Ms. Choy, please.
Greetings, members of the press. I am Linda Choy, Corporate Affairs and Branding Director. Welcome to MTR 2025 Interim Results Press Conference. Let me first introduce to you the MTR management on stage here. Seated in the middle is our CEO, Dr. Jacob Kam. On his right are Managing Director, Hong Kong Transport Services, Ms. Jenny Yeung; Capital Works Director, Mr. Carl Devlin; and on the CEO's left is Mr. Michael Fitzgerald, Finance Director; Property and International Business Director, Mr. David Tang; and Mainland China Business Director, Mr. Sammy Wong. We will be using mainly Chinese for this media briefing. First of all, Dr. Kam will first briefly go through the interim results for 2025. After that, Michael will give us a briefing on the finance.
After that, Dr. Kam will come back to share with us the future outlook. Lastly, we'll be answering some questions.
First of all, Dr. Kam, please.
Thank you, Linda. Good afternoon, members of the press. Welcome to this meeting despite the rain and the winds to attend our MTR Corporation's Interim Results 2025 Press Conference. This is the last time for me to host the MTR results announcements as CEO of the corporation. Over the past six years, we have overcome challenges of the pandemic, restored our businesses, and launched multiple new rail lines in Hong Kong, mainland, and overseas. In Hong Kong, we also opened new malls, entered a new phase of railway development with construction works in Northern Link Part One project agreement, and embraced innovative technologies in customer services, operations, and construction. These achievements have been made possible thanks to the dedication of our colleagues, the support from the government and MTR Board, and the encouragement of the public.
In the first half, MTR's various businesses remain stable, but challenges abound. We will continue to adhere to the think-ahead, stay-ahead principle to expand our businesses, striving to reach new heights. We are strengthening Hong Kong's future through building railways and growing communities. These new projects are driving growth across our businesses, sustaining the development of the corporation, and creating value for our society, shareholders, and various stakeholders. We remain committed to delivering efficient, safe, and reliable railway services as the backbone of the city's public transport while keeping cities moving. We're now in a major phase of railway investment and construction while also upgrading our existing railway assets. We'll maintain prudent financial management, shaping forward-looking fundraising strategies, and expand businesses to guide the corporation's growth.
I will now highlight a few key points on our performance in the first half of the year. Railways are a crucial pillar of Hong Kong's infrastructure in support of the government's development plan. The Tung Chung Line Extension, Tuen Mun South Extension, Kwu Tung Station on the East Rail Line, Oyster Bay Station on Lantau Island, and Hung Shui Kiu Station in New Territories Northwest are making steady progress. The Northern Metropolis is vital to Hong Kong's future strategic positioning. In July, we signed the Northern Link Part One project agreement with the government for financing and construction of parts of the mainline and began the detailed design and planning for the spur line.
The agreement adopts a holistic approach by taking the mainline and spur line of the Northern Link together, enabling us to prioritize the advancement of mainline sections and are ready for construction. The remaining parts of the mainline will be planned and constructed together with the spur line to maximize synergies. This includes the design of shared facilities, planning, construction of common sections, and alignment with government policies. In the future, the Northern Link mainline will serve as a mass transportation backbone of the Northern Metropolis, while the spur line will provide direct connectivity between Hong Kong and Shenzhen. The two lines are being developed as a single project with a goal of commissioning both lines by 2034. Achieving this target presents considerable challenges.
We will work with the government to explore feasible measures from multiple perspectives, accelerating project delivery in the Part Two project agreement discussion. Many of these new projects are being constructed alongside operational railway lines, adding complexity and challenges when it comes to advancing construction and maintaining normal train services to passengers. The Northern Link mainline involves connecting two railway lines from Kwu Tung Station on the East Rail Line to Kam Sheung Road on the Tuen Ma Line, advancing construction while ensuring uninterrupted railway operations and passenger services undoubtedly adds to the complexity and challenges of the project. Some construction works can only be carried out during the golden two hours working window after the train services end each night.
