TFG 2013 Annual Report

ANNUAL REPORT
2013
People
Planet and Profit
www.tengerfinancialgroup.com
TenGer Financial Group - 2013 Annual Report 2


INTRODUCTION
4 Guiding Principles
5 About TenGer Financial Group
6 Shareholders
7 Corporate Snapshot
8 Financial Highlights
9 Chairmans Statement
10 CEOs Statement
11 Our Strategy
12 Our Approach
13 Management Discussion and Analysis
14 Key Performance Indicators
16 Funding
17 TFG Organization Structure
18 Institutional Development
18 Social and Environmental
Responsibility & Compliance
18 Human Capital

SOCIAL & ENVIRONMENTAL
RESPONSIBILITY
19 Eco Banking

SUBSIDIARIES
20 XacBank
21 XacLeasing
22 TenGer Insurance
23 TenGer Capital
24 TianRong MCC
25 XacSecurity

GOVERNANCE
26 Board of Directors
28 Corporate Governance Report
31 Executive Management Team
32 Recent History of TFG
33 Company Overview & Contacts

FINANCIAL INFORMATION
34 Auditors Statement
37 Statement of Comprehensive Income
38 Statement of Financial Position
39 Statement of Cash Flows
41 Statement of Changes in Equity

Table of Contents
4 TenGer Financial Group - 2013 Annual Report

OUR GUIDING
PRINCIPLES
People

Planet

Profit
OUR VISION

TenGer Financial Group is a family
of companies built to provide equi-
table access to inclusive financial
services. The Group will strive to
be a dynamic leader setting the
highest standards of Triple Bottom
Line mission in corporate govern-
ance, social and environmental
responsibility while returning fair
value to the Shareholders.
OUR MISSION

TenGer Financial Groups mission
is to create synergies among our
affiliates in order to maximize
social and financial gains to our
Stakeholders. Business will be
driven by innovation and dyna-
mism in delivering premium quality
services and added value to our
Customers.

We are a diversified regional family of companies headquartered in
Ulaanbaatar, Mongolia. Our portfolio includes XacBank, XacLeasing,
TenGer Insurance, TenGer Capital, TianRong, and XacSecurity all
providing fair access to broad financial services to our customers.

We strive to meet all our customers financial needs and help them
succeed financially through banking, insurance, leasing, investing,
mortgage, and commercial and consumer finance.

TenGer Financial Group aims to build a transnational group of
companies to deliver a full range of financial services to people and
businesses. The Group will adhere to the highest norms of ethical
business conduct and environmental sustainability as one of its
mission pillars.

XacBank, the flagship subsidiary of TenGer Financial Group, has
maintained its leading positions in Mongolia as a transparent and
socially responsible banking institution.

TenGer Financial Group
Commercial
Banking
Leasing
Services
Physical
Security
Investment
Banking
Microcredit
(China)
General
Insurance
X.A.C
NGO

Shareholders
Shareholder Composition

Shareholders Shares Stake
1 Mongolyn Alt Corporation (MAK) 3,316,985 20.000%
2 International Finance Corporation (IFC) 3,179,487 19.171%
3 ORIX Corporation 2,577,420 15.541%
4
European Bank for Reconstruction and
Development (EBRD)
1,929,475 11.634%
5 Ronoc Partners 1,683,342 10.150%
6 EIT Capital Management (ECM) 1,668,937 10.063%
7 Mercy Corps 1,254,180 7.562%
8 Triodos Fair Share Fund 618,680 3.730%
9 Open Society Forum 264,141 1.593%
10 UB Rotary Club 50,000 0.301%
11 Bold Magvan 16,968 0.102%
12 Ganbold Chuluun 15,372 0.093%
13 EIT LLC 9,657 0.058%
TOTAL 16,584,644 100.00%

As of December 31st, 2013

Corporate Snapshot
Name TenGer Financial Group LLC
Principles People, Planet and Profit
Purpose provide equitable access to inclusive financial services
Established October 2001
Location of Head Office
Central Tower, Room 508, Great Chinggis Khans Square 2, SBD-8
Ulaanbaatar-14200, Mongolia
Board of Directors
Chairman: Chuluun Ganbold
Local: 4 out of 8
International: 4 out of 8
Female Board Members 3 out of 8 (38%)
Senior Management
CEO: Bold Magvan
Managing Director: Amartuvshin Hanibal
Description of Business
diversified financial services holding company, banking, insurance,
leasing, investment advisory, mortgage, and commercial and
consumer finance
Number of Subsidiaries 6
Type of Company Limited liability company (private)
Currency Units Mongolian Togrog ( or MNT)
Total Assets MNT 1,876 billion or USD 1,130 million (as of December 31, 2013)
Number of Employees
1,894 (consolidated as of December 31, 2013)
2,087 (including those on maternity leave)
Average Age of Employees 31 years old
Employee Gender Balance 56% female and 44% male

Investor Relations
Contact Ashidmaa Dashnyam, VP, Investor Relations and Corporate Affairs
Email ashidmaa.d@tengerfg.mn

3,594
4,270
6,104
7,057
8,865
0
2,000
4,000
6,000
8,000
10,000
2009 2010 2011 2012 2013
Book Value per share
MNT 8,865
MNT
8.6
18.4
21.3
15.6
19.3
0
5
10
15
20
25
2009 2010 2011 2012 2013
%
19.3%
ROaE (ordinary shares)
5.9
10.8
13.1
11.4
12.5
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2009 2010 2011 2012 2013
Profit Margin
12.5%
%
321
475
834
1,124
1,876
0
400
800
1,200
1,600
2,000
2009 2010 2011 2012 2013
Assets
MNT 1,876 B
MNT B
10.3
8.3
10.9
10.4
7.8
2.0
4.0
6.0
8.0
10.0
12.0
2009 2010 2011 2012 2013
Capital Strength
7.8%
%
2.4
6.7
12.9
15.9
25.0
0
5
10
15
20
25
30
2009 2010 2011 2012 2013
Profit after Tax
MNT B
MNT 25.0 B

Group Consolidated Financial Highlights (as of December 31)

USD 15.1 MM
EUR 10.9 MM
Core tier 1 ratio USD 1,130 MM
EUR 820 MM
USD 5.34
EUR 3.87
Operational
highlights

XacBanks retail and SME business
process was revised (piloted in 4 UB
and 7 rural branches)
121 ATMs and 1,296 merchants are
online
XacBanks call center is replaced
with interactive intelligence call
system
Tsevegjav Gumenjav was appointed
as the new CEO of XacLeasing
TenGer Insurance became 100%
subsidiary of TFG
TenGer Capital achieved operational
break-even point in 21 months since
its establishment

TianRong achieved operational
break-even point in 12 months since
its establishment
ORIX Corporation became a new
shareholder, Ronoc and MAK
became direct shareholders
EBRD provided a loan in MNT (USD
3 million) to fund financial leases
Signed USD 40 million debt financ-
ing with ADB
IFC & XacBank signed a currency
swap worth USD 50 million
Transferred MNT 3.2 billion worth of
pension fund from EIT to XacBank
Dec.31.2013 MNT/USD exchange rate: 1,659.34
Dec.31.2013 MNT/EUR exchange rate: 2,288.81

Highlights of 2013

Capital covered the losses of the previous years and started to earn
net income.
I am pleased to report that TianRong, our micro credit institution in
China, celebrated its first anniversary as a profitable entity. TianRong
exceeded our expectation in achieving the results ahead of the plan.
We hope that our Chinese venture will replicate the success of
XacBank, utilizing our substantial knowledge base in microfinance and
capitalizing on the economic growth in Xinjiang.
At the Group level, we continued to build our institutional capacity to
provide consolidated management and support for subsidiaries in
such areas as business development, risk management, financial
planning, legal compliance, corporate governance and human
resource management.
Last year, the ownership transformation process at TFG was success-
fully completed. Several of the shareholders of the Group exited by
selling their shares to the new investors and, at the same time,
indirect shareholders restructured their holdings in the Group. We,
thus, welcomed ORIX Corporation of Japan, Mongolyn Alt (MAK)
Corporation and Ronoc as our direct shareholders in the Group.
Additionally, TFGs existing shareholder IFC signed an investment
agreement with TFG and two advisory agreements with its flagship
subsidiary XacBank. The investment agreement increased IFCs
equity stake in the Group, while the advisory agreements would
strengthen XacBanks capacity.
As part of our compliance with the highest standards of personal and
professional ethics, all board directors refreshed their corporate
governance knowledge by enrolling in the director training programs
offered by the Mongolian Corporate Governance Development Center
and received certificates of training in 2013. Recognizing that trans-
parency and disclosure is not only part of good corporate governance
but is also a legal and regulatory requirement, the Board of the Group
focused also on improving disclosure and reporting by shareholders
on their ultimate beneficial holdings and interests.
Notwithstanding any changes in our shareholding structure, our main
focus is to maintain and enhance our good corporate governance cul-
ture. A diverse and balanced shareholding structure has always been
the driving force of the Groups success. Building on its self-evaluation
of the previous year, the board of the Group is continuing to work
towards improving its structure, in order to ensure the most optimal
mix of skills and experience of directors. Following the ownership
transformation process at TFG, our board has changes in its composi-
tion. We saw several our long-standing board directors resign and
new directors come on the board.
I would like to wish to all of us shareholders, stakeholders, board
and management every success in our aspirations and endeavors
for this year. As always, I would like to remind that we have new mile-
stones to meet and more challenging tests to pass. I am confident
that, with our new strategic partnership, renewed board and stronger
management teams and capable professional staff at all of our Group
companies, we will continue to succeed and emerge as a powerful
financial group.

Sincerely yours,

Chuluun Ganbold
Chairman of the Boards of Directors
of TenGer Financial Group and XacBank
Dear Shareholders,
Board Directors and
Stakeholders,
I am pleased to address you once
again and report that in 2013 TenGer
Financial Group (TFG or the
Group) reached several important
milestones on its journey to leader-
ship and excellence in inclusive
financial services. The most
significant event was the ownership
transformation process at the Group
that lasted for two years and resulted in the entry of new strategic inves-
tors. With this change, the Group is positioned better than ever to grow
our existing businesses, become more competitive and expand into new
areas of business by capitalizing on knowledge, capital and network of
our new partners.
On behalf of the Board of Directors, I would like to congratulate the
team of TenGer Financial Group led by Chief Executive Officer Bold
Magvan and supported by the management teams of the Groups sub-
sidiaries with a successful closing of 2013 and express my wholeheart-
ed gratitude for their dedication and efforts. I congratulate my fellow
board directors for their wise guidance of the Group. I extend my and
the entire boards sincere appreciations to all our shareholders who
worked with the management and the board to complete the ownership
transformation.
Building on its consistent track record of growth, the Group continued to
deliver a strong performance, both operationally and financially, despite
strong headwinds and uncertain operating environment in 2013. The
Groups consolidated assets grew to USD 1.1 billion (MNT 1.88 trillion),
an increase of 67 percent from the previous year, and net profit
amounted to MNT 25 billion, an increase of 57 percent compared to a
year earlier. Our book value has reached MNT 8,865.26 per share, a
robust 26 percent growth year-on-year.
Such growth would not have been possible without the contributions of
all our Group companies but first and foremost of XacBank. Our Bank
continued its transformation from a niche player to a universal bank of
systemic significance in Mongolia. A relentless focus on customers and
their needs enabled XacBank to earn the recognition of the Best Bank in
Mongolia by The Banker magazine. Aiming always to be in the forefront
of changes, XacBank has embarked on an ambitious plan to redesign
its operations and brand. The successful implementation of the retail
banking transformation will allow us to re-brand and differentiate
XacBank from the competition and make it a preferred bank for target
customer segments.
XacLeasing has refocused its attention to vendors and has become a
preferred partner for its customers. With a new CEO in place, XacLeas-
ing redesigned its sales and marketing processes with the focus on
building market share and strengthening relationships. Improved risk
management has also contributed to the performance of the company.
The profit amounted to MNT 1.7 billion an increase of 37 percent from
2012.
In 2013, we fully consolidated the ownership of TenGer Insurance by
completing the full acquisition of the remaining stake. TenGer Insurance
closed the year under review with a profit of MNT 831 an increase of
307 percent compared to the previous year. As a wholly-owned subsidi-
ary of the Group, TenGer Insurance will now play a much greater role in
differentiating the Group from competition by providing integrated risk
solutions to customers.
Our relatively new subsidiary of the Group, TenGer Capital, quickly
ramped up its advisory business last year. The company acted as an
exclusive advisor to the landmark acquisition in the healthcare sector.
TenGer Capitals team hard work is making the company a valuable
contributor to the overall mission and objectives of the Group. TenGer
Chairmans Statement

Dear Board,
Shareholders, and
Stakeholders of TenGer
Financial Group,
TenGer closed 2013 with MNT
1.88 trillion ($ 1.1 billion) in
consolidated assets, an increase
of 67% from the last year, which
was the second highest growth
rate over the last five years,
driven by expansion of XacBank,
the Bank of the Year for Mongolia by the Banker Magazine and
the Best Retail Bank by Global Finance and Banking Review. Net
loan and lease portfolio reached MNT 1,070 billion, an increase of
64% from the last year.
The consolidated overhead ratio was reduced to 60.4% in 2013.
Net profit totaled MNT 25 billion, an increase of 57% compared to
the last year, to reach RoE of 19.3% exceeding the previous
years 15.6%. The increase in profitability also stemmed from the
stronger performances of XacLeasing and TianRong and full ac-
quisition of TenGer Insurance, contributing 6.6%, 2.1% and 3.2%
of the Groups profit, respectively. TenGer Capital record-
ed a profit, RoE 47%, and recouped its initial invest-
ment within 21 months since its establishment. As a
result, book value of TenGer per share rose by
25.6% from MNT 7,057.18 to MNT 8,865.26.
TenGer continued to focus on developing its IT
infrastructure, cross-selling and synergies, funding,
and human capital, for successful implementation of
the Group strategy for 2012-2016, while strengthening
institutional capacity of the Group. The Group level IT Steering
Committee assisted to select an international vendor to supply a
new accounting and reporting software to advance the accounting
and business intelligence of the Group. Operations of TenGer
Solutions were discontinued and its resources were integrated in-
to XacBank to avoid duplication of functions and increase efficien-
cy of limited resources.
The Group wide emphasis on cross sale resulted in 77% growth
in insurance revenue and 50% growth in number of the policies
sold by TenGer Insurance through XacBank, XacLeasing and
TenGer Capital. Referrals by TenGer Capital to XacBank resulted
in MNT 3.6 billion in interest revenues and fees. For now, a basic
CRM is functional and used by retail and corporate lines of the
Bank. ADB approved a 5 year, USD 40 million debt financing
first ever ADB private sector loan endorsing to our Group. TenGer
adopted its Accounting policy, in accordance with the IAS for its
daily implementation and compliance.

