk
management and internal controls;
•
Identifying and evaluating the risks faced by the
Company for consideration by the Board;
96
MTR CORPORATION LIMITED
CORPORATE GOVERNANCE REPORT
•
Designing, operating and monitoring a suitable internal
control system and risk management system; and
•
Providing assurance to the Board that it has done so,
together with a confirmation that these systems are
effective and adequate.
In addition, all employees have responsibility for risk
management and internal controls within their areas of
accountability.
Business/Functional Management
Committees
A number of committees have been established to
assist the Executive Committee in the management
and control of the Company’s various core businesses
and functions. Each committee has its own terms
of reference which, together with the structure and
composition of the committees, are reviewed from time
to time to ensure they meet the Company’s business and
operational needs.
Internal Audit
The Head of Internal Audit reports directly to the
Board via the Audit & Risk Committee and reports
administratively to the CEO. The Internal Audit
Department (“IAD”) has unrestricted access to information
that allows it to review all aspects of the Company’s risk
management, control and governance processes.
On a regular basis, it conducts audits on financial,
operational and compliance controls and the risk
management functions of the Company and its
subsidiaries. Relevant members of the management team
are responsible for ensuring that control deficiencies
highlighted in internal audit reports are rectified within a
reasonable time.
The IAD produces an annual internal audit plan for
the Audit & Risk Committee’s approval. The audits are
selected based on a risk assessment of the Company’s
audit universe to ensure that business activities with
higher risks are covered most frequently. On a quarterly
basis, the Head of Internal Audit reports to the Audit
& Risk Committee on major observations identified in
audit reviews and the implementation progress of audit
recommendations, together with her opinion on the
adequacy and effectiveness of the Company’s internal
control system.
To ensure IAD’s conformance with the Institute of Internal
Auditors’ International Standards for the Professional
Practice of Internal Auditing, an independent assessment,
namely a Quality Assurance Review (“QAR”), is conducted
by an external qualified party once every five years.
The results of the QAR are reported to the Executive
Committee and the Audit & Risk Committee. The last QAR
was conducted in 2023.
ERM system
The ERM system is an essential and integral part of
the Company’s corporate governance framework and
helps to sustain business success and create value for
stakeholders. It involves a corporate-wide systematic
risk identification and management process which
aims to assist the Executive Committee and individual
business unit managers to manage the key risks facing
the Company and supports the Board in discharging its
corporate governance functions.
More details of the features of the ERM system, the
process used to identify, evaluate and manage significant
risks, the significant risks being managed and the process
used to review the effectiveness of the ERM system are set
out in the “Risk Management” section (pages 109 to 113)
of this Annual Report.
The independent external review on the ERM
system completed in 2023 identified best practice
recommendations which were further developed in 2024
for implementation. These include updating the ERM
Manual, enhancing risk register content, streamlining the
enterprise level risk profile (consolidating enterprise risks
under Principal Risk Areas), and deploying risk dashboards
which make reference to quantitative key risk indicators,
risk controls effectiveness assessments and assurance
information from across the 3LoD functions.
Control Activities and Processes
To ensure the efficient and effective operation of Business
Units and Functions and the safety of the operating
railway and construction works in railway projects,
Corporation General Instruction(s) (“CGI(s)”), Business
Units’/Functions’/Departments’ procedures and manuals,
committees, working groups and quality assurance units
are established to monitor and enforce internal controls
and evaluate their effectiveness.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
97
ANNUAL REPORT 2024
CGIs and various Departments’ procedures and manuals are established for preventing or detecting unauthorised
expenditures/payments, safeguarding the Company’s assets, ensuring the accuracy and completeness of accounting
records, and the timely preparation of reliable financial information.
Directors and Department Heads of Business Units/Functions, including General Managers/Project Managers for
overseas subsidiaries/projects, are required to conduct annual assessments and certifications on the effectiveness of risk
management and internal control systems within their areas of responsibility.
Compliance with Statutes and Regulations
All Department Heads, including General Managers/Project Managers for overseas subsidiaries/projects, are responsible
for ensuring compliance with the statutes and regulations applicable to their own functional units in accordance with the
Regulatory Compliance Framework, with necessary legal support.
Issues relating to compliance with statutes and regulations, including potential and actual non-compliances, and the
status of rectifications and actions taken to prevent recurrence are reported annually to the Executive Committee and the
Audit & Risk Committee.
The diagram below shows the Regulatory Compliance Framework of the Company:
Department Heads
Maintain a list of applicable statutes/regulations
Identify relevant new or updated statutes/regulations
Corporation General Instruction sets out
compliance responsibilities
Department Heads
Assess impact of statutes/regulations on operations
Review compliance at least once a year
Department Heads report non-compliances to
Members of Executive Directorate
Executive Committee and Audit & Risk Committee
receive annual report
Department Heads
Identify potential and actual non-compliances
Devise improvement actions
Regulatory
Compliance
Framework
Improve
Assess
Report
Plan and
Monitor
Department Heads
Board via
Audit & Risk
Committee
Executive
Committee
Supporting
Functions
(Legal, ERM)
Whistle-blowing Policy
A whistle-blowing policy, which is available on the Company’s website (www.mtr.com.hk), has been put in place to deal
with concerns related to fraudulent or unethical acts or non-compliance with laws and the Company’s policies that have
or could have significant adverse financial, legal or reputational impacts on the Company. The whistle-blowing policy
is regularly reviewed by the IAD. Various whistle-blowing channels are available to all staff, parties who deal with the
Company, as well as the general public. Every quarter, a summary of all whistle-blowing cases handled by the Whistle-
blowing Panel is reported to the Executive Committee and the Audit & Risk Committee.
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MTR CORPORATION LIMITED
CORPORATE GOVERNANCE REPORT
Review of significant issues arising from internal audit reports
through the quarterly IAD Reports and the external audit report
Private sessions with internal and external auditors
Routine interviews with the Members of the Executive Directorate
Review of annual assessment and certification of internal controls
from Members of the Executive Directorate, management of
overseas subsidiaries and key associates and Department Heads in
their areas of responsibility
The Audit & Risk
Committee concluded
that the internal
control system was
overall effective
Inside Information Policy
The Company has developed a system with established policies, processes and procedures across all relevant Functions,
Business Units and Departments for the handling and dissemination of Inside Information, which encompasses
the following:
•
A CGI setting out:
(i) the internal processes for identifying, assessing and escalating potential Inside Information to the Executive
Committee and the Board;
(ii) the responsibilities of Model Code Managers in preserving the confidentiality of Inside Information,
escalating upwards any such potential information and cascading down the message and responsibilities to
relevant staff; and
(iii) the process for disclosure of Inside Information; and
•
Training for Members of the Board and the Executive Directorate, Executive Managers, Department Heads and
Model Code Managers is provided from time to time. In particular, Members of the Executive Directorate, Executive
Managers, Department Heads and Model Code Managers are regularly required to complete an online training
programme on Inside Information. To refresh their awareness of the Inside Information policy, a new mandatory
online training programme was launched in December 2024.
Evaluation of the Effectiveness of the Risk Management System
The Company has surpassed the relevant requirement in the CG Code by completing an effectiveness review of the ERM
system for the Company and its subsidiaries and extending the review to the Company’s key associates operating in
Mainland China and overseas.
For the year ended 31 December 2024, the Audit & Risk Committee, with delegated authority from the Board, has
evaluated the effectiveness of the ERM system of the Company and considers that it is overall effective and adequate.
Details about the “Process of System Effectiveness Review” are set out in the Risk Management section (page 113) of this
Annual Report.
Evaluation of the Effectiveness of the Internal Control System
For the year ended 31 December 2024, the annual review of the effectiveness of the internal control system of the
Company and its subsidiaries and key associates was performed by the Audit & Risk Committee based on the following:
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
99
ANNUAL REPORT 2024
Evaluation of the Adequacy of Resources
of the Company’s Accounting, Financial
Reporting and Internal Audit Functions and
for ESG Performance and Reporting
For the year ended 31 December 2024, the annual
assessments performed by the Company’s Finance
Function, the IAD and the Environmental & Social
Responsibility Department concluded that there were
adequate resources, staff qualifications and experience,
training programmes and budgets for the Company’s
accounting, financial reporting, internal audit and ESG
performance and reporting functions respectively.
The Company is committed to recruit, train and develop
a team of qualified and competent accountants for
overseeing the Group’s financial reporting and other
accounting-related matters. A process to capture and
update relevant laws, rules and regulations applicable
to the financial reporting and accounting function
is in place. Designated officers will ensure relevant
standards and ordinances including Hong Kong
Financial Reporting Standards, the Listing Rules and
the Companies Ordinance under their responsibility are
complied with. Resources and provisions required to
deliver the accounting and financial reporting function
are critically reviewed during the annual budgeting
exercise. Company-wide recruitment processes and staff
development programmes are in place to address the
competency, qualifications and experience required.
Adherence to the process is confirmed on an annual basis
by the designated officers to the Finance Director, who
will conduct a formal annual review and report the review
results to the Audit & Risk Committee.
In terms of internal audit, the Company is also committed
to recruiting, training and developing a team of qualified
and competent internal auditors to provide independent
and objective assurance along with consulting services
designed to add value and improve the Company’s
operations. A process to capture updated standards
and best practices relating to internal audit is in place.
Proper recruitment processes and staff development
programmes are also in place to address the competency,
qualifications and experience required. The Head of
Internal Audit conducts a formal annual review on the
adequacy of staff resources, qualifications and experience
of the internal audit function and reports the results to
the Audit & Risk Committee.
In terms of ESG performance and reporting, the Company
is also committed to recruiting, training and developing
a team of qualified and competent specialists for
overseeing the implementation of the Company’s ESG
initiatives, enhancing and monitoring ESG performance
and preparing ESG reports and other disclosures.
A process to capture and update laws, regulations,
standards and best practices applicable to the Company’s
ESG performance and reporting is in place. Designated
officers will ensure relevant ordinances, regulations and
standards under their responsibility are complied with.
Resources and provisions required to deliver the ESG
performance and reporting function are reviewed during
the annual budgeting exercise by respective business
units and corporate functions. Proper recruitment
processes and staff development programmes are in
place to address the competency, qualifications and
experience required. The Legal and Governance Director
will conduct a formal annual review on the adequacy
of staff resources, qualifications and experience of staff
involved in delivering the Company’s ESG performance
and reporting function and report the review results to
the Audit & Risk Committee as part of the report on risk
management and internal control systems effectiveness.
Based on the above, the Audit & Risk Committee
considers that the resources, staff qualifications and
experience, training programmes and budgets for the
Company’s accounting, financial reporting and internal
audit functions, as well as for the ESG performance and
reporting functions are adequate.
Board’s Annual Review
The Board has, through the Audit & Risk Committee,
overseen the Company’s risk management and internal
control systems on an on-going basis. The Board has
conducted its annual review of the risk management
and internal control systems of the Company and its
subsidiaries and key associates for the year ended
31 December 2024 and considers that such systems
are overall effective and adequate, with supporting
compliance mechanisms to provide assurance that
the Company and its officers observe their disclosure
obligations in respect of Inside Information.
The Board has also conducted a review of the adequacy
of resources, staff qualifications and experience, training
programmes and budgets for the Company’s accounting,
financial reporting and internal audit functions, as well
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CORPORATE GOVERNANCE REPORT
as the ESG performance and reporting functions for the
year ended 31 December 2024, and considers the above
resource components to be adequate.
CRISIS MANAGEMENT
To uphold the reputation of being one of the world’s
leading railway operating companies and to ensure that
the Company can respond to and recover from crises in an
organised and highly effective manner, the Company has
established a mechanism to activate pre-defined levels
of crisis response in the event of a crisis which enables
timely communication with principal stakeholders such
as Government departments and shareholders. The
Corporate Crisis Management Team comprises relevant
Members of the Executive Directorate and Executive
Managers. Its operation is governed by a Corporate Crisis
Management Plan which, among other things, sets out
the duties of respective members. The Corporate Crisis
Management Plan is regularly reviewed to ensure it aligns
with international standards and remains up-to-date.
An information system is also in place to support the
operation of the Corporate Crisis Management Team by
tracking the latest developments and strategic actions
while disseminating crisis-related information.
Regular crisis management exercises are conducted to
validate the corporate crisis management mechanism
and provide practical experience for team members. To
further enhance the crisis leadership and strategic crisis
management of the Corporate Crisis Management Team,
two sessions of the corporate crisis management exercise
“Cultivating a Strategic Crisis Management Mindset”
were conducted in 2024. Instead of focusing on one
specific type of crisis, the 2024 exercise evaluated the
strategic decision-making capabilities of the Corporate
Crisis Management Team under stressed conditions
involving simultaneous incidents at various MTR
locations, including construction sites, malls and stations.
The exercise also assessed the coordination capabilities
among business units at operational interfaces and
with external parties. Additionally, a computer-based
training module has been launched for all managers
in the Company to provide them with a fundamental
understanding of the Corporate Crisis Management
Framework and to increase their awareness of potential
smouldering issues.
GOVERNANCE OF SUBSIDIARIES
AND ASSOCIATES
The Company has a number of subsidiaries and associates
which operate independent businesses in Hong Kong,
Macao, Mainland China and overseas. Notwithstanding
the fact that these subsidiaries and associates are separate
legal entities, the Company has implemented a corporate
governance framework (the “Corporate Governance
Framework”) to ensure that it exercises an appropriate
level of control and oversight as a shareholder of these
subsidiaries and associates. In addition, the Company also
maintains several corporate governance related policies
and practices including (i) legal entity management; and
(ii) connected and continuing connected transactions.
The Company’s Corporate Governance Framework
promotes collaboration between the corresponding
Business Units/Functions in the Company on the one
hand and the subsidiaries and associates on the other
hand. The implementation process of the Corporate
Governance Framework in the Company’s subsidiaries
and associates starts from the inception of any new
business operations/investments, with flexibility for
certain subsidiaries and associates to be exempt from
compliance with the relevant CGI, subject to satisfaction
of specified criteria and conditions.
Pursuant to the Corporate Governance Framework, the
Company exercises its control and oversight through the
formulation of a governance structure that is tailored
for individual subsidiaries and associates through (i) the
imposition of certain internal controls in key areas; and
(ii) the adoption of management practices and policies
that are appropriate to the business nature and local
situation. As a result, adequate internal controls will be
adopted by subsidiaries and associates and the Company
will be consulted and notified on important matters,
complemented by regular reporting and assurance.
Compliance with this governance structure is reported by
subsidiaries and associates with significant operations on
an annual basis.
To facilitate colleagues who are newly nominated
as directors and/or alternate directors of the
Company’s subsidiaries and associates in gaining a
better understanding of their directors’ duties and
responsibilities, they are required to attend a mandatory
training on “Directors’ Duties and Responsibilities”.
This mandatory training covers the fundamental legal
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ANNUAL REPORT 2024
principles governing the duties and responsibilities
of a director and key protocols and policies that are
relevant to discharging their duties as the Company’s
representatives on the boards of directors of
those entities.
BUSINESS ETHICS
Practising integrity and responsible business ethics is
paramount to the Company’s continued success. The
Company’s Code of Conduct lays down the requirements
of the Company in terms of ethical practices and obliges
staff to operate transparently and under the highest
principles of fairness, impartiality and integrity in all of the
places where the Company does business.
The Code of Conduct is reviewed and updated
periodically to ensure appropriateness and compliance
with relevant corporate and regulatory requirements. The
updates made in the 2024 review have been released to
all staff and shared across various hubs and subsidiaries
at the end of October. To ensure staff awareness of
these changes and to promote compliance, an online
quiz was organised, attracting over 2,000 participants. In
addition, as part of the Code of Conduct staff awareness
programmes launched in 2020, the seventh module
on “Integrity and Accuracy of Data and Records” was
launched in June 2024. Animated videos and interactive
games with real life examples have been provided to
staff to illustrate the guiding principles and to help staff
members exercise good judgement on data and records
integrity and accuracy in the workplace. Other education
programmes, such as mandatory online training
programmes and ethical webinars on relevant ordinances,
have also been introduced to raise staff awareness.
To ensure our staff members live up to the highest
ethical standards, a policy related to the prevention of
bribery and corrupt practices has been put in place and is
reviewed periodically. Staff members are also encouraged
to report existing or perceived violations of the Code
of Conduct, as well as malpractices. Proper procedures
relating to the whistle-blowing policy of the Company
are also established, which enable staff members to raise
their concerns in a safe environment and in complete
confidence if they have genuine suspicions about
any wrongdoings.
To assist new recruits in embracing the Company’s values
and ethical commitments, they are briefed on the Code
of Conduct during the staff induction programme. New
recruits are also required to complete mandatory online
training programmes within three months of joining
the Company. The Code of Conduct is available on the
Company’s website (www.mtr.com.hk).
In addition, the Code of Conduct serves as a guideline
for establishing a comparable ethical culture among our
subsidiaries and associates in and outside Hong Kong.
EXTERNAL AUDITOR
The Company engages KPMG as its External Auditor. In
order to maintain KPMG’s independence and objectivity
and the effectiveness of the audit process in accordance
with applicable standards, the Audit & Risk Committee,
under its terms of reference, pre-approves all audit
services to be provided by KPMG and discusses with
KPMG the nature and scope of their audit and reporting
obligations before the audit commences.
The Audit & Risk Committee also reviews and
pre-approves the engagement of KPMG to provide any
non-audit services, for complying with relevant regulatory
requirements and seeks to balance the maintenance of
objectivity with value for money.
The nature of audit and non-audit services provided by
KPMG and fees paid to KPMG (including any entity that
is under common control, ownership or management
with KPMG or any entity that a reasonable and informed
third party having knowledge of all relevant information
would reasonably conclude as part of KPMG nationally or
internationally) are set out in note 10B to the consolidated
financial statements on page 204 of this Annual Report.
For maintaining independence and objectivity as the
External Auditor of the Company, KPMG implements
policies and procedures to comply with professional
ethics and independence policies and requirements
applicable to the work it performs. In addition, KPMG
requires its audit partner serving the Group to rotate off
the audit engagement with the Group at least once every
seven years in accordance with the Hong Kong Institute
of Certified Public Accountants/International Federation
of Accountants Code of Ethics.
KPMG confirms its independence with regard to The Code
of Ethics for Professional Accountants issued by the Hong
Kong Institute of Certified Public Accountants regarding
auditor independence.
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COMMUNICATION WITH SHAREHOLDERS
The Company aims to provide shareholders with information about the Company to enable them to engage actively
with the Company and exercise their rights as shareholders in an informed manner. The Board is responsible for
maintaining an on-going dialogue with shareholders and, in particular, for communicating with them and encouraging
their participation. The Company adopted a Shareholders’ Communication Policy and is available on the website of the
Company (www.mtr.com.hk).
A high-level summary of the Shareholders’ Communication Policy is set out below:
•
as a general policy: the Company (i) will assign dedicated management personnel to be in charge of ensuring
effective and timely dissemination of information to shareholders; (ii) will provide shareholders with ready access to
information about the Company; and (iii) will facilitate shareholders’ participation in annual general meetings; and
•
as specific policies: (i) corporate communications (such as annual reports, interim reports, circulars and
announcements) will take full account of the Company’s obligations under the Listing Rules and other relevant
laws and regulations; (ii) annual general meetings and other general meetings are opportunities for shareholders
to exercise their right to speak and discuss the business activities of the Company; (iii) announcements, notices,
circulars and other documents as required by the Listing Rules, and news releases and data/information about latest
developments of the Company are available on the Company’s website; and (iv) shareholders can communicate their
views on various matters affecting the Company, and the Company has set out different engagement channels to
solicit and understand the views of its stakeholders.
During the year, the key communication channels and engagements with shareholders were as follows:
Corporate Communications
Almost 60 corporate communications
documents (including annual report,
interim report and sustainability report as
well as various notices and announcements)
were released on the websites of the
Company and the Stock Exchange
Press releases and webcast archives of the
results announcements are available on the
Company’s website
Dividend Information
Dividend Policy is available on page 71 of this
Annual Report under “Investor Relations” section
Dividend payment history can be found on the
Company’s website
Dividend calculator for 2023 final dividend was
made available on the Company’s website during
the scrip dividend election period to facilitate
shareholders’ calculation of the maximum number
of scrip shares to which they are entitled
2024 AGM
Held in hybrid format, which provided
shareholders with the options of attending
the 2024 AGM physically or joining online
Submission of questions in advance of
the 2024 AGM and/or in person or online
during the 2024 AGM
Investor Meetings
Approximately 240 meetings
with institutional investors and
analysts globally
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The Board has conducted its annual review of the
Shareholders’ Communication Policy and considers that it
has been effectively implemented during the year ended
31 December 2024 and remains appropriate.
After the Companies (Amendment) Ordinance 2025
comes into operation on 17 April 2025, the Company will
be permitted to disseminate corporate communications
via its website to shareholders. This aligns with the
Listing Rules’ requirement to disseminate corporate
communications (other than the actionable corporate
communications*) by listed issuers to their securities
holders electronically effective from 31 December 2023.
The Company will notify shareholders about this
new arrangement for dissemination of corporate
communications and the relevant updates to the
Shareholders’ Communication Policy will be available on
the Company’s website.
*
Actionable corporate communications refer to any corporate communications
that are issued to seek instructions from the Company’s shareholders on how
they wish to exercise their rights or make an election as shareholders
Annual General Meeting
The Company’s Annual General Meeting is one of
the principal channels of communication with its
shareholders. It provides an opportunity for shareholders
to communicate face to face with Members of the Board
and Members of the Executive Directorate about the
Company’s performance and operations. It has been the
practice for the Chairman of the Company, the chairman
of each Board Committee/Advisory Panel, all Members of
the Executive Directorate and the External Auditor of the
Company to attend Annual General Meetings to answer
shareholders’ questions.
The 2024 AGM continued to be held in a hybrid format,
with shareholders provided with an option to participate
through an online platform with a choice of language
(Cantonese, English and Putonghua). Sign language
interpretation and simultaneous interpretation services
continued to be made available. Shareholders could
submit questions in advance of the 2024 AGM or at
the meeting either in person or in real-time through
the online platform. For the benefit of the Company’s
shareholders who were unable to attend the 2024 AGM,
a webcast of the whole proceedings was also posted on
the Company’s website for viewing during the year.
The 2025 AGM has been scheduled on 21 May 2025. To
keep up with the intent of helping shareholders save time
and resources and with a view to reducing the Company’s
carbon footprint, the Company plans to continue holding
the 2025 AGM in a hybrid format, which will provide
shareholders with the option of attending physically or
joining the AGM online, and the abovementioned sign
language interpretation and simultaneous interpretation
services will continue to be provided to further facilitate
smooth and direct communication between the
shareholders of the Company and the Members of the
Board and the Executive Directorate of the Company.
The Company is committed to making available meeting
facilities to enable all eligible attendees to be able to
participate in the 2025 AGM.
Resolutions passed at the 2024 AGM
The Chairman proposed separate resolutions for each
substantially separate issue at the 2024 AGM. Before the
resolutions were considered, the Chairman exercised his
right as the Chairman of the 2024 AGM under Article 71 of
the Articles of Association to call a poll on all resolutions
conducted by electronic means.
A total of nine resolutions were passed at the 2024 AGM
(with resolution no. 3 comprising three separate
resolutions), all of which were supported by over 90%
of the votes cast, with a vast majority of the resolutions
receiving over 99% support. The full text of the resolutions
is set out in the 2024 AGM Circular (which comprised the
Notice of the 2024 AGM) dated 12 April 2024 and the
results of the 2024 AGM are available on the respective
websites of the Company (www.mtr.com.hk) and the
Stock Exchange.
Calling General Meetings
Members of the Board may call a general meeting
of the Company.
Shareholders representing at least 5% of the total voting
rights of all the shareholders having a right to vote at
general meetings may request the Members of the Board
to call a general meeting of the Company.
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CORPORATE GOVERNANCE REPORT
The requesting shareholders must state in their request
the general nature of the business to be dealt with
and may include the text of a resolution to be moved
at the general meeting. The request may consist of
several documents in like form and may be sent to the
Company in hard copy or electronic form, which must be
authenticated by the requesting shareholders.
The Members of the Board are required to call a general
meeting within 21 days after the date on which the
Company receives such request, and the general meeting
must be held on a date not more than 28 days after the
date of the notice convening the general meeting.
If the request includes a resolution to be moved at the
general meeting, the notice of the general meeting must
include notice of the resolution. If the resolution is to
be proposed as a special resolution, the Members of the
Board are required to specify the intention to propose
the resolution as a special resolution in the notice of the
general meeting.
If, within 21 days after the date on which the Company
receives the required request, the Members of the
Board do not proceed duly to call a general meeting,
the shareholder(s) who requested the general meeting,
or any of them representing more than one-half of the
total voting rights of all of them, may themselves call
a general meeting, provided that the general meeting
must be called for a date not more than three months
after the date on which the Company receives the
required request.
Procedures for Shareholders Putting
Forward Proposals
Shareholders may put forward proposals for
consideration at a general meeting according to the
Companies Ordinance and the Articles of Association.
As regards proposing a person for election as a
member of the Board, please refer to the “Appointment
Procedure for Members of the Board of the Company”
which is available on the website of the Company
(www.mtr.com.hk).
Enquiries from Shareholders
Shareholders are, at all times, welcome to raise questions,
communicate their views on various matters affecting
the Company and request information (to the extent it is
publicly available) from the Board and management by
writing to the Company Secretary.
For other means of communication with the Company,
please refer to the Investor Relations section (pages 70 to
71) of this Annual Report.
CONSTITUTIONAL DOCUMENT
The Company’s Articles of Association (in both English
and Chinese) are available on the websites of both the
Company (www.mtr.com.hk) and the Stock Exchange.
During the year ended 31 December 2024, there was no
change to the Company’s Articles of Association.
For and on behalf of the Board
Gillian Elizabeth Meller
Company Secretary
Hong Kong, 6 March 2025
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ANNUAL REPORT 2024
As at the date of this Report, the Audit & Risk Committee
of the Company (referred to as the “Committee” in this
Report) consists of six Non-executive Directors, five of
whom are Independent Non-executive Directors of the
Company. None of the Committee members was (within
two years before his/her appointment as a Committee
member) a former partner or is currently a partner of
KPMG, the Company’s external auditor. During 2024,
Dr Carlson Tong stepped down as the Chairman of the
Committee, although remains a member. The Committee
is grateful for his leadership as the Committee Chairman
over the past two years and for his continued contribution.
Details of the Committee’s membership and their
attendance records during 2024 are set out on
pages 92 to 93 of this Annual Report.
The Finance Director (the “FD”), the Legal and Governance
Director (the “L&GD”) and the Head of Internal Audit
(the “Head of IA”), or their respective delegates, and
representatives of the external auditor are required to
attend all meetings of the Committee. The Committee
meets at least once every quarter. The Chair of the
Committee, any two members of the Committee, the
external auditor or the FD may request additional
meetings if they consider necessary.
TERMS OF REFERENCE OF
THE COMMITTEE
The Terms of Reference of the Committee (the “ToR”)
is available on the respective websites of the Company
(www.mtr.com.hk) and the Stock Exchange.
DUTIES OF THE COMMITTEE
Under the ToR, the duties of the Committee primarily
comprise the following:
•
Overseeing the relationship with the Company’s
external auditor, including making recommendations
to the Board on the appointment of and any
change to the Company’s external auditor and
communicating with the external auditor on financial
matters of the Company;
•
Reviewing the financial information of the
Company, including monitoring the integrity of
financial statements;
•
Developing and implementing a policy on the
engagement of the external auditor to supply
non-audit services;
•
Overseeing the Company’s financial reporting system
and internal control procedures, including overseeing
the adequacy of the resources and competence
of the Company’s accounting and financial
reporting functions;
•
Overseeing the Company’s Internal Audit function,
including liaison with the Head of IA, approval of
the annual internal audit plan of the Company and
receiving periodic reports from the Head of IA;
•
Reviewing the Company’s enterprise risk management
(“ERM”) framework and the guidelines, policies and
procedures for risk assessment and risk management;
•
Receiving reports on the Company’s enterprise risks
and key emerging risks; and
•
Reviewing the effectiveness of the ERM function
(including staffing levels and qualifications), the
Company’s “Three Lines of Defence” (“3LoD”) assurance
framework and crisis management arrangements.
More details on the duties of the Committee are set out in
the ToR and further information can be found in the “Risk
Management and Internal Control Systems” section of the
Corporate Governance Report on pages 96 to 101 of this
Annual Report.
For more details of the features of the ERM system and
processes, the significant risks being managed and the
process used to review the effectiveness of the ERM
system, please refer to the “Risk Management” section on
pages 109 to 113 of this Annual Report.
Reporting to the Board
The Chair of the Committee summarises the activities of
the Committee and highlights issues arising therefrom or
concerns raised by Committee members in a report to the
Board after each Committee meeting.
The minutes of Committee meetings are prepared by
the secretary of the meetings with details of the matters
considered by Committee members and decisions
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AUDIT & RISK COMMIT TEE REPORT
reached, including any concerns raised by Committee
members, dissenting views expressed and suggestions for
enhancing the governance and internal control systems
of the Company. The draft minutes are circulated to
Committee members for comment after each meeting.
The Committee formally adopts the draft minutes at
the next subsequent meeting, after taking into account
any comments that Committee members may have
made. Minutes of Committee meetings are open for
inspection by Committee members at the Company’s
registered office.
In advance of the first regular Committee meeting each
year, the secretary of the meetings pre-agrees key agenda
items for the year with the Chair of the Committee
who makes a final determination on the agenda for the
Committee meetings.
WORK PERFORMED BY THE
COMMITTEE IN 2024
In 2024, the Committee held four regular meetings.
Representatives of the external auditor, the FD, the L&GD
and the Head of IA attended or joined online all four
regular meetings to report and answer questions about
their work. In addition, relevant Members of the Executive
Directorate were invited to join certain presentations
to the Committee. During the year, the Committee also
held private sessions with the external auditors and
the Head of IA, without the presence of Management
representatives, immediately after the regular meetings.
The Committee devoted its attention to the review of the
Company’s annual and interim results announcements/
financial statements at the February and August 2024
meetings respectively, while maintaining close oversight
of the Company’s internal controls through receiving
reports from the ERM, second line of defence (“2LoD”)
and internal audit teams at each of the regular meetings.
In addition to the four regular meetings, the Committee
approved the engagement of KPMG for providing
independent assurance services for the Company’s
Sustainability Report for 2024 and 2025, by way of
circulation during the year.
Throughout 2024, the Company continued
demonstrating its commitment to robust governance
and effective risk management across all Business Units
by implementing 3LoD model. Pursuant to this model,
2LoD activities are managed by the Legal & Governance
function with its Centres of Excellence in technical,
engineering, safety, quality, risk and commercial
disciplines. 2LoD Assurance activities span across all
Business Units of the Company as well as critical corporate
projects and initiatives.
Other major work performed by the Committee in
2024 included:
Financial
•
Reviewed the draft 2023 Annual Report, Annual
Results Announcement and Financial Statements,
2024 Interim Report, Interim Results Announcement
and Financial Statements, accounting matters,
and relevant disclosure notes in the said Financial
Statements and made recommendations on the same
for the Board’s approval;
•
Received updates on the valuations of the Group’s
Hong Kong property assets and Mainland China
investment properties;
•
Received updates on the latest budget status of
the Company’s railway construction projects under
entrustment by the Government and updates
on the detailed planning for the Company’s new
railway projects;
•
Received a preview of the 2024 interim and
annual accounting, financial reporting issues and
tax matters; and
•
Followed up and received updates on the outstanding
receivables of a business outside Hong Kong;
Internal Audit and Internal Control
•
Reviewed a report on the evaluation of the
effectiveness of the Internal Audit Department
for 2023;
•
Reviewed the continuing connected transactions
for 2023;
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•
Reviewed Internal Audit Department’s Quarterly
Reports;
•
Approved updates to the Internal Audit Charter;
•
Approved the 2025 Internal Audit Plan; and
•
Approved the Internal Audit Department strategy
for compliance with the new Global Internal
Audit Standards released by The Institute of
Internal Auditors;
External Auditor
•
Received KPMG’s reports on the salient features of the
2023 Annual Financial Statements and 2024 Interim
Financial Statements respectively;
•
Considered KPMG’s independence and other relevant
factors when approving the appointment of KPMG
in providing non-audit services; and noted KPMG’s
confirmation of independence in its audit report in
respect of the 2023 Annual Financial Statements and
2024 Interim Financial Statements respectively;
•
Approved KPMG to provide certain non-audit services;
•
Approved KPMG’s fee proposal for the 2024 annual
audit and the 2025 interim review, as well as other
audit related and tax services; and
•
Reviewed KPMG’s audit plan for the year ending
31 December 2024;
Governance
•
Reviewed the report on compliance with statutes
and regulations, Operating Agreement and Rail
Merger Related Agreements in 2023, and outstanding
litigation/potential litigation;
•
Endorsed the Audit & Risk Committee Report and
Risk Management related disclosures for the 2023
Annual Report; and
•
Reviewed summaries of key issues reported to the
Audit/Risk/Governance Committees of various
subsidiaries of the Company;
Risk Management and Assurance
•
Reviewed the Risk Management and Internal
Control Systems effectiveness paper for 2023 for
submission to the Board;
•
Reviewed ERM’s 2023 Annual Report, 2024 Half Yearly
Report and Quarterly Reports;
•
Received presentations on the new Principal Risk
Area Dashboards;
•
Received 2LoD’s Quarterly Reports; and
•
Received an annual update on the Company’s
insurance policies.
RE-APPOINTMENT OF
EXTERNAL AUDITOR
The Committee was satisfied with KPMG’s work,
its independence and objectivity, and therefore
recommended the re-appointment of KPMG (which
has indicated its willingness to continue in office) as
the Group’s external auditor for 2025 for approval
by the Company’s shareholders at the 2025 Annual
General Meeting.
Professor Anna Wong Wai-kwan
Audit & Risk Committee Chair
Hong Kong, 6 March 2025
This Audit & Risk Committee Report has been reviewed and endorsed by
the Committee.
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RISK MANAGEMENT
*
See the Audit & Risk Committee Report (pages 106 to 108 of this Annual Report)
for duties and work performed by the Committee in 2024.
• Exercise ongoing risk oversight
• Establish appropriate risk management strategies
• Oversee the ERM framework
• Review top risks and emerging risks
• Conduct annual review of ERM system effectiveness
• Implement and continuously improve ERM framework
• Enterprise Risk Committee
– Chaired by Legal and Governance Director
– Comprises representatives from all business units and
corporate functions
– Steers framework implementation and improvement
– Reviews Company’s top risks and key emerging risks
– Reports to Executive Committee and Audit & Risk
Committee quarterly, and to Board every six months
• Establish arrangements and implement risk management
process consistent with the Company’s ERM
framework and policy
• Manage risks, and identify and implement risk controls
• Capture identified risks in risk registers for regular review
and monitoring
Board
assisted by
Audit & Risk
Committee*
Executive Committee
assisted by
Enterprise Risk Committee
Business Units and Corporate Functions
SYSTEM FEATURES
Business units across the Company embrace the
Company’s Enterprise Risk Management (“ERM”)
framework which underpins their day-to-day business
activities. The framework provides a simple and effective
management process to:
•
Identify, assess, and effectively manage operational,
functional, and enterprise risks across the Company
•
Prioritise resources to manage risks
•
Give management a clear view of the significant risks
facing the Company
•
Support decision making and project execution for
better business performance
The Board, with the assistance of the Audit & Risk
Committee oversees the Company’s ERM framework
and top risks, whereas the Executive Committee, with
the support of the Enterprise Risk Committee (“ERC”),
is overall accountable for the ERM policy, system
implementation and continuous improvement.
The Executives provide top-down views on the key
risks of the Company through discussions on the
quarterly enterprise risk reports and during “Blue Sky”
(brainstorming) risk workshops. In April 2024, a “Blue Sky”
workshop was held, in which the Executives reviewed
how Artificial Intelligence (“AI”) and Generative AI were
transforming today’s railways (and similar industries)
and discussed risks and opportunities relevant to the
Company. The Company is working on an enhanced AI
Governance Framework that will guide the Company
in its adoption of AI and an AI & Data Governance
Working Group has been set up with representatives
from across the Company to review the risks associated
with AI applications and the execution of the AI
Governance Framework.
The Company’s risks are rigorously identified, assessed
and managed. Each risk is evaluated on the likelihood
of its occurrence, as well as the potential consequences,
while taking existing controls into consideration. A risk
matrix is used to determine a risk rating (E1 – E4), with
E1 being a relatively high risk and E4 being a relatively
low risk. The risk rating determines the required level
of management attention and risk treatment effort,
while considering the Company’s risk appetite. The
highest category of risk, “E1”, is subject to Board, Board
Committee and Executive Committee oversight.
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BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
*
Areas below are not exhaustive
Evaluate Risk
• Evaluate risk by
estimating likelihood and
consequence of the
risk event
• Determine risk
rating using the risk
matrix (E1-E4)
Treat Risk*
• Take into account
risk appetite
• Avoid risks where
no appetite and
possible to do so
• Mitigate – review
controls in place to
evaluate adequacy
and effectiveness
and ensure owners in
place to implement
• Transfer – take out
insurance to transfer risks
where cost effective
and efficient
• Accept once mitigated to
an appropriate level
Report and
Monitor Risk
• Capture risks in
risk registers
• Periodic ERM reports to
– Enterprise Risk
Committee
– Executive Committee
– Audit & Risk Committee
– Board
Identify Risk*
• Existing businesses
• Changing
external environment
• New projects or
business ventures
• New and emerging issues
or trends which may pose
significant risks
• List of running issues
and risk drivers
for brainstorming
• Change in laws
and regulations
While encountering risk is inevitable in the course of
business, the Company’s appetite for risk varies and is
particularly low in certain areas such as in relation to
public and employee safety and the provision of a reliable
transport service.
The Company’s ERM system provides an important
internal control in identifying, assessing and managing
the risks affecting the Company. As a learning
organisation, the Company constantly looks for
improvement opportunities through internal and external
reviews and studies, including learning from incidents
encountered during its operations. Following the severe
rainstorm event in September 2023, the Company
has identified relevant measures and has actively
implemented these improvements. Flooding sensors
have been installed at entrances/exits of MTR stations
which are more vulnerable to flooding risk due to their
surrounding environment and past flooding records.
In addition, some of our strategic locations have had
flood boards relocated closer to station entrances/exits
and drills to handle “catastrophic flooding” have been
completed at all MTR stations.
The independent external review on the ERM
system completed in 2023 identified best practice
recommendations which we further developed in 2024
for implementation. These include updating the ERM
Manual, enhancing risk register content, streamlining the
enterprise level risk profile (consolidating enterprise risks
under Principal Risk Areas), and deploying risk dashboards
which make reference to quantitative key risk indicators,
risk controls effectiveness assessments and assurance
information from across the 3LoD functions.
MANAGEMENT PROCESS FOR
SIGNIFICANT RISKS
The Company adopts a proactive management process
to identify, evaluate, treat, report and monitor significant
risks arising from its recurrent and growth businesses and
from the constantly changing business environment. Risk
management strategies are developed for different areas
including, but not limited to, operations, construction,
finance, and environment, social and governance (“ESG”).
The ERM Team within the Legal and Governance Function
maintains a list of issues and risk drivers pertinent to the
changing business and external environments, which
is used to assist the ERC in identifying potential risks
that may emerge.
In addition, the ERC and the Executive Committee review
the Company’s enterprise risk profile and brainstorm
emerging risks quarterly to ensure key risks are captured,
assessed and controlled. The Board also reviews these on
a six-monthly basis.
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MTR CORPORATION LIMITED
RISK MANAGEMENT
Key risk management focus areas for the Company include:
Effective and Balanced Relationship with Key Stakeholders
Key Challenges
•
Diverse stakeholder expectations
•
Uphold public confidence in light of operational incidents
•
Build relationships with communities and stakeholders affected by new projects and planned service changes
Key Controls
•
Implement proactive tailored engagement plans for different stakeholders to maintain effective communication
and understanding
•
Fulfill the Company’s operating obligations and maintain good performance
Operations
Key Challenges
•
Maintain asset performance while assets are ageing
•
Manage interfaces with works along the operating railway to mitigate any major impact on train services
•
Secure sufficient Non-traffic Hours (“NTH”) possessions to meet asset replacement and maintenance needs
•
Replace complex signalling systems in a live operating railway environment
•
Resilience in the face of extreme weather events
•
Unsafe behaviour of passengers
•
The ageing population in Hong Kong
Key Controls
•
Strengthened governance of asset replacement strategy to manage asset replacement demand
•
Pursue continuous improvement opportunities regarding asset management including utilising new software solutions
•
Explore use of technology to monitor asset condition and performance
•
Railway Protection and assurance teams to review potential railway interface hazards
•
Secure required NTH possessions through the NTH Office established to coordinate supply and demand across
business units and invest in necessary resources
•
Engage independent safety assessor to assist delivery of safety critical projects to safety and quality standards
•
Comprehensive investigation of incidents followed by implementation of corrective and preventative actions
•
Enhanced operating procedures, inspection regimes and flood protection provisions, and enhanced design standards
•
Promotional campaigns to encourage safe practices by passengers
•
Outreach initiatives, including “Elderly Ambassadors” programme and elderly talks to raise public awareness about
general railway safety
People
Key Challenge
•
Maintaining sufficient competent staff to sustain and grow MTR businesses
Key Controls
•
Talent acquisition – Succession planning and forward manpower planning
•
Talent retention – understanding staff’s concerns through engagement surveys and proactively addressing key issues
through various initiatives and communication channels
•
Upskilling – various learning and talent development programmes across different disciplines and grades to support
staff in growing their functional and managerial competencies
New Projects Quality, Programme and Cost
Key Challenges
•
Delivering new projects on time, within budget, and to the expected standard of quality while meeting
stakeholder expectations
•
Obtaining adequate and timely NTH possessions to deliver new projects on time while need for operational
maintenance/asset replacement NTH possessions is met
Key Controls
•
New operating model for the Capital Works Business Unit with centralised capabilities for efficient delivery of
multiple projects
•
Deploy three lines of defence to provide project assurance, including audits and assurance to ensure compliance with
processes and procedures
•
Capital Works Project Integrated Management System
•
Monitoring of project quality and progress against Key Performance Indicators
•
Stringent control of change and management of contingency funds
•
Competency and resource management framework in the Capital Works Business Unit to ensure sufficient staff with
the right skills and competencies
•
Use of technology to deliver and manage projects, including the use of Building Information Modelling (“BIM”) and
digital supervision and record keeping
•
NTH Office established to coordinate supply and demand for track possessions across business units and to develop
initiatives and procure resources to improve possession efficiency
•
Proactive engagement with Government to establish the future way of delivering railway projects
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FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
New Business Model/Technological Disruption/Competition
Key Challenges
•
Current business model disrupted by new technology including Generative AI
•
Manage competition from other transport providers
Key Controls
•
Invest in technology and digital solutions to strengthen business model
•
Monitor competition from other transport providers and implement initiatives to maintain market share
•
Governance Framework to govern the adoption of AI/Generative AI
Delivery of Growth Strategy
Key Challenges
•
Keen competition for business opportunities outside Hong Kong
•
Business performance below bid models and assumptions
•
Heightened geopolitical risk
Key Controls
•
Ongoing engagement with Government to establish business models for new lines in Hong Kong
•
Maximise branding effect of the Company and stakeholder engagement
•
Diversify the Company’s businesses in locations outside Hong Kong and conduct regular scans for new
business opportunities
•
Formulate and implement business improvement plans for underperforming businesses
•
Regular geopolitical risk pulse check surveys
Security threat (cyber/physical)
Key Challenges
•
Threat of cyber-attack on Operations and IT systems
•
Terrorist attack threat
Key Controls
•
Enhanced corporate security governance framework and security measures
•
Enhanced vulnerability management to identify and remediate vulnerabilities proactively
•
Enhanced Identity and Access Management System to protect against unauthorised access of critical IT systems
•
Enhanced IT network resilience to protect against cyber-attacks
•
Enhanced threat intelligence engagement to improve anomaly detection and protection against endpoints,
networks, and application systems
•
Convergence of the Security Operation Centres of IT and Operations Technology (“OT”) to improve the effectiveness
on detecting cyber-attacks
•
Conduct of regular Red Teaming exercises to enhance incident response and vulnerability discovery capabilities
•
Continuous monitoring of the exposure of the Company’s digital assets to the public internet
The long-term financial sustainability of the Company is continuously monitored by the Board and the Executive
Committee. The revenue from our recurrent business activities continues to recover despite changes in patterns of
consumer and traveller behaviour in the post-pandemic era. While our revenue in and outside of Hong Kong remains
dependent to a degree on macroeconomics and consumption trends, the Group continues to implement transformation
initiatives and practise prudent financial management with a view to further improving the Group’s profitability in the
longer-term. Further, the new railway and other projects with established viable business cases may help to contribute to
the Group’s long-term financial sustainability.
ESG risks are identified through the ERM framework and are mapped against relevant issues to determine material aspects
during the materiality assessment process. Business resilience to extreme weather has been identified as one of the key
future strategic priority areas to sustain long-term business growth, with discussions held at Board level in December
2024 and January 2025 respectively. Climate-related physical and transition risks and the roles of multiple interconnected
stakeholders were examined. The Company has well-established frameworks and protocols and practical responding
strategies and actions undertaken at the Corporate and Business Unit/Function levels to provide effective risk mitigation.
The Company will continue to strengthen business resilience through innovation and technology adoption, scenario
planning and future design enhancements as continuous improvement.
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RISK MANAGEMENT
Process of System Effectiveness Review
On behalf of the Executive Committee, the ERC evaluates the effectiveness of the ERM system at least annually. The Legal
and Governance Director, who chairs the ERC, presented the ERM system effectiveness review results for the year ending
31 December 2024 to the Executive Committee, which confirmed its agreement with the review results on 13 February 2025
and to the Audit & Risk Committee on 25 February 2025, who likewise confirmed their agreement with the review results.
The Audit & Risk Committee, with delegated authority from the Board, has evaluated the effectiveness and adequacy of
the Company’s ERM system and considers it to be overall “effective and adequate”, based on a number of review areas.
CONTINUOUS PROCESS IMPROVEMENT
Key initiatives undertaken in relation to the ERM system in 2024 include the following:
•
The ERM Team continued to produce ERM Newsletters for dissemination to all staff focusing on topical issues in risk
management, aiming to raise risk awareness and share good risk management practices.
•
In September 2024, the Company launched its annual Risk Awareness Week “RAW” event to promote risk awareness
across all levels of the organisation, including a keynote seminar on the theme “Managing through Turbulent Times”.
The seminar was well received and was attended by about 240 department heads and senior managers. Over 2,400
participants also took part in the RAW Online Game aimed at testing their knowledge of risk awareness and principles.
In addition, over 70 safety experts and practitioners from Hong Kong, Mainland China, and International Business Units
joined the “Global Safety Roundtable” workshops in October 2024. The workshops provided a platform for exchange
of safety knowledge and safety management skills. Discussions were held on risk precursors for Major Risk Scenarios,
which have helped uplift the Company’s risk management capability and capacity.
•
Throughout 2024, the Company continued demonstrating its commitment to robust governance and effective risk
management across all Business Units by implementing its 3LoD model. Pursuant to this model, 2LoD activities are
managed by the Legal & Governance function with its Centres of Excellence in technical, engineering, safety, quality,
risk and commercial disciplines. 2LoD Assurance activities span across all Business Units of the Company as well as
critical corporate projects and initiatives.
•
The Company keeps abreast of the latest developments in risk management through reviews with users, reviewing
a variety of global risk reports, and cross-industry benchmarking and experience sharing, including through
participation in the Hong Kong ERM Roundtable meetings and Pan-Asia Risk & Insurance Management Association
(“PARIMA”) meetings.
Factors considered during the review
•
Review areas suggested in the Corporate Governance Code for the
Board’s annual review of the risk management system
•
Annual internal certification of risk management effectiveness by
Department Heads and Heads of subsidiaries/associates
•
Risk management of subsidiaries/associates
•
Benchmarking/roundtable/peer group engagements and interactions
•
Risk management training and promotion events held in 2024
Conclusion
The ERM system was
considered overall
effective and adequate
for the year ended
31 December 2024.
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FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
As at the date of this Report, the Capital Works Committee
of the Company (referred to as the “Committee” in this
report) consists of five Non-executive Directors, four of
whom are Independent Non-executive Directors of the
Company (“INEDs”). Details of the Committee’s members
and their attendance records during 2024 are set out on
pages 92 to 93 of this Annual Report.
DUTIES OF THE COMMITTEE
The Committee’s Terms of Reference are available on the
website of the Company (www.mtr.com.hk).
The Committee provide oversight and advice to the
Board in respect of any capital project of the Company
in Hong Kong and outside of Hong Kong involving
design and/or construction and/or replacement activities
(“Relevant Project”) with a capital value in excess of
HK$10 billion and any other Relevant Project, in the event
that such Relevant Project is four months or more behind
programme on an overall basis:
•
review the progress of such projects, from a
programme, cost, quality, safety, environmental and
stakeholder engagement perspective;
•
review matters that could have a material impact on
the programme, cost, quality, safety, environmental
and stakeholder engagement aspects of such projects,
including the management thereof and processes
adopted by the Company in supervising and
managing the projects;
•
review non-compliances in relation to materials, works
and processes;
•
review the sufficiency of resources for and the
supervision of such projects;
•
keep under review the Company’s communication
strategy and protocols and crisis management plans
in respect of such projects.
The Committee also review major technical or
engineering contracts of the Company in excess of
the thresholds set out in Appendix 1 to the Protocol of
Conduct of Business of MTR Corporation Limited and
provide guidance and recommendations, as appropriate.
The Committee report to the Board after every Committee
meeting and on an ad hoc basis if the Committee
deems appropriate.
WORK PERFORMED BY
THE COMMITTEE IN 2024
In 2024, the Committee held six meetings at which the
following key matters were reviewed and considered:
•
progress and issues related to the Company’s capital
projects under construction including the Tung Chung
Line Extension, the Oyster Bay Station, the Tuen Mun
South Extension, the Hung Shui Kiu Station, the Kwu
Tung Station on the East Rail Line and the Signalling
Replacement Works on the urban lines
•
planning and design work for other new railway projects,
including the Airport Railway Extended Overrun Tunnel
and the Northern Link
•
half-yearly reports on the construction programme and
cost status of all the awarded development projects of
the Company’s Property Business Unit in Hong Kong
•
half-yearly reports on projects-related audits conducted
by the Company’s Internal Audit Department
•
recommendation for award of contracts for
Replacement of Power System on Tsuen Wan Line,
Island Line & Tseung Kwan O Line, New Rolling Stock
for Tuen Mun South Extension & Hung Shui Kiu Station,
Signalling System for Tuen Mun South Extension &
Hung Shui Kiu Station, Siu Ho Wan Depot Phase 1 &
associated works, and Hung Shui Kiu Station
Capital Works Director and General Manager – Commercial
Management (Capital Works) attended six Committee
meetings, General Manager – Lantau and New Territories
South Portfolio attended five meetings, to report and answer
questions on projects related matters in 2024. Operations
& Innovation Director attended four meetings, Chief Signal
Engineer (Ops) attended five meetings, to report and
answer questions on Signalling Replacement Works in 2024.
Property and International Business Director attended
one meeting, General Manager – Property Project attended
two meetings, to report and answer questions on progress
of awarded Property development projects in 2024. Other
executives and senior managers were also invited to attend
Committee meetings when required. I thank Committee
members and colleagues for their support and hard work.
Mr Cheng Yan-kee
Capital Works Committee Chairman
Hong Kong, 6 March 2025
The Capital Works Committee Report has been reviewed and endorsed by
the Committee.
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MTR CORPORATION LIMITED
CAPITAL WORKS COMMIT TEE REPORT
The Finance & Investment Committee (referred to as
the “Committee” in this report) was established on
1 February 2022. As at the date of this Report, the
Committee consists of five Non-executive Directors, of
which four are Independent Non-executive Directors
(INEDs). The Chairman of the Committee is an INED.
Details of the Committee’s members and their attendance
records during 2024 are set out on pages 92 to 93 of this
Annual Report.
The Chief Executive Officer, the Finance Director, and the
General Manager – Corporate Finance are required to
attend all meetings of the Committee. Other executives
and senior managers were also invited to attend
Committee meetings when required.
DUTIES OF THE COMMITTEE
The Committee’s Terms of Reference are available on the
respective websites of the Company (www.mtr.com.hk)
and the Stock Exchange.
Reviewing proposals from the Company’s Executive
Directorate on the following matters and providing
an assessment of such proposals to the Board for its
consideration:
•
the annual budget and financing plan of the Company;
•
the Company’s preferred financing model;
•
the Company’s dividend policy;
•
if in excess of the financial or other thresholds set
by the Board, bank borrowings or other financing
agreements, investments and disposals, parent
company guarantees, expenditure and revenue
contract awards;
•
the strategy for (if in excess of the investment
threshold set by the Board) and the award of
tenders for the Company’s property development
projects in Hong Kong;
•
the average and floor selling prices for units within the
Company’s property development projects;
•
project proposals for new capital works projects in
Hong Kong; and
•
the investment caps for the Company’s Mainland
China and International Businesses and for any other
part(s) of the Company’s business.
WORK PERFORMED BY THE
COMMITTEE IN 2024
During 2024, the Committee held seven meetings at
which the following key proposals were reviewed and
considered, and the Committee made corresponding
recommendations to the Board for its consideration:
•
the project agreement required for undertaking the
Hung Shui Kiu Station railway extension project;
•
project proposal for undertaking a railway
extension project;
•
tender submission for two overseas railway
franchise contracts;
•
New Growth Engine investment update;
•
Debt issuance programme for 2024;
•
the change of the Company’s financing horizon;
•
the Company’s potential financing options and
mechanisms to address the funding challenges
associated with both currently committed projects
and those under negotiation over the next decade;
•
the Company’s 2024 Latest Estimate, 2025 Budget and
Longer-Term Forecast;
•
the Company’s 2023 Final Dividend and 2024
Interim Dividend; and
•
the tender arrangement and sales price proposals of
various property development projects.
Mr Andrew Brandler
Finance & Investment Committee Chairman
Hong Kong, 6 March 2025
The Finance & Investment Committee Report has been reviewed and endorsed by
the Committee.
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FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
FINANCE & INVESTMENT
COMMIT TEE REPORT
INTRODUCTION
The Remuneration Committee has been delegated the
authority to consider and recommend to the Board the
Company’s remuneration policy and the remuneration
packages of the Non-executive Directors, as well as to
review and determine the remuneration packages for
the Chief Executive Officer and other Members of the
Executive Directorate.
Throughout the year, the Committee met regularly to
discuss and approve remuneration issues pertaining to the
Company’s Core Incentive Scheme, long-term incentive
scheme, and also the remuneration packages of the Chief
Executive Officer and other Members of the Executive
Directorate in the light of the Company’s remuneration
policy, and to consider and make recommendations to the
Board on the remuneration packages of the Non-executive
Directors. In determining the remuneration of the
Chief Executive Officer, the Committee consults with
the Chairman and in the case of other Members of the
Executive Directorate, the Committee consults with both
the Chairman and the Chief Executive Officer in respect of
their recommendations.
Currently, the Committee has seven Non-executive
Directors, four of whom are independent Non-executive
Directors. The Chairman of the Remuneration Committee
is an independent Non-executive Director. As necessary
and with the agreement of the Chairman of the
Remuneration Committee, the Remuneration Committee
is authorised to obtain outside independent professional
advice to support the Committee on relevant issues. No
individual Director or any of his/her associates is involved
in deciding his/her own remuneration.
The principal responsibilities of the Remuneration
Committee include:
•
Formulating a remuneration policy and practices that
facilitate the employment of top quality talent;
•
Recommending to the Board the remuneration of the
Non-executive Directors;
•
Determining, with delegated responsibility, the
remuneration packages of Members of the Executive
Directorate; and
•
Reviewing and approving performance-based
remuneration of Members of the Executive
Directorate by reference to the Board’s corporate
goals and objectives.
The Committee’s responsibilities are set out in its Terms of
Reference and are consistent with the Code.
This Remuneration Committee Report has been reviewed
and authorised by the Remuneration Committee
of the Company.
REMUNERATION POLICY
It is the Company’s policy to ensure that remuneration
is appropriate and aligns with the Company’s goals,
objectives and performance. To achieve this, the Company
has taken into consideration a number of relevant factors
such as salaries paid by comparable companies, job
responsibilities, duties and scope, employment conditions
elsewhere in the Company and its subsidiaries, market
practices, financial and non-financial performance, and the
desired mix of fixed and performance-based remuneration.
The Company is committed to effective corporate
governance and employing and motivating top quality
talent. The Company also recognises the importance of a
formal and transparent remuneration policy covering its
Board and Executive Directorate.
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REMUNERATION COMMIT TEE REPORT
REMUNERATION FOR
NON-EXECUTIVE DIRECTORS
The Remuneration Committee makes recommendations
to the Board from time to time on the remuneration
of the Members of the Board who are Non-executive
Directors. The remuneration of Non-executive Directors is
in the form of annual director’s fees.
To ensure that Non-executive Directors are appropriately
remunerated for their time and responsibilities devoted
to the Company, the Committee undertakes periodic
reviews and considers the following factors as they put
forward recommendations to the Board:
•
Fees paid by comparable companies;
•
Time commitment;
•
Responsibilities of the Non-executive Directors; and
•
Employment conditions elsewhere in the Company.
Details of the remuneration for the Non-executive
Directors are set out in note 11 to the consolidated
financial statements. The current Non-executive Director
fees payable in respect of the Board, each Board
Committee and Advisory Panel in effect since 1 July 2023,
are set out below:
Board/Board Committees/
Panel Memberships
Annual Fees
(HK$)
Board
– Chairman
1,500,000
– Other Members
350,000
Audit & Risk Committee, Capital Works Committee,
and Finance & Investment Committee
– Chairman
160,000
– Other Members
100,000
Remuneration Committee, Nominations Committee,
Environmental & Social Responsibility Committee,
and Technology Advisory Panel
– Chairman
120,000
– Other Members
70,000
REMUNERATION FOR EMPLOYEES
The Company’s remuneration structure for its employees,
including the Chief Executive Officer and other Members
of the Executive Directorate, comprises:
•
fixed compensation – base salary, allowances and
benefits-in-kind (e.g. medical);
•
variable incentives – discretionary or performance-
based payment and other business-specific cash
incentive plans;
•
long-term incentives – e.g. restricted shares and
performance shares; and
•
retirement schemes.
The specifics of these components are described below.
Fixed Compensation
Base salary and allowances are set and reviewed annually.
The annual review process takes into consideration the
Company’s remuneration policy, competitive market
positioning, market practice, as well as the Company’s
and the individuals’ performance. Benefits-in-kind
are reviewed as and when appropriate taking into
consideration market practices.
Variable Incentives
The Chief Executive Officer, other Members of the
Executive Directorate and management of the Company
are eligible to receive an annual performance-based
cash incentive under the Company’s Core Incentive
Scheme (“CIS”), the terms and rules of which are regularly
reviewed by the Remuneration Committee.
Under the current scheme rules, the overall CIS funding is
subject to the Company’s performance which is measured
by both financial and non-financial factors including:
Financial Factors
•
Operating profit;
•
EBITDA margin; and
•
Hong Kong property development profits.
Non-financial Factors
•
Results from customer satisfaction surveys;
•
Fulfillment of the Customer Service Pledges; and
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OVERVIEW
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•
Fulfillment of Performance Requirements in relation to
“Train Service Delivery”, “Passenger Journeys on Time”
and “Train Punctuality” as defined in Schedule 2, Part 1
of the Operating Agreement.
CIS funding will be automatically reduced if the Company
does not achieve any one or more of the Performance
Requirements. They will also be adjusted subject to the
Company’s achievement of all the Customer Service
Pledges. The final payout will then be adjusted based on
the performance of individual employees.
Following the end of each year, the Company engages an
independent expert to conduct a review and audit of its
performance against the Performance Requirements and
Customer Service Pledges. The results of this audit are
shared with the Remuneration Committee to determine
if adjustments to the funding under the scheme
are appropriate.
Individual performance ratings are part of the thorough
annual performance assessment process that is applied
throughout the Company. The performance ratings and
assessments reflect the full range of factors over which
the individual has accountability, including operational,
other non-financial and financial factors. Performance for
the Chief Executive Officer is assessed by the Chairman,
and the individual performance ratings for other
Members of the Executive Directorate are determined by
the Chief Executive Officer.
Target incentive levels for the Chief Executive Officer and
other Members of the Executive Directorate represent
approximately 25-35% of total cash compensation.
In addition, the Company operates other business-related
incentive schemes to motivate the staff concerned to
reach specific business targets of the Company.
Discretionary Awards
In 2024, discretionary awards were provided to
non-managerial staff with competent or above
performance, as a recognition of their contribution to
the Company’s performance and achievements in the
past year and to motivate staff to strive for continuous
business growth. In addition, as 2024 marked the 45th
Anniversary of the commencement of our metro service
in Hong Kong, a one-off special award was granted
to all staff in 2024 as a token of appreciation for their
contributions over the years.
Long-Term Incentives
During 2024, the Company maintained the Executive
Share Incentive Scheme.
Executive Share Incentive Scheme
On 15 August 2014, the Board approved the adoption
of the Executive Share Incentive Scheme. The Executive
Share Incentive Scheme took effect on 1 January 2015
for an original term of 10 years up to 31 December 2024.
The Board has approved the renewal of the Executive
Share Incentive Scheme for a further 10 years and so
it will remain in force until 31 December 2034 (unless
terminated earlier by the Company).
The purposes of the Executive Share Incentive Scheme
are to retain management and key employees, to align
participants’ interest with the long-term success of the
Company and to drive the achievement of strategic
objectives of the Company.
The Remuneration Committee may, from time to time,
at its absolute discretion, determine the criteria for any
eligible employee to participate in the Executive Share
Incentive Scheme as award holders in accordance with
the rules of the Executive Share Incentive Scheme. An
award holder may be granted an award of Restricted
Shares and/or Performance Shares. Awards under the
Executive Share Incentive Scheme were granted to
selected employees of the Company, including Members
of the Executive Directorate, in 2024. Award holders
are entitled to cash dividends accrued in respect of
unvested Restricted Shares that are granted on or after
1 January 2018.
Restricted Shares are awarded on the basis of the
individual performance of the relevant eligible employee
and vest ratably over three years in equal tranches (unless
otherwise determined by the Remuneration Committee).
Performance Shares are awarded every three years
and vest subject to the performance of the Company
over a pre-determined performance period, assessed
with reference to such Board-approved performance
metric and in respect of such performance period, and
any other performance conditions, as determined by
the Remuneration Committee from time to time. For
the most recent performance share grant covering
2024 to 2026, performance metrics include financial
metrics and operational and strategic metrics to support
118
MTR CORPORATION LIMITED
REMUNERATION COMMIT TEE REPORT
the Company’s growth, Environmental, Social and
Governance commitments, innovation initiatives and
project delivery in Hong Kong and overseas businesses.
In general, the Company will pay to the third party trustee
(the “Trustee”) monies and may give directions or a
recommendation to the Trustee to apply such amount
of monies and/or such other net amount of cash derived
from shares held as part of the funds of the trust to
acquire existing shares from the market. Such shares will
be held on trust by the Trustee for the relevant award
holders. The Trustee shall not exercise any voting rights
in respect of any shares held in the trust and no award
holder is entitled to instruct the Trustee to exercise the
voting rights in respect of any unvested award shares. For
purposes of Chapter 17 of the Listing Rules effective from
1 January 2023, the scheme is classified as “share schemes
involving existing shares of listed issuers”.
As part of the overall governance of the Executive Share
Incentive Scheme, the Company reviews scheme features
on a regular basis to ensure continued relevance and
effectiveness.
Details of the Executive Share Incentive Scheme and
shares granted to Members of the Executive Directorate
and selected employees of the Company under the
Executive Share Incentive Scheme are set out in notes 11
and 44 to the consolidated financial statements.
Retirement Schemes
In Hong Kong, the Company operates four retirement
schemes under trust, the MTR Corporation Limited
Retirement Scheme (the “MTR Retirement Scheme”),
the MTR Corporation Limited Provident Fund Scheme
(the “MTR Provident Fund Scheme”) and two Mandatory
Provident Fund (“MPF”) Schemes, the “MTR MPF Scheme”
and the “KCRC MPF Scheme”, with details as follows:
(i) MTR Retirement Scheme
The MTR Retirement Scheme is a defined benefit scheme
registered under the Occupational Retirement Schemes
Ordinance (Cap. 426) (the “ORSO”) and has been granted
an MPF Exemption Certificate by the Mandatory Provident
Fund Schemes Authority (the “MPFA”).
The MTR Retirement Scheme has been closed to new
employees from 1 April 1999 onwards. It is administrated
in accordance with the Trust Deed and Rules by the Board
of Trustees, comprising management and employee
representatives, and independent non-employer trustees.
It provides benefits based on the greater of a multiple of
final salary multiplied by the number of years of service
and a factor multiplied by the accumulated member
contributions with investment returns. Members’
contributions are based on fixed percentages of base
salary. The Company’s contributions are determined by
reference to an annual actuarial valuation carried out by
an independent actuarial consulting firm.
(ii) MTR Provident Fund Scheme
The MTR Provident Fund Scheme is a defined
contribution scheme registered under the ORSO and
has been granted an MPF Exemption Certificate by the
MPFA. All benefits payable under the MTR Provident Fund
Scheme are calculated by reference to members’ own
contributions and the Company’s contributions, together
with investment returns on these contributions. Both
members’ and the Company’s contributions are based on
fixed percentages of members’ base salary.
(iii) MTR MPF Scheme
The MTR MPF Scheme is a defined contribution scheme
covered under an MPF master trust registered with the
MPFA. It covers those employees who did not opt for or
who are not eligible to join the MTR Retirement Scheme or
the MTR Provident Fund Scheme. Both members and the
Company each contribute to the MTR MPF Scheme at the
mandatory levels as required by the Mandatory Provident
Fund Schemes Ordinance (Cap. 485) (the “MPFSO”). The
Company makes additional contributions above the
mandatory level for eligible members who joined the MTR
MPF Scheme before 1 April 2008, subject to individual
terms of employment.
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OVERVIEW
CORPORATE GOVERNANCE
(iv) KCRC MPF Scheme
The KCRC MPF Scheme is a defined contribution scheme
covered under an MPF master trust registered with the
MPFA. It covers those former KCRC employees who were
previously members of the KCRC MPF scheme and were
eligible to join the MTR Provident Fund Scheme but opted
to re-join the KCRC MPF Scheme. Both members and the
Company each contribute to the KCRC MPF Scheme at
the mandatory levels as required by the MPFSO.
