DB ETC plc

Directors' report and audited financial statements

For the year ended 31 December 2021

Registered number : 103781

Page 1
DB ETC plc  
Contents  
  Page (s)
Directors and other information 1
Directors' report 2 - 6
Statement of Directors' responsibilities 7
Independent auditor's report 8 - 14
Statement of comprehensive income 15
Statement of financial position 16
Statement of changes in equity 17
Statement of cash flows 18
Notes to the financial statements 19 - 39
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DB ETC plc    
    Page 1
Directors and other information    
Directors Visdirect Services Limited  
  Viscom Services Limited  
  Marc Harris  
Registered Office 4th Floor  
  St Paul's Gate  
  22-24 New Street  
  St Helier  
  Jersey JE1 4TR  
  Channel Islands  
Company Secretary Vistra Secretaries Limited  
  4th Floor  
  St Paul's Gate  
  22-24 New Street  
  St Helier  
  Jersey JE1 4TR  
  Channel Islands  
Administrator Vistra Fund Services Limited  
  4th Floor  
  St Paul's Gate  
  22-24 New Street  
  St Helier  
  Jersey JE1 4TR  
  Channel Islands  
Determination Agent Apex Fund Services (Ireland) Limited  
  2nd Floor  
  Block 5  
  Irish Life Centre  
  Abbey Street Lower  
  Dublin D01 P767  
  Ireland  
Lead Authorised Participant, Arranger, Deutsche Bank AG, London Branch  
Issuing and Paying Agent, Programme Winchester House  
Counterparty and Metal Agent 1 Great Winchester Street  
  London EC2N 2DB  
  United Kingdom  
Secured and Subscription Account JPMorgan Chase Bank, N.A. (“JPMorgan”), London Branch  
Custodian 25 Bank Street  
  Canary Wharf  
  London E14 5JP  
  United Kingdom  
Note Trustee Deutsche Trustee Company Limited  
  Winchester House  
  1 Great Winchester Street  
  London EC2N 2DB  
  United Kingdom  
Independent Auditor KPMG Channel Islands Limited  
  Chartered Accountants and Recognised Auditor  
  37 Esplanade  
  St Helier  
  Jersey JE4 8WQ  
  Channel Islands  
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DB ETC plc

Page 2

Directors' report

The directors (the "Directors") present the Directors' report and audited financial statements of DB ETC plc (the “Company”) for the year ended 31 December 2021.

Principal activities and business review

The Company was incorporated on 06 August 2009 as a public limited liability company in Jersey under the Companies (Jersey) Law 1991 with registration number 103781.

The principal activity of the Company, under the Secured ETC Precious Metal Securities Programme (the “Programme”), is to issue from time to time series (each a "Series") of secured precious metal linked securities (the “ETC Securities”), where recourse in respect of each Series is limited to the proceeds of enforcement of the security over each respective Series' assets.

With respect to each Series of ETC Securities, the Company's main assets are its holdings of underlying Precious metals (the "Precious metals") and its interests under the related balancing agreement (the ''Balancing Agreement''). The obligations of the Company under the ETC Securities of a Series will be secured in favour of the Trustee by an assignment by way of security of all the Company's rights, title, interest and benefit present and future against the secured account custodian (the ''Secured Account Custodian''), the subscription account custodian (the ''Subscription Account Custodian'') and any sub-custodian (the ''Sub-Custodian'') relating to the underlying metal in respect of this Series of ETC Securities.

The net proceeds from the issue of a Series of ETC Securities are used to purchase an amount of metal which, in accordance with the custody agreement (the ''Custody Agreement'') for secured accounts will, to the extent possible, be allocated to physical metal bars or other metal shapes and be held in the secured allocated account. Any remaining metal is held in the secured unallocated account. Such underlying metal is used to meet the Company's obligations under the relevant Series of ETC Securities and the relevant Balancing Agreement.

The ETC Securities issued are listed on various exchanges including London Stock Exchange, Swiss Stock Exchange, XETRA and Borsa Italiana.

Key performance indicators

The Company is a Special Purpose Vehicle (the ''SPV'') whose sole business is the issue of asset-backed securities. The Company has established a programme for the issue of ETC Securities whose return is linked to the performance of a specified Precious metal: either gold, silver, platinum, palladium or rhodium. Each series of ETC Securities will be separate (or 'ring-fenced') from each other series of ETC Securities. The best benchmark is the price of the relevant metal in which the proceeds of the ETC Securities are invested in. For all Series, the performance closely follows the movement in the metal linked to the Series.

The Directors confirm that the key performance indicators as disclosed below are those that are used to assess the performance of the Company.

During the year:        
the Company made a profit of EUR nil (2020: EUR nil);      
the net fair value loss on Precious metals at fair value and Precious metal due from the Programme Counterparty at fair value amounted to
  EUR 247,933,647 (2020: net fair value gain amounting to EUR 1,493,258,338);      
the net fair value gain on financial liabilities designated at fair value through profit or loss amounted to EUR 247,933,647 (2020: net fair
  value loss of EUR 1,493,258,338); and        
there were additional subscriptions in the following existing Series of ETC Securities:      
      Maturity date CCY Nominal
  Series 1 Xtrackers Physical Gold ETC 15-Jun-60 USD 738,491
  Series 2 Xtrackers Physical Gold EUR hedged ETC 15-Jun-60 EUR 4,922,500
  Series 3 Xtrackers Physical Silver ETC 15-Jun-60 USD 55,918
  Series 4 Xtrackers Physical Silver EUR Hedged ETC 15-Jun-60 EUR 1,029,494
  Series 5 Xtrackers Physical Platinum ETC 15-Jun-60 USD 77,240
  Series 6 Xtrackers Physical Platinum EUR Hedged ETC 15-Jun-60 EUR 614,454
  Series 7 Xtrackers Physical Palladium ETC 15-Jun-60 USD 9,660
  Series 8 Xtrackers Physical Palladium EUR Hedged ETC 15-Jun-60 EUR 76,789
  Series 9 Xtrackers Physical Gold ETC (EUR) 27-Aug-60 EUR 3,026,184
  Series 10 Xtrackers Physical Silver ETC (EUR) 27-Aug-60 EUR 533,311
  Series 13 Xtrackers Physical Gold GBP Hedged ETC 14-Jul-60 EUR 3,278,980
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DB ETC plc                      
                        Page 3
Directors' report (continued)                  
Key performance indicators (continued)                
During the year (continued):                  
• the following Series of ETC Securities were partially redeemed:          
  Series   Description         Maturity date CCY Nominal
  Series 1   Xtrackers Physical Gold ETC         15-Jun-60 USD 4,088,433
  Series 2   Xtrackers Physical Gold EUR hedged ETC       15-Jun-60 EUR 13,519,538
  Series 4   Xtrackers Physical Silver EUR Hedged ETC     15-Jun-60 EUR 857,890
  Series 6   Xtrackers Physical Platinum EUR Hedged ETC     14-Jul-60 EUR 977,898
  Series 9   Xtrackers Physical Gold ETC (EUR)       27-Aug-60 EUR 9,644,831
  Series 10   Xtrackers Physical Silver ETC (EUR)       27-Aug-60 EUR 719,558
  Series 11   Xtrackers Physical Rhodium ETC         19-May-61 EUR 17,909
  Series 12   Xtrackers Physical Rhodium ETC (EUR)       19-May-61 EUR 7,369
  Series 13   Xtrackers Physical Gold GBP Hedged ETC       15-Jun-60 GBP 8,010,722
• the following Series of ETC Securities were fully redeemed:            
  Series 3   Xtrackers Physical Silver ETC         15-Jun-60 USD 296,815
  Series 5   Xtrackers Physical Platinum ETC         14-Jul-60 USD 511,992
  Series 7   Xtrackers Physical Palladium ETC         14-Jul-60 USD 45,319
  Series 8   Xtrackers Physical Palladium EUR Hedged ETC   14-Jul-60 EUR 266,716
• the prices of Precious metals movement are as follows:              
  Series Precious CCY Price per ounce Price per ounce as Movement (%)    
    metals   as at 31 Dec 2021   at 31 Dec 2020      
  Series 1 Gold USD   1,820.10     1,891.10 ( 3.75 )    
  Series 2 Gold EUR   1,605.95     1,539.80 4.30    
  Series 4 Silver EUR   20.39     26.49 ( 23.00 )    
  Series 6 Platinum EUR   849.22     875.37 ( 2.99 )    
  Series 9 Gold EUR   1,605.95     1,539.80 4.30    
  Series 10 Silver EUR   20.39     21.58 ( 5.49 )    
  Series 11 Rhodium USD   14,215.00     17,150.00 ( 17.11 )    
  Series 12 Rhodium EUR   12,541.91     13,977.18 ( 10.27 )    
  Series 13 Gold GBP   1,346.98     1,382.69 ( 2.58 )    

