In the Name of God 4

IN THE NAME OF GOD 4. 50th Anniversary of Iran Capital Market 6. TSE at a glance 11. TSE Annual General Assembly 14. Board of Directors 16.Message from board of directors 18. Time line 25. Introduction to TSE and financial performance 30. Financial performance 33. Market Operations Review 54. Corporate Governance 58. Risk Analysis Report 63. Operations & Achievements in the Financial Year TEHRAN STOCK EXCHANGE 67. TSE’s strategic plans 68. Targets & plans in 2017 - 2018 Annual Report 72. Financial Statements Fiscal Year Ended 20 March 2017 CONTENTS

2 TSE ANNUAL REPORT STOCK EXCHANGE HISTORY IN IRAN DATES BACK TO MORE THAN YEARS NOW

February 1967 is the first registered date when introducing electronic trading system, restructuring Tehran Stock Exchange was inaugurated with 6 listed of the capital market and demutualizing of TSE, companies. Later some public bonds and certain privatization of the state-owned companies, joining state-backed securities were added to the tradable global capital markets’ entities, deregulation of foreign instruments. investment and developing new securities, like ETFs and derivatives. In its initial period of development (1967-1978), TSE became the trading venue, as well as fund raising With huge resources, vast geographical area, large platform for 105 listed companies, including 22 population and great untapped opportunities, banks, 2 insurance companies, and 81 other industrial Iran’s capital market is a real promising investment corporations. destination for local and international investors. th In the next periods of evolution, several significant The new logo on the other page has been designed 50 Anniversary of milestones can be specified at the Exchange, namely to commemorate the 50th anniversary of the capital providing tax incentives for listing and trading in TSE, market in Iran. Iran Capital Market

4 TSE 5 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 TSE at a Glance Trading Commission

Trading Share Trading Commission Trading days Saturdays - Wednesdays Buyer (%) Seller (%) Total (%) Trading hours 9:00 – 12:30 (pre-opening 8:30 – 9:00) Securities and Exchange 0.032 0.048 0.08 Trading system Fully automated order based Organization (SEO) Trading mechanism Opening auction / continuous trading TSE 0.032 0.048 0.08 Market making Optional Brokerage Firm 0.4 0.4 0.8 Tradable instruments Shares, rights, Islamic participation papers, single stock TSE Technology Manage- 0.01 0.015 0.025 futures, embedded put option, option, sukuks, CDs and ment Co. ETFs. CSDI 0.012 0.018 0.03 Currency Iranian Rial Total 0.486 0.529 1.015 Online accessible information (Opening, minimum, maximum and closing) prices, indices, listed companies information, trading data and Debt Trading Commission quotes Buyer (%) Seller (%) Total (%) Depository, clearing and settlement Different types of Sukuk 0.0725 0.0725 0.145 Entity Central Securities Depository of Iran (CSDI) (Ijareh, Participant, Mora- beh, Istesna, …) Settlement period T+3 (shares, derivatives and ETFs) T+1 (Islamic participation papers, fixed-income securities) Derivatives Trading Commission Settlement Funds settlement at broker level, securities dematerial- Buyer (%) Seller (%) Total (%) ized settlement at client Futures 0.108 0.108 0.216 Clearing Multilateral netting Options 0.0832 0.0848 0.168 Short selling N/A Embedded Put Options 0.4 0.4 0.8 Tax Mutual Funds Trading Commission Dividends Exempted Buyer (%) Seller (%) Total (%) Capital gain Exempted Investment Funds in Equi- 0.486 0.529 1.015 Transaction (seller) 0.5% of trading value ties Structure and regulations Mix Investment Funds 0.243 0.2645 0.5075 Legal structure Public joint stock company Mutual Funds in Fix Income 0.0725 0.0725 0.145 Regulation Self-regulated under SEO’s surveillance Securities Daily price fluctuation limit Shares and debt instruments: ±5%, rights: ±10% (it is Real State Funds 0.0725 0.0725 0.145 changeable by market makers’ proposal and SEO’s confir- Securities Information mation in case of Auction) Closing price calculation Weighted average based on equity’s base volume Equities Market Foreign investment Authorized (based on foreign investment bylaw) Equities First Market-main board First market-secondary Second Total board market Markets and Listing Requirements Listed companies 67 61 197 325 First Market / main board First market / subsidiary Second market board Debt Market Minimum paid-in Capital 1,000 500 200 Fix Income Papers Number (IRR billion) Islamic Participates 16 Minimum years of business 3 3 2 Sukuk 6 activity Minimum free-float (%) 20 15 10 Derivatives Market Minimum number of share- 1,000 750 250 Derivatives Number holders Futures 3 Contracts Profitability (years) 3 2 1 Put Embedded Option 4 papers Equity/total assets (%) 30 20 15 Call Option 22 Contracts Put Option 22 Contracts

6 TSE 7 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 TSE at a Glance

 ETFs Market information Investment Traded Funds 9 Fiscal Year 20 Mar. Fiscal Year 19 Mar. Fiscal Year 20 Mar. Investment Funds in Equities 2 Market indicators 2017 2016 2015 Mutual Funds in Fix Income Securities 4 Mix Investment Funds 1 Market capitalization (IRR billion) 3,220,374 3,448,390 2,813,156 Real State Funds 2 Nominal Value (IRR billion) 1,377,883 1,171,812 954,198

Brokerage firms Market cap/nominal value 2.3 2.9 2.9

Tehran Provinces - regions Total Average P/E 6.84 7.45 5.43 Number of brokerage firms (entities) 101 4 105 Fiscal Year 20 Mar. Fiscal Year 19 Mar. Fiscal Year 20 Mar. Total Trading Market Trading stations 859 758 1,617 2017 2016 2015 On-line trading access providers 100 4 104 Total trading value (IRR billion) 638,540 561,607 559,353 Financial digest Total trading volume (million shares) 256,772 228,063 165,499 Financial information (IRR billion) Number of trading days 242 243 241 Performance Information Fiscal Year 20 Fiscal Year 20 Fiscal Year 19 Fiscal Year 20 Mar. 2017 Mar. 2017 Mar. 2016 Mar. 2015 Number of issued trading codes 145,071 115,972 151,540 (Net Worth) (Main) (Main) (Main) Fiscal Year 20 Mar. Fiscal Year 19 Mar. Fiscal Year 20 Mar. Operating revenues 644 644 573 514 Equities Trading 2017 2016 2015 Total expenses (377) (377) 341 272 Operating income 267 267 232 242 trading value (IRR billion) 537,936 473,624 542,522 EBIT 401 369 358 389 trading volume (million shares) 252,613 227,798 165,184 Net income 343 312 297 327 Cash flows from operations 408 408 367 230 Number of trades (thousand) 15,689 13,922 12,916 EPS (IRR) 275 249 270 363 Normal trading value (IRR billion) 490,269 425,537 377,119 Financial status (IRR billion) Financial status Fiscal Year 20 Fiscal Year 20 Fiscal Year 19 Fiscal Year 20 Normal trading volume (million shares) 232,975 204,287 144,646 Mar. 2017 Mar. 2017 Mar. 2016 Mar. 2015 Average daily trading value (IRR billion) 2,223 1,949 2,251 (Net Worth) (Main) (Main) (Main) Current assets 176 176 494 511 Average daily trading volume (million shares) 1,044 937 685 Total assets 2,330 2,143 1,854 1,451 Daily average number of trades (thousand) 65 57 54 Total liabilities 455 455 368 171 Fiscal Year 20 Mar. Fiscal Year 19 Mar. Fiscal Year 20 Mar. Registered capital 1,250 1,250 1,100 900 Debt Instruments Trading Total equities 1,875 1,687 1,486 1,280 2017 2016 2015 Rate of Return (%) Trading value (IRR billion) 93,132 86,626 15,676 Rate of Return Fiscal Year 20 Fiscal Year 20 Fiscal Year 19 Fiscal Year 20 Trading volume (million paper) 93 88 15.6 Mar. 2017 Mar. 2017 Mar. 2016 Mar. 2015 (Net Worth) (Main) (Main) (Main) Fiscal Year 20 Mar. Fiscal Year 19 Mar. Fiscal Year 20 Mar. Derivatives Trading Return On Asset* 14.7 14.5 16.1 22.5 2017 2016 2015 Return On Equity** (net worth) 18.3 18.4 19.9 25.5 Trading value (IRR billion) 60 12 21 Equity shares Fiscal Year 20 Fiscal Year 20 Fiscal Year 19 Fiscal Year 20 Trading volume (million shares) 3,371 57 166 Mar. 2017 Mar. 2017 Mar. 2016 Mar. 2015 Fiscal Year 20 Mar. Fiscal Year 19 Mar. Fiscal Year 20 Mar. (Net Worth) (Main) (Main) (Main) Broad index 2017 2016 2015 Number of shares (million) 1,250 1,250 1,100 900 Real EPS (IRR) 275 249 270 363 Broad Index (value-weighted) 77,230 80,219 62,532 Dividends Per Share (IRR) ------100 100 Price Index (value-weighted) 26,829 30,511 26,987 Last EPS forecast (IRR) 4,707 4,707 6,630 5,991 Book Value 1500 1351 1351 1422 Board Index (equal-weighted) 15,723 13,357 9,862 Other information Price Index (equal-weighted) 12,377 11,202 9,036 Number of staff 287 287 274 275 *ROA = Net Income/Total Assets **ROE = Net Income/Shareholder’s Equity

8 TSE 9 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 TSE at a Glance

MONTHLY TRADING VALUE AND TSE ANNUAL GENERAL ASSEMBLY VOLUME TREND

Implementing the provisions of Article 232 of the company’s general status and the Board performance. Commercial Law Amendment, approved in March In our opinion, considering TSE profit and coordinate 1968, and Article 45 of the Law on Securities, hereby with the rules and regulations and TSE statute, the the report on TSE’s general activities and financial report confirms fairly the Board performance. This situation during the fiscal year ended to 20 March report is in line with reality and their effects are provided according to existing documents and inadequate to the extent that they can be predicted ,2017 ﻧﻣودار ﺻﻔﺣﮫ ۸ (ﺟﺎﯾﮕزﯾن ﺷود) information is presented. in the current situation and no information has been Monthly Trading Value and Volume trend during the last three years The report, as one of the Annual Board Member removed from the report if its lack of knowledge leads reports to the General Assembly, is according to the to misleading the users. This report has been signed 100000 information of the Financial Statement, and shows the by the Board on 11 June 2017.

90000

80000

70000

60000 Board of Directors

50000 Member Delegate Position 40000 Tejarat Brokerage Firm Mr. Mohammad Esmaeil Fadaei Chairman 30000 Nezhad Arzesh Afarinan Pasargad Group Mr. Ali Akbar Amin Tafreshi Vice Chairman 20000 Tadbir Investment Company Mr. Mojtaba Taghipour Member of the Board 10000 Tosee Melli Investment Company Mr. Abbas Naeemi Member of the Board 0 Saba Ta’min Investment company Mr. Jamshid Imani Member of the Board

Tosee Farda Brokerage Firm Mr. Farhad Abdollahzadeh Member of the Board

Mellat Financial Group Mr. Mostafa Zarghami Member of the Board

---- Mr. Hassan Ghalibaf Asl CEO and President

---- Mr. Ali Sahraee Secretary of Board 22 Jun.14 - 22Jul.14 22 Jun.15 - 22Jul.15 21 Jun.16 - 21Jul.16 23 Sep.14 - 22 Oct. 14 23 Sep.15 - 22 Oct. 15 22 Sep.16 - 21 Oct. 16 22 Dec. 14 - 20 Jan.15 20 - 14 Dec. 22 Jan.16 20 - 15 Dec. 22 Jan.17 19 - 16 Dec. 21 21 Mar.14- 20 Apr.14 21 Mar.15- 20 Apr.15 20 Mar.16- 19 Apr.16

Volume (Mil. Shares) Value (IRR Bil.)

10 TSE 11 ANNUAL REPORT Tehran Stock Exchange Annual Report Fiscal Year Ended 20 March 2017

MESSAGE FROM BOARD OF DIRECTORS

12 TSE 13 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Board of Directors

CHAIRMAN OF THE BOARD VICE CHAIRMAN OF THE BOARD MEMBER OF THE BOARD MEMBER OF THE BOARD

Dr. Mohammad Esmaeil Mr. Ali Akbar Amin Mr. Mojtaba Taghipour Mr. Mostafa Zarghami Fadaee Nejad Tafreshi Tadbir Investment Co. Mellat Financial Group Tejarat Brokerage Co. Arzesh Afarinan Pasargad Co.

MEMBER OF THE BOARD MEMBER OF THE BOARD MEMBER OF THE BOARD SUPERVISOR OF SEO CEO AND PRESIDENT VICE PRESIDENT, MARKET

Mr. Abbas Naeemi Mr. Jamshid Imani Mr. Farhad Abdollahzadeh Dr. Hassan Amiri Dr. Hassan Ghalibaf Asl Mr. Ali Sahraee Tosee Melli Investment Co. Saba Ta’min Investment Co. Tosee Farda Brokerage Co. SEO CEO & President Secretary of Board

14 TSE 15 ANNUAL REPORT MESSAGE FROM Euro-Asian Exchanges could be worthy of attention. of modern financial instruments in Iran capital In the year before, 7 new companies were listed in market, which, through the development of general BOARD OF DIRECTORS and two companies were delisted from Tehran Stock and specialized knowledge, the use of up-to-date Exchange. Additionally, the listing companies had a software and continuous monitoring and pathology, capital raise of IRR 167 trillion. These resulted in 17.6 can provide a significant place in the capital market. In 2016, named by the Supreme Leader as “the The number of international visitors groups to percent growth of TSE nominal value (1,378 trillion). In the field of development of new financial Economy of Resistance: Action and Implementation” Tehran Stock Exchange, which had grown to 46, In spite of holding the 20 meetings of the listing board instruments, in addition to launching the market Tehran Stock Exchange, as an incomparable pillar of was unprecedented and International creditable and the presence of listing potential and offering for the option, Tehran Stock Exchange received an the capital market and an important and influential companies demonstrated their willingness clearly to of 40 new companies in TSE, with the increasing approval to set up a deposit account certificate from member of the Iranian economy, has been tirelessly invest in different sectors of the Iran economy and in sensitivity of the capital market participants in the the Sharia Committee of Securities and Exchange trying to achieve the macroeconomic goals. important cases, they also started contracting with issuance of shares and the restrictions imposed on it, Organization. Executive studies for the distribution Tehran Stock Exchange has overtaken this year Iranian companies. Eventually and after many efforts, financing through TSE in the financial year ended 20 of dividend-backed securities were also another with the pursuit of general policy objectives for the Eventually, in the financial year ended 20 March 2017, March 2017 decreased by 16% and it reach from IRR attempt by Tehran Stock Exchange in last year that Economy of Resistance. following the efforts of Securities and Exchange 276 to IRR 238 trillion. could lead to an increase in the financial instruments Activating funds for entrepreneurship development, organization and Tehran Stock Exchange, along In this period, and among other parameters of the of the Iran capital market. Additionally, regarding the maximizing community participation in economic with the acceptance of SEO membership in the capital market, the growth of securities transactions, increase in market value and trading of these bonds activities by facilitating and encouraging collective International Organization of Securities Commissions in particular, derivatives instruments was significant. in the past year, the study of indices of fixed-income cooperation, complete reforming and strengthening (IOSCO), the suspended membership of Tehran Stock The trading volume grew by 13.6% this year, and securities was carried out by Tehran Stock Exchange the financial system of the country, financing Exchange in the World Federation of Exchanges brought the turnover in the Tehran Stock Exchange and by obtaining the necessary methodology and from abroad, attracting foreign investment and (WFE) was renewed. The suspension removing of TSE to more than 16%. Among the various types of formulas and initial calculations, sent to the Index transparency and health of the economy were all membership can enhance the reputation of the Tehran securities traded in Tehran Stock Exchange, the Committee of Stock Exchange Organization in order principles of resistance policies which were considered Stock Exchange and help attract international investors derivative instrument was associated with a stunning to make decision. by Tehran Stock Exchange. in this market. Promotion of the trading system, which growth of 408%. The derivatives market, which At the end, the board of directors, appreciates the The year 2016, as the first year of post-JCPOA saw the was a concern for the market participants for a long previously included futures and embedded put support of shareholders, members of the High presence of various political and economic groups time, this year and with the agreement with Atos options, was also available to deal options during Council of Securities and exchanges, Securities and Tehran stock exchange as an important part of entered into the executive phase. The signing of the the year. In the last year, there were a significant and Exchange Organization’s board and managers, the Iran economy was attractive for international Memorandum of Understanding with the Athens drop in futures, a sharp increase in the volumes of members and issuers of the listed companies, investors. The attention of international investors and Munich Stock Exchanges was another of the embedded put options and the increase in options the media and human resources of Tehran Stock toward Iran economy and capital market confirmed international activities of the Tehran Stock Exchange trading. Meanwhile, ETFs trading grew by 451% Exchange and believes that the development and that Iran is an untouched market with a high potential last year. In the international activities, maintaining in this year. Fixed Income Securities also increased generalization of the capital market will be possible of growth. the TSE membership in the board of the Federation of by 7.5% last year. All this reflects the high capacity with the cooperation of all market participants.

