MTR Corporation Company Overview June 2018 to July 2018 Page 1
Forward-looking statements Certain statements contained in this presentation may be viewed as forward-looking statements. Such forwardlooking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual performance, financial condition or results of operations of the Company to be materially different from any future performance, financial condition or results of operations implied by such forward-looking statements. Page 2
MTR Today Establishment of MTR MTR was listed in the Stock Exchange of Hong Kong (2000) 1975 1980 1985 1990 1995 2000 2005 2010 2018 1 st Railway line opened (1979) Merger with KCRC (2007) 2017 Underlying Profit 2 HK$10.5 billion 11.3% 2017 Recurrent Profit 1 HK$8.6 billion 3.8% 32% 4% Transport Operations Station Commercial 40% 5% 18% 9% 37% Property Rental Outside Hong Kong Property Development # 10% 45% Note: 1. Recurrent Profit: $8,580M - Net Profit attributable to Shareholders of the Company arising from Recurrent Businesses (comprising Hong Kong Transport Operations, Hong Kong Station Commercial Businesses, Hong Kong Property Rental & Management Businesses, Mainland of China and International Railway, Property Rental and Management Businesses and Other Businesses) 2. Underlying Profit: $10,515M - Net Profit attributable to Shareholders of the Company arising from Underlying Businesses (comprising Recurrent Businesses and Property Development Businesses) 3. Reported Profit (not shown here): $16,829M - Net Profit attributable to Shareholders of the Company arising from Underlying Businesses and Investment Property Revaluation 4. #Include Mainland of China property development profit being 9.7% of total Underlying Profit Vision: a leading multinational company that connects and grows communities with caring services Page 3
Rail + Property Business Model Railway Land Development Right Land Development Opportunity Share of Profit Government Land Premium Funding Contribution Developer MTR leads and coordinates the development processes including: Agrees with Government amount of property development rights for new rail extension Land premium is negotiated with Government on greenfield basis *, prior to tender being offered to developers Tender property packages to developer partners MTR contributes property rights, oversees the design & construction Developers usually pay for land premium and development costs; MTR may contribute on a case by case basis Profit sharing with MTR by percentage of profits or assets in kind or lump-sum payment *Greenfield basis = market value ignoring the presence of the railway Page 4
Examples of MTR Rail + Property Development Tung Chung Station Development Total GFA: 1,030,634 sq m (Retail: 55,793 sq m; Office: 14,913 sq m) ~12,400 residential units Kowloon Station Development Tseung Kwan O LOHAS Park Development Total GFA: 1,654,600 sq m (Retail: 40,000-50,000 sq m) ~25,500 residential units Total GFA: 1,096,169 sq m (Retail: 82,750 sq m; Office: 231,778 sq m) ~5,800 residential units Page 5
Hong Kong Transport Operations Page 6
MTR Network 羅湖 Lo Wu No. of Stations: 93 (1) Route Length: 231km (2) 落馬洲 ( 福田口岸 ) Lok Ma Chau (Futian Port) 3 Rail Segments: Domestic Service, Airport Express and Cross-boundary Service 1. 93 heavy rail stations and 68 light rail stops 2. Includes 195km of heavy rail and 36km of light rail Page 7
Market Share Hong Kong Franchised Public Transport Green minibuses 13.9% Trams & ferries 2.4% Green minibuses 13.7% Trams & ferries 2.3% Buses 35.3% MTR 48.4% Buses 34.9% MTR 49.1% Jan Dec 2016 Jan Dec 2017 Cross-harbour 68.6% 69.6% Cross-boundary 51.2% 50.8% Airport Express 21.4% 21.5% Jan-Dec 2016 Jan-Dec 2017 Jan-Dec 2016 Jan-Dec 2017 Jan-Dec 2016 Jan-Dec 2017 Sources: The Transport Department / Immigration Department / Airport Authority Hong Kong 1. Calculation based on the proportion of air passenger using Airport Express over the total air passenger figures reported by the Airport Authority Hong Kong Page 8 (1) (1)
