ABOUT MTR CORPORATION

ABOUT MTR CORPORATION

WEBSITE MENU ABOUT MTR CORPORATION About this Report MTR Corporation Limited (“the Company”) is a publicly-listed company (SEHK: 0066) headquarter...

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ABOUT MTR CORPORATION

About this Report

MTR Corporation Limited (“the Company”) is a publicly-listed company (SEHK: 0066) headquartered in the Hong Kong Special Administrative Region (“Hong Kong”).

CEO Letter Q&A with the Chairman About MTR Corporation Our Businesses Value Chain, Materiality and Stakeholders Engagement

Safety Financial and Economic Performance Environment Corporate Governance Staff Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business

In June 2000, the Hong Kong Government (“the Government”) sold a portion of its issued share capital to private investors in an Initial Public Offering. The Company’s shares were listed for trading on the Stock Exchange of Hong Kong in October 2000. They are also traded in the United States through an American Depositary Receipt Level 1 Programme. Today, the Hong Kong Government holds a majority (76.5 %) of the shareholding while private investors, including institutional and retail investors, hold the remainder. Our primary business is the construction and operation of mass transit railway systems in Hong Kong, which carried an average of more than 5.5 million passengers every weekday as at the end of 2015. While we are recognised as one of the best passenger railway transport providers in the world, we also engage in the development and sale of residential and commercial properties in partnership with property developers, and operate a property management service. The success of these businesses is based on our unique Rail plus Property model, which has enabled us to be self-sustaining and to keep our fares at affordable levels. Our railway operations in Hong Kong are among the most intensively used in the world, and are well regarded for their safety, efficiency and reliability. In addition to our Hong Kong rail operations, we also have a presence in the Mainland of China, Europe and Australia, where we provide operational and maintenance services directly or through joint ventures. In recent years, we have succeeded in expanding our business to other cities in the Mainland of China, Australia and Europe. In 2015, we carried nearly as many passengers on networks outside of Hong Kong as we did at home. In total, the Company and its subsidiaries and associates employ more than 31,000 people around the world, of which majority are locally-employed staff.

Performance Metrics

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KEY BUSINESS FIGURES FOR 2015

About this Report CEO Letter

Hong Kong Transport Operations

Q&A with the Chairman

Hong Kong Network Expansion Hong Kong Station Commercial Business

About MTR Corporation

Hong Kong Property Business

Our Businesses

Mainland and International Business

Value Chain, Materiality and Stakeholders Engagement

Safety Financial and Economic Performance Environment Corporate Governance Staff Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics List of Awards Please click here for a list of awards received by the Company during 2015.

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KEY BUSINESS FIGURES FOR 2015

About this Report Hong Kong Transport Operations

CEO Letter Q&A with the Chairman

We operate an urban mass transit railway system with 10 heavy rail lines and a Light Rail system. The heavy rail network comprises domestic and cross-boundary services and a dedicated Airport Express link. We also provide intercity services to and from the Mainland of China as well as a small feeder bus service in Hong Kong.

About MTR Corporation Our Businesses

• • • •

Value Chain, Materiality and Stakeholders Engagement

Safety

Total route length of 220.9km 87 stations and 68 Light Rail stops Average of more than 5.5 million passengers per weekday Total patronage of more than 1.9 billion

Hong Kong Network Expansion

Financial and Economic Performance

Hong Kong Station Commercial Business

Environment Corporate Governance

Hong Kong Property Business

Staff

Mainland and International Business

Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics List of Awards Please click here for a list of awards received by the Company during 2015.

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KEY BUSINESS FIGURES FOR 2015

About this Report CEO Letter

Hong Kong Transport Operations

Q&A with the Chairman

Hong Kong Network Expansion We manage the design and construction of new railway extensions along with a multitude of other projects each year to upgrade and improve the operating railway network. The Island Line Extension to Western District project was completed in 2014. Four other projects are still under construction including the South Island Line (East), Shatin to Central Link, Kwun Tong Line Extension and Express Rail Link. Together these five projects will increase the route length of our network in Hong Kong by 25 per cent.

About MTR Corporation Our Businesses Value Chain, Materiality and Stakeholders Engagement

Safety

• 1 rail project completed in 2014 • 4 rail projects under construction • These projects will increase the route length of our network by about 25%

Financial and Economic Performance Environment Corporate Governance

Hong Kong Station Commercial Business

Staff

Hong Kong Property Business

Community

Mainland and International Business

Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics List of Awards Please click here for a list of awards received by the Company during 2015.

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KEY BUSINESS FIGURES FOR 2015

About this Report CEO Letter

Hong Kong Transport Operations

Q&A with the Chairman

Hong Kong Network Expansion Hong Kong Station Commercial Business

About MTR Corporation

To make the most of our railway assets, we operate related businesses such as the leasing of station retail space, advertising in trains and stations, and fixed and mobile telecommunications systems.

Our Businesses Value Chain, Materiality and Stakeholders Engagement

• • • •

Safety Financial and Economic Performance

1,362 station shops for passenger convenience 45,185 advertising units on stations and trains Enhanced mobile service through 4G access at all stations Free Wi-Fi available at all stations

Hong Kong Property Business

Environment

Mainland and International Business

Corporate Governance Staff Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics List of Awards Please click here for a list of awards received by the Company during 2015.

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WEBSITE

MENU

KEY BUSINESS FIGURES FOR 2015

About this Report CEO Letter

Hong Kong Transport Operations

Q&A with the Chairman

Hong Kong Network Expansion Hong Kong Station Commercial Business

About MTR Corporation

Hong Kong Property Business

Our Businesses

We work with leading property developers to build properties above or near our stations. We also manage a portfolio of residential properties, office space and commercial space. Other businesses include rail-related consultancy, the Ngong Ping 360 cable car and associated theme village, and the Octopus card payments system.

Value Chain, Materiality and Stakeholders Engagement

Safety Financial and Economic Performance

• 96,066 managed residential units • 764,018 m 2 of commercial and office space under management • Investment portfolio: - 212,301 m2 of retail properties - 55,288 m2 of lettable office space and other uses

Environment Corporate Governance Staff Community

Mainland and International Business

Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics List of Awards Please click here for a list of awards received by the Company during 2015.

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WEBSITE

MENU

KEY BUSINESS FIGURES FOR 2015

About this Report CEO Letter

Hong Kong Transport Operations

Q&A with the Chairman

Hong Kong Network Expansion Hong Kong Station Commercial Business

About MTR Corporation

Hong Kong Property Business

Our Businesses

Mainland and International Business

Value Chain, Materiality and Stakeholders Engagement

Our subsidiaries and affiliates build, operate and maintain railway systems and provide related services in the Mainland of China, the United Kingdom, Sweden and Australia. In the Mainland of China, we are also involved in leasing retail space, providing estate management services and developing properties.

Safety Financial and Economic Performance Environment Corporate Governance Staff Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics List of Awards Please click here for a list of awards received by the Company during 2015.

7

WEBSITE

MENU About this Report CEO Letter Q&A with the Chairman About MTR Corporation Our Businesses Value Chain, Materiality and Stakeholders Engagement

Vision, Mission and Values Our success of providing passenger rail transport reflects our consistent and conscientious pursuit of our Vision to be a leading multinational company that connects and grows communities with caring service. Our Mission includes four key objectives: to strengthen our Hong Kong corporate citizen reputation, to grow and enhance our Hong Kong core businesses, to accelerate our success in the Mainland and internationally, and to inspire, engage and develop our staff.

Vision

This concise statement of our Vision, Mission and Values (VMV) is integral to our management approach in all areas of our business.

We aim to be a leading multinational company that connects and grows communities with caring service.

Safety Financial and Economic Performance Environment Corporate Governance

Mission

• Strengthen our Hong Kong corporate citizen reputation • Grow and enhance our Hong Kong core businesses • Accelerate our success in the Mainland and internationally • Inspire, engage and develop our staff

Staff Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

We will

Values

Excellent Service

Value Creation

We anticipate, listen and respond to customer needs and provide a safe, effective and caring service.

We create profit and community goodwill through growth, effective execution, continuous improvement and innovation.

Mutual Respect

Enterprising Spirit

We work internally and externally in a collaborative environment based on trust, joint commitment and respect.