The prices of the metals have mostly decreased during the year. The movement in price for Gold in EUR is mainly due to exchange rates. The table below highlights the movement in foreign exchange during the period.

  31-Dec-21 31-Dec-20 Movement (%)
      in 31-Dec-21
USD - EUR 0.8793 0.8186 7.42 %
GBP - EUR 1.1893 1.1185 6.33 %

As at 31 December 2021:

• the Company's total ETC Securities issued had a fair value of EUR 5,903,037,311 (2020: EUR 8,811,446,423);

• the Company has invested in Precious metals with a fair value of EUR 5,895,950,836 (2020: EUR 8,780,336,340);

• Precious metals with a value of EUR 7,086,475 (2020: EUR 31,110,083) was due to the Company from the Programme Counterparty under the terms of the Balancing Agreement; and

• the net assets were EUR 30,002 (2020: EUR 30,002).

• the Company had the following ETC Securities in issue:

             
  Series Description Maturity date Ccy Nominal (in Metals held
          units)  
  1 Xtrackers Physical Gold ETC 15-Jun-60 USD 2,798,048 Gold
  2 Xtrackers Physical Gold EUR hedged ETC 15-Jun-60 EUR 14,702,882 Gold
  4 Xtrackers Physical Silver EUR Hedged ETC 15-Jun-60 EUR 1,213,804 Silver
  6 Xtrackers Physical Platinum EUR Hedged ETC 14-Jul-60 EUR 2,396,611 Platinum
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DB ETC plc            
              Page 4
 Directors' report (continued)          
  As at 31 December 2021: (continued)            
• the Company had the following ETC Securities in issue: (continued)            
  Series Description Maturity date   Ccy Nominal (in Metals held
            units)  
  9 Xtrackers Physical Gold ETC (EUR) 27-Aug-60   USD 14,667,240 Gold
  10 Xtrackers Physical Silver ETC (EUR) 27-Aug-60   USD 4,428,282 Silver
  11 Xtrackers Physical Rhodium ETC 19-May-61   USD 74,313 Rhodium
  12 Xtrackers Physical Rhodium ETC (EUR) 19-May-61   EUR 28,410 Rhodium
  13 Xtrackers Physical Gold GBP Hedged ETC 01-Apr-61   GBP 15,678,603 Gold

Exchange Offer

On 26 April 2021, an exchange offer (the "Exchange Offer") took place as per the Exchange Offer Memorandum, (“EOM”), whereby the holders of each series of the Company were given the opportunity to exchange some of their existing DB ETC Securities for specified series of the New Xtrackers ETC Securities to be issued by Xtrackers ETC Public Limited Company (the Offeror, an Irish domiciled public limited company), subject to the “Offer and Distribution Restrictions” set out in the EOM. The New Xtrackers ETC Securities were issued by Xtrackers ETC Public Limited Company as further securities and consolidated with the corresponding existing series of securities that were issued under Xtrackers' Secured Xtrackers ETC Precious Metal Linked Securities Programme.

Detailed information on the Exchange Offer are included in note 20.

Future developments

The Directors expect that the present level of activity will be sustained for the foreseeable future. The board of Directors of the Company (the ''Board'') will continue to seek new opportunities for the Company and will continue to ensure proper management of the current portfolio of Series of the Company.

Going concern

The Company's financial statements for the year ended 31 December 2021 have been prepared on a going concern basis. Each Series of ETC Securities is referenced to a specific asset and any loss derived from the asset will be ultimately borne by the relevant ETC Securityholders. The Directors anticipate that assets are readily realisable and hence, will continue to generate enough cash flows on an ongoing basis to meet the financial liabilities as they fall due. The ETC Securities in issue as at 31 December 2021 have final maturities ranging from 2060 to 2061.

During the financial year, an exchange offer took place whereby noteholders of ETC Securities of the Company were offered to transfer some of their ETC Securities to ETC Xtrackers Plc. The Directors do not expect a further significant Exchange Offer will occur that might trigger going concern issues. The Directors do not foresee any material redemptions in the next 12 months that would trigger going concern issues.

Covid-19 Global Pandemic

As COVID-19 coronavirus pandemic continues, the impacts and risks for the financial sector kept changing.

COVID-19 recovery is uneven globally and is presenting a variety of challenges and risks from economic uncertainty to changes in consumer demand, disrupted supply chains and staff shortages, new hybrid working patterns, the ending of government support packages and increased merger and acquisitions activity. Businesses are experiencing conditions often associated with a general economic downturn. This includes dealing with lost revenue, increasing inflation rates, disrupted supply chains, financial market volatility, deteriorating credit, liquidity concerns and further government intervention. Numerous governments have continued to provide both financial and non-financial assistance to the affected entities. As the economy recovers, spending to support households and businesses is falling and tax receipts are growing. With emerging new variants of COVID-19, governments have been imposing mandatory self- isolations, mandatory use of face coverings in most indoor venues, work from home guidance, mandatory use of COVID-19 passes of a negative test to access certain venues and booster dose programmes were also made. Social distancing has been encouraged to reduce social contact and limitations set to household meetings and large events being limited in capacity.

The Directors have considered the impact of the COVID-19 on the going concern assumption of the Company. The investors' recourse per Series is limited to the performance of the specified Precious metal for each Series respectively. As a result, the investors may not receive in full the final redemption amount or early redemption amount payable in respect of an ETC Security. In addition to mentioning that the products are to follow the underlying price of certain commodities, it is a market tracker, therefore risk is held solely with the holders of the ETCs and not with the entity. Also, all fees are linked to the value of units held, therefore a decrease in value will cause a decrease in expenses. Also, as per agreement, Deutsche Bank AG, London Branch (the "Arranger", the "Lead Authorised Participant", "Metal Agent", "Programme Counterparty" and "Issuing and Paying Agent") agreed to reimburse the Company against any costs, fees, expense or out-goings incurred. In light of this, the Directors have concluded that the impact of COVID-19 does not represent a material uncertainty in relation to the Company's ability to continue as a going concern through the date of the issuance of these financial statements.

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DB ETC plc

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Directors' report (continued)

Going concern (continued)

A high-level analysis was made on the liquidity and performance of the Company following the financial year end 31 December 2021. The Directors note that though there has been a negative change in the value of the Precious metals due to a decrease in the prices of the Precious metals as compared to the financial year end 31 December 2020, the level of activity has remained stable post the financial year end. As noted in note 21 to the financial statements, the post year end prices are resurging and have increased post the year end. The Directors have also noted that the Administrator has taken measures to ensure business continuity.