To address this, our project team is leveraging technology and meticulous planning while closely working with the operations team to coordinate efforts. Looking ahead, if service adjustments are needed to accommodate complex and indivisible work procedures, we'll inform passengers well in advance to support their journey planning. We are entering a new phase of railway investment with about HKD 140 billion planned investment allocated for new railway projects and a five-year investment of HKD 65 billion for the maintenance and upgrading of existing assets starting from 2023. These substantial investments demonstrate our unwavering commitment to Hong Kong's long-term development. We continue to adopt a robust and forward-looking financial approach, leveraging a diverse range of fundraising options in line with economic cycles to address our funding needs.
In the first half of the year, we successfully issued HKD 3 billion of public senior notes and HKD 3 billion of subordinated perpetual securities, with both receiving overwhelming responses from investors and reflecting market confidence in our business models and outlook. Our rail plus property development model enables the corporation to build both railways and communities while channeling part of the profits generated by the railway back into supporting its railway development. Profits from property development fund the substantial costs of railway construction, operations, maintenance, and asset renewal. This approach helps maintain safe and reliable services and also creates long-term value for our shareholders and various stakeholders.
In the first half of the year, profits from several property development projects located above our railway lines were booked. While these profits are one-off and they fluctuate year by year according to the railway completion cycle, they are allocated to support the long-term railway development operations and maintenance over decades. We are currently advancing ten residential property development projects, which are expected to provide approximately 9,000 units to Hong Kong's housing market. Meanwhile, the value of MTR malls in Hong Kong dropped in the first half of the year after revaluation, reflecting challenges faced by Hong Kong's retail industry. Hong Kong Transport Services remain the core of our businesses.
In our railway operations, the total patronage in Hong Kong exceeded HKD 960 million in the first half of the year, with passenger journeys on time maintaining at world-class level of over 99.9%. Benefiting from the increasingly frequent exchanges between Hong Kong and the mainland, increased ridership on high-speed rail and cross-boundary railway services drove year-on-year revenue growth. MTR has been serving Hong Kong for over 45 years, consistently committed to maintaining and upgrading its railway facilities. Operating a highly complex system with over 7,500 train trips daily, MTR demands a level of precision that exceeds typical railway standards, and as such, we continue to invest substantial resources in upgrading railway assets and strengthening emergency preparedness to further reinforce service reliability.
With the rapid advancement of innovative technologies and AI, MTR is actively exploring and investing in the development and application of innovative technology across business operations. We collaborate with the government, academic, and research institutions to foster industry, academia, research, investment partnerships, co-building an innovation and technology ecosystem, and driving Hong Kong's I&T development. To promote smart railway, we continue to explore and invest in new innovative initiatives across our businesses. By incubating new ideas and integrating data and analytics from our data studio with AI, these initiatives have been applied to railway operations and maintenance and have earned multiple international awards and accolades in the year. To support the government's Low-Altitude Economy framework, we have also launched a pilot project using drones for tunnel inspections, exploring the potential Low-Altitude Economy applications in railway operations and maintenance.
To further enhance passenger experience, we launched an upgrade in MTR Mobile app, introduced the eCity Saver, and enhanced fare payment options with China T-Union Card. In addition, 5G Golden Spectrum upgrades have been completed in 10 MTR stations, facilitating smart mobility for our passengers. As for the new railway projects, the team is actively applying innovative technologies, including the establishment of Digital Delivery Centers to promote digitalized project management. This ensures that new railway projects progress safely, efficiently, and in an orderly manner while enhancing construction management, safety, and efficiency. The corporation will continue to develop and apply innovative technologies across all areas of our business.
On the mainland of China, international businesses are under steady development. In the mainland, initial section of Shenzhen Metro Line 13 Phase One has been well received by the public since its opening. The remaining sections of Shenzhen Metro Line 13 Phase One and Beijing Metro Line 17 are expected to open by the end of the year. During the period, we signed an agreement to invest in CRRC Guangdong to further explore opportunities along the railway value chain in the mainland and overseas. At the same time, we are extending our station commercial expertise garnered in Hong Kong to the mainland, advancing station commercial businesses in Chengdu, Zhengzhou, and Xi'an. In our international business, Sydney Metro M1 Line Southwest section is expected to open next year.
