MTR Corporation

Company Overview December 2019 to January 2020 Forward-looking statements

Certain statements contained in this presentation may be viewed as forward-looking statements. Such forward- looking 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 MTR was listed in the Stock Exchange of (2000) Establishment of MTR

1975 1980 1985 1990 1995 2000 2005 2010 2015 1st Railway line opened (1979) Merger with KCRC (2007)

1H19 Underlying Profit2 1H19 Recurrent Profit1 HK$3.4 billion HK$2.7 billion 26.0% 40.6%

34% Transport Operations 8% 40% 10% Station Commercial

Property Rental 14% Outside Hong Kong 3% 3% 41% 48% Property Development#

Note: 1. Recurrent Profit: $2,665M - Net Profit attributable to Shareholders of the Company arising from Recurrent Businesses (comprising Hong Kong Transport Operations, Commercial Businesses, Hong Kong Property Rental & Management Businesses, Mainland of and International Railway, Property Rental and Management Businesses, Other Businesses and project studies and business development expenses). Excluding provisions for Shatin to Central Link project and South Western Railway, recurrent profit would have increased by 13.8% 2. Underlying Profit: $3,440M - Net Profit attributable to Shareholders of the Company arising from Underlying Businesses (comprising Recurrent Businesses and Property Development Businesses). Excluding provisions for Shatin to Central Link project and South Western Railway, underlying profit would have increased by 26.4% 3. Reported Profit (not shown here): $5,506M - Net Profit attributable to Shareholders of the Company arising from Underlying Businesses and Investment Property Revaluation # Property development profit mainly derived from the sales of inventory at Lake Silver and Wings at Sea II and share of surplus proceeds released from completed property development projects Vision: a leading multinational company that connects and grows communities with caring services

Page 3 Rail + Property Business Model

Railway Share of Profit Land Land Development Development Right Opportunity

Land Premium Funding Contribution Government 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 Station Development • Total GFA: 1,030,634 sq m (Retail: 55,793 sq m; Office: 14,913 sq m) • ~12,400 residential units

Tseung Kwan O LOHAS Park Development • Total GFA: 1,650,000 sq m (Retail: 46,000 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 No. of Stations: 94(1) 羅湖 Route Length: 257km(2) Lo Wu

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, 1 XRL station (ex. 68 stops) 2. 195km of heavy rail, 36km of light rail, 26 km of XRL Page 7 Market Share Hong Kong Franchised Public Transport

Green Trams & Green Trams & minibuses ferries minibuses ferries 13.4% 2.3% 13.0% 2.2%

MTR MTR 48.9% 48.8% Buses Buses 35.4% 36.0%

Jan – May 2018(2) Jan – May 2019

Cross-harbour Cross-boundary & HSR Airport Express 69.2% 68.2% 51.8% 51.5% 21.7% 21.8%

(1) (1) Jan-May 2018 Jan-May 2019 Jan-May 2018 Jan-May 2019 Jan-May 2018 Jan-May 2019 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 2. Market share for January-May 2018 was rebased to reflect the impact on the opening of Hong Kong – Zhuhai – Macao Bridge. Page 8 Patronage

Domestic Service(1) (m) Airport Express (m)

YoY change

YoY 17.7 8.6% 16.1 16.6

change 14.9 15.7 14.7 %

1,670.0 5.2 1,547.8 1,577.5 1,586.5 1,637.9 1,445.1

2014 2015 2016 2017 2018 Nov-19

Cross-boundary Service (m)

YoY

change %

2014 2015 2016 2017 2018 Nov-19 113.3 112.5 117.4 10.5 113.0 114.2 95.9

2014 2015 2016 2017 2018 Nov-19

1. Domestic Service comprises the Kwun Tong, Tsuen Wan, Island, South Island, , Tseung Kwan O, Disneyland Resort, East Rail (excluding Cross-boundary service), West Rail and lines

Page 9

2018 2019 2018 2019 2018 2019 2018 2019

148 1.5 126 1.3

9.3% 7.8% 4.0% 0.5%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2018 2019 2018 2019

10.4

8.4

5.8%

(8.4%) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Hong Kong Transport Operations (HK$b)

30 43.1% 43.2% 45.0% 42.6% 41.9% 41.1% 40.7%

40.0%

25 Revenue Domestic Service 35.0% Cross-boundary Service High Speed Rail 20 19.5 30.0% Airport Express 17.7 18.2 Light Rail, Bus, Intercity and others 16.9 HKTO revenue 16.2 25.0% EBITDA 15 EBITDA margin (%)