The Members of the Executive Directorate who were
hired by the Company before 1 April 1999 are eligible to
join the MTR Retirement Scheme. Other Members of the
Executive Directorate are eligible to join either the MTR
Provident Fund Scheme or the MTR MPF Scheme.
Dr. Jacob Kam, the Company’s Chief Executive Officer
effective from 1 April 2019, participates in the MTR
Provident Fund Scheme.
For subsidiary companies in Hong Kong, Macau, the
Mainland of China, United Kingdom, Sweden and
Australia, the Group operates retirement schemes
established in accordance with, in the case of subsidiaries
in Hong Kong, the MPFSO and, in the case of subsidiaries
in Macau, the Mainland of China and overseas, their
respective local laws and regulations.
Work performed by the Remuneration Committee
during the year
•
Approved the 2023 Remuneration Committee Report
as incorporated in the 2023 Annual Report;
•
reviewed and approved payouts under the
Company’s performance-based CIS for the 2023
performance period;
•
evaluated a proposal to link safety performance to the
CIS payouts and recommended conducting further
studies into available metrics;
•
reviewed and approved restricted share and/or
performance share awards for eligible employees
under the Executive Share Incentive Scheme;
•
conducted an annual review of the remuneration
packages for Members of the Executive Directorate,
which took effect in July 2024;
•
conducted review on the remuneration packages
for Members of the Executive Directorate, as
appropriate; and
•
endorsed the performance metrics which determine
the vesting of Performance Shares covering the
performance period of 2024 – 2026 under the Executive
Share Incentive Scheme.
REMUNERATION OF
NON-EXECUTIVE AND
EXECUTIVE DIRECTORS
The total remuneration of the Members of the Board
and the Executive Directorate is shown below and
the remuneration details are set out in note 11 to the
consolidated financial statements.
in HK$ million
2024
2023
Fees
10.7
10.4
Base salaries, allowances and other
benefits-in-kind
60.8
63.9
Variable remuneration related to performance
33.0
26.6
Retirement scheme contributions
7.5
7.0
Share-based payments
26.9
22.8
Total
138.9
130.7
Please refer to note 11 to the consolidated financial
statements for information relating to the five highest
paid employees of the Company for the year ended
31 December 2024.
Mr Adrian Wong Koon-man
Remuneration Committee Chairperson
Hong Kong, 17 February 2025
120
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REMUNERATION COMMIT TEE REPORT
Full biographies of Members of the Board and the Executive Directorate are available on the Company’s website
(www.mtr.com.hk).
MEMBERS OF THE BOARD
Dr Jacob
Kam Chak-pui*^
JP
Age 63
Chairman (since 1 July 2019)
NED (since 7 March 2019)
Environmental & Social Responsibility Committee (Chairman)
Nominations Committee (Member)
Remuneration Committee (Member)
Dr Auyeung leads the Board of the Company in ensuring
effective management and oversight of the Company’s
business affairs, formulating the corporate strategy,
establishing the corporate governance structure and
evaluating the performance of the Executive Directorate.
Dr Auyeung is the vice chairman and an independent
non-executive director of C-MER Medical Holdings
Limited, and an independent non-executive director of
China Construction Bank (Asia) Corporation Limited.
Dr Auyeung has over 40 years of experience in the
insurance industry in Canada and Hong Kong. Before
his retirement in June 2017, he was Chairman – Asia of
the Principal Financial Group Inc. (“PFG”), a Fortune 500
company, responsible for PFG’s overall businesses in Asia.
Dr Auyeung also actively serves the public sector and is
currently a board member of Bo Charity Foundation (Food
Angel) and a convenor of the Advisory Committee of the
Jockey Club Community eHealth Care Project. In addition,
he is a member of the Board of Advisers of Healthcare
Dispute Resolution Centre Limited.
Dr Auyeung was previously an independent
non-executive director of HSBC Provident Fund Trustee
(Hong Kong) Limited, Standard Life (Asia) Limited
and Sompo Insurance China Co., Ltd. He was also the
chairman of Hong Kong Strategy for Financial Literacy
Sub-committee on Stakeholder Coordination and
Collaboration, a member of the Board of Directors of
Chief Executive Officer (“CEO”) (since 1 April 2019)
Environmental & Social Responsibility Committee (Member)
Dr Kam joined the Company in 1995 and had held various
management positions in the Operations, Projects and
Mainland China and International Business Divisions.
Before the CEO appointment, he was the Operations
Director between January 2011 and April 2016 and the
Managing Director – Operations and Mainland Business
from May 2016.
As the CEO, Dr Kam is responsible for all performance
of the Company and its group companies, both in and
outside Hong Kong.
Dr Kam is an Honorary Chairman of the International
Association of Public Transport (UITP) and a member
of each of the General Committee of The Hong Kong
General Chamber of Commerce, and the General
Committee of the Employers’ Federation of Hong Kong.
He is also a member of the United Nations Economic
and Social Commission for Asia and the Pacific (UN
ESCAP) Sustainable Business Network (ESBN) Executive
Council and the chair of its Task Force on Infrastructure
and Logistics.
Dr Kam qualified as a Chartered Engineer in the United
Kingdom in 1989.
the Investor and Financial Education Council under the
Securities and Futures Commission of Hong Kong, an
observer of the Independent Police Complaints Council
Observers Scheme, a member of the Independent Review
Committee on Hong Kong’s Franchised Bus Service and
the chairman of the Council of Lingnan University.
Dr Rex
Auyeung Pak-kuen*^
GBS, JP
Age 72
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OVERVIEW
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BOARD AND EXECUTIVE DIRECTORATE
INED (since 17 May 2017)
Finance & Investment Committee (Chairman)
Audit & Risk Committee (Member)
Mr Brandler is the chairman of Sir Elly Kadoorie & Sons
Limited. He was formerly the group managing director
and chief executive officer of CLP Holdings Limited from
2000 to 2013, an executive director between October
2013 and April 2014, and currently is the vice chairman
of the board and a non-executive director of that
company. Mr Brandler is also a non-executive director
of The Hongkong and Shanghai Hotels, Limited and
the chairman of the Board of Governors of the Chinese
International School.
Prior to joining CLP Holdings Limited in 2000, Mr Brandler
was an investment banker, his last position being Head
of Asia Pacific Corporate Finance at Schroders based in
Hong Kong. He is the former chairman of The Hong Kong
General Chamber of Commerce.
Mr Brandler is a member of The Institute of Chartered
Accountants in England and Wales.
Dr Bunny
Chan Chung-bun
GBM, GBS, SBS, BBS, JP
Age 67
INED (since 20 May 2020)
Environmental & Social Responsibility Committee (Member)
Remuneration Committee (Member)
Dr Chan has over 30 years of experience in the garment
industry and is the founder and chairman of Prospectful
INED (since 22 May 2019)
Nominations Committee (Chairman)
Capital Works Committee (Member)
Mr Chan has been a practising lawyer for over 40 years
and is currently a senior consultant of Messrs. So, Lung
& Associates, Solicitors. He is also a China-Appointed
Attesting Officer. Mr Chan currently is an independent
non-executive director of Chiyu Banking Corporation
Limited and a member of the supervisory board of The
Hong Kong Housing Society.
Andrew Clifford
Winawer Brandler
Age 68
Walter
Chan Kar-lok#
SBS, JP
Age 71
Holdings Limited. He is an independent non-executive
director of Li Ning Company Limited and Glorious Sun
Enterprises Limited. Dr Chan is currently a member of
the Hong Kong delegation to the National People’s
Congress of the People’s Republic of China. He is also
the chairman and a founding member of the Hong Kong
Army Cadets Association, a member of the Court of
Hong Kong Metropolitan University (formerly The Open
University of Hong Kong), and an advisor to Our Hong
Kong Foundation.
Dr Chan was formerly an independent non-executive
director of Speedy Global Holdings Limited and Great
Harvest Maeta Holdings Limited. He was appointed
to the Commission on Youth in 2004 and was the
chairman from 2009 to 2015. Dr Chan set up the Hong
Kong Association of Youth Development in 2007 and
was the former chairman of the Kwun Tong District
Council and the vice-chairperson of the Community
Care Fund Task Force of the Commission on Poverty.
He also served on the Financial Reporting Council, the
Social Welfare Advisory Committee, the Personal Data
(Privacy) Advisory Committee, and the Council for
Sustainable Development.
122
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BOARD AND EXECUTIVE DIRECTORATE
INED (since 22 May 2019)
Capital Works Committee (Chairman)
Remuneration Committee (Member)
Mr Cheng is a practising civil and structural engineer,
and an Authorised Person and a Registered Structural
Engineer under the Buildings Ordinance. He is also a
Class 1 Registered Structural Engineer in the People’s
Republic of China.
Mr Cheng currently is a director of YKC Consulting
Engineers Limited. He is also a member of each of the
Advisory Committee on Post-service Employment of
Civil Servants and the Advisory Committee on Post-office
Employment for Former Chief Executives and Politically
Appointed Officials. Mr Cheng is also a member of the
Supervisory Managing Organisation under The Nina and
Teddy Wang Charitable Trust.
Mr Cheng formerly was an independent non-executive
director of K. H. Group Holdings Limited, President of the
Institution of Structural Engineers, and Chairman of both
the Council of the Hong Kong Baptist University and the
Corruption Prevention Advisory Committee under the
Independent Commission Against Corruption. He was
also a member of the Hospital Authority, Town Planning
Board and Hong Kong Housing Authority.
Cheng Yan-kee*^
BBS, JP
Age 70
INED (since 26 May 2021)
Capital Works Committee (Member)
Remuneration Committee (Member)
Mr Hui joined the Hong Kong Government in 1978 as a
student building surveyor. He worked in a wide range of
posts in the former Buildings Ordinance Office, the former
Building Development Department, the former Buildings
and Lands Department and the Buildings Department.
In 2001, Mr Hui was seconded to the Security Bureau of
the HKSAR Government and assumed the position of
the Principal Assistant Secretary/Special Duties, with the
primary responsibility of overseeing aviation security.
Before his retirement, Mr Hui was the Director of Buildings
between 2014 and 2017.
Mr Hui was appointed by the HKSAR Government and
served as a member of the Expert Adviser Team for the
Shatin-to-Central Link Project between 2018 and 2020.
Mr Hui has been a member of the Hong Kong Institute of
Surveyors since 1984.
Hui Siu-wai
SBS
Age 68
Mr Chan was formerly the chairman of Appeal Tribunal
(Buildings) and The Hong Kong Housing Society, as well as
a non-executive director of the Urban Renewal Authority.
He was also a member of the Housing Authority, the
Town Planning Board, the Harbourfront Commission,
the Advisory Committee on Post-service Employment
of Civil Servants and the Board of Advisors of Radio
Television Hong Kong, and a convenor-cum-member of
the Pensions Appeal Panel under the Civil Service Bureau.
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OVERVIEW
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INED (since 25 May 2022)
Technology Advisory Panel (Chairman)
Capital Works Committee (Member)
Mr Lee has more than 40 years of experience in business
and technology management gained in both Hong
Kong and overseas. He is an independent non-executive
director of SUNeVision Holdings Ltd and BOC Hong Kong
(Holdings) Limited.
Mr Lee is the former vice-president (Administration)
of City University of Hong Kong. He was the executive
director of information technology (“IT”) of The Hong
Kong Jockey Club (“HKJC”), where he served as a
member of the board of management and had overall
responsibility for HKJC’s IT strategy and innovation. Prior
to joining HKJC, Mr Lee held various key positions at The
Hong Kong and China Gas Company Limited, including as
an executive committee member and as chief information
officer of the group, as well as the chief executive
officer of two strategic diversification businesses,
iCare.com Limited and Towngas Telecommunications
Company Limited.
Mr Lee also actively serves in many governing and
advisory committees in the academic, professional
and community arena. He is the board chairman of
Hong Kong Applied Science and Technology Research
Institute Company Limited, an ex-officio member of the
Committee on Innovation, Technology and Industry
Sunny
Lee Wai-kwong*^
BBS, JP
Age 65
INED (since 22 May 2024)
Audit & Risk Committee (Member)
Finance & Investment Committee (Member)
Mrs Lau is a chartered accountant. Prior to joining KPMG
in Hong Kong, she had worked at KPMG in London.
Mrs Lau was formerly a Partner of KPMG China and its
Managing Partner in Hong Kong. She retired from all her
positions at KPMG in September 2021.
Mrs Lau actively engages in community service and
has been appointed by the HKSAR Government as a
member of various finance advisory bodies. She is the
chairman and a non-executive director of both Mandatory
Provident Fund Schemes Authority and its wholly-owned
subsidiary, eMPF Platform Company Limited, a director of
the Hong Kong Academy of Finance, as well as a member
of the Exchange Fund Advisory Committee of the Hong
Kong Monetary Authority, and a member of the Financial
Infrastructure and Market Development Sub-Committee
and Governance Sub-Committee of its Exchange Fund
Advisory Committee. In addition, Mrs Lau has been an
Accounting Advisor of the Ministry of Finance of the
People’s Republic of China since May 2016 and a member
of the Chinese People’s Political Consultative Conference
of Jiangsu Province Committee, since January 2018. She is
also an advisor of Our Hong Kong Foundation.
Mrs Lau was the chairman of the Joint Committee on
Student Finance, a member of each of the Legal Aid
Services Council, Financial Leaders Forum, the Council
of The University of Hong Kong, the Public Service
Commission, the Advisory Panel on BEPS 2.0, the Lump
Sum Grant Independent Review Committee, the Task
Force on Economic Challenges, the Financial Reporting
Review Panel of the Financial Reporting Council, the
Market Development Committee and the Policy Research
Committee of the Financial Services Development
Council, the Hong Kong Trade Development Council, the
Independent Commission Against Corruption Advisory
Ayesha
Macpherson Lau
BBS, JP
Age 58
Committee on Corruption, the Harbourfront Commission,
the Aviation Development Advisory Committee, the
Standing Committee on Judicial Salaries and Conditions
of Service and the Women’s Commission.
Mrs Lau is a member of each of The Institute of Chartered
Accountants in England and Wales and the Hong Kong
Institute of Certified Public Accountants.
124
MTR CORPORATION LIMITED
BOARD AND EXECUTIVE DIRECTORATE
INED (since 22 May 2019)
Nominations Committee (Member)
Technology Advisory Panel (Member)
Mr Ng is a solicitor admitted to practise in Hong Kong
and currently is a partner of Messrs. Tung, Ng, Tse &
Lam, Solicitors. He is currently a member of the Hong
Kong delegation to the National People’s Congress of
the People’s Republic of China and a Legislative Council
member representing the Industrial (Second) Functional
Constituency. Mr Ng is an independent non-executive
director of Yanchang Petroleum International Limited and
Glorious Sun Enterprises Limited. He is also the chairman
of the Hong Kong – Taiwan Business Co-operation
Committee and the HKSAR Passports Appeal Board, a
vice-chairman of the Independent Police Complaints
Council, a non-executive director of The Hong Kong
Mortgage Corporation Limited, and a member of the
Court and the Council of The University of Hong Kong,
the Competition Commission and the Chinese People’s
Political Consultative Conference of Shaanxi Province, the
People’s Republic of China.
Jimmy
Ng Wing-ka^
BBS, JP
Age 55
Development of the HKSAR, as well as a council member
of each of Hong Kong Management Association,
Hong Kong Quality Assurance Agency and Hong Kong
Professionals and Senior Executives Association.
Mr Lee, formerly, was a president of Hong Kong
Computer Society, as well as the chairman of the Hong
Kong Institute of IT Professional Certification, the Public
Libraries Advisory Committee of the HKSAR and the
board of Hong Kong Education City. He was also a
council member of Vocational Training Council, an audit
committee member of Hong Kong Housing Society, and
a member of the Working Group of Intellectual Property
Trading of the HKSAR.
Mr Lee is a Chartered IT Professional and a Chartered Engineer.
INED (since 25 May 2022)
Audit & Risk Committee (Member)
Finance & Investment Committee (Member)
Dr Tong is a chartered accountant and has extensive
experience in the financial services sector and the capital
market in both the Mainland China and Hong Kong
markets. He is the chairman of Hong Kong Exchanges
and Clearing Limited and an independent non-executive
director of Standard Chartered Bank (Hong Kong)
Limited. Dr Tong is also a member of the International
Advisory Council of the National Financial Regulatory
Administration.
Dr Tong joined KPMG UK in 1979 and became an audit
partner of the firm in Hong Kong in 1989. He was elected
chairman of KPMG China and Hong Kong in 2007, before
becoming the Asia Pacific chairman and a member of the
global board and global executive team of KPMG in 2009.
Dr Tong spent over 30 years at KPMG and was actively
involved in the work of the capital market, corporate
governance and regulatory compliance, serving as a
member of the Main Board and Growth Enterprise Market
Listing Committee of The Stock Exchange of Hong Kong
Limited from 2002 to 2006, before becoming the chair
during 2006 to 2008. After retiring from KPMG in 2011, he
was appointed a non-executive director of the Securities
and Futures Commission (“SFC”), and later acted as its
chairman for the period from 2012 to October 2018.
Dr Carlson Tong^
GBS, SBS, JP
Age 70
Mr Ng was formerly an independent non-executive
director of China Weaving Materials Holdings Limited, a
non-executive director of the Mandatory Provident Fund
Schemes Authority, a director of Hong Kong Science and
Technology Parks Corporation, and a member of each
of the Small and Medium Enterprises Committee of the
Trade and Industry Department and the Council of The
Hong Kong Polytechnic University.
125
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OVERVIEW
CORPORATE GOVERNANCE
INED (since 24 May 2023)
Environmental & Social Responsibility Committee (Member)
Nominations Committee (Member)
Ms Wong is a solicitor admitted to practise in Hong Kong
and England and Wales. She is currently a non-executive
director of Medialink Group Limited and a consultant at
So, Lung & Associates, Solicitors.
Ms Wong has taken up many public duties in serving the
community. She is the chairlady of the Human Organ
Transplant Board, and a member of the Town Planning
Board and the vice-chairperson of its Metro Planning
Committee. Ms Wong is also a member of each of the
Hong Kong Advisory Council on AIDS, the HKSAR Election
Committee, the Election Committee for the HKSAR
Deputies to the 14th National People’s Congress of the
People’s Republic of China and the Mandatory Provident
Fund Schemes Appeal Board, and a co-opted member
of the Broadcast Codes of Practice Committee of the
Communications Authority. She is the Past President
and a council member of the Hong Kong Federation of
Women Lawyers Limited and an honorary court member
of the Hong Kong Baptist University.
Ms Wong was formerly a consultant and the Head of Legal
of Maxim’s Caterers Limited and a consultant at Liau, Ho
& Chan, Solicitors & Notaries. She was also a member
of the Competition Commission and the chairlady of
its Enforcement Committee, a member of each of the
Audit Committee of West Kowloon Cultural District
Authority, the Chinese Medicine Practitioners Board, and
the Hong Kong Council on Smoking and Health, and a
council member and a court member of the Hong Kong
Baptist University.
Sandy
Wong Hang-yee
JP
Age 53
Dr Tong oversaw a number of major policy initiatives
during his term as the chairman of the SFC, including the
introduction of the Hong Kong and Shanghai/Shenzhen
Stock connect schemes and the mutual recognition of
funds between the Mainland and Hong Kong.
Dr Tong, formerly, was an independent non-executive
director of Standard Chartered PLC, a non-executive
director of the Hong Kong International Airport
Authority, chairman of Aviation Security Company
Limited, chairman of the University Grants Committee, a
member of the Exchange Fund Advisory Committee of
Hong Kong Monetary Authority, a vice president and a
council member of the Hong Kong Institute of Certified
Public Accountants, a member of the Hong Kong Human
Resources Planning Commission, and a board member of
Hong Kong Laureate Forum Limited.
Dr Tong currently sits on various HKSAR Government
and professional bodies. He is the chairman of the
Independent Commission on Remuneration for Members
of the Executive Council and the Legislature, and Officials
under the Political Appointment System, as well as the
chairman of the Task Force on Enhancing Stock Market
Liquidity. Dr Tong is also a board member of both Hong
Kong Investment Corporation Limited and the Hong Kong
Academy of Finance, a member of the Judicial Officers
Recommendation Commission, and a member of the
Greater China Strategic Advisory Group of the Institute of
Chartered Accountants in England and Wales (“ICAEW”).
In addition, he is a board member of The Community
Chest of Hong Kong and a director of the World
Federation of Exchanges.
Dr Tong is a Fellow of ICAEW and the Hong Kong Institute
of Certified Public Accountants respectively.
126
MTR CORPORATION LIMITED
BOARD AND EXECUTIVE DIRECTORATE
INED (since 24 May 2023)
Audit & Risk Committee (Chairman)
Finance & Investment Committee (Member)
Professor Wong is a Professor of Practice in Finance at
the Faculty of Business and Economics and the Program
Director of the Bachelor of Finance (Asset Management
and Private Banking) at The University of Hong Kong. She
teaches financial regulations, compliance and credit risk
management at the Faculty.
Professor Wong has extensive experience in banking and
finance. She had worked in major financial institutions
including Citigroup, HSBC, Credit Suisse, BNP Paribas and
the Chase Manhattan Bank, covering private banking,
asset management, securities brokerage, corporate
and commercial banking, credit and risk management.
Professor Wong was the Head of Private Bank, Greater
China at Credit Suisse and the CEO of HSBC Broking
Services (Asia) Limited.
Professor Wong is an independent non-executive director
of The Hong Kong and China Gas Company Limited
and a member of each of the Competition Commission,
the Finance Committee of the Housing Authority, the
Process Review Panel for the Accounting and Financial
Reporting Council, the Human Capital Committee of
the Financial Services Development Council and the
Innovation and Technology Venture Fund Advisory
Committee. She was previously a non-executive director
of the Insurance Authority, a member of the Advisory
Committee of the Securities and Futures Commission,
an independent non-executive director of Bank of
China International Limited and a director of each of
the Hong Kong Securities and Investment Institute and
Hong Kong Securities Association Limited, as well as a
member of the Investment Committee of The Hong Kong
Polytechnic University.
Professor Wong is a Senior Fellow of Hong Kong Securities
and Investment Institute.
Professor Anna
Wong Wai-kwan
Age 65
INED (since 26 May 2021)
Remuneration Committee (Chairman)
Audit & Risk Committee (Member)
Mr Wong is an executive director and Chief Operations
Officer of VL Asset Management Limited and a director of
Abercan Limited. He is also the chairman of the Standing
Commission on Civil Service Salaries and Conditions of
Service as well as a member of each of the Travel Industry
Authority, the Public Service Commission and the
Unsolicited Electronic Messages (Enforcement Notices)
Appeal Board.
Mr Wong previously worked for commercial law firms in
England and in Hong Kong and specialised in listings and
mergers and acquisitions in the Greater China region. He
was the chairman of the Corruption Prevention Advisory
Committee and a member of the Advisory Committee
on Corruption of the Independent Commission Against
Corruption. Mr Wong previously was also a board
member of Airport Authority Hong Kong and Aviation
Security Company Limited, and a member of each of
the Listing Committee of The Stock Exchange of Hong
Kong Limited, the Communications Authority and the Air
Transport Licensing Authority, as well as a director of the
Urban Renewal Fund.
Adrian
Wong Koon-man
BBS, MH, JP
Age 60
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NED (since 5 December 2024)
Nominations Committee (Member)
Remuneration Committee (Member)
Ms Chan is a board member of Airport Authority
Hong Kong.
Ms Chan joined the Government as an Administrative
Officer in 1989 and has served in various bureaux and
departments. Her recent postings included Deputy
Secretary for Financial Services and the Treasury
(Treasury) from July 2012 to July 2016, Deputy Secretary
for Financial Services and the Treasury (Financial Services)
from August 2016 to October 2017, the Commissioner
for Transport from October 2017 to July 2020 and the
Permanent Secretary for Transport and Logistics (formerly
named Permanent Secretary for Transport and Housing
(Transport)) from August 2020 to December 2024. She
served as a Non-executive Director of the Company and a
member of each of the former Audit Committee and the
former Risk Committee of the Company in her capacity as
the Commissioner for Transport.
Alternate Directors
(i) Under Secretary for Transport and Logistics
(Liu Chun-san since 2 August 2022)
(ii) Permanent Secretary for Transport and Logistics
(iii) Deputy Secretary for Transport and Logistics 1
(Amy Wong Pui-man since 30 January 2023)
(iv) Deputy Secretary for Transport and Logistics 2
(Kirk Yip Hoi-ying since 30 December 2024)
Secretary for
Transport and
Logistics@
(Mable Chan)
JP
Age 59
NED (since 1 June 2020)
Remuneration Committee (Member)
Finance & Investment Committee (Member)
Mr Hui sits on the boards of several public bodies,
including Airport Authority Hong Kong, Mandatory
Provident Fund Schemes Authority, The Hong Kong
Mortgage Corporation Limited and West Kowloon
Cultural District Authority, and is the Chairman of the
Kowloon-Canton Railway Corporation and an ex-officio
member of the Financial Services Development
Council (“FSDC”) in his official capacity. He is also, in his
official capacity, a director of Hongkong International
Theme Parks Limited and Hong Kong Investment
Corporation Limited. In addition, Mr Hui is a member
of the Democratic Alliance for the Betterment and
Progress of Hong Kong.
Mr Hui was an Administrative Officer in the HKSAR
Government from 1999 to 2003 and held different
positions in the Economic Development Branch, the
Office of the HKSAR Government in Beijing and the Home
Affairs Department. After he left the HKSAR Government
in 2003, Mr Hui worked in the banking sector before
joining Hong Kong Exchanges and Clearing Limited
(“HKEx”) in 2006. From 2006 to 2018, Mr Hui held various
senior positions in the Market Development Division and
Listing Division in HKEx and was the Managing Director
at the time he left HKEx. He was the Executive Director of
FSDC from 2019 to 2020.
Alternate Directors
(i) Joseph Chan Ho-lim (since 1 June 2020)
(ii) Andrew Lai Chi-wah (since 23 July 2024)
(iii) Bruno Luk Kar-kin (since 5 September 2024)
Christopher
Hui Ching-yu
(Secretary for
Financial Services
and the Treasury)
GBS, JP
Age 48
128
MTR CORPORATION LIMITED
BOARD AND EXECUTIVE DIRECTORATE
Notes:
*
Also a director of the Company’s subsidiary(ies).
^
Up for retirement by rotation and eligible for re-election at the Company’s forthcoming Annual General Meeting (“AGM”).
#
Director who will retire after the conclusion of the Company’s forthcoming AGM.
@ Director appointed by the Chief Executive of the HKSAR pursuant to Section 8 of the MTR Ordinance, who is not required to retire by rotation under the Articles of Association.
INED : independent non-executive director
NED : non-executive director
NED (since 8 October 2021)
Capital Works Committee (Member)
Technology Advisory Panel (Member)
Mr Lau joined the Hong Kong Government in March
1992 and was the Director of Civil Engineering and
Development from October 2018 to October 2021.
Mr Lau is a fellow of The Hong Kong Institution of
Engineers and the Institution of Civil Engineers,
United Kingdom.
Alternate Director
Deputy Secretary for Development (Works)3
(Tony Ho Ying-kit since 5 June 2023)
NED (since 28 August 2023)
Audit & Risk Committee (Member)
Environmental & Social Responsibility Committee (Member)
Ms Lee, in her official capacity as the Commissioner
for Transport, also serves as a director of several
transport-related companies including The Kowloon
Motor Bus Company (1933) Limited, Long Win Bus
Company Limited, New Lantao Bus Company (1973)
Limited, Citybus Limited, The “Star” Ferry Company
Limited and Route 3 (CPS) Company Limited.
Ms Lee joined the Administrative Service in 1994 and
rose to the rank of Administrative Officer Staff Grade
B1 in April 2022. She has served in various bureaux and
departments, including the former Home Affairs Branch,
the former Constitutional Affairs Branch, the Home
Affairs Department, the Security Bureau, the former
Environment, Transport and Works Bureau, the Trade and
Industry Department and the former Food and Health
Bureau. Ms Lee was Deputy Secretary for Home Affairs
from April 2015 to October 2017, Deputy Secretary for
Transport and Housing (Transport) from October 2017 to
December 2020 and Deputy Secretary for Development
(Works) from December 2020 to August 2023.
Alternate Director
Deputy Commissioner for Transport/Transport Services
and Management
(Candy Kwok Wai-ying since 29 July 2024)
Permanent Secretary
for Development
(Works)@
(Ricky Lau Chun-kit)
JP
Age 58
Commissioner for
Transport@
(Angela
Lee Chung-yan)
JP
Age 52
129
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
MEMBERS OF THE EXECUTIVE DIRECTORATE
Dr Jacob Kam Chak-pui*
JP
Age 63
Chief Executive Officer (since 1 April 2019)
Environmental & Social Responsibility Committee (Member)
His biography is set out on page 121.
Jeny Yeung Mei-chun*
Age 60
Managing Director – Hong Kong Transport Services
(since 1 October 2023)
Ms Yeung joined the Company in November 1999. Prior
to her current position, Ms Yeung was the Commercial
Director since September 2011, and the Hong Kong
Transport Services Director since July 2021. She is
currently the Non-Executive Chairman of Octopus
Holdings Limited and of two members of the Octopus
Holdings Limited group.
Ms Yeung heads the Hong Kong Transport Services
Business and has overall responsibility for the Company’s
railway transport operations and its commercial
businesses in Hong Kong. These include the metro
network, the Airport Express and the High Speed Rail.
Before joining the Company, Ms Yeung held various
marketing and business development positions in
Standard Chartered Bank (Hong Kong) Limited and
Citibank in Hong Kong.
Ms Yeung is a non-official member of The Hong Kong
Housing Authority as well as its Commercial Properties
Committee and Finance Committee. She is also a member
of the Council for Carbon Neutrality and Sustainable
Development, and an independent non-executive
director of Hongkong International Theme Parks
Limited. Ms Yeung was the Chairman of Ngong Ping
360 Limited, an independent non-executive director of
Mox Bank Limited, a director of Hong Kong Cyberport
Management Company Limited and a member of the
Cyberport Advisory Panel. She was also a member of
the Advisory Committee on Enhancing Employment of
People with Disabilities and a member of the Hong Kong
Tourism Board, as well as a non-official member of the
Immigration Department Users’ Committee.
Ms Yeung is a Fellow of both The Chartered Institute of
Marketing and Hong Kong Institute of Marketing and a
Chartered Fellow of The Chartered Institute of Logistics
and Transport in Hong Kong.
Margaret Cheng Wai-ching
Sammy Wong Kwan-wai
Michael George Fitzgerald
Jeny Yeung Mei-chun
Dr Jacob Kam Chak-pui
130
MTR CORPORATION LIMITED
BOARD AND EXECUTIVE DIRECTORATE
Margaret Cheng Wai-ching*
JP
Age 59
Human Resources Director (since 1 June 2016)
Environmental & Social Responsibility Committee (Member)
Ms Cheng is responsible for all of the Company’s human
resources and administration affairs. She is currently the
President of MTR Academy.
Ms Cheng is a seasoned human resources practitioner
with rich senior management experience. She took up
different human resources roles in Citibank, N.A. between
1993 and 1997, and was with JP Morgan as Vice President,
Human Resources between 1997 and 2001. From 2001 to
2013, Ms Cheng was with The Hongkong and Shanghai
Banking Corporation Limited (“HSBC”) and was Head of
Human Resources, Hong Kong and Global Business, Asia
Pacific when she left HSBC. Before joining the Company,
she was Group Head of Human Resources of Hong Kong
Exchanges and Clearing Limited.
Ms Cheng is serving various public duties at the
HKSAR Government, including acting as a member
of the Standing Committee on Directorate Salaries
and Conditions of Service, a member of the Panel of
Arbitrators appointed under the Labour Relations
Ordinance, and a non-official member of the Civil
Service Training Advisory Board. She is also the chairman
of the Career Development Board of The Chinese
University of Hong Kong, the vice-chairman of the
Hong Kong Council for Accreditation of Academic and
Vocational Qualifications, as well as a board member of
the Hospital Authority and the chairman of its Human
Resources Committee.
Ms Cheng is currently the Immediate Past President and
a Fellow Member of the Hong Kong Institute of Human
Resource Management. She is also the Chairperson
of The Hong Kong Management Association’s People
Management Committee.
David Tang Chi-fai
Carl Michael Devlin
Gillian Elizabeth Meller
Linda Choy Siu-min
Dr Tony Lee Kar-yun
131
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
Linda Choy Siu-min*
Age 54
Corporate Affairs and Branding Director
(since 1 July 2021)
Ms Choy joined the Company as the Corporate Affairs
Director in March 2020.
Ms Choy is responsible for overseeing the Company’s
corporate communications, corporate relations and
branding functions.
Ms Choy has extensive experience in public affairs and
communications, public engagement and journalism.
She started her career in 1992 as a reporter for the South
China Morning Post (“SCMP”) and later joined the HKSAR
Government as an Administrative Officer, holding a
number of positions in various policy bureaux between
1998 and 2004. Ms Choy rejoined SCMP as its China News
Editor in 2004 and was later promoted to News Editor
before she took on the position of Director, Government
Relations of Hong Kong Disneyland Management Limited
(“HKDML”) in 2007. In 2008, she left this role and was
appointed by the HKSAR Government as the Political
Assistant to the Secretary for the Environment until 2012,
after which she rejoined HKDML as its Vice President,
Communications & Public Affairs, a position which she
held from 2013 to January 2020.
Ms Choy is currently the Vice-Chairperson of the Public
Libraries Advisory Committee, and a member of the
Lantau Development Advisory Committee, the Advisory
Committee on Mental Health as well as the Community
Involvement Committee on Greening. She is also the Vice
Council Chair of Hong Chi Association and an advisor of
the Institute of Mental Health, Castle Peak Hospital.
Carl Michael Devlin
Age 55
Capital Works Director (since 1 August 2022)
Mr Devlin joined the Company in November 2021.
Mr Devlin is responsible for leading the Capital Works
Business Unit and overseeing the Company’s capital
works portfolio, covering new railway extensions and
operations projects.
Mr Devlin possesses extensive experience across a
range of large-scale, complex and multi-disciplinary
projects in different sectors including transport, rail
and civil infrastructure, aviation, energy, oil and gas.
He has a strong project management background
with solid business leadership experience and has
worked successfully with stakeholders and international
companies in the United Kingdom, New Zealand,
Australia, United States of America, Canada and Japan.
Before joining the Company, Mr Devlin was General
Manager, Rail & Mass Transit of Waka Kotahi New Zealand
Transport Agency. Prior to that, from 2015 to 2018, he was
the Executive Director of Construction for Horizon Nuclear
Power in the United Kingdom and Programme Director
for Transport for London, United Kingdom, from 2013 to
2015. Mr Devlin previously held senior leadership roles
with Laing O’Rourke, BAA plc and Bechtel Infrastructure.
Mr Devlin is a Fellow Member of The Hong Kong
Institution of Engineers and a Chartered Member of
Engineers Ireland.
Michael George Fitzgerald*
Age 51
Finance Director (since 1 January 2024)
Mr Fitzgerald joined the Company in September 2023.
Mr Fitzgerald is responsible for the financial management
of the Company’s affairs, including financial planning
and control, budgeting, accounting and reporting, and
corporate finance. He also leads the treasury and investor
relations functions of the Company.
Mr Fitzgerald has extensive corporate finance and
investment banking experience. He started his career at
KPMG in London in 1995 and worked for Société Générale
from 1999 to 2014, holding various posts in London,
Hong Kong and Paris. After he left Société Générale,
Mr Fitzgerald joined the Orient Overseas (International)
Limited (“OOIL”) group as the Group Finance Director and
was later appointed as the Deputy Chief Financial Officer
and a member of the Compliance Committee of OOIL.
He was also a director and a member of the Executive
Committee of Orient Overseas Container Line Limited, the
main operating company of the OOIL group.
Mr Fitzgerald is a Fellow of the Institute of Chartered
Accountants in England and Wales and a member of its
Hong Kong Committee.
132
MTR CORPORATION LIMITED
BOARD AND EXECUTIVE DIRECTORATE
Dr Tony Lee Kar-yun*
Age 64
Operations and Innovation Director
(since 1 October 2023 and up to 30 April 2025)
Dr Lee joined the Company in 1991 and has held
various management positions related to the design,
construction, operations and maintenance of the
Company’s railway system in Hong Kong. Prior to his
current position, Dr Lee was appointed as the Operations
Director in January 2020. He is also the Chairman of
MTR Lab Company Limited, a wholly-owned subsidiary
of the Company.
Dr Lee is responsible for managing the Company’s
railway-related asset performance, asset management,
new railway projects operations planning and
development, operations safety and quality in Hong Kong
as well as innovation and technological development
in Hong Kong Transport Services. He also oversees the
Company’s Digitalisation and Innovation Department
with a view to establishing an integrated technology and
innovation framework across the Company.
Dr Lee is currently a Member of the Hong Kong Quality
Assurance Agency Governing Council. He is also a
Non-official Member of the Common Spatial Data
Advisory Committee, and a Member of each of the
Advisory Committee of the Department of Electrical
and Electronic Engineering of The University of Hong
Kong, the Technical Committee of National Rail Transit
Electrification and Automation Engineering Technology
Research Center (Hong Kong Branch), and the Rail
Excellence Advisory Panel of Land Transport Authority
in Singapore. Dr Lee is an Adjunct Professor of Beijing
Jiaotong University.
Dr Lee is a Chartered Engineer and is a Member of The
Hong Kong Institution of Engineers, The Institution
of Engineering and Technology and The Hong Kong
Institute of Directors.
Gillian Elizabeth Meller*
Age 52
Legal and Governance Director (since 22 February 2021)
Environmental & Social Responsibility Committee (Member)
Ms Meller joined the Company in August 2004. Prior to
her current position, Ms Meller was the Legal Director &
Secretary between September 2011 and June 2016, and
the Legal and European Business Director between July
2016 and February 2021.
Ms Meller is responsible for overseeing the Company’s
legal, insurance, governance and risk management,
environmental and social responsibility, and central
procurement and supply chain functions. She is also
responsible for leading the Company’s assurance function
with the aim of providing a strengthened second line of
defence across key risk areas of the Company.
Before joining the Company, Ms Meller was Director of
Legal Services for Metronet Rail SSL Limited in London,
the United Kingdom, and a solicitor at CMS Cameron
McKenna in London, the United Kingdom.
Ms Meller is a vice chairman of the Legal Committee
of The Hong Kong General Chamber of Commerce, a
member of the Listing Committee of The Stock Exchange
of Hong Kong Limited and an independent director of
Hong Kong, China Rugby.
Ms Meller is qualified to practise as a solicitor in Hong
Kong and England and Wales. She is a Vice President of
the Council of the international Chartered Governance
Institute and a representative of its China/Hong Kong
Division, a former President of The Hong Kong
Chartered Governance Institute, and a Fellow of both of
these institutes.
133
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
*
Also a director of the Company’s subsidiary(ies).
David Tang Chi-fai*
Age 60
Property and International Business Director
(since 22 February 2021)
Mr Tang joined the Company in August 2004. Prior to his
current position, Mr Tang was appointed as the Property
Director in October 2011 and the Property and Australian
Business Director in October 2020, and before that he
had held various senior management positions in the
then Legal and Procurement Division, the China and
International Business Division, and the Property Division.
Mr Tang is responsible for all of the property development
projects, asset and leasing management of investment
properties (including shopping malls and offices), and
property management business of the Company in Hong
Kong, as well as overseeing the Company’s international
businesses. He is also accountable for the business
results of the Hong Kong property and international
businesses portfolios.
Before joining the Company, Mr Tang was Commercial
Manager – Hong Kong & China Region, and Deputy
General Manager – Hong Kong & China Region for
Acciona, S.A. He had close to 20 years’ working experience
in contract administration, project management and
quantity surveying in the United Kingdom and Hong
Kong after starting his career as a Group Trainee of
George Wimpey Plc.
Mr Tang is an adjunct professor in the Department of Real
Estate and Construction at The University of Hong Kong.
He is also a former co-opted member of the Public Private
Partnership Projects Committee under the Board of the
West Kowloon Cultural District Authority and a former
non-executive director of the Urban Renewal Authority of
the HKSAR Government.
Mr Tang is a Chartered Surveyor.
Sammy Wong Kwan-wai*
Age 51
Mainland China Business Director
(since 1 January 2023)
Mr Wong joined the Company in 1995 as Operating
Management Trainee and has since then advanced
his career in the Company having taken on different
positions. Prior to his current position, Mr Wong was
appointed as General Manager-Shenzhen Line 4 in July
2017, Chief of Operating in January 2020 and Chief
of Operating and Metro Segment in July 2021. He is
currently the Chairman of Ngong Ping 360 Limited.
Mr Wong is responsible for overseeing the Company’s
business portfolios in Mainland China and is accountable
for their business performance.
Mr Wong is currently the Vice Chair of the Asia-Pacific
Committee of the International Association of Public
Transport (UITP) and a member of its Asia-Pacific Urban
Rail Platform Committee. He is also a member of the
HKTDC Mainland Business Advisory Committee. Mr Wong
is a fellow member of the China Hong Kong Railway
Institution and a member of The Chartered Institute of
Logistics and Transport in Hong Kong.
134
MTR CORPORATION LIMITED
BOARD AND EXECUTIVE DIRECTORATE
CHANGES IN INFORMATION OF DIRECTORS
Changes in information of Directors during 2024 and up to the date of this Report which are required to be disclosed
pursuant to the Listing Rules are set out below:
(i) Changes in Biographical Details
Name
Change(s)
Nature and
Effective Date of Change(s)
Dr Rex Auyeung Pak-kuen
The Investor and Financial Education Council under
the Securities and Futures Commission of Hong Kong
• Member of the Board of Directors
Cessation (18 October 2024)
Healthcare Dispute Resolution Centre Limited
• Member of the Board of Advisers
Appointment (1 January 2025)
Dr Jacob Kam Chak-pui
The Community Chest of Hong Kong
• Member of the Board of Directors
Cessation (17 June 2024)
The Hong Kong Institution of Engineers
• Co-opted Council Member
Cessation (26 June 2024)
Andrew Clifford
Winawer Brandler
The Hongkong and Shanghai Hotels, Limited
• Deputy Chairman
Cessation (31 December 2024)
Dr Bunny Chan Chung-bun
Great Harvest Maeta Holdings Limited (formerly known as
Great Harvest Maeta Group Holdings Limited)
• Independent Non-executive Director
Cessation (30 August 2024)
Walter Chan Kar-lok
The Hong Kong Housing Society
• Chairman
• Member of the Supervisory Board
Cessation (13 September 2024)
Appointment (13 September 2024)
Cheng Yan-kee
The Nina and Teddy Wang Charitable Trust
• Member of the Supervisory Managing Organisation
Appointment (17 October 2024)
Sunny Lee Wai-kwong
Public Libraries Advisory Committee (Hong Kong)
• Chairman
Cessation (1 May 2024)
City University of Hong Kong
• Vice-president (Administration)
Cessation (1 July 2024)
Jimmy Ng Wing-ka
The Hong Kong Polytechnic University
• Council Member
Cessation (31 March 2024)
Hong Kong Science and Technology Parks Corporation
• Director
Cessation (1 July 2024)
Dr Carlson Tong
Hong Kong Exchanges and Clearing Limited
• Chairman
Appointment (3 May 2024)
Standard Chartered PLC
• Independent Non-executive Director
Cessation (9 May 2024)
World Federation of Exchanges
• Director
Appointment (4 June 2024)
The Community Chest of Hong Kong
• Board Member
Appointment (17 June 2024)
Cathay Pacific Airways Limited
• Observer (on behalf of the HKSAR Government)
Cessation (31 July 2024)
Standard Chartered Bank (Hong Kong) Limited
• Independent Non-executive Director
Appointment (15 August 2024)
National Financial Regulatory Administration
• Member of the International Advisory Council
Appointment (19 October 2024)
Hong Kong Laureate Forum Limited
• Board Member
Cessation (11 November 2024)
Sandy Wong Hang-yee
Town Planning Board (Hong Kong)
• Vice-chairperson of the Metro Planning Committee
Appointment (1 April 2024)
Competition Commission (Hong Kong)
• Member
• Chairlady of the Enforcement Committee
Cessation (1 May 2024)
Cessation (1 May 2024)
West Kowloon Cultural District Authority (Hong Kong)
• Member of the Audit Committee
Cessation (1 January 2025)
135
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
(i) Changes in Biographical Details (continued)
Name
Change(s)
Nature and
Effective Date of Change(s)
Adrian Wong Koon-man
Independent Commission Against Corruption (Hong Kong)
• Chairman of the Corruption Prevention Advisory Committee
• Member of the Advisory Committee on Corruption
Cessation (1 January 2024)
Cessation (1 January 2024)
Public Service Commission (Hong Kong)
• Member
Appointment (1 February 2024)
Airport Authority Hong Kong
• Board Member
Cessation (1 June 2024)
Aviation Security Company Limited
• Board Member
Cessation (1 June 2024)
The Standing Commission on Civil Service Salaries and Conditions
of Service (Hong Kong)
• Chairman
Appointment (1 January 2025)
Professor Anna
Wong Wai-kwan
The Hong Kong Polytechnic University
• Member of the Investment Committee
Cessation (30 May 2024)
The Hong Kong and China Gas Company Limited
• Independent Non-executive Director
Appointment (25 June 2024)
Insurance Authority (Hong Kong)
• Non-executive Director
Cessation (28 December 2024)
Jeny Yeung Mei-chun
The Hong Kong Housing Authority
• Non-official Member
Appointment (1 April 2024)
Ngong Ping 360 Limited
• Chairman
Cessation (1 October 2024)
Advisory Committee on Enhancing Employment of People with
Disabilities (Hong Kong)
• Member
Cessation (1 January 2025)
Immigration Department Users’ Committee (Hong Kong)
• Non-official Member
Cessation (1 January 2025)
Linda Choy Siu-min
Public Libraries Advisory Committee (Hong Kong)
• Vice-Chairperson
Appointment (1 May 2024)
Radio Television Hong Kong
• Member of Board of Advisors
Cessation (1 September 2024)
Institute of Mental Health, Castle Peak Hospital (Hong Kong)
• Advisor
Appointment (10 September 2024)
Michael George Fitzgerald
The Institute of Chartered Accountants in England & Wales
• Member of the Hong Kong Committee
Appointment (1 August 2024)
Gillian Elizabeth Meller
The Chartered Governance Institute
• Vice President of the Council
Appointment (1 July 2024)
Tony Lee Kar-yun
Beijing Jiaotong University
• Adjunct Professor
Appointment (13 January 2025)
Sammy Wong Kwan-wai
Hong Kong Trade Development Council
• Member of the Mainland Business Advisory Committee
Appointment (1 April 2024)
Ngong Ping 360 Limited
• Chairman
Appointment (1 October 2024)
International Association of Public Transport (UITP)
• Vice Chair of the Asia-Pacific Committee
Appointment (7 November 2024)
(ii) Changes in Directors’ Remuneration
For details of the Directors’ remuneration received during the year, please refer to pages 205 to 208 of the Annual Report.
136
MTR CORPORATION LIMITED
BOARD AND EXECUTIVE DIRECTORATE
Jacob Kam Chak-pui
Chief Executive Officer (up to 31 December 2025)
Capital Works
Carl Devlin
Capital Works Director
Scott Mackenzie
General Manager – Commercial Management
(Capital Works)
Rohan Perinpanayagam
General Manager – Lantau & NT South Portfolio
Peter Leung Man-fat
General Manager – Operations Projects
Robert Stockwell
General Manager – Project Management Office
Tim Leung Chi-tim
General Manager – Railway & System Integration
Eva Kong Nai-kui
General Manager – Strategy and Business Services
(Capital Works)
Victor Abbott
General Manager – Technical (Capital Works)
Kevin Man Kwoon-yin
Head of Capital Works+ (Management Office)
Neil Ng Wai-hang
Head of Construction Management
Adrian Stearn
Head of Construction Management – Lantau
Walter Lam Wai-tak
Head of Construction Management – NT South
Thomas Lau Ming-yu
Head of Field Engineering (w.e.f. 1 February 2025)
Lesly Leung Po-po
Head of Field Engineering – Lantau
Jimmy Poon Kin-keung
Head of Field Engineering – NT South
(w.e.f. 1 February 2025)
Lee Ka-leung
Head of Project Delivery – Lantau
Dominic Law Tik-ko
Head of Project Delivery – NOL (Phase 1)
(w.e.f. 1 February 2025)
Alan Yan Wai-ming
Head of Project Delivery – NT South
Kelvin Wong Ka-wo
Head of Railway Systems (Capital Works)
Clifford Chow Lung-hung
Head of Signalling (Capital Works)
Andrew Mead
Principal Advisor – Architecture
(up to 3 February 2025)
Neil Smith
Principal Advisor – Construction
(up to 31 December 2024)
Charles Lau Kam-keung
Principal Advisor – NOL (Main Line and Spur Line)
Bernard Chui Wan-tak
Principal Advisor – Programming
Michael Mellor
Principal Project Commercial Manager –
Lantau and NT South
Stephen Jones
Principal Project Commercial Manager – NOL
Bruce Chang Chi-tat
Project Manager – Operations Projects – E&M
Corporate Affairs & Branding
Linda Choy Siu-min
Corporate Affairs & Branding Director
Karen Woo Kit-sum
General Manager – Branding & Communications
Kendrew Wong Ka-Chun
General Manager – Corporate Communications
Anthia Ku Nga-kuen
General Manager – Corporate Relations
Lam Chan Lam-sang
General Manager – Special Projects
(up to 31 December 2024)
Corporate Strategy
Michael Chan Ting-bond
General Manager – Corporate Strategy
Digitalisation and Innovation
Leo Ng Lup-nung
Chief Digital Officer
Wan Wai-yin
Chief Information Officer
David Chan Moon-hang
General Manager – Global Innovation
Finance
Michael Fitzgerald
Finance Director
Sammy Jim Kwok-wah
General Manager – Corporate Finance
Denny Chen Chi-sing
General Manager – Financial Control
Lena Kwok Lai-kay
General Manager – Investment Control &
Financial Management
William Lee
ERP Project Management Office Lead
(up to 14 May 2025)
Candy Ng Chui-lok
Head of Investor Relations & Retirement Benefits
(up to 9 March 2025)
Andrew Lee Kam-wing
Head of Investor Relations & Retirement Benefits
(w.e.f. 10 March 2025)
David Pang Hoi-hing
Treasurer (up to 11 January 2025)
Luke Lee Guo-chun
Treasurer (w.e.f. 12 January 2025)
Global Operations Standards
Institute
Terry Wong Wing-kin
General Manager – Global Operations
Standards Institute (w.e.f. 1 January 2025)
Hong Kong Property &
International Business
David Tang Chi-fai
Property & International Business Director
David Yam Pak-nin
General Manager – Business Development
Australia
Raymond Yuen Lap-hang
Deputy Director – Australian Business
Raymond O'Flaherty
Chief Executive Officer – Metro Trains Melbourne
Daniel Williams
Chief Executive Officer – Metro Trains Sydney
Lau Pak-wai
Project Director – Sydney Metro City Southwest
(w.e.f. 1 January 2025)
Tommy Lam Choi-fung
Head of Projects Engineering – Australian Business
Hong Kong Property
Debbie Chan Yuen-ping
General Manager – Investment Property (Team 1)
Kenneth Lung Tze-ho
General Manager – Investment Property (Team 2)
Melissa Pang Mee-yuk
General Manager – Property Development
Kenny Chow Chun-ling
General Manager – Property Management
Wilfred Yeung Sze-wai
General Manager – Property Project
Sharon Liu Chung-gay
General Manager – Town Planning
Eric Yeung Ka-hong
Deputy General Manager – Property Development
Lawrence Yam Tze-yi
Deputy General Manager – Property Project
Sweden
Caroline Astrand
Chief Executive Officer – MTR Nordic
Erika Ahlqvist
Chief Executive Officer – MTR Facility Management
Anders Gustafsson
Chief Executive Officer – MTR Tech
Oliver Bratton
Chief Executive Officer – MTR Tunnelbanan
United Kingdom
Andy King
Interim CEO – MTR UK
Mike Bagshaw
Managing Director – MTR Elizabeth Line
Hong Kong Transport Services
Jeny Yeung Mei-chun
Managing Director – Hong Kong Transport Services
Tony Lee Kar-yun
Operations & Innovation Director (up to 30 April 2025)
Ben Lui Gon-yee
Chief of Airport Segment
Paul Wong Kah-ming
Chief of Cross Boundary Segment
Cheris Lee Yuen-ling
Chief of Operating & Metro Segment
Lee Kim-hung
Chief of Operations Engineering Maintenance
Chan Hing-keung
Chief of Operations Engineering Service & Innovation
Andy Lau Wai-ming
General Manager – Commercial
Aiken Tam
General Manager – Engineering Maintenance
(Gateway Segment)
Frankie Ng Sze-ho
General Manager – Engineering Maintenance
(Operating & Metro Segment)
Tony Luk Kin-on
General Manager – Facility Maintenance
Winson Tse Fuk-sum
General Manager – Infrastructure Maintenance
Simon Tang Siu-cheung
General Manager – Innovation & Technology
(Operations)
Shirley Tse Lai
General Manager – Innovative Asset Management
& Governance
Annie Leung Ching-man
General Manager – Marketing & Customer Experience
Diane Chiu Man
General Manager – Marketing &
Revenue Management
Nelson Tsang Yuk-bong
General Manager – Operations Performance &
Services Management
Zoe Tse Yu-yuk
General Manager – Operations Safety & Quality
Allen Ding Ka-chun
General Manager – Projects Planning &
Development (Operations)
Rick Wong Hoi-wah
General Manager – PWay Asset Replacement &
Operations Interfacing Works
Ivan Cheung Tai-lun
General Manager – Rolling Stock Maintenance
Vincent Lam Wang-chi
General Manager – Works Management
Gordon Lam Bik-shun
Chief Signal Engineer (Operations)
Dennis Lau Ming-cheung
Chief Signalling Design Manager
Joseph Sin Chi-man
Chief Signalling Design Manager
Chan Ho-wing
Deputy General Manager – Operations Innovation Hub
Allan Fung Lung-ting
Deputy General Manager – Operations Interfacing
Works (w.e.f. 15 January 2025)
Mark Chan Tat-tai
Deputy General Manager – Projects Planning &
Development (Operations)
Thomas Yick Chun-pang
Deputy General Manager – Projects Planning &
Development (Operations)
Cheuk Man-Fai
Deputy General Manager – Technical &
Asset Engineering
Bess Ng Suet-fa
Head of Line Group Management – EAL & IC
Thomas Hui Chun-sing
Head of Line Group Management – HSR
David Chan Chi-hung
Head of Line Group Management – TML, LR & Bus
Andy Lee Po-wing
Head of Line Group Management – Urban Lines
Gary Tat Yan
Head of Quality Assurance (Operations)
(w.e.f. 3 March 2025)
Rico Wong Kong-kit
Head of Traffic Operations
Human Resources &
Administration
Margaret Cheng Wai-ching
Human Resources Director
Albert Man Tat-shing
General Manager – Corporate Security
Doreen Siu Wai-man
General Manager – Human Resources
Denise Ng Kee Wing-man
General Manager – Learning & Human Resources
Transformation
Duncan Chow Sai-kong
General Manager – Performance & Reward
Vinnie Chi Man-yan
General Manager – Talent Management &
Organisation Development
Emily Chan Fung-ha
Deputy General Manager – Human Resources (Hong
Kong Transport Services & Mainland China Business)
Internal Audit
Linda Chan
Head of Internal Audit (up to 31 March 2025)
Legal & Governance
Gillian Meller
Legal & Governance Director
Brian Downie
Deputy Director – Legal, Procurement & Supply Chain
Michael Parker
General Manager – Assurance Management
Olivia Wong Ka-ying
General Manager – Environmental & Social
Responsibility
Cecilia Cheng Yuet-fong
General Manager – Governance & Company
Secretarial (up to 31 December 2024)
Donald Lai Kam-lun
General Manager – Governance & Company
Secretarial (w.e.f. 1 January 2025)
Alexandre Gautier
General Manager – Procurement & Supply Chain
Stephen Hamill
Chief Engineer
Patrick Chaplin
Head of Commercial Assurance
Katherine Kendall
Head of Corporate Safety & Quality
Wong Yu-yuen
Head of Legal (Mainland China &
International Business)
Barbara Chang Sze-wan
Head of Legal (Operations)
Lawrence Choy Yiu-fai
Head of Legal (Property)
Robert Littlefair
Head of Programme and Portfolio Management
Mainland China Business
Sammy Wong Kwan-wai
Mainland China Business Director
Kyle Lau Ki-ming
Chief of Engineering (Beijing)
Jia Jun
General Manager – Business Development
(Mainland China) & Chengdu
Nelson Ng Wai-hung
General Manager – Hangzhou
Frank Liu Zhui-ming
General Manager – Jing-Jin-Ji
Oscar Ho Ka-wa
General Manager – Mainland China Property
Herbert Leung Tai-chiu
General Manager – Projects for Shenzhen L13
(w.e.f. 1 January 2025)
Justin Man Wing-fai
General Manager – Shenzhen (w.e.f. 1 January 2025)
Jeff Chan Yue-chiu
General Manager – Special Duties (w.e.f. 1 January 2025)
Tse Che-ming
Deputy General Manager – Engineering (Hangzhou)
Kevin Kiang Yee-wing
Deputy General Manager – Operations (Beijing)
George Mui Wai-ming
Deputy General Manager – Operations (Hangzhou)
Nicholas Zhang Xiaolong
Deputy General Manager – Projects (Beijing)
MTR Academy (HK) Company
Limited
Margaret Cheng Wai-ching
President of MTR Academy
MTR Lab Company Limited
Michael Chan Ting-bond
Managing Director of MTR Lab
Ngong Ping 360 Limited
James Tung Pui-chuen
Managing Director of Ngong Ping 360
137
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
KEY CORPORATE MANAGEMENT
The Members of the Board have pleasure in submitting their Report and the audited Consolidated Financial Statements
for the financial year ended 31 December 2024.
PRINCIPAL ACTIVITIES OF THE GROUP
The Group is principally engaged in the following core businesses: railway design, construction, operation, maintenance
and investment in Hong Kong, Mainland China and a number of overseas cities; project management in relation to
railway and property development businesses in Hong Kong and Mainland China; station commercial business including
leasing of station retail space, leasing of advertising space inside trains and stations, and enabling of telecommunication
services on the railway system in Hong Kong; property business including property development and investment,
management and leasing management of investment properties (including shopping malls and offices) in Hong Kong
and Mainland China; investment in Octopus Holdings Limited; provision of railway management, engineering and
technology training; and investment in relevant new technologies.
The principal businesses of the Company’s principal subsidiaries, associates and joint venture as at 31 December 2024 are
set out in notes 26 and 27 to the Consolidated Financial Statements.
BUSINESS REVIEW
The Company has always been committed to providing comprehensive reviews of the Group’s businesses and
performance in its Annual Reports. A summary of the relevant sections in the Company’s Annual Report 2024 covering the
required disclosures under the Companies Ordinance is set out below for ease of reference.
Required Disclosures
Relevant Sections
(1) A fair review of the Group’s businesses and a discussion and an
analysis of the Group’s performance during the financial year
2024
•
Chairman’s Letter (pages 10 to 13)
•
CEO’s Review and Outlook (pages 14 to 17)
•
The Year in Review – Business Performance (pages 18 to 49)
•
The Year in Review – Financial Performance (pages 50 to 59)
(2) Particulars of important events affecting the Group that have
occurred since the end of the financial year 2024
•
Chairman’s Letter (pages 10 to 13)
•
CEO’s Review and Outlook (pages 14 to 17)
•
The Year in Review – Business Performance (pages 18 to 49)
(3) Description of the significant risks and uncertainties facing the
Group
•
CEO’s Review and Outlook (pages 14 to 17)
•
The Year in Review – Business Performance (pages 18 to 49)
•
Risk Management (pages 109 to 113)
•
Financial Risks – note 30B to the Consolidated Financial
Statements (pages 233 to 235)
(4) Outlook for the Group’s businesses
•
Chairman’s Letter (pages 10 to 13)
•
CEO’s Review and Outlook (pages 14 to 17)
•
The Year in Review – Business Performance (pages 18 to 49)
(5) Details regarding the Group’s compliance with relevant laws and
regulations which have a significant impact on the Group
•
Corporate Governance Report (pages 72 to 105)
•
Sustainability Report 2024 (www.mtr.com.hk)
(6) Description of the Group’s relationships with its key stakeholders
•
Chairman’s Letter (pages 10 to 13)
•
CEO’s Review and Outlook (pages 14 to 17)
•
The Year in Review – Business Performance (pages 18 to 49)
•
Environmental & Social Responsibility (pages 63 to 67)
•
Human Resources (pages 68 to 69)
•
Investor Relations (pages 70 to 71)
•
Sustainability Report 2024 (www.mtr.com.hk)
(7) Description of the Group’s environmental policies and
performance
•
Chairman’s Letter (pages 10 to 13)
•
CEO’s Review and Outlook (pages 14 to 17)
•
The Year in Review – Business Performance (pages 18 to 49)
•
Environmental & Social Responsibility (pages 63 to 67)
•
Sustainability Report 2024 (www.mtr.com.hk)
138
MTR CORPORATION LIMITED
REPORT OF THE MEMBERS
OF THE BOARD
DIVIDENDS
The Board has recommended paying a final cash dividend of HK$0.89 per share in respect of the year ended 31 December
2024. Subject to the approval of the shareholders at the Company’s forthcoming annual general meeting (“AGM”),
the proposed 2024 final dividend is expected to be paid on 13 June 2025 to shareholders whose names appear on the
Register of Members of the Company as at the close of business on 30 May 2025.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial position of the Group as at 31 December 2024 and the Group’s consolidated financial
performance and consolidated cash flows for the year are set out in the Consolidated Financial Statements on
pages 180 to 266.
TEN-YEAR STATISTICS
A summary of the results and of the assets and liabilities of the Group together with some major operational statistics for
the last ten years is set out on pages 60 to 61.
DIRECTORS
Members of the Board (including their Alternate Director(s)) and the Executive Directorate as at the date of this Report
are stated below:
Members of the Board
•
Dr Rex Auyeung Pak-kuen (Chairman)
•
Dr Jacob Kam Chak-pui (CEO)
•
Andrew Clifford Winawer Brandler
•
Dr Bunny Chan Chung-bun
•
Walter Chan Kar-lok
•
Cheng Yan-kee
•
Hui Siu-wai
•
Ayesha Macpherson Lau
•
Sunny Lee Wai-kwong
•
Jimmy Ng Wing-ka
•
Dr Carlson Tong
•
Sandy Wong Hang-yee
•
Adrian Wong Koon-man
•
Professor Anna Wong Wai-kwan
•
Christopher Hui Ching-yu
(Secretary for Financial Services and the Treasury)
Alternate Directors:
–
Joseph Chan Ho-lim
–
Andrew Lai Chi-wah
–
Bruno Luk Kar-kin
•
Secretary for Transport and Logistics
(Mable ChanN1)
Alternate Directors:
–
Under Secretary for Transport and Logistics
(Liu Chun-san)
–
Permanent Secretary for Transport and LogisticsN2
–
Deputy Secretary for Transport and Logistics 1
(Amy Wong Pui-man)
–
Deputy Secretary for Transport and Logistics 2
(Kirk Yip Hoi-yingN3)
•
Permanent Secretary for Development (Works)
(Ricky Lau Chun-kit)
Alternate Director:
–
Deputy Secretary for Development (Works) 3
(Tony Ho Ying-kit)
•
Commissioner for Transport
(Angela Lee Chung-yan)
Alternate Director:
–
Deputy Commissioner for Transport/
Transport Services and Management
(Candy Kwok Wai-yingN4)
N1: Change of holder of the post from Lam Sai-hung to Mable Chan with effect from 5 December 2024.
N2: Mable Chan ceased to be the holder of the post with effect from 5 December 2024.
N3: Change of holder of the post from Ida Lee Bik-sai to Kirk Yip Hoi-ying with effect from 30 December 2024.
N4: Change of holder of the post from Macella Lee Sui-chun (ceased on 18 July 2024) to Candy Kwok Wai-ying (appointed on 29 July 2024).
139
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
DIRECTORS (continued)
Members of the Executive Directorate
•
Dr Jacob Kam Chak-pui (CEO)
•
Jeny Yeung Mei-chun (Managing Director – Hong Kong
Transport Services)
•
Margaret Cheng Wai-ching (Human Resources Director)
•
Linda Choy Siu-min (Corporate Affairs and Branding
Director)
•
Carl Michael Devlin (Capital Works Director)
•
Michael George Fitzgerald (Finance Director)
•
Dr Tony Lee Kar-yun (Operations and Innovation
Director)N5
•
Gillian Elizabeth Meller (Legal and Governance Director)
•
David Tang Chi-fai (Property and International Business
Director)
•
Sammy Wong Kwan-wai (Mainland China Business
Director)
N5: On 19 December 2024, the Company announced that Dr Tony Lee Kar-yun will retire from the Company after 30 April 2025 upon completion of his existing service
agreement with the Company. Accordingly, he will cease to be the Operations and Innovation Director and a Member of the Executive Directorate, of the Company, both
with effect from 1 May 2025.
The biographies of each Member of the Board and the Executive Directorate as at the date of this Report are set out on
pages 121 to 134.
In addition, a resolution for electing Ir Shen Shuk-ching (also known as Ir Susanna Shen Shuk-ching) as a new Director
will be proposed at the 2025 AGM. Please refer to the Company’s circular containing the Notice of the 2025 AGM sent
together with this Report.
Members of the Board, Alternate Directors and Members of the Executive Directorate during the course of 2024 who have
since ceased their positions with the Company are stated below:
•
Herbert Hui Leung-wah (retired on 1 January 2024)
•
Dr Dorothy Chan Yuen Tak-fai (retired on 22 May 2024)
•
Rose Lee Wai-mun (retired on 22 May 2024)
•
Macella Lee Sui-chun (ceased on 18 July 2024)^
•
Cathy Chu Man-ling (ceased on 23 July 2024)
•
Maurice Loo Kam-wah (ceased on 5 September 2024)
•
Lam Sai-hung (ceased on 5 December 2024)^
•
Mable Chan (ceased on 5 December 2024)^
•
Ida Lee Bik-sai (ceased on 30 December 2024)^
^
Please refer to Note N1 to N4 above for details relating to the change of post holder of the relevant Member of the Board and Alternate Directors.
DIRECTORS OF SUBSIDIARY UNDERTAKINGS
The directors of the subsidiary undertakings of the Company during the year and up to the date of this Report (unless
otherwise stated) are listed on page 172.
DIRECTORS’ SERVICE CONTRACTS
No Director proposed for election or re-election at the forthcoming AGM has a service contract which is not determinable
by the Company or any of its subsidiaries within one year without payment of compensation, other than statutory
compensation.