To strengthen management capability, senior management
teams of the Group companies were fully staffed by attracting
pool of high caliber repats and expats. TenGer hired TAISHIR
Tumurbaatar (Mr), General Counsel, and ULAMBAYAR
Enebish (Ms), Chief Auditor for the Holding Company,
GANBAATAR Jambal (Mr), President, AART Jongejans (Mr),
Chief risk Officer, and Erdenebayar Ganzorig (Mr), CFO for Xac-
Bank. XacLeasing CEO PHILIPP Marxen was succeeded by
TSEVEGJAV Gumenjav (Mr), former CFO of XacBank and TFG.
I would like to thank Marxen and Ariuntulga Tserendavaa, ex
CEO of TGS for their sincere contribution and wish all the best
in their future endeavors.
Talent review exercises, coaching and leadership trainings, and
workshops for high potential staff were conducted for all Group
companies, and the certificates of CG training received by mem-
bers of the boards of directors and the executive management
team of the Group to continue TFG's good governance practice
and to comply with the Company Law of Mongolia. TenGer HR
policy framework was amended on conflict of political activities.
Middle and senior managers all disclosed nonpartisan status,
with few indicating as passive members of political parties and
affirmed to separate from local political representation. The
Compliance reporting system is functional within the frame-
work of the TFG Code of Corporate Governance, Code
of Ethics, Conflict of Interest policy, and complies with
requirements of the regulator. The Group actively
participated in inter-bank Working group of the Sus-
tainable Finance 2013 to promote the principles of
sustainable banking in Mongolia.
In 2013 TenGer Group companies were fully engaged
in an institutional transformation from loan product
based business processes and organization to a cus-
tomer focused & full banking service oriented business model.
This included redesigning and updating key business processes
and policies, branch restructuring, new rebranding, and upgrad-
ing existing IT platforms and technologies. All allowed for signifi-
cant progress in building a strong foundation for the future
growth of the Group.
I would like to sincerely thank our Shareholders, Board directors,
and colleagues for their team work and commitment to fulfill the
mission of TenGer.

With warmest regards,

Bold Magvan
Chief Executive Officer

Growth in
profit after tax
of parent
57.2
%

CEOs Statement

Long-term Trends in Mongolia
Economic Development
There is an increasing demand for financing of corporations,
individuals, retail and SMEs as the economy continues to develop and
national income rises. Given the geographical and segment reach our
subsidiaries, TenGer Financial Group is poised to benefit from and
contribute to the national growth.
Fueled by investments into mining and related sectors, Mongolia is
projected to be one of the fastest-growing economies in the world over
the next decade. Oyu Tolgoi is the 2
nd
largest copper reserve in the
world as well as rich deposits of coal, gold, iron ore, uranium, among
others. It is located next to China and in the heart of Asia, the fastest
growing region in the world and also heavy users of commodities.
Demand for Finance
is the leading financial services holding company
in Mongolia. TFG will strive to maximize synergies among
subsidiaries and ensure the highest standards of corporate governance in conducting
our operations through subsidiaries. TenGer believes that the mix of strong and reputable, domestic and
international shareholders coupled with solid corporate governance will enable the Group to grow in sustainable way.
Accounting for long-term trends and our competitive advantage, TenGers strategy involves:
Financial Service Package for Corporate Clients
With our unique origin of being a micro-finance institution, we will
continue building on our extensive experience to expand our SME
and retail clients.
TFG holds a unique position in Mongolia in its ability to provide a
broad spectrum of financial service solutions to current and
potential customers through its subsidiaries.
Expansion of the SME and Retail Client Base
Source: Bank of Mongolia (as of December 31st, 2013) Source: IMF, World Economic Outlook (October, 2013)
The Mongolian word TenGer represents the Sky
4,892
5,493
6,140
6,857
7,257
7,516
8,234
8,747
2011 2012 2013 2014 2015 2016 2017 2018
Real GDP growth
(MNT Billions)
-
2,000
4,000
6,000
8,000
10,000
12,000
J
a
n
-
0
5
J
u
l
-
0
5
J
a
n
-
0
6
J
u
l
-
0
6
J
a
n
-
0
7
J
u
l
-
0
7
J
a
n
-
0
8
J
u
l
-
0
8
J
a
n
-
0
9
J
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l
-
0
9
J
a
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-
1
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-
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-
1
1
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l
-
1
1
J
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n
-
1
2
J
u
l
-
1
2
J
a
n
-
1
3
J
u
l
-
1
3
Banking Sector Loans Outstanding
(MNT Billions)

Our Strategy

People, Planet & Profit
TenGer seeks to combine social and environ-
mental performance with strong financial
performance in its core business operations.
TenGer has been a pioneer in the financial arena
to grow into one of the most successful micro
finance institutions in the world. XacBank, our
flagship subsidiary, has developed into a univer-
sal bank with systemic influence in Mongolia.
Since 1998, TenGer has grown from a small
local project to a major financial group, that
provides financial services to the people of
Mongolia and across the border.

Transparent Governance
TenGer Financial Group is committed to main-
taining high standards of corporate governance
to safeguard the interests of its shareholders
and stakeholders and to enhance corporate val-
ue and accountability.
In addition to the OECD Principles of Corporate
Governance of 2003, TenGers corporate gov-
ernance practices are based on the principles
and certain recommended best practices as set
out in the Corporate Governance Code, which
was adopted by the Mongolian Financial Reg-
ulatory Commission in 2007. To further strength-
en its commitment and the principles of corpo-
rate governance applicable within the Group
companies, TenGer adopted the Groups Code
of Corporate Governance in May of 2011.

Our values, governance, and commitment to the triple bottom line guide us in
delivering value to our stakeholders and shareholders
Foundational elements of our business management
Our Values
Respect: we value everyones opinion, work and concern
Excellence: we repeatedly do our best in everything we take on
Innovation: we consistently search for ways of doing things better
Sharing: we receive with others, including our society and the world
Teamwork: we stay in sync and stand for our wins and losses as one
Accountability: we take responsibility for all our actions and their outcomes
Integrity: we see honesty as the basis of our progress, we walk what we talk
Fortitude: we face any challenge with courage and see adversity as an opportunity

Our Approach

20.1
27.7
47.9
63.3
86.6
0
20
40
60
80
100
2009 2010 2011 2012 2013
Net Interest Income
MNT 86.6 billion
MNT billions
195
326
549
651
1,070
0
200
400
600
800
1000
1200
2009 2010 2011 2012 2013
Loan Portfolio
MNT 1,070 billion
MNT billions
Balance Sheet
As of December 31st, 2013, TenGer Financial Groups consoli-
dated total assets stood at 1.88 trillion (USD 1.13 billion), an
increase of 67% from the previous year. Total assets growth was
largely financed with borrowed funds, followed by depositors
growth and other banks.
The Groups loan and lease portfolio grew 64% primarily in SME,
mortgage and micro segments respectively. Reflecting Xac-
Banks strategic shift toward a universal bank, the average loan
size increased 41%. The Groups interest earning assets ratio
increased substantially over the year from 73% to 82%.
Borrowed funds increased 127% and were the primary source of
funding for loan growth. Various loan facilities, as mentioned in
the funding section, and Government deposits aimed at boosting
residential building construction and low interest rate mortgages
supported loan portfolio expansion.
Deposits had a steady growth of 25% despite uncertainties in the
banking sector, where Savings Bank went into state receivership.
XacBanks increased its markets share in public deposits by 30
bsp to 7.3%. While there were growth in all accounts, time de-
posits contributed 70% of total public deposit growth to effectively
supplying a steadier funding base.
Income Statement
The Group ended the 2013 year with a net profit of 25.0 billion,
an increase of 57% from last year.
Reflective of XacBanks strategic focus on becoming a universal
bank, portfolio yield compressed while the average loan size
increased as SME composed 52% (640 bsp YoY) of the loan
portfolio. Lower yield is compensated with higher net fees and
commission income, a significant increase of nearly 75% from
2.8 billion to 4.9 billion in 2013. Fee and commission income is
related to expanding trade finance and increased card related fee
from the expanding ATM network. Net earned insurance premi-
ums are now accounted for with the full acquisition of TenGer
Insurance this past year. The Groups operating income sources
have slowly been diversifying from purely interest income, as net
interest income composed 86% of operating income versus 92%
in 2012.
In conjunction with a slowing Mongolian economy and a growing
loan portfolio, credit loss expenses rose noticeably during the past
year. In relative terms, XacBanks NPL ratio increased only 10
bsp to 1.4%.
Reflecting managements focus on cost prudence in running their
operations, particularly on administrative expenses, the Groups
overhead ratio (cost-to-income) reduced 657 bsp to 60.4%. While
improvements were made at almost all the subsidiaries, XacBank
achieved the largest nominal and percentage decrease.
With a full year of operation, TianRong and TenGer
Capital were both able to record a profit this year and
recoup its initial expenditures. TenGer Insurances
ROaE returned to its historical norm at 30% as the
winter season claims were much lower than the prior
year, when it first start insurance nationwide manda-
tory drivers insurance. The achievements are reflect-
ed in the Groups 370 bps increase in ROaE to 19.3%.

Growth in
total assets
66.9
%
USD 52.2 MM
EUR 37.9 MM
USD 645 MM
EUR 467 MM

Management Discussion & Analysis

0.26
0.73
0.87
0.96
1.51
0.10
0.30
0.50
0.70
0.90
1.10
1.30
1.50
1.70
2009 2010 2011 2012 2013
MNT
Earnings per ordinary share
10.3
8.3
10.9
10.4
7.8
2
4
6
8
10
12
2009 2010 2011 2012 2013
Tier 1 Capital Ratio
%
0.91
1.68
1.98
1.61
1.70
0.0
0.5
1.0
1.5
2.0
2.5
2009 2010 2011 2012 2013
ROaA
%
8.6
18.4
21.3
15.6
19.3
0
3
6
9
12
15
18
21
24
2009 2010 2011 2012 2013
ROaE (ordinary shares)
%
Measuring our
performance
The Groups
management team
evaluates the finan-
cial operation of its
subsidiaries in line
with our business
plan, strategy and
historical perfor-
mance, using both
quantitative and
qualitative measures.
The following pages
are the key consoli-
dated high-level
financial indicators.
Capital deployment
Measure: (percentage) net profit after tax-
es attributable to shareholders divided by
average total shareholders equity.
Target: to maintain a return above 20%.
Outcome: return on average ordinary
shareholders equity was in line with the
target as prior years new subsidiaries
improved their financial results.
Measure: (percentage) net profit after
taxes divided by average total assets.
Target: to maintain a return above 1.5%.
Outcome: return on average assets was
above the target despite total assets
increasing 68%.
Sustainable shareholder return
Measure: (percentage) core tier 1 capital
comprising shareholders equity excluding
minority interest divided by total assets.
Target: to maintain a strong capital base
to support the development of the
business and meet regulatory capital
requirements at all times
Outcome: the Groups leverage expand-
ed over the past year reflecting greater
funding from the Central Bank and foreign
financial institutions.
Measure: (Togrog) level of earnings
generated per ordinary share.
Target: to deliver consistent growth in
earnings per share
Outcome: earnings per share increased,
for the fourth straight year, that ultimately
enhanced shareholders value.

