Balance Sheet. Note m. IRR m. IRR ASSETS:

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2 Balance Sheet ASSETS: Note Cash Due from Central Bank Interbank Accounts Participation Certificates Credit Facilities Granted Account Receivable Investments Fixed Assets Intangible Assets Other Assets Assets ,873 12,376,842 6,548,311 1,947,545 64,16,462 2,775,615 2,529,259 2,56, ,645 1,246,946 95,25,56 238,968 7,722,966 3,242,514 49,875 39,767,517 1,161,497 2,27,198 1,625, ,42 524,572 56,965,2 LIABILITIES: Due to Central Bank Call Deposits Saving Deposits Term Deposits Other Deposits Provision for Corporate Tax Interest Payable (Depositors) Other Liabilities and Accruals Dividend Payable Provision for Severance Pay Liabilities ,313,914 3,613, ,236 73,664,318 3,115, ,44 857,65 799,294 16,366 22,646 84,895,13 1,142,991 4,35, ,845 41,885,475 1,351,325 76, ,657 48,172 21,252 14,79 49,868,529 SHAREHOLDERS EQUITY: Share Capital Issued and Fully Paid Statutory Reserve Discretionary Reserves Retained Earnings Shareholders' Equity Liabilities and Shareholders' Equity ,, 74,13 246,71 2,143,86 1,129,926 95,25,56 5,25, 388, ,442 1,328,723 7,96,491 56,965,2 OFF BALANCE SHEET ITEMS: Commitments for L/Cs Guarantees Issued Other Commitments Managed Funds Commitments ,757,16 11,6,44 4,949,559 1,23 3,967,455 5,421,893 4,46,49 2,761 39

3 Income Statement NET COMMON JOINT INCOME: Note Income on Credit Facilities Granted Income on Investments and Deposits Gross Common Joint Income Less: Depositors Share of Income Bank's Share of Net Income ,561,42 45,454 11,11,874 (8,619,189) 2,392,685 4,459,643 83,61 5,263,244 (4,169,858) 1,93,386 INCOME FROM BANK OPERATIONS: Income on Investments and Deposits Commissions Net Fees and Foreign Exchange Transactions Other Income Income ,717 1,12, , ,31 1,951,922 4,344,67 647,63 236,563 6, ,71 1,457,38 2,55,424 DEDUCT EXPENSES: General and Administration Provision for Bad Debt Expenses Financial Charges Net Profit Before Income Tax Provision for Corporate Tax Net Profit After Tax Earning Per Share (83,387) (9,38) (194,717) (1,898,484) 2,446,123 (1,764) 2,345,359 Rls 335 (411,876) (446,851) (12,27) (87,754) 1,679,67 (53,675) 1,625,995 Rls 31 Statement of Movements of Retained Earnings For The Fiscal Year Ended March 2, Net Profit After Tax Retained Earnings, Beginning Balance Prior Years Adjustment (Property Tax) Adjusted Retained Earnings Less: Dividends Paid for Previous Fiscal Year Retained Earning Available for Allocation 22 2,345,359 1,328,723 (3,795) 1,324,928 (1,58,129) 266,799 2,612,158 1,625, , ,327 (617,4) 27,927 1,653,922 Less: Allocation of Earnings Statutory Reserve Discretionary Reserves Retained Earnings Available for Distribution, Ending Balance (351,84) (117,268) (469,72) 2,143,86 (243,899) (81,3) (325,199) 1,328,723 4

4 Cash Flows Statement OPERATING ACTIVITIES: Note Net Cash Inflow from Operating Activities 37 2,59,942 66,15 RETURN ON INVESTMENT AND FINANCIAL SERVICES: Dividend Received Dividend Paid Net Cash Inflow From Return on Investment and Financial Services 274,619 (16,47) 168,212 36,11 (52,434) (16,324) TAXATION: Corporate Tax Paid (54,98) (35,61) INVESTMENT ACTIVITIES: Payments For Acquisition of Investments Proceeds on Sale of Intangible Assets Proceeds on Sale of Investments Proceeds on Sale of Fixed Assets Payments For Acquisition of Intangible Assets Payments For Acquisition of Fixed Assets Net Cash Outflow from Investment Activities Net Cash Inflow (Outflow) Prior to Financial Activities (472,134) 2 16,535 1,971 (418,263) (562,846) (1,29,717) 1,333,34 (84,968) 89, ,919 (283,74) (833,676) (1,194,21) (64,111) FINANCIAL ACTIVITIES: Receipts on Subscription of Capital Shares Net Cash Inflow During the Year Losses on Foreign Exchange Transactions Net Increase in Cash Cash, Beginning of The Year Cash, End of The Year ,597 2,122,937 (447,821) 1,675, ,919 2,361,35 1,177,35 536,924 (63,96) 472, , ,919 41