20.0% 10.7

10 15.0%

8.2 7.6 10.0% 7.0 7.2 7.5 5

4.3 5.0%

0 - 2014 2015 2016 2017 2018 1H19

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 2018: +3.30%*, effective in June 2019 * The fare adjustment rate for the year 2019/20 should be +3.6%, by applying the FAM formula. After counting the “Affordability-Linked Arrangement”, the result of the overall fare adjustment rate for 2019/20 will be 3.3%, with the remaining +0.3% fare adjustment to be recouped in 2021/22

Page 11 HONG KONG STATION COMMERCIAL BUSINESSES

Page 12 Hong Kong Station Commercial Businesses

Station Kiosks

Advertising Telecommunications

Page 13 Hong Kong Station Commercial (HK$m)

10,000 91.6% 89.6% 89.8% 90.4% 91.2% 90.8% 90.0% Revenue 9,000 Advertising 80.0% Kiosk rental 8,000 Telecommunication income 70.0% Others1 7,000 6,458 HKSC revenue 5,975 60.0% EBITDA 6,000 5,544 5,380 5,891 EBITDA margin (%) 4,963 5,474 50.0% 5,000 5,012 4,830 40.0% 4,000 4,448 3,555

30.0% 3,000 3,227

20.0% 2,000

1,000 10.0%

0 - 2014 2015 2016 2017 2018 1H19

1. Include revenues from other station commercial business such as station car park and publications Page 14 HONG KONG PROPERTY BUSINESSES

Page 15 MTR Investment Property Portfolio Elements (Retail) (Retail) Telford Plaza (Retail)

Plaza Ascot Citylink Plaza (Retail) (Retail)

Ocean Walk Hanford Plaza Sun Tuen Mun Shopping Centre (Retail) The Lane (Retail)

Luk Yeung Galleria (Retail) PopCorn 1 & 2 (Retail) Two IFC (Offices)

Paradise Mall (Retail)

◼ 13 malls – 217,469 sqm, Office – 39,410 sqm, Others – 17,764 sqm ◼ Total Area: 274,643 sqm LFA * Lettable floor area attributable to MTR, as at 30 Jun 2019 Page 16 Hong Kong Property Rental and 90.0% 7,000 85.0% 83.6% 83.9% 82.2% 82.9% Management 80.9%

80.0%

(HK$m) 6,000 Revenue 70.0%

5,055 5,000 4,900 Management fee 4,741 8,000 90.0% 4,533 60.0% 83.6% 83.9% 85.0% 82.2% 82.9% Revenue 80.9% 4,190 Rental income 80.0% Rental income 7,000 4,000 4,242 Management fee 4,098 50.0% Rental income 3,930 EBITDA 70.0% 6,000 EBITDA 3,668 4.9% EBITDA margin (%) 3,443 40.0% EBITDA margin (%) 5,055 60.0% 3,000 4,900 5,000 4,741 2,635 4,533 50.0% 4,190 30.0% 4,000 4,242 4,098 2,240 3,930 2,000 40.0% 3,668 3,443 20.0% 3,000 2,635 30.0%

2,000 2,240 20.0%

1,000 10.0%

0 - 2014 2015 2016 2017 2018 1H19

Page 17 New Investment Property Initiatives 49% increase in attributable GFA of existing retail portfolio

THE LOHAS

◼ 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 ◼ Target opening: 2H 2020 ◼ With a large international standard indoor ice-skating rink and the biggest cinema in Tseung Kwan O

Tai Wai 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 2023

Wong Chuk Hang Shopping Mall

◼ Profit sharing in the residential development ◼ MTR will take ownership of and invest further in fitting out the shopping mall ◼ Shopping mall GFA: 47,000 sqm ◼ Expected project completion in 2023

Page 18 Hong Kong Property Development

Page 19 MTR Land bank(1) – 1.86 Million sqm GFA

• Tin Shui Wai Light Rail Stop Awarded Land bank: 0.09m sqm GFA

• Tai Wai Station Awarded Land bank: 0.25m sqm GFA

• Yau Tong Ventilation Building Awarded Land bank: 0.03m sqm GFA

• LOHAS Park Station Awarded Land bank: 0.72m sqm GFA Unawarded Land bank: 0.23m sqm GFA

