Tehran Stock Exchange Annual Report Fiscal Year Ended 20 March 2015

In the Name of God

1 Contents

TSE at a glance 4 Financial digest 6 Market information 7 Time line 8 Board message 11 1-Iintroduction to TSE and financial performance 12 2-Market operations overview 16 3-Corporate governance 26 4-Annual achievements 32 5-Board proposal 34 6-Future plans 34 Financial statements, independent auditor’s 41 report and explanatory notes

2 Tehran Stock Exchange Annual Report Fiscal Year Ended 20 March 2015

Trading Trading days Saturdays - Wednesdays Trading hours )pre-opening 8:30 – 9:00( 9:00 – 12:30 Trading system Fully automated order based Trading mechanism Opening auction / continuous Market making Arbitrary Tradable instruments Shares, rights, participation bonds, single stock futures, embedded put options, ETFs, sukuks and CDs Currency Iranian Rial Online accessible information Opening, minimum, maximum and closing) prices,( indices, listed companies information, trading data and quotes

Depository, clearing and settlement Entity Central Securities Depository of Iran (CSDI) Settlement period T+3 (shares, derivatives and ETFs), T+1 (bonds, fixed-in- )come securities Settlement Funds settlement at broker level, securities dematerialized settlement at client Clearing Multilateral netting Short selling N/A

Tax Dividends Exempted Capital gain Exempted Transaction (seller) of trading value 0.5%

Structure and regulations Legal structure Public company Regulations Self-regulated under SEO’s surveillance Daily price fluctuation limit Shares: ±4%, rights: ±8%, bonds: ±1% Closing price calculation Weighted average based on base volume Foreign investment Available (Foreign investment bylaw) 4 Trading Commission Buyer (%) Seller (%) Total (%) SEO 0.032 0.048 0.08 TSE 0.032 0.048 0.08 Brokerage Firm 0.4 0.4 0.8 CSDI 0.01 0.015 0.025 TSETMC 0.012 0.018 0.03 Total 0.486 0.529 1.015

Markets and Listing Requirements First Market / main board First market / secondary board Second market Minimum paid-in Capital 1,000 500 200 (IRR billion) Minimum years of busi- 3 2 1 ness activity Minimum free-float (%) 20 15 10 Minimum number of 1,000 750 250 shareholders Profitability (years) 3 2 1 Equity/total assets (%) 30 20 15

Issuers information First Market main board First market secondary board Second market Total Listed companies 63 61 190 314

Brokerage firms Tehran Provinces - regions Total Number of brokerage firms (entities) 97 4 101 Trading stations 703 711 1,414 On-line trading access providers 89 4 93 5 Board of directors

Member Delegate Position Mellat Financial Group Mr. Mohammad Ebrahim Mohammad Chairman of the Board Pourzarandi Mofid Brokerage Firm Mr. Ali Yar Salehi Vice Chairman of the Board Bank Tejarat Brokerage Firm Mr. Seyed Mojtaba Fahim Hashemi Member of the Board Bahman Investment Company Mr. Ali Rostami Member of the Board Saba Ta’min Investment company Mr. Mohammad Reza Rostami Member of the Board Pasargad Arzesh Afarinan Group Mr. Ali Akbar Amin Tafreshi Member of the Board Tadbir Investment company Mr. Mojtaba Taghipour Member of the Board ------Hassan Ghalibaf Asl CEO and President

Financial digest

A summary of financial information (IRR billion) Operations Fiscal Year 20 Mar. Fiscal Year 20 Mar. Fiscal Year 20 Mar. 2015 2014 2013 Operating revenues 514 684 295 Total expenses 272 221 162 Operating income 242 463 146 EBIT 389 574 199 Net income 327 458 162 Cash flows from operations 230 534 146 EPS (IRR) 364 509 360 Financial status Current assets 510 619 233 Total assets 1,451 1,228 692 Total liabilities 171 226 89 Registered capital 900 450 300 Total equities 1,280 1,002 603 Equity shares Number of shares (million) 900 450 300 Last EPS forecast (IRR) 463 1,080 476 Real EPS (IRR) 364 1,018 545 DPS (IRR) - 110 200 Other information Number of staff 267 263 258

6 Market information

Market indicators Fiscal Year 20 Fiscal Year 20 Fiscal Year 20 Mar. 2015 Mar. 2014 Mar. 2013 Market capitalization (IRR billion) 2,813,156 3,865,970 1,707,498 Nominal Value (IRR billion) 954,198 725,810 506,498 Market cap / nominal value 2.9 5.3 3.4 Average P/E 5.43 7.06 5.35 Trading information Fiscal Year 20 Fiscal Year 20 Fiscal Year 20 Mar. 2015 Mar. 2014 Mar. 2013 Normal trading value (IRR billion) 377,119 701,846 219,615 Normal trading volume (million shares) 144,646 164,433 68,856 Total trading value (IRR billion) 542,522 975,715 364,334 Total trading volume (million shares) 165,184 189,780 80,163 Number of transactions (thousand) 12,916 17,142 5,241 Daily average trading value (IRR billion) 2,251 4,015 1,106 Average daily trading volume (million shares) 685 781 335 Daily average number of trades (thousand) 54 70 22 Number of trading days 241 243 239 Number of issued trading codes 151,540 229,438 173,131 Total index Fiscal Year 20 Fiscal Year 20 Fiscal Year 20 Mar. 2015 Mar. 2014 Mar. 2013 End of year 62,532 79,015 38,041 Highest 79,014 89,501 38,739 Lowest 61,533 38,603 23,787

Monthly trading trend

160,000 146,774 140,000

120,000 Volume (Million Shares) 100,000 Value (IRR Billion) 80,000

60,000 55,315

40,000

20,000

7 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Time line

18 May 2014 – Saba Nour Steel Raw Materials Supply- ing Company was transferred from Iran Farabourse (IFB) to Tehran Stock Exchange (TSE), and its equities started trading at IRR 14,620 per share.

26 May 2014 – 10 percent of Sepahan Oil Company’s shares, as equivalent to 105 million equities were offered at TSE after being listed at IRR 17,500 per share.

3 June 2014 – TSE’s Listed Companies Affairs calculated corporate governance index for the first time at the Ex- change after finalizing its rating methods.

14 June 2014 – Jey Oil Refinement Company and Mo’in Mellat Investment Company were listed at TSE.

16 June 2014 – Tehran Stock Exchange held its AGM for the fiscal year ended 20 March 2014. The new members of the board were elected, TSE’s capital increase from IRR 450 billion to IRR 900 billion from prudential reserve and retained earnings was ratified and the shareholders accepted to receive IRR 110 DPS.

25 June 2014 – Shomal Shargh Housing Investment Company was transferred from IFB and its shares were traded for the first time at TSE at IRR 2,179 per share.

3 July 2014 – TSE started its shareholders dividend payments for the fiscal year ended 20 March 2014.

16 September 2014 – South Kish Kaveh Steel Company shares were admitted at TSE, and the company’s Ijarah sukuk was listed on 17 September 2014. The sukuk’s secondary market trading started on 19 October 2014.

1 November 2014 – Ghadir Capital and Industry De- velopment Company was admitted at Tehran Stock Exchange.

8 Time line

16 November 2014 – 400 million as equivalent to ten percent of Cement Industries Investment and Devel- opment Company’s equity shares were offered at IRR 1,500 per share in TSE.

17 November 2014 – Second cement industry round- table was held at the Exchange in order to review the latest status, to tackle the existing challenges and to improve the industry’s business environment.

18 November 2014 – Shiraz municipality offered 116,000 bonds through book building at IRR 960,000 each for trading at TSE.

27 January 2015 – Firouzeh (Turquoise) 30 largest-company-index fund, TSE’s first index-based ETF was under- written as amounted IRR 500 billion.

1 February 2015 – Mobin Petrochemical Company was admitted at TSE.

10 February 2015 – Brokerage firms were provided with group on-line trading access in order to monitor their branches and clients activities more efficiently and -ex actly.

16 February 2015 – Kardan index ETF units were under- written at Tehran Stock Exchange.

20 February 2015 – In order to increase market liquidity, TSE declined its listed companies’ base volume to stay at 4/10,000 of total share numbers. The highest base volume was set at IRR 10 billion and the lowest at IRR 500 million.

23 February 2015 – Kavian Steel Company was transferred from TSE to IFB due to Listing Committee resolution on 8 October 2014.

9 Time line

Three new indices were launched at TSE, including Price Index, Price Index (equal weighted) and Price and Dividend Index (equal weighted).

8 March 2015 – Isfahan Petrochemical Company was transferred from TSE to IFB due to Listing Committee resolution on 3 September 2015.

15 March 2015 – Ma Insurance Company was listed at TSE.

16 March 2015 – More than 2 million equity shares as equivalent to IRR 4,387 million of Middle East Bank were transferred from IFB to TSE and traded for the first time at IRR 1,876 per share.

18 March 2015 – About 617,000 equity shares of Ka- vir Tire Company were transferred from IFB to TSE and traded at IRR 14,400 per share.

Foreign Investors Visit to TSE During the fiscal year, 175 foreign delegates in 36 groups from policy-makers, regulators, Exchanges and investment societies visited TSE, including delegations from IMF and some embassies in Iran.

Other events

TSE participated in the first Islamic Investment Confer- ence of Iran, Invest Exhibition in Stuttgart, Germany and Iran’s capital market roadshow in London during the fiscal year ended 20 March 2015.

10 TSE Board of Directors 2014

Message from board of directors

Past year was an important period for Tehran Stock Exchange and the investors of this market. Due to the particular economic situation and the uncertainties of international policies, TSE lost 27 percent of its market capitalization to reach IRR 2,813 trillion. The Exchange’s trading value and main index both declined 43 and 21 percent, respectively. However, some positive news came about. Despite the dominant economic stagnation in the country, corporate financing through TSE developed. The nominal value of the market increased more than 31 percent to IRR 954 trillion. Major part of that movement was due to the listed companies’ capital increase. During the year, the listed companies’ capital was raised to above IRR 213 trillion, up 34 percent comparing one year earlier. Of the total amount, IRR 105 trillion funded by receivables and cash contributions, which is 44 percent growth as compared to the last year. In the period, bonds, CDs and sukuks were among the products applied for corporate financing with more than IRR 3,700 billion fund raising for the issuers. Price index re-calculation and re-issuance was a general request of Iran’s capital market participants, which was accomplished last year. Equal weighted indices (price and dividend) were introduced to increase market transparency. Among TSE’s listed financial products and entities, there were 2 ETFs and 29 embedded securities. 6 new companies were also listed at the Exchange. Moreover, above 170,000 person-hours technical and public training courses were held for the issuers, members and investors. 6 seminars, 4 books and 6 technical brochures and several industry roundtables were among other activities at TSE in the last year. Research projects were carried out on securities market micro-structures, proposals to lower base volume, methods to improve free-floats, launching portfolio futures and introducing option contracts. The new building construction project of TSE is also under process. Tehran Stock Exchange is making all its efforts in order to have a role in Iran’s economic growth and prosperity. 11 1- Introduction to TSE and financial performance

1-1 History Tehran Stock Exchange (Public Company) was established on November 2006 based on the new market act ratified by the Parliament in 2005. Based on this development, the existing Exchange, which had been launched in 1960s, was demutualized.

