WEBSITE MENU About this Report MAINLAND OF CHINA AND CEO Letter INTERNATIONAL BUSINESS Q&A with the Chairman About MTR Corporation Safety Financial and Economic Performance Environment Corporate Governance Staff Community Customers 8 5.0 million Rail Services in Total weekday patronage Supply Chain operation outside of on average outside of 2016 and Beyond Hong Kong Hong Kong Mainland of China and International Business Introduction MTR in the Mainland of China MTR in Europe MTR in Australia View Stories Performance Metrics 867.5 km Operating route length outside of Hong Kong 145 WEBSITE MENU INTRODUCTION About this Report Outside of Hong Kong, we invest selectively in rail-related projects, including In this section of the report, we highlight key aspects of the sustainability property developments, which we believe will generate sustainable returns performance of railway operations managed by our subsidiaries around CEO Letter within clear risk parameters. the world by location, namely, MTR in the Mainland of China, Europe and Q&A with the Chairman Australia. Key performance indicators (KPIs) for these railway operations are Learn more… also available. About MTR Corporation Safety Please refer to our Annual Report 2015. Financial and Economic Performance UK SWEDEN MAINLAND OF CHINA Environment London Crossrail Corporate Governance Stockholm Metro Stockholm Commuter Rail Beijing Line 4 Staff (from December 2016) Beijing Daxing Line MTR Tech (renamed from TBT) Beijing Line 14 Community Beijing Line 16 Customers London Overground MTR Express Supply Chain Hangzhou Metro 2016 and Beyond Stockholm Line 1 -Extn London Beijing Mainland of China Hangzhou and International Shenzhen Business Shenzhen Metro Introduction Longhua Line MTR in the Mainland of China MTR in Europe MTR in Australia AUSTRALIA Sydney Weekday average patronge View Stories • Mainland of China - 2.44 million# Sydney Metro Northwest Melbourne • Europe - 1.79 million Performance Metrics • Australia - 0.80 million Metro Trains Melbourne # Patronage number based on "line boarding" 146 WEBSITE MENU Management Approach Operating Agreements Our subsidiaries and associates participate in various forms of agreements with local authorities, including Operations & Maintenance (O&M), About this Report GUIDING FRAMEWORK Public-Private Partnerships (PPPs), and Build-Operate-Transfer (BOT) CEO Letter arrangements. Our ability to influence the environmental, social and Governance of subsidiaries and associates governance impacts through the activities of our subsidiaries and associates Q&A with the Chairman is largely determined by the specific terms of these agreements as well as The Chief Executive Officer is responsible for oversight on governance of the local conditions and circumstances. About MTR Corporation subsidiaries and associates. He is supported by the newly-created roles of Managing Director — Operations and Mainland Business and European Safety Business Director. Fair and ethical business Financial and Economic We promote a culture of fair and ethical business practices. With respect to Performance Management Directives prevention of bribery and illegal practices, whenever the laws or customs of another country impose stricter standards than our own anti-bribery regime In order to ensure good corporate governance and management of financial Environment in Hong Kong the higher standard always prevails. and reputational risks, we exercise oversight over our subsidiaries and Corporate Governance associates. Beyond this, we are committed to promoting best practices in all areas where we have substantive control or influence. Code of Conduct Staff All members of staff, irrespective of their location of employment, are Our wholly-owned and majority-owned subsidiaries are mandated to adopt a Community expected to abide by the Code of Conduct. They should not only conduct set of management directives relating to internal controls, consultation and themselves in accordance with the highest ethical standards at all times, but Customers reporting: also to identify and address any instances of behaviour by other members of staff that are not in accordance with the Code. Supply Chain • Internal controls — implement appropriate procedures and management 2016 and Beyond systems to ensure compliance with relevant laws and regulations, as well as the Company’s specific requirements on safety, enterprise risk and asset management, among other issues. Mainland of China • Consultation — headquarters must be consulted on matters relating to and International material variation of the concession or franchise agreement, appointment Business of senior managers, litigation and non-compliance with relevant laws and regulations, amongst others. Introduction • Reporting — provide