MTR Corporation Limited (66) Earnings Call Transcript & Summary

[Interpreted] Good morning, shareholders. Welcome to the 2021 Annual General Meeting of MTR Corporation Limited. I would also like to welcome those watching meeting today online -- through online live webcast. As a number of shareholders who can physically attend our meeting today is limited, the company has especially made available live webcast. However, please note that shareholders watching the live webcast will not be counted towards the quorum and nor be able to [Audio Gap] of the Board committees and certain members of the Executive Director. Others are joining us virtually, as you can see them on the screen now. Before the meeting officially commences, I'd like to draw your attention to a few points. We are limited in numbers here today in order to comply with the government's regulation. We understand that the Annual General Meeting is an important occasion on which shareholders can meet and ask questions of the Board and management. So we have made every effort to accommodate as many of you as the circumstances permit to provide shareholders with an opportunity to ask questions and to vote, while at the same time, being mindful of the need to protect your health and safety [Audio Gap] in light of COVID-19 [Audio Gap] Before coming into the venue, let me remind you of a few other measures. First of all, you are kindly reminded to wear a mask throughout the meeting. In the environmental bag distributed to you earlier, there is an alcohol wet tissue for you to clean the electronic voting headset and simultaneous [Audio Gap]. Please remain in your assigned seat throughout the meeting to ensure social distancing and to enable contact tracing, if required. Please -- or thirdly, as mentioned in the circular of this Annual General Meeting, there will not be distribution of refreshment packs or provision of coffee or tea at the meeting. The amount of money saved by not purchasing refreshment packs will be donated by the company to Gingko House, a nonprofit making organization. In a minute, the Chairman will be delivering his statement in Cantonese and the meeting will also be conducted in Cantonese. There will be simultaneous translation into Putonghua and English throughout the meeting. If a part of the meeting is conducted in English, there will also be simultaneous translation into Cantonese and Putonghua. If you need an interpretation earphone, please collect one from the earphone counter at the entrance of this hall. The company is committed to making available meeting [Audio Gap] Simultaneous sign language interpretation will also be provided at this meeting and will be shown on the screen. As mentioned in the company's letter to shareholders dated April 16, 2021, shareholders are [Audio Gap] As of May 2021. After Chairman has deliver his statement, we will endeavor to answer as many relevant questions as possible at this meeting, which will -- within the allocated time of 15 minutes. Thereafter, voting on the proposed resolutions will take place. For questions which cannot be dealt with today, the company will address them afterwards as appropriate. The facility of the shareholders who cannot come today or watch the live webcast, the meeting will also be video recorded, and the webcast will be [Audio Gap] In case of emergency of fire evacuation, please leave this hall by following the fire evacuation safety instruction [Audio Gap] who are wearing a yellow work pass. After the close of the meeting, please return the electronic voting headset and smart card and the interpretation earphone to the designated place as directed by our help desk. At this time, please turn off your mobile phone or turn them to the silent mode. I now have the pleasure of passing the floor to our Chairman, Dr. Rex Auyeung.

