YOU MAY HAVE noticed that the Modern Town Redevelopment Company (MTRC) had a splendid year last year with pretax earnings up an impressive 23.4 per cent to a record $5.2 billion. It goes to show what huge government handouts of scarce development land can do to boost a company's fortunes while at the same time modernising our urban landscape. Let us have a big hurrah here for a wonderful public effort. Some people, however, still insist on misnaming this company. They call it the Mass Transit Railway Corp as if its primary business were actually public transport. How odd. You might as well call Sun Hung Kai Properties a transport company because of its minor holdings in buses, ports and freight forwarding. In fact, if you had to find proper words for the acronym MTRC you could as easily choose Male Titillation aRousal Company on the grounds, judging by station advertising displays, that it must have been established to promote women's underwear fashions. This advertising business was actually its second biggest earnings generator after property last year, with an operating profit that, at a rough guess from the figures, was in excess of $800 million. It is true that the company also owns and runs a metro railway system in Hong Kong but let us get this straight. The railway operation incurred a pretax loss of $961 million last year, much greater than the $363 million loss suffered the previous year and there is not much prospect of better returns in the future. The table shows you how I have worked this out from the profit and loss account published this week. First take the reported turnover of $7.59 billion and deduct the income for property rental and management. Then take its operating expenses of $3.84 billion and deduct the related property expenses. The result is an operating profit of $2.95 billion. Now assume that all of the depreciation and interest charges were incurred on railway construction and operation, which is a fairly safe assumption. Add in a minor item for income from subsidiary (Octopus, I assume) and you get my loss figure of $961 million. At its worst, if you treat both Octopus and advertising as separate businesses along with the property arm, you get a loss on the railway of about $1.8 billion. Notice here also that the depreciation charge actually went down despite the first full-year booking of depreciation for the Tseung Kwan O extension and some other works. You would normally expect the charge to rise with this. The fine print tells you, however, that depreciation periods were lengthened this year, an old trick and probably a legitimate one. However, there was no restatement by the company of last year's earnings on this basis. These latest results would have looked even worse compared with the previous year's if it had been done. No, this is not quite the picture you got from the company's results notice or from the immediate press commentary on it. What I have not included here is the operating profit of $5.6 billion from property development and one good reason for not mentioning it earlier is that the MTRC itself never expects to do so again. 'This level of profit is not expected to repeat [sic] in the foreseeable future,' says the fine print. So much, then, for the company's purported expectation, much ballyhooed in press reports but, significantly, not contained in its formal results notice, that there will be $9.2 billion of property development earnings over the next three years. It is indeed possible but divide that number by three and in each of those three years the figure will not be much more than half of what was booked for last year. After that there will be some sales of property in Tseung Kwan O and from there onwards the corporation will be in open territory on its earnings. It must then beg for yet more largesse from the public purse or raise its fares and substantially, too. It is getting high time that some serious thought was given to its longer-term future. Unfortunately, all we have is Transport Secretary Sarah Liao Sau-tung putting off a merger with the Kowloon-Canton Railway Corp for a further six months of talks.