• Awarded land bank: 0.13m sqm GFA

• Wong Chuk Hang Station Awarded Land bank: 0.30m sqm GFA Unawarded Land bank: 0.10m sqm GFA

Awarded = 1.53m sqm GFA Unawarded = 0.33m sqm 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 Jun 2019 Page 20 Update on Hong Kong Property Development

◼ Tendering activities ➢ LOHAS Park Package 11 awarded to a consortium formed by Sino Land, K. Wah Land International and China Merchants Land in April 2019 Tendering ➢ Wong Chuk Hang Station Package 4 awarded to a consortium formed by Kerry Properties, Swire Properties and Sino Land in October 2019 ➢ Between now and March 2020, subject to market conditions, aiming to tender out LOHAS Park Package 12

◼ Pre-sales of LOHAS Park property development packages Property ◼ Pre-sales of West Rail residential projects where we act as agent for KCRC Sales

◼ Sales of inventory units or car parks, subject to market conditions

Page 21 Hong Kong Property Development Tendered MTR developments: about 22,000 residential units (GFA : 1.37 million sqm)

Property Tender Date of Developer partner Residential No. of units Tender Award (a subsidiary of) Gross Floor Area (sqm) 1 Tai Wai Station Oct 2014 New World 190,500 3,090 2 LOHAS Park Package 5 Nov 2014 Wheelock 102,300 1,600 3 LOHAS Park Package 6 Jan 2015 Nan Fung 137,000 2,392 4 Tin Wing Stop Feb 2015 Sun Hung Kai 91,000 1,976 5 LOHAS Park Package 7 Jun 2015 Wheelock 70,300 1,120 6 LOHAS Park Package 8 Oct 2015 Cheung Kong 97,000 1,422 7 LOHAS Park Package 9 Dec 2015 Wheelock 104,100 1,653 8 LOHAS Park Package 10 Mar 2016 Nan Fung 75,400 893 9 Ho Man Tin Station Package 1 Dec 2016 Goldin Financial 69,000 918 Road King Infrastructure & Ping An 10 Wong Chuk Hang Station Package 1 Feb 2017 53,600 800 Real Estate Sino Land 11 Wong Chuk Hang Station Package 2 Dec 2017 45,800 600 & Kerry Properties Sino Land 12 Yau Tong Ventilation Building May 2018 30,200 500 & CSI Properties

13 Wong Chuk Hang Station Package 3 Aug 2018 Cheung Kong 92,900 1,200

14 Ho Man Tin Station Package 2 Oct 2018 Chinachem Group 59,400 1,000 Sino Land, K. Wah International 15 LOHAS Park Package 11 Apr 2019 88,900 1,850 and China Merchants Land Kerry Properties, Swire Properties 16 Wong Chuk Hang Station Package 4 Oct 2019 59,300 800 and Sino Land

Page 22 MAINLAND OF CHINA AND INTERNATIONAL BUSINESSES

Page 23 and Overseas Strategies

Stockholm: • MTR Tunnelbanan  Asset Light • MTR Pendeltågen • Focus on “asset light” operating rail Sweden: Beijing: concessions  • MTR Express • BJL4, Daxing Line  • MTR Tech • BJL14 • Franchise operations  • BJL16 in UK, Stockholm and Melbourne United Kingdom: • MTR Crossrail  Hangzhou • South Western  • HZL 1  • HZL 5 Asset Heavy Light Rapid • Invest in urban rail networks Transit Line Line 4 in the Mainland of China • Focus on development of rail networks within cities Sydney Metro • Operating rail businesses in Northwest Mainland China (Beijing, Shenzhen and Hangzhou). Melbourne Trains Metro  Sweden (MTR Express) and  Australia (North West Rail Link)

Page 24 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: Beijing Metro Line 14 (BJL14) 2021 • 49% ownership/ RMB 2.45billion • 47.3km/ 37 stations Beijing Metro Line 4 (BJL4) • 30 years • Phase 1: May 2013; Phase 2: • 49%/ RMB 700 million Dec 2014; Phase 3: Dec 2015 ; • 28km/ 24 stations full line: 2021 • 30 years • Sep 2009

BJL14 Phase IV (TBC)

Daxing Line • O&M contract Metro Line • 22km/ 11 stations (Southward • % Ownership/ equity investment extension of BJL4) • Route length/ no. of stations • 10 years • Concession period • Year of service commencement • Dec 2010

