In the Name of God. Tehran Stock Exchange. Annual Report

Transcription

1 In the Name of God Tehran Stock Exchange Annual Report Fiscal Year Ended 20 March

2 Contents TSE at a glance Financial digest Market information Time line Board message 1-Iintroduction to TSE and financial performance 2-Market operations overview 3-Corporate governance 4-Annual achievements 5-Board proposal 6-Future plans Financial statements, independent auditor s report and explanatory notes

3 Tehran Stock Exchange Annual Report Fiscal Year Ended 20 March

4 TEHRAN STOCK EXCHANGE TSE at a glance Trading Trading days Saturdays - Wednesdays Trading hours )pre-opening 8:30 9:00( 9:00 12:30 Trading system Fully automated order based Trading mechanism Opening auction / continuous Market making Arbitrary Tradable instruments Shares, rights, participation bonds, single stock futures, embedded put options, ETFs, sukuks and CDs Currency Iranian Rial Online accessible information Opening, minimum, maximum and closing) prices,( indices, listed companies information, trading data and quotes Depository, clearing and settlement Entity Settlement period Central Securities Depository of Iran (CSDI) T+3 (shares, derivatives and ETFs), T+1 (bonds, fixed-in- )come securities Settlement Funds settlement at broker level, securities dematerialized settlement at client Clearing Multilateral netting Short selling N/A Tax Dividends Exempted Capital gain Exempted Transaction (seller) of trading value 0.5% 4 Structure and regulations Legal structure Public company Regulations Self-regulated under SEO s surveillance Daily price fluctuation limit Shares: ±4%, rights: ±8%, bonds: ±1% Closing price calculation Weighted average based on base volume Foreign investment Available (Foreign investment bylaw)

5 Trading Commission Buyer (%) Seller (%) Total (%) SEO TSE Brokerage Firm CSDI TSETMC Total Markets and Listing Requirements Minimum paid-in Capital (IRR billion) Minimum years of business activity First Market / main board First market / secondary board Second market 1, Minimum free-float (%) Minimum number of 1, shareholders Profitability (years) Equity/total assets (%) Issuers information First Market main board First market secondary board Second market Total Listed companies Brokerage firms Tehran Provinces - regions Total Number of brokerage firms (entities) Trading stations ,414 On-line trading access providers

6 Board of directors Member Delegate Position Mellat Financial Group Mr. Mohammad Ebrahim Mohammad Pourzarandi Chairman of the Board Mofid Brokerage Firm Mr. Ali Yar Salehi Vice Chairman of the Board Bank Tejarat Brokerage Firm Mr. Seyed Mojtaba Fahim Hashemi Member of the Board Bahman Investment Company Mr. Ali Rostami Member of the Board Saba Ta min Investment company Mr. Mohammad Reza Rostami Member of the Board Pasargad Arzesh Afarinan Group Mr. Ali Akbar Amin Tafreshi Member of the Board Tadbir Investment company Mr. Mojtaba Taghipour Member of the Board Hassan Ghalibaf Asl CEO and President Financial digest A summary of financial information (IRR billion) Operations Fiscal Year 20 Mar Fiscal Year 20 Mar Fiscal Year 20 Mar Operating revenues Total expenses Operating income EBIT Net income Cash flows from operations EPS (IRR) Financial status Current assets Total assets 1,451 1, Total liabilities Registered capital Total equities 1,280 1, Equity shares Number of shares (million) Last EPS forecast (IRR) 463 1, Real EPS (IRR) 364 1, DPS (IRR) Other information Number of staff

7 Market information Market indicators Fiscal Year 20 Mar Fiscal Year 20 Mar Fiscal Year 20 Mar Market capitalization (IRR billion) 2,813,156 3,865,970 1,707,498 Nominal Value (IRR billion) 954, , ,498 Market cap / nominal value Average P/E Trading information Fiscal Year 20 Mar Fiscal Year 20 Mar Fiscal Year 20 Mar Normal trading value (IRR billion) 377, , ,615 Normal trading volume (million shares) 144, ,433 68,856 Total trading value (IRR billion) 542, , ,334 Total trading volume (million shares) 165, ,780 80,163 Number of transactions (thousand) 12,916 17,142 5,241 Daily average trading value (IRR billion) 2,251 4,015 1,106 Average daily trading volume (million shares) Daily average number of trades (thousand) Number of trading days Number of issued trading codes 151, , ,131 Total index Fiscal Year 20 Mar Fiscal Year 20 Mar Fiscal Year 20 Mar End of year 62,532 79,015 38,041 Highest 79,014 89,501 38,739 Lowest 61,533 38,603 23,787 Monthly trading trend 160, , , , ,000 80,000 Volume (Million Shares) Value (IRR Billion) 60,000 55,315 40,000 20,000 0 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 7

8 Time line 18 May 2014 Saba Nour Steel Raw Materials Supplying Company was transferred from Iran Farabourse (IFB) to Tehran Stock Exchange (TSE), and its equities started trading at IRR 14,620 per share. 26 May percent of Sepahan Oil Company s shares, as equivalent to 105 million equities were offered at TSE after being listed at IRR 17,500 per share. 3 June 2014 TSE s Listed Companies Affairs calculated corporate governance index for the first time at the Exchange after finalizing its rating methods. 14 June 2014 Jey Oil Refinement Company and Mo in Mellat Investment Company were listed at TSE. 16 June 2014 Tehran Stock Exchange held its AGM for the fiscal year ended 20 March The new members of the board were elected, TSE s capital increase from IRR 450 billion to IRR 900 billion from prudential reserve and retained earnings was ratified and the shareholders accepted to receive IRR 110 DPS. 25 June 2014 Shomal Shargh Housing Investment Company was transferred from IFB and its shares were traded for the first time at TSE at IRR 2,179 per share. 3 July 2014 TSE started its shareholders dividend payments for the fiscal year ended 20 March September 2014 South Kish Kaveh Steel Company shares were admitted at TSE, and the company s Ijarah sukuk was listed on 17 September The sukuk s secondary market trading started on 19 October November 2014 Ghadir Capital and Industry Development Company was admitted at Tehran Stock Exchange. 8

9 Time line 16 November million as equivalent to ten percent of Cement Industries Investment and Development Company s equity shares were offered at IRR 1,500 per share in TSE. 17 November 2014 Second cement industry roundtable was held at the Exchange in order to review the latest status, to tackle the existing challenges and to improve the industry s business environment. 18 November 2014 Shiraz municipality offered 116,000 bonds through book building at IRR 960,000 each for trading at TSE. 27 January 2015 Firouzeh (Turquoise) 30 largest-company-index fund, TSE s first index-based ETF was underwritten as amounted IRR 500 billion. 1 February 2015 Mobin Petrochemical Company was admitted at TSE. 10 February 2015 Brokerage firms were provided with group on-line trading access in order to monitor their branches and clients activities more efficiently and exactly. 16 February 2015 Kardan index ETF units were underwritten at Tehran Stock Exchange. 20 February 2015 In order to increase market liquidity, TSE declined its listed companies base volume to stay at 4/10,000 of total share numbers. The highest base volume was set at IRR 10 billion and the lowest at IRR 500 million. 23 February 2015 Kavian Steel Company was transferred from TSE to IFB due to Listing Committee resolution on 8 October

10 Time line Three new indices were launched at TSE, including Price Index, Price Index (equal weighted) and Price and Dividend Index (equal weighted). 8 March 2015 Isfahan Petrochemical Company was transferred from TSE to IFB due to Listing Committee resolution on 3 September March 2015 Ma Insurance Company was listed at TSE. 16 March 2015 More than 2 million equity shares as equivalent to IRR 4,387 million of Middle East Bank were transferred from IFB to TSE and traded for the first time at IRR 1,876 per share. 18 March 2015 About 617,000 equity shares of Kavir Tire Company were transferred from IFB to TSE and traded at IRR 14,400 per share. Foreign Investors Visit to TSE During the fiscal year, 175 foreign delegates in 36 groups from policy-makers, regulators, Exchanges and investment societies visited TSE, including delegations from IMF and some embassies in Iran. Other events TSE participated in the first Islamic Investment Conference of Iran, Invest Exhibition in Stuttgart, Germany and Iran s capital market roadshow in London during the fiscal year ended 20 March

11 TSE Board of Directors 2014 Message from board of directors Past year was an important period for Tehran Stock Exchange and the investors of this market. Due to the particular economic situation and the uncertainties of international policies, TSE lost 27 percent of its market capitalization to reach IRR 2,813 trillion. The Exchange s trading value and main index both declined 43 and 21 percent, respectively. However, some positive news came about. Despite the dominant economic stagnation in the country, corporate financing through TSE developed. The nominal value of the market increased more than 31 percent to IRR 954 trillion. Major part of that movement was due to the listed companies capital increase. During the year, the listed companies capital was raised to above IRR 213 trillion, up 34 percent comparing one year earlier. Of the total amount, IRR 105 trillion funded by receivables and cash contributions, which is 44 percent growth as compared to the last year. In the period, bonds, CDs and sukuks were among the products applied for corporate financing with more than IRR 3,700 billion fund raising for the issuers. Price index re-calculation and re-issuance was a general request of Iran s capital market participants, which was accomplished last year. Equal weighted indices (price and dividend) were introduced to increase market transparency. Among TSE s listed financial products and entities, there were 2 ETFs and 29 embedded securities. 6 new companies were also listed at the Exchange. Moreover, above 170,000 person-hours technical and public training courses were held for the issuers, members and investors. 6 seminars, 4 books and 6 technical brochures and several industry roundtables were among other activities at TSE in the last year. Research projects were carried out on securities market micro-structures, proposals to lower base volume, methods to improve free-floats, launching portfolio futures and introducing option contracts. The new building construction project of TSE is also under process. Tehran Stock Exchange is making all its efforts in order to have a role in Iran s economic growth and prosperity. 11