4.7% 2.5% 5.4% Patronage Domestic Service (1) (m) Airport Express (m) 13.7 14.9 15.7 16.1 16.6 YoY change 1,474.7 1,547.8 1,577.5 1,586.5 1,637.9 YoY change 7.0 2013 2014 2015 2016 2017 May 2018 682.4 Cross-boundary Service (m) 2013 2014 2015 2016 2017 May 2018 111.4 113.0 114.2 113.3 112.5 YoY change 48.7 2013 2014 2015 2016 2017 May 2018 1. Domestic Service comprises the Kwun Tong, Tsuen Wan, Island, South Island, Tung Chung, Tseung Kwan O, Disneyland Resort, East Rail (excluding Cross-boundary service), West Rail and Ma On Shan lines Page 9
Hong Kong Transport Operations (HK$b) 24 44.3 43.1 42.6 43.2 41.1 40.0 19 14 15.17 16.22 16.92 17.66 18.20 30.0 20.0 Revenue Light Rail, Bus and Intercity and others Airport Express 10.0 Cross-boundary Service 9 6.7 7.0 7.2 7.6 7.5 - Domestic Service EBITDA Margin (10.0) EBITDA 4 (20.0) -1 2013 2014 2015 2016 2017 (30.0) Page 10
Fare Adjustment Mechanism (FAM) FAM a direct drive mechanism providing a measure of certainty for fare setting Next scheduled review in 2022/23 Fare Adjustment = 0.5 * CCPI + 0.5 * WAGE INDEX - t - Wage index: the yearly percentage change in the Nominal Wage Index (Transportation Sector) - t: productivity factor Productivity Factor t = greater of zero and 0.5 x CAGR in Productivity over a reference period (t = 0 from 2017 to 2022) Productivity: HK Transport Operations Revenue HK Transport Operations Expenses Fare Promotions 3% rebate for Every Octopus Trip for at least 6 months (linked to profitability and service performance arrangements), and others Special applications from 2017 to 2022 Fare rise under FAM shall be reduced by 0.6 percentage point from 2017 to 2022 In 2017, it will be followed by a further 10% discount Past Fare Adjustments 2009: +2.05%, effective in June 2010 2010: +2.20%, effective in June 2011 2011: +5.40%, effective in June 2012 2012: +2.70%, effective in June 2013 2013: +3.60%, effective in June 2014 2014: +4.30%, effective in June 2015 2015: +2.65%, effective in June 2016 2016: +1.49% (rolled over to 2018/19) 2017: +3.14%, effective in June 2018 Page 11
Hong Kong Station Commercial Page 12
Hong Kong Station Commercial Businesses Station Kiosks Advertising Telecommunications Page 13
Hong Kong Station Commercial (HK$m) 8000 7000 6000 5000 4000 3000 2000 89.9% 4,588 4,124 89.6% 4,963 4,448 89.8% 5,380 4,830 90.4% 5,544 5,012 91.6% 5,975 5,474 90 80 70 60 50 40 30 20 Revenue Others (1) Advertising Station retail Telecommunications EBITDA Margin EBITDA 1000 10 0 2013 2014 2015 2016 2017 0 1. Include revenues from other station commercial business such as station car park and publications Page 14
Hong Kong Property Rental & Management Page 15
MTR Investment Property Portfolio Maritime Square (Retail) Elements (Retail) Telford Plaza (Retail) Plaza Ascot (Retail) Citylink Plaza (Retail) Ocean Walk Hanford Plaza Sun Tuen Mun Shopping Centre (Retail) The Lane (Retail) Luk Yeung Galleria (Retail) Two IFC (Offices) PopCorn 1 & 2 (Retail) Paradise Mall (Retail) 13 malls 218,251 sqm, Office 39,410 sqm, Others 17,764 sqm Total Area: 275,425 sqm LFA * Lettable floor area attributable to MTR, as at 31 Dec 2017 Page 16
Hong Kong Property Rental and Management (HK$m) 82.2% 82.2% 80.9% 82.9% 83.6% HK property management revenue 3,778 3,105 4,190 3,443 4,533 3,668 4,741 3,930 4,900 4,098 HK property rental revenue EBITDA Margin EBITDA 2013 2014 2015 2016 2017 Page 17
New Investment Property Initiatives Tai Wai Shopping Mall LOHAS Park Shopping Mall MTR contribution: HK$7.5 billion Profit sharing in the residential development MTR will take ownership of and invest further in fitting out the shopping mall Shopping mall GFA: 60,620 sqm Expected project completion in 2022 MTR contribution: HK$4.98 billion Profit sharing in the residential development MTR will take ownership of and invest further in fitting out the shopping mall Shopping mall GFA: 44,500 sqm Expected project completion in end-2020 Page 18