1-2 Activities according to the articles of association • Organizing and managing the securities exchange in order to make trades by local and foreign investors according to the regulations • Listing securities of local or international issuers • Setting membership standards for applicants, ratifying and implementing disciplinary principles on and be- tween members, regulating their responsibilities and monitoring their activities • Providing the required infrastructure for the members’ fair access to trading • Cooperating and coordinating with other financial entities, responsible for parts of the related securities trading, issuing or data processing activities, namely Central Securities Depository of Iran (CSDI), as well as carrying out research activities and training jobs and culture development in order to facilitate and develop securities trading and investment culture • Working with other Exchanges in Iran or overseas for exchanging information and expertise, harmonizing the regulations and standards and cross-listing of the securities • Listing securities trading surveillance • Compiling, processing and disseminating the ordering and trading information • Observing securities issuers’ activities

1-3 TSE’s shareholders TSE’s shareholders and ownership level are mentioned in table 01. Based on the market act, no shareholder can hold more than 2.5 percent of the Exchange’s own shares. The articles of association maintain that the shareholders include brokerage firms, financial institutes and retailers. The ownership levels should be always maintained.

Table 01 – Shareholders breakdown composition, fiscal year ending 20 March 2015

Shareholders No. of shareholders No. of shares Percent of ownership Brokerage firms 76 305,701,992 34 Financial institutes 78 353,555,992 39.2 Retailers 5,888 240,742,016 26.8 Total 6,024 900,000,000 100 12 1-4 Major shareholders Table 02 includes the list of TSE’s major shareholders at the end of fiscal year ending 20 March 2015.

Table 02 – Major shareholders based on groups’ breakdown

No. Shareholder No. of shares Percent of ownership Brokerage firms 305,701,992 33.96 1 Keshavarzi bank brokerage firm 22,500,000 2.5 2 Mofid brokerage firm 22,500,000 2.5 3 Iran Insurance brokerage firm 20,289,600 2.25 4 Razavi brokerage firm 20,289,600 2.25 5 Agah brokerage firm 18,000,000 2.0 6 Refah bank brokerage firm 18,000,000 2.0 7 Tejarat bank brokerage firm 18,000,000 2.0 8 Mellat bank brokerage firm 18,000,000 2.0 9 Hafez brokerage firm 15,869,996 1.76 10 Tose’e Farda brokerage firm 13,620,000 1.51 11 Pasargad bank brokerage firm 13,620,000 1.51 12 Maskan bank brokerage firm 13,620,000 1.51 13 Other brokerage firms 91,392,796 10.18 Financial institutes 353,555,992 39.26 14 Parsian Bank 22,500,000 2.5 15 National development investment company 22,500,000 2.5 16 Ghadir investment company 22,500,000 2.5 17 Omid investment management company 22,500,000 2.5 18 Saba ta’min investment company 22,500,000 2.5 19 Oil industry pension fund investment company 19,800,000 2.2 20 Bahman investment company 18,360,000 2.04 21 Tadbir investment company 18,000,000 2.0 22 Alborz insurance company 17,940,000 1.99 23 Andishe mehvaran investment company 13,500,000 1.5 24 Industry and mine investment company 13,500,000 1.5 25 Iran national investment company 13,500,000 1.5 26 Other financial institutes 455,996,126 14.02 Others (retailers) 240,742,016 26.78 Total 900,000,000 100 13 1-5 Capital increase TSE’s capital has changed since establishment as indicated below.

Table 03 – Capital changes (IRR billion)

Fiscal year Capital increase Previous Increase New capital Increase % Source of increase ending registration date capital 20 March - 150 - 150 - - 2009 20 March 21 November 150 105 255 70 Prudential reserves 2010 2010 and retained earning 20 March 7 December 2011 255 45 300 17.6 Prudential reserves 2011 and retained earning 20 March 14 October 2013 300 150 450 50 Prudential reserves 2014 and retained earning 20 March 22 October 2014 450 450 900 100 Prudential reserves 2015 and retained earning

1-6 TSE’s own shares trading Due to the GA’s approval for self-listing of TSE’s shares and providing trading mechanism for its shareholders, required arrangements were made on 4 September 2011 for TSE’s shares being listed in Iran Farabourse (IFB). The shares’ trading started on the mentioned date at IFB through negotiated transactions. The following table shows TSE’s shares trading in the last two fiscal years.

Table 04 – TSE’s shares trading

Shareholder Fiscal year ending 20 March 2015 Fiscal year ending 20 March 2014 Total trading Total trading Average Total trading Total trading Average volume value (IRR) price per volume value (IRR) price per share (IRR) share (IRR) Brokerage 51,500 461,300,000 8,957 - - - firm Financial 22,515,000 3,956,250,000 176 75,002 400,012,429 5,720 institutes Others 27,989,438 183,078,912,333 6,541 556,600 2,388,050,000 4,290

1-7 Legal environment The major governing regulations at Tehran Stock Exchange include Commercial Code, The Law for Develop- ment of New Financial Instruments and Institutions, Tehran Stock Exchange’s Trading Bylaw, Trading Executive Directive, as well as the brokerage firms’ executive bylaws and issuers’ disciplinary directive. The anti-money laundering rule is also among the related regulations. 14 1-8 Financial Performance A summary of Tehran Stock Exchange’s financial activities during the fiscal year ended 20 March 2015 is given in the following table:

Table 05 – Financial activities’ market

Description Fiscal year ended 20 Fiscal year ended 20 % Change March 2014 (IRR billion) March 2013 (IRR billion) Income from services 514 684 (52) Cost of services (181) (341) 26 General and administra- (91) (78) 17 tive expenses Income from investment 12 14 (14) Net other incomes 147 111 32 EBIT 389 574 (32) Net profit 327 458 (29) EPS (IRR) 364 509 (28) Current ratio % 357 299 0.19 Total debt ratio % 13.35 22.53 (40.7) Return on assets % 22.6 37.3 (39.4) Return on equity % 25.6 45.7 (20.1)

1-9 Earning per share forecast The forecasted TSE’s EPS for the fiscal year ending 19 March 2016, as well as the comparative information of the fiscal year ended 20 March 2015 are included in the table 06.

Table 06 – the forecasted information on TSE’s EPS and real operations

Description FY ending 19 Mar. 2016 FY ended 20 Mar. 2015 FY ended 20 Mar. 2014 budget (IRR million) budget (IRR million) operations (IRR million) Income from services 820,245 757,920 513,750 Cost of services (261,601) (173,540) (181,027) Gross income 603,644 584,380 332,723 General and administra- (112,820) (91,292) (90,907) tive expenses Operating profit 490,824 493,088 241,816 Net other non-operating 51,230 74,644 147,413 income and expenses EBIT 524,054 567,732 389,229 Tax (125,231) (124,912) (61,846) Net profit 148,614 442,820 383,723 EPS (IRR) 463 492 364 Operating EPS (IRR) 406 409 203 Non-operating EPS (IRR) 57 83 161 15 2- Market operations overview

2-1 Outline The general performance at Tehran Stock Exchange in the fiscal year ended 20 March 2015 is provided in table 07. During this period, total trading turnover of the Exchange shrank 44 percent to reach IRR 542 trillion, while the main index lost 21 percent and closed at 62,532. The average daily trading value, as well as retail and bloc trading value respectively contracted 43 and 46 percent. The number of listed companies reached 314 in the year when TSE had 2 IPOs (Sepahan Oil and Cement Industries Development Investment companies), 4 transferred listings from IFB (Saba Nour Steel, Shomal-e-shargh Housing Investment, Kavir Tire and Middle East Bank), and also 9 de-listings. Number of trades reduced to 13 million times, comparing 17 million times one year earlier, indicating 25 percent decrease. The market capitalization was also lost about 27 percent in the fiscal year ended 20 March 2015 to reach IRR 2,813 trillion.( Table 07) Moreover, 36 percent dropping of new trading codes in the past year was an indication for less investment interests to the stock exchange. On-line trading turnover was IRR 304,731 billion in the fiscal year ended 20 March 2014 that was diminished in the past fiscal year for about 34 percent to stay at I RR 201,082 billion. However, the trading volume escalated about 9 percent from 77,151 million shares.

Table 07 – Securities market activities indicators

Indicators Unit FY ended 20 FY ended 20 % Change March 2015 March 2014 Main index (TEDPIX) - 62,532 79,015 (21) Market capitalization IRR billion 2,813,156 3,865,970 (27) Trading volume Million shares 165,184 189,689 (13) Trading value (total) IRR billion 542,522 964,198 (44) Normal trading value (retail & block) IRR billion 377,119 701,846 (46) State-owned offering value IRR billion 9,613 104,087 (91) State-owned offering volume Million shares 2,420 8,266 (71) Average daily trading value (total) IRR billion 2,251 3,968 (43) Average daily normal trading value IRR billion 1,565 2,888 (46) Average P/E ratio - 5.4 7.1 (11) On-line/total trading volume Million shares 84,312 77,151 9 On-line/total trading value IRR billion 201,082 304,731 (34) No. of listed companies No. 314 317 (1) No. of trades Million times 13 17 (25) 16 2-2 Equities market indices During the past fiscal year, TSE’s broad index declined from 79,015 to 62,532 from the start to the end; this was 21 percent loss on the index. Other indices of the Exchange ALSO reduced in the period as an indicator of shrinking in all market’s sectors. The free-float index was 90,978 at the end of the fiscal year ended 20 March 2014, and contracted 21 percent to 72,210 one year later.

Table 08 – Main indices of Tehran Stock Exchange

Index FY ended 20 FY ended 20 Change % Change March 2015 March 2014 Broad (TEDPIX) 62,532 79,015 (16,483) (21) Free-float 72,210 90,978 (18,768) (21) First market 45,317 58,607 (13,290) (23) Second market 127,841 152,442 (24,601) (16) Financial 135,089 157,628 (22,539) (14) Industrial 51,296 65,837 (14,541) (22) TSE 50 blue-chip 2,576 3,336 (760) (23) TSE largest 30 (22 Aug. 2010)=1,000 2,877 3,760 (883) (23)

Chart 01 – TSE’s broad index trend

Broad Index

100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14

3-2 Market Capitalization Tehran Stock Exchange’s market capitalization declined 27 percent in the fiscal year ended 20 March 2015 and reached IRR 2,813 trillion. 17 Chart 02 – TSE’s market capitalization, monthly trend (IRR billion) Market Capitalization (IRR Billion) 6000000 5500000 5000000 4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0

Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14

Table 09 – Top 10 sectors by market capitalization (FY ended 20 March 2015)

Sector No. of companies Market cap (IRR billion) % Chemical 27 628,601 22 Banks, credit institutes 11 376,018 13 Base metals 19 276,735 10 Petroleum products 4 247,737 6 Diversified holdings 2 241,543 9 Telecommunication 9 177,632 9 Metal ores mining 7 164,102 6 Pharmaceutical 31 108,171 3 Cement, lime and plaster 27 84,613 3 Auto manufacturing 30 74,072 4 Others 147 433,931 15 Total 314 2,813,156 100 18 Chart 03 – Market c apitalization by sectors (FY ended 20 March 2015) (%)

Chemical Banks Base metals Petroleum Diversified holdings Telecommunication Metal Ores Pharmaceutical Cement Auto manufacturing Others

4-2 Securities trading Total equities and rights trading value at the Exchange in the past fiscal year 241) trading days( equaled IRR 522,542 billion, 44 percent lower than one year earlier. About 69 percent of the value (IRR 377,119 billion) was related to the normal trading (retail and bloc) with 46 percent decrease than the year before. During the fiscal year ended 20 March 2015, daily average trading value lessened from IRR 4,015 billion to IRR 2,251 billion.

