Tehran Stock Exchange Annual Report Exchange 2011 Stock Tehran Tehran Stock Exchange Address: No.228,Hafez Ave. Tehran - Iran Tel: (+98 021) 66704130 - 66700309 - 66700219 Fax: (+98 021) 66702524 Zip Code: 1138964161 Gun-metal relief discovered in Lorestan prov- ince, among the Achaemedian dynasty’s (550-330 BC)Antiquities. Featuring four men, hand in hands, indicating unity and cooperation; standing inside circles of 2011 globe,which is it, according to Iranian ancient myths, put on the back of two cows, ANNUAL symbols of intelligence and prosperity. Tehran Stock Exchange Implementation: CAPITAL&MARKET REPORT ANNUAL REPORT Tehran Stock Exchange 2011 Tehran Stock Exchange Tehran www.tse.ir Annual Report 2011 2 Tehran Stock Exchange Tehran www.tse.ir Mission Statement To develop a fair, efficient and transparent market equipped with diversified instruments and easy access in order to create added value for the stakeholders. Vision To be the region’s leading Exchange and country’s economic growth driver. Goals To increase the capital market’s share in financing the economic productive activities. To apply the effective rules and procedures to protect the market’s integrity and shareholders’ equity. To expand the market through using updated and efficient technology and processes. To promote financial literacy and develop investing and shareholding culture in Iran. To extend and facilitate the market access through information technology. To create value for shareholders and comply with transparency and accountability principles, with cooperation and interaction of stakeholders. To develop constantly intellectual assets and human resources of the company. 3 Annual Report 2011 Tehran Stock Exchange Tehran TSE at a Glance www.tse.ir Trading Days Saturday to Wednesday Hours 9:00 to 12:00 System Automated - order driven Mechanisms According to the auction regulations Market maker Arbitrary in the main market and compulsory in the second market Instruments Shares & rights, participation certificates, stock futures, ETF and SUKUK Currency Local (Rial) Bid/ask, prices, indices, companies’ announcements, trading volume and Real time information value, quotes Depository, Clearing and Settlement Depository and Settlement Central Securities Depository of Iran (CSDI) Period T+3 Settlement Book entry Clearing Netting Short selling No Taxes Dividend No tax Capital gain No tax Transfers (paid by seller only on shares) 0.5% of trading value Trading Commissions Seller (%) Buyer (%) SEO 0.032 0.048 TSE 0.032 0.048 Broker 0.4 0.4 Clearing Fee 0.022 0.033 Total 0.486 0.529 Structure and Regulations Legal Demutualized (listed in Iran Farabourse (Over the Counter market)) Regulations Self-regulated under SEO supervision Foreign investment Yes (according to foreign investment by-law) Minimum Listing Requirements First market Second market Main board Secondary board Paid-in capital (Billion IRR) 1000 500 200 Years of business activity 3 2 2 Free float ratio (%) 20 15 10 Number of shareholders 1000 750 250 profitable 3 2 1 periods ended the listing date Equity to total assets ratio (%) 30 20 15 Listed companies First market Second market Main board Secondary board Number of listed companies 67 58 218 Brokerages Firms Brokerage Firms 88 Trading stations 790 Annual Report 2011 4 Tehran Stock Exchange Tehran www.tse.ir C o n t e n t s CEO’s Message ............................................................................................................................................................................................. 8 Economy ............................................................................................................................................................................................................ 10 Events ..................................................................................................................................................................................................................... 11 Market Performance................................................................................................................................................................................ 12 Business Operations and Achievements .......................................................................................................................... 26 Future Outlook ............................................................................................................................................................................................ 27 Corporate Governance ........................................................................................................................................................................ 28 Financial Statements .............................................................................................................................................................................. 32 Appendices ....................................................................................................................................................................................................... 63 5 Annual Report 2011 Tehran Stock Exchange Tehran www.tse.ir CEO’s Message Annual Report 2011 6 Tehran Stock Exchange Tehran www.tse.ir 7 Annual Report 2011 Tehran Stock Exchange Tehran n 2011, the global value traded, with Ilittle decrease (0.1), remained relative- ly stable. Market capitalization of the glob- CEO’s al Exchanges, with significant decrease of www.tse.ir 13.6% reached the figure less than it in 2009. Moreover, according to the main Message indices of the Exchanges being member of the World Federation of Exchanges, average return of the members had 11.9% decrease, as compared to the pre- vious year. The main factors affecting the decrease are high volatility, global uncer- tainty created from sovereign debt crisis. In this year, Exchanges tried to diversify their financial instruments using various bonds, exchange traded funds and other instruments. Annual Report 2011 8 Tehran Stock Exchange Tehran In 2011, despite of challenges related to implement- ing the first phase of targeted Subsidizes law, fluctuations in the gold and foreign currency market ,TSE, against the gen- eral trend of the world market, had a growth of operation indices. Moreover, TSE tried to increase market transparency and li- quidity, diversify financial instruments, improve surveillance mecha- nism and develop the investment culture within the society. In this year, market capitalization and value traded showed 33.4% and 8.2% growth respectively. Also, block and retail trades had 34% www.tse.ir growth, as compared to the previous year, which shows liquidity increases in the market. Listed firms had 82% growth of capital in- crease.Also, free floats reached from 19% to 23%. All the above men- tioned factors indicate market transparency, integrity and liquidity. In order to meet the accountability principles, have a transparent in- teraction with stakeholders, and promote market integrity and trans- parency, some effective plans have been implemented in cooperation with other responsible institutions, including development of the cal- culation directives of corporate governance index and presentation of it to SEO, participation in Development of software of members oversight and inspection, and enforcement of discipline regulations of brokers. Other actions taken by TSE are to revise and update in- formation rules, to introduce new trading mechanisms, to plan op- eration of closing discontinuous auctions and closing trades, and to plan securities lending mechanism. As a plan to attract foreign investors, some conferences have been held including conference for Financing Opportunities of Listed companies and Listing Forum. During the year 2011,6 firms have been listed and initially offered in TSE. Also, 4 futures contracts and 2 participation certificates have been listed in TSE. To develop and support derivatives market, enhance the trading system and facilitate the market access, some actions have been taken, includ- ing proposing for margin trading to SEO, seeking for option trad- ing rules approval. Also, some efforts have been made for development of market awareness and promotion of financial literacy through targeted training courses, books, web sites, seminars and TV programs in order to help people to make informed participation in the capital market. In addition,TSE has performed a plan for attracting foreign inves- tors through brokerage Firms. In this year,two Confereces with titles of “ Financing Opportunities of Listed Companies” and “Listing of Firms in Securities Euchanges” were held by Tehran Stock Euchange. Hasan Ghalibaf Asl 9 Annual Report 2011 Tehran Stock Exchange Tehran Economy Indicators Unit Description Land area Million square kilometers 1.6 Population Million 75.8 Active population (2010, Q2) Million 25.2 Capital city Tehran www.tse.ir Life expectation at birth Year 72 Unemployment rate (2010, Q2) % 15.1 GDP (2011) Million IRR 5,457,413.38 GDP growth rate (annual) % 2.1 GDP per capita (2011) Million IRR 72 Inflation rate (consumer prices)(2011) % 21.3 Source:www.CBI.ir,www.Worldbank.org,www.IMF.org Annual Report 2011 10 Tehran Stock Exchange Tehran www.tse.ir Events The conference was held with the aim to introduce financing Conference of Financing opportunities for listed companies, review the government 25 Apr Opportunities through policies for enhancement of capital market role in finance and Capital Market consulting with