We question the status quo, proactively seek improvement and take ownership to overcome obstacles. 8

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MENU About this Report CEO Letter Q&A with the Chairman About MTR Corporation

OUR BUSINESSES Hong Kong Transport Operations and Network Expansion In Hong Kong, we operate an urban mass transit railway system with 10 heavy rail lines and a Light Rail system. The heavy rail network comprises domestic and cross-boundary services and a dedicated Airport Express Line. We also provide intercity services to and from the Mainland of China as well as a small feeder bus service in Hong Kong. The following map provides an overview of these services.

MTR system and properties

Our Businesses Value Chain, Materiality and Stakeholders Engagement

Safety Financial and Economic Performance Environment Corporate Governance Staff Community Customers Supply Chain

Telford Gardens / Telford Plaza I and II World-wide House Admiralty Centre Argyle Centre Luk Yeung Sun Chuen / Luk Yeung Galleria New Kwai Fong Gardens Sun Kwai Hing Gardens Fairmont House Kornhill / Kornhill Gardens Fortress Metro Towers Hongway Garden / Infinitus Plaza Perfect Mount Gardens New Jade Garden Southorn Garden Heng Fa Chuen / Heng Fa Villa / Paradise Mall Park Towers Felicity Garden Tierra Verde / Maritime Square Tung Chung Crescent / Citygate / Novotel Citygate / Seaview Crescent / Coastal Skyline / Caribbean Coast Central Park / Island Harbourview / Park Avenue / Harbour Green / Bank of China Centre / HSBC Centre / Olympian City One / Olympian City Two The Waterfront / Sorrento / The Harbourside / The Arch / Elements / The Cullinan / The Harbourview Place / W Hong Kong / International Commerce Centre / The RitzCarlton, Hong Kong One International Finance Centre / Two International Finance Centre / IFC Mall / Four Seasons Hotel / Four Seasons Place Central Heights / The Grandiose / The Wings / PopCorn 1 / PopCorn 2 / Crowne Plaza, Hong Kong, Kowloon East Holiday Inn Express, Hong Kong, Kowloon East / Vegas Suites Residence Oasis / The Lane No. 8 Clear Water Bay Road / Choi Hung Park & Ride Metro Town Royal Ascot / Plaza Ascot Ocean Walk Sun Tuen Mun Centre / Sun Tuen Mun Shopping Centre Hanford Garden / Hanford Plaza Citylink Plaza MTR Hung Hom Building / Hung Hom Station Carpark Trackside Villas The Capitol / Le Prestige / Le Prime / La Splendeur / Hemera The Palazzo Lake Silver Festival City The Riverpark Century Gateway / Century Gateway II The Austin / Grand Austin City Point

Property Developments under Construction / Planning

2016 and Beyond

LOHAS Park Package 4-10 Tai Wai Station Tin Wing Stop Wong Chuk Hang Station Ho Man Tin Station

Mainland of China and International Business Performance Metrics

Properties Owned / Developed / Managed by the Corporation

West Rail Line Property Development (As Agent for the Relevant Subsidiary of KCRC) Kwun Tong Line Extension

Century Gateway / Century Gateway II Tsuen Wan West Station (TW5) Bayside / Tsuen Wan West Station (TW5) Cityside / Tsuen Wan West Station (TW6) / City Point Nam Cheong Station The Spectra / Long Ping Station (South) Yuen Long Station Kam Sheung Road Station Pat Heung Maintenance Centre

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CEO Letter Q&A with the Chairman About MTR Corporation Our Businesses Value Chain, Materiality and Stakeholders Engagement

Safety Financial and Economic Performance Environment Corporate Governance Staff Community Customers

Domestic Services refer to nine main commuter lines: Kwun Tong, Tsuen Wan, Island, Tung Chung, Tseung Kwan O, East Rail, West Rail, Ma On Shan and Disneyland Resort lines. Cross-boundary Service refers to our service running to/from Hong Kong and Shenzhen via Lo Wu or Lok Ma Chau on the East Rail Line.

Cross-boundary Service

Light Rail and Bus

Domestic Services

Airport Express

Airport Express refers to the direct service linking Hong Kong International Airport and Hong Kong Station in the Central business hub. Light Rail and Bus refers to the Light Rail network in the northwestern New Territories and feeder bus services to/from many MTR stations in the New Territories.

4.3 224.6 14.9 113.0

4.1 226.7 15.7 114.2

1,547.8

1,577.5

Intercity refers to three through train routes to/from cities in the Mainland of China, namely Beijing, Shanghai and Guangdong.

Since 2006, our share of total franchised public transport boardings in Hong Kong has increased year on year and now exceeds 48.5%.

FRANCHISED PUBLIC TRANSPORT BOARDINGS IN HONG KONG (%) MTR

Supply Chain 2016 and Beyond

Intercity

2015

About this Report

TOTAL PATRONAGE FOR HONG KONG TRANSPORT OPERATIONS (MILLIONS)

Hong Kong Rail Network

2014

MENU

Buses

Green minibus

2.6% 13.9%

Performance Metrics

2.5% 48.1%

Mainland of China and International Business

13.9%

2014 35.4%

Trams and ferries

48.5%

2015 35.1%

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MENU About this Report CEO Letter Q&A with the Chairman About MTR Corporation Our Businesses Value Chain, Materiality and Stakeholders Engagement

Safety Financial and Economic Performance Environment Corporate Governance Staff Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

Four new lines are currently under construction which, in addition to the Island Line Extension to Western District that was opened in 2014, will expand the capacity of our rail network in Hong Kong to meet the future transportation needs of the people of Hong Kong. On 29 March 2015, we completed the Island Line Extension to Western District with the opening of Sai Ying Pun Station, the first of five new railway projects. The following map provides an overview of four projects that are still under construction. All together, the new railway projects, including the Island Line Extension to Western District, will expand the route length of our railway network in Hong Kong by about 25%.

Hong Kong Network Expansion Projects (and Completion Status of Rail Projects in 2015) South Island Line (East) — The first metro service to the Southern District, extending from Admiralty to the southern part of Hong Kong Island and serving an estimated 350,000 residential and working population. We are responsible for financing this new line as well as for its design, construction, operation and maintenance. The most recent example of our Rail plus Property model will be in evidence on this line. At year end, completion reached 93%, with opening of the line targeted for the end of 2016. Kwun Tong Line Extension — Extending the existing line to connect Yau Ma Tei with the Whampoa area. At year end, completion had reached 91%, with the opening of the line targeted for the third or fourth quarter of 2016.

Learn More… Learn more about our railway extension projects on the MTR YouTube Channel.

Learn More… Express Rail Link In 30 November 2015, the Company announced that it had reached an agreement called the “XRL Agreement”. The XRL Agreement, which includes a proposal to resolve the additional funding for the Express Rail Link Project, was approved by the HKSAR Legislative Council on 11 March, 2016. On 1 February 2016 the Company’s independent shareholders supported the resolution to approve, confirm and ratify the terms of the XRL Agreement including the conditional Special Dividend (as defined in the XRL Agreement), with 99.83% voting in favour. Refer to this link for more information.

We recognise that in order to continue to connect and grow communities in parts of Hong Kong that are currently underserved by an efficient mass transportation system, we must continue to explore new opportunities to expand our network.

Express Rail Link — A 26km high-speed cross-boundary rail service connecting Hong Kong with Shenzhen, Guangzhou and the highspeed rail network in the Mainland of China. At year end, completion had reached 76%. Shatin to Central Link — The 17-km Shatin to Central Link connects existing railway lines to form an East West Corridor and a North South Corridor. The lines will provide much needed new links across the New Territories, serving an estimated residential and working population of 640,000 in 2021. At year end, completion had reached 48% overall. 11

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Hong Kong Station Commercial Business

About this Report

To make the most of our railway assets, we operate related businesses such as leasing retail space and advertising in trains and stations, and fixed and mobile telecommunications services.

CEO Letter Q&A with the Chairman About MTR Corporation Our Businesses Value Chain, Materiality and Stakeholders Engagement

Safety Financial and Economic Performance Environment Corporate Governance Staff Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

As at 31 December 2015, there were 1,362 shops inside stations covering 56,238 square metres of retail space, an increase of 542 square metres from 2014.

Learn More… More information about MTR Shops and Malls.

For our telecommunications services business, in 2015, we agreed with all mobile network operators to build a new mobile network offering increased data capacity and more 4G services at eight busy stations, for which the tender is in progress.