[Interpreted] In behalf of the Board and management, I welcome you all to our 2021 Annual General Meeting, [Audio Gap] attendees of infection, such as continuing to restrict the number of shareholders in attendance [Audio Gap] Shareholders to participate in the corporation's general meetings going forward, a resolution today will be proposed containing certain amendments to the corporation's Articles of Association which will be considered at this meeting. Later at the meeting, a part from briefly reviewing the corporation's financial and business performance over the past year, I will also share with you the corporation's business outlook, our new corporate [Audio Gap] To attend our meeting today. As there is a quorum present, I declare this meeting open. I believe you already have received a notice of this meeting. With your [Audio Gap] I take this opportunity to thank Mr. James Kwan and Mrs. Lucia Li, who will retire from the Board after the [Audio Gap] Board resolutions for the election of 2 new Board members will be proposed today. And now let me share with you the business [Audio Gap] The COVID-19 pandemic presented a number of challenges to the group's businesses. The pandemic and various control and group gathering restriction manages have significantly reduced the Hong Kong train patronage. Our revenue from the station commercial and property rental businesses have also decreased materially due to the grant of rental concessions to those mall and stations tenants, who have suffered from reduced footfall [Audio Gap] Business and investment property revaluation, the net loss attributable to shareholders for the year ended December 31, 2020, was [ HKD 4.8 billion ] [Audio Gap] in 2020 and the challenging economic conditions ahead, the corporation's overall financial position remains sound. Having considered the corporation [Audio Gap] Dividend for the year ended December 31, 2020 of HKD 0.09 per share. I will now like to share with you [Audio Gap] Our first priority. On that basis, we may use some different technologies to further improve operations, safety and efficiency. On the hardware side, we began trials on using the underframe inspection robot since last year. The underframe [Audio Gap] Anomalies in the underframes of our rolling stock. We've also set up an MTR [Audio Gap] Site, the corporation organized various activities to promote safety awareness, such as the [Audio Gap] Safe, reliable and hygienic transport services to our community. We have intensified the cleaning of our trains and railway facilities. As support to passengers and the local businesses in these difficult times, we have introduced a number of [Audio Gap] Measures, including the offering of fairly based commuters, grant [ fresh ] tickets to health care workers and donating tablet devices to underprivileged children who undertake online learning at home. Moreover, we have placed free COVID-19 specimen collection pack vending machines at 20 stations for the convenience of the community. On fare adjustment, in March this year, the corporation announced a reduction in fares under the fare adjustment mechanism, which take effect from the 27th of June this year and around 5% fare rebates starting from April of this year. Developed passengers weathered the challenges on top of the [Audio Gap] to passengers through various fare promotions during 2021 and 2022. [Audio Gap] Strategy, transforming the future. The new corporate strategy is based on 3 core pillars. First, to attain the full potential of our Hong Kong core businesses; second, to maintain a steady growth in the Mainland of China and international businesses; and third, to build growth engines, [ especially ] investing in technologies and [Audio Gap] Technology, organization and processes, people, finance and transformation management. With the new corporate strategy as a road map, we will continue our endeavors to keep cities moving [Audio Gap] To bring a new experience on [Audio Gap] smart mobility to passengers. On transport operations, as a result of the adverse impact from the pandemic, total patronage for our Hong Kong transport operations dropped by 31.5% in [Audio Gap] Difficulties mentioned above, we will continue to deliver industry-leading operational performance. As a result of the dedication of our staff, our professional railway operations and the high performance for the heavy rail train at work both remained at 99.9% world-class level in 2020. Regarding the new signaling system, we decided in September of last year to postpone the commencement of the new signaling system and the gradual introduction of [Audio Gap] New trains on the East Rail Line were commissioned in February this year. In respect of our railway projects, preparation for the [Audio Gap] its construction. Turning to our new railway [Audio Gap] and the Northern Link under the Railway Development Strategy 2014. We also [Audio Gap] the procurement of the [Audio Gap] projects and asset replacement work. [Audio Gap] Topside development may provide in the medium to long term about 20,000 residential units, of which half will [Audio Gap]. We have awarded the tender for the sell side Package 6 property development last month. [Audio Gap] From government, the sell-side [Audio Gap]. Our station commercial businesses -- on station commercial businesses, the total revenue from all Hong Kong station commercial activities was down by [Audio Gap] to the shop tenants, which were affected by the COVID-19 pandemic. Since consumer center [Audio Gap] retail tenants [Audio Gap] and rental revenue in 2021. [Audio Gap] Constantly upgrading our telecom network, represent 1 of the 3 pillars of our new corporate strategy and [Audio Gap] part of Hong Kong. Last year, the corporation attained good results in various new projects. We were awarded the Shenzhen Metro Line 13, a public-private partnership project for investment in [Audio Gap]. We opened the Shenzhen Metro Line for North Extension, the full line of Hangzhou Metro Line 16, and successfully obtained and participated in [Audio Gap] development of the COVID-19 pandemic remains uncertain. We expect the outlook for the global and local economies to remain challenging. [Audio Gap] future in the coming decade. We intend to [Audio Gap]. We believe that these projects will enable us [Audio Gap] opportunities for the [Audio Gap] corporation. [Audio Gap] value for our shareholders and support the interactive development and growth between the corporation and the people [Audio Gap] corporate strategy, transforming the future. The corporation has firmly established clear business, social and environmental goals under a robust ESG framework. [Audio Gap] reducing greenhouse gas emissions. [Audio Gap] business levels while enhancing assurance at the executive and [Audio Gap] assisted by an external consultant whilst kicked off in the [Audio Gap] operation of the MTR Board [Audio Gap] fit for purpose to support us to transit during the pandemic. [Audio Gap] To keep cities moving, allowing cities to advance forward. [Audio Gap] MTR's caring service to the community through measures such as fare rebates for passengers, rental concessions for mall and station tenants, donating surgical masks and the placement of free COVID-19 specimen collection pack venting machines at 20 stations for the convenience of the community. The successful implementation of all these support programs, all this credit to the tireless efforts and dedication -- dedicated framework of our management and our staff. Taking this opportunity, I would like to thank our more than 50,000 MTR staff in Hong Kong, the Mainland and overseas for the dedication and contributions and who have overcome various challenges and continue [Audio Gap] 2020. Once again, my heartfelt thanks to every member of MTR. Finally, I would like to thank each member of the Board [Audio Gap] of the meeting. We will take about 15 minutes to answer some of the questions received from shareholders.