Brexit

Following the departure of the United Kingdom from the European Union on 31 January 2020 and the expiry of the transitional period on 31 December 2020, the United Kingdom Financial Conduct Authority (“FCA”) was no longer a valid competent authority for the purposes of Regulation EU 2017/1129 (the “Prospectus Regulation”). As such, the Company elected Ireland as its Home Member State for the purposes of the Transparency Directive during the financial year.

Russia- Ukraine conflict

Russia began an invasion of Ukraine on 24 February 2022. The conflict has led to increased market price volatility in precious metals which is reflected in the daily value per ETC Security. There is also a general increase in the bid/offer spread of our ETC securities quoted by third party market markers on the secondary market as a consequence to increased volatility across the market. It is expected that prolonged conflict and sanctions could affect the structural supply of metal and therefore the price of metal on the international market given Russia is a large producer of gold, silver and platinum.

On 7 March 2022, the London Bullion Market Association (the "LBMA") announced sanctions in respect to 6 Russian gold/silver refiners. Following the sanctions, the 6 refiners are no longer accepted as Good Delivery by LBMA.

For precious metals, sanctions are applied from the date of the sanction to bars refined from that point onwards. Anything refined prior to the sanctions date is still considered “Good Delivery” and as such, can still be held by the Company. There is no impact on the ability of investors to redeem due to the sanctions.

The Directors believe that none of the Authorised Participants in the primary market are Russian entities and hence would not be subject to the Russian sanctions. The Directors also assessed that none of the operations of the counterparties are based in Ukraine. The Directors will continue to monitor the situation and appropriate steps will be taken for the smooth running of the Companies' business.

Further details are included in the subsequent event note to the financial statements.

Business risks and principal uncertainties

The Company is subject to various risks. The key risks facing the Company relate to their use of financial instruments and other risks (i.e. market risk, credit risk, liquidity risk and operational risk) arising from the Precious metals which are set out in note 14 to the financial statements.

Results and dividends for the year

The results for the year are set out on page 14. The Directors do not recommend the payment of a dividend for the year under review (2020: nil).

Changes in Directors, Secretary and Registered Office

There has been no change in Directors, Secretary and Registered Office during the year.

Directors, Secretary and their interests

None of the Directors or the Secretary who held office on 31 December 2021 held any shares or ETC Securities in the Company at that date, or during the year. There were no contracts of any significance in relation to the business of the Company in which the Directors had any interest.

As disclosed in note 17, Related Party Transactions, Marc Harris, a Director of the Company is an employee of an affiliate company of the administrator and Visdirect Services Limited and Viscom Services Limited are affiliates of the administrator. See note 17 for full details of the relationships entered into between the Company and its related parties.

Shares and shareholders

The authorised share capital of the Company is GBP 10,000 divided into 10,000 limited shares of GBP 1 each (the "Shares") of which 2 are issued and fully paid and are directly or indirectly held by Vistra Nominees I Limited and Vistra Nominees II Limited (the "Share Trustees") under the terms of a declaration of trust (the "Declaration of Trust") under which the Share Trustees hold the benefit of the shares on trust for charitable purposes. There are no other rights that pertain to the shares and the shareholders.

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DB ETC plc  

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Directors' report (continued)  

Significant matters

On 11 June 2021, the Company informed Securityholders of the Series below (the "Series") that certain performance and cost fee information contained in the sections "What are the risks & what could I get in return? - Performance Scenarios" and "What are the Costs?" was incorrectly stated in the key information documents ("KIDs") of the Series, dated 10 March 2021, as uploaded to the Issuer's website on 17 March 2021. The amended versions of the KIDs dated 07 June 2021 were published on the Issuer's website.

Series Description ISIN Incorrect Impact on return (RIY) per year/Other ongoing costs % Correct Impact on return (RIY) per year/Other ongoing costs %
Series 2 Xtrackers Physical Gold EUR Hedged ETC DE000A1EK0G3 0.29% 0.59%
Series 4 Xtrackers Physical Silver EUR Hedged ETC DE000A1EK0J7 0.45% 0.75%
Series 6 Xtrackers Physical Platinum EUR Hedged ETC DE000A1EK0H1 0.45% 0.75%
Series 8 Xtrackers Physical Palladium EUR Hedged ETC DE000A1EK3B8 0.45% 0.75%
Series 13 Xtrackers Physical Gold GBP Hedged ETC GB00B68FL050 0.29% 0.69%

On 15 July 2021, the Company informed Securityholders of the Series below (the "Series") of its decision to redeem the Series. The Series became due and payable, as follows:

Series Description ISIN Early Redemption Date Early Redemption Amount Currency
Series 3 Xtrackers Physical Silver ETC GB00B57Y9462 30-Sep-21 215.81 USD
Series 5 Xtrackers Physical Platinum ETC GB00B57GJC05 30-Sep-21 94.22 USD
Series 7 Xtrackers Physical Palladium ETC GB00B5VYVZ75 01-Oct-21 189.01 USD
Series 8 Xtrackers Physical Palladium EUR Hedged ETC DE000A1EK3B8 01-Oct-21 119.88 EUR

On 20 December 2021, the Company informed Securityholders of the Series below (the "Series") that the Programme Counterparty determined to change the Metal Fixing Time for the Scheduled Valuation Days on 24 December 2021 and 31 December 2021.

Series Description ISIN
Series 1 Xtrackers Physical Gold ETC GB00B5840F36
Series 2 Xtrackers Physical Gold EUR Hedged ETC DE000A1EK0G3
Series 6 Xtrackers Physical Platinum EUR Hedged ETC DE000A1EK0H1
Series 9 Xtrackers Physical Gold ETC (EUR) DE000A1E0HR8
Series 13 Xtrackers Physical Gold GBP Hedged ETC GB00B68FL050

Subsequent events

Subsequent events have been disclosed in note 21 to the financial statements.

Independent auditor

In accordance with the Companies (Jersey) Law 1991, KPMG Channel Islands Limited, Chartered Accountants and Recognised Auditor has been appointed to continue in office.

 

 

 

On behalf of the Board

 

 

 

Director

 

Date:

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DB ETC plc  

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Statement of Directors' responsibilities

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

Company law requires the Directors to prepare financial statements for each financial year. Under that law they are required to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the EU and applicable law.

Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of its profit or loss for that year. In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable, relevant and reliable;

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial  statements;

• assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

• use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic  alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies (Jersey) Law, 1991. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

The Directors are also required by the Transparency (Directive 2004/109/EC) (Amendment) (No. 2) Regulations 2015 (the ''Regulations'') to include a Directors' Report containing a fair review of the business and a description of the principal risks and uncertainties facing the Company.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in respect of the Directors' Report

We confirm that to the best of our knowledge:

•the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

•the Directors' report includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face. The principal risks facing the Company are outlined in note 14 of the financial statements.

We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

On behalf of the Board

Director

Date:

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Independent Auditor's Report to the Members of DB ETC plc

Report on the audit of the financial statements

Our opinion is unmodified

We have audited the financial statements of DB ETC plc (the “Company”), which comprise the statement of financial position as at 31 December 2021, the statements of profit or loss and other comprehensive income,changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information.

In our opinion, the accompanying financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard as required by the Crown Dependencies' Audit Rules and Guidance. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.

Key audit matters: our assessment of the risks of material misstatement

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matters were as follows (unchanged from 2020):

  The risk Our response

Valuation of precious metals at fair value

Euro 5,895,950,836; (2020 Euro 8,780,336,340 )

Refer to note 3(e) accounting policy and note 9 disclosures

Basis:

Precious metals at fair value (the “Metals”) represent 99.9% of the Company’s total assets at 31 December 2021 (2020: 99.6%) .