Page 25 Existing Businesses on Mainland of China – Shenzhen and Hangzhou; Macau

Shenzhen Metro Line 4 (Longhua Line) Hangzhou Metro Line 1 • 100%/ RMB 2.4 billion • 49%/ RMB 2.2 billion • 20.5 km/ 15 stations • 54km/ 34 stations (including a 5.7km 3- • 30 years station extension under O&M) • Jun 2011 • 25 years • Nov 2012

Hangzhou Metro Line 5 • Up to 60%/ RMB 2.6 billion • 51.5km/ 38 stations • 25 years • 2019

Macau Light 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 26 Existing Overseas Operations - Sweden

MTR Tech Stockholm Metro (MTR Stockholm) • Total investment: HK$180 million • O&M concession for 8 years to 2017 (for 50% interest in TBT) • 6-year extension from 2017 to 2023 • 100% ownership • 100% ownership • Rolling stock maintenance for the • Contract amount: HK$20 billion Metro metro network in Stockholm fully • 108km/ 100 stations

Stockholm Stockholm under our management • Since Nov 2009

• Feb 2016

Intercity Service MTR Express • Total investment: HK$830 million • 100% ownership • 457km intercity service between Stockholm & Gothenburg • Since Mar 2015

Stockholm Commuter Rail (MTR Pendeltågen) • 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

Service • Since Dec 2016 Commuter

Page 27 Existing Overseas Operations

Melbourne’s Metropolitan Rail Sydney Metro Northwest (PPP) Services • Equity investment: AUD63 million • O&M concession for 7 years (plus • 36km high capacity rapid transit a 3-year option) between Chatswood and Rouse Hill • 60% ownership • Design and delivery of railway system • 390km and 217 stations and O&M for 15 years • 8-year concession since Nov 2009; • Commenced in May 2019

Australia new franchise to start on 30 Nov 2017

MTR Crossrail

• O&M concession for 8 years (with an option to extend 2 more years to 10 years) United Kingdom • 100% ownership • Contract amount: GBP1.4 billion • 118km and 40 stations, including 42km of new tunnels across London • Commenced first and second section of service in 2015 and 2018, respectively.

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

Page 28 Mainland of China and International Businesses 57.3% Recurrent profit (excluding property development)(1): HK$146m Recurrent profit excluding South Western Railway provisions: $582m, +70.2% Mainland of China ◼ Beijing MTR – good operational and financial Profit from recurrent businesses performance (excluding property development) ◼ MTR Shenzhen – good operational and steady financial HK$m performance ◼ Hangzhou MTR – good operational and financial 396 performance Others(2) HZ Macau 332 342 ◼ Macau LRT Taipa Line – higher contribution from BJ projects and full 6 months contribution from O&M 163 146 119 129 contract Sydney 33 Europe SZ Melbourne 25 (3) ◼ Stockholms pendeltåg, Sweden – reduced loss mainly due to improvement in train availability and maintenance 1H18 1H19 1H18 1H19 1H18 1H19 1H18 1H19 1H18 1H19 1H18 1H19 (150) ◼ MTR Express, Sweden – Patronage continued to improve and loss narrowed further UK ◼ South Western Railway franchise, UK – Made a provision of HK$436m, representing the maximum potential loss under the Franchise Agreement ◼ MTR Crossrail, UK – higher contribution mainly due to Nordic higher concession payment

(498) Australia ◼ Sydney Metro North West (SMNW) – Project profit Mainland Macau Europe Australia Recurrent Net Property of China Profit Development recognition slowed down as the project was completed in Profit 1H2019. ◼ Metro Trains Melbourne (MTM) – higher contribution mainly due to higher franchise payment 1. 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. Does not include project studies and business development expenses. 2. Mainland of China property rental and management Page 29 GROWTH INITIATIVES IN HONG KONG

Page 30 Unprecedented HK Railway Growth

Total route length Express Rail Link (XRL) – 26km to reach 274km HK$84.4B

Shatin to Central Link (SCL) – 17km HK$97.2B Extension – 3km HK$6.9B

West Island Line – 3km (East) – 7km HK$18.5B HK$17.2B

Service concessions Cash grant “Rail + Property”

* Project cost estimates (before capitalised interest) subject to regular review Page 31 -Shenzhen-HK High Speed Rail

Project Background ◼ The 26-km XRL to provide high speed cross- boundary rail services connecting Hong Kong to Shenzhen, Guangzhou and the high speed rail network in Mainland of China

10 years concession with the government ◼ A fair and symmetrical concession ◼ KCRC will pay MTR a fixed payment of HK$8B over 10 years ◼ MTR will pay KCRC 35% of the fare and non-fare revenue over 10 years ◼ Any excess or shortfall greater than 15% of the projected patronage will be borne between MTR and KCRC at 30% and 70% respectively ◼ MTR will receive compensation of up to $1.5B from KCRC, for patronage loss in existing cross- boundary and intercity services.