DIRECTORS’ MATERIAL INTERESTS IN TRANSACTIONS, ARRANGEMENTS
OR CONTRACTS
Except for, in respect of Mr Christopher Hui Ching-yu (Secretary for Financial Services and the Treasury), Secretary for
Transport and Logistics (Mr Lam Sai-hung (up to 4 December 2024) and Ms Mable Chan (since 5 December 2024)),
Permanent Secretary for Development (Works) (Mr Ricky Lau Chun-kit), and Commissioner for Transport (Ms Angela Lee
Chung-yan) and their respective Alternate Director(s), all of whom are or were officials of Government, those connected
transactions and continuing connected transactions between the Company and Government (and/or its associates) which
are described on pages 147 to 170, there was no transaction, arrangement or contract of significance in relation to the
Group’s business, to which the Company or any of its subsidiary undertakings was a party and in which a Member of the
Board, an Alternate Director or a Member of the Executive Directorate or an entity connected with him/her had a material
interest (whether direct or indirect), which was entered into during the year or subsisted at any time during the year.
140
MTR CORPORATION LIMITED
REPORT OF THE MEMBERS OF THE BOARD
DIRECTORS’ INTERESTS IN SHARES, UNDERLYING SHARES AND
DEBENTURES OF THE COMPANY
As at 31 December 2024, the interests or short positions of relevant Members of the Board and Members of the Executive
Directorate in the shares, underlying shares and debentures of the Company (within the meaning of Part XV of the
Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“SFO”)) as recorded in the register required to be
kept under section 352 of the SFO or as otherwise notified to the Company and the HKSE pursuant to the Model Code set
out in Appendix C3 of the Listing Rules (the “Model Code”), were as follows:
(i) Interests in Shares and Underlying Shares
Members of the Board/
Members of the
Executive Directorate
No. of Ordinary Shares held
No. of award
shares#
Total
interests
Percentage
of aggregate
interests to
total no. of
voting shares
in issueD
Personal
interests*
Family
interests†
Personal
interests*
Dr Jacob Kam Chak-pui
1,089,277
–
692,185
1,781,462
0.02862
Cheng Yan-kee
–
2,000
(Note 1)
–
2,000
0.00003
Adrian Wong Koon-man
–
558
(Note 1)
–
558
0.00001
Jeny Yeung Mei-chun
886,634
–
167,318
1,053,952
0.01693
Margaret Cheng Wai-Ching
333,453
–
160,902
494,355
0.00794
Linda Choy Siu-min
105,188
–
140,184
245,372
0.00394
Carl Michael Devlin
20,185
–
132,385
152,570
0.00245
Michael George Fitzgerald
30,800
1,500
(Note 1)
164,300
196,600
0.00316
Dr Tony Lee Kar-yun
246,790
–
145,400
392,190
0.00630
Gillian Elizabeth Meller
311,645
–
144,068
455,713
0.00732
David Tang Chi-fai
418,866
–
167,318
586,184
0.00942
Sammy Wong Kwan-wai
61,652
–
128,968
190,620
0.00306
(ii) Interests in Debentures
Member of the Board
Amount of debentures held
Total
interests
Amount of
debentures of
same class in issue
Personal
interests*
Family
interests†
Ayesha Macpherson Lau
CNY26,000,000
(Note 2)
–
CNY26,000,000
CNY400,000,000
Notes:
1. As at 31 December 2024, these shares were held by the spouse of the relevant Member of the Board or Member of the Executive Directorate of the Company.
2. These represent the interests held by Mrs Ayesha Macpherson Lau in the 3.10% Fixed Rate Notes (non-listed) due 1 March 2025 issued by the Company.
#
Details of the award shares are set out in the section headed “Executive Share Incentive Scheme” on pages 142 to 145
*
Interests as beneficial owner
†
Interests of spouse or child under 18 as beneficial owner
Δ
The Company’s total number of voting shares in issue as at 31 December 2024 was 6,224,823,171
Save as disclosed above and in the section headed “Executive Share Incentive Scheme”:
A as at 31 December 2024, no Member of the Board or Alternate Director or Member of the Executive Directorate of the
Company had any interest or short position in the shares, underlying shares or debentures of the Company or any of
its associated corporations (within the meaning of Part XV of the SFO); and
B during the year ended 31 December 2024, no Member of the Board or Alternate Director or Member of the Executive
Directorate of the Company nor any of their spouses or children under 18 years of age held any rights to subscribe for
equity or debt securities of the Company nor had there been any exercises of any such rights by any of them,
as recorded in the register kept by the Company under section 352 of the SFO or otherwise notified to the Company and
the HKSE pursuant to the Model Code.
141
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
SUBSTANTIAL SHAREHOLDERS’ INTERESTS
Set out below is the name of the party which was interested in 5% or more of all the Company’s voting shares in issue and
the number of shares in which it was interested as at 31 December 2024 as recorded in the register kept by the Company
under section 336 of the SFO:
Name
No. of
Ordinary Shares held
Percentage of Ordinary Shares to
total no. of voting shares in issueD
The Financial Secretary Incorporated (“FSI”)
(in trust on behalf of Government)
4,634,173,932
74.45%
Δ
The Company’s total number of voting shares in issue as at 31 December 2024 was 6,224,823,171
The Company has been informed by the Hong Kong Monetary Authority that, as at 31 December 2024, approximately
0.14% of the Ordinary Shares in issue (not included in the FSI shareholding set out in the above table) were held for the
account of the Exchange Fund. The Exchange Fund is a fund established under the Exchange Fund Ordinance (Cap. 66 of
the Laws of Hong Kong) under the control of the Financial Secretary.
OTHER PERSONS’ INTERESTS
Pursuant to section 337 of the SFO, the Company has maintained a register recording the shareholding information
provided by persons in response to the Company’s requests pursuant to section 329 of the SFO.
Save as disclosed above and in the sections headed “Directors’ Interests in Shares, Underlying Shares and Debentures of
the Company” and “Substantial Shareholders’ Interests”, as at 31 December 2024, the Company has not been notified of
any other persons who had any interests or short positions in the shares, underlying shares or debentures of the Company
which would be required to be recorded in the register kept by the Company pursuant to section 336 of the SFO.
EQUITY-LINKED AGREEMENT
No equity-linked agreement was entered into by the Company during the year ended 31 December 2024 or subsisted at
the end of the year.
EXECUTIVE SHARE INCENTIVE SCHEME
The Company adopted the Executive Share Incentive Scheme with effect from 1 January 2015 (“Effective Date”), for an
original term up to 31 December 2024. The Board has approved the renewal of the Executive Share Incentive Scheme
for a further 10 years and so it will remain in force until 31 December 2034. Details of the renewal of the Executive Share
Incentive Scheme were disclosed in the Company’s announcement (page 23 of English version) dated 6 March 2025.
The purposes of the Executive Share Incentive Scheme are to retain management and key employees, to align
participants’ interests with the long-term success of the Company and to drive the achievement of the strategic objectives
of the Company. Under the terms of the Executive Share Incentive Scheme, the participants can be any employees and
any directors of the Company or any of its subsidiaries (excluding non-executive members of the Board but including
Members of the Executive Directorate).
The maximum number of award shares that may at any time be the subject of an outstanding award granted under
the Executive Share Incentive Scheme shall not exceed 2.5% (i.e. 145,663,358 Ordinary Shares) of the number of issued
Ordinary Shares as at the Effective Date (i.e. 5,826,534,347 Ordinary Shares) and the maximum number of award shares
that may be granted to a single eligible employee in the 12-month period up to the relevant award date shall be 0.03% of
the number of issued Ordinary Shares on the relevant award date.
The number of award shares that are the subject of outstanding awards granted under the Executive Share Incentive
Scheme is 34,629,301 Ordinary Shares up to the date of this Report. Therefore, the total number of award shares
available under the Executive Share Incentive Scheme that may be granted is 111,034,057 Ordinary Shares, representing
approximately 1.78% of the Company’s total number of issued shares as at the date of this Report.
142
MTR CORPORATION LIMITED
REPORT OF THE MEMBERS OF THE BOARD
EXECUTIVE SHARE INCENTIVE SCHEME (continued)
Pursuant to the terms of the Executive Share Incentive Scheme, each grantee undertakes to pay HK$1.00, on demand, to
the Company, in consideration for the grant of the award shares. Save for the above, the grantee is not required to pay
any price for the shares purchased by the Trustee from the open market pursuant to the terms of the Executive Share
Incentive Scheme. Any offers of award shares made under the Executive Share Incentive Scheme will specify the date by
which the offer of the award shares must be accepted (being a date no more than 30 days (inclusive) from the date on
which the offer is made).
Movements in award shares under the Executive Share Incentive Scheme during the year ended 31 December 2024 are
set out below:
Members of the
Executive Directorate
and eligible employees
Date of
award
Types of award
shares granted
(Note 1)
Award
shares
outstanding
as at
1 January
2024
Award
shares
vested
during
the year
Award
shares
lapsed
and/or
forfeited
during
the year
Award
shares
outstanding
as at
31 December
2024
Weighted
average
closing price
of shares
immediately
before the
date(s) on
which the
award shares
were vested
(HK$)
Restricted
shares
(Note 2)
Performance
shares
(Note 3)
Dr Jacob Kam Chak-pui
8/4/2021
52,750
199,800
217,384
217,384
–
–
25.43
1/4/2022
132,000
–
132,000
–
–
132,000
–
8/4/2022
133,700
–
89,134
44,566
–
44,568
25.80
11/4/2023
54,700
–
54,700
18,233
–
36,467
26.00
18/3/2024
(Notes 6 & 9)
–
68,990
–
68,990
–
–
25.40
8/4/2024
(Notes 6 & 10)
87,100
392,050
–
–
–
479,150
–
Jeny Yeung Mei-chun
8/4/2021
17,200
47,850
53,584
53,584
–
–
25.44
8/4/2022
46,000
–
30,667
15,333
–
15,334
25.80
11/4/2023
25,100
–
25,100
8,366
–
16,734
26.00
18/3/2024
(Notes 6 & 9)
–
16,522
–
16,522
–
–
25.40
8/4/2024
(Notes 6 & 10)
41,700
93,550
–
–
–
135,250
–
Margaret Cheng
Wai-ching
8/4/2021
17,450
47,850
53,668
53,668
–
–
25.44
8/4/2022
39,500
–
26,334
13,166
–
13,168
25.80
11/4/2023
23,300
–
23,300
7,766
–
15,534
26.00
18/3/2024
(Notes 6 & 9)
–
16,522
–
16,522
–
–
25.40
8/4/2024
(Notes 6 & 10)
38,650
93,550
–
–
–
132,200
–
Linda Choy Siu-min
8/4/2021
13,500
47,850
52,350
52,350
–
–
25.43
8/4/2022
32,200
–
21,467
10,733
–
10,734
25.80
11/4/2023
17,550
–
17,550
5,850
–
11,700
26.00
18/3/2024
(Notes 6 & 9)
–
16,522
–
16,522
–
–
25.40
8/4/2024
(Notes 6 & 10)
24,200
93,550
–
–
–
117,750
–
Carl Michael Devlin
8/4/2022
7,700
7,300
12,434
9,866
–
2,568
25.50
11/4/2023
15,700
–
15,700
5,233
–
10,467
26.00
18/3/2024
(Notes 6 & 9)
–
2,520
–
2,520
–
–
25.40
8/4/2024
(Notes 6 & 10)
25,800
93,550
–
–
–
119,350
–
Michael George
Fitzgerald
(Note 4)
25/9/2023
60,900
–
60,900
20,300
–
40,600
27.35
8/4/2024
(Notes 6 & 10)
30,150
93,550
–
–
–
123,700
–
143
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
EXECUTIVE SHARE INCENTIVE SCHEME (continued)
Members of the
Executive Directorate
and eligible employees
Date of
award
Types of award
shares granted
(Note 1)
Award
shares
outstanding
as at
1 January
2024
Award
shares
vested
during
the year
Award
shares
lapsed
and/or
forfeited
during
the year
Award
shares
outstanding
as at
31 December
2024
Weighted
average
closing price
of shares
immediately
before the
date(s) on
which the
award shares
were vested
(HK$)
Restricted
shares
(Note 2)
Performance
shares
(Note 3)
Dr Tony Lee Kar-yun
8/4/2021
13,550
47,850
52,368
52,368
–
–
25.43
8/4/2022
34,050
–
22,700
11,350
–
11,350
25.80
11/4/2023
14,850
–
14,850
4,950
–
9,900
26.00
18/3/2024
(Notes 6 & 9)
–
16,522
–
16,522
–
–
25.40
8/4/2024
(Notes 6 & 10)
30,600
93,550
–
–
–
124,150
–
Gillian Elizabeth Meller
8/4/2021
14,250
47,850
52,600
52,600
–
–
25.44
8/4/2022
34,600
–
23,067
11,533
–
11,534
25.80
11/4/2023
19,550
–
19,550
6,516
–
13,034
26.00
18/3/2024
(Notes 6 & 9)
–
16,522
–
16,522
–
–
25.40
8/4/2024
(Notes 6 & 10)
25,950
93,550
–
–
–
119,500
–
David Tang Chi-fai
8/4/2021
17,200
47,850
53,584
53,584
–
–
25.44
8/4/2022
46,000
–
30,667
15,333
–
15,334
25.80
11/4/2023
25,100
–
25,100
8,366
–
16,734
26.00
18/3/2024
(Notes 6 & 9)
–
16,522
–
16,522
–
–
25.40
8/4/2024
(Notes 6 & 10)
41,700
93,550
–
–
–
135,250
–
Sammy Wong Kwan-wai
8/4/2021
7,350
10,100
12,550
12,550
–
–
25.48
8/4/2022
8,050
–
5,367
2,683
–
2,684
25.80
11/4/2023
16,400
–
16,400
5,466
–
10,934
26.00
18/3/2024
(Notes 6 & 9)
–
3,487
–
3,487
–
–
25.40
8/4/2024
(Notes 6 & 10)
21,800
93,550
–
–
–
115,350
–
Five highest paid
individuals
(Note 8)
8/4/2021
104,600
343,350
378,220
378,220
–
–
25.44
1/4/2022
132,000
–
132,000
–
–
132,000
–
8/4/2022
265,200
–
176,802
88,398
–
88,404
25.80
11/4/2023
128,200
–
128,200
42,731
–
85,469
26.00
25/9/2023
60,900
–
60,900
20,300
–
40,600
27.35
18/3/2024
(Notes 6 & 9)
–
118,556
–
118,556
–
–
25.40
8/4/2024
(Note 6 & 10)
239,300
766,250
–
–
–
1,005,550
–
Other eligible
employees
(Note 5)
8/4/2021
1,802,700
1,061,050
1,375,758
1,324,290
51,468
–
25.53
8/4/2022
2,125,450
233,400
1,358,031
813,374
18,873
525,784
25.76
11/4/2023
2,349,300
42,850
2,277,600
873,121
69,707
1,334,772
26.02
18/3/2024
(Notes 6 & 9)
–
318,694
–
318,694
–
–
25.40
8/4/2024
(Notes 6 & 10)
3,731,850
1,987,000
–
101,500
65,300
5,552,050
26.93
144
MTR CORPORATION LIMITED
REPORT OF THE MEMBERS OF THE BOARD
Notes:
1. The award shares granted under the Executive Share Incentive Scheme are issued Ordinary Shares.
2. Restricted shares are awarded to selective eligible employees and vest over three years in equal tranches (unless otherwise determined by the Remuneration Committee
(“RC”) of the Company).
3. Performance shares are awarded to selective eligible employees and generally vest at the end of a three-year performance cycle, subject to review and approval by the RC
from time to time.
4. Mr Michael George Fitzgerald was appointed as the Finance Director and became a Member of the Executive Directorate of the Company, both with effect from
1 January 2024.
5. Other eligible employees also include former employees of the Company.
6. The closing price of the Ordinary Shares immediately before the date on which the award shares were granted on 18 March 2024 and 8 April 2024 was HK$25.40 and
HK$25.25 respectively.
7. No award shares were cancelled during the year.
8. With respect to the five highest paid individuals for the financial year, all five of them were Members of the Executive Directorate of the Company and details of the
movements in their awarded shares under the Executive Share Incentive Scheme during the year ended 31 December 2024 are also shown in the table above.
9. Following a review of the results of the 2021 – 2023 performance cycle by the RC, additional performance shares were awarded to eligible employees under the
Executive Share Incentive Scheme on 18 March 2024.
10. On 8 April 2024, performance shares for the next three years performance cycle were awarded to eligible employees with a new set of performance criteria approved by
the RC and the Board.
11. Further details on the operation of the Executive Share Incentive Scheme including, but not limited to, the performance targets, the fair value of the share awards at the
date of grant and the accounting standard and policy adopted are set out in the section headed “Long-Term Incentives” under the Remuneration Committee Report
(pages 118 to 119) and notes 2U(iii), 11B and 44 to the Consolidated Financial Statements in this Report.
SHARES ISSUED
No. of Ordinary
Shares issued
Value
(HK$)
As at 1 January 2024
6,217,197,282
N/A
Scrip shares issued in respect of 2023 final dividend
7,625,889
202 million
As at 31 December 2024
6,224,823,171
N/A
Details of the movements in the share capital of the Company during the year are set out in note 41 to the Consolidated
Financial Statements.
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES
The Company redeemed its RMB1 billion, RMB250 million and RMB250 million bonds at par on 24 March 2024,
25 March 2024 and 6 September 2024 respectively. The bonds were listed on the HKSE prior to their redemption. Save
as disclosed above, the Group did not purchase, sell or redeem any of the Group’s listed securities during the year ended
31 December 2024. However, the Trustee of the Executive Share Incentive Scheme, pursuant to the terms of the rules and
the trust deed of the Executive Share Incentive Scheme, purchased on the HKSE a total of 7,454,157 Ordinary Shares for a
total consideration of approximately HK$207 million during the year ended 31 December 2024.
PUBLIC FLOAT
The HKSE granted to the Company, at the time of its listing on the Main Board of the HKSE in 2000, a waiver from
strict compliance with Rule 8.08(1) of the Listing Rules (“Public Float Waiver”). Pursuant to the Public Float Waiver, the
Company’s prescribed minimum percentage of shares which must be in the hands of the public must not be less than
10% of the total number of issued shares of the Company. Based on the information that is publicly available to the
Company and within the knowledge of the Directors, the Company has maintained the prescribed amount of public float
during the year and up to the date of this Report as required by the Public Float Waiver.
145
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
MAJOR SUPPLIERS AND CUSTOMERS
Information in respect of the Group’s major suppliers and major customers for the year ended 31 December 2024 is as follows:
As a percentage of the
Group’s total purchases
Total value of purchases (not of a capital nature) attributable to the Group’s five largest suppliers
17.02%
As a percentage of the
Group’s total revenue
Total revenue attributable to the Group’s five largest customers
35.62 %
Total revenue attributable to the Group’s largest customer
18.88 %
KCRC, being one of the Group’s five largest customers, is a statutory public corporation wholly owned by Government.
As at 31 December 2024, Government, through the FSI, the substantial shareholder of the Company, held approximately
74.45% of all the Company’s voting shares in issue (see the section headed “Substantial Shareholders’ Interests” above for
further details).
As at 31 December 2024, the Non-executive Directors of the Company (excluding Dr Rex Auyeung Pak-kuen and all the
Independent Non-executive Directors) and their Alternate Directors, whose names are listed on page 139, were officials
of Government.
Save as disclosed above, as at 31 December 2024, no other Member of the Board, Alternate Director or Member of the
Executive Directorate or any of their respective close associates or any other shareholder (which, to the knowledge of
the Members of the Board, Alternate Directors or Members of the Executive Directorate, owned more than 5% of all the
Company’s voting shares in issue), had any beneficial interests in the Group’s five largest customers.
DONATIONS
During the year, the Group donated and sponsored approximately HK$17.3 million to charitable and other organisations.
LOANS AND OTHER OBLIGATIONS
The total loans and other obligations of the Group as at 31 December 2024 amounted to HK$77,568 million, details of
which are set out in note 35 to the Consolidated Financial Statements.
BONDS AND NOTES ISSUED
The Group issued notes with total face value amounting to HK$23,486 million equivalent during the year ended
31 December 2024, details of which are set out in note 35C to the Consolidated Financial Statements. Such notes were
issued in order to meet the Group’s general corporate funding requirements, including financing of capital expenditure
and refinancing of debts.
PROPERTIES
Particulars of the principal investment properties and properties held for sale of the Company are shown on
pages 33 to 34.
146
MTR CORPORATION LIMITED
REPORT OF THE MEMBERS OF THE BOARD
CONNECTED TRANSACTION
During the year under review, the transaction described
below was entered into with Government (which is a
substantial shareholder of the Company as defined in
the Listing Rules). Government is therefore a “connected
person” of the Company for the purposes of the Listing
Rules and the transaction described below is a connected
transaction for the Company under the Listing Rules.
As disclosed in the announcement of the Company
dated 13 January 2005, the Stock Exchange has granted
a waiver to the Company from strict compliance with
the requirements of Chapter 14A of the Listing Rules
which would otherwise apply to connected transactions
and continuing connected transactions between the
Company and Government, subject to certain conditions
(the “Waiver”).
Consequently, the Company makes the disclosures below
in accordance with Rule 14A.71 of the Listing Rules and in
accordance with the conditions of the Waiver.
Land Agreement
On 3 January 2025, the Company accepted an offer dated
22 November 2024 from Government to proceed with
the proposed Tung Chung East Station Package One
Property Development at Site B of Tung Chung Town Lot
No. 53 on the terms and conditions of the relevant land
grant. The land premium is assessed at HK$337,299,000.
After deduction therefrom of the reduction amount
pursuant to the project agreement in respect of the Tung
Chung Line Extension, nil net land premium is payable
by the Company.
CONTINUING CONNECTED
TRANSACTIONS
During the year under review, the following transactions
and arrangements described below involved the
provision of goods or services carried out on an ongoing
or recurring basis and are expected to extend over a
period of time between the Company and Government
and/or KCRC, and between the Company and the
Airport Authority (the “AA”).
As noted above under the section headed “Connected
Transaction”, Government is a substantial shareholder of
the Company for the purposes of the Listing Rules. KCRC
and the AA are both associates of Government and they
are also connected persons of the Company as defined in
the Listing Rules.
Therefore, each of Government, KCRC and the AA is a
“connected person” of the Company for the purposes
of the Listing Rules and, during 2024, each transaction
set out at sections I, II, III and IV below constituted a
continuing connected transaction for the Company under
the Listing Rules.
Following the Guidance Letter GL 73-14 issued by the
Stock Exchange and considering the Stock Exchange’s
recommendation, the Company’s Internal Audit
Department (“IAD”) has reviewed the Company’s
continuing connected transactions set out below and the
related internal control procedures. IAD found that the
internal control procedures put in place by the Company
were adequate and effective and reported the same to
the Audit & Risk Committee of the Company to assist the
Company’s Independent Non-executive Directors in their
annual review and confirmation required to be given
under the Merger-related Waiver (as defined below), the
Waiver and the Listing Rules (as appropriate).
I
Merger-related Continuing Connected
Transactions
Each of the transactions listed in paragraphs A to C below
of this section (together, the “Merger-related Continuing
Connected Transactions”) and which formed part of
the Rail Merger, was approved by the independent
shareholders of the Company at an Extraordinary General
Meeting held on 9 October 2007. These paragraphs
should be read in conjunction with the paragraphs
contained in the section headed “Additional Information
in respect of the Rail Merger”.
147
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
•
the payment of HK$7.79 billion in respect of the
Property Package Agreements (as described in
paragraph C on pages 148 to 149 and in paragraph F
in the section headed “Additional Information in
respect of the Rail Merger” below);
•
the allocation of liability for any Pre-Rail Merger and
Post-Rail Merger claims by third parties; and
•
the Company’s retention of its English name and
(pursuant to the Rail Merger Ordinance) the change of
its Chinese name to “香港鐵路有限公司”.
B
West Rail Agency Agreement
The West Rail Agency Agreement and related agreements
were entered into on 9 August 2007 between the
Company, KCRC and certain KCRC subsidiary companies
(the “West Rail Subsidiaries”). Pursuant to the terms
of the West Rail Agency Agreement, the Company
was appointed:
•
to act as KCRC’s agent, and donee under powers of
attorney, to exercise certain rights and perform certain
obligations relating to specified development sites
along West Rail; and
•
to act as agent for, and donee under powers of
attorney from, each of the West Rail Subsidiaries
to exercise certain rights and perform certain
obligations relating to specified development sites
along West Rail.
The Company will receive an agency fee of 0.75% of the
gross sale proceeds in respect of the unawarded West
Rail development sites and 10% of the net profits accrued
to the West Rail Subsidiaries under the development
agreements in respect of the awarded West Rail
development sites. The Company will also recover from
the West Rail Subsidiaries its costs (including internal
costs) incurred in respect of the West Rail development
sites plus 16.5% on-cost, together with interest
accrued thereon.
C
Property Package Agreements
Category 3 Properties
On 9 August 2007, the Company entered into three
agreements (the “Category 3 Agreements”) and related
powers of attorney with KCRC. Each Category 3 Agreement
relates to a certain property (each a “Category 3 Property”).
As disclosed in the circular issued by the Company on
3 September 2007 in connection with the Rail Merger,
the Stock Exchange granted a waiver to the Company
from strict compliance with the requirements under
Chapter 14A of the Listing Rules which would otherwise
apply to continuing connected transactions between the
Company, Government and/or KCRC arising as a result
of the Rail Merger, subject to certain conditions (the
“Merger-related Waiver”).
A
Merger Framework Agreement
The Merger Framework Agreement was entered into on
9 August 2007 between the Company, KCRC and the then
Secretary for Transport and Housing and the Secretary
for Financial Services and the Treasury for and on behalf
of Government.
The Merger Framework Agreement contains provisions
for the overall structure and certain specific aspects of the
Rail Merger, including in relation to:
•
a seamless interchange programme;
•
corporate governance of the Company
Post-Rail Merger;
•
payments relating to property enabling works;
•
arrangements relating to the establishment of
a rolling programme on the level of flat production
arising from tenders for railway property development;
•
arrangements in relation to the assessment of land
premium amounts;
•
arrangements in relation to the employees of the
Company and KCRC, including provisions preventing
the Company from terminating the employment of
relevant frontline staff for any reason that relates
to the process of integrating the operations of the
Company and KCRC;
•
the implementation of certain fare reductions;
•
arrangements in relation to the proposed Shatin to
Central Link;
•
KCRC’s continuing responsibility for its existing
financial arrangements;
•
treatment of KCRC’s cross border leases;
148
MTR CORPORATION LIMITED
REPORT OF THE MEMBERS OF THE BOARD
KCRC has previously entered into a development
agreement in respect of each Category 3 Property. None
of the rights and obligations granted to or undertaken
by the Company under the Category 3 Agreements may
be exercised or performed by the Company if they relate
exclusively to the concession property situated on any
Category 3 Property. Matters affecting the concession
property situated on any Category 3 Property are dealt with
under the terms of the Service Concession Agreement
(as defined and summarised on pages 167 to 168).
Pursuant to the terms of each Category 3 Agreement, the
Company has been appointed to act as KCRC’s agent,
and donee under powers of attorney, to exercise rights
and to perform obligations of KCRC which relate to the
Category 3 Property (but excluding the right or obligation
to dispose of the relevant Category 3 Property).
The Company is required at all times to comply with
statutory restrictions and obligations binding on KCRC
which relate to the Category 3 Properties, and shall pay
all amounts due and payable from KCRC which have been
incurred by KCRC as a result of the Company’s actions.
In acting as KCRC’s agent, the Company is required to act
according to prudent commercial principles, and aim to
maximise gross profits under the Category 3 Properties
and to run a safe and efficient railway. In order to assist
the Company in performing its agency functions, KCRC
has granted powers of attorney to the Company. The
Company may only use the powers of attorney to exercise
rights and perform obligations conferred or undertaken
by it under the relevant Category 3 Agreement. As well
as acting as KCRC’s agent, the Company has the right to
give KCRC instructions in respect of any action or matter
relating to each Category 3 Property (including its related
development agreement) which the Company is unable
to take by reason of the limitation of the scope of its
agency powers. KCRC is required to comply promptly with
those instructions provided that it is permitted under law,
and under the relevant Government grant, to carry out
those instructions.
KCRC is required to account for revenue received in
respect of a Category 3 Property by way of balance sheet
movement (rather under its profit and loss account),
provided that such treatment is permitted under law and
accounting principles and practices.
KCRC shall not take any action in respect of a Category 3
Property which is not carried out by the Company
(acting as KCRC’s agent), or according to the Company’s
instructions, or otherwise in accordance with the terms of
the Category 3 Agreement.
As consideration for acting as KCRC’s agent, the Company
shall be paid a fee which is expected to be similar in
quantum to the profits made by KCRC in respect of the
relevant Category 3 Property (after deducting certain
initial and upfront payments and consultant contribution
costs, in each case paid or to be paid by the relevant
developer to KCRC). Generally, the Company’s fee shall
be payable in instalments promptly following receipt
of relevant funds by KCRC (but subject to specified
deductions of amounts due from KCRC to the relevant
Category 3 Property developer).
The Company has agreed to give certain indemnities to
KCRC in respect of each Category 3 Property.
The Company shall be the first manager, or shall ensure
that a manager is appointed in respect of, each Category 3
Property (once developed).
The Company’s appointment as agent shall terminate
when KCRC ceases to have any undivided share in the
relevant Category 3 Property, other than concession
property, and neither KCRC nor the developer nor
the guarantors have any further rights to exercise,
or obligations to perform, under the development
agreement relating to the relevant Category 3 Property.
II
Non Merger-related Continuing
Connected Transactions
The following disclosures, in paragraphs A1 to D below
of this section together with the Third XRL Agreement
(as defined below) (together, the “Non Merger-related
Continuing Connected Transactions”), are made in
accordance with the conditions of the Waiver and
Rule 14A.71 of the Listing Rules.
149
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
A1 Entrustment Agreement for Design and
Site Investigation in relation to the
Shatin to Central Link
The Entrustment Agreement for Design and Site
Investigation in relation to the Shatin to Central Link (the
“First SCL Agreement”) was entered into on 24 November
2008 between the Company and the then Secretary for
Transport and Housing for and on behalf of Government.
The First SCL Agreement contains provisions for the
design of and site investigation and procurement
activities in relation to the proposed Shatin to Central
Link, including in relation to:
•
Government’s obligation to pay the Company up to
a maximum aggregate amount of HK$1,500 million
in respect of certain costs incurred by the Company
pursuant to the First SCL Agreement, including the
Company’s in-house design costs and certain on-costs
and preliminary costs;
•
Government’s obligation to bear and finance the total
cost of the design and site investigation activities
under the First SCL Agreement (subject to the limit
noted above in respect of payments to the Company)
and arrangements for the payment of these costs
directly by Government;
•
the Company’s obligation to carry out or procure
the carrying out of the design and site investigation
activities in relation to the proposed Shatin to
Central Link;
•
the limitation of the Company’s liability to
Government under the First SCL Agreement, except
in respect of death or personal injury caused by the
negligence of the Company, to HK$600 million; and
•
should the railway scheme for the Shatin to Central
Link be authorised under the Railways Ordinance
(Cap. 519 of the Laws of Hong Kong), the execution of a
further agreement by Government and the Company
setting out each of their rights, obligations, duties and
powers with respect to the financing, construction,
completion, testing, commissioning and putting into
service the works necessary for the construction and
operation of the Shatin to Central Link.
A2 Entrustment Agreement for Advance Works
relating to the Shatin to Central Link
The Entrustment Agreement for Advance Works
relating to the Shatin to Central Link (the “Second SCL
Agreement”) was entered into on 17 May 2011 between
the Company and the then Secretary for Transport and
Housing for and on behalf of Government.
The Second SCL Agreement contains the following
provisions:
•
in consideration of the Company executing or
procuring the execution of certain entrustment
activities as set out in the Second SCL Agreement
and carrying out its other obligations under the
Second SCL Agreement, Government shall pay to the
Company the Company’s project management cost.
The amount of such project management cost is to be
agreed between the Company and Government and
prior to such agreement, the project management
cost shall be paid by Government to the Company on
a provisional basis calculated in accordance with the
Second SCL Agreement;
•
the Company and Government may agree that the
Company will carry out (or procure the carrying
out of) certain additional works for Government
(such agreed additional works being “miscellaneous
works”). Miscellaneous works (if any) are to be carried
out by the Company in the same manner as if they
had formed part of the activities specified to be
carried out under the Second SCL Agreement and in
consideration of the Company executing or procuring
the execution of such miscellaneous works (if any) and
carrying out its other obligations under the Second
SCL Agreement in relation to such miscellaneous
works (if any), Government shall pay to the Company
an amount to be agreed between the Company
and Government as being the project management
fee payable to the Company for designing and
constructing such miscellaneous works;
•
Government shall bear all of the “Works Cost”
(as defined in the Second SCL Agreement). In this
connection, Government will make payments to the
Company in respect of the Works Cost on a provisional
basis, subject to adjustments when the final outturn
cost of the Works Cost is determined;
150
MTR CORPORATION LIMITED
REPORT OF THE MEMBERS OF THE BOARD
•
Government shall bear land acquisition, clearance and
related costs and those costs which are incurred by
the Lands Department in connection with the Shatin
to Central Link project;
•
the maximum aggregate amount payable by
Government to the Company under the Second
SCL Agreement is limited to approximately
HK$3,000 million per annum and a total in aggregate
of approximately HK$15,000 million;
•
the Company shall carry out or procure the carrying
out of certain enabling works on the expanded
Admiralty Station and the to be constructed Ho Man
Tin Station, the reprovisioning of the International
Mail Centre from Hung Hom to Kowloon Bay
and other works as described under the Second
SCL Agreement;
•
the Company’s total liability to Government under the
First SCL Agreement and the Second SCL Agreement,
except in respect of death or personal injury caused
by the negligence of the Company, is limited to the
aggregate fees that have been and will be received by
the Company from Government under the First SCL
Agreement and the Second SCL Agreement;
•
the Company will provide to Government by the end
of each calendar month, a progress report on the
activities under the Second SCL Agreement that were
carried out in the immediately preceding calendar
month and, within three months following the
completion of the relevant works, a final report on the
activities required to be carried out under the Second
SCL Agreement;
•
the Company shall be responsible for the care of all
works constructed under the Shatin to Central Link
project from the commencement of construction until
the date of handover of those works to Government
and for completing or procuring the completion
of any outstanding works and/or defective works
identified prior to the handover of the works;
•
during the period of twelve years following the issue
of a certificate of completion by the Company in
respect of work carried out under any contract with
any third party, the Company shall be responsible
for the repair of any defects in such work that are
identified following the expiry of any defects liability
period under the relevant contract;
•
the Company warrants that:
–
in the case of those activities under the Second
SCL Agreement that relate to the provision of
project management services, such activities shall
be carried out with the skill and care reasonably
to be expected of a professional and competent
project manager;
–
in the case of those activities under the Second
SCL Agreement that relate to the provision of
design services, such activities shall be carried
out with the skill and care reasonably to be
expected of a professional and competent design
engineer; and
–
in the case of those activities under the Second
SCL Agreement that relate to the carrying out
of construction activities, such activities shall
be carried out with the skill and care reasonably
to be expected of, and by utilising such plant,
goods and materials reasonably to be expected
from, a competent and workmanlike construction
contractor; and
•
Government further undertakes to use reasonable
endeavours to provide the Company with assistance
of a non-financial nature, including taking all
reasonable steps to procure that all necessary licences
and consents, required in connection with the design,
construction and operation of the Shatin to Central
Link are given or granted.
151
ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
A3 Entrustment Agreement for Construction and
Commissioning of the Shatin to Central Link
The Entrustment Agreement for Construction and
Commissioning of the Shatin to Central Link (the “Third
SCL Agreement”) was entered into on 29 May 2012
between the Company and the then Secretary for
Transport and Housing for and on behalf of Government.
The Third SCL Agreement contains the following
provisions:
•
in consideration of the Company executing or
procuring the execution of certain entrustment
activities as set out in the Third SCL Agreement and
carrying out its other obligations under the First
SCL Agreement and the Second SCL Agreement,
Government shall pay to the Company the Company’s
project management cost. The amount of the project
management cost is HK$7,893 million and will be paid
by Government to the Company on a quarterly basis;
•
the Company and Government may agree that the
Company will carry out (or procure the carrying out of)
certain additional works for Government (such agreed
additional works being “miscellaneous works”).
Miscellaneous works (if any) are to be carried out
by the Company in the same manner as if they had
formed part of the activities specified to be carried out
under the Third SCL Agreement and in consideration
of the Company executing or procuring the execution
of such miscellaneous works (if any) and carrying out
its other obligations under the Third SCL Agreement
in relation to such miscellaneous works (if any),
Government shall pay to the Company an amount to
be agreed between the Company and Government
as being the project management fee payable to
the Company for designing and constructing such
miscellaneous works;
•
Government shall bear certain “Third Party Costs”, any
“Interface Works Costs” and any “Direct Costs” (each as
defined in the Third SCL Agreement);
•
Government shall bear land acquisition, clearance and
related costs and those costs which are incurred by
the Lands Department in connection with the Shatin
to Central Link project;
•
the maximum aggregate amount payable by
Government to the Company under the Third SCL
Agreement is limited to HK$3,000 million per annum
and a total in aggregate of HK$15,000 million;
•
the maximum aggregate amount payable by the
Company to Government under the Third SCL
Agreement in relation to its contribution to certain
railway works under the Third SCL Agreement is
limited to HK$4,000 million per annum and a total in
aggregate of HK$15,000 million;
•
the Company’s total liability to Government under
the First SCL Agreement, the Second SCL Agreement
and the Third SCL Agreement, except in respect of
death or personal injury caused by the negligence of
the Company, is limited to the aggregate fees that
have been and will be received by the Company from
Government under the First SCL Agreement, the
Second SCL Agreement and the Third SCL Agreement;
•
the Company will provide to Government by the
end of each calendar month, a progress report on
the activities under the Third SCL Agreement that
were carried out in the immediately preceding
calendar month and, within three months following
the handover of the Shatin to Central Link project to
Government, a final report on the activities required to
be carried out under the Third SCL Agreement;
•
the Company shall be responsible for the care of all
works constructed under the Shatin to Central Link
project from the commencement of construction until
the date of handover of those works to Government
and for completing or procuring the completion
of any outstanding works and/or defective works
identified prior to the handover of the works;
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•
during the period of twelve years following the issue
of a certificate of completion by the Company in
respect of work carried out under any contract with
any third party, the Company shall be responsible
for the repair of any defects in such work that are
identified following the expiry of any defects liability
period under the relevant contract;
•
the Company warrants that:
–
in the case of those activities under the Third SCL
Agreement that relate to the provision of project
management services, such activities shall be
carried out with the skill and care reasonably to
be expected of a professional and competent
project manager;
–
in the case of those activities under the Third SCL
Agreement that relate to the provision of design
services, such activities shall be carried out with
the skill and care reasonably to be expected of a
professional and competent design engineer; and
–
in the case of those activities under the Third SCL
Agreement that relate to the carrying out of
construction activities, such activities shall be
carried out with the skill and care reasonably
to be expected of, and by utilising such plant,
goods and materials reasonably to be expected
from, a competent and workmanlike construction
contractor; and
•
Government further undertakes to use reasonable
endeavours to provide the Company with assistance
of a non-financial nature, including taking all
reasonable steps to procure that all necessary licences
and consents, required in connection with the design,
construction and operation of the Shatin to Central
Link are given or granted.
B1 Entrustment Agreement for Design and Site
Investigation in relation to the Express Rail Link
The Entrustment Agreement for Design and Site
Investigation in relation to the Express Rail Link (the “First
XRL Agreement”) was entered into on 24 November 2008
between the Company and the then Secretary for
Transport and Housing for and on behalf of Government.
The First XRL Agreement contains provisions for the
design of and site investigation and procurement
activities in relation to the proposed Express Rail Link,
including in relation to:
•
Government’s obligation to pay the Company, up to
a maximum aggregate amount of HK$1,500 million,
in respect of certain costs incurred by the Company
pursuant to the First XRL Agreement, including the
Company’s in-house design costs and certain on-costs,
preliminary costs and recruited staff costs;
•
Government’s obligation to bear and finance the total
cost of the design and site investigation activities
under the First XRL Agreement (subject to the limit
noted above in respect of payments to the Company)
and arrangements for the payment of these costs
directly by Government;
•
the Company’s obligation to carry out or procure
the carrying out of the design and site investigation
activities in relation to the proposed Express Rail Link;
•
the limitation of the Company’s liability to
Government under the First XRL Agreement, except
in respect of death or personal injury caused by the
negligence of the Company, to HK$700 million; and
•
should the railway scheme for the Express Rail Link
be authorised under the Railways Ordinance (Cap. 519
of the Laws of Hong Kong), the execution of a further
agreement by Government and the Company setting
out each of their rights, obligations, duties and
powers with respect to the financing, construction,
completion, testing, commissioning and putting into
service the works necessary for the construction and
operation of the Express Rail Link.
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B2 Entrustment Agreement for Construction,
Testing and Commissioning of the
Express Rail Link
The Entrustment Agreement for the Construction and
Commissioning of the Express Rail Link was entered into
on 26 January 2010 between the Company and the then
Secretary for Transport and Housing for and on behalf of
Government (the “Second XRL Agreement”).
The scheme in respect of the Express Rail Link was first
gazetted under the Railways Ordinance (Cap. 519 of
the Laws of Hong Kong) on 28 November 2008, with
amendments and corrections gazetted on 30 April 2009.
The scheme, as amended with such minor modifications
as deemed necessary, was authorised by the Chief
Executive in Council on 20 October 2009 and funding
support was approved by the Finance Committee on
16 January 2010.
The Second XRL Agreement contains the following
provisions:
•
in consideration of the Company executing or
procuring the execution of certain entrustment
activities as set out in the Second XRL Agreement and
carrying out its other obligations under the Second XRL
Agreement and the First XRL Agreement, Government
shall pay to the Company HK$4,590 million (further
details relating to the amendments to this provision
are set out in the section headed “The Third Agreement
in relation to the Express Rail Link”), to be paid in cash
quarterly in advance on a scheduled basis as such
sum may be varied in accordance with the Second XRL
Agreement, subject to the maximum payment
limits stated in the Second XRL Agreement (being
HK$2,000 million annually and HK$10,000 million in
total) (the “Maximum Payment Limits”);
•
the Company and Government may agree that the
Company will carry out (or procure the carrying
out of) certain additional works for Government
(such agreed additional works being “miscellaneous
works”). Miscellaneous works (if any) are to be carried
out by the Company in the same manner as if they
had formed part of the activities specified to be
carried out under the Second XRL Agreement and in
consideration of the Company executing or procuring
the execution of the miscellaneous works (if any) and
carrying out its other obligations under the Second
XRL Agreement in relation to the miscellaneous
works (if any), Government shall pay to the Company
an amount equal to an agreed fixed percentage of
third party costs attributable to the miscellaneous
works from time to time subject to the Maximum
Payment Limits;
•
the Company will provide to Government by the
end of each calendar month, a progress report on
the activities under the Second XRL Agreement
that were carried out in the immediately preceding
calendar month and, within three months following
the earlier of handover of the Express Rail Link project
to Government or termination of the Second XRL
Agreement, a final report on the activities required to
be carried out under the Second XRL Agreement;
•
the Company shall be responsible for the care of all
works constructed under the Express Rail Link project
from the commencement of construction until the
date of handover of those works to Government
(or to a third party directed by Government) and
for completing or procuring the completion of any
outstanding works and/or defective works identified
prior to the handover of the works;
•
during the period of twelve years following the issue
of a certificate of completion by the Company in
respect of work carried out under any contract with
any third party, the Company shall be responsible
for the repair of any defects in such work that are
identified following the expiry of any defects liability
period under the relevant contract;
•
the Company warrants that:
–
in the case of those activities under the Second
XRL Agreement that relate to the provision of
project management services, such activities shall
be carried out with the skill and care reasonably
to be expected of a professional and competent
project manager;
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–
in the case of those activities under the Second
XRL Agreement that relate to the provision of
design services, such activities shall be carried
out with the skill and care reasonably to be
expected of a professional and competent
design engineer; and
–
in the case of those activities under the Second
XRL Agreement that relate to the carrying out
of construction activities, such activities shall
be carried out with the skill and care reasonably
to be expected of, and by utilising such
plant, goods and materials reasonably to be
expected from, a competent and workmanlike
construction contractor;
•
Government is required to bear (i) any costs payable
to third parties, (ii) any charges, costs or amounts
payable to any Government department, bureau,
agency or body in relation to the activities to be
carried out under the Second XRL Agreement, (iii) any
and all amounts payable to KCRC as compensation for
damage arising as a result of the Company and/or a
third party contractor carrying out activities under the
Second XRL Agreement; and (iv) all land acquisition,
clearance and related costs (including all amounts
arising as a result of any claim for compensation by
any third party) and those costs which are incurred
by the Lands Department in connection with the
Express Rail Link project (further details relating to
the amendments to this provision are set out in the
section headed “The Third Agreement in relation to
the Express Rail Link”); and
•
Government further undertakes to use reasonable
endeavours to provide the Company with assistance
of a non-financial nature, including taking all
reasonable steps to procure that all necessary licences
and consents, required in connection with the design,
construction and operation of the Express Rail Link are
given or granted.
Government had agreed that the Company
would proceed with the construction, testing and
commissioning of the Express Rail Link (pursuant to
and on the terms of the Second XRL Agreement) on the
understanding that the Company would be invited to
undertake the operation of the Express Rail Link under the
concession approach.
The Third Agreement in relation to the
Express Rail Link
On 30 November 2015, Government and the Company
entered into the deed of agreement relating to the
further funding and completion of the Express Rail Link
project (the “Third XRL Agreement”). The Third XRL
Agreement contains an integrated package of terms and
provides that:
(i) Government will bear and finance the project cost up
to HK$84.42 billion;
(ii) if the project cost exceeds HK$84.42 billion, the
Company will bear and finance the portion which
exceeds that sum (if any), except for certain agreed
excluded costs;
(iii) the Company will pay a special dividend of HK$4.40 in
aggregate per share in two equal tranches (of HK$2.20
per share, in cash in each tranche);
(iv) certain amendments will be made to the existing
entrustment arrangements entered into in 2010
relating to the Express Rail Link, including an increase
in the project management fee payable to the
Company to HK$6.34 billion;
(v) Government reserves the right to refer to arbitration,
after commencement of operations on the Express
Rail Link, the question of the Company’s liability for
the current cost overrun (if any); and
(vi) the Third XRL Agreement was subject to (a) the
obtaining of approval of the Company’s independent
shareholders (which was obtained on 1 February
2016) and (b) the obtaining of approval of the
Legislative Council for Government’s additional
funding obligations (which was obtained on
11 March 2016).
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The first tranche of the special dividend of HK$2.20 per
share was distributed on 13 July 2016 and the second
tranche, also of HK$2.20 per share, was distributed
on 12 July 2017.
Pursuant to the Third XRL Agreement, certain
amendments have been made to the Second XRL
Agreement to reflect the arrangements contained in the
Third XRL Agreement, including (i) amendments to the
arrangements for the bearing and financing of the project
cost; and (ii) an increase in the project management
cost payable to the Company to an aggregate of
HK$6.34 billion (which reflects the estimate of the
Company’s expected internal costs in performing its
obligations in relation to the Express Rail Link project).
C1 Maintenance Contract for the
Automated People Mover System at the
Hong Kong International Airport
On 2 July 2020, the Company entered into a contract with
the AA for the maintenance of the Automated People
Mover system at the Hong Kong International Airport
(the “System”) for a seven-year period (the “Contract”)
effective from 6 January 2021. For the total amount
received from AA in respect of the services provided
under the Contract for the year ended 31 December 2024,
please refer to Note 47K to the Notes to the Consolidated
Financial Statements. Based on the foregoing and the
services expected to be provided by the Company
under the Contract, it is expected that the highest
amount per year receivable from the AA will be around
HK$250 million.
The Contract contains provisions relating to the
maintenance of the System as undertaken by
the Company and, in particular, it includes the
following provisions:
•
the duration of the Contract shall be seven years from
6 January 2021 up to and including 5 January 2028;
•
the performance of scheduled maintenance works
and overhaul of the System;
•
the monitoring of the System against any breakdown
and the related repair services where necessary; and
•
the Company to carry out, in certain circumstances,
upgrade work on the System.
C2 Subcontractor Warranty to the AA
On 18 May 2018, the Company, as a sub-contractor,
provided a sub-contractor warranty effective from
25 September 2017 to the AA as a result of the Company
having entered into a subcontract from Niigata Transys
Co., Ltd. (“NTS”) for the modification works of the existing
System for an initial seven-year period, which was
subsequently extended to mid-2026. It is expected that
the highest amount per year receivable from NTS will be
no more than HK$60 million.
The Subcontract contains provisions covering the
provision and modification of the power distribution,
communication and control subsystems in respect of the
System, which includes the following:
•
modification of the existing System for its
extension to the new Automated People Mover
Interchange Station;
•
provision of related electrical and mechanical
systems, including power distribution system,
telecommunication systems and maintenance
equipment; and
•
relocation of existing maintenance equipment to the
new Automated People Mover depot.
D Project Agreement for the Financing, Design,
Construction and Operation of the West Island Line
The Project Agreement for the Financing, Design,
Construction and Operation of the West Island Line (the
“WIL Project Agreement”) was entered into on 13 July 2009
between the Company and the then Secretary for
Transport and Housing for and on behalf of Government.
The WIL Project Agreement contains provisions for
the financing of and the carrying out, or procuring the
carrying out, of the design, construction, completion,
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REPORT OF THE MEMBERS OF THE BOARD
testing and commissioning by the Company of the railway
works required in order to bring the West Island Line
into operation in accordance with the MTR Ordinance,
the Operating Agreement between the Company and
the then Secretary for Transport and Housing for and on
behalf of Government dated 9 August 2007 and the WIL
Project Agreement. The West Island Line will be owned,
operated and maintained by the Company for its own
account for the period of the Company’s railway franchise.
The final payment certificate was issued on 28 June 2019.
The WIL Project Agreement includes provisions
in relation to:
•
payment by Government of HK$12,252 million to
the Company in consideration of the Company’s
obligations under the WIL Project Agreement, such
sum constituting funding support from Government
for the Company to implement the West Island
Line project;
•
within 24 months of commercial operations
commencing on the West Island Line on a revenue
earning basis and providing scheduled transport for
the public (which period was extended to no later
than 30 June 2018 by a supplemental agreement
between the Company and Government dated
23 December 2016, further extended for a period
ended on or before 31 March 2019 by a second
supplemental agreement between the Company
and Government dated 29 June 2018, and further
extended for a period ended on 30 June 2019 by a
third supplemental agreement between the Company
and Government dated 29 March 2019), payment
by the Company to Government of any “Repayment
Amounts” for any over-estimation of certain capital
expenditure, price escalation costs, land costs and
the amount of contingency in relation to the railway
works and reprovisioning, remedial and improvement
works (together with interest);
•
the design, construction and completion of the
associated reprovisioning, remedial and improvement
works (the cost of which shall be the responsibility
of the Company) and the associated essential public
infrastructure works (the cost of which shall be the
responsibility of Government);
•
the Company’s responsibility for costs relating to
land acquisition, clearance and related costs arising
from the implementation of the West Island Line
project (save for costs arising from certain claims for
compensation by third parties) and all costs, expenses
and other amounts incurred or paid by the Lands
Department pursuant to the involvement of the Lands
Department in connection with the implementation
of the West Island Line project; and
•
the Company carrying out measures specified in
the environmental impact assessment and the
environmental permit issued by Government to
the Company in relation to the West Island Line on
12 January 2009.
III Continuing Connected Transactions
relating to the Operation of the High
Speed Rail (formerly known as the
Express Rail Link)
The following disclosures, in paragraphs A and B below
of this section (together, the “Continuing Connected
Transactions relating to the Operation of the High Speed
Rail”), are made in accordance with the conditions of the
Waiver, the Merger-related Waiver and Rule 14A.71 of the
Listing Rules.
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A
Amendment Operating Agreement
On 23 August 2018, the Company and the then
Secretary for Transport and Housing, for and on behalf
of Government, entered into the Amendment Operating
Agreement (the “AOA”) to amend and supplement the
Operating Agreement dated 9 August 2007 (as described
in paragraph D of the section headed “Additional
Information in respect of the Rail Merger” on pages 168
to 169), as amended (the “Existing Integrated Operating
Agreement”), in order to prescribe the operational
requirements that will apply to the High Speed Rail.
The intent and effect of the AOA is that the operational
requirements that are applicable to the existing railway
network will apply in substantially the same manner to
the High Speed Rail, save where any amendments are
necessary to reflect the particular characteristics of, and
arrangements for, the High Speed Rail.
The AOA is an “operating agreement” for the purposes of
the MTR Ordinance, forms part of the legal and regulatory
regime for the operation of railways in Hong Kong and
is required for the purposes of the MTR Ordinance so
that the High Speed Rail is properly regulated under the
MTR Ordinance.
Principal Terms of the AOA are as follows:
The terms of the AOA are based substantially on the terms
of the Existing Integrated Operating Agreement. The AOA
has taken effect on 23 September 2018 (the “Commercial
Operation Date (High Speed Rail)”) and will expire at
the same time as the Supplemental Service Concession
Agreement (the “SSCA”) entered into between the
Company and KCRC on 23 August 2018.
Certain principal terms of the AOA that are specific to the
High Speed Rail include:
•
obligations on the Company to maintain specific
performance requirements in relation to train
service delivery, ticket machine reliability, ticket-gate
reliability and escalators and passenger lifts reliability;
•
obligations on the Company to publish specific
customer services pledges in relation to train service
delivery, ticket machine reliability, ticket-gate
reliability, escalators and passenger lifts reliability,
temperature and ventilation levels, railway cleanliness
(relating only to the Company’s High Speed Rail trains)
and passenger enquiry response time;
•
obligations in relation to the carrying out of the
maintenance of the Company’s High Speed Rail trains
outside Hong Kong;
•
obligations on the Company to carry out design
checks and tests to verify that the Mainland operator’s
High Speed Rail trains are compatible with the
Company’s infrastructure and can run on the High
Speed Rail safely;
•
establishing procedures with the Mainland operator
for approving the Mainland operator’s trains to run
on the High Speed Rail safely and for informing
Government of the modification of any such trains;
•
developing and maintaining a training qualification
system for drivers of High Speed Rail trains;
•
facilitating the carrying out of inspections by the
railway inspector, including liaising with the Mainland
operator for this purpose, where necessary;
•
security obligations in relation to maintaining
the integrity and security of the boundaries of
the Mainland Port Area and the Cross-Boundary
Restricted Area; and
•
mechanisms and Government approval procedures
for setting fares for High Speed Rail train journeys,
including that:
(i) prior to the Commercial Operation Date (High
Speed Rail), the Company will seek prior written
consent from Government before setting the
fares for the various available High Speed Rail
ticket types; and
(ii) thereafter, fares cannot be adjusted, introduced
or withdrawn without the prior consent
of Government.
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B
Supplemental Service Concession Agreement
On 23 August 2018, the Company and KCRC entered
into the SSCA to supplement the Service Concession
Agreement dated 9 August 2007 (as described in
paragraph B of the section headed “Additional
Information in respect of the Rail Merger” on pages 167
to 168) (the “Existing Service Concession Agreement”)
in order for KCRC to grant a concession to the Company
in respect of the High Speed Rail and to prescribe the
operational and financial requirements that will apply to
the High Speed Rail. The intent and effect of the SSCA is
that the operational requirements that are applicable to
the Company’s operation of the existing KCRC railway
system will apply in substantially the same manner to
the High Speed Rail, save where any amendments are
necessary to reflect the particular characteristics of, and
arrangements for, the High Speed Rail. The financial
provisions in the SSCA have been designed to reflect
the provisions of the Existing Integrated Operating
Agreement that relate to new concession projects, such
as the High Speed Rail subject as set out below.
The SSCA is a “service concession agreement” for the
purposes of the MTR Ordinance, forms part of the legal
and regulatory regime for the operation of railways
in Hong Kong and is required for the purposes of the
MTR Ordinance so that the High Speed Rail is properly
regulated under the MTR Ordinance.
Principal Terms of the SSCA
The terms of the SSCA are based substantially on the
terms of the Existing Service Concession Agreement.
The operating period with respect to the High Speed
Rail has commenced on the Commercial Operation Date
(High Speed Rail) and will terminate automatically on
the earlier of:
(i) a revocation of the Company’s franchise under the
MTR Ordinance in whole or in respect of the High
Speed Rail; and
(ii) the date falling immediately before the tenth
anniversary of the Commercial Operation Date (High
Speed Rail), but may be extended subject to further
negotiation between the Company and KCRC in
accordance with the mechanism set out in the SSCA,
in which case it shall terminate on such other date
as is agreed between the Company and KCRC (the
“Concession Period (High Speed Rail)”).
Certain principal terms of the SSCA that are specific to the
High Speed Rail include:
•
Additional concession payments for the High Speed Rail
(i) General
The additional concession payments to be
made by the Company to KCRC and by KCRC to
the Company in respect of the High Speed Rail
(described below) have been designed to reflect
the requirements under the Existing Integrated
Operating Agreement, inter alia, for the Company
to retain 10% of the currently expected positive
discounted net cash flow from the operation of the
High Speed Rail (being discounted at a discount
rate which reflects the Company’s commercial rate
of return in relation to the High Speed Rail).
The SSCA provides for the fixed annual payments
and variable annual payments structure for the
additional concession payments, to reflect the
current concession payments structure for the
existing KCRC system under the Existing Service
Concession Agreement.
The additional concession payments for the
High Speed Rail are in addition to, and do not
replace, the payments made in respect of the
existing KCRC system under the Existing Service
Concession Agreement.
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(ii) Variable annual payments
The variable annual payments (being payments
by the Company to KCRC) will be calculated in
the same manner prescribed under the Existing
Service Concession Agreement whereby the
Company pays to KCRC, for each financial year,
a certain percentage of the revenue generated
from the KCRC system (being 35% for revenues
generated from the KCRC system that are beyond
the first HK$7.5 billion). For the purposes of
calculating the variable annual payments, the
revenue generated from the KCRC system shall
include the actual revenue from the High Speed
Rail fares received or retained by the Company
and revenue derived from businesses related to
the High Speed Rail which may include, without
limitation, advertising, telecommunications, duty
free and kiosk rental.
(iii) Fixed annual payments for the High Speed Rail
In light of the variable annual payments described
in paragraph (ii) above and in order for the
Company to be able to retain 10% of the currently
expected positive discounted net cash flow from
the operation of the High Speed Rail as described
above, the fixed annual payments shall comprise
payments from KCRC to the Company which,
in aggregate, over the Concession Period (High
Speed Rail), will be equal to HK$7,965 million.
These fixed annual payments shall be without
prejudice to the Company’s obligation to pay the
fixed annual payments of HK$750 million each
financial year to KCRC under the Existing Service
Concession Agreement.
•
Revenue-related arrangements
In addition, the SSCA contains the following
revenue-related arrangements:
(i) Patronage adjustment
In respect of actual deviations from the current
patronage projections for the High Speed Rail:
(a) any excess or shortfall in actual patronage of
up to 15% in relation to the currently projected
patronage for the High Speed Rail will be
borne by the Company; and
(b) any excess or shortfall in actual patronage
greater than 15% in relation to the currently
projected patronage for the High Speed Rail
will be borne between the Company and KCRC
in the proportions of 30% by the Company
and 70% by KCRC.
(ii) Incremental revenue adjustment
In respect of actual deviations from the currently
projected patronage for the Company’s existing
cross-boundary services to and from Lo Wu and
Lok Ma Chau, and the existing intercity service, the
Company may receive two payments from KCRC
(in respect of the period from and including the
Commercial Operation Date (High Speed Rail) up
to and including 31 December 2023 and in respect
of the period from and including 1 January 2024
up to and including the day falling immediately
before the tenth anniversary of the Commercial
Operation Date (High Speed Rail), respectively)
and which will be capped at HK$500 million and
HK$1,000 million, respectively.
(iii) Mainland discount programme loss
In respect of revenue loss resulting from the
Mainland Student Ticket Discount and the
Mainland Disabled Military/Police Officer Discount
programmes adopted by the Mainland operator,
the Company will receive reimbursement
payments from KCRC on an annual basis.
KCRC and the Company will also discuss in good
faith similar reimbursement arrangements should
the Mainland operator introduce any other
discount programmes in future.
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(iv) Service fees subsidy
In respect of the proportion of the service
fee charged in respect of tickets sold at West
Kowloon Station for journeys originating from
and terminating at any railway station in the
Mainland which Government has directed should
be borne by the Company, the Company will
receive reimbursement payments from KCRC on
an annual basis.
•
Pre-operating costs reimbursements
In addition, KCRC shall reimburse the Company for
the pre-operating costs that are agreed between
the Company and KCRC, being costs and expenses
reasonably incurred by the Company prior to the
Commercial Operation Date (High Speed Rail) that
satisfy all of the following criteria:
(i) that directly resulted from the planning and
commencement of the operation of the relevant
High Speed Rail assets;
(ii) that have not already been paid, and will not be
paid or payable, by Government to the Company
under any relevant agreement or which the
Company and Government otherwise agree in
writing should be treated as a pre-operating cost;
(iii) that are not covered in any of the payments to
be made by KCRC to the Company under the
SSCA; and
(iv) that fall within certain other types of agreed costs
and expenses in connection with the operation
of the High Speed Rail (including, mobilisation
activities in preparation for the opening of the
High Speed Rail and trial operations prior to the
opening of the High Speed Rail, and other items as
may be agreed between KCRC and the Company).
•
Equalisation payment
If the franchise is revoked by Government prior
to 31 December 2023, KCRC is required to make
a payment to the Company of an amount that is
equivalent to the aggregate fixed annual payment
payable by KCRC over the ten-year life of the
concession, reduced pro rata to take account of
the time at which termination occurs, and less any
amounts of the fixed annual payment already paid
to the Company. The intention of this equalisation
payment is to ensure that the Company is partly
protected in the event of early termination of the
concession in respect of the High Speed Rail.
•
High Speed Rail services
The Company is obliged to operate the High Speed
Rail during the Concession Period (High Speed Rail)
to the standards prescribed in the MTR Ordinance
and the Existing Operating Agreement (subject
as otherwise stated herein). The Company is not
regarded as having failed to meet a requirement
under the MTR Ordinance or the Existing Integrated
Operating Agreement if the failure has resulted from
anything done or omitted to be done by the Mainland
operator, any Mainland authority or persons directly
under their control.
•
Return requirements
If the Concession Period (High Speed Rail) expires
or is terminated, the Company shall, at no cost to
KCRC, redeliver possession of the High Speed Rail
concession property.
IV Continuing Connected Transactions
relating to the Operation of the
Shatin to Central Link
The following disclosures, in paragraphs IV-1 and
IV-2 below of this section (together, the “Continuing
Connected Transactions relating to the Operation of the
Shatin to Central Link”), are made in accordance with the
conditions of the Waiver, the Merger-related Waiver and
Rule 14A.71 of the Listing Rules.
The Shatin to Central Link is commissioned in two parts.
The Tuen Ma Line as a whole was commissioned on
27 June 2021 and formed the first part of the Shatin to
Central Link. Construction of the second part of the Shatin
to Central Link has been completed and commercial
operations on the Shatin to Central Link as a whole
commenced on 15 May 2022.
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IV-1 First Part of the Shatin to Central Link –
Tuen Ma Line
The first phase of the Tuen Ma Line (the “TML1”) which
extended the Ma On Shan Railway (“MOSR”) from
Tai Wai to Kai Tak with two stations at Hin Keng and
Kai Tak, and an interchange station at Diamond Hill, was
commissioned on 14 February 2020. The second phase
of the Tuen Ma Line, runs from Kai Tak to Hung Hom with
two new stations at Sung Wong Toi and To Kwa Wan
and incorporating one existing station at Ho Man Tin,
and it integrated the TML1 with West Rail into a single
railway line that is known as the Tuen Ma Line (the
“TML”). Commercial operations on the TML as a whole
commenced on 27 June 2021. This forms the first part of
the Shatin to Central Link.
Amendment Operating Agreements, Supplemental
Operating Agreements and Amendment No.1 to
Memorandum on Performance Requirements
On 11 February 2020, the Company and the then
Secretary for Transport and Housing, for and on behalf
of Government, entered into the Amendment Operating
Agreement (the “TML1 AOA”) and the Company and
the Commissioner for Transport, for and on behalf of
Government, entered into the Supplemental Operating
Agreement (the “TML1 SOA”) to amend and supplement,
respectively, the Existing Integrated Operating
Agreement in order to prescribe the operational
requirements, such as service standards, that will apply to
the TML1. The intent and effect of the TML1 AOA and the
TML1 SOA together is that the operational requirements
that are applicable to the existing railway network will
apply in substantially the same manner to the TML1.
On 21 June 2021, the Company and the then Secretary for
Transport and Housing, for and on behalf of Government,
entered into the Amendment Operating Agreement
(the “TML AOA”) to amend and the Company and
the Commissioner for Transport, for and on behalf of
Government, entered into the Supplemental Operating
Agreement (the “TML SOA”) and the Amendment No.1
to Memorandum on Performance Requirements (the
“Memorandum Amendment”) to supplement the Existing
Integrated Operating Agreement in order to prescribe the
operational requirements that will apply to the TML as a
whole, such as service standards. The intent and effect
of the TML AOA, the TML SOA and the Memorandum
Amendment together is that the operational
requirements that are applicable to the existing railway
network will apply in substantially the same manner to
the TML as a whole.
The TML1 AOA, TML AOA, TML1 SOA, TML SOA and
the Memorandum Amendment are each an “operating
agreement” for the purposes of the MTR Ordinance,
form part of the legal and regulatory regime for the
operation of railways in Hong Kong and are required for
the purposes of the MTR Ordinance so that the TML as a
whole is properly regulated under the MTR Ordinance.
The principal terms of the TML1 AOA, TML AOA, TML1
SOA, TML SOA and the Memorandum Amendment have
the effect of bringing the TML as a whole within the
legal and regulatory regime for the operation of railways
in Hong Kong contained in the Existing Integrated
Operating Agreement, as explained in the paragraphs
above. The amendments under (1) the TML1 AOA
and TML1 SOA took effect on 14 February 2020; and
(2) the TML AOA, the TML SOA and the Memorandum
Amendment took effect on 21 June 2021.
IV-2 Shatin to Central Link as a whole
The second part of the Shatin to Central Link, extends
from Hung Hom Station to Admiralty Station with a
station at Exhibition Centre, and it integrates with the
railway lines connecting Lo Wu Station and Lok Ma Chau
Station to Hung Hom Station (excluding such portion
of the Hung Hom Station designed and constructed
pursuant to certain entrustment agreements and those
assets set out in certain assignment agreements between
KCRC and Government) (the “East Rail Line (Original)”)
into a single railway line. This, together with the TML,
forms the entire Shatin to Central Link.