12 1- Introduction to TSE and financial performance 1-1 History Tehran Stock Exchange (Public Company) was established on November 2006 based on the new market act ratified by the Parliament in Based on this development, the existing Exchange, which had been launched in 1960s, was demutualized. 1-2 Activities according to the articles of association Organizing and managing the securities exchange in order to make trades by local and foreign investors according to the regulations Listing securities of local or international issuers Setting membership standards for applicants, ratifying and implementing disciplinary principles on and between members, regulating their responsibilities and monitoring their activities Providing the required infrastructure for the members fair access to trading Cooperating and coordinating with other financial entities, responsible for parts of the related securities trading, issuing or data processing activities, namely Central Securities Depository of Iran (CSDI), as well as carrying out research activities and training jobs and culture development in order to facilitate and develop securities trading and investment culture Working with other Exchanges in Iran or overseas for exchanging information and expertise, harmonizing the regulations and standards and cross-listing of the securities Listing securities trading surveillance Compiling, processing and disseminating the ordering and trading information Observing securities issuers activities 1-3 TSE s shareholders TSE s shareholders and ownership level are mentioned in table 01. Based on the market act, no shareholder can hold more than 2.5 percent of the Exchange s own shares. The articles of association maintain that the shareholders include brokerage firms, financial institutes and retailers. The ownership levels should be always maintained. Table 01 Shareholders breakdown composition, fiscal year ending 20 March Shareholders No. of shareholders No. of shares Percent of ownership Brokerage firms ,701, Financial institutes ,555, Retailers 5, ,742, Total 6, ,000,

13 1-4 Major shareholders Table 02 includes the list of TSE s major shareholders at the end of fiscal year ending 20 March Table 02 Major shareholders based on groups breakdown No. Shareholder No. of shares Percent of ownership Brokerage firms 305,701, Keshavarzi bank brokerage firm 22,500, Mofid brokerage firm 22,500, Iran Insurance brokerage firm 20,289, Razavi brokerage firm 20,289, Agah brokerage firm 18,000, Refah bank brokerage firm 18,000, Tejarat bank brokerage firm 18,000, Mellat bank brokerage firm 18,000, Hafez brokerage firm 15,869, Tose e Farda brokerage firm 13,620, Pasargad bank brokerage firm 13,620, Maskan bank brokerage firm 13,620, Other brokerage firms 91,392, Financial institutes 353,555, Parsian Bank 22,500, National development investment company 22,500, Ghadir investment company 22,500, Omid investment management company 22,500, Saba ta min investment company 22,500, Oil industry pension fund investment company 19,800, Bahman investment company 18,360, Tadbir investment company 18,000, Alborz insurance company 17,940, Andishe mehvaran investment company 13,500, Industry and mine investment company 13,500, Iran national investment company 13,500, Other financial institutes 455,996, Others (retailers) 240,742, Total 900,000,

14 1-5 Capital increase TSE s capital has changed since establishment as indicated below. Table 03 Capital changes (IRR billion) Fiscal year ending 20 March March March March March 2015 Capital increase registration date Previous capital Increase New capital Increase % Source of increase November Prudential reserves and retained earning 7 December Prudential reserves and retained earning 14 October Prudential reserves and retained earning 22 October Prudential reserves and retained earning 1-6 TSE s own shares trading Due to the GA s approval for self-listing of TSE s shares and providing trading mechanism for its shareholders, required arrangements were made on 4 September 2011 for TSE s shares being listed in Iran Farabourse (IFB). The shares trading started on the mentioned date at IFB through negotiated transactions. The following table shows TSE s shares trading in the last two fiscal years. Table 04 TSE s shares trading Shareholder Fiscal year ending 20 March 2015 Fiscal year ending 20 March 2014 Brokerage firm Financial institutes Total trading volume Total trading value (IRR) Average price per share (IRR) Total trading volume Total trading value (IRR) Average price per share (IRR) 51, ,300,000 8, ,515,000 3,956,250, , ,012,429 5,720 Others 27,989, ,078,912,333 6, ,600 2,388,050,000 4, Legal environment 14 The major governing regulations at Tehran Stock Exchange include Commercial Code, The Law for Development of New Financial Instruments and Institutions, Tehran Stock Exchange s Trading Bylaw, Trading Executive Directive, as well as the brokerage firms executive bylaws and issuers disciplinary directive. The anti-money laundering rule is also among the related regulations.

15 1-8 Financial Performance A summary of Tehran Stock Exchange s financial activities during the fiscal year ended 20 March 2015 is given in the following table: Table 05 Financial activities market Description Fiscal year ended 20 March 2014 (IRR billion) Fiscal year ended 20 March 2013 (IRR billion) Table 06 the forecasted information on TSE s EPS and real operations % Change Income from services (52) Cost of services (181) (341) 26 General and administrative (91) (78) 17 expenses Income from investment (14) Net other incomes EBIT (32) Net profit (29) EPS (IRR) (28) Current ratio % Total debt ratio % (40.7) Return on assets % (39.4) Return on equity % (20.1) 1-9 Earning per share forecast The forecasted TSE s EPS for the fiscal year ending 19 March 2016, as well as the comparative information of the fiscal year ended 20 March 2015 are included in the table 06. Description FY ending 19 Mar budget (IRR million) FY ended 20 Mar budget (IRR million) FY ended 20 Mar operations (IRR million) Income from services 820, , ,750 Cost of services (261,601) (173,540) (181,027) Gross income 603, , ,723 General and administrative (112,820) (91,292) (90,907) expenses Operating profit 490, , ,816 Net other non-operating 51,230 74, ,413 income and expenses EBIT 524, , ,229 Tax (125,231) (124,912) (61,846) Net profit 148, , ,723 EPS (IRR) Operating EPS (IRR) Non-operating EPS (IRR)

16 2- Market operations overview 2-1 Outline The general performance at Tehran Stock Exchange in the fiscal year ended 20 March 2015 is provided in table 07. During this period, total trading turnover of the Exchange shrank 44 percent to reach IRR 542 trillion, while the main index lost 21 percent and closed at 62,532. The average daily trading value, as well as retail and bloc trading value respectively contracted 43 and 46 percent. The number of listed companies reached 314 in the year when TSE had 2 IPOs (Sepahan Oil and Cement Industries Development Investment companies), 4 transferred listings from IFB (Saba Nour Steel, Shomal-e-shargh Housing Investment, Kavir Tire and Middle East Bank), and also 9 de-listings. Number of trades reduced to 13 million times, comparing 17 million times one year earlier, indicating 25 percent decrease. The market capitalization was also lost about 27 percent in the fiscal year ended 20 March 2015 to reach IRR 2,813 trillion. (Table 07) Moreover, 36 percent dropping of new trading codes in the past year was an indication for less investment interests to the stock exchange. On-line trading turnover was IRR 304,731 billion in the fiscal year ended 20 March 2014 that was diminished in the past fiscal year for about 34 percent to stay at I RR 201,082 billion. However, the trading volume escalated about 9 percent from 77,151 million shares. Table 07 Securities market activities indicators 16 Indicators Unit FY ended 20 March 2015 FY ended 20 March 2014 % Change Main index (TEDPIX) - 62,532 79,015 (21) Market capitalization IRR billion 2,813,156 3,865,970 (27) Trading volume Million shares 165, ,689 (13) Trading value (total) IRR billion 542, ,198 (44) Normal trading value (retail & block) IRR billion 377, ,846 (46) State-owned offering value IRR billion 9, ,087 (91) State-owned offering volume Million shares 2,420 8,266 (71) Average daily trading value (total) IRR billion 2,251 3,968 (43) Average daily normal trading value IRR billion 1,565 2,888 (46) Average P/E ratio (11) On-line/total trading volume Million shares 84,312 77,151 9 On-line/total trading value IRR billion 201, ,731 (34) No. of listed companies No (1) No. of trades Million times (25)

17 2-2 Equities market indices During the past fiscal year, TSE s broad index declined from 79,015 to 62,532 from the start to the end; this was 21 percent loss on the index. Other indices of the Exchange ALSO reduced in the period as an indicator of shrinking in all market s sectors. The free-float index was 90,978 at the end of the fiscal year ended 20 March 2014, and contracted 21 percent to 72,210 one year later. Table 08 Main indices of Tehran Stock Exchange Index FY ended 20 March 2015 FY ended 20 March 2014 Change % Change Broad (TEDPIX) 62,532 79,015 (16,483) (21) Free-float 72,210 90,978 (18,768) (21) First market 45,317 58,607 (13,290) (23) Second market 127, ,442 (24,601) (16) Financial 135, ,628 (22,539) (14) Industrial 51,296 65,837 (14,541) (22) TSE 50 blue-chip 2,576 3,336 (760) (23) TSE largest 30 (22 Aug. 2010)=1,000 2,877 3,760 (883) (23) Chart 01 TSE s broad index trend Broad Index 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec Market Capitalization Tehran Stock Exchange s market capitalization declined 27 percent in the fiscal year ended 20 March 2015 and reached IRR 2,813 trillion. 17

18 Chart 02 TSE s market capitalization, monthly trend (IRR billion) Market Capitalization (IRR Billion) Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Table 09 Top 10 sectors by market capitalization (FY ended 20 March 2015) 18 Sector No. of companies Market cap (IRR billion) % Chemical , Banks, credit institutes , Base metals , Petroleum products 4 247,737 6 Diversified holdings 2 241,543 9 Telecommunication 9 177,632 9 Metal ores mining 7 164,102 6 Pharmaceutical ,171 3 Cement, lime and plaster 27 84,613 3 Auto manufacturing 30 74,072 4 Others , Total 314 2,813,

19 Chart 03 Market c apitalization by sectors (FY ended 20 March 2015) (%) Chemical Banks Base metals Petroleum Diversified holdings Telecommunication Metal Ores Pharmaceutical Cement Auto manufacturing Others 4-2 Securities trading Total equities and rights trading value at the Exchange in the past fiscal year 241) trading days( equaled IRR 522,542 billion, 44 percent lower than one year earlier. About 69 percent of the value (IRR 377,119 billion) was related to the normal trading (retail and bloc) with 46 percent decrease than the year before. During the fiscal year ended 20 March 2015, daily average trading value lessened from IRR 4,015 billion to IRR 2,251 billion. Table 10 Equities and rights trading Trading FY ended 20 March 2015 FY ended 20 March 2014 % Percent No. (million Value (IRR No. (million Value (IRR Number Value shares) billion) shares) billion) Normal (retail and bloc) 144, , , ,846 (12) (46) Wholesale and others 20, ,403 25, ,352 (19) (37) Total (equities and rights) 165, , , ,198 (13) (44) Futures Bonds 16 15, , Embedded put option ,086 - ETFs 133 1, Total 165, , , ,715 1, Number of trades shrank about 25 percent to reach 13 million times. First market s equities and rights value, volume and number of trading was respectively 58, 69 and 56 percent of total figures in the market. 19

