26 April 2006
KCRC announces 2005 annual results
The Kowloon-Canton Railway Corporation (KCRC) today announced its annual results of 2005. Both its total patronage and total revenue achieved satisfactory results, with growth rates of 12.3% and 8.2% respectively.
Total patronage increased from 1,354,800 daily passenger trips in 2004 to 1,527,000 trips a day on average for the whole year mainly due to the increase in patronage of West Rail and the first full year service of the Tsim Sha Tsui Extension and Ma On Shan Rail in 2005.
The Corporation's main focus last year was on building patronage numbers. As a result of vigorous improvements in connectivity and accessibility, the launch of various concession schemes and promotional events throughout the year, West Rail's daily patronage on weekdays and Saturdays has exceeded 200,000 in December 2005, an increase of 14.3% from December 2004.
The introduction of East Rail One-Month Pass since April 2005 has also helped boost East Rail's domestic patronage. East Rail's domestic patronage increased by 15.9% to an average of 656,200 passenger trips a day. Its share of the domestic market for the North East New Territories to urban journeys grew from about 40% in 2004 to 46.6% in 2005.
In the cross-boundary market, the Corporation continued to suffer from competition from road-based modes of transport which benefited from the completion of major improvement works at the Lok Ma Chau and Sha Tau Kok road crossing points in early 2005. Despite the added convenience offered by Shenzhen Metro, the opening of Disneyland last year and the major station improvements at Lo Wu, our market share fell from 61% in 2004 to 59% last year with an average of 235,500 passengers a day, up 1.3% from 2004.
With respect to Intercity Passenger Services, the added convenience brought about by the launch of the Corporation's Intercity Through Train e-Ticketing System and the through train passengers special packages offered jointly with travel agencies, hotels, entertainment and retail outlets and tourist destinations have led to higher patronage. The average daily passengers increased by 5.6% to 8,500. The Guangzhou-Kowloon Through Train market share declined slightly from 25% in 2004 to 24% in 2005 due to keen competition in the price sensitive leisure travel market.
The Light Rail patronage continued to grow in 2005 as a result of the patronage growth of West Rail in the year. Since the opening of West Rail, Light Rail service has been rationalised to provide efficient feeder services for West Rail to better meet the transport needs of the local residents. There were an average of 373,000 passenger trips on Light Rail in 2005, compared to 359,800 in the previous year, an increase of 3.7%.
Transport revenue increased by 7.7% to HK$4,612 million, as compared with HK$4,281 million in 2004 mainly because of the continued recovery of the local economy, the build up of patronage for West Rail and the full year operation of the Tsim Sha Tsui Extension and Ma On Shan Rail. Non-transport recurrent revenue, derived mainly from property rents, increased by 10.9% to HK$771 million from HK$695 million in 2004.
Net profit after tax was HK$317 million, a decrease of 38.2% compared with the net profit of HK$513 million in 2004. The reason for the decrease was mainly due to the increased full-year operating costs of the Tsim Sha Tsui Extension and Ma On Shan Rail and the depreciation charges due to the adoption of new Hong Kong accounting standards, partly offset by the unrealised accounting profits resulting from the change in fair value of investment properties and financial instruments. The operating costs before depreciation increased by 7.9% to HK$3,145 million from HK$2,916 million in 2004 while depreciation rose by 36.4% to HK$2,140 million from HK$1,569 million in 2004.
In 2005 the Government as the sole shareholder of KCRC received a dividend of HK$172 million for the year 2004. There will be no dividend for the year 2005 since a loss was incurred after excluding the unrealised accounting profits.
As regards future new rail projects, the construction of the Lok Ma Chau Spur Line is well on target for completion in early 2007 while the construction of the Kowloon Southern Link is underway and targeted for commissioning in 2009. The Government has invited the Corporation to proceed with further planning of the Northern Link and the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link as a combined project.
As for the possible rail merger of the MTR and KCR systems, the Government made an announcement on 11 April 2006. The Government has signed a non-binding Memorandum of Understanding with MTRCL on the basis of the structure and the terms for the merger. Under the merger proposal, MTRCL would be granted a Service Concession for an initial period of 50 years to use its assets to operate the KCR system. In return, the Corporation will receive from MTRCL an upfront payment of HK$4.25 billion and an annual fixed payment of HK$750 million, plus an annual variable payment based on revenues generated from KCR rail and rail-related operations. MTRCL will also pay HK$7.79 billion for the acquisition of property packages along the KCR lines.
After the Government's announcement of the rail merger, the Corporation will work closely with the MTRC and the Government on the development of a detailed implementation plan that will ensure a smooth integration of the two railway systems. The whole process will take a year or more.