- What are the Company's principal activities?
- What is the Company's relationship with the Hong Kong SAR Government?
- Does the Company require Government or legislative approval to change its fares?
- What is the Company's property development strategy?
- Does the Hong Kong SAR Government guarantee debts
issued by the Company?
- Who should I contact for questions relating to
my shareholdings such as transfer of shares, change of name or
address, and lost of share certificates?
1. What are the Company's principal activities?
The Corporation operates an integrated railway network comprising the MTR-built and owned metro railway lines and since 2 December 2007, the regional rail lines of the Kowloon-Canton Railway Corporation (KCRC) under a service concession arrangement.
The rail merger with KCRC became effective on 2 December 2007 and involves, among other things, the expansion of the MTR Corporationˇ¦s existing franchise under the MTR Ordinance to provide the Corporation with the right to operate both the MTR and KCR railways for an initial period of 50 years from the merger date.
In conjunction with the railway business, the Company also engages in the development and sales of residential and commercial properties above and adjacent to its stations and depots in partnership with property developers. The Company has a portfolio of investment properties for long-term investments and also provides property management services.
The Company also derives income from other businesses associated with the railway including advertising, kiosk and shop rentals and provision of telecommunication services.
The Company's subsidiary, Octopus Cards Limited, operates the smart card system which the Company and other major transport operators use to collect the majority of its fares. Octopus Cards Limited has since expanded its operations to non transport sectors.
2. What is the Company's relationship with the Hong Kong SAR Government?
Following the partial privatisation and public listing of the Company on the Hong Kong Stock Exchange in October 2000, the Hong Kong SAR Government now owns around 77% of the Company. The Government has pledged to continue to hold at least 50% shareholding in the Company for at least 20 years from the date of the IPO, and to provide the same support to the Company as before the privatisation.
Despite its majority ownership by the Government, the Company is independently managed on commercial principles. It is financially independent and does not rely on any subsidy from the Government.
3.
Does the Company require Government or legislative approval to change its fares?
Fare setting is in accordance with the "Fare Adjustment Mechanism" (FAM) which is a direct-drive formula linked to changes in consumer price index and wage index as well as a pre-determined productivity factor. Fares will be reviewed annually.
The formula for the FAM: "Overall weighted fare adjustment rate = 0.5 x ˇµCCPI + 0.5 x ˇµ wage index - t" where:
- ˇµCCPI: the yearly percentage change in the Government Composite Consumer Prices Index;
- ˇµWage index: the yearly percentage change in the Nominal Wage Index (Transport Services Sector);
- t = productivity. t= 0 (first five years following the merger date); t=0.1% (starting from the sixth year following the merger date)
4. What is the Company's
property development strategy?
The Company's strategy is to help establish new
communities along the routes of its railway through the development
of substantial properties at the sites of its stations. This has
led to more effective integration between its railway and property
developments, increased catchment and passenger flows for the railway,
and enhanced investment returns.
In property developments, the Company will enter
into partnerships with reputable developers whereby the developers
will bear all development costs, including land premium and construction
costs, and therefore all development risks. The Company will supervise
construction of the projects and share part of the profits upon
completion and sale.
5. Does
the Hong Kong SAR Government guarantee debts issued by the Company?
The Company has its own credit ratings, which
are on par with the Hong Kong SAR Government. Its debts are not
guaranteed by the Hong Kong SAR Government.
6. Who should I contact
for questions relating to my shareholdings such as transfer of shares,
change of name or address, and lost of share certificates?
Any matters related to your shareholding, such
as transfer of shares, change of name or address, and lost of share
certificate should be sent in writing to the Company’s Share
Registrar:
Computershare Hong Kong Investor Services Limited
Shops 1712 - 1716, 17th Floor, Hopewell Centre
183 Queen's Road East
Hong Kong
Tel: (852) 2862 8628
Fax: (852) 2529 6087
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