Opened on 23 September 2018 ◼ Average daily patronage was 55,000 in 1H2019 ◼ Recorded passengers of over 104,000 at Check Point on 7 February 2019

Page 32 Shatin to Central Link

Shatin to Central Link (SCL)

Tai Wai to Section – 99.7% complete

◼ Construction works for all stations are substantially completed

Kai Tak station

Hung Hom to Admiralty Section – 78.8% complete

◼ Immersed tube tunnel installed and connected to the land tunnels ◼ Bored tunnels completed ◼ Fitting out and railway system work progressing

Exhibition Centre station

Page 33 Shatin to Central Link

Tuen Ma Line Funding ◼ Government is responsible for funding the Shatin to Central Link

◼ Estimated cost as of December 2017 was HK$87.3 billion – additional funding will therefore be required

◼ The Company intends to carry out a further review and revalidation of the cost-to-complete within 2019

◼ The Company continues to exercise rigorous cost control with the objective of ensuring that construction costs are contained so far as possible

Overall 90.2% complete

Page 34 Shatin to Central Link

◼ On 26 March 2019, Interim Report of the COI which investigated the construction works at and near the extension was published and concluded that the Hung Hom Station extension diaphragm wall and platform slab construction works are safe. It also made recommendations for improving the Corporation’s project management practices.

◼ Many of these recommendations concurred with the findings of our own review conducted by the Capital Works Committee of the Board

◼ We have already begun implementing some of these recommendations and will continue to strengthen our project management through technology solutions and additional training.

◼ On 18 July 2019, Government accepted our recommendation that the should open in phases, with the first phase of the Tuen Ma Line from Tai Wai Station to Kai Tak Station targeted to open in the first quarter of 2020

◼ To progress the Shatin to Central Link project and facilitate the phased opening, we will fund, on an interim basis, certain costs arising from the Hung Hom incidents and associated with the phased opening. Our best estimate of these costs is around HK$2 billion in aggregate.

◼ We have therefore made a provision of HK$2 billion in our consolidated profit and loss account for the first half of 2019.

Page 35 Railway Development Strategy 2014 A total of 7 new railway projects of which: ▪ : Proposal submitted ▪ Northern Link (and Kwu Tung Station): Proposal submitted ▪ Tung Chung West Extension (and Tung Chung East Station): Proposal submitted ▪ : Proposal submitted ▪ : Proposal submitted ▪ Hung Shui Kiu Station: Invited by Government in May 2019 to submit proposals ▪ South Island Line (West): Invited by Government in June 2019 to submit proposals Government’s “Strategic Study on Railways beyond 2030 – Feasibility Study” planned to commence in 2019 Route Project Length (km) Tuen Mun South 2.4 Extension Northern Link (and Kwu 10.7 Tung Station) Tung Chung West Extension (and Tung 1.5 Chung East Station)

East Kowloon Line 7.8

North Island Line 5.0

Hung Shui Kiu Station -

South Island Line (West) 7.4

Total 34.8

Page 36 ESG Strategy and Initiatives

Environment Social Governance Green transport Stakeholder engagement Benchmark with best practices

Efficient use of energy Safety first – Good governance E1 S1 customers, G1 and land resources contractors and staff structure

Caring for E2 Pollution prevention S2 stakeholders G2 Diversified Board

Adapting to climate Investing in Interest aligned with E3 change S3 community G3 stakeholders

Risk management & E4 Green Financing S4 Investing in staff G4 Corporate Responsibility

Our goal is to contribute to the sustainability of the community through our business by meeting and balancing the current and future needs of our stakeholders

MTR Corporation Page 37 Pollution prevention

• Reduction in greenhouse gas emission • Air filtration technologies – indoor air quality in stations better than ambient • Enhanced pollution prevention initiatives, noise control • Active management of high ecological value wetlands