16 TSE 17 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017

3 May 2016 19 May 2016 10 July 2016

Ejareh Raytel Sukuk Underwriting TSE attending Euromoney Conference Attending the 9th International Exchange, Ejareh Raytel Sukuk after admission in trading code Tehran Stock Exchange took part in 2016 Euromoney Bank and Insurance Exhibition RITQ1, was underwritten in Tehran stock exchange Conference in London. In this conference, the CEO The 9th International Exchange, Bank and Insurance in IRR 2000 billion value. of Tehran Stock Exchange, responded to various Exhibition was held in Tehran International questions about the characteristics of this market in Exhibition venue. the specific panel of “Knowing Iran Capital Market”.

1 June 2016 11 July 2016

Mellat Leasing IPO Signing MoU with Munich and Athens 80 million shares, equivalent to 10% of the shares of At a meeting between the senior directors of Mellat Leasing were offered on the second market Tehran Stock Exchange and Athens and Munich and traded at the price of IRR 1,060 per share. Stock Exchanges, Mous were signed and Based on these two MoUs, the both sides agreed on 4 May 2016 8 June 2016 the development of markets, the exchange of experiences and expertise, and the establishment TIME LINE of joint trading systems. International Oil, Gas, Refining and Reopening of the Municipality of Isfahan bond Petrochemical Exhibition Municipality of Isfahan bond in the value of IRR Tehran Stock Exchange attended “the International 3000 billion was admitted and re-traded in Tehran Oil, Gas, Refining and Petrochemical Exhibition” to Stock Exchange introduction of financing opportunities through Tehran stock exchange along with other participants 2 July 2016 of the capital market. Removing suspension of TSE membership in WFE 25 April 2016 5 May 2016 Following the Tehran Stock Exchange’s numerous pursuits to remove the suspension of TSE Iranian Investment Petrochemical Company Participating in FEAS meetings in Romania membership in the World Federation of Exchanges, Transferring to TSE Tehran Stock Exchange as a member of the after the implementation of JCPOA and the Iranian Investment Petrochemical Company was Board of ‘the Euro-Asian Federation of Exchanges sanctions obviation, and re-structuring of the transferred to the list of Tehran Stock Exchange’s (FEAS) participated in the meeting of the Working organization, the WFE’s board was agreed upon second market. Each share of the company was Committee and Executive Committee of this with the request for suspension removal of Tehran traded to investors at a price of IRR 1557. Federation hosted by the Bucharest Stock Exchange, Stock Exchange membership. in Romania.

26 April 2016 18 May 2016 9 July 2016 17 July 2016

Zanjan Financial Center launching construction TSE attending the foreign investors meeting in Underwriting of the fixed income investment Holding TSE’s Annual General Assembly and The ceremony of Zenjan financial center launching London funds units of Parand Paydar Sepehr Extraordinary Meetings construction was held with the participation of CEO and President of Tehran Stock Exchange at a Parand Paydar Sepehr investment funds units were TSE’s Annual General Assembly and Extraordinary Tehran Stock Exchange’s CEO and Zanjan province meeting in London, was attended by the foreign admitted and underwritten on the investment fund Meetings for the fiscal year ended 19 March 2016, officials. This financial center is intended to cover investors interested in Iran’s capital market delivered market of Tehran Stock Exchange. with the presence of maximum of shareholders the Zanjan capital market and related institutions the overall outline and investment opportunities of were held. The General Assembly approved IRR 100 including banks, insurance and brokerage firms and this market. other financial institutions.

18 TSE 19 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 TIME LINE

13 November 2016 7 December 2016

dividend per share. 36.3 percent capital raise was 1 October 2016 Kiyan Fixed income investment fund units Embedded put option of Jam Petrochemicals approved in Extraordinary General Assembly and underwriting offering TSE capital was increased from IRR 1100 billion to  Units of Kiyan Fixed income investment fund were According to the fact that the embedded put option IRR 1500 billion. Additionally, it was agreed that the Admission of Zangan Distribution Transformer admitted and underwritten in ETF market. of Jam Petrochemicals could have a huge attraction capital raise was accomplished in two steps. The Zangan Distribution Transformer was admitted on of the investors, 100% of the share was sold in the first stage of this increase (from IRR 1100 billion to the second market list of Tehran Stock Exchange. 16 November 2016 first three days. The total value is IRR 15 billion. IRR 1250 billion) was immediately executed and the 16 October 2016 rest was placed on the board of directors. Saipa Murabeh underwriting 18 December 2016 Reopening of Tehran municipality bond Saipa Murabehs, in the value of IRR 5000 billion 12 August 2016 The bonds of Tehran municipality, in value of IRR were underwritten in Debt market. Options offering 3000 billion was admitted and started its secondary Nine options contracts on three basic shares: Maturity of Saipa Bonds trades. 19 November 2016 Mobarakeh Steel, Iran National Copper Industry Saipa bonds, with a maturity of 4 years were and Iran Khodro were admitted and started to be successfully settled on August 12. The value of the 17 October 2016 Jey Oil Refining Company admission traded. bonds was IRR 1500 billion. Jey Oil Refining Company was admitted on TSE’s Persian Asan Pardakht IPO secondary market. 20 August 2016 80 million shares of Persian Asan Pardakht shares in 18 December 2016 the price of IRR 9999 per share were traded in TSE 23 November 2016 Reopening of Mashhad municipality bond secondary market. Option market opening The bonds of Mashhad municipality, in value of IRR TSE reselecting in FEAS Board The options market with the basic share of three 5000 billion, were admitted and traded on Debt 30 October 2016 During FEAS Annual meetings on 16 and 17 large companies, including Mobarakeh Steel, Iran Market of Tehran Stock Exchange. November, in Egypt, Tehran Stock Exchange was National Copper Industry and Iran Khodro was Tehran Oil Refining Company transferring to TSE retained as a member of the board. inaugurated. 24 August 2016 Tehran Oil Refining was transferred to TSE’s The ceremony was held in Central Securities secondary market. Each share was traded in the 23 November 2016 Depository of Iran with the presence of the Registration of Mino Industrial Group price of IRR 3438 by investors. chairman of Securities and Exchange Organization, Signing MoU with Atos Mino Industrial Company, as 499th listed company CEO & President of Tehran Stock Exchange and the Atos representatives and Iran capital market in Food Products and Beverages Industry, rest of the capital market top managers. top managers singed an MoU on updating and Manufacture of other food products, and Making To diversify the financial instruments and reduce improving the trading system in Iran capital market bakery products, was admitted on the second the risk, the option market has been launched. as well as using the new soft wares and hard wares. market of Tehran Stock Exchange. The existing option contracts are exercised as European options. 28 August 2016

21 December 2016 Narvan Construction Fund units underwriting Narvan Construction Fund was admitted and underwritten in the list of Mutual Funds. Reopening of Tehran Stock Exchange share After qualifying, Tehran Stock Exchange’s share was 7 September 2016 13 November 2016 reopened and entered TSE first market. Each share was traded in the price of IRR 5860 by investors. 3 December 2016 Reopening of Tehran municipality bond System Group transferring to TSE The bonds of Tehran municipality in order to finance System Group was transferred to TSE’s secondary first and second phases of the line 6 were admitted market. Each share was traded in the price of IRR Amin Yekom Farda Fixed income investment and started their secondary trades, in two trading 5000 by investors. fund units underwriting codes, with value of IRR 4600 and IRR 2400 billion. Units of Amin Yekom Farda Fixed income investment fund were admitted and underwritten in ETF market.

20 TSE 21 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 TIME LINE

25 December 2016 Exchange Organization Board and after testing the 11 March 2017 has approved Tehran Stock Exchange’s suggestion designed system, the Initial Public Offering process for launching Certificate of Deposit and one-share in book building way was commissioned. investment fund. Reopening of Mashhad municipality bond Jahrom Power Generation admission Regarding qualifying, the bond of Mashhad Jahrom Power Generation Co. was admitted on municipality, in value of IRR 4000 billion, was 31 January 2017 TSE’s secondary market. 14 March 2017 admitted and started the secondary trading in Debt Market of Tehran Stock Exchange. Omid Investment Bank admission 11 March 2017 Chodansazan Manufacture admission Omid Investment Bank with the capital of IRR 4000 Chodansazan Manufacture from “Fabricated Metal billion was admitted on TSE secondary market. 15 January 2017 After a number of review sessions, Sharieh Products except Machinary & Equipments Industry” Committee of Securities and Exchange Organization was admitted on TSE’s secondary market.

Reopening of Mashhad municipality bond 6 February 2017 Regarding qualifying, the bond of Mashhad municipality, in value of IRR 2000 billion, was Rayan Siapa Leasing Bonds Underwriting admitted and started the secondary trading in Debt Rayan Siapa Leasing Bonds in the value of IRR 1000 Market of Tehran Stock Exchange. billion was underwritten in the debt market.

15 January 2017 11 February 2017

Underwriting of Shahr Rey Negin Real Estate Appreciation of Tehran Stock Exchange in the Investment Fund 3rd International Conference of Holdings and Shahr Rey Negin Real Estate Investment Fund was Companies Group admitted and underwritten in ETF market. In the 3rd International Conference of Holdings and Companies Group, Tehran Stock Exchange was appreciated.

21 February 2017

Isfahan Tile transferring to IFB Trading code of Isfahan tile Industry complex was delisted from TSE and transferred to Base Market of Iran Fara Bourse. 18 January 2017

7 March 2017 Kish South Kaveh Steel Company admission Kish South Kaveh Steel Company, from “Basic Metal Mellat Behpardakht admission Industry”, “Basic Iron & Steel Manufacturing group” Mellat Behpardakht was admitted on TSE’s was admitted on the secondary market. secondary market. 23 January 2017 8 March 2017 Underwriting and IPO Instructions approval Underwriting and IPO Instructions for Tehran Stock Sina Financial & Investment Holding admission Exchange and Iran Fara bourse, including 41 Articles Sina Financial & Investment Holding Co. was and 35 Notes was approved by Securities and admitted on TSE’s secondary market.

22 TSE 23 ANNUAL REPORT COMMEMORATING THE ANNIVERSARY OF COMPANIES’ IPO BY INTRODUCTION TO TSE AND TEHRAN STOCK EXCHANGE FINANCIAL PERFORMANCE

By ringing the opening bell at the trading floor, the selected listed companies’ authorities held the commemoration of companies’ IPO in Tehran Stock Exchange to mark the event.

entities, responsible for parts of the related securities 1. History trading, issuing or data processing activities, namely The presence of TSE at various Holding specialized meetings and Tehran Stock Exchange (Public Joint Stock Company) Central Securities Depository of Iran (CSDI), domestic exhibitions educational workshops was established on November 2006 based on the • Carrying out research activities and training jobs and • the first specialty exhibition and national conference Tehran Stock Exchange held a series of specific new market act ratified by the Parliament in 2005. culture development in order to facilitate and develop on economy and capital in Hamedan meetings named “Futures and Options Portfolio”, 3 Based on this development, the existing Exchange, securities trading and investment culture which had been initially launched in 1960s, became • the international exhibition of exchange, bank and meetings with investment funds in TSE, meeting of • Working with other Exchanges in Iran or overseas for demutualized. insurance in Kish the capital market analysts with Behshahr Industrial exchanging information and expertise, harmonizing Company’s managers, meeting of financing strategies the regulations and standards and cross-listing of the • the third exhibition of exchange, banking and 2. Activities according to the articles through Tehran Stock Exchange in Isfahan, financing securities according to the rules and regulations insurance in Shiraz of association strategies conference in Kish, a training course on • Listing securities trading surveillance • the exhibition of the government achievement in financing the capital market and attracting foreign • Organizing and managing the securities exchange • Compiling, processing and disseminating the Khuzestan direct investment in Tabriz, and a training meeting in order to make trades by local and foreign investors ordering and trading information • the first exhibition of Investment Opportunities in and a forum with the presence of the presidents and according to the regulations • Observing securities issuers’ activities Khuzestan judges of Iran Judiciary Complex. • Listing securities of local or international issuers • Holding specialized workshops conditions and Additionally, training classes including three-day according to the rules and regulations 3. Percentage of shareholders’ benefits of listing at TSE in the first exhibition of course on “familiarity with financing, listing procedures exchange, bank and insurance and in the third and issuance of securities in TSE”, 17 retraining • Setting membership standards for applicants, ownership ratifying and implementing disciplinary principles exhibition of Investment Opportunities in Khorasan workshops on “capital markets rules and regulations TSE’s shareholders and ownership level are on and between members, regulating their for issuers”, and the first specialized workshop on mentioned in table 01. Based on the 54th market act, responsibilities and monitoring their activities Foreign Investors visiting “Corporate Governance for the listed issuers” were no shareholder can hold more than 2.5 percent of the according to the rules and regulations held by TSE. Exchange’s own shares. The article number 9 of statute During the past financial year, 260 foreign investors • Providing the required infrastructure for the shows that the shareholders include brokerage firms, in 46 delegations visited Tehran Stock Exchange and members’ fair access to trading financial institutes and retailers. The ownership levels were briefed about Iran’s capital market and process • Cooperating and coordinating with other financial should be always determined by SEO. and trading.

24 TSE 25 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017

Table 01 – Shareholders breakdown composition, fiscal year ending 20 March 2017 5. Capital changes

Shareholders No. of shareholders No. of shares Percent of ownership The capital of the company at the time of establishment was IRR150 billion, which increased in several Brokerage firms 81 424,558,322 33.96 stages by IRR1100 billion at the end of the fiscal year ending 20 March 2017. TSE’s capital has changed since establishment as indicated below. Financial institutes 85 490,949,988 39.28

Others 5,958 334,491,690 26.76

Total 6,124 1,250,000,000 100 Table 03 – Capital changes (IRR billion) 4. Major shareholders Fiscal year Capital Previous Increase New capital Increase % Source of increase ending increase regis- capital Table 02 includes list of TSE’s major shareholders at the end of fiscal year ending 20 March 2017. tration date

Table 02 – Major shareholders based on groups’ breakdown 20 March 2009 - 150 - 150 - - No. Shareholder No. of shares Percent of ownership Brokerage firms 424,558,322 33.96 21 November Prudential reserves and 1 Keshavarzi bank brokerage firm 31,249,998 2.5 20 March 2010 150 105 255 70 2010 retained earning 2 Mofid brokerage firm 31,249,998 2.5 3 Iran Insurance brokerage firm 28,179,998 2.25 4 Razavi brokerage firm 28,069,998 2.24 7 December Prudential reserves and 20 March 2011 255 45 300 17.6 5 Agah brokerage firm 24,999,998 2 2011 retained earning 6 Refah bank brokerage firm 24,999,998 2 7 Mellat bank brokerage firm 24,999,998 2 8 Hafez brokerage firm 22,041,660 1.76 14 October Prudential reserves and 20 March 2014 300 150 450 50 9 Tose’e Farda brokerage firm 19,937,310 1.51 2013 retained earning 10 Pasargad bank brokerage firm 18,749,998 1.5 11 Maskan bank brokerage firm 18,749,998 1.5 22 October Prudential reserves and 12 Nhayatnegar brokerage firm 16,958,332 1.36 20 March 2015 450 450 900 100 2014 retained earning 13 Other brokerage firms 135,371,038 10.8 Financial institutes 490,949,988 39.28 14 Parsian Bank Financial Group 31,249,998 2.5 5 September Prudential reserves and 19 March 2016 900 200 1100 22.2 15 Ghadir Investment Company 31,249,998 2.5 2015 retained earning 16 Omid Investment Management Group Company 31,249,998 2.5 17 Saba Tamin Investment Company 31,249,971 2.5 18 Tose Melli Investment Company 31,249,304 2.5 24 September Prudential reserves and 20 March 2017 1100 150 1250 13.63 19 Oil Pension Fund Investment Company 27,499,998 2.2 2016 retained earning 20 Alborz Insurance Company 25,678,028 2.1 21 Iranian Petrochemical Investment Company 25,568,181 2 22 Bahman Investment Company 25,499,304 2 23 Tadbir Investment Company 24,999,304 2 According to the approval of the Extraordinary General Assembly, dated 17 July 2016, the TSE’s capital raise 24 Industry & Mine Investment Company 18,749,998 1.5 from IRR1100 billion to IRR1500 billion (36.3%) was agreed during one or more stages and within two years. 25 Iran National Investment Company 18,749,998 1.5 The first phase of its increase (from 1100 billion to 1250 billion) was immediately implemented and the rest of 26 Other institutions 167,955,908 13.4 it was placed on the board decision. Others 334,491,690 26.76 Total 1,250,000,000 100

26 TSE 27 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017

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. From 21 December 2016, after qualified for transferring of the company to the main board of the first market of Tehran Stock Exchange, the shares of the company were transferred and traded for all above categories of shareholders. The following table shows TSE’s shares trading in the last two fiscal years.