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A
Amendment Operating Agreement and
Supplemental Operating Agreement
On 10 May 2022, the Company and the then Secretary for
Transport and Housing, for and on behalf of Government,
entered into the Amendment Operating Agreement (the
“SCL AOA”) and the Company and the Commissioner for
Transport, for and on behalf of Government, entered into
the Supplemental Operating Agreement (the “SCL SOA”)
to amend and supplement, respectively, the Existing
Integrated Operating Agreement in order to prescribe
the operational requirements that will apply to the Shatin
to Central Link as a whole, such as service standards.
The intent and effect of the SCL AOA and the SCL SOA
together is that the operational requirements that are
applicable to the existing railway network will apply in
substantially the same manner to the Shatin to Central
Link as a whole.
The SCL AOA and the SCL SOA are each an “operating
agreement” for the purposes of the MTR Ordinance,
form part of the legal and regulatory regime for the
operation of railways in Hong Kong and are required for
the purposes of the MTR Ordinance so that the Shatin to
Central Link as a whole is properly regulated under the
MTR Ordinance.
The principal terms of the SCL AOA and the SCL SOA have
the effect of bringing the Shatin to Central Link as a whole
within the legal and regulatory regime for the operation
of railways in Hong Kong contained in the Existing
Integrated Operating Agreement, as explained in the
paragraphs above. The amendments under the SCL AOA
and the SCL SOA took effect on 10 May 2022.
B
Supplemental Service Concession Agreement
On 10 May 2022, the Company and KCRC entered into
the Supplemental Service Concession Agreement No. 4
(the “SCL SSCA”) relating to the Shatin to Central Link, to
supplement the Existing Service Concession Agreement
and to supersede and replace the Supplemental Service
Concession Agreement No. 3 (the “TML SSCA”) dated
21 June 2021 relating to the TML , in order for KCRC to
grant a concession to the Company in respect of the
Shatin to Central Link as a whole and to prescribe the
operational and financial requirements that will apply to
the Shatin to Central Link as a whole. The TML SSCA had, in
turn, superseded and replaced the Supplemental Service
Concession Agreement No.2 dated 11 February 2020
relating to the TML1 (the “TML1 SSCA”). The intent and
effect of the SCL SSCA is that the operational requirements
that are applicable to the Company’s operation of the
existing KCRC railway system will apply in substantially
the same manner to the Shatin to Central Link as a whole,
save where any amendments are necessary to reflect the
particular characteristics of, and arrangements for, the
Shatin to Central Link as a whole. The financial provisions
in the SCL SSCA have been designed to reflect the
principles contained in the Existing Integrated Operating
Agreement that relate to new concession projects, such
as the Shatin to Central Link other than as set out below.
The SCL SSCA is a “service concession agreement” for the
purposes of the MTR Ordinance, forming part of the legal
and regulatory regime for the operation of railways in
Hong Kong, and is required for the purposes of the MTR
Ordinance so that the Shatin to Central Link as a whole is
properly regulated under the MTR Ordinance.
Principal Terms of the SCL SSCA
The terms of the SCL SSCA are based substantially on
the terms of the Existing Service Concession Agreement,
as explained in the paragraphs above. The SCL SSCA
was made on 10 May 2022 and the term of the service
concession and licence granted by KCRC to the Company
pursuant to the terms of the SCL SSCA commenced on
13 May 2022 (the “New Project Effective Date (NSL)”) and
the commercial operation of the part of the railway line
connecting such portion of the Hung Hom Station, the
Exhibition Centre Station and the Shatin to Central Link
Portion (as defined in the assignment deed in relation
to Inland Lot No. 9070 dated 13 May 2022) (“NSL”)
commenced on 15 May 2022 (the “Commercial Operation
Date (NSL)”), which will terminate automatically on and
from the earlier of (being the “Termination Date (SCL)”):
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(i) the effective date of the revocation of the franchise
pursuant to the MTR Ordinance as it relates to
the KCRC railway;
(ii) the effective date of the withdrawal or revocation of
the permission by the Director of Lands pursuant to
the vesting deeds entered into between KCRC and
Government as well as the revocation of the franchise
pursuant to the MTR Ordinance as it relates to the
Shatin to Central Link;
(iii) any date designated as a Termination Date (SCL)
for the purposes of the SCL SSCA in any legally
binding agreement for any extension of the period
commencing on the New Project Effective Date (NSL)
and ending on the day prior to the Termination Date
(SCL) (the “Concession Period (SCL)”) beyond the
Natural Expiry Date (SCL) (as defined in (iv) below) on
such terms and conditions as the Company on the one
hand, and KCRC (or a nominee of Government and/or
any third party designated by Government) on the
other may agree by way of an agreement to follow
the SCL SSCA (including, without limitation, that the
Company shall operate the Shatin to Central Link
pursuant to a service concession as defined in the MTR
Ordinance) (the “SCL Concession Extension”) (which
shall supersede and replace the SCL SSCA); and
(iv) the day falling immediately before the tenth
anniversary of the Commercial Operation Date (NSL),
or such later date as each of the Company, KCRC
and Government may agree in a written agreement
by no later than the date falling one month prior to
the tenth anniversary of the Commercial Operation
Date (NSL) or prior to the last extended date (where
applicable) (the “Natural Expiry Date (SCL)”).
Certain principal terms of the SCL SSCA that are specific to
the Shatin to Central Link include:
•
Concession payments
The concession payments under the SCL SSCA
consists of variable annual payments (payable by
the Company to KCRC) and fixed annual payments
(payable by KCRC to the Company).
(i) Variable annual payments and fixed
annual payments
The variable annual payments (being payments
by the Company to KCRC) will be calculated in
the same manner prescribed under the Existing
Service Concession Agreement whereby the
Company pays to KCRC, for each financial year,
a certain percentage of the revenue generated
from the KCRC system. For the purposes of
calculating the variable annual payments, the
revenue generated from the KCRC system shall
include the actual revenue from the TML and the
East Rail Line (including the NSL) fares received
or retained by the Company and revenue derived
from businesses related to the TML and the East
Rail Line (including the NSL) which may include,
without limitation, telecommunications and kiosk
rental, subject to certain agreed adjustments.
In light of the variable annual payments
described in the paragraph above and in
order for the Company to be able to earn a
commercial return, the fixed annual payments
shall comprise payments from KCRC to the
Company over the Concession Period (SCL).
These fixed annual payments shall be without
prejudice to the Company’s obligation to pay the
fixed annual payments of HK$750 million each
financial year to KCRC under the Existing Service
Concession Agreement.
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(ii) Estimated net amount of the concession payments
Based on the Concession Period (SCL) terminating
on the Natural Expiry Date (SCL), the estimated
net amount of the concession payments under
the SCL SSCA (taking into account both the
estimated variable annual payments and the fixed
annual payments for the Shatin to Central Link)
payable by the Company to KCRC is expected, in
aggregate, to be approximately HK$1,036 million
(subject to certain agreed adjustments) over the
Concession Period (SCL).
•
Equalisation payment
If the Termination Date (SCL) occurs prior to
31 December 2028, KCRC is required to make a
payment to the Company of an amount that is
equivalent to the aggregate fixed annual payment
payable by KCRC over the ten-year life of the
concession, reduced pro rata to take account of
the time at which termination occurs, and less any
amounts of the fixed annual payment already paid
to the Company. The intention of this equalisation
payment is to ensure that the Company is partly
protected in the event of early termination of the
concession in respect of the Shatin to Central Link.
•
A new legally binding agreement in relation to an SCL
Concession Extension for the Shatin to Central Link
On and from 1 January 2029 (or such earlier date as
may be agreed in writing by the Company, KCRC and
Government) up to and including the date that is
twelve months before the Natural Expiry Date (SCL)
(prior to any extension) or such later date as may
be agreed in writing by the Company, KCRC and
Government, Government, the Company and KCRC
shall commence exclusive negotiations in good faith
with a view to agreeing the terms of a legally binding
agreement in relation to a SCL Concession Extension
(including, without limitation, that the Company
shall operate the Shatin to Central Link pursuant to a
service concession as defined in the MTR Ordinance)
which shall apply to the Shatin to Central Link the
Existing Integrated Operating Agreement and which
should in accordance with the Existing Integrated
Operating Agreement, enable the Company to earn
a commercial rate of return from its operation of the
Shatin to Central Link.
•
Return requirements
If the Concession Period (SCL) expires or is terminated,
and there has been no SCL Concession Extension, the
Company shall, at no cost to KCRC, redeliver possession
of the Shatin to Central Link concession property
(which, for the avoidance of doubt, excludes the MOSR,
the West Rail Line and the East Rail Line (Original)).
In relation to the Merger-related Continuing Connected
Transactions, the Non Merger-related Continuing
Connected Transactions, the Continuing Connected
Transactions relating to the Operation of the High Speed
Rail and the Continuing Connected Transactions relating
to the Operation of the Shatin to Central Link (collectively
“Transactions”) and in accordance with (i) in the case of
the Merger-related Continuing Connected Transactions,
paragraph B(I)(i) of the Merger-related Waiver; (ii) in the
case of the Non Merger-related Continuing Connected
Transactions, paragraph B(I)(iii)(a) of the Waiver; (iii) in the
case of the Continuing Connected Transactions relating to
the Operation of the High Speed Rail, paragraph B(I)(i) of
the Merger-related Waiver and paragraph B(I)(iii)(a) of the
Waiver; and (iv) in the case of the Continuing Connected
Transactions relating to the Operation of the Shatin
to Central Link, paragraph B(I)(i) of the Merger-related
Waiver and paragraph B(I)(iii)(a) of the Waiver, the
Company confirms that the Independent Non-executive
Directors of the Company have reviewed and confirmed
that each of the Transactions was entered into:
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(1) in the ordinary and usual course of business (within
the meaning of the Listing Rules) of the Group;
(2) on normal commercial terms or better (within the
meaning of the Listing Rules); and
(3) according to the agreement governing them on terms
that are fair and reasonable and in the interests of the
Company’s shareholders as a whole.
The Company has engaged the auditors of the Company
to report on the Transactions in accordance with Hong
Kong Standard on Assurance Engagements 3000 (Revised)
“Assurance Engagements Other Than Audits or Reviews
of Historical Financial Information” and with reference
to Practice Note 740 (Revised) “Auditor’s Letter on
Continuing Connected Transactions under the Hong
Kong Listing Rules” issued by the Hong Kong Institute
of Certified Public Accountants. In accordance with (i) in
the case of the Merger-related Continuing Connected
Transactions, paragraph B(I)(ii) of the Merger-related
Waiver; (ii) in the case of the Non Merger-related
Continuing Connected Transactions, paragraph B(I)(iii)(b)
of the Waiver; (iii) in the case of the Continuing Connected
Transactions relating to the Operation of the High Speed
Rail, paragraph B(I)(ii) of the Merger-related Waiver and
paragraph B(I)(iii)(b) of the Waiver; and (iv) in the case of
the Continuing Connected Transactions relating to the
Operation of the Shatin to Central Link, paragraph B(I)(ii)
of the Merger-related Waiver and paragraph B(I)(iii)(b)
of the Waiver, the auditors have provided letters to the
Board confirming that:
(a) nothing has come to their attention that causes them
to believe that any of the Transactions has not been
approved by the Board; and
(b) nothing has come to their attention that causes
them to believe that any of the Transactions
was not entered into, in all material respects, in
accordance with the relevant agreements governing
such transactions.
Additional Information in respect of the
Rail Merger
The Rail Merger consisted of a number of separate
agreements, each of which was detailed in the circular
issued by the Company on 3 September 2007 in
connection with the Rail Merger, and which together
formed a complete package deal which was approved
by the independent shareholders of the Company at an
Extraordinary General Meeting held on 9 October 2007. The
information set out at paragraph A below of this section
describes the payment framework adopted in respect of
the Rail Merger and paragraphs B to F below of this section
set out summaries of the various agreements entered into
by the Company in respect of the Rail Merger in addition
to those agreements disclosed above under the heading
“Merger-related Continuing Connected Transactions”.
A
Payments in connection with
Merger-related Agreements
In connection with the Rail Merger, the following initial
payments were made by the Company to KCRC on
2 December 2007 (being the Merger Date):
•
an upfront payment of HK$4.25 billion, payable under
the Service Concession Agreement (as described in
paragraph B below of this section), being the upfront
fee for the right to operate the Service Concession (as
defined in paragraph B below of this section) and the
consideration for the purchased rail assets; and
•
an upfront payment of HK$7.79 billion payable under
the Merger Framework Agreement (as described
on page 148) in consideration for the execution of
the Property Package Agreements (as described in
paragraph C on pages 148 to 149 and in paragraph F
below of this section) and the sale of the shares in
the subsidiaries of KCRC (the “KCRC Subsidiaries”)
that were transferred to the Company under the Sale
and Purchase Agreement which was entered into on
9 August 2007 between the Company and KCRC.
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In addition to the initial payments above, the Company
is also required to make the following payments to KCRC
going forward:
•
fixed annual payments of HK$750 million payable
under the Service Concession Agreement, for the right
to use and operate the concession property for the
operation of the service concession, in arrears on the
day immediately preceding each anniversary of the
Merger Date which falls during the concession period
in respect of the 12-month period up to and including
the date on which such payment falls due; and
•
variable annual payments payable under the Service
Concession Agreement, for the right to use and
operate the concession property for the operation of
the service concession, in each case, calculated on a
tiered basis by reference to the amount of revenue
from the KCRC system (as determined in accordance
with the Service Concession Agreement) for each
financial year of the Company. No variable annual
payment is payable in respect of the first 36 months
following the Merger Date.
As a complete package deal, other than the payment
elements described above and unless stated otherwise in
the relevant paragraph below in this section, no specific
allocation was made between the various elements of
the Rail Merger.
B
Service Concession Agreement
The Service Concession Agreement was entered into on
9 August 2007 between the Company and KCRC.
The Service Concession Agreement contains provisions in
relation to the grant and operation of a service concession
and licence granted by KCRC to the Company (the
“Service Concession”), including in relation to:
•
the grant of the Service Concession to the Company
to access, use and operate the concession property
(other than KCRC railway land referred to immediately
below) to certain specified standards;
•
the grant of a licence to access and use certain
KCRC railway land;
•
the term (being an initial period of 50 years from the
Merger Date) of the Service Concession and redelivery
of the KCRC system upon expiry or termination of
the concession period. The Service Concession will
end if the Company’s franchise relating to the KCRC
railway is revoked;
•
the payments of an upfront payment of HK$4.25 billion
and fixed annual payments and variable annual
payments (as described in paragraph A above in
this section);
•
KCRC remaining the legal and beneficial owner of
the concession property as at the Merger Date and
the Company being the legal and beneficial owner of
certain future concession property (the “Additional
Concession Property”);
•
the regime for compensation payable by KCRC to
the Company if Additional Concession Property is
returned to KCRC at the end of the concession period;
•
the rights and restrictions of the Company and KCRC
in relation to the concession property; and
•
subject to certain conditions, the Company bearing
all risks, liabilities and/or costs whatsoever associated
with or arising from the concession property and
the land on which any of the concession property is
located during the concession period.
On 23 August 2018, the Company and KCRC entered
into the SSCA in order for KCRC to grant a concession to
the Company in respect of the High Speed Rail and to
prescribe the operational and financial requirements that
will apply to the High Speed Rail. Further details are set
out in the sub-section headed “III Continuing Connected
Transactions relating to the Operation of the High Speed
Rail (formerly known as the Express Rail Link)” in the
section headed “Continuing Connected Transactions”.
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On 11 February 2020, the Company and KCRC entered into
the TML1 SSCA in order for KCRC to grant a concession
to the Company in respect of the TML1 of the Shatin to
Central Link and to prescribe the operational and financial
requirements that will apply to the TML1. On 21 June 2021,
the Company and KCRC further entered into the TML SSCA
in order for KCRC to grant a concession to the Company
in respect of the TML and to prescribe the operational
and financial requirements that will apply to the TML,
which superseded the TML1 SSCA. On 10 May 2022, the
Company and KCRC entered into the SCL SSCA in order
for KCRC to grant a concession to the Company in respect
of the Shatin to Central Link as a whole and to prescribe
the operational and financial requirements that will apply
to the Shatin to Central Link as a whole, which superseded
the TML SSCA. Further details are set out in the sub-section
headed “IV Continuing Connected Transactions relating
to the Operation of the Shatin to Central Link” in the
section headed “Continuing Connected Transactions”.
C
Sale and Purchase Agreement
The Sale and Purchase Agreement was entered into on
9 August 2007 between the Company and KCRC.
The Sale and Purchase Agreement provides the terms
pursuant to which the Company acquired certain assets
and contracts (the “Purchased Rail Assets”) from KCRC.
The consideration for the sale of the Purchased Rail
Assets (excluding the shares in the KCRC Subsidiaries)
formed part of the upfront payment of HK$4.25 billion.
The consideration for the sale of the shares in the KCRC
Subsidiaries (which own the Category 1A Properties
referred to at paragraph F below in this section and act
as property managers) formed part of the payment of
HK$7.79 billion for the property package (as described
in paragraph A above in this section and in paragraph F
below in this section).
D
Operating Agreement
The Operating Agreement was entered into on
9 August 2007 between the Company and the then
Secretary for Transport and Housing for and on behalf of
Government as contemplated in the MTR Ordinance.
The Operating Agreement is based on the previous
Operating Agreement which was signed on 30 June 2000.
The Operating Agreement differs from the previous
Operating Agreement to provide for, amongst other
things, the nature of the combined MTRC railway
and KCRC railway.
The Operating Agreement includes terms relating to:
•
the extension of the Company’s franchise under the
MTR Ordinance;
•
the design, construction and maintenance
of the railway;
•
passenger services;
•
a framework for the award of new projects and the
operation and ownership structure of new railways;
•
the adjustment mechanism to be applied to certain of
the Company’s fares; and
•
compensation which may be payable under the MTR
Ordinance to the Company in relation to a suspension,
expiry or termination of the franchise.
Under the Operating Agreement, the fare adjustment
mechanism is subject to review periodically. The first of
such reviews was undertaken in 2013 and the second
was conducted in 2017. The Company and Government
agreed on 16 April 2013 to amend the fare adjustment
mechanism. On 21 March 2017, the Company announced
that it and Government had agreed to maintain the fare
adjustment mechanism formula and direct-drive nature of
such formula, save for certain consequential changes as a
result of the review of the formula having been advanced
by one year. In addition, the wider terms of the Operating
Agreement are subject to review every five years and
such a review was also undertaken in 2013. As a result
of such review, the Company and Government agreed
measures in enhancing communication and liaison on
operational arrangements.
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On 23 August 2018, the Company and the then
Secretary for Transport and Housing, for and on behalf
of Government, entered into the AOA to amend
and supplement the Operating Agreement dated
9 August 2007, as amended, in order to prescribe the
operational requirements that will apply to the High
Speed Rail. Further details are set out in the sub-section
headed “III Continuing Connected Transactions relating to
the Operation of the High Speed Rail (formerly known as
the Express Rail Link)” in the section headed “Continuing
Connected Transactions”.
On 11 February 2020, the Company and the then
Secretary for Transport and Housing, for and on behalf
of Government, entered into the TML1 AOA and the
Company and the Commissioner for Transport, for and
on behalf of Government, entered into the TML1 SOA
to amend and supplement, respectively, the Existing
Integrated Operating Agreement, in order to prescribe the
operational requirements that will apply to the TML1 of
the Shatin to Central Link. On 21 June 2021, the Company
and the then Secretary for Transport and Housing, for
and on behalf of Government, further entered into the
TML AOA and the Company and the Commissioner for
Transport, for and on behalf of Government, further
entered into the TML SOA and the Memorandum
Amendment to amend and supplement, respectively,
the Existing Integrated Operating Agreement in order to
prescribe the operational requirements that will apply to
the TML of the Shatin to Central Link. On 10 May 2022,
the Company and the then Secretary for Transport and
Housing, for and on behalf of Government, entered into
the SCL AOA and the Company and the Commissioner
for Transport, for and on behalf of Government, entered
into the SCL SOA to amend and supplement, respectively,
the Existing Integrated Operating Agreement, in order
to prescribe the operational requirements that will apply
to the Shatin to Central Link as a whole. Further details
are set out in the sub-section headed “IV Continuing
Connected Transactions relating to the Operation of the
Shatin to Central Link” in the section headed “Continuing
Connected Transactions”.
E
Memorandum on Performance Requirements
The Memorandum on Performance Requirements
was signed by the Company and the Commissioner
for Transport for and on behalf of Government on
9 August 2007. It sets out the prescribed formulae for
calculating the Performance Requirements. Further details
are set out in the section headed “Amendment Operating
Agreements, Supplemental Operating Agreements and
Amendment No.1 to Memorandum on Performance
Requirements” under paragraph “IV-1 First Part of the
Shatin to Central Link – Tuen Ma Line” in the sub-section
headed “IV Continuing Connected Transactions relating
to the Operation of the Shatin to Central Link” in the
section headed “Continuing Connected Transactions”.
F
Additional Property Package Agreements
Category 1A Properties
The Category 1A Properties are held by the KCRC
Subsidiaries. Under the terms of the Sale and Purchase
Agreement, the Company acquired from KCRC the shares
in the KCRC Subsidiaries (and thereby indirectly acquired
the “Category 1A Properties”).
Category 1B Properties
On 9 August 2007, KCRC and the Company entered into
an agreement for sale and purchase under which KCRC
agreed to assign certain properties (the “Category 1B
Properties”) to the Company on the Merger Date. The
relevant assignment was executed between KCRC and the
Company on 2 December 2007.
Category 2A Properties
On 9 August 2007, Government entered into an
undertaking that it would issue to KCRC an offer for
the grant at nil premium of Government leases in
respect of the land upon which certain properties
(the “Category 2A Properties”) are situated (the “said
Government Leases”). The Category 2A Properties were
held by KCRC as vested land under the Kowloon-Canton
Railway Corporation Ordinance (Cap. 372 of the Laws of
Hong Kong). On 9 August 2007, KCRC entered into an
undertaking that it would, immediately after the grant of
the said Government Leases referred to in the preceding
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ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
sentence, enter into agreements for sale and purchase
to sell the Category 2A Properties to the Company (the
“said Agreements for Sale and Purchase”). Assignments
of the Category 2A Properties to the Company shall then
take place pursuant to the said Agreements for Sale and
Purchase (the “said Assignments”).
The said Government Leases were issued to KCRC
respectively on 27 March 2009 and 31 March 2009. The
said Agreements for Sale and Purchase were entered into
between KCRC and the Company on 27 March 2009 and
31 March 2009 respectively and the said Assignments
to the Company were executed on 27 March 2009 and
31 March 2009 respectively. Deeds of Mutual Grant were
also entered into between the Company and KCRC on
27 March 2009 and 31 March 2009 respectively setting
out the easements, rights, entitlements, privileges and
liberties of the Company and KCRC in the land on which
the Category 2A Properties are situated.
Category 2B Property
On 9 August 2007, Government entered into an
undertaking that it would issue to the Company an offer
for the grant of a Government Lease of a certain property
(the “Category 2B Property”) on terms to be agreed.
The basic terms offer for the Category 2B Property
(i.e. Trackside Villas) was issued and accepted by the
Company on 31 December 2009 and Government Lease in
respect of Tai Po Town Lot No. 199 dated 29 March 2010
was issued for a term of 50 years from 2 December 2007.
Category 4 Properties
On 9 August 2007, Government entered into an
undertaking that it would, within periods to be agreed
between the Company and Government, offer to the
Company a private treaty grant in respect of certain
development sites (the “Category 4 Properties”). The
terms of each private treaty grant shall generally be
determined by Government, and the premium for each
private treaty grant shall be assessed on a full market
value basis ignoring the presence of the railway other
than the Tin Shui Wai Terminus, Light Rail, Yuen Long,
New Territories.
On 9 August 2007, the Company issued a letter to KCRC
confirming that, if there should be any railway premises
on the Category 4 Properties, the Company would assign
the railway premises to KCRC.
Metropolis Equity Sub-participation Agreement
The Metropolis Equity Sub-participation Agreement
was entered into on 9 August 2007 between KCRC and
the Company. KCRC is obliged to act on the Company’s
instructions, and pay to the Company any distributions,
or proceeds of sale, relating to its shareholding in
the property management company The Metropolis
Management Company Limited (“Metropolis”). The issued
share capital of Metropolis is 25,500 A shares (which are
held by KCRC) and 24,500 B shares (which are held by
Cheung Kong Property Management Limited). Metropolis’
business is property management.
G
Application of Merger-related Waiver
In relation to the Operating Agreement and the Service
Concession Agreement, pursuant to paragraph A of the
Merger-related Waiver, the Stock Exchange granted a
waiver to the Company from strict compliance with all
the continuing connected transaction requirements of
Chapter 14A of the Listing Rules.
CAPITAL AND OPERATING
EXPENDITURE
There are defined procedures for the appraisal, review
and approval of major capital and operating expenditure.
During the year ended 31 December 2024, the
employment of consultancy services over 0.1% of the
net assets of the Group and other capital and operating
expenditure over 0.3% of the net assets of the Group
required the approval of the Board.
REPORTING AND MONITORING
There is a comprehensive budgeting system for all
operational and business activities, with an annual
budget approved by the Board. Monthly results of the
Group’s operations, businesses and projects are reported
against the budget to the Board and updated forecasts
for the year are prepared regularly.
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MTR CORPORATION LIMITED
REPORT OF THE MEMBERS OF THE BOARD
TREASURY MANAGEMENT
The Company’s Treasury Department operates within
approved guidelines from the Board. It manages the
Company’s debt portfolio with reference to the Preferred
Financing Model which defines the preferred mix of
financing instruments, fixed and floating rate debt,
maturities, interest rate risks, currency exposure and
financing horizon. The model is reviewed and refined
periodically to reflect changes in the Company’s financing
requirements and the market environment. Derivative
financial instruments such as interest rate swaps and
cross currency swaps are used only as hedging tools
to manage the Group’s exposure to interest rate and
currency risks. Prudent guidelines and procedures are
in place to control the Company’s derivatives activities,
including a comprehensive credit risk management
system for monitoring counterparty credit exposure
using the Value-at-Risk approach. There is also
appropriate segregation of duties within the Company’s
Treasury Department.
Major financing transactions and guidelines for
derivatives transactions, including the credit risk
management framework, are approved at the Board level.
COMPUTER PROCESSING
There are defined procedures, controls and regular quality
reviews on the operation of computer systems to ensure
the accuracy and completeness of financial records and
efficiency of data processing. The Company’s computer
centre operation and support, help desk operation and
support services, and also software development and
maintenance, have been certified under ISO 9001:2015.
Disaster recovery rehearsal on critical applications is
conducted annually. For cyber security, the Company has
been certified with ISO 27001:2022 on the Information
Security Management System that complies with the
required standard for the comprehensive scope of IT
services operation. The Innovation and Technology
Executive Management Committee sets the direction,
policies and strategy, and cultivates best practices on
innovation and technology (“I&T”) and cyber security for
the Company. It steers and oversees the management
and performance of all matters relating to I&T initiatives
and cyber security. Various security controls have been
implemented and are reviewed regularly to protect the
Company from cyber-attacks.
PERMITTED INDEMNITY
PROVISION
Pursuant to the Articles of Association, subject to the
statutes, the Company will indemnify every Director of
the Company out of its own assets against any liability
incurred by him/her in the execution of his/her office
in defending any civil or criminal proceedings. The
relevant Article was in force during the year ended
31 December 2024 and on 6 March 2025 when this Report
was approved. To ensure sufficient coverage is provided,
the Company undertakes an annual review of
the Directors’ and Officers’ liability insurance policy of the
Company (the “D&O Insurance Policy”) in light of recent
trends in the insurance market and other relevant factors.
The D&O Insurance Policy also indemnifies the other
directors within the Group.
GOING CONCERN
The Consolidated Financial Statements on pages 180
to 266 have been prepared on a going concern basis.
The Board has reviewed the Group’s budget for 2025,
together with the longer-term forecast for the following
five years and is satisfied that the Group has sufficient
resources to continue as a going concern for the
foreseeable future.
AUDITORS
The retiring auditors, KPMG, have signified their willingness
to continue in office. A resolution will be proposed at the
forthcoming AGM to reappoint them and to authorise the
Board of Directors to fix their remuneration.
For and on behalf of the Board
Gillian Elizabeth Meller
Company Secretary
Hong Kong, 6 March 2025
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ANNUAL REPORT 2024
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
DIRECTORS OF SUBSIDIARY UNDERTAKINGS
The directors of the subsidiary undertakings of the Company during the year and up to the date of this Report (unless
otherwise stated) are listed below:
Name
Director
Alternate Director
Altamirano Celis, Sandra Elena
√
Astrand, Anna Caroline
√
Dr Auyeung Pak-kuen, Rex
√
Bagshaw, Michael David
√
Bailie, William Paul
√
Butcher, Stephen Anthony
√
Chan Chi-hung
√
Chan Chun-pan
√
√
Chan Hing-keung
√
Chan Ting-bond, Michael
√
Dr Chan Yuen Tak-fai, Dorothy
√
Cheng Wai-ching, Margaret
√
Cheng Yan-kee
√
Cheng Yiu-lam, Elaine
√
Chim Edwin
√
√
Chiu Man
√
Chow Chun-ling
√
Choy Siu-min, Linda
√
Choy Yiu-fai, Lawrence
√
Chu Fung-kuen, Margaret
√(Resigned)
Collis, Charles Grant Ross
√(Resigned)
Cooper, William Arthur Gordon
√
Downie, Brian Francis
√
√
Fitzgerald, Michael George
√
Fu Oi-yu
√(Ceased)
Fung Ching-ting, Teresa
√
Gustafsson, Anders Krister
√
Hellners, Karl Erik Hjalmar
√
Herrmann, Lena Christina
√(Resigned)
Ho Ka-wa
√
Hui Chun-sing, Thomas
√
Hui Leung-wah, Herbert
√(Resigned)
Jia Jun
√
Jim Kwok-wah
√
√(Ceased)
Jubian, Albert
√
√
Dr Kam Chak-pui, Jacob
√
Kenny, Michael John
√
Kershaw, Phillip John
√
√
Kiang Yee-wing
√
King, Andrew Lewis
√
Kwok Lai-kay, Lena
√
√
Lai Kai-shing
√(Ceased)
Lam Ting-chung, Wilfred
√
Lau Kwai-hin, Kenneth
√
Lau Pak-wai
√
Lau Tin-shing, Adi
√(Resigned)
Lau Wai-ming
√
Lee Guo-chun
√
Name
Director
Alternate Director
Dr Lee Kar-yun, Tony
√
Lee Kim-hung
√
Lee Wai-kwong, Sunny
√
Lee Yuen-ling
√
Leung Tai-chiu, Herbert
√
Lung Tze-ho
√
√
Lusher, Sarah Ellison
√
Man Wing-fai
√
McCusker, Andrew
√
Meller, Gillian Elizabeth
√
Meyer, Peter
√
Moros, Tony Antonio
√
Munro, Peter James
√(Ceased)
Murphy, Stephen John
√(Resigned)
Ng Isaac
√
Ng Lup-nung, Leo
√
Ng Yuen-fan, Hannah
√
Nyas, Jesper Karl Pontus
√
O'Flaherty, Raymond Anthony
√
Ortner, Ruben Daniel Johannes
√(Resigned)
Pang Hoi-hing
√(Resigned)
Pendlebury, Ian John
√
Poon Kai-chung
√
Quarrie, Ian Roger
√
√
Robinson, John Alexander Macleod
√
Rostaminegad, Paul Nader
√
Tam Ka-yee, Irene
√
Tang Chi-fai, David
√
Tong Kwok-wai, Dono
√
Tse Fuk-sum, Winson
√
Tse Kwan-yu
√
Tung Pui-chuen, James
√
Wan Wai-yin
√
Wang Chao
√
Wang Ying
√
Wei Yan
√(Ceased)
Williams Daniel
√
Wong Kwan-wai, Sammy
√
Wong Wing-kin
√
Xia Jing
√(Ceased)
Xu Muhan
√
Yam Pak-nin
√
√
Yeung Mei-chun, Jeny
√
Yip Chun-to
√
Yuen Lai-ki
√
Yuen Lap-hang
√
Zhang Ling
√
172
MTR CORPORATION LIMITED
REPORT OF THE MEMBERS OF THE BOARD
CONTENTS OF CONSOLIDATED
FINANCIAL STATEMENTS AND NOTES
174 Independent Auditor’s Report
Consolidated Financial Statements
180 Consolidated Statement of Profit or Loss
181 Consolidated Statement of Comprehensive Income
182 Consolidated Statement of Financial Position
183 Consolidated Statement of Changes in Equity
184 Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
185 1
Statement of Compliance
185 2
Material Accounting Policies
197 3
Rail Merger with Kowloon-Canton Railway Corporation
and Operating Arrangements for the High Speed Rail
and the Shatin to Central Link
198 4
Revenue from Hong Kong Transport Operations
199 5
Revenue from Hong Kong Station Commercial
Businesses
199 6
Revenue from Hong Kong Property Rental and
Management Businesses
199 7
Revenue and Expenses Relating to Mainland China and
International Subsidiaries
200 8
Revenue from Other Businesses
200 9
Segmental Information
204 10
Operating Expenses
205 11
Remuneration of Members of the Board and the
Executive Directorate
209 12
Hong Kong Property Development Profit from Share of
Surplus, Income and Interest in Unsold Properties
209 13
(Loss)/Gain from Fair Value Measurement of Investment
Properties
209 14
Depreciation and Amortisation
210 15
Interest and Finance Charges
211 16
Income Tax in the Consolidated Statement of Profit or
Loss
212 17
Dividends
213 18
Earnings Per Share
213 19
Other Comprehensive (Loss)/Income
214 20
Investment Properties and Other Property, Plant and
Equipment
218 21
Service Concession Assets
220 22
Railway Construction Projects under Entrustment by
the HKSAR Government
224 23
Railway Construction in Progress
226 24
Property Development in Progress
227 25
Deferred Expenditure
227 26
Investments in Subsidiaries
229 27
Interests in Associates and Joint Ventures
230 28
Investments in Securities
230 29
Properties Held for Sale
231 30
Derivative Financial Assets and Liabilities
235 31
Stores and Spares
235 32
Debtors and Other Receivables
236 33
Amounts Due from Related Parties
237 34
Cash, Bank Balances and Deposits
237 35
Loans and Other Obligations
239 36
Creditors, Other Payables and Provisions
241 37
Amounts Due to Related Parties
241 38
Obligations under Service Concession
241 39
Loans from Holders of Non-controlling Interests
242 40
Income Tax in the Consolidated Statement of Financial
Position
243 41
Share Capital, Shares Held for Executive Share Incentive
Scheme, Reserves, Company-level Movements in
Components of Equity and Capital Management
246 42
Other Cash Flows Information
248 43
Fair Value Measurement
250 44
Share-based Payments
251 45
Retirement Schemes
253 46
Defined Benefit Retirement Scheme
256 47
Material Related Party Transactions
260 48
Commitments, Contingent Liabilities and Legal
Proceedings
263 49
Assets and Liabilities of Disposal Group Classified as
Held For Sale
264 50
Company-level Statement of Financial Position
265 51
Accounting Estimates and Judgements
266 52
Possible Impact of Amendments, New Standards and
Interpretations Issued but Not Yet Effective for the Year
Ended 31 December 2024
266 53
Approval of the Consolidated Financial Statements
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
173
ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT
Independent auditor’s report to the members of MTR Corporation Limited
(incorporated in Hong Kong with limited liability)
Opinion
We have audited the consolidated financial statements of MTR Corporation Limited (“the Company”) and its subsidiaries (“the Group”) set out on
pages 180 to 266, which comprise the consolidated statement of financial position as at 31 December 2024, the consolidated statement of profit
or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement
of cash flows for the year then ended and notes, comprising material accounting policy information and other explanatory information.
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at
31 December 2024 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with
Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and have
been properly prepared in compliance with the Hong Kong Companies Ordinance.
Basis for opinion
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the HKICPA. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We
are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (“the Code”) and we have fulfilled our
other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial
statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Railway construction projects under entrustment by the HKSAR Government
Refer to note 22 to the consolidated financial statements and the accounting policies in note 2X
The Key Audit Matter
How the matter was addressed in our audit
The Group and the Government of the Hong Kong Special Administrative
Region (“HKSAR Government”) have entered into certain entrustment
arrangements whereby the Group has been entrusted by the HKSAR
Government to proceed with the planning, design, construction, testing
and commissioning of the Hong Kong Section of the Guangzhou-Shenzhen-
Hong Kong Express Rail Link (“the HSR”) and the Shatin to Central Link (“the
SCL”). As the HKSAR Government is the owner of both the HSR and the SCL,
the financing of the development of these two railway lines is borne by the
HKSAR Government, with project management fees payable to the Group.
HSR
Pursuant to an agreement entered into with the HKSAR Government on
30 November 2015, the Group will bear and finance project costs for the
HSR (including the Group’s project management fees) which exceed
HK$84.42 billion and the HKSAR Government reserves the right to refer
to arbitration the question of the Group’s liability, if any, in respect of the
project costs borne and financed by the HKSAR Government which exceed
HK$65 billion up to HK$84.42 billion. In the event that the Group is found
to be liable under the relevant HSR entrustment agreements, the Group’s
liability for such costs is currently limited to the amount of the project
management fees and certain other additional fees received by the Group
under the agreements.
In September 2018, construction of the HSR was completed following which
commercial operations commenced.
Based on the information available including the progress of finalising
construction contracts, management does not currently believe there is
any need to revise further the total project costs of HK$84.42 billion. No
provision for project costs has been made in this respect.
Our audit procedures in relation to railway construction projects under
entrustment by the HKSAR Government included the following:
• inspecting the minutes of the relevant committees of the Group and
discussing with management the current status of the HSR and SCL
projects, including the forecast total project costs, assessment of
contract claims, estimate of further internal costs to be incurred and the
assessment of the financial implications of the projects for the Group;
• assessing the design and implementation of management’s key
internal controls over the project cost assessment;
• comparing, on a sample basis, costs incurred during the current year
in respect of the HSR and SCL with underlying contracts and interim or
final payment certificates;
• assessing the provisions made for the Hung Hom Incidents Related
Costs and Project Management Costs by inspecting, on a sample basis,
the relevant underlying documentation and, where applicable, the
actual amounts incurred during the year;
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MTR CORPORATION LIMITED
Railway construction projects under entrustment by the HKSAR Government (continued)
Refer to note 22 to the consolidated financial statements and the accounting policies in note 2X (continued)
The Key Audit Matter
How the matter was addressed in our audit
SCL
Towards the end of the first half of 2018, there were allegations concerning
workmanship in relation to the Hung Hom Station extension. Subsequently,
the Group advised the HKSAR Government of an insufficiency of
construction records and certain construction issues at the Hung Hom
North Approach Tunnel, the South Approach Tunnel and the Hung Hom
Stabling Sidings. A commission of enquiry (“COI”) was set up by the HKSAR
Government to investigate, inter-alia, certain construction works at the
Hung Hom station extension. A redacted final report from the COI was
published in May 2020, in which the COI determined that it is satisfied that,
with suitable measures completed, the relevant structures will be safe and
fit for purpose. The management considered that the suitable measures for
the relevant structures have been completed.
The Group announced that it would fund, on an interim and without
prejudice basis, certain costs arising from the Hung Hom incidents and
certain costs associated with the phased opening of the Tuen Ma Line
(“Hung Hom Incidents Related Costs”), which were estimated to be around
HK$2 billion in aggregate, and has charged the full amount of such
estimate in its consolidated statement of profit or loss for the year ended
31 December 2019.
In February 2020, the Group notified the HKSAR Government of the
latest estimate of the cost to complete the SCL Project of HK$82,999 million
including the additional project management fee payable to the
Group of HK$1,371 million, which increased from the original estimate
of HK$70,827 million. In June 2020, the Legislative Council approved
additional funding amounting to HK$10,801 million sought by the HKSAR
Government, which excludes the Hung Hom Incidents Related Costs and
the additional project management fee for the Group, and the HKSAR
Government has maintained its position of disagreement to any increase
in the project management fee. The Group has announced that it would
continue to meet, on an interim and without prejudice basis, the costs of
complying with its project management obligations under the entrustment
agreements, which were estimated to be around HK$1,371 million
(“Project Management Costs”), and has charged the full amount of such
estimate in its consolidated statement of profit or loss for the year ended
31 December 2020.
In May 2022, construction of the SCL was completed following which
commercial operations commenced.
The above matters are ongoing and the timing of their ultimate resolution
and any further financial impact to the Group are highly uncertain
at this stage.
In the event that the Group is found to be liable under the entrustment
agreements, the Group’s liability is currently limited to a cap equal to the
aggregate fees received by the Group under the relevant SCL agreements.
However, such cap could not be relied upon if the Group were, in
accordance with general principles of law, found to be liable for any loss
that had been caused by the fraudulent or other dishonest conduct of its
employees or agents.
We identified railway construction projects under entrustment by the
HKSAR Government as a key audit matter because the arrangements in
respect of these railway projects are highly complex and convey rights and
obligations on the Group which could potentially have significant financial
implications for the Group.
• holding discussions with management and the Group’s external legal
advisors to assess the Group’s legal obligations and financial exposure
in connection with the HSR and SCL projects; and
• assessing the disclosures in the consolidated financial statements in
relation to the HSR and SCL projects with reference to the requirements
of the prevailing accounting standards.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
175
ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT
Valuation of investment properties (“IP”)
Refer to note 20A to the consolidated financial statements and the accounting policies in note 2E(i)
The Key Audit Matter
How the matter was addressed in our audit
The fair value of the Group’s IP as at 31 December 2024 was
HK$96,322 million, with a loss from fair value remeasurement for the year
ended 31 December 2024 recorded in the consolidated statement of profit
or loss of HK$3,821 million.
The Group’s IP, which are mainly located in Hong Kong, principally comprise
shopping malls and office premises.
The fair values of the Group’s IP were assessed by external property valuers
based on independent valuations.
We identified valuation of the Group’s IP as a key audit matter because of
the significance of IP to the consolidated financial statements and because
the determination of the fair values involves significant judgement and
estimation, particularly in selecting the appropriate valuation methodology,
market yields and market rents.
Our audit procedures to assess the valuation of the Group’s IP included
the following:
• obtaining and inspecting the IP valuation reports prepared by the
external property valuers;
• evaluating the independence, qualifications, expertise and objectivity
of the external property valuers;
• evaluating the valuation methodologies adopted with reference to
prevailing accounting standards and those applied by other external
property valuers for similar property types;
• holding discussions with management and the external property
valuers and challenging the key assumptions and estimates adopted
in the valuations, including prevailing market rents and market yields
applied by comparing, on a sample basis, the key estimates adopted
with comparable available market data with the assistance of our
internal valuation specialists; and
• comparing the tenancy information, including occupancy status and
market rents, provided by the Group to the external property valuers
with underlying contracts and documentation, on a sample basis.
Assessing impairment of fixed assets other than assets carried at revalued amounts
Refer to notes 20B and 21 to the consolidated financial statements and the accounting policies in note 2G(ii)
The Key Audit Matter
How the matter was addressed in our audit
The carrying value of the Group’s fixed assets other than assets carried at
revalued amounts as at 31 December 2024 totalled HK$143,648 million
and the related depreciation and amortisation charge for the year ended
31 December 2024 amounted to HK$5,991 million.
The carrying values of these assets are reviewed annually by management
for potential indicators of impairment. For assets where such indicators
exist, management performs detailed impairment reviews, taking into
account, inter alia, the impact of revenue assumptions and technical factors
which may affect the expected remaining useful lives and carrying value
of the assets.
Shenzhen Metro Line 4 (“SZL4”)
In July 2020, the Shenzhen Municipal Government announced that a fare
adjustment framework for the Shenzhen Metro network would come
into effect on 1 January 2021. The framework was expected to enable the
establishment of a mechanism for fare setting and the implementation
procedures for fare adjustments.
There has been no increase in SZL4’s fare since the operations started in
2010 whilst the operating costs continue to rise. The Group anticipated
that the mechanism and procedures for fare adjustments will take longer
time to implement and patronage will remain at a lower level for a period
of time. Based on the impairment assessment performed by management
for the year ended 31 December 2022, impairment losses of HK$962 million
were recognised on fixed assets in that year related to the SZL4’s service
concession assets. As at 31 December 2024, the Group has performed a
further impairment review and did not identify any indication of additional
impairment or reversal of impairment previously made, based on the latest
operating assumptions.
We identified the assessment of impairment of fixed assets other than assets
carried at revalued amounts as a key audit matter because the assessment
can involve a significant degree of management judgement in determining
the key assumptions such as patronage, fare and discount rates.
Our audit procedures to assess the impairment of fixed assets other than
assets carried at revalued amounts included the following:
• discussing indicators of impairment on fixed assets with management,
and where such indicators were identified, evaluating management’s
impairment assessments and the assumptions adopted therein,
including patronage and fare assumptions, with reference to the actual
patronage levels achieved in the current year, latest developments of
fare adjustment mechanism and implementation procedures, future
operating plans and broader city specific developments;
• involving our internal valuation specialists to assess the methodology
and significant assumptions including discount rates adopted by
management in its impairment assessment for SZL4;
• comparing the assumptions adopted in the prior year’s impairment
assessments with actual results for the current year, investigating
significant variances identified and considering the impact on the
current year’s impairment assessments; and
• performing sensitivity analyses for the discount rates applied and
the assumptions for revenue levels adopted and considering the
information used to derive the most sensitive assumptions and whether
there were any indicators of management bias in their selection.
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MTR CORPORATION LIMITED
Profits tax assessment relating to the Rail Merger
Refer to note 16B to the consolidated financial statements and the accounting policies in note 2V
The Key Audit Matter
How the matter was addressed in our audit
Since the Rail Merger with Kowloon-Canton Railway Corporation (the “Rail
Merger”) in 2007, the Company has claimed annual Hong Kong Profits
Tax deductions in respect of the amortisation of upfront payment and
cut-over liabilities, and fixed annual payments (“FAPs”) and variable annual
payments (“VAPs”) relating to the Rail Merger (collectively “the Sums”). The
total tax amount in respect of the Sums for the years of tax assessment
from 2007/2008 to 2024/2025 amounted to HK$5.8 billion. As of
31 December 2024, deduction of the Sums in the computation of the
Company’s assessable profits for the years of assessment from 2009/2010
to 2017/2018 was disallowed by the Inland Revenue Department of
Hong Kong (“IRD”).
On 16 June 2022, the Company lodged a notice of appeal to the Board of
Review against the Commissioner of Inland Revenue’s determination which
confirmed the profits tax assessment and additional profits tax assessment
from 2011/12 to 2017/18 (i.e. holding that the Sums are not deductible
in the computation of the Company’s assessable profits for those years
of assessment).
In the opening submissions before the Board of Review, the Company
decided not to pursue its deduction claims in respect of the amortisation
of the upfront payment and the cut-over liabilities. As the Group and the
Company had already made the related tax provision for such amounts in
the past years, no additional tax provision was required to be made by the
Group and the Company.
On 6 August 2024, the Board of Review issued its decision (“the Board of
Review Decision”) and disagreed with the deduction claims of the FAPs
and VAPs for the years of assessment from 2011/2012 to 2017/2018,
i.e. confirming the relevant profits tax assessment/additional profits tax
assessments in respect of the FAPs and VAPs being non-tax deductible.
Based on the strength of advice from external legal counsel and its tax
advisor after reviewing the Board of Review Decision, on 4 September 2024,
the Company lodged an application to the Court of First Instance of the
High Court of the Hong Kong Special Administrative Region (“the Court of
First Instance”) for leave to appeal against the Board of Review Decision.
The hearing for the application for leave to appeal was held before the
Court of First Instance in late February 2025. As at the date of these financial
statements, the Court of First Instance has yet to hand down its decision
on whether to grant leave to appeal. The Company has conferred with
external legal counsel and its tax advisor and the advice obtained is that the
Company currently continues to have strong legal grounds to support its
position. As such, no additional tax provision has been made.
We identified the profits tax assessment relating to the Rail Merger as a key
audit matter because of its significance to the Group’s consolidated financial
statements and the high degree of management judgement in interpreting
the applicable tax laws and in assessing the likelihood of the tax position
being upheld by the judiciary.
Our audit procedures in relation to the profits tax assessment relating to the
Rail Merger included the following:
• engaging our internal Hong Kong tax specialists to assist in discussions
with management to understand their assessments, reading the
correspondence with the IRD and the Board of Review Decision to
identify key areas of dispute and assess potential risks, challenging
the assumptions, critical judgements, and interpretation of applicable
tax laws and technical analyses, and assessing any indication of
management bias;
• discussing with the Group’s internal legal counsels about the status of
legal proceedings and reading the opinions from the Group’s external
legal counsel about their views on the interpretation of applicable tax
laws, the likely outcome of material tax dispute in relation to the Rail
Merger, and the magnitude of potential exposure, if any; and
• evaluating the reasonableness of the accounting and disclosures
related to the uncertain tax position with reference to the requirements
of the prevailing accounting standards.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
177
ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT
Information other than the consolidated financial statements and auditor’s report thereon
The directors are responsible for the other information. The other information comprises all the information included in the annual report, other
than the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Responsibilities of the directors for the consolidated financial statements
The directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with
HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative but to do so.
The directors are assisted by the Audit & Risk Committee in discharging their responsibilities for overseeing the Group’s financial
reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. This report is made solely to you, as
a body, in accordance with section 405 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility
towards or accept liability to any other person for the contents of this report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism throughout the audit.
We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made
by the directors.
•
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether
the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
•
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business units within the group as a basis for forming an opinion on the group financial statements. We are responsible for the direction,
supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit & Risk Committee regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.
178
MTR CORPORATION LIMITED
We also provide the Audit & Risk Committee with a statement that we have complied with relevant ethical requirements regarding
independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence
and, where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Audit & Risk Committee, we determine those matters that were of most significance in the audit of the
consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Leung Sze Kit Roy.
KPMG
Certified Public Accountants
8th Floor, Prince’s Building
10 Chater Road
Central, Hong Kong
6 March 2025
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
179
ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
The notes on pages 185 to 266 form part of the consolidated financial statements.
for the year ended 31 December in HK$ million
Note
2024
2023
Revenue from Hong Kong transport operations
4
23,013
20,131
Revenue from Hong Kong station commercial businesses
5
5,343
5,117
Revenue from Hong Kong property rental and management businesses
6
5,379
5,079
Revenue from Mainland China and international railway,
property rental and management subsidiaries
7
25,467
25,955
Revenue from other businesses
8
809
700
60,011
56,982
Revenue from Mainland China property development
7
–
–
Total revenue
60,011
56,982
Expenses relating to Hong Kong transport operations
– Staff costs and related expenses
10A
(7,636)
(6,917)
– Maintenance and related works
(2,436)
(2,387)
– Energy and utilities
(2,289)
(2,427)
– General and administration expenses
(1,039)
(940)
– Stores and spares consumed
(729)
(605)
– Railway support services
(488)
(375)
– Government rent and rates
(192)
(155)
– Other expenses
(510)
(371)
(15,319)
(14,177)
Expenses relating to Hong Kong station commercial businesses
(685)
(560)
Expenses relating to Hong Kong property rental and management businesses
(1,184)
(1,063)
Expenses relating to Mainland China and international railway,
property rental and management subsidiaries
7
(23,811)
(24,883)
Expenses relating to other businesses
(702)
(579)
Project study and business development expenses
(403)
(397)
(42,104)
(41,659)
Expenses relating to Mainland China property development
7
(3)
(13)
Operating expenses before depreciation, amortisation and
variable annual payment
10
(42,107)
(41,672)
Operating profit/(loss) before Hong Kong property development,
fair value measurement of investment properties,
depreciation, amortisation and variable annual payment
– Arising from recurrent businesses
17,907
15,323
– Arising from Mainland China property development
(3)
(13)
17,904
15,310
Hong Kong property development profit from share of surplus, income and
interest in unsold properties
12
12,185
2,329
(Loss)/gain from fair value measurement of investment properties
13
(1,703)
1,386
Operating profit before depreciation, amortisation and
variable annual payment
28,386
19,025
Depreciation and amortisation
14
(6,144)
(6,105)
Provisions for onerous contracts
–
(1,022)
Variable annual payment
(3,025)
(2,355)
Share of profit of associates and joint ventures
27
1,340
1,259
Profit before interest, finance charges and taxation
20,557
10,802
Interest and finance charges
15
(1,032)
(1,139)
Profit before taxation
19,525
9,663
Income tax
16
(3,458)
(1,575)
Profit for the year
16,067
8,088
Attributable to:
– Shareholders of the Company
15,772
7,784
– Non-controlling interests
295
304
Profit for the year
16,067
8,088
Profit/(loss) for the year attributable to shareholders of the Company:
9
– Arising from recurrent businesses
– in Hong Kong
5,981
4,940
– outside Hong Kong
1,229
(659)
7,210
4,281
– Arising from property development
– in Hong Kong
10,235
2,035
– outside Hong Kong
30
48
10,265
2,083
– Arising from underlying businesses
17,475
6,364
– Arising from fair value measurement of investment properties
(1,703)
1,420
15,772
7,784
Earnings per share:
18
– Basic
HK$2.54
HK$1.26
– Diluted
HK$2.54
HK$1.25
180
MTR CORPORATION LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
The notes on pages 185 to 266 form part of the consolidated financial statements.
for the year ended 31 December in HK$ million
Note
2024
2023
Profit for the year
16,067
8,088
Other comprehensive (loss)/income for the year
(after taxation and reclassification adjustments):
19
Items that will not be reclassified to profit or loss:
– (Loss)/surplus on revaluation of self-occupied buildings
(127)
24
– Remeasurement of net asset/liability of defined benefit schemes
144
(194)
17
(170)
Items that may be reclassified subsequently to profit or loss:
– Exchange differences on translation of:
– financial statements of subsidiaries, associates and
joint ventures outside Hong Kong
(762)
(378)
– non-controlling interests
(40)
26
– Cash flow hedges: net movement in hedging reserve
270
(608)
(532)
(960)
(515)
(1,130)
Total comprehensive income for the year
15,552
6,958
Attributable to:
– Shareholders of the Company
15,297
6,628
– Non-controlling interests
255
330
Total comprehensive income for the year
15,552
6,958
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
181
ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
The notes on pages 185 to 266 form part of the consolidated financial statements.
in HK$ million
Note
At 31 December
2024
At 31 December
2023
Assets
Fixed assets
– Investment properties
20A
96,322
98,205
– Other property, plant and equipment
20B
107,223
103,721
– Service concession assets
21
39,645
36,710
243,190
238,636
Property management rights
9
10
Railway construction in progress
23
11,375
4,256
Property development in progress
24A
42,300
41,728
Deferred expenditure
25
64
378
Interests in associates and joint ventures
27
13,039
12,785
Deferred tax assets
40B
521
603
Investments in securities
28
1,952
862
Properties held for sale
29
2,422
1,939
Derivative financial assets
30
342
240
Stores and spares
31
2,421
2,557
Debtors and other receivables
32
15,780
13,756
Amounts due from related parties
33
6,198
5,802
Cash, bank balances and deposits
34
27,886
22,375
Assets of disposal group classified as held for sale
49
–
499
367,499
346,426
Liabilities
Short-term loans
35A
847
1,379
Creditors, other payables and provisions
36
69,417
76,682
Current taxation
40A
2,909
1,623
Amounts due to related parties
37
3,207
2,614
Loans and other obligations
35A
76,721
58,112
Obligations under service concession
38
9,969
10,059
Derivative financial liabilities
30
2,014
1,710
Loans from holders of non-controlling interests
39
116
141
Deferred tax liabilities
40B
16,166
15,151
Liabilities of disposal group classified as held for sale
49
–
99
181,366
167,570
Net assets
186,133
178,856
Capital and reserves
41
Share capital
61,287
61,083
Shares held for Executive Share Incentive Scheme
(299)
(269)
Other reserves
124,637
117,530
Total equity attributable to shareholders of the Company
185,625
178,344
Non-controlling interests
508
512
Total equity
186,133
178,856
Approved and authorised for issue by the Members of the Board on 6 March 2025
Rex P K Auyeung
Jacob C P Kam
Michael G Fitzgerald
Chairman
Chief Executive Officer
Finance Director
182
MTR CORPORATION LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
The notes on pages 185 to 266 form part of the consolidated financial statements.
Other reserves
for the year ended 31 December
in HK$ million
Note
Share
capital
Shares
held for
Executive
Share
Incentive
Scheme
Fixed assets
revaluation
reserve
Hedging
reserve
Employee
share-based
capital
reserve
Exchange
reserve
Retained
profits
Total equity
attributable to
shareholders of
the Company
Non-
controlling
interests
Total
equity
2024
Balance as at 1 January 2024
61,083
(269)
3,848
(522)
178
(1,662)
115,688
178,344
512 178,856
Changes in equity for the year
ended 31 December 2024:
– Profit for the year
–
–
–
–
–
–
15,772
15,772
295
16,067
– Other comprehensive (loss)/
income for the year
19
–
–
(127)
270
–
(762)
144
(475)
(40)
(515)
– Total comprehensive (loss)/
income for the year
–
–
(127)
270
–
(762)
15,916
15,297
255
15,552
– Amounts transferred from
hedging reserve to initial
carrying amount of
hedged items
–
–
–
(1)
–
–
–
(1)
–
(1)
– 2023 final ordinary dividend
17
–
–
–
–
–
–
(5,533)
(5,533)
–
(5,533)
– Shares issued in respect of scrip
dividend of 2023 final
ordinary dividend
41A
202
(3)
–
–
–
–
3
202
–
202
– 2024 interim ordinary dividend
17
–
–
–
–
–
–
(2,614)
(2,614)
–
(2,614)
– Shares purchased for Executive
Share Incentive Scheme
41B
–
(207)
–
–
–
–
–
(207)
–
(207)
– Vesting and forfeiture of
award shares of Executive
Share Incentive Scheme
41B
2
180
–
–
(176)
–
(6)
–
–
–
– Employee share-based
payments
–
–
–
–
137
–
–
137
–
137
– Equity contributions from
holders of non-controlling
interests
–
–
–
–
–
–
–
–
6
6
– Dividends to holders of
non-controlling interests
–
–
–
–
–
–
–
–
(265)
(265)
Balance as at 31 December 2024
61,287
(299)
3,721
(253)
139
(2,424)
123,454
185,625
508 186,133
2023
Balance as at 1 January 2023
60,547
(262)
3,824
87
146
(1,284)
116,228
179,286
626
179,912
Changes in equity for the year
ended 31 December 2023:
– Profit for the year
–
–
–
–
–
–
7,784
7,784
304
8,088
– Other comprehensive income/
(loss) for the year
19
–
–
24
(608)
–
(378)
(194)
(1,156)
26
(1,130)
– Total comprehensive income/
(loss) for the year
–
–
24
(608)
–
(378)
7,590
6,628
330
6,958
– Amounts transferred from
hedging reserve to initial
carrying amount of
hedged items
–
–
–
(1)
–
–
–
(1)
–
(1)
– 2022 final ordinary dividend
17
–
–
–
–
–
–
(5,520)
(5,520)
–
(5,520)
– Shares issued in respect of scrip
dividend of 2022 final
ordinary dividend
41A
438
(2)
–
–
–
–
2
438
–
438
– 2023 interim ordinary dividend
17
–
–
–
–
–
–
(2,610)
(2,610)
–
(2,610)
– Shares issued in respect of scrip
dividend of 2023 interim
ordinary dividend
41A
97
–
–
–
–
–
–
97
–
97
– Shares purchased for Executive
Share Incentive Scheme
41B
–
(93)
–
–
–
–
–
(93)
–
(93)
– Vesting and forfeiture of
award shares of Executive
Share Incentive Scheme
41B
1
88
–
–
(87)
–
(2)
–
–
–
– Employee share-based
payments
–
–
–
–
119
–
–
119
–
119
– Equity contributions from
holders of non-controlling
interests
–
–
–
–
–
–
–
–
125
125
– Dividends to holders of
non-controlling interests
–
–
–
–
–
–
–
–
(569)
(569)
Balance as at 31 December 2023
61,083
(269)
3,848
(522)
178
(1,662)
115,688
178,344
512
178,856
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
183
ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF CASH FLOWS
The notes on pages 185 to 266 form part of the consolidated financial statements.
for the year ended 31 December in HK$ million
Note
2024
2023
Cash flows from operating activities
Cash generated from operations
42
19,741
13,471
Purchase of tax reserve certificates
(60)
(57)
Current tax paid
– Hong Kong Profits Tax paid
(762)
(1,975)
– Tax paid outside Hong Kong
(428)
(242)
Net cash generated from operating activities
18,491
11,197
Cash flows from investing activities
Capital expenditure
– Purchase of assets for Hong Kong transport and related operations
(11,486)
(8,463)
– Hong Kong railway extension projects
(5,817)
(2,309)
– Investment property projects and fitting out work
(666)
(1,250)
– Shenzhen Metro Line 13 Phase 1 project
(1,310)
(429)
– Other capital projects
(137)
(125)
(19,416)
(12,576)
Fixed and variable annual payments
(3,105)
(1,073)
Receipts in respect of property development
3,007
7,109
Payments in respect of property development
(1,259)
(1,007)
Decrease/(increase) in bank deposits with more than three months to
maturity when placed or pledged, and structured bank deposits
750
(907)
Dividends and distributions received from associates
639
577
Investments in associates and joint ventures
(73)
(52)
(Purchase)/redemption of investments in securities
(1,154)
203
Others
344
2
Net cash used in investing activities
(20,267)
(7,724)
Cash flows from financing activities
Purchase of shares for Executive Share Incentive Scheme
(207)
(93)
Proceeds from loans and capital market instruments
45,842
74,057
Repayment of loans, capital market instruments and others
(27,405)
(62,179)
Interest and finance charges paid
(2,497)
(1,869)
Interest received
1,177
563
Capital element of lease rentals paid
(189)
(567)
Equity contributions from holders of non-controlling interests
6
125
Repayment of loan from holders of non-controlling interests
(13)
–
Dividends paid to shareholders of the Company
(7,946)
(7,595)
Dividends paid to holders of non-controlling interests
(265)
(569)
Net cash generated from financing activities
8,503
1,873
Net increase in cash and cash equivalents
6,727
5,346
Cash and cash equivalents at 1 January
15,575
10,241
Effect of exchange rate changes
(466)
82
Cash and cash equivalents reclassified as disposal group held for sale
49
–
(94)
Cash and cash equivalents at 31 December
34
21,836
15,575
184
MTR CORPORATION LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1
Statement of Compliance
These financial statements have been prepared in compliance with the Hong Kong Companies Ordinance and the applicable disclosure
provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”). These
financial statements have also been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”), which
collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and
Interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). The HKFRSs are fully converged with International
Financial Reporting Standards in all material respects. Material accounting policies adopted by the Group is set out in note 2.
The HKICPA has issued a number of amendments to HKFRSs that are first effective or available for early adoption for accounting periods
beginning on or after 1 January 2024. None of these have had a material effect on how the Group’s results and financial position for the current
or prior periods have been prepared or presented. The Group has not applied any new standard or interpretation that is not yet effective for the
current accounting period (note 52).
2
Material Accounting Policies
A
Basis of Preparation of the Consolidated Financial Statements
(i)
The measurement basis used in the preparation of the consolidated financial statements is the historical cost basis except that the
following assets and liabilities are stated at their fair value as explained in the accounting policies set out below:
•
investment properties (note 2E(i));
•
self-occupied buildings (note 2E(ii));
•
investments in securities (note 2M); and
•
derivative financial instruments (note 2T).
(ii)
The preparation of the consolidated financial statements in conformity with HKFRSs requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenditure. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the judgements and estimations about carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
Judgements made by management in the application of HKFRSs that have significant effect on the consolidated financial statements and
estimates are discussed in note 51.
B
Basis of Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries (together referred to as the “Group”)
and the Group’s interest in associates and joint ventures (note 2D) made up to 31 December each year. The results of subsidiaries acquired
or disposed of during the year are included in the consolidated statement of profit or loss from or to the date of their acquisition or disposal,
as appropriate.
C
Subsidiaries and Non-controlling Interests
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed, or has rights, to variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity. When assessing whether the Group has
power, only substantive rights (held by the Group or other parties) are considered.
An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date
that control ceases. Intra-group balances, transactions and cash flows and any unrealised profits arising from intra-group transactions are
eliminated in full in preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated in
the same way as unrealised profits, but only to the extent that there is no evidence of impairment.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss,
consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of financial
position respectively.
When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain or loss
being recognised in the consolidated statement of profit or loss. Any interest retained in that former subsidiary at the date when control is lost is
recognised at fair value and this amount is regarded as the fair value on initial recognition of a financial asset or, when appropriate, the cost on
initial recognition of an investment in an associate or a joint venture (note 2D).
Investments in subsidiaries are carried in the Company’s statement of financial position at cost less any impairment losses (note 2G(ii)).
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
185
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2
Material Accounting Policies (continued)
D
Associates and Joint Ventures
An associate is an entity over which the Group or the Company has significant influence, but not control or joint control, over its management,
including participation in the financial and operating policy decisions.
A joint venture is an arrangement whereby the Group or the Company and other parties contractually agree to share control of the arrangement,
and have rights to the net assets of the arrangement.
An investment in an associate or a joint venture is accounted for in the consolidated financial statements of the Group using the equity method
and is initially recorded at cost and adjusted thereafter for the post acquisition change in the Group’s share of the investees’ net assets and any
impairment loss relating to the investment (note 2G(ii)). At each reporting date, the Group assesses whether there is any objective evidence
that the investment is impaired. The Group’s share of the post-acquisition post-tax results of the investees and any impairment losses for the
year is recognised in the consolidated statement of profit or loss, whereas the Group’s share of the post-acquisition items of the investees’ other
comprehensive income is recognised in the consolidated statement of comprehensive income.
When the Group’s share of losses equals or exceeds its interest in the associate or the joint venture, the Group’s interest is reduced to nil and
recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments
on behalf of the investee. For this purpose, the Group’s interest in the investee is the carrying amount of the investment under the equity
method together with any other long-term interests that in substance form part of the Group’s net investment in the associate or the joint
venture (after applying the expected credit losses (“ECL”) model to such other long-term interests where applicable (note 2G(i)).
Unrealised profits and losses resulting from transactions between the Group and its associates and joint ventures are eliminated to the extent
of the Group’s interest in the investee, except where unrealised losses provide evidence of an impairment of the asset transferred, in which case
they are recognised immediately in the consolidated statement of profit or loss.