Key Performance Indicators

157
140
152
127
167
100
110
120
130
140
150
160
170
180
2009 2010 2011 2012 2013
Loans to Deposit Ratio
%
63
89
54
42
25
0
20
40
60
80
100
2009 2010 2011 2012 2013
Deposit Growth
%
77
71
63
67
60
50
55
60
65
70
75
80
2009 2010 2011 2012 2013
Overhead Ratio
%
8
60
65
35
47
0
10
20
30
40
50
60
70
2009 2010 2011 2012 2013
Operating Income Growth
%
31
67
69
19
64
0
10
20
30
40
50
60
70
2009 2010 2011 2012 2013
Loan Growth
%
61
69
66
58
57
0
10
20
30
40
50
60
70
80
2009 2010 2011 2012 2013
Loan to Asset Ratio
%
Key Performance Indicators continued
Positioning ourselves for success
Measure: (percentage) increase in
deposits by customers since last year.
Target: growth between 20% and 60%, a
range which is expected to fund future
business growth.
Outcome: while all deposit accounts
grew, time deposits contributed 70% of
total public deposit growth to effectively
supplying a steadier funding base.

Measure: (percentage) increase in net
operating income before impairment and
other credit risk charges since last year.
Target: to deliver consistent growth in
operating income from diverse sources.
Outcome: operating income increased
due to interest income, net fees &
commission, net FX gain and income from
insurance.
Measure: (percentage) total loan and
lease portfolio divided by total assets
Target: to have sufficient liquid assets to
buffer against uncertainties while attaining
target income.
Outcome: aside from higher regulatory
requirements, the Group has positioned a
greater amount of its assets in liquid
securities.
Measure: (percentage) operating
expense divided by operating income
prior to provision expense.
Target: to be below 50% by 2016.
Outcome: improving operational scale
and cost consciousness has improved the
ratio toward the long term target.
Measure: (percentage) increase in
total loan and lease portfolio since last
year.
Target: growth between 20% and 45%, a
range which is expected to support future
business income.
Outcome: our loan portfolio grew pre-
dominantly in SME followed by mortgage
and micro loans.
Measure: (percentage) total loan and
lease portfolio divided by deposits.
Target: to achieve a diversified funding
base from long term steady sources.
Outcome: Throughout most of the year,
borrowed funds, from Central Bank and
foreign financial intuitions, were the pri-
mary source of funding that contributed to
an increase in the ratio.
Generating growth

golian Togrog equivalent to US$ 3 million to fund financial leas-
es to small and medium-sized enterprises (SMEs) with a particu-
lar focus on machinery, equipment and vehicles.

The efforts of nearly two years have finally yielded in US$ 40 mil-
lion debt financing from the Asian Development Bank (ADB).
XacBank and XacLeasing clients will reap the benefits from this
ADB private sector first loan to be granted to our Group in 2014.
Incofin Investment Management fund from Belgium continued to
show their trust in our business growth through accepting the roll-
forward of US$ 3 million loan for another 3 years, thus supporting
the growth of SME clients of XacLeasing via Group lending.

A major milestone was achieved, when B and Internation-
al Financial Corporation, a member of World Bank (IFC) signed a
first of its kind in the Mongolian financial market, a currency swap
agreement of US$50 million in the last quarter of 2013. The swap
agreement enables XacBank clients to choose from financing so-
lutions in the local currency on a much broader and longer term
perspective.

Capitalization
Financial services industry is capital intensive, especially in the
emerging economies, such as Mongolia with GDP growth in dou-
ble digits. The Groups plan to raise new capital was supported
by the Board of Directors, with expected capital increase at Xac-
Bank and TenGer Insurance subsidiaries in 2014.
TenGer medium term strategy to complete the acquisition of the
controlling stake in TenGer Insurance had materialized in full
ownership of the insurance company by the Group, via success-
ful share purchase in the second half of 2013. The regulators has
been also welcoming to the new capital injection of MNT750 mil-
lion into the company, aimed towards compliance with the man-
datory capital level. The shareholders and Board on the other
hand are keen to enhance the growth of the insurance subsidiary
through wholeheartedly leveraging on the Group infrastructure
and sales platform.
Financing and finding financial solutions
Our major subsidiary XacBank continued leading its way in the
local financial sector by successfully launching US$9.8 million
bond at Luxembourg institutional capital market through Swiss
based Symbiotics fund, specialized in emerging, sustainable and
inclusive finance. The issuance of this bond creates the first op-
portunity for XacBank to enter the global market. Also it enhances
reputation of XacBank and strengthens its market position. The
bond proceeds together with additional US$3 million equivalent
funding from Symbiotics are used towards strengthening the fu-
ture growth of the bank micro, small and medium business clients.

In summer, XacBank and Proparco, a subsidiary of the Agence
Franaise de Dveloppement (AFD), the investment and devel-
opment finance institution of France have executed a credit facility
agreement worth US$15 million. At the signing ceremony attend-
ed by the Regional director of Proparco in North and South-east
Asia along with the Ambassador of France to Mongolia and Pierre
-Alain Pacaud noted on the importance of contributing to the fi-
nancial integration of the disadvantaged members of the Mongoli-
an population, through such financing facility, totally new to a first
class actor like XacBank.

In December 2013, XacBank and Oesterreichische
Entwicklungsbank (OeEB, the Development Bank of Austria), a
member of European Development Financial Institutions that
specializes in the provision of long-term finance for the
implementation of private sector projects in developing countries,
signed a USD 15 million long term loan agreement. It is the first
direct investment in Mongolia from OeEB. This loan increases the
amount of sustainable funds which provide long-term growth to
XacBank through directing them into micro, small and medium-
sized enterprises (MSMEs).

In September 2013, the European Bank for Reconstruction and
Development (EBRD) and the Bank of Mongolia have taken a key
step towards the development of the countrys local currency
money and capital markets and have signed a Memorandum of
Understanding under the EBRDs Early Transition Countries
(ETCs) Local Currency Lending Programme. XacLeasing became
the very first financial institution in Mongolia to sign a loan agree-
ment under this Programme. EBRD has provided a loan in Mon-
Xacbank and IFC Signed an International Swaps and
Derivatives Association (ISDA) Master Agreement
The Group continues to diversify
its funding sources from international
financial institutions.
XacBank and World Vision signed a cooperation
agreement to support the youth through sports

Funding

Management Committees
The Group has several committees to facilitate the dissipation of
knowledge and integration of the Groups mission with its
subsidiaries. It serves as a communication bridge for senior
management, of each company, to build a greater overall
synergy.
The Executive Committee (ECM) functions as the shareholders
of wholly-owned subsidiaries of TFG. ECM structure is adopted
within each subsidiaries.

Our Organization
At the holding company level, TenGer will implement the business
plan by setting the overall guidance of the Group, aligning our
affiliate companies to maximize synergies and ensuring best
practice in corporate governance. Our immediate focus will be on
assisting in institutional development, driving the implementation
of each divisions business plan, providing management support,
and exploring new investment opportunities that complement
TenGers existing investments and overall strategy. The Group
believes a blend of reputable local and international shareholders
along with solid corporate governance will enable us to reach our
goals.
TFG (Holding Company) LLC structure: Management Committee structure:
MD: Managing Director
VP: Vice President
HR: Human Resource
100% 100%
100%
100%
51% 80%
Commercial
Banking
Leasing
Services
Physical
Security
Investment
Banking
Microfinance
(China)
General
Insurance
The Groups structure:
Group Risk Management
Committee
CRO, TenGer
Insurance
Risk Manager,
XacLeasing
Head of IRMD,
XacBank
MD, TFG (chair)
Executive Committee
Members (ECM)
VP, TFG
CEO, XacBank
CEO, XacLeasing
CEO, TenGer
Insurance
CEO, TianRong
CEO, XacSecurity
MD, TFG
CEO, TFG (chair)
Group Human
Resource Management
Committee
COO,
XacLeasing
COO,
TenGer Insurance
Deputy CEO,
XacSecurity
VP,
TenGer Capital
Head of HRD,
XacBank
HR,
TFG (chair)
Shareholders
Board of Directors
CEO
Executive
Committee
VP / Investor Relations
& Corporate Affairs
Chief Auditor
Executive assistant
Office manager
Managing Director
HR Officer
Risk Management
Officer
VP / Legal &
Compliance
Investment Analyst
Compliance Officer
Subsidiary Legal
Units
Group HR
Management
Committee
Investment Officer
VP / Human
Resources
VP / Finance
Director
Financial Analyst
Internal Auditor
Accountant

TFG Organization Structure
People
Planet
Profit

Overview
Having committed ourselves to corporate responsibility we adopt-
ed universal principles and standards for sustainability in our daily
management and operations, including the principles of the Unit-
ed Nations Global Compact, Global Reporting Initiative, Equator
Principles, IFC Performance Standards and Universal Principles
for Social Performance Management.
To achieve the triple bottom line goals, design and delivery of ser-
vices are transparent in its disclosure of the terms and conditions
in addition to satisfying clients needs.
In our lending policy, we monitor clients implementation of and
compliance with environmental and social laws and manage risk
on the Groups side as well as for the wellbeing of customers. We
implement the Smart Campaigns standards for client protection,
including the social mission where poverty reduction is viewed as
one of the social goals. In addition to financial performance, the
Group regularly discloses to the public and stakeholders its social
and environmental performance.
CSR initiatives and progress are anchored in our determination to
act ethically and responsibly in every aspect of our business for
the planet, clients, our shareholders, our employees, and many
other stakeholders.
Both the Board members and new employees take an orientation
on TFGs environmental and social vision and mission, as well as
the values and culture of the Group. They are required to comply
with the Code of Ethics and Conflict of Interest policy and regula-
tions on Anti-corruption and Non-partisan conduct of all employ-
ees. The Groups Human Resources policy provides for safety at
work, nondiscrimination and prohibition of forced or childs labor.
The Groups codes, charters, policies and procedures integrate
external standards that apply to our activities. They are often de-
signed to exceed compliance with regulatory requirements by set-
ting even higher standards for the Group companies.
As one of the leading institutions in Mongolia, financially and in
social performance, we continue to strive for universal standards
and principles. To identify our weaknesses and prioritize areas of
improvement, we undergo an internal compliance audit to in-
crease social performance transparency (Planet Rating).
In order to improve our sustainability performance and leadership,
we are building sustainability- related systems and measurements
tools, and train the TFG managers to integrate sustainability is-
sues into strategy, operations and employee performance assess-
ments.
Together with other Mongolian banks, called to action to support
sustained economic development and signed a Joint Statement,
explicitly committing to integrate environmental and social respon-
sibilities into decisions and align our core business strategies with
social investments.

Social and Environmental
Responsibility & Compliance Human Capital
Overview
As of December 31, 2013 the Group had a total workforce of
1,894 full time employees, 74 part time and 194 on maternity
leave. XacBank employs 1,533 employees, XacSecurity 181,
TenGer Insurance 96, TianRong 39, XacLeasing 24, TenGer
Capital 5 and 16 at the holding company.
TenGer Financial Group is committed to building a values-driven
high performance culture where all employees are valued. The
Group remains committed to the merit policy to ensure alignment
between employee compensation and the business results,
where individual performance is assessed against annual finan-
cial and non-financial objectives summarized in scorecards.
The Group provides a competitive package of benefits, including
medical insurance and a pension plan, in addition to the manda-
tory government scheme. The Groups pension plan is based on
years of service and individual salary, consisting of mandatory
monthly cash contributions, matched by the employer.
The Group management decided to discontinue the pension fund
management contract with EIT LLC fully owned MTND LLC. The
Group pension fund of MNT 3.2 billion received as of 1 October
2013 and all accounts transferred and placed at XacBank. After
full acquisition of TenGer Insurance its pensions brought in line
with the group plan.
TFG continued group-wide well-being program aiming to improve
employee personal wellbeing and health. The program contained
several initiatives that were organized consistently throughout the
year with the ultimate goal for happier and healthier employees.
Well-being activities promote active life style, sports, cultural and
social activities. Even though the participation is entirely on a vol-
untary basis turn-out rates were high.
Strict restrictions on political activity have been endorsed in June
2013 to ensure public confidence in the political impartiality of
TenGer Financial Group. It is important that the Group preserves
independent and nonpartisan character and being viewed as a
politically neutral body. The Group staff may not run for political
office or position associated with political party, engage in any
political activity while on duty or on Group premises, solicit or ac-
cept any political contributions nor sponsor political campaigns.
Group officers are subject to additional restrictions.