We will continue to explore business opportunities in mainland China and overseas, including countries along the Belt and Road region. As a low-carbon public transport operator, we are committed to advancing our ESG vision across our businesses. We have set an internationally recognized carbon emission reduction target to cut emissions by around half by 2030 for the railway investment property businesses in Hong Kong, supporting our long-term goal to reach carbon neutrality by 2050 for a greener future. We continue to foster diversity and inclusion of service and workforce. These are the key highlights for the first half. After taking into full account our financial position and future capital requirements, the MTR board has declared an interim ordinary dividend of HKD 0.42 per share.
In the first half of 2025, MTR's various businesses remain stable, but challenges abound. We will continue to adhere to the think-ahead, stay-ahead principle to expand our businesses and strengthen Hong Kong's future through building new railways and growing communities. These new projects are driving business growth and creating value for our society and stakeholders. We remain committed to delivering safe, efficient, and reliable railway services as the backbone of the city's public transport. We keep cities moving. We're now in a major phase of railway investment and construction while also upgrading our railway assets. In future, we will maintain prudent financial management, shaping forward-looking strategies to guide the corporation's growth. I will highlight a few key points on our performance in the first half of this year. Railway is a crucial pillar of Hong Kong's infrastructure.
Several new projects are making steady progress, including the Tung Chung Line Extension, Tuen Mun South Extension, Kwu Tung Station on the East Rail Line, Oyster Bay Station, and Hung Shui Kiu Station. The Northern Metropolis is vital to Hong Kong's future strategic positioning. In July, we signed the Northern Link Part One project agreement with the government for the financing and construction of parts of the mainline and began the detailed design and planning of the spur line. The agreement adopts a holistic approach by taking the mainline and spur line of the Northern Link together, enabling us to advance construction of parts of the mainline. The remaining parts of the mainline will be planned and constructed together with the spur line to maximize synergies.
While there are many challenges in commissioning both lines by 2034, we will explore with the government during the Part Two project agreement discussion the feasible measures to accelerate the project. Many of these new projects are being constructed alongside operational railway lines, adding complexity and challenges. To address this, our project teams leverage technologies and meticulous planning while working closely with our operations teams to coordinate efforts. If service adjustments are required to complete the works efficiently, we will inform passengers in advance.
We are entering a new phase of railway investment with planned investment of about HKD 140 billion for new railway projects, for which we have completed about HKD 20 billion worth of work, and a five-year investment of HKD 65 billion for the maintenance and upgrading of existing assets starting from 2023, and for which we have completed about half of the work. These investments demonstrate our unwavering commitment to Hong Kong's long-term development. We continue to adopt a robust and forward-looking financial approach, leveraging a range of fundraising options. In the first half of this year, we successfully issued HKD three billion of public senior notes and HKD three billion of subordinated perpetual securities, both receiving overwhelming responses from investors and reflecting market confidence in our businesses and outlook.
Our rail property development model enables profits from property development to fund railway constructions, operations, and asset renewal. This approach helps maintain safe and reliable services and also creates long-term value for our shareholders and various stakeholders. In the first half of this year, profits from several property development projects were booked. While these profits are one-off and they fluctuate year by year according to the railway completion cycle, they are allocated to support the ongoing railway works, operations, and maintenance.
We are currently advancing ten residential property development projects, which are expected to provide approximately 9,000 units to Hong Kong's housing market. Meanwhile, the value of MTR malls dropped after revaluation, reflecting the challenges faced by Hong Kong's retail industry. In our railway operations, the total patronage in Hong Kong exceeded 960 million in the first half of this year, with passenger journeys on time maintained at a world-class level of over 99.9%. Increased ridership on high-speed rail and cross-boundary railway services drove year-on-year revenue growth. Railway systems are highly complex, especially the MTR, which operates over 7,500 train trips per day. While we consistently invest in railway asset upgrades, we also enhance emergency preparedness to reinforce service reliability. We continue to explore and invest in new technologies across our businesses.
