Annual Report 2012 - REDD-Monitor...2012/12/31 · Tanja Havemann Tanja Havemann originated,...

Annual Report 2012

Annual Report 2012

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Table of Contents

DIRECTORS, OFFICERS, ADVISERS AND COMPANY INFORMATION .......................................................................... 3

BOARD OF DIRECTORS .............................................................................................................................................. 4

CHAIRMAN’S STATEMENT ........................................................................................................................................ 6

DIRECTORS’ REPORT ................................................................................................................................................. 7

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ........... 9

DIRECTORS’ RESPONSIBILITIES STATEMENT........................................................................................................... 13

INDEPENDENT AUDITOR’S REPORT ........................................................................................................................ 14

STATEMENT OF COMPREHENSIVE INCOME ........................................................................................................... 15

STATEMENT OF FINANCIAL POSITION .................................................................................................................... 16

STATEMENT OF CASH FLOWS ................................................................................................................................. 17

STATEMENT OF CHANGES IN EQUITY ..................................................................................................................... 18

NOTES TO THE FINANCIAL STATEMENTS ............................................................................................................... 19

1. Reporting entity ................................................................................................................................................ 19

2. Basis of preparation .......................................................................................................................................... 19

3. Financial risk management ............................................................................................................................... 19

4. Capital management ......................................................................................................................................... 23

5. Significant accounting policies .......................................................................................................................... 24

6. Determination of fair values ............................................................................................................................. 28

7. Inventories / Revenue and segmental analysis ................................................................................................. 29

8. Financial assets ................................................................................................................................................. 30

9. Capital and reserves .......................................................................................................................................... 32

10. Operating expenses and costs related to issues of new shares ...................................................................... 34

11. Taxation ........................................................................................................................................................... 35

12. Related parties ................................................................................................................................................. 36

13. Borrowings ....................................................................................................................................................... 36

14. Net foreign exchange gains / (losses) .............................................................................................................. 36

15. Subsequent events .......................................................................................................................................... 36

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DIRECTORS, OFFICERS, ADVISERS AND COMPANY INFORMATION

Directors

Dr. Karl Preisig, Herrliberg, Switzerland Chairman Dr. David Haas, Al Seef, Bahrain Delegate Robert W. Hausheer Meyer, Buchen, Switzerland Forestry / Financial Engineering Tanja Havemann, Zurich, Switzerland Sustainability Stephen Hooper, Sorrento, Australia Forestry / Carbon Graham Taylor, Chelmsford, United Kingdom Taxes

Officers

John Rhys Hopkins, Holte, Denmark COO Rolf H. Küng, Zurich, Switzerland CFO Oliver Saager, Zurich, Switzerland Head Administration & Compliance Florian Wegmann, Zurich, Switzerland Head Investor Relations

Advisers

Salvatore Toscano, Rome, Italy Energy projects / Engineering Dr. Bruno Seemann, Zurich, Switzerland Legal

Registered office Company number

c/o IFIT Fund Services AG CH-440.3.016.333-3 Rothusstrasse 21 CH-6331 Hunenberg

Auditor Paying agent

Balmer-Etienne AG ISP Securitites AG Bederstrasse 66 Bellerivestrasse 45 CH-8002 Zurich CH-8008 Zurich

Investor Relations Bankiers

IFIT Institute For Innovative Trading AG Banque CIC (Suisse) Voltastrasse 61 CH-8021 Zurich CH-8044 Zurich

Designated Sponsor and Specialist Web Address

ICF Kursmakler AG Wertpapierhandelsbank www.4wm.ch Kaiserstrasse 1 DE-60311 Frankfurt am Main

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BOARD OF DIRECTORS

Dr. Karl Preisig

Karl Preisig started his career in the financial industry more than 30 years ago in New York, followed by several executive positions in some of the world's largest financial institutions in the US, UK and in Singapore.

After his return to Switzerland, Karl was appointed Managing Director and General Manager of JP Morgan in Zurich and from 1996 to 1998 he served as Chairman of the Executive Committee of Guyerzeller Bank.

Since 1999 Karl has been serving as an independent director in various companies.

Karl Preisig holds a doctorate in Business Administration from the University of Zurich. He also completed the International Advanced Management Program at INSEAD in France.

Dr. David Haas

David Haas has a PhD degree in business administration and finance from the University of Zurich, Switzerland.

David has been active for more than 20 years in management positions in the banking industry in Switzerland. He has a vast experience in corporate and private banking and has held positions with Credit Suisse, State Bank of Zurich and Julius Baer & Co. AG, where he built a sizeable network of national and international contacts. David was instrumental in the setting up, structuring and development of a Private Bank in Zurich, where he acted as member of the executive committee.

David is a founding partner of a Swiss regulated Asset Management company and holds various board positions.

Robert W. Hausheer Meyer

Robert W. Hausheer Meyer studied jurisprudence at the University of Zurich after his secondary education. At this time he had a parallel military career training as a pilot with the Swiss Air Force.

In 1980 he moved to Credit Suisse in Zurich as an investment advisor for private clients in Europe with positions in London and Nice. After five years he became an investment advisor in the private banking arm of Citicorp where he spent two years serving private clients. Since 1988 he has pursued his many family business interests culminating over the past five years in the investment management field.

In 1993 he launched an international investment fund group based in Dublin, Ireland, under the supervision of the Irish Central Bank. He ran the group from its founding until 2001, when he sold it to a Swiss listed company. He then structured the F.I.T. Timber Growth Fund and was a member of the Board of Directors.

Tanja Havemann

Tanja Havemann originated, performed and managed investments for the world's largest private sector carbon fund (Climate Change Capital). She was actively involved in forestry projects, covering Sub Saharan Africa and Southeast Asia. She has experience with forestry and infrastructure funds.

Tanja has advised a number of investors (e.g. Dexia Carbon Fund), as well as multilaterals including the UN Food and Agriculture Organization (ASO) and the World Bank on carbon and improved land management.

Tanja holds an MSc in Applied Environmental Economics, Imperial College, London, an LLM in Environmental Law and Policy from Canterbury Law School, University of Kent, and a BSc Hons in Tropical Environmental Science, University of Aberdeen. She is a founder and managing partner of Beyond Carbon LLC.

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Stephen Hooper

Stephen Hooper is the Managing Director of Rainforest Project Management Limited which is the project manager and developer of the April Salumei project. Rainforest Project Management Limited hold the Intellectual Property rights to the project and have developed propriety information including all policies, procedures and work practices necessary to develop and manage the April Salumei project as approved during the validation.

Stephen has researched and worked for the last three years in developing an in-depth understanding of the social and business issues that surround avoided deforestation projects in Papua New Guinea. His previous experience has seen him working in senior management roles including that of Managing Director of an ASX Listed company, which has provided him with the experience and insight to lead this diverse and complex project.

Graham Taylor

Graham Taylor qualified by examination to become a member of the UK Chartered Institute of Taxation in 1985.

In January 1990 he became a junior partner in a London based firm of taxation consultants serving a wide range of UK and internationally based clients.