20 Table 11 Equities and rights retail and bloc trading Items FY ended 20 March 2015 FY ended 20 March 2014 % Change Trading value (IRR billion) 542, ,198 (44) First market (IRR billion) 313, ,334 (41) Second market (IRR billion) 229, ,864 (47) Number of shares and rights (million) 165, ,689 (13) First market (million shares) 114, ,126 (4) Second market (million shares) 51,021 70,563 (28) Number of trades (million) (25) First market (million times) 7 10 (30) Second market (million shares) 6 7 (14) Table 12 Equities and rights value, volume and number of trading Fiscal year Ended 20 March 2013 Ended 20 March 2014 FY ended 20 March 2015 Volume (million shares) Value (IRR billion) Number of trades (millions) No. of trading days Vol. (Mil. shares) Daily average Value (IRR Bil.) No. of trades 80, , ,076 21, , , ,968 70, , , ,251 53,595 Table 13 Equities and rights daily average trading (FY ended 20 March 2015) 20 Period Trading days Daily average trading value (IRR billion) Daily average trading volume (million shares) Daily average number of trades 21 Mar 20 Apr 17 1, , Apr 21 May 22 6, , May 21 Jun 19 3, , Jun 22 Jul 22 1, , Jul 22 Aug 19 1, , Aug 22 Sep 23 1, , Sep 22 Oct 20 1, , Oct 21 Nov 18 2, , Nov 21 Dec 20 2, , Dec 20 Jan 21 1, , Jan 19 Feb 20 1, , Feb 20 Mar 20 2, ,620

21 5-2 Initial public offerings (IPOs) In the financial year ended 20 March 2015, the listing committee held 12 sessions and ratified admitting of 8 applied companies, some were listed during the past year and the rest are under process of listing. The following tables indicate the latest status of the new companies listing, IPOs information, as well as bonds and ETFs listings value, equal to IRR 3,700 billion and IRR 1,500 billion respectively. Table 14 IPOs (FY ended 20 March 2015) No. Company Date of admission Date of listing 1 Sepahan Oil 7 Jul Jan SabaNour Steel 16 Mar May Jey Oil 15 Dec Jun Mo in Mellat 5 Jan Jun Ghadir Capital & Industry Development 6 Cement Industries Investment & Development 4 May Nov Jul Jan Khuzestan Cement 15 Dec Mar Shomal Shargh Housing Investment 9 South Kish Kaveh Steel 16 Mar May Mar Sep Mobin Petrochemical 3 Aug Feb Ma Insurance 19 Nov Mar Middle East Bank 26 Oct Mar Kavir Tire 23 Feb Mar 2015 Date of offering 26 May May 2014 Capital (IRR billion) At listing Last capital 1,050 1,050 1,036 2,036 Notes Annulled by the major shareholder - 1,000 3,000 Listing and offering period extended - 2,900 33, Nov ,000 4,000-14, Once extension and offering 25 Jun 1, ,000 6,000 Listing and offering period extension 16 Sep ,250-1,000 1, Mar Mar ,000 4, Fajr Petrochemical 23 Feb ,000 1, Jam Petrochemical 23 Feb ,800 9, Saveh Cement 23 Feb

22 Table 15 Newly listed companies trading value No. Company IPO day trading Normal trading from IPO day till 20 Mar 2015 Million shares IRR billion % of capital Million shares IRR billion % of capital 1 Saba Nour Sepahan Oil 90 1, ,227 6, Shomal Shargh Housing Investment , Cement Industries Investment & ,330 2, Development 5 Middle East Bank Kavir Tire Total ,242-3,145 10,025 - Table 16 Debt securities listing Name Type of security Listing date Offering date Maturity date Value (IRR billion) Rayan Saipa Leasing Kaveh Jonoub Steel Shiraz Municipality Certificate of 7 Sep Sep Mar Deposit Sukuk 20 Sep Sep Sep ,000 Certificate of Cooperation 28 Oct Nov Nov ,200 Total 3,700 Table 17 Exchange Traded Funds (ETFs) Name Type of fund Manager No. of units (mil) Firouzeh Asia Firouzeh Asia Brokerage Firm Kardan Stock investment Kardan Investment Bank Units nominal value (IRR) Total (IRR billion) 50 10, ,000 1,000 Sepaas 1, Listed companies classification changes 22 Based on article 54 of listing directives, TSE is in charge of classifying the listed companies on the basis of its first and second markets standards around May each year. In the past fiscal year ended 20 March 2015 totally 314 companies were listed in 37 sectors at TSE. The de-listed companies are transferred to IFB to continue their trading in the capital market. Table 18 points out (de)listings of the past three years.

23 Table 18 New listings and de-listings Fiscal Year Ended 20 Mar 2015 Ended 20 Mar 2014 Ended 20 Mar 2013 # Co. at year s beginning No. of listed and offered companies Saba Nour Steel, Sepahan Oil, Shomal Shargh Housing Investment, Cement Industries Development Investment, Kavir Tire, Middle East Bank Ta min Oil & Gas, Mobile Telecom, Banks Investment & Pension Fund, Iranian Leasing, Ta min Pharmaceutical Investment, Pakshou, Khalij Fars Petrochemical industries Kharazmi Investmnent, Mellat insurance, Bandar Abbas Refinery No. of de-listed companies 9 Firouza Engineering, Toulipers, Rangin Industrial and Chemical, Tousi Wool Knitting, Iran gypsum, Sadid Industrial Group, Kaf, Isfahan Petrochemical,Kavian Steel Doroud Farsit, Ahvaz Farsit, Azarit, Tak Cable, Mashhad Packaging, Pars Sugar, Bakhtar Cable, Permit, Jaam e Jahan Nama, Kerman Ferromolybdenum Italran, Pars Home Appliances, Zangan Power Supply, Sadra, Azmayesh Industries, Telecom Manufacturing, Payam Industries Development, Iran Cable Manufacturing, Mashhad Carton, Sadid Pipes and Installations, Torbat e Jaam Food and Sugar, Keyvan, Ghazvin Glass, Iran Packaging Industries, Plastiran, Abgineh Manufacturing and Industrial, Shahin Plastic Manufacturing, Naab Vegetable Oils, Henkel Pakvash, Pars Packaging, Azarit, Ahvaz Farsit, Doroud Farsit No. of Co. at year s end TSE listed companies financing Number of the listed companies with capital increase in the fiscal year ended 20 March 2015 was 110 and the total value amounted IRR 158,861 billion. Table 19 demonstrates more details about their capital increase. Table 19 Capital increase in TSE s listed companies Fiscal year Resources for capital increase (IRR billion) Capital increase (IRR Receivables and cash contributions Retained earnings and excess of reassessed assets billion) Ended 20 73,276 85, ,861 March 2015 Ended 20 73,225 85, ,649 March 2014 Ended 20 March ,979 25,538 57, Member brokerage firms At the end of the past fiscal year, 101 brokerage firms provided their services through 1,414 trading stations to clients. Among the members, 97 firms were based in Tehran and 4 others out of the capital city. 93 brokerage firms were authorized to provide on-line trading access, 41 were listing consultants and 42 firms were offering services. Moreover, 38 firms have portfolio management services, as well as 50 brokerage companies managing mutual funds. 23

24 Table 20 TSE s brokerage firms Brokerage firms and stations In the past fiscal year, total new trading stations license, minus the number of license termination of the existing stations, amounted to 223 units, as mentioned in the table below. Table 21 Activity and trading authorization FY ended 20 Mar 2015 FY ended 20 Mar 2014 Brokerage firms Trading stations at TSE s trading floor Trading stations at brokerage firms Tehran offices Trading stations at brokerage firms provincial regional offices Trading stations in regional floors Trading stations of mutual funds Total trading stations 1,414 1,191 Description FY ended 20 Mar 2015 FY ended 20 Mar 2014 Floor launching Trading station launching License FY ended 20 Mar 2015 FY ended 20 Mar Office launching License termination (13) (9) Local representative Issued (terminated) (5) - launching licenses Total Total Regional trading floors Among the major activities of the regional trading floors are: facilitating access to the trading engine, improving investment culture and providing training through courses and workshops, as well as producing media programs and developing brokerage networks and any other related market operations. 24 Tehran Stock Exchange has regional floors in 21 provinces around the country, and in other parts the brokerage firms offices provide investment services through their exclusive floors. During the fiscal year ended 20 March 2015 total amount of IRR 226,702 billion, 21 percent of total trading value (buy and sell) were executed out of the capital Tehran. Details of trading value in each trading floor are as mentioned in the following table.