The Metals act as collateral for the financial liabilities designated at fair value through profit or loss (“the ETC Securities”) issued by the Company. The Metals are accounted for at fair value.

The Company determines fair value by revaluing the quantity of Metals held at

Our audit procedures included:

• Assessed the design and implementation of controls over valuation of Metals.

• Assessed the appropriateness of the pricing sources in accordance with IFRS.

• Performed an independent recalculation of fair value based on published market prices. Compared the

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Independent Auditor's Report to the Members of DB ETC plc (continued)

  The risk Our response
 

the reporting date to the last market prices published by the sources described in the financial statements.

Risk:

The reported fair value of precious metals held may be materially misstated.

recalculated values to those determined by the Company.

• Assessed the fair value disclosures in the financial statements for compliance with IFRS requirements.

  The risk Our response

Existence of precious metals at fair value

Euro 5,895,950,836; (2020 Euro 8,780,336,340 )

Refer to note 3(e) accounting policy and note 9 disclosures

Basis:

Precious metals at fair value (the “Metals”) represent 99.9% of the Company’s total assets at 31 December 2021 (31 December 2020: 99.6%).

The Metals act as collateral for the financial liabilities designated at fair value through profit or loss (“the ETC Securities”) issued by the Company. The Metals are accounted for at fair value.

The Metals are held on behalf of the Company by JPMorgan as custodian (for all metals other than Rhodium) and Johnson Matthey as sub custodian (for Rhodium).

Risk:

Precious metals recorded do not exist.

Our audit procedures included:

• Obtained a portfolio listing of physical metals from the Company as at 31 December 2021.

• Obtained independent confirmation from the custodians of the quantity of metals held in custody at the reporting date.

• Agreed the amounts per the accounting records to the independent custody records and audited any reconciling items.

  The risk Our response

Valuation of financial liabilities designated at fair value through profit or loss (“ETC Securities”)

Basis:

The issuance of ETC Securities is central to the Company’s principal

Our audit procedures included:

• Assessed the design and implementation of the controls

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Independent Auditor's Report to the Members of DB ETC plc (continued)

  The risk Our response

Euro 5,903,037,311; (2020 Euro 8,811,446,423)

Refer to note 3(e) accounting policy and note 11 disclosures

activity. ETC Securities allow investors to gain exposure to movements in prices of Metals without needing to take physical delivery.

ETC Securities are accounted for at fair value.

The Company determines fair value in accordance with the formula set out in the prospectuses to reflect the contractual price at which the ETC Securities will be issued or redeemed by the Company at the reporting date. This formula takes into account the quantity of ETC Securities in issue at the reporting date, and the price of the relevant metals, adjusted for product and related fees.

Risk:

A discrepancy in the inputs or incorrect application of the formula used to determine the fair value of ETC Securities may cause the reported fair value of financial liabilities designated at fair value through profit or loss to be materially misstated.

over the valuation of ETC Securities.

• Assessed the appropriateness of the methodology used to value the ETC Securities, and considered whether it is in compliance with IFRS.

• Recalculated the fair value of ETC Securities using published market data on Metals prices. Compared the recalculated values to those determined by the Company.

• Assessed the fair value disclosures in the financial statements, for compliance with IFRS.

Our application of materiality and an overview of the scope of our audit

Materiality for the financial statements as a whole was set at Euro 59 million, determined with reference to a benchmark of total assets of Euro 5,903,316,985, of which it represents approximately 1.0% (2020: 1.0%).

In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the financial statements as a whole. Performance materiality for the Company was set at 75% (2020: 75%) of materiality for the financial statements as a whole, which equates to Euro 44 million (2020 : Euro 66 million). We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk.

We reported to the Audit Committee any corrected or uncorrected identified misstatements exceeding Euro 2.95 million, in addition to other identified misstatements that warranted reporting on qualitative grounds.

10

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Independent Auditor's Report to the Members of DB ETC plc (continued)

Our audit of the Company was undertaken to the materiality level specified above, which has informed our identification of significant risks of material misstatement and the associated audit procedures performed in those areas as detailed above.

Going concern

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease its operations, and as they have concluded that the Company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements (the “going concern period").

In our evaluation of the directors' conclusions, we considered the inherent risks to the Company's business model and analysed how those risks might affect the Company's financial resources or ability to continue operations over the going concern period. The risks that we considered most likely to affect the Company's financial resources or ability to continue operations over this period were:

We considered whether these risks could plausibly affect the liquidity in the going concern period by comparing severe, but plausible downside scenarios that could arise from these risks individually and collectively against the level of available financial resources indicated by the Company's financial forecasts.

We considered whether the going concern disclosure in note 2a to the financial statements gives a full and accurate description of the directors' assessment of going concern.

Our conclusions based on this work:

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Company will continue in operation.

Fraud and breaches of laws and regulations - ability to detect

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

11

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Independent Auditor's Report to the Members of DB ETC plc (continued)

As required by auditing standards, we perform procedures to address the risk of management override of controls, in particular the risk that management may be in a position to make inappropriate accounting entries. On this audit we do not believe there is a fraud risk related to revenue recognition because the Company's revenue streams are simple in nature with respect to accounting policy choice, and are easily verifiable to external data sources or agreements with little or no requirement for estimation from management. We did not identify any additional fraud risks.

We performed procedures including

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience and through discussion with management (as required by auditing standards), and from inspection of the Company's regulatory and legal correspondence, if any, and discussed with management the policies and procedures regarding compliance with laws and regulations. As the Company is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity's procedures for complying with regulatory requirements.

The Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

The Company is subject to other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation or impacts on the Company's ability to operate. We identified financial services regulation as being the area most likely to have such an effect, recognising the regulated nature of the Company's activities and its legal form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.

In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

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Independent Auditor's Report to the Members of DB ETC plc (continued)

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report but does not include the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

We have nothing to report on other matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:

Respective responsibilities

Directors' responsibilities

As explained more fully in their statement set out on page 7, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities .  

The purpose of this report and restrictions on its use by persons other than the Company's members, as a body

This report is made solely to the Company's members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the Company's members those

13

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Independent Auditor's Report to the Members of DB ETC plc (continued)

matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

Report on Regulatory Requirements

European Single Electronic Format (ESEF)

The Company has prepared its annual report in ESEF. The requirements for this format are set out in the Commission Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (these requirements are hereinafter referred to as: the RTS on ESEF).

In our opinion, the annual report prepared in the XHTML format, including the financial statements as included in the reporting package by the Company, has been prepared in all material respects in accordance with the RTS on ESEF.

The directors are responsible for preparing the annual report including the financial statements in accordance with the RTS on ESEF, whereby the directors combine the various components into a single reporting package. Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package, is in accordance with the RTS on ESEF.

Our procedures included amongst others:

Brian Bethell

For and on behalf of KPMG Channel Islands Limited

Chartered Accountants and Recognized Auditors

Jersey

8 April 2022

14

Page 16
         
DB ETC plc        
        Page 15
Statement of comprehensive income        
For the year ended 31 December 2021        
      Year ended Year ended
      31-Dec-21 31-Dec-20
  Notes   EUR EUR
Net fair value (loss)/gain on Precious metals at fair value and Precious metal due 4   (247,933,647) 1,493,258,338
from the Programme Counterparty        
Net fair value gain/(loss) on financial liabilities designated at fair value through 5   247,933,647 (1,493,258,338)
profit or loss        
Operating profit before taxation     - -
Taxation 6   - -
Profit or loss and total comprehensive income for the year     - -

 

 

 

 

The notes on pages 19 to 39 form an integral part of the financial statements.

