Chairman's Message

(extracted from Annual Report 2007)

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