25 Table 22 TSE and brokerage firms regional trading statistics Exchange s trading/regional floor No Region Trading value (IRR billion) FY ended 20 Mar 2015 % of total FY ended 20 Mar 2014 Trading value (IRR billion) % of total Brokerage firms floors/offices FY ended 20 Mar 2015 No Region Trading value (IRR billion) % of total FY ended 20 Mar 2014 Trading value (IRR billion) 1 Kish 111, , Arak 1, , Isfahan 19, , Ahwaz 1, , Mashhad 14, , Sanandaj Karaj 11, , Amol , Tabriz 8, , Babol , Rasht 8, , Neishabour % of total , Zanjan 7, , Gorgan , Shiraz 5, , Kashan , Yazd 5, , Shahroud Ardebil 4, , Bojnourd Kerman 4, , Doroud Qom 3, , Rafsanjan Kermanshah 3, , Shahr e kord Ghazvin 2, , Nour Hamedan 2, , Boushehr Sari 2, , Khoram abad Uremia 1, , Boroujerd Bandar Abbas 1, , Babolsar Semnan 1, , Sabzevar Birjand , Gonbad Zahedan Total 219, , , , Chart 04 Regional trading floors 120, ,000 80,000 60, (IRR Billion) 2013 (IRR Billion) 40,000 20,000 0 Kish Isfahan Mashad Karaj Tabriz Kerman Zanjan Shiraz Yazd Rasht Hamedan Ardebil Qazvin Kermanshah Qom Sari Urumieh Bandar Abbas Semnan Ahvaz Birjand Zahedan 25

26 Hassan Ghalibaf Asl TSE CEO 3 Corporate Governance 3-1 Board of directors Mohammad Ebrahim Mohammad Pourzarandi Chairman Aliyar Salehi Vice chairman Seyed Mojtaba Fahim Hashemi Non-executive board member The efficient CG trends are necessary for well performing of capital market and overall economy in order to maintain and raise public confidence. Weak CG may deteriorate market s confidence, which in its turn leads to outflow of resources, liquidity crisis and price crash in the Exchanges. As a matter of fact, corporates should be accountable not only to their shareholders, but also their investors and other members. Tehran Stock Exchange attempts to observe the highest ethics, punctual and transparent disclosure, as well as observing all rules, regulations and directives through the Exchange s CG directives implementation. This has made a set of inquiries, by which the board of directors and its committees to comply their activities with the requirements. The elected members of the board in the last FY held 25 sessions in order to rule efficient governance on the Exchange s affairs in line with shareholders benefits and other stakeholders balanced profits. The board applies three technical and two subordinate committees for efficiency of its duties. Table 23 Tehran Stock Exchange s board of directors 26 Board Member Representative Position Education Mellat Financial Group Mohammad Ebrahim Mohammad Pourzarandi Chairman Industrial management, PhD. Mofid Securities Co. Aliyar Salehi Vice chairman Industrial engineering, B.S. Bank Tejarat Brokerage Seyed Mojtaba Fahim Hashemi Non-executive Accounting, B.S. Firm board member Bahman Investment Co. Ali Rostami Non-executive board member Saba Ta min Investment Co. Pasargad Arzesh-afarinan Group Mohammad Reza Rostami Ali Akbar Amin Tafreshi Non-executive board member Non-executive board member Tadbir Investment Co. Mojtaba Taghipour Non-executive board member Securities and Exchange Organization Commercial management, PhD. Financial management, PhD. Financial management, M.S. Financial management, M.S. Hassan Amiri SEO supervisor Financial management, PhD. Hassan Ghalibaf Asl CEO Financial management, PhD.

27 Ali Rostami Non-executive board member Mohammad Reza Rostami Non-executive board member Ali Akbar Amin Tafreshi Non-executive board member Mojtaba Taghipour Non-executive board member Hassan Amiri SEO supervisor Auditing committee The committee is in charge of monitoring internal and independent external auditors, proposing independent auditors to the board of directors, as well as the shareholders in order to appoint auditors, determine their fee levels and dismiss them, reviewing or ratifying their activities, receive auditing reports and adopt the revisions. The auditing committee includes 6 members, at least 3 of them among the non-executive board members and the rest are appointed out of the Exchange by the board of directors Risk management and strategic committee The risk committee and strategic subsidiary commission are in charge of monitoring management activities in strategic policies and market risk control, as well as liquidity, operational, reputational and other risks. Risk management committee is an integral part of the Exchange s risk control mechanism. The committee aims to help the management team to reach targets matched with the strategic plan. The members report all subjects they believe are related with governance, rule of law and risk management duties to the board of directors. The committee consists of 3 members, including a member of the board, one of the executive directors, appointed by the CEO and an accredited expert qualified by the board of directors Compensation committee An overall oversight of the payments to the staff, and ensuring that compensations are consistent with organizational culture, goals, strategy and surveillance environment as described in the Exchange s vision are among this committee s responsibilities. There are 5 members in compensation committee, including the non-executive board member, the CEO, and logistics vice president or HR chief expert. 3 non-executive member of the committee are appointed by the CEO Rules and regulations committee The board of directors has formed this committee in order to execute its own responsibilities more effectively. The rules and regulations committee is in charge of monitoring the executive procedures, as well as decision making on new trading offices authorization, members and issuers disciplinary infringing verdicts, etc. The committee reports the results of its reviews to the board members. There are 4 members in the committee, including 3 non-executive board members, as well as the CEO Construction committee Tehran Stock Exchange s new building construction project was started over a land as large as 2,621 sqm. in Sa adat Abad region since 2010, Tehran. The committee acts to direct, apply proper policies and monitor the construction stages in this project. 3 board members, as well as the CEO, logistics vice president and 2 independent experts are the committee members with the project executor contractor as the committee s secretary. 27

28 TSE s New Building Table 24 New building floors and space application 28 Floors Application Area sqm. -6 Data center 2,579-5 to -2 Parking 10,076-1 Commercial use, training and assembly salons 2,217 GF Lobby, trading floor 1,606 Mezzanine Commercial use, investors assembly 1, to +10 Administrative use 15,928 Total area 33,768

29 3-1-6 Board of directors secretariat Based on article 34 of the Exchange s statutes, the board of directors has a secretariat which operates under the chairman. This is in charge of arranging board meetings, documentation, as well as minutes preparation. The secretariat is the official reference for disseminating the board s decisions and the source for any enquiry from the board. 3-2 Human force The table below depicts the human capital TSE enjoys in its current and development plans on 20 March Table 26 Human force on 20 March 2015 Education Staff % of total Tehran Regional floors Total PhD Master s Bachelor s Associate s General Diploma and below Total TSE Staff 29

30 3-3 Organizational chart Tehran Stock Exchange s organizational chart is shown below. The board s appointed CEO is in charge of the executive affairs. The other executive directors operate under the CEO s supervision. There are four deputies, as well as the CEO s department. General Assembly Compensation Commitiee Advisors Board of Directors Strategic & Risk Management Commitiee Board of Directors Secretarial Internal Auding Auding Commitiee Advisors CEO Physical Security Legal & Contact Affairs Dept CEO Office Public Relations & International Dept Logistics Deputy Issuers & Members Deputy Market Deputy Development Deputy Finance Dept. Issuers Dept. Operations Dept. Research & Development Dept. AdminiStration Dept. Listing Dept. Data Information Dept. Organizational Excellence Dept. Information technology & Systems Dept. Members Dept. Market Sruveilance Dept. Investment Development Dept. 3-4 Independent auditor and legal inspector Bayat Rayan Auditing Institute is the independent auditor and legal inspector of Tehran Stock Exchange and Rahyaft Auditing Institute is the alternate one. The auditing committee of the Exchange sets remuneration and proposes the auditor to the general assembly. 30

31 TSE s New Building 31

32 4 Annual performance and achievements In line with the macro strategies, development plans and current affairs were arranged for the fiscal year and accomplished as stated in the following table. 32 Departments Development plans Current programs Issuers and members Development Administration Preparing a comprehensive report on cement and auto manufacturing industries Establishing mutual funds secretariat and frequent joint meetings with funds managers Revising securities listing directive Holding cement industry s roundtable Studying TSE s micro-structures and the related regulations Designing and calculating new indices and supervising TSETMC S calculations Preparing single-stock ETF s statutes and prospectus Studying the feasibility of introducing index derivatives products; case studies: index portfolio futures and option contracts Reviewing possible mechanisms to increase listed companies free float equities Reporting on corporate governance index design and calculation Studying short term financing Searching the listed industries individual features and proposing mechanism for proper financing Making the required arrangements for market data distribution Ratifying and implementing capital increase from IRR 450 billion to IRR 900 billion 10 companies admission process was completed, 4 companies were listed and the remaining was pending due to market s conditions for the coming year. 3 ETFs, one Ijarah sukuk, a CD and one municipality bond. 9 companies were determined as disqualified for continued listing and were transferred to the junior exchange, Iran Farabourse. 150 thousand hours of training courses were held in different regions, as well as 750 person/hour training for improving issuers standards person/hour technical training for market participants 1600 person/hour technical training for the brokerage houses 7900 person/hour general and promotional training 474 person/hour technical training for issuers 6 training seminars regarding new financial instruments Publishing 4 new books and 6 technical brochures Holding frequent monitoring sessions and quarterly plans controlling trend Holding training courses for the personnel Providing credits and facilities to the staff Development of rules and guidlines Proceeding with the new building development project

33 Market - Trading operations Suspending and re-opening operations, trading cancellation and market-making Publishing frequent reports on market activities Market surveillance and risk control CEO and board of directors - Holding exhibitions and events Legal processes and contractual affairs Public relations and investors relations Quarterly press conferences and other market s disclosure actions Foreign investment and international relations arrangements FEAS General Assembly, Nov. 2015, Isfahan 33

34 5 Board of directors proposal for dividend payments and capital increase The members of the board would like to ask the shareholders to accept their proposal for the payment of IRR 100 as DPS, and allocating the rest of EPS for reinvestment, due to the ongoing new building development project and other expansion plans. The feasibility study to increase the capital from IRR 900 billion to IRR 1,100 billion has been prepared with the auditor s report. The study and the report were submitted to the SEO for authorization. 6 Tehran Stock Exchange s strategic plan TSE s strategic plan includes goals and macro strategies, as well as operational and development programs in 2014 as follow: 6-1 Goals Goals are described in the following seven parts: Goal1: increasing capital market s share in financing economic productive activities Goal2: applying effective regulations and procedures in order to protect market s integrity and shareholders rights Goal3: deepening and expanding the market, as well as facilitating its public access with modern technology and updated processes Goal4: improving financial literacy and investment culture in the country Goal5: observing accountability and transparency to interact with all stakeholders Goal6: Developing physical assets and human capital constant Goal7: Making value for shareholders 6-2 Macro strategies The Exchange s macro strategies in operational and administrative fields include: Designing new financial instruments and trading mechanisms Increasing efficiency in regional trading floors Increasing incentives and constant improvements in the staff occupational attitudes Reviewing organizational regulations and management settings Public investment development and encouraging investors to indirect participation in the market Developing investment culture and planning to raise investment base of the country Constant improvement of human sources capability and efficiency Planning for less ownership centralization and more free float equities in the listed companies Trading and surveillance infrastructure development and upgrading Supporting disclosure system, aiming at mitigating risks and increasing transparency Developing interaction with the listed companies and providing new mechanisms for monitoring issuers and upgrading internal auditing Improving listing advisors status and role in the listing process Creating advantage and brand management at TSE Effective connections with the market s active participants to establish required regulations and deregulations 34 Facilitating trading access in cyber space Effective application of international memberships and cooperation with international Exchanges Cash flow management by capital and money markets mechanisms