Institutional Development
People
Planet
Profit

2013 Achievements
In May 2013, XacBank signed an agreement with the International
Finance Corporation for consulting services to develop institutional
capacity in sustainable energy finance. IFC engineers reviewed poten-
tial areas for current XacBank SME clients to save on energy and
implement energy-efficiency, and executing training for employees. As
a shareholder in XacBank, IFC has committed itself to helping build
XacBanks ability to provide finance options for reducing pollution and
energy use in Mongolia.
In November, the Department concluded another stage of its series of
eco product project partnerships this time with the Clean Air Fund.
The partnership, which started in late 2012 and operated through 25
product centers, culminated in selling more than 17,700 additional en-
ergy efficient stoves and 4,192 low pressure boilers to ger district
households. XacBank has continued to distribute eco products, team-
ing with the Ulaanbaatar Clean Air Project (UB-CAP) in October 2013.
As with previous iterations of the project, the results of XacBanks Eco
Product Program have surpassed expectations. Since the first project,
in which XacBank teamed with the Millenium Challenge Corporation
Mongolia, XacBank has distributed more than 125,000 improved
stoves and more than 17,000 ger blankets, achieving significant market
penetration and reaching more than 70% of ger district households.
The stoves distributed by XacBank and its partners reduce particulate
matter emissions by more than 85%, helping to mitigate the pollution in
the ger districts and the resulting health expenses, which some esti-
mates peg at USD 470 million per year. The average fuel savings for a
family using a product provided by one of XacBanks Eco Product Pro-
grams is 46%, resulting in additional savings of roughly MNT 925,000
per family. In the course of 2013, XacBank products reduced an esti-
mated 368,000 tonnes of CO2 that would have otherwise been emitted
into Ulaanbaatars air.
To turn these emission reductions into sustainable revenue, XacBank
continued its partnership with MicroEnergy Credits and began the pro-
cess of surveys and audits required to submit the Banks eco product
project to the Gold Standard project registry. Registration with the Gold
Standard enables XacBank to sell its carbon offsets to buyers across
the globe in a voluntary carbon market. With the Clean Development
Mechanism market for offsets showing occasional volatility, XacBank is
ensuring that carbon offsets will remain a viable means of maintaining
financial sustainability for both the department and its associated pro-
jects by also registering with the Gold Standard. XacBanks project has
already been validated under the UNFCCCs Clean Development
Mechanism, but, by securing additional carbon revenue channels,
XacBank can cover ongoing operational expenses and support the
expansion of the Departments efforts to address environmental issues
in the future.
Perhaps most significantly, the Eco Banking Department began dis-
bursing loans through its partnership with Deutsche Banks Global Cli-
mate Partnership Fund to SMEs and for mortgages in 2013. Working
with both XacBanks SME Lending Department and XacBanks Mort-
gage Department, Eco Banking has disbursed nearly USD 2 million for
the implementation of energy-efficient measures or the production of
energy-efficient materials and alternative fuel. The facility has gone to-
ward mortgages for energy-efficient houses or apartments, for the pro-
duction of insulated windows, for the production of improved construc-
tion materials, and for the production of biodiesel. All of these reduce
either the amount of energy used or directly reduce the amount of
emissions from a client or clients customers, helping to reduce stress
on Ulaanbaatars electricity grid and environment. Moving forward,
XacBank is now working with the Mortgage Department further to begin
providing below-market interest rates for clients seeking mortgages
outside of Ulaanbaatar provided that they move into an energy-
efficient house.
Eco Banking: Overview
XacBanks focus on environmentally sustainable finance began in 2009
with the formation of the Eco Products Unit, a team that looked to use
finance to mitigate both the short- and long-term effects of the pollution
in Mongolias capital Ulaanbaatar (second-most polluted city in the
world). Borne out of XacBanks Triple Bottom Line mission to people
and planet as well as the profit of the Banks shareholders, the Eco
initiative focused on addressing the primary contributor to Ulaanbaatars
pollution: household-level consumption of raw coal in the ger districts.
The ger districts are peri-urban areas that surround the capital and, in
addition to comprising approximately 60% of the citys population,
produce up to 60% of the citys total pollution.
Partnering with local and international donors, XacBank developed an
innovative model to combat air pollution. The Eco Products Unit estab-
lished sales and distribution centers centers (Product Centers) housed
in gers (traditional Mongolian felt tents) and governmental buildings
throughout the ger districts. These Product Centers used and displayed
the core energy-efficient technologies made available to the Mongolian
market by XacBank and its partnersefficient stoves and insulating ger
blankets made of high quality felt. With the marketing and distribution
covered by XacBank, donors could focus on providing subsidies to the
producers of products that would reduce air pollution, resulting in a
lower cost of these improved technologies to end users. For potential
clients with the lowest income, XacBank expanded access to these
energy-efficient products by developing flexible microloan products
offered at below-market rates.
To make this project sustainable with or without donor involvement,
XacBank partnered with MicroEnergy Credits, a US-based carbon
finance company to evaluate, bundle, and sell the carbon emission
reductions (or offsets) generated by the products distributed through
XacBanks program. XacBanks carbon finance program is anticipated
to generate more carbon emission reductions per year than any other
single project in Mongolia and will permit XacBank to continue and
expand its carbon-reducing projects even after donor involvement
ceases.
As a result of its success, the Eco Products Unit formed XacBanks Eco
Banking Department in 2011. While Eco Banking continues to focus on
the distribution of energy-efficient products to reduce Ulaanbaatars air
pollution, it also has begun looking at a wide range of financial products
and services that can mitigate a multitude of environmental challenges
facing Mongolia. By signing an agreement with Deutsche Banks Global
Climate Partnership Fund for a facility geared toward emission reduc-
tions in late 2012, XacBanks Eco Banking Department could expand its
loan products beyond microloans. XacBank now provides eco loans
across a spectrum of sectors, including energy generation, industrial
production, and waste and sanitation. These low-cost loans go to small
and medium enterprises looking to reduce energy consumption or emis-
sion by at least 20%, households seeking mortgages for energy-efficient
housing, and the implementation or production of renewable energy
measures.

Social and Environmental Responsibility
People
Planet
Profit

Overview
XacBank is one of Mongolias largest and systemically important Bank serving retail and corporate clients with a range of inclusive
banking, fair investment and other financial products and services. It operates all over the country serving more than 619 thousand
customers through its 100 retail and 4 business service branches as well as specialized banking outlets which includes over 2,315
AMAR mobile banking merchants and 49 Savings and Credit Cooperatives. The Bank aims to create a sustainable value for its share-
holders and institutional investors, while promoting a triple-bottom line vision and mission built around People, Planet and Profit.
XacBank is the undisputed leader in Corporate Governance, Transparency and Risk Management, and is best known for its world
standard Corporate Social Responsibility implementations. In 2013, both Moodys and Fitch ratings affirmed the operational scope and
the credit capacity of XacBank at B1 and B respectively.
The Banks goal is to be a client-focused organization that is more accessible, innovative, and able to strike quickly at the numerous
unique growth opportunities, in line with the tremendous economic growth prospect for Mongolia in the coming decade.
MNT billions 2011 2012 2013
Net Interest Income 45.3 60.0 80.7
Profit 12.1 15.2 24.4
Total Assets 818 1,078 1,811
Equity 83 98 122
% 2011 2012 2013
ROaE 22.0 16.9 22.4
NPL 1.2 1.3 1.4
Liquidity Ratio 31 42 44
CAR 20.8 19.5 16.5
Tier 1 capital ratio 14.4 13.0 11.2
Performance
At the end of 2013, total assets reached 1.81 trillion. This 68
percent growth from the previous year was principally funded by
significant increases in local borrowed funds. As a result, the
Banks gross loan portfolio expanded by 64 percent to reach
1.04 trillion.
Total liabilities rose 709 billion (72 percent), mainly through
deposits and borrowed funds to finance our growth. XacBanks
deposit increase of 25 percent was one of the highest in the
banking sector. Borrowed funds expanded by 378 billion owing
to substantial influx of local and project funds from various pro-
grams by the Government.
Total capital amounted to 181 billion, consisting of subordinated
debt and equity, making XacBank one of the most well capital-
ized Banks in Mongolia with a Capital Adequacy Ratio of 16.5
percent.
Revenues attributable to short-term securities surged 77 percent
to reach 22 billion while non-interest income grew 116 percent
to 11.7 billion stemming from trade finance, card business and
active foreign currency trading for corporate clients.
General, personnel and administrative expenses were 54
billion, an increase of 23 percent from 2012. This growth in
operating expenses is directly linked to the expansion of banking
activities.
XacBank had an effective tax rate of 18.5 percent, one of the top
50 tax paying businesses in Mongolia, with a reported net profit
of 24.4 billion. Net interest income was the key driver of the 60
percent growth in net profit.

Q4:

long to TenGer Insurance
Active participation in price stabilization program and general stimulus
program by Government and Central Bank for affordable construc-
tion , construction raw material and mortgage financing
Introduced SMS transaction notification service for the first time
The Bank of Mongolia granted XacBank permission to engage in gold
related transactions
Issued the first bond in Luxembourg through Symbiotics Platform
Recognized as Bank Of The Year Mongolia by The Banker maga-
zine
Concluded the first securitization transaction of the 8% mortgage
program with Mongolian Mortgage Corporation (MMC). 14.3 bln
mortgage pool sold to MMC
Q1:

Q2:

Q3:
2013 Major Events
Restructured retail banking area at HQ to create two different lines:
Retail Banking Division and Channel Management Division
Implemented XacLoyalty program to attract more current accounts
Electronic channel significantly expanded: 121 ATMs are on service
and more than 1,000 POS machines are on-line (5x increase)
Received USD 46 mln by EBRD syndication, USD 20 mln from DEG
and USD 15 mln from Proparco
Recognized as Best Retail Bank Mongolia 2013 by Global Banking
and Finance Review
Actively participated with Government Housing Program 8% mort-
gage and price stabilization program
Started selling insurance products to customer and has agreement
with 6 insurance companies. More than 90% of insurance sales be-

XacBank
People
Planet
Profit
New Photo
XacBanks customers

Overview
XacLeasing was founded in 2007 as a wholly owned subsidiary of TenGer Financial Group with the aim of spearheading the develop-
ment of Mongolias leasing sector. The Companys financial leasing services enabled entrepreneurs, micro, small and medium sized
enterprises throughout Mongolia to realize the benefits of leasing and provided access to equipment and machinery in order to gener-
ate revenue from their business operations.
XacLeasings primary aim is to develop financial leasing products that deliver new opportunities, friendly convenient customer service,
but most importantly alternative financial solution to traditional bank finance. As a result, the micro and SME lessees create new jobs,
promote domestic production, and positively contribute to the nations economic growth.
XacLeasing has constantly improved its outreach, profitability and operations supported by IFC, BIO, ORIX and Symbiotic technical
assistances as well as a network of reputable domestic and international funders. The Companys lease portfolio includes virtually
every business sector, including manufacturing, construction, healthcare, trade, agriculture, mining and transportation.
Net Interest Income 1.31 2.87 3.50
Profit 0.39 1.26 1.73
Total Assets 18.1 26.0 29.8
Equity 5.9 7.2 8.9
ROaE % 12.4 19.4 21.8
ment and retention, redesigning and updating key business pro-
cesses and policies as well as initiating a social and environmen-
tal impact reporting framework.
While most banks and captive leasing companies are providing
financial leasing, but XacLeasing is proud to be the only inde-
pendent diversified leasing company operating in Mongolia. The
dedicate team has concentrated on the development of the leas-
ing market through advertising campaigns, cross training vendors
and dealerships, and providing financial advice to micro and
SME clients. Furthermore, the Company recognizes that chang-
es and amendments in the financial leasing law are essential in
the future development of the leasing sector. As a result,
XacLeasing has initiated a discussion with the support of EBRD,
Mongolian Bankers Association and Central Bank of Mongolia to
make relevant changes in the law to clarify rights and responsibil-
ities of the lessor and lessee, remove contradictions within exist-
ing law, and possibly to include tax benefits.
Performance
Despite Despite uncertain and volatile economic developments
in 2013, XacLeasing has delivered continuing profit growth in
2013, with net income of 1.73 billion, up 37.2 percent on the
prior year. As a result, the Company has delivered RoE of 21.8
percent, the highest return on equity in our history. This result
reflects the successful execution of our strategy, the benefits of
solid financial management and maintaining strong operational
efficiency. XacLeasing will continue to pursue a prudent financial
strategy as well as investing in the future of our business in order
to deliver RoE of above 24 percent for the next couple of years.
As of fiscal year end, net lease portfolio increased by 2.5 billion,
or 13.7 percent compared to the previous year, totaling 21.1
billion. The Company took advantage of demand for equipment
and machinery in the construction, road maintenance, manufac-
turing, transportation and passenger automobile sectors. Total
lease disbursements amounted to 16.5 billion in 2013.
While growth in 2013 has been slower than in years before due
to stricter under writing policy from macro economic conditions,
lack of availability of funds during peak season and high lease
repayments from prior year disbursements. Approximately, 71
percent of year-end 2012 portfolio has been either repaid or pre-
paid during the 2013 fiscal year.
During 2013, the Company focused on other areas of business
including building institutional capacity, focusing on HR develop-
XacLeasings customers

Oct.
Nov.

Nov.