If an investment in an associate becomes an investment in a joint venture or vice versa, retained interest is not remeasured. Instead, the
investment continues to be accounted for under the equity method.
In all other cases, when the Group ceases to have significant influence over an associate or joint control over a joint venture, it is accounted for as
a disposal of the entire interest in that investee, with a resulting gain or loss being recognised in the consolidated statement of profit or loss. Any
interest retained in that former investee at the date when significant influence or joint control is lost is recognised at fair value and this amount is
regarded as the fair value on initial recognition of a financial asset.
In the Company’s statement of financial position, investments in associates and joint ventures are stated at cost less impairment losses
(note 2G(ii)).
E
Fixed Assets
(i)
Investment Properties
Investment properties are land and/or buildings which are owned or held under a leasehold interest to earn rental income and/or for capital
appreciation. These include properties that are being constructed or developed for future use as investment properties.
Investment properties are stated at fair value as measured semi-annually by independent professionally qualified valuers. Gains or losses arising
from changes in the fair value are recognised in the consolidated statement of profit or loss in the period in which they arise.
(ii)
Other Property, Plant and Equipment
Leasehold land registered and located in the Hong Kong Special Administrative Region is stated at cost less accumulated depreciation and
impairment losses (notes 2H and 2G(ii)). Self-occupied leasehold buildings where the Group is the registered owner of the property interest
are stated at their fair value at the date of revaluation less any subsequent accumulated depreciation (note 2H). Revaluations are performed by
independent professionally qualified valuers semi-annually, with changes in the fair value arising on revaluations recorded as movements in the
fixed assets revaluation reserve, except:
(a)
where the balance of the fixed assets revaluation reserve relating to a self-occupied leasehold building is insufficient to cover a revaluation
deficit of that property, the excess of the deficit is charged to the consolidated statement of profit or loss; and
(b)
where a revaluation deficit had previously been charged to the consolidated statement of profit or loss and a revaluation surplus
subsequently arises, this surplus is firstly credited to the consolidated statement of profit or loss to the extent of the deficit previously charged to
the consolidated statement of profit or loss, and thereafter taken to the fixed assets revaluation reserve.
Civil works and plant and equipment, including right-of-use assets arising from freehold or leasehold properties where the Group is not the
registered owner of the property interest, and right-of-use assets arising from leases of underlying plant and equipment are stated at cost less
accumulated depreciation and impairment losses (notes 2H and 2G(ii)).
186
MTR CORPORATION LIMITED
2
Material Accounting Policies (continued)
E
Fixed Assets (continued)
Assets under construction include capital works on operating railway and are stated at cost less impairment losses (note 2G(ii)). Cost comprises
direct costs of construction, such as materials, staff costs and overheads, together with interest expense capitalised during the period of
construction or installation and testing. The cost of abnormal amounts of wasted material, labour, or other resources incurred is not included
in the costs of the asset and charged as an expense in the consolidated statement of profit or loss when incurred. Capitalisation of these costs
ceases and the asset concerned is transferred to the appropriate fixed assets category when substantially all the activities necessary to prepare
the asset for its intended use are completed.
In the event any assets under construction are no longer held for use and it is not probable that future economic benefits associated with
these assets will flow to the Group, the associated cost capitalised by then will be charged to profit or loss in the reporting period when such
conditions met.
(iii)
Service Concession Assets
Where the Group enters into service concession arrangements under which the Group acquires the right to access, use and operate certain
assets for the provision of public services, upfront payments and expenditure directly attributable to the acquisition of the service concession
up to inception of the service concession are capitalised as service concession assets and amortised on a straight-line basis over the period of
the service concession. Annual payments over the period of the service concession with the amounts fixed at inception are capitalised at their
present value, calculated using the incremental long term borrowing rate determined at inception as the discount rate, as service concession
assets and amortised on a straight-line basis over the period of the service concession, with a corresponding liability recognised as obligations
under service concession. Annual payments for the service concession which are not fixed or determinable at inception and are contingent on
future revenue are charged to the consolidated statement of profit or loss in the period when incurred.
Where the Group enters into service concession arrangements under which the Group constructs, uses and operates certain assets for the
provision of public services, construction revenue and costs are recognised in the consolidated statement of profit or loss by reference to the
stage of completion at the end of the reporting period while the fair value of construction service is capitalised initially as service concession
assets in the consolidated statement of financial position and amortised on a straight-line basis over the shorter of the assets’ useful lives and the
period in which the service concession assets are expected to be available for use by the Group.
Expenditure for assets subject to service concession is capitalised and amortised on a straight-line basis at rates sufficient to write off their cost
less their estimated residual value, if any, over the shorter of the assets’ useful lives and the remaining period in which the service concession
assets are expected to be available for use by the Group.
Service concession assets are carried at cost less accumulated amortisation and impairment losses, if any (notes 2H and 2G(ii)).
(iv)
Subsequent Expenditure and Gains or Losses on Retirement or Disposal
Subsequent expenditure relating to the replacement and/or upgrade of certain parts of an existing asset is recognised in the carrying amount
of the asset if it is probable that future economic benefit will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of those parts that are replaced is derecognised, with any gain or loss arising therefrom being dealt with in the consolidated statement
of profit or loss.
Expenditure on repairs or maintenance of an existing asset to restore or maintain the originally assessed standard of performance of that asset is
charged as an expense in the consolidated statement of profit or loss when incurred.
Gains or losses arising from the retirement or disposal of an asset are determined as the difference between the net disposal proceeds and the
carrying amount of the asset. Such gains or losses are recognised as income or expense in the consolidated statement of profit or loss on the
date of retirement or disposal. Any related revaluation surplus is transferred from the fixed assets revaluation reserve to retained profits and is
not re-classified to consolidated statement of profit or loss.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
187
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2
Material Accounting Policies (continued)
F
Leased Assets
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the
customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.
(i)
As a Lessee
At the lease commencement date, the Group recognises a right-of-use asset and a lease liability, except for short-term leases that have a
lease term of 12 months or less and leases of low-value assets. When the Group enters into a lease in respect of a low-value asset, the Group
decides whether to capitalise the lease on a lease-by-lease basis. The lease payments associated with those leases which are not capitalised are
recognised as an expense on a systematic basis over the lease term.
Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments payable over the lease term,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate.
After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method.
The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the initial amount of the lease liability
plus any lease payments made at or before the commencement date, and any initial direct costs incurred. Where applicable, the cost of the
right-of-use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site
on which it is located, discounted to their present value, less any lease incentives received. The right-of-use asset is subsequently stated at cost
less accumulated depreciation and impairment losses (notes 2H and 2G(ii)), except for the following types of right-of-use asset:
– right-of-use assets that meet the definition of investment property are carried at fair value in accordance with note 2E(i);
– right-of-use assets related to self-occupied leasehold buildings where the Group is the registered owner of the leasehold interest are carried
at fair value in accordance with note 2E(ii); and
– right-of-use assets related to interests in leasehold land where the interest in the land is held as inventory are carried at the lower of cost and
net realisable value in accordance with note 2L.
The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, or there is a change in
the Group’s estimate of the amount expected to be payable under a residual value guarantee, or there is a change arising from the reassessment
of whether the Group will be reasonably certain to exercise a purchase, extension or termination option. When the lease liability is remeasured
in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying
amount of the right-of-use asset has been reduced to zero.
The lease liability is also remeasured when there is a change in the scope of a lease or the consideration for a lease that is not originally provided
for in the lease contract (“lease modification”) and that is not accounted for as a separate lease. In this case the lease liability is remeasured based
on the revised lease payments and lease term using a revised discount rate at the effective date of the modification.
(ii)
As a Lessor
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. A lease is classified
as a finance lease if it transfers substantially all the risks and rewards incidental to the ownership of an underlying assets to the lessee. If this is not
the case, the lease is classified as an operating lease.
When a contract contains lease and non-lease components, the Group allocates the consideration in the contract to each component on a
relative stand-alone selling price basis. The rental income from operating leases is recognised in accordance with note 2Y(ii).
G
Impairment of Assets
(i)
Credit Losses from Financial Instruments, Contract Assets and Lease Receivables
For the Group’s trade receivables, contract assets and lease receivables, the Group recognises a loss allowance for ECL which is measured at an
amount equal to “lifetime ECLs” (which are the losses that are expected to result from all possible default events over the expected lives of the
items to which the ECL model applies). For the Group’s other financial assets measured at amortised cost, the loss allowance is measured at
an amount equal to “12-month ECLs” (which are losses that are expected to result from possible default events within the 12 months after the
reporting date) unless there has been a significant increase in credit risk of the financial instrument since initial recognition, in which case the loss
allowance is measured at an amount equal to “lifetime ECLs”. Financial assets measured at fair value are not subject to the ECL assessment.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all expected cash shortfalls (i.e. the
difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive).
In assessing whether the credit risk of a financial instrument has increased significantly since initial recognition, the Group compares the risk
of default occurring on the financial instrument assessed at the reporting date with that assessed at the date of initial recognition. The Group
considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking
information that is available without undue cost or effort.
ECLs are remeasured at each reporting date to reflect changes in the financial instrument’s credit risk since initial recognition. Any change in
the ECL amount is recognised as an impairment gain or loss in profit or loss. The Group recognises an impairment gain or loss for all financial
instruments with a corresponding adjustment to their carrying amount through a loss allowance account.
188
MTR CORPORATION LIMITED
2
Material Accounting Policies (continued)
G
Impairment of Assets (continued)
(ii)
Impairment of Other Assets
Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following assets
may be impaired or, except in the case of goodwill, an impairment loss previously recognised no longer exists or may have decreased:
•
fixed assets (including right-of-use assets and service concession assets but other than assets carried at revalued amounts);
•
property management rights;
•
goodwill;
•
railway construction in progress;
•
deferred expenditure; and
•
investments in subsidiaries, associates and joint ventures.
If any such indication exists, the asset’s recoverable amount is estimated. In addition, the recoverable amount for goodwill is estimated annually
whether or not there is any indication of impairment.
The recoverable amount of an asset is the greater of its fair value less costs of disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the
recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).
An impairment loss is recognised in the consolidated statement of profit or loss whenever the carrying amount of an asset, or the
cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce
the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be
reduced below its individual fair value less costs of disposal (if measurable) or value in use (if determinable).
In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable change in the estimates used to determine
the recoverable amount of the asset. An impairment loss in respect of goodwill is not reversed.
A reversal of impairment losses is limited to the asset’s carrying amount that would have been determined had no impairment loss been
recognised in prior years. Reversals of impairment losses are credited to the consolidated statement of profit or loss in the year in which the
reversals are recognised.
H
Depreciation and Amortisation
(i)
Investment properties are not depreciated.
(ii)
Fixed assets other than investment properties (note 2E(i)), assets under construction (note 2H(iii)) and service concession assets which are
amortised over the entire or remaining period of the service concession (note 2E(iii)) are depreciated or amortised on a straight-line basis at rates
sufficient to write off their cost or valuation, less their estimated residual value, if any, over their estimated useful lives as follows:
•
Land and Buildings
Self-occupied buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . the shorter of 50 years and the unexpired term of the lease
Leasehold land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . the unexpired term of the lease
•
Civil Works
Excavation and boring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Indefinite
Tunnel linings, underground civil structures, overhead structures and immersed tubes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 years
Station building structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 years
Depot structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 years
Kiosk structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 – 30 years
Cableway station tower and theme village structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 – 30 years
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
189
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2
Material Accounting Policies (continued)
H
Depreciation and Amortisation (continued)
•
Plant and Equipment
Rolling stock and components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 42 years
Platform screen doors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 – 35 years
Rail track . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 – 60 years
Environmental control systems, lifts and escalators, fire protection and drainage system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 – 45 years
Power supply systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 – 40 years
Aerial ropeway and cabin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 – 27 years
Automatic fare collection systems, metal station kiosks, and other mechanical equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 – 25 years
Train control and signalling equipment, station announcement systems, telecommunication systems and advertising panels . . . . . . . . 5 – 35 years
Station architectural finishes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 – 30 years
Fixtures and fittings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 – 25 years
Maintenance equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 – 40 years
Office furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 – 15 years
Computer software licences and applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 – 10 years
Computer equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 – 5 years
Cleaning equipment and tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 – 12 years
Where parts of an item of property, plant and equipment have different useful lives, each part is depreciated or amortised separately. The useful
lives of the various categories of fixed assets are reviewed annually in the light of actual asset condition, usage experience and the current asset
replacement programme.
(iii)
No depreciation or amortisation is provided on assets under construction until the construction is completed and the assets are ready for
their intended use.
I
Construction Costs of Railway Construction Projects
(i)
Costs incurred by the Group in respect of proposed railway related construction projects (including consultancy fees, in-house staff costs
and overheads) are dealt with as follows:
•
where the proposed projects are at a preliminary review stage and are not yet considered probable of materialising, the costs concerned
are charged to the consolidated statement of profit or loss; and
•
where the proposed projects are at a detailed study stage, having been supported by a feasible financial plan, the costs concerned are
recorded as deferred expenditure until such time as a project agreement is reached, whereupon the costs are transferred to railway
construction in progress which is stated at cost less impairment losses (note 2G(ii)). In the event the project agreement cannot be reached
and the costs concerned are not considered recoverable, the costs concerned are charged to the consolidated statement of profit or loss
immediately.
(ii)
After entering into a project agreement, all costs (including construction costs, consultancy fees, inhouse staff costs and overhead)
incurred in the construction of the railway are dealt with as railway construction in progress which is stated at cost less impairment losses
(note 2G(ii)). Upon commissioning of the railway line, the relevant costs are transferred to fixed assets (note 2E).
J
Joint Operations
A joint operation is an arrangement whereby the Group and other parties contractually agree to share control of the arrangement, and have
rights to the assets, and obligations for the liabilities, relating to the arrangement. The Group recognises its interest in the joint operation by
combining the assets, liabilities, revenues and expenses relating to its interest with similar items on a line by line basis. Consistent accounting
policies are applied for like transactions and events in similar circumstances.
The arrangements entered into by the Group with developers for Hong Kong property development without establishing separate entities
are considered to be joint operations in accordance with HKFRS 11, Joint Arrangements. Under the development arrangements, the Group is
normally responsible for its own costs, including in-house staff costs and the costs of enabling works, and the developers normally undertake
to pay for all other project costs such as land premium (or such remaining portion as not already paid by the Group), construction costs,
professional fees, etc. In respect of its interests in such operations, the Group accounts for the purchase costs of development rights, costs of
enabling works (including any interest accrued) and land costs (including any land premiums) incurred net of payments or distributions of the
assets received as property development in progress. In cases where payments or distributions of the assets received from developers exceed
the related expenditures incurred by the Group, such excess is recorded as deferred income. Expenses incurred by the Group on staff, overhead
and consultancy fees in respect of these developments are also capitalised as property development in progress. The Group’s share of profits
earned from such operations is recognised in the consolidated statement of profit or loss on the basis of note 2K(iii) after netting off any related
balance in property development in progress at that time.
190
MTR CORPORATION LIMITED
2
Material Accounting Policies (continued)
K
Property Development
(i)
Property development in progress comprise costs incurred by the Group in respect of site preparation, land costs, acquisition of
development rights, aggregate cost of development, borrowing costs capitalised, provisions and other direct expenses, and are stated initially
at their cost and subsequently carried at the lower of cost and net realisable value. Net realisable value represents the estimated selling price as
determined by reference to management estimates based on prevailing market conditions less estimated costs of completion and costs to be
incurred in selling the property.
(ii)
Payments or distributions of the assets received from developers in respect of Hong Kong property developments under joint operations
arrangement are offset against the amounts in property development in progress attributable to that development. Payments or distributions
of the assets received from developers in excess of the balance in property development in progress are transferred to deferred income which
is included in the consolidated statement of financial position under “Creditors, other payables and provisions”. In these cases, further costs
subsequently incurred by the Group in respect of that development are charged against deferred income.
(iii)
Profits arising from the development of properties in Hong Kong undertaken under joint operations arrangement are recognised in the
consolidated statement of profit or loss as follows:
•
where the Group receives payments from developers in excess of the balance in property development in progress (i.e. resulting in
deferred income), profits arising from such payments are recognised when the foundation and site enabling works are complete
and acceptable for development, and after taking into account the outstanding risks and obligations, if any, retained by the Group in
connection with the development;
•
where the Group receives distributions of the assets of the developments in excess of the balance in property development in progress
(i.e. resulting in deferred income), profit is recognised based on the fair value of such assets at the time of receipt, and after taking into
account the outstanding risks and obligations, if any, retained by the Group in connection with the development; and
•
where the Group receives a right to a share of the net surplus from the development, the Group’s share of the profit is initially recognised
once the amounts of revenue (including the fair value of any unsold properties) and costs for the development as a whole can be
estimated reliably. The Group’s interest in any unsold properties is subsequently remeasured on a basis consistent with the policy set out
in note 2L and included within properties held for sale.
Upon recognition of profit, property development in progress relating to that development is charged to the consolidated statement of profit
or loss, if any. Deferred income arising from the outstanding risks and obligations retained by the Group in connection with the development
is included in the consolidated statement of financial position under “Creditors, other payables and provisions”. The outstanding risks and
obligations retained by the Group in connection with the development will be reassessed at the end of each reporting period. Any reduction
in the amount of outstanding risks and obligations will be accounted for as a decrease in deferred income and a corresponding profit in that
reporting period.
(iv)
Revenue arising from sales of properties not under joint operations arrangement is recognised when the legal assignment is completed,
which is the point in time when the purchaser has the ability to direct the use of the properties and obtain substantially all of the remaining
benefits of the properties. Deposits and instalments received on properties sold prior to the date of revenue recognition are included in the
consolidated statement of financial position under “Creditors, other payables and provisions”.
(v)
Where costs are incurred for the construction and/or the related fitting out costs for the properties under construction to be received from
a development, those costs are initially capitalised in deferred expenditure before the receipt of such properties, and subsequently recognised as
the respective assets upon receipt.
L
Properties Held for Sale
Where properties are held for sale, those properties are stated initially at their cost and subsequently carried at the lower of cost and net
realisable value.
For those properties in Hong Kong, cost represents the fair value, as determined by reference to an independent open market valuation, upon
the recognition of profits arising from the development as set out in note 2K(iii).
For those properties in Mainland China, cost is determined by the apportionment of the development costs attributable to the unsold properties.
Net realisable value represents the estimated selling price less costs to be incurred in selling the properties.
The amount of any write-down of properties to net realisable value is recognised as an expense in the period the write-down occurs. The
amount of any reversal of any write-down of properties arising from an increase in net realisable value is recognised as a reduction in the cost of
properties sold in the period in which the reversal occurs.
When properties held for sale are sold, the carrying amount of those properties is recognised in the consolidated statement of profit or loss.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
191
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2
Material Accounting Policies (continued)
M
Investments in Securities
Investments in securities (other than investments in subsidiaries, associates and joint ventures) are classified as at fair value through profit or loss.
Changes in the fair value of the investments (including interest) are recognised in profit or loss.
Investments in securities are recognised/derecognised on the date the Group commits to purchase/sell the investments. Profit or loss on disposal
of investments in securities are determined as the difference between the net disposal proceeds and the carrying amount of the investments and
are accounted for in the consolidated statement of profit or loss as they arise.
N
Stores and Spares
Stores and spares used for business operation are categorised as either revenue or capital. Revenue spares are stated at cost, using the weighted
average cost method and are recognised as expenses in the period in which the consumption occurs. Provision is made for obsolescence where
appropriate. Capital spares are included in fixed assets and stated at cost less accumulated depreciation and impairment losses (note 2H and
2G(ii)). Depreciation is charged at the rates applicable to the relevant fixed assets against which the capital spares are held in reserve.
O
Contract Assets and Contract Liabilities
A contract asset is recognised when the Group recognises revenue (note 2Y) before being unconditionally entitled to the consideration under
the payment terms set out in the contract. Contract assets are assessed for ECL in accordance with the policy set out in note 2G(i) and are
reclassified to receivables when the right to the consideration has become unconditional (note 2Q).
A contract liability is recognised when the customer pays consideration before the Group recognises the related revenue (note 2Y). A contract
liability would also be recognised if the Group has an unconditional right to receive consideration before the Group recognises the related
revenue. In such cases, a corresponding receivable would also be recognised (note 2Q).
For a single contract with the customer, either a net contract asset or a net contract liability is presented. For multiple contracts, contract assets
and contract liabilities of unrelated contracts are not presented on a net basis.
When the contract includes a significant financing component, the contract balance includes interest accrued under the effective interest
method (note 2Z).
P
Cash and Cash Equivalents
Cash and cash equivalents comprise cash at banks and on hand, demand deposits with banks and other financial institutions, and short-term
highly liquid investments that are readily convertible into known amounts of cash and subject to an insignificant risk of changes in value with
a maturity at acquisition within three months. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash
management are also included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows.
Q
Debtors and Other Receivables
A receivable is recognised when the Group has an unconditional right to receive consideration. A right to receive consideration is unconditional
if only the passage of time is required before payment of that consideration is due. If revenue has been recognised before the Group has an
unconditional right to receive consideration, the amount is presented as a contract asset (note 2O). Receivables are stated at amortised cost
using the effective interest method less allowance for credit losses (note 2G(i)).
R
Interest-bearing Borrowings
Interest-bearing borrowings are measured initially at fair value net of transaction costs incurred. The interest-bearing borrowings not subject to
fair value hedges are subsequently stated at amortised costs using effective interest method. Interest expense is recognised in accordance with
the Group’s accounting policy for interest and finance charges (note 2Z).
Subsequent to initial recognition, the carrying amount of interest-bearing borrowings subject to fair value hedges is remeasured and the change
in fair value attributable to the risk being hedged is recognised in the consolidated statement of profit or loss to offset the effect of the gain or
loss on the related hedging instrument.
S
Creditors and Other Payables
Creditors and other payables are stated at amortised cost if the effect of discounting would be material, otherwise they are stated at cost.
T
Derivative Financial Instruments and Hedging Activities
The Group uses derivative financial instruments such as interest rate swaps and currency swaps to manage its interest rate and foreign exchange
exposure. Based on the Group’s policies, these instruments are used solely for reducing or eliminating financial risks associated with the Group’s
investments and liabilities and not for trading or speculation purposes.
Derivatives are recognised at fair value and are remeasured at their fair value at the end of each reporting period. The method of recognising the
resulting gain or loss depends on whether the derivative is designated as a hedging instrument and the nature of the item being hedged.
192
MTR CORPORATION LIMITED
2
Material Accounting Policies (continued)
T
Derivative Financial Instruments and Hedging Activities (continued)
Where hedge accounting applies, the Group designates derivatives employed as either: (1) a fair value hedge: to hedge the fair value of
recognised liabilities; (2) a cash flow hedge: to hedge the variability in cash flows of a recognised liability or the foreign currency risk of a firm
commitment; or (3) a hedge of a net investment: to hedge the variability in cash flows of a monetary item that is receivable from or payable to a
foreign operation where the settlement for the monetary item is neither planned nor likely to occur in foreseeable future.
(i)
Fair Value Hedge
Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recorded in the consolidated statement of profit
or loss, together with any changes in the fair value of the hedged assets or liabilities that are attributable to the hedged risk.
(ii)
Cash Flow Hedge
The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is recognised in other
comprehensive income which is accumulated separately in equity in the hedging reserve. The gain or loss relating to the ineffective portion is
recognised immediately in the consolidated statement of profit or loss.
Amounts previously recognised in other comprehensive income and accumulated in equity are transferred to the consolidated statement of
profit or loss in the periods when the hedged item is recognised in the consolidated statement of profit or loss. However, when the transaction
in respect of the hedged item results in the recognition of a non-financial asset or liability, the associated gains and losses that were previously
recognised in other comprehensive income and accumulated in equity are transferred from equity and included in the initial cost or carrying
amount of the non-financial asset or liability.
When a hedging instrument expires or is sold, terminated or exercised, or the Group revokes designation of the hedge relationship but the
transaction in respect of the hedged item is still expected to occur, the cumulative gain or loss existing in equity at that time remains in equity
until the transaction occurs and it is recognised in accordance with the above policy. However, if the transaction in respect of the hedged item is
no longer expected to occur, the gain or loss accumulated in equity is immediately transferred to the consolidated statement of profit or loss.
(iii)
Hedge of a Net Investment
The effective portion of changes in the fair value of derivatives that are designated and qualified as hedges of net investments in foreign
operations is recognised in other comprehensive income which is accumulated separately in equity in the exchange reserve. The gain or loss
relating to the ineffective portion is recognised immediately in the consolidated statement of profit or loss.
Amounts previously recognised in other comprehensive income and accumulated in equity are transferred to the consolidated statement of
profit or loss as a reclassification adjustment on the disposal or partial disposal of the foreign operation.
(iv)
Derivatives that do not qualify for Hedge Accounting
Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the consolidated
statement of profit or loss.
U
Employee Benefits
(i)
Salaries, annual leave, other allowances, contributions to defined contribution retirement schemes, including contributions to Mandatory
Provident Funds (“MPF”) as required under the Hong Kong Mandatory Provident Fund Schemes Ordinance, and other costs of non-monetary
benefits are accrued in the period in which the associated services are rendered by employees of the Group. Where these benefits are incurred
for staff relating to construction projects, capital works and property developments, they are capitalised as part of the cost of the qualifying
assets. In other cases, they are recognised as expenses in the consolidated statement of profit or loss as incurred.
(ii)
The Group’s net obligation from defined benefit plans includes defined benefit retirement schemes operated or participated by the Group
and long service payment (“LSP”) under the Hong Kong Employment Ordinance. The amount is calculated separately for each plan by estimating
the amount of future benefit that employees have earned in return for their service in the current and prior years and discounting that amount.
For defined benefit retirement schemes’ obligation, the amount is estimated after deducting the fair value of scheme assets. For LSP obligation,
the estimated amount of future benefit is determined after deducting the negative service cost arising from the accrued benefits derived from
the Group’s mandatory contributions to the retirement schemes that have been vested with employees, which are deemed to be contributions
from the relevant employees.
The calculation of net obligation from defined benefit plans is performed by a qualified actuary using the Projected Unit Credit Method. For
defined benefit retirement schemes, when the calculation results in a benefit to the Group, the recognised asset is limited to the present
value of economic benefits available in the form of any future refunds from the scheme or reductions in future contributions to the scheme.
Service cost and net interest expense/income on the net defined benefit liability/asset are recognised either as an expense in the consolidated
statement of profit or loss, or capitalised as part of the cost of the relevant construction projects, capital works or property developments, as the
case may be. Current service cost is measured as the increase in the present value of the defined benefit obligation resulting from employee
service in the current period. Net interest expense/income for the period is determined by applying the discount rate used to measure the
defined benefit obligation at the beginning of the reporting period to the net defined benefit liability/asset. The discount rate is the yield at
the end of the reporting period on high quality corporate bonds that have maturity dates approximating the weighted average duration of the
scheme’s obligations.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
193
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2
Material Accounting Policies (continued)
U
Employee Benefits (continued)
When the benefits of a plan are changed, or when a plan is curtailed, current service cost for the portion of the changed benefit related to past
service by employees, or the gain or loss on curtailment, is recognised as an expense in the consolidated statement of profit or loss or capitalised
at the earlier of when the scheme amendment or curtailment occurs and when related restructuring costs or termination benefits are recognised.
Remeasurements arising from defined benefit plans are recognised in other comprehensive income and reflected immediately in retained
profits. Remeasurements comprise of actuarial gains and losses, the return on scheme assets in defined benefit retirement schemes (excluding
amounts included in net interest on the net defined benefit liability/asset) and any change in the effect of the asset ceiling (excluding amounts
included in net interest on the net defined benefit liability/asset).
(iii)
Equity-settled share-based payments are measured at fair value at the date of grant. For award shares under the Executive Share Incentive
Scheme, the amounts to be expensed as staff costs are determined by reference to the fair value of the award shares granted, taking into account
all non-vesting conditions associated with the grants. The total expense is recognised over the relevant vesting periods, with a corresponding
credit to the employee share-based capital reserve under equity.
For those award shares which are amortised over the vesting periods, the Group reviews its estimates of the number of award shares that are
expected to ultimately vest based on the vesting conditions at the end of each reporting period. Any resulting adjustment to the cumulative fair
value recognised in prior years is charged/credited to consolidated statement of profit or loss in the year of the review, with a corresponding
adjustment to the employee share-based capital reserve. Upon vesting of award shares, the related costs of the vested award shares purchased
from the market (the “purchased shares”) and shares received in relation to scrip dividend and shares purchased from the proceeds of
cash ordinary dividends received (the “ordinary dividend shares”) are credited to Shares held for Executive Share Incentive Scheme, with a
corresponding decrease in employee share-based capital reserve for the purchased shares, and decrease in retained profits for the ordinary
dividend shares.
(iv)
For cash-settled share-based payments, a liability equal to the portion of the services received is recognised at the fair value of the shares
determined at the end of each reporting period.
(v)
Termination benefits are recognised at the earlier of when the Group can no longer withdraw the offer of those benefits and when it
recognises restructuring costs involving the payment of termination benefits.
V
Income Tax
(i)
Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Income tax is recognised in the
consolidated statement of profit or loss except to the extent that it relates to items recognised in other comprehensive income or directly in
equity, in which case it is recognised in other comprehensive income or directly in equity respectively.
(ii)
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of
the reporting period, and any adjustment to tax payable in respect of previous years.
(iii)
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial
statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets also arise from unused tax losses and
unused tax credits. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are generally
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction
that affects neither the taxable profit nor the accounting profit and does not give rise to equal taxable and deductible temporary differences
(provided they are not part of a business combination). Deferred tax is not recognised for those related to the income taxes arising from tax laws
enacted or substantively enacted to implement the Pillar Two model rules published by the OECD.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and interests in associates
and joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such
investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise
the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The Group recognised deferred tax assets and deferred tax liabilities separately in relation to its lease liabilities and right-of-use assets.
Where investment properties are carried at their fair value in accordance with the accounting policy set out in note 2E(i), the amount of deferred
tax recognised is measured using the tax rates that would apply on sale of those assets at their carrying value at the end of the reporting period
unless the property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits
embodied in the property over time, rather than through sale. In all other cases, the amount of deferred tax recognised is measured based on the
expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted
at the end of the reporting period. Deferred tax assets and liabilities are not discounted.
The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow the related tax benefit to be utilised. Any such reduction is reversed to the extent
that it becomes probable that sufficient taxable profits will be available.
194
MTR CORPORATION LIMITED
2
Material Accounting Policies (continued)
W
Financial Guarantee Contracts
Financial guarantees are contracts that require the issuer to make specified payments to reimburse the holder of the guarantee for a loss it incurs
because a specified debtor fails to make payment to the holder when due in accordance with the original or modified terms of a debt instrument.
When the Group issues a financial guarantee, where the effect is material, the fair value of the guarantee, after netting off any consideration
received or receivable at inception, is initially debited to the consolidated statement of profit or loss and recognised as deferred income within
creditors, other payables and provisions. The fair value of financial guarantees issued at the time of issuance is determined by reference to fees
charged in an arm’s length transaction for similar services, when such information is obtainable, or is otherwise estimated by reference to interest
rate differentials, by comparing the actual rates charged by lenders when the guarantee is made available with the estimated rates that lenders
would have charged, had the guarantees not been available, where reliable estimates of such information can be made.
The amount of the guarantee initially recognised as deferred income is amortised in the consolidated statement of profit or loss over the term of
the guarantee as income from financial guarantees issued.
The Group monitors the risk that the specified debtor will default on the contract and recognises a provision when ECLs on the financial
guarantees are determined to be higher than the amount carried in creditors, other payables and provisions in respect of the guarantees
(i.e. the amount initially recognised, less accumulated amortisation). To determine ECLs, the Group considers changes in the risk of default
of the specified debtor since the issuance of the guarantee. A 12-month ECL is measured unless the risk that the specified debtor will default
has increased significantly since the guarantee is issued, in which case a lifetime ECL is measured. The same definition of default and the same
assessment of significant increase in credit risk as described in note 2G(i) apply.
As the Group is required to make payments only in the event of a default by the specified debtor in accordance with the terms of the instrument
that is guaranteed, an ECL is estimated based on the expected payments to reimburse the holder for a credit loss that it incurs less any amount
that the Group expects to receive from the holder of the guarantee, the specified debtor or any other party. The amount is then discounted using
the current risk-free rate adjusted for risks specific to the cash flows.
X
Provisions, Contingent Liabilities and Onerous Contracts
(i)
Provisions and Contingent Liabilities
Provisions are recognised when the Group has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow
of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material,
provisions are stated at the present value of the expenditure expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is
disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will
only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the
probability of outflow of economic benefits is remote.
Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, a separate asset is recognised
for any expected reimbursement that would be virtually certain. The amount recognised for the reimbursement is limited to the carrying amount
of the provision.
(ii)
Onerous Contracts
An onerous contract exists when the Group has a contract under which the unavoidable costs of meeting the obligations under the contract
exceed the economic benefits expected to be received from the contract. Provisions for onerous contracts are measured at the present value
of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract, which is determined
based on the incremental cost of fulfilling the obligation under that contract and an allocation of other costs that relate directly to fulfilling that
contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with that contract.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
195
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2
Material Accounting Policies (continued)
Y
Revenue Recognition
Revenue is recognised when control over a product or service is transferred to the customer, or the lessee has the right to use the asset, at the
amount of promised consideration to which the Group is expected to be entitled, excluding those amounts collected on behalf of third parties.
Revenue excludes value added tax or other sales taxes and is after deduction of any trade discounts. Further details of the Group’s revenue and
other income recognition policies are as follows:
(i)
Fare revenue is recognised when the journey is provided.
(ii)
Rental income from investment properties, station kiosks and other railway premises under operating leases is recognised in profit or
loss in equal instalments over the periods covered by the lease term, except where an alternative basis is more representative of the pattern of
benefits to be derived from the use of the leased assets. Lease incentives granted are recognised in the consolidated statement of profit or loss as
an integral part of the aggregate net lease payments receivable. Variable lease payments that do not depend on an index or a rate are recognised
as income in the accounting period in which they are earned.
(iii)
Contract revenue is recognised when the outcome of a consultancy, construction or service contract can be estimated reliably. Contract
revenue is recognised progressively over-time using the cost-to-cost method, i.e. based on the proportion of the actual costs incurred relative
to the estimated total costs. When the outcome of a consultancy, construction or service contract cannot be estimated reliably, revenue is
recognised only to the extent of contract costs incurred that are expected to be recovered.
(iv)
Income from other railway and station commercial businesses, property management, railway franchises and service concessions are
recognised when the services are provided.
Z
Interest and Finance Charges
Interest income and expense directly attributable to the financing of capital projects prior to their completion or commissioning are capitalised.
Exchange differences arising from foreign currency borrowings relating to the acquisition of assets are capitalised to the extent that they are
regarded as an adjustment to capitalised interest costs. Interest expense attributable to other purposes is charged to the consolidated statement
of profit or loss.
Finance charges on lease liabilities are charged to the consolidated statement of profit or loss over the period of the lease so as to produce an
approximately constant periodic rate of charge on the remaining balance of the obligations for each accounting period.
AA Foreign Currency Translation
Foreign currency transactions during the year are translated into Hong Kong dollars and recorded at exchange rates ruling at the transaction
dates. Foreign currency monetary assets and liabilities are translated into Hong Kong dollars at the exchange rates ruling at the end of the
reporting period. Exchange gains and losses are recognised in the consolidated statement of profit or loss.
The results of foreign entities are translated into Hong Kong dollars at the average exchange rates for the year. Statement of financial position
items are translated into Hong Kong dollars at the closing exchange rates at the end of the reporting period. The resulting exchange differences
are recognised in other comprehensive income and accumulated separately in equity in the exchange reserve.
When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative
amount in the exchange reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. On disposal
of a subsidiary that includes a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation that
have been attributed to the non-controlling interests shall be derecognised, but shall not be reclassified to profit or loss. If the Group disposes
of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to non-controlling
interests. When the group disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant
proportion of the cumulative amount is reclassified to profit or loss.
AB Segment Reporting
Operating segments, and the amounts of each segment item reported in the consolidated financial statements, are identified from the financial
information provided regularly to the Group’s most senior executive management for the purposes of allocating resources to, and assessing the
performance of, the Group’s various lines of businesses and operations in different geographical locations.
Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic
characteristics and are similar in respect of the nature of services and products, the type or class of customers, the methods used to provide the
services or distribute the products, and the nature of the regulatory environment. Operating segments which are not individually material may
be aggregated if they share a majority of these criteria.
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MTR CORPORATION LIMITED
2
Material Accounting Policies (continued)
AC Related Parties
For the purposes of these financial statements, a person, or a close member of that person’s family, is related to the Group if that person has
control, joint control or significant influence over the Group, or is a member of the key management personnel of the Group.
An entity is related to the Group if (i) the entity and the Group are members of the same group; (ii) the entity is an associate or joint venture of the
Group; (iii) the entity is a post-employment benefit scheme for the benefit of employees of the Group or of any entity that is a related party of the
Group; (iv) an individual who is a related party of the Group has control or joint control over that entity; (v) a person, or a close member of that
person’s family, who has control or joint control over the Group, has significant influence over the entity or is a member of the key management
personnel of that entity; or (vi) the entity, or any member of a group of which it is a part, provides key management personnel services to the
Group or to the Group’s parent.
AD Government Grants
Government grants are assistance by governments in the form of transfer of resources in return for the Group’s compliance with the conditions
attached thereto. Government grants which represent compensation for the cost of an asset are deducted from the cost of the asset in arriving at
its carrying value to the extent of the amounts received and receivable as at the end of the reporting period. Government grants which represent
compensation for expenses or losses are deducted from the related expenses. Any excess of the amount of grant received or receivable over the
cost of the asset or the expenses or losses at the end of the reporting period are carried forward as advance receipts or deferred income to set off
against the future cost of the asset or future expenses or losses.
AE Disposal Group Held for Sale
Disposal group comprising assets and liabilities, are classified as held for sale if it is highly probable that they will be recovered primarily through
sale rather than through continuing use. Disposal groups are generally measured at the lower of their carrying amount and fair value less costs to
sell. Impairment losses on initial classification as held for sale and subsequent gains and losses on remeasurement are recognised in profit or loss.
Once classified as held for sale, property, plant and equipment are no longer depreciated.
3
Rail Merger with Kowloon-Canton Railway Corporation and Operating
Arrangements for the High Speed Rail and the Shatin to Central Link
A
Rail Merger
On 2 December 2007 (the “Appointed Day”), the Company’s operations merged with those of Kowloon-Canton Railway Corporation (“KCRC”)
(the “Rail Merger”). The structure and key terms of the Rail Merger were set out in a series of transaction agreements entered into between, inter
alia, the Government of the Hong Kong Special Administrative Region (the “HKSAR Government” or “Government”), KCRC and the Company
including the Service Concession Agreement, Property Package Agreements and Merger Framework Agreement.
Pursuant to the Service Concession Agreement (“SCA”), KCRC granted the Company the right to access, use and operate the KCRC system for an
initial term of 50 years (the “Concession Period”), which will be extended if the franchise period (as it relates to the KCRC railway) is extended.
In accordance with the terms of the SCA, the Company paid an upfront lump sum to KCRC on the Appointed Day and is obliged to pay to KCRC
fixed annual payments and variable annual payments (calculated on a tiered basis by reference to the revenue generated from the KCRC system
above certain thresholds).
Under the SCA, the Company is responsible for the expenditure incurred in relation to the maintenance, repair, replacement and upgrade of the
KCRC system (with any new assets acquired being classified as “additional concession property”). To the extent that such expenditure exceeds an
agreed threshold (“Capex Threshold”), the Company will be reimbursed for any above-threshold expenditure at the end of the Concession Period
with such reimbursement to be on the basis of depreciated book value.
Details of the Rail Merger are disclosed in the Company’s circular dated 3 September 2007.
B
Operating Arrangements for the High Speed Rail
On 23 August 2018, the Company entered into relevant agreements with the HKSAR Government and KCRC to supplement and amend the
then current agreements to enable the Company to operate the Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail
Link (“High Speed Rail” or “HSR”) in substantially the same manner as the existing railway network. Under the supplemental service concession
agreement that was executed on 23 August 2018 (“SSCA-HSR”), the operating period with respect to the HSR is for an initial term of 10 years from
23 September 2018 (“Concession Period (High Speed Rail)”), which may be extended subject to further negotiation between the Company and
KCRC in accordance with the mechanism set out in the SSCA-HSR. Under the SSCA-HSR, the Company is responsible for the expenditure incurred
in relation to the maintenance, repair, replacement and upgrade of the concession property of the High Speed Rail (with any new assets acquired
being classified as “additional concession property (High Speed Rail)”). To the extent that such expenditure exceeds an agreed threshold
(“Capex Threshold (High Speed Rail)”), the Company will be reimbursed for any above-threshold expenditure at the end of the concession period
with such reimbursement to be on the basis of depreciated book value.
Details of the SSCA-HSR are disclosed in the Company’s announcement dated 23 August 2018.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
197
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3
Rail Merger with Kowloon-Canton Railway Corporation and Operating
Arrangements for the High Speed Rail and the Shatin to Central Link (continued)
C
Operating Arrangements for the Shatin to Central Link
The Shatin to Central Link (“SCL”) was commissioned in two parts:
(a)
The first part of the SCL extended the previously existing Ma On Shan Railway from Tai Wai Station to the West Rail Line via East Kowloon
to form the Tuen Ma Line. The Tuen Ma Line was in turn commissioned in two phases:
(i)
The First Phase of Tuen Ma Line extended the previously existing Ma On Shan Railway from Tai Wai Station to Kai Tak Station with two new
stations at Hin Keng and Kai Tak, and incorporating one existing station at Diamond Hill, and was commissioned on 14 February 2020.
(ii)
The Second Phase of Tuen Ma Line extends from Kai Tak Station to Hung Hom Station with two new stations at Sung Wong Toi and
To Kwa Wan and incorporating one existing station at Ho Man Tin, and it integrated the existing First Phase of Tuen Ma Line with the West Rail
Line into a single railway line known as the Tuen Ma Line, and was commissioned on 27 June 2021.
(b)
The second part of the SCL extended the East Rail Line (Original) from Hung Hom Station to Admiralty Station via the new
Exhibition Centre Station.
Relevant agreements with the HKSAR Government and KCRC to supplement and amend the current agreements are detailed below.
On 11 February 2020, the Company entered into relevant agreements with the HKSAR Government and KCRC to supplement and amend
the then current agreements to enable the Company to operate the First Phase of Tuen Ma Line in substantially the same manner as the
existing railway network for a period of two years from 14 February 2020 including a supplemental service concession agreement
(“SSCA1-SCL”) with KCRC.
On 21 June 2021, the Company entered into relevant agreements with the HKSAR Government and KCRC to supplement and amend the current
agreements to enable the Company to operate the Tuen Ma Line, in substantially the same manner as the existing railway network for a period
of two years from 27 June 2021 including the supplemental service concession agreement (“SSCA2-SCL”) signed with KCRC. The SSCA2-SCL
replaced the SSCA1-SCL.
On 10 May 2022, the Company entered into relevant agreements with the HKSAR Government and KCRC to supplement and amend the current
agreements to enable the Company to operate the SCL as a whole in substantially the same manner as the existing railway network but for a
period of ten years from 15 May 2022, being the date of commissioning and commercial operation of the second part of the SCL, including the
supplemental service concession agreement (“SSCA3-SCL”) signed with KCRC. The SSCA3-SCL superseded and replaced the SSCA2-SCL. Prior to
the expiry of this ten-year period, the parties are obliged to commence exclusive negotiations in good faith with a view to agreeing the terms
of a legally binding agreement in relation to an extension of SCL concession (including, without limitation, that the Company shall operate the
SCL pursuant to a service concession as defined in the Mass Transit Railway Ordinance (Cap. 556 of the Laws of Hong Kong) (“MTR Ordinance”)),
which shall apply to the SCL the Operating Agreement dated 9 August 2007 and which should in accordance with the Operating Agreement
dated 9 August 2007, enable the Company to earn a commercial rate of return from its operation of the SCL.
Details of the SSCA1-SCL, SSCA2-SCL and SSCA3-SCL are disclosed in the Company’s announcements dated 11 February 2020, 21 June 2021 and
10 May 2022 respectively.
4
Revenue from Hong Kong Transport Operations
Revenue from Hong Kong transport operations comprises:
in HK$ million
2024
2023
Domestic Service
14,507
13,995
Cross-boundary Service
3,562
2,206
High Speed Rail and Intercity Service
3,338
2,503
Airport Express
803
664
Light Rail and Bus
698
658
Others
105
105
23,013
20,131
Domestic Service comprises the Kwun Tong, Tsuen Wan, Island, South Island, Tung Chung, Tseung Kwan O, Disneyland Resort, East Rail
(excluding Cross-boundary Service) and Tuen Ma Lines. Others include mainly by-law infringement surcharge, Octopus load agent fees and other
rail-related income.
198
MTR CORPORATION LIMITED
5
Revenue from Hong Kong Station Commercial Businesses
Revenue from Hong Kong station commercial businesses comprises:
in HK$ million
2024
2023
Duty free shops and kiosks
3,616
3,429
Advertising
1,021
981
Telecommunication income
582
603
Other station commercial income
124
104
5,343
5,117
6
Revenue from Hong Kong Property Rental and Management Businesses
Revenue from Hong Kong property rental and management businesses comprises:
in HK$ million
2024
2023
Property rental income
5,076
4,795
Property management income
303
284
5,379
5,079
7
Revenue and Expenses Relating to Mainland China and International
Subsidiaries
Revenue and expenses relating to Mainland China and international subsidiaries comprise:
2024
2023
in HK$ million
Revenue
Expenses*
Revenue
Expenses*
Melbourne’s Metropolitan Rail Services
12,996
12,131
13,787
12,787
City section of Sydney Metro M1 Metro North West
and Bankstown Line**
1,601
1,445
867
794
Sydney Metro City & Southwest (Design and Delivery)
1,225
1,139
1,318
1,243
MTR Nordic***
3,730
3,558
4,809
5,206
London Elizabeth Line
3,255
3,051
3,178
3,143
Shenzhen Metro Line 4 (“SZL4”)
800
662
792
680
Shenzhen Metro Line 13 (“SZL13”) Phase 1 project
(note 21C)
1,312
1,313
429
429
Others
548
512
775
601
25,467
23,811
25,955
24,883
Property development in Mainland China
–
3
–
13
Total Mainland China and international subsidiaries
25,467
23,814
25,955
24,896
*
Expenses include staff costs of HK$10,599 million (2023: HK$11,092 million) (note 10A) and maintenance and related work costs of HK$3,247 million
(2023: HK$3,548 million).
** City section of Sydney Metro M1 Metro North West and Bankstown Line comprises the former Sydney Metro North West Line and operation of city section of
Sydney Metro City & Southwest opened in August 2024.
*** MTR Nordic comprises the Mälartåg, MTR Tech, MTRX (note 49), Stockholm Commuter Rail (“Stockholms pendeltåg”) and Stockholm Metro operations in Sweden.
The Group disposed of its operations of Beijing Ginza Mall in Mainland China and MTRX in Sweden in May 2024, as well as early terminated the concessions for
Stockholms pendeltåg and Mälartåg in Sweden in March 2024 and June 2024 respectively. In this regard, included in “Expenses relating to Mainland China and
international subsidiaries” during the year ended 31 December 2024 was a net aggregated loss of HK$148 million principally arising from the disposal of the
Group’s operation in Beijing Ginza Mall.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
199
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8
Revenue from Other Businesses
Revenue from other businesses comprises income from:
in HK$ million
in HK$ million
2024
2024
2023
2023
Ngong Ping 360
489
378
Consultancy business
234
213
Miscellaneous businesses
86
109
809
700
9
Segmental Information
The Group’s businesses consist of (i) recurrent businesses (comprising Hong Kong transport operations, Hong Kong station commercial
businesses, Hong Kong property rental and management businesses, and other businesses (collectively referred to as “recurrent businesses in
Hong Kong”), and Mainland China and international railway, property rental and management businesses (referred as “recurrent businesses
outside of Hong Kong”), and both excluding fair value measurement of investment properties) and (ii) property development businesses
(together with recurrent businesses referred to as “underlying businesses”).
The Group manages its businesses by the various business executive committees. In a manner consistent with the way in which information is
reported internally to the Group’s most senior executive management for the purposes of resource allocation and performance assessment, the
Group has identified the following reportable segments:
(i)
Hong Kong transport operations: The provision of passenger operation and related services on the domestic mass transit railway system
in Hong Kong, the Airport Express serving both the Hong Kong International Airport and the AsiaWorld-Expo at Chek Lap Kok, cross-boundary
railway connection with Mainland China at Lo Wu and Lok Ma Chau, the HSR, light rail and bus feeder with railway system in the north-west
New Territories and intercity railway transport with certain cities in Mainland China.
(ii)
Hong Kong station commercial businesses: Commercial activities including the letting of advertising, retail and car parking spaces at
railway stations, the provision of telecommunication, bandwidth and data centre services in railway and other premises, and other commercial
activities within the Hong Kong transport operations network.
(iii)
Hong Kong property rental and management businesses: The letting of retail, office and car parking spaces and the provision of property
management services in Hong Kong.
(iv)
Hong Kong property development: Property development activities at locations near the railway systems in Hong Kong.
(v)
Mainland China and international railway, property rental and management businesses: The construction, operation and maintenance
of mass transit railway systems including station commercial activities outside of Hong Kong and the letting of retail spaces and provision of
property management services in Mainland China.
(vi)
Mainland China property development: Property development activities in Mainland China.
(vii)
Other businesses: Businesses not directly relating to transport services or properties such as Ngong Ping 360, which comprises cable
car operation in Tung Chung and related businesses at the Ngong Ping Village, railway consultancy business, investment in
Octopus Holdings Limited and the provision of project management services to the HKSAR Government.
200
MTR CORPORATION LIMITED
9
Segmental Information (continued)
The results of the reportable segments and reconciliation to the corresponding consolidated totals in the consolidated financial statements
are shown below:
Hong Kong transport services
Mainland China and
international affiliates
in HK$ million
Hong Kong
transport
operations
Hong Kong
station
commercial
businesses
Hong Kong
property
rental and
management
businesses
Hong Kong
property
development
Mainland
China and
international
railway,
property
rental and
management
businesses
Mainland
China
property
development
Other
businesses
Un-allocated
amount
Total
2024
Revenue from contracts with
customers within the scope
of HKFRS 15
23,013
1,742
397
–
25,370
–
795
–
51,317
– Recognised at a point in time
21,616
35
–
–
4,134
–
497
–
26,282
– Recognised over time
1,397
1,707
397
–
21,236
–
298
–
25,035
Revenue from other sources
–
3,601
4,982
–
97
–
14
–
8,694
– Lease payments that are
fixed or depend on an
index or a rate
–
3,506
4,841
–
95
–
10
–
8,452
– Variable lease payments
that do not depend on
an index or a rate
–
95
141
–
2
–
–
–
238
– Others
–
–
–
–
–
–
4
–
4
Total revenue
23,013
5,343
5,379
–
25,467
–
809
–
60,011
Operating expenses
(15,319)
(685)
(1,184)
–
(23,811)
(3)
(702)
–
(41,704)
Project study and business
development expenses
–
–
–
–
(283)
–
–
(120)
(403)
Operating profit/(loss)
before Hong Kong property
development, fair value
measurement of investment
properties, depreciation,
amortisation and variable
annual payment
7,694
4,658
4,195
–
1,373
(3)
107
(120)
17,904
Hong Kong property
development profit from
share of surplus, income and
interest in unsold properties
–
–
–
12,185
–
–
–
–
12,185
Loss from fair value
measurement of
investment properties
–
–
(1,329)
–
(374)
–
–
–
(1,703)
Operating profit/(loss) before
depreciation, amortisation
and variable annual payment
7,694
4,658
2,866
12,185
999
(3)
107
(120)
28,386
Depreciation and amortisation
(5,359)
(265)
(19)
–
(433)
–
(68)
–
(6,144)
Variable annual payment
(2,398)
(620)
(7)
–
–
–
–
–
(3,025)
Share of profit of associates and
joint ventures
–
–
–
–
900
–
440
–
1,340
(Loss)/profit before interest,
finance charges and taxation
(63)
3,773
2,840
12,185
1,466
(3)
479
(120)
20,557
Interest and finance charges
–
–
–
–
88
38
–
(1,158)
(1,032)
Income tax
–
–
–
(1,950)
(404)
(5)
–
(1,099)
(3,458)
(Loss)/profit for the year ended
31 December 2024
(63)
3,773
2,840
10,235
1,150
30
479
(2,377)
16,067
Assets
Fixed assets
135,596
3,762
95,086
–
8,302
–
444
–
243,190
Other segment assets
8,077
897
857
4,882
9,042
1,716
1,033
26,123
52,627
Property management rights
–
–
9
–
–
–
–
–
9
Railway construction in progress
11,375
–
–
–
–
–
–
–
11,375
Property development in progress
–
–
–
42,300
–
–
–
–
42,300
Deferred expenditure
63
–
–
1
–
–
–
–
64
Deferred tax assets
–
–
–
–
479
14
–
28
521
Investments in securities
–
–
–
–
11
372
569
1,000
1,952
Properties held for sale
–
–
–
2,411
–
11
–
–
2,422
Interests in associates and
joint ventures
–
–
–
–
11,264
–
1,775
–
13,039
Total assets
155,111
4,659
95,952
49,594
29,098
2,113
3,821
27,151
367,499
Liabilities
Segment liabilities
27,057
2,445
2,736
29,763
11,240
318
1,495
96,343
171,397
Obligations under service
concession
9,816
–
–
–
153
–
–
–
9,969
Total liabilities
36,873
2,445
2,736
29,763
11,393
318
1,495
96,343
181,366
Other information
Capital expenditure on:
Fixed assets
11,108
333
540
–
2,263
–
40
–
14,284
Deferred expenditure
10
–
–
2
–
–
–
–
12
Railway construction
in progress
7,114
–
–
–
–
–
–
–
7,114
Property development
in progress
–
–
–
1,922
–
–
–
–
1,922
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
201
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9
Segmental Information (continued)
Hong Kong transport services
Mainland China and
international affiliates
in HK$ million
Hong Kong
transport
operations
Hong Kong
station
commercial
businesses
Hong Kong
property
rental and
management
businesses
Hong Kong
property
development
Mainland
China and
international
railway,
property
rental and
management
businesses
Mainland
China
property
development
Other
businesses
Un-allocated
amount
Total
2023
Revenue from contracts with
customers within the scope
of HKFRS 15
20,131
1,701
369
–
25,812
–
639
–
48,652
– Recognised at a point in time
18,764
29
–
–
5,011
–
374
–
24,178
– Recognised over time
1,367
1,672
369
–
20,801
–
265
–
24,474
Revenue from other sources
–
3,416
4,710
–
143
–
61
–
8,330
– Lease payments that are
fixed or depend on an
index or a rate
–
3,212
4,528
–
140
–
7
–
7,887
– Variable lease payments
that do not depend on
an index or a rate
–
204
182
–
3
–
–
–
389
– Others
–
–
–
–
–
–
54
–
54
Total revenue
20,131
5,117
5,079
–
25,955
–
700
–
56,982
Operating expenses
(14,177)
(560)
(1,063)
–
(24,883)
(13)
(579)
–
(41,275)
Project study and business
development expenses
–
–
–
–
(260)
–
–
(137)
(397)
Operating profit/(loss)
before Hong Kong property
development, fair value
measurement of investment
properties, depreciation,
amortisation and variable
annual payment
5,954
4,557
4,016
–
812
(13)
121
(137)
15,310
Hong Kong property
development profit from
share of surplus, income and
interest in unsold properties
–
–
–
2,329
–
–
–
–
2,329
Gain/(loss) from fair value
measurement of
investment properties
–
–
1,522
–
(136)
–
–
–
1,386
Operating profit/(loss) before
depreciation, amortisation
and variable annual payment
5,954
4,557
5,538
2,329
676
(13)
121
(137)
19,025
Depreciation and amortisation
(5,232)
(249)
(11)
–
(548)
–
(65)
–
(6,105)
Provisions for onerous contracts
–
–
–
–
(1,022)
–
–
–
(1,022)
Variable annual payment
(1,833)
(516)
(6)
–
–
–
–
–
(2,355)
Share of profit of associates and
joint ventures
–
–
–
–
757
–
502
–
1,259
(Loss)/profit before interest,
finance charges and taxation
(1,111)
3,792
5,521
2,329
(137)
(13)
558
(137)
10,802
Interest and finance charges
–
–
–
–
2
74
–
(1,215)
(1,139)
Income tax
–
–
–
(294)
(322)
(13)
–
(946)
(1,575)
(Loss)/profit for the year ended
31 December 2023
(1,111)
3,792
5,521
2,035
(457)
48
558
(2,298)
8,088
Assets
Fixed assets
130,049
3,608
98,002
–
6,505
–
472
–
238,636
Other segment assets
7,576
903
859
1,069
11,277
3,416
1,129
18,501
44,730
Property management rights
–
–
10
–
–
–
–
–
10
Railway construction in progress
4,256
–
–
–
–
–
–
–
4,256
Property development in progress
–
–
–
41,728
–
–
–
–
41,728
Deferred expenditure
374
–
–
3
1
–
–
–
378
Deferred tax assets
–
–
–
–
551
18
–
34
603
Investments in securities
–
–
–
–
11
446
405
–
862
Properties held for sale
–
–
–
1,927
–
12
–
–
1,939
Interests in associates and
joint ventures
–
–
–
–
11,074
–
1,711
–
12,785
Assets of disposal group
classified as held for sale
–
–
–
–
499
–
–
–
499
Total assets
142,255
4,511
98,871
44,727
29,918
3,892
3,717
18,535
346,426
Liabilities
Segment liabilities
25,301
2,208
2,793
37,637
12,066
369
1,642
75,396
157,412
Obligations under service
concession
9,898
–
–
–
161
–
–
–
10,059
Liabilities of disposal group
classified as held for sale
–
–
–
–
99
–
–
–
99
Total liabilities
35,199
2,208
2,793
37,637
12,326
369
1,642
75,396
167,570
Other information
Capital expenditure on:
Fixed assets
8,394
276
1,253
–
682
–
31
–
10,636
Deferred expenditure
183
–
–
3
1
–
–
–
187
Railway construction
in progress
2,352
–
–
–
–
–
–
–
2,352
Property development
in progress
–
–
–
1,572
–
–
–
–
1,572
202
MTR CORPORATION LIMITED
9
Segmental Information (continued)
For the year ended 31 December 2024, profit attributable to shareholders of the Company arising from recurrent businesses in Hong Kong
of HK$5,981 million (2023: HK$4,940 million) represents (i) the profit for the year of HK$8,358 million (2023: HK$7,238 million) arising from
recurrent businesses in Hong Kong (after excluding loss from fair value measurement of investment properties of HK$1,329 million (2023: gain of
HK$1,522 million)) and (ii) un-allocated expenses of HK$2,377 million (2023: HK$2,298 million) in Hong Kong.
For the year ended 31 December 2024, profit attributable to shareholders of the Company arising from recurrent businesses outside Hong Kong
of HK$1,229 million (2023: loss of HK$659 million) represents (i) the profit for the year of HK$1,524 million (2023: loss of HK$355 million) arising
from recurrent business outside Hong Kong (after excluding loss from fair value measurement of investment properties of HK$374 million
(2023: HK$136 million) and related income tax credit of HK$nil (2023: HK$34 million)), and (ii) net of profit attributable to non-controlling
interests of HK$295 million (2023: HK$304 million).
For the year ended 31 December 2024, loss attributable to shareholders of the Company arising from fair value measurement of investment
properties of HK$1,703 million (2023: profit of HK$1,420 million) represents loss from fair value remeasurement on investment properties of
HK$3,821 million (2023: gain of HK$26 million), gain from fair value measurement of investment properties on initial recognition from property
development of HK$2,118 million (2023: HK$1,360 million) and related income tax credit of HK$nil (2023: HK$34 million).
Unallocated assets and liabilities mainly comprise cash, bank balances and deposits, investment in bank medium-term notes, tax reserve
certificates, derivative financial assets and liabilities, interest-bearing loans and borrowings, current taxation, as well as deferred tax assets
and liabilities.
Other segment assets mainly include debtors, stores and spares, cash, bank balances and deposits and other assets employed in the operations
of individual business segments.
For the year ended 31 December 2024, revenue from one customer (2023: one customer) of Mainland China and international railway, property
rental and management businesses segment has exceeded 10% of the Group’s revenue. Approximately 18.88% of the Group’s total revenue was
attributable to the customer (2023: 22.31%).
For the year ended 31 December 2024, profit before tax attributable to joint operations of HK$14,250 million (2023: HK$3,695 million)
was recognised.
The following table sets out information about the geographical location of the Group’s revenue from external customers and the Group’s fixed
assets, property management rights, railway construction in progress, property development in progress, deferred expenditure and interests
in associates and joint ventures (“specified non-current assets”). The geographical location of customers is based on the location at which
the services were provided or goods were delivered. The geographical location of the specified non-current assets is based on the physical
location of the asset in the case of investment properties, other property, plant and equipment, railway construction in progress and property
development in progress, the location of the proposed capital project in the case of deferred expenditure, the location of the operation to which
they are related in the case of service concession assets and property management rights and interests in associates and joint ventures.
Revenue from external customers
Specified non-current assets
in HK$ million
2024
2023
2024
2023
Hong Kong SAR (place of domicile)
34,531
30,962
289,820
280,212
Australia
15,822
15,972
841
900
Mainland China and Macao SAR
2,592
2,027
19,300
16,554
Sweden
3,730
4,809
12
116
United Kingdom
3,336
3,212
4
11
25,480
26,020
20,157
17,581
60,011
56,982
309,977
297,793
As at 31 December 2024, aggregated amount of the transaction price allocated to the remaining performance obligation under the Group’s
existing contracts is HK$33,423 million (2023: HK$40,918 million). This amount represents revenue expected to be recognised in the future
mainly from the fixed annual payments in relation to High Speed Rail under the SSCA-HSR and in relation to Shatin to Central Link under
SSCA3-SCL, as well as the construction, consultancy and project management contracts entered into with the Group’s customers. The Group will
recognise the expected revenue in future when or as the work is completed or as the services are rendered which is expected to occur over the
next one to fifteen years.
The Group has applied the practical expedients in paragraph 121 of HKFRS 15 to exempt the disclosure of revenue expected to be recognised in
the future arising from certain contracts with customers in existence at the reporting date that are billed based on the performance completed to
date or have an original expected duration of one year or less.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
203
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10 Operating Expenses
A
Total staff costs include:
in HK$ million
2024
2023
Amounts charged to consolidated statement of profit or loss account under:
– staff costs and related expenses for Hong Kong transport operations
7,636
6,917
– maintenance and related works for Hong Kong transport operations
121
123
– other expense line items for Hong Kong transport operations
108
109
– expenses relating to Hong Kong station commercial businesses
145
136
– expenses relating to Hong Kong property rental and management businesses
245
193
– expenses relating to Mainland China and international subsidiaries
10,599
11,092
– expenses relating to other businesses
315
459
– project study and business development expenses
209
200
– Hong Kong property development profit from share of surplus, income and interest in
unsold properties
–
11
Amounts capitalised in the consolidated statement of financial position under:
– assets under construction and other projects
1,277
1,085
– service concession assets
764
525
– railway construction in progress before offset by government grant
940
753
– property development in progress
349
281
Amounts recoverable
690
663
Total staff costs
23,398
22,547
Amounts recoverable relate to property management, entrustment works and other agreements.
The following expenditures are included in total staff costs:
in HK$ million
2024
2023
Share-based payments
137
119
Contributions to defined contribution retirement schemes and Mandatory Provident Fund
1,304
1,178
Amounts recognised in respect of defined benefit plans
319
386
1,760
1,683
B
Auditors’ remuneration charged to the consolidated statement of profit or loss include:
in HK$ million
2024
2023
Audit services
24
24
Other audit related services
6
6
Tax services
2
3
Other non-audit services
5
–
37
33
C
Loss on disposal of fixed assets of HK$167 million (2023: HK$136 million) is included in operating expenses.
204
MTR CORPORATION LIMITED
11 Remuneration of Members of the Board and the Executive Directorate
A
Remuneration of Members of the Board and the Executive Directorate
(i)
The emoluments of Members of the Board and the Executive Directorate of the Company were as follows:
in HK$ million
Fees
Base pay,
allowances and
benefits in kind
Retirement
scheme
contributions
Variable
remuneration
related to
performance
Total
2024
Members of the Board
– Rex Auyeung Pak-kuen
1.8
–
–
–
1.8
– Andrew Clifford Winawer Brandler
0.6
–
–
–
0.6
– Bunny Chan Chung-bun
0.5
–
–
–
0.5
– Walter Chan Kar-lok
0.6
–
–
–
0.6
– Dorothy Chan Yuen Tak-fai (retired on 22 May 2024)**
0.2
–
–
–
0.2
– Cheng Yan-kee
0.6
–
–
–
0.6
– Hui Siu-wai
0.5
–
–
–
0.5
– Ayesha Macpherson Lau (appointed on 22 May 2024)*
0.3
–
–
–
0.3
– Sunny Lee Wai-kwong
0.6
–
–
–
0.6
– Rose Lee Wai-mun (retired on 22 May 2024)**
0.2
–
–
–
0.2
– Jimmy Ng Wing-ka
0.5
–
–
–
0.5
– Carlson Tong
0.6
–
–
–
0.6
– Sandy Wong Hang-yee
0.5
–
–
–
0.5
– Adrian Wong Koon-man
0.6
–
–
–
0.6
– Anna Wong Wai-kwan
0.6
–
–
–
0.6
– Christopher Hui Ching-yu
0.5
–
–
–
0.5
– Secretary for Transport and Logistics
0.5
–
–
–
0.5
– Permanent Secretary for Development (Works)
0.5
–
–
–
0.5
– Commissioner for Transport
0.5
–
–
–
0.5
Members of the Executive Directorate
– Jacob Kam Chak-pui***
–
9.8
1.4
8.3
19.5
– Jeny Yeung Mei-chun
–
6.7
1.0
3.4
11.1
– Margaret Cheng Wai-ching
–
6.2
0.9
3.0
10.1
– Linda Choy Siu-min
–
4.8
0.7
2.4
7.9
– Carl Michael Devlin~
–
5.2
–~ ~
2.6
7.8
– Michael George Fitzgerald (appointed on 1 January 2024)
–
6.1
0.9
2.7
9.7
– Tony Lee Kar-yun
–
5.0
0.7
2.4
8.1
– Gillian Elizabeth Meller
–
5.2
0.7
2.6
8.5
– David Tang Chi-fai
–
7.2
1.0
3.4
11.6
– Sammy Wong Kwan-wai
–
4.6
0.2
2.2
7.0
10.7
60.8
7.5
33.0
112.0
*
Ayesha Macpherson Lau was appointed as a Member of the Board on the date shown in the above table. The amount of her emolument shown in the above table
covers the period from the date of her appointment to 31 December 2024.