Hong Kong Property Business In Hong Kong, we work with leading property developers to build properties above or near our stations. We have a portfolio of investment properties comprising 212,301 m2 of shopping malls and 41,006 m2 of office space. The Company also manages a portfolio of residential properties, office space and commercial space. As of the end of 2015, we had 96,066 residential units, including Century Gateway II which opened in October 2014, and 764,018 square metres of commercial and office space under management. We are enhancing the assets of our existing shopping centre portfolio while making significant additions. These projects will add a total of about 120,620 square metres (gross floor area, “GFA”) to the existing retail portfolio, increasing by approximately 40%. A number of new property development projects were initiated in 2014 and 2015 comprising approximately 10,000 residential units to support the community’s housing needs. More details of these projects and expansion of our shopping centre portfolio are available in 2016 and Beyond.

Learn More… More information about MTR Properties is available on our corporate website.

Consulting Services and Other Businesses We offer worldwide consultancy and contracting services on railway planning, design management, system integration and assurance, project management, construction management, railway operations and maintenance, and non-fare revenue business. In recent years our consultancy business has provided services in cities across Asia, Australia and the Middle East.

Did you know? We served as technical consultant to Metro Barra for the Rio Metro Line 4, which is scheduled to open in 2016 as a key infrastructure project for the 2016 Olympic Games in Rio de Janeiro, Brazil. We also previously assisted Metro Rio for Metro Rio Lines 1 and 2. More information about our consulting services can be found on our corporate website.

We are engaged in other businesses in Hong Kong which are outside the scope of this report, including the Ngong Ping 360 cable car service, named as one of the “Ten Amazing Cable Car Rides Around the World” by the UK’s Daily Telegraph newspaper in 2014, and associated theme village, and the Octopus smart card payments system.

Learn more… Please refer to separate websites for more information about Ngong Ping 360.

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Mainland of China and International Business

About this Report

Outside of Hong Kong, we invest selectively in rail-related projects, including property developments, which we believe will generate sustainable returns within clear risk parameters.

CEO Letter Q&A with the Chairman About MTR Corporation Our Businesses Value Chain, Materiality and Stakeholders Engagement

Please refer to Mainland of China and International Business for an introduction to the sustainability approach and performance of the railway operations conducted by our subsidiaries outside of Hong Kong. More information about our future plans outside of Hong Kong is available in 2016 and Beyond.

Currently our subsidiaries and associates are involved in building, operating and maintaining mass transit railway systems and providing related services in the Mainland of China, the United Kingdom, Sweden and Australia. In the Mainland of China, subsidiaries and associates are also involved in the leasing of retail space, providing estate management services and developing properties. The total number of passengers carried by our subsidiaries and associates in six cities outside of Hong Kong reached approximately 1.46 billion in 2015. In 2015 we saw our overseas operations progress well:

Safety Financial and Economic Performance Environment Corporate Governance Staff Community Customers

• Australia: our consortium is implementing the Operations, Trains and Systems Contract for Australia’s largest public transport project, the Sydney Metro North West, our first international Public-PrivatePartnership (“PPP”) project • Beijing: Phase 3 Middle Section of Beijing Metro Line 14 (“BJL14”) was opened in December 2015 and the PPP for Line 14 commenced on 31 December 2015 under a 30-year concession • Hangzhou: took on the operation and maintenance of an extended section of Hangzhou Metro Line 1, which commenced services in November 2015

2016 and Beyond

• Sweden: the new MTR Express (“MTRX”) linking Stockholm with Gothenburg launched its full service in August 2015 (with initial service commencing in March 2015), while MTR Stockholm (“MTRS”) was awarded a six-year extension of its concession for the Stockholm Metro

Mainland of China and International Business

• UK: commenced operations of the Crossrail Train Service in London in May 2015

Performance Metrics

• Shenzhen: successful presales of our first property development in China, Tiara

Supply Chain

13

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UK

SWEDEN

MAINLAND OF CHINA

CEO Letter Q&A with the Chairman

London Crossrail

Stockholm Metro Stockholm Commuter Rail (from December 2016) MTR Tech (renamed from TBT)

About MTR Corporation

Beijing Line 4 Beijing Daxing Line Beijing Line 14 Beijing Line 16

London Overground

Our Businesses

MTR Express

Value Chain, Materiality and Stakeholders Engagement

Safety

Hangzhou Metro Line 1 - Extension

Stockholm London

Financial and Economic Performance

Beijing Hangzhou

Environment

Shenzhen

Corporate Governance

Shenzhen Metro Longhua Line

Staff Community Customers AUSTRALIA

Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

Sydney Metro Northwest

Sydney Melbourne

Weekday average patronge • Mainland of China - 2.44 million# • Europe - 1.79 million • Austraila - 0.80 million #

Metro Trains Melbourne

Patronage number based on "line boarding"

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VALUE CHAIN, MATERIALITY AND STAKEHOLDER ENGAGEMENT

About this Report

We recognise that being a responsible and sustainable business cannot be done in isolation. We look for opportunities to collaborate with stakeholders to scale our positive impact. We are also committed to continually deepening our understanding of our stakeholders’needs through strategic and regular engagement.

CEO Letter Q&A with the Chairman About MTR Corporation Our Businesses Value Chain, Materiality and Stakeholders Engagement

Safety Financial and Economic Performance Environment Corporate Governance

Value chain Our value chain is complex because it encompasses a wide range of activities from planning and construction through to delivery of rail, property, retail and other services.

Working with our value chain Despite, or indeed because of, this complexity our value chain provides many opportunities to broaden, amplify and deepen the Company’s contribution to society. In particular, our suppliers are a crucial component of our value chain, our supply chain section provides more details on our work with them. The table on the next page outlines how we respond to the concerns of our main stakeholders throughout the different phases of our value chain. This is linked and aligned to our materiality matrix, which is addressed in more detail in the relevant sections of this report.

Staff Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

15

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What is a value chain?

About this Report

A value chain is a set of activities performed by an organisation in order to deliver products and services. It is related to the idea of evaluating each organisation as a collection of various inputs, processes and outputs.

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CEO Letter Q&A with the Chairman

+

MTR'S VALUE CHAIN

SHOPPING MALL

Shop 01

About MTR Corporation

Online Shop!

MTR

+

+

+

Shop 02

Shop 01

Our Businesses

Services for

Value Chain, Materiality and Stakeholders Engagement

• Station retailers • Advertisers • Tenants in shopping malls • Other service providers

Safety

Planning

Financial and Economic Performance Corporate Governance Community Customers

Operations

PHASE

MAIN STAKEHOLDERS

TOP MATERIALITY ISSUES OF CONCERN

HOW MTR RESPONDS

PLANNING

• Regulators

• Access to essential services

Customers

• Political Interest

• Community involvement and development (engagement)

2016 and Beyond

Supply Chain

• Environmental Interest

2016 and Beyond

• Investors

Mainland of China and International Business

• Customers (incl. passengers & shoppers) • Tenants in managed properties

• Suppliers of goods & services • Consultancy services • Contractors & developers

Environment Staff

Construction

Services for

Community

• Communities • Staff

Performance Metrics

16

WEBSITE

MENU

What is a value chain?

About this Report

A value chain is a set of activities performed by an organisation in order to deliver products and services. It is related to the idea of evaluating each organisation as a collection of various inputs, processes and outputs.

+

CEO Letter Q&A with the Chairman

+

MTR'S VALUE CHAIN

SHOPPING MALL

Shop 01

About MTR Corporation

Online Shop!

MTR

+

+

+

Shop 02

Shop 01

Our Businesses

Services for

Value Chain, Materiality and Stakeholders Engagement

• Station retailers • Advertisers • Tenants in shopping malls • Other service providers

Safety

Planning

Financial and Economic Performance

• Customers (incl. passengers & shoppers) • Tenants in managed properties

Operations

• Suppliers of goods & services • Consultancy services • Contractors & developers

Environment Corporate Governance Staff

Construction

Services for

PHASE

MAIN STAKEHOLDERS

TOP MATERIALITY ISSUES OF CONCERN

HOW MTR RESPONDS

CONSTRUCTION

• Regulators

• Employee and contractor health & safety

Safety

• Political Interest

• Fair operating practices

Corporate Governance

Supply Chain

• Environmental Interest

• Fair competition

Customers

2016 and Beyond

• Communities

• Prevention of pollution

Environment

• Business Partners

• Sustainable resource use

Community

• Suppliers

• Community involvement and development (engagement)

• Investors

• Payment from government/tax payment

Community Customers

Mainland of China and International Business Performance Metrics

• Staff

16

WEBSITE

MENU

What is a value chain?

