Interim Financial Statements 2014

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2 Table of Contents FINANCIAL DISCUSSION FIRST HALF YEAR... 3 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE... 6 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE AND 31 DECEMBER... 7 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE... 8 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE... 9 NOTES TO THE INTERIM FINANCIAL STATEMENTS Reporting entity Basis of preparation Capital management Significant accounting policies Financial assets Capital and reserves Borrowings Subsequent events Page 2

3 FINANCIAL DISCUSSION FIRST HALF YEAR (a) Overview The principal activity of World Markets AG (the Company ) is the development, management and financing of projects based on undervalued natural resources. The Company targets renewable energy and sustainable forest management opportunities around the world. (b) Key opportunities The performance of the World Markets Group (the Group ) in depends on the outcome of the ongoing restructuring process of the F.I.T. Timber Growth Fund Ltd and its subsidiaries ( TGF ). The development of several biomass power plants in Cambodia and other potential investments, currently under negotiation, will also play a key role in re- shaping the Group. Following a one- off adjustment in the valuation of all TGF- related investments, during the Group antici- pates rather modest results as several of its current projects are still in development stage and will generate income in 2015 at the earliest. For example, the biomass power plants in Cambodia are not going to start com- mercial operations before Only then revenues will be generated from their part. The Group is regularly analysing other potential investments and expansion / diversification opportunities. However, their development has been delayed due to the limitations posed by the difficult situation of TGF. Financial highlights (a) For the six months ended 30 June (in CHF) KEY FIGURES Revenue Operating profit / (- ) losses Earnings / (- ) losses before taxes Total profit / (- ) losses for the period During the first half year the Group did not generate any operating income. The main part of the operating cost is due to the ongoing reconstruction of the Group. The interest of the loans to the TGF group reduced the oper- ating loss for the first six months of the financial year to TCHF 185. Page 3

4 (b) Statement of financial position as at 30 June and 31 December (in CHF) audited KEY FIGURES Non current assets Current assets Total assets Equity Non current liabilities Current liabilities Total liabilities and equity The total assets of the Group decreased to TCHF as at 30 June compared to TCHF at the end of the financial year. The decrease was primarily due to the offset of an asset and a liability that have the same counterparty. (c) Statement of changes in equity Please see page 9 (Condensed Consolidated Statement of Changes in Equity) for more information. (d) Statement of cash flows for the six months ended 30 June (restatement of cash flow: change from the indirect to the direct method) (in CHF) Cash flows used for operating activities Cash flows used for investing activities Cash flows from / (- ) used for financing activities Net increase / (- ) decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of the period Comparing the first half year of and the Group s cash decreased by TCHF 363 down to TCHF 59. Dur- ing the first 6 months of the year the Group raised a net amount of TCHF 504 cash in loans. Page 4

5 Risk report An extensive risk monitoring process, created in July 2012, continues to be analysed on a quarterly basis by the Board, serving as the basis for its risk management decisions. Currently the Board monitors the following risks on Group 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 part- ners. Medium to high risks as per middle of the year were Cooperation risks (related to TGF) and Develop- ment risks (in Cambodia). Operational risk; this definition summarises risks from being public and the accuracy of public infor- mation, risks of meeting certification criteria/meeting them in time, risks to assets from handling the asset and counterparty risks. Marked as low to medium risk as TGF may face production issues as a result of overdue salary pay- ments to local staff. Legal and political risk; this definition summarises risks of political changes in countries of the Group s activities and investments; contractual risks, litigation and claims risks. Litigation risk is possible, but not likely as per middle of the year. It may change depending on how the situation of FIT Group develops. Financial risk; this definition summarises the main financial risks such as credit risks, liquidity risks, market risks and currency risks. Furthermore, the Group monitors equity risks, cluster risks, risks from investment instruments, risks of high leave- payments, risks of unexpected massive decreases in re- turns, risks of non- accuracy of budget and financial plans, tax risks, insurance risks and Anti Money Laundering risks. Medium to high risks were assigned to credit risk, liquidity risks and other risks related mainly to the TGF group, which is currently going through a restructuring process. The status of such restructuring remains unclear to the Group. The overall risk report shows a risk exposure of the Group for the period ended 30 June that is HIGH, mainly due to the exposure to TGF following the acquisition of FITML and loan facility agreement with F.I.T. Timber Ltd ( FITTL, ISIN: VCP4172L1007). Strategy and future development The Group s strategy for is to strengthen and diversify its activities by (1) supporting the restructuring process of TGF whenever possible, (2) developing the biomass power plant portfolio in Cambodia and (3) con- cluding the negotiations to expand the operations in other areas. In addition to these specific businesses, the Group looks to further enhance shareholder value by moving forward with other projects currently in the pipe- line that will enlarge and diversify the project and revenue base. 31 August On behalf of the Management Rolf Küng Page 5

6 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE (Expressed in CHF) () () REVENUE Income from sales of goods Income from services Unrealised gains on financial assets at fair value through profit or loss 0-4 TOTAL REVENUE Costs of goods sold and sales commission Operating expenses Marketing expenses Bank charges OPERATING PROFIT Interest income Interest expense Foreign exchange gains / (- ) losses EARNINGS / (- ) LOSSES BEFORE TAXES Income taxes TOTAL PROFIT / (- ) LOSSES FOR THE PERIOD BASIC EARNINGS PER SHARE OTHER COMPREHENSIVE INCOME Currency translation differences TOTAL PROFIT / (- ) LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD Page 6