By incubating new ideas and integrating data analytics from our data studio with AI, we are enhancing railway operations and maintenance. Just in the first six months of this year, our technology initiatives have received multiple international awards and accolades. We have also launched a pilot project using drones for tunnel inspections, exploring the potential of Low-Altitude Economy applications. To further enhance passenger experience, we launched an upgraded MTR Mobile app, enhancing fare payment options and upgrading the mobile network in stations. For new railway projects, we have established digital delivery centers to enhance project safety and efficiency. In Mainland China, the remaining sections of Shenzhen Metro Line 13 and Beijing Metro Line 17 are expected to open by the end of this year.
During the period, we signed an agreement to invest in CRRC Guangdong to further explore opportunities in Mainland China and overseas. We are also advancing station commercial businesses in Chengdu, Zhengzhou, and Xi'an in our international business. Sydney Metro M1 Line Southwest section is expected to open next year. We continue to explore business opportunities in mainland China and overseas, including countries along the Belt and Road. As a low-carbon public transport operator, we are committed to advancing our environment, social, and governance (ESG) vision across our businesses. We are adopting various measures to reduce carbon emissions by around half by 2030, targeting to reach carbon neutrality by 2050. We also foster diversity and inclusion in our services and workforce.
These are the key highlights of our first half business performance. After taking into full account the corporation's financial position and future capital requirements, the MTR board has declared an interim ordinary dividend of HKD 42 per share. I'll now pass to Michael to report some of the financial highlights.
Thank you, Jacob. Recurrent businesses in Hong Kong recorded a profit of HKD 3 billion, whereas the profit of our recurrent businesses outside Hong Kong was HKD 0.4 billion. While this result reflected some level of increase in operating expenses as compared to the same period last year, a meaningful proportion of those changes in costs arose through either one-off or timing effects. Property development profit after tax increased to HKD 5.5 billion, a reflection of there being several property projects reaching completion. Our property profits, which are more significant in some years than in others, are a vital part of our ability to finance our long-term investment in long-term projects.
They show the Rail plus Property, or R+P model, in action. Property development profits linked to railway project investments made several years ago by MTR set us up for the next phase of our growth story. Including property development profit, underlying business profit was therefore HKD 8.9 billion. Together with changes in fare value measurement of our investment property, total net profit attributable to shareholders for the half year was HKD 7.7 billion. The group's financial position remains robust. This is a good starting point for the challenges of our significant program of investment and growth, both in terms of new projects and in terms of ongoing asset replacement and upgrades.
As at the end of June 2025, the combined total of our available cash balances and undrawn committed facilities was close to HKD 90 billion. Our net debt-to-equity ratio was at the healthy level of 18.8%, which will help us to attract the necessary funding in the coming years of investment and growth. In terms of our consolidated balance sheet, total assets increased by HKD 35 billion to HKD 403 billion, mainly due to the increase in cash after the issuance of US dollar bonds in March and perpetual capital securities in June, together with the increase in bank medium-term notes and in railway construction in progress. Total liabilities increased by HKD 10 billion to HKD 191 billion, mainly due to net drawdown of loans, partly offset by the decrease in deferred income from various property development projects.
As such, total equity increased by HKD 25 billion to HKD 211 billion. As for our consolidated cash flows, our operating activities generated HKD 6.5 billion of net cash inflow. Net receipts from property development were HKD 9.1 billion. Capital expenditure amounted to HKD 8.6 billion, comprising HKD 4.8 billion for maintenance CapEx, such as station renovation works, new trains and signaling systems, and HKD 3.8 billion for new railway projects. Together with our other items, our net cash inflow before financing was HKD 4.2 billion. Cash inflow from the net drawdown of debt and issuance of perpetual capital securities amounted to HKD 34.5 billion. Finally, net of dividend payments and other smaller items, the net increase in cash was HKD 33.6 billion.