Page 17
DB ETC plc        
        Page 16
Statement of financial position        
As at 31 December 2021        
    31-Dec-21 31-Dec-20
  Notes EUR   EUR
Assets        
Cash and cash equivalents 7 2   2
Other receivables 8 279,672   30,000
Precious metals at fair value 9 5,895,950,836 8,780,336,340
Precious metal due from the Programme Counterparty 9 7,086,475 31,110,083
Total assets   5,903,316,985 8,811,476,425
Liabilities and equity        
Liabilities        
Other payables 10 249,672   -
Financial liabilities designated at fair value through profit or loss 11 5,903,037,311 8,811,446,423
Total liabilities   5,903,286,983 8,811,446,423
Equity        
Share capital 12 2   2
Retained earnings   30,000   30,000
Total equity   30,002   30,002
Total liabilities and equity   5,903,316,985 8,811,476,425

The financial statements on pages 15 to 39 were approved by the Board and authorised for issue on……………………… 2022.

On behalf of the Board

Director

Date:

The notes on pages 19 to 39 form an integral part of the financial statements.

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DB ETC plc          
          Page 17
Statement of changes in equity          
For the year ended 31 December 2021          
  Share Retained   Total
  capital earnings   equity
  EUR EUR   EUR
Balance as at 01 January 2020 2 30,000   30,002
Total comprehensive income for the year        
Profit for the year - -   -
Total comprehensive income for the year - -   -
Balance as at 31 December 2020 2 30,000   30,002
Balance as at 01 January 2021 2 30,000   30,002
Total comprehensive income for the year        
Profit for the year - -   -
Total comprehensive income for the year - -   -
Balance as at 31 December 2021 2 30,000   30,002

The notes on pages 19 to 39 form an integral part of the financial statements.

Page 19
DB ETC plc      
      Page 18
Statement of cash flows      
For the year ended 31 December 2021      
    Year ended Year ended
    31-Dec-21 31-Dec-20
  Notes EUR EUR
Cash flows from operating activities      
Profit before taxation   - -
Adjustments for:      
(Increase)/decrease in other receivables   ( 249,672 ) 6,984,393
Increase/(decrease) in other payables   249,672 ( 6,984,393 )
Net cash generated from operating activities   - -
Movement in cash and cash equivalents      
Cash and cash equivalents at start of the year   2 2
Cash and cash equivalents at end of the year 7 2 2
Non-cash Transactions during the year include:      
Issuance of ETC Securities 11 1,531,033,751 4,684,702,313
Redemptions of ETC Securities 11 (4,191,509,216) (4,704,001,713)
Additions of Precious metals 9 (1,531,033,751) (4,684,702,313)
Disposals of Precious metals 9 4,191,509,216 4,704,001,713
Net fair value loss on financial liabilities designated at fair value through profit or 5 ( 247,933,647 ) 1,493,258,338
loss      
Net fair value gain on Precious metals at fair value and Precious metal due from the 4 247,933,647 ( 1,493,258,338)
Programme Counterparty      
    - -

The notes on pages 19 to 39 form an integral part of the financial statements.

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DB ETC plc

Page 19

Notes to the financial statements

For the year ended 31 December 2021

1 General information

The Company was incorporated on 6 August 2009 as a public limited company in Jersey under the Companies (Jersey) Law 1991, as amended, with company number 103781.

The principal activity of the Company, under the Programme, is to issue from time to time Series of the ETC Securities, where recourse in respect of each Series is limited to the proceeds of enforcement of the security over each respective Series' assets.

With respect to each Series of ETC Securities, the Company's main assets are its holdings of underlying metal and its interests under the Balancing Agreement. The obligations of the Company under the ETC Securities of a Series will be secured in favour of the Trustee by an assignment by way of security of all the Company's rights, title, interest and benefit present and future against the Secured Account Custodian, the Subscription Account Custodian and any Sub-Custodian relating to the underlying metal in respect of this Series of ETC Securities.

The net proceeds from the issue of a Series of ETC Securities are used to purchase an amount of metal which, in accordance with the Custody Agreement for secured accounts will, to the extent possible, be allocated to physical metal bars or other metal shapes and be held in the secured allocated account. Any remaining metal is held in the secured unallocated account. Such underlying metal is used to meet the Company's obligations under the relevant Series of ETC Securities and the relevant Balancing Agreement.

The ETC Securities issued are listed on various exchanges including London Stock Exchange, Swiss Stock Exchange, XETRA and Borsa Italiana.

2 Basis of preparation

(a) Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") and in accordance with the Companies (Jersey) Law 1991.

The accounting policies set out below have been applied in preparing the financial statements for the year ended 31 December 2021; the comparative information for the year ended 31 December 2020 presented in these financial statements has been prepared using the same accounting policies.

Going concern

The Company's financial statements for the year ended 31 December 2021 have been prepared on a going concern basis. Each Series of ETC Securities is referenced to a specific asset and any loss derived from the asset will be ultimately borne by the relevant ETC Securityholders. The Directors anticipate that assets are readily realisable and hence, will continue to generate enough cash flows on an ongoing basis to meet the financial liabilities as they fall due. The ETC Securities in issue as at 31December 2021 have final maturities ranging from 2060 to 2061. During the financial year, an exchange offer took place whereby noteholders of ETC Securities of the Company were offered to transfer some of their ETC Securities to ETC Xtrackers Plc. The Directors do not expect a further significant Exchange Offer will occur that might trigger going concern issues. The Directors do not foresee any material redemptions in the next 12 months that would trigger going concern issues.

 

Covid-19 Global Pandemic

As COVID-19 coronavirus pandemic continues, the impacts and risks for the financial sector kept changing.

COVID-19 recovery is uneven globally and is presenting a variety of challenges and risks from economic uncertainty to changes in consumer demand, disrupted supply chains and staff shortages, new hybrid working patterns, the ending of government support packages and increased merger and acquisitions activity. Businesses are experiencing conditions often associated with a general economic downturn. This includes dealing with lost revenue, increasing inflation rates, disrupted supply chains, financial market volatility, deteriorating credit, liquidity concerns and further government intervention. Numerous governments have continued to provide both financial and non-financial assistance to the affected entities. As the economy recovers, spending to support households and businesses is falling and tax receipts are growing. With emerging new variants of COVID-19, governments have been imposing mandatory self- isolations, mandatory use of face coverings in most indoor venues, work from home guidance, mandatory use of COVID-19 passes of a negative test to access certain venues and booster dose programmes were also made. Social distancing has been encouraged to reduce social contact and limitations set to household meetings and large events being limited in capacity.

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DB ETC plc  

Page 20

Notes to the financial statements (continued)

For the year ended 31 December 2021

2 Basis of preparation (continued)

(a) Statement of compliance (continued)

Covid-19 Global Pandemic (continued)

The Directors have considered the impact of the COVID-19 on the going concern assumption of the Company. The investors' recourse per Series is limited to the performance of the specified Precious metal for each Series respectively. As a result, the investors may not receive in full the final redemption amount or early redemption amount payable in respect of an ETC Security. In addition to mentioning that the products are to follow the underlying price of certain commodities, it is a market tracker, therefore risk is held solely with the holders of the ETCs and not with the entity. Also, all fees are linked to the value of units held, therefore a decrease in value will cause a decrease in expenses. Also, as per agreement, Deutsche Bank AG, London Branch (the "Arranger", the "Lead Authorised Participant", "Metal Agent", "Programme Counterparty" and "Issuing and Paying Agent") agreed to reimburse the Company against any costs, fees, expense or out-goings incurred. In light of this, the Directors have concluded that the impact of COVID-19 does not represent a material uncertainty in relation to the Company's ability to continue as a going concern through the date of the issuance of these financial statements.