In June 1992 he resigned to undertake an ambition of travelling overland through various parts of Africa. On his return to the UK Graham set up his own practice as a Chartered Tax Adviser and has been based at his current office for eleven years. His client base is primarily individuals who own and run their own businesses.

Graham has been serving as an independent Director in several international companies for many years.

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CHAIRMAN’S STATEMENT

Overview

Two-thousand and twelve was a record-breaking year in many ways for World Markets AG (“The Company”). This in spite of the continued financial and geo-political uncertainties and the ever-increasing regulatory environment.

The Company took a major step forward in 2012 by significantly increasing and further developing its business activities and its project pipeline through internal growth and through diversification into new business areas including sustainable biomass, energy and environmental goods projects. The Company reached an agreement on the acquisition of F.I.T. Management Limited (“FITML”), a licensed fund management company, which manages the F.I.T. Timber Growth Fund (“FIT”) with fund assets in excess of USD 330 million invested in Acacia Mangium plantations in the area of Roraima in Brazil's northernmost state. After 12 years, this project is moving from the planting and cultivation stages of high quality timber (FSC Forest Stewardship Counsel-certified), to the sustainable harvesting and production stage for various markets. This will generate higher returns on its investment, and with the recently signed co-operation agreement with Kronoswiss (Kronospan Switzerland AG), the Company anticipates a growing revenue stream from the project. Kronoswiss is a major European player in the manufacturing and finishing of timber products. The acquisition of FITML will allow the Company to generate income through management activities and further development of the Net Asset Value of the Brazilian activities.

In 2012 the Company also saw a significant increase in the number of projects identified as potentially profitable. Information on several of these projects is available on the Company’s website (www.4wm.ch).

Following the FITML acquisition, Mr. Robert W. Hausheer Meyer joined the Company’s Board of Directors (“Board” or “BoD”). Mr. Hausheer has been the driving force behind the development and success of the Brazilian project.

The Company received approval from BaFin (German authorities) to continue with its listing on the Frankfurt Stock Exchange and to join the Open Market Entry Standard as of 17 December 2012. The Company completed a reverse share split of 1 for 8, during the year.

The Company saw substantial growth in its asset base through the FITML acquisition, which was also reflected in the significant increase to its capital base during the year. It should also be noted that existing projects contributed strongly to the overall growth of the Company.

The Board and Management are currently evaluating new opportunities to actively growing the Company’s asset base and the continued delivery of attractive returns to investors. All details in respect to the Company’s activities in 2013 and other relevant shareholder information can be found on the Company’s website (www.4wm.ch).

Financial Results

Revenues for 2012 increased three fold to CHF 1.5 million while a rise in operational expenses to TCHF 324 resulted in improved profitability. There was an increase in investments in associates to CHF 11.3 million financed by capital increase to CHF 7.1 million (CHF 3.2 million in 2011) and borrowings.

Annual General Meeting

The Annual General Meeting (“AGM”) will be held at the offices of IFIT Institute For Innovative Trading, Voltastrasse 61, CH-8044 Zurich and we welcome shareholders to attend our meeting and to meet our Directors and staff. The date of the AGM is published in the corporate calendar on the Company’s website.

4 February 2013

Dr. Karl Preisig, Chairman

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DIRECTORS’ REPORT

The Directors present their report together with the audited financial statements for the year ended 31 December 2012.

Activities and business review

The principal activity of the Company is described in the Management Discussion and Analysis (“MD&A”) of this annual report.

Results and dividends

The results of the Company for the year are set out in the MD&A, the Statement of Comprehensive Income and the Statement of Financial Position of this annual report.

The Directors propose to allocate all of the available profits to the general legal reserves and therefore not to pay a dividend to the shareholders.

Strategy and future developments

Strategy and future developments of the Company are described in the MD&A of this annual report.

Risk management

The Company is exposed to a number of business risks which are disclosed in Note 3 to the financial statements.

Directors’ interests – Shares and remuneration

The Directors who served during the year and to the date of this report and their beneficial interests, including those of their spouses, at the end of the year in the Company were as follows:

There are no option plans for Directors and/or staff in place.

Details of the Directors’ remuneration are disclosed in Note 12 to the financial statements.

Major shareholdings

Shareholders holding more than 5% of the shares of the Company as at 31 December 2012 were:

Carbon Equity Fund SPC obo First Clean Sustainable SP 540 395 shares (48.3%)

Capital structure

Details of the authorised and issued share capital, together with details of the movements in the Company’s issued share capital during the year are shown in Note 9 to the financial statements.

The holders of ordinary shares are entitled to receive notice of and to attend and vote at any General Meeting of the Company. Every share represented at such meeting shall have one vote. All ordinary shares are entitled to participate in any distribution of the Company’s profits or assets.

There are no restrictions on the transfer of the Company’s ordinary shares. The shares are traded solely on the Frankfurt Open Market.

Directors' interests as at 31 December 2012 No of shares

Director

Stephen Hooper 42 343

Karl Preisig 9 374

Graham Taylor 6 250

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Key performance indicators Due to the Company having changed its business activities in 2011, key performance indicators are not applicable.

Disclosure of information to auditor

Each Director at the date of approval of this annual report confirms that:

(i) As far as he/she is aware, there is no relevant audit information of which the Company’s auditor is unaware of; and

(ii) He/she has taken all appropriate steps that he/she believes are necessary as a Director to make himself/herself aware of any relevant audit information and to ensure that the Company’s auditor is aware of such information.

4 February 2013 By order of the Board of Directors

Dr. David Haas, Delegate

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the results of operations and the financial condition of World Markets AG. The MD&A is provided as a supplement to, and should be read in conjunction with, our audited financial statements and the accompanying notes to the financial statements.

Unless otherwise indicated, all financial information presented in this MD&A, including tabular amounts, are prepared in accordance with International Financial Reporting Standards (“IFRS”).

Business description

(a) Overview

The principal activity of the Company is investing in companies using processes that meet the Clean Development Mechanism (“CDM”) design criteria or projects that are in the process of procuring carbon benefit units (“CBUs”) accredited under either the Climate Community Biodiversity Alliance standard (“CCBA”) or more likely the Verified Carbon Standard (“VCS”).

The profitability of the Company during 2012 was mainly driven by the sale of CBUs from the April Salumei project. While sales have thus far been exclusively from this project, there has been a marked increase in Q4 turnover. The Company anticipates further increases in growth throughout much of 2013. The Company expects this project to be VCS certified by the end of Q2 and since there has been such strong market participation in the trading of these pre-issuance CBUs, the Company intends to sell pre-issuance CBUs from other projects in its pipeline. This will not only increase interest in these projects, but it will also continue market momentum for this type of CBU.

The Company has progressed with the acquisition of F.I.T. Management Ltd. (“FITML”) which will substantially increase the Company’s returns, balance sheet and net income. The Company believes FITML can be further developed to provide shareholders with additional income.