Hong Kong Property Development Page 19
MTR Land bank (1) 1.98 Million sq m GFA Tin Shui Wai Light Rail Stop Awarded Land bank: 0.09m sq m GFA Tai Wai Station Awarded Land bank : 0.25m sq m GFA Yau Tong Ventilation Building Awarded Land bank: 0.03m sq m GFA LOHAS Park Station Awarded Land bank: 0.76m sq m GFA Unawarded Land bank: 0.32m sq m GFA Ho Man Tin Station Awarded land bank: 0.07 sq m GFA Unawarded Land bank: 0.06m sq m GFA Wong Chuk Hang Station Awarded Land bank: 0.10m sq m GFA Unawarded Land bank: 0.30m sq m GFA Awarded = 1.30m sq m GFA Unawarded = 0.68m sq m GFA MTR Land bank Land bank acquired from KCRC 1. Definitions of landbank: - Property development rights granted by the Government as part of the Rail + Property model or through acquisition from KCRC - Where profit has not yet been recognised, status in May 2018 Page 20
Update on Hong Kong Property Development Land Tendering Tendering activities Yau Tong Ventilation Building Property Development awarded to Sino Land and CSI Properties in May 2018 Between now and March 2019, subject to market conditions, aiming to tender out Ho Man Tin Station Package 2, LOHAS Park Package 11 and Wong Chuk Hang Station Package 3 Pre-sales of LOHAS Park property development packages Property Sales Pre-sales of West Rail residential projects where we act as agent for KCRC Sales of inventory units or car parks, subject to market conditions Page 21
Mainland of China & International Businesses Page 22
Mainland China and Overseas Strategies United Kingdom: MTR Crossrail South Western Stockholm: MTR Tunnelbanan Stockholm pendeltåg Sweden: MTR Express MTR Tech Macau Light Rapid Transit Taipa Line Melbourne Trains Metro Beijing: BJL4, Daxing Line BJL14 BJL16 Hangzhou HZL 1 HZL 5 Shenzhen Line 4 Sydney Metro Northwest Asset Light Focus on asset light operating rail concessions Franchise operations in UK, Stockholm and Melbourne Asset Heavy Invest in urban rail networks in the Mainland of China Focus on development of rail networks within cities Operating rail businesses in Mainland China (Beijing, Shenzhen and Hangzhou). Sweden (MTR Express) and Australia (North West Rail Link) Page 23
Existing Businesses on Mainland of China Beijing Beijing Metro Line 16 (BJL16) 49%/ RMB 2.45billion 50km/ 29 stations 30 years Phase 1: Dec 2016; full line: after 2018 Beijing Metro Line 4 (BJL4) 49%/ RMB 700 million 28km/ 24 stations 30 years Sep 2009 Beijing Metro Line 14 (BJL14) 49% ownership/ RMB 2.45billion 47.3km/ 37 stations 30 years Phase 1: May 2013; Phase 2: Dec 2014; Phase 3: Dec 2015 BJL14 Phase IV (TBC) Metro Line % Ownership/ equity investment Route length/ no. of stations Concession period Year of service commencement Daxing Line O&M contract 22km/ 11 stations (Southward extension of BJL4) 10 years Dec 2010 Page 24
Existing Businesses on Mainland of China Shenzhen and Hangzhou; Macau Shenzhen Metro Line 4 (Longhua Line) 100%/ RMB 2.4 billion 20.5 km/ 15 stations 30 years Jun 2011 Hangzhou Metro Line 1 49%/ RMB 2.2 billion 54km/ 34 stations (including a 5.7km 3- station extension under O&M) 25 years Nov 2012 Hangzhou Metro Line 5 Up to 60%/ RMB 2.6 billion 51.5km/ 38 stations 25 years Around end-2019 Macau Light Rapid Transit Taipa Line O&M contract of ~HK$5.71 billion 9.3 km/ 11 stations 80 months 2019 Metro Line % Ownership/ equity investment Route length/ no. of stations Concession period Year of service commencement Page 25
Commuter Service Stockholm Metro Existing Overseas Operations - Sweden MTR Tech Total investment: HK$180 million (for 50% interest in TBT) 100% ownership Rolling stock maintenance for the metro network in Stockholm fully under our management Feb 2016 MTR Stockholm O&M concession for 8 years to 2017 6-year extension from 2017 to 2023 100% ownership Contract amount: HK$20 billion 108km/ 100 stations Since Nov 2009 MTR Express Total investment: HK$830 million 100% ownership 457km intercity service between Stockholm & Gothenburg Since 21 March 2015 Intercity Service Stockholms pendeltåg O&M concession for 10 years (with option to extend a further 4 years) 100% ownership Contract amount: SEK30 billion (14 years) 247km/ 53 stations Since Dec 2016 Page 26