Brexit

Following the departure of the United Kingdom from the European Union on 31 January 2020 and the expiry of the transitional period on 31 December 2020, the United Kingdom FCA was no longer a valid competent authority for the purposes of the Prospectus Regulation. As such, the Company elected Ireland as its Home Member State for the purposes of the Transparency Directive during the financial year.

 

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following material items in the Statement  of financial position:  

• Precious metal due from the Programme Counterparty is measured at fair value;  

• Precious metals at fair value are measured at fair value; and  

• Financial liabilities designated at fair value through profit or loss are measured at fair value.  

The method used to measure fair values are discussed further in note 3(e, f) and 15.

 

(c) Functional and presentation currency

Functional currency is the currency of the primary economic environment in which the entity operates. The Company does not have an investment strategy limited to one currency, as such the currency of the assets held and Notes in issue is expected to change periodically as a result of investor demand. The Directors believe that the functional and the presentation currency should be EUR, in line with prior year, as EUR is the currency that most faithfully represents the economic effects of the transactions, events and conditions of the Company's underlying operations.

 

(d) Use of estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Details of material judgements and estimates have been further described in accounting policy note 3(e) "Precious metals at fair value and Precious metal due from the Programme Counterparty", note 3(f) “Financial instruments” and note 15 "Fair Values" to the financial statements.

Critical judgements in applying the Company's accounting policies

The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the Directors have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in financial statements.

Page 22

DB ETC plc  

Page 21

Notes to the financial statements (continued) 

For the year ended 31 December 2021 

2 Basis of preparation (continued)

(d) Use of estimates and judgements (continued)

Determination of measurement basis for precious metals

In the absence of a specific precious metals or gold bullion accounting standard under IFRS, the Directors believe that the most appropriate basis for accounting for precious metals and gold bullion is at fair value. Please refer to note 3(e) “Precious metals at fair value and Precious metals due from the Programme Counterparty” for further details.

Determination of fair value of financial liabilities issued at fair value through profit or loss

The financial liabilities designated at fair value through profit or loss are measured using the prices calculated by Apex Fund Services (Ireland) Limited (the "Determination Agent"), and not based on the quoted secondary price available on the recognised stock exchanges for the financial liabilities at fair value through profit and loss. In the opinion of the Directors, this is the most appropriate method of estimating fair value, as the Company is contractually obliged to settle the ETC Securities at their calculated price. Please refer to note 3(f) “Financial instruments” for further details.

Product fees

The product fees are borne by investors through a daily reduction in the metal entitlement of each ETC Security. Accordingly, the product fees form an integral component of the determination of the daily fair values of the ETC Securities, and are not separately accounted for as an expense of the Company. Please refer to note 3(f) “Financial instruments” for further details.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of Precious metals and liabilities within the next financial year, are discussed below.

Precious metals at fair value and Precious metal due from the Programme Counterparty

The Directors have determined that the main estimates are in relation to the determination of the fair value of Precious metals at fair value and Precious metal due from the Programme Counterparty using prices quoted by the London Bullion Market Association. Further details have been described in accounting policy note 3(e) "Precious metals at fair value and Precious metal due from the Programme Counterparty" to the financial statements.

Financial liabilities issued at fair value through profit or loss

The Directors have determined that prices calculated by the Determination Agent are used as measurement basis at 31 December 2021 and 31 December 2020 as these prices most accurately reflect the obligations of the Company under the terms of the Series issue deeds. Please refer to note 3(f) “Financial instruments” for further details.

 

(e) Changes in accounting standards

(i) New standards, amendments and interpretations issued effective as of 01 January 2021:

Description Effective date
Amended by Covid-19-Related Rent Concessions (Amendment to IFRS 16) 1 June 2020
Interest rate benchmark reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) 1 January 2021

The Directors have considered the impact of the new standards, amendments and interpretations and do not consider there to be a significant impact from these newly effective standards, amendments and interpretations.

(ii) Standards not yet effective, but available for early adoption

Description Effective date
Amendments to IFRS 16 Leases: Covid-19 Related Rent Concessions beyond 30 June 2021 1 April 2021*
IAS 16: Property Plant and Equipment: Proceeds before Intended Use 1 January 2022*
Amendments to IFRS 3 Business Combinations 1 January 2022*
2018-20 Annual Improvements and Onerous Contracts 1 January 2022*
IFRS 17: Insurance contracts 1 January 2023*
Amendments to IFRS 4 Insurance Contracts 1 January 2023*
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies 1 January 2023**
IAS 1 Presentation of Financial Statements: Amendments regarding the classification of liabilities 1 January 2023**
Page 23

DB ETC plc  

Page 22

Notes to the financial statements (continued) 

For the year ended 31 December 2021  

2 Basis of preparation (continued)

(e) Changes in accounting standards (continued)

(ii) Standards not yet effective, but available for early adoption (continued)

Description Effective date
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates 1 January 2023**
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction 1 January 2023**
Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 - Comparative Information 1 January 2023**

*Where new requirements are endorsed, the EU effective date is disclosed. For un-endorsed standards and interpretations, the IASB's effective date is noted. Where any of the requirements are applicable to the Company, it will apply them from their EU effective date.

** Not endorsed.

Directors have considered the new standards, amendments and interpretations as detailed in the above table and do not plan to adopt these standards early. The Directors anticipate that the adoption of those standards or interpretations will have no material impact on the financial statements of the Company in the period of initial application.

 

3 Significant accounting policies

(a) Foreign currency transactions

Transactions in foreign currencies are translated into the functional currency at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated into the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated into the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in the Statement of comprehensive income.

Gains and losses arising on retranslation of financial liabilities designated at fair value through profit or loss and Precious metals at fair value are included in the Statement of comprehensive income together with fair value gains and losses as noted below.

 

(b) Net fair value (loss)/gain on Precious metals at fair value and Precious metal due from the Programme Counterparty

Net fair value (loss)/gain on Precious metal relates to the movement in the prices of metals and includes all realised and unrealised fair value changes and foreign exchange differences. Any gains and losses arising from changes in fair value of Precious metals and changes in fair value of Precious metals due from the Programme Counterparty are recorded in net fair value gain on Precious metals at fair value and Precious metals due from the Programme Counterparty at fair value in the Statement of comprehensive income. Under normal circumstances, there is no realised gain on metals as realisation occurs at the value computed and there is no difference between realisation proceeds and carrying amount of the metals. Details of recognition and measurement of Precious metals are disclosed in the accounting policy for Precious metals (note 3(e)).

 

(c) Net fair value gain/(loss) on financial liabilities designated at fair value through profit or loss

Net fair value gain/(loss) on financial liabilities designated at fair value through profit or loss relates to ETC Securities issued by the Company and includes all realised and unrealised fair value changes and foreign exchange differences. Any gains and losses arising from changes in the fair value of the financial liabilities designated at fair value through profit or loss are recorded in net fair value loss on ETC Securities in the Statement of comprehensive income. Details of recognition and measurement of financial liabilities are disclosed in the accounting policy of financial instruments (note 3(f)).

 

(d) Other expenses

All expenses, other than product fees recorded as a reduction in metal entitlement, are paid by the Arranger and as such, are not reflected in these financial statements. Product fees are recorded as a reduction in metal entitlement in calculation of the fair value of the ETC Securities.