** Dorothy T F Chan Yuen and Rose W M Lee retired as Members of the Board on the date shown in the above table. The amounts of their emoluments shown in the
above table cover the period from 1 January 2024 to the respective dates of their retirement.
*** Jacob C P Kam, being the Chief Executive Officer of the Company, also serves as a Member of the Board.
~
The Company has allocated HK$180,000 to Carl M Devlin through the Relocation Assistance Program to cover the tenancy deposit requirements.
~ ~ The total contributions paid by the Company attributable to the financial year ended 31 December 2024 for Carl M Devlin, who participated in MTR Mandatory
Provident Fund Scheme (as described in note 45A(iii)) was HK$18,000.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
205
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11 Remuneration of Members of the Board and the Executive Directorate
(continued)
A
Remuneration of Members of the Board and the Executive Directorate (continued)
in HK$ million
Fees
Base pay,
allowances and
benefits in kind
Retirement
scheme
contributions
Variable
remuneration
related to
performance
Total
2023
Members of the Board
– Rex Auyeung Pak-kuen
1.7
–
–
–
1.7
– Andrew Clifford Winawer Brandler
0.6
–
–
–
0.6
– Bunny Chan Chung-bun
0.5
–
–
–
0.5
– Walter Chan Kar-lok
0.5
–
–
–
0.5
– Pamela Chan Wong Shui (retired on 24 May 2023)**
0.2
–
–
–
0.2
– Dorothy Chan Yuen Tak-fai
0.5
–
–
–
0.5
– Cheng Yan-kee
0.5
–
–
–
0.5
– Hui Siu-wai
0.5
–
–
–
0.5
– Sunny Lee Wai-kwong
0.5
–
–
–
0.5
– Rose Lee Wai-mun
0.5
–
–
–
0.5
– Jimmy Ng Wing-ka
0.5
–
–
–
0.5
– Carlson Tong
0.6
–
–
–
0.6
– Sandy Wong Hang-yee (appointed on 24 May 2023)*
0.3
–
–
–
0.3
– Adrian Wong Koon-man
0.5
–
–
–
0.5
– Anna Wong Wai-kwan (appointed on 24 May 2023)*
0.3
–
–
–
0.3
– Johannes Zhou Yuan (retired on 24 May 2023)**
0.2
–
–
–
0.2
– Christopher Hui Ching-yu
0.5
–
–
–
0.5
– Secretary for Transport and Logistics
0.5
–
–
–
0.5
– Permanent Secretary for Development (Works)
0.5
–
–
–
0.5
– Commissioner for Transport
0.5
–
–
–
0.5
Members of the Executive Directorate
– Jacob Kam Chak-pui***
–
11.2
1.3
6.9
19.4
– Jeny Yeung Mei-chun
–
7.1
1.0
2.8
10.9
– Margaret Cheng Wai-ching
–
6.5
0.8
2.6
9.9
– Linda Choy Siu-min
–
4.6
0.6
1.8
7.0
– Carl Michael Devlin~
–
5.0
–~ ~
2.0
7.0
– Herbert Hui Leung-wah (retired on 1 January 2024)****
–
6.8
0.8
2.1
9.7
– Tony Lee Kar-yun
–
5.5
0.7
2.0
8.2
– Gillian Elizabeth Meller
–
5.5
0.7
2.0
8.2
– David Tang Chi-fai
–
7.0
0.9
2.8
10.7
– Sammy Wong Kwan-wai (appointed on 1 January 2023)
–
4.7
0.2
1.6
6.5
10.4
63.9
7.0
26.6
107.9
*
Sandy H Y Wong and Anna W K Wong were appointed as Members of the Board on the date shown in the above table. The amounts of their emoluments shown
in the above table cover the period from the respective dates of their appointment to 31 December 2023.
**
Pamela S Chan Wong and Johannes Y Zhou retired as Members of the Board on the date shown in the above table. The amounts of their emoluments shown in
the above table cover the period from 1 January 2023 to the respective dates of their retirement.
*** Jacob C P Kam, being the Chief Executive Officer of the Company, also serves as a Member of the Board.
**** Herbert L W Hui received the pro-rated one-off special award of HK$65,710 in July 2024 for his services provided during 2023.
~
The Company has allocated HK$180,000 to Carl M Devlin through the Relocation Assistance Program to cover the tenancy deposit requirements.
~ ~ The total contributions paid by the Company attributable to the financial year ended 31 December 2023 for Carl M Devlin, who participated in MTR Mandatory
Provident Fund Scheme (as described in note 45A(iii)) was HK$18,000.
206
MTR CORPORATION LIMITED
11 Remuneration of Members of the Board and the Executive Directorate
(continued)
A
Remuneration of Members of the Board and the Executive Directorate (continued)
The above emoluments do not include the share-based payments which arose from the Executive Share Incentive Scheme as disclosed in
note (ii) below.
The director’s fees in respect of the office of the Secretary for Transport and Logistics (Lam Sai-hung for the period from 1 January 2023 to
4 December 2024 and Mable Chan for the period from 5 December 2024 to 31 December 2024), the office of the Permanent Secretary for
Development (Works) (Ricky Lau Chun-kit) and the office of the Commissioner for Transport (Rosanna Law Shuk-pui for the period from
1 January 2023 to 14 August 2023 and Angela Lee Chung-yan for the period from 28 August 2023 to 31 December 2024), each of whom was
appointed Director by the Chief Executive of the HKSAR pursuant to Section 8 of the MTR Ordinance, were received by the HKSAR Government
rather than by the individuals personally.
The director’s fee in respect of Christopher Hui Ching-yu, being the Secretary for Financial Services and the Treasury of Government, was received
by the HKSAR Government rather than by the individual personally.
Alternate Directors were not entitled to director’s fees.
(ii)
Restricted Shares and Performance Shares were granted to Members of the Executive Directorate under the Company’s Executive Share
Incentive Scheme. Performance Shares offered to Members of the Executive Directorate under such grants, in general, covered a period of three
years from the date of grant. The entitlements of each of the Members of the Executive Directorate with vesting periods falling in the years
ended 31 December 2024 and 2023, if any, are as follows:
•
Jacob C P Kam was granted 89,300 Restricted Shares on 8 April 2020, 52,750 Restricted Shares and 199,800 Performance Shares on
8 April 2021, 132,000 Contract-end Restricted Shares on 1 April 2022, 133,700 Restricted Shares on 8 April 2022, 54,700 Restricted Shares
on 11 April 2023, 68,990 Performance Shares on 18 March 2024, and 87,100 Restricted Shares and 392,050 Performance Shares on
8 April 2024, of which a total of 80,383 Restricted Shares and 268,790 Performance Shares were vested in 2024 (2023: 91,917 Restricted
Shares), and the respective fair value of the share-based payments recognised for the year ended 31 December 2024 was HK$9.6 million
(2023: HK$8.3 million). No award shares were lapsed/forfeited in 2024 (2023: nil);
•
Jeny M C Yeung was granted 32,650 Restricted Shares on 8 April 2020, 17,200 Restricted Shares and 47,850 Performance Shares
on 8 April 2021, 46,000 Restricted Shares on 8 April 2022, 25,100 Restricted Shares on 11 April 2023, 16,522 Performance Shares on
18 March 2024, and 41,700 Restricted Shares and 93,550 Performance Shares on 8 April 2024, of which a total of 29,433 Restricted Shares
and 64,372 Performance Shares were vested in 2024 (2023: 31,950 Restricted Shares), and the respective fair value of the share-based
payments recognised for the year ended 31 December 2024 was HK$2.3 million (2023: HK$2.0 million). No award shares were lapsed/
forfeited in 2024 (2023: nil);
•
Margaret W C Cheng was granted 32,450 Restricted Shares on 8 April 2020, 17,450 Restricted Shares and 47,850 Performance Shares
on 8 April 2021, 39,500 Restricted Shares on 8 April 2022, 23,300 Restricted Shares on 11 April 2023, 16,522 Performance Shares on
18 March 2024, and 38,650 Restricted Shares and 93,550 Performance Shares on 8 April 2024, of which a total of 26,750 Restricted Shares
and 64,372 Performance Shares were vested in 2024 (2023: 29,800 Restricted Shares), and the respective fair value of the share-based
payments recognised for the year ended 31 December 2024 was HK$2.3 million (2023: HK$1.9 million). No award shares were lapsed/
forfeited in 2024 (2023: nil);
•
Linda S M Choy was granted 13,500 Restricted Shares and 47,850 Performance Shares on 8 April 2021, 32,200 Restricted Shares on
8 April 2022, 17,550 Restricted Shares on 11 April 2023, 16,522 Performance Shares on 18 March 2024, and 24,200 Restricted Shares and
93,550 Performance Shares on 8 April 2024, of which a total of 21,083 Restricted Shares and 64,372 Performance Shares were vested
in 2024 (2023: 15,233 Restricted Shares), and the respective fair value of the share-based payments recognised for the year ended
31 December 2024 was HK$1.9 million (2023: HK$1.6 million). No award shares were lapsed/forfeited in 2024 (2023: nil);
•
Carl M Devlin was granted 7,700 Restricted Shares and 7,300 Performance Shares on 8 April 2022, 15,700 Restricted Shares on
11 April 2023, 2,520 Performance Shares on 18 March 2024, and 25,800 Restricted Shares and 93,550 Performance Shares on 8 April 2024,
of which a total of 7,799 Restricted Shares and 9,820 Performance Shares were vested in 2024 (2023: 2,566 Restricted Shares), and the
respective fair value of the share-based payments recognised for the year ended 31 December 2024 was HK$1.3 million
(2023: HK$0.5 million). No award shares were lapsed/forfeited in 2024 (2023: nil);
•
Michael G Fitzgerald was granted 60,900 Restricted Shares on 25 September 2023, and 30,150 Restricted Shares and 93,550 Performance
Shares on 8 April 2024, of which a total of 20,300 Restricted Shares were vested in 2024, and the respective fair value of the share-based
payments recognised for the year ended 31 December 2024 was HK$1.9 million. No award shares were lapsed/forfeited in 2024;
•
Tony K Y Lee was granted 15,500 Restricted Shares on 8 April 2020, 13,550 Restricted Shares and 47,850 Performance Shares on
8 April 2021, 34,050 Restricted Shares on 8 April 2022, 14,850 Restricted Shares on 11 April 2023, 16,522 Performance Shares on
18 March 2024, and 30,600 Restricted Shares and 93,550 Performance Shares on 8 April 2024, of which a total of 20,818 Restricted Shares
and 64,372 Performance Shares were vested in 2024 (2023: 21,034 Restricted Shares), and the respective fair value of the share-based
payments recognised for the year ended 31 December 2024 was HK$2.0 million (2023: HK$1.6 million). No award shares were lapsed/
forfeited in 2024 (2023: nil);
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
207
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11 Remuneration of Members of the Board and the Executive Directorate
(continued)
A
Remuneration of Members of the Board and the Executive Directorate (continued)
•
Gillian E Meller was granted 27,000 Restricted Shares on 8 April 2020, 14,250 Restricted Shares and 47,850 Performance Shares on
8 April 2021, 34,600 Restricted Shares on 8 April 2022, 19,550 Restricted Shares on 11 April 2023, 16,522 Performance Shares on
18 March 2024, and 25,950 Restricted Shares and 93,550 Performance Shares on 8 April 2024, of which a total of 22,799 Restricted Shares
and 64,372 Performance Shares were vested in 2024 (2023: 25,283 Restricted Shares), and the respective fair value of the share-based
payments recognised for the year ended 31 December 2024 was HK$2.0 million (2023: HK$1.7 million). No award shares were lapsed/
forfeited in 2024 (2023: nil);
•
David C F Tang was granted 31,350 Restricted Shares on 8 April 2020, 17,200 Restricted Shares and 47,850 Performance Shares on
8 April 2021, 46,000 Restricted Shares on 8 April 2022, 25,100 Restricted Shares on 11 April 2023, 16,522 Performance Shares on
18 March 2024, and 41,700 Restricted Shares and 93,550 Performance Shares on 8 April 2024, of which a total of 29,433 Restricted Shares
and 64,372 Performance Shares were vested in 2024 (2023: 31,516 Restricted Shares), and the respective fair value of the share-based
payments recognised for the year ended 31 December 2024 was HK$2.3 million (2023: HK$2.0 million). No award shares were lapsed/
forfeited in 2024 (2023: nil);
•
Sammy K W Wong was granted 7,650 Restricted Shares on 8 April 2020, 7,350 Restricted Shares and 10,100 Performance Shares on
8 April 2021, 8,050 Restricted Shares on 8 April 2022, and 16,400 Restricted Shares on 11 April 2023, 3,487 Performance Shares on
18 March 2024, and 21,800 Restricted Shares and 93,550 Performance Shares on 8 April 2024, of which a total of 10,599 Restricted Shares
and 13,587 Performance Shares were vested in 2024 (2023: 7,683 Restricted Shares), and the respective fair value of the share-based
payments recognised for the year ended 31 December 2024 was HK$1.3 million (2023: HK$0.6 million). No award shares were lapsed/
forfeited in 2024 (2023: nil); and
•
Herbert L W Hui was granted 29,050 Restricted Shares on 8 April 2020, 15,600 Restricted Shares and 47,850 Performance Shares on
8 April 2021, 37,850 Restricted Shares on 8 April 2022, 17,100 Restricted Shares on 11 April 2023, and 16,522 Performance Shares on
18 March 2024, of which a total of 64,372 Performance Shares were vested in 2024 (2023: 75,034 Restricted Shares), and the respective fair
value of the share-based payments recognised for the year ended 31 December 2024 was HK$0.4 million (2023: HK$2.6 million). No award
shares were lapsed/forfeited in 2024 (2023: nil).
The details of the interest in the Company’s shares of the Members of the Board and the Members of the Executive Directorate are disclosed in
the Report of the Members of the Board and note 44.
(iii)
For the years ended 31 December 2024 and 2023, the five individuals with the highest emoluments were Members of the Executive
Directorate of the Company, whose emoluments are shown above.
(iv)
The aggregate emoluments and share-based payments of Members of the Board and the Executive Directorate for the year was
HK$138.9 million (2023: HK$130.7 million).
(v)
The Company has a service contract with each of the independent non-executive Directors (“INEDs”)/non-executive Directors (“NEDs”)
(excluding three additional directors appointed pursuant to Section 8 of the MTR Ordinance) specifying the terms of his/her continuous
appointments as an INED/a NED and a Member of the relevant Board Committees and/or Advisory Panel, for a period not exceeding three years.
He/she is also subject to retirement by rotation and re-election at the Company’s annual general meetings in accordance with the Articles of
Association where applicable. Dr Rex P K Auyeung, the non-executive Chairman of the Company since 1 July 2019, was re-appointed by The
Financial Secretary Incorporated (“FSI”) on 7 March 2024 for an additional one-and-a-half-year term, to 31 December 2025.
B
Award Shares
Award Shares granted, vested, lapsed and/or forfeited, and outstanding in respect of each Member of the Executive Directorate for the year
ended 31 December 2024 are set out in the Report of the Members of the Board.
Under the Executive Share Incentive Scheme as described in note 44, all Members of the Executive Directorate may be granted an award of
Restricted Shares and/or Performance Shares (collectively known as “Award Shares”). Restricted Shares are awarded on the basis of individual
performance. Performance Shares are awarded every three years and vest subject to the performance of the Company over a pre-determined
performance period, assessed with reference to such Board-approved performance metric and in respect of such performance period, and any
other performance conditions, as determined by the Remuneration Committee from time to time.
Award Shares granted to the Members of the Executive Directorate under the Company’s Executive Share Incentive Scheme are expensed as
share-based payments under staff costs as set out in note 2U(iii). In accordance with that policy, staff costs are determined by reference to the fair
value of the award shares granted, taking into account all non-vesting conditions associated with the grants and recognised over the relevant
vesting periods, and includes adjustments to reverse amounts accrued in previous years where grants of Award Shares are lapsed/forfeited
prior to vesting.
An award of Restricted Shares will vest ratably over three years in equal tranches (unless otherwise determined by the Remuneration
Committee). An award of Performance Shares will vest upon certification by the Remuneration Committee that the relevant performance metric
and performance conditions have been achieved.
208
MTR CORPORATION LIMITED
12 Hong Kong Property Development Profit from Share of Surplus, Income and
Interest in Unsold Properties
Hong Kong property development profit from share of surplus, income and interest in unsold properties comprises:
in HK$ million
2024
2023
Share of surplus, income and interest in unsold properties from property development
12,132
2,335
Agency fee and other income from West Rail property development (note 24C)
60
8
Overheads
(7)
(14)
Hong Kong property development profit (pre-tax)
12,185
2,329
Hong Kong property development profit (post-tax)
10,235
2,035
For the year ended 31 December 2024, profit attributable to shareholders of the Company arising from Hong Kong property development of
HK$10,235 million (2023: HK$2,035 million) represents Hong Kong property development profit of HK$12,185 million (2023: HK$2,329 million)
and related income tax expenses of HK$1,950 million (2023: HK$294 million).
13 (Loss)/Gain from Fair Value Measurement of Investment Properties
(Loss)/gain from fair value measurement of investment properties comprises:
in HK$ million
2024
2023
(Loss)/gain from fair value remeasurement on investment properties
(3,821)
26
Gain from fair value measurement of investment properties on initial recognition
from property development
2,118
1,360
(1,703)
1,386
During the year ended 31 December 2023, investment property with a carrying value of HK$5.2 billion was initially recognised upon the receipt
of a shopping mall from a property development project.
In accordance with the Group’s accounting policies, deferred income of HK$5.0 billion was initially recognised after taking into account
HK$0.2 billion cost incurred/to be incurred by the Group in connection with this property development. The outstanding risks and obligations
retained by the Group will be reassessed at the end of each reporting period. Any reduction in the amount of outstanding risks and obligations
will be accounted for as a decrease in deferred income and a corresponding “Gain from fair value measurement of investment properties on
initial recognition from property development” in profit or loss of that reporting period.
During the year ended 31 December 2024, after reassessing the outstanding risks and obligations retained by the Group at the end of reporting
period, HK$2.1 billion (2023: HK$1.4 billion) was recognised as gain from fair value measurement of investment properties on initial recognition
from property development in profit or loss. As at 31 December 2024, deferred income of HK$1.5 billion (2023: HK$3.6 billion) was recognised in
the Group’s consolidated statement of financial position and included in “Creditors, other payables and provisions”.
14 Depreciation and Amortisation
Depreciation and amortisation comprise:
in HK$ million
2024
2023
Depreciation charge relating to:
– Owned property, plant and equipment
3,574
3,727
– Right-of-use assets
357
350
3,931
4,077
Amortisation charge:
– Amortisation charge relating to service concession assets and other intangible assets
2,213
2,028
6,144
6,105
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
209
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
15 Interest and Finance Charges
in HK$ million
2024
2023
Interest expenses in respect of:
– Bank loans, overdrafts and capital market instruments
2,611
1,816
– Obligations under service concession
676
681
– Lease liabilities
21
40
– Others
20
28
Finance charges
56
42
Exchange (gain)/loss
(389)
82
2,995
2,689
Derivative financial instruments:
– Fair value hedges
(105)
9
– Cash flow hedges:
– transferred from hedging reserve to interest expenses
(127)
(57)
– transferred from hedging reserve to offset exchange gain/(loss)
476
(75)
– transferred from hedging reserve upon discontinuation of
cash flow hedge
(4)
–
– Derivatives not adopting hedge accounting
2
17
242
(106)
Interest expenses capitalised
(964)
(667)
2,273
1,916
Interest income in respect of:
– Deposits with banks
(1,105)
(669)
– Others
(136)
(108)
(1,241)
(777)
1,032
1,139
During the year ended 31 December 2024, interest expenses capitalised were calculated on a monthly basis at the pre-determined cost of
borrowings and/or the relevant group companies’ borrowing cost which varied from 3.5% to 3.9% per annum (2023: 3.1% to 4.0% per annum).
During the year ended 31 December 2024, the gain resulting from fair value changes of the underlying financial assets and liabilities being
hedged under fair value hedge was HK$126 million (2023: loss of HK$90 million) while the loss resulting from fair value changes of hedging
instruments comprising interest rate and cross currency swaps was HK$29 million (2023: gain of HK$81 million), thus resulting in a net gain of
HK$97 million (2023: net loss of HK$9 million).
210
MTR CORPORATION LIMITED
16 Income Tax in the Consolidated Statement of Profit or Loss
A
Income tax in the consolidated statement of profit or loss represents:
in HK$ million
2024
2023
Current tax
– Hong Kong Profits Tax
2,086
610
– Tax outside Hong Kong
389
377
2,475
987
Deferred tax
– Origination and reversal of temporary differences on:
– tax losses
7
68
– depreciation allowances in excess of related depreciation
1,018
638
– revaluation of properties
–
(34)
– provisions and others
(44)
(102)
– right-of-use assets
(12)
4
– lease liabilities
14
14
983
588
3,458
1,575
Except for the Company which is a qualifying corporation under the two-tiered Profits Tax rate regime in Hong Kong, the provision for Hong
Kong Profits Tax for the year ended 31 December 2024 is calculated at 16.5% (2023: 16.5%) on the estimated assessable profits for the year after
deducting accumulated tax losses brought forward, if any. Under the two-tiered Profits Tax rate regime, the Company’s first HK$2 million of
assessable profits are taxed at 8.25% and the remaining assessable profits are taxed at 16.5%. The provision for Hong Kong Profits Tax for the
Company was calculated on the same basis in 2024 and 2023.
Current taxes for subsidiaries outside Hong Kong are charged at the appropriate current rates of taxation ruling in the relevant tax jurisdictions.
Provision for deferred tax on temporary differences arising in Hong Kong is calculated at the Hong Kong Profits Tax rate at 16.5% (2023: 16.5%),
while that arising outside Hong Kong is calculated at the appropriate current rates of taxation ruling in the relevant tax jurisdictions.
B
Since the Rail Merger in 2007, the Company has claimed annual Hong Kong Profits Tax deductions in respect of the amortisation of
upfront payment and cut-over liabilities, and fixed annual payments and variable annual payments relating to the Rail Merger (collectively “the
Sums”). The total tax amount in respect of the Sums for the years of tax assessment from 2007/2008 to 2024/2025 amounted to HK$5.8 billion
(for the years of tax assessment from 2007/2008 to 2023/2024: HK$5.1 billion). As disclosed in previous years:
(i)
As of 31 December 2024, the Inland Revenue Department of Hong Kong (“IRD”) issued notices of profits tax assessments/additional
profits tax assessments for the years of assessment from 2009/2010 to 2017/2018 disallowing deduction of the Sums in the computation of
the Company’s assessable profits. Based on the strength of advice from the external legal counsel and its tax advisor, the Company has lodged
objections against these tax assessments (regarding the deductibility of the Sums) and has applied to hold over the additional tax demanded.
The IRD has agreed to the holdover of the additional tax demanded subject to the purchases of tax reserve certificates (“TRCs”) amounting to
HK$2.3 billion. The Company has purchased the required TRCs and the additional tax demanded has been held over by IRD. The purchases of
TRCs do not prejudice the Company’s tax position and the purchased TRCs were included in “Debtors and other receivables” in the Group’s
consolidated statement of financial position.
(ii)
On 20 May 2022, the Commissioner of Inland Revenue issued a determination to the Company disagreeing with the objections lodged
by the Company and confirming profits tax assessment/additional profits tax assessments in respect of the Sums in dispute for the years of
assessment from 2011/2012 to 2017/2018 (i.e. holding that the Sums are not deductible in the computation of the Company’s assessable profits
for those years of assessment). The Company re-affirmed the case with the external legal counsel who advised the Company previously and its
tax advisor, and obtained further advice from another external legal counsel. Based on the advice from the external legal counsel and its tax
advisor, the directors of the Company believe that the Company has strong legal grounds and have determined to contest and appeal against
the assessments for the years of assessment from 2011/2012 to 2017/2018. Accordingly, the Company lodged a notice of appeal to the Inland
Revenue Board of Review on 16 June 2022.
(iii)
After discussing with the external legal counsel and its tax advisor on the approach to the appeal, the Company decided not to pursue
its deduction claims in respect of the amortisation of upfront payment and cut-over liabilities during the opening submission before Board of
Review. As the Company had already made the related tax provision for the amortisation of upfront payment and cut-over liabilities in the past
years taking into account the uncertainty in their tax deductibility, no additional tax provision is required.
As mentioned above, the total tax amount in respect of the Sums for the years of tax assessment from 2007/2008 to 2024/2025 amounted to
HK$5.8 billion (for the years of tax assessment from 2007/2008 to 2023/2024: HK$5.1 billion). As of 31 December 2024, the related tax provision
made for the amortisation of upfront payment and cut-over liabilities amounted to HK$0.2 billion (2023: HK$0.2 billion). The hearing of appeal
was held before the Board of Review in early 2024.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
211
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16 Income Tax in the Consolidated Statement of Profit or Loss (continued)
On 6 August 2024, the Board of Review has issued its decision (“the Board of Review Decision”) and has disagreed with the deduction claims of
the fixed annual payments and variable annual payments for the years of assessment from 2011/2012 to 2017/2018. It confirmed the relevant
profits tax assessment/additional profits tax assessments in respect of the fixed annual payments and variable annual payments being non-
tax deductible.
The Company, external legal counsel and its tax advisor have completed their review of the Board of Review Decision and the advice obtained
continues to be that the Company has strong legal grounds to support its position. Based on the strength of advice from external legal counsel
and its tax advisor, on 4 September 2024, the Company lodged an application to the Court of First Instance of the High Court of the Hong
Kong Special Administrative Region (“the Court of First Instance”) for leave to appeal against the Board of Review Decision. The hearing for the
application of leave to appeal was held before the Court of First Instance in late February 2025. As at the date of the annual report, the Court of
First Instance has yet to hand down its decision on whether to grant leave to appeal. The Company has conferred with external legal counsel and
its tax advisor and the advice obtained is that the Company currently continues to have strong legal grounds to support its position. As such, no
additional tax provision has been made.
C
Reconciliation between tax expense and accounting profit or loss at applicable tax rates:
2024
2023
HK$ million
%
HK$ million
%
Profit before taxation
19,525
9,663
Notional tax on profit before taxation, calculated at the rates
applicable to profits in the tax jurisdictions concerned
3,390
17.4
1,561
16.2
Tax effect of non-deductible expenses
809
4.1
305
3.1
Tax effect of non-taxable revenue
(786)
(4.0)
(555)
(5.7)
Tax effect of unused tax losses not recognised
63
0.3
276
2.8
Utilisation of tax losses previously not recognised
(18)
(0.1)
(12)
(0.1)
Actual tax expenses
3,458
17.7
1,575
16.3
D
Pillar Two Income Taxes
The Group operates in Australia, Sweden and the United Kingdom, where these jurisdictions have enacted or substantially enacted new tax laws
to implement the Pillar Two model rules published by the OECD.
The Group has applied the temporary mandatory exception to recognising and disclosing information about deferred tax assets and liabilities
related to Pillar Two income taxes and has accounted for the tax as current tax when incurred, if any. During the year ended 31 December 2024,
the Group has recognised HK$nil for the current tax relating to the Pillar Two model rules for Australia, Sweden and the United Kingdom, where
new tax laws became effective on 1 January 2024.
17 Dividends
Ordinary dividends to shareholders of the Company are as follows:
in HK$ million
2024
2023
Ordinary dividends attributable to the year
– Interim ordinary dividend declared and paid of HK$0.42 (2023: HK$0.42) per share
2,614
2,610
– Final ordinary dividend proposed after the end of the reporting period of HK$0.89
(2023: HK$0.89) per share
5,541
5,533
8,155
8,143
Ordinary dividends attributable to the previous year
– Final ordinary dividend of HK$0.89 (2023: HK$0.89 per share attributable to year 2022)
per share approved and paid during the year
5,533
5,520
The 2024 final ordinary dividend proposed after the end of the reporting period has not been recognised as a liability at the end of the
reporting period.
Details of ordinary dividends paid to the FSI are disclosed in note 47Q.
212
MTR CORPORATION LIMITED
18 Earnings Per Share
A
Basic Earnings Per Share
The calculation of basic earnings per share is based on the profit attributable to shareholders of the Company for the year ended
31 December 2024 of HK$15,772 million (2023: HK$7,784 million) and the weighted average number of ordinary shares in issue less shares held
for Executive Share Incentive Scheme, which is calculated as follows:
2024
2023
Issued ordinary shares at 1 January
6,217,197,282
6,202,060,784
Effect of scrip dividend issued
3,521,244
6,203,749
Less: Shares held for Executive Share Incentive Scheme
(8,057,365)
(6,164,436)
Weighted average number of ordinary shares in issue less shares held for Executive Share
Incentive Scheme during the year
6,212,661,161
6,202,100,097
B
Diluted Earnings Per Share
The calculation of diluted earnings per share is based on the profit attributable to shareholders of the Company for the year ended
31 December 2024 of HK$15,772 million (2023: HK$7,784 million) and the weighted average number of ordinary shares in issue less shares
held for Executive Share Incentive Scheme after adjusting for the dilutive effect of the Company’s Executive Share Incentive Scheme, which is
calculated as follows:
2024
2024
2023
2023
Weighted average number of ordinary shares in issue less shares held for Executive Share
Incentive Scheme during the year
6,212,661,161
6,202,100,097
Effect of shares awarded under Executive Share Incentive Scheme
8,725,631
6,214,868
Weighted average number of shares (diluted) during the year
6,221,386,792
6,208,314,965
C
Both basic and diluted earnings per share would have been HK$2.81 (2023: HK$1.03), if the calculation is based on profit attributable to
shareholders of the Company arising from underlying businesses of HK$17,475 million (2023: HK$6,364 million).
19 Other Comprehensive (Loss)/Income
A
Tax effects relating to each component of other comprehensive (loss)/income of the Group are shown below:
2024
2023
in HK$ million
Before-tax
amount
Tax
credit/
(expenses)
Net-of-tax
amount
Before-tax
amount
Tax
(expenses)/
credit
Net-of-tax
amount
Exchange differences on translation of:
– Financial statements of subsidiaries,
associates and joint ventures outside
Hong Kong
(762)
–
(762)
(378)
–
(378)
– Non-controlling interests
(40)
–
(40)
26
–
26
(802)
–
(802)
(352)
–
(352)
(Loss)/surplus on revaluation of
self-occupied buildings
(152)
25
(127)
29
(5)
24
Remeasurement of net asset/liability of defined
benefit schemes
170
(26)
144
(247)
53
(194)
Cash flow hedges: net movement in hedging
reserve (note 19B)
323
(53)
270
(728)
120
(608)
Other comprehensive (loss)/income
(461)
(54)
(515)
(1,298)
168
(1,130)
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
213
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19 Other Comprehensive (Loss)/Income (continued)
B
The components of other comprehensive (loss)/income of the Group relating to cash flow hedges are as follows:
in HK$ million
2024
2023
Cash flow hedges:
Effective portion of changes in fair value of hedging instruments recognised during the year
(28)
(621)
Amounts transferred to initial carrying amount of hedged items
1
–
Amounts transferred to profit or loss during the year:
– Interest and finance charges (note 15)
345
(132)
– Other expenses
5
25
323
(728)
Tax effect resulting from:
– Effective portion of changes in fair value of hedging instruments recognised during the year
5
102
– Amounts transferred to profit or loss during the year
(58)
18
270
(608)
20 Investment Properties and Other Property, Plant and Equipment
A
Investment Properties
Movements of the Group’s investment properties, all of which being held in Hong Kong and Mainland China and carried at fair value, are
as follows:
in HK$ million
2024
2023
At 1 January
98,205
91,671
Additions*
2,053
6,517
Disposal of a subsidiary (note 7)
(93)
–
Fair value remeasurement on investment properties (note 13)
(3,821)
26
Exchange differences
(22)
(9)
At 31 December
96,322
98,205
*
Additions for the year include the fair value measurement of investment properties on initial recognition from property development of HK$nil
(2023: HK$5,211 million) (note 13), the amount reclassified from prepayment of HK$1,522 million (2023: HK$nil) and the amount transferred from deferred
expenditure of HK$nil (2023: HK$92 million).
All investment properties of the Group were remeasured at 31 December 2024 and 2023. Details of the fair value measurement are disclosed
in note 43. Investment properties in Hong Kong and Mainland China are remeasured semi-annually by independent firms of surveyor, Colliers
International (Hong Kong) Limited and Cushman & Wakefield Limited respectively. Future market condition changes may result in further gains
or losses to be recognised through the consolidated statement of profit or loss in future periods.
Included in the Group’s investment properties as at 31 December 2024 was HK$1,349 million (2023: HK$316 million) relating to properties in
Mainland China.
214
MTR CORPORATION LIMITED
20 Investment Properties and Other Property, Plant and Equipment (continued)
B
Other Property, Plant and Equipment
in HK$ million
Leasehold
land
Self-
occupied
buildings
Civil works
Plant and
equipment
Assets under
construction
Total
2024
Cost or Valuation
At 1 January 2024
1,765
3,938
62,502
94,296
14,901
177,402
Additions#
–
31
1
313
7,411
7,756
Disposals/write-offs
–
(23)
(1)
(1,376)
(12)
(1,412)
Loss on revaluation
–
(304)
–
–
–
(304)
Transfer to investment properties (note 20A)
–
–
–
–
(7)
(7)
Transfer from/(to) Services Concession
Assets (note 21)
–
–
2
(4)
(1)
(3)
Reclassification within other property,
plant and equipment
–
–
–
5
(5)
–
Other assets commissioned
–
–
13
3,431
(3,444)
–
Exchange differences
–
(22)
–
(132)
(1)
(155)
At 31 December 2024
1,765
3,620
62,517
96,533
18,842
183,277
At Cost
1,765
400
62,517
96,533
18,842
180,057
At 31 December 2024 Valuation
–
3,220
–
–
–
3,220
Accumulated depreciation
At 1 January 2024
510
261
11,558
61,352
–
73,681
Charge for the year
34
243
565
3,089
–
3,931
Written back on disposals
–
(7)
–
(1,282)
–
(1,289)
Written back on revaluation
–
(152)
–
–
–
(152)
Exchange differences
–
(16)
–
(101)
–
(117)
At 31 December 2024
544
329
12,123
63,058
–
76,054
Net book value at 31 December 2024
1,221
3,291
50,394
33,475
18,842
107,223
2023
Cost or Valuation
At 1 January 2023
1,765
4,089
62,382
93,565
12,059
173,860
Additions#
–
97
–
254
5,549
5,900
Disposals/write-offs
–
(84)
(1)
(1,579)
(12)
(1,676)
Loss on revaluation
–
(123)
–
–
–
(123)
Capitalisation adjustments*
–
–
–
(3)
–
(3)
Transfer from/(to) Services Concession
Assets (note 21)
–
–
1
(5)
(10)
(14)
Reclassification within other property,
plant and equipment
–
–
107
(100)
(7)
–
Reclassification as assets of disposal group
classified as held for sale
–
(51)
–
(558)
(1)
(610)
Other assets commissioned
–
–
13
2,664
(2,677)
–
Exchange differences
–
10
–
58
–
68
At 31 December 2023
1,765
3,938
62,502
94,296
14,901
177,402
At Cost
1,765
415
62,502
94,296
14,901
173,879
At 31 December 2023 Valuation
–
3,523
–
–
–
3,523
Accumulated depreciation
At 1 January 2023
476
269
10,956
59,862
–
71,563
Charge for the year
34
236
603
3,204
–
4,077
Written back on disposals
–
(64)
(1)
(1,540)
–
(1,605)
Written back on revaluation
–
(152)
–
–
–
(152)
Reclassification as assets of disposal group
classified as held for sale
–
(39)
–
(215)
–
(254)
Exchange differences
–
11
–
41
–
52
At 31 December 2023
510
261
11,558
61,352
–
73,681
Net book value at 31 December 2023
1,255
3,677
50,944
32,944
14,901
103,721
#
After taking into account the utilisation of government grant (if any).
*
Capitalisation adjustments related to adjustments on the cost of assets to their final contract values after finalisation of contracts.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
215
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20 Investment Properties and Other Property, Plant and Equipment (continued)
C
Right-of-use Assets
At 31 December 2024 and 2023, the analysis of the net book value of right-of-use assets by class of underlying asset is as follows:
in HK$ million
Note
2024
2023
Ownership interests in leasehold land held for own use, with remaining lease term of:
(i)
– less than 50 years
1,221
1,255
Ownership interests in self-occupied buildings held for own use, with remaining lease
term of:
(i)
– less than 50 years
3,220
3,523
Other self-occupied buildings leased for own use, with remaining lease term of:
(ii)
– less than 10 years
71
154
Plant and equipment leased, with remaining lease term of:
(iii)
– between 10 and 50 years
877
284
– less than 10 years
123
136
5,512
5,352
Ownership interests in leasehold investment properties, with remaining lease term of:
– 50 years or more
13
14
– less than 50 years
96,309
98,069
96,322
98,083
Other leasehold investment property, with remaining lease term of:
– less than 10 years
–
122
96,322
98,205
101,834
103,557
The analysis of expense items in relation to leases recognised in profit or loss is as follows:
in HK$ million
2024
2023
Depreciation charge of right-of-use assets by class of underlying asset:
Ownership interests in leasehold land held for own use
34
34
Ownership interests in self-occupied buildings held for own use
152
152
Other self-occupied buildings leased for own use
91
84
Plant and equipment leased
80
80
357
350
Interest on lease liabilities
21
40
Expense relating to short-term leases
27
14
Expense relating to leases of low-value assets, excluding short-term leases of low-value assets
12
13
During the year, additions to right-of-use assets were HK$2,759 million (2023: HK$6,682 million). This amount primarily related to additions of
investment properties, including fair value measurement of investment properties on initial recognition from property development (note 13).
Details of total cash outflow for leases and the maturity analysis of lease liabilities are set out in notes 42C and 35D, respectively.
216
MTR CORPORATION LIMITED
20 Investment Properties and Other Property, Plant and Equipment (continued)
C
Right-of-use Assets (continued)
(i)
Ownership Interests in Leasehold Land and Buildings Held for Own Use
The lease of the land on which civil works as well as plant and equipment are situated for Hong Kong transport operations was granted to the
Company under a running line lease which is coterminous with the Company’s franchise to operate the mass transit railway under the Operating
Agreement (notes 47A, 47B and 47C).
Under the terms of the lease, the Company undertakes to keep and maintain all the leased areas, including underground and overhead
structures, at its own cost. With respect to parts of the railway situated in structures where access is shared with other users, such as the
Lantau Fixed Crossing, the Company’s obligation for maintenance is limited to the railway only. All maintenance costs incurred under the terms
of the lease have been dealt with as expenses relating to Hong Kong transport operations in the consolidated statement of profit or loss.
All self-occupied buildings of the Group in Hong Kong are carried at fair value. The details of the fair value measurement are disclosed in note 43.
The revaluation loss of HK$152 million (2023: surplus of HK$29 million) and the related deferred tax credit of HK$25 million (2023: tax expenses of
HK$5 million) has been recognised in other comprehensive income/loss and accumulated in the fixed assets revaluation reserve (note 41C). The
carrying amount of the self-occupied buildings at 31 December 2024 would have been HK$561 million (2023: HK$587 million) had the buildings
been stated at cost less accumulated depreciation.
(ii)
Other Self-occupied Buildings Leased for Own Use
The Group has obtained the right to use other properties as its offices through tenancy agreements. The leases typically run for an initial period
of 4 to 7 years.
(iii)
Other Leases
The Group leases plant and equipment under leases expiring from 2 to 20 years. Some leases include an option to renew the lease when all terms
are renegotiated, while some include an option to purchase the leased equipment at the end of the lease term at a price deemed to be a bargain
purchase option. None of the leases includes variable lease payments.
D
Properties Leased Out under Operating Leases
The Group leases out investment properties and station kiosks, including duty free shops, under operating leases. The leases typically run for
an initial period of 1 to 5 years, with an option to renew the lease after that date, at which time all terms will be renegotiated. Lease payments
are adjusted periodically to reflect market rentals. Certain leases carry additional rental based on turnover, some of which are with reference
to thresholds. Lease incentives granted are amortised in the consolidated statement of profit or loss as an integral part of the net lease
payment receivable.
The gross carrying amount of investment properties of the Group held for use in operating leases were HK$96,322 million
(2023: HK$98,205 million). The costs of station kiosks of the Group held for use in operating leases were HK$983 million (2023: HK$961 million)
and the related accumulated depreciation charges were HK$637 million (2023: HK$606 million).
Total future minimum lease receipts under non-cancellable operating leases are receivable as follows:
in HK$ million
2024
2023
Within 1 year
6,854
6,869
After 1 year but within 2 years
4,926
5,365
After 2 years but within 3 years
2,854
2,708
After 3 years but within 4 years
588
1,153
After 4 years but within 5 years
281
491
After 5 years
215
340
15,718
16,926
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
217
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20 Investment Properties and Other Property, Plant and Equipment (continued)
E
In March 2003, the Group entered into a series of structured transactions with unrelated third parties to lease out and lease back certain
of its passenger cars (“Lease Transaction”) involving a total original cost of HK$2,562 million and a total net book value of HK$1,674 million as at
31 March 2003. Under the Lease Transaction, the Group has leased the assets to institutional investors in the United States (the “Investors”), who
have prepaid all the rentals in relation to the lease agreement. Simultaneously, the Group has leased the assets back from the Investors based on
terms ranging from 21 to 29 years with an obligation to pay rentals in accordance with a pre-determined payment schedule. The Group has an
option to purchase the Investors’ leasehold interest in the assets at the expiry of the lease term for fixed amounts. Part of the rental prepayments
received from the Investors has been invested in debt securities to meet the Group’s rental obligations and the amount payable for exercising
the purchase option under the Lease Transaction. The Group has an obligation to replace these debt securities with other debt securities in
the event those securities do not meet certain credit ratings requirements. In addition, the Group has provided standby letters of credit to the
Investors to cover additional amounts payable by the Group in the event the transactions are terminated prior to the expiry of the lease terms.
The Group retains legal title to the assets and there are no restrictions on the Group’s ability to utilise these assets in the operation of the
railway business.
As a result of the Lease Transaction, an amount of approximately HK$3,688 million was received in an investment account and was used to
purchase debt securities (“Defeasance Securities”) to be used to settle the long-term lease payments with an estimated net present value of
approximately HK$3,533 million in March 2003. This resulted in the Group having received in 2003 an amount of HK$141 million net of costs.
As the Group is not able to control the investment account in pursuit of its own objectives and its obligations to pay the lease payments are
funded by the proceeds of the above investments, those obligations and investments in the Defeasance Securities were not recognised in
March 2003 as liabilities and assets of the Group. The net amount of cash received was accounted for as deferred income by the Group and
amortised to the consolidated statement of profit or loss over the lease period until 2008, when credit ratings of some of these Defeasance
Securities were downgraded and subsequently replaced by standby letters of credit, the charge on which had fully offset the remaining balance
of the deferred income.
During the year ended 31 December 2024, part of the Lease Transaction expired and the related non-defeased obligation were fully settled.
21 Service Concession Assets
Movements and analysis of the Group’s service concession assets are as follows:
KCRC Rail Merger
in HK$ million
Initial
concession
property
Additional
concession
property
Additional
concession
property
(High Speed
Rail)
Additional
concession
property
(Shatin to
Central Link)
Shenzhen
Metro
Line 4
Shenzhen
Metro
Line 13
MTR
Nordic
London
Elizabeth
Line
Total
2024
Cost
At 1 January 2024
15,226
27,070
484
355
8,224
2,293
69
54
53,775
Net additions during
the year
–
3,116
121
156
60
1,933
–
–
5,386
Disposals and transfers
–
(174)
–
(1)
(64)
–
(17)
–
(256)
Net transfer from
other property,
plant and
equipment
(note 20)
–
2
–
1
–
–
–
–
3
Reclassification within
service concession
assets
–
(11)
–
11
–
–
–
–
–
Exchange differences
–
–
–
–
(277)
(76)
(4)
(1)
(358)
At 31 December 2024
15,226
30,003
605
522
7,943
4,150
48
53
58,550
Accumulated
amortisation and
impairment loss
At 1 January 2024
4,898
7,142
88
27
4,793
–
63
54
17,065
Amortisation charge
for the year
304
1,563
68
20
255
2
–
–
2,212
Written-off on
disposals
–
(146)
–
–
(40)
–
(11)
–
(197)
Exchange differences
–
–
–
–
(170)
–
(4)
(1)
(175)
At 31 December 2024
5,202
8,559
156
47
4,838
2
48
53
18,905
Net book value at
31 December 2024
10,024
21,444
449
475
3,105
4,148
–
–
39,645
218
MTR CORPORATION LIMITED
21 Service Concession Assets (continued)
KCRC Rail Merger
in HK$ million
Initial
concession
property
Additional
concession
property
Additional
concession
property
(High Speed
Rail)
Additional
concession
property
(Shatin to
Central Link)
Shenzhen
Metro
Line 4
Shenzhen
Metro
Line 13
MTR
Nordic
London
Elizabeth
Line
Total
2023
Cost
At 1 January 2023
15,226
24,728
345
249
8,403
1,816
69
54
50,890
Net additions during
the year
–
2,535
139
99
78
429
–
–
3,280
Disposals
–
(199)
–
(1)
(106)
–
–
–
(306)
Net transfer from
other property,
plant and
equipment
(note 20)
–
6
–
8
–
–
–
–
14
Exchange differences
–
–
–
–
(151)
48
–
–
(103)
At 31 December 2023
15,226
27,070
484
355
8,224
2,293
69
54
53,775
Accumulated
amortisation and
impairment loss
At 1 January 2023
4,594
5,890
51
12
4,706
–
62
52
15,367
Amortisation charge
for the year
304
1,413
37
15
255
–
1
2
2,027
Written-off on
disposals
–
(161)
–
–
(63)
–
–
–
(224)
Exchange differences
–
–
–
–
(105)
–
–
–
(105)
At 31 December 2023
4,898
7,142
88
27
4,793
–
63
54
17,065
Net book value at
31 December 2023
10,328
19,928
396
328
3,431
2,293
6
–
36,710
A
Initial concession property relates to the payments recognised at inception of the Rail Merger with KCRC while additional concession
property relates to the expenditures for the upgrade of the initial concession property after inception of the Rail Merger. Additional concession
property (High Speed Rail) and additional concession property (Shatin to Central Link) relate to the expenditures for the upgrade of the
concession property of High Speed Rail and Shatin to Central Link respectively.
B
SZL4 forms part of the Shenzhen Metro, which is operated by a wholly owned subsidiary, MTR Corporation (Shenzhen) Limited (“MTRSZ”).
In July 2020, the Shenzhen Municipal Government announced that a fare adjustment framework for the Shenzhen Metro network would come
into effect on 1 January 2021. The framework was expected to enable the establishment of a mechanism for fare setting and the implementation
procedures for fare adjustments. Up to 31 December 2024, there has been no increase in SZL4’s fare since MTRSZ started operating the line in
2010 whilst the operating costs continue to rise. As disclosed in previous years, if a suitable fare increase and adjustment mechanism are not
implemented soon, the long-term financial viability of this line will be impacted.
At 30 June 2022, as it was anticipated that the mechanism and procedures for fare adjustments will take longer time to implement and
patronage will remain at a lower level for a period of time, an impairment test was performed for SZL4 and an impairment provision of
HK$962 million was recognised for the SZL4 service concession assets in the consolidated statement of profit or loss for the six months ended
30 June 2022.
Based on the review performed by the Group as at 31 December 2024 and 2023, no further impairment loss was recognised as at 31 December
2024 and 2023.
C
On 30 October 2020, MTR CREC Metro (Shenzhen) Company Ltd., a subsidiary of the Company, signed the Project Concession Agreement
with the Shenzhen Municipal Government for a Build-Operate-Transfer (“BOT”) project in respect of the construction of SZL13 and the operation
of SZL13 for a term of 30 years. Accordingly, the fair value of construction services rendered during the year ended 31 December 2024 of
HK$1,310 million (2023: HK$429 million) was capitalised as service concession assets by reference to the stage of completion at the end of the
reporting period.
Total capital cost for the project is estimated at RMB4.9 billion (HK$5.2 billion). As at 31 December 2024, the Group has incurred cumulative
expenditure of RMB3.2 billion (HK$3.4 billion) and has authorised outstanding commitments totalling RMB1.7 billion (HK$1.8 billion) in relation
to the project which are included in capital commitment (note 48A).
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
219
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22 Railway Construction Projects under Entrustment by the HKSAR
Government
A
Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link
(“High Speed Rail” or “HSR”) Project
(a)
Entrustment Agreements
The HKSAR Government and the Company entered into the HSR Preliminary Entrustment Agreement in 2008, and the HSR Entrustment
Agreement in 2010 (together, the “Entrustment Agreements”), in relation to the HSR.
Pursuant to the HSR Preliminary Entrustment Agreement, the HKSAR Government is obligated to pay the Company the Company’s in-house
design costs and certain on-costs, preliminary costs and staff costs.
Pursuant to the HSR Entrustment Agreement, the Company is responsible for carrying out or procuring the carrying out of the agreed activities
for the planning, design, construction, testing and commissioning of the HSR and the HKSAR Government, as owner of HSR, is responsible
for bearing and financing the full amount of the total cost of such activities (the “Entrustment Cost”) and for paying to the Company a fee in
accordance with an agreed payment schedule (the “HSR Project Management Fee”) (subsequent amendments to these arrangements are
described below).
The HKSAR Government has the right to claim against the Company if the Company breaches the HSR Entrustment Agreement (including, if
the Company breaches the warranties it gave in respect of its project management services) and, under the HSR Entrustment Agreement, to be
indemnified by the Company in relation to losses suffered by the HKSAR Government as a result of any negligence of the Company in performing
its obligations under the HSR Entrustment Agreement or any breach of the HSR Entrustment Agreement by the Company. Under the HSR
Entrustment Agreement, the Company’s total aggregate liability to the HKSAR Government arising out of or in connection with the Entrustment
Agreements (other than for death or personal injury) is subject to a cap equal to the total of HSR Project Management Fee and any other fees that
the Company receives under the HSR Entrustment Agreement and certain fees received by the Company under the HSR Preliminary Entrustment
Agreement (the “Liability Cap”). In accordance with general principles of law, such Liability Cap could not be relied upon if the Company were
found to be liable for the fraudulent or other dishonest conduct of its employees or agents, to the extent that the relevant loss had been caused
by such fraudulent or other dishonest conduct. Although the HKSAR Government has reserved the right to refer to arbitration the question of
the Company’s liability for the Current Cost Overrun (as defined hereunder) (if any) under the HSR Preliminary Entrustment Agreement and
the HSR Entrustment Agreement (as more particularly described in note 22A(b)(v) below), up to the date of this annual report, no formal claim
has been received from the HKSAR Government. In 2024, the HKSAR Government informed the Company of a number of areas of interest to it
arising out of the Company’s performance under the HSR Entrustment Agreements (“Areas of Interest”) for which the HKSAR Government was
seeking further information and explanations from the Company. Subsequently, in late 2024, the HKSAR Government invited the Company to
take part in a series of Senior Executive Meetings as a forum to discuss and endeavour to settle issues between the parties in connection with the
HSR project (as was contemplated under a protocol entered into between the parties in December 2021 (the “Protocol”)). The first such meeting
was held on 13 December 2024, at which the HKSAR Government submitted a “Position Paper” to the Company for the purpose of commencing
discussions in accordance with the Protocol. The Company is reviewing the matters raised in the Position Paper and discussions with the HKSAR
Government are ongoing.
(b)
HSR Agreement
In 2015, as a result of the HSR programme being extended to the third quarter of 2018 and the Company and the HKSAR Government reaching
agreement for revising the estimate project cost to HK$84.42 billion (the “Revised Cost Estimate”), the HKSAR Government and the Company
entered into an agreement (the “HSR Agreement”) relating to the further funding and completion of the HSR (and which made certain changes
to the HSR Entrustment Agreement) which was subsequently approved by the Company’s independent shareholders at an extraordinary
general meeting, and the Legislative Council approved the HKSAR Government’s additional funding obligations, during 2016. Pursuant to the
HSR Agreement:
(i)
The HKSAR Government will bear and finance the project cost up to HK$84.42 billion, which includes an increase in the project cost by the
amount of HK$19.42 billion being the “Current Cost Overrun”;
(ii)
The Company will, if the project cost exceeds HK$84.42 billion, bear and finance the portion of the project cost which exceeds that sum (if
any) (the “Further Cost Overrun”) except for certain agreed excluded costs (namely, additional costs arising from changes in law, force majeure
events or any suspension of construction contracts specified in the HSR Agreement);
(iii)
The Company would pay a special dividend in cash of HK$4.40 in aggregate per share in two tranches in 2016 and 2017;
(iv)
The HSR Project Management Fee increases from HK$4.59 billion to HK$6.34 billion. Consequently, the Liability Cap increases from up to
HK$4.94 billion to up to HK$6.69 billion; and
(v)
The HKSAR Government reserves the right to refer to arbitration the question of the Company’s liability for the Current Cost Overrun (if
any) under the Entrustment Agreements (including any question the HKSAR Government may have regarding the validity of the Liability Cap).
The Entrustment Agreements contain dispute resolution mechanisms which include the right to refer a dispute to arbitration. If the arbitrator
does not determine that the Liability Cap is invalid and determines that, but for the Liability Cap, the Company’s liability under the Entrustment
Agreements for the Current Cost Overrun would exceed the Liability Cap, the Company shall:
•
bear such amount as is awarded to the HKSAR Government up to the Liability Cap;
•
seek the approval of its independent shareholders, at another General Meeting (at which the FSI, the HKSAR Government and their Close
Associates and Associates and the Exchange Fund will be required to abstain from voting), for the Company to bear the excess liability; and
•
if the approval of the independent shareholders (referred to immediately above) is obtained, pay the excess liability to the HKSAR
Government. If such approval is not obtained, the Company will not make such payment to the HKSAR Government.
220
MTR CORPORATION LIMITED
22 Railway Construction Projects under Entrustment by the HKSAR
Government (continued)
A
Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link
(“High Speed Rail” or “HSR”) Project (continued)
(c)
As at 31 December 2024, the Company has not made any provision in its consolidated financial statements in respect of:
(i)
any possible liability of the Company for any Further Cost Overrun (if any), given the Company does not currently believe based on
information available to date there is any need to revise further the Revised Cost Estimate;
(ii)
any possible liability of the Company that may be determined in accordance with any arbitration that may take place (as more particularly
described in note 22A(b)(v) above), given that (a) the Company has not received any notification from the HKSAR Government of any formal
claim by the HKSAR Government against the Company or of any referral by the HKSAR Government to arbitration as of 31 December 2024
and up to the date of this annual report and the eventual outcome of any dialogue between the Company and the HKSAR Government on the
Areas of Interest remains highly uncertain at the current stage; (b) the Company has the benefit of the Liability Cap; and (c) as a result of the HSR
Agreement, the Company will not make any payment to the HKSAR Government in excess of the Liability Cap pursuant to a determination of
the arbitrator without the approval of its independent shareholders; and where applicable, because the Company is not able to measure with
sufficient reliability the amount of the Company’s obligation or liability (if any).
B
Shatin to Central Link (“SCL”) Project
(a)
SCL Agreements
The Company and the HKSAR Government entered into the SCL Preliminary Entrustment Agreement (“SCL EA1”) in 2008, the SCL Advance
Works Entrustment Agreement (“SCL EA2”) in 2011, and the SCL Entrustment Agreement (“SCL EA3”) in 2012 (together, the “SCL Agreements”),
in relation to the SCL.
Pursuant to the SCL EA1, the Company is responsible for carrying out or procuring the carrying out of the design, site investigation and
procurement activities while the HKSAR Government is responsible for funding directly the total cost of such activities.
Pursuant to the SCL EA2, the Company is responsible for carrying out or procuring the carrying out of the agreed works while the HKSAR
Government is responsible for bearing and paying to the Company all the work costs (“EA2 Advance Works Costs”). The EA2 Advance Works
Costs and the Interface Works Costs (as described below) are reimbursable by the HKSAR Government to the Company. During the year
ended 31 December 2024, HK$53 million (2023: HK$84 million) of such costs were incurred by the Company, which are payable by the HKSAR
Government. As at 31 December 2024, the amount of such costs which remained outstanding from the HKSAR Government was HK$166 million
(2023: HK$144 million).
The SCL EA3 was entered into in 2012 for the construction and commissioning of the SCL. The HKSAR Government is responsible for bearing all
the work costs specified in the SCL EA3 including costs to contractors and costs to the Company (“Interface Works Costs”) (which the Company
would pay upfront and recover from the HKSAR Government) except for certain costs of modification, upgrade or expansions of certain assets
(including rolling stock, signalling, radio and main control systems) for which the Company is responsible under the existing service concession
agreement with KCRC. The Company will contribute an amount in respect of the costs relating to such modifications, upgrades or expansions.
This will predominantly be covered by the reduction in future maintenance capital expenditure which the Company would have otherwise
incurred. The total sum entrusted to the Company by the HKSAR Government for the main construction works under the SCL EA3, including
project management fee, was HK$70,827 million (“Original Entrusted Amount”).
The Company is responsible for carrying out or procuring the carrying out of the works specified in the SCL Agreements for a project
management fee of HK$7,893 million (the “Original PMC”) which has been fully received by the Company and recognised in the consolidated
statement of profit or loss in previous years.
(b)
SCL EA3 Cost Overrun
(i)
Cost to Complete
The Company has previously announced that, due to the continuing challenges posed by external factors, including issues such as delays
due to the discovery of archaeological relics, the HKSAR Government’s requests for additional scope and late or incomplete handover of
construction sites, the Original Entrusted Amount under SCL EA3 would not be sufficient to cover the total estimated cost to complete (“CTC”)
and would need to be revised upwards significantly. After carrying out detailed reviews of the estimated CTC for the main construction works,
on 10 February 2020, the Company submitted a revised estimated total CTC of HK$82,999 million (“2020 CTC Estimate”), including additional
project management fee payable to the Company of HK$1,371 million (“Additional PMC”), being the additional cost to the Company of
carrying out its remaining project management responsibilities under the SCL EA3, as detailed in note 22B(b)(ii) below but excluding the
Hung Hom Incidents Related Costs in respect of which the Company had already recognised a provision of HK$2 billion in its consolidated
statement of profit or loss for the year ended 31 December 2019 (as detailed in note 22B(c)(ii) below). The 2020 CTC Estimate represents an
increase of HK$12,172 million from the Original Entrusted Amount of HK$70,827 million.
The HKSAR Government obtained the approval from Legislative Council on 12 June 2020 for additional funding required for the SCL Project
amounting to HK$10,801 million (“Additional Funding”) so that the SCL can be completed.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
221
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22 Railway Construction Projects under Entrustment by the HKSAR
Government (continued)
B
Shatin to Central Link (“SCL”) Project (continued)
(ii)
Provision for Additional PMC
As detailed in note 22B(b)(i) above and as previously disclosed by the Company, the programme for the delivery of the SCL Project has been
significantly impacted by certain key external events. Not only do these matters increase the cost of works, they also increase the cost to the
Company of carrying out its project management responsibilities under the relevant SCL entrustment agreement, which is estimated to be
around HK$1,371 million.
The Additional Funding approved by the Legislative Council did not include any Additional PMC for the Company which the Company had
previously sought from the HKSAR Government. Therefore, the cost to the Company of continuing to comply with its project management
obligations under the SCL EA3 (which the Company has continued and will continue to comply with) is currently being met by the Company on
an interim and without prejudice basis (to allow the SCL Project to progress in accordance with the latest programme) and the Company reserves
its position as to the ultimate liability for such costs and as to its right to pursue the courses of action and remedies available under the SCL EA3.
After taking into account the matters described above, and in particular, the Company meeting, on an interim and without prejudice basis (on
the basis outlined above), the cost to the Company of continuing to comply with its project management obligations, the Group recognised a
provision of HK$1,371 million in its consolidated statement of profit or loss for the year ended 31 December 2020 for the estimated additional
cost to the Company of continuing to comply with its project management responsibilities. During the year ended 31 December 2024, the
provision utilised amounted to HK$111 million (2023: HK$172 million) and no provision was written back (2023: HK$nil). As at 31 December 2024,
the provision of HK$196 million (2023: HK$307 million), net of amount utilised, is included in “Creditors, other payables and provisions” in the
consolidated statement of financial position.
This amount does not take into account any potential payment to the Company of any Additional PMC (whether as a result of an award,
settlement or otherwise). Accordingly, if any such potential payment becomes virtually certain, the amount of any such payment will be
recognised and credited to the Company’s consolidated statement of profit or loss in that financial period.
(c)
Hung Hom Incidents
As stated in the Company’s announcement dated 18 July 2019, there were allegations in 2018 concerning workmanship in relation to the Hung
Hom Station extension (“First Hung Hom Incident”). The Company took immediate steps to investigate the issues, report the Company’s
findings to the HKSAR Government and reserve the Company’s position against relevant contractors.
In late 2018 and early 2019, the Company advised the HKSAR Government of an insufficiency of construction records and certain construction
issues at the Hung Hom North Approach Tunnel (“NAT”), the South Approach Tunnel (“SAT”) and the Hung Hom Stabling Sidings (“HHS”),
forming an addition to the First Hung Hom Incident (“Second Hung Hom Incident”).
(i)
Commission of Inquiry (“COI”)
On 10 July 2018, the COI was set up by the HKSAR Chief Executive in Council pursuant to the Commissions of Inquiry Ordinance (Chapter 86 of
the Laws of Hong Kong). On 29 January 2019, the HKSAR Government made its closing submission to the first phase of the COI in which it stated
its view that the Company ought to have provided the required skills and care reasonably expected of a professional and competent project
manager but that the Company had failed to do so.
On 26 March 2019, the HKSAR Government published the redacted interim report of the COI in which the COI found that although the Hung
Hom Station extension diaphragm wall and platform slab construction works are safe, they were not executed in accordance with the relevant
contract in material aspects.
On 18 July 2019, the Company submitted to the HKSAR Government two separate final reports, one in respect of the First Hung Hom Incident
and one in respect of the Second Hung Hom Incident, containing, inter alia, proposals for suitable measures required at certain locations to
achieve code compliance. These suitable measures have been implemented.
On 22 January 2020, the HKSAR Government reiterated, in its closing submissions to the COI, that there was failure on the part of both the
Company and the contractor Leighton Contractors Asia Limited to perform the obligations which the two parties undertook for the SCL project
and that the Company, which was entrusted by the HKSAR Government as the project manager of the SCL project, ought to have provided the
requisite degree of skill and care reasonably expected of a professional and competent project manager.
On 12 May 2020, the HKSAR Government published the final report of the COI in which the COI determined that it is fully satisfied that, with
the suitable measures in place, the station box, NAT, SAT and HHS structures will be safe and also fit for purpose. The suitable measures for
these structures were completed in 2020. The COI also made a number of comments on the construction process (including regarding failures
in respect thereof such as unacceptable incidents of poor workmanship compounded by lax supervision and that in a number of respects also,
management of the construction endeavour fell below the standards of reasonable competence) and made recommendations to the Company
for the future.
222
MTR CORPORATION LIMITED
22 Railway Construction Projects under Entrustment by the HKSAR
Government (continued)
B
Shatin to Central Link (“SCL”) Project (continued)
(ii)
Provision for the Hung Hom Incidents Related Costs
In order to progress the SCL Project and to facilitate the phased opening of the Tuen Ma Line in the first quarter of 2020, the Company
announced in July 2019 that it would fund, on an interim and without prejudice basis, certain costs arising from the Hung Hom Incidents and
certain costs associated with phased opening (being costs for alteration works, trial operations and other costs associated with the preparation
activities for the phased opening) (“Hung Hom Incidents Related Costs”), whilst reserving the Company’s position as to the ultimate liability
for such costs.
The Company and the HKSAR Government will continue discussions with a view to reaching an overall settlement in relation to the Hung Hom
Incidents and their respective funding obligations relating to the CTC and the Hung Hom Incidents Related Costs. If no overall settlement is
reached between the Company and the HKSAR Government within a reasonable period, the provisions of the SCL EA3 shall continue to apply
(as they currently do) including in relation to such costs, and the responsibility for the funding of such costs shall be determined in accordance
with the SCL EA3.
After taking into account the matters described in note 22B(c) above, and in particular, the Company’s decision to fund, on an interim and
without prejudice basis, the Hung Hom Incidents Related Costs, the Company recognised a provision of HK$2,000 million in its consolidated
statement of profit or loss for the year ended 31 December 2019. During the year ended 31 December 2024, the provision utilised amounted
to HK$31 million (2023: HK$65 million) and no provision was written back (2023: HK$nil). As at 31 December 2024, the provision of
HK$731 million (2023: HK$762 million), net of amount utilised, is included in “Creditors, other payables and provisions” in the consolidated
statement of financial position.
This amount does not take into account any potential recovery from any other party (whether in the circumstances that no overall settlement
is reached and/or as a result of an award, settlement or otherwise). Accordingly, if any such potential recovery becomes virtually certain, the
amount of any such recovery will be recognised and credited to the Company’s consolidated statement of profit or loss in that financial period.
(d)
Potential Claims from and Indemnification to the HKSAR Government
The HKSAR Government has the right to claim against the Company if the Company breaches the SCL Agreements (including, if the Company
breaches the warranties it gave in respect of its project management services) and, under each SCL Agreement, to be indemnified by the
Company in relation to losses incurred by the HKSAR Government as a result of the negligence of the Company in performing its obligations
under the relevant SCL Agreement or breach thereof by the Company. Under the SCL EA3, the Company’s total aggregate liability to the HKSAR
Government arising out of or in connection with the SCL Agreements (other than for death or personal injury) is subject to a cap equal to the
fees that the Company receives under the SCL Agreements. In accordance with general principles of law, such cap could not be relied upon if the
Company were found to be liable for the fraudulent or other dishonest conduct of its employees or agents, to the extent that the relevant loss
had been caused by such fraudulent or other dishonest conduct. Although the HKSAR Government has stated that it reserves all rights to pursue
further actions against the Company and related contractors and has made the statements in its closing submission to the COI (as stated in note
22B(c)(i) above), up to the date of this annual report, no claim has been received from the HKSAR Government in relation to any SCL Agreement.
It is uncertain as to whether such claim will be made against the Company in the future and, if made, the nature and amount of such claim.