Scope 1 emissions are direct GHG emissions from sources that are owned or controlled by the Corporation, such as emissions from fossil fuels burned on site. Scope 2 emissions are indirect GHG emissions resulting from the generation of electricity, heating and cooling, or steam generated off site but purchased by the Corporation. Scope 3 emissions include indirect GHG emissions from sources not owned or directly controlled by the Corporation but related to our activities. Page 38 Sustainability Initiatives

Energy Reduction and Renewable Energy: • Carrying out chiller replacement in stations and depots • Installing solar panels in Hung Hom office building

Waste Reduction: • Installed drinking water dispensers initially at , and Prince Edward Station

Supply Chain Management: • Conducting a study to enhance responsible procurement practices

Stakeholders’ Communication: • Launched our new Sustainability Website and the Sustainability Report 2018

Awareness Raising: • Launched a 2-day discussion forum “ID pitch”

MTR Corporation Page 39 Corporate Responsibility Initiatives

STEM Challenge Youth Forum 2.0 Uth Live Saturdays

MTR Budding Station Master Programme MTR Safety Experience Zone

MTR Corporation Page 40 Structure of overall management

Regular communication channels

Page 41 Aligned with stakeholder interests

Employees' remuneration

Financial factors Non-financial factors

• Operating profit • Customer feedback survey • EBITDA margin • Customer Services Pledge • HK property development profit • Train Service Delivery, Passenger Journeys on Time, Train Punctuality

Page 42 Financial Results

Page 43 Financial Highlights

Contribution from Recurrent Businesses 1H2019 Recurrent Businesses

(HK$m) Hong Kong(1) Outside of Total Hong Kong(1) Revenue 17,714 10,558 28,272 Change (YoY) 11.3% 1.0% 7.2% Recurrent profits 2,519 146 2,665 Change (YoY) (39.2%) (57.3%) (40.6%)

Recurrent profits excluding SCL/South Western Railway provisions 4,519 582 5,101

Change (YoY) 9.1% 70.2% 13.8%

Net Profit (HK$m) 1H2019 Change (YoY) Profit from recurrent businesses(2) 2,665 (40.6%) Post-tax profit from property development Hong Kong 750 468.2% Mainland of China 25 (24.2%) Sub-total 775 369.7% Profit from underlying businesses(2) 3,440 (26.0%) Investment property revaluation 2,066 (15.2%) Reported net profit attributable to shareholders of the company(2) 5,506 (22.3%) Reported EPS (HK$)(2) 0.90 (23.7%) Underlying businesses EPS (HK$)(2) 0.56 (27.3%) Interim ordinary dividend per share (HK$) 0.25 -

1. Recurrent business profit from Hong Kong includes HK transport operations, HK station commercial, HK property rental and management, other businesses (mainly project management services to Government, , and consultancy) and project studies and business development expenses. Recurrent business profit outside of Hong Kong excludes project studies and business development expenses. 2. Net of non-controlling interests (1H2019: HK$98m; 1H2018: HK$88m) Page 44 Consolidated Balance Sheet

Cash, bank balances and deposits Railway: 47% Property: 35% Debtors and other receivables

Service Investment Others Assets Railway assets concession properties assets

Property development in progress

Total Equity: 64% Total Debt: 13% Deferred tax liabilities

Liabilities and Shareholders’ funds Debt Others Shareholders' funds

Obligations under Creditors and other service concession payables

0 50,000 100,000 150,000 200,000 250,000

Note: As at 30 Jun 2019 (HK$m) Page 45 Progressive Dividend Policy

(HKD) 2.0 Ordinary DPS 1.8 Underlying EPS1 1 1.6 Recurrent EPS

1.4 1.20 1.2 1.12 1.05 1.06 1.07 1.0 0.92 0.79 0.8 0.76

0.59 0.6 0.52

0.4

0.2

0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

1. 2012 figures restated due to retrospective adoption of Revised HKAS19, Employee Benefits

Page 46 Appendix

Page 47 Hong Kong Transport Operations

Revenue Cost

(HK$m) (HK$m) 9,738 10,690 Others(2) Variable annual payment 504 1,048 9,328 576 Airport Express 8,180 Depreciation & 3,394 515 1,139 amortisation, 688 Depreciation & High Speed Rail 2,346 amortisation 559 variable annual 1,716 payment: 2,953 General admin, 1,723 Cross-boundary 2,265 Railway support & Service 979 others 260 Stores & spares 671 consumed 264 981 Maintenance & related (1) 679 Domestic Service 891 Operating 759 6,344 Energy & utilities 6,531 6,755 cost:5,227

