Bursa Malaysia Berhad - What caused the higher staff costs?

18/2/2014 – Bursa Malaysia expects its financial performance to improve in the coming year, despite a challenging global environment.

The company just announced earnings for Q4 FY13:

Revenue: +9% to RM 103.9 mln
Profit: -6% to RM 33.8 mln
Cash flow from operations: RM 192.3 mln vs RM 165 mln
Dividend: 16 sen per share vs 13.5 sen per share

Revenue for the securities market increased 15% to RM 81.2 mln due to more trades and a higher number of IPOs during the period.

These factors resulted in a higher profit for the segment.

But revenue for the derivatives market dropped 6% to RM 18.5 mln due to fewer trades in derivatives.

Profit for the segment dropped, also weighed by higher operating expenses.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question

1. What caused the higher staff costs?

Staff costs jumped 33% to RM 36 mln for Q4.

On a yearly basis, staff costs also rose 18% to RM 120 mln from RM 101.8 mln the previous year.

Question

2. Will operating expenses go up in FY14?

MIDF Research thinks Bursa’s cost management measures proved to be effective, despite having recently completed a RM 30 mln project to upgrade its trading engine and other infrastructure initiatives.

Bursa’s operating expenses (without depreciation and staff costs) for FY14 increased by just 1% compared to FY13.

How did Bursa manage its operating expenses in FY13?

Is Bursa confident of its cost management for FY14, or does it see other factors that will make its costs go up?

Question

3. Will it pay out higher dividends soon?

According to RHB, Bursa has the potential to distribute higher dividends if there is excess cash available.

The broker said that as of the end of December, Bursa’s cash pile stood at RM 381 mln, and after factoring in RM 200 mln of cash required for operations and capex and after paying the final dividend, the company will be sitting on excess cash of about RM 96 mln, or 18 sen/share.

Will Bursa be distributing any excess cash to its shareholders?

(Total number of questions in the full story: 8)

We have sent these questions to the company to invite them for an on-camera interview, and/or seek their written response.

So far, we have not had a reply (which is why you are seeing this message).

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