(b) Key opportunities

During 2013 the Company anticipates adding additional sources of CBUs and Carbon Credits from the projects that are under negotiation with our business partners. The Company proposes to establish a sales team to directly market the CBUs to gain improved returns for the shareholders.

The addition of FITML will provide additional income and has the potential of providing further opportunities of increasing value in the fund.

Under negotiation is an opportunity to acquire several Bio-Gas Power Plants in Cambodia. This is viewed as a diversification into other green areas which will help and continue to improve income and capital value for the shareholders.

Additional green projects are being considered in other areas and locations and the Company will continue to investigate these opportunities in line with its business strategy during 2013.

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Financial highlights

(a) Statement of comprehensive income

For the year ended 31 December 2012, total profit for the year was TCHF 1’024, almost a five-fold increase from the TCHF 210 profit recorded in 2011. The increase was derived from CBU sales and the unrealised gain on F.I.T. Timber Growth Fund (“FIT”) shares held for trading.

Looking forward into 2013, the Company believes it is well positioned to build on these gains as further CBU sales and pre-certification sales come up in line. Furthermore, the Company looks set to start receiving the management fee from FIT, which in itself is a multiple of current income.

(b) Statement of financial position

The balance sheet of the Company was significantly strengthened during 2012. The main position, being the prepayments for the acquisition of FITML, will be funded by a mixture of cash and equity. The acquisition is expected to be completed in the first quarter of 2013.

The total assets of the Company increased to CHF 16.5 million at the end of 2012 compared to CHF 3.6 million at the end of 2011. This increase was primarily due to the investments in associates and the purchase of financial assets. On the capital side, this was reflected by an increase in equity, borrowings (non-current and current) and in other liabilities/due to related parties.

(in 1 000 CHF) 2012 2011 Change

KEY FIGURES

Gross profit 994 378 263%

Unrealised gains on financial assets at fair value

through profit or loss 550 -

Operating profit 1 217 229 530%

Earnings before taxes 1 241 232 535%

Total profit for the year 1 024 210 488%

(in 1 000 CHF) 2012 2011 Change

KEY FIGURES

Non current assets 11 863 37 31845%

Current assets 4 621 3 566 130%

TOTAL ASSETS 16 484 3 603 457%

Equity 7 071 3 194 221%

Non current l iabilities 777 0

Current l iabilities 8 636 409 2112%

TOTAL LIABILITIES AND EQUITY 16 484 3 603 457%

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(c) Statement of changes in equity

In order to accommodate the growth of the Company and in particular to finance the prepayment for the acquisition of FITML, the Company expanded its shareholder base with an issue of new shares. The equity markets reacted positively to the Company’s strategy by reflecting a share price increase of nearly +59% to close the year at EUR 15.995 per share versus EUR 10.08 in 2011.

(d) Statement of cash flows

The Company’s cash available decreased by TCHF 269 in 2012 to TCHF 332 as at 31 December 2012 even though the cash flows from operating activities were positive and contributed TCHF 78.

In 2012 the Company raised a total of CHF 8.5 million, of which CHF 2.8 million through an issue of new shares and CHF 5.7 million through short- and long-term borrowings. The cash raised was mainly used for down payments on the acquisition of FITML.

In order to meet the projected cash requirement in 2013 the Board has taken measures to mitigate the risk of difficulty in meeting the obligations associated with the short-term borrowings and the amounts due to the seller by preparing new issues of shares and the placement of these shares.

Risk report

The Company strengthened its risk management process through implementing a formal risk monitoring process by delivering on a quarterly basis a risk report created by the Management to the Board, providing the basis for its risk management decisions.

Currently the Board monitors the following risks on company and project level:

- Market risk; this definition summarises risks of changes in trends/following false trends, competition risks, development risks; risks from entering into new/unknown markets, acquisition risks; risks from new entering into new projects/acquisitions and cooperation risks; risks from co-operations and partners.

- Medium to high risks as per end of year were co-operations risks and development risks.

- Operational risk; this definition summarises risks from being public and the accuracy of public information, risks of meeting certification criteria/meeting them in time, risks to assets from handling the asset and counterparty risks. Marked, as medium risk was the risk of meeting the certification criteria in time due to unforeseen changes in methodologies of parts of the VCS.

(in 1 000 CHF) 2012 2011

Cash flows from / (-) used for operating activities 78 -2 304

Cash flows used for investing activities -8 834 0

Cash flows from financing activities 8 515 2 899

Net increase / (-) decrease in cash and cash equivalents -269 595

Cash and cash equivalents at beginning of year 601 5

Cash and cash equivalents at end of year 332 601

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- Legal and political risk; this definition summarises risks of political changes in countries of the Company’s activities and investments; risks of changes of the Kyoto Protocol and subsequent rules, contractual risks, litigation and claims risks. Political changes in countries of activities and investments reached the highest risk score as per end of year in this group.

- Financial risk; this definition summarises risks the main financial risks as described in note 3 such as credit risks, liquidity risks, market risks currency risks. Furthermore the company monitors equity risks cluster risks, risks from investment instruments, risk of high leave-payments, risk of unexpected massive decreases in returns, risks of non-accuracy of budget and financial plans, tax risks, insurance risks and Anti Money Laundering risks.

Medium to high risks where rated liquidity risks market risks, risks from unexpected decreases in returns due to changes in the financial environment as well as risks of non-accuracy of budget and financial plans due to the development stage of the Company. The overall risk report shows a risk exposure of the Company for the period ended 31 December 2012 that is medium to high, mainly due to the current acquisition of FITML.

The overall risk report shows a risk exposure of the Company for the period ended 31 December 2012 that is medium to high, mainly due to the current acquisition of FITML.

Strategy and future development

The Company’s strategy for 2013 is to maintain and build on its growth momentum in three specific areas: (1) the full integration of FITML, (2) to continue to grow CBU sales and (3) to implement the power production project in Cambodia. In addition to these specific businesses, the Company looks to further enhance shareholder value by moving forward with other projects currently in the pipeline.

The acquisition of FITML will provide the Company with additional potential growth in assisting in and developing the FITML business plan. During the coming period, the Company has the opportunity of discussing further developments of FIT with FIT shareholders.

4 February 2013

On behalf of the Management

John Rhys Hopkins, COO

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DIRECTORS’ RESPONSIBILITIES STATEMENT

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under this law, the Directors are required to prepare the Company financial statements in accordance with Swiss Law. In addition, the Directors have decided to prepare financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Under company law, the Directors will not approve the financial statements unless they are fully satisfied that they reflect a true and fair view of the state of affairs of the Company and its reported profit or loss of the period in review.

In preparing these financial statements, International Accounting Standard 1 requires that Directors:

properly select and apply accounting policies;

present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable readers to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

provide an accurate assessment of the Company's ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that accurately record and reflect the Company's transactions while disclosing with reasonable accuracy at any given time the financial position of the Company, which enables them to ensure that the financial statements comply with Swiss Law. Furthermore, they are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps to ensure the prevention or detection of fraud and other irregularities.