5 1 BANK ACTIVITIES 11 Background Bank Pasargad was established in accordance with the law pertaining to the establishment of private banks in Iran, and was registered under No2543 with the Tehran Companies Registrar Office on September 4, 25. The Central Bank of Islamic Republic of Iran issued The Banking Operation License No2849 on September 13, 25. The Head Office is located at: No. 43, Mirdamad Blvd., Tehran , Iran 12 Activities Bank Pasargad provides and offers all kind of banking products and services; core business includes commercial, retail, and wholesale banking. All banking activities are performed in accordance and in compliance with the regulatory laws, set by The Central Bank and in line with The International Banking Standards. 13 No. of Branches and Employees 131 Bank Pasargad had 22 branches nationwide at the year end. 132 Bank's human capital comprises of both seasoned veterans of the Iranian Banking Industry, as well as highly educated and talented young individuals; totaling to 2,49 employees at the year end. 2 BASIS FOR PREPARATION OF FINANCIAL STATEMENTS 21 The Bank's financial statements are prepared on historical cost basis; revenues and expenses are recorded on accrual basis. Current values are used where required. 22 In accordance with Accounting Standard No. 18, the Bank is exempted from presentation of consolidated financial statements. Pars Aryan Investment Co., as the "Parent Holding Company" of the group, prepares the ultimate consolidated financial statements for the group subsidiaries. 3 SIGNIFICANT ACCOUNTING POLICIES 31 Investments 311Longterm investments are recorded at cost less provision for any permanent decline in value. 42

6 312 Shortterm investments in listed securities readily available for sale, are recorded on the basis of lower of cost or portfolio market value. All other short term investments are recorded at lower of cost or market value. 313 In accordance with paragraph 62 of the Bank's Articles of Association, income from banking activities and financial facilities granted, is recorded on accrual basis. Income from banking services is realized when received. Income from investment in subsidiaries and affiliated companies is realized when declared by the investee (up to the date of preparation of financial statements). Differences arising from fluctuation in exchange rates, are recorded as revenue or loss of the period incurred. 32 Fixed Assets 321 Tangible fixed assets are recorded at historical cost. Expenditures enhancing useful life, capacity or quality of such assets are capitalized and depreciated. General repair and maintenance charges are recorded as expense when incurred. 322 Fixed assets are depreciated in accordance with the rules stipulated in Article 151 of the Direct Taxation Act, using the following rates and methods. Fixed Assets Dep. Rate Dep. Method Buildings 7% Reducing Balance Installations 2% Reducing Balance Motor Vehicles 25%&3% Reducing Balance Computer Hardware 3 Years Straight Line Communication Equipment 1 Years Straight Line Furniture & Fixtures 1 Years Straight Line ATM, (POS Machines) 3 Years Straight Line 323 Fixed assets acquired during the month are depreciated from the following month. 33 Goodwill Amortization In accordance with regulation set by Money and Credit Council of the Central Bank of Iran, no amortization or deprecation is assumed for goodwill (leasehold premium paid for branch sites, offices and lands). 34 Realization of Income In accordance with banking regulations, income from banking activities and credit facilities granted are recorded on accrual basis and as follows: 43