Table 10 – Equities and rights trading

Trading FY ended 20 March 2015 FY ended 20 March 2014 % Percent No. (million Value (IRR No. (million Value (IRR Number Value shares) billion) shares) billion) Normal (retail and bloc) 144,646 377,119 164,433 701,846 (12) (46) Wholesale and others 20,539 165,403 25,256 262,352 (19) (37) Total (equities and rights) 165,184 542,522 189,689 964,198 (13) (44) Futures 0.000172 10 0.000094 3 - 233 Bonds 16 15,676 11 10,747 45 46 Embedded put option 166 12 14 0.81 1,086 - ETFs 133 1,133 81 770 64 47 Total 165,499 559,353 189,795 975,715 1,182 283

Number of trades shrank about 25 percent to reach 13 million times. First market’s equities and rights value, volume and number of trading was respectively 58, 69 and 56 percent of total figures in the market. 19 Table 11 – Equities and rights retail and bloc trading

Items FY ended 20 FY ended 20 % Change March 2015 March 2014 Trading value (IRR billion) 542,522 964,198 (44) First market (IRR billion) 313,008 528,334 (41) Second market (IRR billion) 229,514 435,864 (47) Number of shares and rights (million) 165,184 189,689 (13) First market (million shares) 114,163 119,126 (4) Second market (million shares) 51,021 70,563 (28) Number of trades (million) 13 17 (25) First market (million times) 7 10 (30) Second market (million shares) 6 7 (14)

Table 12 – Equities and rights value, volume and number of trading

Fiscal year Volume Value Number of No. of Daily average (million trades (mil- trading Vol. (Mil. Value (IRR No. of (IRR billion) shares) lions) days shares) Bil.) trades Ended 20 80,156 257,072 5 239 335 1,076 21,904 March 2013 Ended 20 189,689 964,198 17 243 781 3,968 70,474 March 2014 FY ended 20 165,184 542,522 13 241 685 2,251 53,595 March 2015

Table 13 – Equities and rights daily average trading (FY ended 20 March 2015)

Period Trading days Daily average trad- Daily average trad- Daily average num- ing value ing volume ber of trades (IRR billion) (million shares) 21 Mar – 20 Apr 17 1,637 435 50,997 21 Apr – 21 May 22 6,672 914 70,968 22 May – 21 Jun 19 3,310 743 58,454 22 Jun – 22 Jul 22 1,429 522 43,962 23 Jul – 22 Aug 19 1,647 596 45,535 23 Aug – 22 Sep 23 1,301 463 41,343 23 Sep – 22 Oct 20 1,378 604 52,058 23 Oct – 21 Nov 18 2,518 977 86,108 22 Nov – 21 Dec 20 2,095 828 66,716 22 Dec – 20 Jan 21 1,461 615 42,143 21 Jan – 19 Feb 20 1,145 592 47,573 20 Feb – 20 Mar 20 2,201 957 41,620 20 5-2 Initial public offerings (IPOs) In the financial year ended 20 March 2015, the listing committee held 12 sessions and ratified admitting of 8 applied companies, some were listed during the past year and the rest are under process of listing. The following tables 14 – 17 indicate the latest status of the new companies listing, IPOs information, as well as bonds and ETFs listings value, equal to IRR 3,700 billion and IRR 1,500 billion respectively.

Table 14 – IPOs (FY ended 20 March 2015)

No. Company Date of Date of Date of Capital Notes admission listing offering (IRR billion) At listing Last capital 1 Sepahan Oil 7 Jul 2013 6 Jan 26 May 1,050 1,050 2014 2014 2 SabaNour Steel 16 Mar 2014 5 May 18 May 1,036 2,036 2014 2014 3 Jey Oil 15 Dec 2013 14 Jun - 290 290 Annulled by 2014 the major shareholder 4 Mo’in Mellat 5 Jan 2014 14 Jun - 1,000 3,000 Listing and 2014 offering period extended 5 Ghadir Capital & In- 4 May 2014 1 Nov - 2,900 33,350 dustry Development 2014 6 Cement Industries 28 Jul 2013 26 Jan 16 Nov 4,000 4,000 Investment & Devel- 2014 2014 opment 7 Khuzestan Cement 15 Dec 2013 19 Mar - 14,250 650 Once ex- 2014 tension and offering 8 Shomal Shargh 16 Mar 2014 5 May 25 Jun 1,000 600 Housing Investment 2014 2014 9 South Kish Kaveh 16 Mar 2014 16 Sep - 4,000 6,000 Listing and Steel 2014 offering period extension 16 Sep 2015 10 Mobin Petrochemical 3 Aug 2014 1 Feb - 200 14,250 2015 11 Ma Insurance 19 Nov 5 Mar - 1,000 1,000 2014 2015 12 Middle East Bank 26 Oct 2014 1 Mar 16 Mar 4,000 4,000 2015 2015 13 Kavir Tire 23 Feb 2014 1 Mar 17 Mar 200 200 2015 2015 14 Fajr Petrochemical 23 Feb 2014 - - 1,000 1,000 15 Jam Petrochemical 23 Feb 2014 - - 4,800 9,600 16 Saveh Cement 23 Feb 2014 - - 650 650 21 Table 15 – Newly listed companies trading value

No. Company IPO day trading Normal trading from IPO day till 20 Mar 2015 Million IRR billion % of cap- Million IRR % of shares ital shares billion capital 1 Saba Nour 3.4 50 - 23 194 165 2 Sepahan Oil 90 1,574 8.5 1,227 6,586 195 3 Shomal Shargh Housing Invest- 2.5 5 - 560 1,120 170 ment 4 Cement Industries Investment & 400 600 10 1,330 2,108 74 Development 5 Middle East Bank 2 4 - 4 8 3 6 Kavir Tire 0.6 9 - 0.6 9 1 Total 498.5 2,242 - 3,145 10,025 -

Table 16 – Debt securities listing

Name Type of security Listing date Offering date Maturity date Value (IRR billion) Rayan Saipa Certificate of 7 Sep 2014 16 Sep 2014 14 Mar 2017 500 Leasing Deposit Kaveh Jonoub Sukuk 20 Sep 2014 22 Sep 2014 22 Sep 2018 2,000 Steel Shiraz Munici- Certificate of 28 Oct 2014 18 Nov 2014 8 Nov 2017 1,200 pality Cooperation Total 3,700

Table 17 – Exchange Traded Funds (ETFs)

Name Type of fund Manager No. of units Units nominal Total (IRR bil- (mil) value (IRR) lion) Firouzeh Asia Firouzeh Asia 50 10,000 500 Brokerage Firm Kardan Stock invest- Kardan Invest- 100 10,000 1,000 ment ment Bank Sepaas 1,500

6-2 Listed companies classification changes Based on article 54 of listing directives, TSE is in charge of classifying the listed companies on the basis of its first and second markets’ standards around May each year. In the past fiscal year ended 20 March 2015 totally 314 companies were listed in 37 sectors at TSE. The de-listed companies are transferred to IFB to continue their trading in the capital market. Table 18 points out (de)listings of the past three years. 22 Table 18 – New listings and de-listings

Fiscal # Co. No. of listed and offered No. of de-listed companies No. of Year at year’s companies Co. at begin- year’s ning end Ended 317 6 Saba Nour Steel, Sepahan Oil, 9 Firouza Engineering, Toulipers, 314 Shomal Shargh Housing Invest- Rangin Industrial and Chemical, ment, Cement Industries Develop- Tousi Wool Knitting, Iran gypsum, 20 Mar ment Investment, Kavir Tire, Middle Sadid Industrial Group, Kaf, Isfahan 2015 East Bank Petrochemical ,Kavian Steel Ended 322 7 Ta’min Oil & Gas, Mobile Telecom, 12 Doroud Farsit, Ahvaz Farsit, Azarit, 317 Banks Investment & Pension Fund, Tak Cable, Mashhad Packaging, Pars Iranian Leasing, Ta’min Pharmaceu- Sugar, Bakhtar Cable, Permit, Jaam 20 Mar tical Investment, Pakshou, Khalij e Jahan Nama, Kerman Ferromolyb- 2014 Fars Petrochemical industries denum Ended 343 3 Kharazmi Investmnent, Mellat 24 Italran, Pars Home Appliances, Zan- 322 insurance, Bandar Abbas Refinery gan Power Supply, Sadra, Azmayesh Industries, Telecom Manufacturing, 20 Mar Payam Industries Development, 2013 Iran Cable Manufacturing, Mashhad Carton, Sadid Pipes and Installations, Torbat e Jaam Food and Sugar, Key- van, Ghazvin Glass, Iran Packaging Industries, Plastiran, Abgineh Manu- facturing and Industrial, Shahin Plas- tic Manufacturing, Naab Vegetable Oils, Henkel Pakvash, Pars Packaging, Azarit, Ahvaz Farsit, Doroud Farsit

7-2 TSE listed companies financing Number of the listed companies with capital increase in the fiscal year ended 20 March 2015 was 110 and the total value amounted IRR 158,861 billion. Table 19 demonstrates more details about their capital increase.

Table 19 – Capital increase in TSE’s listed companies

Fiscal year Resources for capital increase (IRR billion) Capital in- Receivables and cash contributions Retained earnings and excess of crease (IRR reassessed assets billion) Ended 20 73,276 85,585 156,861 March 2015 Ended 20 73,225 85,424 158,649 March 2014 Ended 20 31,979 25,538 57,517 March 2013

8-2 Member brokerage firms At the end of the past fiscal year, 101 brokerage firms provided their services through 1,414 trading stations to clients. Among the members, 97 firms were based in Tehran and 4 others out of the capital city. 93 brokerage firms were authorized to provide on-line trading access, 41 were listing consultants and 42 firms were offering services. Moreover, 38 firms have portfolio management services, as well as 50 brokerage companies managing mutual funds. 23 Table 20 – TSE’s brokerage firms

Brokerage firms and stations FY ended 20 Mar FY ended 20 Mar 2015 2014 Brokerage firms 101 94 Trading stations at TSE’s trading floor 98 93 Trading stations at brokerage firms’ Tehran offices 576 487 Trading stations at brokerage firms’ provincial regional offices 460 350 Trading stations in regional floors 251 239 Trading stations of mutual funds 29 22 Total trading stations 1,414 1,191 In the past fiscal year, total new trading stations license, minus the number of license termination of the existing stations, amounted to 223 units, as mentioned in the table below. Table 21 – Activity and trading authorization

Description FY ended 20 FY ended 20 License FY ended 20 FY ended 20 Mar 2015 Mar 2014 Mar 2015 Mar 2014 Floor launching 53 56 Trading station 241 228 launching Office launching 69 68 License termination (13) (9) Local representa- 61 18 Issued (terminated) (5) - tive launching licenses Total 183 142 Total 223 219 9-2 Regional trading floors Among the major activities of the regional trading floors are: facilitating access to the trading engine, improving investment culture and providing training through courses and workshops, as well as producing media programs and developing brokerage networks and any other related market operations.

