CHIEF OFFICER'S REPORT : Simon Zammit
The financial performance during 2019 was positive overall with the Malta Stock Exchange managing to post an operating profit of over €3.4 million. This was 2.1% above the operating profit registered in 2018. Total revenue was just over €7 million, which is more than a 3.3% increase on last year’s results.
The achievement of these financial results was brought about by an overall increase in activity in both the primary market as well as in the secondary market, strengthening the Exchange’s traditional income streams from listing fees, trading fees and income from security registrations.
Market capitalisation at the end of the year stood at just below €13 billion, an increase of 7.4% from the €12.1 billion value at the end of 2018. Market capitalisation increases were registered in all segments, with the largest increase being in the equity segment which increased by €323.1 million, followed by MGS which went up by €321.9 million. Market capitalisation of corporate bonds increased by a total of €188.9 million, and Treasury Bills registered an increase of €10 million.
The trend in yearly turnover decline that characterised the secondary market for a number of years was reversed in 2019. Infact, the total market turnover for 2019 stood at €487.6 million, an increase of nearly €95 million or 24.2%, when compared to 2018 figures. This increase was also registered in all the market segments, the highest being MGS, which increased by €89.6 million to €302.3 million, representing a 42% increase over the 2018 figures. Similarly, trading volumes in the equity segment increased by €2.9 million, which is a 3.3% increase when compared to 2018 and the corporate bond segment increased by over 2.6%, or €2.4 million, when compared to 2018.
The primary market in 2019 proved to be more active than the previous year. Attracting new issuers from across different economic sectors is seen as key to facilitating the portfolio diversification that the Exchange has always promoted with investors. Our operations departments were kept very busy with the number of new financial instruments coming to the market.
New listings in 2019 included a major local technology company listing equity on the main market for the first time, and five already listed companies increasing their issued share capital through various corporate actions such as bonus share issues and a rights offer. These share equity issues had a combined initial market capitalisation of €220.9 million. A total of 16 corporate bonds were issued during the year, having an aggregate value of €378 million. The new capital raised through these bond issues totalled €303 million, being more than two and a half times the new capital raised from six bonds the previous year.
Throughout the year, while the Prospects MTF Rules and procedures underwent a number of changes primarily to strengthen and clarify admission criteria, the Exchange continued to attract new companies to this SME market. Eleven new securities were admitted to Prospects MTF, including one equity admission for an Issuer already having securities listed on the Regulated Main Market. This brought the number of admitted securities on Prospects MTF to 24 by the end of 2019.
As mentioned in my report for the previous year, a major upgrade in the trading system being utilised by the Exchange was underway in 2019. On 25 March 2019, following months of preparation and co-ordination with Deutsch Böerse and our Members, the Malta Stock Exchange successfully upgraded its trading system technology and migrated to Deutsch Böerse’s T7 Trading System. With this move to T7, the MSE now participates on the same network of exchanges and participants as several other exchanges, including the Frankfurt Stock Exchange and the Vienna Stock Exchange. For the Malta Stock Exchange, this upgrade also meant that it could continue focusing on overall operational improvements that yield further cost reductions.
We are very proud that in 2019 the Malta Stock Exchange Institute was licenced by the National Commission for Further and Higher Education (NCFHE) as a Further Education Institute, thus allowing the Institute to offer accredited awards. In only its second year of full operation, the Institute has again registered a strong performance and continued to grow. During 2019 more than 1,300 participants attended MSEI courses. Attendants consistently give a very high degree of satisfaction rating to our lecturers, facilities and organisation. The range of courses being offered has now been expanded from around 40 to over 60 different topics. Various business and financial services related subjects, tax and regulatory reporting, cyber security and corporate governance are among the many topics now being offered.
As briefly described above, 2019 has been a very busy and successful year for the Exchange and I invite you all to read further into this report for the full details. Of course, none of this would have been possible without the vision and guidance of the Chairman and Board of Directors, and without the hard work and commitment of all the management team and staff at the Exchange. Together we have once again achieved good results and, although it is difficult not to look ahead without considering the impact that the current circumstances surrounding the pandemic will have on our Exchange and on our economy in the years to come, it is my opinion that,
yet again, we can register a strong performance in 2020 and continue to provide the robust and efficient service to our capital markets that is required from the Malta Stock Exchange.
Source : Malta Stock Exchange Annual Report 2019
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