A n n u a l R e p o r t 2 0 0 4 - Bursa Malaysia Berhad

Transcription

A n n u a l
P r o g r e s s
•
R e p o r t
S u c c e s s
•
2 0 0 4
P o t e n t i a l
Mission Statement
Financial Highlights
Bursa Highlights
Chairman's Message
Board of Directors
2
4-5
6
7-8
9
Chief Executive Officer's Message
10-12
Event Highlights
13-16
Economic Review 2004
17
Market Performance 2004
18-19
Management Discussion and Analysis
- Business and Operations
22-35
Management Discussion and Analysis
- Financials
36-40
Statement of Corporate Governance
42-53
Statement on Internal Control
54-56
Audit Committee Report
57-60
Corporate Social Responsibility Statement
61-64
Investor Protection
Corporate Information
Group Corporate Structure
65
68-70
71
Board of Directors Profile
72-78
Board Committees
79-82
Consultative Panels
83-85
Regulatory Committees
86-88
Management Committee
Management Profile
Organisation Structure
Human Capital & Remuneration
89
90-92
93
94-96
Financial Calendar
98
Statement on Directors' Responsibility for
the Annual Audited Financial Statements
99
Financial Statements for the year ended
31 December 2004
100-152
Statistics of Shareholdings as at 31 March 2005 153-156
List of Properties
Additional Information
Information for Shareholders on
Twenty-Eighth (28th) Annual General Meeting
157
158-159
160
Mission
Statement
“
Bursa Malaysia aims to
offer an internationally
competitive marketplace
for fund raising
and investment.
”
2
• Bursa Malaysia Berhad Annual Report 2004
Charting Progress
“Quality and excellence are now the national agenda in building and
reinforcing a strong performance culture for both public and corporate
sectors.
Actions taken by the government towards a more conducive business
environment include tackling corrupt practices, re-instituting
competitive bidding for government contracts, prioritising infrastructure
projects and a more efficient delivery system. All these augur well
for national interest and in encouraging international investors’
confidence and participation in the market.
The National Budget 2005 announced in September is a catalyst to
strengthen and enhance the competitiveness of the Malaysian capital
market. Proposals related to the capital market tabled by Prime Minister
YAB Dato’ Seri Abdullah Hj Ahmad Badawi are set to contribute towards
enhancing market liquidity, boosting global competitiveness of the
capital market and strengthening Malaysia’s position as a financial
centre.”
YUSLI MOHAMED YUSOFF
CEO
Bursa Malaysia Berhad Annual Report 2004 • 3
Financial
Highlights
BURSA MALAYSIA GROUP
Year
ended
Year
ended
18 months
ended
Year
ended
Year
ended
June-001 June-011 Dec-021
Dec-03
Dec-04
1) Key Results (RM Million)
Operating Revenue
378.8
168.2
222.0
201.5
218.3
Operating Expenses (including depreciation and amortisation)
188.6
167.7
296.5
187.1
222.9
Operating EBITDA
243.5
37.2
35.8
14.5
Operating Profit
189.8
0.5
(74.5)
14.4
(4.6)
86.2
56.7
105.5
81.3
68.2
Profit Before Tax
273.8
56.0
30.7
95.6
63.5
Net Profit attributable to Shareholders
180.2
36.2
2.8
59.9
35.1
965.2
861.9
824.2
859.5
862.0
1,588.7
1,646.3
1,658.2
1,744.0
1,765.1
235.1
245.4
272.4
304.1
287.0
1,307.1
1,376.7
1,367.5
1,425.2
1,460.3
Operating Revenue Growth
66.8
(55.6)
Operating EBITDA Margin
64.3
22.1
Operating Profit Margin
50.1
Net Profit Margin
Other Income
(34.5)
Balance Sheet (RM Million)
Net Current Assets
Total Assets
Total Liabilities
Membership Fee and Reserves / Shareholders’ Equity
2) Key Ratio (%)
2
2
36.1
8.3
(15.5)
17.8
6.63
0.3
(33.6)
7.1
(2.1)3
38.8
16.1
0.9
21.2
12.33
n/a
n/a
n/a
n/a
2.4
Basic earnings per ordinary share
n/a
n/a
n/a
n/a
7.02
Net tangible asset per share
n/a
n/a
n/a
n/a
282.53
Return on Shareholders’ Equity
(12.0)
3) Key Per Share Data (Sen)
4) Key Operating Drivers
Average daily turnover value for On Market Transaction
(RM Million)
Average daily number of derivative contracts traded
1,142
302
467
748
874
3,109
2,938
4,678
8,131
10,617
Total number of new listings
Funds raised from IPOs (RM Million)
Number of Institutional Settlement Service instructions
28
36
57
58
72
9,961
5,890
13,811
7,628
7,350
108,500 280,355 203,645
289,035
78,622
Number of Central Depository System
accounts (Million)
2.7
2.8
3.2
3.4
1
Comparative figures from year 2000 to 2002 are based on the Accountants’ Report contained in Bursa’s Prospectus
dated 23 February 2005.
2
The ratios for 2002 and 2003 are based on annualised 2002 revenue.
3
The ratios for 2004 excluding the one-off Voluntary Separation Scheme (VSS) costs are as follows:
i) Operating EBITDA Margin: 23.7% ii) Operating Profit Margin: 15.0% iii) Net Profit Margin: 25.3%
“n/a” means not applicable as Bursa did not have any shares issued prior to 5 January 2004
4
3.0
Financial
Highlights
Overall Financial Results
RM’ million
500.0
465.0
475.0
450.0
425.0
400.0
375.0
350.0
327.5
325.0
300.0
296.5
286.5
282.8
275.0
250.0
224.9
225.0
200.0
180.2
222.9
188.6
187.1
167.7
175.0
150.0
125.0
100.0
75.0
59.9
50.0
35.1
36.2
25.0
2.8
0.0
June 2000
June 2001
Dec 2002*
Dec 2003
Dec 2004
Financial Year
Total Revenue
Operating Expenses
Net Profit Attributable to Shareholders
Note: * The figures for financial year 2002 were for 18-month period.
Bursa
Highlights
Total market capitalisation (RM billion)
Total number of listed companies
800
1000
800
798
816
865
722.0
963
906
700
640.3
600
500
600
444.4
465.0
481.6
400
300
400
200
200
100
0
0
2000
2001
2002
2003
2004
2000
2001
2002
2003
2004
Total trading volume (billion units)
140
124.2
122.7
2003
2004
120
100
75.4
80
62.7
60
55.0
40
20
0
2000
2001
2002
Total trading value (RM billion)
Turnover velocity (%)
50
44.6%
40
300
32.8%
250
244.1
243.9
31.8%
30
206.3
24.7%
200
18.7%
20
150
131.9
96.0
100
10
50
0
0
2000
2001
2002
2003
2004
2000
2001
2002
2003
2004
For turnover velocity, the trading value figures are
based on On Market Transactions
Note : All figures shown are based on calendar year
6
Chairman’s
Message
Tun Mohamed Dzaiddin Haji Abdullah
Chairman
shareholders and investors on the
The transformation of Bursa Malaysia Berhad (Bursa) into
a demutualised and listed exchange signals the maturity
of Malaysia’s capital market. In delivering on its expanded
roles and responsibilities, the Board and I are committed
to carving further progress for Bursa through achieving its
commercial objectives whilst at all times, maintaining its
regulatory obligations.
board to perform its functions in the
Industry Overview
“
The board’s role has become more
challenging in the face of globalisation
and increasing expectations of
most effective and competent manner
possible.
The board has the task of ensuring that
the right balance is struck between
business strategies and practices and
proper internal controls, accountability
and transparency.
”
Whilst exchanges have traditionally enjoyed monopolistic
positions, dynamic transformation of the global capital
market poses challenges and competition for exchange
operators around the world. Globalisation has resulted in
greater capital mobility, lifting boundaries and increasing
participation by international investors in markets that
provide larger liquidity pools. Trends also include
consolidation of markets, in providing global investment
solutions. At the centre of this transformation, technology
facilitates greater speed, broader access and lower costs
to trading.
The Capital Market Masterplan (CMP) issued by the
Securities Commission (SC) in 2001 presents 24 strategic
objectives and 152 recommendations as a systematic
approach towards developing and strengthening the
Malaysian capital market and addressing global
challenges.
In line with the CMP, the consolidation of all exchanges
was completed in March 2002, with the merger of
MESDAQ, the high growth and technology exchange, with
Bursa, then referred to as KLSE. The next milestone was
the demutualisation of the consolidated exchange in
January 2004 which was an enabler for expanded growth
and development of the exchange. Another significant
milestone achieved was the listing of Bursa on 18 March
2005 which places the exchange on a more competitive
and performance oriented platform.
Chairman’s
Message
Bursa today is Malaysia’s fully integrated exchange,
offering equities, derivatives and offshore products and
comprehensive exchange related services which include
clearing, settlement and depository for the equities and
derivatives markets, and information services related to
all our markets. With 963 companies listed as at 31
December 2004, we aim to continuously offer a competitive
marketplace for fund raising and investments.
Performance in 2004
Amidst a robust economy and strong economic
fundamentals, Bursa Group recorded a net profit after tax
of RM35.1 million. Whilst this reflects a 41.4% decrease
from the net profit after tax of RM59.9 million in 2003, it
must be understood that the decrease is largely due to
the one-off expense incurred from payout to staff relating
to the voluntary separation scheme (VSS) exercise in
June 2004.
Bursa Group however recorded an increase of 8.3% in
operating revenue, attributable to an increase in market
turnover. Improved market conditions, enhanced investor
confidence and higher number of corporate activities
contributed to the increased turnover. Total value
transacted on the Securities Exchange increased by 18.2%
to RM243.9 billion. Income from clearing fee, score fee
and derivatives trade fee also contributed to the increase
in operating revenue with RM101.5 million, RM10.8 million
and RM15.6 million respectively.
Prospects for 2005
As Bursa Group’s revenue is dependent on market activity,
the focus will remain on broadening access and
convenience to trading, enhancing investor confidence and
developing revenue potential from related businesses, thus
reducing dependency on market volatility.
The Common Trading Platform which has been the priority
project for Bursa Group will facilitate broader front-end
access and encourage wider participation from
intermediaries and investors. The introduction of our new
information services pricing model and new products
planned will contribute towards growing revenue for the
Group.
These initiatives, coupled with the positive developments
enacted by Government and other regulators towards
further liberalisation of the capital market will ef fect
significant progress for the business of the exchange and
development of the securities and derivatives industry.
8
Moving Forward
Besides creating shareholder value, the larger implication
from the listing of Bursa - the consolidated, national
exchange - is the promotion of a more transparent market
and the enhancement of corporate best practices.
Bursa aims to offer an internationally competitive
marketplace for fund raising and investment. In competing
on the global platform, Bursa will be committed to setting
the pace with exemplary standards of disclosure,
transparency and corporate best practices whilst constantly
reviewing regulatory and infrastructure effectiveness and
efficiency. In offering an attractive marketplace for fund
raising and investment, Bursa will focus on expanding
investment products and instruments to meet the
evolving needs of investors.
A guidance issued by the SC in December 2004 sets out
the manner in which Bursa’s regulatory obligations are to
be fulfilled, among other things, in relation to regulating
market participants, surveillance, enforcement, fees and
charges. The relevant securities laws and the Guidance
on Self-Listing of Bursa Malaysia Berhad, issued by the
SC in February 2005 provide that the responsibility of
regulating Bursa as a listed issuer rests with the SC.
We are committed to the maintenance of a fair and orderly
market and investor protection. Intermediary activities,
trading practices and disclosure of information are
monitored and market surveillance efforts will continue to
protect the interests of investors. The regulatory framework,
infrastructure and operations of the market will be reviewed
to ensure relevance, improve market efficiency and accord
investor protection. Finally, we will pay careful attention in
the management of systemic risks. It is our endeavour to
ensure that via regulation, systemic risks are reduced and
duly managed through capital and internal control
requirements.
Our roles and regulatory processes are clear. Our powers
and authority are defined. Our board, management and
staff will observe the highest professional standards,
prudence and accountability in serving the interests of our
markets and in serving you, our shareholders.
TUN MOHAMED DZAIDDIN HAJI ABDULLAH
Board
Tun Mohamed Dzaiddin bin
Haji Abdullah
Datin Paduka Siti Sa’diah binti
Sheikh Bakir
Dato’ Seri Hwang Sing Lue
of Directors
Dato’ Abdul Latif bin Abdullah
Dr. Thillainathan a/l
Ramasamy
Cheah Tek Kuang
Datuk Haji Faisyal bin
Datuk Yusof Hamdain Diego
Dato’ Abdul Wahid bin
Omar
Datuk Azman bin
Abdul Rashid
Izham bin Yusoff
Peter Leong Tuck Leng
Yusli bin Mohamed Yusoff
Chief Executive
Officer’s
Message
Yusli Mohamed Yusoff
CEO
“
The successful transformation of
Bursa is the collective effort of all who
have contributed to the exhange,
industry and market, past and present.
In charting further progress for Bursa,
it
is
the
commitment
of
the
management team to strike a balance
between
meeting
commercial
objectives of the company in
enhancing shareholder value and in
fulfilling regulatory obligations in the
interest of investors, industry and
market.
”
2004 was a year of transformation for Bursa Malaysia.
Taking over the helm as CEO in March 2004, my main
goal was to achieve the objectives of successfully
transforming the exchange into an entity with expanded
commercial objectives whilst balancing its regulatory and
public interest obligations.
My immediate task was to define business objectives
and strategies, improve efficiency and transform the
organisation into a performance driven entity. This was
coupled with leading the process for the Initial Public
Offering (IPO) and eventual listing of the exchange.
Guided by the Chairman and the Board, and supported
by Management and all staff, and in discussions with
relevant market and industry participants, we charted our
course for the market’s continued progress, the
company’s success and sustained returns for our
shareholders.
Laying the foundation for progress
Strategic Objectives of Bursa Malaysia
1. Boost market velocity and liquidity
2. Expand products and services
3. Improve operational scale and efficiency
10
CEO’s
Message
Boosting market velocity and liquidity
Expanding products and services
The first strategic objective of Bursa is to boost liquidity
and velocity. For the year 2004 Bursa recorded a 31.8%
turnover velocity. This is low relative to regional
benchmarks and we aim to see it rise to pre-crisis levels
of about 60%. This we hope to achieve by encouraging
trading activity from both retail and institutional investors
through aggressive promotion of our market and listed
companies.
The second strategic objective is to expand both equity
and derivatives products and other services that will
enhance revenue growth for the exchange.
Engagements with participating organisations, research
houses, merchant bankers and local and foreign fund
managers will be regularly conducted to explore new ways
to collectively profile investment opportunities in growing
the equities and derivatives markets.
To facilitate research coverage on more Malaysian listed
companies, a research scheme was launched jointly by
Bursa and the Capital Market Development Fund (CMDF).
CMDF, consistent with its objective of promoting market
development, agreed to provide a RM7.5 million grant.
There were 100 participating listed companies at the point
of launch of the CMDF-Bursa Research Scheme and
we target to grow this number further. The first research
reports were published in March 2005 and are available
on Bursa’s website.
Programmes for retail investors, especially those based
on investor education like roadshows, evening talks,
expositions and conferences were pursued, some working
closely with intermediaries.
Internationally, our participation at various international
roadshows and forums in Singapore, Hong Kong, United
Kingdom, Australia, Japan, Dubai and New York has
significantly assisted in our singular mission of promoting
Malaysia as an investment destination. Such marketing
efforts will continue to be prioritised in the coming years.
The exchange will maximise new opportunities arising from
our new common trading platform (CTP) which will be
implemented by the second quarter 2005 for derivatives
trading and end 2005 for equities. The CTP will expand
access by facilitating the convergence of the equities and
derivatives market. Through it, the introduction of new
products can also be done more expeditiously. We can
expect greater participation by intermediaries and
investors on our exchange with the full implementation of
the CTP.
We have also identified the trading link between Bursa
and Singapore Exchange (SGX) as an initiative towards
boosting liquidity and velocity. The link is scheduled for
implementation in 2006 and discussions are well under
way with our counterparts and our regulators. The link will
make trading more convenient and efficient for investors
on both sides of the causeway.
Information services is a priority growth area for Bursa
group. Contributing 5.9% to group revenue in 2004, the
earnings from information services is expected to increase
with the implementation of the new distribution and pricing
model for price feeds in 2004.
Clearing, settlement and depository services too hold
potential for growth. We expect to begin offering clearing
and settlement facilities for the over-the-counter (OTC)
derivatives market with the launch of the clearing of
ethylene contracts.
We are also working closely with Securities Commission
(SC), Bank Negara and market participants to introduce a
new price reporting and dissemination system for the bond
market, with the objective of enhancing transparency and
efficient price dissemination.
We note the market demand for regulated short selling
and stock borrowing and lending and the potential of such
products in enhancing the depth of the market. In this
regard, we will continue to engage SC and the Ministry of
Finance for discussions on the framework and product
features.
Our plans to introduce new products such as single stock
futures and exchange-traded funds for conventional and
Islamic markets will provide further depth to our investment
offerings. We will also facilitate the listing and trading of
Real Estate Investment Trusts (REITs) on our market to
enable investors to access this investment product using
Bursa’s market infrastructure.
Realising the potential of the Islamic capital market and
Malaysia’s position as a growth market for Islamic
investments, we will also be focusing on expanding
Islamic instruments for both the onshore and offshore
markets that we operate. As at end 2004, 778 from the
total of 963 companies listed on the exchange are classified
as Syariah compliant by the Syariah Advisory Council
of the SC. Our offshore exchange, Labuan International
Financial Exchange (LFX) has carved a niche for Islamic
instruments with 6 international Islamic notes or ‘sukuk’
listed amongst the 24 investment instruments offered.
Improve operational scale and efficiency
Efforts to improve turnaround time and business
efficiencies and achieve economies of scale in all
operations will continue to be pursued.
CEO’s
Message
Enhancing efficiency began with restructuring the
organisation and streamlining operations. We then
implemented a voluntary separation scheme (VSS) in June
2004 which resulted in a reduction of human resources by
40.7%, or 417 people.
We also started an efficiency improvement programme
which we call the ‘Renewal Work Out’ with the objective of
enhancing turnaround time, improving service quality and
increasing cost efficiency. Areas of focus cover both
operational and regulatory functions and in 2004 these
included pooling of group funds for treasury management.
Programmes that have been identified for 2005 include
improving turnaround time for review of circulars issued
by listed companies and more efficient document
management.
We divested our entire equity interest in Bursa Training
Sdn. Bhd. and Malaysia Share Registration Services Sdn.
Bhd. in line with our strategy to focus on core businesses.
We embarked on the IPO and listing exercise of Bursa in
earnest in the middle of 2004 as a listed Bursa would
enable greater profiling of the marketplace and its
investment opportunities, instil greater corporate discipline
and transparency in running the organisation and allow
us to invite new investors into the company.
In line with the transformation into a more performance
oriented organisation, key performance indicators or KPIs
were introduced for the entire group and performance
measurements prescribed. The creation of distinctive
business units and a business development unit further
underscored the distinction between commercial strategies
and regulatory responsibilities of Bursa.
Potential for growth
As a listed company, it is our pledge to grow shareholder
value by optimising our capital structure and maximising
returns to shareholders through dividend payments. We
will also evaluate other capital management initiatives to
achieve the same objective.
With the exchange being the main market barometer of
the Malaysian economy, there is a strong correlation
between the economic performance and development of
the market and securities industry. With sound economic
growth and strong economic indicators, the prospects and
potential for further growth are bright and encouraging.
12
Capital market policies implemented by the Government and SC
and the financial market policies that are all geared towards
liberalisation and competitiveness have set an environment
conducive for growth. These market liberalisation efforts will translate
into expanded access, and enhanced interest and participation in
our market by a larger group of investors and intermediaries.
We are very excited about the prospects of the market, with respect
to liquidity, market sophistication and product development with the
establishment of five new foreign brokers this year.
Bursa’s position as a fully integrated exchange offering diversified
investment options and its full suite of trading services provide us
the advantage of diversified sources of revenue.
Through our focus on technology and business transformation, we
will be able to achieve better economies of scale and improve
efficiency in both business and operations. With investor protection
mechanisms and our risk management framework, we are better
prepared to face market risks and challenges.
As shareholders of Bursa, your active participation is invited in
keeping a healthy check and balance in ensuring that we keep our
course. Your involvement is significant not only in developing the
company and market, but also in setting standards of shareholder
activism in the Malaysian securities industry.
The Management Discussion and Analysis on business and
operations and financial results will present the facts on our progress
and proof of our success. I invite you to explore the potential within
the exchange and growth prospects within the market in making an
informed decision to invest and progress with Bursa.
Last but certainly not least, I wish to extend my sincere appreciation
to the Board of Directors for their guidance in charting the strategic
direction of the entire organisation during this challenging
transformation period. Also, to all staff that have been committed
to the transformation process from a mutual organisation to a
demutualised entity and now to a listed company, just within a span
of 14 months, thank you for your tireless contribution towards
realising our mission and strategic objectives.
To all shareholders, grow with our progress, share our success and
explore our potential.
Event
Highlights
5 January 2004
KLSE Converts into Public Company Limited by Shares
Kuala Lumpur Stock Exchange (KLSE) completed its conversion into a public
company limited by shares from a company limited by guarantee. With the
conversion, KLSE vested and transferred its stock exchange business to a
new wholly-owned subsidiary whilst the demutualised KLSE became the
exchange holding company called Kuala Lumpur Stock Exchange Berhad
(KLSE Bhd).
19 January 2004
LFX and IIFM enter into MOU
Labuan International Financial Exchange Inc. (LFX) signed a Memorandum
of Understanding (MOU) with Bahrain-based International Islamic Financial
Market (IIFM) to set the framework for greater co-operation towards promoting
Islamic Financial products and services globally.
13 February 2004
KLSE Corporate Awards 2003
YB Senator Tan Sri Nor Mohamed Yakcop, Minister of Finance II, officiated
KLSE Corporate Awards 2003. Commenced in 2000, the KLSE Corporate
Awards honours listed companies with exemplary corporate conduct. Two
new awards were given - ‘Best Disclosure in Annual Report’ and KLSE
Corporate Awards for MESDAQ Market.’
20 February 2004
Launch of Palm Kernel Oil Futures
Bursa Malaysia Derivatives Berhad, (formerly known as Malaysia Derivatives
Exchange Berhad) launched Palm Kernel Oil Futures (FPKO). The launch
was officiated by YB Dato’ Seri Dr Lim Keng Yaik, Minister of Primary Industries.
27 February 2004
Hand-over of Exchange Leadership
Out-going Executive Chairman of KLSE Berhad, Dato’ Mohd Azlan Hashim
who helmed the Exchange since 1998, handed over the leadership to Tun
Mohamed Dzaiddin Haji Abdullah and Yusli Mohamed Yusoff who took over
as Chairman and Chief Executive Officer respectively, effective 1 March 2004.
Event
Highlights
2 - 4 March 2004
Annual Palm & Lauric Oils Conference & Exhibition
Bursa Malaysia Derivatives Berhad organised the Annual Palm & Lauric
Oils Conference & Exhibition : Price Outlook 2004/2005 from 2 - 4 March in
Kuala Lumpur. This was the 15th event in this series, attended by over 1,300
delegates from 41 countries.
10 April 2004
KLSE Bhd’s 27th Annual General Meeting
KLSE Bhd’s 27th Annual General Meeting (AGM) held on 10 April 2004 was
the demutualised exchange’s first AGM involving the participation of shareholders
comprising the Minister of Finance Inc., the Capital Market Development Fund,
Licensed Stockbroking Companies and Remisiers.
20 April 2004
KLSE Bhd is now Bursa Malaysia Berhad
KLSE Bhd changed its name to Bursa Malaysia Berhad with effect from 14
April 2004. The new name denotes an exclusive yet global image and reflects
the broader deliverables of the exchange.
18 June 2004
Bursa and Singapore Exchange Limited begin discussion for crosstrading linkage
Bursa and Singapore Exchange Limited (SGX) began discussions for the
establishment of a cross-trading link to facilitate the trading of securities listed
on Bursa Securities by investors in Singapore and similarly, securities listed
on SGX by investors in Malaysia. The trading link is expected to be ready in
2006.
30 July 2004
Bursa appoints IPO advisors
Bursa appointed advisors for its Initial Public Offering (IPO) exercise. Members
of the consortium were:
• Commerce International Merchant Bankers Bhd as the principal listing
advisor, joint global coordinator, joint book runner and joint lead manager
• UBS Investment Bank as the joint global coordinator, joint book runner and
joint lead manager
• Messrs Kadir, Andri & Partners as local legal advisor
• Clifford Chance Wong Pte Ltd as international legal counsel
• Messrs Ernst & Young as reporting accountants
14
Event
Highlights
5 August 2004
Visit by Minister of Plantation Industries & Commodities
Bursa hosted YB Datuk Peter Chin, the newly appointed Minister of Plantation
Industries & Commodities. The Minister was briefed on the business and
operations of the exchange, particularly the derivatives market and commodity
derivative contracts.
10 August 2004
KL Rat Race 2004
The Kuala Lumpur Rat Race 2004, the annual ‘run for charity’ co-organised
by Bursa drew the largest number of participants since the inaugural race in
2000, with almost 400 participants and RM667,500 in total collections.
Proceeds were donated to 10 charity organisations and community homes.
20 August 2004
Launch of Best Practices in Corporate Disclosure
Bursa launched the Best Practices in Corporate Disclosure aimed at improving
disclosure of material information by listed companies and assisting companies
in meeting the letter and spirit of their continuous disclosure obligations under
Bursa Securities Listing Requirements and securities law.
26 August 2004
PM launches INVEST Malaysia 2004
Prime Minister, YAB Dato’ Seri Abdullah Hj Ahmad Badawi launched ‘INVEST
Malaysia 2004’, held at Putra World Trade Centre from 26 to 29 August 2004.
The four-day investment fair was aimed at creating awareness of investment
opportunities in the securities and derivatives industry. Besides talks on smart
investing and other investor education topics, an exhibition featuring
investment products and services was also held.
26 September 2004
Bursa’s Family Day Extravaganza 2004
The Family Day Extravaganza was held at the Bukit Kiara Equestrian and
Country Club for all staff and their families. Through this fun fair which included
relay games, hot air balloon rides, performances by clowns and fire-eaters
and pony rides, the spirit of togetherness and understanding amongst the
Bursa community was further enhanced.
Event
Highlights
18 October 2004
Team Building for Bursa staff
Team building workshops were held groupwide from September to October
2004 for all employees of Bursa with the objective of creating team synergy
in obtaining better productivity output through understanding of corporate
goals and objectives, appreciation of individual contributions and team support
and cooperation.
8 November 2004
Bursa receives grant from CMDF for research scheme
Bursa received a grant of RM7.5 million from the Capital Market Development
Fund (CMDF) for the CMDF-Bursa Research Scheme. The scheme,
implemented in January 2005 aims to promote research coverage on more
listed companies, particularly the smaller capitalised entities, as part of the
exchange’s initiatives to enhance informed investing and market liquidity.
11 December 2004
Bursa’s EGM and CCM for IPO
Shareholders of Bursa approved all resolutions tabled at the Extraordinary
General Meeting (EGM) and Court Convened Meeting (CCM) in relation to
its Initial Public Offering (IPO) and listing.
16
Economic
Review 2004
The year 2004 saw the Malaysian economy
strengthening further with real Gross Domestic Product
(GDP) expanding 7.1%, the highest since 2000. The
economy’s sterling performance was achieved against
a backdrop of rather adverse external developments.
These included high world oil prices, continued
geopolitical uncertainties especially in the Middle East,
and slowing growth in some major economies, with
Japan as well as Germany slipping into recession
during the year.
In addition to Malaysia’s robust GDP growth, the
country’s international reserves reached a record level
of RM253.5 billion (US$66.7 billion) as at 31 December
2004, sufficient to finance 8.0 months of retained
imports and equivalent to 6.1 times short-term external
debt. International reserves rose by a hefty RM83.0
billion (US$21.8 billion) during 2004, boosted by large
monthly trade surpluses, and net inflows of both
foreign direct investment and portfolio investment.
The robust fundamentals of the Malaysian economy
were evident from its broad-based strength with most
major sectors registering healthy growth during the
year. Providing much of the impetus to the Malaysian
economy in 2004 were the manufacturing and services
sectors, with a combined 89% share of GDP. As in the
past years, the manufacturing sector was a key pillar
of growth, gaining 9.8% in 2004. The services sector the largest sector with a 57.4% share of GDP - grew
a healthy 6.7% in 2004.
With the private sector taking the lead in supporting
economic growth, Government efforts towards fiscal
consolidation continued unabated in 2004. Public
consumption growth moderated to 6.6% in 2004,
noticeably lower than 2003’s 10.0% rise. In contrast,
private consumption showed a double-digit increase
of 10.1% in 2004, gaining momentum from a growth
of 6.6% in 2003. Despite moderating growth in the
Malaysian economy in the second half of 2004, private
consumption still expanded an impressive 9.7% in the
last quarter of the year. This trend was supported
by sustained high disposable incomes, stable
employment conditions with the unemployment rate
at just 3.5%, favourable financing conditions, low
interest rates and low inflation.
Paving the way to sustained economic growth over
the longer term, private investment activity continued
to rise since its recovery in the third quarter of 2003.
For the whole of 2004, gross fixed capital formation
rose 3.1% despite a decline in Federal Government
development expenditure during the period. In fact, in
the last quarter of 2004, private investment activity was
robust due to expenditure on replacement of machinery
and equipment in the manufacturing sector as well
as investment in oil exploration activities.
With crude oil prices up by a third in 2004, concerns
about inflationary pressures grew as the year unfolded.
However, Malaysia’s track record in maintaining price
stability was proven once again with the Consumer
Price Index (CPI) rising just 1.4% for the whole of
2004. Even though the CPI climbed higher nearing
year-end, the index averaged only about 2% in the
last quarter of 2004.
Overall, fundamentals of the Malaysian economy
remained robust in 2004, assisted by an
accommodating monetary policy and a slightly less
expansionary fiscal policy. The Government’s
combination of policies enabled the private sector to
play its role as the growth engine of the Malaysian
economy more effectively while allowing fiscal
consolidation to be stepped up. In 2004, the fiscal
deficit was 4.3% of GDP, down from 5.3% in 2003 as
the Government continued to exercise fiscal prudence.
Going forward, prospects for the Malaysian economy
remain bright. Future growth will be led by private
sector activity amidst a favourable environment of
stable prices and labour market conditions, with low
interest rates. The country can also count on the
external sector to boost economic activities despite
some expected moderation in global economic growth.
Malaysia’s competitiveness in the global markets is
underscored by the continued success of its exports,
which is reflected in the nation’s huge trade surplus of
RM80.7 billion (US$21.2 billion) for 2004, its seventh
year of positive trade balance. The country is well able
to meet the challenges arising from an increasingly
competitive global environment by enhancing its
competitiveness in traditional areas while developing
new sources of growth. Over the longer term,
competitiveness of the Malaysian economy will be
enhanced through increased human capital
investment, efficient public sector delivery system and
a more dynamic and responsive private sector to meet
global challenges.
Market
Performance 2004
1000
900
End Jan to early Feb
Concerns over rapid
spread of bird flu virus in the
Asian region
Feb 6: Moody's
upgraded
Malaysia's foreign
currency rating
outlook
Index
600
500
400
May 12: MSCI
added six counters
to its Malaysian Index,
effective 28 May 2004
Jun 24:
Additional
RM10b
allocation
for 8MP
Mar 2: Purchase of
5% stake in
Telekom Malaysia
by Temasek
Holdings Pte from
Khazanah
800
700
Mar 22: Landslide election
victory for Barisan Nasional
Feb 18:
Reinstatement
of Malaysia to
CalPERS' list of
permissible
investments
Apr: Fears of US
rate hike, concerns
over a hard landing
in China, threat of
rising oil prices and
growing tension in
the Middle East
May 26:
Announcement of a
better-than-expected
1Q 2004 GDP
growth of 7.6% y-o-y
May 14: News
of revamp of
government-linked
companies (GLCs)
Jan 7:
Appointment of
DPM and MOFII,
and Cabinet
reshuffle
300
200
100
23 Jan
30 Jan
06 Feb
13 Feb
20 Feb
27 Feb
05 Mar
12 Mar
19 Mar
26 Mar
02 Apr
09 Apr
16 Apr
23 Apr
30 Apr
07 May
14 May
21 May
28 May
04 Jun
11 Jun
18 Jun
25 Jun
02 Jul
02 Jan
09 Jan
16 Jan
0
Mkt Transacted Volume
18
Mkt Transacted Value
Composite Index
16,000
10 Sep: 2005 BudgetAnnouncement of
measures to liberalise
the capital market
Nov 22: Largest IPO in 2004, AirAsia
Bhd, listed on Main Board
14,000
Aug: Concerns over
rising global crude
oil prices and their
impect on global
economic growth
Nov 8: Fitch Ratings
upgraded Malaysia's
foreign currency
rating
12,000
Dec 16:
Moody's
upgraded
Malaysia's
foreign
currency
rating
10,000
8,000
Dec 26:
Tsunami
disaster
6,000
Volume (Units)/Value (RM)
(Million)
Jun 30: US
Fed raised
interest rate by
25 bps to 1.25%,
the first rate
increase in
four years
Oil prices continued
to surge
in Oct, breeching
US$55 a barrel on
22 Oct
Nov 17: Fall in oil
prices and renewed
speculation about a
ringgit peg review
4,000
2,000
30 Jul
06 Aug
13 Aug
20 Aug
27 Aug
03 Sep
10 Sep
17 Sep
24 Sep
01 Oct
08 Oct
15 Oct
22 Oct
29 Oct
05 Nov
12 Nov
19 Nov
26 Nov
03 Dec
10 Dec
17 Dec
24 Dec
31- Dec
09 Jul
16 Jul
23 Jul
0
Success through
Business
Transformation
“Let ethics be the focal point of any transformation. Ethics is about
doing the right thing instead of the easy thing - even when there is no
one watching.
Ethics in regulating the market, at its broadest and most basic level,
is the protection of investor interest. Lest we forget, this principle
reaffirms a simple and salient truth - that markets exist only by the
grace of investors.”
CHAIRMAN
Management
Discussion and Analysis - Business & Operations
A. BUSINESS UNIT
Bursa group comprises an exchange holding company and various subsidiaries which own and operate various
businesses. The businesses are operated through three business units:
• Exchange Business Unit
• Clearing, Settlement and Depository Business Unit; and
• Information Services Business Unit
Bursa Malaysia
Exchange
Business Unit
Clearing, Settlement and
Depository Business Unit
Information Services
Business Unit
Bursa Securities
Bursa Securities
Clearing
Bursa Derivatives
Bursa Derivatives
Clearing
Labuan International
Financial Exchange
(LFX)
Bursa Depository
Bursa Information
A1. EXCHANGE BUSINESS UNIT
Resurgence in the IPO market, new records in derivatives trading and expansion of Islamic instruments in offshore
markets mark our success. We will continue to expand the breadth and depth of investment products and grow
foreign participation and retail interest for further progress.
A1.1 Securities Exchange
As at 31 December 2004, Bursa Malaysia Securities Berhad (Bursa Securities), consisting of the Main Board,
Second Board and MESDAQ Market, was ranked the eighth largest exchange in Asia by market capitalisation
(excluding Japan), and the largest in South East Asia by number of listed companies.
Total Market Capitalisation and Total Number
of Listed Companies
Market Cap.
RM Billion
1000
800
906
865
816
798
No. of Listed
Companies
1000
963
722.0
800
640.3
600
400
600
444.4
465.0
481.6
400
200
200
0
0
2000
2001
2002
Market Capitalisation
22
2003
2004
Listed Company
Management
With positive economic outlook and the increasing number of securities listed, market capitalisation reached the
highest level since 1996, at RM722.0 billion as at 31 December 2004, reflecting 12.8% increase from the RM640.3
billion recorded at the end of 2003. Average daily trading volume was 494.6 million units, compared to 504.8 million
units in 2003. However, average daily value rose to RM983.1 million, from RM838.7 million in 2003.
The equities market experienced a resurgence in initial public offerings (IPOs), with 72 new listings in 2004, the
highest number since 1997. MESDAQ Market was the focus for new IPOs with 31 listings, reflecting heightened
capital raising activities in the high growth and technology sector. The Second Board added 26 new listings whilst
the Main Board, 15 companies, bringing the total number of companies listed on Bursa Securities to 963 as at end
2004.
Listed Companies by Main Board,
Second Board and MESDAQ Market
800
622
600
598
561
499
400
520
296
292
292
276
278
200
3
4
2000
2001
0
Main Board
63
32
12
2002
2003
Second Board
2004
MESDAQ Market
2004 saw improvement in market turnover due to a combination of factors. These included the change in leadership
in Government, Barisan Nasional’s landslide election victory, the reinstatement of Malaysia on the permissible
investment’s list of California Public Employees’ Retirement System (CalPERS), the upgrading of Malaysia’s foreign
currency rating, the remaking of Malaysia Incorporated, prospects from Government’s decision to divest their interest
in government linked companies (GLCs) and the positive announcements relating to the capital market in the 2005
budget which include further liberalisation of the capital market for the allocation for five foreign stockbroking
companies and global fund managers to operate in the country. The positive outlook prevailed in spite of the
unpredictability in the Middle East, continued global economic uncertainty, rise in crude oil prices and fears of a US
interest rate hike.
Market Turnover
Turnover Velocity
(Percentage)
Turnover Value
(RM Billion)
50
500
44.6%
40
400
32.8%
31.8%
30
300
244.1
24.7%
206.3
243.9
18.7%
20
200
131.9
96.0
10
0
2000
2001
100
2002
Turnover Velocity
2003
2004
0
Turnover value
Management
Total trading value increased from RM206.3 billion in 2003 to RM243.9 billion in 2004. Institutional participation,
both domestic and foreign, increased from 45.0% in 2003 to 55.4% in 2004. Based on submissions made by
participating organisations (POs), foreign trades made up 30.5% of total trading in 2004, an increase of 6.5% from
the 24.0% recorded in 2003.
As at 31 December 2004 there were 33 participating organisations ( POs) and 59 branches operating nationwide.
Of the 33 POs, six are universal brokers (UBs). UBs are POs that have merged with 3 or more POs and are able to
provide a broader range of capital market products and services. The UBs collectively have 8 Electronic Access
Facilities (EAFs) and 67 Electronic Access Facilities with Permitted Activities (EAFPAs) in place. EAFs are sites or
premises where clients of POs are able to initiate orders in respect of transactions or obtain market information.
EAFPAs, in addition to the above services, have Dealer’s Representatives on site to facilitate the placement of
orders and limited front and back-office operations, including CDS operations.
A1.2 Derivatives Exchange
Progress and growth were also evident in the performance of Bursa Malaysia Derivatives Berhad (Bursa Derivatives)
which recorded new trading highs. Total volume traded on Bursa Derivatives in 2004 amounted 2,632,962 contracts
representing a growth of 31.6% over the volume of 2,000,271 contracts traded in 2003.
The KL Composite Index Futures (FKLI) recorded a total volume of 1,088,419 contracts for 2004, averaging 4,389
contracts a day and more than tripling its volume in 2003, with a record high of 14,795 contracts on 27 May 2004.
The Crude Palm Oil Futures (FCPO) remained the most actively traded futures contract in the derivatives exchange
with a total turnover of 1,378,334 contracts, averaging 5,558 contracts per day and representing a national value of
approximately 140,000 metric tons of crude palm oil traded per day. Bursa Derivatives operates the largest palm oil
futures market in the world - the FCPO is the preferred benchmark for the pricing of palm oil and its products
worldwide. The FCPO is currently the 10th largest commodity-based derivative contract traded worldwide.
In February 2004, Bursa Derivatives launched the Palm Kernel Oil Futures (FPKO) contract bringing the number of
contracts available for trading to 8.
Open Interest has also grown, averaging 30,000 lots in 2004, signifying industry’s confidence in our products and
markets.
As at 31 December 2004 there were 15 licensed trading participants (TPs), 30 associate participants and 94 local
participants.
Volume/ Open Interest In Derivatives Market
Trading Date:02 January 2004
Volume: 6,097
Open Interest: 49,784
Trading Date:31 December 2004
Volume: 5,375
Open Interest: 65,824
90,000
28,000
No of contracts
70,000
20,000
60,000
16,000
50,000
12,000
40,000
30,000
8,000
20,000
4,000
10,000
Open Position
Volume
0
24
Dec-04
Nov-04
Oct-04
Sep-04
Aug-04
Jul-04
Jun-04
May-04
Apr-04
Mar-04
Feb-04
Jan-04
0
Open Interest
80,000
24,000
Management
A1.3 Offshore Exchange
The Offshore market is represented by Labuan International Financial Exchange or LFX. LFX was created to
complement various financial services offered in Labuan with its goal to facilitate mobilisation of funds and capital
raising through the listing and trading of a wide range of multi-currency (non-RM) financial instruments based on
either conventional or Syariah principles.
LFX recorded thirteen new listings in 2004, bringing the total number of listings to 24, growing the market capitalisation
to approximately US$10.08 billion (RM38.30 billion). These include debt and equity linked instruments, sukuks
issued by foreign issuers such as the Kingdom of Bahrain and the Government of Qatar. The exchange also
received increased participation from local issuers with the listing of Malaysian Government Securities and
Government-Linked Companies.
The listing of local guaranteed notes and foreign Islamic financial instruments, adds to the growth potential of LFX
as an offshore Islamic Capital Market. In addition, the dual listing of the Sukuk Trust Certificate for the Bahrain
Monetary Agency International Sukuk Company on both the LFX and Bahrain Stock Exchange illustrates the ability
and potential of LFX to bridge global markets.
Break down of Listed Instruments on LFX (as at 31 December 2004)
Year
Listed
Instruments
2000
Withdrawn
Instruments*
Open-Ended
Funds (USD)
Debt Securities
(USD)
Total
(USD)
0
0
0
0
2001
1
0
250,000,000
250,000,000
2002
10
229,048,993
1,400,000,000
1,629,048,993
2003
13
292,622,228
1,965,205,000
2,257,827,228
2004
24
342,786,607
9,735,705,000
10,078,491,607
2
* Instruments withdrawn upon maturity
As at 31 December 2004 there were 7 listing sponsors and 4 trading agents.
A2. CLEARING, SETTLEMENT AND DEPOSITORY (CSD) BUSINESS
Offering comprehensive clearing, settlement and depository services with due attention to operational and systemic
risks amongst intermediaries is the pillar for CSD business success.