35 6-3 Targets and plans in 2015 Department Development plans Current affairs Issuers and members Calculation and publishing corporate governance grade of the listed companies Listing 8 new companies and transferring 4 companies from IFB Revising issuers disciplinary mechanism Revising issuers reporting and surveillance structures Listing 3 project and construction funds Listing 5 participation bonds Development Introducing a new product to the market Cooperating to revise and amend foreign investment regulations Implementing equity portfolio futures contracts Implementing option contracts trading Feasibility study on warrants trading Regulating to launch vulture funds Acknowledging securities exchanges incentives for the listed companies Calculating and analyzing market s and industrial risks and rating Feasibility study on designing and introducing new indices at TSE Reviewing Iran s capital market shortcoming in market-making process and comparative analysis with other Exchanges Holding 2 industry tables Holding 150k hour/person in regional floors Making 500 visits to brokerage firms Holding 1k hour/person training for the listed companies directors Listed companies rating reports Meetings with mutual funds Analyzing industrial status Option trading platform establishing Continuous monitoring and seasonal control on plans development Continuous assessment of TSE s departments activities Holding 5 training seminars in regional floors on new instruments and entities 10k hour/person technical courses for markets participants 1k hour/person technical courses for brokerage firms 1k hour/person technical courses for issuers 10k hour/person public and investment courses Publishing 2 books and 6 brochures Revising selection directives for TSE 30 largest and TSE 50 blue-chip indices Holding 6 national training seminars Supporting university projects and research works 35

36 Administration Market CEO and board directors Establishing and assessing profiles of intelligence features among staff Searching for TSE s required staff Designing and implementing Business Intelligence (BI) platform Procuring administrative automation software Applying data distribution system Improving (on time information) reporting in BI platform Media Comprehensive Initiative Holding FEAS GAM Holding training courses for staff Installing mechanized system for logistics Trading directives revision Integrated management on regional floors internet systems Pursuing new building construction project Trading symbols halt and reopening Market making of the securities Trading cancellation Market reports preparation Making new contracts in the futures market Surveillance measures and report making Bloc and wholesale trading Special trading price discovery operations Holding and attending exhibitions in 5 regions Seasonal meetings with stakeholders Members and listing regulations revision Legal consultation Foreign delegates and international investors reception in the market 36

37 Forecasted income statement for the fiscal year ending 20 March 2015 (IRR million) Item FY2014 (Special value) FY2014 (Main) Audited budget FY2015 (Special value) Audited budget FY2015 (Main) Income from services 513, , , ,245 Costs of services (181,027) (181,027) (216,601) (216,601) Gross income 332, , , ,644 Administrative and general expenses (90,709) (90,709) (112,820) (112,820) Operating profit 241, , , ,824 Net other income and non-operating expenses Profit before including affiliated company s profit (loss) 135, ,413 38,866 51, , , , ,054 Share in affiliated company s 47, ,00 - profit (loss) Tax on current operations (61,846) (61,846) (125,213) (125,213) Net profit from current operations 362, , , ,841 Net profit per share Tehran Highways 37

38 38

39 FEAS General Assembly, Nov. 2015, Isfahan 39

40 40

41 Financial Statements For the Fiscal Year Ended March 20,

42 Report of Independent Auditor To the General Assembly Tehran Stock Exchange Corporation Report on the Financial Statements 1. We have audited the balance sheet of Tehran Stock Exchange Corporation as of 1393 and the income and cash flow statements of the Company for the fiscal year ended 3/20/2015, together with notes 1-30 thereof. Board of Directors responsibility 2. The responsibility of financial statements is with the company s Board of Directors. The board of directors should plan, apply and maintain the relevant internal controls in order to prepare the financial statements which are free from material misstatements resulted from frauds and errors. Auditor s and legal Inspector s Responsibility 3. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with the Auditing Standard of financial statements. These standards require that we meet the requirements of professional ethics and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. The audit includes examining, on a test basis, evidences supporting the amounts and disclosures in the financial statements. Deciding on the auditing methods is on the auditor s judgment and based on reviewing any risks of material misstatement resulted from frauds and errors in the financial statements. To review the risks, we assess internal controls related to the preparation and presentation of financial statements in order to plan the relevant audit methods in the current circumstances, not to express an opinion on the effectiveness of the internal controls. An audit also includes assessing the accounting principles and procedures used and significant estimates made by the Board as well as evaluating the overall fairness of financial statement presentation. We believe our audit provides a reasonable basis for our opinion. Also, our responsibility is to report to the general assembly of shareholders on any noncompliance with the legal requirements set out in the Commercial Code as amended and the company s provisions of the Articles of Incorporation. Opinion In our opinion, the financial statements referred to above present fairly in all material aspects in conformity with Iranian Accounting Standards.

43 Explanatory Note 5. Financial statements of the Company for the year ended 3/20/2015 have been audited by another auditing firm and an unqualified opinion has been reported on 31/5/2014. Report on Other Legal and Regulatory Requirements Reports on Duties of Legal Inspector 6. The transaction included in the explanatory note 28 to the financial statements has been examined as all transactions subject to the Article 129 of the Commercial Code, which are conducted and reported to us by the Company s Board of Directors. We have not observed any evidences indicating that the transaction has not been conducted on the appropriate trade conditions and in normal course of the company s activities. 7. We have examined the report of the Board of Directors to the Annual General Meeting of the company in respect of the Company s general status and activities, as the subject of the article 232 of the Commercial Code. Based on our examinations, we have not observed any material cases of non-conformity of the provided information with books and records submitted to us by the Board of Directors. 8. With respect to compliance of companies registered with Securities and Exchange Organization with required rules and regulation, we have examined the disclosure procedure for these companies. We have not observed any material cases of non-compliance with the rules and regulations, except no preparation of interim financial statements of the period ended 21/6/2014. Report on Other Auditor s Legal and Regulatory Responsibilities 9. With respect to the article 33 of anti-money laundering rules for auditors, we have examined the rules and procedures compliance in the framework of auditing standards. We have not observed any material cases of non-compliance with the rules and procedures. 15 June 2015 Bayat Rayan Audit and Financial Services Firm 43

44 Tehran Stock Exchange Corporation Financial Statements For the Fiscal year ended March 20, 2012 We would like to submit the financial statements of Tehran Stock Exchange Corporation for The fiscal year ended March 20, Components of the financial statements are as followings: Equity method Primary Financial Statements Balance sheet Income statement Retained earnings account Cash flow statement Primary Financial Statements Balance sheet Income statement Retained earnings account Cash flow statement Explanatory Notes History Basis for preparing Financial Statements Equity basis Significant Accounting policies Notes to the Financial Statements (items and numbers) The financial statements have been prepared according to the National Accounting Standards and they have been approved by the Board of Directors on May 26, Members of the Board of Directors Member of the Board of Directors Legal Person Position Mellat Financial Group Mohammad Ebrahim Mohammad Chairman Poorzandi Mofid Brokrage Co. Ali Yarsalehi Vice Chairman Bank Tejarat Brokrage Co. Seyed Mojtaba Fahim Hashemi Non-executive member Bahman Investment Co. Ali Rostami Non-executive member Saba Tamin Investment Co. Mohammad Reza Rostami Non-executive member Pasargad Bank Value Creation Group Ali Akbar Amin Tafreshi Non-executive member Tadbir Investment co. Mojtaba Taghipoor Non-executive member Hasan Ghalibaf Asl Managing director 44

45 Equity Method Balance Sheet -March 20, 2015 Assets Note March 20,2015 Million Rials March 20,2014 Million Rials Liabilities & shareholders equity Note March 20,2015 Million Rials March 20,2014 Million Rials Current Assets: Current Liabilities: Cash & Bank 5 6,631 25,860 Other accounts Payable 14 80,499 88,821 Short Term Investments 6 432, ,500 Dividends 15 3,670 2,971 Trade Accounts Receivable 7 30,132 19,234 Provision for Taxes 16 85, ,763 Other Accounts Receivable 8 37,911 38,817 Prepayments 9 3,017 3,143 Total Current Assets 510, ,554 Total Current Liabilities 142, ,562 Non-Current Assets: Noncurrent liabilities: Tangible Fixed assets , ,286 Intangible assets 11 3,146 2,721 Provisions for Employees Termination Benefits 17 28,043 19,144 Long Term Investments , ,739 Other Assets 13 16,048 61,887 Total Non-Current Assets 1,052, ,633 Total Non-Current Liabilities 28,043 19,144 Total Liabilities 170, ,706 Shareholders equity: Paid-in capital(900 million shares paid totally) , ,000 Legal reserve 19 61,369 45,000 prudential reserve 19 65, ,346 Retained earning 364, ,135 Total Shareholders equity 1,391,831 1,078,481 Total Assets 1,562,752 1,304,187 Total Liabilities and Shareholders, Equity 1,562,752 1,304,187 Explanatory notes are an integral part of financial statements. 45

46 Equity Method Income Statement For the Fiscal year ended March 20, 2015 Note Fiscal year ended March 20,2015 Million Rials Fiscal year ended March 20,2014 Million Rials Services revenue , ,519 Cost of services 21 (181,027) (143,130) Gross income 332, ,389 Administrative and general expenses 22 (90,907) (77,599) Operating profit 241, ,790 Net other non-operating income and expenses ,348 99,238 Income irrespective of income from associate companies 377, ,028 Income from associate companies 12 47,532 44,002 Income before tax 424, ,030 Income tax 16 (61,846) (116,138) Net income 362, ,892 Earnings per share Revenue Gains Retained Earnings Account Net Income 362, ,892 Retained earnings at the beginning of the period 469, ,983 Allocatable income 831, ,875 Income allocation: Capitalization 18 (336,000) (106,150) Dividend (49,500) (60,000) Legal reserve 19 (16,369) (15,000) Prudential reserve 19 (65,477) (91,590) Allocated income during the period (467,346) (272,740) Retained earnings at the end of the period 364, ,135 Explanatory notes are an integral part of financial statements. 46

