MTR Corporation Limited

Friends of the media, greetings. I am Linda Choi, Director, Corporate Affairs and Branding. Welcome to the 2026 Interim Results Announcement for MTR. First of all, to introduce our representatives on this stage, seated in the middle is our CEO, Miss Jenny Yeung. On her right are Mr. David Tang, Managing Director, Property and International Business, and Mr. Wilson Kwong, Hong Kong Transport Services Director. And on Ms. Yeung's left are Mr. Michael Fitzgerald, Finance Director, Mr. Carl Deflin, Capital Works Director, and also Mr. Sami Wong, Chinese Mainland Business Director. The session will be held mainly in Chinese today. First of all, Ms Yeung will succinctly go through the 2026 interim results, and after that, Mr Michael Fitzgerald will briefly go through the financials. First of all, Ms Jenny Yeung. Please. And then she will be speaking in English to go through the summary. We will have a Q&A session in the end but because of time limitation as we want to very much answer all your questions if we cannot do so because of time limitation we seek your understanding. Jenny Pleas. Greetings. Good afternoon, ladies and gentlemen. In the first half of 2026, although the macroeconomic environment remained complex and evolving, Hong Kong's overall economy and market conditions have shown signs of recovery, while the property market stabilised. We made progress across transport services, new railway projects and property development. As we reached new milestones in network expansion, we continued to strengthen our core businesses. Patronage on the railway network recorded growth, while rental reversions for malls and station shops continued to narrow. Several new projects in the Chinese mainland and overseas also commenced. Recurrent business profit increased slightly to HK$3.4 billion in the first half of the year. Benefiting from one-off booking of property development projects from the previous phase of railway projects, we recorded a net profit of HK$15.9 billion in the first half. and also at the same time the seven new railway projects made good progress in supporting Hong Kong's development. We understand that these are one-off property and our property revenue will continue to support our rail construction and services. And as we plan ahead for the funding needs of over A hundred billion Hong Kong dollars for new railway projects, a corporation will continue to pursue prudent and forward-looking financial planning. I will now highlight the progress of several key areas of our businesses. Total patronage of Hong Kong transport services remained broadly comparable with last year, exceeding 970 million passenger journeys. Patronage on the Lowu and Lokma Jiao cross-boundary services recorded growth of 8%. In the first half, high-speed rail recorded over 16 million passenger trips, which is a year-on-year growth of more than 10%, while cumulative Patronage exceeded 100 million passenger journeys. With the number of direct destinations increasing, high-speed rail has further facilitated travel between Hong Kong and different cities in Chinese mainland. We operate more than 7,500 train trips every day with passenger journeys on time consistently maintaining at a world-class level We continue to invest in enhancing safety, reliability and resilience of our rail system and signalling system replacement as one of our major asset renewal programmes in recent years. The new signalling system on the Chin Wan Line was successfully commissioned in the first quarter, while replacement works for the other three urban lines are progressing in an orderly manner. Another major asset renewal programme is the replacement of urban line trains. In the first half of the year, 13 new trains came into service, providing passengers with safer, more efficient and more reliable service. The corporation is driving forward seven new railway projects concurrently, mainly to serve the northern metropolis, Lantau, and also Tuen Mun. These projects are progressing smoothly. The tunnel excavation works for the Tongchong Line extension have been completed and Tongchong East Station was topped out earlier this year. We have commenced the design and planning work for South Island Line West and Pak Shek Kok Station in line with the government's planning direction of positioning railway as the backbone of public transport. Upon completion of the seven new projects underway, Together with the South Island Line West and Park Shek Kok station projects currently under planning and design, a total of 20 new stations will be added and Hong Kong railway network will be expanded by more than 10% to around 300 kilometres. These projects will serve as key growth driver for our future sustainable development. Among the new projects, the Northern Metropolis is a pivotal engine for Hong Kong's future development. We're taking forward three projects related to the Northern Metropolis, with works progressing at full speed following the... Topping out of Kutong Station on the East Rail Line last year, we are now advancing the station's electrical and mechanical works and interior fitting out. Signalling system testing has also commenced. Upon completion next year, Kutong Station will become our 100th station. Hongshiqiu Station on the Tumah Line is also progressing well. Station structural works are expected to proceed next year in preparation for the Northern Link. The large-scale Northern Link project will become a key transport backbone for driving the development of the northern metropolis and enhancing connectivity within the GBA supporting Hong Kong's integration into the overall national development. Following the signing of the Northern Link Part 1 project agreement with the government in July last year, We have commenced mainline works and started comprehensive planning for both the mainline and the spur line. And we're currently discussing the Northern Link Part 2 project agreement with the government with the target of completing construction and commencing service for both the main and spur line no later than 2034. As these projects move through planning, design and construction, rigorous project management and supervision are essential to enhance speed and efficiency. Since these projects involve extensions to existing railway lines and works within an operating railway environment, the challenges are substantial. Our project and operations teams have carried out thorough planning and close coordination with innovative mindset and introducing new technologies so that works can proceed in an orderly manner while minimizing any possible impact on our trained services. For the seven new railway projects, excluding the Northern Link Part 2 project agreement, the total amount of investment is around HK$140 billion. As we prepare for the construction peak in the coming years, prudent and forward-looking financial planning is essential. To finance our future development and to maintain a strong cash flow. In the first half of the year, we successfully issued three green bonds, including the largest single issuance in the history of Hong Kong dollar bond market, raising HK$18.8 billion. In total, we raised HK$58 billion during the period. All were well received by investors, reflecting market confidence in our businesses and our future development. The rail plus property development model has long supported our corporation in building railways and communities while using income from property development to meet the substantial cost of railway construction, long-term operations, maintenance and asset renewal. This model is not only a financial arrangement, it's also an important foundation for us to connect transport, communities and urban development. In the first half, the corporation recorded approximately HK$12.2 billion in property development profit, mainly from Tai Wai Station and the Southside Package 5, Both from property development associated with previous railway projects. Such projects are one-off and fluctuate with project completion cycles and market conditions. Under the rail plus property development model, the relevant income is used to support railway construction. and to help sustain long-term development, operation and maintenance of the system. As we build and operate railways, we are also building communities for Hong Kong. As at mid-year, MTR was progressing eight residential property projects under construction. Together with the completed property projects, they're expected to provide over 9,000 residential units to the market. And in April, we awarded the Kamsung Road Station Phase 2 project and are currently tendering the Tumun A16 Station Package 2 project. As innovative technology and AI continue to advance, the corporation has been studying, adopting, developing and applying technologies such as big data and AI across core business processes and customer services. We are also formulating and advancing our AI strategy. In Railway Service, we continue to promote smart railway development and drive more intelligent models for operations, management and services. In Customer Service, we continue to expand the capabilities of our Virtual Service Ambassador, providing customers with more diversified, timely and convenient service channels. In railway operations and maintenance, we are enhancing management and maintenance efficiency through more automated and digitalized technologies. In support of the government's low-altitude economy framework, we are also studying and testing the use of drones to inspect suitable railway areas. For new railway projects, we have established a smart project management center, adopted Pre-fabricated components and design for manufacture and assembly and introduce the concept of a virtual station to enable earlier system testing. These initiatives enhance construction efficiency and accelerate project development. By introducing these technologies into railway operations, maintenance and new rail Wai projects, we can help overcome the constraints of the golden two-hour maintenance window and the challenges of tight construction timeframes while achieving our goal of enhancing both quality and efficiency. Our business in the Chinese mainland and overseas continue to develop. In Chinese mainland, corporation secured the operating right for northern extension of Shenzhen Metro Line 13 Phase 2, which commends services in June. We also continue to expand our mainland station commercial businesses, leveraging our expertise in integrating railway operations with station commerce. Internationally, the remaining section of Sydney Metro M1 line is expected to open in the second half of the year, and earlier this year, we partnered with CRRC to secure the major contract and 15-year operation right for Sydney Metro West project. This allows us to capture opportunities to expand overseas together with mainland enterprises and promote mutual success. As we grow our businesses, we are committed to creating long-term value for the society. We have integrated ESG principles into our business development to build a more sustainable and inclusive community in Hong Kong. As a low-carbon public transport operator, the corporation is committed to achieving carbon neutrality by 2050. At the same time, we continue to allocate resources to support community development, including different fare concessions to benefit various passenger groups, while continuing to provide caring services for the passengers in need. I'll now pass on to Michael for our financial performance in detail. Thank you, Jenny.