2,854 3,233 Staff costs & related

1H2018 1H2019 1H2018 1H2019

(3) EBITDA: Margin: 3.3% EBIT : Margin: 3.4% 6.0% 17.1% HK$4,346m 40.7% pts HK$952m 8.9% 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 48 Segment EBIT (HK$b)

12

11 Profit*/ (loss) from property development 10 Profit*/ (loss) from businesses outside 9 of HK

8 Profit*/ (loss) from recurring businesses (excluding property 7 development) 6 Profit*/ (loss) for the year (excluding investment property revaluation) 5

4

3

2

1

0 Opening of (1) Opening of Merger with KCRC Airport Express TKO Line on 2 Dec 07 (2) Opening of Urban Lines

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 18

Page 49 Consolidated Profit and Loss Account 1H2019 1H2018 Favourable/ (adverse) change (HK$m) HK$m % HK transport operations 10,690 9,328 1,362 14.6 HK station commercial and HK property rental & management businesses 6,190 5,592 598 10.7 Mainland of China & international railway, property rental and management subsidiaries 10,558 10,453 105 1.0 Other businesses 834 1,000 (166) (16.6) 28,272 26,373 1,899 7.2 Mainland of China property development - - - N/A Total revenue 28,272 26,373 1,899 7.2 Operating expenses excluding Mainland of China & international subsidiaries(1) (9,975) (7,009) (2,966) (42.3) Expenses relating to Mainland of China & international railway, property rental and (9,886) (10,043) 157 1.6 management subsidiaries(2) Expenses relating to Mainland of China property development (10) (17) 7 41.2 Total operating expenses (19,871) (17,069) (2,802) (16.4) EBITDA excluding Mainland of China & international subsidiaries 7,739 8,911 (1,172) (13.2) EBITDA relating to Mainland of China & international railway, property rental and 672 410 262 63.9 management subsidiaries EBITDA relating to Mainland of China property development (10) (17) 7 41.2 Total EBITDA 8,401 9,304 (903) (9.7) HK property development profit 898 158 740 468.4 Total operating profit 9,299 9,462 (163) (1.7) Depreciation & amortisation (2,592) (2,461) (131) (5.3) Variable annual payment (1,506) (999) (507) (50.8) Interest and finance charges (442) (580) 138 23.8 Investment property revaluation 2,066 2,435 (369) (15.2) Share of profit or loss of associates and joint venture (74) 286 (360) (125.9) Profit before taxation 6,751 8,143 (1,392) (17.1) Income tax (1,147) (972) (175) (18.0) Non-controlling interests (98) (88) (10) (11.4) Reported net profit attributable to shareholders of the Company 5,506 7,083 (1,577) (22.3) Reported earnings per share (HK$) 0.90 1.18 (0.28) (23.7) Profit from underlying businesses 3,440 4,648 (1,208) (26.0) Underlying businesses EPS (HK$) 0.56 0.77 (0.21) (27.3) Interim ordinary dividend per share (HK$) 0.25 0.25 - -

Note 1: Includes project studies and business development expenses Note 2: Excludes project studies and business development expenses Page 50 Consolidated Statement of Financial Position

30 Jun 2019 31 Dec 2018 Increase/ (Decrease) (HK$m) HK$m % Assets Investment properties 85,218 82,676 2,542 3.1 Other property, plant and equipment 102,616 102,776 (160) (0.2) Service concession assets 30,824 30,473 351 1.2 Property development in progress 14,657 14,840 (183) (1.2) Interests in associates & joint venture 9,603 8,756 847 9.7 Properties held for sale 939 1,369 (430) (31.4) Debtors and other receivables 10,289 9,576 713 7.4 Amounts due from related parties 2,418 2,088 330 15.8 Cash, bank balances and deposits 21,617 18,022 3,595 19.9 Others 4,535 4,111 424 10.3 Total Assets 282,716 274,687 8,029 2.9

Liabilities Debts 37,149 40,205 (3,056) (7.6) Creditors, other payables and provisions 32,661 25,947 6,714 25.9 Current taxation 1,857 1,161 696 59.9 Amounts due to related parties 6,579 2,676 3,903 145.9 Obligations under service concession 10,378 10,409 (31) (0.3) Deferred tax liabilities 13,015 12,979 36 0.3 Others 553 691 (138) (20.0) Total Liabilities 102,192 94,068 8,124 8.6

