Exhibit 7.4

 

MTR Corporation Limited

 

Computation of

Ratio of Earnings to Fixed Charges

Based on US GAAP

(Expressed in millions of HK$)

 

          As of December 31
  
          1998
     1999
    2000
     2001(1)
    2002
  

Net income in accordance with US GAAP

         1,556     2,449    3,418     4,468    3,261  
         
 
  
 
  

Adjustments:

                                  

US GAAP adjustments related to taxes:

                                  

Deferred tax accounting

         372     49    574     724    761  

Tax effect of adjustments

         (170 )   72    (9 )   160    (35 )
         
 
  
 
  

Income before tax in accordance with US GAAP

         1,758     2,570    3,983     5,352    3,987  

Fixed charges:

                                 

Interest expenses

         1,123     1,680    1,942     1,870    1,748  

Amortization of debt discount or deferred debt costs

         26     32    46     53    23  

Representative portion of interest in operating lease expenses(2)

         23     13    6     5    4  
         
 
  
 
  

Total fixed charges

    (B)    1,172     1,725    1,994     1,928    1,775  
         
 
  
 
  

Less: fixed charges capitalized

         473     383    797     1,029    621  
         
 
  
 
  
          699     1,342    1,197     899    1,154  
         
 
  
 
  

Earnings before taxes and fixed charges

    (A)    2,457     3,912    5,180     6,251    5,141  
         
 
  
 
  

Ratio of Earnings to Fixed Charges

    (A)/(B)    2.10     2.27    2.60     3.24    2.90  
         
 
  
 
  
(1)   Due to the adoption of SSAP 34, “Employee Benefits”, issued by the Hong Kong Society of Accountants, which became effective on January 1, 2002, a restatement of the 2001 financial data was necessary. See Note 42A of Notes to the Financial Statements.

 

(2)   The balance represented one third of operating lease expenses of the Group.