Dec.
policies as well as sales tactics for 2014.
ResponsAbility has extended USD 2.0 million loan
Development of social impact reporting
As part of Symbiotic funding, consultant has started social and envi-
ronmental impact reporting framework in accordance with IRIS. The
management believes implementing S&E impact reporting will further
strengthen the Group mission of triple bottom lines.
EBRD provided USD 3.0 million equivalent funding in
local currency
Signed a loan agreement with EBRD in MNT (equivalent to USD 3
million) to fund finance leases to SMEs with a particular focus on ma-
chinery, equipment and vehicles.
ADB approved USD 10.0 million funding
Asian Development Bank approved a loan to XacLeasing through
TFG to support leasing for micro and SMEs in Mongolia
Mar.

Jul.
Aug.

Oct.

2013 Major Events
The Group appointed a new CEO, Tsevegjav Gumen-
jav
The new XacLeasing Executive Committee has developed a strategy
and business plan to market position the Company by incorporating
key leasing fundamentals including focus on great customer service,
emphasis on asset specialization, simpler documentation, faster and
sound decision-making, competitive terms and conditions, and close
working relationship with quality vendors
MNT 4.0 billion loan agreement with XacBank
Business trip to ORIX Group
Senior management met with ORIXs executive team to discuss strat-
egy and future collaboration opportunities
Development of new scoring tool
As part of BIO funding, consultants developed a Scoring Tool that will
be utilized as part of lease underwriting process. Also, consultancy
scope served as the stepping-stone for the updated lease and risk
XacLeasing
People
Planet
Profit

Overview
TenGer Insurance was established in 2001 by the initiative of Mongolias largest petro chemical company under the name Bat Insur-
ance. In 2010, the name was changed to TenGer Insurance, and the firm has grown into one of the leading insurance firms in Mongolia
with its nationwide presence. The company was also well known in the market by its old/second name Prime General Insurance.
The company has 20 branches throughout Mongolia serving both corporate and retail customers. Currently, the firm is engaged in
business activities with more than 300 insurance representatives. TenGer Insurance offers competitive and comprehensive insurance
products of various types, depending on the needs of the customers. Some of the products include coverage of property and equip-
ment, petrochemical products, auto vehicle, third party liability, cargo and passenger liability, personal accident, temporary disability,
comprehensive general liability to name a few.
In particular, TenGer Insurance is the leader in petrochemical and international transport insurances. Along with the firms strong
focuses on corporate services, TenGer Insurance is aiming to introduce an unique micro-insurance for low incomes individuals within
the country through its cooperation with leading micro finance institutions.
Gross Written Premiums 4.11 6.03 8.51
Profit .66 .20 .83
Total Assets 5.8 7.4 11.7
Equity 2.2 2.4 3.9
ROaE % 34.4 8.0 29.5
Other Highlights
The company has become a member of the Board of
Mongolian Insurers Association
According to the minimum statutory capital requirements, by
the Financial Regulatory Commission, the company has
called capital injection of 750 million. As a result, its paid
capital has reached 2,750 million and total equity notably
grew to 3.9 billion
The company was awarded by the Mongolian National
Chamber of Commerce and Industry for Good corporate
governance
The company successfully implemented Green ERP, a com-
prehensive human resource software, and made further
developments in its insurance core system
As actuarial is key in the insurance business, the companys
second actuary has passed his second professional exam
Performance
TenGer Insurance ended the year with total assets of 11.7 bil-
lion, up 49% from the previous year. Primary changes include an
increase in short term investment by 1.9 billion (41%), cash
and equivalents by 390 million, reserve funds by 2.074 mil-
lion (41%), and an increase equity by 1.6 billion (67%).
Gross written premium reached 8.5 billion, an increase of 41%
compared to 2012. Cross selling of TenGer Insurance policies,
through XacBank and XacLeasing, increased notably in the sec-
ond half of the year.
Total claims paid for the year was 2 billion, increase of only
27%, due to sound risk management policy in products with high
loss ratio and diversification in portfolio.
The Company was more cost conscious over the past year and
have been able to reduce the expense ratio from 61% in 2012 to
57% this year. As result, the combined ratio reduced to 94%
from 96%.
Net income for the year was 831 million, an increase of 307%
from the prior years low base.
FY.

FY.
2013 Major Events
Year of operation expansion and growth
GWP grew by more than 40% for the second consecutive year and
reached 8.5 billion, total asset's increase of 49% was an industry
high record among top performers. Market share in GWP reached
9.1% from 7.6%.

Ownership change
TenGer Insurance officially became 100% subsidiary of TenGer
Financial Group in September 12, 2013.
FY.

Dec.

.
Implements our social responsibility successfully.
Sponsored Mongolian Basketball Association, female football teams
and BOOM 2020P participants, organized Science Conference
among students and offered job position to the outstanding students.

Awarded as a Company with Good Corporate Gov-
ernance
National Governance Center and Mongolian National Chamber of
Commerce and Government selected TenGer Insurance as a compa-
ny with Good Corporate Governance for outstanding development
and effort to promote corporate governance.
2012 TenGer Insurance staff members

TenGer Insurance
People
Planet
Profit

Performance
TenGer Capital (TGC or Company) ended the fiscal year
2013 with net profit of MNT 100 million and has subsequently
recouped all expenditures since its inception. The financial per-
formance is a substantial improvement than the prior years net
loss of MNT -82 million. The Companys operating income was
MNT 256 million, a 51x fold increase from the prior year, with an
overhead ratio of 55%. The result of this years effort has yielded
in a ROaE of 46.7%.
Investment Banking: In Q1, TGC advised and arranged for a
residential real estate developer a structured finance transaction
aimed at developing a 120-unit residential housing complex. The
innovative structure allowed the client to secure full funding for
the project as well as a partial offtake of completed units at pre-
determined price.
TenGer Capital provided support to Group companies. It acted
as financial advisor on the full acquisition of TenGer Insurance.
The team worked on the information memorandum and financial
model of XasLeasing. TGC also advised TianRong in preparing
their 5-years financial and business plan.
The Company has played various roles for companies in such
sectors as hospitality, telecom, food processing, logistics and
transportation.
In December, the Company organized a final negotiation session
between our hospital client and the strategic investor in Hong
Kong. The meeting resulted in the signing of the final Heads
of Agreement, which outlined the key aspects of the sales
purchase agreement, shareholders agreement, and intellectual
property agreement between the parties. As a result, TenGer
Q1.

Jul.

2013 Major Events
Apr.

4Q.
Affordable housing project completed
TenGer was the financial advisory for a 120 residential housing pro-
ject designed to provide affordable housing for the employees of the
Group. XacBank was the commercial lender and will be the buyer of
the finished apartments at below the market rate.

Hired two new analysts

Received final approval from Group shareholders on
the full acquisition of TenGer Insurance
TenGer Capital was the exclusive financial advisor performing the
valuation and negotiations with the selling party on the final price.

Final negotiation session concluded on the major
terms of agreement between our hospital client and
the strategic investor in Hong Kong
TenGer Capital was the exclusive financial advisor representing the
selling party.
Capital was able to finish the year with positive results, reaching
break-even.
Brokerage: The brokerage arm of TGC executed trades worth
MNT 190 million in 2013 while opening 141 new client accounts.
The most active single client accounted for 69% of all trades exe-
cuted in Q4. During 2013, TGC produced research papers on
Remicon JSC, a listed producer of ready mixed concrete, and
APU JSC, the largest alcohol and beverage producer in Mongo-
lia.
Other: Concerning staff and internal operations, all members of
the staff has passed the local regulatory, Financial Regulatory
Commission, exam to be certified in the involvement of broker-
age service and financial advisory. Two new analysts joined the
firm in July as part of the investment banking team in addition to
assisting the weekly reports regarding information on the stock
exchange performance for security traders.
The Company expanded its network by signing cooperation
agreements with a partner firm in Hong Kong, private bank in
Switzerland and Central Asian investment and brokerage house
to widen its international investor base while supplying high quali-
ty investment projects from the Company local network and ex-
perience.
Overview
TenGer Capital is the investment banking unit of TFG offering clients services in corporate finance, sales and trading, advisory, mer-
gers and acquisition. The team is dedicated to advising Mongolian companies on their fundraising, expansion and investment strate-
gies. The company has established a broad network of relationships with foreign investors and advisors. TenGer Capital also plays a
crucial role in maintain relationships with local clients and promote synergies across Group companies.
TenGer Capital, along with other Group subsidiaries, participated in the informed
citizens about the financial markets such as opening a

TenGer Capital
People
Planet
Profit
MNT billions 2012 2013
Revenues 0.00 0.27
Profit (0.08) 0.10
Total Assets 0.19 0.32
Equity 0.16 0.27
ROaE % NA 47%

Overview
Urumqi TianRong Microcredit Company is a joint venture of between TenGer Financial Group, IFC, MAK, Xinjiang Longhaida and
Shanghai Junhe from China. TFGs flagship subsidiary XacBank is a leading micro, small and medium enterprises finance provider in
Mongolia and a globally recognized microfinance bank. IFC has been a long-term partner of TFG and XacBank since 1999.
TianRong is the First Sino-Mongolia Micro Finance Institution that opened in September 2012 to provide loans worth more than $200
million to around 15,000 small businesses in the next couple of years.
Branch Expansion: To service all our clients and continue to sup-
port local entrepreneurs and small business owners in the com-
ing years, TianRong officially opened two new branches in 2013.
With the April opening of the Shangmaocheng branch, we made
it more convenient for small business owners and vendors in the
Shayibake district to find financial service. In November,
TianRong expanded further by opening its Xinshiqu branch.
Institutional Capacity Building: Mr. Tengis Damdinkhorol joined
TianRong in October as the new Chief Operating Officer and de-
parting COO Chen Yu coached and transferred her duties over to
him. Numerous training sessions were held, such as the three
days training of new staff, covering company policy, basic ac-
counting, lending practice, client screening and overdue client
management. In addition, basic legal training was taught at the
Xiao Xi Men branch, from a visiting lawyer, in dealing with over-
due clients and a branch managers training organized by Ji
Yuting, consultant from PlaNet Finance. The Company has en-
larged its staff by 7 personal to a total of 39, with a 56% women
composition.
Performance
At the end of 2013, TianRong had 575 active clients with a total
outstanding portfolio of nearly RMB 100 million. Its a remarkable
increase compared to the prior years total disbursement of 34
loans and further evident in total loans composing 96% of total
assets versus 15% in 2012.
The vast majority of the loan portfolio composition was in small
and micro category of less than RMB 500,000. 77% of all active
loans are microloans of RMB 100,000 or less, while a further
21% are small loans of less than RMB 500,000.
Nearly 95% of the loan portfolios maturity is under 1 year and
100% of the loan portfolio is in RMB, due to the regulatory re-
strictions from the local regulators.
While it will take another full year of operations to accurately as-
sess the average portfolio yield, as of December yield on the
loan portfolio was 10.2%. Similarly, as the company continues
ramp up operations and accrue revenues, the overhead ratio has
continued to fall every month to 41% as of year-end.
The company started becoming profitable in June and was able
to recoup all its initial retained earning losses in August. The
company posted net profit of RMB 3.8 million (MNT 1.1 billion), a
significant increase from RMB -1.0 million.
top left: Anniversary Client Meeting, top right: Xinshiqu Branch Opening,
bottom left: Client Training, bottom right: Board Meeting
Jan.

Feb.

Apr.

May.

Jun.

Jul.
2013 Major Events
Aug.

Sep.

Oct.

Nov.

Dec.
The first client training is conducted for Uyghur borrowers, TianRong
organizes its first annual staff meeting for the staff and their families.
TianRong organizes red envelope promotion for the Spring Festival,
first year performance evaluation completed for all staff.
Second branch opens in Shangmaocheng, the number of active bor-
rowers reaches 100, Mr. Ganhuyag Chuluun visits TianRong.
TianRong receives assistance from Shanghai Junhe, IFC and Xac-
Bank, the second new staff training is organized.
TianRong becomes the largest microfinance institution in Xinjiang by
total number of clients, PlaNet Finance starts consulting TianRong.
Third BoD meeting held in Ulaanbaator, Mongolia, Chinese share-
holders visits XacBank and TFG, TianRong Board members and
management participate in company governance training organized
by TFG.
The number of active borrowers tops 300, TianRong starts up rela-
tions with an Urumqi orphanage, Mr. Zhang Yufei, CEO of Junhe visits
TianRong, first management retreat held.
TianRong celebrates its first anniversary with a number of events, in-
cluding a client meeting and an anniversary banquet.
TianRong disburses its 500th loan. Staff training is organized for a
number of topics, including legal training, dealing with overdue clients
and English training.
BoD meeting is held, with participants coming from Tenger, IFC, Jun-
he and Longhaida. Opening ceremony for new Xinshiqu branch held.
TianRongs number of active clients tops 500.
Mr. Boldbaatar, from Xacbank visits and consults with TianRong.
TianRong holds its second annual winter retreat.