Page 24

DB ETC plc  

Page 23

Notes to the financial statements (continued) 

For the year ended 31 December 2021 

3 Significant accounting policies (continued)

(e) Precious metals at fair value and Precious metal due from the Programme Counterparty

The Company holds Precious metals at least equal to the amount due to holders of ETC Securities solely for the purposes of meeting its obligations under the ETC Securities.

The Precious metals are measured at fair value and changes in fair value are recognised in the Statement of Comprehensive Income. Any costs to sell precious metal that arise in the course of settling the Company's obligations under the ETC Securities are borne by the holders of the ETC Securities (“ETC Securityholders”).

Initial recognition

The Precious metal is recognised when the metal is received into the vault of the Custodian.

Derecognition

The Company derecognises Precious metals held at fair value when the contractual rights to the asset have expired, or the Company has transferred the rights to the asset in a transaction in which substantially all the risks and rewards of ownership are transferred.

Fair value measurement principles

The metal assets are valued using the appropriate metal prices:

 • the gold is recorded at fair value using the last available price, nearest or at year-end, quoted by the London Bullion  Market Association. The morning ("AM") fix on 31 December 2021 was used to value the gold as this was the last fix  price available from the London Bullion Market Association for the year.

 • the silver is recorded at fair value using the last available price, nearest or at year-end, quoted by the London Bullion  Market Association. The fix on 31 December 2021 was used to value the silver as this was the last fix price available  from the London Bullion Market Association for the year.

 • the platinum is recorded at fair value using the last available price, nearest or at year-end, quoted by the London Platinum  and Palladium Market. The AM fix on 31 December 2021 was used to value the platinum as this was the last available  fix price available from the London Platinum and Palladium Market for the year.

 • the palladium is recorded at fair value using the last available price, nearest or at year-end, quoted by the London  Platinum and Palladium Market.

 • the rhodium is recorded at fair value using the last available price, nearest or at year-end, quoted by Comdaq. The fix on 31 December 2021 was used to value the rhodium as this was the last fix price available from Comdaq for the year.

The metal prices derived from the above sources are then adjusted for product fees charged at 0.25% to 0.95% per annum of metal entitlement and any purchase or sale transactions between the Observation Date (as defined in the Master Balancing Terms) and the year end date. The product fees are accrued on a daily basis.

The valuation of metal assets held at fair value in the Statement of financial position is calculated after taking account of adjustments to the Company's metal entitlement arising from the accrual of product fees and other rebalancing adjustments, consistent with the Balancing Agreements which are in place for each Series.

Precious metals due from Programme Counterparty

The Precious metals due from the Programme Counterparty represents the amount of metal entitlement of ETC Securities which is not held physically by the custodian / sub custodian on behalf of the Company as at the reporting date but is due to be received from the Programme Counterparty under the Balancing Agreement. Precious metals due from the Programme Counterparty is accounted for at fair value through profit or loss.

 

(f) Financial instruments

Initial recognition

Financial assets and financial liabilities are recognised initially at the trade date at which the Company becomes a party to the contractual provisions of the instrument and are measured initially at fair value plus, for an item not at fair value through profit or loss, transaction costs that are directly attributable to their acquisition or issue.

Classification

The Company has designated the debt financial liabilities issued at fair value through profit or loss. For other financial instruments, the classification is based on both the Company's business model for managing those Instruments and the contractual cash flow characteristics of the instruments.

Page 25

DB ETC plc  

Page 24

Notes to the financial statements (continued) 

For the year ended 31 December 2021 

3 Significant accounting policies (continued)

(f) Financial instruments (continued)

Accordingly, the financial assets and financial liabilities are classified into the following categories:

Financial assets at fair value through profit or loss:

 • Precious metals due from Programme Counterparty

Financial liabilities at fair value through profit or loss:

 • Financial liabilities designated at fair value through profit or loss

Financial assets at amortised cost:

 • Cash and cash equivalents and other receivables

Financial liabilities at amortised cost:

 • Other payables

Subsequent measurement

After initial measurement, the instruments at amortised cost are recorded at the amount at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest rate method or any difference between the initial amount recognised and the maturity amount, minus any reduction for impairment. The effective interest method is a method of calculating the amortised cost of an instrument and of allocating interest over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash flows (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Impairment losses, including reversals of impairment losses and impairment gains, are presented in the Statement of comprehensive income.

Financial liabilities designated at fair value through profit and loss are measured using the prices calculated by Apex Fund Services (Ireland) Limited (the "Determination Agent"). Quoted prices are also available on recognised stock exchanges for the financial liabilities designated at fair value through profit or loss. However, the Directors have determined that prices calculated by the Determination Agent should be used as a measurement basis at 31 December 2021 and 31 December 2020 as these prices most accurately reflect the obligations of the Company under the terms of the Series Issue Deeds. The prices are calculated using the spot price of the relevant underlying metal adjusted for product fees. The product fees range from 0.25% to 0.95% per annum and are accrued on a daily basis by reducing the metal entitlement of each ETC Security. Details of product fees for each Series is described in note 5.

Derecognition

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

Offsetting

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

 

(g) Other receivables

Other receivables are accounted for at amortised cost.

 

(h) Cash and cash equivalents

Cash and cash equivalents include deposits held at call with the cash custodian which are subject to insignificant risk of changes in their fair value, and are used by the Company in the management of its short term commitments.

 

(i) Share capital

Share capital is issued in Pound Sterling ("GBP"). Incremental costs directly attributable to the issue of new shares are shown in  equity as a deduction from the proceeds.

Page 26

DB ETC plc

Page 25

Notes to the financial statements (continued)

For the year ended 31 December 2021

3 Significant accounting policies (continued)

(j) Segment reporting

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity). The Chief Operating Decision Maker (CODM) of the operating segment is the Board. The CODM is responsible for all the Company's activities. The Company is a special purpose vehicle whose principal activities are the issuance of secured precious metal linked securities and has invested in precious metals. The Board believes that each Series can be treated as a segment as the return on each Series is linked to a different precious metal.

4 Net fair value (loss)/gain on Precious metals at fair value and Precious metal due from the Year ended Year ended
  Programme Counterparty 31-Dec-21 31-Dec-20
    EUR EUR
  Net fair value (loss)/gain on Precious metals at fair value and Precious metal due from the Programme ( 247,933,647 ) 1,493,258,338
  Counterparty    
    ( 247,933,647 ) 1,493,258,338
5 Net fair value gain/(loss) on financial liabilities designated at fair value through profit or loss Year ended Year ended
    31-Dec-21 31-Dec-20
    EUR EUR
  Net fair value gain/(loss) on ETC Securities 247,933,647 ( 1,493,258,338)
    247,933,647 ( 1,493,258,338)

Product fees are recorded as a reduction in metal entitlement in calculation of the fair value of the ETC Securities and hence not recorded separately in the statement of comprehensive income as they are all included in the net fair value gain/ (loss) on the financial liabilities.