A2.1 Securities Clearing
Bursa Malaysia Securities Clearing Sdn Bhd (Bursa Securities Clearing) provides, operates and maintains a clearing
house for Bursa Securities.
In 2004, clearing and settlement of securities for on market transaction (OMT) constituted the bulk of total securities
settled and cleared, accounting for about 88% by volume and 89% by value.
Management
Volume And Value of Securities Cleared and Settled
2003
On Market Transaction (OMT)
Volume
Value (RM)
Direct Business Transaction (DBT)
Volume
Value (RM)
TOTAL OMT & DBT
Volume
Value (RM)
2004
% Change
112,183,200,896
183,885,847,755
108,014,303,854
216,677,981,967
(3.7%)
17.8%
12,017,045,978
22,452,434,897
14,666,142,173
27,184,119,665
22.0%
21.1%
124,200,246,874
206,338,282,652
122,680,446,027
243,862,101,632
(1.2%)
18.2%
Settlement netting efficiency for the year 2004 was maintained at approximately 83% compared to the previous
year.
Bursa Securities Clearing recorded a growth of 18.2% in 2004 with shares valued at RM243.9 billion being cleared
and settled as compared to RM206.3 billion in 2003. Under the Institutional Settlement Service (ISS) Buy & Sell
Instruction, 26.4 billion shares valued at RM128.2 billion were cleared and settled as compared to 18.0 billion
shares valued at RM77.5 billion in 2003. This translated to a growth of 65.3% in value of shares cleared and settled.
ISS Instructions Cleared and Settled
2003
OMT
No. of Transactions
Volume
Value (RM)
DBT
No. of Transactions
Volume
Value (RM)
TOTAL OMT & DBT
No. of Transactions
Volume
Value (RM)
2004
% Change
202,196
287,338
42.1%
16,987,400,098
74,702,678,127
24,586,684,347
122,064,177,584
44.7%
63.4%
1,449
1,697
17.1%
1,032,096,602
2,832,653,369
1,776,025,628
6,088,957,032
72.1%
115.0%
203,645
289,035
41.9%
18,019,496,700
77,535,331,496
26,362,709,975
128,153,134,617
46.3%
65.3%
In line with our continuing efforts to improve operational efficiency and widen the range of our products and services,
the timing of settlement for securities and funds for DBT and the timing of settlement payments relating to ISS
commissions and turnaround proceeds for both OMT and DBT were shortened from 3.00p.m. to 12.00p.m. and
12.00p.m. to 11.00a.m. respectively, with effect from 12 January 2004.
As at 31 December 2004 there were 33 trading clearing participants (comprising participating organisations of
Bursa Securities) and 9 non-trading clearing participants. The latter include financial institutions and resident custodian
banks that are allowed to report, clear and settle securities with Bursa Securities Clearing directly.
26
Management
A2.2 Derivatives Clearing
Bursa Malaysia Derivatives Clearing Berhad (Bursa Derivatives Clearing) provides, operates and maintains a clearing
house for Bursa Derivatives.
Total Derivative Contracts Cleared
Product
FKLI
FCPO
FMGA
FPKO1
FKB3
FMG5
FMG3
TOTAL
1
2003
2004
% change
331,218
1,429,967
11
N/A
119,659
118,635
781
2,000,271
1,088,419
1,378,304
0
499
141,969
19,494
4,327
2,632,962
228.6%
(3.6%)
(100.0%)
N/A
18.6%
(83.5%)
454.0%
31.6%
FPKO was launched on 20 Feb 2004.
The total market open position at the end of 2004 recorded an increase of 33.5%. All three key products, Crude
Palm Oil Futures (FCPO), KL Composite Index Futures (FKLI) and Three-month KLIBOR Futures (FKB3) recorded
strong growth in 2004 with 33.9%, 12.2% and 44.5% increase respectively.
Open Position Summary (as at 31 December 2004)
Product
FKLI
FCPO
FKB3
TOTAL MARKET
2003
2004
% change
8,993
21,149
18,977
49,296
10,092
28,314
27,418
65,824
12.2%
33.9%
44.5%
33.5%
Margin collected has also increased on average, due to higher number of open positions. Average daily margin
requirement for year 2004 was approximately RM167.0 million vis-à-vis RM127.0 million for the year 2003.
To extend the breadth of assets that can be lodged as margin collateral, Bursa Derivatives Clearing had on 28
January 2005, established an infrastructure for the lodging of shares as margin collateral for derivatives trading.
Daily Margin Summary (as at 31 December 2004)
Product
FKLI
FCPO
FPKO1
FKB3
FMG5
FMG3
FMGA
1
2003 (RM ‘000)
Highest
57,761
156,368
N/A
39,662
4,406
870
48
Lowest
11,119
57,009
N/A
10,708
254
0
0
2004 (RM ‘000)
Average
22,098
80,403
N/A
17,933
3,017
221
28
Highest
83,424
139,509
952
33,573
3,674
864
32
Lowest
Average
24,664
61,341
0
17,850
0
0
0
39,972
101,138
94
23,715
1,714
240
1
Change in
Average Margin
80.9%
25.9%
N/A
32.2%
(43.2%)
8.5%
(94.9%)
FPKO was launched on 20 Feb 2004.
As at 31 December 2004 total amount of security deposits held by Bursa Derivatives Clearing, which may be used
if the clearing participant defaults in making payments, amounted to RM14.0 million. Bursa Derivatives Clearing
also maintains a clearing fund, fixed and variable, contributed by clearing participants. As at 31 December 2004,
only fixed contributions had been made, amounting to RM14.0 million.
Management
Bursa Derivatives Clearing also plans to launch the
service to clear and settle over-the-counter ethylene
contracts this year.
building exercise in respect of IPOs and holding of
underlying securities for the issuance of ADR/GDR
programmes.
As at 31 December 2004 Bursa Derivatives Clearing
had a total of 14 clearing participants.
The remaining Central Limited Order Book (CLOB)
securities were successfully transferred from the
Central Depository (Pte) Ltd’s CDS account to their
respective beneficial owners’ accounts on 1 October
2004.
A2.3 Depository
Bursa Malaysia Depository Sdn Bhd (Bursa Depository)
provides, operates and maintains a central depository
for securities listed on the securities exchange.
Bursa Depository strives to enhance its services to
continue supporting the ever-changing needs of its
users, such as its CDS account holders and listed
companies. There is a marked increase in the number
of securities immobilised from 29.5 billion in year 2003
to 39.7 billion in year 2004, an increase of 34.6%,
demonstrating the large number of securities issued
arising from new listings and secondary issues.
Bursa Depository through its Central Depository
System (CDS) provides comprehensive depository
services to a diversified group of market participants
comprising Stockbroking Companies, Financial
Institutions, Institutional Investors, Merchant Bankers,
Share Registrars, Issuing Houses and Retail Investors.
Bursa Depository also provides services to facilitate
development of the local securities industry. Amongst
such services are the omnibus accounts for book-
Bursa Depository, which manages a total of 3.4 million
CDS accounts as at 31 December 2004, will reengineer itself to meet the needs of an increasingly
sophisticated market and participants.
In recognising the importance of information technology
and the role it can play, eRapid, an internet based
facility was introduced to enable more efficient and
effective dissemination of information to CDS users and
easy access to important information on CDS. On 20
December 2004, CDS circulars were made available
to Authorised Depository Agents (ADAs) and
Authorised Depository Members (ADMs) via the
internet. Subject to SC’s approval, the platform will be
expanded to include delivery of RODs, allotment
provisions relating to corporate exercises and Initial
Public Offerings (IPOs) and circulars to other users,
such as share registrars and issuing houses.
As at 31 December 2004 there were a total of 35 ADAs
and 26 ADMs.
Depository Activity
2003
No of CDS accounts opened
Total net CDS accounts opened
Total ADAs
Total ADMs
Total ADA Branches
Total Companies in CDS
Total Line of Securities in CDS
Shares Immobilised in CDS during the year (RM billion)
Total Shares Immobilised in CDS (RM billion)
New Companies prescribed into CDS
Transfers processed
Record of Depositors (RODs) produced
Corporate Actions Processed
28
262,172
3,233,206
40
30
96
934
1,227
29.5
263.8
58
866,952
14,737
5,198
2004
255,136
3,440,057
35
27
114
1007
1,310
39.7
303.6
75
694,225
18,284
6,556
Management
A3. INFORMATION SERVICES BUSINESS
Expanding the potential of intellectual asset of the
exchange in exploring revenue growth for the group
will be a key focus for progress.
Bursa Malaysia Information (Bursa Information) is a
market oriented entity, which aims to leverage and
maximise the potential of our intellectual assets - real
time price information which is proprietary to the
exchange. The information services business unit
compiles and disseminates comprehensive information
on prices, trading and indices for listed securities on
real time or delayed basis. It also develops and provides
information products and services for subscribers.
A new information services pricing model was launched
in October 2004, transforming a fixed licence fee basis
into a fixed fee plus variable fee basis for dissemination
of market information via various means.
Bursa information has also embarked on the project to
improve the group Management Information System
(MIS), a testament to our commitment in ensuring a
more efficient platform for delivering information.
In 2004, two more products were launched to further
complement and expand the current range of products:
the licensing of Bursa Malaysia Indices for Index-Linked
Investment products and E-Site Information Services.
With the product target market ranging from
participating organisations to investors; from the
academia to the media; from the government to the
public, it is envisaged that Bursa Information can only
grow from strength to strength in realising its potential
as an important source of revenue for the group.
B. REGULATION AND COMPLIANCE
The regulatory framework was reviewed to improve
market efficiency and accord greater investor
protection.
In light of Bursa’s demutualisation, Bursa entered into
a Memorandum of Understanding (MOU) with the
Securities Commission (SC) on 5 January 2004. The
objective of the MOU is to delineate Bursa’s regulatory
functions and those of the SC in order to further
streamline the operations and processes adopted in
the regulation of the securities and futures market and
provide further clarity on the regulatory duties of each
party.
The SC also issued a Guidance on Bursa’s regulatory
role which sets out the manner in which Bursa and its
subsidiaries shall fulfil their regulatory obligations and
functions under the securities laws and includes the
arrangements contemplated under section 11J of
the Securities Industry Act 1983. The Guidance
encompasses the following areas:
(i) oversight by SC of Bursa’s performance of its
regulatory role;
(ii) Bursa’s role in relation to the registration,
appointment and approval of market participants;
(iii) Bursa’s role in relation to the monitoring,
supervision and regulation of the activities of market
participants in the securities and futures markets
operated by our subsidiary exchanges;
(iv) Bursa’s role in matters pertaining to surveillance
and enforcement;
(v) Bursa’s role in relation to listing-related matters;
and
(vi) fees and charges.
Subsequent to demutualisation, Bursa and its
subsidiaries continued to perform their roles and
obligations vis-a-vis the markets and systems they
operate, in accordance with their statutory duties.
The key roles and obligations included, among other
things, development of rules and policies, the
administration of the rules, supervision and monitoring
of relevant market participants including the
performance of audits and inspection on the relevant
market participants, enforcement of breaches of rules
and surveillance and investigation of trading and market
activities.
In order to enhance efficiency of the fund raising
process in our markets, the regulatory roles of the SC
and Bursa Securities vis-à-vis the MESDAQ Market
were streamlined, resulting in the SC being the sole
authority to approve issues and listings of securities
on the MESDAQ Market. Thus, with effect from
1 January 2005, Bursa Securities ceased to approve
issues and listings of securities on the MESDAQ Market
but continued to approve admissions to and quotation
for trading of securities on the MESDAQ Market.
Management
B1. REVIEW OF RULES
As an integral part of our efforts to develop dynamic
and robust markets and to further promote the
credibility and efficiency of our markets, our
subsidiaries’ rules were reviewed and the necessary
changes were made.
With the demutualisation of Bursa, relevant
amendments were also made to the rules of Bursa’s
subsidiaries to give effect to the relevant provisions of
the Demutualisation (Kuala Lumpur Stock Exchange)
Act 2003 and the relevant securities laws.
Some key changes to the rules of Bursa’s subsidiaries
are highlighted below.
B1.1 Changes to Listing Requirements of Bursa
Securities
Several changes were issued to the Listing
Requirements for the Main Board and Second Board
(LR) and Listing Requirements for the MESDAQ
Market (MMLR) in the year 2004. Amendments were
made, among other things, to give effect to relevant
changes in the securities laws.
One of the changes made for purposes of giving effect
to relevant changes in the securities laws was in
relation to issuance of securities arising from bonus
issues and share schemes for employees (ESOS) by
public companies. Under the amendments to Schedule
1 of the Securities Commission Act 1993 (SCA) that
came into effect in January 2004, public companies
undertaking bonus issues and ESOS were exempted
from procuring the approval of the SC. Pursuant
thereto, public companies seeking listing on Bursa
Securities and companies listed on Bursa Securities
that wished to issue and list securities arising from
bonus issues and/or ESOS on Bursa Securities
needed to apply only to Bursa Securities and to comply
with the requirements in relation to bonus issues and
ESOS as prescribed under the LR. With this, Bursa
Securities became the one-stop agency for listing of
bonus issues and/or ESOS. This new requirement
served to enhance efficiency in capital market
activities.
Another change to the LR for the purpose of enhancing
efficiency in the market was the implementation of a
new framework for perusal of circulars and other
30
Discussion and Analysis - Business & Operation
documents (circular). Amendments to the LR and
Practice Note No.18/2005 provided that Bursa
Securities would no longer conduct a complete perusal
of all circulars issued by listed companies prior to their
issuance but would assume a more risk-based
approach to the perusal of circulars issued by Main
Board and Second Board listed companies. In this
respect, with effect from January 2005 Bursa Securities
ceased perusal of certain circulars whilst continuing
to review other circulars (by way of limited review or
full review depending on the type of circular). The
change in the regulatory approach was expected to
significantly reduce the time-to-market for issuance of
circulars thereby facilitating the expedient completion
of corporate proposals by listed issuers whilst
preserving the standard of disclosure.
In addition to changes mentioned above, the
continuous review of the LR and MMLR, taking into
account the changing environment and feedback of
industry participants, also resulted in changes to the
directors’ training framework developed by Bursa
Securities. The requirements of Continuing Education
Programme (CEP) were repealed with effect from 1
January 2005 and the onus of overseeing the training
needs of directors were required to be assumed by
the boards of directors of the respective listed issuer.
Directors of listed issuers were, however still required
to attend the Mandatory Accreditation Programme
(MAP) and where applicable, comply with the
requirements of CEP prior to its repeal. In addition,
listed companies will be required to disclose in their
annual reports whether their directors have attended
training for the financial year and the type of training
attended. Where a director has not attended any
training, the reasons must be disclosed.
Improving and strengthening the quality of issuers
listed on Bursa Securities has always been a primary
focus of Bursa Securities. In this respect, one of the
efforts undertaken by Bursa Securities was to
review the framework for Practice Note No 4/2001
(PN4) and Practice Note No 10/2001 (PN10) (PN4 and
PN10 Framework) and to introduce a new requirement
for listed issuers to maintain a minimum issued and
paid up capital on a continuing basis. In relation to the
PN4 and PN10 Framework, the amendments
undertaken including the issuance of Practice Note
No 16/2005 and Practice Note No 17/2005 (New
Framework) were aimed at expediting the time taken
by listed issuers with unsatisfactory financial condition
Management
and level of operations (Financially Distressed
Companies) to regularise their condition. These
changes which took effect in January 2005 included a
revised time frame of 8 months for the Financially
Distressed Companies (excluding cash companies) to
submit their regularisation plans to the relevant
authorities for approval, failing which, an automatic
suspension of their securities would be imposed and
delisting procedures would be commenced within the
prescribed period.
In addition, in order to enhance business efficacy and
to aid MESDAQ Market companies in complying with
the MMLR, Bursa Securities issued two Guidance
Notes on Independent Directors and Recurrent
Related-Party Transactions of a Revenue Nature
respectively.
B1.2 Changes to Rules of Bursa Securities
Pursuant to the demutualisation of Bursa, the Rules
of KLSE were superseded with the Rules of Malaysia
Securities Exchange Berhad (MSEB) with effect from
5 January 2004. The Rules of MSEB retained
substantially the provisions of the Rules of KLSE. The
pertinent changes made to the rules of MSEB were in
relation to the governance structure of the stock
exchange and the participating organisations (POs)
arising from the demutualisation of Bursa.
To further enhance and boost efficiency in the
operations of the market participants, amendments
were also made to the Rules of Bursa Securities
effective 9 July 2004 pertaining to capital adequacy
requirements (CAR) to provide for the changes in
relation to the frequency of submission through
electronic transmission of information and records
relevant to calculation of the Capital Adequacy Ratio,
introduction of the Position Risk Factor for investments
in unit trusts, review of the threshold for Large
Exposure Risk (LER) and review of the meaning of
“single equity” for LER.
Subsequent to the aforesaid amendments, the
provisions of the CAR in the Rules of Bursa Securities
in relation to the paid up capital of POs were also
amended to provide for the changes made as to the
computation of the paid up capital of the POs, charged
assets, minimum operation risk requirement,
suspended securities, LER, definition of “single equity”
and LER requirements for exposure to Equity relative
to Instrument on Issue. These amendments took effect
on 1 November 2004.
Changes were also made pertaining to the specific
requirements for physical segregation between dual
licensed dealer’s representatives (for both securities
and derivatives) and a single licensed dealer’s
representatives (for securities only) in the
circumstances where futures broking business is also
conducted at the PO’s premise. As a result of these
amendments, flexibilities were given to the POs
intending not to have the physical segregation to
provide for the establishment and implementation of
the required policies and controls to prevent the flow
of information between the above dual licensed
dealer’s representatives and the single license dealer’s
representatives.
B1.3 Changes to Rules of Bursa Derivatives and
Bursa Derivatives Clearing
The Rules of Bursa Derivatives Clearing were
amended effective 20 December 2004 to allow clearing
participants to deposit shares for initial margin payment
with Bursa Derivatives Clearing. Initially only cash and
Irrevocable Letters of Credit were allowed as payment
of initial margin. With the acceptance of shares as
payment for initial margin, 25 blue chip shares listed
on Bursa Securities were declared as acceptable for
initial margin payment by Bursa Derivatives Clearing.
Following this, the Rules of Bursa Derivatives were
also amended with effect from 20 December 2004 to
allow trading participants (most of whom are clearing
participants), to accept shares from their clients for
margin purposes.
Further, in conjunction with the launch of a new product
namely Crude Palm Kernel Oil Futures (FPKO)
contracts by Bursa Derivatives on 20 February 2004,
relevant amendments were made to the Rules of
Bursa Derivatives.
B1.4 Changes to the Rules of Bursa Depository
In the year 2004, amendments were made to the Rules
of Bursa Depository to allow depositors to determine
the authorisation period for balance enquiries. With
these amendments in place, depositors would be given
the liberty to determine the authorisation period for
balance enquiry and manage the balance enquiry of
Management
their securities accounts in such manner as they
deemed fit. In addition, the removal of the said
restriction was expected to reduce the administrative
work on the part of the ADAs particularly in cases
where no expiry date is specified by the depositors in
the prescribed form.
The Rules of Bursa Depository were also amended
effective 30 December 2004 to include authorised
personnel of exempt dealers who perform pass through
activities as a category of persons eligible to witness
CDS account opening documents. Exempt dealers are
financial institutions which are allowed to conduct pass
through activities i.e. to solicit and accept orders from
their clients to transact in securities and pass such
orders to a PO for execution, without being licensed.
They are declared exempt dealers by virtue of
Securities Industry (Exempt Dealer) Order 1996.
The effect of the above was to allow clients of exempt
dealers to not only submit forms for opening of trading
accounts and to pass orders for transacting in securities
through them but also to submit forms for opening of
CDS accounts via the exempt dealers, which was
necessary for the purposes of investing and trading in
shares. The amendment thus provided investors with
greater convenience in terms of trading on the market
by allowing them to treat the exempt dealer as a one
stop centre for their dealings.
B2. REGULATORY ACTIVITIES AND
COMPLIANCE
B2.1 Perusal of draft circulars and documents to
shareholders
Issues & Listing Division conducts perusal of draft
circulars and other documents to shareholders to
ensure compliance with the standard of disclosure
prescribed in the LR, which include ensuring that
shareholders are given all such information as they
and their professional adviser would reasonably expect
to find in a circular of that nature, for the purpose of
making an informed investment decision. The number
of draft circulars and other documents submitted to
Bursa Securities for perusal in 2004 was 1,292
compared to 1,087 in 2003.
B2.2 Enforcement
Based on the Corporate Governance Survey of Asia in
CG Watch September 2004 conducted by CLSA and
32
the Asian Corporate Governance Association,
Malaysia’s corporate governance practices have
improved whereby Malaysia has moved up to fourth
position in 2004 from fifth position previously. This came
largely from a higher score on enforcement due to a
stricter implementation and enforcement of good
corporate governance practices.
The number of instances of non-compliance of the LR
has decreased as compared to 2003 due to amongst
others, the greater awareness of the LR arising from
our continuous educational efforts and stricter
enforcement actions. We will continue with our
commitment to monitor compliance and to undertake
enforcement in order to maintain a fair and orderly
market and enhance investor confidence.
Enforcement actions taken against Public Listed
Companies, Directors, Advisers and Sponsors for the
financial year ended 31 December 2004
Number of Cases
2003
2004
Caution and Impress
Private Reprimand
Public Reprimand
Public Reprimand & Fine
Total
37
70
55
39
201
1
49
35
30
115
Since the introduction of PN4 in February 2001 and its
repeal in December 2004, a total of 128 companies
have been classified as PN4 companies during the
period.
To-date, 74 PN4 companies have regularised their
financial position, 17 have been de-listed and 37 are
in various stages to regularise their financial condition.
B2.3 Investigation and Inspection
In year 2004 we had 161 new cases for investigation
and 219 cases of completed investigation. A total of
16 annual inspections on POs (including selected
branches, EAFPAs and EAFs) to determine compliance
with the various Rules, Regulations and Directives and
34 readiness inspections on POs to determine their
readiness prior to commencement of operations in
respect of branch, EAFs and EAFPAs were also
conducted. Trading Participants (TPs) were also
subject to inspections with 7 annual inspections and
12 readiness inspections conducted. Disciplinary
actions were taken against the relevant market
participants for breaches of the subsidiaries’ rules.
Management
Disciplinary actions for year 2004
Disciplinary
Action
Participating
Organisation
Dealer’s
Representatives
Executive Director
Dealing /
Executive Director
Operations /
Executive Director
Compliance
Authorised
Depository
Agents
Authorised
Direct
Members
11
20
4
1
5
71
5
15
9
1
-
Struck Off
Suspension
Fines
Reprimand
B2.4 Market Surveillance Activities
In 2004, as a reasult of daily surveilance activities,
several cases of suspected offences were detected.
Suspected offences under the securities laws were
forwarded to SC for further action. These suspected
offences include insider trading, market manipulation,
false trading and transfer involving no change in
beneficial ownership.
• In January 2004, disposal of 100% equity interest in
Malaysian Share Registration Services Sdn Bhd
(MSRS) and Bursa’s investment in MSRS’s
redemable convertable unsecured loan stocks
to Symphony House Berhad for a total cash
consideration of RM6.0 million; and
Bursa had also declared 3 listed companies as
“Designated Securities”. This measure was taken as a
preventive step to curb excessive speculation and
possible manipulation as well as to protect investors’
interest.
• In June 2004, disposal of the entire equity interest in
Bursa Training Sdn Bhd (Bursa Training) to a third
party for a total cash consideration of RM855,878.
Bursa Training had previously acquired the business,
assets and liabilities of Researh Institute Investment
Analysts Malaysia (RIIAM), a company limited by
guarantee for a cash consideration of RM1.00.
B2.5 Service Enhancements for Intermediaries
C2. TECHNOLOGY
In line with our continuous effort to improve the
management of systemic risk and system for monitoring
PO’s financial position, Automated Risk Management
and Decision Making Analysis (ARMADA) System was
developed and implemented.
Bursa is committed to business and process efficiency
through technology innovation. The development of the
Common Trading Platform (CTP) will broaden access
to multiple markets and uncover opportunities for
efficient implementation of new products and services,
re-defining potential of the exchange.
To further enhance the electronic client order-routing,
we revised the code on Electronic Client Order-routing
System (eCOS). eCOS allows clients of POs to access
eCOS facilities via any personal computer or Internet
access devices from anywhere around the globe. As
at 31 December 2004, 28 POs have implemented
eCOS facilities.
C. OTHER BUSINESS
C1. CORPORATE TRANSACTION
As part of the group strategy to focus on its core
competency, Bursa undertook the following
divestments:
Since the implementation of the first computerised
system in 1984, Bursa has successfully automated all
critical operations including trading, real-time price
dissemination, clearing, settlement and depository,
surveillance and risk management. The open out-cry
days and delivery of physical share certificates have
been replaced with silent clicks and electronic book
entries.
In recognition of our IT operations’ achievement in
providing and supporting a 100% system availability
for equity trading, settlement and depository, Bursa was
awarded the “Non-Stop Business Operations Award”
by HP Malaysia in December 2004.
Management
The main focus of Bursa’s technology development
was intensified in 2004 with the implementation of the
Common Trading Platform (CTP).
With the successful implementation of the new network,
the Exchange is now prepared for more inter-system
connectivity in future.
The CTP is planned for full implementation by 2006 to
replace the existing trading platforms.
C3. Business Transformation
The three major phases for implementation of the CTP
are as follows:
Another key focus of the Exchange is to increase
business and operational efficiency and effectiveness
through business transformation.
•
C3.1 Renewal Work-Out
•
•
Phase 1 - Implementation of the new derivatives
trading system by the second quarter of 2005;
Phase 2 - Implementation of the new securities
trading system by the fourth quarter of 2005. At
this stage, a common trading platform will be
created. However, participating organisations and
trading participants will continue to have separate
front-end trading systems; and
Phase 3 - Implementation of the common broker
front-end trading system in 2006, as well as open
access which will provide choice to participating
organisations and trading participants on how they
can access the market and differentiate service
offerings to the end customer.
In short, at the end of phase 3 of the project, the CTP
will provide trading convenience and efficiency through
an integrated platform for brokers to access and trade
both the securities and derivatives markets, and
present opportunities for the efficient implementation
of new products and services.
In recognition of our progress and potential, Bursa was
mandated by the National Bond Market Committee
to develop and operate the Electronic Trading Platform
(ETP) for bond market in Malaysia. With the first
phase scheduled to be system ready by the end of
2005, ETP would create a dynamic price discovery
mechanism to promote trading in the secondary
market, enhance price dissemination and market
transparency.
In 2004, Bursa embarked on a major exercise to
replace the old network infrastructure implemented in
1997 with the latest network technology from Cisco.
This project, initiated in the 2nd quarter of 2004, was
completed by end of 2004. This major undertaking not
only improved the reliability and operational efficiency
of the network but also enhanced network capacity.
34
Bursa adopted a business re-engineering programme
in July 2004 which is known as Renewal Work-Out
(RWO). RWO is a tool to improve performance and
facilitate change management. The RWO workshops
prepare and train staff in three key areas - issue
identification, problem solving and process reengineering, through a systematic approach and
strategic analysis.
To support the initiative, the Management Committee
and Group Management team committed themselves
to the RWO and have been trained as facilitators
through a series of Leadership Facilitation Workshops.
The pilot process started with six groups-Issues &
Listing, Compliance & Inspection, Legal Advisory,
Corporate & Legal Affairs, Information Services and
Treasury. The projects ran within a tight 6 month
timeframe. The projects resulted in significant reduction
of turnaround time, costs simplification of processes
and opportunities for revenue enhancement.
With the successful implementation of the pilot process,
the RWO will be expanded groupwide and as part of
the group’s commitment to improving quality, customer
service efficiency as well as reducing costs.
C4. RISK MANAGEMENT
Enterprise Risk Management (ERM) ensures that
balance is struck between realising opportunities for
gains in meeting business objectives and minimising
potential adverse impact.
The Board of Directors entrusted the Risk Management
Committee with the responsibility for overseeing the
risk management activities for Bursa Malaysia and
recommending appropriate risk management policies
across the organisation.
Management
A groupwide effort was undertaken in March 2004 to
develop and implement an Enterprise Risk
Management (ERM) Framework. Apart from
compliance with the Securities Industry Act 1983, it is
also to ensure that the organisation achieves an
appropriate balance between realising opportunities
for gains in meeting corporate objectives and
minimising potential adverse impact.
The ERM framework provides the Board reasonable
assurance regarding the achievement of the group
objectives through prudent and consistent risk
management practices in conducting business and
operations.
Audit and Risk Management ensures risks at
operational level are effectively managed and we are
prepared to face any conceivable crisis.
In terms of business continuity in the event of a disaster,
our Business Continuity Plan has undergone 15
revisions and more than 20 major mock exercises. With
the objective of minimising disruption to all the services
provided by us, our plan enables us to operate all our
mission critical services within 24 hours of the
disaster. Additional precautions are taken by keeping
critical data offsite under the care of a third party vendor.
This would allow us to recommence our business within
a reasonable period of time even in the event of a total
loss to both the primary and disaster sites.
Regular risk profiling exercises within each operating
unit, led by the Management team, Group Internal
Management
Discussion and Analysis - Financials
Operating revenue accounted for about 76.2% of total
revenue whilst the balance was other income.
OVERALL PERFORMANCE
The Group recorded net profit after tax (NPAT) of
RM35.1 million for the financial year ended 31
December 2004, a decrease of RM24.8 million or
41.4% compared to the NPAT of RM59.9 million
recorded for the financial year ended 31 December
2003. The significant drop in net profit was primarily
attributable to a one-off expense of RM37.3 million
relating to the Voluntary Separation Scheme (VSS)
implemented by the Group in June 2004.
The financial performance of the Group is summarised
below:
2004
2003
RM’million RM’million
Operating Revenue
Other Income
Total Revenue
Total Operating Expenses
218.3
201.5
68.2
81.3
286.5
282.8
(222.9)
(187.1)
Profit From Operations
63.6
95.7
Finance Costs
(0.1)
(0.1)
Profit Before Taxation
Taxation
63.5
95.6
(25.2)
(30.2)
Minority Interest
(3.2)
(5.5)
NPAT
35.1
59.9
TOTAL REVENUE
Total revenue for 2004 increased by about 1.3% to
RM286.5 million from RM282.8 million in 2003.
Operating Revenue
Total operating revenue for the year increased to
RM218.3 million from RM201.5 million recorded in
2003, representing an increase of RM16.8 million or
8.3% from the previous year.
The increase in operating revenue was primarily due
to an increase in market turnover as a result of
improved market conditions and higher number of
corporate activities. Trading revenue from both the
equity market and derivatives market comprised
62.2 % of operating revenue in 2004, as opposed to
60.7% in 2003.
Market turnover improved further in 2004 compared
to the previous year due to a combination of factors
which helped boost investors’ confidence in the local
market. Total value transacted on Bursa Malaysia
Securities Berhad (Bursa Securities) increased by
RM37.6 billion or 18.2% to RM243.9 billion in 2004
from RM206.3 billion in 2003. Consequently, income
from clearing fee and SCORE fee rose by 5.5% and
11.3% respectively to RM101.5 million and RM10.8
million, respectively. The number of derivatives
contracts traded on Bursa Derivatives also recorded
an increase to 2.6 million contracts in 2004 from 2.0
million contracts in 2003, mainly due to an increase in
the trading of KL Composite Index Futures (FKLI)
contracts. Derivatives trade fee grew 50.0% to RM15.6
million in 2004 from RM10.4 million the previous year.
Analysis of Operating Revenue
Stable Revenue
Others
RM 12.0mil
RM 70.5mil
32%
6%
Stable Revenue
Others
RM 13.0mil
62%
36
Trading Revenue
RM 135.8mil
RM 122.3mil
33%
61%
Trading Revenue
2004
RM 66.2mil
6%
2003
Management
Stable revenue, which comprised depository services,
listing, broker services, information services and
participants’ subscription fees, accounted for 32.3%
of operating revenue, which was about the same
percentage compared to previous year though the
stable revenue for 2003 was lower at RM66.2 million.
Operating Revenue 2004 (RM 218.3mil)
Other Operating Revenue
Institutional Settlement Service (ISS) fee
RM 7.2mil
RM 12.0mil
Depository Services
Participants’ Subscription
RM 27.6mil
13%
6%
RM 3.0mil
3%
1%
Derivatives Trade Fee
RM 15.6mil
7%
47%
Clearing Fee
6%
RM 12.9mil
5%
SCORE Fee and Buying in
Commission RM11.5mil
6%
RM 101.5mil
Broker Services
RM 13.9mil
6%
Listing Fee
RM 13.1mil
Operating Revenue 2003 (RM 201.5mil)
ISS Fee
Other Operating Revenue
RM 5.1mil
RM 13.0mil
Participants Subscription
Depository Services
RM 24.9mil
RM 3.7mil
12%
6% 3%
2%
Derivatives Trade Fee
RM 10.4mil
5%
5%
Clearing Fee
5%
48%
7%
RM 96.2mil
RM 10.7mil
SCORE Fee and Buying in
Commission RM10.6mil
Listing fee declined slightly by RM0.6 million or 4.4%
to RM13.1 million in 2004. Initial listing fee and annual
listing fee increased by 11.1% and 21.4%, respectively
to RM1.0 million and RM6.8 million, respectively.
However, this was partially offset by a 28.2% drop in
additional listing fee from RM7.1 million in 2003 to
RM5.1 million in 2004. The number of new listings on
Bursa Securities increased to 72 new companies in
2004 compared to 58 new companies in 2003. A total
of 15 (2003: 16) new companies were listed on the
Main Board, 26 (2003: 22) new companies on the
Second Board and 31 (2003: 20) new companies on
the MESDAQ Market. 15 companies were delisted
during 2004 compared to 17 delistings in 2003. Total
companies listed on Bursa Securities as at 31
December 2004 was 963 compared to 906 at the end
of 2003. However total funds mobilised on the equity
market reduced slightly by 2.6% from RM7.6 billion to
RM7.4 billion.
Broker Services
RM 13.2mil
7%
In line with the increase in activities on Bursa
Securities, fees from depository services continued to
grow, to RM27.6 million in 2004 from RM24.9 million
in 2003. Record of Depositors (ROD) fees increased
by RM0.8 million or 8.8% to RM9.9 million in 2004
due to the increase in the number of ROD requests
and the number of securities prescribed into CDS.
Similarly, CDS custodian fees grew by RM0.3 million
or 10.3% to RM3.2 million in 2004. However, other
depository fees such as additional/public issue fee,
account opening fee and administrative fee were lower
in 2004 at RM5.1 million, RM1.9 million and RM0.8
million, respectively, compared to RM5.2 million,
RM2.0 million and RM1.3 million, respectively, for 2003.
Listing Fee
RM 13.7mil
Revenue from broker services grew by RM0.7 million
or 5.3% to RM13.9 million (2003: RM13.2 million). This
was primarily due to the increase in the rental of data
communication equipment by participating
organisations (PO) following the opening of 4 new
branches and 25 Electronic Access Facilities with
Permitted Activities (EAFPA) during the current year.
As at 31 December 2004 there were 59 (2003: 55)
branches, 8 (2003: 8) Electronic Access Facilities
(EAF) and 67 (2003: 48) EAFPA.
Management
Revenue from information services increased by
RM2.2 million or 20.6% to RM12.9 million (2003:
RM10.7 million). This was mainly due to reclassification
of KLOFFE data feed revenue of RM2.3 million from
other income in 2003 to information services in 2004.
Revenue from participants’ subscriptions declined by
RM0.7 million or 18.9% to RM3.0 million in 2004 from
RM3.7 million in 2003. The decrease was mainly due
to the reduction in the number of participating
organizations and registered persons, from 39 and 369,
respectively as at 31 December 2003 to 34 and 157,
respectively as at 31 December 2004, following
mergers of stockbroking companies and the deletion
of certain categories of registered persons specified
under the Rules of Bursa Securities effective 5 January
2004, namely registered person (corporate/individual
shareholders)(formerly known as non-dealing
members) and trainee dealers’ representatives,
pursuant to the demutualisation of the exchange.
Other operating revenue mainly comprised perusal
fee, ISS fee, and buying in commission.
Other Income
Other income comprised mainly income from
investments, gain on disposal of fixed assets and
subsidiaries, exposition income, fines collected and
other miscellaneous income. Other income declined
by RM13.1 million or 16.1% from RM81.3 million in
2003 to RM68.2 million in 2004.
Staff and VSS Cost
Staff cost reduced marginally to RM96.6 million in 2004
from RM97.0 million in 2003.
In tandem with the Group’s initiatives to improve
efficiency and equip itself to meet global market
challenges and competition, resources were
consolidated and optimized by the centralization of
manpower at the holding company.
The Group implemented a VSS exercise last year
whereby about 40.7% or 417 staff left the employment
from Bursa Group. The one-off cost incurred for this
exercise was RM37.3 million. The VSS exercise also
resulted in higher pension costs incurred by the Group
of RM4.3 million in relation to staff Retirement Benefit
Scheme due to the additional provision for curtailment
and settlement loss.
The Group had also implemented a new scheme of
service for executive staff (New Scheme) in
September 2003. Under the New Scheme, employees
ceased to accrue benefits under the Retirement Benefit
Scheme in respect of pensionable service after 31
August 2003 in return for a 6.0% increase in employers’
contribution to Employees’ Provident Fund (EPF). This
resulted in an increase in pension costs in relation to
EPF contribution to RM11.7 million in 2004 from RM9.8
million in 2003, representing RM1.9 million or 19.4%
increase.
Depreciation
The lower income recorded in 2004 was mainly
attributable to lower gains on disposal of investment
securities (2004: RM3.6 million; 2003: RM18.4 million)
partially offset by higher interest income (2004: RM54.1
million; 2003: RM51.9 million) and gain from disposal
of investment in subsidiaries (2004: RM4.2 million;
2003: nil). Higher gains on disposal of investments
securities was recorded in 2003 due to more active
bond market activities during that year.
OPERATING EXPENSES
Total operating expenses rose by RM35.8 million or
19.1% to RM222.9 million in 2004 from RM187.1
million in 2003, mainly attributable to the one-off VSS
expense of RM37.3 million. During the year, the Group
implemented several initiatives to consolidate
operations and increase cost efficiencies and
effectiveness.
38
Depreciation decreased by RM2.3 million or 12.4% to
RM16.2 million in 2004 from RM18.5 million in 2003.
The decrease was as a result of a greater proportion
of assets being fully depreciated during 2004.
Other Operating Expenses
Other operating expenses increased slightly by RM1.2
million or 1.7% to RM72.8 million in 2004 from RM71.6
million in 2003. This increase was primarily attributable
to the RM5.5 million provision for impairment of
property, additional provision for bad and doubtful debts
of RM1.8 million and increase in legal and professional
fees by RM1.4 million. In addition, the Group made a
one-off cash settlement of RM2.8 million in favor of
Hong Leong Bank Berhad in August 2004 with respect
to the latter’s claim against a former subsidiary.
Management
The higher operating expenses mentioned above were
partially offset by a writeback of provision in diminution
of investment of RM3.0 million, lower donations (2004:
RM0.1 million; 2003: RM5.0 million) and reduction in
other overhead expenses.
Operating Expenses 2004 (RM 222.9mil)
RM 72.8mil
33%
43%
Staff Cost
RM 96.6mil
7%
Depreciation
17%
RM 16.2mil
VSS Cost
RM 37.3mil
IT upkeep and maintenance and building management
cost declined slightly from RM17.0 million and RM11.0
million, respectively in 2003 to RM16.7 million and
RM10.4 million, respectively in 2004. The reduction
was mainly due to the cost control measures
implemented by the Group in 2004.
Operating Expenses 2003 (RM 187.1mil)
TAXATION
RM 71.6mil
38%
52%
Staff Cost
RM 97.0mil
Depreciation
10%
RM 18.5mil
Taxation declined from RM30.2 million in 2003 to
RM25.2 million in 2004 mainly due to lower taxable
income. Effective tax rate was 39.9% in 2004 and
31.1% in 2003. The higher effective tax in 2004 was
mainly due to higher proportion of expenses which
were not tax deductible such as impairment loss on
the property, cash settlement in respect of a legal claim
against one of the subsidiaries and provision for
retirement benefits.
Breakdown of Other Operating Expenses 2004 (RM 72.8mil)
FINANCIAL RESOURCES AND LIQUIDITY
IT Upkeep & Maintenance
Printing & Stationery
RM 16.7mil
RM 2.5mil
3%
Legal & Professional Fees
Impairment of Property
RM 5.5mil
23%
7%
RM 5.4mil
Others
8%
RM 24.3mil
34%
14%
Building Management
7%
RM 10.4mil
4%
Amortisation of Goodwill
Advertising & Public Relations
RM 2.9mil
RM 5.1mil
Breakdown of Other Operating Expenses 2003 (RM 71.6mil)
Amortisation of Goodwill
IT Upkeep &
4%
Maintenance
RM 4.0mil
41%
6%
Legal & Professional Fees
Building Management
RM 2.9mil
Advertising &
Public Relations
5%
RM 3.3mil
RM 4.0mil
5%
24%
RM 17.0mil
Printing & Stationery
As at 31 December 2004, the Group had cash and
cash equivalents of RM714.8 million compared to
RM808.4 million as at 31 December 2003. Cash
equivalents comprise cash and bank balances, and
short term deposits with financial institutions. The
Group also had short term investments and other
investments totaling RM529.4 million as at 31
December 2004 compared to RM455.7 million as at
31 December 2003.
15%
Others
RM 29.4mil
In addition, as at 31 December 2004, the Group had a
total of RM1.5 billion of available credit facilities for
trade settlement and other contingency purposes. The
Group had no borrowings other than two interest free
unsecured loans from the Government of Malaysia
totaling RM1.1 million as at 31 December 2004.
CASH FLOWS
Cash generated from operations (before tax and
dividends) declined by 84.3% to RM16.5 million in 2004
from RM105.3 million in 2003. This was mainly
attributable to the lower profits due to the one-off
RM 11.0mil
Management
expense and reduction in security and margin deposits
placed by future brokers.
Higher cash outflow was recorded from investing
activities due to purchase of property, plant and
equipment. In 2004, RM67.6 million was incurred for
capital expenditure, out of which RM43.5 million was
for Common Trading Platform (CTP).