Australia Existing Overseas Operations Melbourne s Metropolitan Rail Services O&M concession for 7 years (plus a 3-year option) 60% ownership 390km and 217 stations 8-year concession since Nov 2009; new franchise to start on 30 Nov 2017 Sydney Metro Northwest (PPP) Equity investment: AUD63 million 36km high capacity rapid transit between Chatswood and Rouse Hill Design and delivery of railway system and O&M for 15 years To commence in 2019 MTR Crossrail O&M concession for 8 years (with an option to extend 2 more years to 10 years) 100% ownership Contract amount: GBP1.4 billion 118km and 40 stations, including 42km of new tunnels across London Commenced first section of service in May 2015; full line operation in 2019 South Western Railway The new franchise from Aug 2017 for 7 years (with the option for an 11-month extension) 70:30 joint venture between FirstGroup and MTR 998.2km network serving 203 stations (186 stations operator managed) Covers routes between London Waterloo and south western England, including Bristol, Exeter and Portsmouth United Kingdom Page 27
Mainland China and International Businesses HK$m YoY change Others (2) 402 6.3% Net profit (including property development) (1) Net recurrent profit (excluding property development) 879 70.3% Net Property Development Profit 1,019 287% : HK$1,898m Recurrent Mainland of China Beijing MTR good operational and financial performance MTR Shenzhen decline in profit due to higher operating expenses Hangzhou MTR share of loss worsened due to one-off provision Europe 144% MTR Pendeltågen, Sweden takeover in Dec 2016 and full year contribution in 2017 South Western Rail franchise, UK contribution since our takeover in Aug 2017 MTR Express, Sweden making every effort to improve financial results BJ SZ HZ Mainland of China 235 292% Nordic UK 242 210% Sydney Melbourne Europe Australia Total Total recurrent Net Mainland of Recurrent China property Profit development Australia Sydney Metro North West (SMNW) - Initial profit recognition from project design and delivery phase Metro Trains Melbourne (MTM) decrease in net profit mainly due to increased operating cost in operation activities Property Development Mainland of China Property Development Tiara, Shenzhen - Profit bookings with handover of highrise and podium units 1. On attributable basis comprising net profit from Mainland of China and international business (MC&IB) subsidiaries net of non-controlling interests, and share of profit or loss from MC&IB associates and joint venture 2. Mainland of China Property rental and management Page 28
Growth Initiatives in Hong Kong Page 29
Unprecedented HK Railway Growth Route length to increase ~18% Express Rail Link (XRL) 26km HK$84.4B Shatin to Central Link (SCL) 17km HK$97.2B Kwun Tong Line Extension 3km HK$6.9B West Island Line 3km HK$18.5B South Island Line (East) 7km HK$17.2B SCL is service concession while XRL is subject to negotiation Cash grant Rail + Property * Project cost estimates (before capitalised interest) subject to regular review Page 30
Rail Projects under Project Management Project Background Express Rail Link (XRL) The 26-km XRL to provide high speed crossboundary rail services connecting Hong Kong to Shenzhen, Guangzhou and the high speed rail network in Mainland of China Project Progress Close to 99.4% complete as at 31 March 2018 Civil works at West Kowloon Station substantially complete All tracks in tunnels laid and overhead lines energised Target Completion and Project Cost Estimate Completion timetable remains in 3Q 2018 Project cost estimate remains at HK$84.42 billion Page 31