About this Report

A value chain is a set of activities performed by an organisation in order to deliver products and services. It is related to the idea of evaluating each organisation as a collection of various inputs, processes and outputs.

+

CEO Letter Q&A with the Chairman

+

MTR'S VALUE CHAIN

SHOPPING MALL

Shop 01

About MTR Corporation

Online Shop!

MTR

+

+

+

Shop 02

Shop 01

Our Businesses

Services for

Value Chain, Materiality and Stakeholders Engagement

• Station retailers • Advertisers • Tenants in shopping malls • Other service providers

Safety

Planning

Financial and Economic Performance

• Customers (incl. passengers & shoppers) • Tenants in managed properties

Operations

• Suppliers of goods & services • Consultancy services • Contractors & developers

Environment Corporate Governance Staff

Construction

Services for

PHASE

MAIN STAKEHOLDERS

TOP MATERIALITY ISSUES OF CONCERN

HOW MTR RESPONDS

OPERATIONS

• Regulators

• Customers’ health & safety

Safety

• Staff

• Employee and contractor health & safety

Supply Chain

Supply Chain

• Suppliers

• Fair operating practices

Financial Performance

2016 and Beyond

• Communities

• Fair competition

Community

• Investors

• Climate Change

Environment

• Political Interest

• Prevention of pollution

Customers

• Environmental Interest

• Sustainable resource use

Mainland of China and International Business

Community Customers

Mainland of China and International Business Performance Metrics

• Community involvement and development (engagement)

16

WEBSITE

MENU

What is a value chain?

About this Report

A value chain is a set of activities performed by an organisation in order to deliver products and services. It is related to the idea of evaluating each organisation as a collection of various inputs, processes and outputs.

+

CEO Letter Q&A with the Chairman

+

MTR'S VALUE CHAIN

SHOPPING MALL

Shop 01

About MTR Corporation

Online Shop!

MTR

+

+

+

Shop 02

Shop 01

Our Businesses

Services for

Value Chain, Materiality and Stakeholders Engagement

• Station retailers • Advertisers • Tenants in shopping malls • Other service providers

Safety

Planning

Financial and Economic Performance Corporate Governance Community Customers Supply Chain 2016 and Beyond

• Customers (incl. passengers & shoppers) • Tenants in managed properties

Operations

• Suppliers of goods & services • Consultancy services • Contractors & developers

Environment Staff

Construction

Services for

PHASE

MAIN STAKEHOLDERS

TOP MATERIALITY ISSUES OF CONCERN

HOW MTR RESPONDS

SERVICE PROVISION

• Customers

• Customers’ health & safety

Safety

• Staff

• Employee and contractor health & safety

Supply Chain

• Fair operating practices

Customers

Station retailers, advertisers, tenants in shopping malls

• Customer education • Customer service, support and complaint handling

Mainland of China and International Business Performance Metrics

16

WEBSITE

MENU

What is a value chain?

About this Report

A value chain is a set of activities performed by an organisation in order to deliver products and services. It is related to the idea of evaluating each organisation as a collection of various inputs, processes and outputs.

+

CEO Letter Q&A with the Chairman

+

MTR'S VALUE CHAIN

SHOPPING MALL

Shop 01

About MTR Corporation

Online Shop!

MTR

+

+

+

Shop 02

Shop 01

Our Businesses

Services for

Value Chain, Materiality and Stakeholders Engagement

• Station retailers • Advertisers • Tenants in shopping malls • Other service providers

Safety

Planning

Financial and Economic Performance Corporate Governance Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business

• Customers (incl. passengers & shoppers) • Tenants in managed properties

Operations

• Suppliers of goods & services • Consultancy services • Contractors & developers

Environment Staff

Construction

Services for

PHASE

MAIN STAKEHOLDERS

TOP MATERIALITY ISSUES OF CONCERN

HOW MTR RESPONDS

SERVICE PROVISION

• Customers

• Customers’ health & safety

Safety

• Staff

• Employee and contractor health & safety

Passengers in transport operations and tenants in managed properties

Customers

• Communities

• Customer education

Community

• Customer service, support and complaint handling

Mainland of China and International Business

• Access to essential services • Community involvement and development (engagement)

Performance Metrics

16

WEBSITE

MENU About this Report CEO Letter Q&A with the Chairman About MTR Corporation

Materiality

Materiality Matrix

Sustainability reporting is one way that we engage with our stakeholders throughout our value chain on an annual basis. The infographic below presents an overview of our approach to stakeholder engagement and risk management and reflects outcomes from our stakeholder engagement process that were relevant to our sustainability reporting in 2015.

SUSTAINABLE COMPETITIVE ADVANTAGE Monitor and Report

Our Businesses

Take Action

Financial and Economic Performance

Risk Management

Corporate Strategy

Stakeholder Engagement

Actions

Close Perception Gaps

Environment Corporate Governance Staff

Alternatively, you can click on the stakeholder headings in the side bar to learn about engagement channels and information resources that are relevant to each category of stakeholder. At the same time, key sustainability reporting issues (utilising the terms under the ISO 26000; refer to Materiality Methodology for more details) of importance to this category of stakeholders will appear in the Materiality Matrix. Our stakeholders include any entity or individual who is significantly affected by our principal activities in Hong Kong and/or whose actions are expected to significantly affect the ability of the Company to achieve its objectives. By this definition, we have millions of stakeholders from all parts of our city, of all ages, all socio-economic groups, and all types of employment

Value Chain, Materiality and Stakeholders Engagement

Safety

In the next two pages, please click on each of the sustainability reporting categories in the leader bar to see the position of relevant sustainability reporting issues in the Materiality Matrix and a description of the issues below.

Identify and Prioritise

Identify and Prioritise

Community Customers

Stakeholder Engagement and Risk Management

Supply Chain

Stakeholder engagement is a dynamic and evolving process that provides essential input into our business. Despite the enormous diversity of views and opinions that are represented, we want all of our stakeholders to feel heard and understood. For the purposes of our materiality assessment, we have created 10 categories of stakeholders. Definitions for each stakeholder group can be found in our interactive Materiality Matrix. Learn more about our Risk Management Approach in our Corporate Governance Section.

2016 and Beyond Mainland of China and International Business Performance Metrics

17

About this Report CEO Letter Q&A with the Chairman

Materiality Outcomes for Stakeholder Groups Investors

Business Partners

Staff

Regulators

Environmental Interests

12 10 11

Customers and Passengers

Communities

Political Interests

Suppliers

About MTR Corporation

8

Media

Description Shareholders, including our majority shareholder, the Hong Kong Government, other providers of capital and financial analysts.

25 9

Financial and Economic Performance Environment

5

23 37

21 16

15

4

7

20 29 27 30

35

LOW

17

26

33

32

13 14 28 18

31 1

34 19

Value Chain, Materiality and Stakeholders Engagement

3

2

6 36

Our Businesses

Safety

24

22 External interests

MENU

HIGH

WEBSITE

Materiality Level

Low

Medium

Engagement channels

High

LOW

Internal assessment on importance to business

Key interests

Materiality level

How MTR responds

HIGH

1

Organisational governance structure and process

High

Corporate Governance - Management Approach

2

Fair operating practices (ethical dealings with other organisations)

High

Fair and Ethical Business

3

Anti-corruption

High

Anti-Corruption and Whistle-Blowing

4

Responsible political involvement

High

Materiality

6

Fair marketing (factual and unbiased information & fair contractual practices)

Medium

Not reported

Customers

7

Customer education

High

Safety Management Approach

Supply Chain

8

Customers' health & safety

High

Customer Safety

10

Customer service, support, and complaint handling

High

Customers - Management Approach

12

Access to essential services (incl avoidance of service disruption)

High

Concessions and Discounts Train Service Performance New Railway Lines

Corporate Governance Staff Community

2016 and Beyond Mainland of China and International Business

• Annual and interim reporting • Annual General Meeting • Special announcements • Investor road shows • MTR Hotline • Socially Responsible Investment Indices

Performance Metrics

18

About this Report CEO Letter Q&A with the Chairman

Materiality Outcomes for Stakeholder Groups Investors

Business Partners

Staff

Regulators

Environmental Interests Communities

About MTR Corporation

12 10 11

Customers and Passengers Political Interests

Suppliers

8

Media

Description All employees of the Company and its subsidiaries.