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8 37 Provision for Doubtful Accounts Allowance is provided for doubtful accounts, based on the ratification of the Credit and Money Council, as follows: General provision, equal to 1.5 percent of facilities balance except for overdue, deferred and doubtful accounts for which allowance for special impairment loss is provided. Past due category 1% Deferred category 2% Bad debt category (Based on customers capabilities) 5% to 1% Bad debt category more than five years overdue 1% 38 Provision for Severance Pay A provision, equivalent to one month salary for each full year of service, is provided in the accounts to cover employee's termination pay. 39 Foreign Exchange Transactions Monetary assets and liabilities in foreign currencies are converted into Iranian Rials at exchange rates prevailing at balance sheet date; any differences are recorded as gain or loss of the period. Nonmonetary items are reflected at historical rates. 4 CASH Balance of the cash includes the following: Cash in Hand Cash in ATM Machines Notes in Foreign Currencies Cash Such cash has full insurance coverage. 622,95 14,58 2,46 747,873 23,61 24,61 11,36 238,968 45

9 5 DUE FROM CENTRAL BANK Amounts due from the Central Bank includes the following: Statutory Deposit Current Account with CBI Interest Receivable on Statutory Deposit Special Shortterm Deposit Other Amounts Due From The Central Bank Note 51 11,724,487 23,367 97,461 3,5 51,27 12,376,842 7,614,39 53,43 1, 54,227 7,722, Statutory deposit with the Central Bank (was equivalent to 17% of all deposits in previous year) is computed on the basis of Paragraph (3) of Article 14 of Banking Act, and in accordance with the provisions ratified by the Money and Credit Council, as Follows: Shortterm Deposits Atsight Deposits Saving Deposits Two to Three Years Term Deposits Four Years Term Deposits Five Years Term Deposits L/G Deposits L/C Advances Freezone Deposits 6 INTERBANK ACCOUNTS The Balance of this account includes the following: Current accounts with foreign banks (foreign currencies) Long term deposits with local banks (Rls) Long term deposits with foreign banks (foreign currencies) Current accounts with local banks (Rls) Current accounts with local banks (foreign currencies) Debtors/clearing house Cash in transit % ,161, ,828 1,679,752 5, ,358 3,99,396 1,54 6,548,311 1,261,356 42,938 8, ,681 22, , ,914 15,191 7,575 11,724, , , ,24 7,46 33,326 2,48,638 2,554 3,242,514 46

10 7 PARTICIPATION CERTIFICATES (BONDS) The Balance of this account includes the following: Development plans (Governmental Certificates) Participation certificates issued by other banks Other Certificates 8 CREDIT FACILITIES GRANTED The Balance of this account includes the following: 287,3 65,8 1,9,445 1,947,545 43,521 6,354 49,875 Credit Facilities (Rials) Qarzolhassaneh(loan with no interest) Foreign Currencies Loans DebtorsL/C's DebtorsL/G's Interbanks Facilities * Balance 61,234,52 1,218,32 1,652, , ,933 1,15, 66,23,549 Deferred Interest (669,84) (88) (669,172) Provision for Bad debt (1,32,715) (19,514) (24,782) (11,946) (51,78) (17,25) (1,517,915) Net 59,262,73 1,198,86 1,627,296 68, ,225 1,132,75 64,16,462 Balance(Net) 35,975, , ,674 67,917 2,169 2,7, 39,767,517 The above facilities are categorized (in total) in conformity with directives of Circular No.174 of the Money and Credit Council as follows: Current Past due Deferred Bad debts Less: Deferred interest income Provision for doubtful accounts (General) Provision for doubtful accounts (Special) 62,272,785 1,589,165 1,78,43 561,556 66,23,549 (669,172) (935,425) (582,49) 64,16,462 *M. IRR. 5,547,777 out of above facilities were granted to the Bank s subsidiaries and affiliated companies. 47

11 9 ACCOUNTS RECEIVABLE The Balance of this account includes the following: Dividends receivable Interest on participation certificates (Bonds) and certificates of deposit Due from affiliated companies and subsidiaries Other parties Payments in suspense Interest on participation certificates purchased Notes receivable Note 91 61,191 49,269 1,871,536 15,171 2,379 24,7 751,999 2,775, ,94 319, ,52 18,911 53,795 14,733 1,161, Dividends receivable are as follows: Bank's subsidiaries and affiliates Listed Companies 41,431 19,76 61, ,13 13, ,94 1 INVESTMENTS The Balance of this account includes direct investment by the Bank in subsidiaries and affiliated companies as well as investment in shares of listed stocks and etc. as follows: Direct investments (unlisted shares) Investment in listed shares (net of provision for decline in market value) Other investments Note ,429,287 98,462 1,51 2,529,259 2,39, ,53 1,5 2,27,198 48