7 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE AND 31 DECEMBER (Expressed in CHF) ASSETS () (audited) Non current assets Investments in associates Advances and loans Prepayments / Project under development Current assets Prepaid expenses and accrued income Amounts due from related parties Receivables Cash and cash equivalents TOTAL ASSETS EQUITY AND LIABILITIES () (audited) Equity Share capital Share premium Retained earnings and reserves / (- ) losses Non current liabilities Borrowings Current liabilities Borrowings Accounts payable Accrued expenses Current tax liabilities TOTAL LIABILITIES AND EQUITY Page 7

8 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE (Expressed in CHF) Cash flows from / (- ) used for operating activities Cash receipts from customers Cash paid to suppliers Cash paid for operating expenses Tax paid Currency differences on cash Cash flows used for investing activities Prepayments (projects in development) Purchases of marketable securities Loans granted Cash flows from financing activities Proceeds from the issuance of share capital Costs paid for issuance of share capital and share in kind Purchase of treasury shares Sale of treasury shares Proceeds for financial debts Repayment of financial debts Interest paid Other costs paid for financing activities 0-8 Net change in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivaltents at the end of the period Page 8

9 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE (Expressed in CHF) Retained Cumulative Share earnings and translation Total Share capital premium reserves / (- ) losses adjustment equity () Balance at 1 January Issue of new share capital Costs of issue of new shares, net of tax Net income for the period Gains on trading with treasury shares, net of tax Other comprehenisve income Balance at 30 June () Balance at 1 January Net loss for the period Comprehensive loss: Currency translation differences - 86 Changes in currency translation differences 158 Total Comprehensive loss for the period Balance at 30 June Page 9

10 NOTES TO THE INTERIM FINANCIAL STATEMENTS 1. Reporting entity The Company is domiciled in Switzerland and is listed on the Open Market in Frankfurt, Germany (ISIN: CH 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. On 3 July World Markets changed its purpose of business: The purpose of the Company is the development, management and financing of primarily sustainable projects, especially in the areas of energy and the environment, locally and abroad, as well as the provision of administration and consulting services for and related to similar projects and products of all kinds. The full purpose of the Company is published on the webpage ( These financial statements are the interim financial statements of the Company and its subsidiary for the six- month period ended 30 June. 2. Basis of preparation (a) Statement of compliance These interim financial statements have been prepared in accordance with IFRS 34 Interim Financial Report- ing issued by the International Financial Reporting Standards Board (IASB) and interpretations of the IFRS In- terpretations Committee ( IFRIC ), IAS 34 Interim Financial Reporting as adopted by the European Union. These interim financial statements should be read in conjunction with the financial statements and the notes thereto included in the audited Annual Report of the Company (available at Certain finan- cial information that is included in the audited annual financial statements but is not required for interim re- porting purposes has been condensed or omitted. These interim financial statements for the six months ending 30 June have been prepared on an ongoing concern basis as the directors believe there are no material uncertainties that lead to significant doubt that the Group can continue as a going concern in the foreseeable future, a period not less than 12 months from the date of this report. These interim financial statements for the six months ended 30 June were approved by the Board of Di- rectors and authorised for issue on 31 August. (b) Use of estimates and judgements The preparation of the interim 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. The currency exchange rates applied as per 30 June were the following: (June 30) (December 31) EUR/CHF: USD/CHF: GBP/CHF: Capital management The Board s policy is to maintain a strong capital base as to keep up shareholders, creditors and market s con- fidence and to sustain future development of the business. Capital consists of share capital, share premiums, reserves and retained earnings of the Group. The Board monitors the return on capital as well as the level of dividends to shareholders. Page 10

11 The Group s net debts to equity ratio at the reporting dates were as follows: (in CHF) As at 30 June and 31 December audited Net debt Total liabilities Less: cash and cash equivalents Total equity Net debt to equity ratio % % 4. Significant accounting policies These condensed interim consolidated financial statements are prepared using the same accounting policies as applied in the audited Annual Report. The Group has implemented various minor amendments to existing standards and interpretations, which have no material impact on the overall result and financial position. 5. Financial assets (a) Financial assets at fair value through profit or loss (in CHF) As at 30 June and 31 December audited Financial assets at fair value through profit or loss 0 0 F.I.T. Timber Growth Fund Ltd., St. Vincent 0 0 Opening fair value Transaction due to consolidation Purchases Movement in fair value F.I.T. Timber Ltd., St. Vincent 0 0 Opening fair value 0 0 Purchases Movement in fair value Page 11

12 (b) Investments in associates (in CHF) As at 30 June and 31 December audited AURA Donsoco Holdings AG, Zürich (40%) (formerly: Southern Partners AG) Opening value (40 shares) at cost CPP Holdings PTE. Ltd., Singapore 5 5 Opening value at cost 5 0 Prepayment 0 5 The investments are accounted for at equity. 6. Capital and reserves As of 30 June the share capital of the Group is CHF and is divided into bearer shares with a par value of CHF 1.60 per share. The shares are fully paid- in, and each share is entitled to one vote. The Board of Directors is empowered, at any time but latest 18 December 2015, to increase the share capital of the Group by a maximum of CHF by issuing a maximum number of 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. Earnings per share for the period ended 30 June (in CHF) Basic earnings per share Profit on ordinary activities after taxation Adjustment to reflect impact of dilutive share options Earnings Number of shares in issue (weighted average) Basic earnings per share being diluted earnings per share Diluted earnings per share: There is neither an option plan for employees in place, nor any convertible bonds outstanding. 7. Borrowings The Group s borrowings mainly come from private investors, who have been financing the Company for several periods. Loans are typically short term, with a fixed interest rate of around 10% p.a. The total amount due in is TCHF The interest expenses for the first six months in amounted to TCHF 346. Page 12

13 8. Subsequent events The Board identified no further issues or transactions between 30 June and the date of issue of the inter- im condensed financial statement, which affect the financial statements and would need to be disclosed in accordance with IAS 10. Page 13