Lastly, the Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Note that legislation in Switzerland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

4 February 2013

By order of the Board of Directors

Dr. David Haas, Delegate

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INDEPENDENT AUDITOR’S REPORT

for the business year 2012 to the general meeting of shareholders of World Markets AG, Hünenberg

Report on the financial statements

As statutory auditor, we have audited the accompanying financial statements of World Markets AG, which comprise the statement of

comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes (page 15 – page 37) for the year

ended 31 December 2012.

Board of Directors’ Responsibility

The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of International

Financial Reporting Standards (IFRS), Swiss law and the company’s articles of incorporation. This responsibility includes designing,

implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material

misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate

accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with

Swiss law, Swiss Auditing Standards and the International Standards on Auditing. Those standards require that we plan and perform the

audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The

procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to

the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the

appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall

presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of World Markets AG

as of 31 December 2012, and the results of its operations, changes in equity and its cash flows for the year then ended in conformity with

International Financial Reporting Standards (IFRS) as adopted by the European Union and the International Financial Reporting

Interpretations Committee, comply with Swiss law and the company's articles of incorporation.

Report on Other Legal Requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728

CO and article 11 AOA) and that there are no circumstances incompatible with our independence.

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists,

which has been designed for the preparation of financial statements according to the instructions of the Board of Directors.

Zurich, 8 February 2013

Balmer-Etienne AG

Werner Pfäffli Tu'uyen Maria Lang Licensed audit expert Licensed audit expert (Auditor in Charge)

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STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARS ENDED 31 DECEMBER

(Expressed in CHF)

See accompanying Notes to the financial statements. Signed on behalf of the Board of Directors: Dr. David Haas, Delegate

Notes 2012 2011

REVENUE

Sales of goods 7 1 580 482 520 729

Costs of goods sold 7 -341 112 -72 837

Sales commissions 7 -245 525 -69 693

GROSS PROFIT 993 845 378 199

Unrealised gains on financial assets at fair

value through profit or loss 8 549 724 0

TOTAL REVENUE 1 543 569 378 199

Operating expenses 10 -324 394 -116 443

Marketing expenses 0 -25 206

Bank charges -2 120 -357

Depreciation on financial assets 8 0 -6 743

OPERATING PROFIT 1 217 055 229 450

Interest income 29 565 1 092

Interest expense -104 055 0

Foreign exchange gains 97 996 1 421

EARNINGS BEFORE TAXES 1 240 561 231 963

Income taxes 11 -216 650 -21 965

TOTAL PROFIT FOR THE YEAR, BEING TOTAL

COMPREHENSIVE INCOME FOR THE YEAR 1 023 911 209 998

BASIC EARNINGS PER SHARE 9 1.07 0.47

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STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER

(Expressed in CHF)

See accompanying Notes to the financial statements.

ASSETS Notes 2012 2011

Non current assets 11 862 720 37 252

Investments in associates 8 21 312 0

Advances and loans to related parties 12 520 707 37 252

Prepayments 8 11 320 701 0

Current assets 4 620 856 3 565 810

Inventories 7 3 343 364 2 960 222

Financial assets at fair value through profit or loss 8 828 360 0

Amounts due from related parties 12 10 077 0

Other receivables 107 281 4 975

Cash and cash equivalents 331 774 600 613

TOTAL ASSETS 16 483 576 3 603 061

EQUITY AND LIABILITIES Notes 2012 2011

Equity 9 7 070 650 3 194 145

Share capital 1 789 976 1 505 000

Share premium account 4 145 748 1 578 131

Retained earnings and reserves 1 134 926 111 014

Non current liabilities 777 371 0

Borrowings 678 421 0

Deferred tax liabilities 98 950 0

Current liabilities 8 635 555 408 916

Borrowings 5 009 730 0

Amounts due to related parties 12 3 201 450 0

Other liabilities 164 647 4 864

Accounts payable 550 352 412

Accrued expenses and provisions 225 378 0

Current tax l iabilities 33 800 51 640

TOTAL LIABILITIES AND EQUITY 16 483 576 3 603 061

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STATEMENT OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER

(Expressed in CHF)

Note, the presentation of the 2011 statement of cash flows has been adjusted to match the presentation of the 2012 statement of cash flows. See accompanying Notes to the financial statements.

Notes 2012 2011

Cash flows from / (-) used for operating activities 77 707 -2 304 085

Operating profit for the year 1 217 055 229 450

Adjustments for

Unrealised gain on financial assets at fair value through

profit or loss 8 -549 725 0

Impairments and other non-cash items net 0 20 693

Working capital changes

Increase in inventories -383 142 -2 960 222

Increase in receivables -112 383 -4 975

Increase / (-) decrease in payables -192 079 357 276

Decrease in prepaid expenses and accrued income 0 7 903

Increase in accrued expenses excluding accrued interest 99 818 45 320

Foreign currency differences on working capital changes 3 004 875

Income tax paid -4 840 -405

Cash flows used for investing activities -8 834 014 32

Investments in associates -21 312 0

Prepayments -8 077 751

Purchases of marketable securities -278 636 0

Lendings to associates -485 880 0

Interest received 29 565 32

Cash flows from financing activities 8 514 879 2 898 720

Net proceeds from issue of new shares 9 2 729 910 2 964 731

Realised gains on treasury stocks 38 465 0

Increase in short-term borrowings 5 090 633 0

Increase in long-term borrowings 680 845 0

Interest paid -24 974 0

Decrease in amounts due to related parties 0 -66 011

Net foreign currency differences of cash and cash equivalents -27 409 680

Net increase / (-) decrease in cash and cash equivalents -268 836 595 348

Cash and cash equivalents at beginning of year 600 611 5 263

Cash and cash equivalents at end of year 331 774 600 611

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STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 DECEMBER

(Expressed in CHF)

Retained earnings and reserves contain net reserves of TCHF 895, which are not available for distribution due to legal restrictions.

See accompanying Notes to the financial statements.

Share Retained earnings Total

Share capital premiums and reserves equity

Balance at 1 January 2011 100 000 0 -98 985 1 015

Issue of new share capital 1 405 000 1 684 350 3 089 350

Costs of issue of new shares, net of tax -106 219 -106 219

Net income for the period 209 998 209 998

Rounding differences 0 0 1 1

Balance at 31 December 2011 1 505 000 1 578 131 111 014 3 194 145

Balance at 1 January 2012 1 505 000 1 578 131 111 014 3 194 145

Issue of new share capital 284 976 2 951 283 3 236 259

Costs of issue of new shares, net of tax -415 207 -415 207

Net income for the period 1 023 911 1 023 911

Gains on trading with treasury shares, net of tax 31 541 31 541

Rounding differences 0 0 1 1

Balance at 31 December 2012 1 789 976 4 145 748 1 134 926 7 070 650

Annual Report 2012

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NOTES TO THE FINANCIAL STATEMENTS

1. Reporting entity

World Markets AG (the “Company”) is a company domiciled in Switzerland and is listed on the Open Market in Frankfurt, Germany (ISIN: CH0039402646 – WKN: A0NJ8B – Ticker: 4WM). The Company exists pursuant to art. 620 et seq. of the Swiss Code of Obligations and has its registered office in Hunenberg, Switzerland. World Markets AG is focused on the strategic development of carbon abatement projects worldwide.