12 11 Direct investments in unlisted (unquoted) shares include investments in subsidiaries and affiliated companies established by the Bank as follows: Saman Sakht Aryan Co. Bank s Share % ,4 599,4 Bank Pasargad Investment Co ,96 636,969 Modaberan Sakht Aryan Co , 27, Bank Pasargad Leasing Co , 21, Hashtom Urbanization & Construction Co. 67 1,5 1,5 Pasargad Insurance Co. 2 67,5 45, Middle East Mabna Co ,536 3, Bank Pasargad Electronic Payment Co ,85 36,85 Bank Pasargad Brokerage Co. 6 15, 15, Pasargad International Trade Co. 34, Pasargad ICT Co.(FANAP) Tamin Atiyeh Co. 46 Bank Pasargad Financial & Investment services Co Pasargad Machinery & Equipment Leasing Co ,115 18,115 Middle East Mines & Mineral Industries Development Holding Co ,142 47, Pasargad Mas Construction Development Co. 5 2,5 2,5 Pasargad Energy Development Co. 4 2, 2, Pasargad Building Management Co. 67 2,429,287 2,39, Investment in listed (quoted) stocks are limited to investment in stocks traded in Tehran Stock Exchange. 49

13 11 FIXED ASSETS Movements of fixed assets and provision for depreciation during the year were as follows: Cost () March 19 Additions Fixed Assets Sold Movements & Adjustments March 2 A Properties Land 225, ,415 (6) 341,91 Buildings 422, ,844 (55) (35,74) 52,821 Leasehold Improvements 13,364 12,928 (1,977) 24,315 66, ,187 (1,15) (37,681) 868,227 BMovable Assets Computer Hardware 13, , ,675 Furniture & Fixtures 51,742 69,43 121,172 Vehicles 4,631 4,7 8,71 Movable Assets 159, , ,548 82, ,51 (1,15) (37,681) 1,313,775 Assets under Construction 3,384 14,185 (6,214) 11,355 Capital Prepayments 89,5 1,169,779 (1,23,459) 856,37 Grand 1,713,989 1,86,15 (1,15) (1,247,354) 2,271,5 5

14 Accumulated Depreciation () Book Value () March 19 Dep. Charges of the Year Acc.Dep of Fixed Assets Sold Other Adjustments March 2 March 2 March ,91 225,276 36,156 32,587 (71) ,64 433, ,75 4,886 9,282 (1,89) 13,79 11,236 8,478 41,42 41,869 (71) (697) 82, ,84 619,829 39,416 73,99 112,515 23,16 63,895 6,293 11,67 17,36 13,812 45,449 1,727 1,197 2,924 5,777 2,94 47,436 85, , , ,248 88, ,232 (71) (697) 214,942 1,98, ,77 11,355 3, ,37 89,5 88, ,232 (71) (697) 214,942 2,56,558 1,625,511 51

15 The Balance of this account includes the following: Leasehold Premiums Computer Software Other 765,737 5,688 8,22 779, ,682 7,186 5, ,42 The Balance of this account includes the following: Deposits on Leased Premises Confiscated Collateral Assets Prepaid Insurance Prepaid Lease Stamps Other Miscellaneous Assets 967,372 75, ,744 8, ,666 1,246, ,775 3,88 2,61 15, , INTANGIBLE ASSETS 13 OTHER ASSETS 14 AMOUNTS DUE TO THE CENTRAL BANK The Balance of this account includes the following: Current Deposits with CBI Term Deposits 385, 1,928,914 2,313,914 1,142,991 1,142,991 52

16 The Balance of this account includes the following: Cashiers Checks Current Account Deposits Other 2,477,389 1,14,199 31,759 3,613,347 3,468,44 88, ,35, CALL DEPOSITS 16 SAVING DEPOSITS The Balance of this account includes the following: Saving deposits Rials Deposits 9,471 9,471 Foreign Currencies 277, ,765 (Balance) 368, ,236 Balance 167, , TERM DEPOSITS The Balance of this account includes the following: Shortterm deposits Special shortterm deposits (1 to 9 months) Longterm deposits Rials 18,68,576 1,65,926 43,765,276 72,511,778 Foreign Exchange 813, ,3 1,152,54 18,68,576 1,879,463 44,14,279 73,664,318 17,998,666 5,81,41 18,85,48 41,885,475 53