Total Equity 180,524 180,619 (95) (0.1) Cash flow

1H2019 1H2018 Favourable/ (adverse) change (HK$m) HK$m % Cash Inflow Cash flows from operations 9,964 4,845 5,119 105.7 Receipt of government subsidy for Longhua Line operation 608 645 (37) (5.7) Receipts from property developments 4,580 1,089 3,491 320.6 Others 7 271 (264) (97.4) Total inflows 15,159 6,850 8,309 121.3

Cash Outflow Tax paid (522) (681) 159 23.3 Purchase of tax reserve certificates (7) (6) (1) (16.7) Capital expenditure - Hong Kong existing rail (2,614) (2,653) 39 1.5 - Hong Kong new rail (175) (233) 58 24.9 - Property related (469) (516) 47 9.1 - Mainland of China and international railway related (91) (95) 4 4.2 Variable annual payment (2,305) (1,933) (372) (19.2) Investments in/ loan to associates & joint venture (802) (669) (133) (19.9) Net interest paid (448) (485) 37 7.6 Others (122) (267) 145 54.3 Total outflows (7,555) (7,538) (17) (0.2) Net cash inflow/(outflow) before financing 7,604 (688) 8,292 1,205.2 Cash outflow from net repayment (3,955) (3,597) (358) (10.0) Net cash inflow/(outflow) 3,649 (4,285) 7,934 185.2

Page 52 Financing and Credit Ratios

Company Debt Profile (30 Jun 2019)(1) Consolidated group borrowings and other obligations(2):

> 5 years Fixed HK$37,149m (HK$40,205m as at 31 Dec 2018) 57% 68%

Hedged Average cost of borrowing and other 100% obligations(2): 2.8%(3) 2-5 years 27% Floating Interest and finance charges: (4) <2 year 32% HK$442m 16%

Maturity Fixed/Floating Currency Compared to 1H2018 figures

30 Jun 2019 31 Dec 2018 Net Debt / Equity ratio(5) 14.4% 18.1%

1H2019 1H2018 Interest cover 13.4x 11.6x

1. Excluding Mainland of China and overseas subsidiaries debts 2. Excluding obligations under service concession 3. Not directly comparable to the 1H2018 figure. Excluding lease liabilities and obligations under service concession, weighted average borrowing cost of the Group in 1H2019 was 2.7%, same as 1H2018. 4. Not directly comparable to the 1H2018 figure. Excluding the lease liabilities recognised under HKFRS 16, interest and finance charges would be HK$422 million in 1H2019 compared with HK$580 million in 1H2018 5. Including lease liabilities, obligations under service concession and loan from holders of non-controlling interests as components of debt Page 53 Capital Expenditure & Investments

2019-2021 Hong Kong Maintenance CAPEX# 54% Estimated spend: Total 2019 - HK$16.9 billion 23% HK$47.4B 2020 - HK$15.2 billion Hong Kong Property 2021 - HK$15.3 billion Total - HK$47.4 billion 10% 13%

Mainland of China Hong Kong & Overseas New Railway Projects

# Includes the Maintenance CAPEX for the Existing Railway Assets and Advance Railway Works related to SCL The Advance Railway Works related to SCL 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 54 Business Update

Patronage Jan to Nov 2019 (YoY%) - Domestic services Down 5.2% - Airport express Down 8.6% - Cross-boundary services Down 10.5% - High-speed-rail ~47,300 (daily average) Fare Mid-2019 - FAM Up 3.3%* Total tenant sales turnover Jan to Nov 2019 (YoY%) Station commercial - Station kiosks Down high-single-digit# - Duty free shops Down mid-teens# Shopping malls - Elements Down low-single-digit - Shopping malls excluding Elements Down mid-single-digit Industry statistics Jan to Nov 2019 (YoY%) - Hong Kong retail sales Down 10.3% - Hong Kong tourist arrivals Down 10.0% Source: Company data and government figures

*The fare adjustment rate for the year 2019/20 should be +3.6%, by applying the FAM formula. After counting the “Affordability-Linked Arrangement”, the result of the overall fare adjustment rate for 2019/20 will be 3.3%, with the remaining +0.3% fare adjustment to be recouped in 2021/22 #High Speed Rail (HSR) related sales turnover figures are excluded for YoY comparison (HSR service commenced on 23 September 2018) Page 55 MTR Corporation www..com.hk [email protected]

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