The eventual outcome of the discussions between the Company and the HKSAR Government on various matters remain highly uncertain at the
current stage. As a result, no additional provision other than as stated above has been made as the Company is currently not able to measure
with sufficient reliability the ultimate amount of the Company’s obligation or liability arising from the SCL Project as a whole in light of the
significant uncertainties involved. While no provision in respect of the SCL Project related matters was recognised at 31 December 2024 other
than as stated above, the Company will reassess on an ongoing basis the need to recognise any further provision in the future in light of any
further development.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
223
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23 Railway Construction in Progress
Movements of railway construction in progress of the Group are as follows:
in HK$ million
Balance at
1 January
Additions^
Balance at
31 December
2024
Oyster Bay Station
Construction costs and consultancy fees
170
234
404
Staff costs and other expenses
89
63
152
Finance costs
9
18
27
Utilisation of government grant
(268)
(315)
(583)
–
–
–
Tung Chung Line Extension
Construction costs and consultancy fees
1,365
2,693
4,058
Staff costs and other expenses
507
533
1,040
Finance costs
39
106
145
1,911
3,332
5,243
Tuen Mun South Extension
Construction costs and consultancy fees
397
1,628
2,025
Staff costs and other expenses
422
185
607
Finance costs
7
53
60
826
1,866
2,692
Kwu Tung Station*
Construction costs and consultancy fees
921
934
1,855
Staff costs and other expenses
589
348
937
Finance costs
9
78
87
1,519
1,360
2,879
Hung Shui Kiu Station
Construction costs and consultancy fees
–
295
295
Staff costs and other expenses
–
262
262
Finance costs
–
4
4
–
561
561
Total
4,256
7,119
11,375
224
MTR CORPORATION LIMITED
23 Railway Construction in Progress (continued)
in HK$ million
Balance at
1 January
Additions^
Balance at
31 December
2023
Oyster Bay Station
Construction costs and consultancy fees
53
117
170
Staff costs and other expenses
44
45
89
Finance costs
1
8
9
Utilisation of government grant (note 47H)
(98)
(170)
(268)
–
–
–
Tung Chung Line Extension
Construction costs and consultancy fees
–
1,365
1,365
Staff costs and other expenses
–
507
507
Finance costs
–
39
39
–
1,911
1,911
Tuen Mun South Extension
Construction costs and consultancy fees
–
397
397
Staff costs and other expenses
–
422
422
Finance costs
–
7
7
–
826
826
Kwu Tung Station*
Construction costs and consultancy fees
–
921
921
Staff costs and other expenses
–
589
589
Finance costs
–
9
9
–
1,519
1,519
Total
–
4,256
4,256
^
The additions represent capital expenditure incurred and transferred from deferred expenditure.
*
According to the project agreement of Kwu Tung Station signed on 5 September 2023 with the HKSAR Government, the Kwu Tung Station project works include,
inter alia, (i) the construction of the Kwu Tung Station, and (ii) the detailed planning and design, and the advance works of the Northern Link (main line).
The Oyster Bay Station project is targeted to complete in 2030. Total capital cost for the Oyster Bay Station project based on the defined
scope of works and programme is estimated at HK$6.7 billion (excluding finance costs). As at 31 December 2024, the Company has incurred
cumulative expenditure of HK$556 million (2023: HK$259 million) (excluding finance costs), which was wholly offset by the government grant,
and has authorised outstanding commitments totalling HK$6.1 billion in relation to the Oyster Bay Station project which are included in “Capital
commitments” (note 48A).
The Tung Chung Line Extension project is targeted to complete in 2029. Total capital cost for Tung Chung Line Extension project based
on the defined scope of works and programme is estimated at HK$24.2 billion (excluding finance costs). As at 31 December 2024, the
Company has incurred cumulative expenditure of HK$5,098 million (2023: HK$1,872 million) (excluding finance costs) and has authorised
outstanding commitments totalling HK$19.1 billion in relation to the Tung Chung Line Extension project which are included in “Capital
commitments” (note 48A).
The Tuen Mun South Extension project is targeted to complete in 2030. Total capital cost for Tuen Mun South Extension project based
on the defined scope of works and programme is estimated at HK$18.2 billion (excluding finance costs). As at 31 December 2024, the
Company has incurred cumulative expenditure of HK$2,632 million (2023: HK$819 million) (excluding finance costs) and has authorised
outstanding commitments totalling HK$15.6 billion in relation to the Tuen Mun South Extension project which are included in “Capital
commitments” (note 48A).
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
225
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23 Railway Construction in Progress (continued)
The Kwu Tung Station and advance works of the Northern Link (main line), and detailed planning and design of the Northern Link (main line) are
targeted to complete in 2027 and 2034 respectively. Total capital cost for Kwu Tung Station project based on the defined scope of works and
programme (including the detailed planning and design, and the advance works of the Northern Link (main line)) is estimated at HK$10.8 billion
(excluding finance costs). As at 31 December 2024, the Company has incurred cumulative expenditure of HK$2,792 million
(2023: HK$1,510 million) (excluding finance costs) and has authorised outstanding commitments totalling HK$8.0 billion in relation to the
Kwu Tung Station project which are included in “Capital commitments” (note 48A).
The Hung Shui Kiu Station project is targeted to complete in 2030. Total capital cost for Hung Shui Kiu Station project based on the defined scope
of works and programme is estimated at HK$8.3 billion (excluding finance costs). As at 31 December 2024, the Company has incurred cumulative
expenditure of HK$557 million (excluding finance costs) and has authorised outstanding commitments totalling HK$7.7 billion in relation to the
Hung Shui Kiu Station project which are included in “Capital commitments” (note 48A).
24 Property Development in Progress
A
Property Development in Progress
Pursuant to the project agreements in respect of the construction of railway extensions and the Property Package Agreements in respect of the
Rail Merger, the HKSAR Government has granted the Company with development rights on the land over the stations along railway lines.
Movements of property development in progress of the Group are as follows:
in HK$ million
Balance at
1 January
Net additions*
Transfer out to
profit or loss
Balance at
31 December
2024
Hong Kong Property Development Projects
41,728
572
–
42,300
2023
Hong Kong Property Development Projects
41,269
459
–
41,728
*
The net additions represent expenditure incurred for Hong Kong property development projects, including the amount of land premium, capital expenditure and
development costs transferred from deferred expenditure, and are offset by payments or distributions of the assets received from developers and utilisation of
government grant (if any).
The remaining lease terms of leasehold land in Hong Kong included under property development in progress are between 10 and 50 years.
B
Stakeholding Funds
Being the stakeholder under certain Airport Railway, Tseung Kwan O Extension, South Island Line, Kwun Tong Line and East Rail Line/Light
Rail Property Projects, the Company receives and manages deposit monies and sales proceeds in respect of sales of properties under those
developments. These monies are placed in separate designated bank accounts and, together with any interest earned, are to be released to
the developers for the reimbursement of costs of the respective developments in accordance with the terms and conditions of the HKSAR
Government Consent Schemes and development agreements. Any balance remaining is to be released for distribution only after all obligations
relating to the developments have been met. Accordingly, the balances of the stakeholding funds have not been included in the consolidated
statement of financial position. As at 31 December 2024, the balance of the stakeholding funds was HK$20,802 million (2023: HK$18,397 million).
C
West Rail Property Development
As part of the Rail Merger, the Company was appointed to act as the agent of KCRC and certain KCRC subsidiary companies (“West Rail
Subsidiaries”) in the development of specified development sites along the West Rail. The Company can receive an agency fee of 0.75%
of the gross sale proceeds in respect of the developments except for the Tuen Mun development on which the Company can receive 10%
of the net profits accrued under the development agreement. The Company can also recover from the West Rail Subsidiaries all the costs
incurred in respect of the West Rail development sites plus 16.5% on-cost, together with interest accrued thereon. During the year ended
31 December 2024, HK$60 million (2023: HK$8 million) of agency fee and other income in respect of West Rail property development was
recognised (note 12). During the year ended 31 December 2024, the reimbursable costs incurred by the Company including on-cost and interest
accrued were HK$42 million (2023: HK$43 million).
226
MTR CORPORATION LIMITED
25 Deferred Expenditure
As at 31 December 2024, deferred expenditure included costs of HK$64 million (2023: HK$0.4 billion) mainly incurred for certain railway projects
which the project agreements are yet to be reached with the HKSAR Government. The future development of the respective projects is expected
to bring future economic benefits to the Group. In the event that in a future period it is no longer considered probable that the corresponding
project agreements can be reached, and the costs concerned are no longer considered as recoverable, the costs concerned will be charged to
the consolidated statement of profit or loss in that reporting period.
26 Investments in Subsidiaries
The following list contains the particulars of principal subsidiaries of the Company as at 31 December 2024:
Proportion of ownership interest
Name of company
Issued
share capital/
contributed
registered capital
Group’s
effective
interest
Held by the
Company
Held by
subsidiary(ies)
Place of
incorporation/
establishment
and operation
Principal activities
LOUDER HK Company Limited
HK$100
100%
–
100%
Hong Kong
Retail
MTR Academy (HK) Company Limited
HK$10,000
100%
–
100%
Hong Kong
Administering the
operation of
MTR Academy
MTR Lab Company Limited
HK$100
100%
100%
–
Hong Kong
Holding of investments
MTR Telecommunication Company
Limited
HK$100,000,000
100%
100%
–
Hong Kong
Mobile
telecommunication
services
Ngong Ping 360 Limited
HK$2
100%
100%
–
Hong Kong
Operating the Tung
Chung to Ngong Ping
cable car system and
village in Ngong Ping
Pierhead Garden Management
Company Limited
HK$50,000
100%
100%
–
Hong Kong
Property investment
and management
TraxComm Limited
HK$15,000,000
100%
100%
–
Hong Kong
Fixed
telecommunication
network and
related services
V-Connect Limited
HK$1,000
100%
100%
–
Hong Kong
Mobile
telecommunication
services
Metro Trains Melbourne Pty. Ltd. *
AUD39,999,900
60% on
ordinary
shares;
–
100% on
ordinary
shares;
Australia
Railway operations
and maintenance
AUD100
30% on
Class A
shares
–
100% on
Class A
shares
Metro Trains Sydney Pty Ltd *
AUD100
60%
–
60%
Australia
Railway operations
and maintenance
MTR Corporation (Sydney) NRT
Pty Limited
AUD2
100%
–
100%
Australia
Design and delivery of
railway related systems
MTR Corporation (Sydney) SMCSW
Pty Limited
AUD1
100%
–
100%
Australia
Design, delivery and
integration of railway
related systems
MTR Corporation (C.I.) Limited
US$1,000
100%
100%
–
Cayman Islands/
Hong Kong
Financing
MTR Consultadoria (Macau) Sociedade
Unipessoal Lda.
MOP25,000
100%
–
100%
Macao
Railway consultancy
services
MTR Railway Operations (Macau)
Company Limited
MOP25,000
100%
–
100%
Macao
Railway operations
and management
MTR Tech AB *
SEK30,000,000
100%
–
100%
Sweden
Railway maintenance
MTR Tunnelbanan AB *
SEK40,000,000
100%
–
100%
Sweden
Railway operations
and maintenance
MTR Nordic AB *
SEK40,050,000
100%
–
100%
Sweden
Holding of investments
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
227
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Proportion of ownership interest
Name of company
Issued
share capital/
contributed
registered capital
Group’s
effective
interest
Held by the
Company
Held by
subsidiary(ies)
Place of
incorporation/
establishment
and operation
Principal activities
MTR Corporation (Shenzhen) Limited ^@
HK$2,636,000,000
100%
–
100%
The People’s
Republic of China
Railway construction,
operations and
management
MTR CREC Metro (Shenzhen) Company
Limited #@
RMB1,379,440,000
83%
–
83%
The People’s
Republic of China
Railway construction,
operations and
management
MTR Property Development (Shenzhen)
Company Limited #@
HK$1,304,969,189
100%
–
100%
The People’s
Republic of China
Property development,
operation, leasing,
management and
consultancy services
MTR Commercial Centre Management
(Tianjin) Company Limited ^@
RMB1,391,000,000
100%
–
100%
The People’s
Republic of China
Property investment,
leasing and
management
MTR Corporation (Crossrail) Limited
GBP1,000,000
100%
–
100%
United Kingdom
Railway operations
and maintenance
*
Subsidiaries not audited by KPMG
^
Wholly foreign owned enterprise registered under the People’s Republic of China (PRC) Law
#
Sino-foreign equity joint venture registered under PRC Law
@ English translation for identification purpose only
The Directors of the Company are of the opinion that a complete list of all subsidiaries and their particulars will be of excessive length and
therefore the above table contains only those subsidiaries which, in the opinion of the Directors, materially contribute to the Group’s results,
assets or liabilities.
26 Investments in Subsidiaries (continued)
228
MTR CORPORATION LIMITED
27 Interests in Associates and Joint Ventures
The following list contains the particulars of material associates and joint venture as at 31 December 2024, all of which are unlisted corporate
entities whose quoted market price is not available:
Proportion of ownership interest
Name of company
Group’s
effective
interest
Held by the
Company
Held by
subsidiary
Place of
incorporation/
establishment
and operation
Principal activities
Associates
Octopus Holdings Limited (“OHL”)
64.02%
64.02%
–
Hong Kong
Holding company of a group
of companies which engage in
the operation of a contactless
smartcard common payment
system in Hong Kong and
consultancy services
Beijing MTR Corporation Limited ~@
49%
–
49%
The People’s
Republic of China
Metro investment,
construction, operations
and passenger services
Beijing MTR L16 Corporation Limitedα@
49%
–
49%
The People’s
Republic of China
Metro investment,
construction, operations
and passenger services
Hangzhou MTR Corporation Limited
(“HZMTR”) *~@
49%
–
49%
The People’s
Republic of China
Railway operations
and management
First MTR South Western Trains Limited *
30%
–
30%
United Kingdom
Railway operations
and management
NRT Pty Ltd *
27.55%
–
27.55%
Australia
Financing, railway construction,
operations and maintenance
through a unit trust
NRT CSW Pty Ltd *
27.55%
–
27.55%
Australia
Financing, railway construction,
operations and maintenance
through a unit trust
Joint Venture
Hangzhou MTR Line 5 Corporation
Limited ~@
60%
–
60%
The People’s
Republic of China
Railway electrical and
mechanical construction,
operations and management
*
Companies not audited by KPMG
~
Sino-foreign co-operative joint venture registered under PRC Law
α Limited liability company (wholly owned by a legal person) under PRC Law
@ English translation for identification purpose only
All the associates and joint ventures are accounted for using the equity method in the consolidated financial statements and considered to be
not individually material.
The summary financial information of the Group’s effective interests in associates and joint ventures is as follows:
in HK$ million
2024
2023
Income
9,332
8,215
Expenses and others
(7,595)
(6,423)
Profit before taxation
1,737
1,792
Income tax
(397)
(533)
Net profit
1,340
1,259
Other comprehensive loss
(411)
(157)
Total comprehensive income
929
1,102
Assets
32,609
33,533
Liabilities
(19,891)
(21,069)
Net assets
12,718
12,464
Group’s share of net assets of the associates and joint ventures
12,718
12,464
Goodwill
321
321
Carrying amount in the consolidated statement of financial position
13,039
12,785
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
229
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27 Interests in Associates and Joint Ventures (continued)
HZMTR, a 49% owned associate of the Group, operates Hangzhou Metro Line 1 (“HZL1”), the HZL1 Xiasha Extension and HZL1 Airport Extension.
As previously mentioned, HZMTR has been loss making in recent years due to slow patronage growth and the pandemic. Because there is no
patronage protection mechanism under this concession agreement, the line’s long-term financial viability will be impacted if patronage remains
at a lower level over a further period of time, especially when compounded by the lower average fare resulting from the expanded network.
28 Investments in Securities
Investments in securities are measured at fair value and comprise of:
in HK$ million
2024
2023
Unlisted equity securities held by subsidiaries
640
564
Listed debt securities held by an overseas insurance underwriting subsidiary
312
298
Bank medium-term notes
1,000
–
1,952
862
As at 31 December 2024, all debt securities were expected to mature within one year except for HK$166 million (2023: HK$267 million)
which were expected to mature after one year. During the year ended 31 December 2024, net fair value loss on investments in securities of
HK$50 million (2023: gain of HK$54 million) was recognised.
29 Properties Held for Sale
in HK$ million
2024
2023
Properties held for sale
– at cost
924
860
– at net realisable value
1,498
1,079
2,422
1,939
Representing:
Hong Kong property development
2,410
1,927
Mainland China property development
12
12
2,422
1,939
Properties held for sale represent the Group’s interest in unsold properties or properties received by the Group as sharing-in-kind in Hong Kong,
and the Group’s unsold properties in Mainland China.
For Hong Kong property development, the net realisable values as at 31 December 2024 and 2023 were determined by reference to an open
market valuation of the properties as at those dates, undertaken by an independent firm of surveyors, Colliers International (Hong Kong) Limited,
who have among their staff Members of the Hong Kong Institute of Surveyors.
Properties held for sale at net realisable value of the Group are stated net of provision of HK$139 million (2023: HK$83 million) made in order to
state these properties at the lower of their cost and estimated net realisable value. The remaining lease terms of leasehold land in Hong Kong
included under properties held for sale are between 10 and 50 years.
230
MTR CORPORATION LIMITED
30 Derivative Financial Assets and Liabilities
A
Fair Value
The contracted notional amounts, fair values and maturities based on contractual undiscounted cash flows of derivative financial instruments
outstanding are as follows:
Notional
amount
Fair value
Contractual undiscounted cash flows maturing in
in HK$ million
Less than
1 year
1-2 years
2-5 years
Over
5 years
Total
2024
Derivative Financial Assets
Gross settled:
Foreign exchange forwards
– cash flow hedges:
88
2
– inflow
–
89
–
–
89
– outflow
–
(88)
–
–
(88)
– not qualified for hedge accounting:
31
1
– inflow
4
27
–
–
31
– outflow
(4)
(27)
–
–
(31)
Cross currency swaps
– fair value hedges:
7,990
79
– inflow
2,770
1,381
2,251
2,939
9,341
– outflow
(2,845)
(1,381)
(2,154)
(2,871)
(9,251)
– cash flow hedges:
1,418
13
– inflow
9
11
32
2,678
2,730
– outflow
(12)
(12)
(37)
(2,655)
(2,716)
Net settled:
Interest rate swaps
– fair value hedges
15,648
85
152
131
114
61
458
– cash flow hedges
12,855
125
55
12
(3)
94
158
– not qualified for hedge accounting
299
37
9
8
23
5
45
38,329
342
138
151
226
251
766
Derivative Financial Liabilities
Gross settled:
Foreign exchange forwards
– cash flow hedges:
2,032
(129)
– inflow
936
909
59
–
1,904
– outflow
(1,008)
(968)
(63)
–
(2,039)
– not qualified for hedge accounting:
869
(54)
– inflow
565
210
33
–
808
– outflow
(597)
(231)
(35)
–
(863)
Cross currency swaps
– fair value hedges:
8,903
(383)
– inflow
2,915
1,715
998
4,443
10,071
– outflow
(3,067)
(1,739)
(1,136)
(4,392)
(10,334)
– cash flow hedges:
24,459
(1,317)
– inflow
501
6,043
5,252
16,801
28,597
– outflow
(535)
(6,164)
(6,086)
(17,286)
(30,071)
Net settled:
Interest rate swaps
– fair value hedges
6,271
(73)
(18)
(12)
21
(5)
(14)
– cash flow hedges
6,646
(27)
12
(9)
(26)
(3)
(26)
– not qualified for hedge accounting
300
(31)
(8)
(7)
(17)
(2)
(34)
49,480
(2,014)
(304)
(253)
(1,000)
(444)
(2,001)
Total
87,809
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
231
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30 Derivative Financial Assets and Liabilities (continued)
A
Fair Value (continued)
Notional
amount
Fair value
Contractual undiscounted cash flows maturing in
in HK$ million
Less than
1 year
1-2 years
2-5 years
Over
5 years
Total
2023
Derivative Financial Assets
Gross settled:
Foreign exchange forwards
– cash flow hedges:
2,164
15
– inflow
223
477
898
–
1,598
– outflow
(219)
(471)
(886)
–
(1,576)
– not qualified for hedge accounting:
445
8
– inflow
358
87
8
–
453
– outflow
(353)
(84)
(8)
–
(445)
Cross currency swaps
– fair value hedges:
3,978
56
– inflow
152
462
3,929
–
4,543
– outflow
(185)
(420)
(3,839)
–
(4,444)
– cash flow hedges:
391
–
– inflow
–
–
–
802
802
– outflow
–
–
–
(811)
(811)
Net settled:
Interest rate swaps
– fair value hedges
14,774
116
(11)
201
49
–
239
– cash flow hedges
600
5
8
1
(4)
1
6
– not qualified for hedge accounting
1,300
40
11
7
18
10
46
23,652
240
(16)
260
165
2
411
Derivative Financial Liabilities
Gross settled:
Foreign exchange forwards
– cash flow hedges:
209
(13)
– inflow
528
195
56
–
779
– outflow
(541)
(198)
(58)
–
(797)
– not qualified for hedge accounting:
378
(17)
– inflow
250
8
102
–
360
– outflow
(258)
(9)
(111)
–
(378)
Cross currency swaps
– fair value hedges:
6,528
(346)
– inflow
2,294
2,823
43
1,474
6,634
– outflow
(2,463)
(2,856)
(73)
(1,527)
(6,919)
– cash flow hedges:
22,920
(1,030)
– inflow
446
444
10,428
16,682
28,000
– outflow
(453)
(451)
(10,975)
(17,117)
(28,996)
Net settled:
Interest rate swaps
– fair value hedges
5,251
(88)
(34)
18
(24)
(14)
(54)
– cash flow hedges
9,832
(182)
64
(46)
(134)
(89)
(205)
– not qualified for hedge accounting
300
(34)
(9)
(6)
(14)
(9)
(38)
45,418
(1,710)
(176)
(78)
(760)
(600)
(1,614)
Total
69,070
232
MTR CORPORATION LIMITED
30 Derivative Financial Assets and Liabilities (continued)
A
Fair Value (continued)
The Group’s derivative financial instruments consist predominantly of interest rate and cross currency swaps entered into exclusively by the
Company, and the relevant interest rate swap curves as of 31 December 2024 and 2023 were used to discount the cash flows of financial
instruments. Interest rates used ranged from 3.35% to 4.58% (2023: 3.09% to 5.27%) for Hong Kong dollars, 4.33% to 4.63% (2023: 3.76% to
5.59%) for United States dollars, 3.67% to 4.44% (2023: 3.77% to 4.39%) for Australian dollars, 0.46% to 0.82% (2023: 0.07% to 0.52%) for Japanese
yen and 3.10% to 4.60% (2023: 3.10% to 3.65%) for Renminbi.
The table above details the remaining contractual maturities at the end of the reporting period of the Group’s derivative financial assets and
liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating,
based on rates current at the end of the reporting period) and the earliest date the Group can be required to pay. The details of the fair value
measurement are disclosed in note 43.
B
Financial Risks
The Group’s operating activities and financing activities expose it to four main types of financial risks, namely liquidity risk, interest rate risk,
foreign exchange risk and credit risk. The Group’s overall risk management policy focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects of these financial risks on the Group’s financial performance.
The Board of Directors provides principles for overall risk management and approves policies covering specific areas, such as liquidity risk,
interest rate risk, foreign exchange risk, credit risk, concentration risk, use of derivative financial instruments and non-derivative financial
instruments, and investment of excess liquidity. The Group’s Preferred Financing Model (the “Model”) for the Company is an integral part of its
risk management policies. The Model specifies, amongst other things, the preferred mix of fixed and floating rate debts, the permitted level of
foreign currency debts and an adequate length of financing horizon for coverage of forward funding requirements, against which the Company’s
financing related liquidity, interest rate and currency risk exposures are measured, monitored and controlled. The Board regularly reviews its risk
management policies and authorises changes if necessary based on operating and market conditions and other relevant factors. The Board also
reviews on an annual basis as part of the budgeting process and authorises changes if necessary to the Model in accordance with changes in
market conditions and practical requirements.
The use of derivative financial instruments to control and hedge against interest rate and foreign exchange risk exposures is an integral part of
the Group’s risk management strategy. These instruments shall only be used for controlling or hedging risk exposures, and cannot be used for
speculation purposes. All of the derivative instruments used by the Company are over-the-counter derivatives comprising principally interest
rate swaps, cross currency swaps and foreign exchange forward contracts.
(i)
Liquidity Risk
Liquidity risk refers to the risk that funds are not available to meet liabilities as they fall due, and it may result from timing and amount
mismatches of cash inflow and outflow.
The Group employs projected cash flow analysis to manage liquidity risk by forecasting the amount of cash required, including working capital,
debt repayments, dividend payments, capital expenditures and new investments, and by maintaining sufficient cash balance and/or undrawn
committed banking facilities to ensure these requirements are met. It adopts a prudent approach and will maintain sufficient cash balance and
committed banking facilities to provide forward coverage of a target of 9 months (but not less than 6 months) of projected cash requirements at
the parent company level as specified in the Model. The Company also conducts stress testing of its projected cash flow to analyse liquidity risk,
and would arrange additional banking facilities or debt issuance or otherwise take appropriate actions if such stress tests reveal significant risk of
material cash flow shortfall.
As at 31 December 2024, the Group had undrawn committed banking facility of HK$20,915 million (2023: HK$18,329 million).
The following table details the remaining contractual maturities at the end of the reporting period of the Group’s loans and other obligations
other than lease liabilities (as detailed in note 35D below), which are based on contractual undiscounted cash flows (including interest payments
computed using contractual rates or, if floating, based on rates current at the end of the reporting period) and the earliest date the Group can be
required to pay:
2024
2023
in HK$ million
Capital
market
instruments
Bank
loans
Others
Total
Capital
market
instruments
Bank
loans
Others
Total
Loans and other obligations
Amounts repayable beyond 5 years
40,419
1,746
–
42,165
25,633
1,599
–
27,232
Amounts repayable within a period of
between 2 and 5 years
15,159
832
–
15,991
14,670
790
–
15,460
Amounts repayable within a period of
between 1 and 2 years
15,411
256
–
15,667
15,918
481
–
16,399
Amounts repayable within 1 year
16,696
4,076
–
20,772
8,791
1,618
620
11,029
87,685
6,910
–
94,595
65,012
4,488
620
70,120
Others represent obligations under lease out/lease back transaction (note 20E).
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
233
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30 Derivative Financial Assets and Liabilities (continued)
B
Financial Risks (continued)
The Group’s exposure to liquidity risks in respect of “Derivative financial liabilities” (note 30A), “Lease liabilities” (note 35D), “Creditors, other
payables and provisions” (note 36), “Amounts due to related parties” (note 37), “Obligations under service concession” (note 38), and “Loans from
holders of non-controlling interests” (note 39) are disclosed in the respective notes.
(ii)
Interest Rate Risk
The Group’s interest rate risk arises principally from its borrowing activities at the parent company level (including its financing vehicles).
Borrowings based on fixed and floating rates expose the Group to fair value and cash flow interest rate risks respectively due to fluctuations in
market interest rates. The Group manages and controls its interest rate risk exposure at the parent company level by maintaining a level of fixed
rate debt between 45% and 80% (2023: 45% and 80%) of total debt outstanding as specified by the Model. Should the actual fixed rate debt
level deviate substantially from the Model, derivative financial instruments such as interest rate swaps would be procured to align the fixed and
floating mix with the Model. As at 31 December 2024, 72% (2023: 67%) of the Company’s (including financing vehicles) total debt outstanding
was denominated either in or converted to fixed interest rate after taking into account outstanding cross currency and interest rate swaps.
Interest rate risk at subsidiary, associate and joint venture companies are managed separately based on their own borrowing requirement,
circumstances and market practice.
As at 31 December 2024, it is estimated that a 100 basis points increase/100 basis points decrease in interest rates, with all other variables
held constant, would increase/decrease the Group’s profit after tax and increase/decrease the Group’s retained profits by approximately
HK$130 million/HK$125 million (2023: decrease by HK$87 million/increase by HK$83 million). Other components of consolidated equity would
increase/decrease by approximately HK$1,174 million/HK$1,278 million (2023: HK$527 million/HK$567 million).
The sensitivity analysis above has been determined assuming that the change in interest rates had occurred at the end of the reporting period
and had been applied to the exposure to interest rate risk for both derivative and non-derivative financial instruments in existence at that date.
The interest rate assumptions represent management’s assessment of a reasonably possible change in interest rates over the period until the
next annual financial period.
(iii)
Foreign Exchange Risk
Foreign exchange risk arises when recognised assets and liabilities are denominated in a currency other than the functional currency of the
Group’s companies to which they relate. For the Group, it arises principally from its borrowing as well as investment and procurement activities
outside Hong Kong.
The Group manages and controls its foreign exchange risk exposure by maintaining a modest level of unhedged non-Hong Kong dollar debt at
the parent company level as specified by the Model, and minimal foreign exchange open positions created by its investments and procurements
outside Hong Kong. Where the currency of a borrowing is not matched with that of the expected cash flows for servicing the debt, the Company
would convert its foreign currency exposure resulting from the borrowing to Hong Kong dollar exposure through cross currency swaps. For
investment and procurement in foreign currencies, the Group would purchase the foreign currencies in advance or enter into foreign exchange
forward contracts to secure the necessary foreign currencies at pre-determined exchange rates for settlement.
As most of the Group’s receivables and payables are denominated in the respective Group companies’ functional currencies (Hong Kong dollars,
Renminbi, Australian dollars, British Pound or Swedish Krona) or United States dollars (with which Hong Kong dollars are pegged) and most of its
payment commitments denominated in foreign currencies are covered by foreign exchange forward contracts, management does not expect
that there will be any significant currency risk associated with them.
(iv)
Credit Risk
Credit risk refers to the risk that a counterparty will be unable to pay amounts in full when due. For the Group, this arises mainly from the
deposits it maintains and the derivative financial instruments that it has entered into with various banks and counterparties as well as from the
Defeasance Securities it procured under the lease out/lease back transaction (note 20E). The Group limits its exposure to credit risk by placing
deposits and transacting derivative financial instruments only with financial institutions with acceptable investment grade credit ratings or
guarantee, and diversifying its exposure to various counterparties.
All derivative financial instruments are subject to a maximum counterparty limit based on the respective counterparty’s credit ratings in
accordance with policy approved by the Board. Credit exposure in terms of estimated fair market value of and largest potential loss arising from
these instruments based on the “value-at-risk” concept is measured, monitored and controlled against their respective counterparty limits. To
further reduce counterparty risk exposure, the Group also applies set-off and netting arrangements across all derivative financial instruments and
other financial transactions with the same counterparty.
All deposits and investments are similarly subject to a separate maximum counterparty/issuer limit based on the respective counterparty/issuer’s
credit ratings and/or status as Hong Kong’s note-issuing banks. There is also a limit on the length of time that the Group can maintain a deposit
with a counterparty or investment from an issuer based upon the counterparty/issuer’s credit ratings. Deposit/investment outstanding and
maturity profile are monitored regularly to ensure they are within the limits established for the counterparties/issuers. In addition, the Group
actively monitors the credit default swap levels of counterparties/issuers and their daily changes, and may on the basis of the observed levels
and other considerations adjust its exposure and/or maximum counterparty/issuer limit to the relevant counterparty.
234
MTR CORPORATION LIMITED
30 Derivative Financial Assets and Liabilities (continued)
B
Financial Risks (continued)
As at the end of the reporting period, the maximum exposure to credit risk of the Group with respect to derivative financial assets and
bank deposits is represented respectively by the carrying amount of the derivative financial assets and the aggregate amount of deposits
on its consolidated statement of financial position. As at the end of the reporting period, there was no significant concentration risk to a
single counterparty.
In addition, the Group also manages and controls its exposure to credit risk in respect of receivables as stated in note 32.
31 Stores and Spares
As at 31 December 2024, stores and spares net of provision for obsolete stock of HK$90 million (2023: HK$27 million) amounted to
HK$2,421 million (2023: HK$2,557 million), of which HK$1,654 million (2023: HK$1,817 million) is expected to be consumed within 1 year
and HK$767 million (2023: HK$740 million) is expected to be consumed after 1 year. Stores and spares expected to be consumed after 1 year
comprise mainly contingency spares and stocks kept to meet cyclical maintenance requirements.
32 Debtors and Other Receivables
The Group’s credit policies in respect of receivables arising from its principal activities are as follows:
(i)
The majority of fare revenue from Hong Kong transport operations (except for that from the High Speed Rail as described in note 32(ii)
below) is collected through Octopus Cards, QR code and contactless bank cards with daily settlement on the next working day or in cash for
other ticket types. A small portion of it is collected through pre-sale agents which settle the amounts due within 30 days.
(ii)
In respect of the High Speed Rail, tickets are sold by the Company and other Mainland train operators. The clearance centre of China
Railway Corporation administers the revenue allocation and settlement system of the Guangzhou-Shenzhen-Hong Kong Express Rail Link and
allocates the revenue of the High Speed Rail to the Company under a “section-based” approach with settlement in the following month.
(iii)
Fare revenue from SZL4 is collected either through Shenzhen Tong Cards or QR code payment with daily settlement on the next working
day or in cash for other ticket types. Service fees from Macao Light Rapid Transit Taipa Line are billed monthly with due dates in accordance with
the terms of the service agreement.
(iv)
Franchise revenue in Australia is collected either daily or monthly depending on the revenue nature. The majority of the franchise revenue
from operations in Sweden is collected in the transaction month with the remainder being collected in the following month. Concession revenue
for London Elizabeth Line is collected once every 4 weeks.
(v)
Rentals, advertising and telecommunication service fees are billed monthly with due dates ranging from immediately due to 60 days.
Tenants of the Group’s investment properties and station kiosks are generally required to pay three to six months’ rental deposit upon the
signing of lease agreements.
(vi)
Amounts receivable under interest rate and currency swap agreements with financial institutions are due in accordance with the terms of
the respective agreements.
(vii)
Consultancy service income is billed monthly for settlement within 30 days upon work completion or on other basis stipulated in the
consultancy contracts.
(viii)
Debtors in relation to contracts and capital works entrusted to the Group, subject to any agreed retentions, are due within 30 days upon
the certification of work in progress.
(ix)
Amounts receivable in respect of property development are due in accordance with the terms of relevant development agreements or
sale and purchase agreements.
The ageing analysis of debtors by due dates is as follows:
in HK$ million
2024
2023
Amounts not yet due
8,181
5,118
Overdue by within 30 days
177
218
Overdue by more than 30 days but within 60 days
55
89
Overdue by more than 60 days but within 90 days
18
29
Overdue by more than 90 days
121
285
Total debtors
8,552
5,739
Other receivables and contract assets
7,228
8,017
15,780
13,756
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
235
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
32 Debtors and Other Receivables (continued)
Included in other receivables as at 31 December 2024 was HK$1,598 million (2023: HK$1,008 million) in respect of property development profit in
Hong Kong distributable from stakeholding funds and receivables from property purchasers based on the terms of the development agreements
and sales and purchase agreements. In addition, the Company purchased the tax reserve certificates of Hong Kong Profits Tax in respect of
certain payments relating to the Rail Merger. Details are set out in note 16B.
On 23 March 2017, MTR Property (Tianjin) No.1 Company Limited (“MTR TJ No.1”) entered into a Framework Agreement comprising, inter
alia, a Share Transfer Agreement, with Tianjin Xingtai Jihong Real Estate Co., Ltd. (“TJXJRE”), a wholly-owned subsidiary of Beijing Capital
Land Ltd., for the disposal of MTR TJ No.1’s 49% equity interest in Tianjin TJ – Metro MTR Construction Company Limited at a consideration of
RMB1.3 billion; and MTR TJ No.1’s future acquisition of a shopping mall to be developed on the same site at a consideration of RMB1.3 billion.
The disposal of equity interest was completed on 10 July 2017 and consequently a prepayment was recognised on the Group’s consolidated
statement of financial position. The construction of this shopping mall was completed and handed over to the Group during the year ended
31 December 2024. Consequently, the prepayment was reclassified to investment properties at cost (note 20). As at 31 December 2024, in
accordance with the Group’s accounting policies (set out in note 2E), all investment properties of the Group were remeasured at fair value.
The Group’s exposure to credit risk on debtors and other receivables mainly relates to debtors relating to rental receivables in Hong Kong and
franchise fee/project fee receivables outside of Hong Kong. Given the Group’s policy is to receive rental deposits from tenants in Hong Kong and
the debtors in relation to the franchise fee/project fee receivables outside of Hong Kong are government related entities, the Group considers
the credit risk is low and the expected credit loss is immaterial.
As at 31 December 2024, all debtors and other receivables were expected to be recovered within one year except for amounts relating to
deposits and other receivables of HK$3,527 million (2023: HK$3,535 million) which were expected to be recovered after more than one year. The
nominal values less credit losses are not discounted as it is considered that the effect of discounting would not be significant.
Included in debtors and other receivables are the following amounts denominated in a currency other than the functional currency of the entity
to which they relate:
in million
in million
2024
2024
2023
2023
Australian dollars
7
6
Renminbi
107
77
United States dollars
50
24
33 Amounts Due from Related Parties
in HK$ million
2024
2023
Amounts due from:
– HKSAR Government
906
896
– KCRC and Airport Authority Hong Kong (“AAHK”)
4,788
4,318
– associates
504
588
6,198
5,802
As at 31 December 2024, the amount due from the HKSAR Government mainly related to the recoverable cost for the advanced works in relation
to the Shatin to Central Link, reimbursable costs for the essential public infrastructure works in respect of the South Island Line, reimbursement
of the fare revenue difference in relation to the “Public Transport Fare Concession Scheme for the Elderly and Eligible Persons with Disabilities”,
agency fee receivables and reimbursable costs in respect of West Rail property development (note 24C), as well as receivables and retention for
other entrustment and maintenance works.
As at 31 December 2024, the amount due from KCRC and AAHK mainly related to the revenue receivable in respect of (i) High Speed Rail
and Shatin to Central Link under relevant supplemental service concession agreements and (ii) the maintenance services provided as
detailed in note 47K.
Given the amounts due from related parties mainly related to HKSAR Government and government related entities, the Group considers the
credit risk is low and the expected credit loss is immaterial.
As at 31 December 2024, all amounts due from related parties were expected to be recovered within one year except for HK$3,353 million
(2023: HK$2,763 million) which were expected to be recovered after more than one year. The carrying amounts of amounts due from the HKSAR
Government and other related parties are considered not significantly different from their fair values.
236
MTR CORPORATION LIMITED
34 Cash, Bank Balances and Deposits
in HK$ million
2024
2023
Deposits with banks and other financial institutions
23,059
16,282
Cash at banks and on hand
4,827
6,093
Cash, bank balances and deposits
27,886
22,375
Less: Bank deposits with more than three months to maturity when placed or pledged deposits
(note 35E)
(6,050)
(6,800)
Cash and cash equivalents in the consolidated statement of cash flows
21,836
15,575
Included in cash, bank balance and deposits in the consolidated statement of financial position are the following amounts denominated in a
currency other than the functional currency of the entity to which they relate:
in million
2024
2023
Australian dollars
57
70
Euros
38
36
Japanese yen
1,509
1,104
Pound sterling
23
1
Renminbi
660
200
United States dollars
426
78
35 Loans and Other Obligations
A
By Type
2024
2023
in HK$ million
Carrying
amount
Fair value
Repayable
amount
Carrying
amount
Fair value
Repayable
amount
Capital market instruments
Listed or publicly traded:
Debt issuance programme notes due
during 2025 to 2047 (2023: due during
2024 to 2047)
26,597
24,487
27,308
22,031
20,820
22,475
Unlisted:
Debt issuance programme notes due
during 2025 to 2055 (2023: due during
2024 to 2055)
43,515
42,880
44,442
32,347
32,182
32,988
Total capital market instruments
70,112
67,367
71,750
54,378
53,002
55,463
Bank loans
5,543
5,543
5,549
2,411
2,411
2,411
Lease liabilities
1,066
1,066
1,066
720
720
720
Others
–
–
–
603
601
603
Loans and other obligations
76,721
73,976
78,365
58,112
56,734
59,197
Short-term loans
847
847
847
1,379
1,379
1,379
Total
77,568
74,823
79,212
59,491
58,113
60,576
Others included non-defeased obligations under lease out/lease back transaction (note 20E).
The fair values are based on the discounted cash flows method which discounts the future contractual cash flows at the current market
interest and foreign exchange rates that are available to the Group for similar financial instruments. The carrying amounts of short-term loans
approximated their fair values. Details of the fair value measurement are disclosed in note 43.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
237
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
35 Loans and Other Obligations (continued)
A
By Type (continued)
The amounts of borrowings, denominated in a currency other than the functional currency of the entity to which they relate, before and after
currency hedging activities are as follows:
Before hedging activities
After hedging activities
in million
2024
2023
2024
2023
Australian dollars
431
381
–
–
Japanese yen
15,000
15,000
–
–
Renminbi
9,160
4,725
460
–
United States dollars
2,973
2,714
–
–
B
By Repayment Terms
2024
2023
in HK$ million
Capital
market
instruments
Bank
loans
Lease
liabilities
Others
Total
Capital
market
instruments
Bank
loans
Lease
liabilities Others
Total
Loans and other obligations
Amounts repayable beyond 5 years
30,872
1,576
683
–
33,131
20,701
1,260
153
– 22,114
Amounts repayable within a period
of between 2 and 5 years
12,619
637
141
–
13,397
13,080
605
153
– 13,838
Amounts repayable within a period
of between 1 and 2 years
13,741
188
109
–
14,038
14,527
401
182
– 15,110
Amounts repayable within 1 year
14,518
3,148
133
–
17,799
7,155
145
232
603
8,135
71,750
5,549
1,066
–
78,365
55,463
2,411
720
603 59,197
Short-term loans
–
847
–
–
847
–
1,379
–
–
1,379
71,750
6,396
1,066
–
79,212
55,463
3,790
720
603 60,576
Less: Unamortised discount/
premium/finance charges
outstanding
(214)
(6)
–
–
(220)
(229)
–
–
–
(229)
Adjustment due to fair value
change of financial instruments
(1,424)
–
–
–
(1,424)
(856)
–
–
–
(856)
Total carrying amount of debt
70,112
6,390
1,066
–
77,568
54,378
3,790
720
603 59,491
The amounts repayable within 1 year in respect of capital market instruments and bank loans are included in long-term loans as these amounts
are intended to be refinanced on a long-term basis.
C
Bonds and Notes Issued and Redeemed
Notes issued by the Group during the years ended 31 December 2024 and 2023 comprise:
2024
2023
in HK$ million
Principal
amount
Net consideration
received
Principal
amount
Net consideration
received
Debt issuance programme notes
23,486
23,470
16,144
16,127
During the year ended 31 December 2024, the Group issued HK$1,700 million and RMB4,500 million (HK$4,968 million) of its listed debt
securities in the respective currency (2023: HK$1,200 million and RMB945 million (HK$1,044 million)). The Group issued AUD50 million
(HK$258 million), HK$12,541 million, RMB1,855 million (HK$1,992 million) and US$259 million (HK$2,027 million) of its unlisted debt
securities in the respective currency (2023: HK$9,337 million, RMB700 million (HK$777 million) and US$484 million (HK$3,786 million) in the
respective currency).
During the year ended 31 December 2024, the Group redeemed RMB1,500 million (HK$1,777 million) of its listed debt securities
(2023: RMB410 million (HK$465 million)). The Group redeemed HK$4,902 million and RMB420 million (HK$476 million) of its unlisted debt
securities in the respective currency (2023: AUD50 million (HK$347 million), HK$1,500 million and RMB350 million (HK$414 million) in the
respective currency).
As at 31 December 2024 and 2023, there were outstanding debt securities issued by a wholly-owned subsidiary, MTR Corporation (C.I.) Limited
(“MTRCI”). The obligations of the debt securities issued by MTRCI are direct, unsecured and unsubordinated to the other unsecured obligations of
MTRCI which are unconditionally and irrevocably guaranteed by the Company. The obligations of the Company under the guarantee are direct,
unsecured, unconditional, and unsubordinated to other unsecured and unsubordinated obligations of the Company.
238
MTR CORPORATION LIMITED
35 Loans and Other Obligations (continued)
D
Lease Liabilities
At 31 December 2024 and 2023, the Group had lease liabilities as follows:
2024
2023
in HK$ million
Present value of
the minimum
lease payments
Total minimum
lease payments
Present value of
the minimum
lease payments
Total minimum
lease payments
Within 1 year
133
161
232
248
After 1 year but within 2 years
109
134
182
193
After 2 years but within 5 years
141
200
153
167
After 5 years
683
902
153
163
933
1,236
488
523
1,066
1,397
720
771
Less: Total future interest expenses
(331)
(51)
Present value of lease obligations
1,066
720
E
Guarantees and Pledges
(i)
There were no guarantees given by the HKSAR Government in respect of the loan facilities of the Group as at 31 December 2024 and 2023.
(ii)
As at 31 December 2024, MTR Corporation (Shenzhen) Limited has pledged the fare and non-fare revenue and the benefits of insurance
contracts in relation to Phase 2 of Shenzhen Metro Line 4 as security for the RMB593 million (HK$631 million) bank loan facility granted to it.
(iii)
As at 31 December 2024, MTR CREC Metro (Shenzhen) Company Limited, a subsidiary of the Company in Mainland China, has pledged the
fare and non-fare revenue in relation to Phase 1 of SZL13 as security for the RMB3.2 billion (HK$3.4 billion) bank loan facility granted to it.
Saved as disclosed above and those disclosed elsewhere in the consolidated financial statements, none of the other assets of the Group was
charged or subject to any encumbrance as at 31 December 2024.
36 Creditors, Other Payables and Provisions
in HK$ million
2024
2023
Creditors and accrued charges
23,015
21,255
Other payables, deferred income and provisions
43,212
52,303
Contract liabilities
3,190
3,124
69,417
76,682
A
Creditors and Accrued Charges
The analysis of creditors by due dates is as follows:
in HK$ million
2024
2023
Due within 30 days or on demand
9,212
9,191
Due after 30 days but within 60 days
2,850
2,188
Due after 60 days but within 90 days
1,166
951
Due after 90 days
4,761
4,460
17,989
16,790
Rental and other refundable deposits
2,823
2,498
Accrued employee benefits
2,203
1,967
23,015
21,255
The Group’s general payment terms are one to two months from the invoice date.
The nominal values of creditors and accrued charges are not significantly different from their fair values.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
239
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
36 Creditors, Other Payables and Provisions (continued)
A
Creditors and Accrued Charges (continued)
Included in creditors and accrued charges are the following amounts denominated in a currency other than the functional currency of the entity
to which they relate:
in million
2024
2023
Australian dollars
14
13
Euros
56
13
Japanese yen
616
448
Pound sterling
179
11
Renminbi
128
90
United States dollars
49
36
B
Other Payables, Deferred Income and Provisions
Other payables included contract retentions. Deferred income related to (i) the surplus amounts of payments received from property developers
in excess of the balance in property development in progress, (ii) portion of fair value amount of shopping mall received from property
development in connection with the outstanding risks and obligations retained by the Group (note 13) as well as (iii) the unutilised government
grant of HK$28,804 million (2023: HK$30,480 million).
C
Contract Liabilities
Movements in contract liabilities of the Group during the year ended 31 December are as follows:
in HK$ million
2024
2023
Balance as at 1 January
3,124
2,587
Increase in contract liabilities as a result of billing in advance
704
896
Decrease in contract liabilities as a result of revenue recognised during the year that
was included in the contract liabilities at the beginning of the year
(544)
(368)
Exchange differences
(94)
9
Balance as at 31 December
3,190
3,124
Contract liabilities mainly arise from construction contracts and other project arrangements, when the Group receives a deposit before the
activity commences and until the revenue recognised on the project exceeds the amount of the deposit received. The payment terms are
negotiated on a case by case basis with customers.
D
As at 31 December 2024, except for unutilised government grant included in deferred income, contract liabilities and others of
HK$48,802 million (2023: HK$56,873 million) which were expected to be settled or recognised as income after one year, all remaining creditors
and other payables were expected to be settled or recognised as income within one year. The Group considers the effect of discounting the
amounts due after one year would be immaterial.
240
MTR CORPORATION LIMITED
37 Amounts Due to Related Parties
in HK$ million
2024
2023
Amounts due to:
– HKSAR Government
117
128
– KCRC
3,090
2,420
– associates
–
66
3,207
2,614
The amount due to the HKSAR Government as at 31 December 2024 relates to land administrative fees in relation to railway extensions.
The amount due to KCRC as at 31 December 2024 mainly relates to the accrued portion of the fixed annual payment and variable annual
payment that is expected to be settled within 12 months.
38 Obligations under Service Concession
Movements of the Group’s obligations under service concessions are as follows:
in HK$ million
2024
2023
Balance as at 1 January
10,059
10,142
Less: Net amount repaid during the year
(85)
(81)
Exchange differences
(5)
(2)
Balance as at 31 December
9,969
10,059
The outstanding balances as at 31 December 2024 and 2023 are repayable as follows:
2024
2023
in HK$ million
Present
value of
payment
obligations
Interest
expense
relating
to future
periods
Total
payment
obligations
Present
value of
payment
obligations
Interest
expense
relating
to future
periods
Total
payment
obligations
Amounts repayable beyond 5 years
9,454
11,665
21,119
9,577
12,310
21,887
Amounts repayable within a period of
between 2 and 5 years
329
1,953
2,282
308
1,975
2,283
Amounts repayable within a period of
between 1 and 2 years
96
665
761
90
671
761
Amounts repayable within 1 year
90
671
761
84
677
761
9,969
14,954
24,923
10,059
15,633
25,692
39 Loans from Holders of Non-controlling Interests
Loans from holders of non-controlling interests as at 31 December 2024 mainly represents the portion of total shareholder loan of
AUD60 million (HK$290 million) (2023: AUD60 million (HK$320 million)) granted to Metro Trains Australia Pty. Ltd. (“MTA”) by the holders of its
non-controlling interests. The loan carries an interest rate of 6.2% per annum and is repayable at the discretion of MTA or on 28 November 2027,
whichever is earlier.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
241
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
40 Income Tax in the Consolidated Statement of Financial Position
A
Current taxation in the consolidated statement of financial position includes:
in HK$ million
2024
2023
Balance relating to Hong Kong Profits Tax
2,790
1,468
Balance relating to tax outside Hong Kong
119
155
2,909
1,623
B
Deferred Tax Assets and Liabilities Recognised
The components of deferred tax assets and liabilities recognised in the consolidated statement of financial position and the movements during
the year are as follows:
Deferred tax arising from
Deferred tax arising from
in HK$ million
in HK$ million
Depreciation
allowances
in excess
of related
depreciation
Right-
of-use
assets
Lease
liabilities
Revaluation
of properties
Provision
and other
temporary
differences
Cash flow
hedges
Tax
losses
Total
2024
Balance as at 1 January 2024
14,618
62
(106)
766
(655)
(102)
(35)
14,548
Charged/(credited) to profit or loss
1,018
(12)
14
–
(44)
–
7
983
(Credited)/charged to other
comprehensive income
–
–
–
(25)
26
53
–
54
Disposal of subsidiaries (note 7)
–
–
32
(23)
–
–
–
9
Exchange differences
–
(3)
5
4
45
–
–
51
Balance as at 31 December 2024
15,636
47
(55)
722
(628)
(49)
(28)
15,645
2023
Balance as at 1 January 2023
13,980
56
(115)
799
(509)
18
(135)
14,094
Charged/(credited) to profit or loss
638
4
14
(34)
(102)
–
68
588
Charged/(credited) to other
comprehensive income
–
–
–
5
(53)
(120)
–
(168)
Assets of disposal group
classified as held for sale (note 49)
–
1
–
–
–
–
28
29
Exchange differences
–
1
(5)
(4)
9
–
4
5
Balance as at 31 December 2023
14,618
62
(106)
766
(655)
(102)
(35)
14,548
Deferred tax assets and liabilities recognised in the consolidated statement of financial position are as follows:
in HK$ million
2024
2023
Net deferred tax assets
(521)
(603)
Net deferred tax liabilities
16,166
15,151
15,645
14,548
C
The Group has not recognised deferred tax assets in respect of some of its subsidiaries’ cumulative tax losses of HK$3,434 million
(2023: HK$3,420 million) as it is not probable that future taxable profits against which the losses can be utilised will be available in the relevant
tax jurisdictions and entities.
242
MTR CORPORATION LIMITED
41 Share Capital, Shares Held for Executive Share Incentive Scheme,
Reserves, Company-level Movements in Components of Equity and
Capital Management
A
Share Capital
2024
2023
Number of shares
HK$ million
Number of shares
HK$ million
Ordinary shares, issued and fully paid:
At 1 January
6,217,197,282
61,083
6,202,060,784
60,547
Shares issued in respect of scrip dividend of
2023/2022 final ordinary dividend
7,625,889
202
12,108,603
438
Shares issued in respect of scrip dividend of
2023 interim ordinary dividend
–
–
3,027,895
97
Vesting of shares of Executive Share Incentive
Scheme
–
2
–
1
At 31 December
6,224,823,171
61,287
6,217,197,282
61,083
In accordance with section 135 of the Companies Ordinance, the ordinary shares of the Company do not have a par value.
B
Shares Held for Executive Share Incentive Scheme
During the year ended 31 December 2024, the Company awarded Performance Shares and Restricted Shares under the Company’s Executive
Share Incentive Scheme to certain eligible employees of the Group (note 44). A total of 492,823 Performance Shares were awarded and accepted
by the grantees on 18 March 2024, and 3,221,000 Performance Shares and 4,099,500 Restricted Shares were awarded and accepted by a grantee
on 8 April 2024 (2023: 42,850 Performance Shares and 2,561,550 Restricted Shares were awarded and accepted by the grantees on 11 April 2023,
and 60,900 Restricted Shares were awarded and accepted by a grantee on 25 September 2023). The fair values of these awarded shares were
HK$25.70 per share on 18 March 2024 and HK$25.40 per share on 8 April 2024 (2023: HK$39.10 per share on 11 April 2023 and HK$30.30 per
share on 25 September 2023).
During the year ended 31 December 2024, the Trustee of the Executive Share Incentive Scheme, pursuant to the terms of the rules and
the trust deed of the Executive Share Incentive Scheme, purchased on the Hong Kong Stock Exchange a total of 7,454,157 Ordinary Shares
(2023: 2,370,900 Ordinary Shares) of the Company for a total consideration of approximately HK$207 million (2023: HK$93 million). During the
year ended 31 December 2024, 108,555 Ordinary Shares (2023: 67,245 Ordinary Shares) of the Company were issued to the Executive Share
Incentive Scheme in relation to scrip dividend issued amounting to HK$3 million (2023: HK$2 million).
During the year ended 31 December 2024, 4,378,805 award shares (2023: 2,040,524 award shares) were transferred to the awardees under
the Executive Share Incentive Scheme upon vesting. The total cost of the vested shares was HK$180 million (2023: HK$88 million). During the
year ended 31 December 2024, HK$2 million (2023: HK$1 million) was credited to share capital in respect of vesting of shares whose fair values
at the grant date were higher than the costs of the vested shares. During the year ended 31 December 2024, 205,348 award shares
(2023: 223,120 award shares) were lapsed/forfeited.
As at 31 December 2024, taking into account the shares acquired out of the dividends from the shares held under the trust, there were
9,678,664 shares (2023: 6,494,757 shares) held in trust under the Executive Share Incentive Scheme (excluding shares vested but not yet
transferred to awardees).
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
243
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
41 Share Capital, Shares Held for Executive Share Incentive Scheme,
Reserves, Company-level Movements in Components of Equity and
Capital Management (continued)
C
Reserves
The fixed assets revaluation reserve is used to deal with the surpluses or deficits arising from the revaluation of self-occupied buildings
(note 2E(ii)).
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow
hedges pending subsequent recognition of the hedged cash flow in accordance with the accounting policy adopted for cash flow hedges as
explained in note 2T(ii).
The employee share-based capital reserve comprises the share-based payment expenses recognised in respect of award shares under the
Executive Share Incentive Scheme granted which are yet to be vested, as explained in the accounting policy under note 2U(iii).
The exchange reserve of the Group comprises all foreign exchange differences arising from the translation of the financial statements of foreign
entities. The reserve is dealt with in accordance with the accounting policy set out in note 2AA.
Apart from retained profits, the other reserves are not available for distribution to shareholders because they do not constitute realised
profits. In addition, the Company considers the cumulative surpluses on fair value measurement of investment properties of HK$65,491 million
(2023: HK$66,776 million) included in retained profits of the Company are non-distributable as they do not constitute realised profits. As
at 31 December 2024, the Company considers that the total amount of reserves of the Company available for distribution to shareholders
amounted to HK$48,176 million (2023: HK$41,036 million).
Included in the Group’s retained profits as at 31 December 2024 is an amount of HK$5,126 million (2023: HK$4,425 million), being the retained
profits attributable to the associates and joint ventures.
D
Capital Management
The Group’s primary objectives in managing capital are to safeguard its ability to continue as a going concern, and to generate sufficient profit to
maintain growth and provide an adequate return to its shareholders.
The Group manages the amount of capital in proportion to risk, and makes adjustments to its capital structure through the amount of
dividend payment to shareholders, issuance of scrip and new shares, and managing its debt portfolio in conjunction with projected financing
requirement. The FSI of the HKSAR Government is the majority shareholder of the Company holding 4,634,173,932 shares as at
31 December 2024, representing 74.45% of total equity interest in the Company.
The Group monitors capital on the basis of the net debt-to-equity ratio, which is calculated based on net borrowings as a percentage of the total
equity, where net borrowings are represented by the aggregate of loans and other obligations, obligations under service concession and loans
from holders of non-controlling interests net of cash, bank balance, deposits and bank medium-term notes. As at 31 December 2024, the Group’s
net debt-to-equity ratio is 31.6% (2023: 26.5%).
Fasttrack Insurance Ltd. is required to maintain a minimum level of shareholders’ fund based on the Bermuda Insurance Act. MTR Corporation
(Shenzhen) Limited is required to maintain a registered capital at or above 40% of the total investment for the SZL4 project in accordance with
the concession agreement. MTR Property Development (Shenzhen) Company Limited is required to maintain a registered capital at or above
33% of the total investment based on Jianfang [2015] No. 122. Metro Trains Melbourne Pty. Ltd. is required to maintain total shareholders’
funds at a specified amount in accordance with the franchise agreement. All the Group’s subsidiaries in Sweden are required to maintain total
shareholders’ fund at or above 50% of their respective registered share capital based on the Swedish Companies Act. MTR Travel Limited is
required to maintain a certain level of paid-up capital in order to maintain membership of the Travel Industry Council of Hong Kong. As at
31 December 2024, all these capital requirements were met. Apart from these, neither the Company nor any of its other subsidiaries are subject
to externally imposed capital requirements.
244
MTR CORPORATION LIMITED
41 Share Capital, Shares Held for Executive Share Incentive Scheme,
Reserves, Company-level Movements in Components of Equity and
Capital Management (continued)
E
Company-level Movements in Components of Equity
The reconciliation between the opening and closing balances of each component of the Group’s consolidated equity is set out in the
consolidated statement of changes in equity. Details of the changes in the Company’s individual components of equity between the beginning
and the end of the year are set out below:
Other reserves
in HK$ million
Note
Share
capital
Shares
held for
Executive
Share
Incentive
Scheme
Fixed
assets
revaluation
reserve
Hedging
reserve
Employee
share-
based
capital
reserve
Retained
profits
Total
equity
2024
Balance as at 1 January 2024
50
61,083
(269)
3,848
(668)
178
108,480
172,652
Profit for the year
–
–
–
–
–
13,617
13,617
Other comprehensive (loss)/income for
the year
–
–
(127)
246
–
143
262
Total comprehensive (loss)/income for
the year
–
–
(127)
246
–
13,760
13,879
Amounts transferred from hedging
reserve to initial carrying amount
of hedged items
–
–
–
(1)
–
–
(1)
2023 final ordinary dividend
–
–
–
–
–
(5,533)
(5,533)
Shares issued in respect of scrip dividend
of 2023 final ordinary dividend
202
(3)
–
–
–
3
202
2024 interim ordinary dividend
–
–
–
–
–
(2,614)
(2,614)
Shares purchased for Executive Share
Incentive Scheme
–
(207)
–
–
–
–
(207)
Vesting and forfeiture of award shares of
Executive Share Incentive Scheme
2
180
–
–
(176)
(6)
–
Employee share-based payments
–
–
–
–
137
–
137
Balance as at 31 December 2024
50
61,287
(299)
3,721
(423)
139
114,090
178,515
2023
Balance as at 1 January 2023
60,547
(262)
3,824
(59)
146
108,980
173,176
Profit for the year
–
–
–
–
–
7,896
7,896
Other comprehensive income/(loss) for
the year
–
–
24
(608)
–
(266)
(850)
Total comprehensive income/(loss) for
the year
–
–
24
(608)
–
7,630
7,046
Amounts transferred from hedging
reserve to initial carrying amount
of hedged items
–
–
–
(1)
–
–
(1)
2022 final ordinary dividend
–
–
–
–
–
(5,520)
(5,520)
Shares issued in respect of scrip dividend
of 2022 final ordinary dividend
438
(2)
–
–
–
2
438
2023 interim ordinary dividend
–
–
–
–
–
(2,610)
(2,610)
Shares issued in respect of scrip dividend
of 2023 interim ordinary dividend
97
–
–
–
–
–
97
Shares purchased for Executive Share
Incentive Scheme
–
(93)
–
–
–
–
(93)
Vesting and forfeiture of award shares of
Executive Share Incentive Scheme
1
88
–
–
(87)
(2)
–
Employee share-based payments
–
–
–
–
119
–
119
Balance as at 31 December 2023
50
61,083
(269)
3,848
(668)
178
108,480
172,652
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
245
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
42 Other Cash Flows Information
A
Reconciliation of the Group’s operating profit before Hong Kong property development, fair value measurement of investment properties,
depreciation, amortisation and variable annual payment arising from recurrent businesses to cash generated from operations is as follows:
in HK$ million
2024
2023
Operating profit before Hong Kong property development, fair value measurement of investment
properties, depreciation, amortisation and variable annual payment arising from
recurrent businesses
17,907
15,323
Adjustments for non-cash items
414
124
Operating profit before working capital changes
18,321
15,447
Decrease/(increase) in debtors and other receivables
565
(1,682)
Increase in stores and spares
(11)
(283)
Increase/(decrease) in creditors, other payables and provisions
866
(11)
Cash generated from operations
19,741
13,471
B
Reconciliation of the Group’s liabilities arising from financing activities is as follows:
Loans and other obligations
Short-term
loans
Interest and
finance
charges
payables
Total
in HK$ million
Capital
market
instruments
Bank
loans
Lease
liabilities
Others
2024
At 1 January 2024
54,378
2,411
720
603
1,379
289
59,780
Changes from financing cash flows:
– Proceeds from loans and capital
market instruments
23,486
9,412
–
–
12,944
–
45,842
– Repayment of loans and capital
market instruments
(7,155)
(6,167)
–
(621)
(13,462)
–
(27,405)
– Capital element of lease rentals paid
–
–
(189)
–
–
–
(189)
– Interest and finance charges paid
–
–
–
–
–
(2,497)
(2,497)
16,331
3,245
(189)
(621)
(518)
(2,497)
15,751
Exchange differences
(44)
(113)
(21)
(1)
(14)
–
(193)
Other changes:
– Adjustment due to fair value change
of financial instruments
(553)
–
–
–
–
–
(553)
– Recognition of lease liabilities
–
–
556
–
–
–
556
– Interest and finance charges
–
–
–
19
–
2,555
2,574
(553)
–
556
19
–
2,555
2,577
At 31 December 2024
70,112
5,543
1,066
–
847
347
77,915
246
MTR CORPORATION LIMITED
42 Other Cash Flows Information (continued)
B
Reconciliation of the Group’s liabilities arising from financing activities is as follows: (continued)
Loans and other obligations
Short-term
loans
Interest and
finance
charges
payables
Total
in HK$ million
Capital
market
instruments
Bank
loans
Lease
liabilities
Others
2023
At 1 January 2023
40,794
3,773
1,113
574
1,592
205
48,051
Changes from financing cash flows:
– Proceeds from loans and capital
market instruments
16,144
999
–
–
56,914
–
74,057
– Repayment of loans and capital
market instruments
(2,726)
(2,395)
–
–
(57,058)
–
(62,179)
– Capital element of lease rentals paid
–
–
(567)
–
–
–
(567)
– Interest and finance charges paid
–
–
–
–
–
(1,869)
(1,869)
13,418
(1,396)
(567)
–
(144)
(1,869)
9,442
Exchange differences
–
(32)
19
1
(3)
–
(15)
Other changes:
– Adjustment due to fair value change
of financial instruments
166
–
–
–
–
–
166
– Recognition of lease liabilities
–
–
155
–
–
–
155
– Interest and finance charges
–
–
–
28
–
1,953
1,981
– Reclassification
–
66
–
–
(66)
–
–
166
66
155
28
(66)
1,953
2,302
At 31 December 2023
54,378
2,411
720
603
1,379
289
59,780
C
Total Cash Outflows for Leases
Amounts included in the consolidated statement of cash flows for leases comprise the following:
in HK$ million
2024
2023
Within operating cash flows
39
27
Within financing cash flows
211
607
250
634
These amounts relate to the leases of the following:
in HK$ million
2024
2023
Buildings
172
192
Plant and equipment
78
442
250
634
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
247
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
43 Fair Value Measurement
In accordance with HKFRS 13, Fair Value Measurement, the level into which a fair value measurement is classified is determined with reference to
the observability and significance of the inputs used in the valuation technique as follows:
Level 1: Fair value measured using only Level 1 inputs, i.e. unadjusted quoted prices in active markets for identical assets or liabilities at the
measurement date
Level 2: Fair value measured using Level 2 inputs, i.e. observable inputs which fail to meet Level 1, and not using significant unobservable inputs.
Unobservable inputs are inputs for which market data are not available
Level 3: Fair value measured using significant unobservable inputs
A
Fair Value Measurements of Fixed Assets
All of the Group’s investment properties and self-occupied buildings measured at fair value on a recurring basis are categorised as Level 3 of the
fair value hierarchy.
During the year ended 31 December 2024 and 2023, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3 in
respect of the Group’s investment properties and self-occupied buildings. The Group’s policy is to recognise transfers between levels of fair value
hierarchy as at the end of the reporting period in which they occur.
All the Group’s investment properties and self-occupied buildings were revalued as at 31 December 2024 and 2023 by independent qualified
surveyors. The Group’s senior management have discussion with the surveyors on the valuation assumptions and valuation results when the
valuation is performed at each interim and annual reporting date.
The fair value of all the Group’s self-occupied buildings is determined on a recurring basis using primarily the direct comparison approach
assuming sale of properties in their existing state with vacant possession.