Rail Projects under Project Management Project Background Shatin to Central Link SCL comprises two sections, the East West Corridor and North South Corridor New link across the New Territories, serving residential and working population of 640,000 Entrustment Agreement signed with Government in May 2012 Construction commenced in June 2012 Project Progress Overall completion at 84% as at 31 Mar 2018 East-West Corridor at 96% North-South Corridor at 68% Target Completion and Project Cost Estimate East-West Corridor target completion in mid-2019 North-South Corridor target completion in 2021 Page 32
Railway Development Strategy 2014 Total route length of about 34.8km Project Tuen Mun South Extension Northern Link (and Kwu Tung Station) Route Length (km) 2.4 10.7 East Kowloon Line 7.8 Tung Chung West Extension (and Tung 1.5 Chung East Station) North Island Line 5.0 Hung Shui Kiu Station - South Island Line (West) 7.4 Total 34.8 Page 33
Financial Results Page 34
Financial Highlights Contribution from Recurrent Businesses 2017 Recurrent Businesses (HK$m) Hong Kong (1) Outside of Hong Kong Total Revenue 31,454 16,990 48,444 Change (YoY) 3.6% 26.1% 10.5% Recurrent profits 7,701 879 (2) 8,580 Change (YoY) (8.3)% 70.3% (3.8)% Net Profit (HK$m) 2017 Change (YoY) Profit from recurrent businesses (2) 8,580 (3.8)% Post-tax profit from property development Hong Kong Mainland of China Sub-total 916 1,019 1,935 243.1% 287.5% 265.1% Profit from underlying businesses (2) 10,515 11.3% Investment property revaluation 6,314 681.4% Report net profit attributable to shareholders of the company (2) 16,829 64.1% Reported EPS (HK$) (2) 2.83 62.6% Underlying businesses EPS (HK$) (2) 1.77 9.9% Ordinary dividend per share (HK$) 1.12 4.7% 1. Hong Kong recurrent businesses include HK transport operations, HK station commercial, HK property rental and mgt, other businesses (mainly project management services to Gov t, Ngong Ping 360, and consultancy) and project studies and business development expenses 2. Net of non-controlling interests (2017: HK$56m; 2016: HK$94m) Page 35
Consolidated Balance Sheet Railway: 50% Property: 35% Cash, bank balances and deposits Debtors and other receivables Assets Railway assets Service concession assets Investment properties Others Property development in progress Total Equity: 63% Total Debt: 16% Deferred tax liabilities Liabilities and Shareholders' funds Shareholders funds Debt Others Obligations under service concession Creditors and other payables Note: As at 31 Dec 2017 0 50,000 100,000 150,000 200,000 250,000 (HK$m) Page 36
Progressive Dividend Policy (HKD) 2.0 1.8 1.6 Ordinary dividend Per Share Underlying EPS 1 Recurrent Businesses EPS 1 1.4 1.2 1.05 1.06 1.07 1.12 1.0 0.92 0.8 0.76 0.79 0.6 0.48 0.52 0.59 0.4 0.2-2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1. 2012 figures restated due to retrospective adoption of Revised HKAS19, Employee Benefits Page 37
Investment Highlights One of the world s most efficient and highly utilised urban railway operator generating strong and stable cash flow Successful property developments with limited downside risks Clear growth strategy Growth within Hong Kong Strategic expansion in China and other countries Progressive dividend policy Professional management team Good corporate governance with high level of transparency Government remains a major shareholder until 2020 Superior credit ratings on par with Hong Kong Sovereign Page 38
Appendix Page 39