timely reporting on financial, operational and safety MTR in the Mainland of China performance. MTR in Europe MTR in Australia View Stories Performance Metrics 147 WEBSITE MENU KEY PRINCIPLES AND PROCESSES About this Report Assurance and audit CEO Letter We conduct thorough assurance and regular audits, including a safety assurance assessment and enterprise risk management review, before the Q&A with the Chairman start of operations and following any substantive change in operational or business activity. About MTR Corporation Safety Local talent Financial and Economic In general, our subsidiaries and associates are run by local teams; whenever Performance possible, we bring on board people who share our values and contribute to fostering our unique corporate culture in their local context. Environment Corporate Governance Learning and sharing Staff In order to promote the flow of information and development of an open, trusting relationship, staff across the Company are encouraged to develop Community relationships with their counterparts and implement a culture of sharing and learning. Customers Supply Chain Building on firm foundations 2016 and Beyond We are exercising prudence in our approach to the continued expansion of our global footprint. When considering future plans outside of Hong Kong, we have a strong preference for consolidating our position in countries and Mainland of China cities where we already have a presence. and International Business Safety Introduction We have an enhanced corporate safety governance framework based MTR in the Mainland of China on a benchmarking study of international best practices. The resulting enhancements to the framework include providing independent risk MTR in Europe assessment from headquarters to cover major operational changes, and MTR in Australia requiring businesses to plan and achieve specified maturity levels. View Stories Performance Metrics 148 WEBSITE MENU MTR IN THE MAINLAND OF CHINA About this Report OUR MAIN BUSINESSES IN THE MAINLAND OF CHINA AT A GLANCE CEO Letter Commencement MTR Franchise/ of Franchise/Expected Number of Route Length Q&A with the Chairman Corporation Business Model Concession Period Date of Commencement Stations (km) Shareholding (years) About MTR Corporation of Operation Projects in operation Safety Beijing Metro Public Private 49% Sep 2009 30 24 28 Financial and Economic Line 4 (“BJL 4”) Partnership (“PPP”) Performance Operations and Daxing Line of 49% Maintenance (“O&M”) Dec 2010 10 11 22 Environment BJL 4 Concession Corporate Governance West Section: May 2013 West Section: 7 West Section: Staff Beijing Metro 49% PPP East Section: Dec 2014 30 East Section: 12.4 Line 14 (“BJL14”) Middle Section: Dec 2015 12 (Note 1) East Section: Community Middle Section: 11 14.8 Middle Section: Customers 16.6 Supply Chain Shenzhen Metro Line 4 Build Operate‐ Phase 1: 2010 Phase 1: 5 Phase 1: 4.5 100% 30 2016 and Beyond (Longhua Linne) Transfer (“BOT”) (Note 2) Phase 2: 2011 Phase 2: 10 Phase 2: 16 Hangzhou Metro 49% PPP Nov 2012 25 31 48 Mainland of China Line 1 Hangzhou Metro End together with and International 49% O&M Concession Nov 2015 3 5.7 Line 1 Extension HZL1 concession Business Projects in progress Introduction MTR in the Mainland of China BJL14 49% PPP Full Line: After 2017 30 Full Line: 37 Full Line: 47.3 MTR in Europe Beijing Metro Phase 1: 2016 49% PPP 30 Full Line: 29 Full Line: 50 MTR in Australia Line 16 Phase 2: After 2017 View Stories Notes 1) BJL14 Phase 2 East Section has 12 stations, ten opened (two are currently bypassed). BJL14 Phase 3 Middle Section has 11 stations, nine opened (two are currently bypassed). Performance Metrics 2) Shenzhen Metro Line 4 Phase 1 assets are owned by the Shenzhen Municipal Government. MTR Corporation (Shenzhen) Ltd took over the operation of Phase 1 in July 2010. 149 WEBSITE MENU Beijing MTR Corporation Limited (BJMTR) Property Businesses Associate Shenzhen About this Report Established: 2006 We undertook our first property development project in the Mainland of Activity: PPP Agreements for investment, operations and maintenance of China after winning a tender for a development site at the Shenzhen Metro CEO Letter Beijing Metro Line 4, Line 14 and Line 16, and O&M Agreement for delivery Longhua Line Depot Site Lot 1 in 2011. The project, named "Tiara", is of through-train services on the Daxing Line, connecting with Beijing Line 4. our first self-developed property project and developed through the MTR Q&A with the Chairman Property Development (Shenzhen) Company Limited, which is jointly owned About MTR Corporation BJMTR was the first “foreign-invested cooperation company” to participate by our two subsidiaries, MTR Corporation (Shenzhen) Limited and MTR in urban railway transportation