Tehran Stock Exchange has regional floors in 21 provinces around the country, and in other parts the brokerage firms’ offices provide investment services through their exclusive floors. During the fiscal year ended 20 March 2015 total amount of IRR 226,702 billion, 21 percent of total trading value (buy and sell) were executed out of the capital Tehran. Details of trading value in each trading floor are as mentioned in the following table. 24 Table 22 – TSE and brokerage firms regional trading statistics

Exchange’s trading/regional floor Brokerage firms floors/offices FY ended 20 Mar FY ended 20 Mar FY ended 20 Mar FY ended 20 Mar 2015 2014 2015 2014 No Region Trading % of Trading % of No Region Trading % of Trading % of value total value (IRR total value total value total (IRR billion) (IRR (IRR billion) billion) billion) 1 Kish 111,980 51.07 118,483 32.32 1 Arak 1,253 16.90 3,453 18.81 2 Isfahan 19,398 8.85 48,122 13.03 2 Ahwaz 1,077 14.53 2,803 15.27 3 Mashhad 14,195 6.47 34,915 9.52 3 Sanandaj 929 12.53 994 5.41 4 Karaj 11,454 5.22 24,357 6.64 4 Amol 831 11.21 1,893 10.31 5 Tabriz 8,190 3.73 19,596 5.35 5 Babol 499 6.73 1,468 7.99 6 Rasht 8,056 3.67 11,547 3.15 6 Neisha- 499 6.73 1,248 6.80 bour 7 Zanjan 7,155 3.26 12,837 3.50 7 Gorgan 448 6.04 1,719 9.36 8 Shiraz 5,854 2.67 12,518 3.41 8 Kashan 413 5.57 1,269 6.91 9 Yazd 5,222 2.38 12,324 3.36 9 Shahroud 247 3.33 768 4.18 10 Ardebil 4,163 1.90 7,318 2 10 Bojnourd 202 2.72 402 2.19 11 Kerman 4,097 1.87 12,988 3.54 11 Doroud 188 2.54 532 2.90 12 Qom 3,425 1.56 6,725 1.83 12 Rafsanjan 178 2.40 292 1.59 13 Kerman- 3,153 1.44 6,925 1.89 13 Shahr e 136 1.83 232 1.26 shah kord 14 Ghazvin 2,763 1.26 7,271 1.98 14 Nour 107 1.44 345 1.88 15 Hamedan 2,727 1.24 9,515 2.60 15 Boushehr 96 1.29 158 0.86 16 Sari 2,071 0.94 6,717 1.83 16 Khoram 93 1.25 322 1.75 abad 17 Uremia 1,916 0.87 5,098 1.39 17 Boroujerd 88 1.19 385 2.10 18 Bandar 1,893 0.86 3,854 1.05 18 Babolsar 54 0.73 0 0 Abbas 19 Semnan 1,137 0.52 3,757 1.02 19 Sabzevar 51 0.69 0 0 20 Birjand 255 0.12 1,255 0.34 20 Gonbad 25 0.34 79 0.43 21 Zahedan 184 0.08 493 0.13 Total 219,288 100 701,615 100 7,414 100 18,362 100

Chart 04 –Regional trading floors 120,000

100,000 2014 (IRR Billion) 80,000 2013 (IRR Billion) 60,000

40,000

20,000

0 25 Sari Kish Yazd Qom Karaj Rasht Tabriz Shiraz Ahvaz Zanjan Qazvin Birjand Isfahan Ardebil Kerman Mashad Semnan Urumieh Zahedan Hamedan Kermanshah Bandar Abbas Mohammad Ebrahim Aliyar Salehi Seyed Mojtaba Mohammad Pourzarandi Vice chairman Fahim Hashemi Chairman Non-executive board member Hassan Ghalibaf Asl TSE CEO 3 – Corporate Governance

3-1 Board of directors The efficient CG trends are necessary for well performing of capital market and overall economy in order to maintain and raise public confidence. Weak CG may deteriorate market’s confidence, which in its turn leads to outflow of resources, liquidity crisis and price crash in the Exchanges. As a matter of fact, corporates should be accountable not only to their shareholders, but also their investors and other members. Tehran Stock Exchange attempts to observe the highest ethics, punctual and transparent disclosure, as well as observing all rules, regulations and directives through the Exchange’s CG directives implementation. This has made a set of inquiries, by which the board of directors and its committees to comply their activities with the requirements.

The elected members of the board in the last FY held 25 sessions in order to rule efficient governance on the Exchange’s affairs in line with shareholders benefits and other stakeholders’ balanced profits. The board applies three technical and two subordinate committees for efficiency of its duties.

Table 23 – Tehran Stock Exchange’s board of directors

Board Member Representative Position Education Mellat Financial Group Mohammad Ebrahim Chairman Industrial management, Mohammad Pourzarandi PhD. Mofid Securities Co. Aliyar Salehi Vice chairman Industrial engineering, B.S. Bank Tejarat Brokerage Seyed Mojtaba Fahim Hashemi Non-executive Accounting, B.S. Firm board member Bahman Investment Co. Ali Rostami Non-executive Commercial management, board member PhD. Saba Ta’min Investment Mohammad Reza Rostami Non-executive Financial management, Co. board member PhD. Pasargad Arzesh-afarinan Ali Akbar Amin Tafreshi Non-executive Financial management, Group board member M.S. Tadbir Investment Co. Mojtaba Taghipour Non-executive Financial management, board member M.S. Securities and Exchange Hassan Amiri SEO supervisor Financial management, Organization PhD. Hassan Ghalibaf Asl CEO Financial management, PhD. 26 Ali Rostami Mohammad Reza Ali Akbar Amin Tafreshi Mojtaba Taghipour Hassan Amiri Non-executive Rostami Non-executive Non-executive SEO supervisor board member Non-executive board member board member board member

3-1-1 Auditing committee The committee is in charge of monitoring internal and independent external auditors, proposing independent auditors to the board of directors, as well as the shareholders in order to appoint auditors, determine their fee levels and dismiss them, reviewing or ratifying their activities, receive auditing reports and adopt the revisions. The auditing committee includes 6 members, at least 3 of them among the non-executive board members and the rest are appointed out of the Exchange by the board of directors. 3-1-2 Risk management and strategic committee The risk committee and strategic subsidiary commission are in charge of monitoring management activities in strategic policies and market risk control, as well as liquidity, operational, reputational and other risks.

Risk management committee is an integral part of the Exchange’s risk control mechanism. The committee aims to help the management team to reach targets matched with the strategic plan. The members report all sub- jects they believe are related with governance, rule of law and risk management duties to the board of directors. The committee consists of 3 members, including a member of the board, one of the executive directors, appointed by the CEO and an accredited expert qualified by the board of directors. 3-1-3 Compensation committee An overall oversight of the payments to the staff, and ensuring that compensations are consistent with organizational culture, goals, strategy and surveillance environment as described in the Exchange’s vision are among this committee’s responsibilities. There are 5 members in compensation committee, including the non-executive board member, the CEO, and logistics vice president or HR chief expert. 3 non-executive member of the committee are appointed by the CEO. 3-1-4 Rules and regulations committee The board of directors has formed this committee in order to execute its own responsibilities more effectively. The rules and regulations committee is in charge of monitoring the executive procedures, as well as decision making on new trading offices authorization, members and issuers disciplinary infringing verdicts, etc. The committee reports the results of its reviews to the board members. There are 4 members in the committee, including 3 non-executive board members, as well as the CEO. 3-1-5 Construction committee Tehran Stock Exchange’s new building construction project was started over a land as large as 2,621 sqm. in Sa’adat Abad region since 2010, Tehran. The committee acts to direct, apply proper policies and monitor the construction stages in this project. 3 board members, as well as the CEO, logistics vice president and 2 independent experts are the committee members with the project executor contractor as the committee’s secretary. 27 TSE’s New Building TSE’s

Table 24 – New building floors and space application

Floors Application Area sqm. -6 Data center 2,579 -5 to -2 Parking 10,076 -1 Commercial use, training and assembly salons 2,217 GF Lobby, trading floor 1,606 Mezzanine Commercial use, investors assembly 1,362 +1 to +10 Administrative use 15,928 Total area 33,768 28 3-1-6 Board of directors’ secretariat Based on article 34 of the Exchange’s statutes, the board of directors has a secretariat which operates under the chairman. This is in charge of arranging board meetings, documentation, as well as minutes preparation. The secretariat is the official reference for disseminating the board’s decisions and the source for any enquiry from the board. 3-2 Human force The table below depicts the human capital TSE enjoys in its current and development plans on 20 March 2015.

Table 26 – Human force on 20 March 2015

Education Staff % of total Tehran Regional floors Total PhD. 3 4 7 3 Master’s 73 23 96 36 Bachelor’s 49 43 92 34 Associate’s 7 7 14 5 General Diploma and below 34 24 58 22 Total 166 101 267 100

TSE Staff 29 3-3 Organizational chart Tehran Stock Exchange’s organizational chart is shown below. The board’s appointed CEO is in charge of the executive affairs. The other executive directors operate under the CEO’s supervision. There are four deputies, as well as the CEO’s department.

General Assembly Compensation Commitiee

Board of Strategic & Advisors Risk Management Directors Commitiee

Board of Directors Internal Auding Secretarial Auding Commitiee

Advisors CEO

CEO Office Physical Security Public Relations & International Dept Legal & Contact Affairs Dept

Logistics Issuers & Market Development Deputy Members Deputy Deputy Deputy

Finance Issuers Operations Research & Dept. Dept. Dept. Development Dept.

AdminiStration Listing Data Information Organizational Dept. Dept. Dept. Excellence Dept.

Information technology & Members Market Sruveilance Investment Systems Dept. Dept. Dept. Development Dept.

3-4 Independent auditor and legal inspector Bayat Rayan Auditing Institute is the independent auditor and legal inspector of Tehran Stock Exchange and Rahyaft Auditing Institute is the alternate one. The auditing committee of the Exchange sets remuneration and proposes the auditor to the general assembly.

30 TSE’s New Building TSE’s 31 4 – Annual performance and achievements

In line with the macro strategies, development plans and current affairs were arranged for the fiscal year and accomplished as stated in the following table.

Departments Development plans Current programs Issuers and members • Preparing a comprehensive report • 10 companies admission process on cement and auto manufacturing was completed, 4 companies were industries listed and the remaining was pend- • Establishing mutual funds secre- ing due to market’s conditions for tariat and frequent joint meetings the coming year. 3 ETFs, one Ijarah with funds managers sukuk, a CD and one municipality bond. • Revising securities listing directive • 9 companies were determined as • Holding cement industry’s round- disqualified for continued listing table and were transferred to the junior exchange, Iran Farabourse. • 150 thousand hours of training courses were held in different regions, as well as 750 person/hour training for improving issuers’ standards. Development • Studying TSE’s micro-structures • 13000 person/hour technical train- and the related regulations ing for market participants • Designing and calculating new in- • 1600 person/hour technical train- dices and supervising TSETMC’S cal- ing for the brokerage houses culations • 7900 person/hour general and pro- • Preparing single-stock ETF’s stat- motional training utes and prospectus • 474 person/hour technical training • Studying the feasibility of intro- for issuers ducing index derivatives products; • 6 training seminars regarding new case studies: index portfolio futures financial instruments and option contracts • Publishing 4 new books and 6 • Reviewing possible mechanisms to technical brochures increase listed companies’ free float equities • Holding frequent monitoring sessions and quarterly plans controlling • Reporting on corporate gover- trend nance index design and calculation • Studying short term financing • Searching the listed industries’ individual features and proposing mechanism for proper financing Administration • Making the required arrangements • Holding training courses for the for market data distribution personnel • Ratifying and implementing cap- • Providing credits and facilities to ital increase from IRR 450 billion to the staff IRR 900 billion • Development of rules and guidlines • Proceeding with the new building development project 32 Market - • Trading operations • Suspending and re-opening operations, trading cancellation and market-making • Publishing frequent reports on market activities • Market surveillance and risk control CEO and board of directors - • Holding exhibitions and events • Legal processes and contractual affairs • Public relations and investors relations • Quarterly press conferences and other market’s disclosure actions • Foreign investment and international relations arrangements

FEAS General Assembly, Nov. 2015, Isfahan

33 5 – Board of directors’ proposal for dividend payments and capital increase

The members of the board would like to ask the shareholders to accept their proposal for the payment of IRR 100 as DPS, and allocating the rest of EPS for reinvestment, due to the ongoing new building development project and other expansion plans. The feasibility study to increase the capital from IRR 900 billion to IRR 1,100 billion has been prepared with the auditor’s report. The study and the report were submitted to the SEO for authorization.

