Chairman's Message
Dear Shareholders
I am pleased to report to you on another year of
solid performance at Bursa Malaysia. The year
began with financial markets worldwide in a buoyant
mood; Malaysia was no exception. Coupled with
the achievements of the previous year, we had a
firm foundation for progress. Our team took full
advantage of these favourable circumstances.
Improving the Markets
We made great strides in developing market infrastructure and efficiency with
the introduction of the first phase of the new trading platform, Bursa Trade, and
additional capabilities such as Sub-Division of Shares, Shares Consolidation and
Bonus Issue Exercise in the CDS (SPEEDS) and Trading Halt. Our derivatives
market will soon enjoy the benefit of Direct Market Access (DMA). We also
enhanced some of the existing contract terms to make trading more attractive.
To help raise the quality of listed issuers and their communications with
shareholders and other stakeholders, we published a manual on Investor
Relations (IR) in June 2007. The manual provides practical advice on establishing
an effective IR function within a public listed company (PLC). As a forum to
further promote this important activity, we also helped sponsor the establishment
of the Malaysian Investor Relations Association (MIRA) and launched an incentive
scheme to encourage companies to adopt an IR culture.
Market variety was also improved with additions to the FTSE Bursa Malaysia (FBM)
Index Series. Two new Islamic indices were launched, plus one each for the
Second Board and MESDAQ. Our FBM family of indices has now grown to ten.
The reward for these efforts is reflected in the statistic called market velocity, a
measure of how often a market turns over its value. We set ourselves a target
velocity of 40% for 2007, and produced a result of 53%. This is an exceptional
advance in so short a time, but is still some way behind the velocity of other
regional bourses. The challenge for the year ahead is not simply to maintain
this activity, but to take it to a higher level again.
Improving Financial Returns
All these improvements helped us maximise the benefits of the generally upbeat
market. The KLCI reached an all time high of 1,447 points on 28 December 2007.
When translated into financial results for Bursa Malaysia, the results were
exceptional, as the following growth data demonstrates:
- Operating Revenue: + 69%
- Operating EBITDA: +120%
- Profit After Tax: +123%
- Earnings per Share: +121%
- Return on Equity: +137%
In line with our dividend policy to distribute at least 75% of profit after tax
and minority interests, we have significantly improved the dividend payment
to shareholders for the 2007 financial year. The 32 sen gross interim dividend
and the proposed 25 sen gross final dividend for 2007 mark a 115% increase
compared with a total payment of 26.5 sen gross last year. In addition, we paid
out a special dividend of 28 sen gross.
When Bursa Malaysia was listed in March 2005, our Initial Public Offer (IPO) price
was RM3.00. Our shares closed the year at RM14.30. These gains, coupled
with our dividends and capital repayments, mean that total shareholders' return
delivered by Bursa Malaysia amounts to 442% since listing.
Corporate Responsibility
We have always taken the view at Bursa Malaysia that we have a broader
role than the management, development and enhancement of our financial
markets. ‘A model public listed entity' is the phrase which describes this wider
goal. While meeting the financial and operational performance expectations
of our stakeholders remain the primary objective, we must look beyond the
reports and accounts and act with responsibility towards our society and the
environment. In doing so, we must act as an example for other public listed
entities and an advocate for the virtues of this approach.
In 2006, we launched a Corporate Social Responsibility (CSR) framework
to assist others in crafting their own CSR efforts. On 5 October 2007, Bursa
Malaysia achieved double certifications for conformance to ISO 9001:2000
Quality Management System and ISO 14001:2004 Environmental Management
System standards. This is a unique achievement, and we believe Bursa
Malaysia is the first exchange in the world to pursue these two certifications
simultaneously. These certifications affirm the quality of Bursa Malaysia's
environment management systems and signify conformance to internationally
recognised standards. They also reflect the way we are influencing other
entities to implement similar systems for monitoring and optimizing their own
environmental performance.
Our Regulatory Role
Investor confidence and the integrity of our markets are intertwined. A fair,
orderly and transparent market depends on the quality of listed entities and
market participants. Rules were changed during 2007 to give effect to the
various new products and enhancements that were introduced.
With our usual proactive approach, we responded effectively to certain accounting
irregularities. In line with the heightened market activity in 2007, we also saw an
increase in the number of interventions and investigations undertaken.
There is always a balance to be struck between trading exuberance and
the regulatory imperative, which is often more art than science. However, it
is a sign of the growing effectiveness of this aspect of our work, that it was
achieved without attracting much adverse comment during the year.
The Road Ahead
Towards the end of 2007, market enthusiasm was tempered by global economic
events. The sub-prime mortgage crisis and possible recessionary signs in the
United States (US), plus the high prices of energy and commodities on international
exchanges will continue to have a spill over effect. Despite a resilient domestic
economy, we will not be completely isolated from external factors.
However, we cannot let this distract us from the tasks at home. There remains
much to be done to enhance our markets. We have plans and initiatives in
hand to further enhance our offerings in both equities and derivatives. We will
concentrate not only on consolidating the gains of 2007, but improving the
velocity levels recorded during the coming year and capturing new ground with
further efficiencies. To this end, we have announced a more focused internal
management structure.
Developments in store for the coming year include:
- introduction of Bursa Trade Securities (BT Securities);
- a DMA capability for equities market participants;
- additions to our financial derivatives products; and
- a trading platform for debt instruments.
Efforts to keep the international investment community aware of all these
developments will continue, as their interest in our markets is an important
constituent of past successes.
The challenges of the coming year should not be underestimated, but I am
confident that we face them with a clear and coherent strategy and a commitment
to succeed. We are determined to meet the expectations thrust on us as the
manager and custodian of our markets, and as a role model for others. This is
also the path to delivering on the expectations of shareholders and stakeholders.
Tun Mohamed Dzaiddin Haji Abdullah
Chairman