17 171 Longterm deposits include the following: Oneyear deposits Twoyear deposits Threeyear deposits Fouryear deposits Fiveyear deposits Rials 35,381,26 324,189 1,8, ,354 6,791,761 43,765,276 Foreign Exchange 339,3 339,3 35,72, ,189 1,8, ,354 6,791,761 44,14,279 12,815, ,626 1,298,444 43,297 3,63,9 18,85, During the year interest rates on long term deposits varied from to 19 percent p.a. on shortterm deposits it was 9 percent p.a. and on special shortterm deposits varied from 16 to percent p.a. 173 Foreign exchange deposits were as follows: USD Euro Pound Sterling Dirhams Foreign Exchange 527,153 26,364,64 7,2 15,2 Long Term Rial Equivalent 5, , ,3 Foreign Exchange 2,975,42 61,77, ,817 57,226 Short Term Rial Equivalent 28, ,954 2, ,537 Foreign Exchange 3,52,573 88,134, ,17 72,246 Rial Equivalent 34,35 1,115,696 2, ,152,54 18 OTHER DEPOSITS Balance of this account reflects the cash collateral against L/Gs and L/Cs. 54

18 19 PROVISION FOR CORPORATE TAX Bank corporate taxation position is as follows: March 2, () March 19, () Taxes Provisions Year SelfAssessed Income SelfAssessed Taxable Income SelfAssessed Tax Assessment Notice Final Tax Notice Provision Note ,178 6,153 5, ,368 14,73 58,7 94,48 58,7 58, ,679,67 214,696 53,675 53,675 53, ,446,123 1,764 1, , ,375 Less: prepaid tax 89,699 35,61 Balance 123,44 76, Out of. 5,565 final tax notice for year 26,. 4,28 was paid by the Bank against principal amount of tax. It has been requested to waive the balance pertaining to penalty charges. Whereas Bank did not accept the verdict of the tax tribunal, tax file was sent to the High Taxation Council for further investigation, upon the Bank s protest. 192 Tax file of fiscal year 27 has been referred to a taxation settlement tribunal; however, it is not yet finalized. 193 Result of investigation by taxation authorities pertaining to year, has not been yet notified to the Bank. 194 Taxes for year have been calculated on the basis of selfassessed income, with due consideration to tax exemptions. 55

19 2 INTEREST PAYABLE (DEPOSITORS) The Balance of this account includes the following: Shortterm deposits Special shortterm deposits Oneyear deposits Twoyears deposits Threeyears deposits Fouryears deposits Fiveyears deposits Certificates of deposit 18,827 56, ,63 5,456 17, , ,657 Year s onaccount 2,265,195 1,862,355 2,646,834 59,22 29,533 21,838 89,55 744,664 8,619,189 Final interest difference Paid during the year 2,246,192 1,78,618 2,373,279 53,636 28,842 8, ,41 713,55 8,139, ,83 138, ,185 11,4 18,52 14, ,861 31,69 857,65 21 OTHER LIABILITIES AND ACCRUALS The Balance of this account includes the following: Accrued expenses (payable) Social security premium payable Salary taxes payable Checks payable Goodperformance retentions Other , ,56 18,216 64,43 799,294 15, 1,979 14,45 134,724 11,94 32,925 48, DIVIDEND PAYABLE The Movement of this account has been as follow: Year Ratified by AGM 122,5 612,5 1,5, 1,785, Paid upto 27 18,411 18,411 Paid in 7, ,339 65,337 Balance March 6,91 15,161 21,252 Paid in 893 6,241 1,47,752 1,54,886 Balance March 5,198 8,92 2,248 16,366 56