Table 04 – TSE’s shares trading TSE’s staff in trading floor Fiscal year ending 20 March 2017 Fiscal year ending 19 March 2016

Shareholder Total trading Total Average price Total Total Average price volume trading value per share (IRR) trading trading value per share (IRR) volume (IRR) (IRR) 9. Organizational chart

Brokerage firm 8,794,997 44,742 5,084 341,332 2,826 8,279 General Compensation Financial Assembly 11,823,763 81,958 6,932 5,696,665 196,362 6,964 Committee institutes

Others 57,243,858 396,307 5,526 50,615,255 268,325 5,301 Board of Strategic & Risk Advisors Management Directors Committee

7. Legal environment Board of Internal Directors Auditing Secretariat Auditing Committee The major governing regulations at Tehran Stock Exchange include Commercial Code, Securities Market Act, The Law for Development of New Financial Instruments and Institutions, Tehran Stock Exchange’s Trading CEO Bylaw, Trading Executive Directive, as well as the Brokerage Firms’ Executive bylaws and Issuers’ Disciplinary Directive, the Instruction to Investigate Delinquency of Persons under Article 35 of the Securities Market Act. The anti-money laundering rule is also among the related regulations. CEO’s Office Physical Securities 8. Human resources PR & International Human resources, as the main and valuable capital of the company, play an important role in implementing Contracts & Legal Affairs Construction current and development programs. The combination of the company’s human resources on 20 March 2017 is Development presented in the following table: Management

Table 07 – TSE’s Human Resources Combination Number of Staff Issuers and Development Education % of total Logistics Deputy Market Deputy Tehran Regional Floors Total Members Deputy Deputy PhD 5 4 9 3.1 Statistics & MA, MS 79 28 107 37.3 Finance Listing R & D Information BA, BS 60 42 102 35.5

AA, AS 6 6 12 4.2 Administration Issuers Operations Organizational Excellence Diploma and less 33 24 57 19.9 Information Market Investment Total 183 104 287 100 Technology & Members Culture Systems Surveillance Development

28 TSE 29 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Performance

Table 10 – Financial Ratios

1. Performance information Fiscal year ended 20 Fiscal year ended 19 Description % Change March 2017 March 2016 A summary of Tehran Stock Exchange’s financial activities during the fiscal year ended 20 March 2017 is given in the following table: Current ratio % 1 43 154 (72)

Total debt ratio % 2 27 25 8 Table 08 – Financial activities’ market Return on assets % 3 14.5 16.1 (10)

Fiscal year ended 20 Fiscal year ended 19 4 Description % Change Return on equity % 18.4 19.9 (7) March 2017 (IRR billion) March 2016 (IRR billion)

Income from services 644 573 12 1. Current Ratio = Current Assets ÷ Current Liabilities 2. Total Debt Ratio = Total Liabilities ÷ Net Worth Cost of services (254) (224) 14 3. Return on Assets = Net Profit ÷ Total Assets General and administrative 4. Return on equity = Net Profit ÷ Equities (123) (118) 4 expenses

Income from investment 78 77 -

Net other incomes 23 49 (53)  EBIT 369 358 (3) 4. Earnings per share forecast

Net profit 312 297 (5) The forecasted TSE’s EPS for the fiscal year ending 20 March 2018, as well as the comparative information of the fiscal year ended 20 March 2017 are included in the table 11. EPS (IRR) 249 237 (5) Table 11 – the forecasted information on TSE’s EPS and real operations

FY ending 20 Mar. 2018 FY ended 20 Mar. 2017 FY ended 20 Mar. 2017 Description 2. Financial status information budget (IRR million) budget (IRR million) operations (IRR million)

The most important of Tehran Stock Exchange’s financial items during the fiscal year ended 20 March 2017 is Income from services 860,974 668,996 644,463 given in the following table: Cost of services (289,622) (246,760) (254,497)

Table 09 – Financial items summery Gross income 571,351 422,236 389,966

General and administrative Fiscal year ended 20 Fiscal year ended 19 (161,189) (119,314) (122,696) Description % Change expenses March 2017 (IRR billion) March 2016 (IRR billion) Operating profit 410,162 302,922 267,270 Current assets 176 494 (64) Net other non-operating 106,597 88,219 101,453 Total assets 2,143 1,854 15 income and expenses

Total liabilities 455 368 21 EBIT 516,760 391,141 368,723

Registered capital 1,250 1,100 13 Tax (83,808) (65,862) (57,223)

Equities 1,687 1,486 13 Net profit 432,952 325,279 311,500

EPS (IRR) 346 260 249

3. Financial ratios Operating EPS (IRR) 261 190 173 Non-operating EPS (IRR) 85 70 76 The most important of Tehran Stock Exchange’s Financial Ratios during the fiscal year ended 20 March 2017 is Number of shares based on given in the following table: 1,250 1,250 1,250 EPS calculation

30 TSE 31 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Performance

5. Forecasted income statement Market Operations Review The forecasted TSE’s Income Statement for the fiscal year ending 20 March 2018, as well as the comparative information of the fiscal year ended 20 March 2017 are included in the table 06.

Table 12 – Forecasted Income Statement 1.Overview FY ending FY ended 20 FY ended 20 FY ended 20 20 Mar. 2017 Mar. 2018 Mar. 2018 The following chart indicates the general overview and Tehran-Shimi Pharmaceutical). In the period, Mar. 2017 oper- operations (net budget Audited budget Audited of Tehran Stock Exchange’s markets and boards. 4 fixed rate participation papers and sukuks were Description ations (main) worth) (net worth) (main) During the financial year ended 20 March 2017, underwritten and 7 participation papers started number of listed companies reached 325, with 3 being traded in the secondary market. There are IRR million IRR million IRR million IRR million IPOs (Mellat Leasing, Asan Pardakht, and Barekat 22 fixed rate debt instruments in Tehran Stock Income from services 644,463 644,463 860,974 86,974 Pharmaceutical), and 4 upgraded transferred Exchange. In the last financial year, new derivatives companies from Iran Farabourse (Iranian market was launched and 44 different contracts of Cost of services (254,497) (254,497) (289,622) (289,622) Investment Petrochemical, Tehran Oil Refinery, options securities were introduced for trading. Also, Hamkaran System, and Tehran Stock Exchange). 5 new Exchange Traded Funds (ETFs) were admitted Gross income 389,966 389,966 571,351 571,351 Two companies were also transferred from Tehran and started trading in the Exchange. Stock Exchange to Iran Farabourse (Isfahan Tile General and administrative expenses (122,696) (122,696) (161,189) (161,189)

Operating profit 267,270 267,270 410,163 410,163

Net other non-operating income and 72,674 101,453 87,482 106,597 expenses

Profit before calculating the portion Table 2 – Markets and Boards Overview 339,944 368,723 497,645 516,760 of the profit (loss) of the subsidiaries Equities Debt Derivatives ETFs The share of the profit (loss) of the 60,630 - 71,828 - subsidiaries This section is divided into In this market, different two separate markets: Tax (57,223) (57,223) (83,808) (83,808) sukuks (including Ijarah, Futures, embedded put Exchange Traded Funds are First Markets (main and Murabeha, Istisna, etc.) and options, (put & call) options admitted and traded in this secondary boards) and certificates of deposit are are traded in this market. market. Net profit 343,351 311,500 485,665 432,952 Second Market. Equities underwritten and traded. and rights are tradable here. EPS (IRR) 275 249 389 346

32 TSE 33 ANNUAL REPORT Market FISCAL YEAR ENDED 20 MAR. 2017 Operations Review

ﻧﻣودار ﺑﺎﻻی ﺻﻔﺣﮫ ۳۳

85,000.00 32,500.00

80,000.00 30,000.00 2- Equity Market Indices 75,000.00 In the fiscal year ended 20 March 2017, the broad year to 26829 at the end of the period. The broad index (equal weighted), however, gained 17.7% and index of Tehran Stock Exchange declined from 80219 27,500.00 units to 77230 at the end of the period. This indicates approached 15723 from 13357 at the end of the 70,000.00 a drop of 3.7%. The price index (value weighted) period. Moreover, the price index (equal weighted) shrank 12% from 30511 at the beginning of the reached 12377 unit on 20 March 2017 with 10% rise.

65,000.00 25,000.00

Table 13 – Main Indices Movement – Fiscal Years Ended 19 March 2016 and 20March 2017 Broad Index Price Index FY ended 20 Mar. FY ended 19 Mar. Chart 3 – Broad and Price Indices (value weighted) – FY Ended 20 March 2017 Index Changes % of changes 2017 2016

Broad Index 77230 80219 -2989 (3.7) ﻧﻣودار ﭘﺎﯾﯾن ﺻﻔﺣﮫ ۳۳ Price Index (value 26829 30511 -3682 (12.1) weighted) 17,000.00 Broad Index (equal 15723 13357 2366 17.7 weighted) 16,000.00 Price Index (equal 12377 11202 1175 10.5 weighted) 15,000.00 Free Float Index 84725 92557 -7832 (8.5) 14,000.00 First Market Index 54460 57004 -2544 (4.5)

Second Market Index 166371 170269 3897 (2.3) 13,000.00 Financial Index 131866 158225 -26359 (16.7) 12,000.00 Industry Index 66100 66994 -893 (1.3)

50 Most Active Com- 3035 3254 -220 (6.7) 11,000.00 panies Indices

30 Blue-chip Index 3098 3381 -283 (8.4) 10,000.00

Price Index Broad Index

Chart 4 – Broad and Price Indices (equal weighted) - FY Ended 20 March 2017

34 TSE 35 ANNUAL REPORT Market FISCAL YEAR ENDED 20 MAR. 2017 Operations Review Chart 6 – Market Capitalization of TSE’s Boards - FY Ended 20 March 2017

3 - Equities Market Capitalization 32% Total market capitalization of Tehran Stock Exchange declined 6.61% in the fiscal year ended 20 March 2017 and reached IRR 3220 trillion. 41% First Market - Main First Market - Secondary ﻧﻣودار ﺑﺎﻻی ﺻﻔﺣﮫ ۳۴ Second Market Chart 5 – Market CapitalizationMarket Cap - FY Ended(IRR 20Trillions) March 2017 (IRR Trillions) 3,600 27% 3,500

3,400 Chart 7 – Industries’ Breakdown of Market Capitalization - FY Ended 20 March 2017

3,300

3,200 19.34% Chemicals 20.63% Metal Ores 3,100 20.63% 3.09% Base Metals 10.30% Auto Manufacturing 3,000 4.39% 10.30% Banks and Credit Inst. Pharmaceutical 2,900 4.84% Telecom Utilities 9.79% 2,800 Petroleum Products Others 5.71% 8.85% Holdings 6.45%

6.61%

Market Cap (IRR…

4- Total Securities Trading Table 14 – Market Capitalization of Exchange Industries - FY Ended 20 March 2017 Tehran Stock Exchange’s total trading value of 537,935 billion, 13.6% more than one year earlier. Market Capitalization Industry No. of Companies % of Total Market securities (including equities, rights, fixed-income Fixed-income securities turnover exceeded 7.5% (IRR Billion) products, futures, options and ETFs) during the than the preceding year to reach IRR 93,132 billion. Chemical Products 29 664,472 20.6 financial year ended 20 March 2017 reached IRR A considerable growth was noted in derivatives and 638,539 billion, which is 14% above last year’s ETFs trading value. Additionally, 145,071 investment Basic Metals 19 331,557 10.3 figure. Total equities and rights trading value during codes were registered for new investors during the Banks & Credit Institutes 11 315,176 9.8 the period with 242 trading days equaled IRR financial year, increased by 25% than the last year. Telecommunication 2 285,064 8.9 Petroleum Products 8 212,801 6.6 Table 15 – Total Securities Trading

Diversified Holdings 4 207,632 6.4 FY Ended 20 March 2017 FY Ended 19 March 2016 Change % Products Metal Ores 9 183,810 5.7 Value Value No. (Mil) No. (Mil) No. Value (IRR Bil) (IRR Bil) Automotive Manufacturing 30 155,927 4.8 Equities 252,613 537,936 227,798 473,624 10.9 13.6 Pharmaceutical 28 141,507 4.4 Debt 93 93,132 88 86,626 5.7 7.5 Utilities 2 99,531 3.1 Derivatives 3,371 60 57 12 5,796 408 Others 183 622,896 19.3 ETFs 695 7,412 120 1,345 479 451 Total 325 3,220,374 100 Total Market 256,772 638,540 228,063 561,607 12.6 13.7

36 TSE 37 ANNUAL REPORT Market FISCAL YEAR ENDED 20 MAR. 2017 Operations Review

Chart 8 – Trading Value of Different Sectors (IRR billion)

Equities Derivatives Equities Derivatives 560000 70 540000 Equities 60 Derivatives 537935 60 520000 50 560000 70 500000 40 540000 60 537935 Derivatives 480000 30 60 520000 50 460000 473623 20 500000 40 440000 10 Derivatives 480000 30 12 FY 20 Mar 2017 FY 19 Mar 2016 0 460000 473623 20 FY 20 Mar 2017 FY 19 Mar 2016 FY 20 Mar 2017 FY 19 Mar 2016

440000 10 12 FY 20 Mar 2017 FY 19 Mar 2016 0 FY 20 Mar 2017 FY 19 Mar 2016 FY 20 Mar 2017 FY 19 Mar 2016

Debt ETFs

94000 8000 Debt ETFs 7000 92000 93132 Debt 7412 ETFs 6000 90000 94000 8000 5000 88000 92000 7000 93132 4000 7412 86000 ETFs 86626 6000 90000 3000 84000 5000 88000 2000 82000 4000 86000 FY 20 Mar 2017 FY 19 Mar 2016 1000 ETFs 86626 1345 84000 3000 FY 20 Mar 2017 FY 19 Mar 2016 0 2000 FY 20 Mar 2017 FY 19 Mar 2016 82000

FY 20 Mar 2017 FY 19 Mar 2016 1000 13451345

FY 20 Mar 2017 FY 19 Mar 2016 0 FY 20 Mar 2017 FY 19 Mar 2016 4-1 Equities Market

At the end of the fiscal year ended 20 March 2017, TSE’s market capitalization reached IRR 3,220,374 billion, translating 6.6% decline than a year earlier. Total trading value of equities rose 4-1 Equities Market by 13.6% in the year to amount IRR 537,936 billion. Broad index of the Exchange dropped 3.73% Atand the closed end ofat the77,2 fiscal30. Average year ended daily 20 trading March value 2017 and, TSE’s volume market respectively capitalization increased reached 14.1% IRR and 15.7% at Tehran Stock Exchange in the year ended 20 March 2017. The equities market number of TSE 3,220,374 billion, translating 6.6% decline than a year earlier. Total trading value of equities rose 38 trading surged 12.9% to exceed 15 million transactions from around 14 million one year earlier.39 ANNUAL REPORT by 13.6% in the year to amount IRR 537,936 billion. Broad index of the Exchange dropped 3.73% and closed at 77,230. Average daily trading value and volume respectively increased 14.1% and The on-line trading value continued its growth by 23% from IRR 233,378 billion in the fiscal year 15.7% at Tehran Stock Exchange in the year ended 20 March 2017. The equities market number of ended 19 March 2016 to reach IRR 287,206 billion in the last year. The volume of on-line trading trading surged 12.9% to exceed 15 million transactions from around 14 million one year earlier. also gained 21% to catch up IRR 152,897 billion in this year from IRR 126,114 billion. The on-line trading value continued its growth by 23% from IRR 233,378 billion in the fiscal year ended 19 March 2016 to reach IRR 287,206 billion in the last year. The volume of on-line trading 31 30 also gained 21% to catch up IRR 152,897 billion in this year from IRR 126,114 billion.