Cash flow used in financing activities was lower from
RM4.1 million in 2003 to RM0.8 million in 2004. In 2003,
the Group incurred RM2.8 million in demutualisation
cost and paid RM0.7 million of dividends to minority
shareholders, resulting in higher cash outflow for the
year.
40
CAPITAL EXPENDITURE
The Group has embarked on a project to implement
an integrated platform for trading on the securities and
derivatives markets, using the system purchased from
Atos Euronext. The CTP comprises both new hardware
and software which will replace the technology of the
existing disparate trading platforms. As at 31 December
2004, RM43.5 million of capital expenditure had been
incurred for the CTP, the amount of which has been
capitalised under work-in-progress until the CTP
systems are fully implemented. We have adequate
financial resources to fund our commitment on capital
expenditure.
Commitment
to Progress
“We have moved forward as a group, braving challenges in the major
transformation of the exchange - the demutualisation process. It must
have been the most trying times for the board and committee members.
There were many decisions to make, focusing on our core
competencies, consolidating the business and enhancing operational
scale and efficiency for the exchange moving forward.
Bursa Malaysia is fortunate to have the collective expertise and
experience of Board members who continue to bring quality to board
deliberations and decisions. They bring to the board a composite of
industry and market perspective - befitting the requirements of the
changing and challenging regulatory and business environment.
The contributions so far will be the foundation for the exchange moving
forward. It forms the commitment to progress for Bursa Malaysia to
grow and thrive and become a global exchange.”
CHAIRMAN
Statement
The year 2004 has seen great change for Bursa
Malaysia Berhad (Bursa or the Company). Bursa was
demutualised into a company limited by shares on 5
January 2004. Pursuant to Section 4 of the
Demutualisation (Kuala Lumpur Stock Exchange) Act,
2003, the governing body of the mutualised exchange,
the Committee of the Kuala Lumpur Stock Exchange,
became the inaugural Board of Bursa (inaugural
Board) 1. The inaugural Board was reconstituted and
the current Board of Directors (Board) came into being
on 10 April 2004.
In conjunction with demutualisation, the Company’s
corporate governance practices have been reviewed
and enhanced. In undertaking the review, the Company
was guided by the Malaysian Code on Corporate
Governance.
As required by Paragraph 15.26 of the Listing
Requirements of Bursa Malaysia Securities Berhad
(Bursa Securities LR), this statement summarises the
corporate governance practices of Bursa under the
leadership of the current Board. These practices are
consistent with the underlying aspirations and
objectives as set out in the Code of Corporate
Governance and demonstrate the commitment of the
Board to good corporate governance.
THE DIRECTORS
A1.
The Board
A1.1 The Board meets regularly and oversees the
business affairs of the Company. In its
deliberation and decision-making, the Board
acts in the best interests of the Company and
its shareholders whilst balancing the interests
of investors in the marketplace as required by
law.
A1.2 As prescribed by the Code, the Board assumes
the following six (6) specific responsibilities to
facilitate the ef fective discharge of its
stewardship responsibilities:1. Reviewing and adopting a strategic plan for
the Company
The Board approved strategic objectives and
goals to be achieved by the Company and
its subsidiaries (Group); which in broad terms,
42
of Corporate Governance
are focused on boosting market velocity and
liquidity, expanding products and services
and, improving operational scale and
efficiency. To this end, the Board adopted the
Group’s business plan for 2004 to 2006;
which incorporates certain strategic
initiatives. The Board is regularly informed at
Board meetings of the status of key strategic
initiatives and whether the milestones for the
same have been met. The achievement of
strategic objectives and goals is also built into
the performance management framework
implemented in 2004 (Performance
Management Framework). The Performance
Management Framework uses the “balanced
score card” concept to translate business
strategies into key performance indicators.
Hence, a “cascading” system links strategic
objectives with each business unit’s
objectives and ultimately, individual
employee’s objectives.
2. Overseeing the conduct of the Company’s
business to evaluate whether the business
is being properly managed.
A centralised framework that sets out the
decisions which are specifically reserved for
the Board and those decisions which are
delegated to the committees of the Board,
Chief Executive Officer (CEO) and/or
management to decide has been
implemented (Authority Limits Document).
This division of authority is reviewed as and
when required to ensure an optimum
structure for effective and expedient decisionmaking. Key business matters which are
reserved for the Board are the approval or
adoption, as the case may be, of:a. The annual business plan which includes
overall corporate strategy and the financial
plan and budget;
b. The financial statements;
c. The business continuity plan framework;
d. Acquisitions and disposals of companies
within the Group;
e. Operating and capital expenditure above
a certain limit;
f. Disposals of fixed assets for a
consideration above a certain limit;
Statement
g. Group business restructuring;
h. Dividend policy; and
i. New issues of securities.
Specific responsibilities have been delegated
to committees of the Board (Board
Committees) which are designed to assist
and support the Board in fulfilling its
responsibility to oversee the affairs of the
Company. These comprise the Nomination
and Remuneration Committee (NRC) which
was established on 13 April 2004, the Audit
Committee, Investment Advisory Committee,
Risk Management Committee and Executive
Committee which were established on 30
April 2004, and the Option Committee which
was established on 1 March 2005. Further
details of the Board Committees are set out
on Pages 79 to 82 of the Annual Report 2004.
For the period between 1 January 2004 and
9 April 2004, the inaugural Board was
supported by various interim board
committees comprising the various
committees of the mutualised exchange and
its subsidiaries and the Pro-tem Nomination
Committee.
The CEO, is responsible for the day-to-day
management of the Group’s business. He is
supported by management who have
relevant knowledge and experience in,
amongst others, finance, human resource,
risk management, marketing, information
technology, operations, regulations and law.
The Board is regularly informed at Board
meetings of the Company’ s business
management and performance. A CEO’s
report is tabled at Board and Executive
Committee meetings comprising:a. Selected key market indicators such as
daily average market transacted volume,
daily average market transacted value and
annualised velocity, and an explanation of
the status or performance of the same;
b. A market commentary for the period being
reported on;
c. A summary of the Group’s financial
performance for the period being reported
on; and
d. Updates on key strategic initiatives and
significant operational issues.
3. Identifying principal risks and ensuring the
implementation of appropriate systems to
manage these risks
A system for risk identification and
management has been formalised. In 2004,
the Board adopted an Enterprise Risk
Management framework (ERM). The ERM is
aimed at ensuring that the Company achieves
an appropriate balance between realising
opportunities for gains in meeting corporate
objectives whilst minimising potential adverse
impact. The Board via the Risk Management
Committee was informed of the principal risks
and is regularly updated on the status of the
ERM as well as any significant risk
management issues. Further details of the
ERM are furnished on Page 54 of the Annual
Report 2004.
4. Succession planning including appointing,
training, fixing of compensation of and where
appropriate, replacing senior management.
A formalised appointment, training and
compensation framework for key
management2 positions has been adopted. In
this regard, the Company has entered into
fixed term service or employment contracts
with all key management personnel, typically
for a two (2) year term. The majority of the
fixed term contracts are subject to early
termination provisions and may be renewed
upon mutual agreement. For key
management personnel who meet or exceed
agreed performance benchmarks, new two
(2) year contracts will be offered at the end
of the first year of each contract term. Early
termination is conditional upon requisite
notice being given or the payment of an
equivalent amount in terms of monthly salary
in lieu of notice. The appointment of certain
key management positions is subject to the
purview of the NRC which will then make a
recommendation to the Board for decision.
The NRC also considers and determines the
performance and the remuneration of certain
key management personnel, where the same
is linked to performance. However, the
performance and the variable components of
remuneration of the CEO, which are linked
Statement
to performance, is a matter for the Board as
a whole.
The inaugural Board has approved a
succession plan for key management
positions, which is currently being
implemented.
5. Developing and implementing an investor
relations programme or shareholder
communication policy for the Company
It is the policy of the Company to keep its
shareholders and investors informed of the
Company’s business and position by way of
media releases issued by the Company and
general meetings held. After listing,
communications with shareholders and
investors will be enhanced by way of quarterly
announcements of the Company’s financial
results and other announcements on
significant corporate developments. A
dedicated investor relations unit was
established in January 2005 to formulate and
manage the Company’s communications with
shareholders and investors.
6. Reviewing the adequacy and integrity of the
Company’s internal control systems and
management information systems, including
systems for compliance with applicable laws,
regulations, rules, directives and guidelines.
Name of Directors of Inaugural Board
Dato’ Mohamed Azlan Hashim
Datuk Mohaiyani Shamsudin
Tan Kim Leong, JP
Abdul Kadir Hj. Md. Kassim
Abdul Jabbar Abdul Majid
Abdul Rauf bin Ramli
Datin Mariam Prudence Yusof
44
The Board, via the Audit Committee,
reviewed the effectiveness of the
Company’s internal controls for the
financial year ended 31 December 2004.
The internal control system is designed to
assist in the realisation of the Company’s
business objectives, ensure that the
Company’ s assets are protected from
unauthorised use or disposition, and ensure
the maintenance of proper accounting
records for the provision of reliable financial
information and compliance with relevant
laws and regulations. The Statement on
Internal Control, which provides an overview
of Bursa’s internal control framework, is set
out on Pages 54 to 56 of the Annual Report
2004.
The Company’s management information
systems were reviewed and a plan to
implement a fully-integrated enterprise-wide
management information system has been
formulated.
A1.3 The inaugural Board and current Board had
seven (7) and ten (10) meetings respectively, in
the financial year under review. Proceedings of
the Board meetings were recorded by the
Company Secretary. Details of attendance of
the Directors for the inaugural Board and current
Board during the financial year ended 31
December 2004 are as follows:
Date of
Appointment
Date of
Resignation
Attendance
5 January 2004
5 January 2004
5 January 2004
5 January 2004
5 January 2004
5 January 2004
5 January 2004
5 January 2004
5 January 2004
29 February 2004
10 April 2004
10 April 2004
10 April 2004
29 February 2004
10 April 2004
10 April 2004
10 April 2004
10 April 2004
3/3
7/7
7/7
6/7
3/3
7/7
7/7
6/7
6/7
Statement
Name of Directors of Current Board
Tun Mohamed Dzaiddin bin Haji Abdullah (Chairman)
Datuk Haji Faisyal bin Datuk Yusof Hamdain Diego
Datuk Azman bin Abdul Rashid
Datin Paduka Siti Sa’diah binti Sheikh Bakir
Dr. Thillainathan a/l Ramasamy
Dato’ Abdul Wahid bin Omar
Izham bin Yusoff
Cheah Tek Kuang
Yusli bin Mohamed Yusoff (CEO)
Dates for Board meetings are decided in
advance upon consultation with the Chairman.
A structured agenda facilitates the effective
conduct of meetings by the Chairman and the
allocation of adequate time for discussion. Prior
to Board meetings, the agenda and Board
papers are provided to the Board. During the
course of a meeting, the Chairman ensures that
proposals by management are given due
analysis and deliberation. All members of the
Board are given ample opportunity to express
their views and opinions, and are free to decide
on matters tabled to the Board. Constructive
debate on issues before the Board is always
encouraged.
A1.4 The Board commenced the process of
assessing its effectiveness for the financial year
ended 31 December 2004 through the
appointment of independent consultants,
Towers Perrin, in December 2004. The
methodology adopted for the performance
assessment of the Board is one of selfevaluation in relation to the Board, based on
feedback via standard questionnaires. This will
ensure confidentiality whilst enabling open
feedback. An evaluation report prepared by the
independent consultants will be tabled to the
NRC which will thereafter present its
recommendations to the Board. Evaluation of
the Board will be based on a combination of
factors, both quantitative and qualitative,
recognising the need to enhance shareholder
value balanced against other wider public
interest objectives related to the operation and
development of the capital markets.
Date of Appointment
Attendance
1 March 2004
1 April 2004
9 June 2004
23 July 2004
10 April 2004
10 April 2004
10 April 2004
10 April 2004
10 April 2004
10 April 2004
10 April 2004
10 April 2004
14/14 3
8/10
5/6
5/5
9/10
9/10
9/10
10/10
8/10
8/10
8/10
10/10
A1.5 The above statements also apply to the
performance evaluation of individual Directors.
In addition, the performance of the CEO will also
be evaluated under the Performance
Management Framework; based on the extent
to which certain key performance indicators
(KPIs) have been met. This performance
evaluation is conducted by the NRC annually.
For the financial year ended 31 December 2004,
the CEO was evaluated based on KPIs that had
been set by the Board.
A2.
Board Balance
A2.1 The current Board comprises twelve (12)
Directors, consisting of eleven (11) NonExecutive Directors, which include four (4)
Independent Non-Executive Directors and four
(4) Public Interest Directors, and the CEO as
the sole Executive Director. The Independent
Non-Executive Directors, who in compliance
with Paragraph 15.02 of Bursa Securities LR
comprise one-third (1/3) of the Board, are
independent of management and free from any
business or other relationship which could
materially interfere with the exercise of their
independent judgement. Their independence
was considered by the inaugural Board.
Similarly the Public Interest Directors also satisfy
this test of independence.
A2.2 The Chairman, Tun Mohamed Dzaiddin bin Haji
Abdullah, who is a Non-Executive Director, was
appointed on 1 March 2004 by the Minister of
Finance (MOF) in consultation with the
Securities Commission (SC) from amongst the
Statement
Public Interest Directors, pursuant to Section
8D(3) of the Securities Industry Act, 1983 (SIA)
and in accordance with Article 68(3) of the
Company’s Articles of Association. The Board
is led by Tun Dzaiddin as the Non-Executive
Chairman and the executive management of
Bursa is led by the CEO, Yusli bin Mohamed
Yusoff. In this regard, the roles of Chairman and
CEO are not combined and there is a clear and
distinct division of the roles and responsibilities
of the Chairman and the CEO to ensure a
balance of power and authority within Bursa. The
Chairman, being responsible for the business
of the Board, leads the Board in the discharge
of the responsibilities set out in paragraph A1.2
above. The CEO on the other hand manages
the business of the Company and as such, is
responsible for the efficient and effective
operation of the Group.
A2.3 The individual Directors bring a diverse range
of skills and backgrounds including
accountancy, law, public policy, regulation,
business, stock broking and risk management
as well as business acumen and skills. The
Board members are a blend of professionals,
businessmen and entrepreneurs. The Board
also comprises individuals who have longstanding experience and involvement in capital
markets operations.
A2.4 The separation of powers of the CEO and
Chairman combined with the presence of the
Independent Non-Executive Directors and the
Public Interest Directors, who collectively
represent two-thirds (2/3) of the Board, ensures
a balance of power and authority and promotes
objective and considered decision-making. In
addition, none of the Directors are nominees of
the Company’s substantial shareholders; Capital
Market Development Fund (CMDF) and Minister
of Finance, Incorporated (MOF Inc). Whilst the
Public Interests Directors are appointed by MOF
in consultation with the SC, these Directors do
not represent the interests of MOF Inc on the
Board. In view of the composition of the Board
and, having regard to the calibre of the Directors
and their range of experience, the Board
believes that the interests of investors including
the Company’s minority shareholders and the
public are adequately protected and advanced.
46
The Company does not have any significant
shareholders as defined under the Code 4.
A2.5 The Chairman, having the necessary skills and
experience to manage the business of the
Board, encourages healthy debate and ensures
that resolutions are put to a vote. Hence, Board
decisions reflect the collective will of the Board
and not the views of an individual or group. In
view of this and given that the Board comprises
eleven (11) Non-Executive Directors including
four (4) Independent Non-Executive Directors
and four (4) Public Interest Directors, the
independence of the Chairman as well as the
breadth of experience and individual calibre of
all the Non-Executive Directors, the necessity
to appoint a Senior Independent Non-Executive
Director does not arise. As such, the Company
did not appoint a Senior Independent NonExecutive Director, which is a best practice of
the Code.
A2.6 The Board commenced the process of
conducting a review of its size, composition and
mix of skills, experience and qualities, through
the appointment of independent consultants,
Towers Perrin, in December 2004. The
independent consultants will submit a report on
the review findings for consideration by the NRC
which
will
thereafter
present
its
recommendations to the Board. In conducting
the review, qualitative factors relating to the
functions and workings of the Board will be the
focal point. The regulatory role of the Company
and the provisions as to the composition of the
Board under the Bursa Securities LR and statute
will also be taken note of.
A3.
Supply of Information
A3.1 The Board appreciates that its deliberations and
decisions are highly dependent on the provision
of reliable and complete information. Hence, the
Board and its members have access to all
relevant information on the Group’s business
and affairs in furtherance of their duties. The
Board expects and receives timely advice on
all material information about the Group so as
to ensure effective deliberations and decisionmaking. Prior to Board meetings, the Board is
furnished with Board papers which contain
Statement
sufficient information on matters to be
deliberated so as to facilitate an informed
decision-making process. Additionally, other
relevant information is also regularly supplied
to the Board which includes:1.
2.
3.
4.
The annual business plan and updates;
The CEO’s progress report;
Quarterly results of the Company and Group;
Minutes of meetings of the Board
Committees;
5. Circular resolutions passed;
6. Significant risk management issues;
7. Significant issues raised by shareholders;
8. Information on recruitment and remuneration
of key management positions including
appointment or removal of the same;
9. Material litigations, show causes, demands
and penalty notices;
10. Fatal or serious accidents or dangerous
occurrences;
11. Details of any joint ventures, acquisitions of
companies or alliances; and
12. Significant developments on the human
resources front.
The Chairman exercises control over the quality
and timeliness of such information.
Management representatives who are able to
provide additional insight into the matters to be
discussed will be present at the relevant times
during the board meetings. Minutes of Board
meetings are recorded and draft minutes are
circulated to all Directors for confirmation prior
to being approved. The minutes are kept by the
Company Secretary and are open to inspection
by Directors.
A3.2 All Directors are provided with a manual
including the Memorandum and Articles of
Association, the Authority Limits Document, the
Code of Ethics for Directors, the Bursa
Securities LR and the Code. Updates to the
manual will also be provided to the Directors.
A3.3 The Directors have access to the advice and
service of the Company Secretary in the course
of discharging their duties. The Company
Secretary’s role is to ensure that board policies
and procedures are complied with and all
proceedings of the Board meetings are recorded
in writing for the effective functioning of the
Board. In addition, the Board has access to the
Chief Legal Officer for advice on relevant rules
and regulations as well as legal issues and
implications relating to matters being
deliberated.
A3.4 The Board may also seek advice from three (3)
consultative panels, which provide industry
expertise and guidance on policy proposals,
product and market development initiatives and
other strategic initiatives in relation to the
securities market, derivatives market and
clearing, settlement and depository issues.
A3.5 Where necessary, the Board may obtain
independent professional advice at the
Company’s expense on specific issues to enable
the Board to discharge its duties in relation to
the matters being deliberated. Individual
Directors may also obtain independent
professional or other advice to enable them to
discharge their responsibilities, as and when
necessary, subject to approval by the Chairman,
where the fee payable is below a certain
threshold amount and where it exceeds such
threshold, the Board.
A4.
Appointments to the Board
A4.1 Pursuant to Section 8D(1)(a) of the SIA, one
third (1/3) of the Board must be appointed by
the MOF in consultation with the SC to be Public
Interest Directors. The Public Interest Directors
have been appointed for a two (2) year term. In
relation to appointments of Directors, other than
Public Interest Directors, the SIA provides that
all appointments to the Board of the Company
must be with the concurrence of the SC.
A4.2 All appointments of Directors, other than Public
Interest Directors, are considered by the NRC
which, in accordance with Article 68(5) of the
Company’s Articles of Association, comprises
five (5) Non-Executive Directors, a majority of
whom are Independent Non-Executive
Directors. The NRC will make recommendations
to the Board on the proposed candidate(s) for
the Board’s approval. In its deliberations, the
Board will take into account the characteristics
of the person in question in addition to his or
her skills, functional knowledge and experience.
The concurrence of the SC must be obtained
Statement
pursuant to Section 8D(1)(b) of the SIA for any
appointment or election of a Director of the
Company. Any shareholder may propose a
candidate for directorships subject to Article 71
of the Company’s Articles of Association.
A5.
Re-election
A5.1 In accordance with Article 69 of the Company’s
Articles of Association, an election of Directors
other than the Public Interest Directors shall take
place each year at the annual general meeting
(AGM) of the Company where one third (1/3) of
the Directors for the time being, or if there is not
three (3) or a multiple of three (3), then the
number nearest to one third (1/3) shall retire
from office and be eligible for re-election and
that each Director shall retire at least once in
every three (3) years. As between persons
(other than the Public Interest Directors) who
were appointed Directors on the same day,
retirement shall be determined by lot (unless
otherwise agreed among themselves) pursuant
to Article 70 of the Company’s Articles of
Association. This provides an opportunity for
shareholders to renew their mandates. The
election of each Director is voted separately. To
assist shareholders in their decision, sufficient
information such as personal profile and
shareholdings in Bursa (if any), and meeting
attendance of each Director standing for reelection is furnished in the Board of Directors
Profile on Pages 72 to 78 of the Annual Report
2004 and paragraph A1.3 above.
A5.2 Upon the expiry of their term of appointment,
Public Interest Directors may be eligible for
reappointment by the MOF.
A5.3 A Director who is of or over the age of seventy
(70) years shall retire annually at the conclusion
of the next AGM unless he or she is
re-appointed as Director by way of special
resolution in accordance with Section 129(6) of
the Companies Act, 1965. Presently, there is one
(1) Director of the Company, Dato’ Seri Hwang
Sing Lue who is subject to such retirement and
re-appointment.
A6.
Training of Directors
A6.1 An orientation programme to familiarise new
48
Directors with the Group’s business and
governance has been put in place. Such a
familiarization programme assists new Directors
in effectively discharging their duties.
Notwithstanding the above, Directors are
always welcome to request further explanations,
information or updates on any aspect of the
Company’s operations or business concerns
from management.
A6.2 As at end March 2005, all Directors have
attended the Mandatory Accreditation
Programme (MAP). The Company recognises
that continuous education is important for Board
members to continually discharge their roles in
an effective manner. On an annual basis, the
Company will be conducting an analysis of the
Directors’ training needs and will carry out or
arrange for Directors to attend relevant training
programmes for the Board. Directors may also
request to attend additional training
programmes. To this end, the Company has a
dedicated training budget for Directors’
continuous education in connection with their
duties.
DIRECTORS’ REMUNERATION
B1.
Level and make-up of remuneration
B1.1 Compensation offered to Directors should be
appropriate given the responsibilities and
accountabilities, taking into account market
practice. Levels and mix of remuneration should
be sufficient to attract and retain Directors
needed to manage the Company successfully.
B1.2 Article 78 of the Company’s Articles of
Association provides that:1. salaries payable to Executive Director(s) may
not include a commission on or percentage
of turnover;
2. fees payable to Non-Executive Directors shall
be a fixed sum and not by a commission on
or percentage of profits or turnover;
3. any fee paid to an alternate Director shall be
such as shall be agreed between himself and
the Director nominating him and shall be paid
Statement
out of the remuneration of the latter; and
4. fees payable to Directors shall not be
increased except pursuant to an ordinary
resolution passed at a general meeting,
where notice of the proposed increase has
been given in the notice convening the
meeting.
Article 79 of the Company’s Articles of
Association also provides that:1. The Directors shall be paid all their travelling
and other expenses properly and necessarily
expended by them in and about the business
of the Company including their travelling and
other expenses incurred in attending board
meetings of the Company; and
2. If by arrangement with the Directors, any
Director shall perform or render any special
duties or services outside his ordinary duties
as a Director in particular if any Director
performs extra services or makes any special
efforts in going or residing away from his
usual place of business or residence for any
of the purposes of the Company or in giving
special attention to the business of the
Company as a member of a Board
Committee, the Company may give such
Director a special remuneration in addition
to his Director ’s fees and such special
remuneration may be by way of a fixed sum
or otherwise as may be arranged.
B1.3 The general remuneration framework for NonExecutive Directors comprises the following:1. an annual fixed sum which is subject to
shareholders’ approval (Director’s Fee):• RM60,000.00 for the Chairman;
• RM40,000.00 for other Non-Executive
Directors;
2. a meeting allowance for each Board and
Board Committee meeting attended:• RM3,000.00 for the Chairman of the Board;
• RM1,500.00 for the other members of the
Board;
• RM1,500.00 for the Chairman of a Board
Committee;
• RM1,000.00 for the other members of the
Board Committees.
This current general remuneration framework for
Non-Executive Directors was formulated by the
Pro-tem Nomination Committee in 2004, taking
into account market practice, and subsequently
approved by the Board. Non-Executive Directors
are also given certain benefits-in-kind and other
emoluments. The Company has entered into a
service contract with the Chairman. His
appointment is for a period of two (2) years. Other
Non-Executive Directors do not have service
contracts with the Company.
B1.4 The CEO’s compensation package comprises
a monthly salary and other benefits and
emoluments which are in line with the
Company’s general remuneration policy for its
senior management. He is not paid the
Director’s Fee nor is he entitled to receive any
meeting allowance for the Board and Board
Committee meetings he attends. Variable
components of his remuneration such as
bonuses and options granted under the
Employees’ Share Option Scheme (ESOS)
approved by shareholders on 11 December
2004 are linked to performance. The
compensation of the present CEO had been
considered by the inaugural Board in 2004 and
approved in accordance with its directions. The
CEO has a three (3) year service contract,
ending January 2007 with a provision for
extension by mutual agreement. His service
contract can be terminated by either party. The
notice period in the event of termination is three
(3) months’ written notice or three (3) months’
salary in lieu of notice.
B1.5 In the year 2004, the Board decided that NonExecutive Directors will not participate in any
employee share option scheme established by
Bursa. The CEO, being an employee of the
Company will however, be eligible to participate.
In conjunction with the Company’s listing, the
CEO has been offered options to subscribe up
to 6,000,000 shares over the five (5) year
duration of the ESOS. For the year 2005, the
CEO is entitled to subscribe for 1,000,000
Statement
shares at an exercise price of RM 3.00 per
share. For the remaining four (4) years, the
amount the CEO is entitled to subscribe to is
based on, amongst others, his performance.
B2.
RELATIONS WITH SHAREHOLDERS AND
INVESTORS
C1.
C1.1 Bursa Malaysia acknowledges the significance
of two-way communication with its shareholders
and investors. The key principles of Bursa’s
investor relations policy are the timeliness,
quality and clarity of communication with
shareholders and investors, using available
mediums and technologies.
Indemnification of Directors
For the financial year ended 31 December 2004,
shareholders have communicated their
enquiries to the Company Secretary and via
general meetings held. Going forward, the
investor relations unit will be primarily
responsible for liaising with shareholders and
investors on any enquires.
B3.1 A Directors’ and Officers’ Liabilities insurance
has been obtained by the Company but does
not extend to any liability incurred or sustained
by a Director in respect of any negligence,
default, breach of duty or breach of trust by him
in relation to the Company.
C2.
B4.
AGM
Procedure
B4.1 Where a review of the remuneration of NonExecutive Directors is undertaken, the NRC will
deliberate on and make a recommendation to
the Board on the remuneration packages for the
Non-Executive Directors. Fees payable to NonExecutive Directors will be subject to
shareholders’ approval.
B4.2 In relation to the remuneration of the CEO, the
NRC will annually review the variable
components of his remuneration package, such
as bonuses and options granted under any
employee share option scheme, which are
linked to performance, and make a
recommendation to the Board for its approval.
The CEO will abstain from deliberation of his
remuneration at Board level. The NRC has
reviewed and the Board has approved the
CEO’s bonus in relation to the financial year
ended 31 December 2004 and the options
granted under the ESOS which he is entitled to
subscribe to for 2005.
50
Dialogue between the Company and its
investors
Disclosure
B2.1 Disclosure of Directors’ remuneration is set out
in Note 7 to the Annual Audited Financial
Statements for the financial year ended 31
December 2004 (Annual Audited Financial
Statements 2004) on Pages 118 to 120 of the
Annual Report 2004.
B3.
C2.1 Shareholder meetings, in particular the AGM,
represent a primary forum for dialogue and
interaction with shareholders by providing an
opportunity for shareholders to meet with and
question the Board and management of Bursa.
Any item of special business included in a notice
of a general meeting is accompanied by an
explanation of the effects of the proposed
resolution to enable shareholders to make
informed decisions. A Question and Answer
session is also included in the agenda of general
meetings to further enhance communication
between shareholders and the Board. The
Company’s external auditors attend general
meetings upon invitation and are available to
answer shareholder questions, where
appropriate. Reasonable time is accorded for
discussion at general meetings and the
Company endeavors to ensure that questions
and issues are given due debate at the general
meetings. All meetings are recorded by the
Company Secretary. Minutes of the general
meetings are available for inspection at the
registered office of the Company.
Statement
C2.2 General meetings held in 2004 were conducted
in the manner as stated in paragraph C2.1
above. The Company’s external auditors
attended all general meetings in 2004.
C3.
Bursa’s website, briefings and road-shows
C3.1 The Company’s Annual Reports for 1999
onwards, media releases as well as market
information are posted on the Company’ s
website, www.bursamalaysia.com. Going
forward, the Company’s website is expected to
be a key source of information for the
Company’s shareholders and investors as it is
planned to contain a wide range of useful
information. The Company’s investor relations
unit focuses on managing the expectations of
shareholders and investors and narrowing any
perception gaps between the investment
community and the Company. To this end, in
addition to convening general meetings and the
maintenance of the website, Bursa has and will
continue with investor and analyst briefings and
road-shows. In this respect, the Company
intends to have quarterly briefings for analysts
in conjunction with the issuance of the
Company’s quarterly results.
ACCOUNTABILITY AND AUDIT
D1.
the operations and performance for each year
for the period between 2001 to 2004. The
prospects and business strategies going forward
were also set out explicitly. Risk factors, in
particular risks associated with the Company’s
business and operations, were thoroughly
explained. An industry overview, in terms of the
global market environment and in the Malaysian
context, was included to provide a backdrop for
the fiscal information provided and the forward
prospects of the Company and the Group as a
whole.
Financial reporting
D1.1 Shareholders have been provided with a
balanced and meaningful evaluation of the
Company’s financial performance and position
for the year 2004 and its prospects going
forward. This Annual Report includes historical
information on the Company’ s financial
performance and position via the presentation
of the Annual Audited Financial Statements
2004, including the Directors’ Report. The
Company’s prospects going forward have also
been explained in the Chairman’s Message and
CEO’s Message on Page 8 and Page 12 of the
Annual Report 2004 respectively.
D1.2 On 23 February 2005, Bursa issued its
prospectus which included a comprehensive
explanation of its financial performance and
position. The Company included in the
prospectus a detailed management analysis of
D1.3 In addition to the above, as an operator of a
fully integrated exchange and provider of
services related to the capital market, Bursa has
also, from time to time, issued media releases
on strategic projects and business initiatives, as
and when necessary, to inform and to update
the market, and shareholders in 2004.
D2.
Internal Control
D2.1 The Company’s internal control system is
designed to manage principal risks by providing
reasonable but not absolute assurance against
material misstatements or loss. An internal audit
function has been established to regularly
review and appraise the effectiveness of the
Company’s system of internal controls. The
Statement on Internal Control is set out on
Pages 54 to 56 of the Annual Report 2004.
D3.
Relationship with the Auditors
D3.1 Bursa’s relationship with its external auditors is
maintained through the Audit Committee and the
Board. Under its terms of reference, the Audit
Committee has express authority to
communicate directly with external and internal
auditors. Meetings with the external and internal
auditors are held as appropriate to discuss the
audit plan, audit findings and the financial
statements. External auditors and internal
auditors may, conversely, call for a meeting with
the Audit Committee to discuss issues relating
to the financial statements and other related
matters. Other Directors and management
attend the Audit Committee meetings upon
invitation. The Audit Committee has met with
the external auditors without the presence of the
Statement
CEO and management in relation to the Annual Audited Financial Statements 2004.
D3.2 The Audit Committee also reviews the appointment of the Company’s external auditors and the fees payable
to them on an annual basis. Whilst the external auditors may be appointed by the Company or Group to
provide services in relation to non-audit matters, the relationship with the external auditors is monitored to
ensure that their impartiality and independence remains unquestionable. The aggregate fees paid and payable
to the external auditors in relation to non-audit matters in the financial year ended 31 December 2004, on a
Group basis, is RM2,058,600.00, a breakdown of which is as follows:Type of Fees
Consultancy fees in relation to ERM
Fees in relation to the Initial Public Offering5
Other services
Fees for tax computation and other tax consultancy services
paid and payable to Ernst & Young Tax Consultants
Total
Amount (RM)
954,750
740,000
7,500
356,350
2,058,600
D3.3 The detailed Audit Committee Report is set out on Pages 57 to 60 of the Annual Report 2004.
CONFLICTS OF INTEREST
52
E1.
In addition to potential conflicts of interest which may arise from related party transactions, conflicts of interest
may potentially arise with respect to the regulatory role of Bursa Malaysia when regulating companies in
which the Directors and/or the substantial shareholder MOF Inc have interests.
E2.
These potential conflicts of interest have been adequately addressed by the regulatory decision-making
process. Significant regulatory decisions are made by committees comprising of Directors, independent
individuals and in some committees, management as well. As MOF Inc does not have any representatives on
the Board and these committees, the Board does not believe that MOF Inc will be able to influence the
regulatory-related decision-making process. As for the Directors, in the event a Director, who is member of a
committee, has an interest in the issue discussed, such Director is required to abstain from deliberation and
voting on the issue.
E3.
In addition, conflicts of interest may also arise between Bursa’s commercial interests and the proper
performance of statutory duties as an exchange holding company. In discharging such statutory duties,
Bursa must act in the public interest, having regard to the need for investor protection. Where Bursa’s own or
any other interest conflicts with public interest, Bursa must ensure that the latter prevails.
E4.
The commercial functions are separate and distinct from the regulatory functions to ensure that these functions
operate independently. A framework that outlines the policies, guidelines and procedures for the identification,
treatment and reporting of conflicts of interest situations has also been put into effect in 2005 (Conflicts
Guidelines).
E5.
Pursuant to the Conflicts Guidelines, a conflict of interest arising between commercial and regulatory interests
identified by Bursa will be notified to the SC together with proposals to address such conflict. Once SC has
given its consent to such proposals, Bursa will implement them. Where the SC disagrees with Bursa’s proposals,
the SC may direct Bursa or its subsidiaries to take certain steps to remedy the conflict of interest (Direction).
Bursa is obliged to comply with such Direction.
E6.
As at 31 December 2004, Bursa has not identified any conflicts of interest, actual or potential, arising between
commercial interests and the proper performance of its regulatory duties.
Statement
DEALINGS IN SECURITIES
F1.
All the Directors and employees who are in
possession of price-sensitive information
regarding the Company which is not publicly
available are subject to insider trading laws. The
Directors’ and employees’ Codes of Ethics
reinforce the need to observe insider trading
laws. An internal compliance framework has
been put in place in 2005 to ensure compliance
with the Company’s obligations under Bursa
Securities LR including compliance in relation
to dealings in Bursa’s securities. In addition,
under the Code of Ethics for employees, all
securities transactions by an employee shall be
notified to the Company within a specified
timeframe following the date of the transaction.
CODE OF ETHICS
G1.
The Company has a Code of Ethics for Directors
(Directors’ Code) and employees (Employees’
Code) which set out standards of conduct for
Directors and employees based on accepted
beliefs and values.
G2.
The Directors’ Code sets out principles relating
to:1. Duties as a Director of the Company;
2. Conflicts of interest;
3. Dealings in securities; and
4. Other matters relating to conduct or
expectations as a Director of the Company.
G3.
The Employees’ Code sets out principles and,
in some instances, procedures relating to:1. Dealing and preserving confidential or
sensitive information to which employees
may have access or obtain in the course of
employment;
2. Dealings in securities;
3. Avoiding conflicts of interest;
4. Gifts or gratuities; and
5. Other matters relating to general conduct of
employees.
COMPLIANCE STATEMENT
The Board is satisfied that the Company has complied
with the best practices of the Code as at 31 December
2004 except for the appointment of a Senior
Independent Non-Executive Director.
1
Article 68(7) of the Company’s Articles of Association provides that the members of the Committee of the Company immediately before the date on which the Company is
converted to a public company limited by shares as specified by the Minister of Finance pursuant to the Demutualisation (Kuala Lumpur Stock Exchange) Act 2003 i.e. on 5
January 2004 (Appointed Date) shall be deemed the first Directors of the Company on and from the Appointed Date and the Committee shall be deemed to be the inaugural
Board of the Company on the Appointed Date.
2
“Key management” refers to the CEO, Chief Financial Officer, Chief Regulatory Officer, Chief Legal Officer, Chief Information Officer-Strategic, Chief Information OfficerOperations, and Heads of Group Internal Audit & Risk Management, Group Business Development, Exchanges, Clearing Settlement & Depository, Information Services and
Group Human Resources & Administration.
3
This includes four (4) meetings attended as Chairman of the inaugural Board.
4
Under the Code a “significant shareholder” is defined as a shareholder with the ability to exercise a majority of votes for the election of directors. CMDF and MOF Inc, being
the largest shareholders in Bursa Malaysia as at 31 December 2004 have equal shareholdings of 30% each in the Company. As at 31 March 2005, CMDF and MOF Inc have
shareholdings of approximately 20% each in the Company.
5
Classified in the Annual Audited Financial Statements 2004 as deferred expenditure to be written off against the share premium account upon completion of the listing
exercise.
Statement
on Internal Control
Introduction
and the action plans with implementation timeframe
to address these risks. In accordance to the Risk
Management Policy, the Management Committee
reviews and discusses the Corporate Risk Profile
on a monthly basis. The respective business and
functional unit heads who have been assigned the
responsibilities to own and manage specific risk
items in the Corporate Risk Profile are to ensure
that the risks are effectively managed, and are
required to update the Management Committee
accordingly. It is also the responsibility of the
respective members of the Management
Committee, being also the Heads for business and
functional units, to highlight risks that have potential
significant impact on Bursa as a whole, for the
immediate attention of the Chief Executive Officer
(CEO). On a quarterly basis, the CEO together with
the Management Committee are responsible for
the review and sign-off of the major risk issues to
be brought to the attention of the Risk Management
Committee. Periodic review of the Corporate Risk
Profile is undertaken by the Management
Committee and Risk Management Committee for
continuous revalidation and update on the
identified risks.
In accordance with good principles of Corporate
Governance, the Board maintains a sound system of
internal control to safeguard shareholders’ investments
and Bursa Malaysia’s assets.
Responsibility
The Board affirms its overall responsibility for the
Group’s system of internal control and risk
management and for reviewing the adequacy and
integrity of those systems. The Board understands that
the main purpose of internal control is to manage and
control risks. In order to properly manage risks, a risk
assessment and evaluation framework has been put
in place.
The Board has in place, an ongoing process for
identifying, evaluating and managing the significant
risks faced by Bursa and this is regularly reviewed by
the Board, through the Audit Committee, in accordance
with the Statement on Internal Control: Guidance For
Directors of Public Listed Companies issued in
December 2000.
Enterprise Risk Management Function
An Enterprise Risk Management (ERM) framework has
been established with the aim of strengthening the risk
management functions across the Group. The Board
believes in maintaining a robust ERM framework and
a sound system of internal control founded on clear
understanding and appreciation of the following key
elements:
•
54
The Risk Management Committee carries out its
responsibilities to identify and communicate to the
Board of Directors the significant existing and
potential risks the Group faces and the
management action plans to manage these risks.
•
Formalised Risk Management Policy and
Guidelines have been adopted. It outlines the risk
management framework for the Group to effectively
implement and embed risk management
processes within their key business processes.
•
A Corporate Risk Profile has been developed,
summarising the significant risks that affect the
achievement of the Group’s business objectives
•
Management with the assistance of Group Internal
Audit & Risk Management Division has rolled out
risk profiling for operating units within the Group.
For this on-going exercise, key risks to each
business unit’s objectives aligned with the Group’s
strategic objectives are identified and ranked for
likelihood of the risk occurring and the magnitude
of impact. Management has subsequently
developed appropriate action plans with
implementation time scales to manage significant
residual risks.
The identification of risks are at two levels - at corporate
level and at divisional level. The former requires the
explicit attention of senior management and the Risk
Management Committee while the latter is routinely
managed at the divisional level. Once risks have been
identified, the appropriate control systems to manage
and control these risks will be maintained and regularly
reviewed. The Board is aware that profits are, in part,
the reward for successful risk-taking and as such the
purpose of internal control is to help manage and
control risks appropriately rather than to eliminate it.
on Internal Control
Internal Audit Function
The Board obtains sufficient assurance of regular
reviews and appraisals on the effectiveness of the
system of internal control within Bursa from an
independent and competent Internal Audit Function
which reports to the Audit Committee.
Bursa’s Internal Audit Function is independent of the
activities that they audit and perform their work with
impartiality, proficiency and due professional care. The
Audit Committee determines the adequacy of the
scope, function and resources of the Internal Audit
Function and that it has the necessary authority to carry
out its work. Bursa’s Internal Audit Function adds
substantive value by providing assurance that its
risk exposures are understood and managed
appropriately.
In its endeavour to provide reasonable assurance on
the state of internal control for the Group, the Internal
Audit Function carries out its reviews based on an
Annual Audit Plan. When selecting an auditable area
for inclusion in the Plan, the following criteria are
considered:
Date of the last audit
•
Audit rating previously given (Good, Satisfactory,
Unsatisfactory or Critical)
•
Risk ranking (Extreme risk, High risk, Moderate
risk or Low risk)
16
15
8
39
OL ENV
NTR
IR
O
O
C
Risk Assessment
Framework &
Activities
Information &
Communication
Processes
IS
1. Core Business functions
2. Support Business functions
3. Information Systems/
Information Technology
functions
No. of
Audit
Reports
The diagram below describes the key elements of
Bursa’s internal control system, which are further
explained in brief after the diagram.
AN
Functional Area
Key Elements of Internal Control
ORG
The Annual Audit Plan for 2004 was approved by the
Audit Committee of the then Kuala Lumpur Stock
Exchange Berhad at its 4th Meeting held on 10
December 2003. A total of 39 audits were conducted
for the year 2004 as follows:
The performance of the work of the Internal Audit
Function in providing independent assurance on the
state of internal control is reviewed by the Audit
Committee. At the end of each financial year, the
Internal Audit Function submits a post-mortem report
to the Audit Committee indicating the number of audits
that was completed against the Annual Audit Plan. Any
variance is deliberated by the Audit Committee. The
post-mortem report also provides a snapshot on the
state of the internal control system of each business/
functional unit based on the rating of the audit reports
that were issued for the year.