The property interests of all the shopping malls and office accommodation held by the Group as investment properties have been valued using
the income capitalisation approach. Under this approach, the market value is derived from the capitalisation of the rental revenue to be received
under existing tenancies and the estimated full market rental value to be received upon expiry of the existing tenancies with reference to the
market rental levels prevailing as at the date of valuation by an appropriate single market yield rate. The range of market yield rate adopted for
the valuation of major investment properties as at 31 December 2024 was 3.5% – 5.75% (2023: 3.5% – 5.75%) with a weighted average of 4.8%
(2023: 4.8%). The fair value measurement is negatively correlated to the market yield rate.
The movements of investment properties during the year ended 31 December 2024 are shown in note 20A. All the fair value adjustment related
to remeasurement on investment properties held as at 31 December 2024 was recognised under “(Loss)/gain from fair value measurement of
investment properties” in the consolidated statement of profit or loss.
B
Fair Value Measurements of Financial Instruments
(i)
Financial Assets and Liabilities Carried at Fair Value
Included in the Group’s investments in securities as at 31 December 2024, there were HK$312 million (2023: HK$298 million) of listed debt
securities carried at fair value using Level 1 measurements, HK$1,000 million (2023: HK$nil) of investment in bank medium-term notes carried
at fair value using Level 2 measurements and HK$640 million (2023: HK$564 million) of unlisted equity securities carried at fair value using Level
3 measurements.
The Group’s derivative financial instruments were carried at fair value using Level 2 measurements. As at 31 December 2024, the fair
values of derivative financial assets and derivative financial liabilities were HK$342 million (2023: HK$240 million) and HK$2,014 million
(2023: HK$1,710 million) respectively.
The discounted cash flow method, which discounts the future contractual cash flows at the current market interest rates, is the main valuation
technique used to determine the fair value of the Group’s borrowings, derivative financial instruments and investment in bank medium-term
notes. For interest rate swaps, cross currency swaps and foreign exchange forward contracts, the discount rates used were derived from the swap
curves of the respective currencies and the cross currency basis curves of the respective currency pairs at the end of the reporting period. Closing
exchange rates at the end of the reporting period were used to convert value in foreign currency to local currency.
248
MTR CORPORATION LIMITED
43 Fair Value Measurement (continued)
B
Fair Value Measurements of Financial Instruments (continued)
The fair value of the Group’s investments in unlisted equity securities is determined based on the adjusted net asset method. The significant
unobservable input includes the fair value of the individual assets less liabilities (recognised and unrecognised). The fair value measurement is
positively correlated to the fair value of the individual assets less liabilities (recognised and unrecognised). The movements of the investments in
unlisted equity securities during the year are as follows:
in HK$ million
2024
2023
At 1 January
564
669
Additions
143
66
Disposal
–
(203)
Changes in fair value recognised in profit or loss
(54)
46
Exchange differences recognised in other comprehensive income
(13)
(14)
At 31 December
640
564
As at 31 December 2024, it is estimated that a 5-percent increase/decrease (2023: 5-percent increase/decrease) in fair value of the total individual
assets less liabilities (recognised and unrecognised), with all other variables held constant, would increase/decrease the Group’s profit after tax
by approximately HK$27 million/HK$27 million (2023: HK$22 million/HK$22 million).
At the end of each interim and annual reporting period, valuations are performed for the financial instruments which are categorised into Level 3
of the fair value hierarchy, and the valuation assumptions and results are reviewed by the Group’s management accordingly.
During the years ended 31 December 2024 and 2023, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3. The
Group’s policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.
(ii)
Financial Assets and Liabilities Not Carried at Fair Value
The carrying amounts of the Group’s financial assets and liabilities not carried at fair value are not materially different from their fair values as at
31 December 2024 and 2023 except for capital market instruments and other obligations, for which their carrying amounts and fair values are
disclosed below:
At 31 December 2024
At 31 December 2023
in HK$ million
Carrying amount
Fair value
Carrying amount
Fair value
Capital market instruments
70,112
67,367
54,378
53,002
Other obligations
1,066
1,066
1,323
1,321
The above fair value measurement is categorised as Level 2. The discount cash flow method, which discounts the future contractual cash flows
at the current market interest rates, is the main valuation technique used to determine the fair value of the Group’s capital market instruments
and other obligations. The discount rates used were derived from the swap curves of the respective currencies at the end of the reporting period.
Closing exchange rates at the end of the reporting period were used to convert value in foreign currency to local currency.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
249
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
44 Share-based Payments
Equity-settled Share-based Payments – Executive Share Incentive Scheme
On 15 August 2014, the Board of the Company approved the adoption of the Executive Share Incentive Scheme. The Executive Share Incentive
Scheme took effect on 1 January 2015 for an original term of 10 years up to 31 December 2024. The Board has then approved the renewal of
the Executive Share Incentive Scheme for a further 10 years and so it will remain in force until 31 December 2034 (unless terminated earlier
by the Company).
The purposes of the Executive Share Incentive Scheme are to retain management and key employees, to align participants’ interest with the
long-term success of the Company and to drive the achievement of strategic objectives of the Company. Under the Executive Share Incentive
Scheme, an award holder may be granted an award of Restricted Shares and/or Performance Shares (collectively known as “Award Shares”).
Restricted Shares are awarded to selective eligible employees. Performance Shares are awarded to eligible employees which vest subject to
the performance of the Company over a pre-determined performance period, assessed by reference to such Board-approved performance
metric and in respect of such performance period and any other performance conditions as determined by the Remuneration Committee
from time to time.
Subject to the Scheme Rules, the Remuneration Committee shall determine the vesting criteria and conditions or periods for the Award Shares
to be vested, subject to review from time to time. An award of Restricted Shares will vest ratably over three years in equal tranches (unless
otherwise determined by the Remuneration Committee). An award of Performance Shares will vest upon certification by the Remuneration
Committee that the relevant performance metric and performance conditions have been achieved. The Executive Share Incentive Scheme will
be administered by the Company in accordance with the Scheme Rules and the Company has entered into a Trust Deed with the Trustee for the
purpose of implementing the Scheme. The number of Award Shares will be acquired in the market at the cost of the Company by the Trustee.
Award Shares will be held on trust by the Trustee until the end of each vesting period.
The following awards of shares with vesting period falling in the years ended 31 December 2024 and 2023 were offered to Members of the
Executive Directorate and selected employees of the Group under the Executive Share Incentive Scheme:
Number of
Award Shares granted
Fair value
per share
Vesting period
Date of award
Restricted
Shares
Performance
Shares
HK$
From
To
8 April 2020
2,334,750
6,950
41.90
1 April 2020
1 April 2023 (Restricted Shares)
3 April 2021 (Performance Shares)
8 April 2021
1,955,950
1,558,050
44.05
1 April 2021
1 April 2024 (Restricted Shares)
1 April 2024 (Performance Shares)
1 April 2022
132,000
–
42.35
1 April 2022
31 March 2025
8 April 2022
2,507,250
240,700
42.05
1 April 2022
1 April 2025 (Restricted Shares)
1 April 2024 (Performance Shares)
11 April 2023
2,561,550
42,850
39.10
3 April 2023
3 April 2026 (Restricted Shares)
1 April 2024 (Performance Shares)
25 September 2023
60,900
–
30.30
19 September 2023
19 September 2026
18 March 2024*
–
492,823
25.70
–
–
8 April 2024
4,099,500
3,221,000
25.40
2 April 2024
1 April 2027 (Restricted Shares)
1 April 2027 (Performance Shares)
*
Following a review of the results of the 2021 – 2023 performance cycle by the Remuneration Committee, additional Performance Shares were awarded to eligible
employees under the Executive Share Incentive Scheme on 18 March 2024 and fully vested on 18 March 2024.
Movement in the number of Award Shares outstanding was as follows:
2024
2023
Number of
Award Shares
Number of
Award Shares
Outstanding as at 1 January
6,226,464
5,824,808
Awarded during the year
7,813,323
2,665,300
Vested during the year
(4,378,805)
(2,040,524)
Forfeited during the year
(205,348)
(223,120)
Outstanding as at 31 December
9,455,634
6,226,464
250
MTR CORPORATION LIMITED
44 Share-based Payments (continued)
Equity-settled Share-based Payments – Executive Share Incentive Scheme (continued)
Award Shares outstanding at 31 December 2024 had the following remaining vesting periods:
Award Shares
Remaining vesting period
Number of Award Shares
years
Restricted Shares
1 April 2022
0.25
132,000
8 April 2022
0.25
653,058
11 April 2023
1.25
1,476,276
25 September 2023
1.72
40,600
8 April 2024
2.25
3,950,800
Performance Shares
8 April 2024
2.25
3,202,900
The details of the Executive Share Incentive Scheme are also disclosed in the Remuneration Report.
During the year ended 31 December 2024, the equity-settled share-based payments relating to the Executive Share Incentive Scheme recognised
as an expense amounted to HK$137 million (2023: HK$119 million) (note 10A).
45 Retirement Schemes
The Group operates or participates in a number of retirement schemes in Hong Kong, Mainland China, Macao, the United Kingdom, Sweden and
Australia. The assets of these schemes are held under the terms of separate trust arrangements so that the assets are kept separate from those of
the Group. The majority of the Group’s employees are covered by the retirement schemes operated by the Company.
A
Retirement Schemes Operated by the Company in Hong Kong
The Company operated four retirement schemes under trust in Hong Kong during the year ended 31 December 2024, including the MTR
Corporation Limited Retirement Scheme (the “MTR Retirement Scheme”), the MTR Corporation Limited Provident Fund Scheme (the “MTR
Provident Fund Scheme”) and two MPF Schemes, the “MTR MPF Scheme” and the “KCRC MPF Scheme”.
Currently, new eligible employees can choose between the MTR Provident Fund Scheme and the MTR MPF Scheme while the MTR MPF Scheme
covers employees who did not opt for or who are not eligible to join the MTR Provident Fund Scheme.
(i)
MTR Retirement Scheme
The MTR Retirement Scheme is a defined benefit scheme registered under the Occupational Retirement Schemes Ordinance (Cap. 426)
(the “ORSO”) and has been granted an MPF Exemption Certificate by the Mandatory Provident Fund Schemes Authority (the “MPFA”).
The MTR Retirement Scheme had been closed to new employees from 1 April 1999 onwards. It is administrated in accordance with the Trust
Deed and Rules by the Board of Trustees, comprising management and employee representatives, and independent non-employer trustees.
It provides benefits based on the greater of a multiple of final salary times years of service and a factor times the accumulated member
contributions with investment returns. Members’ contributions are based on fixed percentages of base salary. The Company’s contributions
are determined by reference to an annual actuarial valuation carried out by an independent actuarial consulting firm. As at 31 December 2024,
the total number of members was 2,076 (2023: 2,313). In 2024, members contributed HK$49 million (2023: HK$52 million) and the Company
contributed HK$95 million (2023: HK$73 million) to the MTR Retirement Scheme. The fair value of scheme assets of the MTR Retirement Scheme
excluding the portion attributable to members’ voluntary contributions as at 31 December 2024 was HK$6,938 million (2023: HK$7,316 million).
The actuarial valuations as at 31 December 2024 and 2023 to determine the accounting obligations in accordance with HKAS 19,
Employee Benefits, were carried out by an independent actuarial consulting firm, Towers Watson Hong Kong Limited (“WTW”), which is
represented by Ms Wing Lui, a Fellow of the Society of Actuaries of the United States of America, using the Projected Unit Credit Method.
The results of the valuation are shown in note 46.
The actuarial valuations as at 31 December 2024 and 2023 to determine the cash funding requirements were also carried out by Ms Wing Lui of
WTW using the Attained Age Method. The principal actuarial assumptions used for the valuation as at 31 December 2024 included a long-term
rate of investment return net of salary increases of 0.25% (2023: 1.90%) per annum, together with appropriate allowances for expected rates of
mortality, turnover and retirement.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
251
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
45 Retirement Schemes (continued)
A
Retirement Schemes Operated by the Company in Hong Kong (continued)
As at the valuation date of 31 December 2024, under the situation that the value of members’ voluntary contributions was included:
(a)
the MTR Retirement Scheme was insolvent, covering 99.4% (2023: 100.4%) of the aggregate vested liability had all members left service
with their leaving service benefits secured, resulting in a solvency deficit of HK$42 million (2023: surplus of HK$30 million); and
(b)
on the assumption that the MTR Retirement Scheme would continue in force, its value of assets was insufficient to cover the aggregate
past service liability, with a funding level of 98.7% (2023: 100.3%), representing a past service deficit of HK$92 million (2023: surplus of
HK$25 million).
(ii)
MTR Provident Fund Scheme
The MTR Provident Fund Scheme is a defined contribution scheme registered under the ORSO and has been granted an MPF Exemption
Certificate by the MPFA. All benefits payable under the MTR Provident Fund Scheme are calculated by reference to members’ own contributions
and the Company’s contributions, investment returns on these contributions, together with year of services. Both members’ and the Company’s
contributions are based on fixed percentages of members’ base salary.
As at 31 December 2024, the total number of employees participating in the MTR Provident Fund Scheme was 11,312 (2023: 10,717).
In 2024, total members’ contributions were HK$200 million (2023: HK$180 million) and total contributions from the Company were
HK$441 million (2023: HK$405 million). No contributions forfeited by employees leaving the scheme were utilised to offset contributions during
the year (2023: HK$nil). As at 31 December 2024, forfeited contributions of HK$125 million (2023: HK$90 million) were available to reduce the
contributions payable in future years. The net asset value as at 31 December 2024 was HK$7,799 million (2023: HK$7,049 million).
(iii)
MTR MPF Scheme
The MTR MPF Scheme is a defined contribution scheme covered under an MPF master trust registered with the MPFA. It covers those employees
who did not opt for or who are not eligible to join the MTR Retirement Scheme or the MTR Provident Fund Scheme. Both members and the
Company each contribute to the MTR MPF Scheme at the mandatory levels as required by the Mandatory Provident Fund Schemes Ordinance
(Cap. 485) (the “MPFSO”). The Company makes additional contributions above the mandatory level for eligible members who joined the MTR
MPF Scheme before 1 April 2008, subject to individual terms of employment.
As at 31 December 2024, the total number of employees participating in the MTR MPF Scheme was 6,305 (2023: 5,382). In 2024, total members’
contributions were HK$67 million (2023: HK$58 million) and total contribution from the Company were HK$72 million (2023: HK$63 million).
No contributions forfeited by employees leaving the scheme were utilised to offset contributions during the year (2023: HK$nil). As at
31 December 2024, there were no forfeited contributions (2023: HK$nil) available to reduce the contributions payable in future years.
(iv)
KCRC MPF Scheme
The KCRC MPF Scheme is a defined contribution scheme covered under an MPF master trust registered with the MPFA. It covers those former
KCRC employees who were previously members of the KCRC MPF Scheme and are eligible to join the MTR Provident Fund Scheme but opt
to re-join the KCRC MPF Scheme. Both members and the Company each contribute to the KCRC MPF Scheme at the mandatory levels as
required by the MPFSO.
As at 31 December 2024, the total number of employees participating in the KCRC MPF Scheme was 189 (2023: 214). In 2024, total members’
contributions were HK$3 million (2023: HK$3 million) and total contribution from the Company were HK$3 million (2023: HK$3 million). No
contributions forfeited by employees leaving the scheme were utilised to offset contributions during the year (2023: HK$nil). As at the end of the
reporting period, no forfeited contributions (2023: HK$nil) available to reduce the contributions payable in future years.
B
Retirement Schemes for Employees of Mainland China and Overseas Offices of the
Company and Subsidiaries
Employees not eligible for joining the retirement schemes operated by the Company in Hong Kong are covered by the retirement schemes
established by their respective Mainland China and overseas offices or subsidiary companies or in accordance with respective applicable
labour regulations.
Certain employees of the Group’s Australian subsidiary are entitled to receive retirement benefits from the Emergency Services Superannuation
Scheme operated in Australia. The benefit amounts are calculated based on the member’s years of service and final average salary. The Group
does not recognise any defined benefit liability in respect of this scheme because the Group has no legal or constructive obligation to pay future
benefits relating to its employees; its only obligation is to pay contributions as they fall due. As at 31 December 2024, total number of the Group’s
employees participating in this scheme was 311 (2023: 395). In 2024, total members’ contributions were HK$14 million (2023: HK$15 million) and
total contribution from the Group was HK$58 million (2023: HK$58 million).
Certain employees of the Group’s Swedish subsidiaries are entitled to receive retirement benefits from the ITP 2 Retirement Scheme operated
in Sweden. The benefit amounts are calculated based on the member’s years of service and annual salary. The Group does not recognise any
defined benefit liability in respect of this scheme because the Group has no legal or constructive obligation to pay future benefits relating
to its employees; its only obligation is to pay contributions as they fall due. As at 31 December 2024, total number of the Group’s employees
participating in this scheme was nil (2023: 650). In 2024, total contribution from the Group was HK$1 million (2023: HK$12 million).
252
MTR CORPORATION LIMITED
45 Retirement Schemes (continued)
B
Retirement Schemes for Employees of Mainland China and Overseas Offices of the
Company and Subsidiaries (continued)
Certain employees of the Group’s MTR Crossrail subsidiary are entitled to join the MTR Corporation (Crossrail) section of the Railway Pension
Scheme in the United Kingdom. The scheme is a shared cost arrangement whereby the Group is only responsible for a share of the cost. The
benefit amounts are calculated based on the member’s years of service and final average salary. The Group does not recognise any net defined
benefit liability in respect of this scheme because the Group has no legal or constructive obligation for any deficit in the value of the scheme.
Its only obligation is to pay contributions as they fall due. As at 31 December 2024, total number of the Group’s employees participating in this
scheme was 868 (2023: 829). In 2024, total members’ contributions were HK$33 million (2023: HK$36 million) and total contribution from the
Group was HK$49 million (2023: HK$54 million). Pension expense of HK$74 million (2023: HK$132 million) was recognised in profit or loss and
actuarial gain of HK$10 million (2023: HK$72 million) was recognised in the consolidated statement of other comprehensive income.
Except for the retirement schemes described above, all other retirement schemes to cover employees in overseas offices or in subsidiaries in
Hong Kong, Mainland China, Macao or overseas are defined contribution schemes. For Hong Kong employees, these schemes are registered
under the MPFSO in Hong Kong. For Mainland China, Macao or overseas employees, these schemes are operated in accordance with the
respective local laws and regulations. As at 31 December 2024, the total number of employees of the Group participating in these schemes
was 14,221 (2023: 17,383). In 2024, total members’ contributions were HK$121 million (2023: HK$109 million) and total contribution from the
Group was HK$788 million (2023: HK$707 million). During the years ended 31 December 2024 and 2023, the amount of contributions forfeited in
accordance to the schemes’ rules, if applicable, is not significant.
46 Defined Benefit Retirement Scheme
The Company makes contributions to and recognises defined benefit liabilities in respect of the MTR Retirement Scheme which provides
employees with benefits upon retirement or termination of services for other reasons (note 45). This defined benefit scheme exposes the
Group to actuarial risks, such as interest rate, salary increase and investment risks. The information about the MTR Retirement Scheme is
summarised as below:
A
Amounts Recognised in the Consolidated Statement of Financial Position
in HK$ million
2024
2023
Present value of defined benefit obligations
(7,257)
(7,713)
Fair value of scheme assets
6,938
7,316
Net liabilities
(319)
(397)
The net liabilities are recognised under “Creditors, other payables and provisions” in the consolidated statement of financial position. A portion
of the above obligations is expected to be paid after more than one year. However, it is not practicable to segregate this amount from the
amounts to be paid in the next twelve months, as future contributions will also relate to future services rendered and future changes in actuarial
assumptions and market conditions. The Company expects to pay HK$229 million in contribution to the MTR Retirement Scheme in 2025.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
253
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
46 Defined Benefit Retirement Scheme (continued)
B
Scheme Assets
in HK$ million
2024
2023
Equity securities
– Financial institutions
151
231
– Non-financial institutions
1,954
2,319
2,105
2,550
Bonds
– Government
3,177
1,971
– Non-government
1,414
1,513
4,591
3,484
Cash
458
1,498
7,154
7,532
Voluntary units
(216)
(216)
6,938
7,316
The scheme assets did not include any ordinary shares of the Company as at 31 December 2024 and 2023. Also, there were no investment in
other shares and debt securities of the Company as at 31 December 2024 and 2023. All of the equity securities and bonds have quoted prices in
active markets.
An asset-liability modelling review is performed periodically to analyse the strategic investment policies of the MTR Retirement Scheme. Based
on the latest study performed, the investment strategy of asset allocation was changed in 2024 to about 30% in equities, 65% in bonds and 5% in
cash (2023: 30% in cash, and out of the remaining 70%, 42.5% in equities and 57.5% in bonds).
C
Movements in the Present Value of the Defined Benefit Obligations
in HK$ million
2024
2023
At 1 January
7,713
7,488
Remeasurements:
– Actuarial losses arising from changes in liability experience
100
151
– Actuarial (gains)/losses arising from changes in demographic assumptions
–
–
– Actuarial (gains)/losses arising from changes in financial assumptions
(89)
442
11
593
Members’ contributions paid to the scheme
49
52
Benefits paid by the scheme
(938)
(906)
Current service cost
161
164
Interest cost
261
322
At 31 December
7,257
7,713
The weighted average duration of the present value of the defined benefit obligations was 4.1 years as at 31 December 2024 (2023: 4.4 years).
254
MTR CORPORATION LIMITED
46 Defined Benefit Retirement Scheme (continued)
D
Movements in the Fair Value of Scheme Assets
in HK$ million
2024
2023
At 1 January
7,316
7,500
Company’s contributions paid to the scheme
95
73
Members’ contributions paid to the scheme
49
52
Benefits paid by the scheme
(938)
(906)
Administrative expenses paid from scheme assets
(4)
(3)
Interest income
249
326
Return on scheme assets, excluding interest income
171
274
At 31 December
6,938
7,316
E
Expenses Recognised in Profit or Loss and Other Comprehensive Income
in HK$ million
2024
2023
Current service cost
161
164
Net interest on net defined benefit liability/asset
12
(4)
Administrative expenses paid from scheme assets
4
3
177
163
Less: Amount capitalised
(48)
(40)
Net amount recognised in profit or loss
129
123
Actuarial losses
11
593
Return on scheme assets, excluding interest income
(171)
(274)
Amount recognised in other comprehensive income
(160)
319
The retirement scheme expense is recognised under staff costs and related expenses in the consolidated statement of profit or loss.
F
Significant Actuarial Assumptions and Sensitivity Analysis
2024
2023
Discount rate
3.83%
3.82%
Future salary increase
4.50%
4.60%
Unit value increase
4.75%
6.50%
The below analysis shows how the present value of the defined benefit obligations as at 31 December would have increased/(decreased) as a
result of 0.25% change in the significant actuarial assumptions:
2024
2023
Increase in 0.25%
Decrease in 0.25%
Increase in 0.25%
Decrease in 0.25%
HK$ million
HK$ million
HK$ million
HK$ million
Discount rate
(71)
73
(82)
84
Future salary increases
67
(65)
67
(64)
Unit value increase
6
(5)
17
(15)
The above sensitivity analysis is based on the assumption that changes in these actuarial assumptions are not inter-correlated and therefore the
sensitivity estimated does not take into account the correlations between the actuarial assumptions.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
255
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
47 Material Related Party Transactions
The Financial Secretary Incorporated, which holds approximately 74.45% of the Company’s issued share capital on trust for the HKSAR
Government as at 31 December 2024, is the majority shareholder of the Company. Transactions between the Group and the HKSAR Government
departments or agencies, or entities controlled by the HKSAR Government, other than those transactions such as the payment of fees, taxes,
leases and rates, etc. that arise in the normal dealings between the HKSAR Government and the Group, are considered to be related party
transactions pursuant to HKAS 24, Related Party Disclosures, and are identified separately in these consolidated financial statements.
Major related party transactions entered into by the Group which are relevant for the current year include:
A
On 30 June 2000, the Company was granted by the HKSAR Government a franchise, for an initial period of 50 years, to operate the
then existing mass transit railway, and to operate and construct any extension to the railway. On the same day, the Company and the HKSAR
Government entered into an operating agreement which laid down the detailed provisions for the design, construction, maintenance and
operation of the railway under the franchise. With the Rail Merger, the operating agreement was replaced with effect from 2 December 2007 by
a new operating agreement, details of which are set out in note 47C below.
B
On 14 July 2000, the Company received a comfort letter from the HKSAR Government pursuant to which the HKSAR Government agreed
to extend the period of certain of the Company’s land interests so that they are coterminous with the Company’s franchise period. To prepare for
the Rail Merger, on 3 August 2007, the HKSAR Government wrote to KCRC confirming that, subject to all necessary approvals being obtained, the
period of certain of KCRC’s land interests (which are the subject of the service concession under the Rail Merger) will be extended so that they are
coterminous with the concession period of the Rail Merger.
C
In connection with the Rail Merger (note 3), on 9 August 2007, the Company and the HKSAR Government entered into a new operating
agreement (“OA”), which is based on the then existing operating agreement referred to in note 47A above. On the Appointed Day, the
Company’s then existing franchise under the Mass Transit Railway Ordinance was expanded to cover railways other than the then existing MTR
railway for an initial period of 50 years from the Appointed Day (“expanded franchise”). A detailed description of the OA is contained in the
circular to shareholders in respect of the Extraordinary General Meeting convened to approve the Rail Merger. Such transaction is considered to
be a related party transaction and also constitute continuing connected transaction as defined under the Listing Rules.
D
Other than the OA described in note 47C above, the Company also entered into principal agreements with KCRC and the HKSAR
Government in connection with the Rail Merger. These principal agreements are: (i) Merger Framework Agreement, (ii) Service Concession
Agreement, (iii) Sale and Purchase Agreement, (iv) West Rail Agency Agreement, and (v) Property Package Agreements. For the year ended
31 December 2024, amount recoverable or invoiced by the Company under West Rail Agency Agreement is HK$55 million (2023: HK$44 million)
and the net amounts payable or paid by the Company in relation to the Service Concession is HK$3,775 million (2023: HK$3,105 million).
The above agreements are considered to be related party transactions and also constitute continuing connected transactions as defined under
the Listing Rules. A detailed description of the agreements set out in notes 47C and 47D above is contained under the paragraph “Continuing
Connected Transactions” in the Report of the Members of the Board.
E
The Company entered into the following principal agreements with KCRC and the HKSAR Government in connection with the operation
of the High Speed Rail:
(i)
An amendment operating agreement, which was entered into with the HKSAR Government on 23 August 2018, to amend and
supplement the OA, in order to prescribe the operational requirements that will apply to the High Speed Rail.
(ii)
A supplemental service concession agreement, which was entered into with KCRC on 23 August 2018, to supplement the SCA, in order for
KCRC to grant a concession to the Company in respect of the High Speed Rail and to prescribe the operational and financial requirements that
will apply to the High Speed Rail. During the year ended 31 December 2024, net revenue received or receivable from KCRC in respect of the High
Speed Rail amounted to HK$1,602 million (2023: HK$870 million).
The above transactions are considered to be related party transactions and also constitute continuing connected transactions as defined
under the Listing Rules. A detailed description of each of the above agreements is contained under the paragraph “Continuing Connected
Transactions” in the Report of the Members of the Board.
256
MTR CORPORATION LIMITED
47 Material Related Party Transactions (continued)
F
The Company entered into the following principal agreements with KCRC and the HKSAR Government in connection with the operation
of the Shatin to Central Link (“SCL”):
(i)
An amendment operating agreement and a supplemental operating agreement, which were entered into with the HKSAR Government on
11 February 2020, to amend and supplement, respectively, the OA, in order to prescribe the operational requirements that will apply to the First
Phase of the Tuen Ma Line.
(ii)
A supplemental service concession agreement no. 2, which was entered into with KCRC on 11 February 2020, to supplement the SCA,
in order for KCRC to grant a concession to the Company in respect of the First Phase of the Tuen Ma Line and to prescribe the operational and
financial requirements that will apply to the First Phase of the Tuen Ma Line.
(iii)
An amendment operating agreement, a supplemental operating agreement and the Amendment No.1 to Memorandum on Performance
Requirements, which were entered into with the HKSAR Government on 21 June 2021, to amend and supplement, respectively, the OA, in order
to prescribe the operational requirements that will apply to the Tuen Ma Line, being the first part of the SCL.
(iv)
A supplemental service concession agreement no. 3, which was entered into with KCRC on 21 June 2021 and superseded and replaced
the supplemental service concession agreement no. 2 dated 11 February 2020 (note 47F(ii)), to supplement the SCA, in order for KCRC to grant
a concession to the Company in respect of the Tuen Ma Line, being the first part of the SCL, and to prescribe the operational and financial
requirements that will apply to the Tuen Ma Line.
(v)
An amendment operating agreement and a supplemental operating agreement, which were entered into with the HKSAR Government
on 10 May 2022, to amend and supplement, respectively, the OA, in order to prescribe the operational requirements that will apply to the
SCL as a whole.
(vi)
A supplemental service concession agreement no. 4, which was entered into with KCRC on 10 May 2022 and superseded and replaced
the supplemental service concession agreement no. 3 dated 21 June 2021 (note 47F(iv)), to supplement the SCA, in order for KCRC to grant
a concession to the Company in respect of SCL as a whole, and to prescribe the operational and financial requirements that will apply to the
SCL as a whole.
During the year ended 31 December 2024, net revenue received or receivable from KCRC in respect of Shatin to Central Link under relevant
supplemental service concession agreement amounted to HK$679 million (2023: HK$635 million).
The above transactions are considered to be related party transactions and also constitute continuing connected transactions as defined under
the Listing Rules. A detailed description of the agreements (i), (iii), (v) and (vi) above is contained under the paragraph “Continuing Connected
Transactions” in the Report of the Members of the Board.
G
The Company entered into entrustment agreements with the HKSAR Government for the design, site investigation, procurement
activities, construction, testing and commissioning of HSR and SCL. Detailed description of the agreements are provided in notes 22A and 22B.
In addition, an amount of HK$794 million was paid/payable to the HKSAR Government (net of amount received/receivable) in 2024
(2023: HK$347 million) under SCL EA3’s payment arrangement with the HKSAR Government and relevant contractors.
The above transactions are considered to be related party transactions and also constitute continuing connected transactions as defined
under the Listing Rules. A detailed description of each of the above agreements is contained under the paragraph “Continuing Connected
Transactions” in the Report of the Members of the Board.
H
On 23 September 2022, (i) the Company accepted the HKSAR Government’s Land Exchange Offer for development of the Company’s
existing Siu Ho Wan depot and (ii) the Company also entered into the project agreement with the HKSAR Government for the financing, design,
construction, pre-operation, operation and maintenance of the Oyster Bay Station to cater for the transportation needs of the new community,
together referred to as Oyster Bay Project. The Oyster Bay Project involves, inter alia, re-provision of the existing Siu Ho Wan depot and provision
of property enabling works (including roof deck over the depot for top-side property development) to enable property development on the
depot site, as well as the construction of a new station, Oyster Bay Station, to serve the future community.
The land exchange documents for the Oyster Bay Project was executed by both the Company and the HKSAR Government on
25 November 2022. When determining the land premium for the Land Exchange, costs in relation to the construction of the new Oyster Bay
Station, re-provision of the depot, property enabling works (including roof deck over the depot for top-side property development) and site
formation were accepted by the HKSAR Government as deductible costs and were deducted from the land premium assessment on a full market
basis for the Land Exchange. The amount deducted was accounted for as government grant and was included in Creditors, Other Payables and
Provisions (note 36B). The government grant is being used for offsetting against the respective capital expenditure in Other Property, Plant and
Equipment (note 20B), Railway Construction in Progress (note 23) and Property Development in Progress (note 24).
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
257
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
47 Material Related Party Transactions (continued)
I
The Company entered into project agreements with the HKSAR Government for the financing, design, construction, completion,
pre-operation, operation and maintenance of new railway extensions and the granting of development rights for commercial and residential
property sites along these railway extensions. Pursuant to these project agreements, total amount of land premium payable by the Company in
respect of these proposed property developments along these railway extensions shall be assessed by the Government as the full market value
of the site (taking into account the presence of the railway) less the agreed reduction amounts for the purpose of bridging the funding gaps of
these new railway extensions. These proposed property development sites will be developed in portions and the land premium assessment for
each portion will be carried out, at the time of the relevant tender, with a specified tranche of the agreed reduction amount being deducted. The
reduction amount deducted will be accounted for as government grant when the land grant offer is accepted and will be included in Creditors,
Other Payables and Provisions (note 36B). The government grant will offset against the related capital expenditure in Railway Construction in
Progress (note 23).
Project agreements on railway extensions entered during the year ended 31 December 2024 and 2023 include:
(i)
Project agreement in respect of the Tung Chung Line Extension, which was signed on 28 February 2023. Pursuant to the project
agreement in respect of the proposed property development at new Tung Chung East Station, total reduction amount of HK$18,365 million
would be deducted at the amount of land premium actually payable by the Company.
(ii)
Project agreement in respect of the Kwu Tung Station, which was signed on 5 September 2023. Pursuant to the project agreement in
respect of the proposed property development at Kwu Tung, total reduction amount of HK$15,160 million would be deducted at the amount of
land premium actually payable by the Company.
(iii)
Project agreement in respect of the Tuen Mun South Extension, which was signed on 5 September 2023. Pursuant to the project
agreement in respect of the proposed property development at Tuen Mun, total reduction amount of HK$24,201 million would be deducted at
the amount of land premium actually payable by the Company.
(iv)
Project agreement in respect of the Hung Shui Kiu Station, which was signed on 19 September 2024. Pursuant to the project agreement in
respect of the proposed property development at new Hung Shui Kiu Station, total reduction amount of HK$9,850 million would be deducted at
the amount of land premium actually payable by the Company.
J
In connection with the property developments along the railway systems, on 3 January 2025, the Company accepted an offer dated
22 November 2024 from the HKSAR Government to proceed with the proposed Tung Chung East Station Package One Property Development
at Site B of Tung Chung Town Lot No.53 on the terms and conditions of the relevant land grant. The land premium is assessed at
HK$337,299,000. After deduction therefrom of the reduction amount pursuant to the project agreement in respect of the Tung Chung Line
Extension, nil net land premium is payable by the Company. The transaction is considered to be a related party transaction and also constitute
a connected transaction as defined under the Listing Rules. A description of the transaction is contained under the paragraph “Connected
Transactions” in the Report of the Members of the Board. The reduction amount deducted will be accounted for as government grant in the year
ending 31 December 2025 and will offset against the related capital expenditure in Railway Construction in Progress (note 23).
K
On 18 May 2018, the Company, as sub-contractor, provided a sub-contractor warranty effective from 25 September 2017 to the AAHK
as a result of the Company having entered into a subcontract (“Subcontract”) from a third party for the modification works of the existing
Automated People Mover system at the Hong Kong International Airport (“System”) for an initial seven-year period, which was subsequently
extended to mid-2026.
On 2 July 2020, the Company entered into a contract with the AAHK for the maintenance of the System for a seven-year period effective
from 6 January 2021. In respect of the services provided, HK$222 million was recognised as consultancy income during the year ended
31 December 2024 (2023: HK$180 million).
The above transactions are considered to be related party transactions and also constitute continuing connected transactions as defined
under the Listing Rules. A detailed description of each of the above agreements is contained under the paragraph “Continuing Connected
Transactions” in the Report of the Members of the Board.
258
MTR CORPORATION LIMITED
47 Material Related Party Transactions (continued)
L
During the year ended 31 December 2024, the Group incurred HK$143 million (2023: HK$133 million) of expenses for the central clearing
services provided by Octopus Cards Limited (“OCL”), a wholly-owned subsidiary of OHL. OCL incurred HK$49 million (2023: HK$47 million) of
expenses for the load agent and Octopus card issuance and refund services, computer equipment and relating services as well as warehouse
storage space provided by the Group. During the year, OHL declared HK$376 million (2023: HK$422 million) and distributed HK$399 million
(2023: HK$361 million) of dividends to the Group.
M
During the year ended 31 December 2024, MTR Corporation (Sydney) NRT Pty Ltd, through its joint operation, provided services in respect
of the design and delivery of electrical and mechanical systems and rolling stock to NRT Pty Ltd, an associate of the Group, at a total amount of
AUD1 million (HK$4 million) (2023: AUD1 million or HK$6 million). Metro Trains Sydney Pty Ltd provided operations and maintenance services
in respect of the City section of Sydney Metro M1 Metro North West and Bankstown Line to NRT Pty Ltd at a total amount of AUD197 million
(HK$1,024 million) (2023: AUD121 million or HK$629 million) and operations, maintenance and mobilisation services in respect of the City section
of Sydney Metro M1 Metro North West and Bankstown Line to NRT CSW Pty Ltd, an associate of the Group, at a total amount of AUD108 million
(HK$558 million) (2023: AUD43 million or HK$222 million). MTR Corporation (Sydney) SMCSW Pty Limited provided delivery of electrical and
mechanical systems and rolling stock as well as integration of railway system services to NRT CSW Pty Ltd at a total amount of AUD237 million
(HK$1,222 million) (2023: AUD239 million or HK$1,242 million).
N
During the year ended 31 December 2024, Beijing MTR Corporation Limited declared and distributed RMB200 million (HK$216 million)
(2023: HK$nil) of dividends to the Group.
O
Other than those stated in notes 47A to 47N, the Company has business transactions with the HKSAR Government, entities related to the
HKSAR Government and the Company’s associates in the normal course of business operations. Details of the transactions and the amounts
involved for the reporting period are disclosed in notes 33 and 37.
P
The Group has paid remuneration to Members of the Board and the Executive Directorate. Details of these transactions are described in
note 11A. In addition, Members of the Executive Directorate were granted award shares under the Executive Share Incentive Scheme. Details of
the terms of these award shares are disclosed in note 11B and the Report of the Members of the Board. Their gross remuneration charged to the
consolidated statement of profit or loss is summarised as follows:
in HK$ million
2024
2023
Short-term employee benefits
104.5
100.9
Post-employment benefits
7.5
7.0
Share-based payments
26.9
22.8
138.9
130.7
The above remuneration is included in staff costs and related expenses disclosed in note 10A.
Q
During the year, the following dividends were paid to the FSI of the HKSAR Government:
in HK$ million
2024
2023
Ordinary dividends
– Cash dividends paid
6,071
6,071
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
259
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
48 Commitments, Contingent Liabilities and Legal Proceedings
A
Capital Commitments
(i)
Outstanding capital commitments as at 31 December not provided for in the consolidated financial statements were as follows:
in HK$ million
Hong Kong
transport
operations,
station
commercial
and other
businesses
Hong Kong
railway
extension
projects
(note a)
Hong Kong
property
rental and
development
Mainland
China and
overseas
operations
(note b)
Total
At 31 December 2024
Authorised but not yet contracted for
31,738
34,862
3,431
182
70,213
Authorised and contracted for
22,582
21,716
9,935
1,863
56,096
54,320
56,578
13,366
2,045
126,309
At 31 December 2023
Authorised but not yet contracted for
32,082
36,018
3,263
1,027
72,390
Authorised and contracted for
18,883
19,934
10,800
2,130
51,747
50,965
55,952
14,063
3,157
124,137
Notes:
(a) As at 31 December 2024, capital commitments of Hong Kong railway extension projects included costs of HK$56.6 billion in respect of which the project
agreements have been signed. These costs are approved by the Board of Directors but yet to be incurred as at 31 December 2024. The costs concerned are dealt
with in accordance with the accounting policy set out in note 2I.
(b) As at 31 December 2024, capital commitments of Mainland China and overseas operations included the authorised outstanding commitments totalling
HK$1.8 billion for the capital expenditure in relation to the SZL13 Phase 1 project.
In addition to the above, the Group has the capital commitments in respect of its investments in subsidiary of SZL13 Phase 1 project. The Group
is responsible to contribute equity injection up to RMB1,428 million (HK$1,614 million). Up to 31 December 2024, the Group has contributed
RMB1,213 million (HK$1,386 million) equity to the project.
(ii)
The capital commitments not provided for in the consolidated financial statements under Hong Kong transport operations, station
commercial and other businesses comprise the following:
in HK$ million
Improvement,
enhancement and
replacement works
Acquisition of
property, plant
and equipment
Additional
concession
property
Total
At 31 December 2024
Authorised but not yet contracted for
22,560
3,440
5,738
31,738
Authorised and contracted for
18,718
1,878
1,986
22,582
41,278
5,318
7,724
54,320
At 31 December 2023
Authorised but not yet contracted for
24,146
2,992
4,944
32,082
Authorised and contracted for
15,149
1,550
2,184
18,883
39,295
4,542
7,128
50,965
260
MTR CORPORATION LIMITED
48 Commitments, Contingent Liabilities and Legal Proceedings (continued)
B
Liabilities and Commitments in respect of Property Management Contracts
The Company and certain subsidiaries, namely Hanford Garden Property Management Company Limited, Royal Ascot Management Company
Limited and Sun Tuen Mun Centre Management Company Limited, are holders of Property Management Company Licence (licence number:
C-114608, C-515001, C-363023 and C-931638 respectively). Over the years, the Group has jointly developed with third party property developers
certain properties above or adjacent to railway depots and stations. Under most of the development agreements, the Group retained the right
to manage these properties after their completion. The Group, as manager of these properties, enters into service contracts with third party
contractors for the provision of security, cleaning, maintenance and other services on behalf of the managed properties. The Group is primarily
responsible for these contracts, but any contract costs incurred will be reimbursed by the owners and tenants of the managed properties from
the management funds as soon as they are paid.
As at 31 December 2024, the Group had total outstanding liabilities and contractual commitments of HK$4,497 million (2023: HK$3,788 million)
in respect of these works and services. Cash funds totalling HK$4,123 million (2023: HK$3,822 million) obtained through monthly payments of
management service charges from the managed properties are held by the Group on behalf of those properties for settlement of works and
services provided.
C
Service Concession in respect of the Rail Merger and Operating Arrangements for
HSR and SCL
Pursuant to the Rail Merger and Operating Arrangements for HSR and SCL, the Company is obliged under the SCA to pay an annual fixed
payment of HK$750 million to KCRC over the period of the service concession and recognised as obligations under service concession in the
statement of financial position. Additionally, commencing after three years from the Appointed Day, the Company is obliged to pay a variable
annual payment to KCRC based on the revenue generated from the KCRC system (including HSR & SCL) above certain thresholds. Furthermore,
under the SCA, SSCA-HSR and SSCA3-SCL, the Company is obliged to maintain, repair, replace and/or upgrade the KCRC system over the periods
of the service concession which is to be returned at the expiry of the service concession.
D
Material Financial and Performance Guarantees
(i)
In respect of the lease out/lease back transaction (“Lease Transaction”) (note 20E), the Group has provided standby letters of credit
(“standby LC’s”) to the Investors to cover additional amounts payable by the Group in the event the transactions are terminated prior to the
expiry of the lease terms, and such standby LC’s amounted to US$57 million (HK$443 million) as at 31 December 2024.
(ii)
In respect of the debt securities issued by MTR Corporation (C.I.) Limited (note 35C), the Company has provided guarantees to the
investors of approximately HK$15,283 million (in notional amount) as at 31 December 2024. The proceeds from the debts issued are on lent to
the Company. As such, the primary liabilities have been recorded in the Company’s statement of financial position.
(iii)
In respect of the Melbourne’s Metropolitan Rail Services Franchise, the Group has provided to the Public Transport Victoria a parent
company guarantee of AUD179 million (HK$865 million) and a performance bond of AUD68 million (HK$330 million) on joint and several basis
with other shareholders for Metro Trains Melbourne Pty. Ltd.’s performance and other obligations under the franchise agreement. In respect of
the lease of the office premises, MTM has provided bank guarantees of AUD5 million (HK$24 million) as at 31 December 2024 for the monthly
rental payments to the landlords.
(iv)
In respect of the City section of Sydney Metro M1 Metro North West and Bankstown Line Franchise, the Group has provided to NRT Pty
Ltd a parent company guarantee with a liability cap of AUD1,526 million (HK$7,371 million) for the design and construction contract (the cap
being subject to the usual exclusions of losses arising from wilful misconduct, fraudulent and criminal actions and, in addition, losses arising from
abandonment of the contracts). The Group has also provided a performance bond of AUD18 million (HK$86 million) for the performance and
other obligations under the design and construction sub-contract.
(v)
In respect of the design, delivery and integration of the Sydney Metro City & Southwest, the Group has provided to NRT CSW Pty Ltd a
parent company guarantee with a liability cap of AUD602 million (HK$2,908 million) (the cap being subject to the usual exclusions of losses
arising from wilful misconduct, fraudulent and criminal actions and, in addition, losses arising from abandonment of the contracts) and
performance bonds of AUD51 million (HK$245 million) for integrator works under the integrator contract. The Group has also provided a parent
company guarantee with a liability cap of AUD397 million (HK$1,918 million) and a bank guarantee with a liability cap of AUD51 million
(HK$247 million) for the operation and maintenance of the City section of Sydney Metro M1 Metro North West and Bankstown Line. The Group
has also provided a parent company guarantee to Metro Trains Sydney Pty Ltd with a liability cap of AUD221 million (HK$1,068 million) and a
parent company guarantee to MTR Corporation (Sydney) SMCSW Pty Limited with a liability cap of AUD221 million (HK$1,068 million) for the
interface works under City section of Sydney Metro M1 Metro North West and Bankstown Line and Sydney Metro City & Southwest (Design
and Delivery).
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
261
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
48 Commitments, Contingent Liabilities and Legal Proceedings (continued)
D
Material Financial and Performance Guarantees (continued)
(vi)
In respect of the various lines of the Macao Light Rapid Transit, the Group has provided to Macao Light Rapid Transit Corporation Limited
and the Macao SAR Government a number of bank guarantees amounting to MOP241 million (HK$234 million) as at 31 December 2024 for the
performance and other obligations under the project.
(vii)
In respect of the Stockholm Metro Franchise, the Group has provided to the Stockholm transport authority a guarantee of SEK1,000 million
(HK$706 million) as at 31 December 2024, which can be called if the franchise is terminated early as a result of default by MTR Tunnelbanan AB,
the wholly owned subsidiary of the Group to undertake the franchise.
(viii)
In respect of the investment in Hangzhou West Station property development project, the Group has provided a financial guarantee
of RMB333 million (HK$354 million) to the banks participating in the syndication loan for the repayment of interest and/or loan principal by
the consortium.
(ix)
In respect of the Hangzhou Metro Line 1 and Hangzhou Metro Line 5 concessions, the Group is required to provide handover bank bonds
to the Hangzhou Municipal Government before the end of the concessions for a period of three years to cover any non-compliance of handover
requirements under the concession agreements.
(x)
In respect of the SZL4 concession, the Group has provided to the Shenzhen Municipal Government a parent company guarantee in
respect of MTR Corporation (Shenzhen) Limited’s performance and other obligations under the concession agreement, which can be called if the
performance and other obligations are not met.
(xi)
In respect of the Shenzhen Metro Line 13 concession, the Group is required to provide handover bank bonds to the Shenzhen Municipal
Government before the end of the concessions for a period of three years to cover any non-compliance of handover requirements under the
concession agreements.
(xii)
In respect of the London Elizabeth Line Franchise in London, the Group has provided to the Rail for London Limited a parent company
guarantee of GBP80 million (HK$780 million) and a performance bond of GBP25 million (HK$244 million) for MTR Corporation (Crossrail)
Limited’s performance and other obligations under the franchise agreement. The Group has also provided liability caps totalling GBP11 million
(HK$102 million) and a performance bond of GBP1 million (HK$10 million) as at 31 December 2024 for minor infrastructure improvement works
under London Rail Infrastructure Improvement Framework.
(xiii)
In respect of the South Western Trains Franchise, the Group has provided to the Secretary of State for Transport a parent company
guarantee of GBP1.8 million (HK$18 million) and an early termination indemnity of GBP1.8 million (HK$18 million) as at 31 December 2024
for the performance and other obligations under the National Rail Contract. The Group has provided a funding deed bond of
GBP0.9 million (HK$9 million) and an early termination indemnity agreement bond of GBP0.9 million (HK$9 million) as at 31 December 2024
for aforementioned obligations.
Saved as disclosed elsewhere in the consolidated financial statements, no other provision was recognised in respect of the above financial and
performance guarantees and contingent liabilities as at 31 December 2024.
262
MTR CORPORATION LIMITED
48 Commitments, Contingent Liabilities and Legal Proceedings (continued)
E
Contingent Liabilities and Legal Proceedings
The Company has not received notification of any legal or arbitration proceedings in relation to the construction of either the HSR Project or
the SCL Project. The potential for future proceedings in relation to the construction of: (i) the HSR Project are set out in note 22A; and (ii) the SCL
Project are set out in note 22B.
As discussed in note 16, the Company has objected to the notices of profits tax assessments/additional profits tax assessments for years of
assessment from 2009/2010 to 2017/2018 which disallowed deduction of certain payments relating to the Rail Merger.
A collective action has been launched against several train operators in the United Kingdom, including First MTR South Western Trains Limited,
an associate of the Group. The action alleges that the train operators breached the competition law by abusing their dominant positions.
Specifically, the plaintiff claims that the operators failed to make sufficiently available a specific type of tickets offering “boundary fares” to
Travelcard holders, resulting in double-charging the affected passengers for part of their journeys. Court trials for the action have been split into
three separate stages, with the first trial completed in July 2024 and as at the date of this annual report, the first trial’s judgment has not been
issued. Whilst the Company is not separately named in the action, it is a 30% shareholder in the First MTR South Western Trains Limited. It is not
possible at this time to predict with certainty what liability, if any, the Company might have in respect of this collective action.
Other than the above, whilst the Company may be involved in legal proceedings in the ordinary course of business from time to time, neither
the Company nor any of its directors were involved in any litigation, arbitration or administrative proceedings, which in a material way impact
on the Company’s business, financial condition or operations. As of the date of this annual report, the Company is not aware of any pending or
threatened litigation, arbitration or administrative proceedings against the Company or its directors, which would have a material and adverse
impact on the Company’s business, financial condition, or operations.
49 Assets and Liabilities of Disposal Group Classified as Held For Sale
in HK$ million
2024
2023
Assets
Other property, plant and equipment
–
356
Deferred tax assets
–
29
Debtors and other receivables
–
20
Cash, bank balances and deposits
–
94
Assets of disposal group classified as held for sale
–
499
Liabilities
Creditors, other payables and provisions
–
99
Liabilities of disposal group classified as held for sale
–
99
In 2023, the Group had conducted a strategic review (including divestment) of MTR Express (Sweden) AB, a wholly-owned subsidiary of the
Group operating MTRX service in Sweden. With the implementation of an active sale programme, the sale of MTR Express (Sweden) AB was
considered as highly probable at 31 December 2023. As such, assets of HK$499 million and liabilities of HK$99 million of MTR Express (Sweden)
AB were reclassified as “disposal group held for sale” in the consolidated statement of financial position as at 31 December 2023. During the year
ended 31 December 2024, the Group entered into an agreement with an independent third party on 8 February 2024 for the sale of MTR Express
(Sweden) AB. The transaction was completed in May 2024 (note 7).
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
263
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
50 Company-level Statement of Financial Position
in HK$ million
At 31 December
2024
At 31 December
2023
Assets
Fixed assets
– Investment properties
93,080
95,980
– Other property, plant and equipment
105,789
102,134
– Service concession assets
32,352
30,940
231,221
229,054
Property management rights
9
10
Railway construction in progress
11,375
4,256
Property development in progress
42,300
41,728
Deferred expenditure
64
376
Investments in subsidiaries
2,797
4,147
Interests in associates
410
410
Investments in securities
1,000
–
Properties held for sale
2,410
1,927
Derivative financial assets
342
240
Stores and spares
1,835
1,782
Debtors and other receivables
12,411
7,815
Amounts due from related parties
21,131
21,472
Cash, bank balances and deposits
20,841
14,197
348,146
327,414
Liabilities
Short-term loans
800
1,200
Creditors, other payables and provisions
60,686
66,929
Current taxation
2,785
1,460
Amounts due to related parties
18,955
18,697
Loans and other obligations
58,596
39,898
Obligations under service concession
9,817
9,898
Derivative financial liabilities
2,014
1,710
Deferred tax liabilities
15,978
14,970
169,631
154,762
Net assets
178,515
172,652
Capital and reserves
Share capital
61,287
61,083
Shares held for Executive Share Incentive Scheme
(299)
(269)
Other reserves
117,527
111,838
Total equity
178,515
172,652
Approved and authorised for issue by the Members of the Board on 6 March 2025
Rex P K Auyeung
Jacob C P Kam
Michael G Fitzgerald
Chairman
Chief Executive Officer
Finance Director
264
MTR CORPORATION LIMITED
51 Accounting Estimates and Judgements
A
Key sources of accounting estimates and estimation uncertainty include the following:
(i)
Estimated Useful Life and Depreciation and Amortisation of Property, Plant and Equipment and Service Concession Assets
The Group estimates the useful lives of the various categories of property, plant and equipment and service concession assets on the basis of
their design lives, planned asset maintenance programme and actual usage experience. Depreciation and amortisation are calculated using the
straight-line method at rates sufficient to write off their cost or valuation over their estimated useful lives (note 2H).
(ii)
Impairment of Long-lived Assets
The Group reviews its long-lived assets for indications of impairment at the end of each reporting period according to accounting policies set out
in note 2G(ii). Long-lived assets (including service concession assets of SZL4 (note 21B)) are reviewed for impairment at each reporting date or
whenever events or changes in circumstances indicate that the carrying amount of the assets exceeds its recoverable amount. The recoverable
amount of an asset is the greater of the fair value less costs of disposal and value in use. In estimating the value in use, the Group uses projections
of future cash flows from the assets and the management’s assignment of a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset.
(iii)
Pension Costs
The Group employs independent valuation professionals to conduct annual assessment of the actuarial position of the MTR Retirement Scheme.
The determination of the Group’s obligation and expense for the defined benefit element of the scheme is dependent on certain assumptions
and factors provided by the Group, which are disclosed in notes 45A(i) and 46F.
(iv)
Profit Recognition on Hong Kong Property Development
Recognition of profits from Hong Kong property development (including fair value measurement of investment properties on initial recognition)
requires management’s estimation of the final project costs upon completion, assessment of outstanding transactions and market values of
unsold units and, in the case of sharing-in-kind properties, the properties’ fair value upon recognition. The Group takes into account independent
qualified surveyors’ reports, past experience on sales and marketing costs when estimating final project costs on completion and makes
reference to professionally qualified valuers’ reports in determining the estimated fair value of sharing-in-kind properties.
(v)
Properties Held for Sale
The Group values unsold interests in properties at the lower of their costs and net realisable values (note 29) at the end of each reporting period.
In ascertaining the properties’ net realisable values, which are represented by the estimated selling prices less costs to be incurred in relation to
the sales, the Group engages independent qualified surveyors to assess the properties’ estimated selling prices and makes estimations on further
selling and property holding costs to be incurred based on past experience and with reference to general market practice.
(vi)
Valuation of Investment Properties
The valuation of investment properties requires management’s input of various assumptions and factors relevant to the valuation. The Group
conducts semi-annual fair value measurement of its investment properties by independent qualified surveyors based on these assumptions
agreed with the valuers prior to adoption.
(vii)
Franchise in Hong Kong
The current franchise under which the Group is operating in Hong Kong allows the Group to run the mass transit railway system in Hong
Kong until 1 December 2057, except for HSR and SCL which the concession periods are detailed in note 3. Pursuant to the terms of the OA
and the MTR Ordinance, the Company may apply for extensions of the franchise and the Secretary for Transport and Logistics shall, subject
to certain provisions, recommend to the Chief Executive in Council that the franchise should be extended for a further period of 50 years
(from a date relating to certain capital expenditure requirements) if the Company has satisfied such capital expenditure requirements, at no
additional payment for any such extension. If the franchise is not extended, it will expire on 1 December 2057. Following such expiry, the HKSAR
Government has the right to take possession of railway property (and, where the HKSAR Government has taken possession of any such property
which is not concession property, the Company may require the HKSAR Government to take possession of any other property which the HKSAR
Government was entitled to take possession of, but did not take possession of), but must compensate the Company: (i) in the case of such
property which is not concession property, at the higher of fair value and depreciated book value, and (ii) in the case of such property which is
concession property and to the extent that the capital expenditure exceeds an agreed threshold (“Capex Threshold”), in an amount equal to
any above-threshold expenditure at the end of the Concession Period with such reimbursement to be on the basis of depreciated book value.
The Group’s depreciation policies (note 2H) for such property which is not concession property with assets’ lives which extend beyond 2057
reflect the above.
(viii)
Income Tax
Certain treatments adopted by the Group in its Hong Kong Profits Tax returns in the past years are yet to be finalised with the Hong Kong Inland
Revenue Department. In assessing the Group’s income tax and deferred taxation in the consolidated financial statements, the Company has
predominantly followed the tax treatments it has adopted in these tax returns, which may be different from the final outcome in due course.
As detailed in note 16B, there are tax queries from the IRD with the Company on tax deductibility of the Sums for which the ultimate tax
determination is uncertain up to the date of this financial statements. The Group recognises tax provision for these tax matters based on
estimates of whether additional taxes will eventually be due. Where the final outcome of these matters is different from the amounts that were
initially recorded, such difference will impact the income tax expenses in the period when such determination is made.
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
265
ANNUAL REPORT 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
51 Accounting Estimates and Judgements (continued)
A
Key sources of accounting estimates and estimation uncertainty include the following (continued):
(ix)
Project Provisions
The Group establishes project provisions for the settlement of estimated claims that may arise due to time delays, additional costs or other
unforeseen circumstances common to major construction contracts. The claims provisions are estimated based on an assessment of the Group’s
liabilities under each contract by professionally qualified personnel, which may differ from the actual claims settlement.
(x)
Fair Value of Derivatives and Other Financial Instruments
In determining the fair value of financial instruments, the Group uses its judgement to select a variety of methods and make assumptions that are
mainly based on market conditions existing at the end of each reporting period. For financial instruments that are not traded in active markets,
the fair values were derived using the discounted cash flows method which discounts the future contractual cash flows at the current market
interest or foreign exchange rates, as applicable, for similar financial instruments that were available to the Group at the time.
(xi)
Obligations under Service Concession
In determining the present value of the obligations under service concession, the discount rate adopted was the relevant Group company’s
estimated long-term incremental cost of borrowing at inception after due consideration of the relevant Group company’s existing fixed rate
borrowing cost, future interest rate and inflation trends.
B
Critical accounting judgements in applying the Group’s accounting policies include the following:
(i)
Provisions and Contingent Liabilities
The Group recognises provisions when the Group has a legal or constructive obligation arising as a result of a past event (including in relation to
those under entrustment arrangements (note 22) and provisions for onerous contracts (note 7)), and it is probable that an outflow of economic
benefits will be required to settle the obligation and a reliable estimate can be made. Where it is not probable that an outflow of economic
benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as contingent liability. Other than as set out in
notes 22 and 48E, as at 31 December 2024, the Group considered that it had no disclosable contingent liabilities as there were neither pending
litigations nor events with potential obligation which were probable to result in material outflow of economic benefits from the Group.
52 Possible Impact of Amendments, New Standards and Interpretations Issued
but Not Yet Effective for the Year Ended 31 December 2024
Up to the date of issue of these consolidated financial statements, the HKICPA has issued a number of new or amended standards, which are
not yet effective for the year ended 31 December 2024 and which have not been adopted in these consolidated financial statements. These
developments include the following which may be relevant to the Group:
Effective for accounting periods
beginning on or after
Amendments to HKAS 21, The effects of changes in foreign exchange rates:
Lack of exchangeability
1 January 2025
Amendments to HKFRS 9, Financial instruments and HKFRS 7, Financial instruments:
Disclosures: Amendments to the classification and measurement of financial instruments
1 January 2026
Annual improvements to HKFRSs – Volume 11
1 January 2026
HKFRS 18, Presentation and disclosure in financial statements
1 January 2027
HKFRS 19, Subsidiaries without public accountability: Disclosures
1 January 2027
The Group is in the process of making an assessment of what the impact of these developments is expected to be in the period of initial
application. So far, the Group considers that the adoption of them is unlikely to have a significant impact on the Group’s consolidated financial
statements, except for HKFRS 18, where the structure of the Group’s consolidated statement of profit or loss is expected to change.
53 Approval of the Consolidated Financial Statements
The consolidated financial statements were approved by the Board on 6 March 2025.
266
MTR CORPORATION LIMITED
GLOSSARY
Airport Express
Train service provided between AsiaWorld-Expo Station and Hong Kong Station
Appointed Day or Merger Date
2 December 2007 when the Rail Merger was completed
Articles of Association
The articles of association of the Company
Board
The board of directors of the Company
Bus
Feeder bus services operated in support of Tuen Ma Line, East Rail Line and Light Rail
Company or MTR Corporation
MTR Corporation Limited, a company which was incorporated in Hong Kong under the Companies
Ordinance on 26 April 2000
Companies Ordinance
The Companies Ordinance (Chapter 622 of the Laws of Hong Kong or the predecessor Companies
Ordinance Chapter 32 of the Laws of Hong Kong (as the case may be))
Computershare
Computershare Hong Kong Investor Services Limited, the share registrar of the Company
Cross-boundary Service or
Cross-boundary
Journeys with the destination to/commencing from Lo Wu and Lok Ma Chau stations
Customer Service Pledge
Annually published performance targets in accordance with the Operating Agreement
Director or Member of the Board
A member of the Board
Domestic Service
Collective name for Kwun Tong, Tsuen Wan, Island, South Island, Tung Chung, Tseung Kwan O,
Disneyland Resort, East Rail (excluding Cross-boundary Service) and Tuen Ma lines
EBITDA
Operating profit/loss before fair value measurement of investment properties, depreciation,
amortisation, provisions for onerous contracts and impairment loss, variable annual payment, share of
profit of associates and joint ventures, interests, finance charges and taxation
EBITDA Margin
EBITDA (excluding Hong Kong property development profit from share of surplus, income and interest
in unsold properties) as a percentage of total revenue
EBIT
Profit/loss before fair value measurement of investment properties, interest, finance charges and
taxation and after variable annual payment
EBIT Margin
EBIT (excluding Hong Kong property development profit from share of surplus, income and interest in
unsold properties, and share of profit of associates and joint ventures) as a percentage of total revenue
Express Rail Link or
High Speed Rail or HSR
Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link, also known as
Guangzhou-Shenzhen-Hong Kong High Speed Rail (Hong Kong Section) after the commencement of
passenger service on 23 September 2018
Fare Index
A measure of customer satisfaction for the fares charged for Domestic and Cross-boundary services,
HSR, Airport Express, Light Rail and Bus based on satisfaction scores for different fare attributes
weighted by the corresponding importance rating from the customer research
FSI
The Financial Secretary Incorporated, a corporation solely established under the Financial Secretary
Incorporation Ordinance (Chapter 1015 of the Laws of Hong Kong)
Government
The Government of the Hong Kong SAR
Group
The Company and its subsidiaries
HKSE or Stock Exchange
The Stock Exchange of Hong Kong Limited
Heavy Rail
Collective name for Domestic Service, Cross-boundary Service and Airport Express
BUSINESS REVIEW AND ANALYSIS
FINANCIALS AND OTHER INFORMATION
OVERVIEW
CORPORATE GOVERNANCE
267
ANNUAL REPORT 2024
GLOSSARY
Hong Kong or
Hong Kong SAR or HKSAR
The Hong Kong Special Administrative Region of the People’s Republic of China
Intercity Service or Intercity
Intercity through train services operated between Hong Kong and major cities in Mainland China such
as Beijing, Shanghai and Guangzhou
Interest Cover
Operating profit before fair value measurement of investment properties, depreciation, amortisation,
provisions for onerous contracts and impairment loss, variable annual payment, share of profit of
associates and joint ventures, interests, finance charges and taxation divided by interest and finance
charges before capitalisation, and utilisation of government subsidy for Shenzhen Metro Line 4 operation
KCRC
Kowloon-Canton Railway Corporation
KPMG
KPMG, Certified Public Accountants, the independent auditor of the Company. KPMG is a Public Interest
Entity Auditor registered in accordance with the Financial Reporting Council Ordinance
Light Rail
Light rail serving Northwest New Territories
Listing Rules
The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
MTR Ordinance
The Mass Transit Railway Ordinance (Chapter 556 of the Laws of Hong Kong)
Net Debt-to-equity Ratio
Loans and other obligations, bank overdrafts, short-term loans, obligations under service concession
and loans from holders of non-controlling interests net of cash, bank balances and deposits, and
investment in bank medium-term notes in the consolidated statement of financial position as a
percentage of the total equity
Operating Agreement
The agreement entered into by the Company and the Government on 30 June 2000 for the operation
of our rail services before the Rail Merger and a new agreement entered on 9 August 2007 for the
operation of all of our rail and bus passenger services after the Rail Merger
Ordinary Shares
Ordinary shares in the capital of the Company
Rail Merger or Merger
The merger of the rail operations of MTR Corporation and KCRC and the acquisition of certain property
interests by MTR Corporation from KCRC, full details of which are set out in the Rail Merger Circular. The
Rail Merger was completed on 2 December 2007
Rail Merger Ordinance
The Rail Merger Ordinance (Ordinance No.11 of 2007)
Return on Average Equity
Attributable to Shareholders
of the Company arising from
Underlying Businesses
Profit attributable to shareholders of the Company arising from underlying businesses as a percentage
of the average of the beginning and closing total equity attributable to shareholders of the Company of
the period
Service Concession
A contract to provide services for a particular period which is awarded by a public sector entity to
an operator; in the context of concession projects in Hong Kong, service concession refers to the
concession granted or to be granted by KCRC and/or Government to the Company to operate, maintain
and renew certain railway lines under the Service Concession Agreement or a Supplemental Service
Concession Agreement, as more particularly described in the Rail Merger Circular; in the context of
concession projects in Mainland China and Overseas, service concession refers to the concession
granted by the government or relevant public sector entity to a subsidiary, associate or joint venture
of the Company to provide certain specified services for a specified period under a negotiated
concession agreement
Service Quality Index
A measure of customer satisfaction for the services provided by Domestic and Cross-boundary services,
HSR, Airport Express, Light Rail and Bus based on satisfaction scores for different service attributes
(excluding fares) weighted by the corresponding importance rating from the customer research
268
MTR CORPORATION LIMITED
SHAREHOLDER SERVICES
Any matters relating to your shareholding, such as transfer of shares,
change of name or address, and loss of share certificates should be
addressed in writing to the Registrar:
Computershare Hong Kong Investor Services Limited
17M Floor, Hopewell Centre
183 Queen’s Road East, Wan Chai, Hong Kong
Telephone: (852) 2862 8628
Facsimile: (852) 2529 6087
Website:
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MTR Corporation Limited
MTR Headquarters Building, Telford Plaza
Kowloon Bay, Kowloon, Hong Kong
GPO Box 9916, Hong Kong
Telephone : (852) 2993 2111
Facsimile : (852) 2798 8822
www.mtr.com.hk