Hong Kong’s sole rail operator MTR Corporation - currently embroiled in a construction scandal - reported net profit and revenue decreases for the first six months of the year on Thursday - due to lower property income.
The train services operator posted a 12.1 percent year-on-year decrease in revenue to HK$26.37 million for the first half, while net profit attributable to shareholders fell 5.3 percent to HK$7.08 million.
The company said the main reason for this is that Tiara - its residential and commercial development project in Shenzhen – did not report any significant revenues and profits last year.
But its transport operations in Hong Kong, the MTRC’s core business, grew on the back of the city’s strong economic growth. This helped lift passenger numbers by 2.3 percent to 997.8 million for the period - a record high. Revenue from transport operations increased 4.1 percent to HK$9.32 billion.
As the city’s sole rail operator, MTRC’s overall share of the franchised public transport market in Hong Kong reached 49.2 percent in the first five months of the year.
Strong economic growth and a rebounding retail sector are likely to continue boosting the company’s Hong Kong business, Chief Executive Officer Lincoln Leong Kwok-kuen told reporters when releasing the interim results.
It was also announced on Tuesday that Leong is about to retire ahead of schedule when a successor can be hired in the wake of the corner-cutting scandal at Hung Hom Station of the Sha Tin to Central Link.
He apologized for the scandal several times at Thursday’s media briefing.
The interim report reveals the company has not made any provisions in respect to the Sha Tin to Central Link project
“We have learnt a number of lessons from recent events with Sha Tin-Central Link,” Leong said.
Asked whether the scandal will affect the company’s financial performance, Leong said MTRC is just the manager of the project, while the special administrative region government is the owner and will pay for it. This is based on an entrustment agreement it has with the government.
Herbert Hui Leung-wah, finance director of MTRC, said the company had posted a project management fee of HK$445 million for the first half.
The interim report reveals the company has not made any provisions in respect to the Sha Tin to Central Link project. Up until June 30, MTRC had not received any claims from the government.
The scandal of Sha Tin to Central Link project forced the railway giant to halt trading its shares and debt securities on Tuesday afternoon.
MTRC shares resumed trading on Wednesday morning. They reached a five-month low at HK$40.95 on Thursday and ended 1.8 percent lower.
The company proposed an interim ordinary dividend of HK 25 cents per share.