T
EN
NM
•
Audits are conducted based on a risk-based approach
and in compliance with the Internal Auditing Standards
as issued by the Institute of Internal Auditors, Inc. Each
audit report carries a rating as either ‘Good’,
‘Satisfactory’, ‘Unsatisfactory’ or ‘Critical’.
AT
I
Control
Activities
Processes
for Monitoring the
Continuing Adequacy
& Integrity of the
System of Internal
Control
ON
AL STRU
E
Statement
U
CT
R
Risk Assessment Framework & Activities
•
B u r s a h a s e s t a b l i s h e d a n E R M framework
and objectives and hence can pursue ef fective
control of risks. Our entity-wide objectives include
broad statements of what we desire to achieve
and these are supported by related strategic
plans.
Statement
Information & Communication Processes
•
•
Information is identified, captured, processed and
reported by information systems. Relevant
information includes industry economics and
regulatory information obtained from external
sources, as well as internally generated
information.
Communication, dealing with expectations and
responsibilities of individuals and groups, takes
place down, across and upwards in our
organisation and with parties external to the
organisation.
on Internal Control
•
An Authority Matrix outlining the authorisation
levels for management in all aspects of its major
business operations.
•
Well documented internal policies and procedures
manuals including the Information Technology
Security Standards and Directors’ and employees’
Code of Ethics.
•
Segregation of duties whereby tasks are
apportioned between different members of the staff
in order to reduce the scope for error and fraud.
•
Regular and comprehensive flow of information to
management on all aspects of the performance of
Bursa Malaysia’s operations.
•
A budgetary control process which requires all
business/functional units to prepares budgets for
the forthcoming year including their Business
Plans.
•
Monthly monitoring of the financial results against
budgets with major variances being deliberated by
the Board of Directors.
Control Activities
•
Our control activities encompass a wide range of
policies and related implementation procedures
that help us ensure that management’s directives
are effected. They help ensure that those actions
identified as necessary to address risks to achieve
our objectives are carried out.
Processes for Monitoring the Continuing
Adequacy & Integrity of the System of Internal
Control
•
On-going monitoring occurs routinely and includes
regular management and supervisory activities and
other actions taken by staff in performing their
duties in order to assess the quality of internal
control systems.
Other Key Elements of Internal Control
These include the following:
•
56
Delegation of responsibilities to committees of the
Board through clearly defined terms of reference.
Conclusion
In conclusion, the Board is satisfied with the state of
internal control of Bursa as a group.
Audit
Committee Report
The Board of Directors is pleased to present the audit committee report for the financial year ended 31 December
2004 in accordance with Paragraph 15.16 of the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa
Securities LR).
COMPOSITION
In the year 2004, there were two Audit Committees, i.e. the Audit Committee serving the inaugural Board (inaugural
Audit Committee) and the current Audit Committee which was set up in May 2004.
The inaugural Audit Committee comprised five (5) members as follows:
Name
Position
Date of
Appointment
Directorship
Tan Kim Leong
Datuk Mohaiyani binti Shamsudin
Dato’ Mohamed Adnan bin Ali
Datuk Dr. Abdul Samad bin Alias
Philip T.N. Koh
Chairman
Member
Member
Member
Member
1 January 2003
1 January 2003
1 January 2003
1 January 2003
1 January 2003
Director
Deputy Chairman
Not a Director
Not a Director
Not a Director
The current Audit Committee comprises five Directors, out of whom three Directors including the Chairman, are
Independent Non-Executive Directors, in compliance with Paragraph 15.10(1)(a) and (b) and Paragraph 15.11 of
Bursa Securities LR. They are as follows:
Name
Position
Date of
Appointment
Chairman
12 May 2004
Member
23 July 2004
Member
12 May 2004
Member
12 May 2004
Cheah Tek Kuang
Member
12 May 2004
Directorship
Independent Non-Executive
Director
Non-Executive and Public
Interest Director
Director
Director
Non-Independent NonExecutive Director
TERMS OF REFERENCE
Primary Purpose
The primary purpose of the Audit Committee is to assist the Board in fulfilling its duties and responsibilities for Bursa
and its group of companies (the Group) in relation to:a. overseeing the corporate accounting and reporting practices of the Group;
b. reviewing reports from internal and external auditors, validating scope, evaluating existing policies and establishing
audit quality for the purpose of compliance with the Group’s policies;
c. assessing processes and procedures for the purpose of compliance with all laws, regulations and rules, directives
and guidelines established by the relevant regulatory bodies.
Audit
Membership
Pursuant to Paragraph 15.10 of Bursa Securities
LR, the Audit Committee shall be appointed by the
Board amongst its directors and shall consist of
no less than three (3) members comprising a
majority of independent non-executive directors.
At least one (1) member of the audit committee
must be:
1. a registered member of the Malaysian Institute
of Accountants (MIA); or
2. if he is not a member of the MIA, he must have
at least three (3) years’ working experience;
and
a. he must have passed the examinations
specified in Part I of the 1st Schedule of the
Accountants Act 1967; or
b. he must be a member of one of the
associations of accountants specified in Part II
of the 1st Schedule of the Accountants Act
1967;
and that no alternate director shall be appointed as a
member of the audit committee.
Paragraph 7.1(a) of Practice Note No. 13/2002
which states that a degree/masters/doctorate in
accounting or finance (the said qualifications) and
at least three (3) years’ post qualification
experience in accounting or finance would be
acceptable for the purposes of Paragraphs 9.27(c)
and 15.10(1)(c)(iii) of Bursa Securities LR. The said
qualifications under Paragraph 7.1(a) of Practice
Note No. 13/2002 would include persons who
are members of professional accountancy
organizations, which have been admitted as full
members of the International Federation of
Accountants (IFAC).
Dato’ Abdul Wahid bin Omar, the Chairman of the
Audit Committee is a member of the Association
of Chartered Certified Accountants (United
Kingdom) and the MIA. The Company is therefore
in compliance with Paragraph 15.10(1)(c)(i) of
Bursa Securities LR.
Authority and Duties
The authorities and duties of the Audit Committee
which are in accordance with Paragraph 15.12 of
58
Committee Report
Bursa Securities LR are as follows:a. review the Group’s financial statements before
submission to the Board;
b. recommend the external auditors’ appointment
and related audit fees;
c. review and coordinate with external auditors on
the following and report the same to the Board:
i. audit objectives and plans;
ii. scope and programs;
iii. problems encountered;
iv. significant issues identified;
v. evaluations of the system of internal controls;
vi. audit reports;
d. review and coordinate with the Group Internal
Audit & Risk Management on the following and
report the same to the Board:
i. audit objectives and plans;
ii. audit reports;
iii. effectiveness of the Group’s internal control
systems;
iv. adequacy of resources for internal control
and dealing with problems encountered
during the audit process;
v. adequacy of the scope, functions and
resources of the internal audit functions and
that it has the necessary authority to carry
out its responsibilities;
vi. the internal audit programme and
processes, the results of the internal audit
programme and processes as well as
investigations undertaken and whether or
not appropriate action is taken on the
recommendations of the internal audit
function;
e. review the following and report the same to the
Board:
i. the annual Statement on Internal Control
to be published in the Annual Report;
ii. any related party transactions and conflict
of interest situations;
iii. any letter of resignation from the external
auditors;
iv. whether there is a reason (supported by
grounds) to believe that the external
auditors are not suitable for re-appointment;
f. review recommendations made by internal and
external auditors, study management
responses and advise on appropriate courses
of action; and
Audit
Committee Report
g. monitor management operations to ensure compliance with all laws, regulations and rules established by all
the relevant regulatory bodies.
MEETINGS
The Audit Committee has held five meetings during the financial year ended 31 December 2004, out of which three
meetings were held since the appointment of the members of the current Audit Committee. The agenda and the
papers to be presented at Audit Committee meetings are issued by Corporate Secretarial & Compliance unit one
week prior to the meetings. The quorum for any meeting is a minimum of three members, with at least two Independent
Directors being present. The details of the attendance of the inaugural Audit Committee and the current Audit
Committee are as follows:
No. Inaugural Audit Committee
1.
2.
3.
4.
5.
12.02.04
10.03.04
Attendance
1
1
1
1
1
1
1
1
2/2
2/2
1/2
1/2
2/2
25.05.04
30.08.04
22.11.04
Attendance
1
Appointed
on 23
July 2004
1
1
1
1
1
1
1
3/3
2/2
1
1
1
1
1
3/3
2/3
3/3
Tan Kim Leong (Chairman)
Dato’ Mohamed Adnan Ali
Datuk Dr. Abdul Samad bin Alias
Philip T. N. Toh
No. Current Audit Committee
1.
2.
Dato’ Abdul Wahid bin Omar (Chairman)
3.
4.
5.
Cheah Tek Kuang
The External Auditors’ representative(s) and other members of senior management attend these meetings upon
invitation by the Chairman of the Audit Committee as required under Paragraph 15.14 of Bursa Securities LR.
SUMMARY OF ACTIVITIES
The summary of activities of the Audit Committee in the discharge of its functions and duties during the financial
year ended 31 December 2004 are as follows:
a. Reviewed the audit planning memorandum of the external auditors prior to the commencement of their
engagement;
b. Considered the proposal submitted by management for the streamlining of external auditors;
c. Considered and assessed the merits for the increase in audit fees as submitted by the external auditors for the
Group;
d. Reviewed the audited accounts of all the companies within the Group;
e. Reviewed the management letter issued by the external auditors in conjunction with the statutory audit of the
Group;
f.
Reviewed and deliberated on the Annual Audit Plan submitted by the Internal Auditors;
Audit
Committee Report
g. Reviewed and deliberated on the audit reports
submitted by the Internal Auditors;
h. Reviewed and deliberated on the quarterly
reports on the status of the activities performed
by the Internal Auditors;
d. System administration and support;
3. Providing consulting activity and performing
compliance review for:
a. Projects and system development functions
undertaken by the Group;
i. Reviewed and deliberated on the post-mortem
report indicating the number of audits that was
completed against the Annual Audit Plan for
2004; and
b. Tenders that require the Internal Auditors’
involvement, as stipulated in the Group
Purchasing Policies;
j. Considered proposals on the enhancement of
Group Internal Audit & Risk Management Division.
c. Readiness review on key system development
projects as required by the Securities
Commission; and
INTERNAL AUDIT FUNCTION
The Audit Committee in discharging its responsibilities
are assisted by an independent and competent Internal
Audit function. The main activities of the Internal Audit
function are, amongst others, as follows:
1. Performing IS/IT audits on the following areas:
a. Facilities management functions supporting the
core application systems of the Group;
b. Technical support functions handled by a
subsidiary company, Bursa Malaysia IT Sdn.
Bhd.;
c. System development and maintenance of core
application systems of the Group;
d. Application controls audit; and
e. IT related functions supported by third party
vendors, for example:
equities trading system, derivatives trading
system, offshore market operation system.
2. Performing operational audits on the following
areas:
a. Core business functions of the Group, for
example: Listing, Trading and Depository
Operations;
b. Support services functions of the Group, for
example:
Human Resources, Security Services, Legal
and Finance, General Administration and
Purchases;
c. Quarterly stock count of Central Depository
System (CDS) scrip maintained by Bursa
Malaysia Depository Sdn Bhd; and
60
d. Monitor share transactions by staff as required
by the Code of Ethics for Employees of Bursa
Malaysia Berhad and the Group.
The Internal Audit function also evaluates the
adequacy, integrity and effectiveness of the Group’s
overall system of internal control, and reports directly
to the Audit Committee on its audit findings. The
Internal Audit function also assists the Audit Committee
by doing the following:a. conducting operational audits on selected
business/functional units within the Group, against
the Group’s expected risk management and control
standards;
b. validating the results of Enterprise Risk
Management framework and processes by means
of auditing and provision of independent
consultancy to the Group’s risk situation;
c. promoting maintenance of systems of internal
control which are appropriate to address all
significant operational and financial risks that they
face;
d. introducing a risk-based approach to the
implementation and monitoring of controls;
e. auditing on the application of the principles of
Corporate Governance and the Best Practices in
Corporate Governance within the Group; and
f.
undertaking investigations on any suspicion of
fraud or operational failures reported to them within
the Group.
Corporate
Social Responsibility Statement
Bursa is a public-listed company which is at the heart
of Malaysia’s economic and financial landscape; acting
as a conduit between issuers and investors as well as
stimulating investments in the Malaysian capital market
and encouraging the nation’s economic growth. For
Bursa, corporate social responsibility means
addressing the expectations of its shareholders and
stakeholders which includes its customers whilst
ensuring that the interests of the public, including
investors in general, are adequately protected. This
statement summarises how Bursa has addressed its
corporate social responsibility in 2004.
EMPLOYEES
SHAREHOLDERS
In rewarding staff, Bursa seeks to provide fair play for
their contributions to the Company and its success.
To this end, in 2004, the Company developed and
implemented a performance management framework
using the “balanced score card” concept to translate
mission and business strategies into activities that can
be measured using key performance indicators. In a
move towards enhancing employee contributions and
synergies, Bursa has also designed and implemented
in 2004 a teambuilding programme, which aims to be
interactive and engage employees. Employees are
also given the flexibility to choose a set of benefits
that meets their needs and that of their family. Bursa
is firmly committed to ensuring that all employees work
in a safe and healthy environment. The Company
conducts its operations in a manner that will avoid fire,
accident, injuries and ill health to its employees as well
as the public in general.
Communication with shareholders
As a publicly-owned company, Bursa seeks to
continuously maintain a high quality of relations with
shareholders. The key principles of Bursa’s
communication policy are the timeliness, quality and
clarity of communication with shareholders, using
available mediums and technologies.
Bursa seeks to engage shareholders by, amongst
others, facilitating dialogue with shareholders via
general meetings, maintaining accurate financial
records which provide a true and fair view of the
Company’s financial position and fostering two-way
communication with shareholders via various available
mediums and technologies.
Further details are provided in the Statement of
Corporate Governance on Pages 50 to 51 of the
Annual Report 2004.
Rewarding shareholders
Bursa, recognising the contribution and importance of
shareholders to the Company will strive to enhance
returns to shareholders. The Company will endeavor
to improve return on equity and enhance dividend
payouts to increase shareholders’ value. Bursa
expects to make dividend payouts of at least 75% of
its profits after taxation after minority interest for future
years. Meeting shareholders’ expectations will
contribute to the better performance of the Company
as shareholders and investors will willingly invest and
continue to invest in the Company, thereby reducing
the cost of doing business.
Bursa recognises that its success as a public company
and as an operator of a fully integrated exchange is
dependent on its intellectual capital; its people. The
Company knows that committed and engaged
employees deliver better service and hence, contribute
to better returns for shareholders and the overall
integrity of the market as well as the protection of
investors generally. Bursa’s employee policies are
geared towards attracting, developing and motivating
talented and dedicated people.
In conjunction with Bursa’s listing, the Company has
offered its employees the opportunity to become
shareholders by acquiring shares through the Pink
Form Allocation and participation in the Company’s
Employees’ Share Option Scheme (ESOS). This will
create better alignment between employees’ and other
shareholders’ interests in Bursa.
Further details of Bursa’s employee related
compensation and benefits are set out on Pages 94 to
96 of the Annual Report 2004.
CUSTOMERS
As an operator of a fully integrated exchange and
provider of services related to the capital market, listed
issuers, participating organizations, the investing public
and other market participants and users are customers
of Bursa.
Corporate
In 2004, Bursa adopted strategic objectives and goals
to be achieved by the Group; which focused on
boosting market velocity and liquidity, expanding
products and services and, improving operational scale
and efficiency. Some highlights of efforts in 2004 which
are reflective of these strategic objectives and goals
are:•
The introduction of a new framework for perusal
of circulars issued by listed companies to facilitate
expedient completion of corporate proposals by
listed companies whilst preserving the standard
of disclosure.
•
The revision of the framework governing listed
issuers with inadequate financial condition and/or
level of operations and making appropriate
amendments to the relevant rules to enhance the
quality of listed companies and expedite the time
taken by affected companies in regularising their
financial condition and/or level of operations.
•
The initiation of the trading linkage between Bursa
and the Singapore Exchange (SGX). The linkage
will contribute towards enhancing the liquidity of
the capital market and will provide access to
investors and brokers by expanding access points
internationally.
Bursa is committed to seeking the views of its
customers on various market initiatives as well as
changes to the regulatory framework. In 2004, the
Company actively engaged various market
intermediaries such as the local and foreign brokers,
fund managers, research analysts, global custodian
banks and local merchant banks and remisiers to foster
better working relationships, explore ways to grow the
equities and derivatives market and to gather valuable
market feedback. Going forward, this will be an ongoing
effort by Bursa to ensure market participants’ feedback
is obtained and addressed in an effective and timely
manner. Market participants’ views were also sought
in 2004 for various proposed amendments to rules
which are administered by the Company and/or its
subsidiaries, such as amendments to the Bursa
Securities in relation to financial condition and levels
of operations, the revamp of the LR for the MESDAQ
Market and, amendments to relevant rules in relation
to the implementation of the Common Trading Platform
and acceptance of shares as a form of margin
payment. Three (3) consultative panels were also
62
established in 2004 to provide industry expertise and
guidance on policy proposals, product and market
development initiatives and other strategic initiatives
in relation to the securities market, derivatives market
and clearing, settlement and depository issues. Bursa
will also conduct a customer satisfaction survey, on
an annual basis, to gauge its customers’ satisfaction
level and perception of the Company.
The investing public is also a valued customer of Bursa.
Some highlights of Bursa’s investor education efforts
in 2004 are as follows:•
Organising and participating in retail investor
roadshows throughout the country in 2004. 30 halfday workshops were organised jointly by Bursa and
brokers to enhance public interest on
developments in relation to our exchanges and to
promote Bursa’s products. The Company had also
participated in several roadshows and conferences
organised by external parties. The main objective
of Bursa’s participation was to introduce the new
name and to promote products offered in both
equities and derivatives markets.
•
13 in-house “Evening Talk” sessions were held
every Tuesday between June until October 2004.
The objective of the two-hour session was to
provide information on relevant issues such as
investors’ rights and product knowledge.
•
The launch of “Malaysia Market Update”, a weekly
programme in the “Asia Market Wrap” segment on
CNBC Asia. The objective of the programme was
to keep local and international investors informed
of latest developments, reforms and initiatives in
the Malaysian capital market. “Malaysia Market
Update” featured weekly updates from influential
industry and market participants on the Malaysian
capital market and securities industry. The
interviews were broadcast live from Bursa’s Media
Centre at the Exchange Square.
•
Organising INVEST Malaysia 2004 to provide an
opportunity for investors to learn about smart
investing, investment options and the corporate
profiles of companies listed on the Official List of
Bursa Securities.
As part of its ongoing investor education efforts, Bursa
also maintains a Public Information Centre which
Corporate
provides information services to facilitate research and
references to all stakeholders including the investing
public.
THE COMMUNITY
Yayasan’s programmes include activities such as
sports and recreational activities, excursions to places
of interest and educational camps.
To enhance its contribution to educational
Yayasan Bursa Malaysia (Yayasan Bursa) was
incorporated in 1998 to provide assistance, support
and financial aid for community and educational
activities, projects and programmes with the objective
of improving the standard of living, skills and
professionalism of Malaysians. Yayasan Bursa’s vision
is to assist in the balanced development of a caring
Malaysian community, through various efforts which
include: -
development, Yayasan Bursa offers study loans for
qualified needy undergraduates pursuing their studies
at recognised local public institutions of higher learning.
These study loans, first offered in 2000, can be
converted to full scholarships for candidates achieving
a degree or diploma upon completion of their studies.
Besides providing assistance to needy
undergraduates, Yayasan Bursa has in place a
nationwide tutoring programme for children of
community homes. This programme benefits more
•
Providing assistance to members of society with
special requirements/needs.
than 600 students from 20 homes nationwide. In 2002,
Yayasan Bursa begun sponsoring Book Prizes for
students from local public universities to recognise and
•
Providing funds and supporting Malaysians
pursuing any level of education.
reward academic excellence. A maximum of three
students per university are selected to be recipients of
this award every year. Yayasan Bursa introduced two
•
Organising and supporting schemes and projects
for the promotion of the well being and welfare of
special members in society.
new programmes in 2003 to further enhance its
commitment towards education namely the School
Assistance Scheme and the Award for Excellent
Results. The School Assistance Scheme is designed
•
Providing assistance to voluntary organisations
which have the same charitable objectives as
Yayasan.
•
Encouraging active participation of Bursa staff in
all activities of Yayasan.
Over the years, the Company has encouraged and
supported its employees’ efforts to engage with the
community. The Company together with its employees
reaches out to and supports the community via
Yayasan which undertakes various charitable and
philanthropic initiatives. The reach and diversity of
Yayasan contributions and programmes have touched
many lives from those who are terminally ill to the
elderly, orphans and those with special needs.
Activity/Project
to assist needy school children at the start of the school
year. Financial assistance is given to help defray the
expenses for the purchase of basic schooling items.
The Award for Excellent Results is designed to
recognise and reward children who obtain excellent
results in major government examinations.
Since its establishment, Yayasan Bursa has worked
with over 600 community organisations from every
state in Malaysia and contributed more than RM12
million to needy organisations and individuals.
In 2004, Yayasan Bursa had undertaken a variety of
charitable and community activities in keeping with its
vision which include the following:-
Description
• Children’s Adventure &
Creative Camp
The objective of this camp was to develop children’s interest in adventure and
art. This camp was attended by children between the ages of 10 and 13 from
various homes in the Klang Valley.
• Blood Donation Campaign
This was organized to assist in replenishing the supply of blood at the Kuala
Lumpur General Hospital.
Corporate
Activity/Project
64
Description
• The Edge Kuala Lumpur
Annual Rat Race 2004
This event was co-organized by Yayasan Bursa and The Edge Communications.
A total of 49 teams from various corporate organsations took part in the race,
raising a total of RM667,500.00. The monies raised were distributed to 10
beneficiaries from all over Malaysia.
• Excursion for mentally
challenged children
Children from Persatuan Kanak-Kanak Terencat Akal Selangor & Wilayah
Persekutuan were invited to attend an excursion to the Proton KL Grand Prix CSI
5* International Horse Show at Putra Stadium, Bukit Jalil.
• Sukaneka 2004
The aim of this event was to foster ties amongst Bursa staff, their children and
children from charitable homes. Approximately 200 children from 4 charitable
homes including a group of Orang Asli children were invited to participate.
• Donations
In 2004, Yayasan Bursa made donations and sponsorships to 57 charitable
organizations. The aggregate amount of donations and sponsorships in 2004 is
RM452,245.00.
• Convertible study loans
In 2004, 14 new convertible study loans were granted to qualified needy
undergraduates.
• Tuition programme
In 2004, Yayasan Bursa sponsored tuition fees for underprivileged children from
14 community homes amounting to an aggregate of RM114,456.75.
• Book Prizes
Students from 8 public institutions of higher learning were recipients of this prize
at their convocation ceremony. They were selected to receive this prize by their
respective educational institution. In total, RM8,000.00 was awarded as book
prizes.
Investor
Protection
In the interest of protecting investors, we maintain
three compensation funds, namely the C ompensation
Fund of Bursa Securities, the Fidelity Fund of Bursa
Derivatives and the Compensation Fund of Bursa
Depository to compensate investors who have suffered
losses falling within the circumstances specified under
the relevant securities laws and rules.
This fund comprises contributions from trading
participants. As at 31 December 2004, the fund totaled
RM11.0 million. The maximum compensation payable
in respect of a trading participant is RM0.5 million
provided that if the aggregate of all claims against a
trading participant exceeds RM0.5 million the
compensation shall be apportioned between claimants.
The funds are administered by our Compensation
Committee.
Compensation Fund of Bursa Depository
Compensation Fund of Bursa Securities
The purpose of the Compensation Fund of Bursa
Securities is to compensate persons who have suffered
monetary loss due to defalcation or fraudulent misuse
of monies or other property by a director, officer,
employee or representative of a licensed stockbroking
company or in the event of insolvency of the
stockbroking company, in connection with dealing in
securities.
This fund comprises contributions from participating
organisations and Bursa Securities and a pledge by
the Securities Commission (SC). As at 31 December
2004, the fund totaled RM253.7 million (excluding the
pledge which may be made available by the SC). The
maximum compensation payable to a claimant is
RM0.1 million per claim. However we have the absolute
discretion to increase this amount on a case to case
basis. A total of RM0.2 million was paid out of the
Compensation Fund of Bursa Securities in 2003 and
2004.
Fidelity Fund of Bursa Derivatives
The purpose of the Fidelity Fund of Bursa Derivatives
is to compensate persons who have suffered monetary
loss due to defalcation or fraudulent misuse of monies
or other property by a director, officer, employee or
representative of a licensed futures broking company
in connection with trading in futures contracts.
The purpose of the Compensation Fund of Bursa
Depository is to compensate depositors who have
claims againts Bursa Depository, its nominee
companies and authorised depository agents. These
claims include claims for computer crimes involving
theft or criminal damage to computer systems,
falsification of records within such computer system,
fire or theft of records or profesional negligence of
Bursa Depository’s employees.
This fund comprises cash assets, which are
currently capped at RM50.0 million. The maximum
compensation payable to a claimant is RM0.1 million
per claim. However we have absolute discretion to
increase this amount on a case to case basis.
Other Funds
We intend to establish a clearing guarantee fund for
Bursa Securities Clearing to be applied in respect of
the obligations and liabilities of Bursa Securities
Clearing arising out of market contracts. The fund is
proposed to be in the amount of RM100.0 million and
to be established by the end of 2005, subject to
approval by the SC. Pending establishment of this
proposed fund, we have committed a stand-by facility
of up to RM200.0 million to meet Bursa Securities
Clearing’s clearing obligations.
foundation for
success
“Teamwork builds the foundation for progress. There is no team without
players. To work, players must have passion, determination, energy
and persistence. While some of these qualities are inherent, they can
be taught, they can be learnt, given the right direction, understanding
of and believing in goals and aspirations, specific training, constant
reviews and appropriate rewards.
Passion and determination comes easy when you feel a sense of
belonging to the team, and to the organisation. Persistence comes
when you are accountable for actions and energy, when the rewards
are there.”
CEO
Corporate
BOARD OF DIRECTORS
FORM OF LEGAL ENTITY
Tun Mohamed Dzaiddin bin Haji Abdullah
Chairman, Non-Executive Director
and Public Interest Director
Incorporated on 14 December 1976 as
a public company limited by guarantee
Converted to a public company limited by shares on
5 January 2004 pursuant to the Demutualisation
(Kuala Lumpur Stock Exchange) Act 2003
Non-Executive Director
Independent Non-Executive Director
Izham bin Yusoff
Non-Independent Non-Executive Director
Cheah Tek Kuang
Non-Independent Executive Director
and Chief Executive Officer
COMPANY SECRETARY
Yong Hazadurah binti Md. Hashim
LS 006674
REGISTERED OFFICE
9th Floor, Exchange Square
Bukit Kewangan
50200 Kuala Lumpur
Telephone No.: 03-2034 7000
Facsimile No.: 03-2732 6437
E-mail address: [email protected]
Website: www.bursamalaysia.com
68
Information
STOCK EXCHANGE LISTING
Listed on Main Board of Bursa Malaysia Securities
Berhad on 18 March 2005
Stock Code: 1818
Stock Name: BURSA
INVESTOR RELATIONS
Lim Poh Poh
15th Floor, Exchange Square
Bukit Kewangan
50200 Kuala Lumpur
E-mail: [email protected]
REGISTRAR
Tenaga Koperat Sdn. Bhd. (118401-V)
20th Floor, Plaza Permata, Jalan Kampar
Off Jalan Tun Razak, 50400 Kuala Lumpur
AUDITORS
Ernst & Young (AF 0039)
Chartered Accountants
Level 23A, Menara Milenium
Jalan Damanlela
Pusat Bandar Damansara
50490 Kuala Lumpur
PRINCIPAL BANKERS
Malayan Banking Berhad (3813-K)
Menara Maybank
100, Jalan Tun Perak
50050 Kuala Lumpur
Southern Bank Berhad (5303-W)
Menara Southern Bank
83, Medan Setia 1
Plaza Damansara
Bukit Damansara
50772 Kuala Lumpur
Corporate
Information
Wholly-owned subsidiaries of Bursa Malaysia Berhad
1. BURSA MALAYSIA SECURITIES BERHAD
Date of Incorporation:
Principal Activities:
(635998-W)
4 December 2003
Provide, operate and maintain a securities exchange
2. BURSA MALAYSIA DERIVATIVES BERHAD
(261937-H)
17 April 1993
Provide, operate and maintain a futures and options exchange
3. LABUAN INTERNATIONAL FINANCIAL EXCHANGE INC.
(30632-P)
(LL 02032)
30 July 1999
Provide, operate and maintain an offshore financial exchange
4. BURSA MALAYSIA SECURITIES CLEARING SDN. BHD. (109716-D)
formerly known as Securities Clearing Automated Network Services Sdn. Bhd.
12 November 1983
Provide, operate and maintain a clearing house for the securities
exchange
5. BURSA MALAYSIA INFORMATION SDN. BHD. (152961-H)
formerly known as KLSE Information Services Sdn. Bhd.
2 May 1986
Provide and disseminate prices and other information relating to
securities quoted on exchanges within the group
6. BURSA MALAYSIA IT SDN. BHD. (213411-K)
formerly known as KLSE Technology Sdn. Bhd.
7 March 1991
Provide information and communications technology services
7. BURSA MALAYSIA PROPERTY SDN. BHD. (147792-H)
formerly known as KLSE Property Management Sdn. Bhd.
27 November 1985
Provide building management and security services
Corporate
Information
8. KLOFFE INFORMATION SYSTEMS SDN. BHD. (319465-T)
11 October 1994
Dormant
Wholly-owned subsidiary of Bursa Malaysia Securities Clearing Sdn. Bhd. (109716-D)
9. BURSA MALAYSIA DERIVATIVES CLEARING BERHAD (358677-D)
formerly known as Malaysian Derivatives Clearing House Berhad
9 September 1995
Provide, operate and maintain a clearing house for the futures and
options exchange
Wholly-owned subsidiaries of Bursa Malaysia Derivatives Berhad (261937-H)
10. MALAYSIA MONETARY EXCHANGE BERHAD (247161-A)
19 August 1992
Dormant
11. COMMODITY AND MONETARY EXCHANGE OF MALAYSIA (COMMEX)
(Company limited by guarantee)
(60226-D)
14 July 1980
Dormant
Subsidiary of Bursa Malaysia Berhad (30632-P) with 75% Shareholding
12. BURSA MALAYSIA DEPOSITORY SDN. BHD. (165570-W)
formerly known as Malaysian Central Depository Sdn. Bhd.
26 October 1987
Provide, operate and maintain a central depository for securities
listed on the securities exchange
Wholly-owned subsidiary of Bursa Malaysia Depository Sdn. Bhd.
(165570-W)
13. BURSA MALAYSIA DEPOSITORY NOMINEES SDN. BHD. (240297-W)
formerly known as Malaysian Central Depository Nominees Sdn. Bhd.
70
15 May 1992
Act as a nominee for Bursa Depository and receives securities on
deposit or for safe-custody or management
Group
Corporate Structure
Bursa Malaysia Berhad (30632-P)
100%
100%
100%
100%
Bursa Malaysia
Securities
Berhad
Bursa Malaysia
Derivatives
Berhad
Bursa Malaysia
Property
Sdn. Bhd.
(635998-W)
(261937-H)
Labuan
International
Financial
Exchange Inc.
(147792-H)
(LL 02032)
100%
100%
100%
100%
75%
Bursa Malaysia
Securities
Clearing Sdn. Bhd.
Malaysia
Monetary
Exchange
Berhad
Commodity
and Monetary
Exchange of
Malaysia
KLOFFE
Information
Systems
Sdn. Bhd.
Bursa Malaysia
Depository
Sdn. Bhd.
(247161-A)
(60226-D)
(319465-T)
(109716-D)
(165570-W)
100%
100%
100%
100%
Bursa Malaysia
Derivatives
Clearing Berhad
Bursa Malaysia
Information
Sdn. Bhd.
Bursa Malaysia
IT Sdn. Bhd.
(358677-D)
(152961-H)
Bursa Malaysia
Depository
Nominees
Sdn. Bhd.
(213411-K)
(240297-W)
Board
of Directors Profile
Chairman, Non-Executive Director and Public Interest
Director, appointed by the Minister of Finance
pursuant to Section 8D of Securities Industry Act 1983
Date of Appointment: 1 March 2004
Tun Mohamed Dzaiddin bin Haji Abdullah, aged
68, a Malaysian, was the former Chief Justice of
Malaysia. Barrister of the Middle Temple, England,
he was a practicing lawyer and a former Vice
President of the Malaysian Bar. He was also a
former Director of Malaysia Airlines from 1975 to
1982. Tun Dzaiddin had a distinguished career in
the Malaysian Judiciary, as a High Court Judge
from 1982 to 1992, Supreme Court Judge from
1982 to 1996 and Federal Court Judge from 1996
to 2000. Tun Dzaiddin was appointed the 9th Chief
Justice of Malaysia in 2000. He was conferred
several State and Federal awards, the most
prestigious being the award of the Most Esteemed
Order of Seri Setia Mahkota Malaysia which
carries the title ‘Tun’ in 2001.
Non-Executive Director and Public Interest Director,
appointed by the Minister of Finance pursuant to
Section 8D of Securities Industry Act 1983
Date of Appointment: 1 April 2004
Dato’ Abdul Latif bin Abdullah, aged 54, a
Malaysian, graduated with a Bachelor of Arts
(Hons) in International Relations from the
University of Malaya in 1975, a Master of Science
(Marine Law & Policy) from the University of Wales,
Institute of Science & Technology, United Kingdom
in 1981 and Senior Management Development
Program from Harvard Business School in 1992.
He is also a member of the Chartered Institute of
Logistics & Transportation (United Kingdom).
He began his career as an Officer with the Ministry
of Foreign Af fairs in 1975 and later, joined the
Malaysian International Shipping Corporation
Berhad as an Executive until 1982. He was a
member of the pioneer team that established the
second national line, Perbadanan Nasional
Shipping Line Berhad in 1982, where he remained
until 1992, holding the position as Director/General
Manager before joining Mitsui OSK Lines (M) Sdn.
Bhd. in 1992. He is the Executive Chairman of
72
Currently a legal consultant at Skrine, panel
member of the Singapore International Arbitration
Centre, Chairman of Deutsche Bank (Malaysia)
Berhad, Chairman of the Tun Mohamed Suffian
Foundation, Chairman of the Advisory Council,
Business Ethics Institute of Malaysia and Chairman
of the Royal Commission to Enhance the Operation
and Management of the Royal Malaysian Police.
Tun Dzaiddin sits as Chairman of the Appeals
Committee, Executive Committee, Nomination &
Remuneration Committee, Option Committee and
Risk Management Committee. He has a direct
shareholding of 165,000 ordinary shares of
RM0.50 each in Bursa Malaysia Berhad as at 31
March 2005.
Tun Dzaiddin has attended fourteen (14) Board
meetings held during his tenure for the financial
year ended 31 December 2004.
Mitsui OSK Lines (M) Sdn. Bhd. since 2004, and
Director of Penang Port Sdn. Bhd. since 1999 and
became Chairman in 2004. In addition, Dato’ Abdul
Latif also holds directorship positions in Kumpulan
Wang Pusat Perdagangan Laut, Lembaga Dius
Api Semenanjung Malaysia and other public
companies namely, Ekowood International
Berhad, Efficient E-Solutions Berhad and Tamco
Corporate Holdings Berhad.
He is currently the Chairman of International
Shipowners’ Association of Malaysia (ISOA) since
1998, and was the former Deputy Chairman of
Malaysian Shipowners’ Association (MASA).
Dato’ Abdul Latif is the Chairman of the
Compensation Committee, Disciplinary Committee
and Participation Committee, and also a member
of Investment Advisory Committee. He has a direct
RM0.50 each in Bursa Malaysia Berhad as at 31
March 2005.
Dato’ Abdul Latif has attended eight (8) out of ten
(10) Board meetings held during his tenure for the
Board
Datuk Haji Faisyal bin Datuk Yusof Hamdain
Diego
Date of Appointment: 9 June 2004
Datuk Haji Faisyal bin Datuk Yusof Hamdain Diego,
aged 43, a Malaysian, graduated with a Bachelor
of Economics from York University, Toronto,
Ontario, Canada in 1987. He has been the
Treasurer of the Dewan Perniagaan Melayu
Malaysia (Sabah) since 1997. He has been the
Executive Chairman of Arus Sutera Sdn. Bhd.
Date of Appointment: 23 July 2004
Datuk Azman bin Abdul Rashid, aged 57, a
Malaysian, graduated with a Bachelor of
Economics from the University of Malaya in 1972
and a Masters degree in Agriculture Development
from the University of Ghent, Belgium in 1983.
He began his career as Assistant Secretary in the
Prime Minister’s Department in 1972, where he
remained until 1977, before serving as Principal
Assistant Director in the Agricultural Policy
Section, Ministry of Agriculture Malaysia from 1977
to 1980. He became Deputy State Secretary and
Director of the State Planning Unit, Malacca from
1983 to 1986, District Officer of Kuantan from 1986
since 1997, the Director of Associated Concrete
Products (Sabah) Sdn. Bhd. since 1998 and the
Director of Perkasa Trading Sdn. Bhd. since 1996.
Datuk Haji Faisyal is the Chairman of the Listing
Committee, and also a member of Compensation
Committee and Risk Management Committee. He
has a direct shareholding of 100,000 ordinary
shares of RM0.50 each in Bursa Malaysia Berhad
as at 31 March 2005.
Datuk Haji Faisyal has attended five (5) out of six
to 1992, General Manager of Jengka Regional
Development Authority from 1992 to 1997, Deputy
State Secretary and Director of the State Planning
Unit, Pahang in 1997 and the Federal Development
Officer in Kelantan under the Implementation
Coordination Unit, Prime Minister’s Department
from 1997 to 2000. He was appointed as the
Federal Secretary for Sarawak in 2000 before
becoming the Secretary General in the Ministry of
Rural & Regional Development from 2002 to 22
June 2004.
Datuk Azman is a member of Audit Committee and
Appeals Committee. He has a direct shareholding
of 38,000 ordinary shares of RM0.50 each in
Bursa Malaysia Berhad as at 31 March 2005.
Datuk Azman has attended all five (5) Board
Board
Datin Paduka Siti Sa’diah binti Sheikh Bakir, aged
53, a Malaysian, graduated with a Bachelor of
Economics from the University of Malaya in 1974.
She began her career with Johor Corporation in
1974 and became directly involved with Johor
Corporation’s Healthcare Division in 1978, before
joining KPJ Sdn. Bhd. as its Chief Executive from
1989 to 2002. She has been the Managing Director
of KPJ Healthcare Berhad since 1993. She is also
currently the Chairman of Johor Specialist Hospital
Sdn. Bhd., Puteri Specialist Hospital Sdn. Bhd.,
Damansara Specialist Hospital Sdn. Bhd., Pusat
Pakar Tawakal Sdn. Bhd. and Medical Centre
(Johore) Sdn. Bhd. She also sits as a Director in
other companies within the Johor Corporation
group of companies, such as Kulim (M) Berhad,
Puteri Hotel Sdn. Bhd. and JMF Asset
Management Sdn. Bhd., as well as Pengurusan
Klinik Waqaf An-Nur Berhad, a non-governmental
organization dedicated to the provision of
Dr. Thillainathan a/l Ramasamy, aged 61, a
Malaysian, graduated with a Bachelor of Arts
Degree in Economics from the University of Malaya
in 1968, a Master and Doctorate of Economics from
the London School of Economics, United Kingdom
in 1970 and 1976 respectively.
He was an Associate Professor of University
Malaya from 1977 to 1979. He has approximately
ten (10) years of experience in the banking industry
having served as General Manager of the Arab
Malaysian Merchant Bank, General Manager and
Joint Managing Director of Bank Pusat Kerjasama
Bhd. as well as General Manager and Chief
Executive Officer of Bank Buruh (Malaysia) Bhd.
In addition, he has served on various national task
forces, advisory panels and consultative councils
including the National Economic Panel from 1982
to 1987, the Anti-Recession Task Force from
1986 to 1987, Task Force on Capital Market
74
healthcare services to the less fortunate. In
addition, she has also been a Board member of
MATRADE since 1999, Chairman of the Audit
Committee of MATRADE since 2003, a member
of the National Productivity Corporation’s
Consultative Panel on Healthcare since 2001, a
member of the National Patient Safety Council,
Ministry of Health since 2003 and has been the
President of the Malaysian Society for Quality in
Health (MSQH), an independent, non-profit
accrediting body of the healthcare industry since
its inception in 1997.
Datin Paduka Siti Sa’diah is a member of Appeals
Committee, Audit Committee, Nomination &
Remuneration Committee and Option Committee.
She has a direct shareholding of 100,000 ordinary
shares of RM0.50 each in Bursa Malaysia Berhad
as at 31 March 2005.
Datin Paduka Siti Sa’diah has attended nine (9) out
of ten (10) Board meetings held during her tenure
for the financial year ended 31 December 2004.
Development from 1988 to 1991, Investment Panel
of the Employees Provident Fund (EPF) from 1988
to 2001, National Economic Consultative Council
in 1990 and the Majlis Perundingan Ekonomi
Negara Kedua (MAPEN II) from 1999 to 2000. Dr.
Thillainathan was also the President of the
Malaysian Economic Association from 1996 to
2002. He has been the Chief Operating Officer
and Executive Director of Genting Bhd. since 26
November 2002 and 15 January 2003 respectively.
He also currently sits on the board of Petronas
Dagangan Bhd., Genting Berhad and other public
companies within the Genting Berhad group,
namely Genting Sanyen Power (Labuan) Limited,
Genting Sanyen Utilities Limited, Genting (Labuan)
Limited, Genting International Paper Holdings Ltd.,
Genting International Paper Manufactures Ltd.,
Genting Overseas Investments Ltd., Genting Oil
& Gas (China) Limited, Genting Oil & Gas Limited,
Genting Power (M) Limited, Genting Power (Swiss)
Limited, Genting Power (India) Limited, Genting
Power Holdings Limited, Genting Power
International Limited, Sorona Limited, Laila Limited,
Logan Lock Limited, WEB Energy Limited, RWB
Board
(Labuan) Limited, RWB International (Labuan)
Limited, Prime Venture (Labuan) Limited, Resorts
World (Labuan) Limited, GHR Risk Management
(Labuan) Limited and Prime Holdings (Labuan)
Limited.