47 Equity Method Cash flow Statement For the Fiscal year ended March 20, 2015 Note Fiscal year ended March 20,2015 Million Rials Million Rials Fiscal year ended March 20,2014 Million Rials Operating activities: Net cash inflow from operating activities , ,821 Return on investments and servicing of finance: Interest received from short-term investment 118,805 86,289 Earnings received from long-term investment 1, Dividends Paid (48,808) (59,767) Net cash inflow (Outflow) from Investment Returns and servicing of finance 71,458 27,416 Income tax: Income Tax paid (117,900) (36,318) Investing activities: payments for acquisition of short-term investment - (361,500) Payments for acquisition of tangible and intangible assets (361,614) (155,164) payments for acquisition of long term investments (1,653) - Receipts from tangible fixed asset sales Receipts from short term investment sales 98,672 - Receipts from long-term investment sales Receipts from prudential reserve release 49,500 - Net cash out flow from investing activities (214,732) (516,504) Net cash increase (19,239) 8,415 Cash Balance at the beginning of the period 25,860 17,445 Cash balance at the end of the period 6,621 25,860 Non-cash trades 2,047 1,245 Explanatory notes are an integral part of financial statements. 47

48 Balance Sheet -March 20, 2015 Assets Note March 20,2015 Million Rials March 20,2014 Million Rials Liabilities & shareholders equity Note March 20,2015 Million Rials March 20,2014 Million Rials Current Assets: Current Liabilities: Cash & Bank 5 6,621 25,860 Other accounts Payable 14 80,499 88,821 Short Term Investments 6 432, ,500 Dividends 15 3,670 2,978 Trade Accounts Receivable 7 30,132 19,234 Provision for Taxes 16 58, ,763 Other Accounts Receivable 8 37,911 38,817 Prepayments 9 3,017 3,143 Total Current Assets 510, ,554 Total Current Liabilities 142, ,562 Non-Current Assets: Noncurrent liabilities: Tangible Fixed assets , ,286 Intangible assets 11 3,146 2,721 Provisions for Employees Termination Benefits 17 28,043 19,144 Long Term Investments 12 34,839 31,139 Other Assets 13 16,048 61,887 Total Non-Current Assets 940, ,033 Total Non-Current Liabilities 28,043 19,144 Total Liabilities 170, ,706 Shareholders equity: Paid-in capital(900 million shares paid totally) , ,000 Legal reserve 19 61,369 45,000 prudential reserve 19 65, ,346 Retained earning 252, ,535 Total Shareholders equity 1,279,764 1,001,881 Total Assets 1,450,685 1,227,587 Total Liabilities and Shareholders, Equity 1,450,685 1,227,587 Explanatory notes are an integral part of financial statements. 48

49 Income Statement For the Fiscal year ended March 20, 2015 Note Fiscal year ended March 20,2015 Million Rials Fiscal year ended March 20,2014 Million Rials Services revenue , ,519 Cost of services 21 (181,027) (143,130) Gross income 332, ,389 Administrative and general expenses 22 (90,907) (77,599) Operating profit 241, ,790 Net other non-operating income and expenses , ,297 Income before tax 389, ,087 Income tax 16 (61,846) (116,138) Net income 327, ,949 Earnings per share Revenue Gains Retained Earnings Account Net Income 327, ,949 Retained earnings at the beginning of the period 392, ,326 Allocatable income 719, ,275 Income allocation: Capitalization 18 (336,000) (106,150) Dividend (49,500) (60,000) Legal reserve 19 (16,369) (15,000) Prudential reserve 19 (65,477) (91,590) Allocated income during the period (467,346) (272,740) Retained earnings at the end of the period 252, ,535 Explanatory notes are an integral part of financial statements. 49

50 Cash flow Statement For the Fiscal year ended March 20, 2015 Note Fiscal year ended March 20,2015 Million Rials Million Rials Fiscal year ended March 20,2014 Million Rials Operating activities: Net cash inflow from operating activities , ,762 Return on investments and servicing of finance: Interest received from short-term investment 118,805 86,289 Earnings received from long-term investment 13,526 12,953 Dividends Paid (48,808) (59,767) Net cash inflow (Outflow) from Investment Returns and servicing of finance 83,523 39,475 Income tax: Income Tax paid (117,900) (36,318) Investing activities: payments for acquisition of short-term investment - (361,500) Payments for acquisition of tangible and intangible assets (361,614) (155,164) payments for acquisition of long term investments (1,653) - Receipts from tangible fixed asset sales Receipts from short term investment sales 98,672 - Receipts from long-term investment sales Receipts from prudential reserve release 49,500 - Net cash out flow from investing activities (214,732) (516,504) Net cash increase (19,239) 8,415 Cash Balance at the beginning of the period 25,860 17,445 Cash balance at the end of the period 6,621 25,860 Non-cash trades 25 2,047 1,245 Explanatory notes are an integral part of financial statements. 50

51 1. Background 1.1. History Tehran Stock Exchange Corporation has been founded according to the Securities Market Law approved on November 22, 2005, and registered with the number with the Companies & Non-commercial Institutions Registration Office in Tehran. The head office of the company is located in Tehran and has 23 Branches within the country and an independent registered branch in Kish Island by now Main Activities According to the Provision 2 of the Articles of Incorporation, the main activities of the company are: Establishing, organizing and operating the Stock Exchange for making trades on listed securities by Iranian and foreign parties according to the law and regulations. Listing securities including securities of foreign issuers according to the law and regulations. Determining the brokerage membership conditions for different groups of members, admitting the membership applicants, and enactment and enforcement of professional and disciplinary principles. Providing conditions necessary for fair access of members to trades of listed securities. Cooperation and Consistency with the other financial institutions undertaking responsibilities related to securities trades, making researches, training, culture developing, and cooperation with other Iranian and foreign Exchanges to share information and experiences. Supervising well conduction of listed securities transactions and supervising issuers activities. Providing, collecting, processing and issuing information related to securities, and performing other duties according to the law and regulations Employment position The number of employees at the end of the financial period is as follows: Permanent and temporary employee March 20,2015 March 20,

52 2. Basis for preparing financial statements The financial statements (primary financial statements and equity method financial statements) of the Company have been prepared mainly on historical cost basis and, where necessary, current values have been used. 3. Basis for equity method 3.1. Equity method financial statements have been prepared through aggregation of items of Tehran Stock Exchange financial statements with TSE s share of changes in net assets and operation results of its associated companies including Farabourse (out of the counter) Company and Central Asset Management of Capital Market, less of unrealized gains and losses from transactions The investor company s share of associated companies operation has been reflected in income and comprehensive income statements as the case may be The fiscal year for TSE Corporation and Farabourse Corpotation is ended March and that of Central Asset Management of Capital Market (private stock) is ended January of every year. 4. Significant accounting policies 4.1. Investments Evaluation method Equity method financial statements Investor s financial statements Long term investments: Investment in associates Equity method Cost (less accumulated impairment of investments) Other long term investments Revenue recognition method: Investment in associates Other long term and current investments Cost (less accumulated impairment of investments) Equity method At earning approval by the investee s general association of shareholders (until the balance sheet date) Cost (less accumulated impairment of investments) At earning approval by the investee s general association of shareholders (until financial statements approval) At earning approval by the investee s general association of shareholders (until the balance sheet date) 4.2. Tangible fixed assets Tangible fixed assets are carried on the cost basis. Costs for betterment and substantial repairs resulting in a significant increase in the capacity and useful life of fixed assets or an improvement of their output quality, are accounted for as capital costs and depreciated during the remaining useful life of the relevant assets. Costs necessary to maintain the normal capacity of the assets like maintenance and insignificant repairs, are accounted for as expenses of the period when incurred. 52

53 4.2. Tangible fixed assets Tangible fixed assets are carried on the cost basis. Costs for betterment and substantial repairs resulting in a significant increase in the capacity and useful life of fixed assets or an improvement of their output quality, are accounted for as capital costs and depreciated during the remaining useful life of the relevant assets. Costs necessary to maintain the normal capacity of the assets like maintenance and insignificant repairs, are accounted for as expenses of the period when incurred Depreciation of tangible fixed assets are calculated based on the estimated useful life of the asset, according to the depreciation regulations included in the Article 151 of the amendment of the Direct Taxation Act approved in 1988 and on the basis of the following rates and methods: Assets Depreciation rate Depreciation method Buildings 7% Diminishing balance Computer system and hardware 3, 10 year Straight line Administrative equipments 10 year Straight line Vehicles 25% Diminishing balance Constructions of the rental building 3 Straight line Fixed assets acquired and used within a month are depreciated and carried from the beginning of the next month. When an asset is not used for any reason like work stopping, its depreciation will be equivalent to 30% of the depreciation rate included in the table above Foreign currency translation Foreign currency items with the formal exchange rate at the balance sheet date and expenses carried in foreign currency at historical cost are translated with the formal exchange rate at the date the transaction is entered into. Differences arising from settlement or exchange of foreign currency items are recognized as income or expenses of the period when incurred Provision for employees termination benefits Provision for employees termination benefits are calculated and carried according to their last monthly fixed salary and continuous benefits for every year of their service Revenue recognition Revenue sources of the Company are commissions from trading, admitting and listing fees, brokerage fees, broker services and other sources. The income resources are recognized as realizing over the time when services are rendered and as proportionate to the service time length Intangible assets Intangible assets are carried on the cost basis and amortizable intangible assets (software) are amortized until maximum 3 years. 53

54 5. Cash The company s cash in hand at the balance sheet date are as following: March 20,2015 Million Rials March 20, 2014 Million Rials Bank accounts (Rial) 5,133 24,846 Fund (Rial, foreign currency) 5-1 1, Bank accounts (foreign currency) Total 6,621 25, The balance of foreign currency fund has been included 4,288 Dollars, 9,036 Euro, 4,441 Pound, and 2,665 Yuan which have been converted to 33,530 Rial, 36,450 Rial, 50,900 Rial and 5,350 Rial, respectively The balance of foreign currency bank accounts has been included 14, Dollars, 2.54 Euro which have been converted to 27,994 Rial and 30,156 Rial respectively, at the balance sheet date. 6. Short term investments Notes March 20,2015 Million Rials March 20,2014 Million Rials Bank Melli deposits - 200,000 Bank Pasargad deposits 100,000 - Bank Parsian short term deposits ,591 - Bank Sarmaye deposits - 21,500 Bank Day deposits ,000 Bank Tejarat deposits 5, ,000 EN Bank deposits - 100,000 Mashad Municipality participation Bonds ,000 - Gole Gohar Co. participation Bonds , , , Investments in participation bonds includes 70,000 participation bonds of Mashad Municipality and 180,320 participation bonds of Gole Gohar Co. with 20% interest rate and 1,000,000 Rial par value for each sheet Short term deposits in Parsian Bank will be held for more than 3 months. 54

