Hong Kong’s embattled rail operator has announced a top-level management reshuffle to lead the company out of a crisis sparked by a series of construction scandals, while reporting a 7.1 per cent rise in underlying profit.
The MTR Corporation on Thursday confirmed that non-executive chairman Frederick Ma Si-hang would step down at the end of June, when his contract expires, to be replaced by insurance veteran Rex Auyeung Pak-kuen, while operations and mainland business managing director Jacob Kam Chak-pui would take over on April 1 from CEO Lincoln Leong Kwok-kuen, who is retiring early.
The reshuffle was announced along with the company results for 2018, which saw underlying profit rise to HK$11.26 billion (US$1.43 billion), while net profit was down 4.9 per cent at HK$16 billion after accounting for revaluations of investment property.
The growth in underlying profit, which comes from recurring operations, was lower than that of a year earlier due to revenue from property development dropping 99.1 per cent to HK$60 million.
Kam has been with the corporation for 24 years. His and Auyeung’s appointments confirm earlier reports by the Post.
The rail giant has been embroiled in a management storm following allegations of shoddy work at a station for its HK$97.1 billion Sha Tin to Central link. Documents on safety checks for parts of the station went missing.
The scandal, which came to light in May last year, prompted projects director Philco Wong Nai-keung to resign with immediate effect and also led to the departures of three other project managers in August.
The rail link faces delays and uncertainty as a commission of inquiry studies the scandal and platforms at Hung Hom station are opened up.
Hong Kong engineers split over conclusion rail platforms at centre of MTR construction scandal are safe
Ma on Thursday said: “Guiding the corporation through this period of rapid expansion has been one of the most rewarding tasks I have ever undertaken, and I am proud that the corporation has largely met the goals set for it by the board.”
His replacement, Auyeung, 66, has more than 40 years of experience in the insurance industries of Canada and Hong Kong. He retired from the sector in 2017 after a stint with Principal Financial Group.
“The chairmanship will certainly come with its challenges, but working hand in hand with my fellow members of the board, the MTR management and the dedicated staff, we will be focused on serving the community with the best service,” he said.
Auyeung’s contract lasts for 2½ years, and he will take home HK$1.73 million annually – the same as Ma.
CEO Leong said his successor Kam beat a number of overseas candidates to clinch the role. The new chief’s three-year contract entitles him to base pay of HK$8.1 million per year and 120,000 shares in the company. The amount is less than the HK$9.3 million paid to Leong in 2017.
The outgoing CEO said the past year had been the most difficult in the MTR’s history, but expressed confidence in Kam’s leadership moving forward.
“The company faces a number of challenges but there are a lot of opportunities,” Leong said.
“Jacob is the most appropriate candidate. He has extensive experience at the MTR. He is well respected by all our colleagues … I have every confidence in Jacob that he will lead the company to even greater heights, and restore the trust of Hong Kong people and deliver high-quality service.”
The MTR’s revenue from recurrent business jumped 11.2 per cent to HK$53.87 billion last year. But when the sharp drop in the firm’s mainland Chinese property development business was included, revenue fell 2.7 per cent to HK$53.93 billion.
MTR shares closed 0.22 per cent higher on Thursday at HK$44.85 before the management changes and results were revealed.
The company also released the latest passenger numbers for Hong Kong’s new high-speed rail link to mainland China. It has carried 5.3 million travellers since opening in September last year, which translates to an average of about 53,000 people daily. This number is only about two-thirds of a government forecast of 80,000.
The HK$84.4 billion line generated HK$600 million in revenue during the period, also falling short of the government’s projected HK$671 million.
Figures were also given for local MTR rail services, on which rider numbers grew 2 per cent to a record 1.67 billion passenger boardings last year.
Lawmaker Luk Chung-hung, a member of the legislature’s transport panel, said the new leaders had to urgently restore a good management culture, and step up internal controls and corporate governance.
“The new chairman has to lead these changes, and together with the new CEO boost staff morale by listening actively to staff needs,” he said.