30 31

Market FISCAL YEAR ENDED 20 MAR. 2017 Operations Review

4-1 Equities Market At the end of the fiscal year ended 20 March 2017, The equities market number of trading surged From total trading turnover, First Market (Main and Secondary boards)’s share in trading value, volume and TSE’s market capitalization reached IRR 3,220,374 12.9% to exceed 15 million transactions from number of trades is respectively 60, 62 and 53 per cent. billion, translating 6.6% decline than a year earlier. around 14 million one year earlier. Total trading value of equities rose by 13.6% in the The on-line trading value continued its growth year to amount IRR 537,936 billion. Broad index by 23% from IRR 233,378 billion in the fiscal year of the Exchange dropped 3.73% and closed at ended 19 March 2016 to reach IRR 287,206 billion 77,230. Average daily trading value and volume in the last year. The volume of on-line trading also Table 17 – Market Breakdown of Equities and Rights Retail and Block Trading respectively increased 14.1% and 15.7% at Tehran gained 21% to catch up 152,897 million shares, in Stock Exchange in the year ended 20 March 2017. this year from 126, 114 million shares. FY Ended FY Ended Market Change % 20 March 2017 19 March 2016 Table 16 – Equities and Rights Markets Indicators Trading Value (IRR Billion) 537,936 473,623 13.6 Unit of FY Ended 20 March FY Ended 19 March Indicators Change% First Market 327,343 307,126 6.6 Measurement 2017 2016 Second Market 210,593 166,497 26.5 Broad Index - 77,230 80,219 (3.7) Number of Shares and Market Capitalization IRR Billion 3,220,374 3,448,390 (6.6) Rights Trading 252,613 227,798 10.9 Average P/E Ratio X 6.48 7.45 - (Million Shares) Listed Companies Number 325 320 - First Market 158,211 156,440 1.1 Equities and Rights Trading Second Market 94,402 71,358 32.3 Total Trading Value IRR Billion 537,936 473,624 13.6 Number of Trading (x1000) 15,688 13,921 12.7

Total Trading Volume Million Shares 252,613 227,798 10.9 First Market 8,415 7,827 7.5 Total Number of X1000 Times 15,689 13,922 12.9 Second Market 7,273 6,094 19.3 Trades Normal Trading Value IRR Billion 490,269 425,537 15.7 (Retail & Block) Normal Trading Vol- Million Shares 232,975 204,287 13.9 ume (Retail & Block) Wholesale Trading IRR Billion 47,666 48,086 (9.0) Value Wholesale Trading Table 18 – Normal Trading Volume, Value and Number of Trading (Retail & Block) Million Shares 19,638 23,511 (16.5) Volume Value of Offered Daily Average IRR Billion - 15,970 - Volume Value Number State-owned Shares Working Year (Million (IRR Bilion) of trading Volume Days Value (IRR Number of Number of Offered Shares) (x1000) (Million Million Shares - 6,671 - Billion) Trading State-owned Shares Shares) Average of Daily Total IRR Billion 2,223 1,949 14.1 FY Ended Trading 20 March 144,646 377,119 12,916 241 600 1,565 53,593 Average Normal 2015 Trading Value (Retail IRR Billion 2,026 1,751 15.7 FY Ended & Block) 19 March 204,287 425,537 13,922 243 841 1,751 57,291 Value – Online 2016 IRR Billion 287,206 233,378 23.1 Trading FY Ended Volume – Online 20 March 232,975 490,269 15,689 242 963 2,026 64,831 Million Shares 152,897 126,114 21.2 Trading 2017

40 TSE 41 ANNUAL REPORT Market FISCAL YEAR ENDED 20 MAR. 2017 Operations Review

Table 19 –Average Normal Trading (Retail & Block) - FY Ended 20 March 2017

Daily Average Daily Average Month No. of Daily Average 4-3 Derivatives Market Trading Value Trading Volume (Persian Calendar) Trading Days Number of Trading (IRR Billion) (Million Shares) Option contracts were launched in the financial year ended 20 March 2017. The following table includes the market’s derivatives products trading data. 19 3,086 1,233 91,057 2 21 2,631 1,162 83,919 3 21 1,847 853 67,141 4 20 2,076 936 61,947 Table 22 – Derivatives Market Value, Volume and Number of Trades 5 21 1,935 931 64,102 6 21 1,539 780 47,826 FY Ended 20 March FY Ended 19 March Indicator Measurement Unit Change % 7 18 2,070 1,030 79,088 2017 2016 8 21 2,204 929 73,275 Value IRR Million 59,935 11,807 408 9 19 1,678 728 53,109 Volume (x1000) 3,371,125 57,177 5,796 10 20 1,281 845 50,689 No. of Trades No. 2,320 1,498 55 11 21 1,743 956 49,875 12 20 2,276 1,186 52,369

4-2 Debt Market Table 23 – Securities Breakdown of Derivatives Market Value, Volume and Number of Trades In the financial year ended 20 March 2017, total 22 participation papers and sukuks were listed at numbers of 11 debt securities were listed and 2 Tehran Stock Exchange. FY Ended 20 March 2017 FY Ended 19 March 2016 securities were maturated. At the end of the year Securities Volume Value Volume Value No. of Trades No. of Trades (x1000) IRR Million (x1000) IRR Million Table 20 – Debt Market Value, Volume and Number of Trades Stock Futures 11 0.02 811 164 0.4 11,249 FY Ended 20 March FY Ended 19 March Indicator Measurement Unit Change % Embedded Put 2017 2016 1,610 3,371,099 18,672 1,334 57,177 559 Options Value IRR Billion 93,132 86,262 7.5 Options 699 26 40,452 0 0 0 Volume (x1000) 92,524 87,992 5.2 No. of Trades No. 28,237 26,110 8.1 Total 2,320 3,371,125 59,935 1,498 57,177 11,807

Table 21 – Securities Breakdown of Debt Market Value, Volume and Number of Trades FY Ended 20 March 2017 FY Ended 19 March 2016 Securities Volume Value Volume Value  No. of Trades No. of Trades 5 – Listing and IPO (x1000) IRR Billion (x1000) IRR Billion In the financial year ended 20 March 2017, the listing including Murabeha sukuks and participation Certificate of 5,805 889 899 13,011 1,411 1,411 Deposit board held 20 sessions, and 7 listing applications papers were listed in the Exchange. Five new ETFs were admitted and the companies were listed at were also launched in the market during the year. Sukuks 13,501 20,109 20,393 1,950 10,163 10,192 TSE. In the debt market, 11 different securities, Participation 8,931 71,526 71,840 11,149 76,418 75,023 Papers

Total 28,237 92,524 93,132 26,110 87,992 86,626

42 TSE 43 ANNUAL REPORT Market FISCAL YEAR ENDED 20 MAR. 2017 Operations Review

Applied Admission Offering Capital (IRR Billion) No. Listing Date Company Date Date Descriptions Listing Date Last 5-1 Equities Market Sina Financil The listing board approved to list 24 companies in the last financial year, 4 companies were newly 14 and Investment 03.09.2016 08.03.2017 - 1,200 1,200 Group and to admit 15 companies in the financial year listed in the capital market and 3 companies were ended 20 March 2017. Some of these companies upgraded to be listed at TSE from Iran Farabourse. Zarrin Kalay e 15 Mobin (Jahrom 14.06.2016 11.03.2017 - 24,500 24,500 were listed in the past year, and the listing process The following tables illustrates the latest status of Power Plant) of rest of them postponed to the financial year the listed, admitted and offered companies, as well ending 20 March 2018. Out of 7 listed companies as their trading value of listing. 16 Chodan Sazan 27.09.2016 14.03.2017 - 600 600 17 Iranian Atlas 19.07.2016 - - 1,000 1,000 18 Homa Hotel 01.10.2016 - - 1,961 1,961 Persia Gas and Admitted in 19 15.10.2016 - - 2,000 2,000 Oil 2017. Table 24 – Listing Applications Review – FY Ended 20 March 2017 Pasargad 20 Power and 29.10.2016 - - 420 420 Capital (IRR Billion) Applied Admission Offering Energy No. Listing Date Descriptions Company Date Date Listing Date Last National 21 Building and 10.12.2016 - - 900 900 Iranian Industry Petrochemical Jam Poly 1 14.03.2016 03.04.2016 25.04.2016 20,000 20,000 22 20.12.2016 - - 500 500 Investment Propylene Group 23 Shafa Darou 20.12.2016 - - 1,180 1,180 2 Mellat Leasing 27.06.2015 06.01.2016 01.06.2016 800 800 Qadir Power Asan Pardakht 24 and Energy 11.02.2017 - - 4,500 4,500 3 10.05.2016 26.09.2016 17.10.2016 1,000 1,000 Persian Investment Tehran Oil MAPNA Staff 4 10.05.2016 08.10.2016 30.10.2016 12,000 16,000 25 11.02.2017 - - 1,500 1,500 Refinary Investment Hamkaran Detergent 5 27.09.2016 29.10.2016 13.11.2016 750 750 System Industry Management Tehran Stock 26 11.02.2017 - - 1,000 1,000 6 27.09.2016 15.10.2016 21.12.2016 1,250 1,250 of Behshahr Exchange Industrial Barekat Development 7 Pharmaceutical 06.08.2016 04.12.2016 05.02.2017 3,400 3,400 Asr e Novin Group 27 Dadegostar 26.02.2017 - - 500 500 Minou (HiWeb) 8 Industrial 16.09.2015 24.08.2016 - 680 1,260 28 Parsian Leasing - - - 1,300 1,300 Group Pars National Tozi’ Zangan 9 14.05.2016 01.10.2016 - 500 500 Agriculture, Transfomator 29 Industry - - - 325 325 10 Jay Oil Refinary 19.07.2016 19.11.2016 - 940 940 and Animal Admitted in Husbandry 2017. Kish South 11 19.07.2016 18.01.2017 - 7,000 7,000 Yazd Power Kaveh Steel 30 - - - 1,200 1,200 Generator Omid Asia Tech Data 12 Investment 14.06.2016 31.01.2017 - 4,000 4,000 31 - - - 300 300 Bank Transfer Mellat Beh FirouzkouH 13 24.01.2017 07.03.2017 - 950 950 32 - - - 600 600 Pardakht Cement Total 98,750 103,336

44 TSE 45 ANNUAL REPORT Market FISCAL YEAR ENDED 20 MAR. 2017 Operations Review

Nominal Kind of Admission No. Issuer Offering Date Maturity Date Value Table 25 – Listed Companies Trading Value - FY Ended 20 March 2017 Security Date (IRR Billion) Retail & Bloc Trading from Listing To 20 Tehran Munici- First Day of Listing 5 Participation Pare 05.09.2016 07.09.2016 15.03.2020 2,400 March 2017 pality 2 No. Company Tehran Munici- Volume Volume 6 Participation Pare 09.10.2016 16.10.2016 15.03.2020 3,000 Value % of Value No. of pality 3 (Million (Million (IRR Billion) Capital (IRR Billion) Trading Days Share) Share) 7 Morabeha SAIPA 16.11.2016 14.11.2016 16.11.2020 3,000 Iranian 8 Morabeha SAIPA 16.11.2016 14.11.2016 16.11.2020 2,000 Petrochemical 1 7.45 61.11 0.04 1,771 2,286 208 Mashhad Munici- Investment 9 Participation Pare 21.10.2016 25.12.2016 13.08.2020 4,000 Group* pality 1 Mellat Mashhad Munici- 2 87.20 43.92 10.9 474 575.6 141 10 Participation Pare 03.01.2017 15.01.2017 13.08.2020 2,000 Leasing pality 2 Persian Asan Rayan SAIPA 3 82.56 51.825 8.26 324 4,515 104 11 Participation Pare 31.01.2017 06.02.2017 06.02.2021 1,000 Pardakht Leasing Tehran Oil 4 2.62 4.9 0.02 449 1,248 80 Total - - - 32,000 Refinery* Hamkaran 5 0.61 7.3 0.08 6 29 83 5-3 Derivatives Market System* contracts were launched on 4 underlying shares, Tehran Stock In TSE’s derivatives market, stock futures, embedded 6 2.38 93.13 0.19 29 146 61 Exchange* put options, option contracts are traded. During the out of which 3 contracts were matured in the last financial year ended on 20 March 2017: financial year. Barekat 7 Pharmaceutical 340 28.816 10 700 1,608 30 • 9 different futures contracts were tradable on 6 • 88 option contracts were launched on 4 underlying Group underlying shares. 6 contracts among them were shares, out of which 44 contracts were matured and Total 523 1,772 - 3,753 10,408 - matured in the year. the others will be developed in the financial year ending 20 March 2018. *Transferred companies from Iran Farabourse • 7 different contracts embedded put option

5-2 Debt Market 5-4 Exchange Traded Funds (ETFs) The value of listed debt securities in the financial year ended 20 March 2017, including participation papers and Sukuks equals IRR 32,000 billion, as described in the following table: In the financial year ended 20 March 2017, 5 ETFs were listed at TSE, increasing total number of these funds to 9 in the Exchange.

Table 26 – Debt Securities Details and Value Table 27 – ETFs in FY Ended 20 March 2017 Nominal Kind of Admission No. Issuer Offering Date Maturity Date Value No. ETF Name Security Type Issuer Admission Date Offering Date Security Date Parand Paydar Sepehr Investment (IRR Billion) 1 Fixed-income 02.07.2016 02.07.2016 Sepehr Bank 1 Ijarah Rightel 02.05.2016 03.05.2016 03.05.2020 2,000 Bank Maskan Invest- 2 Narvan Maskan Real estate fund 23.08.2016 28.08.2016 Isfahan ment Bank 2 Participation Pare 06.06.2016 11.06.2016 16.03.2019 3,000 Municipality 3 Kian Fixed-income Asel Brokerage Firm 09.11.2016 13.11.2016 Mashhad 3 Participation Pare 14.08.2016 20.08.2016 18.03.2018 5,000 Amin Investment Municipality 4 Amin Yekom Farda Fixed-income 22.11.2016 03.12.2016 Bank Tehran Bank Maskan Invest- 4 Participation Pare 05.09.2016 07.09.2016 30.01.2020 4,600 5 Negin Shahr e Rey Real estate fund 09.01.2017 15.01.2017 Municipality 1 ment Bank

46 TSE 47 ANNUAL REPORT Market FISCAL YEAR ENDED 20 MAR. 2017 Operations Review

6 - Companies Re-classification Table 30 – Listed Companies Capital Increase Retained Profit, Based on article 54 of Listing Directive, the stock and de-listing of 2 companies) indicates total 325 Capital Increase Year Credits and Cash Reserves and Assets Re- exchange is mandated to classify listed companies listed companies in 38 different sectors. Based on (IRR Billion) in both Main and Second boards on May each the same Directive, the de-listed companies are evaluation Funds year. The outcome of such classification in the transferred to Iran Farabourse for having a trading FY Ended 20 March 2017 99,020 68,150 167,170 platform. financial year ended 20 March 2017 (listing of 7 FY Ended 19 March 2016 103,462 85,340 188,981

FY Ended 20 March 2015 105,228 108,244 213,472 Table 28 - Listed and de-listed Companies

No. of Listed No. of Listed No. of De-listed Companies at No. of Listed and Offered Companies 8 - Brokerage Firms Year Companies the Beginning Companies at the End of At the end of the last financial year, 105 member were licensed to act as listing advisors, 45 of them of Year the Year brokerage firms with 1,617 trading stations were provided offering advisory, 60 firms were authorized 7: Mellat Leasing, Asan performing in the market. Among these, 104 firms for portfolio management and 53 brokerage firms Pardakht Persian, Tehran provided on-line trading access, 58 brokerage firms registered mutual funds. Stock Exchange, Barekat FY Ended 20 2: Chemi Pharmaceutical, 320 Pharmaceutical, Iranian 325 March 2017 Isfahan Tile Petrochemical Investment Table 31 – Brokerage Firms and Trading Stations Group, Tehran Oil Refinery, Hamkaran System Description FY Ended 20 March 2017 FY Ended 19 March 2016 Number of Brokerage Firms 105 104 6: Mobin Petrochemical, Maa FY Ended 19 Insurance, Jam Petrochemical, 314 - 320 Number of Trading Stations 1,617 1,505 March 2016 Fadjr Petrochemical, Sobhan Darou, Khuzestan Cement Number of Trading in Hafez Floor 104 104 Proprietary Floors’ Trading Stations in Tehran 729 650 6: Saba Nour Steel Raw 9: Firouza Engineering, Materials, Sepahan Oil, Tolypers, Rangin Industrial Regional Trading Stations in Brokerage Firms 513 479 FY Ended 20 North East Real Estate and Chemical, Wool Knitting Branches 317 314 March 2015 Investment, Cement Industry Tousi, Iran Plaster, Sadid Development Investment, Industrial Group, Kaf, Isfahan Regional Floors’ Trading Stations 244 244 Kavir Tire, Middle East Bank Petrochemical, Kavian Steel Mutual Funds Dedicated Trading Stations 27 28

7-Financing through Stock Exchange During the financial year ended 20 March 2017, invalidated. As a result, 112 new trading stations During the financial year ended 20 March 2017, Exchange, at the total amount of IRR 167,169 billion. launching permit of 188 new trading stations were were added last year. 89 listed companies applied for capital raise at the The following tables indicate the details. issued, and 76 trading stations certificates were

Table 29 – Financing through Stock Exchange (IRR billion) Table 32 – Trading Stations Authorizing FY Ended FY Ended FY Ended Description 20 March 2017 19 March 2016 20 March 2015 Description FY Ended 20 March 2017 FY Ended 19 March 2016 Equity Financing 206,370 217,283 225,359 Issuing Trading Stations License 188 174 Listed Companies Capital 167,170 188,981 213,473 Raise Invalidating Trading Stations License (76) (77) IPO 39,200 28,302 11,886 (Inactive) Issued Licenses - (4) Debt Financing 32,000 58,474 3,700 Total 112 93 Total Financing 238,370 275,757 229,059

48 TSE 49 ANNUAL REPORT Market FISCAL YEAR ENDED 20 MAR. 2017 Operations Review 0.9 2.5 9.5 100 1.03 0.62 0.56 0.92 2.18 4.35 4.77 1.61 1.33 1.45 3.66 3.53 5.25 5.77 5.59 7.32 3.06 12.39 21.73 % of Total 92 55 50 82 80 194 387 424 143 118 129 326 222 314 467 513 497 651 272 845 8,896 1,102 1,933 Value Trading Trading FY Ended 19 March 2016 FY Ended 19 March 0 100 0.54 0.12 0.45 0.59 1.41 1.94 1.81 1.74 1.51 3.09 2.10 2.01 3.39 3.46 3.54 3.57 8.17 8.09 6.37 14.24 31.02 Brokerage Firms Floor Firms Brokerage % of Total 0 68 15 56 74 176 242 226 217 188 386 262 251 423 432 442 445 795 1,019 1,110 1,776 3,689 Value 12,472 Trading Trading FY Ended 20 March 2017 FY Ended 20 March Ilam Arak City Nour Abad Amol Qa’en Babol Others Kashan Gorgan Doroud Babolsar Khorram Sabzevar Sanandaj Bojnourd Boushehr Rafsanjan Shahroud Boroujerd Nowshahr Neishabour Shahr e Kord

TSE’s trading floor TOTAL 9 8 7 6 4 5 3 2 1 22 21 20 19 18 13 14 15 16 17 11 12 10 No.