TianRong MCC
People
Planet
Profit
MNT billions 2012 2013
Net Interest Income 0.10 2.53
Profit (0.23) 1.06
Total Assets 22.3 28.4
Equity 22.2 28.2
ROaE % NA 3.9
Dec.31.2012 MNT/RMB exchange rate: 223.39
Dec.31.2013 MNT/RMB exchange rate: 274.17

Overview
XacSecurity was established in 2002 as the physical security unit of XacBank with the initial purpose of providing security services to
XacBank branches and Headquarter office. Following the adoption of Law on Security Service by the Parliament of Mongolia, the
security service industry requires a license by the relevant authorities in order to properly protect individuals and corporations. The firm
is routinely recognized among the best security companies by the Police Authority and Capital City Specialized Inspection Agency.
Currently, the firm has over 160 full-time staff that provides universal body, alarm and disaster mitigation service throughout TenGer
Financial Group and its customers. Its goal is to utilize their decade long experience with the aim of catering external companies and
government agencies.
Net Sales 1.09 1.52 1.75
Profit .05 .13 .01
Total Assets .18 .31 .32
Equity .18 .30 .31
The Companys alarm and security engineering team expand-
ed over the past year to a technical unit. The computers and
equipment of the Alarm and Information Center was renewed,
implemented new technology and services in order to further
reach more locations.
New positions of security protection manager and human re-
source officer were established at the local level aiming to im-
prove protection service and implement human resources pol-
icies of the bank branches.
A emergency protection training was organized for directors
and members of emergency protection Units of TFG in collab-
oration with Emergency Department of Chingiltei District.
A fire protection simulation exercise was conducted at Xac-
Banks Ard branch, by the support of staff of Emergency De-
partment. During the simulation training, the staff received fire
alarm information, how to safely transfer the staff to safe loca-
tion, learned to provide first aid service and use the fire distin-
guisher.
The Company received a new certificate as a contracted se-
curity service from the Municipality Police Department.
Performance
73% of total income derived from physical security protection,
26% were from alarm protection and 1% consisted of alarm
equipment sales and income from money transportation. 98% of
net income was derived from services to XacBank.
Staff levels and grades have been revised and followed up since
15 January 2013. Therefore, all staff salary was increased by
20% in 2013 and total number of staff is reaching 180.
After coming to agreement last year, the company has started
importing state of the art alarm protection equipment this past
year to be sold them on the Mongolian market.
Other income from Bank consisted of 2%, which is from 25
alarm service contractors with the aim of increasing the figure up
to 50 in 2014. Majority of clients are located in already protected
buildings were a Bank branch is located.
The companys alarm operational center has the capacity to con-
trol 400-500 alarming equipment. Currently, only 34% of total ca-
pacity is being utilized with 170 alarming equipment.

Other Highlights
To implement the Security Policy of TFG, security officers
were recruited who received professional guidance and train-
ing for the relevant subsidiary companies. XacBanks branch
safety and security information is continously reported every
month to the management, security department and
collaborated to make necessary adjustment when its
necessary.

XacSecurity staff members
Q3.

Q4
28 different types of alarm equipment were purchased from PIMA
Alarms Systems Company of Israel. Radio communication for security
staff was improved through 20 mobile stations to be fully integrated
with our communication network.

Engineers travelled to 28 bank branches to renovate the alarm securi-
ty and camera systems with improved technology.
FY.

Q1.

2013 Major Events
Maintenance checkup is conducted monthly on the conditions of
alarm, security and fire protection throughout TenGer Financial Group
and its subsidiaries.

Rapid meetings for security staff have been held 11 times where in-
formation on city crime situation and other guidance were provided. 8
recommendations on safety and security activities during holidays
have been developed and distributed to the relevant security guard at
bank branches and cash centers.
XacSecurity
People
Planet
Profit

Erdenejargal Perenlei
Non-Executive Director
Appointed to the Board: 2005
Experience: Erdenejargal has been involved
with the Mongolian Foundation for Open
Society (Soros Foundation) in supervision of
programs for education, information, media
and public health. Since the transformation of
Soros Foundation into a national NGO in
2004, Erdenejargal has served the Executive Director and is now
actively involved in promoting citizen participation in decision
making through research-based advocacy. She is a 1982 gradu-
ate from the Rostov-na-Don University in psychology.
Current Appointments: Non-executive director on the Board of
Directors of TenGer Financial Group and XacBank and the
Executive Director of Open Society Forum in Mongolia.
Former Appointments: Erdenejargal started her career at the
State Committee (Ministry) of Labor and Social Welfare as a
labor economist in 1982-1988, a lecturer at the Government Insti-
tute of Management in 1988-1991, a researcher and later a chief
of Social Studies Unit at the Government Center for Public Policy
and Social Studies in 1991-1992, and an Executive Director of
Mongolian Development Foundation in 1992-1997.

Michael Madden
Experience: Michael is a successful
entrepreneur and a founder and managing
director of Ronoc, an investment and advisory
services business based in Dublin, Ireland.
He graduated in 1987 from the College of
Management Studies, Limerick, Ireland, with
a diploma in industrial engineering.
Directors of TenGer Financial Group and XacBank.
Former Appointments: Michael has been involved in the cards
and banking business in Eastern European markets for over 15
years working for American Express on different positions, start-
ing in 1988 as a quality assurance manager and becoming in
1998 a vice president for franchise markets EMEA, London, UK.
In 2003, Michael established Renaissance Credit - the third larg-
est consumer finance bank in Russia and has worked as the
founding CEO. In 2007, Michael founded Ronoc.
Chuluun Ganbold
Non-Executive Director, Chairman
Experience: Ganbold is the CEO of Email
Daily News LLC. He has an extensive 30-
year career and professional experience in
administration, public relations, business
consultancy and facilitation, mass media and
arts management. Ganbold is a graduate of
the Moscow University of Foreign Languages in Russia.
Current Appointments: Chairman of the Board of Directors of
TenGer Financial Group and XacBank, a member of the Board
of Directors of Oyu Tolgoi LLC and President of several NGOs.
Former Appointments: Founding member of X.A.C. (Golden
Fund for Development), the first NBFI in Mongolia and a prede-
cessor of XacBank. He formerly served as Advisor to the Prime
Minister of Mongolia, the Constitutional Court and in 1993-1995
as Director General of the World Mongolian Federation. Ganbold
is a founder of the Rotary movement in Mongolia.

Bold Magvan
Executive Director
Experience: Bold is a senior banking
professional with more than 20-year
expertise in public and private global finan-
cial institutions, including the World Bank and
the International Monetary Fund. He holds a
Masters in International Affairs degree with a major in economic
policy management from the Columbia University, New York.
Current Appointments: CEO and an executive director of Ten-
Ger Financial Group, non-executive director on the Board of Di-
rectors of XacBank, president of the Mongolian Bankers Associ-
ation, Honorary Consul of the Republic of Iceland in Mongolia,
chairman of the boards of the Credit Information Bureau LLC and
Development Solutions NGO in Mongolia.
Former Appointments: From 1996 to 2000, Bold was the
Deputy Governor of the Bank of Mongolia (Central Bank),
Deputy Director at the Market Research Institute, CEO of the
Mongolian Export-Import Bank, member of the boards of the
International Investment Bank and the International Bank for
Economic Cooperation in the Russian Federation and advisor for
Da Afghanistan Bank (Central Bank), Islamic State of Afghani-
stan.

The Board of Directors

Richard Ranken
Experience: Richard is a senior advisor to
IFC in the East Asia and the Pacific Region
with membership on the boards of several
banks and private equity funds in Asia. He
has had a 30-year career with IFC and has
spent majority of this professional life working
in the former Soviet Union, Africa and most recently in East Asia.
Richard is a graduate of the Australian Institute of Company
Directors (GAICD).
Former Appointments: He headed IFCs Advisory Services,
which privatized over 50,000 enterprises, introduced them
corporate governance standards, and played a leading role in
the financial sector development. As a director of IFCs opera-
tions in Africa, he put in place a new strategy and team that built
IFCs investment business to USD1.5 billion in 30 countries, with
concentration on SME and microfinance. Also, as a director of
East Asia and the Pacific, he focused IFCs work on climate
change financing and related advisory services.

Sabina Dziurman
Experience: Sabina is a senior banker with
the financial institutions team of the European
Bank for Reconstruction and Development
(EBRD)s office in London, UK since 2004.
She is responsible for developing and moni-
toring business and managing relations with
clients, regulatory authorities and governments. Sabina graduat-
ed from the Bedford College, London University, UK in 1976 with
BSc in Physiology and from the London Business School, UK in
1991 with a Masters of Business Administration.
Directors of TenGer Financial Group
Former Appointments: Sabina started her professional career
with Timsway Holidays in 1980, later serving as director. Be-
tween 1991-1993, Sabina was a manager for Central Europe
Trust Company in Russia, promoting and marketing CET ser-
vices and undertook project management. She later worked as
an independent consultant, for EBRD and DFID, training various
banks in the central Asia on policies and procedures on key is-
sues and risks.
Shuji Irie
Experience: Shuji is the Executive Officer of
the ORIX Corporation and Deputy Head of
Investment and Operation Headquarters.
Shuji Irie was born in 1963 graduated from
Waseda University, Faculty of Literature in
1985.
Former Appointments: Shuji Irie joined ORIX in April 2011 as
Deputy Head of the Investment Banking Headquarters. Before
joining ORIX, he worked for the Industrial Bank of Japan, Limited
(presently Mizuho Corporate Bank) and Mizuho Securities Co.,
Ltd. mainly in the field of Securitization and Real Estate since
1989. In September 2011 he was appointed Deputy Head of the
Investment and Operation Headquarters. In January 2013 he
was also appointed Executive Officer of the ORIX Corporation.

Tselmuun Nyamtaishir
Experience: Tselmuun is a vice president of
Mongolyn Alt MAK Corporation, one of the
largest mining companies in Mongolia. She is
in charge of the firms investments and
finance department. Tselmuun graduated in
2004 from Valparaiso University, Indiana,
USA with a Bachelor in Business Administration.
Current Appointments: Interim non-executive director on the
Board of Directors of TenGer Financial Group.
Former Appointments: She has worked throughout MAKs
departments such as railway, social responsibility, procurement
and trading to support their strategy. Tselmuun started her career
at the Trade and Development Bank of Mongolia in 2005 .

Board of Directors continued

Board Composition
As of 2013 year end, the Board had 8 members, consisting of
one executive director, 6 shareholder-nominated non-executive
directors and one independent non-executive director.

The non-executive directors bring a wide range of business and
financial expertise, experience and independent judgment to the
Board and the executive management. Through active participa-
tion in board meetings and serving on board committees, all di-
rectors make various contributions to the effective guidance and
direction of the Company.

The members of the Board are not related to one another.

2013 Corporate Governance Report
The board of directors (the Board) of TenGer Financial Group
(TFG, the Group or the Company) is pleased to present this
Corporate Governance Report in the Groups annual report for
the period ended 31 December 2013.

Effective corporate governance has always been an important
part of our identity at the Group and Group companies. TFGs
corporate governance practices are based on the principles and
certain recommended global best practices. As a bank holding
company, TFG is subject to governance rules and procedures
issued from time to time by The Bank of Mongolia, the banking
sector regulator. Continuing its good governance practice and to
improve further its governance and functioning, TFG adopted a
number of major policies and procedures, including a Code of
Corporate Governance, Code of Conduct and Conflict of Interest
Policy, a Related Party Transactions Policy, renewed Internal
Rules of Procedure of the Board of Directors and a Board Direc-
tor Selection and Nomination Policy. Together, these form the
corporate governance framework based on equitable treatment
of all shareholders, including minority and foreign shareholders,
accountability at all levels, disclosure and transparency, and re-
sponsibility before all stakeholders.

Results of 2013
During the year of 2013, the main focus has remained on main-
taining and enhancing our good corporate governance culture.
As part of our compliance with the highest standards of personal
and professional ethics, all board directors refreshed their corpo-
rate governance knowledge by enrolling in the director training
programs offered by the Mongolian Corporate Governance De-
velopment Center and received certificates of training in 2013.
Building on its self-evaluation of the previous year, the board of
the Group continued to work towards improving its structure, in
order to ensure the most optimal mix of skills and experience of
directors. Following the ownership transformation process at
TFG, the board had changes in its composition.
Recognizing that transparency and disclosure is not only part of
good corporate governance but is also a legal and regulatory re-
quirement, the Board of the Group focused also on improving
disclosure and reporting by shareholders on their ultimate benefi-
cial holdings and interests.
TFG will continue to review and enhance its corporate govern-
ance practices to conform further to international best practices
and to meet the requirements of the stock exchange of potential
listing in the future and the rising expectations of shareholders
and investors

Chuluun Ganbold Chairman,
independent non-executive director
Bold Magvan Executive director,
Chief Executive Officer of TFG
Shareholder-nominated non-executive directors are:
Erdenejargal Perenlei Non-executive director,
representing minority shareholders
Michael Madden Non-executive director,
representing Ronoc
Richard Ranken Non-executive director,
representing IFC
Sabina Dziurman Non-executive director,
representing EBRD
Shuji Irie Non-executive director,
representing ORIX
Tselmuun Nyamtaishir Non-executive director,
representing MAK

Corporate Governance Report

Chairman and Chief Executive Officer
The roles and duties of the Chairman and the Chief Executive
Officer of the Company are carried out by different individuals
and have been clearly defined in the Charter of TFG.