Dr. Thillainathan is the Chairman of Investment
Advisory Committee, a member of Audit
Committee, Compensation Committee,
Dato’ Abdul Wahid bin Omar, aged 41, a Malaysian,
is a member of the Association of Chartered
Certified Accountants (United Kingdom) and the
Malaysian Institute of Accountants. He was
previously the Managing Director and Chief
Executive Officer of United Engineers (Malaysia)
Berhad (UEM) from 1 October 2001 to 30 June
2004. During his tenure at UEM group of
companies, he also served on the Boards of
Directors of UEM W orld Berhad, PLUS
Expressways Berhad, UEM Builders Berhad,
Pharmaniaga Berhad and certain subsidiaries of
UEM. Prior to working for the UEM group of
companies, he served as Director, Group
Corporate Services of Amanah Capital Group. He
was also the Chairman of Amanah Short Deposits
Bhd. from 1999 to 2001 and Director of Alliance
Disciplinary Committee and Risk Management
Committee. He has a direct shareholding of
100,000 ordinary shares of RM0.50 each in Bursa
Malaysia Berhad as at 31 March 2005.
Dr. Thillainathan has attended nine (9) out of ten
Merchant Bank Bhd. from 1999 to 2001. He has
been a member of the Lembaga Tabung Haji
Investment Panel since September 2001. He has
also been the Group Chief Executive Officer of
Telekom Malaysia Berhad since 1 July 2004. He
currently sits on the boards of other public
companies within the Telekom Malaysia Berhad
group, namely VADS Berhad and Celcom
(Malaysia) Berhad.
Dato’ Abdul Wahid is the Chairman of Audit
Committee, a member of Investment Advisory
Committee, Nomination & Remuneration
Committee and Option Committee. He has a direct
RM0.50 each in Bursa Malaysia Berhad as at
31 March 2005.
Dato’ Abdul Wahid has attended nine (9) out of
ten (10) Board meetings held during his tenure for
the financial year ended 31 December 2004.
Board
Izham bin Yusoff
Izham bin Yusoff, aged 38, a Malaysian, graduated
with a Bachelor in Accounting from the University
of Miami, USA in 1990 and a Master of Business
Administration (Accounting & International
Business) from the University of Miami, USA in
1991. He began his career with Citibank NA in
Miami as Assistant Business Planning & Analysis
Manager from January 1992 to June 1992 before
joining Procter & Gamble in Singapore as Financial
Analysis Manager, Corporate from July 1992 to
September 1995. He then joined Citibank Bhd. in
Malaysia as Financial Controller from October 1995
to November 1996. He was the Corporate Strategy
Manager with Maxis Bhd. from December 1996
to December 1997, Special Assistant to the
Dato’ Seri Hwang Sing Lue, aged 76, a Malaysian,
holds a Diploma from the Faculty of Secretaries of
London. He is the founder of Hwang-DBS
Securities Berhad and has over thirty (30) years
of experience in the securities industry. Since
August 1995, he has held the position of Executive
Chairman of Hwang-DBS (Malaysia) Berhad, a
company listed under the Finance Sector of the
Main Board of Bursa Malaysia Securities Berhad.
He currently sits on the boards of other public
companies within the Hwang-DBS group, namely
Hwang-DBS Securities Berhad, Hwang-DBS Unit
Trust Berhad, Amluck Enterprises Ltd. and Equity
and Property Investment Corporation Limited.
Dato’ Seri Hwang has also been a Committee
Member of the Association of Stockbroking
Companies of Malaysia since November 2002.
76
Managing Director of EON Bhd. from January 1998
to July 2002 and Managing Director of Amanah
Raya Bhd. from August 2002 to 30 June 2004. He
has been the Chief Executive Officer of KUB
Malaysia Berhad (KUB) since 1 July 2004. He
currently sits on the boards of KUB group of
companies and Computer Forms (Malaysia)
Berhad.
Izham is a member of Executive Committee, Listing
Committee, Option Committee and Participation
Committee. He has a direct shareholding of
100,000 ordinary shares of RM0.50 each in Bursa
Malaysia Berhad as at 31 March 2005.
Izham has attended all ten (10) Board meetings
held during his tenure for the financial year ended
31 December 2004.
He is also actively involved in the rubber industry,
holding the position of a Board Member of the
Malaysian Rubber Board, an Arbitrator of the Panel
of Malaysian Rubber Exchange of Arbitrators and
the President of the Federation of Rubber Trade
Associations of Malaysia.
Dato’ Seri Hwang is a member of Compensation
Committee, Participation Committee and Risk
Management Committee. He has a direct
RM0.50 each in Bursa Malaysia Berhad (the
Company) as at 31 March 2005. He is deemed to
have interest in 6,072,728 ordinary shares of
RM0.50 each in the Company by virtue of his
interest in Hwang-DBS Securities Berhad pursuant
to Section 6A of the Companies Act, 1965.
Dato’ Seri Hwang has attended eight (8) out of ten
Board
Cheah Tek Kuang
Cheah Tek Kuang, aged 58, a Malaysian,
graduated with a Bachelor of Economics from the
University of Malaya in 1970. He began his career
with the Malaysian Industrial Development
Authority from October 1970 to October 1978. His
experience in the securities and derivatives
markets includes serving on the Board of Directors
of Kuala Lumpur Commodity Exchange from 1994
to 2000 and the Malaysian Exchange of Securities
Dealing and Automated Quotation Bhd. from 2000
to 2002. He was conferred Justice of Peace by
Duli Yang Maha Mulia Sultan of Selangor in 1999
and is a Fellow of the Institute of Bankers Malaysia.
He has been with AmMerchant Bank Bhd. since
1978 and was appointed its Chief Executive Officer
and Managing Director in 1994, before becoming
Peter Leong Tuck Leng, aged 48, a Malaysian,
graduated with a Bachelor in Applied Economics
in 1981 and a Master of Economics from the
London School of Economics in 1982. He has more
than twenty three (23) years of experience in the
securities industry, having served as a member of
the Exchange’s Listing Committee since 2002,
Membership Committee from 2001 to 2003 and
Budget & Investment Committee from 2002 to
2003. He is the current Chairman of the Association
of Stockbroking Companies Malaysia and is the
its Group Managing Director in 2002. He has been
the Group Managing Director of AMMB Holdings
Berhad since 1 January 2005. He currently sits on
the boards of other public companies within the
AMMB Holdings Berhad group, namely
AmMerchant Bank Bhd., AmBank Berhad,
AMFB Holdings Bhd., AmFinance Berhad and
AmInvestment Group Berhad.
Cheah is a member of Appeals Committee, Audit
Committee, Investment Advisory Committee and
Risk Management Committee. He has a direct
shareholding of 85,000 ordinary shares of RM0.50
each in Bursa Malaysia Berhad as at 31 March
2005.
Cheah has attended eight (8) out of ten (10) Board
Executive Director as well as the Chief Executive
Officer of EONCAP Securities Sdn. Bhd. (formerly
known as Leong & Company Sdn. Bhd.).
Peter Leong is a member of Compensation
Committee, Executive Committee, Listing
Committee and Option Committee. He has a direct
RM0.50 each in Bursa Malaysia Berhad as at
31 March 2005.
Peter Leong has attended eight (8) out of ten (10)
Board meetings held during his tenure for the
Board
Non-Independent Executive Director
Yusli bin Mohamed Yusoff, aged 46, a Malaysian,
University of Essex (United Kingdom) in 1981, and
is a member of the Institute of Chartered
Accountants, England & Wales.
He began his career in London with Peat Marwick
Mitchell & Co in 1982, where he remained until
1986, holding the position of Audit Senior before
joining Hugin Sweda Plc where he held the position
of Chief Accountant until 1990. His career in
Malaysia includes key positions in prominent
corporations such as Faber Group Bhd. as Group
Financial Controller from April 1992 to December
1992, TIME Engineering Bhd. as Chief Operating
Officer from January 1993 to December 1993,
Renong Bhd. as Chief Operating Officer/Director
from January 1994 to March 1995, Shahpadu
Corporation Bhd. as Group Managing Director
from April 1995 to October 1996, Sime Merchant
Bankers Bhd. as Chief General Manager from
November 1996 to May 1998, Intria Bhd. as
Executive Vice Chairman and Metacorp Bhd. as
Managing Director from June 1998 to December
1999. Prior to his appointment as Chief Executive
Officer of Bursa Malaysia Berhad, he was the Chief
Executive Director of CIMB Securities Sdn. Bhd.
from January 2000 to January 2004. He also
served as the Chairman of the Association of
Stockbroking Companies Malaysia from 2003 to
2004. He presently sits on the Board of Capital
Market Development Fund and is an executive
committee member of the Financial Reporting
Foundation/Malaysian Accounting Standards
Board. He is also the President of Victoria
Institution Old Boys’ Association.
Yusli is a member of Executive Committee,
Investment Advisory Committee, Listing Committee
and Participation Committee. He is also the
Chairman of Consultative Panels for Securities
Market, Derivatives Market and Clearing,
Settlement & Depository. He has a direct
RM0.50 each in Bursa Malaysia Berhad (the
Company) as at 31 March 2005. He also has an
interest by virtue of options granted to him pursuant
to the Company’s Employees’ Share Option
Scheme (ESOS) to subscribe up to 6,000,000
ordinary shares of RM0.50 each in the Company
over the five (5) year duration of the ESOS. For
the year 2005, he has been granted options which
give him the right to subscribe for 1,000,000
ordinary shares of RM0.50 each in the Company.
Yusli has attended all ten (10) Board meetings held
during his tenure for the financial year ended 31
December 2004.
Note:
Save as disclosed, the above Directors have no family relationship with any Director and/or major shareholder of the Company,
have no conflict of interest with the Company and have not been convicted for any offence within the past ten (10) years.
78
Board
Committees
The following chart set forth the Company’s current internal management reporting structure:
Board Committees
Board of Directors
• Audit Committee
Consultative Panels
• Securities Market
• Derivatives Market
• Clearing, Settlement and
Depository
•
Executive Committee
•
Chief Executive Officer
• Nomination & Remuneration Committee
• Investment Advisory Committee
• Risk Management Committee
• Option Committee
Board Committees comprise the following:
1.
Audit Committee
The present Audit Committee (AC) was constituted on 30 April 2004 and its members are appointed annually
by the Board of Directors. It is responsible for reviewing reports from internal and external auditors, evaluating
existing policies, establishing audit quality and ensuring compliance with the Company’s and the Group’s
policies. The AC is also responsible for ensuring that proper processes and procedures are in place to
comply with all laws, regulations and rules established by all relevant regulatory bodies, and reviews any
related party transactions and conflict of interest situations that may arise. The AC currently comprises the
following members:
Name
Position
Date of
Appointment
on AC
Directorship
Attendance
during
tenure
Omar
Chairman
12 May 2004
Director
3/3
Datuk Azman bin Abdul
Rashid
Member
23 July 2004
Interest Director
2/2
Datin Paduka Siti Sa’diah
binti Sheikh Bakir
Member
12 May 2004
Director
3/3
Ramasamy
Member
12 May 2004
Director
2/3
Cheah Tek Kuang
Member
12 May 2004
Non-Independent
3/3
Board
2.
Committees
Nomination and Remuneration Committee
The Nomination and Remuneration Committee (NRC) was established on 13 April 2004 and its members
are appointed annually by the Board of Directors. It is primarily responsible for recommending candidates
for appointments to the Board of Directors, Board Committees, Consultative Panels, Regulatory Committees
and key management personnel, and also recommends and negotiates the compensation packages for
these appointments. The NRC is also responsible for establishing a set of quantitative and qualitative
performance criteria to evaluate the performance of each member of the Board of Directors and the Chief
Executive Officer, and reviewing their respective performances. The NRC currently comprises the following
members:
Name
Tun Mohamed Dzaiddin
bin Haji Abdullah
3.
Position
Date of
Appointment
on NRC
Directorship
Attendance
during
tenure
Chairman
13 April 2004
Chairman, Non-Executive
4/4
binti Sheikh Bakir
Member
13 April 2004
Director
4/4
Omar
Member
13 April 2004
Director
3/4
Izham bin Yusoff
Member
13 April 2004
Director
3/4
Peter Leong
Tuck Leng
Member
13 April 2004
Non-Independent
4/4
Investment Advisory Committee
The Investment Advisory Committee (IAC) was established on 30 April 2004 and its members are appointed
annually by the Board of Directors. It is primarily responsible for reviewing and recommending strategic
investment decisions for the Company and the Group. The IAC currently comprises the following members:
Name
Ramasamy
80
Position
Date of
Appointment
on IAC
Directorship
Attendance
during
tenure
Chairman
12 May 2004
Director
2/2
Member
12 May 2004
Non-Independent
Executive Director
2/2
Dato’ Abdul Latif bin
Abdullah
Member
12 May 2004
Interest Director
2/2
Board
3.
Investment Advisory Committee (cont’d)
Name
4.
Committees
Position
Date of
Appointment
on IAC
Directorship
Attendance
during
tenure
Omar
Member
12 May 2004
Independent
2/2
Cheah Tek Kuang
Member
12 May 2004
Non-Independent
2/2
Risk Management Committee
The Risk Management Committee (RMC) was established on 30 April 2004 and its members are appointed
annually by the Board of Directors. It is primarily responsible for reviewing and recommending the risk
management policies and strategies. It assists the Board in fulfilling its corporate governance, risk
management, and statutory responsibilities in order to manage the overall risk exposure of the Group. The
RMC currently comprises the following members:
Name
bin Haji Abdullah
5.
Position
Date of
Appointment
on RMC
Directorship
Attendance
during
tenure
Chairman
12 May 2004
3/3
Datuk Yusof Hamdain
Diego
Member
9 June 2004
Interest Director
3/3
Ramasamy
Member
12 May 2004
Director
2/3
Dato’ Seri Hwang
Sing Lue
Member
12 May 2004
Non-Independent
3/3
Cheah Tek Kuang
Member
12 May 2004
Non-Independent
2/3
Executive Committee
The Executive Committee (EXCO) was established on 30 April 2004 and its members are appointed annually
by the Board of Directors. It is primarily responsible for making decisions on behalf of the Board, based on
a mandate of having the Board’s delegated authority, in pre-defined areas. The EXCO currently comprises
the following members:
Board
5.
Executive Committee (cont’d)
Name
bin Haji Abdullah
6.
Committees
Position
Date of
Appointment
on EXCO
Directorship
Attendance
during
tenure
Chairman
12 May 2004
7/7
Izham bin Yusoff
Member
12 May 2004
Director
6/7
Peter Leong
Tuck Leng
Member
12 May 2004
Non-Independent
7/7
Yusli bin
Mohamed Yusoff
Member
12 May 2004
Non-Independent Executive
Director / Chief Executive
Officer
7/7
Md. Nor bin Ahmad
Member
12 May 2004
Chief Regulatory Officer
7/7
Khairussaleh bin Ramli
Member
1 June 2004
Chief Financial Officer
5/6
Option Committee
The Option Committee (OC) was established on 1 March 2005 and its members are appointed by Board of
Directors. The term of appointment of the present members of the OC is for a period of two (2) years from 1
March 2005 or until such time he/she shall cease to be a Director of Bursa, whichever is the earlier. It is
primarily responsible for implementing and administering the Company’s Employees’ Share Option Scheme
(ESOS) in accordance with the ESOS Bye-Laws. The OC currently comprises the following members:
Name
bin Haji Abdullah
82
Position
Date of
Appointment
on OC
Directorship
Attendance
during
tenure
Chairman
1 March 2005
1/1
binti Sheikh Bakir
Member
1 March 2005
Director
1/1
Omar
Member
1 March 2005
Director
Nil
Izham bin Yusoff
Member
1 March 2005
Director
Nil
Peter Leong
Tuck Leng
Member
1 March 2005
Non-Independent
1/1
Consultative
Panels
Consultative Panels comprise the following:
1.
Securities Market Consultative Panel
The Securities Market Consultative Panel (SMCP) is responsible for advising the Board on matters relating
to the securities industry that affect the Group.
Name
Date of
Appointment
on SMCP
Classification
Chairman
12 May 2004
Ong Leong Huat
Member
12 May 2004
Representing stock-broking
industry
Member
12 May 2004
industry
Dato’ Ahmad bin Kadis
Member
12 May 2004
industry
Halimah bt Haji Mohd
Member
12 May 2004
Representing remisiers
Dato’ Nazir bin Razak
Member
12 May 2004
Representing merchant
banking industry
Ronald Ong
Member
12 May 2004
Representing international
intermediaries
Ganen Sarvananthan
Member
12 May 2004
intermediaries
Dato’ Mohamed Azman bin Yahya
Member
12 May 2004
Representing public listed
companies
Dato’ Jamaludin Ibrahim
Member
12 May 2004
Representing public listed
companies
Datuk Azlan bin Mohd Zainol
Member
12 May 2004
Representing institutional
investors
Edmond Cheah Swee Leng
Member
12 May 2004
Representing institutional
investors
Position
Consultative
2.
Panels
Derivatives Market Consultative Panel
The Derivatives Market Consultative Panel (DMCP) is responsible for advising the Board on matters relating
to the derivatives industry that affect the Group.
Name
Date of
Appointment
on DMCP
Classification
Chairman
12 May 2004
Ong Soon Ken
Member
12 May 2004
Representing futures broking
industry
Noripah bt Kamso
Member
12 May 2004
Representing futures broking
industry
Ady Ng Lai Wah
Member
12 May 2004
intermediaries
Tan Hup Thye
Member
12 May 2004
intermediaries
Muhammad Kashif bin Zaman
Member
12 May 2004
Representing derivatives traders
Chan Kok Seong
Member
12 May 2004
Wong Kum Cheong
Member
12 May 2004
Yong Chin Fatt
Member
12 May 2004
84
Position
Consultative
3.
Panels
Clearing, Settlement & Depository Consultative Panel
The Clearing, Settlement & Depository Consultative Panel (CSDCP) is responsible for advising the Board
on matters relating to the clearing, settlement, depository and custody that affect the Group.
Name
Date of
Appointment
on CSDCP
Classification
Chairman
12 May 2004
Amrat Kaur
Member
12 May 2004
Representing local clearing
and custody intermediaries
Sharifatu Laila bt Syed Ali
Member
12 May 2004
Representing local clearing and
custody intermediaries
James Lau Yew Kong
Member
12 May 2004
Representing local clearing and
custody intermediaries
Alison Freeman
Member
12 May 2004
clearing and custody institutions
Shariffudin bin Mohamed
Member
12 May 2004
David Pointing
Member
12 May 2004
Dr. Nik Ramlah bin Mahmood
Member
12 May 2004
Representing financial regulators
and policy makers
Ahmad Hizzad bin Baharuddin
Member
12 May 2004
and policy makers
Md. Nor bin Ahmad
Member
12 May 2004
and policy makers
Position
Regulatory
Committees
Regulatory Committees comprise the following:
1.
Listing Committee
The Listing Committee (LC) is responsible for deciding on enforcement of the Listing Requirements of
Bursa Malaysia Securities Berhad, withdrawal of listing and other listing related major regulatory decisions.
Name
Datuk Yusof Hamdain
Diego
2.
Position
Date of
Appointment
on LC
Directorship
Attendance
during
tenure
Chairman
9 June 2004
Interest Director
9/9
Yusli bin Mohamed
Yusoff
Member
12 May 2004
Non-Independent Executive
Director
8/10
Izham bin Yusoff
Member
12 May 2004
Director
8/10
Peter Leong Tuck
Leng
Member
12 May 2004
Non-Independent
8/10
Dato’ Abdul Hamidy bin
Hafiz
Member
12 May 2004
Independent individual
with significant experience
with public listed companies
8/10
Tuan Haji Abdul Kadir bin
Hj. Md. Kassim
Member
12 May 2004
Independent individual with
significant professional or
management experience
7/10
Amin Rafie bin
Othman
Member
12 May 2004
with significant experiences
with investment management
10/10
Dato’ Seri Hj Megat
Najmuddin bin Datuk
Seri Dr. Hj. Megat Khas
Member
12 May 2004
with significant experiences
with capital markets /
corporate governance
7/10
Disciplinary Committee
The Disciplinary Committee (DC) is responsible for hearing cases of alleged breaches of the rules of relevant
subsidiaries of Bursa (other than the Listing Requirements) and making decision relating to the alleged
breaches including appropriate sanctions for the breaches.
Name
Abdullah
86
Position
Chairman
Date of
Appointment
on DC
12 May 2004
Directorship
Interest Director
Attendance
during
tenure
10/10
Regulatory
2.
Disciplinary Committee (cont’d)
Name
3.
Committees
Position
Date of
Appointment
on DC
Directorship
Attendance
during
tenure
Ramasamy
Member
12 May 2004
Director
8/10
Dato’ Mohammed
Adnan Dato’ Shuaib
Member
12 May 2004
in the securities industry
10/10
Ng Chin Leng
Member
12 May 2004
in the derivatives industry
8/10
Chan Guan Seng
Member
12 May 2004
Independent individual with
significant experience in the
clearing and custody industry
9/10
Participation Committee
The Participation Committee (PC) is responsible for deciding on all matters relating to the registration of
Participating Organisations and Registered Persons and all regulatory matters in relation to the rules of the
relevant subsidiaries, other than enforcement actions.
Name
Abdullah
Position
Date of
Appointment
on PC
Directorship
Attendance
during
tenure
Chairman
12 May 2004
Interest Director
2/2
Izham bin Yusoff
Member
12 May 2004
Director
1/2
Dato’ Seri Hwang Sing
Lue
Member
12 May 2004
Non-Independent
2/2
Member
12 May 2004
Non-Independent
Executive Director /
2/2
Md. Nor bin Ahmad
Member
12 May 2004
2/2
Member
1 June 2004
2/2
Regulatory
4.
Committees
Compensation Committee
The Compensation Committee (CC) is responsible for making inquiries into the claims made against the
respective compensation funds, and making related decisions on such claims, based on the delegated
authority from the Board of Bursa and the respective subsidiary Boards.
Name
Abdullah
5.
Position
Date of
Appointment
on PC
Directorship
Attendance
during
tenure
Chairman
12 May 2004
Interest Director
1/1
Datuk Yusof Hamdain
Diego
Member
9 June 2004
Non-Executive and
Public Interest Director
Nil
Ramasamy
Member
12 May 2004
Director
1/1
Peter Leong
Tuck Leng
Member
12 May 2004
Non-Independent
1/1
Dato’ Seri Hwang Sing
Lue
Member
12 May 2004
Non-Independent
1/1
Appeals Committee
The Appeals Committee is responsible for hearing and deciding on appeals against decisions of the Listing
Committee, Disciplinary Committee, Participation Committee or Compensation Committee made for or against
Participating Organisations, Registered Persons, Applicants, Listed Issuers, Directors, Officers, Advisors,
and all other persons to whom the rules of Bursa’s relevant subsidiaries are directed.
Name
88
Position
Date of
Appointment
on Appeals
Committee
Directorship
Attendance
during
tenure
bin Haji Abdullah
Chairman
12 May 2004
6/6
Datuk Azman bin Abdul
Rashid
Member
23 July 2004
Interest Director
5/5
binti Sheikh Bakir
Member
12 May 2004
Director
6/6
Cheah Tek Kuang
Member
12 May 2004
Non-Independent
4/6
Thomas Mun Lung Lee
Member
12 May 2004
Distinguished individual
4/6
Izlan bin Izhab
Member
12 May 2004
Distinguished individual
6/6
Management
Devanesan Evanson
Raghbir Singh Bhart
Committee
Md Nor bin Ahmad
Ahmad Tajuddin bin Abdul
Carrim
Mohd Ridzal bin Mohd
Sheriff
Selvarany Rasiah
Fathi Ridzuan bin Ahmad
Fauzi
Cheah Sin Keat
Ravindran Navaratnam
Yew Kim Keong
Management
Profile
The Management Committee comprise the following key management personnel:
Yusli bin Mohamed Yusoff, aged 46, a Malaysian,
University of Essex (UK) in 1981, is a member of the
Institute of Chartered Accountants, England & Wales
and the Malaysian Institute of Accountants. He has
over 20 years of experience and expertise in financial
management, risk management and business
development. Besides holding directorships in Bursa
Malaysia Berhad and its group of companies, he also
sits on the Board of Capital Market Development Fund
and is an executive committee member of the Financial
Reporting Foundation/Malaysian Accounting
Standards Board.
Md Nor bin Ahmad
Md Nor bin Ahmad, aged 53, a Malaysian, graduated
with a Bachelor of Commerce and Administration from
Victoria University of Wellington, New Zealand in 1978
and is an Associate Chartered Accountant (New
Zealand). He was previously an accountant at the
Registrar of Companies from 1977 to 1980, an
accountant at the Malaysian Road Transport
Department in 1980, and the Chief Accountant of the
Sabah Islamic Council from 1980 to 1983. He joined
us as our Assistant General Manager from 1983 to
1986, our Deputy General Manager from 1987 to 1994,
General Manager of Bursa Depository from 1995 to
1999 and our Deputy President, Exchange Operations
from 1996 to 2003.
90
Khairussaleh bin Ramli, aged 38, a Malaysian,
graduated with a Bachelor of Science in Business
Administration from the Olin School of Business,
Washington University, US in 1989. He joined us in
1998 as Senior Manager, Strategic Planning and
International Affairs, before becoming Senior Vice
President, Policy and Development in 2001 and our
Head, Strategy and Corporate Finance in 2003. Prior
to joining us, he had also served the Public Bank group
for 7 years, during which time he gained experience in
corporate banking, equity research and futures broking,
including serving as Executive Director, PB Futures
from 1995 to 1997.
Selvarany Rasiah
Chief Legal Officer
Selvarany Rasiah, aged 40, a Malaysian, graduated
with a Bachelor of Laws from the University of Malaya
in 1989 and has been admitted as an Advocate &
Solicitor of the High Court of Malaya. She joined us in
November 1992 as a Legal Officer and has held
various positions within the Bursa Malaysia group
including Assistant General Manager, Corporate
Affairs, Legal & Compliance, Bursa Depository, Senior
Vice President/Legal Adviser, Listing and Head
Regulatory Issues & Legal Advisory. She has more
than 15 years of experience in dealing with legal and
regulatory matters. She has dealt with a wide range of
regulatory work relating to the capital markets and
served on various task forces on capital market
initiatives.
Management
Profile
Devanesan Evanson
Head, Group Internal Audit and Risk Management
Devanesan Evanson, aged 50, a Malaysian, graduated
with a Bachelor of Laws from the University of London
in 1989. He is a fellow member of the Association of
Chartered Certified Accountants (FCCA) and a
member of the Malaysian Institute of Accountants. He
was also a Governor and past president of the Institute
of Internal Auditors Malaysia and a member of the
Malaysian Advisory Committee of ACCA. He has over
13 years of experience in the field of external and
internal audit and has held various key positions within
the Bursa Malaysia group including Head of Internal
Audit Function, Senior Vice President, Compliance &
Inspection and Senior Vice President, Legal Advisory
prior to his appointment as Head of Group Internal
Audit and Risk Management in January 2004.
Ahmad Tajuddin bin Abdul Carrim
Head, Group Human Resources and Administration
Ahmad Tajuddin bin Abdul Carrim, aged 52, a
Malaysian, graduated with a Master of Arts in Human
Resources (Training and Development) from the Asia
Pacific International University in 1994. He was
previously the Personnel and Administrative Director
of Nike (M) Sdn. Bhd. from 1980 to 1985, Human
Resources Manager of Mattel (M) Sdn. Bhd. from 1985
to 1988, Human Resources Manager of Motorola
Electronics Sdn. Bhd. from 1989 to 1997, Employee
Relations Manager of Motorola Inc. Chicago in 1994
and Asia Pacific Human Resource Director at Motorola
Inc. from 1997 to 2002.
Fathi Ridzuan bin Ahmad Fauzi
Head, Exchanges
Fathi Ridzuan bin Ahmad Fauzi, aged 40, a Malaysian,
graduated with a Bachelor of Science in Accounting
and Financial Analysis from the School of Industry and
Business Studies, University of Warwick, United
Kingdom in 1988. He has held various key positions
within the Bursa Malaysia group including Senior
Manager, Finance and Administration of Bursa
Depository, Senior Vice President, Finance and
Administration of Malaysian Exchange Securities
Dealing Automated Quotation Bhd., Assistant General
Manager, Finance and Administration of Bursa
Securities Clearing, Senior Vice President, Finance
and Administration of Bursa Securities Clearing,
General Manager of Bursa Depository and Head of
Information Services prior to appointment as Head of
Exchanges in April 2004.
Cheah Sin Keat
Head, Clearing, Settlement and Depository
Cheah Sin Keat, aged 43, a Malaysian, graduated with
a Bachelor of Economics from the University of Malaya
in 1985. He is also a certified Financial Risk Manager
and a fellow member of the Global Association Risk
Professionals. He began his career with the Securities
Commission where he was responsible for establishing
the derivatives market. Subsequently he served in
Bank Negara Malaysia in the Economics Department
and later in the Exchange Control Department. He has
held various key positions within the Bursa Malaysia
group including Deputy Chief Executive Officer of
Bursa Derivatives Clearing and Head of Operations
Risk prior to appointment as Head of Clearing,
Settlement and Depository in November 2004.
Management
Profile
Raghbir Singh Bhart
Head, Information Services
Raghbir Singh Bhart, aged 51, a Malaysian, graduated
with a Bachelor of Economics from the University of
Malaya in 1976 and a Bachelor of Laws from the
University of London in 1994. He also graduated from
the Advanced Management Course from Harvard
Business School, US in 1998 and the Civil Service
Commission Examinations, Government of Malaysia
in 1978. He was previously Assistant Secretary of
Ministry of Primary Industries, Company Secretary of
the Kuala Lumpur Commodity Exchange, Chief
Executive of the Kuala Lumpur Commodity Exchange
and the General Manager of Commodity and Monetary
Exchange of Malaysia (COMMEX) prior to appointment
as Head of Information Services in April 2004.
Mohd Ridzal bin Mohd Sheriff
Head, Group Business Development
Mohd Ridzal bin Mohd Sheriff, aged 40, a Malaysian,
graduated from the University of London with LLB
(Hons) in 1989. He qualified as a licensed Dealers
Representative in 1993 and a licensed Futures
Brokers’ Representative in 1996. He was appointed
to the board of directors of Bursa Derivatives from 1997
to 2000 and Bursa Derivatives Clearing from 1998 to
2000. He has held various key positions within the
Bursa Malaysia group including Head of Clearing,
Settlement and Depository Business Unit, Chief
Executive Officer of Bursa Derivatives Clearing,
General Manager of Bursa Securities Clearing and
General Manager of Bursa Depository prior to
appointment as Head of Group Business Development
in November 2004.
92
Ravindran Navaratnam
Chief Information Officer, Strategic
Ravindran Navaratnam, aged 41, a Malaysian,
graduated with a Bachelor of Science (Hons) in
Electrical and Electronic Engineering from the
University of Wales, United Kingdom in 1987 and is
an associate of the Institute Chartered Accountants in
England and Wales. He was previously an engineer
at Seagate Technology Pte. Ltd. from 1987 to 1988,
Audit Junior of Cohen Arnold & Co. from 1988 to 1989,
Senior Audit Assistant of Touche Ross & Co. from
1989 to 1992, Principal Consultant of
PricewaterhouseCoopers Consulting Sdn. Bhd. from
1992 to 1996, General Manager, Corporate Services
of Danaharta Bhd. (secondment) from 1998 to 2001
and Director of PricewaterhouseCoopers Consulting
Sdn. Bhd. from 2001 to 2002.
Yew Kim Keong
Chief Information Officer, Operations
Yew Kim Keong, aged 45, a Malaysian, graduated with
a higher diploma in Computer Science from ICL
Training Services, Beaumont, United Kingdom in 1990.
He has more than 20 years of working experience in
Information Technology and Securities Industry. He has
held various key positions within the Bursa Malaysia
group including Assistant General Manager,
Information Technology of Bursa Securities Clearing,
Senior Vice President, Facilities Management of Bursa
Malaysia and Head, Facilities Management of Bursa
Malaysia IT Sdn. Bhd. prior to appointment as Chief
Information Officer, Operation in July 2004.
Organisation
Structure
Investor Relations
Public Relations
Group Internal
Audit & Risk
Management
Group Risk
Management
Chief
Regulatory
Officer
Exchanges
Clearing
Settlement &
Depository
Information
Services
Group Business
Development
Project Tender
& Review
Issues &
Listing
Exchanges
& Product
Development
Clearing &
Settlement
Operations
Customer
Service
Marketing
Communications
Support
Services Audit
Listing
Compliance
Exchanges
Operations
Depository
Product
Development
Equities
Marketing
Multimedia
Services
Derivatives
&
IS / IT Audit
Operations Audit
Intermediary
Supervision
Market
Surveillance &
Investigation
Bond Market
Offshore
Markets
Product
Development
&
Customer Service
Data
Services
Operations Risk
Management
Business
Initiatives
Public
Information
Centre
Chief
Financial
Officer
Chief
Legal
Officer
Chief
Information
Officer
Strategic
Chief
Information
Officer
Operations
Group Human
Resources &
Administration
Corporate
Finance
Issuers
Major
Projects
Facilities
Management
Employee &
Industrial
Relations
IT Strategy
& Planning
Policy
IT
Development
& Services
Transformation
& O&M
Business
Continuity &
Disaster
Recovery
Administration
& Building
Management
Customer
Advocacy
Security
Services
Intermediaries
Group
Strategic
Planning
Research &
External Affairs
Policy &
Rule Reform
Corporate &
Commercial
Issues
Finance
Treasury
Corporate
Secretarial &
Compliance
Rewards &
Performance
Management
Training
& Organisational
Development
Staffing &
University
Relations
Transaction
Center
Human
Capital & Remuneration
Recognising that an organisation is driven by the power of its human capital, Bursa focuses on skills enhancements,
teambuilding and empowerment.
HUMAN CAPITAL (As at March 2005)
Distribution by Qualification
Postgraduate
22
Graduate/Professional
Diploma
131
28
134
1
5
A Level
274
O Levels/ Secondary
Management & Executives
Non-Executives
Distribution by length of service
> 10 years
5 < year < 10 years
< 5 years
182
68
77
3
197
68
Management & Executives
Non-Executives
Distribution by age
137
Above 50
41-50 years
93
13
30-40 years
Below 30
353
DIRECTION FOR HUMAN RESOURCES
Performance and Service Orientation
Our Performance Management System is designed to assess all employees on their performance based on the
defined performance indicators and core competencies which are incorporated in the Balance Score Card. Service
orientation is emphasised recognising that service excellence will transform us to become a globally competitive
exchange. It is also the service culture that will set us apart from our competitors.
94
Human
Professionalism and Accountability
Bursa places importance on professionalism and
accountability of its human resources. With its listing
there will be greater transparency in respect to its
human resource policies.
EMPLOYEE COMPENSATION AND
BENEFITS SCHEME
Compensation Strategy/Philosophy
Bursa’s remuneration scheme is benchmarked against
the remuneration packages of the financial sector in
Malaysia. The remuneration strategy is to ensure that
the pay levels are competitive and effective in
attracting, retaining and motivating employees.
Bursa’s compensation philosophy is to instill a payfor-performance culture, built upon organisational
performance and individual excellence. In this respect,
both internal and external equity are important in
formulating, administering and maintaining the reward
programs.
During the financial year, we commenced on a review
of our performance appraisal framework and
compensation structure.
Compensation Mix
Our compensation framework is made up of four
components:
•
•
•
•
Base Salary and fixed allowances
Short Term Incentives (STI) in the form of
performance bonus
Long Term Incentive (LTI) in the form of Employees’
Share Option Scheme (ESOS)
Non-Cash benefits
The base salaries are reviewed annually with
effect from 1st January in order to ensure that the
salary levels remain competitive.
Short Term Incentive
Short term incentive is granted in the form of an
annual performance bonus. The performance
bonus pool is based on the overall Bursa’s
performance as well as individual performance.
As for individual performance, employees will be
measured on their achievement on their Key
Performance Indicators (KPIs) and the established
core competencies.
The corporate KPIs are reviewed and established
at the beginning of each financial year in line with
the Bursa’s business plan. The Board of Directors
approves the corporate KPIs before it is cascaded
throughout the organisation. The achievement of
corporate KPIs will be reviewed by the
Nomination and Remuneration Committee who
will recommend to the Board the performance
level and to approve the performance bonus pool
for distribution to employees.
Benefits
The benefits program provided for employees are
benchmarked against financial sector and the
programs are comparable with local market
practices. The program comprises the medical
coverage, dental, group insurance scheme,
employee loan scheme i.e. housing, vehicle,
personal computer, leave passage, gratuity
payment, and additional contribution to
Employees’ Provident Fund (EPF) i.e. beyond the
mandatory contribution. We have introduced
flexible benefits program since February 2003.
Long Term Incentive
Base Salary and Fixed Allowances
The base salary and fixed allowances are granted
based on the employees’ job grade. The target /
guaranteed base pay is pegged at 50th percentile of
the reference market i.e. financial sector. However, for
those outstanding employees or critical jobs, the
guaranteed base pay will be moved gradually to 75th
percentile of the reference market.
The long term incentive takes the form of ESOS.
An offer was made to all employees in respect of
the ESOS, which covers all full time employees
who are in service prior to the listing date.
The amount of options that may be exercised for
the first year was set based on each job grade.
Human
The amount of options that may be exercised from
year two onwards will be based on individual
employee’s work performance rating for each
individual year.
ESOS Design (as defined in the ESOS Bye-Laws)
Our shareholders have approved the grant in the
extraordinary general meeting held on 11 December
2004. The duration of the ESOS is five (5) years,
subject to extension or earlier determination in
accordance with our Bye-Laws. In total, 65,000,000
shares were approved for grant to existing staff and
future hires.
The ESOS will be administered by our Option
Committee comprising Non-Executive Directors
which will have, among other things, discretion to
96
decide the eligibility criteria and basis of allotment.
Under the ESOS, employees were given the
opportunity to participate in the Selling Flexibility
whereby arrangement had been made with a major
shareholder (MOF Inc.) to allocate a certain number
of shares to facilitate the immediate selling by our
employees at the point when they exercise their
options in accordance with the Selling Flexibility Terms.
The subscription price of each share option made in
conjunction with the Bursa’s listing is offered at the
Initial Public Offering (IPO) price of RM3.00 per share
and offer made to new employees will be based on
the weighted average market price of the shares for
five (5) market days immediately preceding the date
of Offer with a discount of not more than 10% at the
Option Committee’s discretion.
Defining Potential
“Information is key in making investment decisions. The days of punting
in the stock market are over, the herd mentality where dealers and
investors trade based on rumours and shallow tips must come to an
end.
With so much information available, there is no excuse not to base
decisions on facts and figures. With information now conveniently
accessible, there is no excuse for not checking for accurate and
relevant information prior to making an informed investment decision.
I also hope more financial institutions, broking houses,
telecommunications and technology providers will work together in
providing convenient and timely access to investment related
information in promoting informed investments and trading and at the
same time assist in the development of a stronger, more resilient
securities industry and capital market.”
CEO
Financial
Calendar
16 March 2005
Announcement of the audited consolidated results for the year ended 31 December 2004.
18 March 2005
Listing of Bursa Malaysia Berhad on the Main Board of Bursa Malaysia Securities Berhad.
May 2005
Announcement of unaudited consolidated results for the 1st quarter ending 31 March 2005.
26 May 2005
Date of 28th Annual General Meeting.
August 2005
Announcement of unaudited consolidated results for the half year ending 30 June 2005.
November 2005
Announcement of unaudited consolidated results for the 3rd quarter ending 30 September 2005.
February 2006
Announcement of unaudited consolidated results for the 4th quarter and year ending 31 December 2005.
98
Statement on
Directors’ Responsibility for the
Annual Audited Financial Statements
The Directors are required by the Companies Act, 1965
(the Act) to prepare financial statements for each
financial year which give a true and fair view of the
state of affairs of the Group and the Company at the
end of the year and the results of the Group and
Company for the year. The Directors have
responsibility in ensuring that the financial statements
have been prepared in accordance with the applicable
approved accounting standards in Malaysia and the
provisions of the Act.
The Directors consider that, in preparing the financial
statements, the Group and the Company have used
Financial
appropriate accounting policies that are consistently
applied and supported by reasonable and prudent
judgements and estimates. The Directors have
responsibility for ensuring that the Group and the
Company keep accounting records, which disclose
with reasonable accuracy the financial position of the
Group and the Company, which enable them to ensure
that the financial statements comply with the Act.
The Directors are also responsible for taking such steps
as are reasonably open to them to safeguard the
assets of the Group and to detect and prevent fraud
and other irregularities.
Statements for the year
ended 31 December 2004
Directors’ Report
100-102
Statement by The Directors
103
Statutory Declaration
103
Report of The Auditors
104
Income Statements
105
Balance Sheets
106
Statement of Changes in Equity
107-108
Cash Flow Statements
109-110
Notes to The Financial Statements
111-152
Directors’
Report
DIRECTORS' REPORT
The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the
Company for the financial year ended 31 December 2004.
PRINCIPAL ACTIVITIES
The principal activities of the Company were to provide, regulate and maintain facilities for conducting the business of a securities
exchange in Malaysia. Following the demutualisation exercise on 5 January 2004, the Company's securities exchange business
was vested and transferred to Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad), a
wholly owned subsidiary of the Company. Thereafter, the principal activity of the Company became that of an exchange holding
company.
The principal activities of the subsidiaries are described in Note 12 to the financial statements.
There have been no significant changes in the nature of the principal activities during the financial year.
CHANGE OF NAME
During the financial year, the Company changed its name from Kuala Lumpur Stock Exchange Berhad to Bursa Malaysia Berhad.
RESULTS
Net profit for the year
Group
RM'000
35,075
Company
RM'000
10,382
There were no material transfers to or from reserves or provisions during the financial year, other than as disclosed in the
statements of changes in equity.
Except for the Voluntary Separation Scheme ("VSS") cost of RM37,332,000 and RM16,486,000 recognised in the income
statement of the Group and of the Company respectively, in the opinion of the directors, the results of the operations of the Group
and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and
unusual nature.