Hong Kong Transport Operations Total Patronage: 2 billion 2.6% Revenue Cost (HK$m) 17,655 18,201 1,010 998 1,008 1,076 3,252 3,277 12,395 12,840 Others (2) Airport Express Cross-boundary Service Domestic Service (1) (HK$m) Depreciation & amortisation, variable annual payment : 5,061 Operating cost: 10,022 15,083 16,545 1,340 1,281 5,819 4,479 3,780 1,446 1,403 553 538 1,436 1,379 1,543 1,511 10,726 5,191 5,748 Variable annual payment Depreciation & amortisation General admin, Railway support & others Stores & spares consumed Maintenance & related Energy & utilities Staff costs & related 2016 2017 2016 2017 EBITDA: HK$7,475m 2.1% Margin: 41.1% 2.1% pts 35.6% EBIT (3) : HK$1,656m Margin: 9.1% 5.5% pts 1. Domestic Service comprises the Kwun Tong, Tsuen Wan, Island, South Island, Tung Chung, Tseung Kwan O, Disneyland Resort, East Rail (excluding Cross-boundary Service), West Rail and Ma On Shan lines 2. Others comprise Light Rail, Bus, Intercity and other rail related income 3. After depreciation, amortisation and variable annual payment to KCRC Page 40
(HK$b) 12 Contributions to Underlying Profits 11 10 9 8 Profit*/ (loss) from businesses outside of HK Profit*/ (loss) from property development Profit*/ (loss) from recurring businesses (excluding property development) Profit*/ (loss) for the year (excluding investment property revaluation) 7 6 5 4 3 2 1 0-1 -2 Opening of Urban Lines Opening of Airport Express Opening of TKO Line Merger with KCRC on 2 Dec 07 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 * Profits were on pre-tax basis prior 2002, and on post-tax basis from 2002 onwards Page 41
Consolidated Profit and Loss Account 2017 2016 Favourable/ (adverse) change (HK$m) HK$m % HK transport operations 18,201 17,655 546 3.1 HK station commercial and HK property rental & management businesses 10,875 10,285 590 5.7 Mainland of China & international railway, property rental and management subsidiaries 16,990 13,478 3,512 26.1 Other businesses 2,378 2,423 (45) (1.9) 48,444 43,841 4,603 10.5 Mainland of China property development 6,996 1,348 5,648 419.0 Total revenue 55,440 45,189 10,251 22.7 Operating expenses excluding Mainland of China & international subsidiaries (14,679) (14,004) (675) (4.8) Expenses relating to Mainland of China & international railway, property rental and management subsidiaries (16,088) (12,890) (3,198) (24.8) Expenses relating to Mainland of China property development (4,682) (982) (3,700) (376.8) Total operating expenses (35,449) (27,876) (7,573) (27.2) EBITDA excluding Mainland of China & international subsidiaries 16,775 16,359 416 2.5 EBITDA relating to Mainland of China & international railway, property rental and management subsidiaries 902 588 314 53.4 EBITDA relating to Mainland of China property development 2,314 366 1,948 532.2 Total EBITDA 19,991 17,313 2,678 15.5 HK property development profit 1,097 311 786 252.7 Total operating profit 21,088 17,624 3,464 19.7 Depreciation & amortisation (4,855) (4,127) (728) (17.6) Variable annual payment (1,933) (1,787) (146) (8.2) Interest and finance charges (905) (612) (293) (47.9) Investment property revaluation 6,314 808 5,506 681.4 Share of profit of associates and joint venture 494 535 (41) (7.7) Profit before taxation 20,203 12,441 7,762 62.4 Income tax (3,318) (2,093) (1,225) (58.5) Reported net profit attributable to shareholders of the Company (1) 16,829 10,254 6,575 64.1 Reported earnings per share (HK$) 2.83 1.74 1.09 62.6 Profit from underlying businesses (1) 10,515 9,446 1,069 11.3 Underlying businesses EPS (HK$) 1.77 1.61 0.16 9.9 Final ordinary dividend per share (HK$) 0.87 0.82 0.05 6.1 Total ordinary dividend per share (HK$) 1.12 1.07 0.05 4.7 1. Net of non-controlling interests of HK$56 million and HK$94 million in 2017 and 2016 respectively Page 42