2. Basis of preparation

(a) Statement of compliance

These financial statements have been prepared in accordance with the requirements of IFRS as adopted by the European Union and International Financial Reporting Interpretations Committee.

These financial statements were approved by the Board of Directors and authorised for issue on 7 February 2013.

(b) Basis of measurement

These financial statements have been prepared on the historical cost basis except for financial assets which are measured at fair value.

(c) Functional and presentation currency

These financial statements are presented in Swiss Francs (“CHF”), which is the Company’s functional currency.

(d) Use of estimates and judgements

The preparation of the financial statements in conformity with IFRS requires Management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future periods affected.

(e) Going concern basis

The Company’s activities, together with the factors likely to affect its future development, performance and position are set out in the MD&A of this annual report. It also includes the Company’s objectives, policies and processes for managing its business risk objectives, which includes its exposure to credit, market and operational risks. The Company continues to conserve cash resources. After making enquiries, the Directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason the Directors continue to adopt the going concern basis in preparing the financial statements.

3. Financial risk management

The Company has exposure to the following risks:

Credit risk

Liquidity risk

Market risk

Currency risk

Interest rate risk

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This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risks, and the Company’s management of capital. Further quantitative disclosures are included throughout these financial statements.

Credit risk

Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s related party loans, cash and cash equivalents. Due to the nature of these loans and the collaterals held by the Company, Management deems the risk involved to not be significant. The Company’s cash is held at three institutions, being Banque CIC (Suisse), with a credit rating of A+ (Fitch), Swiss Postfinance, with a state guarantee, and ISP Securities AG, not rated. Management deems the credit risk exposure for the Company to not be significant. Thus no additional measures have been taken to mitigate this risk since Management has deemed all financial instruments to be of a standard risk grade.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The cash requirement for the completion of the acquisition of FITML could jeopardise the liquidity situation of the Company. Due to the size of the investment this risk is imminent and material. As at 31 December 2012, the cash required was provided mainly by short-term borrowings. The Board has taken measures to mitigate the risk of difficulty in meeting the obligations associated with the short-term borrowings and the amounts due to the seller by preparing new issues of shares and the placement of these shares.

The investment in Carbon Benefit Units (“CBU”) also poses a liquidity risk, as these assets are not traded on a stock exchange or another regulated market. However, they are predominantly traded on an OTC market. Management is taking measures to mitigate this risk by creating its own marketing and sales team.

The maturity of the Company’s assets and liabilities as of 31 December 2012 and 2011 is presented in the following table:

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Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The investment in Carbon Benefit Units poses a number of market risks to the Company. The market for these units is an emerging market and it may display volatile pricing and be subject to uncertainty, speculation and regulatory intervention. The prices the Company receives for its product are subject to market forces that are beyond the Company’s control. The Company monitors the stability and trends of market prices closely and, where possible, will negotiate agreements that reflect market prices and maintain adequate underlying profit margins.

Currency risk

The functional currency (“base currency”) of the Company is Swiss Francs (“CHF”). Besides CHF the Company holds assets and liabilities in the following currencies (“non-base currencies”): United States Dollars (“USD”), Euros (“EUR”) and British Pounds (“GBP”) and is therefore exposed to currency risk. The following table shows the Company’s net exposure in currency risk as per the end of the financial years 2012 and 2011.

No scheduled

maturity

Less than

1 month

1 to 3

months

3 to 59

months

(in 1 000 CHF) 2012 2011 2012 2011 2012 2011 2012 2011

Financial Assets

Investments in associates

and prepayments 0 0 0 0 0 0 11 342 0

Advances and loans to

related parties 0 0 0 0 0 0 521 37

Inventories 0 0 0 0 3 343 2 960 0 0

Financial assets at fair value

through profit or loss 0 0 0 0 828 0 0 0

Amounts due from related

parties 0 0 10 0 0 0 0 0

Other receivables 0 0 107 5 0 0 0 0

Cash and cash equivalents 332 601 0 0 0 0 0 0

Total 332 601 117 5 4 172 2 960 11 863 37

Financial Liabilities

Borrowings and deferred tax

l iabilities 0 0 0 0 -5 010 0 -777 0

Amounts due to related

parties 0 0 0 0 -3 201 0 0 0

Other liabilities 0 0 -165 -5 0 0 0 0

Accounts payable 0 0 -1 -352 0 0 0 0

Accrued expenses and tax 0

provisions 0 0 -259 -52 0 0 0 0

Total 0 0 -424 -409 -8 211 0 -777 0

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Management deems the risk related to the net exposures in EUR and GBP as not significant and thus has not taken any additional mitigating measures on these. On the other hand Management deems the net exposure in USD as relevant. It derives mainly from the acquisition of FITML. Management will take measures to mitigate the risk once the acquisition is completed.

The currency exchange rates applied as per the end of the financial years 2012 and 2011 were the following:

2012 2011

EUR/CHF: 1.2072 1.2168

USD/CHF: 0.9147 0.9381

GBP/CHF: 1.4856 1.4589

The following paragraph presents sensitivities of profit or loss and equity to reasonably possible changes in exchange rates applied to the financial position per balance sheet date relative to the functional currency of the Company, with all other variables held constant.

Should EUR strengthen/weaken by 25% against CHF, the Company’s net assets would decrease/increase by TCHF: 12

Should USD strengthen/weaken by 25% against CHF, the Company’s net assets would increase/decrease by TCHF: 1’851

Should GBP strengthen/weaken by 25% against CHF, the Company’s net assets would increase/decrease by TCHF: 3

GBP

(in 1 000 CHF) 2012 2011 2012 2011 2012 2011

Financial Assets


and prepayments 0 0 11 342 0 0 0


related parties 483 0 0 0 0 0

Inventories 0 0 3 343 2 960 0 0


through profit or loss 0 0 828 0 0 0


parties 3 0 0 0 0 0

Other receivables 23 0 0 0 0 0

Cash and cash equivalents 263 27 1 16 13 58


Borrowings (Non current l iabilities) -483 0 0 0 0 0

Borrowings (Current l iabilities) -336 0 -4 674 0 0 0


parties 0 0 -3 201 0 0 0

Other liabilities 0 0 -165 0 0 0

Accrued expenses and provisions -3 0 -71 0 0 0

Net currency exposure -50 27 7 403 2 976 13 58

USDEUR

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Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s interest rate risk arises from short and long-term borrowings. The Company’s management mitigates the exposure to interest rate risk by ensuring fixed terms financing from direct investors and investment funds.

The table below summarises the Company’s exposure in interest rate risk as of 31 December 2012 and 2011:

4. Capital management

The Board’s policy is to maintain a strong capital base as to keep up shareholders’, creditors’ and market’s confidence and to sustain future development of the business. Capital consists of share capital, share premiums, reserves and retained earnings of the Company. The Board monitors the return on capital as well as the level of dividends to shareholders.