DIRECTORS
The names of the directors of the Company in office since the date of the last report and as at the date of this report are:
Dato' Abdul Latif bin Abdullah
Datin Paduka Siti Sa'diah bt Sheikh Bakir
Dato' Seri Hwang Sing Lue
Dato' Abdul Wahid bin Omar
Izham bin Yusoff
Cheah Tek Kuang
Datuk Hj. Faisyal bin Datuk Yusof Hamdain Diego
100 • Bursa Malaysia Berhad Annual Report 2004
(appointed on 1 March 2004)
(appointed on 1 April 2004)
(appointed on 9 June 2004)
Directors’
Report
DIRECTORS (cont’d)
Dato’ Mohammed Azlan bin Hashim
Abdul Jabbar bin Abdul Majid
Abdul Rauf bin Ramli
Tan Kim Leong, JP
Abdul Kadir bin Haji Md Kassim
Datin Mariam Prudence binti Yusof
(appointed on 23 July 2004)
(resigned on 29 February 2004)
(resigned on 29 February 2004)
(resigned on 10 April 2004)
DIRECTORS' BENEFITS
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company
was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or
any other body corporate, other than as described in the following immediate paragraph.
Following the demutualisation exercise of the Company and the conversion of the Company to a public company limited by
shares on 5 January 2004, stockbroking companies and remisiers were allotted ordinary shares in the Company. Stockbroking
companies in which Peter Leong Tuck Leng, Dato' Seri Hwang Sing Lue, Datuk Mohaiyani binti Shamsudin and Datin Mariam
Prudence binti Yusof have interest in were allotted shares in the Company. Abdul Rauf bin Ramli, being previously a remisier
was also allotted shares in the Company.
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than the fixed
salary of a full-time employee of the Company and allowances and any other benefits in kind as shown in Note 7 to the financial
statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he
is a member, or with a company in which he has substantial financial interest.
DIRECTORS’ INTERESTS
According to the register of directors' shareholdings, the interests of directors in office at the end of the financial year in shares
in the Company by virtue of their interests in certain stockbroking companies, were as follows :
Number of ordinary shares of RM0.50 each
Indirect interest
Dato' Seri Hwang Sing Lue
1.1.2004
Allotted
-
250,000
9,090,909
Sold
-
31.12.2004
250,000
9,090,909
None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related
corporations during the financial year.
SHARE CAPITAL
On 5 January 2004, pursuant to the Demutualisation (Kuala Lumpur Stock Exchange) Act, 2003, the Company was demutualised
and converted to a public company limited by shares. The Company created authorised share capital of RM500,000,000
comprising 1,000,000,000 ordinary shares of RM0.50 each, and issued 500,000,000 ordinary shares of RM0.50 each, totalling
RM250,000,000. The ordinary shares were issued by way of capitalisation of membership fees and accumulated funds.
On 11 December 2004, the Company increased its authorised share capital from RM500,000,000 comprising 1,000,000,000
ordinary shares of RM0.50 each to RM1,000,000,000 comprising 2,000,000,000 ordinary shares of RM0.50 each.
Directors’
Report
OTHER STATUTORY INFORMATION
(a) Before the income statements and balance sheets of the Group and of the Company were made out, the directors took
reasonable steps:
(i)
to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for
doubtful debts and satisfied themselves that there were no known bad debts and that adequate provision had been
made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the
ordinary course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the directors are not aware of any circumstances which have arisen which would render:
(i)
it necessary to write off any bad debts or the amount of the provision for doubtful debts in the financial statements of
the Group and of the Company inadequate to any substantial extent; and
(ii) the values attributed to current assets in the financial statements of the Group and of the Company misleading.
(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence
to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial
statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
(e) As at the date of this report, there does not exist:
(i)
(f)
any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which
secures the liabilities of any other person; or
(ii) any contingent liability in respect of the Group or of the Company which has arisen since the end of the financial year.
In the opinion of the directors:
(i)
no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve
months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet
their obligations when they fall due; and
(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial
year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the
Company for the financial year in which this report is made.
SIGNIFICANT EVENTS
The significant events during the financial year are disclosed in Note 38 to the financial statements.
SUBSEQUENT EVENTS
The subsequent events are disclosed in Note 39 to the financial statements.
AUDITORS
The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors
TUN MOHAMED DZAIDDIN BIN HAJI ABDULLAH
Kuala Lumpur, Malaysia
8 March 2005
YUSLI BIN MOHAMED YUSOFF
Statement
by the Directors
pursuant to Section 169(15) of the Companies Act, 1965
We, TUN MOHAMED DZAIDDIN BIN HAJI ABDULLAH and YUSLI BIN MOHAMED YUSOFF, being two of the directors of
BURSA MALAYSIA BERHAD, do hereby state that, in the opinion of the directors, the accompanying financial statements set
out on pages 105 to 152 are drawn up in accordance with applicable MASB Approved Accounting Standards in Malaysia and the
provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company
as at 31 December 2004 and of the results and the cash flows of the Group and of the Company for the year then ended.
Signed on behalf of the Board in accordance with a resolution of the directors
TUN MOHAMED DZAIDDIN BIN HAJI ABDULLAH
8 March 2005
Statutory
Declaration
pursuant to Section 169(16) of the Companies Act, 1965
I, YUSLI BIN MOHAMED YUSOFF being the director primarily responsible for the financial management of BURSA MALAYSIA
BERHAD, do solemnly and sincerely declare that the accompanying financial statements set out on pages 105 to 152 are in my
opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions
of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the
abovenamed YUSLI BIN MOHAMED YUSOFF
at Kuala Lumpur in the Federal Territory
on 8 March 2005
Before me,
Teong Kian Meng
No. W 147
Commissioner For Oaths
Lot 112, Tingkat Satu
Wisma MPL, Jalan Raja Chulan
50200 Kuala Lumpur
Report
of the Auditors to the Shareholders of Bursa Malaysia Berhad
(formerly known as Kuala Lumpur Stock Exchange Berhad)
(Incorporated in Malaysia)
We have audited the accompanying financial statements set out on pages 105 to 152. These financial statements are the
responsibility of the Company's directors.
It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion
to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume
responsibility to any other person for the content of this report.
We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as
well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion:
(a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and
applicable MASB Approved Accounting Standards in Malaysia so as to give a true and fair view of:
(i)
the financial position of the Group and of the Company as at 31 December 2004 and of the results and the cash flows
of the Group and of the Company for the year then ended; and
(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and
(b) the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have
been properly kept in accordance with the provisions of the Act.
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the
Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial
statements and we have received satisfactory information and explanations required by us for those purposes.
The auditors' reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any
comment required to be made under Section 174(3) of the Act.
ERNST & YOUNG
AF: 0039
Chartered Accountants
8 March 2005
WONG KANG HWEE
No. 1116/01/06(J)
Partner
Income
Statements
for the year ended 31 December 2004
Group
Operating revenue
Note
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
3
218,386
201,499
155,868
188,949
286,554
282,853
192,782
233,346
Other income
4
Staff costs
5
Voluntary Separation Scheme ("VSS") cost
Depreciation
Other operating expenses
6
Finance costs
8
Taxation
9
Profit/surplus from operations
Profit/surplus before taxation
Profit/surplus after taxation
68,168
(96,658)
(37,332)
Net profit/surplus for the year
81,354
(97,026)
-
36,914
(67,556)
(16,486)
(16,161)
(18,467)
(14,552)
63,636
95,737
21,011
(72,767)
(154)
63,482
(25,190)
38,292
(3,217)
Minority interests
Basic earnings per share (sen)
Company
(71,623)
(187)
95,550
(30,200)
65,350
(5,476)
35,075
59,874
7.0
-
10
(73,177)
-
21,011
(10,629)
10,382
-
10,382
44,397
(56,054)
-
(12,838)
(74,718)
89,736
(6)
89,730
(31,576)
58,154
-
58,154
The accompanying notes form an integral part of the financial statements.
Balance
Sheets
as at 31 December 2004
Group
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
11
12
13
14
15
16
17
356,152
248,434
30,972
47,661
865
684,084
311,546
248,986
41,464
51,091
3,968
657,055
352,938
173,192
83,572
27,784
31,337
668,823
306,778
124,702
2,000
150,874
40,234
33,180
1,358
659,126
18
19
20
24,312
41,913
19,095
280,939
707,344
7,433
1,081,036
29,375
32,195
10,278
206,674
792,321
16,087
1,086,930
2,799
29,766
43,188
3,851
280,939
126,102
197
486,842
9,893
14,291
14,636
8,702
206,668
210,555
12,323
477,068
23
24
20
124,253
90,330
4,207
220
219,010
150,991
67,414
8,829
220
227,454
62,047
62,047
50,981
3,467
54,448
Note
NON-CURRENT ASSETS
Property, plant and equipment
Investment in subsidiaries
Loan stocks from subsidiary
Other investments
Staff loans receivable
Net goodwill
Deferred tax assets
CURRENT ASSETS
Trade receivables
Other receivables
Due from subsidiaries
Tax recoverable
Short term investments
Short term deposits
Cash and bank balances
CURRENT LIABILITIES
Trade payables
Other payables
Due to subsidiaries
Tax payable
Short term borrowings
21
22
32
NET CURRENT ASSETS
FINANCED BY:
Share capital
Membership fees
Retained profits/ accumulated funds
Capital reserve
Foreign exchange reserve
26
27
28
29
Retirement benefit obligations
Deferred income
Long term borrowings
Long term liability
Deferred tax liabilities
30
31
32
33
17
Minority interest
862,026
1,546,110
859,476
1,516,531
424,795
1,093,618
422,620
1,081,746
250,000
1,195,158
15,150
(13)
1,460,295
17,855
1,478,150
80,966
1,329,117
15,150
(5)
1,425,228
14,638
1,439,866
250,000
779,368
1,029,368
1,029,368
80,966
938,020
1,018,986
1,018,986
1,546,110
1,516,531
1,093,618
1,081,746
15,334
2,831
879
47,259
1,657
67,960
Company
24,937
2,831
1,099
47,798
76,665
15,334
47,259
1,657
64,250
14,962
47,798
62,760
Consolidated
Share
capital
RM'000
Membership
fees
RM'000
Capital
reserve
RM'000
14,950
At 1 January 2003
-
83,802
Demutualisation cost
-
(2,836)
Currency translation differences
Issuance of preference shares by a
-
subsidiary (Note 29)
-
At 31 December 2003
-
Net surplus for the year
Currency translation differences
-
Issuance of ordinary shares (Note 26)
250,000
At 31 December 2004
250,000
-
-
-
-
-
200
80,966
15,150
-
-
(80,966)
-
-
-
-
-
-
15,150
Foreign
exchange
reserve
RM'000
(6)
1
-
Total
RM'000
1,269,243
1,367,989
-
-
-
-
-
(5)
(8)
-
-
Accumulated
funds/retained
profits
RM'000
(13)
59,874
1,329,117
-
(169,034)
35,075
1,195,158
1
(2,836)
200
59,874
1,425,228
(8)
-
35,075
1,460,295
Company
Share
capital
RM'000
At 1 January 2003
At 31 December 2003
-
-
-
-
Issuance of ordinary shares (Note 26)
250,000
At 31 December 2004
250,000
Membership
fees
RM'000
-
83,802
(2,836)
-
80,966
(80,966)
-
-
Accumulated
funds
RM'000
879,866
-
58,154
Total
RM'000
963,668
(2,836)
58,154
938,020
1,018,986
10,382
10,382
(169,034)
779,368
-
1,029,368
Cash
Flow Statements
Group
Company
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
63,482
95,550
21,011
89,730
Amortisation of goodwill
2,941
2,923
1,843
1,843
-
1,404
-
1,400
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustment for:
Amortisation of premiums less accretion of discounts
Bad debts written off
Depreciation
Gross dividend income
Impairment of property, plant and equipment
Interest income
146
16,161
-
5,512
508
18,467
-
-
670
14,552
-
5,216
822
12,838
(70,000)
-
(54,140)
(51,922)
(27,286)
(29,376)
Net gain on disposal of investments
(3,641)
(18,406)
(1,287)
(6,070)
Net gain on disposal of subsidiaries
(4,249)
Interest expense
Net gain on disposal of property, plant and equipment
Net provision/(reversal of provision) for bad and doubtful debts
Property, plant and equipment written off
Provision for retirement benefits
(Reversal of provision)/provision for short term
accumulating compensated absences
(Recovery)/write down of short term investments
Recreational club membership benefits to directors written off
Waiver of loans
Operating profit/surplus before working capital changes
Decrease/(increase) in receivables
(Decrease)/increase in payables
Changes in subsidiaries balances
Cash generated from/(used in) operations
Retirement benefits paid
Dividend received
Interest paid
Taxes paid net of refund
Net cash (used in)/generated from operating activities
28
(1,579)
1,751
115
6,396
(201)
(2,984)
-
221
29,959
3,438
(16,934)
-
16,463
(366)
(28)
(33,869)
(17,800)
57
(294)
-
(199)
374
4,826
1,272
2,987
75
-
-
(45)
(2,346)
496
115
5,821
380
(2,984)
-
205
6
(348)
-
(333)
360
2,771
691
2,984
-
-
57,622
16,361
7,318
60,228
3,945
16,736
(9,009)
18,153
(12,561)
-
105,289
(4,534)
-
(57)
(64,096)
36,602
2,704
(32,019)
(366)
-
-
(2,763)
(12,138)
366
(6,267)
(3,863)
50,400
(6)
(57,987)
6,697
Cash
Flow Statements
Group
2004
RM'000
CASH FLOWS FROM INVESTING ACTIVITIES
Company
2003
RM'000
2004
RM'000
2003
RM'000
2,460
2,545
(Disbursement)/repayment of staff loans, net
(2,937)
3,084
Interest received
55,422
46,257
1,852
1,403
Increase in investment in subsidiaries
Net cash inflow from disposal of subsidiaries (Note 12(a))
Proceeds from disposal of property, plant and equipment
Purchase of additional shares in subsidiaries
from minority shareholders
Purchase of property, plant and equipment
Purchase of unquoted bonds and Malaysian Government
Securities, net
Net cash used in investing activities
-
5,434
-
(67,602)
(67,241)
(75,072)
CASH FLOWS FROM FINANCING ACTIVITIES
-
Preference shares issued
-
Payment of dividend to minority shareholders
-
Repayment of long term borrowings and liability
(759)
Net cash used in financing activities
-
(51,000)
-
6,856
(10,490)
(7,971)
(66,308)
(34,025)
(2,836)
(720)
200
(759)
27,149
205
-
(66,203)
(3,369)
(83,902)
-
-
-
(539)
(48,081)
26,275
-
348
(10,490)
(7,767)
(104,256)
(141,426)
(2,836)
-
-
(539)
(759)
(4,115)
(539)
(3,375)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(93,631)
(1,538)
(96,579)
(138,104)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
808,408
809,946
222,878
360,982
CASH AND CASH EQUIVALENTS AT END OF YEAR
714,777
808,408
126,299
222,878
CASH AND CASH EQUIVALENTS COMPRISE:
Short term deposits (Note 22)
7,433
707,344
714,777
16,087
792,321
808,408
197
126,102
126,299
12,323
210,555
222,878
Notes
to the Financial Statements
- 31 December 2004
1. CORPORATE INFORMATION
The principal activities of the Company were to provide, regulate and maintain facilities for conducting the business of a stock
exchange in Malaysia. Following the demutualisation exercise on 5 January 2004, the Company's stock exchange business
was vested and transferred to Bursa Malaysia Securities Berhad (formerly known as Malaysia Securities Exchange Berhad),
a wholly owned subsidiary of the Company. Thereafter, the principal activity of the Company became that of an exchange
holding company. The principal activities of the subsidiaries are described in Note 12 to the financial statements.
There have been no significant changes in the nature of the principal activities during the financial year.
During the financial year, the Company changed its name from Kuala Lumpur Stock Exchange Berhad to Bursa Malaysia
Berhad.
The Company was incorporated under the Companies Act, 1965 on 14 December 1976 under the name of The Kuala Lumpur
Stock Exchange as a company limited by guarantee and without share capital, to function as a stock exchange. On 26 April
1994, the name was changed to Kuala Lumpur Stock Exchange. As disclosed in Note 38 to the financial statements, the
Company was converted to a public company limited by shares on 5 January 2004 and thereafter assumed its current name
of Bursa Malaysia Berhad on 14 April 2004.
The registered office of the Company is located at 9th Floor, Exchange Square, Bukit Kewangan, 50200 Kuala Lumpur.
The number of employees in the Group and in the Company at the end of the financial year were 621 (2003: 1,089) and 620
(2003: 523) respectively. All operational and administrative functions of the subsidiaries are performed by employees of the
Company. Staff costs are charged back to the subsidiaries.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors
on 8 March 2005.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation
The financial statements of the Group and of the Company have been prepared under the historical cost convention
and comply with the provisions of the Companies Act, 1965 and applicable MASB Approved Accounting Standards in
Malaysia.
During the financial year ended 31 December 2004, the Group adopted MASB 31: Accounting for Government Grants
and Disclosure of Government Assistance for the first time. The adoption of MASB 31 has not given rise to any
adjustments to the opening balances of accumulated funds of the prior and current year or to changes in comparatives.
(b) Basis of Consolidation
The consolidated financial statements include the financial statements of the Company and all its subsidiaries.
Subsidiaries are those companies in which the Group has a long term equity interest and where it has power to exercise
control over the financial and operating policies so as to obtain benefits therefrom.
Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting,
the results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement
from the effective date of acquisition or up to the effective date of disposal, as appropriate. The assets and liabilities of
a subsidiary are measured at their fair values at the date of acquisition and these values are reflected in the consolidated
balance sheet. The difference between the cost of an acquisition and the fair value of the Group's share of the net assets
of the acquired subsidiary at the date of acquisition is included in the consolidated balance sheet as goodwill or negative
goodwill arising on consolidation.
Notes
- 31 December 2004
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d)
(b) Basis of Consolidation
Intragroup transactions, balances and resulting unrealised gains are eliminated on consolidation and the consolidated
financial statements reflect external transactions only. Unrealised losses are eliminated on consolidation unless costs
cannot be recovered.
The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group's share of
its net assets together with any unamortised balance of goodwill and exchange differences which were not previously
recognised in the consolidated income statement.
Minority interests in the consolidated balance sheet consist of the minorities' share of the fair value of the identifiable
assets and liabilities of the acquiree as at acquisition date and the minorities' share of movements in the acquiree's
equity since then.
(c) Goodwill
Goodwill represents the excess of the cost of acquisition over the Group's or the Company's interest in the fair value of
the identifiable assets and liabilities at the date of acquisition.
Goodwill is stated at cost less accumulated amortisation and impairment losses. The policy for the recognition and
measurement of impairment losses is in accordance with Note 2(m). Negative goodwill represents the excess of the
Group's interest in the fair value of the identifiable assets and liabilities at the date of acquisition over the cost of
acquisition.
Goodwill and negative goodwill are amortised or credited to the income statement on a straight-line basis over the
estimated useful lives of 20 years.
(d) Investment in Subsidiaries
The Company's investment in subsidiaries are stated at cost less impairment losses. The policy for the recognition and
measurement of impairment losses is in accordance with Note 2(m).
On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised
in the income statement.
(e) Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The policy for
the recognition and measurement of impairment losses is in accordance with Note 2(m).
Project in progress is not depreciated. Long term leasehold land is depreciated over the period of the lease of 99 years.
Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each
asset to its residual value over the estimated useful life at the following annual rates:
Freehold and leasehold building and office lots
Renovations
Office equipment, electrical installation, furniture and fittings
Computers and office automation
Motor vehicles
The leasehold building and office lots have a term of 99 years.
2%
20%
10% - 20%
20% - 33.33%
20%
Upon the disposal of an item of property, plant or equipment, the difference between the net disposal proceeds and the
net carrying amount is recognised in the income statement.
Notes
- 31 December 2004
(f)
Cash and Cash Equivalents
For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at banks and short
term deposits.
(g) Provisions for Liabilities
Provisions for liabilities are recognised when the Group or the Company has a present obligation as a result of a past
event and it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and
adjusted to reflect the current best estimate. Where the effect of the time value of the money is material, the amount of
the provision is the present value of the expenditure expected to be required to settle the obligation.
(h) Employee Benefits
(i) Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the
associated services are rendered by employees of the Group. Short term accumulating compensated absences such
as paid annual leave are recognised when services are rendered by employees that increase their entitlement to
future compensated absences. Short term non-accumulating compensated absences such as sick leave are
recognised when the absences occur.
(ii) Defined contribution plans
As required by law, companies in Malaysia make contributions to the Employees Provident Fund ("EPF"). Such
contributions are recognised as an expense in the income statement as incurred.
(iii) Defined benefit plans
The Group operates a funded, defined benefit Retirement Benefit Scheme ("the Scheme") for its eligible employees.
Effective 1 September 2003, the Scheme was closed to new entrants. The Group's obligations under the Scheme
are determined based on actuarial valuation where the amount of benefit that employees have earned in return for
their service in the current and prior years is estimated. That benefit is discounted using the Projected Unit Credit
Method in order to determine its present value. Actuarial gains or losses are recognised as income or expense over
ten years when the cumulative unrecognised actuarial gains or losses for the Scheme at the end of the previous
financial year exceed 10% of the higher of the present value of the defined benefit obligation and the fair value of
plan assets. Past service cost is recognised immediately to the extent that the benefits are already vested, and
otherwise is amortised on a straight-line basis over the average period until the amended benefits become vested.
The amount recognised in the balance sheet represents the present value of the defined benefit obligations adjusted
for unrecognised actuarial gains and losses and unrecognised past service cost, and reduced by the fair value of
plan assets. Any asset resulting from this calculation is limited to the net total of any unrecognised actuarial losses
and past service cost, and the present value of any economic benefits in the form of refunds or reductions in future
contributions to the plan.
(i)
Government Grants
Government grants are recognised initially at their fair value in the balance sheet as deferred income where there is
reasonable assurance that the grant will be received and all attaching conditions will be complied with. Grants that
compensate the Group for expenses incurred are recognised as income over the periods necessary to match the grant
on a systematic basis to the costs that it is intended to compensate. Grants that compensate the Group for the cost of
an asset are recognised as income on a systematic basis over the useful life of the asset.
Notes
- 31 December 2004
(j)
Income Tax
Income tax on the profit/surplus or loss/deficit for the year comprises current and deferred tax. Current tax is the
expected amount of income taxes payable in respect of the taxable profit/surplus for the year and is measured using the
tax rates that have been enacted at the balance sheet date.
Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax
liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible
temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences, unused tax losses and unused tax credits can be
utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the
initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the
transaction, affects neither accounting profit nor taxable profit.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability
is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax
is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in
which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination
that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.
(k) Foreign Currencies
Transactions in foreign currencies are initially recorded in Ringgit Malaysia at rates of exchange ruling at the date of
transaction. At each balance sheet date, foreign currency monetary items are translated into Ringgit Malaysia at
exchange rates ruling at that date. Non-monetary items initially denominated in foreign currencies, which are carried at
historical cost are translated using the historical rate as of the date of acquisition and non-monetary items which are
carried at fair value are translated using the exchange rate that existed when the values were determined. All exchange
rate differences are taken to the income statement.
The United States Dollar ("USD") denominated financial statements of a subsidiary are translated at year-end exchange
rate with respect to the assets and liabilities, and at the exchange rate at the dates of the transactions with respect to
the income statement. All resulting translation differences are included in the foreign exchange reserve.
Goodwill and fair value adjustments arising on the acquisition of the USD denominated subsidiary are treated as assets
and liabilities of the Group and translated at the exchange rate ruling at the date of the acquisition.
The principal exchange rate ruling for USD denominated balances at both balance sheet dates is RM3.80 : USD1.00.
(l)
Revenue Recognition
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the
enterprise and the amount of the revenue can be measured reliably.
(i) Accretion of discounts and amortisation of premiums on investments are recognised on an effective yield basis.
(ii) Dividend income is recognised when the right to receive payment is established.
(iii) Grants received by Bursa Malaysia Derivatives Clearing Berhad ("Bursa Clearing (D)"), formerly known as Malaysian
Derivatives Clearing House Berhad, a wholly owned subsidiary, from the Securities Commission ("SC"), are
recognised as income over the periods necessary to match them with the related costs which they are intended to
compensate, on a systematic basis.
Notes
- 31 December 2004
(l)
Revenue Recognition (cont’d)
(iv) Interest income on short term deposits and unquoted bonds is recognised on a time proportion basis that reflects the
effective yield on the asset.
(v) All other revenue is recognised on an accrual basis.
(m) Impairment of Assets
At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any
indication of impairment. If any such indication exists, impairment is measured by comparing the carrying values of the
assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is
measured by reference to discounted future cash flows.
An impairment loss is recognised as an expense in the income statement immediately. Reversal of impairment losses
recognised in prior years is recorded when the impairment losses recognised for the asset no longer exist or have
decreased. The reversal is recognised to the extent of the carrying amount of the asset that would have been determined
(net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income
statement immediately.
(n) Financial Instruments
Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual
provisions of the instrument.
Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual
arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported
as expense or income. Distributions to holders of financial instruments classified as equity are recognised directly in
equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle
either on a net basis or to realise the asset and settle the liability simultaneously.
(i) Receivables
Receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is
made for doubtful debts on trade debts which are six months or older, or on debts which recoverability is considered
doubtful.
(ii) Payables
Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services
received.
(iii) Investments
Short term investments comprise unquoted securities which are managed by external fund managers for the purpose
of short term capital gains. These unquoted securities are stated at the lower of cost and market value or indicative
market value determined on an aggregate basis. Cost is determined on the weighted average basis. Increases or
decreases in the carrying amount of short term investments are recognised in the income statement. On disposal of
short term investments, the difference between net disposal proceeds and the carrying amount is recognised in the
income statement.
Notes
- 31 December 2004
(n) Financial Instruments (cont’d)
(iii) Investments (cont’d)
Other investments comprise unquoted securites that are acquired and held for yield or capital growth and are usually
held to maturity. Unquoted securities are stated at cost adjusted for amortisation of premium net of accretion of
discounts, where applicable, to maturity dates, less impairment losses. The policy for recognition and measurement
of impairment losses is in accordance with Note 2(m). On disposal of such investments, the differences between the
net disposal proceeds and their carrying amounts are recognised in the income statement.
Investments in loan stocks of a subsidiary are stated at cost less impairment losses. The policy for recognition and
measurement of impairment losses is in accordance with Note 2(m).
(iv) Equity instruments
Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which
they are declared.
3. OPERATING REVENUE
Operating revenue of the Group consists of the following:
Clearing fees *
Depository services
Derivatives trade fees
Broker services
Listing fee
Information services
SCORE fees
Participants' subscription
Other income/fees derived from operations of the Group
*
Group
2004
RM'000
101,499
27,605
15,570
13,905
13,141
12,922
10,834
3,023
19,887
218,386
2003
RM'000
96,206
24,885
10,449
13,247
13,684
10,742
9,694
3,664
18,928
201,499
Clearing fees of the Group is stated after netting the amount payable to SC of RM22,461,000 (2003: RM21,532,000).
Operating revenue of the Company consists of the following:
Broker services
Listing fee (Note a)
Information services (Note a)
SCORE fees (Note a)
Participants' subscriptions (Note a)
Significant income from subsidiaries:
- Management fees (Note c)
- Cost recoveries
- Commitment income
- Dividend income
- Royalty income (Note b)
Other income/fees derived from operations of the Company
Company
2004
RM'000
13,319
51
1
-
133,495
8,664
120
218
155,868
2003
RM'000
13,212
13,607
5,434
9,694
1,148
15,310
120
70,000
51,676
8,748
188,949
Notes
- 31 December 2004
3. OPERATING REVENUE (cont’d)
(a) These income are no longer recognised as the Company's operating revenue but as the income of Bursa Malaysia
Securities Berhad ("Bursa Securities"), a wholly owned subsidiary, following the transfer of the Company's securities
exchange business as disclosed in Note 38 to the financial statements.
(b) Royalty income in the prior year represents royalty receivable from Bursa Malaysia Securities Clearing Sdn. Bhd. ("Bursa
Clearing (S)"), a wholly owned subsidiary. This income is also no longer recognised as the operating revenue of the
Company due to the abovementioned transfer of the Company's securities exchange business to Bursa Securities
during the year.
(c) On 1 September 2003, all operational and administrative functions of subsidiaries were centralised and thereafter
performed by the Company. The costs of providing operational and administrative services to the subsidiaries are
recovered from the subsidiaries by way of management fee from 1 January 2004.
4. OTHER INCOME
Other income includes the following:
Gain on disposal of property, plant and equipment
Interest income from:
- Deposits with banks and financial institutions
- Investment securities
- Others
Net gain on disposal of investments
Net gain on disposal of subsidiaries (Note 12)
Office rental from:
- Subsidiaries
- Others
Group
Company
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
20,708
31,558
1,874
3,641
4,249
25,407
24,209
2,306
18,406
-
2,459
23,403
1,424
1,287
2,346
7,403
20,225
1,748
6,070
-
1,617
117
437
79
49
348
3,623
307
7,758
246
5. STAFF COSTS
Group
Wages and salaries
Social security costs
(Reversal of provision)/provision for short term
accumulating compensated absences
Pension costs - defined contribution plans
Pension costs - defined benefit plan (Note 30)
Other staff related expenses
2004
RM'000
56,422
303
(201)
11,655
6,396
22,083
96,658
Company
2003
RM'000
2004
RM'000
2003
RM'000
1,272
9,769
4,826
24,353
97,026
380
8,120
5,821
15,505
67,556
691
5,569
2,771
15,250
56,054
56,427
379
37,548
182
31,586
187
Included in staff costs of the Group and of the Company are the Company's executive directors' remuneration amounting to
RM3,180,000 (2003: RM1,681,000) and RM3,094,000 (2003: RM1,097,000) respectively, as further disclosed in Note 7.
Notes
- 31 December 2004
6. OTHER OPERATING EXPENSES
Included in other operating expenses are:
Auditors’ remuneration
- Statutory audit
- Non-audit fees
Bad debts written off
Building management costs:
- Office rental
- Upkeep and maintenance
Impairment of property, plant and equipment
IT upkeep and maintenance
Legal and professional fee
Loss on disposal of property, plant and equipment
Net provision/(reversal of provision)
for bad and doubtful debts
Non-executive directors' remuneration (Note 7)
Property, plant and equipment written off
Recreational club membership benefits to directors written off
(Recovery)/write down of short term investments
Rental of equipment
Company
Group
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
173
1,319
-
183
45
1,404
20
1,261
-
45
18
1,400
2,941
146
682
9,698
5,512
16,727
5,357
38
1,751
1,205
115
(2,984)
628
2,923
508
1,310
9,654
16,963
3,950
143
(199)
1,033
374
75
2,987
493
1,843
670
1,843
822
125
12,457
5,216
16,722
4,195
4
1,217
14,032
16,921
3,454
-
496
804
115
(2,984)
423
(333)
105
360
2,984
-
7. DIRECTORS' REMUNERATION
Group
Company
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
378
1,250
2
193
1,342
87
166
301
1,250
193
845
166
Directors of the Company
Inaugural Board
Executive:
Salaries and other emoluments
Gratuity
Fees
Bonus
Pension costs
- defined contribution plan
Benefits-in-kind
Non-executive:
Fees
Other emoluments
Benefits-in-kind
Total for inaugural board
44
2
1,869
86
12
1,693
37
2
1,783
86
12
1,109
8
424
2
434
269
764
14
1,047
33
33
105
105
2,303
2,740
1,816
1,214
Notes
- 31 December 2004
7. DIRECTORS' REMUNERATION (cont’d)
Group
Company
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
920
225
-
920
225
-
Current Board*
Executive:
Salaries and other emoluments
Bonus
Pension costs
- defined contribution plan
Benefits-in-kind
Non-executive:
Fees
Other emoluments
Benefits-in-kind
Total for current board
168
26
1,339
-
168
26
1,339
-
324
449
24
797
-
-
324
447
24
795
2,134
-
3,180
1,205
1,681
1,033
3,094
804
1,097
105
2,136
-
Analysis excluding benefits-in-kind
Total executive directors' remuneration
excluding benefits-in-kind (Note 5)
Total non-executive directors' remuneration (Note 6)
Total directors' remuneration excluding benefits-in-kind
4,385
2,714
3,898
1,202
The number of directors of the Company whose total remuneration during the financial year fell within the following bands is
analysed below:
Number of directors
2004
2003
1
1
-
7
1
-
2
5
1
Inaugural Board
Executive director:
RM1,650,001 - RM1,700,000
RM1,850,001 - RM1,900,000
Non-executive directors:
RMNil - RM50,000
RM50,001 - RM100,000
RM350,001 - RM400,000
RM600,001 - RM650,000
Notes
- 31 December 2004
7. DIRECTORS' REMUNERATION (cont’d)
The number of directors of the Company whose total remuneration during the financial year fell within the following bands is
analysed below:
Number of directors
2003
2004
Current Board*
Executive director:
RM1,300,001 - RM1,350,000
Non-executive directors:
RMNil - RM50,000
RM50,001 - RM100,000
RM250,001 - RM300,000
*
The current board includes two directors who were also in the inaugural board.
1
-
4
6
1
-
8. FINANCE COSTS
Group
Interest expense
Commitment fee
2004
RM'000
28
126
154
Company
2003
RM'000
57
130
187
2004
RM'000
-
2003
RM'000
6
6
9. TAXATION
Group
Current year's provision
Deferred taxation relating to origination and
reversal of temporary differences (Note 17)
(Over)/under provision of taxation in prior years
2004
RM'000
20,553
4,760
(123)
25,190
Company
2003
RM'000
2004
RM'000
2003
RM'000
2,028
490
30,200
3,015
(1,302)
10,629
3,186
877
31,576
27,682
8,916
27,513
Income tax is calculated at the Malaysian statutory tax rate of 28% (2003: 28%) of the estimated assessable profit/surplus
for the year. The concessionary income tax rate applicable to subsidiaries with paid up capital of RM2,500,000 and below is
20% on chargeable income of up to RM500,000 (2003: RM100,000). For chargeable income in excess of RM500,000 (2003:
RM100,000), the tax rate of 28% is applicable.
Notes
- 31 December 2004
9. TAXATION (cont’d)
A reconciliation of income tax expense applicable to profit/surplus before taxation at the statutory income tax rate to income
tax expense at the effective income tax rate of the Group and the Company is as follows:
Group
Taxation at Malaysian statutory tax rate of 28%
Effect of expenses not deductible for tax purposes
Effect of income not subject to tax
Effect of utilisation of previously unrecognised
tax losses and unabsorbed capital allowances
Effect of lower tax rate at 20% on chargeable
income of up to RM100,000
Effect of tax exemption awarded
by the Ministry of Finance
Deferred tax assets not recognised during the year
Derecognition of deferred tax assets
(Under)/over recognition
of deferred tax assets in prior year
(Over)/under provision of taxation in prior years
Tax expense for the year
Tax savings during the financial year arising
from utilisation of previously unrecognised tax losses
Company
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
17,775
6,894
(2,481)
26,754
7,244
(3,535)
5,883
5,435
(669)
25,124
5,591
(16)
63,482
(157)
(43)
(1,586)
1,227
3,954
(270)
(123)
25,190
189
95,550
(1,367)
(8)
(140)
747
-
15
490
30,200
21,011
-
89,730
-
-
1,573
(291)
(1,302)
10,629
1,367
-
-
877
31,576
-
-
10. BASIC EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit for the year by the weighted average number of ordinary
shares in issue during the financial year.
Net profit/surplus for the year (RM'000)
Weighted average number of ordinary shares in issue ('000)
Basic earnings per share (sen)
2004
35,075
500,000
7.0
2003
59,874
-
Notes
- 31 December 2004
11. PROPERTY, PLANT AND EQUIPMENT
GROUP
Cost
At 1 January 2004
Additions
Acquisition of RIIAM's* assets
Disposals
Disposal of subsidiaries
Written off
Reclassification
At 31 December 2004
Land and
buildings
Note a
RM'000
Office equipment,
electrical
installation,
furniture and
fittings
RM'000
382,177
401
(14)
382,564
Accumulated depreciation and impairment losses
At 1 January 2004
77,754
Depreciation charge for the year
6,990
Impairment losses
5,512
Acquisition of RIIAM's* assets
Disposals
Disposal of subsidiaries
(13)
Written off
Reclassification
At 31 December 2004
90,243
Computers
and office
automation
RM'000
Motor
vehicles
RM'000
Project in
progress #
RM'000
Total
RM'000
76,674
720
675
(1,085)
(3,396)
(21,834)
51,754
267,764
21,737
112
(1,655)
(841)
21,834
308,951
2,242
1,256
70
(1,572)
(110)
1,886
43,488
43,488
728,857
67,602
857
(1,572)
(2,864)
(4,237)
788,643
71,903
1,439
655
(1,042)
(3,281)
(19,323)
50,351
265,744
7,438
106
(730)
(841)
19,323
291,040
1,910
294
56
(1,299)
(104)
857
-
417,311
16,161
5,512
817
(1,299)
(1,889)
(4,122)
432,491
Net book value
At 31 December 2004
292,321
1,403
17,911
1,029
43,488
356,152
Details at 1 January 2003
Cost
Accumulated depreciation
381,710
71,291
74,111
67,298
306,700
301,103
3,489
2,793
-
766,010
442,485
At 31 December 2003
Depreciation charge for 2003
304,423
6,703
4,771
4,686
2,020
6,831
332
247
-
-
311,546
18,467
Notes
- 31 December 2004
11. PROPERTY, PLANT AND EQUIPMENT (cont’d)
COMPANY
Cost
At 1 January 2004
Additions
Disposals
Written off
Reclassification
At 31 December 2004
Land and
buildings
Note a
RM'000
Office equipment,
electrical
installation,
furniture and
fittings
RM'000
368,320
401
368,721
At 1 January 2004
68,896
6,811
Impairment losses
5,216
Disposals
Written off
Reclassification
At 31 December 2004
80,923
Computers
and office
automation
RM'000
Motor
vehicles
RM'000
Project in
progress #
RM'000
Total
RM'000
70,428
709
(3,396)
(21,834)
45,907
232,122
20,349
(841)
21,834
273,464
1,044
1,256
(659)
1,641
43,488
43,488
671,914
66,203
(659)
(4,237)
733,221
66,224
1,178
(3,281)
(19,323)
44,798
229,157
6,304
(841)
19,323
253,943
859
259
(499)
619
-
365,136
14,552
5,216
(499)
(4,122)
380,283
Net book value
At 31 December 2004
287,798
1,109
19,521
1,022
43,488
-
306,778
Cost
366,640
62,724
67,790
61,908
236,301
234,185
1,775
1,480
-
672,506
360,297
At 31 December 2003
299,424
6,172
4,204
4,315
2,965
2,241
185
110
-
352,938
12,838
Notes
- 31 December 2004
(a) LAND AND BUILDINGS
GROUP
Cost
At 1 January 2004
Additions
Disposal of subsidiary
At 31 December 2004
Leasehold
land ~
RM'000
Leasehold
building and
office lots @
RM'000
Freehold
building and
office lots
RM'000
60,818
60,818
285,960
285,960
29,314
29,314
6,085
401
(14)
6,472
382,177
401
(14)
382,564
7,035
396
296
5,177
12,904
4,488
462
(13)
4,937
77,754
6,990
5,512
(13)
90,243
At 1 January 2004
9,526
348
Impairment losses
Disposal of subsidiary
Reclassification
At 31 December 2004
9,874
56,705
5,784
5,216
(5,177)
62,528
Renovation
RM'000
Total
RM'000
Net book value
At 31 December 2004
50,944
223,432
16,410
1,535
292,321
Cost
60,818
8,716
287,148
51,989
29,313
6,648
4,431
3,938
381,710
71,291
At 31 December 2003
51,292
810
229,255
4,910
22,279
386
1,597
597
304,423
6,703
Notes
- 31 December 2004
(a) LAND AND BUILDINGS (cont’d)
COMPANY
Cost
At 1 January 2004
Additions
At 31 December 2004
Leasehold
land ~
RM'000
Leasehold
building and
office lots @
RM'000
Freehold
building and
office lots
RM'000
60,818
60,818
285,960
285,960
19,862
19,862
1,680
401
2,081
368,320
401
368,721
2,466
281
5,177
7,924
199
398
597
68,896
6,811
5,216
80,923
11,938
1,484
287,798
-
366,640
62,724
At 1 January 2004
9,526
348
Impairment losses
Reclassification
At 31 December 2004
9,874
56,705
5,784
5,216
(5,177)
62,528
Net book value
At 31 December 2004
50,944
223,432
229,255
17,396
Cost
60,818
8,716
285,960
51,823
19,862
2,185
At 31 December 2003
51,292
810
4,882
Renovation
RM'000
1,481
281
199
Total
RM'000
299,424
6,172
*
RIIAM refers to Research Institute of Investment Analysts Malaysia.
~
Included in leasehold land of the Group and Company is RM53,318,000 relating to two pieces of land leased from
the Government of Malaysia for a term of 99 years commencing 15 April 1993 and 1 March 1996 respectively. The
corresponding liability is disclosed in Note 33 to the financial statements.
#
Project in progress comprise of costs of computer hardware and software purchased in relation to the Common
Trading Platform project which is still in implementation stage.
@ Office lots represent offices and car park spaces in multistorey buildings.
12. INVESTMENTS IN SUBSIDIARIES
Company
Unquoted shares, at cost
Less: Impairment losses
2004
RM'000
211,932
(38,740)
173,192
2003
RM'000
163,442
(38,740)
124,702
Notes
- 31 December 2004
12. INVESTMENTS IN SUBSIDIARIES (cont’d)
Details of the subsidiaries are as follows:
Name of subsidiaries
Incorporated in Malaysia:
Equity interest
held
2004
2003
(%)
(%)
Ordinary
paid up
capital as at
31.12.2004
RM'000
Principal activities
Bursa Malaysia Securities
Berhad ("Bursa Securities")
(formerly known as
Malaysia Securities
Exchange Berhad)
100
100
25,000
Bursa Malaysia
Derivatives Berhad
("Bursa Derivatives")
(formerly known as
Malaysia Derivatives
Exchange Bhd.)
100
100
50,000
100
100
5,500
(USD)
Bursa Malaysia
Securities Clearing
Sdn. Bhd. ("Bursa
Clearing (S)")
(formerly known as
Securities Clearing
Automated Network
Services Sdn. Bhd.)
100
100
300,000
100
100
20,000
Provide, operate and maintain
a clearing house for the
futures and options
exchange.
Bursa Malaysia
Depository Sdn. Bhd.
("Bursa Depository")
(formerly known as
Malaysian Central
Depository Sdn. Bhd.)
75
75
25,000
a central depository for
securities listed on the
securities exchange.