Key responsibilities

Appointment, election and retirement of directors
The board directors are elected at the annual general meeting of
shareholders for a term of 2 years with an option of re-election.
Upon expiry of this term, the directors are subject to retirement
or re-election by the shareholders. In the case of a vacancy on
the board, an interim director is appointed by the board until
election and approval at the next annual general meeting of
shareholders.
The procedures and process of nomination, appointment, elec-
tion, re-election and removal of a director are set out in the Char-
ter of TFG and the Board Director Selection and Nomination Pol-
icy. The boards Governance, Nomination and Compensation
(GNC) Committee is responsible for reviewing the board compo-
sition, developing and formulating the relevant procedures for
nomination and appointment of directors, monitoring the succes-
sion planning of directors and assessing the skills, expertise and
experience.
Non-executive directors Chuluun Ganbold, Richard Ranken and
Erdenejargal Perenlei were each elected for a 2-year term in
May 2012. In accordance with the Charter, these directors stand
for re-election at the AGM and the GNC Committee recommend-
ed them for re-election at the forthcoming annual general meet-
ing of shareholders.
Executive director Bold Magvan and non-executive director Mi-
chael Madden were re-elected by shareholders resolution in
April 2013 at the AGM for a 2-year term.
Tselmuun Nyamtaishir, appointed by the Board as interim direc-
tor in 2012, was elected as a non-executive director at the AGM
in 2013.
Non-executive directors Shuji Irie and Sabina Dziurman were
elected at a special shareholders meeting in December 2013 for
a 2-year term.
Training and Continuing Development
In 2013, a board director certification training on corporate gov-
ernance was organized for members of the boards of directors of
TFG and XacBank to continue TFG's good governance practice
and to comply as well with Article 75.8 of the Company Law of
Mongolia. The training session was conducted by the Mongolian
Corporate Governance Development Center (CGDC) and IFC.
7 directors out of 11 directors participated in the training session
and received the certificates of CG training. The Chairman of the
TFG and XB boards enrolled also in CG training and received a
training certificate.
In 2013, three members of the Executive Committee of TFG at-
tended the corporate governance trainings organized by CGDC
and obtained training certificates. As of today, all 8 members of
the TFG Executive Committee have certificates of training.
In addition, a special training session was organized for directors
and shareholder representatives of TianRong, the Groups sub-
sidiary in China.
As part of measures to improve board functioning, service agree-
ments are drafted and signed with board directors.
Sessions on corporate governance and governance compliance
were organized to assist the board members of the Groups sub-
sidiary companies with information and guidance necessary for
the board members to fulfill their duties and responsibilities.

Board meetings
The board conducts its business based on the Internal Rules of
Procedure of the Board and the Charter. The main form of board
functioning is a board meeting where the board issues its deci-
sions in the form of resolutions.
In 2013, the board held 4 regular quarterly meetings and one ex-
traordinary meeting. The board meetings were held on:
March 21, 2013
June 20, 2013
September 19, 2013
December 10, 2013 (Extraordinary)
December 11, 2013

All board meetings were held in Ulaanbaatar, Mongolia. The
details of directors attendance at the board and committee

Chairman - Chuluun Ganbold
Appointed in 2003
Ensuring the effective functioning of the Board
Leading the Board in the process of periodic reviews of the
performance of the executives
Setting agendas for board meetings
Encouraging the appropriate level of deliberation of all issues
and inputs from individual board members
Chief Executive Officer - Bold Magvan
Appointed in 2011
Implementing strategies, objectives and policies approved
and delegated by the board
The Companys day-to-day management and operations
Developing strategies and business plans
Formulating the organizational structure, control systems,
internal processes and procedures.
Attendance
Number of meetings held 4
Chuluun Ganbold 4
Bold Magvan 4
Erdenejargal Perenlei 4
Michael Madden 3
Richard Ranken 4
Sabina Dziurman 2
Shuji Irie 2
Tselmuun Nyamtaishir 3
Corporate Governance Report continued

Major decisions made by the Board during 2013:
In 2013, the Board issued 27 resolutions, including 7 resolutions
issued by way of written resolutions through online voting without
holding a board meeting.

The board directors receive regular and appropriate information
to enable them to make informed decisions. During the year un-
der reporting, the notices and pre-reading papers for the board
directors were all delivered at least 14 days prior to the board
meetings to provide an opportunity to review and include matters
on the agenda and give sufficient time to analyze the information
and obtain, as necessary, independent professional advice.
The Group Finance Officer and other senior management attend
all regular board meetings and, where necessary, other board
and committee meetings to provide information and advice on
business developments, financial and accounting matters, regu-
latory compliance, corporate governance and other major as-
pects of the Company.
In addition to these formal communications, the board directors
are in regular informal communication with senior executives and
this fosters an open dialogue and exchange of knowledge and
experience between the management and the board.
The board had regular discussions with the executive manage-
ment during the year on the Groups strategy. An annual strategy
discussion retreat was held at the time of the Q3 regular board
meeting, during which the chief executives gave strategy presen-
tations in each area of the Groups businesses and had a de-
tailed review session with the board on the Groups strategy for
2014-2016.

Board Committees
The board has established standing committees to assist the
board to deliver its responsibilities. The boards standing commit-
tees are:
Governance, Nomination and Compensation Committee
Investment Committee

The committees are governed by written charters approved by
the Board.

Governance, Nomination and Compensation Committee
(GNC)
The GNC Committee reviews and implements, among other
things, compensation and corporate governance across the
Group. In 2013, the GNC Committee had 4 regular meetings.

In 2013, the members of the GNC Committee were:
Chuluun Ganbold, Chair
Richard Ranken
Erdenejargal Perenlei
Sabina Dziurman
Bold Magvan
Secretary: Ashidmaa D (VP, Investor Relations and
Corporate Affairs, TFG)

Investment Committee
The Investment Committee reviews and provides recommenda-
tions on the investment proposals at the Group level. The Invest-
ment Committee met 2 times in 2013.
Corporate Governance Report continued
In 2013, the members of Investment Committee were:
Frank Streppel, Chair
Sarah Djari, Member
Michael Madden, Member
Tselmuun Nyamtaishir, Member
Shuji Irie, Member
Amartuvshin Hanibal, non-voting member from management
Bolor Tserendorj, non-voting member from management
Secretary: Tserendorj Natsagdorj, Investment Officer, TFG
The directors are responsible for financial reporting in respect of
financial statements. The directors are responsible for the prepa-
ration of financial statements of the Company with a view to en-
suring that the financial statements give a true and fair of the
state of affairs of the Group and that relevant regulatory require-
ments and applicable accounting standards are complied with.
The management provides explanation and information to the
Board to enable the directors to make an informed assessment
of the financial information and position of the Company put to
the Board for approval.
The consolidated audited financial statements of the Group for
2013 were reviewed and approved by the Board.
The Board has overall responsibility for the internal control sys-
tem of the Group and for reviewing its effectiveness. The Board
is also responsible for maintaining an adequate internal control
system to safeguard the interests of the shareholders and the
assets of the Company. The Chief Internal Auditor of the Group
reports to the Boards Audit Committee.
TFG believes that effective communication with shareholders is
essential for enhancing shareholder involvement and investor
relations and understanding of the Groups business perfor-
mance and strategies. TFG recognizes the importance of share-
holder involvement and participation by being sufficiently in-
formed of decisions concerning important corporate matters en-
suring at the same time proper exercise of shareholder rights and
effective and prompt shareholder decision making.
Annual general meetings of shareholders provide a forum for
communication between the shareholders, the board and the ex-
ecutive management.
As one of the measures to safeguard shareholders interests and
rights, separate resolutions are proposed at the shareholders
meetings on each substantial issue. All resolutions put forward at
shareholders meetings are voted on by ballots and a tabulating
commission counts the ballots and announces the results of vot-
ing.
TFG recognizes the importance of safeguarding minority share-
holders rights. Although not specified in the governing docu-
ments, a board director can be nominated by minority sharehold-
ers.
Accountability and Audit
Internal Control
Communication with Shareholders and
Investor Relations
Shareholders Rights

Bold Magvan
CEO, Head of Executive Committee
Amartuvshin Hanibal
Managing Director
Zul Ganzorig
VP, Human Resources

Bat-Ochir Dugersuren
CEO, XacBank
Tsevegjav Gumenjav
CEO, XacLeasing
Tsogbadrah Galbadrah
CEO, TenGer Insurance
Enhbaatar Jambaldorj
CEO, XacSecurity
Munhsayhan Jargalsayhan
CEO, TianRong
For the year ended
December 31, 2013
Senior Executive Management of
TenGer Financial Group (Holding Company)
CEOs of the Group Companies
Taishir Tumurbaatar
General Counsel
Ulambayar Enebish
Chief Internal Auditor
Ashidmaa Dashnyam
VP, Investor Relations and
Corporate Affairs
Bold Magvan
CEO, TenGer Financial Group
Amartuvshin Hanibal
CEO, TenGer Capital

Management Team
Bolor Tserendorj
Finance Director

2011
January: Former XacBank CEO, Bold Magvan, becomes the
CEO of TFG
Crucial first steps were made to make TenGer a truly professional hold-
ing company with an active management function among one of
them is the transfer of the CEO position from Ganhuyag Chuluun to
Bold Magvan.
December: Reorganization of the Groups head office
Key focus was devoted on investment and risk management, treasury,
investor relations and corporate affairs, legal and compliance, internal
control and audit, and human resources.
The Group also produced its 5 year Business Plan as well update its
Vision and Mission statement to embrace the triple bottom line mission
and the highest standards of corporate governance and social
responsibility across the TenGer family companies.
December: XacBank becomes a systemic bank in Mongolia
Nearly 10 years after its inception, XacBank becomes the 4th largest
commercial bank in Mongolia in terms of total assets. The central bank
recognized XacBanks significance in the financial sector and resulted
in them labeling XacBank as systemically important institution.

2012
March: TenGer Capital is established as the Groups
investment banking arm
Through an 80% acquisition of Arta Invest, local brokerage and
advisory firm, the Group has extended its available services to
corporate as well as retail clients.
August: Urimqui TianRong MCC is established as the
Groups China based microcredit company
The Group owns 51% along with its other shareholders: IFC, MAK,
Xinjiang Longhaida and Shanghai Junhe from China. The goal of the
firm is to utilize XacBanks extensive experience in micro finance to
provide loans to the local market.

2013
August: ORIX Corporation became strategic shareholder of
ORIX Corporation of Japan, the third largest leasing group in the world,
has became a shareholder of TenGer Financial Group. The investment
exemplifies their trust in the Group and its management.
September: TenGer Insurance became 100% subsidiary of
After several rounds of negotiations with Petrovis, the full acquisition of
TenGer Insurance was finalized. With a fully integrated Group, all cross
sale synergies will accrue to the shareholders of TenGer Financial
Group.
2008
May: Change of name from XAC-GE Group to TenGer
Financial Group
The overwhelming majority of shareholders supported the name
change at its annual meeting. Tenger means sky in Mongolian that
is associated with greatness, eternity and endless boundaries. It is al-
so a play of words that can be broken down as Ten and Ger, where
ten is a number in English and ger stands for a nomadic round
shaped tent, a family, or a home in Mongolian.

June: TenGer Solutions is established as the Groups
software developer company
The firm was originally called Horus Nomadic Solutions that developed
the mobile banking software AMAR. The aim was to develop and
market a flexible and comprehensive mobile banking solution, geared
toward banks and micro-finance institutions.

2009
January: Mol Bulak Finance joins the Group as its Kyrgyz
Republic based micro credit company.
The Group made a pilot investment in Mol Bulak Finance, acquired
30.5%, an institution that was established as a micro credit company
to provide micro loans to the rural areas of Kyrgyzstan.

August: Representative office was set up in China
A representative office was set up in Beijing, China to supply manage-
ment with timely updates on the microfinance market and regulatory
environment in China.

2010
April: Group exits from Mol Bulak Finance
Due to the firms rapid expansion and civil unrest in Kyrgyzstan, the
Group successfully exited from Mol Bulak Finance

May: Acquired 50% of TenGer Insurance
The Group acquired 50% of TenGer Insurance, one of the largest
insurance companies in Mongolia, from ECM (TFG shareholder). The
other major shareholder of TenGer Insurance is Petrovis, one of Mon-
golias largest fuel distributors.

TenGer Financial Group has its origin from the merger of two pioneering non-bank
financial institutions of Mongolia, X.A.C. and Goviin Ehlel, in 2001. Below are the
significant recent events that occurred to our organization against the backdrop of the
changing times.