25 9

Financial and Economic Performance Environment

5

23 37

21 16

15

4

7

20 29 27 30

35

LOW

17

26

33

32

13 14 28 18

31 1

34 19

Value Chain, Materiality and Stakeholders Engagement

3

2

6 36

Our Businesses

Safety

24

22 External interests

MENU

HIGH

WEBSITE

Materiality Level

Low

Medium

Engagement channels

High

LOW

Internal assessment on importance to business

Key interests

Materiality level

How MTR responds

HIGH

8

Customers' health & safety

High

Customer Safety

10

Customer service, support, and complaint handling

High

Customers - Management Approach

12

Access to essential services (incl avoidance of service disruption)

High

Concessions and Discounts Train Service Performance New Railway Lines

18

Protection of civil & political rights of staff

Low

Not reported

19

Employment practices

Medium

Staff - Management Approach

20

Conditions of work & social protection

Medium

Staff - Management Approach Work-life Balance

Supply Chain

21

Staff consultation and engagement (incl freedom of association and collective bargaining)

Medium

Staff - Management Approach Engagement and Recognition

2016 and Beyond

22

Employee and contractor health & safety

High

Staff and Contractor Safety

23

Employee development & training

Medium

Corporate Culture Training Programmes

Corporate Governance Staff Community Customers

Mainland of China and International Business

• Management Communication Meetings • Divisional Communication Meetings • Staff Attitude Survey • Meetings with staff unions • Joint Consultation Committee (JCC) • Staff Consultation Committee (SCC) meetings • Various internal communication channels • "We are MTR" - MTR Retiree Network

Performance Metrics

18

About this Report CEO Letter Q&A with the Chairman

Materiality Outcomes for Stakeholder Groups Investors

Business Partners

Staff

Regulators

Environmental Interests Communities

About MTR Corporation Our Businesses

12 10 11

Customers and Passengers Political Interests

Suppliers

8

Media

Description Combines stakeholders from a variety of backgrounds, including NGOs, academic institutions and industry bodies, who have expressed interest in the environmental impacts of our activities and/or particular environmental issues.

25 9

Financial and Economic Performance Environment Corporate Governance Staff Community Customers

3

2 5

6 36

23 37

21 16

15

4

7

20 29 27 30

35

LOW

17

26

33

32

13 14 28 18

31 1

34 19

Value Chain, Materiality and Stakeholders Engagement

Safety

24

22 External interests

MENU

HIGH

WEBSITE

Materiality Level

Low

Engagement channels

Medium

High

LOW

Key interests

Internal assessment on importance to business

Materiality level

How MTR responds

• Environmental Impact Assessment Consultation • Environmental Impact Assessment Expert Review • Ecologists' advisory services

24

Prevention of pollution (air, water & waste)

High

Environmental Protection

25

Sustainable resource use (resource efficiency & water use)

High

Sustainable Resource Use

26

Climate change

High

Climate Change

27

Biodiversity

Medium

Ecology

• CDP Disclosure

31

Community involvement and development (engagement)

High

Community Engagement

HIGH

• Meetings with green groups • Wetland Special Advisory Committee

Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

18

About this Report CEO Letter Q&A with the Chairman

Materiality Outcomes for Stakeholder Groups Investors

Business Partners

Staff

Regulators

Environmental Interests Communities

About MTR Corporation

Media

Description

Safety

Materiality Level

Environment Corporate Governance Staff Community Customers Supply Chain

25 9

Performance Metrics

3

2 5

6 36

19

23 37

17

26

33

32 21

13 14 28 18

16

31 1

34

15

4

7

20 29 27 30

35

Low

Engagement channels • MTR Facebook • Public announcements, press releases • Contact with the press • Community liaison group meeting • Society Link • Staff volunteering • "art in MTR" • Partnering programmes with NGOs

Medium

High

LOW

Internal assessment on importance to business

Key interests

How MTR responds Corporate Governance - Management Approach Fair and Ethical Business Anti-Corruption and Whistle-Blowing Materiality Not reported Safety Management Approach Customer Safety Environment - Introduction Customers - Management Approach Code of Conduct Concessions and Discounts Train Service Performance New Railway Lines Environmental Protection Sustainable Resource Use Community Engagement Case study: Island Line Extension to Western District Community Programmes Our People Recruitment in Hong Kong Not reported Not reported Staff Volunteering Community Programmes

1

Organisational governance structure and process

High

2

Fair operating practices (ethical dealings with other organisations) Anti-corruption Responsible political involvement Fair marketing (factual and unbiased information & fair contractual practices) Customer education Customers' health & safety Sustainable products & services Customer service, support, and complaint handling Customer data protection & privacy Access to essential services (incl avoidance of service disruption)

High High High Medium High High Low High Medium High

32

Prevention of pollution (air, water & waste) Sustainable resource use (resource efficiency & water use) Community involvement and development (engagement) Education and culture

High High High Low

33

Employment creation and skills development

Medium

34

Technology development and access Community health Community investment (incl staff volunteering)

Low Low Low

3 4 6 7 8 9 10 11 12

24 25 31

36 37

HIGH

Materiality level

2016 and Beyond Mainland of China and International Business

24

22

LOW

Value Chain, Materiality and Stakeholders Engagement

Financial and Economic Performance

11

Customers and Passengers

Our largest stakeholder category in terms of both the number of people and the range of interests represented. It includes members of local communities who are directly impacted by our activities due to their close proximity to our railway operations, property developments or network expansion projects. It also includes community groups representing sections of the wider Hong Kong society, for example youth and the elderly, as well as less advantaged members of our society such as the disabled and those living on low incomes.

Our Businesses

12 10

Political Interests

Suppliers

8

External interests

MENU

HIGH

WEBSITE

18

About this Report CEO Letter Q&A with the Chairman

Materiality Outcomes for Stakeholder Groups Investors

Business Partners

Staff

Regulators

Environmental Interests Communities

About MTR Corporation

12 10 11

Customers and Passengers Political Interests

Suppliers

8

Media

Description All organisations and persons who provide products and services used in our supply chain.

25 9

Financial and Economic Performance Environment Corporate Governance Staff Community

5

23 37

21 16

15

4

7

20 29 27 30

35

LOW

17

26

33

32

13 14 28 18

31 1

34 19

Value Chain, Materiality and Stakeholders Engagement

3

2

6 36

Our Businesses

Safety

24

22 External interests

MENU

HIGH

WEBSITE

Materiality Level

Low

Engagement channels • Supplier survey on Corporate Responsibility • Supplier audit • Industry conferences and road shows • Partnering programmes, site visits and seminars

Medium

High

Key interests 5

Fair competition

LOW

Internal assessment on importance to business

HIGH

Materiality level

How MTR responds

High

Anti-Corruption and Whistle-Blowing

Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

18

About this Report CEO Letter Q&A with the Chairman

Materiality Outcomes for Stakeholder Groups Investors

Business Partners

Staff

Regulators

Environmental Interests Communities

Our Businesses Value Chain, Materiality and Stakeholders Engagement

Safety Financial and Economic Performance Environment Corporate Governance Staff Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

11

Customers and Passengers

Media

Description A sub-set within our supply chain made up of contractors (and employees of our contractors) working on behalf of the Company on network expansion and property development and investment projects. These business partners have been singled out from other suppliers because of their close collaborative relationship with the organisation.