Consolidated Statement of Financial Position 31 Dec 2017 31 Dec 2016 Increase/ (Decrease) (HK$m) HK$m % Assets Investment properties 77,086 70,060 7,026 10.0 Other property, plant and equipment 102,889 103,613 (724) (0.7) Service concession assets 29,797 28,269 1,528 5.4 Property development in progress 14,810 17,484 (2,674) (15.3) Interests in associates & joint venture 6,838 7,015 (177) (2.5) Properties held for sale 1,347 1,394 (47) (3.4) Debtors and other receivables 7,058 4,073 2,985 73.3 Amounts due from related parties 2,570 2,171 399 18.4 Cash, bank balances and deposits 18,354 20,290 (1,936) (9.5) Others 3,019 2,971 48 1.6 Total Assets 263,768 257,340 6,428 2.5 Liabilities Debts 42,043 39,939 2,104 5.3 Creditors and other payables 28,166 32,629 (4,463) (13.7) Current taxation 1,080 123 957 778.0 Amounts due to related parties 2,226 11,783 (9,557) (81.1) Obligations under service concession 10,470 10,507 (37) (0.4) Deferred tax liabilities 12,760 12,125 635 5.2 Others 597 678 (81) (11.9) Total Liabilities 97,342 107,784 (10,442) (9.7) Total Equity 166,426 149,556 16,870 11.3 Page 43
Cash Flow 2017 2016 Favourable/ (adverse) change (HK$m) HK$m % Cash Inflow Cash flows from operations 22,239 19,156 3,083 16.1 Receipt of government subsidy for Shenzhen Metro Longhua Line operation 588 625 (37) (5.9) Receipts from property developments 3,344 5,403 (2,059) (38.1) Others 517 1,160 (643) (55.4) Total inflows 26,688 26,344 344 1.3 Cash Outflow Tax paid (1,408) (2,626) 1,218 46.4 Purchase of tax reserve certificates (1,816) (20) (1,796) N/A Capital expenditure - Hong Kong existing rail (5,226) (4,615) (611) (13.2) - Hong Kong new rail (1,342) (5,243) 3,901 74.4 - Property related (1,753) (1,789) 36 2.0 - Mainland of China and international railway related (202) (292) 90 30.8 Fixed and variable annual payment (2,537) (2,399) (138) (5.8) Investments in/ loan to associates & joint venture (402) (1,286) 884 68.7 Net interest paid (578) (519) (59) (11.4) Dividends paid (15,460) (18,616) 3,156 17.0 Others - (99) 99 100.0 Total outflows (30,724) (37,504) 6,780 18.1 Net cash outflow before financing (4,036) (11,160) 7,124 63.8 Cash inflow from net borrowings 1,494 19,431 (17,937) (92.3) Net cash (outflow)/ inflow (2,542) 8,271 (10,813) N/A Page 44
Financing and Credit Ratios Up to 1 yr 4% Company Debt Profile (31 Dec 2017) (1) > 5 years 49% 2-5 years 18% 1-2 year 29% Fixed 61% Floating 39% Hedged 100% Maturity Fixed/Floating Currency Consolidated group borrowings outstanding: HK$42,043m (HK$39,939m as at 31 Dec 2016) Average borrowing cost: 2.5% Net interest expense: HK$905m 0.4 %pt 47.9% Compared to 2016 figures Net Debt / Equity ratio (2) Interest cover 31 Dec 2017 20.6% (3) 2017 15.0x 31 Dec 2016 20.2% 2016 12.7x 1. Excludes Mainland of China and overseas subsidiaries debts 2. Including obligations under service concession and loan from holders of non-controlling interests as components of debt 3. If the land premium in respect of Wong Chuk Hang Station Package 2 (which was paid in Jan 2018) was excluded from the cash balance, the Group s net debt/ equity ratio at 31 Dec 2017 would have been 23.7% Page 45
Capital Expenditure & Investments Hong Kong Maintenance CAPEX 2018-2020 36% Mainland of China & Overseas 13% Advance Railway Works related to SCL # Total HK$49.8B 10% 12% 29% Hong Kong New Railway Projects Hong Kong Property Estimated spend: 2018 - HK$13.7 billion 2019 - HK$21.4 billion 2020 - HK$14.7 billion Total - HK$49.8 billion # Advance Railway Works involve modifications to or upgrades or expansion of assets for which MTR is responsible under the existing service concession agreement with KCRC. This will predominantly be covered by the reduction in future maintenance CAPEX during the construction period of SCL Project which MTR would have otherwise incurred Page 46
Business Update Patronage Jan to May 2018 (YoY%) - Domestic services Up 2.5% - Airport express Up 5.4% - Cross-boundary services Up 4.7% Fare Mid-2018 - FAM rise 3.14% Total tenant sales turnover Jan to Mar 2018 (YoY%) Station commercial - Station kiosks Up mid-to-high single-digit - Duty free shops Up mid-to-high single-digit Shopping malls - Elements Up over 20% - Shopping malls excluding Elements Up low-to-mid teens Industry statistics Jan to Mar 2018 (YoY%) - Hong Kong retail sales Up 14.3% - Hong Kong tourist arrivals Up 9.6% Source: Company data and government figures Page 47
MTR Corporation www.mtr.com.hk investor@mtr.com.hk Page 48