With regard to our financing and credit position, total group borrowings increased by HKD 14.6 billion to HKD 92.2 billion. This is on a gross basis. Net borrowings decreased by around HKD 19 billion. Our average borrowing cost for the first half of 2025 was 3.7%, 0.1 percentage points lower than the same period last year. We continue to enjoy access to the capital markets at a competitive cost. As monetary and financial markets continued to operate in an orderly manner in Hong Kong amidst volatile and unpredictable global events during the first half of 2025, the company arranged HKD 52.9 billion of new financing, including a three-tranche U.S. dollar public bond equivalent to HKD 23.5 billion and a dual-tranche U.S. dollar public perpetual capital securities equivalent to HKD 23.5 billion.
Funding raised in currencies other than HK dollars is always swapped back to HK dollars, mostly on a fixed-rate basis, meaning that MTR pays HK dollar interest rates. This has helped us to keep average funding costs under control. The company's inaugural issuance of perpetual capital securities adds hybrid capital to our capital structure. This form of funding is eligible for equity treatment in the group's accounts. As at the balance sheet date, close to 80% of our borrowing was on a fixed-rate basis, an approach that has helped to mitigate the adverse impact of interest rate hikes in recent years. MTR's interest cover ratio stood at a solid 12.5 times.
Turning now to our total CapEx forecast for the next three years, the total CapEx from 2025 to 2027 is estimated to be HKD 90.8 billion. This figure includes CapEx in relation to the newly signed agreement for the Northern Link Part One, of which only about HKD 5.7 billion is expected to be incurred between 2025 and 2027. Of that amount of HKD 90.8 billion, 40%, or HKD 36 billion, will be used for Hong Kong railway maintenance CapEx.
This is higher than in previous years, mainly because several railway maintenance and asset replacement projects are taking place at the same time, including train, signaling, and power systems. 43% will be used for new Hong Kong railway projects, 14% will be allocated to the Hong Kong property business, while the remaining 3% is for mainland China and overseas investments. With that, I will now hand back to Jacob to present our outlook.
Thank you, Michael. MTR Corporation has always been committed to keeping cities moving, striving to provide the public with high-quality railway services and to contribute to community development. Amid global economic uncertainties and challenges posed by evolving travel and consumption patterns, we continue to proactively adapt to the new business normal by leveraging our strengths across railway operations, station retail, and shopping malls.
We are actively introducing new services and customer experiences to boost footfall and spending. We also support the railway projects proposed by the government under Hong Kong Major Transport Infrastructure Development Blueprint, and we are closely monitoring the progress of Hong Kong-Shenzhen Western Rail Link and various modern green mass transit systems while supporting the government in advancing these initiatives. For property development subject to the construction and sales progress, we expect to book property development profits from Southside Package 5 and LOHAS Park Package 12 in the second half of the year. We closely monitor market conditions to formulate suitable tender strategies for property development projects and anticipate tendering Tung Chung East Station Package 2 and Tuen Mun Area 16 Station Package 1 within the next 12 months or so.
This is the last time for me to host the corporation's results announcements before stepping down as CEO at the end of the year. Over the past 30 years with MTR, I have had the privilege of being involved in 27 railway openings across Hong Kong, mainland China, and overseas. Despite the arduous challenges of the pandemic, I am proud to have stood alongside the MTR team, passengers, tenants, and citizens through it all. The launch of new railway projects and the application of new technologies have been highlights of my work in recent years. I would like to thank the Hong Kong SAR Government, the MTR board, and my colleagues for their support and trust throughout my six years tenure as CEO, and I also thank our team for consistently providing professional and caring services to the public.
The corporation has announced the appointment of Ms. Jenny Yeung as CEO effective 1 January next year. In the coming months, I will remain focused on fulfilling my responsibilities and ensuring a smooth transition. The corporation will continue to uphold the spirit of teamwork to serve the public as we embrace more milestones ahead.