25

24

9

3

2 5

22 6 36

1

34 19

23 37

17

26

33

32 21

13 14 28 18

16

31

15

4

7

20 29 27 30

35

LOW

About MTR Corporation

12 10

Political Interests

Suppliers

8

External interests

MENU

HIGH

WEBSITE

Materiality Level

Low

Medium

Engagement channels • Industry meetings, conferences, job fairs, road shows • Partnering programmes, contract and site meetings, seminars

High

LOW

Internal assessment on importance to business

Key interests

Materiality level

How MTR responds

HIGH

1

Organisational governance structure and process

High

Corporate Governance - Management Approach

2

Fair operating practices (ethical dealings with other organisations)

High

Fair and Ethical Business

3

Anti-corruption

High

Anti-Corruption and Whistle-Blowing

4

Responsible political involvement

High

Materiality

5

Fair competition

High

Anti-Corruption and Whistle-Blowing

6

Fair marketing (factual and unbiased information & fair contractual practices)

Medium

Not reported

8

Customers' health & safety

High

Customer Safety

9

Sustainable products & services

Low

Environment - Introduction

10

Customer service, support, and complaint handling

High

Customers - Management Approach

11

Customer data protection & privacy

Medium

Code of Conduct

12

Access to essential services (incl avoidance of service disruption)

High

Concessions and Discounts Train Service Performance New Railway Lines

13

Human rights risks assessment

Low

Not reported

14

Human rights risk issues

Low

Not reported

15

Human rights grievances mechanism

Medium

Anti-Corruption and Whistle-Blowing

22

Employee and contractor health & safety

High

Staff and Contractor Safety

24

Prevention of pollution (air, water & waste)

High

Environmental Protection

25

Sustainable resource use (resource efficiency & water use)

High

Sustainable Resource Use

18

About this Report CEO Letter Q&A with the Chairman

Materiality Outcomes for Stakeholder Groups Investors

Business Partners

Staff

Regulators

Environmental Interests Communities

About MTR Corporation Our Businesses

12 10 11

Customers and Passengers Political Interests

Suppliers

8

Media

Description Bodies concerned with enforcement of laws, regulations and other standards that affect our day-to-day operations and business development, including Government departments and the Hong Kong Stock Exchange.

25 9

Financial and Economic Performance Environment

3

2 5

6 36

23 37

21 16

15

4

7

20 29 27 30

35

LOW

17

26

33

32

13 14 28 18

Materiality Level

Low

Engagement channels

Medium

High

LOW

Internal assessment on importance to business

Key interests

Materiality level

How MTR responds

8

Customers' health & safety

High

Customer Safety

12

Access to essential services (incl avoidance of service disruption)

High

Concessions and Discounts Train Service Performance New Railway Lines

22

Employee and contractor health & safety

High

Staff and Contractor Safety

23

Employee development & training

Medium

Corporate Culture Training Programmes

Customers

24

Prevention of pollution (air, water & waste)

High

Environmental Protection

25

Sustainable resource use (resource efficiency & water use)

High

Sustainable Resource Use

Supply Chain

26

Climate change

High

Climate Change

33

Employment creation and skills development

Medium

Our People Recruitment in Hong Kong Youth Connect

34

Technology development and access

Low

Not reported

36

Community health

Low

Not reported

Corporate Governance Staff Community

2016 and Beyond Mainland of China and International Business

31 1

34 19

Value Chain, Materiality and Stakeholders Engagement

Safety

24

22 External interests

MENU

HIGH

WEBSITE

• Regulatory compliance reports • Legislative Council meetings • Advisory panels on transport and urban planning • Meetings with District Councillors • Meetings with Legislative Councillors

HIGH

Performance Metrics

18

About this Report CEO Letter Q&A with the Chairman

Materiality Outcomes for Stakeholder Groups Investors

Business Partners

Staff

Regulators

Environmental Interests Communities

About MTR Corporation Our Businesses

12 10 11

Customers and Passengers Political Interests

Suppliers

8

Media

Description In the context of our rail business, “customers” and “passengers” refer to persons travelling on types of services provided by our Hong Kong transport operations. In the context of our Property business, this category also refers to residential and commercial tenants of our managed properties, and patrons of all MTR Malls.

25 9

Financial and Economic Performance Environment Corporate Governance Staff Community Customers Supply Chain

3

2 5

6 36

23 37

21 16

15

4

7

20 29 27 30

35

LOW

17

26

33

32

13 14 28 18

31 1

34 19

Value Chain, Materiality and Stakeholders Engagement

Safety

24

22 External interests

MENU

HIGH

WEBSITE

Materiality Level

Low

Engagement channels • Customer satisfaction surveys • MTR Mobile app • MTR Club • MTR website and Facebook page • MTR Hotline

Medium

High

LOW

Internal assessment on importance to business

Key interests

Materiality level

How MTR responds

HIGH

6

Fair marketing (factual and unbiased information & fair contractual practices)

Medium

Not reported

8

Customers' health & safety

High

Customer Safety

9

Sustainable products & services

Low

Environment - Introduction

10

Customer service, support, and complaint handling

High

Customers - Management Approach

11

Customer data protection & privacy

Medium

Code of Conduct

12

Access to essential services (incl avoidance of service disruption)

High

Concessions and Discounts Train Service Performance New Railway Lines

31

Community involvement and development (engagement)

High

Community Engagement

2016 and Beyond Mainland of China and International Business Performance Metrics

18

About this Report CEO Letter Q&A with the Chairman

Materiality Outcomes for Stakeholder Groups Investors

Business Partners

Staff

Regulators

Environmental Interests Communities

About MTR Corporation Our Businesses

12 10 11

Customers and Passengers Political Interests

Suppliers

8

Media

Description Representatives of Hong Kong’s political institutions, including District Councillors and members of the Legislative Council whom we need to update and report to on a regular basis on matters related to our operating agreement or the construction of our new railway lines.

25 9

Financial and Economic Performance Environment Corporate Governance Staff Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

3

2 5

6 36

23 37

21 16

15

4

7

20 29 27 30

35

LOW

17

26

33

32

13 14 28 18

31 1

34 19

Value Chain, Materiality and Stakeholders Engagement

Safety

24

22 External interests

MENU

HIGH

WEBSITE

Materiality Level

Low

Engagement channels • Legislative Council meetings • Meetings with District Councillors • Meetings with Legislative Councillors • Other meetings

Medium

High

LOW

Internal assessment on importance to business

Key interests

Materiality level

How MTR responds

HIGH

2

Fair operating practices (ethical dealings with other organisations)

High

Fair and Ethical Business

3

Anti-corruption

High

Anti-Corruption and Whistle-Blowing

4

Responsible political involvement

High

Materiality

6

Fair marketing (factual and unbiased information & fair contractual practices)

Medium

Not reported

7

Customer education

High

Safety Management Approach

10

Customer service, support, and complaint handling

High

Customers - Management Approach

11

Customer data protection & privacy

Medium

Code of Conduct

12

Access to essential services (incl avoidance of service disruption)

High

Concessions and Discounts Train Service Performance New Railway Lines

19

Employment practices

Medium

Staff - Management Approach

21

Staff consultation and engagement (incl freedom of association and collective bargaining)

Medium

Staff - Management Approach Engagement and Recognition

30

Payment from government / tax payment

High

Rail plus Property Model

31

Community involvement and development (engagement)

High

Community Engagement

37

Community investment (incl staff volunteering)

Low

Community Programme

18

About this Report CEO Letter Q&A with the Chairman

Materiality Outcomes for Stakeholder Groups Investors

Business Partners

Staff

Regulators

Environmental Interests Communities

About MTR Corporation Our Businesses

12 10 11

Customers and Passengers Political Interests

Suppliers

8

Media

Description Comprised of both traditional and online media outlets that deliver information such as news, commentary and other stories to the public. Because media reflects topics that our stakeholders have already raised with us separately, we do not have a separate tab. We engage with them on a regular basis through different channels.