6 – Tehran Stock Exchange’s strategic plan

TSE’s strategic plan includes goals and macro strategies, as well as operational and development programs in 2014 as follow:

6-1 Goals Goals are described in the following seven parts: Goal1: increasing capital market’s share in financing economic productive activities Goal2: applying effective regulations and procedures in order to protect market’s integrity and shareholders’ rights Goal3: deepening and expanding the market, as well as facilitating its public access with modern technology and updated processes Goal4: improving financial literacy and investment culture in the country Goal5: observing accountability and transparency to interact with all stakeholders Goal6: Developing physical assets and human capital constant Goal7: Making value for shareholders

6-2 Macro strategies The Exchange’s macro strategies in operational and administrative fields include:

Designing new financial Increasing efficiency in Increasing incentives and Reviewing organizational instruments and trading regional trading floors constant improvements regulations and manage- mechanisms in the staff occupational ment settings attitudes

Public investment devel- Developing investment Constant improvement of Planning for less owner- opment and encouraging culture and planning to human sources capability ship centralization and investors to indirect par- raise investment base of and efficiency more free float equities in ticipation in the market the country the listed companies

Trading and surveillance Supporting disclosure Developing interaction with infrastructure develop- system, aiming at miti- the listed companies and providing new mechanisms ment and upgrading gating risks and increas- for monitoring issuers and up- ing transparency grading internal auditing

Improving listing advi- Creating advantage and Effective connections with sors status and role in the brand management at the market’s active partici- listing process TSE pants to establish required regulations and deregulations

Facilitating trading access Effective application of in- Cash flow management in cyber space ternational memberships by capital and money and cooperation with in- markets’ mechanisms ternational Exchanges 34 6-3 Targets and plans in 2015

Department Development plans Current affairs Issuers and members Calculation and publishing corporate gover- Listing 8 new companies and trans- nance grade of the listed companies ferring 4 companies from IFB

Revising issuers’ disciplinary mechanism Listing 3 project and construction funds Revising issuers’ reporting and surveillance structures Listing 5 participation bonds

Holding 2 industry tables

Holding 150k hour/person in regional floors

Making 500 visits to brokerage firms

Holding 1k hour/person training for the listed companies directors

Listed companies rating reports

Meetings with mutual funds

Analyzing industrial status Development Introducing a new product to the market Option trading platform establishing Cooperating to revise and amend foreign investment regulations Continuous monitoring and seasonal control on plans development Implementing equity portfolio futures contracts Continuous assessment of TSE’s departments activities Implementing option contracts trading Holding 5 training seminars in re- Feasibility study on warrants trading gional floors on new instruments and entities Regulating to launch vulture funds 10k hour/person technical courses Acknowledging securities exchanges incen- for markets participants tives for the listed companies 1k hour/person technical courses Calculating and analyzing market’s and infor brokerage firms dustrial risks and rating 1k hour/person technical courses Feasibility study on designing and introduc- for issuers ing new indices at TSE 10k hour/person public and invest- Reviewing Iran’s capital market shortcoming ment courses in market-making process and comparative analysis with other Exchanges Publishing 2 books and 6 brochures

Revising selection directives for TSE 30 largest Holding 6 national training seminars and TSE 50 blue-chip indices Supporting university projects and research works 35 Administration Establishing and assessing profiles of intelli- Holding training courses for staff gence features among staff Installing mechanized system for lo- Searching for TSE’s required staff gistics

Designing and implementing Business Intelli- Trading directives revision gence (BI) platform Integrated management on regional Procuring administrative automation soft- floors internet systems ware Pursuing new building construction Applying data distribution system project Market Improving (on time information) reporting in Trading symbols halt and reopening BI platform Market making of the securities

Trading cancellation

Market reports preparation

Making new contracts in the futures market

Surveillance measures and report making

Bloc and wholesale trading

Special trading price discovery operations CEO and board direc- Media Comprehensive Initiative Holding and attending exhibitions tors in 5 regions Holding FEAS GAM Seasonal meetings with stakeholders

Members and listing regulations revision

Legal consultation

Foreign delegates and international investors reception in the market

36 Forecasted income statement for the fiscal year ending 20 March 2015 (IRR million)

Item FY2014 (Special FY2014 (Main) Audited budget Audited budget value) FY2015 (Special FY2015 (Main) value) Income from services 513,750 513,750 820,245 820,245 Costs of services (181,027) (181,027) (216,601) (216,601) Gross income 332,723 332,723 603,644 603,644 Administrative and general ex- (90,709) (90,709) (112,820) (112,820) penses Operating profit 241,816 241,816 490,824 490,824 Net other income and non-op- 135,348 147,413 38,866 51,230 erating expenses Profit before including affiliat- 377,164 389,229 529,690 542,054 ed company’s profit (loss) Share in affiliated company’s 47,532 - 401,00 - profit (loss) Tax on current operations (61,846) (61,846) (125,213) (125,213) Net profit from current opera- 362,850 327,383 444,577 416,841 tions Net profit per share 403 364 494 463

Tehran Highways 37 38 FEAS General Assembly, Nov. 2015, Isfahan

39 40 Financial Statements For the Fiscal Year Ended March 20, 2015

41 Report of Independent Auditor To the General Assembly Tehran Stock Exchange Corporation

Report on the Financial Statements

1. We have audited the balance sheet of Tehran Stock Exchange Corporation as of 1393 and the income and cash flow statements of the Company for the fiscal year ended 3/20/2015, together with notes 1-30 thereof.

Board of Directors’ responsibility

2. The responsibility of financial statements is with the company’s Board of Directors. The board of directors should plan, apply and maintain the relevant internal controls in order to prepare the financial statements which are free from material misstatements resulted from frauds and errors.

Auditor’s and legal Inspector’s Responsibility

3. Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with the Auditing Standard of financial statements. These standards require that we meet the requirements of professional ethics and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. The audit includes examining, on a test basis, evidences supporting the amounts and disclosures in the financial statements. Deciding on the auditing methods is on the auditor’s judgment and based on reviewing any risks of material misstatement resulted from frauds and errors in the financial statements. To review the risks, we assess internal controls related to the preparation and presentation of financial statements in order to plan the relevant audit methods in the current circumstances, not to express an opinion on the effectiveness of the internal controls. An audit also includes assessing the accounting principles and procedures used and significant estimates made by the Board as well as evaluating the overall fairness of financial statement presentation. We believe our audit provides a reasonable basis for our opinion. Also, our responsibility is to report to the general assembly of shareholders on any noncompliance with the legal requirements set out in the Commercial Code as amended and the company’s provisions of the Articles of Incorporation.

Opinion

4. In our opinion, the financial statements referred to above present fairly in all material aspects in conformity with Iranian Accounting Standards. 42 Explanatory Note

5. Financial statements of the Company for the year ended 3/20/2015 have been audited by another auditing firm and an unqualified opinion has been reported on 31/5/2014.

Report on Other Legal and Regulatory Requirements

Reports on Duties of Legal Inspector

6. The transaction included in the explanatory note 28 to the financial statements has been examined as all transactions subject to the Article 129 of the Commercial Code, which are conducted and reported to us by the Company’s Board of Directors. We have not observed any evidences indicating that the transaction has not been conducted on the appropriate trade conditions and in normal course of the company’s activities.

7. We have examined the report of the Board of Directors to the Annual General Meeting of the company in respect of the Company’s general status and activities, as the subject of the article 232 of the Commercial Code. Based on our examinations, we have not observed any material cases of non-conformity of the provided information with books and records submitted to us by the Board of Directors.

8. With respect to compliance of companies registered with Securities and Exchange Organization with required rules and regulation, we have examined the disclosure procedure for these companies. We have not observed any material cases of non-compliance with the rules and regulations, except no preparation of interim financial statements of the period ended 21/6/2014.

Report on Other Auditor’s Legal and Regulatory Responsibilities

9. With respect to the article 33 of anti-money laundering rules for auditors, we have examined the rules and procedures compliance in the framework of auditing standards. We have not observed any material cases of non-compliance with the rules and procedures.

15 June 2015 Bayat Rayan Audit and Financial Services Firm 43 Tehran Stock Exchange Corporation Financial Statements For the Fiscal year ended March 20, 2012

We would like to submit the financial statements of Tehran Stock Exchange Corporation for The fiscal year ended March 20, 2015. Components of the financial statements are as followings: Equity method Primary Financial Statements • Balance sheet • Income statement Retained earnings account • Cash flow statement

Primary Financial Statements • Balance sheet • Income statement Retained earnings account • Cash flow statement

Explanatory Notes • History • Basis for preparing Financial Statements • Equity basis • Significant Accounting policies • Notes to the Financial Statements (items and numbers)

The financial statements have been prepared according to the National Accounting Standards and they have been approved by the Board of Directors on May 26, 2015.

Members of the Board of Directors

Member of the Board of Directors Legal Person Position Mellat Financial Group Mohammad Ebrahim Mohammad Chairman Poorzandi Mofid Brokrage Co. Ali Yarsalehi Vice Chairman Bank Tejarat Brokrage Co. Seyed Mojtaba Fahim Hashemi Non-executive member Bahman Investment Co. Ali Rostami Non-executive member Saba Tamin Investment Co. Mohammad Reza Rostami Non-executive member Pasargad Bank Value Creation Group Ali Akbar Amin Tafreshi Non-executive member Tadbir Investment co. Mojtaba Taghipoor Non-executive member Hasan Ghalibaf Asl Managing director

44 Explanatory notes are of financial statements.Explanatory an integral part Total Assets Assets Total Current Assets Tangible Fixed assets Non-Current Assets: Intangible assets Total Non-Current Assets Other Assets Other Long TermInvestments Cash & Bank Current Assets: Short TermShort Investments Trade Accounts Receivable Prepayments AccountsOther Receivable Note 11 10 13 12 5 6 7 9 8 March20,2015 Million Rials Million 1,562,752 1,052,243 510,509 886,143 146,906 432,828 16,048 30,132 37,911 3,017 3,146 6,631 Equity Method Balance Method Equity Sheet -March 20, 2015 March 20,2014 Million Rials Million 1,304,187 685,633 618,554 513,286 107,739 531,500 61,887 25,860 19,234 38,817 3,143 2,721 Total Shareholders’ equity earning Retained prudential reserve Legal reserve Paid-in capital ( 900 million shares paid totally ) Shareholders’ equity: Total Liabilities Total Non-Current Liabilities Total Current Liabilities Total Liabilities and Shareholders, Equity Provisions for Employees’ Termination Benefits Noncurrent liabilities: Liabilities & shareholders’ equity Current Liabilities: Other accounts PayableOther Provision forProvision Taxes Dividends Note 19 19 18 17 14 16 15 March 20,2015 Million Rials Million 1,562,752 1,391,831 170,921 142,878 364,639 900,000 65,823 61,369 28,043 28,043 80,499 85,709 3,670 March 20,2014 Million Rials Million 1,304,187 1,078,481 225,706 206,562 469,135 114,346 450,000 114,763 45,000 19,144 19,144 88,821 2,971

45 Equity Method Income Statement For the Fiscal year ended March 20, 2015

Fiscal year ended Fiscal year ended Note March 20,2015 March 20,2014 Million Rials Million Rials Services revenue 20 513,750 683,519 Cost of services 21 (181,027) (143,130) Gross income 332,723 540,389 Administrative and general expenses 22 (90,907) (77,599) Operating profit 241,816 462,790 Net other non-operating income and expenses 23 135,348 99,238 Income irrespective of income from associate 377,164 562,028 companies Income from associate companies 12 47,532 44,002 Income before tax 424,696 606,030 Income tax 16 (61,846) (116,138) Net income 362,850 489,892 Earnings per share 403 544 Revenue 203 388 Gains 200 156

Retained Earnings Account

Net Income 362,850 489,892 Retained earnings at the beginning of the period 469,135 251,983 Allocatable income 831,985 741,875 Income allocation: Capitalization 18 (336,000) (106,150) Dividend (49,500) (60,000) Legal reserve 19 (16,369) (15,000) Prudential reserve 19 (65,477) (91,590) Allocated income during the period (467,346) (272,740) Retained earnings at the end of the period 364,639 469,135

Explanatory notes are an integral part of financial statements.