Interest bearing Non-interest bearing

(in 1 000 CHF) 2012 2011 2012 2011

Financial Assets


and prepayments 0 0 11 342 0


related parties 521 37 0 0

Inventories 0 0 3 343 2 960


through profit or loss 0 0 828 0


parties 0 0 10 0

Other receivables 0 0 107 5

Cash and cash equivalents 332 601 0 0

Total 853 638 15 630 2 965


Borrowings and deferred tax

l iabilities 678 0 99 0

Borrowings (Current l iabilities) 5 010 0 0 0


parties 0 0 3 201 0

Other liabilities 0 0 165 5

Accounts payable 0 0 1 352

Accrued expenses and tax provisions 0 0 259 52

Total 5 688 0 3 725 409

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The Company’s net debt to equity ratio at the reporting dates were as follows:

In order to reduce the net debt to equity ratio, the Company is going to increase its share capital during the first quarter of the year 2013.

5. Significant accounting policies

The accounting policies set out below have been applied consistently to all years presented in these financial statements.

(a) Investments in associates and jointly controlled entities (equity accounted investees)

Associates are all entities over which the Company has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The Company’s investment in associates includes goodwill identified on acquisition.

(b) Foreign currency

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuations where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the statement of comprehensive income within ‘finance income or costs’. All other foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other (losses)/gains – net’.

Investment and financing activities denominated in foreign currency are presented in the cash flow statement at the exchange rates prevailing at the dates of the transactions.

Changes in the fair value of monetary securities denominated in foreign currency and classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available for sale, are included in other comprehensive income.

(in 1 000 CHF) As at 31 December 2012 2011

Net debt 9 081 -192

Total l iabilities 9 413 409

Less: cash and cash equivalents -332 -601

Total equity 7 071 3 194

Net debt to equity ratio 128.43% -6.00%

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(c) Trade receivables

Trade receivables are recognised initially at the transaction price. They are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

(d) Cash and cash equivalents

The Company’s statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts.

(e) Inventories

Inventories are stated at the lower of cost and net realisable value. In 2012 the Company changed its valuation method for the inventory from FIFO to Average Cost. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. Costs of inventories include the transfer from equity of any gains/losses on qualifying cash flow hedges for purchases of raw materials, if applicable.

(f) Financial instruments

(i) Non-derivative financial assets

The Company initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets are recognised initially on the trade date, which is the date that the Company becomes a party to the contractual provisions of the instrument.

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability.

The Company classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss and loans and receivables.

Financial assets at fair value through profit or loss

A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition. Financial assets are designated at fair value through profit or loss if the Company manages such investments and makes purchase and sales decisions based on their fair value in accordance with the Company’s documented risk management or investment strategy. Attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Loans and receivables comprise amounts due from related parties, prepayments and other receivables.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less.

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(ii) Non-derivative financial liabilities

The Company initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Company becomes a party to the contractual provisions of the instrument.

The Company derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

The Company classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise of interest-bearing loans, deferred tax liabilities, amounts due to related parties, trade payables, other payables and bank overdrafts.

Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

(iii) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.

(g) Impairment

Non-derivative financial assets

A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Loans and receivables

The Company considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually significant receivables are assessed for specific impairment. All individually significant loans and receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans and receivables that are not individually significant are collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics.

In assessing collective impairment the Company uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. Interest on the impaired asset continues to be recognised. When a subsequent event (e.g. repayment) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

(h) Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

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(i) Provisions

Provisions for restructuring costs and legal claims are recognised when: the Company has a present legal or constructive obligation as a result of past events; it is probable that a transfer of economic benefits will be required to settle the obligation; and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

(j) Revenue recognition

The Company follows the principles of IAS 18, ‘Revenue Recognition’, in determining appropriate revenue recognition policies. Therefore in principle revenue is recognised to the extent that the economic benefits associated with the transaction will flow into the Company.

Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards or ownership have been transferred to the customer, recovery is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

(k) Finance income

Finance income comprises interest income on cash balances and on amounts due from related parties.

(l) Earnings per share

The Company presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share are calculated by dividing the profit or loss attributable to shareholders by the weighted average number of shares in issue during the year, adjusted for own shares held, if any. Diluted earnings per share is determined by adjusting the profit or loss attributable to shareholders and the weighted average number of shares outstanding, adjusted for own shares held, for the effects of all dilutive potential shares, which comprise convertible notes and share options granted to employees, if any.

(m) Changes in accounting policies

Changes in accounting policies that arise from the application of new or revised standards and interpretations are applied retrospectively, unless the transitional requirements of the particular standard or interpretation specify that the changes are to be applied prospectively. Retrospective application requires that the results of the comparative period and the opening balances of that period are restated as if the new accounting policy had always been applied. Prospective application requires that the new accounting policy only be applied to the results of the current period and the comparative period is not restated. Comparatives are reclassified or extended from the previously reported results to take into account any presentational changes that are required on the application of new or revised standards and interpretations.

(n) Changes in IFRS implemented in 2012.

The Company has implemented various minor amendments to existing standards and interpretations, which have no material impact on the overall result and financial position.

(o) New standards and interpretations not adopted

The following new standards have been issued by the International Accounting Standards Board (“IASB”) and will be implemented on 1 January 2013:

IFRS 10 ‘Consolidated Financial Statements’.

IFRS 11 ‘Joint Arrangements’.

IFRS12 ‘Disclosure of Interests in Other Entities’.

IFRS 13 ‘Fair Value Measurement’.

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IAS 19 (revised) ‘Employee Benefits’.

The Company does not expect that the adoption of the standards listed above will have a material impact on its overall results and financial position.

(p) Segment reporting

IFRS 8 requires that an entity discloses financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments. Operating segments are identified on the basis of internal reports that are regularly reviewed by the Board to allocate resources and to assess performance. There is no separately identifiable segment according to IFRS 8, therefore no segment reporting is disclosed.

(q) Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement of comprehensive income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available, against which the temporary differences can be utilised.

Deferred income tax is provided for temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

6. Determination of fair values

A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the methods described below. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(i) Financial assets at fair value through profit or loss

The investment in World Market GmbH, Germany ("WM") was initially recorded at cost, which was the purchase price paid for it. The shares of WM are not publicly traded on any stock exchange; therefore the Directors used WM's net asset value at year-end in order to determine the fair value. In 2011, Management

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deemed that there was no value left in WM and decided to write down the investment in full and eventually all the shares were sold at EUR 1.

The investment in F.I.T. Timber Growth Fund Ltd., is carried at fair value. This fair value is based on the latest available price per share as per 30 November 2012 at USD 170.94 (CHF 156.50, rounded). The total value of the 10’406 shares held is CHF 1’628’194. As the shares are not traded and there is a lock-up period ending only in June 2014, the Management believes that an allowance for illiquidity amounting to CHF 799’834 is necessary.

(ii) Amounts due from related parties

The loans have fixed terms of repayment. Furthermore, the loans are secured by one million CBUs, and therefore Management deems the fair value to be equal to the carrying amount.