Table 33 – Proprietary Floors Authorization 0.6 1.9 1.9 9.1 100 0.32 0.22 1.73 2.16 1.81 0.97 1.57 2.63 1.49 3.58 3.61 4.45 5.34 5.35 5.69 13.4 15.25 Description FY Ended 20 March 2017 FY Ended 19 March 2016 16.83 % of Total Issuing Proprietary Floors License 28 36

Invalidating Proprietary Floors License 39 60 528 363 985 3,097 2,823 3,531 3,101 2,965 1,587 2,560 4,301 2,428 5,844 5,900 7,270 8,875 8,747 9,292 Value 14,876 21,898 24,919 Issuing National Representation and Listing 27,493 Trading Trading 88 58 1163,383

License 2016 FY Ended 19 March 100 0.22 0.48 0.58 1.29 1.33 1.61 1.61 1.47 1.42 1.35 2.47 1.84 2.61 3.55 4.13 5.07 5.77 6.49 9.33 7.22 11.64 28.52 9 - Regional Floors Floor Regional TSE % of Total Facilitating nationwide access to the Exchange’s offices in some of the cities. trading platform, investors training and holding The brokerage firms have proprietary floors in some 370 804 capital market introduction courses, as well as of the cities where TSE is not directly present. During 971 2,171 2,241 2,710 2,703 2,477 2,394 2,274 4,161 3,096 4,383 5,980 6,953 8,531 9,703 Value 10,927 15,693 12,144 19,583 47,984 168,253 events and workshops, providing media coverage, the financial year ended 20 March 2017, the total Trading improving brokerage networks and handling all trading turnover (buying and selling) out of Tehran 2017 FY Ended 20 March operations of the capital market in provinces are was amounted as IRR 180,725 billion, 28 percent of among the major activities of the regional floors. total market turnover. Sari Kish City Yazd Qom Karaj Rasht Tabriz Shiraz Ahwaz Zanjan Qazvin Birjand Isfahan Ardebil Urmieh Kerman Semnan Zahedan Mashhad

Beside its main trading floor in the capital city, Each floor detailed figures are provided in the Hamedan Kermanshah Tehran Stock Exchange owns 22 regional floors or following table. Bandar Abbas TOTAL 9 8 7 5 3 4 6 2 1 22 21 20 19 18 13 14 15 16 17 11 12 10 No. Table 34 – Trading by TSE Regional Floors/Brokerage Firms Floors (IRR Billion) Floors Firms Floors/Brokerage Regional TSE by Trading 34 – Table

50 TSE 51 ANNUAL REPORT

r 9 Shiraz 5,980 3.55 5,900 3.61 9 Gorgan 423 3.39 314 3.53 10 Qom 4,383 2.61 5,844 3.58 10 Nowshahr 386 3.09 129 1.45 Kermansha 11 4,161 2.47 4,301 2.63 11 Bojnourd 262 2.10 326 3.66 h 12 Qazvin 3,096 1.84 2,428 1.49 12 Rafsanjan 251 2.01 222 2.5 13 Ardebil 2,710 1.61 3,531 2.16 13 Doroud 242 1.94 387 4.35 14 Hamedan 2,703 1.61 3,101 1.9 14 Sabzevar 226 1.81 424 4.77 15 Kerman 2,477 1.47 2,965 1.81 15 Boroujerd 217 1.74 143 1.61 Khorram 16 Ahwaz 2,394 1.42 1,587 0.97 16 188 1.51 118 1.33 Abad Shahr e 17 Sari 2,274 1.35 2,560 1.57 17 176 1.41 194 2.18 Kord Bandar 18 2,241 1.33 2,823 1.73 18 Babolsar 74 0.59 80 0.9 Abbas 19 Urmieh 2,171 1.29 3,097 1.9 19 Boushehr 56 0.45 82 0.92 20 Semnan 971 0.58 985 0.6 20 Qa’en 15 0.12 50 0.56 FISCAL YEAR ENDED 20 MAR. 2017 Market21 Zahedan 804 0.48 363 0.22 21 Nour 0 0 55 0.62 22 Birjand 370 0.22 528 0.32 22 Others 68 0.54 92 1.03 OperationsTOTAL Review168,253 100 1163,383 100 TOTAL 12,472 100 8,896 100

Chart 9 – Trading by TSE Regional Floors (%) Chart 9 – Trading by TSE Regional Floors (%)

FY 2017 10 FY 2016

0 Sari Kish Yazd Qom Karaj Rasht Shiraz Tabriz Ahwaz Zanjan Qazvin Birjand Ardebil Isfahan Urmieh Kerman Semnan Zahedan Mashhad Hamedan Kermanshah Bandar Abbas Bandar

Chart 10 – Trading by Brokerage Firms Floors (%) Chart 10 – Trading by Brokerage Firms Floors (%) 35

20 42

15 FY 2017

10 FY 2016

0 en ’ Ilam Arak Nour Amol Babol Qa Others Kashan Gorgan Doroud Babolsar Sabzevar Sanandaj Bojnourd Boushehr Shahroud Rafsanjan Boroujerd Nowshahr Neishabour Shahr Kord e Khorram Abad Khorram

52 TSE 53 ANNUAL REPORT Corporate Governance

1 Board of directors

The efficient procedures of corporate governance are vital for integrated operations of capital market, as well as the national economy and need to attract and preserve public confidence. A week implementation of corporate governance may shrink market’s confidence, which can be a reason for capital outflow from the market and a liquidity crisis, leading to price decline in the Exchanges per se. In fact, a company is in charge of its shareholders, as well as investors and its other members. Tehran Stock Exchange has endorsed its corporate governance directives as its commitment to implement the highest ethical standards, transparent and prompt disclosure and thorough observance of all rules and regulations. This has made a series of expectations to assist the board of directors and its committees to cover their obligations.

The nominated board of directors for the financial year ended 20 March 2017 held 15 sessions for assessing about their tasks accomplishment, being harmonized with shareholders’ benefit and balanced with stakeholders’ prospects. The board of directors is included of 3 specialized and 2 subsidiary committees.

2 Auditing Committee

This body is in charge of internal and independent auditors’ surveillance, proposing auditors to the board of directors for appointment and displacement, reviewing auditing reports and verification of the modifying measures for defects controlling, policies and regulations’ non-compliance. The committee applies the compiled information of the company’s financial system, its mechanized structure, the sessions’ minutes and documents, directors’ notes and the points provided in the

FISCAL YEAR ENDED 20 MAR. 2017 Corporate Governance

1- Board of directors 3- Risk Management and Strategy Committee The efficient procedures of corporate 6 - Construction Committee governance are vital for integrated operations This body is composed of risk management Tehran Stock Exchange’s new building construction vice president and 2 independent experts are the of capital market, as well as the national committee and strategy subordinate commission. project was started over a land as large as 2,621 committee members with the project executor economy and need to attract and preserve They are in charge of monitoring management sqm. since 2010 in Sa’adat Abad region, Tehran. contractor as the committee’s secretary. Moreover, public confidence. A week implementation measures regarding strategic policies and market The committee acts to direct, apply proper policies another project to build Zanjan Financial Center in of corporate governance may shrink market’s management, liquidity, operational, reputation and and monitor the construction stages in this project. a piece of land of 1,000 sqm has been initiated since confidence, which can be a reason for capital other corporate risks. 3 board members, as well as the CEO, logistics winter 2015. outflow from the market and a liquidity crisis, The committee makes a large part of corporate risk leading to price decline in the Exchanges and strategy management structure, and is aimed per se. In fact, a company is in charge of its at fully supporting the management to reach shareholders, as well as investors and its the targets harmonized with corporate strategic other members. Tehran Stock Exchange has plan. It evaluates risk management structure’s endorsed its corporate governance directives appropriateness and reports to the board of as its commitment to implement the highest directors. This reporting includes all issues related Table 35 – New building floors and space application ethical standards, transparent and prompt to governance, rule of law and risk management Floors Application Area sqm. disclosure and thorough observance of all obligations. The committee has 3 members, rules and regulations. This has made a series including one member of the board, an executive -6 Data center 2,579 of expectations to assist the board of directors nominated by the CEO, and a specialist verified -5 to -2 Parking 10,076 and its committees to cover their obligations. by the board. The committee is allowed to invite -1 Commercial use, training and assembly salons 2,217 The nominated board of directors for the independent and qualified individuals to attend financial year ended 20 March 2017 held some of the meetings. The committee’s head is GF Lobby, trading floor 1,606 15 sessions for assessing about their tasks appointed by the board of directors, or otherwise, Mezzanine Commercial use, investors assembly 1,362 accomplishment, being harmonized with by the committee’s members. shareholders’ benefit and balanced with +1 to +10 Administrative use 15,928 stakeholders’ prospects. The board of directors 4 - Compensation Committee Total area (17 floors) 33,768 is included of 3 specialized and 2 subsidiary committees. Observing all staff compensation and certifying their payment compliance with the corporate 2 - Auditing Committee targets and strategies are among this committee’s duties. It is composed of 5 members, including This body is in charge of internal and 3 non-executive board members, the CEO and The latest estimates of the project’s expenses 8 - Remuneration independent auditors’ surveillance, proposing Vice President, Administration or a human capital (including land, design and construction), as well as auditors to the board of directors for specialist. 3 non-executive members are appointed data center amount IRR 2,472 billion, out of which Based on the GA’s resolution, total gross amount appointment and displacement, reviewing by the board. IRR 1,897 billion has been fully paid. The building of IRR 2,100 million was dedicated for the board auditing reports and verification of the was more than 90% physically constructed, and the remuneration of the financial year ended 19 modifying measures for defects controlling, 5 - Regulation and Directives financial obligations were 77% accomplished on 20 March 2016. policies and regulations’ non-compliance. The Commission March 2017. The compensation amount of the CEO and committee applies the compiled information of other staff was to be determined by the board the company’s financial system, its mechanized Board of directors has considered a specialized 7 - Board’s Secretariat members. structure, the sessions’ minutes and documents, commission in order to accomplish its obligations Each board member was entitled to be paid directors’ notes and the points provided in the more effectively. It screens executive procedures, The board of directors has a secretariat which is IRR 6 million for each board session (maximum independent auditors’ reports. It includes 6 and authorizes offices or floors licenses. The working under chairperson’s surveillance. This is twice a month). members, with at least 3 members from the committee is also in charge of resolving about in charge of sessions’ arrangements, documents The compensation of the board members will be board of directors, and others appointed by the members and issuers violation rulings. This body provision, and minutes’ preparation. The secretariat fully paid to the related legal entities. board from non-executives. reports the board of directors about its decision. is the official reference for board decisions disclosure. The committee is composed of 4 members, 3 non- executives from board and the CEO.

54 TSE 55 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Corporate Governance

9 - Executive Directors

Table 36 – Executive Officers

No. Name Position

1 Seyed Rouhollah Hosseini Moghaddam Vice President, Issuers and Members

2 Ali Abbas Karimi Vice President, Administration

3 Ali Sahraee Vice President, Market

4 Shahram Daneshvar Director,Members Department

5 Esmaeil Dargahi Director, Listing

6 Tuba Dehghani Ahmadabad Director, Issuers Department

7 Kazem Farhang Director, IT Department

Director, Investment Culture Development 8 Mahbouneh Jafary Department

9 Zohreh Karimi Director,Contracts and Legal Affairs Department

10 Samira Khoshnood Director,Market Surveillance Department

11 Reza Kiani Director, Research and Development Department

12 Ramin Malmasi Director, Organizational Excellence Department

13 Naser Omidvari Director, Internal Auditing Department

14 Seyed Mahdi Parchini Parchin Director,Equity Market Operations

15 Mohammadali Pouladi Baghbaderani Director, Administration Department

16 Hamid Rouhbakhsh Amoli Moghaddam Director, PR and International Department

17 Kazem Shaker Director,Building Development

18 Azadeh Yazdani Director, Finance Department

10 - Independent Auditor and Legal Inspector

TSE’s auditor and inspector is Tadvin & Partners Co., and the substitute inspector is Shakes Andishan Auditing Institute. The auditing committee is in charge of proposing the auditor and determining its remuneration.

56 TSE 57 ANNUAL REPORT TSE’s new building (under Construction) Risk FISCAL YEAR ENDED 20 MAR. 2017 Analysis Report

Risk Analysis Report profitability, efficiency, development schemes and internal projects). Risk sources are generally categorized into Diversity of industries, investment funds and the diversifiable or nonsystematic risk undiversifiable listed companies in Tehran Stock Exchange requires or systematic risk. The nonsystematic risk depends investors to analyze their risk-return expectations on the company’s features such as business, in investment decisions for a suitable outcome. financial and liquidity risks, type of product, Recognition, evaluation and management of the capital structure and shareholders composition. risk are three basic steps to mitigate it. The major The systematic risk, on the other hand, refers to challenge of most investors is their unawareness the market’s general conditions, and national about existence and dimensions of some risks, political and economic developments, business and the aftermath of such investment. Risk cycles, inflation and unemployment, as well as, concept is usually interpreted negatively, but it global economic conditions and exchange rates. is an indispensible part of investment process, Changing of regulations in a jurisdiction by legal, which needs to be accomplished with an accurate judiciary or governmental authorities, such as bank understanding of the risk. interest rates, customs duties, and exchange rates, It is believed that with more transparency of irrespective of political or economic advantages, regulations, market information symmetry and will create systematic risk. During the past years, sustainable financial policymaking, less systematic risks posed by international sanctions were among risk will be experienced. Once strategic policies major sources of systematic risks. of guaranteed purchase, issuing exploitation In the short term, exogenous variables (political, licenses, market adjustment and raw materials economic, social factors) are more effective on pricing become more transparent, the investors trading volume and equities prices in Tehran Stock will participate in a less cloudy environment. Exchange than endogenous factors (companies’

58 TSE 59 ANNUAL REPORT Risk FISCAL YEAR ENDED 20 MAR. 2017 Analysis Report

Table 37 – Risks at Tehran Stock Exchange

Category Kind of risks

1- International risks Oil market price volatilities and their effects on national budget, as well as oil, gas and petrochemical sector Gold prices fluctuations and the impacts on forex and currency prices-sensitive sectors Commodity and basic metals markets and their reactions to the global prices Capital flow Economic development among business partners, sanctions, neighboring countries’ political development Table 38 – Related Parties Transactions (IRR Million) Ambiguities about JCPOA implementation Rent Delivered/ Other Description Name Relativity Office Rent Contract received 2- Macro environment risks Transactions Risks related to political, regulatory and social environments Deposit guarantees • Budget Iran Board member - - 7,000 - • Commodities and services pricing policies Farabourse • Customs tariffs and duties Financial Parliament resolutions Related Board member - - 2,215 - • Center Co. • Tax rate changes Companies • Government debts Central Assets • New environmental rules Management Board member - - - - Co. • Investors expertise in the capital market Macro economy risk Bank Tejarat Board member 989 - - - • Economic growth Brokerage • Interest rate changes Mofid Board member 902 - - - • Manufacturing sector investment fluctuations Brokerage A - Systematic • Residential sector investment fluctuations Saba Ta’min Board member 958 - - - • Liquidity fluctuations Brokerage • Inflation movements Bank Mellat • Income changes (purchasing power) Board member 253 - - - Brokerage • Exchange rate fluctuations (Un)employment rate Tadbirgaran • Others • Export/import volume Farda Board member 44 - - - Broekrage Bank Pasargad 3- Operating environment risks Board member 415 - - - Competitors risk Brokerage • Parallel markets, including gold, housing, currency regarding their investment potentials Bank Tejarat Board member 1,182 13,983 - - • Money market and other Exchanges regarding their financing and investment potentials Iran Energy Business partners risks Board member - - 2,397 - Exchange • Operational risk of CSDI as a result of possible deficiencies in the clearing system, or operations delays Market SEO - - 21,833 2,823 • Operational risk of TSETMC as a result of possible deficiencies in the trading system, and regulator delays in providing the required infrastructures to develop new products Total 4,743 13,983 33,445 2,823 • Brokerage companies as a result of incompliance with the regulations, investors dissatisfaction, and market’s under development • Investment banks as a result of unappealing existing financing methods and time- consuming process • Time-consuming process of regulating • Lack of enough regulations for corporate governance and hedging instruments • Exchange listed companies’ disclosure quality and transparency

Risks of human errors, regulatory deficiencies, member brokerage firms and issuers B - Nonsystematic arrangements

60 TSE 61 ANNUAL REPORT Risk FISCAL YEAR ENDED 20 MAR. 2017 Analysis Report

Table 39 – Related Parties Final Accounts (IRR Million)

Trade Non-trade 20 March 19 March Descrip- Non-trade Name Relativity Receiva- Receiva- Dividends 2016 2015 tion Payables bles bles Gross Gross Iran Board - 3,830 - - 3,830 17,675 Farabourse member Central Assets Board - 881 - - 881 - Related Management member Companies Co. Iran Board Financial - 2,791 - - 2,791 - member Center Total - 7,502 - - 7,502 17,675 Trade Non-trade 20 March 19 March Descrip- Non-trade Name Relativity Receiva- Receiva- Dividends 2016 2015 tion Payables bles bles Gross Gross CSDI Investee 13,156 455 - - 13,611 29,858 Measures Board Bank Tejarat 55 1,615 13,983 - 12,313 - member Bank Tejarat Board on GA’s Obligations - - 1,728 - 1,728 1,920 Brokerage member Saba Ta’min Board - - 586 - 586 -  Brokerage member The last financial year’s obligations Mofid Board based on the resolutions of the general - - 3,755 - 3,755 13,799 Brokerage member assembly are as follow: Bank Mellat Board - - 2,774 - 2,774 - a- Dedicating IRR 59,316 million of the payable Brokerage member Operations and profit to the legal deposit Tose’e Farda Board - - 280 - 280 - Brokerage member b- Paying IRR 110,000 as dividend (DPS: IRR 100) Achievements Tadbirgaran Board Farda - - 3,645 - 3,645 - c- Transferring the remaining amount of payable member Others Brokerage profits to reserve deposits in the Financial Year Bank Board Pasargad - - 5,278 - 5,278 - member Also, the company’s capital gain for the value Brokerage of IRR 400,000 million was authorized to be Ended 20 March 2017 Tose’e Melli Board implemented in one or more phases. The initial Investment 56 - - - 56 - member Co. phase was accomplished last year for the amount of Parsian IRR 150,000 million. During the second phase, the Board Insurance 79 - - - 79 88 capital will be increased to IRR 1,500 billion. member Co. Iran Energy Board - 2,398 - - 2,398 - Exchange member Alborz Board Insurance 5 - - - 5 5 Board’s Proposal for Dividends Payment member Co. Members of the board propose the GA to authorize paying out of IRR 37,500 million (IRR 30 for each share) as SEO Regulator - - - 25,675 3,818 dividends and transferring of the remaining amount to the reserve and prudential deposits. 23, 56, 47, 19, Total 13,351 11,970 32,029 651 034 626 537