[Interpreted] Chairman, the first question is about the development goal of the corporation.

[Interpreted] Thank you. I'd like to thank the shareholders for raising this question. As I said, just now, the MTR over the last 40 years have achieved very [Audio Gap] and to maintain our competitiveness. The [Audio Gap] and our Mainland and international businesses and development of new technology [Audio Gap] talents and resources to do that. However, it is true that there are many challenges, and we all know that technology is available, which can [Audio Gap] In Hong Kong, we are already [Audio Gap] our population is already aging. In our train stations, we have to have facilities which are elderly-friendly. For example, we have [Audio Gap] so that people can actually travel more conveniently.

[Interpreted] Thank you, Chairman. The next question is about whether or not the MTR has constantly has updated the particulars of the Chairman in a timely manner.

[Interpreted] Perhaps Ms. Gillian Meller can answer that question.

Thank you for the question. We do take our disclosure obligations very seriously. And so in [Audio Gap] dated in November of 2020. Thank you.

Thank you, Chairman, and thank you for the question. [Audio Gap] time to get to the implementation of railways [Audio Gap] with the government. I mean, railway development is complex. These projects involve huge capital investments. And it's not a new detailed design [Audio Gap] actual construction and completion. So we do understand shareholders' concerns, and we will continue to work closely with the government to bring these railway development [Audio Gap].

[Interpreted] Question #4 is about the Siu Ho Wan Depot. The question is, what is the progress of the redevelopment of the Siu Ho Wan Depot. Would the [Audio Gap]

[Interpreted] For this question, I'd like [Audio Gap]

[Interpreted] We have already started the advanced design and planning work. At this stage, we expect it is our target that the Phase 1 of the -- we will call invite tender for Phase 1 of the residential development in 2024, depending on the progress. Regarding car parks, car parks for the tenants of the -- for the patrons of the car of shopping mall and others. So the provision is actually based on the Hong Kong planning standards and guidelines.

[Interpreted] The next question [Audio Gap] property studies, the MTR's sale of the Ocean Pride shopping mall and the acquisition of the Telford Plaza II and PopCorn2.

[Interpreted] David Tang, again, will answer the question.

[Interpreted] Thank you. Regarding the acquisition of Telford Plaza II and PopCorn2, as a railway corporation, I think we all know that we need a stable recurring income in order to maintain our high standard railway [Audio Gap] the financial pressure. So we have to enhance our investment portfolio. And in a timely manner, we will acquire or make investment in prime properties so that in the long term, we'll be able to [Audio Gap] in relation to the maintenance of the external wall at Telford [Audio Gap] Since the meeting today [Audio Gap] for questions related to these specific issues, I will [Audio Gap]

[Interpreted] In 2019, many of the special facilities were vandalized. So how much was the expenditure on the repair on these facilities [Audio Gap]

[Interpreted] been vandalized. I think thanks to the effort of our staff and contractors, most of them have now been repaired. In fact, the [Audio Gap] losses. For example, either through civil proceedings or pursuant to the compensation order passed down by the court. [Audio Gap]

[Interpreted] To maximize shareholders benefit, other than through dividend [Audio Gap].

[Interpreted] For that question, I will invite our CEO, Dr. Jacob Kam to comment. Jacob, please.

[Audio Gap] Moving forward, I believe our shareholders want our cooperation to continue. [Audio Gap] Secondly, to maintain a steady growth in our Mainland of China and international businesses. And thirdly, to develop new growth through new technology. [Audio Gap] communities we serve, creating share values for all stakeholders, including our shareholders. This strategy will help us to pursue [Audio Gap] keep cities moving. Thank you.

Thank you, Dr. Kam. [Audio Gap] And they're concerned about adding of your ticket inspectors, in dealing with [Audio Gap] Managing Director to answer the question.

[Interpreted] Thank you. I'd like to thank the shareholder for the question. In order to [Audio Gap] inspection [Audio Gap] all passengers. The ticket inspection in [indiscernible] station in April this year, we [Audio Gap] responsible for ticket inspection. we have provided them with appropriate [Audio Gap]. In case of unexpected scenarios, they should deal with the situation appropriately. We have exchanges with some support groups and organizations. So that in future, when encountered [Audio Gap] at the same time, we hope our shareholders and the public will understand that our frontline staff, while performing their duties, may encounter [Audio Gap] other passengers with special needs. But anyway, we will continue to be customer-focused. If there is room for improvement, we'll certainly do so.

[Interpreted] We now come to the last 2 questions. [Audio Gap] of the MTR staff and were [Audio Gap]

[Interpreted] Once again, Mr. Adi Lau to answer the question.