20 Movements of this account during the year were as follows: Beginning Balance Paid during the year Provision during the year Ending balance 14,79 7,937 22,646 4,956 9,753 14,79 23 PROVISION FOR SEVERANCE PAY 24 SHARE CAPITAL The Bank's capital is divided into 7,,, common shares, at par (nominal) value of Rls. 1, each. Major shareholders and their respective shares at balance sheet date March 2, were as follows: Pars Aryan Investment Company Kharazmi Investment Company Hamyarye Kowsar SAIPA Investment Co. Pars Khodro Co. Zamiad Co. SteelIndustry Pension Fund Other Shareholders No. of Shares 2,99,4, 663,23, ,25, 247,5, 148,5, 99,, 125,228,25 3,245,89,981 7,,, % ,883,5 shares of the Bank are allocated to Pasargad University. No. of Shareholders: Real Persons 33,72 Legal entities

21 Bank's capital adequacy ratio was calculated as follows: Paid in Capital Statutory reserve Other reserves Retained earnings General provision for doubtful accounts and investments Less: Adjustments 1.25 Percent of weighted assets additional capital Basic Capital riskweighted assets* Capital adequacy ratio 7,, 74,13 246,71 2,143,86 1,129, ,425 69,74 866,351 1,996,277 69,38, ,25, 388, ,442 1,328,723 7,96, ,268 1,486 26, ,34 7,623,831 42,36, *Banks assets were weighted, based on their risks presented in the following table: Cash Due from CBI Due from other banks Governmental bonds Investments Other accounts receivable Loans and facilities Interbanks facilities Other loans Fixed assets & leaseholds Other assets Commitments for contracts Commitments for L/Gs Commitments for L/Cs Assets Weighed Based on their Risk Assets 747,873 12,376,842 6,548,311 1,947,545 2,529,259 2,775,615 21,781,392 1,132,75 41,12,32 2,836,23 1,246,946 4,949,559 1,682,322 3,559, ,216,161 Risk Coefficient % Weighted Assets 1,39,662 2,529,259 2,775,615 1,89, ,55 41,12,32 2,836,23 1,246,946 2,474,78 2,136,464 1,779,612 69,38,17 Assets 238,968 7,722,966 3,242,514 49,875 2,27,198 1,161,497 12,874,738 2,7, 24,192,779 1,986, ,572 4,46,49 4,993,488 3,44,535 69,49,533 Risk Coefficient % Weighted Assets 648,53 2,27,198 1,161,497 6,437,369 54, 24,192,779 1,986, ,572 2,23, ,698 1,522,268 42,36,42 58

22 In accordance with Article 63, paragraph B of the Bank's Articles of Association and relevant regulations, 15% of bank's net profit is allocated to legal reserves up to when it equals, the Bank's capital. In accordance with Article 63,paragraph C of the Bank's Articles of Association, 5% of the year's net profit is allocated to discretionary reserve, based on the board of directors proposal. 25 STATUTORY RESERVE 26 OTHER RESERVES 27 INCOME FROM CREDIT FACILITIES GRANTED Income from credit facilities includes the following: Income from credit facilities Late payment charges 1,129, ,727 1,561,42 4,341, ,22 4,459,643 59

23 28 INTEREST PAYABLE (DEPOSITORS) Income from investments during the year comprises the following: Income from investments: Investments in Securities Less: loss on reduction in value of Securities Note ,87 (52,538) 27, ,599 (26,398) 249,21 Income from Deposits: Income on statutory deposit Income on deposits with Iranian banks Income on participation certificates (bonds) Investments (Joint Income with depositors) 97,461 33, ,86 423,122 45,454 5,156 54, ,4 83,61 Add: Bank's Income on Investments (NotJoint with depositors): Income on foreign exchange deposits Income on interbank credit facilities NotJoint Income 281 Incomeform investment in stock includes the following: 3,36 529, ,717 1,1,171 14, , ,63 1,451,231 Dividend Income Capital gain on sale of listed securities 66,848 13,22 79,87 261,154 14, , Dividend income during the year was as follows: Dividend income from investments in listed securities Dividend income from subsidiaries and affiliates 24,161 42,687 66,848 32,52 229,12 261,154 6