Recurrent businesses recorded a profit of HK$3.4 billion for the reporting period. This improvement was mainly driven by higher revenue from Hong Kong transport operations and a decrease in net interest and finance charges, and partly offset by higher operating expenses, higher depreciation and distributions in respect of our perpetual bonds. Property development profit increased to $12.2 billion as a result of the recognition of profits in respect of a number of large projects. Including property development profit, underlying business profit was therefore $15.7 billion. Together with changes in the fair value measurement of our investment properties, total net profit attributable to shareholders for the period was $15.9 billion. In Hong Kong transport operations, our EBIT loss was $141 million. While operating costs were relatively stable, this outcome was mainly attributable to higher railway maintenance expenses, the absence of a fare increase during the period, and an increase in depreciation charges due to asset replacements and upgrades. These adverse impacts were partially offset by stronger patronage in cross-boundary and high-speed rail services, arising through the higher frequency of two-way travel between Hong Kong and the Chinese mainland. Our station commercial EBIT decreased by 2.4%, mainly due to a rental reversion rate of minus 6.7%, which, while still negative, represents an improvement on the full year 2025 comparable figure of minus 8.5%. The EBIT of our property rental and management business decreased by 3.5%, mainly due to ongoing changes in the patterns of consumer expenditure. The rental reversion rate was still negative, but improved meaningfully over 2025. The rental reversion for our property rental and management business was minus 5.5% compared to minus 9.5% for the full year 2025. In our Chinese mainland and international businesses, the contribution increased, mainly due to improved performance from our associates in Hangzhou and higher contribution from both our Melbourne and Sydney Operations. The Group's financial position remains robust, and our net debt to equity ratio was at a healthy level of 21.7%. During the first half of 2026, the corporation arranged a total of 58 billion Hong Kong dollars equivalent of external funding, including a 2 billion Australian dollar green bond, an 18.8 billion Hong Kong dollar green bond, and a 3 billion Euro green bond. Ensuring access to a diversified range of funding sources is a key part of our funding strategy to deliver the investment and growth ahead. In terms of funding cost, funding raised in currencies other than HK dollars is always swapped back to HK dollars, meaning that MTR pays HK dollar interest rates. In the first half of 2026, our average borrowing cost was 3.5% compared to 3.7% for the same period last year. We have actively managed our funding programme and will continue to do so on a considered basis and from a long-term perspective. To prepare for our upcoming program of railway expansion, we have successfully secured significant funding during times when interest rates have been relatively low and when credit spreads have been at multi-decade historic lows. We have also intentionally extended our average debt maturity to almost 10 years. With that, I now hand back to Jenny for our outlook.

Thank you, Michael.