46 Equity Method Cash flow Statement For the Fiscal year ended March 20, 2015

Fiscal year Fiscal year ended ended March March 20,2015 Note 20,2014 Million Million Million Rials Rials Rials Operating activities: Net cash inflow from operating activities 24 241,935 533,821 Return on investments and servicing of finance: Interest received from short-term investment 118,805 86,289 Earnings received from long-term investment 1,461 894 Dividends Paid (48,808) (59,767) Net cash inflow (Outflow) from Investment Returns and 71,458 27,416 servicing of finance Income tax: Income Tax paid (117,900) (36,318) Investing activities: payments for acquisition of short-term investment - (361,500) Payments for acquisition of tangible and intangible assets (361,614) (155,164) payments for acquisition of long term investments (1,653) - Receipts from tangible fixed asset sales 363 - Receipts from short term investment sales 98,672 - Receipts from long-term investment sales - 160 Receipts from prudential reserve release 49,500 - Net cash out flow from investing activities (214,732) (516,504) Net cash increase (19,239) 8,415 Cash Balance at the beginning of the period 25,860 17,445 Cash balance at the end of the period 6,621 25,860 Non-cash trades 2,047 1,245

Explanatory notes are an integral part of financial statements.

47 2,978 88,821 19,144 19,144 45,000 114,763 114,346 392,535 450,000 206,562 225,706 1,001,881 1,227,587 Million Rials March 20,2014 March 3,670 58,709 80,499 61,369 65,823 28,043 28,043 252,572 900,000 142,878 170,921 1,279,764 1,450,685 Million Rials March 20,2015 March 16 15 14 17 18 19 19 Note Provision Taxes Provision for Dividends Other Payable accounts Current Liabilities: Current Liabilities & shareholders’ equity Liabilities & shareholders’ Retained earning Total Shareholders’ equity Shareholders’ Total Total Current Liabilities Current Total Liabilities Non-Current Total Total Liabilities and Shareholders, Equity Liabilities and Shareholders, Total Total Liabilities Total Provisions for Employees’ Termination Benefits Termination Employees’ for Provisions Noncurrent liabilities: Noncurrent equity: Shareholders’ ) paid totally capital ( 900 million shares Paid-in prudential reserveprudential Legal reserve Legal Balance Sheet -March 20, 2015 -March Sheet Balance 3,143 2,721 38,817 19,234 25,860 31,139 61,887 531,500 513,286 618,554 609,033 1,227,587 Million Rials March 20,2014 March 6,621 3,017 3,146 37,911 30,132 34,839 16,048 432,828 886,143 510,509 940,176 1,450,685 Million Rials March 20,2015 March 8 9 7 6 5 12 13 11 10 Note Other Accounts Receivable Other Accounts Prepayments Trade Accounts Receivable Accounts Trade Short Term Investments Short Term Current Assets: Current & Bank Cash Total Current Assets Current Total Long Term Investments Term Long Other Assets Assets Non-Current Total Assets Intangible assets Non-Current Assets: Non-Current assets Fixed Tangible Total Assets Total Explanatory notes are an integral part an integral Explanatory of financial statements. are notes

48 Income Statement For the Fiscal year ended March 20, 2015

Fiscal year ended Fiscal year ended Note March 20,2015 March 20,2014 Million Rials Million Rials Services revenue 20 513,750 683,519 Cost of services 21 (181,027) (143,130) Gross income 332,723 540,389 Administrative and general expenses 22 (90,907) (77,599) Operating profit 241,816 462,790 Net other non-operating income and expenses 23 147,413 111,297 Income before tax 389,229 574,087 Income tax 16 (61,846) (116,138) Net income 327,383 457,949 Earnings per share 29 364 509 Revenue 203 402 Gains 161 107

Retained Earnings Account

Net Income 327,383 457,949 Retained earnings at the beginning of the period 392,535 207,326 Allocatable income 719,918 665,275 Income allocation: Capitalization 18 (336,000) (106,150) Dividend (49,500) (60,000) Legal reserve 19 (16,369) (15,000) Prudential reserve 19 (65,477) (91,590) Allocated income during the period (467,346) (272,740) Retained earnings at the end of the period 252,572 392,535

Explanatory notes are an integral part of financial statements.

49 Cash flow Statement For the Fiscal year ended March 20, 2015

Fiscal year Fiscal year ended ended March March 20,2015 Note 20,2014 Million Million Million Rials Rials Rials Operating activities: Net cash inflow from operating activities 24 - 229,870 521,762 Return on investments and servicing of finance: Interest received from short-term investment 118,805 86,289 Earnings received from long-term investment 13,526 12,953 Dividends Paid (48,808) (59,767) Net cash inflow (Outflow) from Investment Returns and 83,523 39,475 servicing of finance Income tax: Income Tax paid (117,900) (36,318) Investing activities: payments for acquisition of short-term investment - (361,500) Payments for acquisition of tangible and intangible assets (361,614) (155,164) payments for acquisition of long term investments (1,653) - Receipts from tangible fixed asset sales 363 - Receipts from short term investment sales 98,672 - Receipts from long-term investment sales - 160 Receipts from prudential reserve release 49,500 - Net cash out flow from investing activities (214,732) (516,504) Net cash increase (19,239) 8,415 Cash Balance at the beginning of the period 25,860 17,445 Cash balance at the end of the period 6,621 25,860 Non-cash trades 25 2,047 1,245

Explanatory notes are an integral part of financial statements.

50 1. Background

1.1. History Tehran Stock Exchange Corporation has been founded according to the Securities Market Law approved on November 22, 2005, and registered with the number 286502 with the Companies & Non-commercial Institu- tions Registration Office in Tehran. The head office of the company is located in Tehran and has 23 Branches within the country and an independent registered branch in Kish Island by now. 1.2. Main Activities According to the Provision 2 of the Articles of Incorporation, the main activities of the company are:

• Establishing, organizing and operating the Stock Exchange for making trades on listed securities by Iranian and foreign parties according to the law and regulations.

• Listing securities including securities of foreign issuers according to the law and regulations.

• Determining the brokerage membership conditions for different groups of members, admitting the membership applicants, and enactment and enforcement of professional and disciplinary principles.

• Providing conditions necessary for fair access of members to trades of listed securities.

• Cooperation and Consistency with the other financial institutions undertaking responsibilities related to securities trades, making researches, training, culture developing, and cooperation with other Iranian and foreign Exchanges to share information and experiences.

• Supervising well conduction of listed securities transactions and supervising issuers’ activities. Providing, collecting, processing and issuing information related to securities, and performing other duties according to the law and regulations. 1.3. Employment position The number of employees at the end of the financial period is as follows:

Permanent and temporary employee March 20,2015 March 20,2014

267 263 51 2. Basis for preparing financial statements

The financial statements (primary financial statements and equity method financial statements) of the Com- pany have been prepared mainly on historical cost basis and, where necessary, current values have been used.

3. Basis for equity method

3.1. Equity method financial statements have been prepared through aggregation of items of Tehran Stock Exchange financial statements with TSE’s share of changes in net assets and operation results of its associated companies including Farabourse (out of the counter) Company and Central Asset Management of Capital Mar- ket, less of unrealized gains and losses from transactions.

3.2. The investor company’s share of associated companies’ operation has been reflected in income and comprehensive income statements as the case may be.

3.3. The fiscal year for TSE Corporation and Farabourse Corpotation is ended March and that of Central Asset Management of Capital Market (private stock) is ended January of every year.

4. Significant accounting policies

4.1. Investments

Evaluation method Equity method financial statements Investor’s financial statements Long term investments: Investment in associ- Equity method Cost (less accumulated impairment of ates investments) Other long term in- Cost (less accumulated impairment of Cost (less accumulated impairment of vestments investments) investments) Revenue recognition method: Investment in associ- Equity method At earning approval by the investee’s ates general association of shareholders (until financial statements approval) Other long term and At earning approval by the investee’s At earning approval by the investee’s current investments general association of shareholders general association of shareholders (until the balance sheet date) (until the balance sheet date)

4.2. Tangible fixed assets 4.2.1. Tangible fixed assets are carried on the cost basis. Costs for betterment and substantial repairs resulting in a significant increase in the capacity and useful life of fixed assets or an improvement of their output qual- ity, are accounted for as capital costs and depreciated during the remaining useful life of the relevant assets. Costs necessary to maintain the normal capacity of the assets like maintenance and insignificant repairs, are accounted for as expenses of the period when incurred.

52 4.2. Tangible fixed assets 4.2.1. Tangible fixed assets are carried on the cost basis. Costs for betterment and substantial repairs resulting in a significant increase in the capacity and useful life of fixed assets or an improvement of their output qual- ity, are accounted for as capital costs and depreciated during the remaining useful life of the relevant assets. Costs necessary to maintain the normal capacity of the assets like maintenance and insignificant repairs, are accounted for as expenses of the period when incurred.

4.2.2. Depreciation of tangible fixed assets are calculated based on the estimated useful life of the asset, according to the depreciation regulations included in the Article 151 of the amendment of the Direct Taxation Act approved in 1988 and on the basis of the following rates and methods:

Assets Depreciation rate Depreciation method Buildings 7% Diminishing balance Computer system and hardware 3, 10 year Straight line Administrative equipments 10 year Straight line Vehicles 25% Diminishing balance Constructions of the rental building 3 Straight line

4.2.3. Fixed assets acquired and used within a month are depreciated and carried from the beginning of the next month. When an asset is not used for any reason like work stopping, its depreciation will be equivalent to 30% of the depreciation rate included in the table above. 4.3. Foreign currency translation Foreign currency items with the formal exchange rate at the balance sheet date and expenses carried in foreign currency at historical cost are translated with the formal exchange rate at the date the transaction is entered into. Differences arising from settlement or exchange of foreign currency items are recognized as income or expenses of the period when incurred. 4.4. Provision for employees’ termination benefits Provision for employees’ termination benefits are calculated and carried according to their last monthly fixed salary and continuous benefits for every year of their service. 4.5. Revenue recognition Revenue sources of the Company are commissions from trading, admitting and listing fees, brokerage fees, broker services and other sources. The income resources are recognized as realizing over the time when services are rendered and as proportionate to the service time length. 4.6. Intangible assets Intangible assets are carried on the cost basis and amortizable intangible assets (software) are amortized until maximum 3 years.

53 5. Cash

The company’s cash in hand at the balance sheet date are as following:

March 20,2015 Million Rials March 20, 2014 Million Rials

Bank accounts (Rial) 5,133 24,846 Fund (Rial, foreign currency) 5-1 1,088 655 Bank accounts (foreign currency) 5-2 400 359 Total 6,621 25,860

5.1. The balance of foreign currency fund has been included 4,288 Dollars, 9,036 Euro, 4,441 Pound, and 2,665 Yuan which have been converted to 33,530 Rial, 36,450 Rial, 50,900 Rial and 5,350 Rial, respectively.

5.2. The balance of foreign currency bank accounts has been included 14,296.81 Dollars, 2.54 Euro which have been converted to 27,994 Rial and 30,156 Rial respectively, at the balance sheet date.

6. Short – term investments

Notes March 20,2015 Million Rials March 20,2014 Million Rials

Bank Melli deposits - 200,000 Bank Pasargad deposits 100,000 - Bank Parsian short term deposits 6-2 93,591 - Bank Sarmaye deposits - 21,500 Bank Day deposits 200 40,000 Bank Tejarat deposits 5,064 170,000 EN Bank deposits - 100,000 Mashad Municipality participa- 6-1 50,000 - tion Bonds Gole Gohar Co. participation 6-1 183,973 - Bonds 432,828 531,500

6.1. Investments in participation bonds includes 70,000 participation bonds of Mashad Municipality and 180,320 participation bonds of Gole Gohar Co. with 20% interest rate and 1,000,000 Rial par value for each sheet.