Labuan International
Financial Exchange
Inc. * ("LFX")
Bursa Malaysia Derivatives
Clearing Berhad
("Bursa Clearing (D)")
(formerly known as
Malaysian Derivatives
Clearing House Berhad)
Assumed the securities
exchange business of the
Company on 5 January 2004
to provide, operate and
maintain a securities
exchange.
a futures and options
exchange.
an offshore financial
exchange.
a clearing house for the
securities exchange.
Notes
- 31 December 2004
Equity interest
held
2004
2003
(%)
(%)
Ordinary
paid up
capital as at
31.12.2004
RM'000
Bursa Malaysia
Information Sdn. Bhd.
("Bursa Information")
(formerly known as
KLSE Information
Services Sdn. Bhd.)
100
100
250
100
100
1,000
Bursa Malaysia IT Sdn.
Bhd. ("Bursa IT")
(formerly known as
KLSE Technology
Sdn. Bhd.)
100
100
39,998
75
75
~
KLOFFE Information
Systems Sdn. Bhd.
("KLOFFE IS")
100
100
~
^
^
^
Malaysia Monetary
Exchange Berhad
("MME")
100
100
Bursa Malaysia Property
Sdn. Bhd. ("Bursa
Property")
(formerly known as
KLSE Property
Management Sdn. Bhd.)
Bursa Malaysia
Depository Nominees
Sdn. Bhd.
("Bursa Depository (N)")
(formerly known as
Malaysian Central
Depository Nominees
Sdn. Bhd.)
Commodity and Monetary
Exchange of Malaysia
("COMMEX")
1,000
Provide and disseminate
prices and other information
relating to securities quoted
on exchanges within the
Group.
Provide building management
and security services.
Transferred its business to
the Company during the
financial year.
Provide information and
communications technology
services. Transferred its
business to the Company
during the financial year.
Act as a nominee for Bursa
Depository and receive
securities on deposit or
for safe-custody or
management.
Dormant.
Dormant.
Dormant.
Notes
- 31 December 2004
Malaysian Share
Registration Services
Sdn. Bhd. ("MSRS")
Bursa Malaysia Training
Sdn. Bhd. ("Bursa
Training")
(formerly known as
KLSE Training Sdn.
Bhd.)
Equity interest
held
2004
2003
(%)
(%)
Ordinary
paid up
capital as at
31.12.2004
RM'000
-
100
n/a
Provide share registration
services.
-
100
n/a
Dormant.
~
Denotes RM2.
^
COMMEX is a company limited by guarantee. Bursa Derivatives and the Company are regarded as COMMEX's
immediate and ultimate holding company respectively. Bursa Derivatives is the sole member of COMMEX.
*
Incorporated in the Federal Territory of Labuan, Malaysia.
(a) Disposal of Subsidiaries
The Group disposed off its interest in the following subsidiaries during the year :
-
Disposed 100% of MSRS for a total consideration of RM6,000,000 on 5 January 2004; and
Disposed 100% of Bursa Training for a total consideration of RM855,878 on 28 June 2004.
There were no disposals for the financial year ended 31 December 2003.
The disposals had the following effects on the Group's financial results for the year:
Revenue
Profit from operations
31.12.2004
RM'000
632
275
275
Notes
- 31 December 2004
(a) Disposal of Subsidiaries (cont’d)
The disposals had the following effects on the financial position of the Group as at the end of the year:
Property, plant and equipment
Trade and sundry receivables
Tax recoverable
Short term investments
Short term deposits
Sundry payables
Provision for retirement benefit fund
31.12.2004
RM'000
977
2,041
29
6
900
522
(2,095)
(263)
2,117
490
2,607
(6,856)
(4,249)
Goodwill on acquisition
Disposal proceeds
Net gain on disposal to the Group (Note 4)
Cash inflow arising on disposals:
Cash consideration, representing cash inflow of the Company
Cash and cash equivalents of subsidiaries disposed
Net cash inflow of the Group
6,856
(1,422)
5,434
The disposals had the following effects on the Company's financial results for the year:
31.12.2004
RM'000
Total disposal proceeds
Less: Cost of investments in subsidiaries
Gain on disposal of subsidiaries
6,856
(4,510)
2,346
13. LOAN STOCKS FROM SUBSIDIARY
On 5 January 2004, the Company disposed off 2,000,000 of 5 year 4% Redeemable Convertible Unsecured Loan Stocks
2002/2007 ("RCULS") at a nominal value of RM1.00 each in MSRS, a former subsidiary, as disclosed in Note 38.
14. OTHER INVESTMENTS
Group
2004
RM'000
At cost
Malaysian Government Securities
Unquoted bonds
46,627
(236)
46,391
202,015
19
202,034
Company
2003
RM'000
2004
RM'000
2003
RM'000
-
-
-
249,077
(100)
248,977
85,000
(1,428)
83,572
151,210
(336)
150,874
Notes
- 31 December 2004
14. OTHER INVESTMENTS (cont’d)
Group
2004
RM'000
Company
2003
RM'000
2004
RM'000
2003
RM'000
-
-
At cost
Recreational club memberships
Less: Write off
Total
9
9
84
(75)
9
248,434
248,986
83,572
150,874
46,936
206,131
253,067
253,503
253,503
84,795
84,795
150,961
150,961
At market value
Unquoted bonds (indicative)
Maturities and weighted average yield to maturity per annum of the unquoted bonds as at the balance sheet date were as
follows:
Group
Maturity
RM'000
Company
Weighted
average yield
to maturity
%
RM'000
Weighted
average yield
to maturity
%
2004
More than 1 year and less than 5 years
Unquoted bonds
Within 1 year
5 years or more
46,627
3.5
-
-
5,000
160,608
36,407
202,015
3.5
5.5
6.0
5,000
75,000
5,000
85,000
3.5
5.4
4.2
14,976
171,976
62,125
249,077
3.7
5.2
6.0
14,975
102,887
33,348
151,210
3.7
4.4
5.8
2003
Unquoted bonds
Within 1 year
5 years or more
Notes
- 31 December 2004
15. STAFF LOANS RECEIVABLE
Group
Housing loans
Vehicle loans
Computer loans
Staff advances
Less :
Portion within twelve months included in other
receivables (Note 19)
Company
2004
RM'000
2003
RM'000
2004
RM'000
(2,112)
30,972
(4,221)
41,464
(1,700)
27,784
32,199
640
237
8
33,084
43,907
981
743
54
45,685
28,796
489
199
29,484
2003
RM'000
42,312
739
551
5
43,607
(3,373)
40,234
The staff housing and vehicle loans are secured against the properties and vehicles of the borrowers respectively. The staff
loans bear interest of 2% to 4% per annum computed on monthly rest basis.
The maturity structure of the staff loans receivable as at the end of the financial year were as follows:
Group
Within 1 year
5 years or more
2004
RM'000
Company
2003
RM'000
2,112
8,119
22,853
33,084
4,221
13,721
27,743
45,685
2004
RM'000
1,700
6,662
21,122
29,484
2003
RM'000
3,373
12,491
27,743
43,607
16. NET GOODWILL
Company
Group
Goodwill
At 1 January
Arising from acquisition
of additional shares in subsidiaries
Arising from disposal of subsidiary
At 31 December
Accumulated amortisation
At 1 January
Amortisation for the year
At 31 December
Negative goodwill
At beginning/end of year
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
59,305
57,249
36,867
36,867
(8,213)
(2,941)
(11,154)
(5,291)
(2,923)
(8,214)
(3,687)
(1,843)
(5,530)
(1,844)
(1,843)
(3,687)
(9,959)
(9,959)
(490)
58,815
2,056
59,305
36,867
-
36,867
-
Notes
- 31 December 2004
16. NET GOODWILL (cont’d)
Group
Amount recognised in income statement
At beginning/end of year
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
9,959
9,959
-
-
47,661
Net goodwill
Company
51,091
31,337
33,180
17. DEFERRED TAX ASSETS/(LIABILITIES)
Company
Group
At 1 January
Recognised in income statement (Note 9)
At 31 December
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
865
(1,657)
(792)
3,968
3,968
(1,657)
(1,657)
1,358
1,358
3,968
(4,760)
(792)
Presented after appropriate offsetting as follows:
Deferred tax assets
Deferred tax liabilities
5,996
(2,028)
3,968
1,358
(3,015)
(1,657)
4,544
(3,186)
1,358
The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting are as
follows:
Deferred Tax Assets of the Group:
Provision
for
retirement
benefits
RM'000
At 1 January 2004
Recognised in income statement
At 31 December 2004
6,550
(2,256)
4,294
Provision
for
bonus
and EPF
RM'000
1,183
1,183
Provision
for
doubtful
debts
RM'000
643
91
734
Provision
for
training
fund
RM'000
501
501
Depreciation
in excess of
capital
allowances
Others
RM'000
RM'000
242
(114)
128
283
337
620
Total
RM'000
7,718
(258)
7,460
Deferred Tax Liability of the Group:
At 1 January 2004
At 31 December 2004
Accelerated
capital
allowances
RM'000
(3,750)
(4,502)
(8,252)
Notes
- 31 December 2004
17. DEFERRED TAX ASSETS/(LIABILITIES) (cont’d)
Deferred Tax Assets of the Company:
At 1 January 2004
At 31 December 2004
Provision
for
retirement
benefits
RM'000
4,189
104
4,293
Provision
for
bonus
and EPF
RM'000
1,135
1,135
Provision
for
doubtful
debts
RM'000
643
34
677
Others
RM'000
276
214
490
Total
RM'000
5,108
1,487
6,595
Deferred Tax Liability of the Company:
Accelerated
capital
allowances
RM'000
At 1 January 2004
At 31 December 2004
(3,750)
(4,502)
(8,252)
Deferred tax assets have not been recognised in respect of the following items:
Group
2004
RM'000
Retirement benefit obligations
Provision for bonus
Provision for unutilised leave
Unabsorbed capital allowances
Unutilised tax losses
2003
RM'000
38
13,783
8,343
378
91
13,927
8,068
The unutilised tax losses and unabsorbed capital allowances are available indefinitely for offset against future taxable
profits of the respective subsidiaries.
18. TRADE RECEIVABLES
Group
Trade receivables
Less: Provision for doubtful debts
2004
RM'000
28,119
(3,807)
24,312
Company
2003
RM'000
32,428
(3,053)
29,375
2004
RM'000
5,215
(2,416)
2,799
2003
RM'000
12,190
(2,297)
9,893
The Group's and the Company's normal trade credit term ranges from 7 days to 30 days. Other credit terms are assessed
and approved on a case-by-case basis.
The Group and the Company have no significant concentration of credit risk that may arise from exposures to a single debtor
or to groups of debtors.
Notes
- 31 December 2004
19. OTHER RECEIVABLES
Group
Interest receivables
Deferred expenditure
Staff loans receivable within twelve months (Note 15)
Deposits and prepayments
Due from Compensation Funds
Sundry receivables
Less: Provision for doubtful debts
2004
RM'000
10,653
2,104
2,112
2,488
4,444
21,232
43,033
(1,120)
41,913
Company
2003
RM'000
11,935
4,221
2,489
4,007
10,041
32,693
(498)
32,195
2004
RM'000
5,408
2,104
1,700
1,901
3,041
15,989
30,143
(377)
29,766
2003
RM'000
5,271
3,373
2,191
3,001
455
14,291
14,291
The Group and the Company have no significant concentration of credit risk that may arise from exposures to a single debtor
or to groups of debtors.
Deferred expenditure of the Group and of the Company relates to professional expenses incurred in conjunction with the
proposed listing of the Company on the Main Board of Bursa Securities. This amount will be written off against a share
premium account upon the completion of the listing exercise. Included in deferred expenditure of the Group and of the
Company are the following:
(i) Legal fees of RM158,000 paid and payable to a firm in which En. Abdul Kadir bin Haji Md Kassim, a former director of
the Company and a current director of a subsidiary, is a partner; and
(ii) Fees of RM740,000 paid and payable to the auditors.
20. DUE FROM/TO SUBSIDIARIES
The amounts due from/to subsidiaries are unsecured, interest free and have no fixed terms of repayment.
21. SHORT TERM INVESTMENTS
Group
At cost
Unquoted bonds
Less: Write downs
Quoted shares
Less: Impairment loss
Total
At market value
Unquoted bonds (indicative)
Quoted shares
Company
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
280,939
280,939
209,652
(2,984)
206,668
280,939
280,939
209,652
(2,984)
206,668
280,939
206,674
280,939
206,668
286,306
286,306
206,668
6
206,674
286,306
286,306
206,668
206,668
-
9
(3)
6
-
Short term investments of the Group and of the Company are managed by external fund managers.
-
Notes
- 31 December 2004
21. SHORT TERM INVESTMENTS (cont’d)
Maturities and weighted average yield to maturity per annum of the unquoted bonds as at the balance sheet date were as
follows:
Group and Company
Weighted
average yield
to maturity
%
2004
RM'000
2003
RM'000
Weighted
average yield
to maturity
%
Maturity
Unquoted bonds
Within 1 year
5 years or more
10,278
144,237
126,424
280,939
4.4
5.0
5.8
3,313
117,823
88,516
209,652
3.4
5.1
6.4
22. SHORT TERM DEPOSITS
Group
Deposits with:
Licensed banks
Licensed finance companies
Licensed discount houses
Licensed merchant banks
Repurchase agreement with a discount house
Company
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
418,886
201,598
25,329
59,700
705,513
1,831
707,344
351,380
284,997
76,674
73,352
786,403
5,918
792,321
60,824
49,327
8,420
5,700
124,271
1,831
126,102
40,428
90,130
70,253
4,500
205,311
5,244
210,555
Included in short term deposits are:
Group
Deposits pledged with licensed banks for
banking facilities granted
Company
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
1,200
51,200
1,200
1,200
Short term deposits of the Company and of the Group amounting to RM16,429,000 (2003: RM22,898,000) are managed by
external fund managers.
Notes
- 31 December 2004
22. SHORT TERM DEPOSITS (cont’d)
The weighted average effective interest rates per annum and the average maturities of deposits as at balance sheet date
were as follows:
Company
Group
2004
Licensed
Licensed
Licensed
Licensed
2003
Licensed
Licensed
Licensed
Licensed
Weighted
average
effective
interest rates
%
Average
maturities
Days
Weighted
average
effective
interest rates
%
Average
maturities
Days
banks
finance companies
discount houses
merchant banks
3.0
3.0
2.7
2.8
141
176
18
46
2.9
2.9
2.6
2.8
113
130
4
31
banks
finance companies
discount houses
merchant banks
2.8
2.1
1.9
1.9
189
117
13
76
3.4
3.0
2.8
2.8
224
77
12
32
23. TRADE PAYABLES
Trade payables of the Group represent cash deposits collected by Bursa Clearing (D), a wholly owned subsidiary, from
clearing participants:
Group
Security deposits
Clearing fund
Margin and excess cash
2004
RM'000
1,000
14,000
109,253
124,253
2003
RM'000
1,000
14,000
135,991
150,991
The above are placed in interest-bearing deposits and interest earned is credited to clearing participants' accounts net of
service charges levied.
Included in margin deposits are foreign currency collaterals received in USD of RM550,000 (2003: RM301,000).
Security deposits and margin deposits lodged with Bursa Clearing (D) in the form of letters of credits amounting to
RM81,600,000 (2003: RM64,100,000) are not included in the Group's balance sheet.
Notes
- 31 December 2004
24. OTHER PAYABLES
Group
Amount owing to SC
Accruals
Provisions for liabilities (Note 25)
Retirement benefits payable within twelve months (Note 30)
Sundry payables
Short term liability (Note 33)
2004
RM'000
18,785
32,102
6,150
15,633
17,121
539
90,330
Company
2003
RM'000
17,837
22,487
26,551
539
67,414
2004
RM'000
2003
RM'000
13,505
28,055
4,054
5,083
10,811
539
62,047
15,614
15,284
19,544
539
50,981
Included in amount owing to SC is RM13,505,000 (2003: RM13,505,000) relating to an interest free and unsecured loan
granted to Malaysian Exchange of Securities Dealing and Automated Quotation Berhad ("MESDAQ"), whose operations
were assumed by the Company pursuant to its merger with MESDAQ in the financial period ended 31 December 2002. The
amount is payable in a lump sum on 14 March 2005, or upon listing of the Company, whichever is earlier.
25. PROVISIONS FOR LIABILITIES
Bonus and
EPF
RM'000
Group
At 1 January 2004
Provisions during the year
At 31 December 2004 (Note 24)
4,360
4,360
Training
fund
RM'000
Total
RM'000
1,790
1,790
6,150
6,150
Bonus and
EPF
RM'000
Company
At 1 January 2004
Provision during the year
At 31 December 2004 (Note 24)
4,054
4,054
(a) Bonus and EPF
Provision for bonus and EPF is in respect of bonus and EPF of staff which have not been paid out as of the date of the
audit report.
(b) Training fund
Provision for training fund is in respect of fines receipts set aside for the training and education of the securities industry.
26. SHARE CAPITAL
Number of ordinary
shares of RM0.50 each
2004
'000
Authorised
At 1 January
Created on conversion
Created during the year
At 31 December
1,000,000
1,000,000
2,000,000
2003
'000
Amount
2004
RM'000
-
500,000
500,000
1,000,000
2003
RM'000
-
Notes
- 31 December 2004
26. SHARE CAPITAL (cont’d)
Number of ordinary
shares of RM0.50 each
2004
'000
Issued and fully paid
At 1 January
Capitalisation as share capital
At 31 December
500,000
500,000
2003
'000
-
Amount
2004
RM'000
2003
RM'000
250,000
250,000
-
On 5 January 2004, pursuant to the Demutualisation (Kuala Lumpur Stock Exchange) Act, 2003, the Company was
demutualised and converted to a public company limited by shares. The Company created authorised share capital of
RM500,000,000 comprising 1,000,000,000 ordinary shares of RM0.50 each, and issued 500,000,000 ordinary shares of
RM0.50 each, totalling RM250,000,000. The ordinary shares were issued by way of capitalisation of membership fees and
accumulated funds as disclosed in the Statement of Changes in Equity. The ordinary shares were issued to the following
shareholders in the following manner:
Percentage
allocation
%
Shareholders
Minister of Finance Incorporated
Capital Market Development Fund
Participating organisations
Eligible remisiers
30
30
30
10
100
No. of
shares
'000
150,000
150,000
150,000
50,000
500,000
On 11 December 2004, the Company increased its authorised share capital from RM500,000,000 comprising 1,000,000,000
ordinary shares of RM0.50 each to RM1,000,000,000 comprising 2,000,000,000 ordinary shares of RM0.50 each.
27. MEMBERSHIP FEES
As at 31 December 2003:
(i)
Membership fees received from past and present members at RM10,000 each amounted to RM2,960,000; and
(ii) A total contribution of RM94,000,000 was received from members as follows:
Contribution per
participating
organisation
RM'000
5,000
1,000
3,000
Number of
participating
organisations
5
51
6
62
Total contributions
from participating
organisations
RM'000
25,000
51,000
18,000
94,000
The number of participating organisations in operation as at the end of the previous financial year was 38.
(iii) A sum of RM15,994,000 had been charged against the membership fees for advisory fees paid for the demutualisation
of the Company in the prior years. The advisory fees incurred were not in the normal course of operations of the
Company.
Notes
- 31 December 2004
28. RETAINED PROFITS
As at 31 December 2004, the Company has sufficient tax credit under Section 108 of the Income Tax Act, 1976 to frank the
payment of dividends amounting to approximately RM21,696,000 out of its retained profits. If the balance of the retained
profits of approximately RM757,672,000 were to be distributed as dividends prior to there being sufficient tax credit, the
Company would have a Section 108 shortfall of approximately RM212,148,000.
29. CAPITAL RESERVE
Group
Group's portion of accumulated funds capitalised from
redemption of preference shares (Note a)
Share premium from Bursa Derivatives (Note b)
2004
RM'000
2003
RM'000
2,750
12,400
15,150
2,750
12,400
15,150
(a) This relates to the Group's portion of accumulated funds capitalised arising from the redemption of 5,000,000 5%
redeemable cumulative preference shares of RM1.00 each by Bursa Depository, a subsidiary.
(b) In the financial year ended 30 June 2001, Bursa Derivatives, a wholly owned subsidiary, issued 16 non-cumulative
"B" preference shares and 15 non-cumulative "C" preference shares of RM1.00 each at a total premium of
RM10,999,969 as part consideration for the merger of business operations of COMMEX and Bursa Derivatives. The
share premium arising from the above issue is regarded as capital reserve of the Group and is not distributable. The "B"
and "C" preference shares have been accounted for as part of the Group's minority interest.
In the financial year ended 31 December 2002, Bursa Derivatives increased its issued and fully paid-up share capital by
way of the issuance of 6 non-cumulative "C" preference shares of RM1.00 each at a total premium of RM1,199,994.
In the financial year ended 31 December 2003, Bursa Derivatives further increased its issued and fully paid-up share
capital by way of the issuance of 1 non-cumulative "C" preference shares of RM1.00 each at a premium of RM199,999.
30. RETIREMENT BENEFIT OBLIGATIONS
The Group operates a funded, defined benefit Retirement Benefit Scheme ("the Scheme") for its eligible employees.
Contributions to the Scheme are to be made to a separately administered fund. Under the Scheme, eligible employees are
entitled to benefits upon leaving service, of a lump sum, calculated based on the multiplication of 2 times the Final Scheme
Salary, Pensionable Service and a variable factor based on service years, less EPF offset. Effective 1 September 2003, the
Scheme was closed to new entrants.
Movements in the net liability were as follows:
At 1 January
Amount recognised in income statement (Note 5)
Contributions paid
Less:
Portion repayable within twelve months
in other payables (Note 24)
At 31 December
Group
Company
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
(15,633)
15,334
24,937
(5,083)
15,334
14,962
24,937
6,396
(366)
30,967
24,645
4,826
(4,534)
24,937
14,962
5,821
(366)
20,417
16,054
2,771
(3,863)
14,962
The portion of retirement benefits repayable within twelve months relate to retirement benefits in respect of VSS staff, which
will be paid to EPF upon approval from the Inland Revenue Board.
Notes
- 31 December 2004
30. RETIREMENT BENEFIT OBLIGATIONS (cont’d)
The amounts identified as at 31 December 2004 were determined as follows:
Company
Group
Present value of funded defined benefit obligations
Fair value of plan assets
Unrecognised actuarial losses
Net liability
2004
RM'000
2003
RM'000
2004
RM'000
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
47
334
30,673
31,054
31,117
684
3,482
37,594
41,760
41,780
47
334
30,673
31,054
31,117
684
3,293
21,546
25,523
25,529
31,117
(4,481)
(11,302)
15,334
41,780
(11,041)
(5,802)
24,937
31,117
(4,481)
(11,302)
15,334
2003
RM'000
25,529
(6,746)
(3,821)
14,962
Present value of funded defined benefit obligations analysed as:
Company
Group
Current
Non-current:
Later than 1 year but not later than 2 years
Later than 2 years but not later than 5 years
Later than 5 years
63
20
63
The amounts recognised in the income statement during the year were as follows:
Current services cost
Interest cost
Expected return on plan assets
Actuarial loss
Curtailment loss
Over provision of cost in prior year
Total *
6
Group
2004
RM'000
103
2,484
(644)
128
4,325
6,396
2003
RM'000
3,470
2,545
(1,025)
(164)
4,826
* Out of the total costs incurred of RM6,396,000 (2003: RM4,826,000), RM575,000 (2003: RM2,055,000) was recognised
in the income statements of the Company's subsidiaries.
The actual return/(loss) on the plan assets of the Group and of the Company for the year were RM618,000 (2003:
(RM2,699,000)) and RM618,000 (2003: (RM2,170,000)) respectively.
Principal actuarial assumptions used:
Discount rate
Expected return on plan assets
Expected rate of salary increase
2004
%
7.0
5.0
8.0
2003
%
7.0
7.0
5.0
Notes
- 31 December 2004
31. DEFERRED INCOME
Deferred income of the Group relates to grants received by a wholly owned subsidiary, Bursa Clearing (D), from the
Securities Commission and is recognised as income over the period necessary to match them with the related costs which
they are intended to compensate on a systematic basis.
32. BORROWINGS
Group
Long term borrowings
Less: Portion repayable within twelve months included as short term borrowings
2004
RM'000
1,099
(220)
879
2003
RM'000
1,319
(220)
1,099
Long term borrowings of the Group relate to amounts payable to the Government of Malaysia and comprise two
interest-free unsecured loans of RM697,000 and RM1,500,000. Each loan is repayable in ten equal annual instalments,
repayments of which commenced on 30 November 2000.
33. LONG TERM LIABILITY
Group and Company
Long term liability
Less: Portion repayable within twelve months included in other payables (Note 24)
2004
RM'000
47,798
(539)
47,259
2003
RM'000
48,337
(539)
47,798
Long term liability relates to the amount payable to the Government of Malaysia for the lease of land. The amount is interest
free and payable in 99 annual instalments of RM539,000 each.
34. COMPENSATION FUNDS
The Group maintains 3 compensation funds, namely Bursa Malaysia Securities Berhad - Compensation Fund ("Securities
Compensation Fund") (formerly known as Kuala Lumpur Stock Exchange Berhad - Compensation Fund), Bursa
Malaysia Derivatives Berhad - Fidelity Fund ("Derivatives Fidelity Fund") (formerly known as Malaysia Derivatives Exchange
Bhd. - Fidelity Fund) and Bursa Malaysia Depository Sdn. Bhd. - Compensation Fund ("Depository Compensation Fund")
(formerly known as Malaysian Central Depository Sdn. Bhd. - Compensation Fund), to compensate investors who have
suffered losses under the circumstances specified in the Securities Industry Act, 1983, the Futures Industry Act, 1993 and
the Rules of Bursa Depository, respectively.
The net assets of the funds are as follows:
Securities Compensation Fund
Derivatives Fidelity Fund
Depository Compensation Fund
2004
RM'000
253,684
11,019
50,000
2003
RM'000
244,525
10,957
50,000
The assets of the funds are segregated from the financial statements of the Group and accounted for separately.
Notes
- 31 December 2004
34. COMPENSATION FUNDS (cont’d)
(i)
The fund was established on 1 July 1997 pursuant to the Securities Industry Act, 1983 and the net assets of the Kuala
Lumpur Stock Exchange Berhad Fidelity Fund was effectively transferred to the fund on that date.
The fund comprises contributions from Bursa Securities, a wholly owned subsidiary, and participating organisations.
Over and above the contributions, the SC has also pledged to set aside RM100 million to meet the needs of the fund
as and when required. Contributions receivable and withdrawals from the Compensation Fund are governed by the
provisions of the Securities Industry Act, 1983.
(ii) Derivatives Fidelity Fund
The fund was established and maintained by Bursa Derivatives, a wholly owned subsidiary, in accordance with the
provisions of the Futures Industry Act, 1993.
The fund comprises contributions from trading participants. Contributions receivable and withdrawals from the Fidelity
Fund are governed by the provisions of the Futures Industry Act, 1993.
The MME Fidelity Fund which amounted to RM1,100,000 as at 31 December 2004 will, upon completion of the winding
up of MME, be transferred to the Derivatives Fidelity Fund. MME ceased operations on 7 December 1998 and there are
no pending claims against the MME Fidelity Fund.
(iii) Depository Compensation Fund
In 1997, pursuant to the provisions of Section 5(1)(b)(vii) of the Securities Industry (Central Depositories) Act, 1991,
Bursa Depository, a subsidiary, established a scheme of compensation for the purpose of settling claims by depositors
against Bursa Depository, its authorised depository agents and Bursa Depository (N). The scheme comprises the
Compensation Fund and insurance policies. Bursa Depository's policy is to maintain the balance in the Compensation
Fund at RM50,000,000. In consideration for the above, all revenue accruing to the Compensation Fund deposits and
investments are to be credited to Bursa Depository and all expenditure incurred for and on behalf of the Compensation
Fund will be absorbed by Bursa Depository.
35. CAPITAL COMMITMENTS
Group
Approved and contracted for
Office equipment, furniture and fittings
Computer and office automation
Renovation
Approved but not contracted for
Office equipment, furniture and fittings
Computer and office automation
Renovation
Company
2004
RM'000
2003
RM'000
2004
RM'000
2003
RM'000
508
28,557
29,065
98
2,539
12
2,649
508
28,557
29,065
98
2,539
12
2,649
585
30,269
2,281
33,135
5,670
5,670
585
30,269
2,281
33,135
5,000
5,000
Notes
- 31 December 2004
36. CONTINGENT LIABILITIES - UNSECURED
Group and Company
Leased line charges omitted from billings since 1994 claimed
by a local telecommunications company (Note a)
Demand made by local bank against MSRS, a former
subsidiary, for allegedly breaching terms of a Letter of
Undertaking issued by MSRS to the said bank (Note b)
2004
RM'000
2003
RM'000
3,700
12,000
3,700
7,206
19,206
(a) A claim for an approximate sum of RM12,000,000 being leased line charges omitted from billings since 1994 was made
against the Company by a local telecommunications company. This amount has since been reduced to RM3,700,000.
Both parties are in discussion and currently in the process of verifying the said amount claimed in order to ascertain the
Company's actual liability to the telecommunications company. No provision in respect of the claim has been made in
the financial statements as negotiations are in process and an amicable settlement has yet to be reached between the
parties and corresponding billings by the Company to participating organisations in respect of the same are still pending.
(b) The demand by a local bank against MSRS was amicably settled on 14 September 2004 for RM2,800,000.
37. SIGNIFICANT RELATED PARTY TRANSACTIONS
Significant transactions between the Company and its subsidiaries are as follows:
Company
Cost recoveries income from subsidiaries:
- Bursa Securities
- Bursa Derivatives
- LFX
- Bursa Clearing (S)
- Bursa Depository
- Bursa Clearing (D)
- Bursa Information
- Bursa Property
- Bursa IT
- MSRS
Dividend income from subsidiaries
- Bursa Depository
- Bursa Information
- Bursa Property
2004
RM'000
2003
RM'000
2,466
863
406
1,335
2,610
369
553
62
8,664
2,646
301
3,291
5,735
746
461
223
1,254
522
15,179
-
60,000
3,000
5,000
2,000
70,000
Notes
- 31 December 2004
37. SIGNIFICANT RELATED PARTY TRANSACTIONS (cont’d)
Company
Management fee income from subsidiaries:
- Bursa Securities
- Bursa Derivatives
- Bursa Depository
Office rental income from subsidiaries:
- Bursa Securities
- Bursa Depository
- Bursa Information
- MSRS
- Bursa Derivatives
- LFX
- Bursa IT
- Bursa Property
Commitment income from a subsidiary, Bursa Clearing (S)
Royalty income from a subsidiary, Bursa Clearing (S)
Cost recoveries expense to a subsidiary, Bursa IT
Facilities management division charges by a subsidiary, Bursa IT
Management fee expense to a subsidiary, Bursa Information
Property management and other service charges by a subsidiary, Bursa Property
Royalty charges to a subsidiary, Bursa Information
2004
RM'000
2003
RM'000
79,200
13,851
18,688
17,752
4,004
133,495
-
252
132
375
574
212
126
136
1,734
82
3,623
1,381
1,608
109
359
716
155
62
3,144
224
7,758
120
(19,801)
(5,346)
(9,817)
(3,689)
-
120
51,676
(18,579)
(11,286)
(7,231)
(972)
Significant transactions between the Group and the Company and other related parties are as follows:
Group
Cost recoveries income from a company with
a common director, RIIAM
Administration fee income
from a fund managed by the Company,
Administration fee income
from funds managed by a subsidiary:
Derivatives Fidelity Fund
COMMEX Fidelity Fund
Legal fees charged by a firm in which En. Abdul
Kadir bin Haji Md Kassim, a former director of the
Company and a current director of a subsidiary,
is a partner
2004
RM'000
2003
RM'000
Company
2004
RM'000
2003
RM'000
-
131
-
131
180
180
180
180
240
-
120
120
-
-
1,059
180
968
174
Notes
- 31 December 2004
37. SIGNIFICANT RELATED PARTY TRANSACTIONS (cont’d)
The directors are of the opinion that, with the exception of dividends, the above transactions have been established on terms
and conditions that are not materially different from those obtainable in transactions with unrelated parties.
Certain directors are also directors of stockbroking companies. The transactions entered into with these stockbroking
companies have been established on terms and conditions that are not materially different from those obtainable in
transactions with unrelated parties.
Government-linked corporations are related to the Company by virtue of the substantial shareholdings of the Minister of
Finance Incorporated in the Company. The transactions entered into with these government-linked corporations have been
established on terms and conditions that are not materially different from those obtainable in transactions with unrelated
parties.
38. SIGNIFICANT EVENTS
(a) On 1 January 2004, Bursa Training, a previous wholly owned subsidiary, acquired the business assets and liabilities of
Research Institute of Investment Analysts Malaysia, a company limited by guarantee, for a cash consideration of RM1.
On 2 January 2004, Bursa Training increased its issued and paid-up share capital from RM2 to RM1,000,000 through
the issuance of 999,998 new ordinary shares of RM1.00 each for a cash consideration of RM999,998. The shares were
fully subscribed by the Company.
On 28 June 2004, the Company disposed its entire equity interest in Bursa Training to En. Abdullah Naib for a total cash
consideration of RM855,878.
(b) On 2 January 2004, the Demutualisation (Kuala Lumpur Stock Exchange) Act, 2003 came into force. On 5 January
2004, the Company was converted into a public company limited by shares. With this conversion, on the same date,
the Company vested and transferred its securities exchange business to Bursa Securities, a wholly owned subsidiary,
and thereafter became an exchange holding company. The Company assumed its current name of Bursa Malaysia
Berhad on 14 April 2004.
On 5 January 2004, the Company made payments for its subscription for 24,999,998 ordinary shares of RM1.00 each
in Bursa Securities, a wholly owned subsidiary issued at par for a total cash consideration of RM24,999,998. On the
same date, the Company made payments for its subscription for 25,000,000 Redeemable Convertible Preference
Shares of RM0.01 each in Bursa Securities, issued at RM1.00 each for a total cash consideration of RM25,000,000. As
a result, the issued and paid-up preference share capital of Bursa Securities increased to RM250,000.
(c) On 5 January 2004, the Company disposed off 2,000,000 ordinary shares of RM1.00 each representing the Company's
100% equity interest in MSRS, a previously wholly owned subsidiary, and the Company's investment in MSRS's
2,000,000 redeemable convertible unsecured loan stocks of RM1.00 each to Symphony House Berhad for a total cash
consideration of RM6,000,000.
(d) On 6 October 2004, the Company submitted an application to the SC for the proposed listing and quotation for its entire
issued share capital on the Main Board of Bursa Securities. The related corporate proposals were approved by the SC
on 10 December 2004 and the shareholders of the Company via an Extraordinary General Meeting and a Court
Convened Meeting on 11 December 2004. The corporate proposals were completed subsequent to year end, as
disclosed in Note 39, except for the implementation of the Company's Employees' Share Option Scheme ("ESOS") for
eligible directors and employees of the Group. The ESOS is expected to be implemented prior to the Listing (as defined
in Note 39(b)).
Notes
- 31 December 2004
38. SIGNIFICANT EVENTS (cont’d)
The ESOS is governed by the by-laws approved by the shareholders in the abovementioned Extraordinary General
Meeting. Its salient terms are as follows:
(i)
The ESOS shall be in force for a period of 5 years from the date of implementation.
(ii) The Options Committee appointed by the Board of Directors to administer the ESOS, may at its discretion at any
time within the duration of the scheme, grant options to eligible employees or executive directors of the Group to
subscribe for new ordinary shares of RM0.50 each in the Company.
(iii) The total number of shares to be issued under the ESOS shall not exceed in aggregate 13% of the issued share
capital of the Company at any point of time during the tenure of the ESOS and out of which not more than 50% of
the shares shall be allocated, in aggregate, to executive directors and senior management of the Group. In addition,
not more than 10% of the shares available under the ESOS shall be allocated to any individual employee or
executive director who, either singly or collectively through persons connected with him/her, holds 20% or more in
the issued and paid-up capital of the Company.
(iv) The option price for each share shall be as follows:
-
In respect of options granted in conjunction with the Listing (as defined in Note 39 (b)), the initial public offering
price;
In respect of options granted subsequent to the Listing, the weighted average market price of the shares for the
5 market days immediately preceding the date on which the options are granted with a discount of not more than
10% at the Option Committee’s discretion, provided that the option price shall in no event be less than the par
value of the shares of the Company of RM0.50.
(v) All new ordinary shares issued upon exercise of the options granted under the ESOS will rank pari passu in all
respects with the existing ordinary shares of the Company other than as may be specified in a resolution approving
the distribution of dividends prior to their exercise dates.
39. SUBSEQUENT EVENTS
(a) On 27 January 2005, the Company completed the following corporate proposals:
(i)
A bonus issue of 1,334,000,000 new ordinary shares of RM0.50 each in the Company ("Shares") by way of
capitalisation of retained profits of RM667,000,000 on the basis of 2,668 new Shares for every 1,000 Shares;
(ii) A capital reduction exercise under Section 64 of the Companies Act, 1965 whereby RM750,000,000 of the share
capital was cancelled, representing approximately RM0.41 of the par value of each existing ordinary share of
RM0.50 each ("Capital Reduction");
(iii) A share consolidation exercise whereby 1,834,000,000 ordinary shares of approximately RM0.09 par value each
after the Capital Reduction were consolidated into 334,000,000 Shares; and
(iv) The creation of a "Shareholders' Scheme Account" into which the credit of RM750,000,000 arising from the Capital
Reduction was transferred. The payment to shareholders will be on the date after the Initial Public Offering and
Listing (as defined in Note (b)).
(b) On 23 February 2005, the Company issued its local prospectus in relation to the initial public offering of 166,000,000
new Shares, comprising 116,900,000 new Shares under the institutional offering and 49,100,000 new Shares under the
retail offering, for cash ("Initial Public Offering"). Thereafter, the entire issued share capital of the Company comprising
500,000,000 Shares shall be listed on the Main Board of Bursa Securities ("Listing").
Notes
- 31 December 2004
40. COMPARATIVES
The presentation and classification of items in the current year financial statements have been consistent with previous
financial year except that certain comparative amounts have been reclassified to conform with current year's presentation.
As
restated
RM'000
Adjustments
RM'000
As previously
stated
RM'000
201,499
(71,623)
129,876
(21,532)
21,532
-
223,031
(93,155)
129,876
29,375
32,195
150,991
67,414
279,975
29,375
32,195
(57,563)
(4,007)
(2,223)
2,223
-
57,563
4,007
153,214
65,191
279,975
188,949
44,397
233,346
(8,004)
8,004
-
196,953
36,393
233,346
9,893
14,290
24,183
9,893
14,290
(21,182)
(3,001)
-
21,182
3,001
24,183
Group
Income Statement
Operating revenue
Other operating expenses
Balance Sheet
Trade receivables
Other receivables
Receivables
Due from Compensation Fund
Trade payables
Other payables
Company
Income Statement
Revenue
Other income
Balance Sheet
Trade receivables
Other receivables
Receivables
Due from Compensation Fund
41. FINANCIAL INSTRUMENTS
(a) Financial Risk Management Objectives and Policies
The Group's financial risk management policy seeks to ensure that adequate financial resources are available for the
development of the Group's businesses whilst managing its interest rate, foreign exchange, liquidity and credit risks.
The Group operates within clearly defined guidelines that are approved by the Board and the Group's policy is not to
engage in speculative transactions.
(b) Interest Rate Risk
The Group has no interest-bearing debt. However, the Group has substantial short and long term interest-bearing
financial assets as at 31 December 2004. The investments in financial assets are not held for speculative purposes but
have been mostly placed in fixed deposits or invested in unquoted securities. The information on maturity dates and
effective interest rates of financial assets are disclosed in their respective notes.
Notes
- 31 December 2004
41. FINANCIAL INSTRUMENTS (cont’d)
(c) Foreign Exchange Risk
The Group is exposed to USD via acceptance of USD denominated cash deposits from clearing participants. The Group
hedges its exposure by placing the USD denominated cash deposits as fixed deposits.
(d) Liquidity Risk
The Group manages its operating cash flows and the availability of funding so as to ensure that all funding needs are
met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible
investments to meet its working capital requirements. In addition, the Group strives to maintain available banking
facilities of a reasonable level to meet its operational needs.
(e) Credit Risk
Credit risk, or the risk of counterparties defaulting, is controlled by the application of credit approvals, limits and
monitoring procedures. The Group has in place procedures to deal with possible default situations. Trade receivables
are monitored on an ongoing basis via Group management reporting procedures. The Group does not have any
significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk
related to any financial instrument.
(f)
Fair Values
The aggregate net fair values of financial assets and financial liabilities which are not carried at fair value on the balance
sheets of the Group and of the Company are represented as follows:
Group
Company
Carrying
amount
RM'000
Fair value
RM'000
Carrying
amount
RM'000
46,391
202,034
30,972
46,936
206,131
28,796
^
-
83,572
27,784
3,041
43,188
84,795
25,501
879
47,259
951
10,638
47,259
10,638
Fair value
RM'000
31 December 2004
Financial Assets
Other investments (Note 14)
- Malaysian Government Securities
- unquoted bonds
Staff loans receivable (Note 15)
Due from
Compensation Funds (Note 19)
Financial Liabilities
Long term borrowings (Note 32)
Long term liability (Note 33)
4,444
-
^
^
Notes
- 31 December 2004
41. FINANCIAL INSTRUMENTS (cont’d)
(f)
Fair Values (cont’d)
Company
Group
Carrying
amount
RM'000
Fair value
RM'000
Carrying
amount
RM'000
-
-
2,000
Fair value
RM'000
31 December 2003
Financial Assets
Loan stocks from subsidiary
Other investments
- unquoted bonds (Note 14)
Staff loans receivable (Note 15)
Due from
Compensation Funds (Note 19)
Financial Liabilities
Long term borrowings (Note 32)
Long term liability (Note 33)
Due to subsidiaries
^
^
248,977
41,464
253,503
40,134
150,874
40,234
150,961
38,916
-
-
14,636
^
1,115
10,644
-
47,798
3,467
10,644
^
4,007
1,099
47,798
-
^
3,001
^
It is not practical to estimate the fair values of amounts due from/to subsidiaries and Compensation Funds due
principally to a lack of fixed repayment term entered into by the parties involved. However, the Group does not
anticipate the carrying amounts recorded at the balance sheet date to be significantly different from the values that
would eventually be received or settled.