(iii) Amounts due to related parties

The amounts due to related parties have fixed terms of repayment and therefore Management deems the fair value to be the equal to the carrying amount.

7. Inventories / Revenue and segmental analysis

The Company initially purchased 5’000’000 metric tonnes of CO2e Carbon Benefit Units for an amount of CHF 2’500’000 (CHF 0.50 per unit). The debt was converted into equity. The Company started to buy and sell units on the OTC market in 2011.

In 2012 the Company changed its valuation method for the inventory from FIFO to Average Cost. As the impact on the 2011 figures amounts to TCHF 12.5 only, Management considers it as not material and therefore a change of the 2011 financial statements is not required. The Company pledged 1.2 million CBUs (book value TCHF 828) as collateral for loans received. See Note 13.

Inventory (in CHF) 2012 2011

Carbon Benefit Units ("CBU's")

Book value 3 343 364 2 960 222

Opening balance 2 960 222 0

Units purchased (cost) 724 254 3 033 059

Units sold (sales price) -1 580 482 -520 729

Sales commissions paid 245 525 69 693

Realised gross profit 993 845 378 199

Units 4 821 782 5 048 782


Units purchased 300 000 5 194 456

Units sold -527 000 -145 674

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8. Financial assets

(a) Financial assets at fair value through profit or loss

The F.I.T. Timber Growth Fund Ltd. shares (ISIN VCP4170W1089, WKN 658910, BBG TIMBERF) are held for trading. The latest available price per share as per 30 November 2012 was USD 170.94 (CHF 156.50, rounded). The total value of the 10’406 shares held is CHF 1’628’194. As the shares are not traded on an active market and there is a lock-up period ending only in June 2014, Management believes that an allowance for illiquidity amounting to CHF 799’834 is necessary. This resulted to an unrealised gain from financial assets at fair value through profit or loss of CHF 549’724.

For the investment in World Market GmbH, Germany ("WM") please refer to Note 6.

(b) Investments in associates and prepayments for acquisitions

In October 2012, the Company acquired a 40% stake in Southern Partners AG. The investment is accounted for at equity.


Financial assets at fair value through profit or loss 828 0

World Market GmbH, Germany (0% / 100%) 0 0

Opening fair value - EUR 0 6

Movement in fair value 0 -5

Sales price 0 0

Fair value - CHF equivalent 0 0

Opening fair value (CHF equivalent) 0 7

Movement in fair value (CHF equivalent) 0 -7

F.I.T. Timber Growth Fund Ltd., St. Vincent 828 0

Opening fair value 0 0

Purchases (10 406 shares) 279 0

Movement in fair value 1 350 0

Ill iquidity allowance -800 0


Financial assets at equity 21 0

Southern Partners AG, Zurich (40%) 21 0

Opening value 0 0

Purchases (40 shares) 21 0

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On 25 September 2012 World Markets AG signed a share purchase agreement (“SPA”) with Mr. Robert W. Hausheer Meyer, whereby the Company acquires 100% of F.I.T. Management Ltd. (“FITML”). FITML is a licensed fund management company in St. Vincent and the Grenadines, registered as International Business Company with number 9013 IBS 2001, which has been managing the F.I.T. Timber Growth Fund (“FIT”) for more than 10 years.

FIT is a private mutual fund licensed in St. Vincent and the Grenadines with fund assets of USD 330 million (30 November 2012) that offers qualified investors an opportunity to make a fully ecological investment into renewable natural resources, in particular into sustainable timber plantations and the management of natural forests.

The total purchase price for 100% of the FITML shares is USD 27.437 million whereas USD 17.3 million are to be paid in cash and USD 10.137 million in the form of new shares of the Company to be newly issued. The Extraordinary General Meeting of the shareholders held on 25 October 2012 has approved the transaction.

(c) Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The following table presents the Company’s assets and liabilities that are measured at fair value at 31 December 2012:

For the financial year 2011 the Company did not have any balance sheet item requiring a fair value hierarchy.


Prepayment at cost 11 321 0

F.I.T. Management Ltd., St. Vincent 11 321 0

Opening value 0 0

Prepayment as per Share Purchase Agreement 11 321 0

(in 1 000 CHF) Level 1 Level 2 Level 3 Total

Assets


through profit or loss

- Equity 0 828 0 828

Total 0 828 0 828

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9. Capital and reserves

The share capital of the Company is CHF 1’789’976 and is divided into 1’118’735 bearer shares with a par value of CHF 1.60 per share. The shares are fully paid-in. Each share entitles to one vote.

The Board of Directors is empowered, at any time but latest 30 November 2013, to increase the share capital of the Company by a maximum of CHF 215’024 by issuing a maximum number of 134’390 bearer shares with a par value of CHF 1.60 per share, without privileges of individual classes. The share capital has to be fully paid-in and increasing the share capital in partial amounts is permitted.

On 11 June 2012, a reverse split 1 for 8 reduced the number shares in issue from 7’525’000 to 940’625.

In November 2012 there was a new issue of 178’110 shares against cash of CHF 18.17 per share. The shares were issued from the authorised capital.

(a) Weighted average number of shares in issue

(b) Earnings per share for the years ended 31 December

Diluted earnings per share: There is neither an option plan for employees in place, nor any convertible bonds outstanding.

Split-adjusted Period

No. of shares no. of shares from date to date No. of days Weight Weighted

10 000 000 62 500 01.01.2011 07.06.2011 157 157/365 26 884

7 600 000 110 000 07.06.2011 20.07.2011 43 43/365 12 959

126 000 000 897 500 20.07.2011 12.12.2011 145 145/365 356 541

345 000 940 625 12.12.2011 31.12.2011 20 20/365 51 541

365 447 925

Split-adjusted Period

No. of shares no. of shares from date to date No. of days Weight Weighted

7 525 000 940 625 01.01.2012 20.01.2012 19 19/365 48 964

7 475 000 934 375 20.01.2012 02.05.2012 103 103/365 263 673

7 466 350 933 294 02.05.2012 14.11.2012 196 196/365 501 166

1 111 404 1 111 404 14.11.2012 14.12.2012 30 30/365 91 348

1 118 735 1 118 735 14.12.2012 31.12.2012 17 17/365 52 105

365 957 257

(in CHF) 2012 2011

Basic earnings per share

Profit on ordinary activities after taxation 1 023 911 209 998

Adjustment to reflect impact of dilutive share options 0 0

Earnings 1 023 911 209 998

Number of shares in issue (weighted average) 957 257 447 925

(number of shares in issue 2011 adjusted by split ratio)

Basic earnings per share being diluted earnings per share 1,07 0,47

Annual Report 2012

P a g e | 33

(c) Movements of shares in issue

Note: For details of cost related to new share issues see Note 10.