55 7. Trade accounts receivable The receivables are including: Note March 20,2015 Provision for doubtful debts Net March 20,2014 Million Rials Million Rials Million Rials Million Rials Central depository and settlement corporation Listed companies (listing fees) Brokerage (rent and service) ,051-12,051 14, ,880 4,102 5,778 3, ,303-12,303 1,685 34,234 4,102 30,132 19, The amount, as the trade commission for the company in the last three days of the year, has been deposited and settled by Central Depository and Settlement Corporation on 31/3/ The amount includes 1,066 million Rial admission fee and 8,814 million Rial listing fee receivable from firms listed in TSE, from which the amount 4,102 million Rial is carried as Provision for doubtful debts The balance refers to brokerage services fee amounted 12,238 million Rials and rentals amounted 65 million Rial, from which 4,960 million Rial has been received up to the financial statements approval. 8. Other Accounts Receivable Notes Amount (Million Rials) March 20,2015 Amount (Million Rials) March 20,2014 Associated companies: Over the counter ,199 14,258 Financial centre 224 2,175 Others: Loans to Employees (current portion) 9,445 7,862 Income from short-term investment 7,326 4,185 Rentals receivable from banks 8-2 3,142 3,504 Security for building lease 2,670 3,420 Energy Exchange 119 1,213 Security and Exchange Organization Other 1,447 2,200 37,911 38,717 55

56 8.1. The balance of the receivable includes 12 billion Rial dividend for the financial year ended 20/3/2015 and the company s share of common expenses. 9. Prepayments The balance of prepayments is including: Note March 20, 2015 Million Rial March 20, 2014 Million Dollars Costs, goods and services 9-1 1,387 2,315 Tax 3,961 1,375 Insurance 1, ,978 4,518 Tax reserve transfer 16 (3,961) (1,375) 3,017 3, Up to financial statements approval, 550 million Rial from the prepayments refer to goods and services. 56

57 Total 534, ,269 (200) (133) - 914,446 21,224 7,321 (138) (104) - 28, , ,286 Capital inventory Capital prepayments progress , , , , , , , , (136,543) 32, ,938 22, , (48,227) 8, ,918 57,145 Assets in Total 266,789 8,261 (200) (133) 110, ,546 21,224 7,321 (138) (104) - 28, , ,565 Vehicle 2, ,611 1, ,440 1,171 1,561 Computer Fixtures and 24,800 8,261 (200) (133) ,557 13,149 5,211 (138) (104) - 18,118 15,439 11,651 Equipment, Building 18, ,997 6, ,169 11,828 12,719 building on Hafez 2, , ,576 1,238 2,067 Constructions Land 217, , , , ,567 Others 2014/3/ /3/ /3/ /9/ /3/20 Balance on Description Note 2014/3/20 Additions Sold assets Disposal assets Transfers and on on During the year sold assets Disposal assets Transfers on on on Balance Balance Balance Balance Balance Cost- million Rial Retained depreciation-million Rial Book value- million Rial 10. Tangible Fixed Assets 57

58 10.1. All tangible fixed assets amounted 52,928 million Rials are insured against fire, flood and earthquake, Equipment and fixtures additions are mainly related to purchasing computers and hardware, and network equipments Details related to assets sold are as following: Description Cost Retained depreciation Book value Sale price Sale loss Million IRR Million IRR Million IRR Million IRR Million IRR Million IRR Furniture, fixtures and computer The capital prepayments are amounted 32,938 million Rial in 2015 as compared to 22,460 Million Rial in Capital inventory refers to ironware for construction of the new building The balance of assets in progress heading refers to the new building which almost 47% is completed up to financial statement approval. It is expected to be completed 100% at the end of the year March 20, 2015 Million Rial March 20, 2014 Million Dollars Building project costs 1,807,703 1,289,500 Costs incured (845,290) (460,243) Progress percent (Rial) The project is insured up to 352 Billion Rial. 11-Intangible Assets The intangible assets are including: Note March 20, 2015 Million Rial March 20,2014 Million Rial 58 Water Membership fee 1,738 1,738 Regional floor Branches Software line of PRA link, MPLS and PTMP lines, 22 Mobile lines and 32 telephone line ,146 2,721

59 11.1. Software in the company is including: Cost Million Rials Retained Amortization Million Rials Book value Million Rials Balance on 2014/3/20 Purchases Balance on 2015/3/20 Balance on 2014/3/20 During the year Balance on 2015/3/20 Balance on 2015/3/20 Balance on 2014/3/20 Future Contract Software Firm valuing software Didgah software Free floats follow-up system Shareholders information software Other Software , , ,

60 12-Long Term investments Long term investments in companies are including: Equity method Investor Associated companies: Over the counter Corporation of Iran Central Asset Management Pvt. Iran financial center (private Joint) Other long term investments: Energy Exchange Corporation Iran mercantile Exchange corporation Central depository and settlement corporation No. of Shares Investment% March 2015 Million Rials March 2014 Million Rials March 2015 Million Rials March 2014 Million Rials Cost-equity Cost-equity Cost Cost 80,000, ,781 94,882 20,000 20, , ,494 1, ,000, , , , , , , ,000, ,000 10,000 10,000 10, , ,739 34,839 31, Since the TSE has insignificant share of net assets of Central Asset Management Company, we do not use equity method for investment in this company Investment in OTC of Iran is subject to Equity method as the following: Note Share of net asset Million IRR Million IRR Share of total net assets Million IRR Share of net asset Million IRR Goodwill Goodwill Million IRR Share of total net assets Million IRR Balance at the beginning of the year 94,882-94,882 63,744-63,944 Share of the financial year profit ,899-43,899 43,138-43,138 Dividend receivable (12,000) - (12,000) (12,000) - (12,000) 126, ,781 94,882-94,882 60

61 Income from investment of TSE in OTC, as amounted 43,899 million IRR, has been calculated and included in the financial statements based on equity method Share dividend of OTC has been 200 IRR per share for financial year ended 2014/3/20 and 150 IRR per share for financial year ended 2015/3/20 according to decision of the General Association of Shareholders on 2015/5/23. Income statements Million IRR Services revenue 226,992 Expenses (7,499) Net income 219, Significant parts of OTC s balance sheet and income statements based on equity method for the financial year ended 2015/3/20 are as following: Million IRR Balance sheet Million IRR Current assets 383,056 Current liabilities 85,137 Non-current assets 411,305 Non-current liabilities 2,985 Capital 400,000 Reserves 123,605 Retained profit 162,634 Total assets 774, , Investment in Central Asset Management Company is subject to the equity method as following: Balance at the beginning of the year Note Share of net asset Million IRR Goodwill Million IRR Share of total net assets Million IRR Share of net asset Million IRR Goodwill Million IRR Share of total net assets Million IRR 1,926-1,926 1,121-1,121 Share of the financial year profit ,633-3, Dividend receivable (65) - (65) (59) - (59) 5,494-5,494 1,926-1, Income from investment in Central Asset Management Company, as amounted 3,663 million IRR, has been calculated based on equity method and included in the financial statements Share dividend of Central Asset Management Company has been 71 IRR per share for financial year ended 2014/1/20 and 327 IRR per share for financial year ended 2015/1/20 according to decision of the General Association of Shareholders on 2015/3/11. 61

62 Significant parts of Central Asset Management Company s consolidated balance sheet and consolidated financial statements for the financial year ended 2015/1/20 are as following: Consolidated Balance sheet Million IRR Million IRR Current assets 58,838 Current liabilities 51,016 Non-current assets 20,715 Non-current liabilities 501 Capital 1,000 Reserves 100 Retained profit 26,700 Minority Interest 236 Total assets 79,553 79,553 Consolidated Income statements Million IRR Services revenue 16,224 Expenses (16,366) Other operating income and expenses 18,459 Minority interest (151) Net income 18, Other assets Other assets are including: Note March 20, 2015 Million Rial March 20, 2014 Million Rial A prudential reserve security with SEO ,000 Employee s loan (long term) 15,048 11,387 Nikoukari fund ,048 61,887 62

63 14. Other Accounts Payable Note March 20, 2015 Million Rial Mar 20, 2014 Million Rial Brokers (received additions) ,866 50,665 Performance bond deposit ,324 9,867 Insurance deposit ,042 6,259 Employee s saving fund ,975 5,339 Provision for employees unapplied allowed leave 5,523 3,898 Taxes payable ,249 2,793 Insurance Premium ,649 1,293 Information company Provision for incurred and unpaid expenses ,567 3,183 Securities and Exchange Organization - 3,858 Other 1,632 1,666 80,499 88, This amount is mainly related to additional amounts received from some brokerages, which has been finalized on 2014/3/20 and paid and settled up to 2014/4/ This amount is mainly related to Performance bonus deposit for the new building construction agreements This amount is mainly related to Insurance deposit for the new building construction agreements This amount is related to employee s investment deposit including 3% wages and salaries and 3% share of the company together with its profits. Also, 5495 million IRR from the balance of Employee s saving fund as amounted 16,470 million IRR at the balance sheet date has been paid to the employees as an interest-free loan This amount includes 1,330 million IRR as the tax of wages and salary of the employee at the end of the year and 1,919 million IRR as withholding tax This amount is related to insurance Premium of employees salaries and wages in the last month of the year This amount is related to the security employee s fee in the last month of the year This amount is mainly related to costs of water, electricity, gas and other outstanding expenses of the third month of the year 2015, from which 1,494 million IRR has been paid up to financial statement approval. 63

64 15. Dividends March 20, 2015 Million Rial March 20, 2014 Million Rial Dividend in ,387 - Dividend in ,032 Dividend in Dividends in Dividends in Dividends in Dividends in Dividends in ,670 2, Dividend approved in 2014 as amounted 49,500 million IRR has been paid according to the schedule. The balance of this account is related to a number of natural and legal shareholders without the introduced bank account. During the financial year, 48,808 million IRR from total annual dividend has been paid. Up to financial statement approval, 82 million IRR of the above mentioned balance has been paid. 16. Provision for Tax Summary of the provision for taxes is as the followings: Fiscal Year declared profit (Loss) Income taxable March 20,2012 -(Million Rials) Tax declared assessed finalized paid provision balance March 20,2011 Million Rials provision balance Basis for recognition , ,971 37,243 38,636-37,243 - Tax dispute settlement authorities , , , , ,138 Taxes and books auditing , ,382 61, ,846 Not audited Tax Prepayments 62, ,138 (3,961) (1,375) Total 58, , Performance tax of the previous years has been finalized and settled up to 2012/3/19.