24 Long term deposits Oneyear deposits Twoyears deposits Threeyears deposits Fouryears deposits Fiveyears deposits Shortterm deposits Special Shortterm deposits 2,646,834 59,22 29,533 21,838 89,55 744,664 2,265,195 1,862,355 8,619, ,175 51, ,35 6, ,99 481,672 1,71,432 26,944 4,169, DEPOSITORS SHARE OF INCOME 3 UNDER (OVER) PAYMENT OF INTERESTS OF DEPOSITORS Depositors share of income, derived from joint resources with the Bank, is calculated on the basis of directives of the CBI as follows: Facilities granted Investments Participation certificates (bonds) Less: Net resources of depositors: deposits Statutory deposit Net resources of depositors Bank's Resources Joint Income Depositors share of income Income from Statutory deposit Bank's fee and commission on total Joint Income Depositors share of income Payments on account to depositors Under (over) payment to depositors 48,376,539 4,38,177 1,874,365 54,289,81 57,24,366 (9,469,864) 47,77,52 6,518,579 1,914,413 9,63,91 95,94 9,698,995 (1,717,211) 7,981,784 (8,619,189) (637,45) 19,49,534 2,41,31 3,171,78 24,261,913 28,71,89 (4,88,851) 23,83,39 431,874 5,213,15 5,12,39 48,464 5,168,773 (1,4,881) 4,163,892 (4,169,858) (5,966) 61

25 Fees and commissions for the year include the following terms: Fees and commissions for issuance of L/Gs and L/Cs Commissions on credit facilities granted Other fees 815, ,255 91,575 1,12,186 26,13 4,669 25, ,563 Net result of foreign exchange transactions during the year was as follows: Gain (loss) from transactions Gain (loss) on exchange rate fluctuations 593,539 (447,821) 145,718 7,734 (63,96) 6, COMMISSIONS 32 NET FEES AND FOREIGN EXCHANGE TRANSACTIONS 33 OTHER INCOME Other income during the year comprises of the following: Income on sale of property Assessment fees Sundry income ,626 28, ,31 358, ,61 33, ,71 62

26 34 GENERAL AND ADMINISTRATIVE EXPENSES General & Administrative expenses during the year include the following: Salaries and other personnel charges Administrative expenses 355, ,91 83, , , , Salaries and other personnel charges were as follows: Basic salary New year bonus Commuting allowance Over time Social security premium Termination benefits Other 117,822 64,918 26,634 35,37 25,532 12,561 72,73 355,477 75,64 3,938 13,73 16,597 13,678 1,555 18, , Administrative expenses were as follows: Depreciation Rent of branches Advertisement Pantry & entertainment Telecommunications Consulting Repair and maintenance Office supplies Insurance Other 13,649 43,415 79,913 6,421 8,154 8,86 18,31 15,67 18, , ,91 68,43 15,462 58,915 4,352 6,793 6,75 4,619 1,327 4,923 52,44 232,615 63

27 Bad debt expenses of the year was calculated as follows: Special provision for impairment losses General provision for bad debts 52,223 38,57 9,38 56, , , Special provision for impairment losses was calculated as follows: Balance (yearend) Coefficient used for calculation provision for the year Past Due 1,589,165 1% 69,959 Deferred 1,78,43 2% 17,41 Facilities Granted Doubtful 561,556 3,93,764 5% 279,863 52, General provision was calculated as follows: Balance Less: Balance of facilities for which special provision is provided Applicable balance used for calculation of general provision Coefficient applied General provision for the year 66,23,549 3,93,764 62,272, % 38, PROVISION FOR BAD DEBT EXPENSES 36 FINANCIAL CHARGES Balance of this account includes the following: Interest paid on facilities received Foreign exchange deposits Fees and commissions paid 1,876 62,366 31, ,717 12,27 12,27 64