2012 2011

Closing number of shares on hand at year-end 1 118 735 7 525 000

Opening shares 7 525 000 10 000 000

Shares issued on 7 June 2011 at par value CHF 0.01 n/a 7 600 000

Shares issued on 20 July 2011 at CHF 0.02 n/a 126 000 000

Reverse split 20 for 1 on 31 August 2011 n/a -136 420 000

Shares issued on 12 December 2011 at CHF 1.43 n/a 345 000

Reverse split 1 for 8 on 20 June 2012 -6 584 375 n/a

Shares issued on 14 November 2012 178 110 n/a

(in CHF) 2012 2011

Share capital 1 789 976 1 505 000

Opening share capital 1 505 000 100 000

Shares issued on 7 June 7 2011 at par value CHF 0.01 n/a 76 000



Shares issued on 14 November 2012 at CHF 18.714 284 976 n/a

Share premium account 4 145 749 1 578 131


Shares issued on 7 June 2011 at par value CHF 0.01 n/a 0



Shares issued on 14 November 2012 at CHF 18.714 2 951 283 n/a

Gains on trading with treasury shares, net of tax 31 541 n/a

Costs related to new share issues, net of tax

Stamp duties paid -32 036 -21 790

Other costs related to new share issues, net of tax -383 170 -84 428

Annual Report 2012

P a g e | 34

(d) Share price and market capitalisation

The annualised performance of the share price for the year ending 31 December 2012 was 58.68% (520% in 2011).

As at 31 December 2012, the market capitalisation of the Company was EUR 17.9 million (CHF 21.6 million) (EUR 9.5 million/CHF 11.5 million in 2011).

(e) Trading with treasury shares

During 2012 the Company purchased and sold treasury shares both OTC and through the market and realised net gains of CHF 38’464. This gain was recorded as contribution to the share premium account.

10. Operating expenses and costs related to issues of new shares

The costs related to issues of new shares (net of tax) are considered as one-time costs incurred due to changes required by the Frankfurt Open Market. These costs were recognised as reduction of the share premiums received.

(in EUR) 2012

2011

(Split adjusted)

Month end closing share prices

January 11.16 2.88

February 11.80 2.40

March 12.54 2.40

April 13.42 2.08

May 14.34 0.32

June 15.18 1.44

July 15.55 3.20

August 15.67 4.80

September 14.80 6.40

October 15.44 8.24

November 15.70 9.20

December 16.00 10.08

(in 1 000 CHF) 2012 2011

Operating expenses 324 116

Directors fees, management fees and expenses 135 50

Listing costs 30 20

Audit fees 24 18

Business management and accounting fees 108 27

Registered office and other administrative expenses 27 2

Costs related to issues of new shares 415 106

Registrar, notary and publication costs 14 18

Paying agent fees 44 34

Audit fees 0 13

Consulting fees 26 38

Stamp duty 32 22

Placement fees 122 0

Costs for establishing the listing prospectus 268 0

Adjustment for tax impact -91 -18

Annual Report 2012

P a g e | 35

11. Taxation

As a Company with registered offices in Hunenberg, Canton of Zug, Switzerland, the Company is subject to the following taxes:

(i) Federal corporate tax on profits (max rate = 8.5%)

(ii) Cantonal corporate tax on profits

(iii) Cantonal corporate tax on equity

(iv) Communal corporate tax on profits

(v) Communal corporate tax on equity

The total current tax rate for Cantonal and Communal taxes on profits is 9.47%. The taxes on equity amount to 0.08% of the equity. Previous years’ losses can be offset against current year profits for a period of maximum 7 years.

During 2012, the Company has paid TCHF 5 for Cantonal, Communal and Federal taxes based on final taxation for the year ended 31 December 2011. It has accrued estimated taxes of TCHF 34 for the year ended 31 December 2012 for Cantonal, Communal and Federal taxes.

The deferred tax expense on the unrealised gains on financial assets at fair value through profit or loss for the year ending 31 December 2012 amounts to TCHF 99. The total tax expense including the tax impact on costs related to issues of new shares and on profit on treasury shares for the same period amounts to TCHF 217.

The Company is taxed based on financial statements established according to Swiss GAAP which allows the costs related to the issues of new shares to be expensed through profit or loss. Therefore the taxable net profit deviates from the net profit as per the statement of comprehensive income of this report as follows:

(in CHF) 2012 2011

Taxable profit calculation

Net profit per statement of comprehensive income 1 023 911 209 998

Taxation according to Swiss GAAP 33 481 3 565

Deferred tax 98 951 0

Profit on treasury shares trading, net of tax 31 541 0

Deferred income -549 724 0

Costs related to issues of new shares, net of tax -415 207 -106 219

Profit before taxes according to Swiss GAAP 222 953 107 344

Tax losses carried forward 0 -98 985

Taxable profit 222 953 8 359

Taxes on taxable profit 33 481 3 565

Deferred taxes on deferred income 98 950 0

Tax impact on costs related to issues of new shares 91 143 18 400

Tax impact on profit on treasury shares -6 924 0

Total tax expense according to IFRS 216 650 21 965

Annual Report 2012

P a g e | 36

12. Related parties

The transactions and balances with related parties as of 31 December 2012 were as follows:

13. Borrowings

The Company’s borrowings mainly come from private investors. Loans are mainly short term with a fixed interest rate of 10% p.a. The total amount due within the next twelve months is CHF 5 million. The interest expenses in 2012 amounted to TCHF 104. The Company pledged 1.2 million CBUs with a book value of TCHF 828 to the lender of the long-term loan.

14. Net foreign exchange gains / (losses)

The foreign exchange gain for the period amounts to TCHF 98. As described in Note 3 above, the Company maintains assets and liabilities in foreign currencies, mainly USD, EUR, and GBP. The favourable effect of the movement of CHF against USD during the last months of 2012 resulted in a foreign exchange gain, since the Company maintains loan facilities in USD.

15. Subsequent events

On 4 January 2013, with an amendment on 24 January 2013, the Company signed a subscription in-kind agreement with Mr. Robert W. Hausheer Meyer for CHF 9.3 million. The Company Register of the Canton of Zug published the corresponding increase of capital on 25 January 2013. The new share capital of the Company amounts to CHF 2’649’712.00 and is divided into 1’656’070 ordinary bearer shares.

The Board identified no further issues or transactions between 31 December 2012 and the date of issue of the financial statements, which affect the financial statements and would need to be disclosed in accordance with IAS 10.


Amounts due from related parties 531 37

Shareholder loans (direct and indirect) 521 37

Southern Partners 10 0

Amounts due to related parties 3 201 0

Directors

Robert W. Hausheer Meyer 3 201 0

Transactions with related parties

Directors' fees paid 106 23

Directors' fees accrued 29 23

Interest income on amounts due from related parties 29 1

Revenue incurred from CBU sales to shareholders 0 60

Marketing expenses incurred by Derivate Magazin GmbH 0 17

Share purchase agreement with Robert W. Hausheer Meyer * 11 321 0

Restructuring expenses incurred with IFIT ** 0 36

Prospectus related costs incurred with IFIT** 66 0

Business management expenses incurred with IFIT ** 105 30

* see Note 8 b)

**IFIT being the outsourcing partner providing the management of the Company

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