25 9

3

2 5

6 36

37

33

21 16

15

4

7

20 29 27

35

30

LOW

17

26 23

32

13 14 28 18

31 1

34 19

Value Chain, Materiality and Stakeholders Engagement

Safety

24

22 External interests

MENU

HIGH

WEBSITE

Materiality Level

Low

Medium

High

LOW

Internal assessment on importance to business

HIGH

Financial and Economic Performance Environment Corporate Governance Staff Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

18

WEBSITE

Materiality Outcomes Arranged by Topic

HIGH

MENU

I. Fair Operating Practices

12

About this Report

II. Consumer Issues

CEO Letter

III. Human Rights Labour Practices

Q&A with the Chairman

IV. The Environment

10 11 25 External interests

9

VI. Community Involvement and Development

Community

21 16

31

15

4

7

20 29 27 30

35

LOW

Materiality Level

Low

Medium

High

Environment Staff

23

13 14 28 18 17

26

33

32 37

Safety

Corporate Governance

5 1

34 19

Value Chain, Materiality and Stakeholders Engagement

3

2

6 36

Our Businesses

Financial and Economic Performance

24

22

V. Supply Chain

About MTR Corporation

8

LOW

Internal assessment on importance to business

Materiality level

How MTR responds

1

Organisational Governance structure and process

High

Corporate Governance - Management Approach

2

Fair operating practices (including ethical dealings with other organisations)

High

Fair and Ethical Business

3

Anti-corruption

High

Anti-Corruption and Whistle-Blowing

4

Responsible political involvement

High

Materiality

5

Fair competition

High

Anti-Corruption and Whistle-Blowing

HIGH

Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

19

WEBSITE

Materiality Outcomes Arranged by Topic

HIGH

MENU

I. Fair Operating Practices

12

About this Report

II. Consumer Issues

CEO Letter

III. Human Rights Labour Practices

Q&A with the Chairman

IV. The Environment

10 11 25 External interests

9

VI. Community Involvement and Development

5

23 37

17

16

Materiality Level

Low

Medium

High

Environment

29 27 30

35

LOW

Internal assessment on importance to business

Materiality level

How MTR responds

Corporate Governance

6

Fair marketing (including factual and unbiased information & fair contractual practices)

Medium

Not reported

Staff

7

Customer education

High

Safety Management Approach

8

Customers' health & safety

High

Customer Safety

9

Sustainable products & services

Low

Environment - Introduction

10

Customer service, support, and complaint handling

High

Customers - Management Approach

11

Customer data protection & privacy

Medium

Code of Conduct Concessions and Discounts

12

Access to essential services (including avoidance of service disruption)

High

Train Service Performance New Railway Lines

Community Customers Supply Chain 2016 and Beyond

7

20

21 15

4

LOW

Safety

26

33

32

13 14 28 18

31 1

34 19

Value Chain, Materiality and Stakeholders Engagement

3

2

6 36

Our Businesses

Financial and Economic Performance

24

22

V. Supply Chain

About MTR Corporation

8

HIGH

Mainland of China and International Business Performance Metrics

19

WEBSITE

Materiality Outcomes Arranged by Topic

HIGH

MENU

I. Fair Operating Practices

12

About this Report

II. Consumer Issues

CEO Letter

III. Human Rights Labour Practices

Q&A with the Chairman

IV. The Environment

10 11 25 External interests

9

VI. Community Involvement and Development

23

16

31

15

4

7

20

21

13 14 28 18 17

26

33

32 37

29 27 30

35

LOW

Safety Materiality Level

Low

Medium

High

LOW

Environment Corporate Governance

5 1

34 19

Value Chain, Materiality and Stakeholders Engagement

3

2

6 36

Our Businesses

Financial and Economic Performance

24

22

V. Supply Chain

About MTR Corporation

8

Internal assessment on importance to business

Materiality level

How MTR responds

13

Human rights risks assessment

Low

Not reported

14

Human rights risk issues

Low

Not reported

15

Human rights grievances mechanism

Medium

Anti-Corruption and Whistle-Blowing Corporate Governance - Management Approach

16

Diversity and equal opportunity

Low

Staff Introduction

Customers

17

Fundamental principles & rights at work (based on Internal Labour Organisation standards)

Low

Not reported

Supply Chain

18

Protection of civil & political rights of staff

Low

Not reported

19

Employment practices

Medium

Staff - Management Approach

2016 and Beyond

20

Conditions of work & social protection

Medium

Staff - Management Approach Work-life Balance

21

Staff consultation and engagement (including freedom of association and collective bargaining)

Medium

Staff - Management Approach Engagement and Recognition

22

Employee and contractor health & safety

High

Staff and Contractor Safety

23

Employee development & training

Medium

Corporate Culture

Staff Community

Mainland of China and International Business Performance Metrics

HIGH

Training Programmes

19

WEBSITE

Materiality Outcomes Arranged by Topic

HIGH

MENU

I. Fair Operating Practices

12

About this Report

II. Consumer Issues

CEO Letter

III. Human Rights Labour Practices

Q&A with the Chairman

IV. The Environment

10 11 25 External interests

9

VI. Community Involvement and Development

Community

21 16

31

15

4

7

20 29 27 30

35

LOW

Materiality Level

Low

Medium

High

Environment Staff

23

13 14 28 18 17

26

33

32 37

Safety

Corporate Governance

5 1

34 19

Value Chain, Materiality and Stakeholders Engagement

3

2

6 36

Our Businesses

Financial and Economic Performance

24

22

V. Supply Chain

About MTR Corporation

8

LOW

Internal assessment on importance to business

Materiality level

How MTR responds

24

Prevention of pollution (including air, water & waste)

High

Environmental Protection

25

Sustainable resource use (including resource efficiency & water use)

High

Sustainable Resource Use

26

Climate change

High

Climate Change

27

Biodiversity

Medium

Ecology

HIGH

Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

19

WEBSITE

Materiality Outcomes Arranged by Topic

HIGH

MENU

I. Fair Operating Practices

12

About this Report

II. Consumer Issues

CEO Letter

III. Human Rights Labour Practices

Q&A with the Chairman

IV. The Environment

10 11 25 External interests

9

VI. Community Involvement and Development

16

31

33

15

4

7

20 29 27 30

35

LOW

Materiality Level

Low

Medium

High

Environment Staff

21

13 14 28 18 17

26 23

32 37

Safety

Corporate Governance

5 1

34 19

Value Chain, Materiality and Stakeholders Engagement

3

2

6 36

Our Businesses

Financial and Economic Performance

24

22

V. Supply Chain

About MTR Corporation

8

LOW

Internal assessment on importance to business

Materiality level

How MTR responds

28

Supply chain human rights risk

Low

Supply Chain Management

29

Promoting social responsibility in the value chain

Medium

Supply Chain - Introduction Collaboration with Contractors

HIGH

Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

19

WEBSITE

Materiality Outcomes Arranged by Topic

HIGH

MENU

I. Fair Operating Practices

12

About this Report

II. Consumer Issues

CEO Letter

III. Human Rights Labour Practices

Q&A with the Chairman

IV. The Environment

10 11 25 External interests

9

VI. Community Involvement and Development

33

21

13 14 28 18 17

26 23

32 37 16

31

15

4

7

20 29 27 30

35

LOW

Safety Materiality Level

Low

Medium

High

Environment Corporate Governance

5 1

34 19

Value Chain, Materiality and Stakeholders Engagement

3

2

6 36

Our Businesses

Financial and Economic Performance

24

22

V. Supply Chain

About MTR Corporation

8

LOW

Internal assessment on importance to business

Materiality level

How MTR responds

30

Payment from government / tax payment

High

Rail plus Property Model

31

Community involvement and development (engagement)

High

Community Engagement

32

Education and culture

Low

Community

Case study: Island Line Extension to Western District Community Investment

33

Employment creation and skills development

Medium

Customers

Our People Recruitment in Hong Kong

34

Technology development and access

Low

Not reported

Supply Chain

35

Wealth and income creation

Low

Not reported

36

Community health

Low

Not reported

2016 and Beyond

37

Community investment (including staff volunteering)

Low

Staff Volunteering Community Programmes

Staff

HIGH

Mainland of China and International Business Performance Metrics

19

WEBSITE

About this Report CEO Letter Q&A with the Chairman About MTR Corporation

Materiality Methodology The principle of materiality states that our sustainability report should address topics that reflect the Company’s significant economic, environmental and social impacts, and/or that substantively influence the assessments and decisions of our stakeholders. Our materiality assessment methodology involves four basic steps as summarised in the following graphic.

1

Level of Interest Breadth

Value Chain, Materiality and Stakeholders Engagement

Identification of Sustainability Reporting Issues 4

We refer to the ISO 26000 Guidance on Social Responsibility to identify the set of all possible issues that are relevant to sustainability reporting for our organisation. For the sake of convenience, we organise the issues into six categories: i. Fair Operating Practices ii. Consumer Issues iii. Human Rights and Labour Practices iv. The Environment v. Supply Chain vi. Community Involvement and Development

Endorsement by the Corporate Responsibility Steering Committee (CoRSC)

External interests

Financial and Economic Performance Environment Corporate Governance Staff

LOW

Community Customers

STEP 2 LOW

HIGH Internal assessment on importance to business

Supply Chain

Performance Metrics

Identification of Sustainability Reporting Issues

STEP 1

Safety

Mainland of China and International Business

In financial reporting, materiality is commonly thought of as a threshold for influencing the economic decisions of investors. The concept of a threshold is also applicable to sustainability reporting but materiality in this context refers to the shared concerns of the Company and all stakeholders, not just investors.