62 TSE 63 ANNUAL REPORT Conference on Attracting Foreign Capital to Iran , Tehran - Oct. 2017 Conference on Attracting Foreign Capital to Iran , Tehran - Oct. 2017 Operations and Achievements in the Financial Year Development Department

Tehran Stock Exchange in line with its macro strategies, sketched development plans and activities of the Exchange during the financial year ended 20 march 2017. Development plans • Revising TSE’s strategic plan • Reviewing TSE’s international membership and • Reviewing and trouble shooting of TSE’s marketing Listing and Issuers Department interactions activities • Studying algorithmic trading requirements, Current activities Development plans Industrial, Zangan Transformer, Jey Oil Refinery, infrastructure and outcomes at TSE • Holding +10,500 person/hour specialized courses • Holding marketing sessions (regional seminars) for South Kaveh Steel, Omid Investment Bank, Mellat • Devising futures contracts on the listed companies’ for market participants, brokerage agents and public debt instruments listing Bepardakht, Sina Financial and Credit Holding, dividends sessions • Iron ore industry analysis Jahrom Generator Development, Chodan Sazan • Preparing TSE’s annual report and fact book • Holding stock portfolio option and futures contracts • Accreditation process improvement • The admitted but not listed companies forum, and a regional seminar on debt instruments include: Iranian Atlas, Homa Hotel, Persia Oil • Analyzing TSE’s value weighted and equal • Brokerage companies ranking directive revising introduction in Kermanshah floor and Gas, Pasargad Power and Energy, Shafa weighted indices movements Current activities Darou Investment, Jam Polypropylene, National • Publishing one new book and 3 technical brochures Construction and Industry, Qadir power and Energy • Considering dividends-backed listing securities • Listing and offering of 4 companies’ shares: Mellat Investment, MAPNA Group Investment, Behshahr methods • Sponsoring 4 dissertations and research projects Leasing (IRR 800 billion), Asan Pardakht Persian (IRR Detergent Industry Management, and Hiweb • Establishing listing and trading mechanism of • Holding incessant control sessions and quarterly 1,000 billion), Tehran Stock Exchange (IRR 1,250 • Listing fixed income securities including Sukuks, equity certificate of deposits in the capital market monitoring of projects development billion), Barekat Pharmaceutical Group (IRR 3,400) municipality participation papers, etc. • Transferring and offering 3 companies’ shares from • Acknowledging Repo contracts and feasibility • Introducing new indices, certificates of deposit, • 570 supervising visits to brokerage firms Iran Farabourse: Iranian Petrochemical Investment study of their introduction in TSE equity portfolio derivatives, short selling and currency futures trading (IRR 20,000 billion), Hamkaran System (IRR 750 • Holding more than 170,000 person/hour training • Debt instruments designing billion), Tehran Oil Refinery (IRR 12,000 billion) courses in the regional floors • Admission of the following companies: Minou • Holding 1,666 person/hour issuers upgrading courses

64 TSE 65 ANNUAL REPORT Logistics Department Tehran Stock Exchange’s strategic plan

Development plans • Revising human resources’ existing directives and bylaws • Designing and implementing non-cash payments • Providing financial directives regarding general Current activities assembly, budget making and revenue finding • Accomplishing the construction operations of the • Holding average 19 person/hour training for each new building for TSE of TSE’s staff TSE’s strategic plan includes goals and macro investors to indirect participation in the market strategies, as well as operational and development Trading and surveillance infrastructure programs as follow: development and upgrading Improving listing advisors status and role in the Market Department Chart 10 – Macro Goals listing process Goal 1: increasing capital market’s share in Facilitating trading access in cyber space financing economic productive activities Increasing efficiency in regional trading floors Developing investment culture and planning to Goal 2: applying effective regulations and Development plans Current activities raise investment base of the country procedures in order to protect market’s integrity • Launching option contracts market • New futures contract introduction and shareholders’ rights Supporting disclosure system, aiming at mitigating • Reviewing market surveillance reference • Abnormal trading detection operations risks and increasing transparency • Surveillance platform monitoring • Removing trading limitations in investment funds Goal 3: deepening and expanding the market, as Creating advantage and brand management at TSE well as facilitating its public access with modern • Studying other exchanges’ surveillance and • Providing FAQ for option contracts Effective application of international memberships technology and updated processes disclosure procedures • Comparative analysis of existing manipulations and cooperation with international Exchanges • Preparing IPO and book-building directives with the new violations related to new trading Goal 4: improving financial literacy and investment Increasing incentives and constant improvements • Business intelligence programing in line with instruments culture in the country in the staff occupational attitudes surveillance targets • Making algorithms of front running in a Constant improvement of human sources capability • Studying and classifying all types of market cooperation with Iran Farabourse Goal 5: observing accountability and transparency and efficiency manipulation and their cases in other exchanges • Shareholders complaint inspection to interact with all stakeholders • Inspecting suspicious trades against money Developing interaction with the listed companies Developing physical assets and human laundering Goal 6: and providing new mechanisms for monitoring capital constant issuers and upgrading internal auditing Goal 7: Making value for shareholders Effective connections with the market’s active participants to establish required regulations and Chief Executive Department deregulations Chart 11 - Macro Strategies Cash flow management by capital and money The Exchange’s macro strategies in operational and markets’ mechanisms administrative fields include: Reviewing organizational regulations and Development plans Current activities Designing new financial instruments and trading management settings mechanisms Planning for less ownership centralization and more • Revising the English section of TSE’s website to • Signing MoU with the stock exchanges of Athens Public investment development and encouraging free float equities in the listed companies facilitate foreign investors access to the market and Munich • Arranging 48 delegations’ visit to TSE (257 visitors) • Holding quarterly press conferences

66 TSE 67 ANNUAL REPORT Targets & FISCAL YEAR ENDED 20 MAR. 2017 plans in 2017-2018

Department Development plans Current activities Department Development plans Current activities

• Listing of 15 new companies and transferring 5 companies from IFB • Holding average 15 person/hour training courses • Listing 10 funds, including ETFs, project and for each staff • Employment grading system implementation construction funds • Finalizing construction operations of TSE’s new Administra- • New financial system establishment • Listing 20 debt securities premises tion • Reviewing financial procedures • Holding 15 marketing sessions for different • Preparing capital gain reports securities listing • Human resources and financial directives revision • Listing Iranian companies in international markets • Holding +150K person/hour training in the • Issuing foreign currency debt securities overseas regional floors • Pursuing prospectus issues (major shareholders) • 550 visits to brokerage companies • Providing surveillance and inspection procedures for • Holding 2,000 person/hour training courses on • Introducing option contracts on new underlying Issuers and option contracts issuing requirements equities members • Differentiating and ranking of the brokerage companies • Calculating corporate governance grade for the • Developing option markets • Marketing for equity option contracts • Implementing evaluation system for regional floors listed companies • Revising executive procedures of new financial instru- • Documenting book building process in IPOs • Holding workshops and semester-based courses with • Preparing a guide for investment at TSE IN ments • Developing investors’ guide about trading sys- new topics English language • Upgrading trading platform tem’s microstructures Market • Frequent meetings with mutual funds managers • Designing surveillance procedures for option contracts • Designing risk management system of options during the year • Cooperation with TSETMC for designing a platform to contracts • Trouble shooting sessions with nominated provide book building and underwriting services in IPOs • Launching on-line trading access for option industries contracts • Preparing surveillance reports of the companies • Contracts exercise system launching • Holding quarterly meetings with brokerage houses

Doing comparative analyses among stock markets and • Partnership in 50th anniversary of capital their boards as a TSE’s markets revision feasibility study market in Iran • Providing a gap analysis report on mixed tradable • Holding an introductory seminar for local structured instruments issuers about listing requirements in interna- • Reviewing the social services provided by TSE tional markets Chief • Quarterly press conferences and meetings • Studying halting and suspension mechanism of trad- Executive • Legal review of TSE’s trading directives with investors ing at TSE and feasibility of improvement Department • Comparative analysis of investors protection funds in • Attending local and international exhibitions stock markets • Organizing foreign delegates visits to TSE • Studying the executive processes of capital increase at • Finalizing international contracts and mem- TSE and feasibility of improvement berships • Providing a gap analysis report on price fluctuations derivatives • Preparing a gap analysis report on turbo certificates • Providing a gap analysis report on equity based finan- Development cial instruments • Trouble shooting of sukuks marketing • Reviewing trading behaviors of 4 investors groups (2nd. Version) • Studying capital market’s role on the economic and employment growth • Analyzing the process and quality of dividends payment at TSE • Finalizing new trading and post-trade system procure- ment • Producing training animations • Inscribing the risk management regime • Implementing TSE’s macro strategies based on balanced scorecard

68 TSE 69 ANNUAL REPORT TSE’s TSE’s International International Tradable Instruments Relations Relations Iran’s Capital Market in TSE Memberships MoUs Financial Entities:

1.Equities 1. Malaysia 2007 1. Brokerage Firms 2.Rights 2. Indonesia 2008 2.Investment Bank Firms 1992 3.Investment Funds 3.Debt Securities 3. South Korea 2009 4. Investment Firms (Islamic Participation Papers, Sukuks, CDs,) 4. Cyprus 2009 5. Holding Firms 4.Futures Contracts 5. Damascus 2010 6.Market Maker 5.Option Contracts 1995 6. Lahore 2011 7. Portfolio Manager 6.Exchange-Tradad Funds 7. Kazakhstan 2011 8. Karachi 2012 8. Investment Consultants 2008 9. Muscat 2014 9. Financial Information Analysis Firms 10.Istanbul 2015 10. Listing Advisor 11.Athens 2016 11. Offering Advisor 12.Munich 2016 2008

70 TSE 71 ANNUAL REPORT Tehran Stock Exchange Annual Report Fiscal Year Ended 20 March 2017

FINANCIAL STATEMENTS For the Fiscal Year Ended March 20, 2017

72 TSE 73 ANNUAL REPORT Report of Independent Auditor and Legal Inspector To the General Assembly Tehran Stock Exchange Corporation

Opinion

4. In our opinion, the financial statements referred to above present fairly in all material aspects in conformity with Iranian Accounting Standards.

Report on Other Legal and Regulatory

Report on the Financial Requirements Statements

1. We have audited the balance sheet of Tehran Stock Exchange Corporation as of 1395 and the income and cash flow statements of the Company for the fiscal year ended 3/20/2017, Reports on other Duties of Legal we have not observed any material cases of non- together with notes 1-27 thereof. Inspector conformity of the provided information with books and records submitted to us by the Board of 5. The transaction included in the explanatory note Directors. 26 to the financial statements has been examined as all transactions subject to the Article 129 of Report on Other Auditor’s Legal the Commercial Code, which are conducted and and Regulatory Responsibilities Board of Directors’ responsibility test basis, evidences supporting the amounts and reported to us by the Company’s Board of Directors. disclosures in the financial statements. Deciding on In these transactions the provisions of the Article 7. In respect to the Announcement approved by 2. The responsibility of financial statements is with the auditing methods is on the auditor’s judgment 129 including permission of the Board of directors Securities and Exchange Organization in relation the company’s Board of Directors according to and based on reviewing any risks of material and no participation of the beneficiary manager, to the Checklist of internal controls on financial accounting standards. The board of directors should misstatement resulted from frauds and errors in have been observed. We have not observed any reporting, , we have examined the checklist and no plan, apply and maintain the relevant internal the financial statements. To review the risks, we evidences indicating that the transaction has material cases have been observed, except that a controls in order to prepare the financial statements assess internal controls related to the preparation not been conducted on the appropriate trade proper risk assessment and management system is which are free from material misstatements resulted and presentation of financial statements in order conditions and in normal course of the company’s required. from frauds and errors. to plan the relevant audit methods in the current activities. circumstances, not to express an opinion on the 8. With respect to the article 33 of anti-money  Auditor’s and legal Inspector’s effectiveness of the internal controls. An audit also 6. We have examined the report of the Board of laundering rules for auditors, we have examined the Responsibility includes assessing the accounting principles and Directors to the Annual General Meeting of the rules and procedures compliance in the framework of auditing standards. We have not observed any 3. Our responsibility is to express an opinion procedures used and significant estimates made by company in respect of the Company’s general status material cases of non-compliance with the rules and on the financial statements based on our audit. the Board as well as evaluating the overall fairness and activities, as the subject of the article 232 of procedures. We conducted our audit in accordance with the of financial statement presentation. We believe our the Commercial Code. Based on our examinations, Auditing Standard of financial statements. These audit provides a reasonable basis for our opinion. standards require that we meet the requirements of Also, our responsibility is to report to the general professional ethics and plan and perform the audit assembly of shareholders on any noncompliance to obtain reasonable assurance about whether with the legal requirements set out in the 2 July 2017 the financial statements are free from material Commercial Code as amended and the company’s misstatements. The audit includes examining, on a provisions of the Articles of Incorporation. Tadvin Audit institute and Colleagues

74 TSE 75 ANNUAL REPORT Equity Method Balance Sheet - For the Fiscal year ended March 20, 2017

March March March March 20,2017 20,2016 Liabilities & shareholders' 20,2017 20,2016 Assets Note Note Million Million equity Million Million Rials Rials Rials Rials Current Assets: Current Liabilities:

Cash 3 36,816 59,320 Non-trade Payables 11 333,439 260,910

Short Term Investments 4 19,689 290,121 Taxes 12 50,902 56,964

Tehran Stock Exchange Corporation Trade and non-trade 5 111,923 140,263 Dividends 13 17,080 8,645 Financial Statements Accounts Receivable Prepayments 6 7,092 4,597

For the Fiscal year ended Total Current Assets 175,520 494,301 Total Current Liabilities 401,421 326,519 March 20, 2017 Non-Current Assets: Noncurrent liabilities: Long Term Receivables 5 30,634 25,692

Provisions for Employees’ Long Term Investments 7 221,761 189,910 14 53,692 41,415 We would like to submit the financial statements of The financial statements have been prepared Termination Benefits Tehran Stock Exchange Corporation for The fiscal according to the National Accounting Standards Intangible assets 8 35,092 3,150 year ended March 20, 2017. Components of the and they have been approved by the Board of financial statements are as followings: Directors on May 26, 2017. Tangible Fixed Assets 9 1,862,027 1,292,780 Equity method Primary Financial Other Assets 10 4,842 3,513 Statements Members of the Board of Directors Total Non-Current Total Non-Current Assets 2,154,356 1,515,045 53,692 41,415 • Balance sheet Liabilities • Income statement Member of the Board Position Retained earnings account of Directors Total Liabilities 455,113 367,934 • Cash flow statement Mohammad Esmaeel Chairman Shareholders' equity: Primary Financial Statements Fadaeenejad Paid-in capital (1250 • Balance sheet 15 1,250,000 1,100,000 Ali Akbar Amin Tafreshi Vice Chairman million shares paid totally) • Income statement Retained earnings account Mojtaba Taghipoor Non-executive member Legal reserve 16 91,773 76,198 • Cash flow statement Abbas Naeemi Non-executive member prudential reserve 17 66,438 62,138 Explanatory Notes Jamshid Imani Non-executive member Retained earning 466,552 403,076 • History • Basis for preparing Financial Statements Farhad Abdollahzade Non-executive member Total Shareholders' equity 1,874,763 1,641,412 • Equity basis • Significant Accounting policies Mostafa Zarghami Non-executive member Total Liabilities and Total Assets 2,329,876 2,009,346 2,329,876 2,009,346 • Notes to the Financial Statements (items and Shareholders, Equity numbers) Hossein Amiri Organizational Regulator Explanatory notes are an integral part of financial statements.