65 17. Provision for employees termination benefits Turnover of this account is as follows: March 20, 2015 Million Rial March 20, 2014 Million Rial Balance at the beginning of the year 19,144 12,634 Paid out during the year 10,176 7,122 Current year provision (1,277) (612) Balance at the end of the year 28,043 19, Capital At the balance sheet date, the company s shareholders according to the article 9 of the Constitution are classified as: Mar 20,2015 Mar 20, 2014 Shareholders Shares % Shareholders Shares % Brokers ,701, ,840, Financial ,555, ,741, institutions Other 5, ,742, , ,417, Total 6, ,000, , ,000, According to the article 11 of the Constitution, anybody in every time may own directly or indirectly (through related parties) maximum 2/5 percent of the company s share On 2014/6/22, the company s share has increased from 450 billion IRR to 900 billion IRR from retained profit and legal reserve. The increase has been registered with Office for Registration of Companies on 2014/10/ Reserves Financial year ended 2015/3/20 Legal Reserve Million Rials Prudential Reserve Million Rials Balance at the beginning of the year 45, ,346 Raising during the year 16,369 65,477 Transfer to the capital - (114,000) Balance at the end of the year 61,369 65,823 65

66 20. Services Revenue Note March 20, 2015 Million Rials March 20, 2014 Million Rials Income from trading commission , ,629 Income from broker services ,554 90,064 Income from listing fees ,256 25,459 Rentals ,813 13,367 Total 513, , According to the approval of the Securities & Exchange Organization, income from trading commission and future contracts commission has been calculated based on value of per transaction up to 400 million IRR. March 20, 2015 Million Rial March 20, 2014 Million Rial Normal transactions 293, ,987 Whole trading 9,604 5,642 Future contracts and participation bonds 2,421 2,000 Total 305, , The income decrease as compared to the previous year is as a result of volume and value decrease of share traded Income from broker services Notes March 20, 2015 Million Rials March 20, 2014 Million Rials Trading system fees ,327 74,603 Brokerage fees 9,683 9,350 Exchange floor trading station fees 15,367 5,727 Trading stations permit fees Total 165,554 90, According to the Board of directors approval, trading system fees have been increased 25 million IRR for every trading floor and brokerage fees have been increased 10% up to 1,200 million IRR maximum, provided that, fixed and changing trading system fees do not exceed 200 million IRR Income from listing fees 66 Note March 20, 2015 Million IRR March 20, 2014 Million IRR Listing fees ,625 15,609 Admission fees ,631 9,850 25,256 25,459

67 According to the approval of the Securities and Exchange Organization, Listing fees are as equivalent to of capital and maximum 50 million Rials for every year According to the approval of the Securities and Exchange Organization, admitting fees are annually as equivalent to of capital and maximum 500 million Rial for the companies that their capital are equivalent or less than 250 billion Rials and 1000 Million Rials for the companies that their capital are more than 250 billion IRR.The fees are received only at the admission time Income from regional floors rental is related to the agreements entered into by brokerages for using offices. 21. Cost of services: The costs of services are including: Note March 20, 2015 Million Rials March 20, 2014 Million Rials wage and salary ,427 92,918 Supply and maintenance of Regional floors ,521 35,290 Floors security forces fees 9,912 8,238 Computers, communications and technology costs 3,484 3,388 Conference and exhibition costs 2,152 2,871 Council duty Marketing and development of markets and financial instruments , , Items of salary and wages are including: Note March 20, 2015 Million IRR March 20, 2014 Million IRR Salary and wages ,322 45,220 New year bonus and rewards 32,336 24,128 Insurance premium by employer 12,367 8,472 Over time pay 7,129 5,880 Employee s termination benefits 7,151 4,879 Mission allowance and traveling costs 2,139 2,460 Others 2,983 1, ,427 92, Increases in the direct wages and salaries are as a result of approvals by the board and the ministry of labor and social affairs The cost of supply and maintenance of regional floors are including: 67

68 Note March 20, 2015 Million IRR March 20, 2014 Million IRR Rentals for regional floors buildings ,446 20,959 Depreciation costs 5,987 4,941 Water, Electricity, Telephone and Gas 3,218 2,555 Repair and maintenance of floors 3,428 2,621 Entertainment Services fee 1, Duty Consumer goods Transfers Other 1, ,521 35, General and Administrative Expenses Note March 20, 2015 Million IRR March 20, 2014 Million IRR Salaries and wages ,372 53,050 Rent of building 10,459 9,090 Water, Electricity, Phone and Gas 3,039 2,292 The Board bonus 1,925 1,750 Council duty 1,858 1,748 Administrative and consumable supplies 1,534 1,364 Depreciation Cost 1, Entertainment 1,564 1,141 Meetings 1, Legal expenses The board attending compensation Publication cost Withholding and legal tax of the year Repair and maintenance Membership fee of professional associations Transfers Bad debt expenses Computer supplies 216 1,517 Others 742 1,200 Total 90,907 77,599 68

69 22.1. Compensation costs are including: March 20, 2015 Million IRR March 20, 2014 Million IRR Salaries, wages 28,531 23,107 bonus and rewards 14,119 15,262 Over time payments 5,752 4,958 Insurance premium by employer 5,800 4,224 Mission allowances and traveling costs 3,488 2,252 Employees termination benefits 2,715 1,789 Others 1,967 1,458 Total 62,372 53, Net other income and non-operating expenses Note Equity method The Company March 20, 2015 Million IRR March 20, 2014 Million IRR March 20, 2015 Million IRR March 20, 2014 Million IRR Bank deposit interest 109,292 89, ,292 89,461 Contribution bonds 12,654-12,654 - Income from rentals ,516 10,075 12,516 10,075 Central depository corporation s 1, , dividend Energy Exchange dividend Net profit (loss) of the foreign currency exchange Iran mercantile Exchange dividend Over the Counter Exchange dividend ,000 12,000 Central Asset Management dividend Income from tangible fixed assets 272 (9) 272 (9) sale Others 23-2 (987) (1369) (987) (1369) Total 135,348 99, , , Reconciliation of Operating Profit Reconciliation of operating profit to net cash inflow from operating activities is as the followings: 69

70 March 20, 2015 Million IRR Equity Method March 20, 2014 Million IRR March 20, 2015 Million IRR The Company March 20, 2014 Million IRR Operating profits 241, , , ,790 Increase in employees termination 8,899 6,510 8,899 6,510 benefits Depreciation expenses 7,481 5,460 7,481 5,460 Decrease (increase) in operating (12,421) (10,853) (12,421) (10,853) accounts receivable Increase (decrease) in prepayments 126 (2,741) 126 (2,741) Increase (decrease) in operating (27,562) 51,385 (27,562) 51,385 accounts payable Associated companies dividend 12,065 12, Other non-operating income and 11,531 9,211 11,531 9,211 expenses 241, , , , Non-cash Trades Non-cash trades of the financial year are related to capital increases in the investees from 2,047 million IRR receivables from them. 26. Contingent Liabilities and Capital Obligations According to the last estimates regarding to construction costs of the new building of the company (1,807,703 million IRR) on 2015/3/20, from which 845,290 million IRR has been paid up to the balance sheet date, the capital obligations of the company are totally 245,838 million IRR. Amount paid Capital Million IRR Million IRR Million IRR Completion operation agreement 293,064 76, ,150 Supervisor agreement 7,650 7,649 1 Advice and plan agreement 67,610 48,628 18,982 Contractor agreement 178, ,572 10,322 Qualitative control and workshop oversight 14,942 14, , , , Post balance sheet date events 70 No significant post balance sheet event has occurred requiring adjustments or disclosures in the financial statements.

71 28. Related parties transactions Party A. Transactions subject to the Article 129 of the Commercial Code OTC Relationship Type Board of Directors Member Transaction description Allotment of expenses Pricing method Building rental agreement Amount Million Rials Balance of due to (from) Million Rials Amount Million Rials Balance of due to (from) Million Rials 1,199 13,199 2,400 14,258 Iran Central Depository and Settlement Co. Board of Directors Member Rentals Rental agreement , ,187 Bank Tejarat Board of Directors Member Rentals Agreement Saba Tamin Brokerage Stock Experts Brokerage Tosse-eh Farda Brokerage Bank Tejarat Brokerage Mofid brokerage B. Other related parties Board of Directors Member Board of Directors Member Board of Directors Member Board of Directors Member Board of Directors Member Rentals Agreement Trading system and membership fees Regulations 1, Rentals Agreement Trading system and membership fees Regulations Rentals Agreement Trading system and membership fees Regulations Rentals Agreement Trading system and membership fees Regulations 1, Rentals Agreement 1, Trading system and membership fees Regulations 2, Securities and Exchange Organization Supervisor Rentals Agreement & Regulations 27, ,202 (3,858) 71

72 29. Earnings per share Net earnings per share included in the income statement, have been calculated based on the common shares number (900 million shares). Net earnings per share as amounted 364 Rial consist of 203 Rial earnings from operating activities and 161 Rial from non operating activities. 30. Retained earnings at the end of the year: Retained Earnings allocation depends on general assembly approval: Legal duties: Division of minimum 10% of net profit according to the Article 91 of the Commercial Code as amended. Amount Million IRR 32,738 Board of Directors proposal: Dividend proposed by Board of Directors (100 IRR per share) 90,000 72