STEPS TO DETERMINE MATERIALITY

Our Businesses

2016 and Beyond

Did you know?

HIGH

MENU

3

Importance to our stakeholders based on stakeholder engagement

2

Importance to the Company based on Enterprise Risk Management

STEP 3 STEP 4

Learn more… ISO 26000 is an internationally recognised standard for clarifying what corporate responsibility is and translating its principles into best practices.

20

WEBSITE

About this Report CEO Letter Q&A with the Chairman About MTR Corporation

Materiality Methodology The principle of materiality states that our sustainability report should address topics that reflect the Company’s significant economic, environmental and social impacts, and/or that substantively influence the assessments and decisions of our stakeholders. Our materiality assessment methodology involves four basic steps as summarised in the following graphic.

1

Level of Interest Breadth

Value Chain, Materiality and Stakeholders Engagement

STEP 2

4

Importance to the Company based on Enterprise Risk Management

Endorsement by the Corporate Responsibility Steering Committee (CoRSC)

The issues are positioned along the horizontal axis from left to right in order of increasing risk.

External interests

Financial and Economic Performance Environment Corporate Governance Staff

Our sustainability team assessed the relationship among all of the 37 issues that were identified in the ISO 26000 standard and the top 37 enterprise risks from our enterprise risk register in order to evaluate the relative importance of each of the issues to the Company. The outcome of this assessment, is reflected in the position of each of the 37 issues along the horizontal axis of the Materiality Matrix.

LOW

Community Customers

LOW

HIGH Internal assessment on importance to business

Supply Chain

Performance Metrics

Identification of Sustainability Reporting Issues

STEP 1

Safety

Mainland of China and International Business

In financial reporting, materiality is commonly thought of as a threshold for influencing the economic decisions of investors. The concept of a threshold is also applicable to sustainability reporting but materiality in this context refers to the shared concerns of the Company and all stakeholders, not just investors.

STEPS TO DETERMINE MATERIALITY

Our Businesses

2016 and Beyond

Did you know?

HIGH

MENU

STEP 3 STEP 4

3

Importance to our stakeholders based on stakeholder engagement

2

Importance to the Company based on Enterprise Risk Management

Learn more… ISO 26000 is an internationally recognised standard for clarifying what corporate responsibility is and translating its principles into best practices.

20

WEBSITE

About this Report CEO Letter Q&A with the Chairman About MTR Corporation

Materiality Methodology

Did you know?

The principle of materiality states that our sustainability report should address topics that reflect the Company’s significant economic, environmental and social impacts, and/or that substantively influence the assessments and decisions of our stakeholders. Our materiality assessment methodology involves four basic steps as summarised in the following graphic.

In financial reporting, materiality is commonly thought of as a threshold for influencing the economic decisions of investors. The concept of a threshold is also applicable to sustainability reporting but materiality in this context refers to the shared concerns of the Company and all stakeholders, not just investors.

STEPS TO DETERMINE MATERIALITY 1

Our Businesses

Level of Interest Breadth

Value Chain, Materiality and Stakeholders Engagement

Identification of Sustainability Reporting Issues

HIGH

MENU

STEP 1 STEP 2 STEP 3

Safety

4

Environment Corporate Governance Staff

The issues are positioned along the vertical axis from bottom to top in order of increasing stakeholder interest.

LOW

Community Customers

LOW

HIGH Internal assessment on importance to business

Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

Importance to stakeholders based on stakeholder engagement

External interests

Financial and Economic Performance

Endorsement by the Corporate Responsibility Steering Committee (CoRSC)

3

Importance to our stakeholders based on stakeholder engagement

2

Importance to the Company based on Enterprise Risk Management

Our sustainability team synthesised the outcomes of engagement with all categories of stakeholders during the year in order to determine the relative importance of each of the 37 issues for them. Please note that the position of each issue moving towards the top of the horizontal axis reflects the level of interest (for example, intense interest expressed by some stakeholders) and/or breadth of interest (for example, large number of stakeholders expressing some interest). STEP 4

Learn more… ISO 26000 is an internationally recognised standard for clarifying what corporate responsibility is and translating its principles into best practices.

20

WEBSITE

About this Report CEO Letter Q&A with the Chairman About MTR Corporation

Materiality Methodology

Did you know?

The principle of materiality states that our sustainability report should address topics that reflect the Company’s significant economic, environmental and social impacts, and/or that substantively influence the assessments and decisions of our stakeholders. Our materiality assessment methodology involves four basic steps as summarised in the following graphic.

In financial reporting, materiality is commonly thought of as a threshold for influencing the economic decisions of investors. The concept of a threshold is also applicable to sustainability reporting but materiality in this context refers to the shared concerns of the Company and all stakeholders, not just investors.

STEPS TO DETERMINE MATERIALITY 1

Our Businesses

Level of Interest Breadth

Value Chain, Materiality and Stakeholders Engagement

Identification of Sustainability Reporting Issues

HIGH

MENU

STEP 1 STEP 2 STEP 3

Safety

4

Environment Corporate Governance Staff Customers

The overall position of each issue moving from the bottom left to the top right of the matrix determines its level of materiality. We have assigned low, medium and high materiality to each issue depending on its position in the matrix. The materiality assessment of all 37 issues was reviewed and approved by the Corporate Responsibility Steering Committee during 2015. LOW

HIGH Internal assessment on importance to business

Supply Chain Mainland of China and International Business Performance Metrics

Endorsement by the Corporate Responsibility Steering Committee

LOW

Community

2016 and Beyond

STEP 4

External interests

Financial and Economic Performance

Endorsement by the Corporate Responsibility Steering Committee (CoRSC)

3

Importance to our stakeholders based on stakeholder engagement

2

Importance to the Company based on Enterprise Risk Management

Learn more… ISO 26000 is an internationally recognised standard for clarifying what corporate responsibility is and translating its principles into best practices.

20

WEBSITE

CEO Letter Q&A with the Chairman About MTR Corporation Our Businesses Value Chain, Materiality and Stakeholders Engagement

Safety Financial and Economic Performance Environment Corporate Governance Staff Community Customers Supply Chain 2016 and Beyond Mainland of China and International Business Performance Metrics

HIGH

8

Since it is not feasible for us to report extensively on every issue, we have applied the principle of materiality to help us determine what information to disclose in this report. If you would like to provide feedback on the outcome of our materiality assessment, we welcome your views. As a result of our assessment in 2015, the following topics have been identified as outliers. This means that one party, either the Company or the collective assessment of our stakeholder groups, showed high interest in the topic but the other party considered it to be of relatively low importance. We also include topics where we believe there is an opportunity for us to work on, but are considered of relatively low materiality by both parties. • Sustainable products and services (issue #9) relates to reducing unsustainable patterns of production and consumption. Since our core business does not give rise to any physical products, we do not consider this to be an important topic for the Company. However, we recognise that there are indirect impacts on our business of importance for some stakeholders, so we are working to promote sustainable patterns of production and consumption in our Value Chain.

12 10 11 25

24

9

3

2 5

22

External interests

About this Report

Evaluation of Results

6 36

1

34 19

23 37

17

26

33

32

13 14 28 18

21 16

31

15

4

7

20 29 27 30

35

LOW

MENU

LOW

HIGH

Internal assessment on importance to business

Materiality Level Low

Medium

High

• Payment from government/tax payment (issue #30) relates to payment from government in the form of subsidies or other contractual agreement as well as payment of taxes from the Company. Although our stakeholders did not appear to place high importance on this topic, it is important to us since we have entrustment agreements with Government on the Express Rail Link and the Shatin to Central Link, both of which are funded by the Government. While we do receive payments from Government, it should be noted, that for the significant majority of our businesses, such as for our rail operations, it is crucial that we have a sustainable financial model to ensure that we can deliver world-class services to our customers for now and in the long term. • Education and culture (#32) and Community investment (incl staff volunteering) (#37) while considered low materiality by stakeholders, we believe that there is an opportunity for us to leverage our skills, resources, and networks to contribute to community development, including our focus on youth, art, green and healthy living and safety. As such, we report on our related activities and programmes in our Community Initiatives section and Staff section on staff volunteering.

21