6.2. Short term deposits in Parsian Bank will be held for more than 3 months.

54 7. Trade accounts receivable

The receivables are including:

Provision for Note March 20,2015 Net March 20,2014 doubtful debts

Million Rials Million Rials Million Rials Million Rials

Central depository and 7-1 12,051 - 12,051 14,187 settlement corporation Listed companies (list- 7-2 9,880 4,102 5,778 3,362 ing fees) Brokerage (rent and 7-3 12,303 - 12,303 1,685 service) 34,234 4,102 30,132 19,234

7.1. The amount, as the trade commission for the company in the last three days of the year, has been depos- ited and settled by Central Depository and Settlement Corporation on 31/3/2015.

7.2. The amount includes 1,066 million Rial admission fee and 8,814 million Rial listing fee receivable from firms listed in TSE, from which the amount 4,102 million Rial is carried as Provision for doubtful debts.

7.3. The balance refers to brokerage services fee amounted 12,238 million Rials and rentals amounted 65 million Rial, from which 4,960 million Rial has been received up to the financial statements approval.

8. Other Accounts Receivable

Amount (Million Rials) Amount (Million Rials) Notes March 20,2015 March 20,2014

Associated companies: Over the counter 8-1 13,199 14,258 Financial centre 224 2,175 Others: Loans to Employees (current portion) 9,445 7,862 Income from short-term investment 7,326 4,185 Rentals receivable from banks 8-2 3,142 3,504 Security for building lease 2,670 3,420 Energy Exchange 119 1,213 Security and Exchange Organization 339 - Other 1,447 2,200 37,911 38,717

55 8.1. The balance of the receivable includes 12 billion Rial dividend for the financial year ended 20/3/2015 and the company’s share of common expenses.

9. Prepayments

The balance of prepayments is including:

March 20, 2015 March 20, 2014 Note Million Rial Million Dollars

Costs, goods and services 9-1 1,387 2,315 Tax 3,961 1,375 Insurance 1,630 828 6,978 4,518 Tax reserve transfer 16 (3,961) (1,375) 3,017 3,143

9.1. Up to financial statements approval, 550 million Rial from the prepayments refer to goods and services.

56 Vehicle Computer Fixtures and Equipment, Building Capital pre building on Hafez Constructions Land progress Assets in Description Total tory Capital inven payments Total - - Note 10-6 10-5 10-4 10. Tangible Fixed Assets Balance on 2014/3/20 188,116 217,567 266,789 534,510 24,800 18,997 22,460 57,145 2,814 2,611 Additions 224,987 147,021 380,269 8,261 8,261 - - - - - Cost- million Rial assets ( 200 ) ( 200 ) ( 200 ) Sold Sold ------Disposal Disposal assets ( 133 ) ( 133 ) ( 133 ) ------( 136,543 ) fers and ( 48,227 ) 110,000 110,829 Others 73,941 Trans 829 - - - - - 2014/3/20 Balance 487,044 327,567 385,546 914,446 33,557 18,997 32,938 2,814 8,918 2,611 on 2014/3/20 Balance 13,149 21,224 21,224 6,278 1,050 747 on - - - - Retained depreciation-million Rial the year During During 5,211 7,321 7,321 891 829 390 - - - - assets ( 138 ) ( 138 ) ( 138 ) sold ------Disposal Disposal assets ( 104 ) ( 104 ) ( 104 ) ------Trans fers ------2014/3/20 Balance 18,118 28,303 28,303 Book value- million Rial value- Book 7,169 1,576 1,440 on - - - - 2014/9/22 Balance 487,044 327,567 357,243 886,143 15,439 11,828 32,938 1,238 8,918 1,171 on 2014/3/20 Balance 188,116 217,567 245,565 513,286 11,651 12,719 22,460 57,145 2,067 1,561 on

57 10.1. All tangible fixed assets amounted 52,928 million Rials are insured against fire, flood and earthquake,

10.2. Equipment and fixtures additions are mainly related to purchasing computers and hardware, and net- work equipments.

10.3. Details related to assets sold are as following:

Retained depreci- Description Cost Book value Sale price Sale loss ation Million IRR Million IRR Million IRR Million IRR Million IRR Million IRR Furniture, fixtures and 333 242 91 363 272 computer

10.4. The capital prepayments are amounted 32,938 million Rial in 2015 as compared to 22,460 Million Rial in 2014.

10.5. Capital inventory refers to ironware for construction of the new building.

10.6. The balance of assets in progress heading refers to the new building which almost 47% is completed up to financial statement approval. It is expected to be completed 100% at the end of the year 1394.

March 20, 2015 Million March 20, 2014 Million Rial Dollars

Building project costs 1,807,703 1,289,500 Costs incured (845,290) (460,243) Progress percent (Rial) 47 35

10.7. The project is insured up to 352 Billion Rial.

11-Intangible Assets

The intangible assets are including:

March 20, 2015 Million March 20,2014 Million Note Rial Rial Water Membership fee 1,738 1,738 Regional floor Branches 710 709 Software 11-1 503 148 2 line of PRA link , MPLS and PTMP lines, 22 195 126 Mobile lines and 32 telephone line 3,146 2,721 58 Software in the company11.1. Software is including: Other Software Other Shareholders information software Free floats follow-up system Didgah software Firm valuing software Future Contract Software 2014/3/20 Balance 1,143 170 700 273 on - - - Cost Rials Million Purchases 112 251 515 93 52 7 - Balance on 2015/3/20 1,658 112 251 177 700 325 93 Balance on 2014/3/20 114 700 995 181 - - - Retained Amortization Amortization Retained Million Rials Million the year During 160 22 32 58 40 8 - Balance on 2015/3/20 1,155 172 700 221 22 32 8 Balance on 2015/3/20 Book value Rials Million Book 219 503 104 85 90 5 - Balance on 2014/3/20 148 56 92 - - - -

59 12-Long –Term investments

Long term investments in companies are including:

Equity method Investor

March March March 2015 March 2014 2015 Mil- 2014 Mil- Million Rials Million Rials lion Rials lion Rials No. of Invest- Cost-equity Cost-equity Cost Cost Shares ment% Associated companies: Over the counter Corpo- 80,000,000 20 126,781 94,882 20,000 20,000 ration of Iran Central Asset Manage- 200,000 20 5,494 1,926 208 208 ment Pvt. Iran financial center 2,000,000 20 2,000 40 2,000 40 (private Joint) Other long term investments: Energy Exchange Corpo- 870,000 0.5 2,610 870 2,610 870 ration Iran mercantile Ex- 58,500 0.01 21 21 21 21 change corporation Central depository and 15,000,000 5 10,000 10,000 10,000 10,000 settlement corporation 146,906 107,739 34,839 31,139

12.1. Since the TSE has insignificant share of net assets of Central Asset Management Company, we do not use equity method for investment in this company.

12.2. Investment in OTC of Iran is subject to Equity method as the following:

Note 2015 2014 Share of Share of Share of Good- Share of Good- total net total net net asset will net asset will assets assets Million Million Million Million Million IRR Million IRR IRR IRR IRR IRR Balance at the be- 94,882 - 94,882 63,744 - 63,944 ginning of the year Share of the financial 12-2-1 43,899 - 43,899 43,138 - 43,138 year profit Dividend receivable 12-2-2 (12,000) - (12,000) (12,000) - (12,000) 126,781 - 126,781 94,882 - 94,882

60 12.2.1. Income from investment of TSE in OTC, as amounted 43,899 million IRR, has been calculated and included in the financial statements based on equity method.

12.2.2. Share dividend of OTC has been 200 IRR per share for financial year ended 2014/3/20 and 150 IRR per share for financial year ended 2015/3/20 according to decision of the General Association of Shareholders on 2015/5/23.

Income statements Million IRR Services revenue 226,992 Expenses (7,499) Net income 219,493

12.2.3. Significant parts of OTC’s balance sheet and income statements based on equity method for the financial year ended 2015/3/20 are as following:

Balance sheet Million IRR Million IRR Current assets 383,056 Current liabilities 85,137 Non-current assets 411,305 Non-current liabilities 2,985 Capital 400,000 Reserves 123,605 Retained profit 162,634 Total assets 774,361 774,361

12.3. Investment in Central Asset Management Company is subject to the equity method as following:

Note 2015 2014 Share of Share of total Share of Share of total Goodwill Goodwill net asset net assets net asset net assets Million Million Million Million Million IRR Million IRR IRR IRR IRR IRR Balance at the be- 1,926 - 1,926 1,121 - 1,121 ginning of the year Share of the financial 12-3-1 3,633 - 3,633 864 - 864 year profit Dividend receivable 12-3-2 (65) - (65) (59) - (59) 5,494 - 5,494 1,926 - 1,926

12.3.1. Income from investment in Central Asset Management Company, as amounted 3,663 million IRR, has been calculated based on equity method and included in the financial statements.

12.3.2. Share dividend of Central Asset Management Company has been 71 IRR per share for financial year ended 2014/1/20 and 327 IRR per share for financial year ended 2015/1/20 according to decision of the General Association of Shareholders on 2015/3/11. 61 12.3.3. Significant parts of Central Asset Management Company’s consolidated balance sheet and consolidated financial statements for the financial year ended 2015/1/20 are as following:

Consolidated Balance sheet Million IRR Million IRR Current assets 58,838 Current liabilities 51,016 Non-current assets 20,715 Non-current liabilities 501 Capital 1,000 Reserves 100 Retained profit 26,700 Minority Interest 236 Total assets 79,553 79,553

Consolidated Income statements Million IRR Services revenue 16,224 Expenses (16,366) Other operating income and expenses 18,459 Minority interest (151) Net income 18,166

13. Other assets Other assets are including:

Note March 20, 2015 Million Rial March 20, 2014 Million Rial

A prudential reserve security 13-1 500 50,000 with SEO Employee’s loan (long term) 15,048 11,387 Nikoukari fund 500 500 16,048 61,887

62 14. Other Accounts Payable

Note March 20, 2015 Mar 20, 2014 Million Rial Million Rial

Brokers (received additions) 14-1 19,866 50,665 Performance bond deposit 14-2 19,324 9,867 Insurance deposit 14-3 16,042 6,259 Employee’s saving fund 14-4 10,975 5,339 Provision for employees’ unapplied allowed leave 5,523 3,898 Taxes payable 14-5 3,249 2,793 Insurance Premium 14-6 1,649 1,293 Information company 14-7 672 - Provision for incurred and unpaid expenses 14-8 1,567 3,183 Securities and Exchange Organization - 3,858 Other 1,632 1,666 80,499 88,821

14.1. This amount is mainly related to additional amounts received from some brokerages, which has been finalized on 2014/3/20 and paid and settled up to 2014/4/20.

14.2. This amount is mainly related to Performance bonus deposit for the new building construction agreements.

14.3. This amount is mainly related to Insurance deposit for the new building construction agreements.

14.4. This amount is related to employee’s investment deposit including 3% wages and salaries and 3% share of the company together with its profits. Also, 5495 million IRR from the balance of Employee’s saving fund as amounted 16,470 million IRR at the balance sheet date has been paid to the employees as an interest-free loan.

14.5. This amount includes 1,330 million IRR as the tax of wages and salary of the employee at the end of the year and 1,919 million IRR as withholding tax.

14.6. This amount is related to insurance Premium of employees’ salaries and wages in the last month of the year.

14.7. This amount is related to the security employee’s fee in the last month of the year.

14.8. This amount is mainly related to costs of water, electricity, gas and other outstanding expenses of the third month of the year 2015, from which 1,494 million IRR has been paid up to financial statement approval.

63 15. Dividends

March 20, 2015 March 20, 2014 Million Rial Million Rial

Dividend in 1392 1,387 - Dividend in 1391 821 1,032 Dividend in 1390 357 650 Dividends in 1389 425 542 Dividends in 1388 207 226 Dividends in 1387 251 280 Dividends in 1386 200 223 Dividends in 1385 22 25 3,670 2,978

15.1. Dividend approved in 2014 as amounted 49,500 million IRR has been paid according to the schedule. The balance of this account is related to a number of natural and legal shareholders without the introduced bank account. During the financial year, 48,808 million IRR from total annual dividend has been paid. Up to financial statement approval, 82 million IRR of the above mentioned balance has been paid.