[Interpreted] Thank you, Chairman. Once again, I'd like to thank the shareholders for raising this question. The name [Audio Gap]. And so regarding the size of the name card, we have [Audio Gap] sure that the name card [Audio Gap] shares, they're entitled to collect the dividends. If they have already lost their shares, can they recover them? Well, to answer the question about the Chairman, we have already referred this question to the share registar [Audio Gap].

[Interpreted] That was the last [Audio Gap] on each resolution proposed today in order to minimize the time spent on counting the vote. And the results will also be displayed on the screen in this hall. The results of the -- will also be published on the company's website and that of the Hong Kong [Audio Gap].

[Interpreted] Thank you. [Audio Gap] Who is a shareholder or proxy. If not, please raise your hand for assistance. Please ensure [Audio Gap] To reactivate the handset, you can press the track. We will now use a dummy resolution to demonstrate how electronic voting for the poll will work. [Audio Gap] abstain, please do not press any button. In order to -- for your vote to be counted, please press the correct button after I have said, please [Audio Gap] the registration is closed. Once that is clear, the poll on the resolution is closed, you will not be able to change your choice. I now propose the [Audio Gap] to vote yes and press 2 to vote no. But now you have 10 seconds to vote. If you wish to vote, please press the correct button as you wish [Audio Gap] on the screen. [Voting]

[Interpreted] The result of the polls now shown on the screen.

[Interpreted] Thank you, Ms. Lee. All directors of the company recommend shareholders [Audio Gap] of the meeting. We now come to the first resolution to be considered by the meeting, namely the ordinary resolution to receive the audited statement of accounts and the reports of the directors and the auditors of the company for the year ended December 31, 2020. I believe you should have all received a copy of or [Audio Gap] I propose that the audited statement of accounts and the directors of [Audio Gap] Thank you. If there are no [Audio Gap] resolutions. Ladies and gentlemen, I now formally propose ordinary resolution [Audio Gap] shown now on the screen. Please press 1 to vote for and press 2 to vote against. If you wish to abstain from voting please do not press any button. Please vote. You have 10 seconds. [Voting]

[Interpreted] [Audio Gap] Been displayed on the screen. Ladies and gentlemen, as more than 50% of the votes have been cast in favor of resolution 1, I declare resolution 1 carried. [Audio Gap] By the Board of Directors of the resolution in Chinese and English is now shown on the screen. I declare the vote [Audio Gap]. The result of the poll on the [Audio Gap] cast in favor of resolution 2. I declare [Audio Gap] Mr. Benjamin Tang Kwok-bun and [Audio Gap] The ordinary resolution related [Audio Gap] of the company. [Audio Gap] I formally propose the ordinary resolution relating to the reelection of Mr. Benjamin Tang Kwok-bun as a member of the Board of [Audio Gap] The text of the resolution in English and Chinese is now shown on the screen. [Audio Gap] The result of the poll on this resolution is now shown on the screen. Ladies and gentlemen, it's more than [Audio Gap] 3(d). I formally propose the ordinary resolution [Audio Gap] Ladies and gentlemen, as more than 50% of the votes have been cast in favor of resolution 3(d), I declare resolution 3(d) carried. [Audio Gap] biographical details have been included in the company's circular. [Audio Gap] You have 10 seconds. [Voting]

[Interpreted] The result of the poll on this resolution has been displayed on the screen. Ladies and gentlemen, as more than 50% of the votes have been cast [Audio Gap] the election of Mr. Adrian Wong Koon-man as a new member of the Board of the company. Mr. Wong is also with us today. I now invite him to stand up and say hello to [Audio Gap] in the company circular of today's meeting. We shall now conduct the poll on ordinary resolution [Audio Gap] Please vote. You have 10 seconds. [Voting]

[Interpreted] [Audio Gap] Resolution 5 carried. [Audio Gap] I formerly propose [Audio Gap] and authorize the Board to determine their remuneration. [Audio Gap] Ladies and gentlemen, that's more than 50% of the votes have been cast. [Audio Gap] to the Board of Directors to buy back shares in the company in the terms set out in the notice of the meeting. We shall now conduct a poll on ordinary resolution 8. The text of the resolution [Audio Gap] Resolution 8. I declare resolution 8 carried. We now come to the third item of special business of the meeting. I formally propose resolution 9, namely the special resolution to approve the proposed amendments to the Articles of Association. Details of the proposed amendments to the Articles of Association has been set out in the company's circular of today's meeting. We shall now conduct the poll on [Audio Gap] Please vote now. You have 10 seconds. [Voting]

[Interpreted] The result of the poll on this resolution has been displayed on the screen [Audio Gap] All the agenda items I've been dealt with at this meeting. I declare the meeting closed. The results of the polls taken on all the proposed resolutions today will be published on the company's website and that of the Hong Kong stock exchange according to the listing rules. Please return the electronic voting handset, the smart card and the interpretation earphone to the designated place as directed by helpers. Thank you very much for your attendance. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]