Recent History of TFG

Website www.tengerfinancialgroup.com
Telephone (976-11) 320341
TenGer Financial Group LLC
Established May 2007
Mongol Insurance building, 2nd floor, Enkhtaivan avenue 13,
SBD-1, Ulaanbaatar-14210, Mongolia
Website www.xacleasing.mn
Telephone (976) - 7011-2061
Email info@xacleasing.mn
XacLeasing LLC
Location of Head Office Post Branch 20A, PO Box-721, Ulaanbaatar-14200, Mongolia
Website www.xacbank.mn
Telephone (976-11) 318185
Email info@xacbank.mn
XacBank LLC
Established 2007
City Center, 11th floor, Altangerel street 5, SBD-8, Ulaanbaatar-
14200, Mongolia
Website www.tengerdaatgal.mn
Telephone (976-11) - 312234
Email info@tengerdaatgal.mn
TenGer Insurance LLC

Company Contacts

Established March 2012
Website www.tengercapital.mn
Telephone (976-11) - 7011-0637
Email info@tengercapital.mn
TenGer Capital LLC
Established April 2002
Mongol Insurance building, 3rd floor, Rm 304, Enkhtaivan avenue
13, SBD-1, Ulaanbaatar-14210, Mongolia
Website www.xacsecurity.mn
Telephone (976-11) - 318185
XacSecurity LLC
Established September 2012
11-A-4 and A-5, Hongshan New Century Plaza, No. 108 Xinhua Bei
Road, Tianshan District, Urumqi City, China
Telephone +86-991-8869-969
Urumqui Tianrong Micro-Credit LLC
Company Overview continued



2013
MNT'000

2012
MNT'000

2013
MNT'000

2012
MNT'000

Interest and similar income
188,247,032 132,072,558 682,699 622,443
Interest and similar expenses (101,603,895) (68,733,284) (954,506) (344,723)
Net interest income
86,643,137 63,339,274 (271,807) 277,720

Fees and commission income
5,888,041 3,398,492 2,975,599 2,516,980
Fees and commission expenses (1,035,694) (623,519) - -

Net fees and commission income
4,852,347 2,774,973 2,975,599 2,516,980

Net trading loss
2,739,208 2,318,960 123,574 (575,972)

Other operating income
6,871,267 367,800 (695,993) 157,988
Total operating income
101,105,959 68,801,007 2,131,373 2,376,716

Credit loss expense
(9,965,146) (3,066,123) - -
Net operating income
91,140,813 65,734,884 2,131,373 2,376,716

Operating expenses
(61,246,655) (46,103,722) (3,927,090) (3,589,369)

Amortisation of deferred grants
1,323,934 1,270,175 - -

Share of profit of an associate
308,009 102,028 - -
Profit before tax
31,526,101 21,003,365 (1,795,717) (1,212,653)

Income tax expense
(6,025,326) (5,219,758) (68,024) (62,244)
Profit/(loss) for the year
25,500,775 15,783,607 (1,863,741) (1,274,897)

Attributable to:
Equity holders of the parent

25,019,243

15,911,636

(1,863,741)

(1,274,897)
Non-controlling interests 481,532 (128,029) - -
25,500,775 15,783,607 (1,863,741) (1,274,897)
Other comprehensive income
Exchange differences on translation of
foreign operations, net of tax

4,967,017

487,876

-

-
Total comprehensive income, net of tax 30,467,792 16,271,483 (1,863,741) (1,274,897)

Attributable to:
Equity holders of the parent

29,986,260

16,399,512

(1,863,741)

(1,274,897)
Non-controlling interests 481,532 (128,029) - -
30,467,792 16,271,483 (1,863,741) (1,274,897)
Group Company
For the year ended December 31, 2013

Statement of Comprehensive Income

2013
MNT'000

2012
MNT'000

2013
MNT'000

2012
MNT'000
ASSETS

Cash and balances with central bank
238,621,284 174,464,009 - -
Due from banks 132,389,522 163,677,693 899,935 481,155
Reverse repurchase agreements 29,991,255 3,498,061 - -
Derivative financial instrument 636,835 -
Financial investment - held-for-trading 458 80,056 - -
Financial investments - available-for-sale 15,500,694 546,116 - -
Financial investments - held-to-maturity 329,582,816 88,135,490 - -
Loans and advances to customers 1,069,901,579 650,844,727 7,929,182 6,951,609
Other assets 10,745,612 8,192,581 402,030 891,793
Properties held for sale 5,105,763 1,031,577 - -
Property and equipment 31,574,782 25,776,697 421,291 448,068
Intangible assets 10,756,059 4,746,717 - -
Investments in subsidiaries - - 80,409,839 72,030,379
Investments in an associate - 2,057,700 - 1,750,000
Deferred tax asset 1,027,166 677,103 - -
TOTAL ASSETS
1,875,833,825 1,123,728,527 90,062,277 82,553,004

LIABILITIES

Due to banks 141,706,978 55,931,724 - -
Repurchase agreements 162,428,300 63,004,615 - -
Due to customers 639,662,729 511,978,212 -
Derivative financial instrument 626,804 - - -
Written put option 2,226,068 1,761,536 761,350 676,858
Borrowed funds 684,994,007 302,146,544 16,980,050 7,713,767
Subordinated loans 58,637,886 48,864,226 - -
Deferred grants 1,957,277 1,576,638 - -
Finance lease liability - - 266,163 312,948
Other liabilities 22,983,390 9,428,578 958,629 920,623
Income tax payable

2,205,943 1,099,803 31,018 -
TOTAL LIABILITIES 1,717,429,382 995,791,876 18,997,210 9,624,196

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
OF THE GROUP AND OF THE COMPANY

Ordinary shares
16,584,644 16,584,644 16,584,644 16,584,644
Share premium 56,495,362 56,495,362 56,495,362 56,495,362
Other reserves 9,579,293 9,579,293 809,461 809,461
Retained profits/(accumulated losses) 58,912,934 33,893,691 (2,824,400) (960,659)
Foreign exchange revaluation reserve 5,454,893 487,876 - -
Equity attributable to equity holders of the parent 147,027,126 117,040,866 71,065,067 72,928,808
Non-controlling interests 11,377,317 10,895,785 - -
TOTAL EQUITY
158,404,443 127,936,651 71,065,067 72,928,808

TOTAL LIABILITIES AND EQUITY
1,875,833,825 1,123,728,527 90,062,277 82,553,004
Group Company

Statement of Financial Position

2013
MNT'000

2012
MNT'000

2013
MNT'000

2012
MNT'000
CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 31,526,101 21,003,365 (1,795,717) (1,212,653)
Adjustments for:
Changes in fair value of held-for-trading financial instrument
and financial derivative instrument
(381,046) 41,371 84,492 676,858
Loss/(gain) on disposal of property, plant and equipment 6,174 (3,957) 24,665 (2,833)
Gain/(loss) on disposal of intangible asset (4,517) - - -
Gain/(loss) on disposal of properties held for sale (9,819) - - -
Unrealised foreign exchange (gain)/loss (2,113,032) (44,655) 795,859 (4,092)
Credit loss on loans and advances to customers 9,825,769 3,031,578 - -
Credit loss on other assets 139,377 34,545 - -
Depreciation of property, plant and equipment 3,867,582 2,936,709 59,720 48,606
Amortisation of intangible assets 824,252 541,181 - -
Property and equipment written off 220 - 80 -
Recoveries of/impairment loss on foreclosed properties 325,322 (13,048) - -
Recoveries of/impairment loss on properties held for sale - - - -
Amortisation of deferred grants (1,323,934) (1,270,175) - -
Reversal of current and deferred income tax payable - (97,522) - (97,522)
Share of profit of an associate (308,009) (102,028) - -
Dividend income - - - -
Operating profit/(loss) before working capital changes 42,374,440 26,057,364 (830,901) (591,636)
Changes in operating assets:
Statutory deposit with Bank of Mongolia (24,441,404) (23,376,094) - -
Due from banks 20,100,764 (104,241) - -
Reverse repurchase agreements (26,493,194) (3,498,061) - -
Loans and advances to customers (375,845,886) (104,905,149) (46,067) (3,535,748)
Other assets 368,253 (3,346,536) 508,874 (519,095)
Properties held for sale (3,967,398) -
Changes in operating liabilities:
Due to banks 81,954,306 (6,485,611) - -
Repurchase agreements 99,423,685 14,182,028 - -
Due to customers 108,904,582 147,936,826 - -
Other liabilities 6,187,326 4,054,387 31,473 268,379
Cash generated/(used in) from operations (71,434,526) 50,514,913 (336,621) (4,378,100)
Income tax paid (5,270,867) (5,095,982) (37,005) (92,639)

Net cash flows generated/(used in) from operating
activities
(76,705,393) 45,418,931 (373,626) (4,470,739)
Group Company

Statement of Cash Flows

2013
MNT'000

2012
MNT'000

2013
MNT'000

2012
MNT'000
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial investments (69,512,726) (24,315,604) - -
Proceeds from disposal of property, plant and equipment 320,105 421,355 37,000 153,619
Proceeds on disposal of intangible asset 6,600 - - -
Purchase of property, plant and equipment (9,066,237) (9,207,183) (94,688) (121,572)
Purchase of intangible assets (1,990,624) (1,105,823) - -
Acquisition of a subsidiary, net of cash acquired

238,257

-
Disposal of associates - - 1,750,000 -
Increase in investment in subsidiaries - - (8,379,460) (11,363,849)
Net cash flows used in investing activities (74,320,540) (33,968,998) (6,687,148) (11,331,802)

CASH FLOWS FROM FINANCING ACTIVITIES

Drawdown of borrowed funds 503,460,651 118,615,364 7,529,991 3,515,502
Drawdown of subordinated loans - 11,955,949 - -
Proceeds from issuance of ordinary shares - 22,284,373 - 11,252,683
Repayment of borrowed funds (165,082,378) (43,601,325) - -
Payment of finance lease liabilities - (23,416) (64,408) (23,416)
Dividends paid - (697,232) - -
Deferred grants received 1,704,573 2,136,771 - -
Net cash flows generated from financing activities
340,082,846 110,670,484 7,465,583 14,744,769

Net increase/(decrease) in cash and cash equivalents 189,056,913 122,120,417 404,809 (1,057,772)

Effect of exchange rate changes on cash and cash
equivalents
24,529,717 3,781,184 13,971 59
Cash and cash equivalents brought forward 316,929,478 191,027,877 481,155 1,538,868
Cash and cash equivalents carried forward 530,516,108 316,929,478 899,935 481,155
Group Company
Statement of Cash Flows continued

Group
Ordinary
shares
MNT'000

Share
premium
MNT'000

Other
reserves
MNT'000

Retained
profits
MNT'000

Foreign
currency
translation
reserve
MNT'000

Total
MNT'000

Non-
controlling
interest
MNT'000

Total Equity
MNT'000

1 January 2012 14,932,723 46,894,599 11,340,829 17,982,055

-
91,150,206 - 91,150,206
Profit for the year - - - 15,911,636 - 15,911,636 (128,029) 15,783,607
Other comprehensive income - - - - 487,876 487,876 - 487,876
Total comprehensive income - - - 15,911,636 487,876 16,399,512 (128,029) 16,271,483
Issuance of ordinary shares 1,651,921 9,600,763 - - - 11,252,684 - 11,252,684
Written put option - - (1,761,536) - - (1,761,536) - (1,761,536)
Acquisition of subsidiaries - - - - - - 11,023,814 11,023,814
At 31 December 2012 and
1 January 2013
16,584,644 56,495,362 9,579,293 33,893,691

487,876
117,040,866 10,895,785 127,936,651
Profit for the year - - - 25,019,243 - 25,019,243 481,532 25,500,775
Other comprehensive income - - - - 4,967,017 4,967,017 - 4,967,017
Total comprehensive income - - - 25,019,243 4,967,017 29,986,260 481,532 30,467,792
At 31 December 2013 16,584,644 56,495,362 9,579,293 58,912,934 5,454,893 147,027,126 11,377,317 158,404,443

Company

Ordinary shares
MNT'000

Share premium
MNT'000

Other reserves
MNT'000

Retained profits
/(accumulated
losses)
MNT'000

Total equity
MNT'000
1 January 2012 14,932,723 46,894,599 809,461 314,238 62,951,021

Total comprehensive loss - - - (1,274,897) (1,274,897)
Issuance of ordinary shares 1,651,921 9,600,763 - - 11,252,684
At 31 December 2012 16,584,644 56,495,362 809,461 (960,659) 72,928,808
Total comprehensive loss
- - - (1,863,741) (1,863,741)
Issuance of ordinary shares - - - - -
At 31 December 2013 16,584,644 56,495,362 809,461 (2,824,400) 71,065,067

Statement of Changes in Equity

GOLDEN FUND FOR
DEVELOPMENT ASSOCIATION
Central Tower, Room 508, Great Chinggis Khans Square 2, SBD-8 Ulaanbaatar-14200, Mongolia
www.tengerfinancialgroup.com (976-11) 320341

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