28 Net profit before tax Depreciation charges Loss on market value of investments Provision for bad debts Dividend received and capital gain on investments (Gain) Loss on sale of fixed assets Income realized on accrual basis and gain & loss on exchange rate Net cash inflow from operation 2,446,123 13,649 52,538 9,38 (79,87) (821) (4,428,551) (979,552) 1,679,67 68,43 26, ,851 (36,11) (7,518) (2,23,19) 154,531 Net increase (decrease) in operating liabilities: Call deposits Amounts due to CBI Saving deposits Time deposits Other deposits Accruals and other liabilities (Increase) decrease in operating assets: Statutory deposit Other accounts receivable Amounts due from other banks and financial institutions Facilities granted and other amounts due from nongovernmental sector Participation certificates (bonds) Other assets Net increase in operating assets Net Cash Inflow From Operating Activities (736,982) 1,17,923 2,391 31,778,843 1,764,639 (5,598) 34,127,216 (4,46,478) (1,759,598) (2,289,524) (19,562,78) (1,897,67) (722,374) (3,637,722) 2,59,942 2,832,352 1,142, ,14 27,65,361 1,14,383 (453,441) 31,728,75 (4,994,689) 1,748,6 (16,244) (28,468,544) 883,531 (339,326) (31,277,266) 66,15 37 RECONCILIATION OF PROFIT WITH CASH FLOWS FROM OPERATING ACTIVITIES 38 NET INCREASE IN CASH Net increase in cash reflected in the statement of cash flows was as follows: Cash hand Current account with CBI Current accounts with local banks Current accounts with foreign banks Note ,873 23, ,811 1,161,984 2,361,35 238,968 53,43 4, , ,919 Net Increase 58,95 149,937 27,25 89,249 1,675,116 65

29 39 OFF BALANCE SHEET ITEMS Off balance sheet items consisting of the following items: 391 Commitments on Letters of Credits: Rials Foreign Exchangeq 443,832 5,313,274 5,757,16 459,332 3,58,123 3,967, Commitments on Letters of Guarantee: Bank commitments on L/Gs (IRR) Bank commitments on L/Gs (Foreign Exchange) 1,353,932 1,246,472 11,6,44 5,87,49 334,484 5,421, Other Commitments Commitments on joint ventures Commitments on Credit Cards 4,681,26 268,353 4,949,559 4,4,41 42,8 4,46, Managed funds and similar cases were as follows: Managed fundsunused portion Others 13 1,1 1,23 2,761 2,761 66

30 The Bank has the following capital commitments at balance sheet date of March 2,: Commitments for payment of the remaining acquisition price of 14 Branches Commitments for investment in Pasargad Insurance Co. Commitments for investment in Pasargad Brokerage Co. Amount 11,71 22,5 15, 147,571 The Bank has no contingent liabilities at balance sheet date. There has been no major events after balance sheet date requiring adjustments in the accounts or disclosure hereto. 4 CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS 41 POST BALANCE SHEET DATE EVENTS 42 RETAINED EARNINGS AT YEAR END Allocation of retained earnings, ending balance available for distribution, upon decisions of the shareholders Annual General Meeting: Minimum mandatory DPS equal to 1% of the year end net profit in accordance with Article 9 of the commercial code: () Board of Directors' proposed dividends (2 Rls. per share) () 187,629 1,4, 67

31 43 Foreign Exchange Position Foreign exchange commitments as well as monetary assets and liabilities as at March 2, were as follows: Note USD EUR Cash 4 454, ,219 Receivable from other banks 6 5,54, ,78,938 Facilities 8 133,179,939 Current accounts 15 (528,417) (5,899,778) Depositssavings 16 (1,621,99) (19,427,773) Depositslong term 17 (3,52,573) (88,134,638) Other deposits 18 (1,12,381) (13,672,951) (1,155,33) 19,76,956 L/Cs ,978,73 332,12,148 L/Gs 392 5,962,59 79,94,425 68

32 69 289,825 3,283,2 (3,128) (55,278) (192,17) (4,412,881) (1,9,477) 5,599,254 46,71 1,724,615 (1,) (2,799,137) (1,28,812) 3,98,278 7,448,117 (9,693,881) (2,245,764) 12,624, ,618,987 13,5,595 (36,18,24) 179,444, ,271,977 1,792,868,25 28,812 5,343,5 8,824,46 (1,82,518) (5,787,93) (72,246) (127,885,5) (76,189,449) 227,79,81 CHF SEK JPY AED GBP

33 44 RELATED PARTY TRANSACTIONS In conformity with Article 148 of The Iranian Commercial Code, the related party transactions have been reported separately and approved in the Shareholders Annual General Meeting. 7

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