16. Provision for Tax

Summary of the provision for taxes is as the followings:

March 20,2012 -(Million Rials) March Tax 20,2011 Mil- Fiscal lion Rials Basis for Year declared Income declared assessed finalized paid provi- provision recognition profit taxable sion balance (Loss) balance 1391 199,294 148,971 37,243 38,636 - 37,243 - Tax dispute settlement authorities 1392 574,087 464,553 116,138 - - 115,314 824 116,138 Taxes and books auditing 1393 327,383 247,382 61,846 - - - 61,846 Not audited 62,670 116,138 Tax (3,961) (1,375) Prepay- ments Total 58,709 114,763

16.1. Performance tax of the previous years has been finalized and settled up to 2012/3/19. 64 17. Provision for employees’ termination benefits

Turnover of this account is as follows:

March 20, 2015 March 20, 2014 Million Rial Million Rial Balance at the beginning of the year 19,144 12,634 Paid out during the year 10,176 7,122 Current year provision (1,277) (612) Balance at the end of the year 28,043 19,144

18. Capital

At the balance sheet date, the company’s shareholders according to the article 9 of the Constitution are clas- sified as:

Mar 20,2015 Mar 20, 2014 Shareholders Shares % Shareholders Shares % Brokers 76 305,701,992 34 75 152,840,996 34 Financial 78 353,555,992 39.2 75 176,741,996 39.2 institutions Other 5,888 240,742,016 26.8 5,571 120,417,008 26.8 Total 6,024 900,000,000 100 5,721 450,000,000 100

18.1. According to the article 11 of the Constitution, anybody in every time may own directly or indirectly (through related parties) maximum 2/5 percent of the company’s share.

18.2. On 2014/6/22, the company’s share has increased from 450 billion IRR to 900 billion IRR from retained profit and legal reserve. The increase has been registered with Office for Registration of Companies on 2014/10/19.

19. Reserves

Financial year ended 2015/3/20 Legal Reserve Million Prudential Reserve Rials Million Rials Balance at the beginning of the year 45,000 114,346 Raising during the year 16,369 65,477 Transfer to the capital - (114,000) Balance at the end of the year 61,369 65,823 65 20. Services Revenue

Note March 20, 2015 Million March 20, 2014 Million Rials Rials Income from trading commission 20-1 305,127 554,629 Income from broker services 20-2 165,554 90,064 Income from listing fees 20-3 25,256 25,459 Rentals 20-4 17,813 13,367 Total 513,750 683,519

20.1. According to the approval of the Securities & Exchange Organization, income from trading commission and future contracts commission has been calculated based on value of per transaction up to 400 million IRR.

March 20, 2015 Million Rial March 20, 2014 Million Rial Normal transactions 293,102 546,987 Whole trading 9,604 5,642 Future contracts and participation bonds 2,421 2,000 Total 305,127 554,629

20.1.1. The income decrease as compared to the previous year is as a result of volume and value decrease of share traded.

20.2. Income from broker services

March 20, 2015 Million March 20, 2014 Million Notes Rials Rials Trading system fees 20-2-1 140,327 74,603 Brokerage fees 9,683 9,350 Exchange floor trading station fees 15,367 5,727 Trading stations permit fees 177 384 Total 165,554 90,064

20.2.1. According to the Board of directors’ approval, trading system fees have been increased 25 million IRR for every trading floor and brokerage fees have been increased 10% up to 1,200 million IRR maximum, provided that, fixed and changing trading system fees do not exceed 200 million IRR.

20.3. Income from listing fees

Note March 20, 2015 Million IRR March 20, 2014 Million IRR Listing fees 20-3-1 15,625 15,609 Admission fees 20-3-2 9,631 9,850 25,256 25,459 66 20.3.1. According to the approval of the Securities and Exchange Organization, Listing fees are as equivalent to 0.002 of capital and maximum 50 million Rials for every year.

20.3.2. According to the approval of the Securities and Exchange Organization, admitting fees are annually as equivalent to 0.002 of capital and maximum 500 million Rial for the companies that their capital are equivalent or less than 250 billion Rials and 1000 Million Rials for the companies that their capital are more than 250 billion IRR .The fees are received only at the admission time.

20.4. Income from regional floors’ rental is related to the agreements entered into by brokerages for using offices.

21. Cost of services:

The costs of services are including:

March 20, 2015 March 20, 2014 Note Million Rials Million Rials wage and salary 21-1 123,427 92,918 Supply and maintenance of Regional floors 21-2 41,521 35,290 Floors security forces fees 9,912 8,238 Computers, communications and technology costs 3,484 3,388 Conference and exhibition costs 2,152 2,871 Council duty 399 317 Marketing and development of markets and financial instruments 132 108 181,027 143,130

21.1. Items of salary and wages are including:

Note March 20, 2015 March 20, 2014 Million IRR Million IRR Salary and wages 21-1-1 59,322 45,220 New year bonus and rewards 32,336 24,128 Insurance premium by employer 12,367 8,472 Over time pay 7,129 5,880 Employee’s termination benefits 7,151 4,879 Mission allowance and traveling costs 2,139 2,460 Others 2,983 1,879 123,427 92,918

21.1.1. Increases in the direct wages and salaries are as a result of approvals by the board and the ministry of labor and social affairs.

21.2. The cost of supply and maintenance of regional floors are including: 67 Note March 20, 2015 March 20, 2014 Million IRR Million IRR Rentals for regional floors buildings 21-2-1 23,446 20,959 Depreciation costs 5,987 4,941 Water, Electricity, Telephone and Gas 3,218 2,555 Repair and maintenance of floors 3,428 2,621 Entertainment 955 900 Services fee 1,878 863 Duty 446 832 Consumer goods 608 451 Transfers 359 276 Other 1,196 892 41,521 35,290

22. General and Administrative Expenses

Note March 20, 2015 March 20, 2014 Million IRR Million IRR Salaries and wages 23-1 62,372 53,050 Rent of building 10,459 9,090 Water, Electricity, Phone and Gas 3,039 2,292 The Board bonus 1,925 1,750 Council duty 1,858 1,748 Administrative and consumable supplies 1,534 1,364 Depreciation Cost 1,494 519 Entertainment 1,564 1,141 Meetings 1,162 845 Legal expenses 929 308 The board attending compensation 740 663 Publication cost 645 747 Withholding and legal tax of the year 1391 511 Repair and maintenance 482 328 Membership fee of professional associations 471 705 Transfers 466 332 Bad debt expenses 298 - Computer supplies 216 1,517 Others 742 1,200 Total 90,907 77,599

68 22.1. Compensation costs are including:

March 20, 2015 Million IRR March 20, 2014 Million IRR Salaries, wages 28,531 23,107 bonus and rewards 14,119 15,262 Over time payments 5,752 4,958 Insurance premium by employer 5,800 4,224 Mission allowances and traveling costs 3,488 2,252 Employees’ termination benefits 2,715 1,789 Others 1,967 1,458 Total 62,372 53,050

23. Net other income and non-operating expenses

Note Equity method The Company March 20, March 20, March 20, March 20, 2015 Million 2014 Million 2015 Million 2014 Million IRR IRR IRR IRR

Bank deposit interest 109,292 89,461 109,292 89,461 Contribution bonds 12,654 - 12,654 - Income from rentals 23-1 12,516 10,075 12,516 10,075 Central depository corporation’s 1,500 840 1,500 840 dividend Energy Exchange dividend 87 44 87 44 Net profit (loss) of the foreign 2 186 2 186 currency exchange Iran mercantile Exchange divi- 12 10 12 10 dend Over the Counter Exchange divi- - - 12,000 12,000 dend Central Asset Management divi- - - 65 59 dend Income from tangible fixed assets 272 (9) 272 (9) sale Others 23-2 (987) (1369) (987) (1369) Total 135,348 99,238 147,413 111,297

24. Reconciliation of Operating Profit

Reconciliation of operating profit to net cash inflow from operating activities is as the followings:

69 Equity Method The Company March 20, 2015 March 20, 2014 March 20, 2015 March 20, 2014 Million IRR Million IRR Million IRR Million IRR Operating profits 241,816 462,790 241,816 462,790 Increase in employees’ termina- 8,899 6,510 8,899 6,510 tion benefits Depreciation expenses 7,481 5,460 7,481 5,460 Decrease (increase) in operating (12,421) (10,853) (12,421) (10,853) accounts receivable Increase (decrease) in prepay- 126 (2,741) 126 (2,741) ments Increase (decrease) in operating (27,562) 51,385 (27,562) 51,385 accounts payable Associated companies’ dividend 12,065 12,059 - - Other non-operating income and 11,531 9,211 11,531 9,211 expenses 241,935 533,821 229,870 521,762

25. Non-cash Trades

Non-cash trades of the financial year are related to capital increases in the investees from 2,047 million IRR receivables from them.

26. Contingent Liabilities and Capital Obligations

According to the last estimates regarding to construction costs of the new building of the company (1,807,703 million IRR) on 2015/3/20, from which 845,290 million IRR has been paid up to the balance sheet date, the capital obligations of the company are totally 245,838 million IRR.

Amount paid Capital Million IRR Million IRR Million IRR Completion operation agreement 293,064 76,914 216,150 Supervisor agreement 7,650 7,649 1 Advice and plan agreement 67,610 48,628 18,982 Contractor agreement 178,894 168,572 10,322 Qualitative control and workshop oversight 14,942 14,559 383 562,160 316,322 245,838

27. Post balance sheet date events

No significant post balance sheet event has occurred requiring adjustments or disclosures in the financial statements. 70 28. Related parties transactions

2015 2014 Balance Balance Relation- Transaction Pricing Party Amount of due to Amount of due to ship Type description method (from) (from) A. Transactions subject to the Million Million Million Million Article 129 of Rials Rials Rials Rials the Commer- cial Code Board of Building Directors Allotment of rental agree- 1,199 13,199 2,400 14,258 OTC Member expenses ment

Board of Iran Central Deposi- Directors Rental tory and Settlement Rentals 334 12,051 349 14,187 Member agreement Co.

Board of Directors Bank Tejarat Rentals Agreement 840 306 694 - Member

Rentals Agreement 443 - 328 - Board of Saba Tamin Broker- Directors Trading system and age Member Regulations 1,725 - 955 - membership fees Rentals Agreement - - 404 - Board of Stock Experts Bro- Directors Trading system and kerage Member Regulations 619 - 980 - membership fees Rentals Agreement - - 165 - Board of Tosse-eh Farda Directors Trading system and Brokerage Member Regulations 580 - 950 - membership fees Rentals Agreement 372 - - - Board of Bank Tejarat Bro- Directors Trading system and kerage Member Regulations 1,953 - - - membership fees Rentals Agreement 1,352 - - - Board of Directors Trading Mofid brokerage system and Member Regulations 2,875 - - - membership fees B. Other related parties

Securities and Agreement Exchange Organi- Supervisor Rentals & Regula- 27,126 339 24,202 (3,858) zation tions 71 29. Earnings per share

Net earnings per share included in the income statement, have been calculated based on the common shares number (900 million shares). Net earnings per share as amounted 364 Rial consist of 203 Rial earnings from operating activities and 161 Rial from non operating activities.

30. Retained earnings at the end of the year:

Retained Earnings allocation depends on general assembly approval:

Amount Million IRR Legal duties:

Division of minimum 10% of net profit according to the Article 91 of the Com- 32,738 mercial Code as amended.

Board of Directors proposal: 90,000 Dividend proposed by Board of Directors (100 IRR per share)