The following methods and assumptions were used to estimate the fair values of the following classes of financial
instruments:
(i)
Cash and cash equivalents, receivables, payables and short term borrowings
The carrying amounts approximate fair values due to the relatively short term maturity of these financial
instruments.
(ii) Other investments and short term investments
The fair value of unquoted securities is determined by reference to a reasonable estimate of fair value that has
been calculated based on the indicative rates obtained from third parties at the close of the business on the
balance sheet date.
(iii) Staff loans receivable
The fair value of staff loans receivable is estimated by discounting the expected future cash flows using the
current interest rates for loans with similar risk profiles.
(iv) Long term liability and borrowings
The fair values of long term liability and borrowings are estimated by discounting the expected future cash
flows using a discount rate of 5%.
It is not practical to estimate the fair value of contingent liabilities reliably due to the uncertainties of timing, costs
and eventual outcome.
Notes
- 31 December 2004
42. SEGMENT INFORMATION
The Group is organised into four major business segments:
(i)
Exchanges - to provide, operate and maintain securities, futures and options and offshore financial exchanges.
(ii) Clearing, settlement and depository - to provide, operate and maintain clearing houses for the securities and futures
and options exchange, and a central depository for securities listed on the securities exchange.
(iii) Information services - to provide and disseminate information relating to securities quoted on exchanges within the
Group.
(vi) Exchange holding - to function as an investment holding company.
Expenses, assets and liabilities which are common and cannot be meaningfully allocated to the business segments are
presented under unallocated expenses, assets and liabilities respectively.
Exchanges
RM'000
Clearing,
settlement
and
Information Exchange
depository
services
holding
Others Elimination Consolidated
RM'000
RM'000
RM'000 RM'000
RM'000
RM'000
31 December 2004
Operating revenue
External revenue
Inter-segment revenue
Total operating revenue
Other income
Segment results
Profit from operations
Unallocated corporate expenses
Group profit from operations
Finance costs
Profit before taxation
Taxation
Profit after taxation
Minority interests
Segment assets
Assets
Unallocated corporate assets
Consolidated total assets
Segment liabilities
Liabilities
Unallocated corporate liabilities
Consolidated total liabilities
119,017
218
119,235
7,141
84,944
84,944
23,636
13,297
10,804
24,101
463
142,046
142,509
665
26,102
26,767
(179,170)
(179,170)
3,754
40,436
10,530
14,340
2,178
(120)
205,706
623,174
20,896
871,047
3,707
1,724,530
40,590
1,765,120
8,782
144,555
2,156
124,640
973
281,106
5,864
286,970
807
36,914
3,565
(3,895)
218,386
218,386
68,168
71,118
(7,482)
63,636
(154)
63,482
(25,190)
38,292
(3,217)
35,075
Notes
- 31 December 2004
42. SEGMENT INFORMATION (cont’d)
Exchanges
RM'000
Clearing,
settlement
and
depository
services
holding
RM'000
RM'000
RM'000 RM'000
RM'000
RM'000
31 December 2004 (cont’d)
Other information
Capital expenditure
Depreciation
Impairment loss
Non-cash expenses other
than depreciation,
amortisation of goodwill
and impairment losses
44,868
1,321
303
-
8
246
296
11
15
-
22,715
14,552
1,843
5,216
27
-
330
479
93
7,687
(161)
109,632
22
109,654
6,142
76,813
44
76,857
40,001
10,778
972
11,750
2,679
140
84,247
84,387
35,991
4,136
34,680
38,816
(119,965)
(119,965)
72,116
22,222
11,606
13,698
1,950
(19,299)
795
67,602
16,161
2,941
5,512
8,428
31 December 2003
Operating revenue
External revenue
Inter-segment revenue
Total operating revenue
Other income
Segment results
Surplus from operations
Unallocated corporate expenses
Group surplus from operations
Finance costs
Surplus before taxation
Taxation
Surplus after taxation
Minority interests
335
(3,794)
201,499
201,499
81,354
102,293
(6,556)
95,737
(187)
95,550
(30,200)
65,350
(5,476)
59,874
Notes
- 31 December 2004
42. SEGMENT INFORMATION (cont’d)
Exchanges
RM'000
Clearing,
settlement
and
depository
services
holding
RM'000
RM'000
RM'000 RM'000
RM'000
RM'000
31 December 2003 (cont’d)
Segment assets
Assets
Unallocated corporate assets
Consolidated total assets
Segment liabilities
Liabilities
Unallocated corporate liabilities
Consolidated total liabilities
Other information
Capital expenditure
Depreciation
Non-cash expenses other
than depreciation,
amortisation of goodwill
and impairment losses
161,305
624,776
19,375
903,873
13,441
1,722,770
21,215
1,743,985
19,375
170,367
1,977
98,186
5,385
295,290
8,829
304,119
152
4,271
303
27
728
-
5
39
-
7,767
12,838
1,843
20
591
-
7,971
18,467
2,923
3,062
883
(52)
7,627
1,128
777
12,648
Statistics
of Shareholdings as at 31 March 2005
Authorised Share Capital
:
RM1,000,000,000 divided into 2,000,000,000 ordinary shares of RM0.50 each
Issued and Paid-up Share Capital
:
RM250,396,050 comprising 500,792,100 ordinary shares of RM0.50 each
Class of Shares
:
Ordinary shares of RM0.50 each
Voting Rights
:
One (1) vote per ordinary share
Analysis by Size of Shareholdings
Size of Shareholdings
No. of
Shareholders
Malaysian
Foreigner
1 - 99
Total No. of
Shareholders
No.
%
No. of
Issued Shares
Malaysian
Foreigner
Total No. of
Issued Shares
No.
%
37
1
38
0.25
841
60
901
0.00
100 - 1,000
6,658
54
6,712
43.64
6,299,631
39,600
6,339,231
1.27
1,001 - 10,000
6,617
173
6,790
44.15
31,336,074
764,400 32,100,474
6.41
10,001 - 100,000
1,546
112
1,658
10.78
31,854,717
85
95
180
1.17
2
0
2
14,945
435
15,380
100,001 - less than 5% of
issued shares
5% and above of issued shares
Total
4,242,200
36,096,917
7.21
134,468,936
116,385,640 250,854,576
50.09
0.01
175,400,001
0 175,400,001
35.02
100.00
379,360,200
121,431,900 500,792,100
100.00
Analysis of Equity Structure
No. Category of Shareholders
1.
Individual
2.
Body Corporate
a. Banks/finance
companies
b. Investment trusts/
foundations/charities
c. Industrial and
commercial companies
3.
Government agencies/
institutions
4.
Nominees
5.
Others
Total
No. of Shareholders
Malaysian
Foreigner
No. of Issued Shares
Malaysian
Foreigner
% of Issued Shares
Malaysian
Foreigner
13,547
86
59,528,466
1,090,760
11.89
0.22
41
0
70,721,926
0
14.12
0.00
11
0
2,168,100
0
0.43
0.00
58
0
8,219,210
0
1.64
0.00
5
0
183,195,001
0
36.58
0.00
1,277
349
53,931,497
120,341,140
10.77
24.03
6
0
1,596,000
0
0.32
0.00
14,945
435
379,360,200
121,431,900
75.75
24.25
Statistics
Top Thirty (30) Securities Account Holders
No. Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
No. of
% of
Issued Shares Issued Shares
CIMSEC Nominees (Tempatan) Sdn Bhd
Minister of Finance Incorporated (ESOS Pool Account)
Cartaban Nominees (Asing) Sdn Bhd
SSBT Fund HG22 for Smallcap World Fund, Inc.
DB (Malaysia) Nominee (Asing) Sdn Bhd
Caledonia Investments Pty Limited
HSBC Nominees (Asing) Sdn Bhd
Abu Dhabi Investment Authority
T. Rowe Price International Funds for New Asia Fund
Citicorp Nominees (Asing) Sdn Bhd
Mellon Bank, N.A. for Mellon Newton Universal Growth Funds Limited (Asian Growth FD)
Kumpulan Wang Amanah Pencen
Government of Singapore Investment Corporation Pte Ltd for Government of Singapore (C)
Hwang-DBS Securities Berhad
IVT (SFS)
K&N Kenanga Bhd
IVT (B1)
Kuala Lumpur City Corporation Berhad
Avenue Securities Sdn Bhd
IVT (OCD) for Avenue Securities Sdn Bhd
T. Rowe Price International Funds for International Discovery Fund
TA Securities Holdings Berhad
IVT (TDZ)
Mellon Bank, N.A. for Newton Oriental Fund
Government of Singapore Investment Corporation Pte Ltd for Monetary Authority of Singapore (H)
UBS AG
Mayban Securities Sdn Bhd
IVT for Mayban Securities Sdn Bhd
AmSecurities Sdn Bhd
Investment (082)
PM Securities Sdn. Bhd.
IVT (DRAM)
BBH (LUX) SCA for Fidelity Funds Asean
JF Apex Securities Berhad
IVT (DE1B)
Pertubuhan Keselamatan Sosial, Cawangan Pelaburan dan Harta
TNTC for Government of Singapore Investment Corporation Pte Ltd
State Street London Fund HKXD for Stichting Philips Pensioen Fonds
SBB Securities Sdn Bhd
IVT (RLS)
BHLB Trustee Berhad
Public Focus Select Fund
CIMB Securities Sdn Bhd
100,200,001
75,200,000
24,580,500
20.01
15.02
4.91
12,250,000
2.45
10,973,300
2.19
10,413,100
2.08
8,699,700
1.74
7,893,100
1.58
7,700,000
6,297,100
1.54
1.26
6,072,728
1.21
6,072,728
1.21
6,072,728
6,072,728
1.21
1.21
6,046,400
1.21
4,554,546
0.91
4,405,200
0.88
3,911,600
0.78
3,500,000
0.70
3,036,364
0.61
3,036,364
0.61
2,822,728
0.56
2,800,000
0.56
2,750,000
0.55
2,500,000
2,446,700
0.50
0.49
2,250,000
0.45
2,236,362
0.45
2,142,000
0.43
2,036,364
0.41
Total
338,972,341
67.69
Statistics
Directors’ Direct and Indirect Interests in the Company and/or its related corporations
The details of interests of the Directors in the shares of the Company (both direct and indirect) as at 31 March 2005
are kept by the Company in the Register of Directors’ Shareholdings pursuant to Section 134 of the Companies Act,
1965 as follows:Name of Directors
Izham bin Yusoff
Cheah Tek Kuang
Direct Interest
No. of
% of
Issued
Issued
Shares
Shares
165,000
100,000
100,000
38,000
100,000
100,000
100,000
100,000
100,000
85,000
100,000
250,000
0.033
0.02
0.02
0.0076
0.02
0.02
0.02
0.02
0.02
0.017
0.02
0.05
Indirect Interest
No. of
% of
Issued
Issued
Shares
Shares
6,072,728*
-
1.21
-
Note:
* Dato’ Seri Hwang Sing Lue is deemed to have interest in 6,072,728 ordinary shares of RM0.50 each in the Company by virtue of his
interest in Hwang-DBS Securities Berhad pursuant to Section 6A of the Companies Act, 1965.
Below is the interest of the Director by virtue of the options granted to him pursuant to the Employees’ Share Option
Scheme (ESOS) to subscribe up to 6,000,000 ordinary shares of RM0.50 each in the Company over the five (5)
year duration of the ESOS. For the year 2005, he has been given the right to subscribe for 1,000,000 ordinary
shares of RM0.50 each in the Company:Year
Name of Director
2005
Exercise Price per Share
No. of Shares
that may be subscribed
RM3.00
1,000,000
Substantial Shareholders according to the Register of Substantial Shareholders as at 31 March 2005
No.
Name
1.
2.
Total
No. of Issued Shares
100,200,001
99,780,500*
199,980,501
% of Issued Shares
20.01
19.92
39.93
Note:
*
Total shares held by Minister of Finance Incorporated (MOF Inc) is by reference to Items 2 and 3 of the Top Thirty (30) Securities
Account Holders. A total of 419,500 ordinary shares of RM0.50 each had been transferred from MOF Inc (ESOS Pool Account) to
facililate the immediate selling by Bursa employees who had exercised their options under the ESOS (as described on Page 156 of the
Annual Report 2004) between 23 March 2005 and 29 March 2005 (both dates inclusive). As at 31 March 2005, the same number of
shares are pending issuance and crediting into the relevant employees’ securities accounts and immediate transfer thereof to MOF Inc
(ESOS Pool Account).
Statistics
Employees’ Share Option Scheme (ESOS)
In conjunction with the listing of Bursa on the Main Board of Bursa Securities, options over 55,992,600 ordinary
shares of RM0.50 each in the Company have been offered to the existing eligible employees. The duration of the
ESOS is five (5) years, subject to extension or earlier determination in accordance with the ESOS Bye-Laws. For
the first year i.e. 2005, options over 14,404,500 ordinary shares of RM0.50 each in the Company may be exercised
by the employees.
The number of shares allotted pursuant to the exercise of options under ESOS as at 31 March 2005 is reflected in
the changes in issued and paid-up share capital by reference to Items 5 and 6 set out below.
Authorised Share Capital
The authorised share capital as at 31 March 2005 is RM1,000,000,000 divided into 2,000,000,000 ordinary shares
of RM0.50 each. The change in the authorised share capital of the Company is as follows:No.
Date
Increase in Authorised Share Capital (RM)
1.
2.
5 January 2004
11 December 2004
Total Authorised Share Capital (RM)
500,000,000
500,000,000
1,000,000,000
Issued and Paid-up Share Capital
The issued and paid-up share capital as at 31 March 2005 is RM250,396,050 comprising 500,792,100 ordinary
shares of RM0.50 each. The changes in the issued and paid-up share capital of the Company are as follows:No.
Date of
Allotment/
(cancellation)
No. of
Shares
Allotted/
(cancelled)
Increase/
(Decrease)
in Issued and
Paid-up Share
Capital (RM)
Consideration
Cumulative
No. of Shares
Allotted
Cumulative
Issued and
Paid-up Share
Capital (RM)
1.
5 January 2004
500,000,000
250,000,000
Capitalisation of
membership fees
and retained
earnings
500,000,000
250,000,000
2.
27 January 2005 1,334,000,000
667,000,000
Bonus issue via
capitalisation of
retained earnings
1,834,000,000
917,000,000
3.
27 January 2005 (1,500,000,000)
(750,000,000)
Capital reduction
and share
consolidation
334,000,000
167,000,000
4.
11 March 2005
166,000,000
83,000,000
Initial Public
Offering exercise
500,000,000
250,000,000
5.
25 March 2005
444,100
222,050
Exercise of options
under ESOS
500,444,100
250,222,050
6.
31 March 2005
348,000
174,000
Exercise of options
under ESOS
500,792,100
250,396,050
List
of Properties
List of Properties owned by Bursa Malaysia Group as at 31 December 2004
Location
Postal
Address
Description
Current
Use
Tenure
Remaining
Land Area/ Date Of
Lease
Age
Built-up Acquisition
Period
Of
Area
(Expiry
Building
(Sq.
Date)
meters)
Net Book
Value
RM’000
BURSA MALAYSIA BERHAD
1. Geran No. 28936
Lot No. 520
(formerly P.T. 8)
Section 19,
Town and District of
Kuala Lumpur
Exchange
Square, Bukit
Kewangan,
50200
Kuala Lumpur
88
7 years
16-storey office building Principal Leasehold
99 years* years
with 5-level of
and
(14.4.2092)
basements and a lower operational
level car park known as
office
the main building
7,144 /
71,347
August
1997
191,453
2. Geran No. 28938 Lot
No. 522 (formerly P.T.
10) Section 19,
Town and District of
Kuala Lumpur
Exchange
Square, Bukit
Kewangan,
50200
Kuala Lumpur
2-storey office cum
exposition building with
2-level basements car
park known as the
annexe building
91
6 years
Principal Leasehold
99 years* years
and
(28.2.2095)
operational
office
9,314 /
38,609
March
1998
84,280
3. Lot 5.0 to 8.0,
No. Berdaftar Geran
17768/MI/4/5 to 8
Bangunan No. M1 Lot
No. 51452, Mukim of
Kuala Lumpur Daerah
Wilayah Persekutuan
4th floor, Wisma Four office units on the
Chase Perdana, 4th floor of a 12-storey
Off Jalan
office building
Semantan,
Damansara
Height , 50490
Kuala Lumpur
21 years
N/A /
3,355
May
1998
6,761
N/A
8,094 /
N/A
October
1997
3,819
19 years
1,085 /
4,928
September
1994
(Ground to
4th floors)
4,472
4. PN 147624,
Lot No. 9458 N,
Bandar Ipoh,
Daerah Kinta,
Perak Darul Ridzuan @
N/A
N/A
Disaster
recovery
site
Freehold
N/A
90
Vacant Leasehold
99
years
commercial
years (21.11.2094)
land
BURSA MALAYSIA SECURITIES CLEARING SDN BHD
5. Grant First Grade No.
17375/M1/1/1, M1/1/2,
M1/2/1, M1/4/1,
M1/5/1, M1/6/1, M1/7/1
and M1/8/1, Petak 1,
Tingkat G-7,
Bangunan M1,
Daerah Timur Laut,
Bandar Georgetown,
Sek 19, Lot 000782,
Pulau Pinang
*
@
N/A
43, Wisma John
Hancock,
Green Hall,
Georgetown,
10200
Pulau Pinang
8-storey office building
which included two car
park levels on the 1st
and 2nd floors
Vacant Freehold
commercial
building
N/A
October
1997
(5th to 7th
floors)
These are freehold lands which have been leased to us by the Federal Land Commissioner for a period of 99 years.
A sale and purchase agreement dated 1 August 2003 was executed for the sale of this land to a purchaser company. The full purchase
price for this land was paid to our solicitors on 31 January 2005.
not applicable
No revaluation that resulted in an increase in the carrying amount of the poperties was carried out.
Additional
Information
The following information is provided in accordance with Paragraph 9.25 of Bursa Securities LR as set out in
Appendix 9C thereto.
1. Utilisation of Initial Public Offering (IPO) proceeds
The net proceeds received from IPO are as set out below. The purpose of the proceeds was for working capital
and to partially restore the cash position of the balance sheet of the Company after a capital repayment of
RM750 million was made on 1 April 2005 to its pre-IPO shareholders.
RM’ million
IPO Proceeds
Less: Estimated Listing Expenses
521.4
17.5
Net Proceeds from IPO
503.9
2. Share Buy-back
Given that the Company was listed on 18 March 2005, the issue of share buy-back did not arise prior to that.
Subsequent to the listing and up to the first quarter ended 31 March 2005, the Company had not made any
proposal for share buy-back.
3. Options, Warrants or Convertible Securities
The Company did not issue any options, warrants or convertible securities for the financial year ended 31
December 2004. However, as at 31 March 2005, 792,100 ordinary shares of RM0.50 each in the Company
were issued pursuant to the exercise of options granted under ESOS as set out on Page 156 of the Annual
Report 2004.
4. American Depository Receipt (ADR) / Global Depository Receipt (GDR)
During the financial year ended 31 December 2004 and also the first quarter ended 31 March 2005, the Company
did not sponsor any ADR/GDR Programme.
5. Penalties
The particulars of penalties imposed on the Company and/or its subsidiaries (Group) by the Inland Revenue
Board (IRB) during the financial year under review are as follows:-
Name of Company
Year of
Assessment
(YA)
Penalties
imposed by
IRB
Remarks
Malaysia Monetary
Exchange Berhad
(MME)
YA 2003
RM487.40
MME Fidelity Fund income was not brought to tax
previously (i.e. from YA 1997 onwards). The income
was subsequently brought to tax as part of MME’s
tax computation. An amount of RM487.40 was
imposed for under-estimation of tax for the MME
Fidelity Fund for YA 2003.
Additional
Information
6. Variation in Results
There was no variation between the financial results in the Annual Audited Financial Statements 2004 and the
unaudited financial results for the year ended 31 December 2004 which were disclosed in the prospectus
issued by the Company on 23 February 2005.
7. Profit Guarantee
As at 31 March 2005, there was no profit guarantee given to the Company.
8. Material Contracts
There were no material contracts which had been entered into by the Group involving the interest of Directors
and major shareholders, either still subsisting at the end of the financial year ended 31 December 2004 or
entered into since the end of the previous financial year.
9. Revaluation Policy
The Group’s current policy is to conduct a review of the value of its landed properties at the end of each financial
year. Any impairment to the carrying amounts of the landed properties will be recognised in the income statement.
Thus, the value of the landed properties is stated at cost less accumulated depreciation and impairment losses,
if any.
Information
for Shareholders on Twenty-Eighth (28th )
Annual General Meeting
The Twenty-Eighth (28th) Annual General Meeting (AGM) will be held on Thursday, 26 May 2005. Details of the 28th
AGM are set out in the Notice of 28 th AGM which accompanies this Annual Report 2004 together with a proxy form.
They are also available on Bursa’s website, www.bursamalaysia.com
For the purposes of determining the persons to whom the Notice of 28 th AGM shall be given by the Company, the
Company has requested Bursa Malaysia Depository Sdn. Bhd. (formerly known as Malaysian Central Depository
Sdn. Bhd.) in accordance with Article 49A(1) of the Company’s Articles of Association and Section 34(1) of the
Securities Industry (Central Depositories) Act, 1991 to issue a Record of Depositors as at 25 April 2005 and only a
Depositor whose name appears on such Record of Depositors shall be given the notice of the said meeting.
BURSA MALAYSIA BERHAD (30632-P)
Notice
of Twenty-Eighth (28th ) Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Twenty-Eighth (28th) Annual General Meeting of Bursa Malaysia Berhad (the Company) will be held at the
Exchange Square Annexe, Bukit Kewangan, 50200 Kuala Lumpur on Thursday, 26 May 2005 at 10.00 a.m. for the transaction of the following
business:
Ordinary Business
1.
To receive and adopt the Audited Financial Statements for the year ended 31 December 2004 and Reports of the Directors and Auditors
thereon.
Resolution 1
2.
To re-elect the following Directors who retire by rotation in accordance with Article 69 of the Company’s Articles of Association and who being
eligible offer themselves for re-election:(1)
(2)
(3)
(4)
Cheah Tek Kuang
Resolution 2
Resolution 3
Resolution 4
Resolution 5
3.
To approve the payment of Directors’ fees amounting to RM60,000 for the Non-Executive Chairman and RM40,000 for each of the NonExecutive Directors respectively in respect of the financial year ended 31 December 2004.
Resolution 6
4.
To appoint Messrs. Ernst & Young as Auditors of the Company and to authorise the Board of Directors to determine their remuneration.
Resolution 7
Special Business
5.
To consider and if thought fit, to pass the following resolution as Special Resolution in accordance with Section 129(6) of the Companies Act,
1965:“THAT Dato’ Seri Hwang Sing Lue, a Director who retires pursuant to Section 129(2) of the Companies Act, 1965 be and is hereby reappointed as Director of the Company to hold office until the conclusion of the next annual general meeting of the Company.”Resolution 8
6.
To transact any other business of which due notice shall have been given in accordance with the Companies Act, 1965 and the Company’s
Articles of Association.
FURTHER NOTICE IS HEREBY GIVEN THAT for the purposes of determining who shall be entitled to attend this 28 th Annual General Meeting
(AGM), the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd. (formerly known as Malaysian Central Depository Sdn. Bhd.) in
accordance with Article 49A(2) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act,
1991 to issue a General Meeting Record of Depositors as at 20 May 2005 and only a Depositor whose name appears on such Record of
Depositors shall be entitled to attend the said meeting.
By Order of the Board
YONG HAZADURAH BINTI MD HASHIM, LS 006674
Company Secretary
Kuala Lumpur
3 May 2005
Notes:
1. Proxy
(1) A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
(2) In the case of a corporate member, the instrument appointing a proxy shall be under its Common Seal or under the hand of a duly authorised officer or attorney.
(3) A member shall not, subject to Paragraph (4) below, be entitled to appoint more than two (2) proxies to attend and vote at the same meeting. Where a member appoints more than
one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy. Each proxy appointed shall represent a
minimum of 100 shares.
(4) Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect
of each securities account it holds which is credited with ordinary shares of the Company.
(5) Any alteration to the instrument appointing a proxy must be initialised. The instrument appointing a proxy must be deposited at the office of the Share Registrar at 20th Floor, Plaza
Permata, Jalan Kampar, Off Jalan Tun Razak, 50400 Kuala Lumpur not less than forty-eight (48) hours before the time appointed for holding the meeting.
(6) All the Non-Executive Directors of the Company who are shareholders of the Company will abstain from voting on Resolution 6 concerning remuneration to Non-Executive Directors
at the 28 th AGM.
2.
Special Business
Special Resolution pursuant to Section 129(6) of the Companies Act, 1965
The re-appointment of Dato’ Seri Hwang Sing Lue, a person over the age of seventy (70) years, as Director of the Company to hold office until the conclusion of the next annual
general meeting of the Company shall take effect if the proposed Resolution 8 has been passed by a majority of not less than three-fourths (3/4) of such members as being entitled to
vote in person or, where proxies are allowed, by proxy, at a general meeting of which not less than twenty-one (21) days’ notice specifying the intention to propose the resolution as
a special resolution has been duly given.
Statement
Accompanying Notice of
Twenty-Eighth (28 th) Annual General Meeting
pursuant to Paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad
1. Name of Directors who are standing for re-election at the 28th AGM pursuant to Article 69 of the Company’s Articles of Association:
(1)
(2)
(3)
(4)
Cheah Tek Kuang
2. Further details of Directors who are standing for re-election or re-appointment as per Agenda 2 and Agenda 5 of the Notice of 28 th AGM
respectively:
(1) Dr. Thillainathan a/l Ramasamy (Independent Non-Executive Director)
Dr. Thillainathan a/l Ramasamy, aged 61, a Malaysian, graduated with a Bachelor of Arts Degree in Economics from the University of Malaya in 1968,
a Master and Doctorate of Economics from the London School of Economics, United Kingdom in 1970 and 1976 respectively.
He was an Associate Professor of University Malaya from 1977 to 1979. He has approximately ten (10) years of experience in the banking industry
having served as General Manager of the Arab Malaysian Merchant Bank, General Manager and Joint Managing Director of Bank Pusat Kerjasama
Bhd. as well as General Manager and Chief Executive Officer of Bank Buruh (Malaysia) Bhd. In addition, he has served on various national task forces,
advisory panels and consultative councils including the National Economic Panel from 1982 to 1987, the Anti-Recession Task Force from 1986 to 1987,
Task Force on Capital Market Development from 1988 to 1991, Investment Panel of the Employees Provident Fund (EPF) from 1988 to 2001, National
Economic Consultative Council in 1990 and the Majlis Perundingan Ekonomi Negara Kedua (MAPEN II) from 1999 to 2000. Dr. Thillainathan was also
the President of the Malaysian Economic Association from 1996 to 2002. He has been the Chief Operating Officer and Executive Director of Genting
Bhd. since 26 November 2002 and 15 January 2003 respectively. He also currently sits on the board of Petronas Dagangan Bhd., Genting Berhad and
other public companies within the Genting Berhad group, namely Genting Sanyen Power (Labuan) Limited, Genting Sanyen Utilities Limited, Genting
(Labuan) Limited, Genting International Paper Holdings Ltd., Genting International Paper Manufactures Ltd., Genting Overseas Investments Ltd.,
Genting Oil & Gas (China) Limited, Genting Oil & Gas Limited, Genting Power (M) Limited, Genting Power (Swiss) Limited, Genting Power (India)
Limited, Genting Power Holdings Limited, Genting Power International Limited, Sorona Limited, Laila Limited, Logan Lock Limited, WEB Energy
Limited, RWB (Labuan) Limited, RWB International (Labuan) Limited, Prime Venture (Labuan) Limited, Resorts World (Labuan) Limited, GHR Risk
Management (Labuan) Limited and Prime Holdings (Labuan) Limited.
Dr. Thillainathan is the Chairman of Investment Advisory Committee, a member of Audit Committee, Compensation Committee, Disciplinary Committee
and Risk Management Committee. He has a direct shareholding of 100,000 ordinary shares of RM0.50 each in Bursa Malaysia Berhad as at 31 March
2005.
Dr. Thillainathan has attended nine (9) out of ten (10) Board meetings held during his tenure for the financial year ended 31 December 2004.
(2) Dato’ Abdul Wahid bin Omar (Independent Non-Executive Director)
Dato’ Abdul Wahid bin Omar, aged 41, a Malaysian, is a member of the Association of Chartered Certified Accountants (United Kingdom) and the
Malaysian Institute of Accountants. He was previously the Managing Director and Chief Executive Officer of United Engineers (Malaysia) Berhad (UEM)
from 1 October 2001 to 30 June 2004. During his tenure at UEM group of companies, he also served on the Boards of Directors of UEM World Berhad,
PLUS Expressways Berhad, UEM Builders Berhad, Pharmaniaga Berhad and certain subsidiaries of UEM. Prior to working for the UEM group of
companies, he served as Director, Group Corporate Services of Amanah Capital Group. He was also the Chairman of Amanah Short Deposits Bhd.
from 1999 to 2001 and Director of Alliance Merchant Bank Bhd. from 1999 to 2001. He has been a member of the Lembaga Tabung Haji Investment
Panel since September 2001. He has also been the Group Chief Executive Officer of Telekom Malaysia Berhad since 1 July 2004. He currently sits on
the boards of other public companies within the Telekom Malaysia Berhad group, namely VADS Berhad and Celcom (Malaysia) Berhad.
Dato’ Abdul Wahid is the Chairman of Audit Committee, a member of Investment Advisory Committee, Nomination & Remuneration Committee and
Option Committee. He has a direct shareholding of 100,000 ordinary shares of RM0.50 each in Bursa Malaysia Berhad as at 31 March 2005.
Dato’ Abdul Wahid has attended nine (9) out of ten (10) Board meetings held during his tenure for the financial year ended 31 December 2004.
(3) Cheah Tek Kuang (Non-Independent Non-Executive Director)
Cheah Tek Kuang, aged 58, a Malaysian, graduated with a Bachelor of Economics from the University of Malaya in 1970. He began his career with the
Malaysian Industrial Development Authority from October 1970 to October 1978. His experience in the securities and derivatives markets includes
serving on the Board of Directors of Kuala Lumpur Commodity Exchange from 1994 to 2000 and the Malaysian Exchange of Securities Dealing and
Automated Quotation Bhd. from 2000 to 2002. He was conferred Justice of Peace by Duli Yang Maha Mulia Sultan of Selangor in 1999 and is a Fellow
of the Institute of Bankers Malaysia. He has been with AmMerchant Bank Bhd. since 1978 and was appointed its Chief Executive Officer and Managing
Director in 1994, before becoming its Group Managing Director in 2002. He has been the Group Managing Director of AMMB Holdings Berhad since 1
January 2005. He currently sits on the boards of other public companies within the AMMB Holdings Berhad group, namely AmMerchant Bank Bhd.,
AmBank Berhad, AMFB Holdings Bhd., AmFinance Berhad and AmInvestment Group Berhad.
Cheah is a member of Appeals Committee, Audit Committee, Investment Advisory Committee and Risk Management Committee. He has a direct
shareholding of 85,000 ordinary shares of RM0.50 each in Bursa Malaysia Berhad as at 31 March 2005.
Cheah has attended eight (8) out of ten (10) Board meetings held during his tenure for the financial year ended 31 December 2004.
(4) Peter Leong Tuck Leng (Non-Independent Non-Executive Director)
Peter Leong Tuck Leng, aged 48, a Malaysian, graduated with a Bachelor in Applied Economics in 1981 and a Master of Economics from the London
School of Economics in 1982. He has more than twenty three (23) years of experience in the securities industry, having served as a member of the
Exchange’s Listing Committee since 2002, Membership Committee from 2001 to 2003 and Budget & Investment Committee from 2002 to 2003. He is
the current Chairman of the Association of Stockbroking Companies Malaysia and is the Executive Director as well as the Chief Executive Officer of
EONCAP Securities Sdn. Bhd. (formerly known as Leong & Company Sdn. Bhd.).
Peter Leong is a member of Compensation Committee, Executive Committee, Listing Committee, Nomination & Remuneration Committee and Option
Committee. He has a direct shareholding of 100,000 ordinary shares of RM0.50 each in Bursa Malaysia Berhad as at 31 March 2005.
Peter Leong has attended eight (8) out of ten (10) Board meetings held during his tenure for the financial year ended 31 December 2004.
(5) Dato’ Seri Hwang Sing Lue (Non-Independent Non-Executive Director)
Dato’ Seri Hwang Sing Lue, aged 76, a Malaysian, holds a Diploma from the Faculty of Secretaries of London. He is the founder of Hwang-DBS
Securities Berhad and has over thirty (30) years of experience in the securities industry. Since August 1995, he has held the position of Executive
Chairman of Hwang-DBS (Malaysia) Berhad, a company listed under the Finance Sector of the Main Board of Bursa Malaysia Securities Berhad. He
currently sits on the boards of other public companies within the Hwang-DBS group, namely Hwang-DBS Securities Berhad, Hwang-DBS Unit Trust
Berhad, Amluck Enterprises Ltd. and Equity and Property Investment Corporation Limited. Dato’ Seri Hwang has also been a Committee Member of the
Association of Stockbroking Companies of Malaysia since November 2002. He is also actively involved in the rubber industry, holding the position of a
Board Member of the Malaysian Rubber Board, an Arbitrator of the Panel of Malaysian Rubber Exchange of Arbitrators and the President of the
Federation of Rubber Trade Associations of Malaysia.
Dato’ Seri Hwang is a member of Compensation Committee, Participation Committee and Risk Management Committee. He has a direct shareholding
of 100,000 ordinary shares of RM0.50 each in Bursa Malaysia Berhad (the Company) as at 31 March 2005. He is deemed to have interest in 6,072,728
ordinary shares of RM0.50 each in the Company by virtue of his interest in Hwang-DBS Securities Berhad pursuant to Section 6A of the Companies Act,
1965.
Dato’ Seri Hwang has attended eight (8) out of ten (10) Board meetings held during his tenure for the financial year ended 31 December 2004.
Note:
Save as disclosed, the above Directors have no family relationship with any Director and/or major shareholder of the Company, have no conflict of
interest with the Company and have not been convicted for any offence within the past ten (10) years.
3. Details of attendance of Directors at Board of Directors’ Meetings:
Please refer to the Board of Directors’ attendance as set out in the Statement of Corporate Governance on Pages 44 to 45 of theAnnual Report
2004.
4. Date, time and place of the 28th AGM:
Date
26 May 2005
Time
10.00 a.m.
Place
Exchange Square Annexe, Bukit Kewangan, 50200 Kuala Lumpur
Administrative
Date
Time
Venue
:
:
:
Details of the 28 th Annual General Meeting
Thursday, 26 May 2005
10.00 a.m.
Exchange Square Annexe, Bukit Kewangan, 50200 Kuala Lumpur
Parking
1. Parking is free and you are advised to park your vehicle at the Exchange Square Annexe car park. Bursa Malaysia’s Security will be at hand to direct
you.
Registration
2.
3.
4.
5.
6.
Registration will start at 8.00 a.m. at the Lower Ground Floor of the Main Building and will end at a time as directed by the Chairman of the meeting.
Please read the signages to ascertain where you should register yourself for the meeting and join the queue accordingly.
Please produce your original Identity Card (IC) to the registration clerk for verification. Please make sure you collect your IC thereafter.
After the verification, you are required to write your name and sign on the Attendance List placed on the registration table.
You will also be given an identification tag. No person will be allowed to enter the meeting room without the identification tag. There will be no
replacement in the event that you lose or misplace the identification tag.
7. Once you have collected your identification tag and have signed on the Attendance List, please leave the registration area immediately and proceed to
the Exchange Square Annexe i.e. the venue of meeting.
8. No person will be allowed to register on behalf of another person even with the original IC of that other person.
9. The registration counter will handle only verification of identity and registrations. If you have any clarification or enquiry, please proceed to the Help
Desk.
Help Desk
10. Please proceed to the Help Desk for any enquiry or clarification.
11. The Help Desk will also handle revocation of proxy’s appointment.
Share Certificate
12. If you are still holding the share certificate issued to you pursuant to the demutualization of the Company, you may return your share certificate for
cancellation at the Help Desk. Acknowledgement of returned certificate will be issued thereat.
Refreshment
13. Refreshment will be served before the meeting at the Exchange Square Annexe, i.e. the venue of meeting.
Enquiry
14. If you have any enquiry prior to the meeting, please contact the following persons during office hours:
(i) Name
:
Cik Salmi Dali or Puan Tan Lee Ming
Organisation
:
Bursa Malaysia Berhad
Telephone number
:
03-2034 7000 ext. 7055 or 7463
(ii) Name
Organisation
Telephone number
:
:
:
Puan Suzana Abdul Rahim or Puan Afifah Abu Bakar
Tenaga Koperat Sdn Bhd
03-4041 6522 ext. 3668 or 3674
General Meeting Record of Depositors
15. For the purposes of determining who shall be entitled to attend this 28th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd.
(formerly known as Malaysian Central Depository Sdn. Bhd.) in accordance with Article 49A(2) of the Company’s Articles of Association and Section
34(1) of the Securities Industry (Central Depositories) Act, 1991 to issue a General Meeting Record of Depositors as at 20 May 2005 and only a
Depositor whose name appears on such Record of Depositors shall be entitled to attend the said meeting.
Proxy
16. A member entitled to attend and vote is entitled to appoint proxy/proxies, to attend and vote instead of him. If you are unable to attend the meeting and
wish to appoint a proxy to vote on your behalf, please submit your Proxy Form in accordance with the notes and instructions printed therein.
17. If you wish to attend the meeting yourself, please do not submit any Proxy Form for the meeting that you wish to attend. You will not be allowed to attend
the meeting together with a proxy appointed by you.
18. If you have submitted your Proxy Form prior to the meeting and subsequently decided to attend the meeting yourself, please proceed to the Help Desk
to revoke the appointment of your proxy.
19. If you wish to submit your Proxy Form by fax, please fax to the office of the Share Registrar at Fax No.: 03-4042 6352. Please also ensure that the
original Proxy Form is deposited at the office of the Share Registrar not less than forty eight (48) hours before the time appointed for holding the
meeting.
Corporate Member
20. Any corporate member who wishes to appoint a representative instead of a proxy to attend this meeting should lodge the certificate of appointment
under the seal of the corporation, at the office of the Share Registrar, not less than forty eight (48) hours before the time appointed for holding the
meeting.
Annual Report 2004
21. The Annual Report 2004 is prepared in English and Bahasa Malaysia and is available on Bursa Malaysia’s website at www.bursamalaysia.com under
Company Announcements. Printed copies of the Annual Report 2004 may be furnished to the shareholders upon their request in writing to the Company
Secretary or the Share Registrar.
PROXY FORM
BURSA MALAYSIA BERHAD (30632-P)
I/We _________________________________________________________________________NRIC No. (new) __________________________
(old) _________________________ of ____________________________________________________________________________________
being a member(s) of BURSA MALAYSIA BERHAD (30632-P), hereby appoint _____________________________________________________
NRIC No. (new) ____________________________ (old) __________________________ or failing him/her ______________________________
NRIC No. (new) ____________________________ (old) __________________________ or failing him/her the Chairman of the meeting as my/
our proxy to vote for me/us on my/our behalf at the Twenty-Eighth (28th ) Annual General Meeting of Bursa Malaysia Berhad to be held at Exchange
Square Annexe, Bukit Kewangan, 50200 Kuala Lumpur on Thursday, 26 May 2005 at 10.00 a.m. and at any adjournment thereof in the manner as
indicated with an “X” in the spaces provided hereunder:
No.
1.
RESOLUTIONS
FOR
To receive and adopt the Audited Financial Statements for the year ended
31 December 2004 and Reports of the Directors and Auditors thereon
Resolution 1
2.
To re-elect Dr. Thillainathan a/l Ramasamy as Director of the Company
Resolution 2
3.
To re-elect Dato’ Abdul Wahid bin Omar as Director of the Company
Resolution 3
4.
To re-elect Cheah Tek Kuang as Director of the Company
Resolution 4
5.
To re-elect Peter Leong Tuck Leng as Director of the Company
Resolution 5
6.
To approve the payment of Directors’ fees amounting to RM60,000 for the
Non-Executive Chairman and RM40,000 for each of the Non-Executive Directors
respectively in respect of the financial year ended 31 December 2004
Resolution 6
To appoint Messrs. Ernst & Young as Auditors of the Company and to authorise the
Board of Directors to determine their remuneration
Resolution 7
To re-appoint Dato’ Seri Hwang Sing Lue as Director of the Company to hold office until
the conclusion of the next annual general meeting of the Company
Resolution 8
7.
8.
AGAINST
In the absence of specific instruction, the proxy may vote or abstain from voting at his/her discretion.
Dated this ____________________ day of ______________________ 2005
Number of shares held
Signature(s)/Common Seal of Member(s)
Notes:
1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
2. In the case of a corporate member, the instrument appointing a proxy shall be under its Common Seal or under the hand of a duly authorised officer or attorney.
3. A member shall not, subject to Paragraph (4) below, be entitled to appoint more than two (2) proxies to attend and vote at the same meeting. Where a member appoints more than
one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy. Each proxy appointed shall represent a
minimum of 100 shares.
4. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect
of each securities account it holds which is credited with ordinary shares of the Company.
5. Any alteration to the instrument appointing a proxy must be initialised. The instrument appointing a proxy must be deposited at the office of the Share Registrar at 20th Floor, Plaza
Permata, Jalan Kampar, Off Jalan Tun Razak, 50400 Kuala Lumpur not less than forty-eight (48) hours before the time appointed for holding the meeting.
6. All the Non-Executive Directors of the Company who are shareholders of the Company will abstain from voting on Resolution 6 concerning remuneration to Non-Executive Directors
at the 28 th AGM.
7. For the purposes of determining who shall be entitled to attend this 28 th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd. (formerly known as Malaysian
Central Depository Sdn. Bhd.) in accordance with Article 49A(2) of the Company’s Articies of Association and Section 34(1) of the Securities Industry (Central Depositories)Act, 1991
to issue a General Meeting Record of Depositors as at 20 May 2005 and only a Depositor whose name appears on such Record of Depositors shall be entitled to attend the said
meeting.
1. Fold here
2. Fold here
Affix
Stamp
The Share Registrar
TENAGA KOPERAT SDN. BHD.
(118401-V)
20th Floor, Plaza Permata
Jalan Kampar, Off Jalan Tun Razak
50400 Kuala Lumpur
3. Fold here

A n n u a l R e p o r t 2 0 0 4 - Bursa Malaysia Berhad

Transcription

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