76 TSE 77 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

Equity method Income Statement For the Fiscal year ended March 20, 2017 Equity Method Cash flow Statement For the Fiscal year ended March 20, 2017

Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Assets Note March 20,2017 March 20,2016 Assets Note March 20,2017 March 20,2016 Million Rials Million Rials Million Rials Million Rials

Services revenue 18 644,463 573,433 Operating activities:

Cost of services 19 (254,497) (223,572) Net cash inflow from operating activities 23 407,897 367,390 Gross income 389,966 349,861 Return on investments and servicing of finance: Administrative and general expenses 20 (122,696) (117,690)

Operating income 267,270 232,171 Interest received from bank deposits 50,540 92,908

Other non-operating income and expenses 21 72,674 109302 Earnings per share received 20,746 15,341 Income irrespective of income from associate companies 339,944 341473 Dividends Paid (101,565) (85,025) Income from associate companies 7 60,630 60,979 Net cash inflow (Outflow) from Investment Returns and servic- (30,279) 23,224 Income before tax 400,574 402,452 ing of finance Income tax 12 (57,223) (61,647) Income tax: Net income 343,351 340,805

Earnings per shares: Income Tax paid (59,870) (63,392)

Revenue 173 139 Investing activities: Gains 102 133 Payments for acquisition of tangible fixed assets (578,464) (414,928) Earnings per share 22 275 272 Receipts from short term investment sales 270,432 142,707 Net Income 343,351 340,805

Retained earnings at the beginning of the period 403,076 364,639 Receipts from tangible fixed asset sales 45 21

Prior period adjustment - (1,223) Payments for acquisition of intangible assets (32,265) - Retained earnings at the beginning of the period-adjusted 403,076 363,416 Receipts from prudential reserve release - (3,323) Dividend 13 (110,000) (90,000)

Capitalization 15 (92,000) (137,000) Net cash out flow from investing activities (340,252) (274,523)

Income allocation: 544,427 477,221 Net cash increase (decrease) (22,504) 52,699 Legal reserve 16 (15,575) (14,829) Cash Balance at the beginning of the period 59,320 6,621 Prudential reserve 17 (62,300) (59,316)

Retained earnings at the end of the period 466,552 403,076 Cash balance at the end of the period 36,816 59,320

Explanatory notes are an integral part of financial statements. Explanatory notes are an integral part of financial statements

78 TSE 79 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

1. Background 2. Significant Accounting Policies

1.1. History 2.1. Basis for preparing financial Management of Capital Market, less of unrealized statements gains and losses from transactions. Tehran Stock Exchange Corporation has been issuers according to the law and regulations. founded according to the Securities Market Law The financial statements (primary financial 2.2.2 The investor company’s share of associated approved on November 22, 2005, and registered • Determining the brokerage membership statements and equity financial statements) of the companies’ operation has been reflected in income with the number 286502 with the Companies & conditions for different groups of members, Company have been prepared mainly on historical and comprehensive income statements as the case Non-commercial Institutions Registration Office in admitting the membership applicants, and cost basis and, where necessary, current values may be. Tehran. According to approval of Securities listing enactment and enforcement of professional and have been used. 2.2.3. The fiscal year for Central Asset Management Council, the company is listed on the main board disciplinary principles, determining the members’ of Capital Market is ended) is ended in January of of the main market of Tehran Stock Exchange. The duties and responsibilities and monitoring them. 2.2. Basis for equity method the next year, however, its financial statements are head office of the company is located in Tehran • Providing conditions necessary for fair access of 2.2.1. Equity financial statements have been used in equity calculations as before. Any significant and has 23 Branches within the country and an members to trades of listed securities. prepared through aggregation of items of Tehran event occurred until the parent company’s financial independent registered branch in Kish Island by Stock Exchange financial statements with TSE’s statement date, should be accounted for in the now. • Cooperation and Consistency with the other share of changes in net assets and operation results financial statements of the associate company financial institutions undertaking responsibilities 1.2. Main Activities of its associated companies including Farabourse Central Asset Management of Capital Market. related to securities trades, making researches, (out of the counter) Company and Central Asset According to the Provision 3 of the Articles of training, culture developing, and cooperation with other Iranian and foreign Exchanges to share Incorporation, the main activities of the company 2.3. Investments are: information and experiences. • Supervising well conduction of listed securities • Establishing, organizing and operating the Stock Evaluation method Equity method financial statements Investor's financial statements Exchange for making trades on listed securities by transactions and supervising issuers’ activities. Providing, collecting, processing and issuing Iranian and foreign parties according to the law and Long term investments: regulations. information related to securities, and performing other duties according to the law and regulations. Cost (less accumulated impairment of Investment in associates Equity method • Listing securities including securities of foreign investments) Cost (less accumulated impairment of Cost (less accumulated impairment of Other long term investments investments) investments) 1.3. Employment position March 20, March 20, Revenue recognition Permanent and 2017 2016 method: The number of employees at the end of the financial temporary employee At earning approval by the investee's period is as follows: 328 314 Investment in associates Equity method general association of shareholders ( until financial statements approval) At earning approval by the investee's At earning approval by the investee's Other long term and current general association of shareholders ( until general association of shareholders (until investments the balance sheet date) the balance sheet date) Investments in other secu- At interest realization At interest realization rities

80 TSE 81 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

2.4. Goodwill 2.6. Tangible fixed assets 2.7. Devaluation of Non-current Assets

Accounting for commercial combinations as 2.6.1. Tangible fixed assets are carried on the cost 2.7.1. If there is any sign of devaluation of assets at before tax indicating the time value of money and an acquisition is conducted based on purchase basis. Costs for betterment and substantial repairs the end of any reporting period, a devaluation test is the asset risks that the estimated future cash flows method. The cost surplus of acquisition of the resulting in a significant increase in the capacity and made, that is, the recoverable amount of the asset is have not been adjusted for. associated company subject to equity method useful life of fixed assets or an improvement of their estimated and compared with its book value. If the 2.7.4. Only if the recoverable amount of an asset for the group share of net fair value of net assets output quality, are accounted for as capital costs estimation is impossible, the recoverable amount of is less than its book value, the book value decreases at acquisition date, is recognized as goodwill and and depreciated during the remaining useful life of the cash generating unit the asset is belonged to to the recoverable amount and the difference is amortized after 20 years. As the acquisition of the relevant assets. Costs necessary to maintain the will be determined. immediately included in income statement as associated companies by Tehran Stock Exchange is normal capacity of the assets like maintenance and impairment losses. made at the foundation date, fair value of net assets insignificant repairs, are accounted for as expenses 2.7.2. Devaluation test of intangible assets is conducted annually irrespective of any sign of it. has been equal to the book value and no goodwill of the period when incurred. 2.7.5. If the recoverable amount increases from has been created. the last loss recognition, which indicates returning 2.6.2. Depreciation of tangible fixed assets are 2.7.3. Recoverable amount of an asset (or cash of impairment losses, the asset book value 2.5. Intangible Assets calculated based on the estimated useful life of the generating unit) is equal to the sale value divided increases to new recoverable amount. The return of asset, according to the depreciation regulations into the more of sale costs or economic value. The asset impairment losses is immediately included in Intangible assets are carried on the cost basis included in the Article 149 of the amendment of economic value is equal to the current value of income statement. and amortizable intangible assets (software) are the Direct Taxation Act approved in 1988 and on the future cash flows from asset using discount rate amortized until maximum 3 years and based on basis of the following rates and methods: straight line basis.

Assets Depreciation rate Depreciation method 2.8 2.9. Provision for employees’ termination benefits Buildings 25 years Straight line Foreign currency items with the formal exchange rate at the balance sheet date and expenses carried Provision for employees’ termination benefits Computer system and hardware 3 years Straight line in foreign currency at historical cost are translated are calculated and carried according to their last Administrative equipment 6,5 years Straight line with the formal exchange rate at the date the monthly fixed salary and continuous benefits for transaction is entered into. Differences arising from every year of their service. Vehicles 6 years Straight line settlement or exchange of foreign currency items are recognized as cost of that asset for qualified 2.10. Revenue recognition Constructions of the rental building 3 years Straight line asset and as income or expenses of the period The income from services is recognized when when incurred for other assets. services are rendered.

2.6.3. Fixed assets acquired and used within not used for any reason like work stopping, its a month are depreciated and carried from the depreciation will be equivalent to 30% of the beginning of the next month. When an asset is depreciation rate included in the table above.

82 TSE 83 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

5. Trade and non-trade accounts receivable

5.1 Short-term receivables

3. Cash March 20,2017 Provision March The company’s cash in hand at the balance sheet date are as following: Notes 2017/3/20 for doubt- Net 20,2016 million Rial ful debts million Rial million Rial million Rial Notes March 20,2017 Million Rials March 20, 2016 Million Rials Trade

Bank accounts (Rial) 3.1 35,703 55,187 Listed companies (listing fees) 5.1.1 20,712 (4,102) 16,610 11,714

Fund & Petty Cash (Rial) 3.2 1,113 4,133 Brokerage (rent, service, tax, value added tax) 16,336 16,336 48,701

Total 36,816 59,320 Central Depository and Settlement Corporation 5.1.2 13,554 13,554 29,858

Non-trade

3.1. Cash in hand at the balance sheet date 3.2. The balance of foreign currency fund has Associated companies: foreign currencies amounted 466 million Rials been included 3,444 Dollars, 3,240 Euro, 4,441 including 14,298.81 Dollars and 2.54 Euro which Pound, 2,665 Yuan and 1,968 Dollars as Visa card Over the counter (Farabourse) 29,963 29,963 17,675 have been converted to 32,580 Rials and 35, 023 which have been converted at the free rate at the Financial center 3,016 3,016 1,402 Rials, respectively as the balance sheet. balance sheet date. Central financial management 881 881 152

Others: 4. Short – term investments Loans to Employees (current portion) 17,229 17,229 13,739

Rentals receivable from banks 5.1.3 4,474 4,474 3,196

Notes March 20,2017 Million Rials March 20, 2016 Million Rials Energy Exchange 2,398 2,398 1,944

Bank Day deposits 4.1 19,689 134,547 Security for building lease 1,370 1,370 2,670

Bank Pasargad deposit certificate - 100,000 Income from short-term deposits with banks 1,145 1,145 6,327

Bank Parsian short term deposits - 55,574 Other: 4,947 4,947 2,885

Total 19,689 290,121 116,025 111,923 140,263

 4.1. Short term deposits in Day Bank will be held for more than 3 months. 5.1.1 The amount includes 4,374 million Rials as 5.1.2 .This amount has been received from admission fee and 16,338 million Rials as listing Central Depository and Settlement Corporation on fee. The provision for doubtful debts as amounted 2016/3/26. 4,102 million Rials is related to the balance of annual receivables from some listed firms for listing 5.1.3. The balance refers to rentals from banks fees and some delisted firms. The amount of 931 Melli, Saman, Saderat and Tejarat. The amount of million Rials of all receivables has been collected up 1,142 million Rial of the balance has been received to financial statements approval date. up to financial statement approval date.

84 TSE 85 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

7-Long –Term investments

Equity method Investor

March 2017 March 2016 March 2017 March 2016 Notes No. of Shares Investment% Cost-equity Cost-equity Cost Cost Million Rials Million Rials Million Rials Million Rials

Associated companies:

5.2. Long-term receivables Over the counter (Fara- 7.1 140,000,000 20 184,798 159,837 20,000 20,000 bourse Corporation)

March 20, 2017 Iran financial center (Pvt.) 7.2 4,000,000 20 4,878 4,433 2,000 2,000 Provision March 20,2016 Central Asset Manage- 2017/3/20 for doubt- Net 7.3 200,000 20 19,454 13,009 208 208 million Rial ful debts million Rial million Rial ment Pvt. million Rial Other long term 30,634 - 30,634 25,692 investments: Loans to Employees (long term loan portion) 30,634 - 30,634 25,692 Central depository and 25,000,000 5 10,000 10,000 10,000 10,000 settlement corporation

Energy Exchange Corpo- 2,610,000 0.5 2,610 2,610 2,610 2,610 ration

6. Prepayments Iran mercantile Exchange 58,500 0.01 21 21 21 21 corporation

The balance of prepayments is including: 7.1. Investment in OTC of Iran is subject to Equity method as the following: Notes March 20,2017 Million Rials March 20, 2016 Million Dollars 2017 2016 Costs, goods and services 2,777 1,428 Share of net Share of total Share of net Share of total Tax 8,098 4,683 Goodwill Notes asset Goodwill net assets asset net assets Million IRR Insurance 4,315 3,169 Million IRR Million IRR Million IRR Million IRR

Tax payable 12 8,098 4,693 Balance at the beginning 159,837 - 159,837 125,821 - 125,821 of the year 7,092 4,597 Share of the financial year profit and other 7.1.1 52,961 - 52,961 50,016 - 50,016 adjustments

Dividend receivable 7.1.2 (28,000) - (28,000) (16,000) - (16,000)

184,798 184,798 159,837 159,837

86 TSE 87 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

7.1.1 Income from investment of TSE in OTC, IRR per share for financial year ended 2017/3/20 7.2.1. Income from investment of TSE in Iran according to decision of the General Association of amounted 52,961 million IRR, for the fiscal year according to decision of the General Association of Financial Center, amounted 495 million IRR, for the Shareholders on 2017/4/22. ended 2017/3/20 has been calculated and included Shareholders on 2017/5/22. fiscal year ended 2017/3/20 has been calculated 7.2.3. Significant parts of Iran Financial Center in the financial statements based on equity method. and included in the financial statements based on 7.1.3 Significant parts of OTC’s balance sheet and balance sheet and income statements based equity method. 7.1.2 Dividend of OTC has been 200 IRR per income statements based on equity method for the on equity method for the financial year ended share for financial year ended 2016/3/20 and 200 financial year ended 2017/3/20 are as following: 7.2.2. Dividend of Iran Financial Center is 12.5 2017/3/20 are as following: IRR per share for financial year ended 2017/3/20

Balance sheet Income statements Balance sheet Income statements 2017/3/20 2017/3/20 2017/3/20 2017/3/20 2017/3/20 2017/3/20 Million IRR Million IRR Million IRR Million IRR Million IRR Million IRR Current Current Services revenue 313,939 Current Current Services revenue 22,644 747,990 130,631 26,523 5,159 assets liabilities assets liabilities Expenses (193,099) Expenses (24,889) Non-cur- Non-current Non-cur- Non-current 454,930 8,297 Other operational and non-operational 3,976 700 Other operational and non-operational rent assets liabilities 142,121 rent assets liabilities 4,718 income and expenses income and expenses Capital 700,000 Net income 262,961 Capital 20,000 Net income 2,473

Reserves 137,202 Reserves 948

Retained Retained 226,790 3,692 profit profit Total Total liabilities Total assets 30,499 30,499 Total assets 1,202,920 liabilities 1,202,920 and equities and equities

7.1.4 All shares of OTC Co. is submitted to 7.2. Investment in Iran Financial Center is subject TSE as a security according to Article 42 of the to Equity method as the following: Constitution and approval of Securities and Exchange Organization. 7.3. Investment in Central Asset Management Company is subject to the equity method as following:

2017 2016 2017 2016

Share of net Share of total Share of net Share of total Share of net Share of total Share of net Share of total Goodwill Goodwill Goodwill Goodwill Notes asset net assets asset net assets Notes asset net assets asset net assets Million IRR Million IRR Million IRR Million IRR Million IRR Million IRR Million IRR Million IRR Million IRR Million IRR Million IRR Million IRR

Balance at the beginning Balance at the beginning 4,433 - 4,433 1,737 - 1,737 13,009 - 13,009 5,494 - 5,494 of the year of the year

Share of the financial year Share of the financial year 7.2.1 495 - 495 3,296 - 3,296 profit profit and other adjust- 7.3.1 7,174 - 7,174 7,667 - 7,667 ments Dividend receivable 7.2.2 (50) - (50) (600) - (600) Dividend receivable 7.3.2 (729) - (729) (152) - (152) 4,878 4,878 4,433 4,433 19,454 19,454 13,009 13,009

88 TSE 89 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

8-Intangible Assets

The intangible assets are including:

7.3.1. Income from investment in Central Asset year ended 2016/1/20 and 3,645 IRR per share Notes March 20, 2017 Million Rial March 20,2016 Million Rial Management Company, as amounted 7,174 million for financial year ended 2017/1/20 according to IRR for the fiscal year ended 2017/3/20 based on the decision of the General Association of Shareholders Water, sewage and electricity Mem- 28,701 1,738 consolidated financial statements of the company, on 2017/4/15. bership fee has been calculated based on equity method and Prepayment for trading system soft-  5,015 - included in the financial statements. 7.3.3. Significant parts of Central Asset ware Management Company’s consolidated balance Regional floor Branches 763 710 7.3.2. Dividend of Central Asset Management sheet and consolidated financial statements for the Company has been 759 IRR per share for financial financial year ended 2017/1/20 are as following: Software 8-1 410 507

22 Mobile lines and 33 telephone line 203 195

35,092 3,150 Consolidated Income statements Consolidated Balance sheet 2017/3/20 2017/3/20 2017/3/20 Million IRR Million IRR Million IRR 8.1. Software in the company includes: Services revenue 30,866 Current Current 164,678 34,724 assets liabilities Cost Retained Amortization Book value Net other income and expenses 29,851 Million Rials Million Rials Million Rials Non-cur- Non-current Expenses (26,104) 3,784 32,822 Balance on Balance on Balance on During Balance on Balance on Balance on rent assets liabilities Purchases 2016/3/20 2017/3/20 2016/3/20 the year 2017/3/20 2017/3/20 2016/3/20 Minority interest (268) Capital 1,000 Future Contract Net income 34,345 700 - 700 700 - 700 0 0 Reserves 447 Software

Retained 98,644 Firm valuing software 177 - 177 177 - 177 0 0 profit Minority 825 Didgah software 319 72 391 133 118 251 140 186 interest Free floats follow-up Total assets 168,462 168,462 133 - 133 66 44 110 22 67 system

Shareholders 151 62 213 58 64 122 91 93 information software

Other Software 437 92 529 276 97 373 157 161

1,917 226 2,143 1,410 323 1,733 410 507

90 TSE 91 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements on 412 878

8,904 are mainly related to purchasing computers and 11,001 12,697 9.1. All tangible fixed assets amounted 63,192 334,347 359,335 784,848 139,693 Balance Balance 1,292,780 2016/3/20 million Rials are insured against fire, flood and hardware, and network equipment. earthquake, 

Million Rial Details related to sold and disposal assets

- 9.3. Book value- on 435 9,751 8,904

10,371, are as following: 334,563 355,120 156,038 9.2. Equipment, fixtures and computer additions Balance 1,341,965 1,862,027 2017/9/20 - - - - Retained Fixed asset on 2,814 8,626 2,176 Description Cost Book value Sale price 31,778 45,394 45,394 depreciation sale income Balance Balance

2017/3/20 Million IRR Million IRR Million IRR Million IRR Million IRR Million IRR Furniture, fixtures and ------104 (96) 8 45 37 (96) (96) (96)

sold computer assets - - - - 412 630 443

7,724   9,209 9,209 9.4. The capital prepayments are amounted 9.6. The balance of assets in progress heading During the year 156,038 million Rial in 2017 as compared to 139,693 refers to the new building which almost 73% is Million Rial in 2016. completed up to balance sheet date. It is expected - - - - Retained depreciation-Million RialRetained depreciation-Million to be completed 100% at the end of the year on 2,402 7,996 1,733  24,150 36,281 36,281 9.5. Capital inventory refers to ironware for

Balance Balance 2017/9/21. 2016/3/20 construction of the new building. on 2,814 2,611 8,904 18,997 41,529 334,563 400,514 156,038 Balance Balance 1,341,965 1,907,421 March 20, 2017 Million Rial March 20, 2016 Million Rials 2017/3/20

Building project costs 2,472,541 1,829,375 ------and 1,339 1,339 Others

103,384 Costs incurred 1,798,668 1,233,635 (104,723) Transfers Transfers Progress percent (Rial) 73 67 ------9.6.1. The project is insured up to 1,100 Billion Rial. assets Disposal ------(104) Sold (104) (104) assets Cost- Million Rial Cost- 10. Other assets - - - - 216 3,447 3,663 Other assets are including: 453,733 121,068 578,464 Additions

March 20, 2017 Million Rial March 20, 2016 Million Rial on 2,814 2,611 8,904 18,997 36,847 334,347 395,616 784,848 139,693 Balance Balance 1,329,061 A prudential reserve security with SEO 4,138 2,823 2016/3/20

Nikoukari fund 500 500 9.6 9.4 9.5 Note Other 204 190 - - 4,842 3,513 Total Land Total Hafez ments Capital Capital Capital Vehicle prepay tions on Building progress Assets in Assets building Construc Computer inventory Equipment, Equipment, Fixtures and Fixtures Description 9. Tangible Fixed Assets Fixed Tangible 9.

92 TSE 93 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

11. Non-trade Accounts Payable 12. Provision for Tax

Summary of the provision for taxes is as the followings: Notes March 20, 2017 Million Rial March 20,2016 Million Rial March 20, 2017 -(Million Rials) March Brokers 11-1 124,719 132,636 20,2016 Million Tax Lease contract deposit 11-2 62,988 - Rials Basis for Fiscal Year recognition Insurance deposit 11-3 44,781 29,401 declared Income provision provision profit taxable declared assessed finalized paid balance balance Performance bond deposit 11-4 28,993 16,394 (Loss)

Employee's saving fund 11-5 19,690 14,995 Tax dispute Provision for incurred and unpaid 2015 327,383 247,382 61,846 68,800 63,466 63,466 - - settlement 11-6 19,329 1,283 expenses authorities

Security and Exchange Organization 11-7 11,444 3,818 Taxes and 2016 296,578 246,588 61,647 64,313 - 61,647 1,777 61,647 Provision for employees' unapplied books auditing 6,914 7,991 allowed leave 2017 368,723 286,115 57,223 - - - 57,223 - Not audited Taxes payable 11-8 5,127 3,731 Provision for tax and value added 59,000 61,647 3,590 43,135 duties Offseting Insurance Premium 11-9 2,557 2,025 with tax prepay- (8,098) (4,683) Information company 1,822 842 ment- Market development fund - 3,462 note 6

Other 1,485 1,197 Total 50,902 56,964

333,439 260,910

11.1. This amount is mainly related to additional investment deposit including 3% wages and 12.1. Income tax of the Company for the years 12.2. Tax and value added duties have been amounts received from some brokerages, which salaries and 3% share of the company together with 2006 to 2014 has been finalized and settled. finalized and settled up to 2010/3/20. has been finalized on 2017/3/20 and paid and its profits. settled next year 11.6. The amount is related to provision for lease 13. Dividends 11.2. This amount is related to lease contracts of Kish, Isfahan, Kermanshah and Hamedan. with Banks Melli, Tejarat, Saman and Pasargad for 11.7. The amount is mainly related to lease March 20, 2017 Million Rial March 20, 2016 Million Rial some business parts of Saadatabad building. contract of Hafez building floor. Dividend in 1394 11,267 - 11.3. This amount is mainly related to Insurance 11.8 This amount includes 1,845 million IRR as deposit for the new building construction Dividend in 1393 3,482 6,594 the tax of wages and salary of the employee at the agreements. end of the year and 3,282 million IRR as withholding Dividend in 1392 809 884 11.4. This amount is mainly related to tax which has been paid to Tax Affairs Organization. Years before 1392 1,522 1,167 Performance bonus deposit for the new building 11.9. This amount is related to insurance construction agreements. 17,080 8,645 Premium of employees’ salaries and wages in the 11.5. This amount is related to employee’s last month of the year.

94 TSE 95 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

13.1. Dividend approved in 2016 as amounted the introduced bank account.. Up to financial 16. Legal reserves 110,000 million IRR has been paid according to the statement approval, 4,132 million IRR of the above schedule. The balance of this account is related to a mentioned balance has been paid. According to articles 140 and 238 of the net income should be transferred to the reserve as number of natural and legal shareholders without amendment to Commercial Code and article 64 far as it reaches 10% of the capital of the company. of the Constitution, the amount of 15,578 million The legal reserve may not be transferred to the 14. Provision for employees’ termination benefits Rials from allocable income has been transferred capital and may be paid to shareholders only on the to legal reserve. According to the articles, 1/20 of company liquidation.

Turnover of this account is as follows: 17. Prudential Reserves March 20, 2017 Million Rial March 20, 2016 Million Rial

Balance at the beginning of the year 41,415 28,043

Current year provision 14,148 13,745 Prudential Reserves

Paid out during the year (1,871) (373) 2017/3/20 Million Rials 2016/3/20 Million Rials

Balance at the end of the year 53,692 41,415 Balance at the beginning of the year 62,138 65,822

Raising during the year 62,300 59,316

Transfer to the capital (58,000) (63,000) 15. Capital Balance at the end of the year 66,438 62,138 Capital of the company on 2017/3/20 is 1,250,000 the balance sheet date, the company’s shareholders million Rials including 1,250 million non-bearer according to the article 9 of the Constitution are shares with price of 1000 Rial which is totally paid. At classified as: 18. Services Revenue

Mar 20,2017 Mar 20, 2016 Notes March 20, 2017 Million Rial March 20,2016 Million Rial Shares % Shares % Income from trading commission 18-1 400,524 354,527 Brokers 424,558,322 34 373,611,323 34 Income from broker services 18-2 183,937 177,746 Financial institutions 490,949,988 39 432,035,990 39 Income from listing fees 18-3 37,030 19,892 Other 334,491,690 27 294,352,687 27 Rentals 18-4 22,972 21,268 Total 1,250,000,000 100 1,100,000,000 100 Total 644,463 573,433

15.1. According to the article 11 of the 15.2. On 2016/7/17, the company’s share has Constitution, anybody in every time may own increased from 1,100 billion IRR to 1,250 billion IRR 18.1. According to the approval of the Securities been calculated based on 0.8/1000 value of per directly or indirectly (through related parties) from retained profit and legal reserve. The increase & Exchange Organization, income from trading transaction up to 400 million IRR. maximum 2/5 percent of the company’s share. has been registered with Office for Registration of commission and future contracts commission has Companies on 2016/9/18.

96 TSE 97 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

19. Cost of services: March 20, 2017 Million Rial March 20, 2016 Million Rial

Normal transactions 367,096 273,353 The costs of services are including:

Whole trading 23,600 74,867 Notes March 20, 2017 Million Rial March 20,2016 Million Rial Future contracts and participation 9,828 6,307 bonds wage and salary 19-1 184,380 155,675 Total 400,524 354,527 Supply and maintenance of Regional 19-2 48,806 46,044 floors

18.2. Income from broker services Floors security forces fees 14,242 14,597 Computers, communications and 4,183 3,468 Notes March 20, 2017 Million Rial March 20,2016 Million Rial technology costs

Trading system fees 18-2-1 157,802 151,900 Conference and exhibition costs 2,131 3,194

Exchange floor trading station fees 15,694 15,642 Council duty 579 440 Marketing and development of mar- 176 154 Brokerage fees 10,442 10,204 kets and financial instruments Total 183,937 177,746 254,497 223,572

18.2.1. According to the Board of directors’ fees have been increased 10% up to 1,200 million approval, trading system fees have been increased IRR maximum, provided that, fixed and changing 19.1. Items of salary and wages are including: 25 million IRR for every trading floor and brokerage trading system fees do not exceed 200 million IRR. Notes March 20, 2017 Million Rial March 20,2016 Million Rial

Salary and wages 19-1-1 87,694 74,737 18.3. Income from listing fees New year bonus and rewards 47,636 39,433 Notes March 20, 2017 Million Rial March 20,2016 Million Rial Insurance premium by employer 20,672 16,426 Listing fees 18-3-1 15,978 15,712 Employee's termination benefits 10,813 9,720 Admission fees 18-3-2 21,052 4,180 Over time pay 12,446 9,896 37,030 19,892 Mission allowance and traveling costs 1,142 1,933

Others 3,977 3,530 18.3.1. According to the approval of the Securities and maximum 500 million Rial for the companies and Exchange Organization, Listing fees are as that their capital are equivalent to or less than 250 184,380 155,675 equivalent to 0.002 of capital and maximum 50 billion Rials and 1000 billion Rials for the companies million Rials for every year. Listing fees in the first that their capital are more than 250 billion IRR. The half of the year refers to 319 firms listed in TSE. fees are received only at the admission time. 19.1.1. Increases in the direct wages and salaries 19.2. The cost of supply and maintenance of are as a result of approvals by the board and the regional floors are including: 18.3.2. According to the approval of the 18.4. Income from regional floors’ rental is related ministry of labor and social affairs. Securities and Exchange Organization, admitting to the agreements entered into by brokerages for fees are annually as equivalent to 0.002 of capital using offices.

98 TSE 99 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

March 20, 2017 Million Rial March 20, 2016 Million Rial 20.1. Compensation costs are including:

Rentals for regional floors buildings 28,065 26,446 March 20, 2017 Million Rial March 20, 2016 Million Rial

Depreciation costs 7,477 6,790 Salaries, wages 38,416 36,713 Water, Electricity, Telephone and Gas 4,166 3,711 bonus and rewards 23,596 21,411 Repair and maintenance of floors 3,324 3,527 Over time payments 9,483 7,561 Entertainment 1,136 1,000 Insurance premium by employer 9,031 7,643 Duty 930 906 Employees' termination benefits 4,738 4,026 Services fee 862 1,352 Mission allowances and traveling 930 650 Consumer goods 712 528 costs Transfers 573 450 Others 1,965 1,694 Other 1,561 1,334 Total 88,159 79,698 48,806 46,044

21. Net other non-operating income and expenses 20. General and Administrative Expenses

Notes March 20, 2017 Million Rial March 20,2016 Million Rial Equity method The Company March 20, 2017 March 20, 2016 March 20, 2017 March 20, 2016 Salaries and wages 20-1 88,159 79,698 Million IRR Million IRR Million IRR Million IRR Rent of building 12,987 11,563 Bank deposit interest 45,358 57,051 45,358 57,051 Water, Electricity, Phone and Gas 3,824 3,945 Contribution bonds - 34,858 - 34,858 The Board bonus 2,100 2,100 Council duty 2,064 1,465 Income from rentals 17,387 15,051 17,387 15,051 Income from Ganjine Almas Depreciation Cost 2,055 1,476 2,403 - 2,403 - Investment Fund Administrative and consumable 1,783 1,649 Central depository and settlement supplies 1,300 3,000 1,300 3,000 corporation's dividend Entertainment 1,751 1,768 Energy Exchange dividend 261 261 261 261 Withholding and legal tax 1,586 4,050 Net profit (loss) of the foreign 25 48 25 48 Meetings 1,347 1,059 currency exchange Membership fee of professional asso- 1,244 2,156 Iran mercantile Exchange dividend 3 15 3 15 ciations Over the Counter Exchange - - 28,000 16,000 Transfers 710 605 (Farabourse) dividend The board attending compensation 558 654 Central Asset Management dividend - - 729 152 Repair and maintenance 465 351 Income from Financial Center of Iran - - 50 600 Publication cost 444 901 Co. Income from tangible fixed assets Administrative and Computer supplies 245 485 37 1 37 1 sale Legal expenses 56 2,623 Others 5,900 (983) 5,900 (983) Others 1,318 1,142 Total 72,674 109,302 101,453 126,054 Total 122,696 117,690

100 TSE 101 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

22. Earnings per share 23. Reconciliation of Operating Profit

Basic and reduced earnings per share are restated considering dividend of all financial period and according Reconciliation of operating profit to net cash inflow from operating activities is as the followings: to the Accounting Standard 30. Equity method The Company Equity method The Company March 20, 2017 March 20, 2016 March 20, 2017 March 20, 2016 (restated) (restated) Million IRR Million IRR Million IRR Million IRR march 20, 2017 march 20, 2017 march 20,2016 march 20,2016 million Rials million Rials Operating profits 267,270 232,171 267,270 232,171 million Rials million Rials Increase in employees' termination Income from ongoing operation-op- 12,277 13,372 12,277 13,372 267,270 232,1171 267,270 232,171 benefits erating Depreciation expenses 9,532 8,266 9,532 8,266 Tax effects (51,386) (58,118) (51,386) (58,118) Decrease (increase) in operating 30,216 (79,176) 30,216 (79,176) net operating income 215,884 174,053 215,884 174,053 accounts receivable Number of normal sharesused in Increase (decrease) in prepayments (7,239) (1,580) (7,239) (1,580) calculation of basic earnings per 1,250 1,250 1,250 1,250 and other assets share-million shares Increase (decrease) in operating 72529 180,411 72,529 180,411 Basic earnings per share- operating 173 139 173 139 accounts payable Other non-operating income and income from ongoing operation- 23312 13,926 23,312 13,926 133,304 170,281 101,453 126,054 expenses non-operating 407,897 367,390 407,897 367,390 Tax effects (5,837) (3,529) (5,837) (3,529)

net non-operating income 127,467 166,752 95,616 122,525 Number of normal sharesused in 24. Contingent Liabilities and Capital Obligations calculation of basic earnings per 1,250 1,250 1,250 1,250 share-million shares Basic earnings per share-non-oper-  Total amounts of agreements are 1,515,173 million 102 133 76 98 Capital obligations of the company are mainly ating related to construction costs of the new building Rials from which the amount of 1,250,659 million Basic earnings per share 275 272 249 237 of the company as amounted 264,514 million Rials. Rials has been paid.

25. Post balance sheet date events

No significant post balance sheet event has occurred requiring adjustments or disclosures in the financial statements.

102 TSE 103 ANNUAL REPORT FISCAL YEAR ENDED 20 MAR. 2017 Financial Statements

26. Related parties transactions

Subject to the Article Lease con- Other Description Party Relationship type 129 of the Office rental Guarantees tract deposit transactions 27. Retained earnings at the end of the year: Commercial Code

Common board of OTC directors member - - 7,000 - Amount Million IRR (Farabourse) and Board of  Directors Member Legal duties:

Common board of Division of minimum 10% of net profit according to the Article 190 of 31.150 Financial Center directors member the Commercial Code as amended. Associates - - 2,215 - of Iran Co and Board of  Directors Member Board of Directors proposal: Common board of 37,500 Central Asset Dividend proposed by Board of Directors (30 IRR per share) directors member Management of - - - - and Board of  Capital Market Directors Member

Bank Tejarat Board of Directors 989 - - - Brokerage Member 

Mofid Board of 902 - - - brokerage Directors Member 

Saba Tamin Common Board of 958 - - - Brokerage Directors Member 

Bank Mellat Common Board of 253 - - - brokerage Directors Member 

Tadbirgaran Common Board of 44 - - - Other farda brokerage Directors Member 

Pasargan Bank Common Board of 415 - - - Brokerage Directors Member 

Common Board of Tejarat Bank 1,182 13,983 - - Directors Member 

Iran Energy Common Board of - - 2,397 - Exchange Directors Member 

Securities and Exchange Regulator  - - 21,833 2,823 Organization

Total  4,743 13,983 33,445 2,823

104 TSE 105 ANNUAL REPORT TEHRAN FISCAL YEAR ENDED 20 MAR. 2017

106 TSE 107 ANNUAL REPORT NOTE