During the year, the Company incurred the following product fees:

Series Description Year ended Year ended
    31-Dec-21 31-Dec-20
    EUR EUR
Series 1 Xtrackers Physical Gold ETC 1,505,561 2,668,718
Series 2 Xtrackers Physical Gold EUR hedged ETC 13,046,887 17,091,411
Series 3 Xtrackers Physical Silver ETC 128,180 168,889
Series 4 Xtrackers Physical Silver EUR Hedged ETC 1,382,573 1,121,546
Series 5 Xtrackers Physical Platinum ETC 111,804 132,048
Series 6 Xtrackers Physical Platinum EUR Hedged ETC 1,208,622 1,003,081
Series 7 Xtrackers Physical Palladium ETC 28,136 30,009
Series 8 Xtrackers Physical Palladium EUR Hedged ETC 155,048 166,601
Series 9 Xtrackers Physical Gold ETC (EUR) 6,202,683 8,040,026
Series 10 Xtrackers Physical Silver ETC (EUR) 3,858,041 2,347,395
Series 11 Xtrackers Physical Rhodium ETC 1,207,446 806,226
Series 12 Xtrackers Physical Rhodium ETC (EUR) 455,547 345,079
Series 13 Xtrackers Physical Gold GBP Hedged ETC 726,625 1,757,343
    30,017,153 35,678,372
6 Taxation  
  The Company is not a regulated financial service company from a Jersey Income Tax perspective. Therefore, the Company is liable to Jersey
  Income Tax at 0%.    
7 Cash and cash equivalents 31-Dec-21 31-Dec-20
    EUR EUR
  Cash at bank 2 2
    2 2
Page 27
DB ETC plc        
          Page 26
Notes to the financial statements (continued)      
For the year ended 31 December 2021      
  8 Other receivables 31-Dec-21 31-Dec-20
      EUR  EUR
  Other receivable 30,000   -
  Precious metal receivables* 249,672   -
  Corporate benefit receivable due from the Arranger -   30,000
      279,672   30,000
  * As at 31 December 2021, there were 20 units of Rhodium @ $14,175 each, in respect to Series 11 that were unsettled (31 December 2020:
  there were no unsettled sale of Precious metal).      
  9 Precious metals at fair value and Precious metal due from the Programme Counterparty at fair      
  value   31-Dec-21 31-Dec-20
      EUR   EUR
  Precious metals at fair value 5,895,950,836 8,780,336,340
  Precious metal due from the Programme Counterparty 7,086,475   31,110,083
      5,903,037,311 8,811,446,423
  Movement in Precious metals at fair value 31-Dec-21 31-Dec-20
      EUR   EUR
  At beginning of the year 8,811,446,423 7,337,487,485
  Non-cash transactions      
  Additions during the year 1,531,033,751 4,684,702,313
  Disposals during the year* (4,191,509,216)   (4,704,001,713)
  Net changes in fair value during the year ( 247,933,647 ) 1,493,258,338
  At end of the year 5,903,037,311 8,811,446,423

Precious metal due from the Programme Counterparty represents the amount of metal entitlement of ETC Securities which is not held as physical metal inventory as at the reporting date but which is due to be received from the Programme Counterparty under the Balancing Agreement.

* Includes an amount of EUR 1,097,751,597 which relates to the Precious Metals transferred under the Exchange Offer. Refer to Note 20 to the financial statements for further details.

The fair values of the Precious Metal by Series as at 31 December 2021 are as follows:

Series Metals Currency Total Metal Adjusted Price Fair value Fair value
name     holdings (Ounce) per ounce CCY EUR
Series 1 Gold USD 270,994 1,819.88 493,175,945 433,649,608
Series 2 Gold EUR 1,069,687 1,608.76 1,720,867,242 1,720,867,242
Series 4 Silver EUR 8,308,971 20.37 169,259,897 169,259,897
Series 6 Platinum EUR 163,005 849.93 138,542,893 138,542,893
Series 9 Gold EUR 1,421,366 1,605.76 2,282,372,620 2,282,372,620
Series 10 Silver EUR 42,153,276 20.39 859,511,181 859,511,181
Series 11 Rhodium USD 6,704 14,222.68 95,355,022 83,845,671
Series 12 Rhodium EUR 2,566 12,534.55 32,163,763 32,163,763
Series 13 Gold GBP 111,916 1,373.58 153,724,406 182,824,436
            5,903,037,311

During the financial year, the precious metals in respect to Series 3, Series 5, Series 7 and Series 8 were fully disposed of following the early termination of the corresponding ETC Securities.

Page 28
DB ETC plc                    
                      Page 27
Notes to the financial statements (continued)              
For the year ended 31 December 2021              
9 Precious metals at fair value and Precious metal due from the Programme Counterparty at fair value (continued)  
  The fair values of the Precious Metal by Series as at 31 December 2020 are as follows:        
  Series Metals   Currency     Total Metal Adjusted Price Fair value   Fair value
  name             per ounce CCY   EUR
  Series 1 Gold   USD     596,950 1,890.87 1,128,755,673 923,999,394
  Series 2 Gold   EUR   1,855,765 1,552.67 2,881,386,303 2,881,386,303
  Series 3 Silver   USD   2,262,179 26.48 59,901,566 49,035,422
  Series 4 Silver   EUR   7,828,405 21.76 170,325,298 170,325,298
  Series 5 Platinum   USD     41,455 1,074.77 44,554,408 36,472,238
  Series 6 Platinum   EUR     206,770 881.14 182,192,625 182,192,625
  Series 7 Palladium   USD     3,474 2,319.38 8,056,716   6,595,228
  Series 8 Palladium   EUR     14,071 1,944.46 27,361,046 27,361,046
  Series 9 Gold   EUR   2,067,997 1,539.62 3,183,923,379 3,183,923,379
  Series 10 Silver   EUR   44,104,670 21.57 951,554,967 951,554,967
  Series 11 Rhodium   USD     8,408 17,144.93 144,149,712 118,000,954
  Series 12 Rhodium   EUR     3,262 13,974.35 45,578,800 45,578,800
  Series 13 Gold   GBP     148,763 1,412.45 210,121,385 235,020,769
                    8,811,446,423
  Movement in fair values by Series for the period ended 31 December 2021          
  Series Metal CCY Opening balance Issuances Redemptions Net changes in   Closing
    description             fair values   balance
          01-Jan-21         31-Dec-21
          EUR   EUR EUR EUR   EUR
  Series 1 Gold USD   923,999,394 108,871,896 ( 588,599,866 ) ( 10,621,816 ) 433,649,608
  Series 2 Gold EUR   2,881,386,303 585,860,678 ( 1,575,048,874 ) ( 171,330,865 ) 1,720,867,242
  Series 4 Silver EUR   170,325,298 161,452,805 ( 136,177,306 ) ( 26,340,900 ) 169,259,897
  Series 6 Platinum EUR   182,192,625 40,852,679 ( 66,104,989 ) ( 18,397,421 ) 138,542,894
  Series 9 Gold EUR   3,183,923,379 453,071,799 ( 1,396,190,431 ) 41,567,873 2,282,372,620
  Series 10 Silver EUR   951,554,967 109,966,425 ( 146,472,089 ) ( 55,538,123 ) 859,511,180
  Series 11 Rhodium USD   118,000,954   - ( 34,975,401 ) 820,118 83,845,671
  Series 12 Rhodium EUR   45,578,800   - ( 12,348,376 ) ( 1,066,661 ) 32,163,763
  Series 13 Gold GBP   235,020,769 37,070,837 ( 89,903,234 ) 636,064 182,824,436
  Series 3 Silver USD   49,035,422 12,434,844 ( 58,251,232 ) ( 3,219,034 )   -
  Series 5 Platinum USD   36,472,238 7,013,208 ( 43,629,396 ) 143,950   -
  Series 7 Palladium USD   6,595,228 1,936,347 ( 7,648,604 ) ( 882,971 )   -
  Series 8 Palladium EUR   27,361,046 12,502,233 ( 36,159,418 ) ( 3,703,861 )   -
          8,811,446,423 1,531,033,751 ( 4,191,509,216 ) ( 247,933,647 ) 5,903,037,311
  Movement in fair values by Series for the period ended 31 December 2020          
  Series Metal CCY Opening balance Issuances Redemptions Net changes in   Closing
    description             fair values   balance
          01-Jan-20         31-Dec-20
          EUR   EUR EUR EUR   EUR
  Series 1 Gold USD   1,062,267,181 572,765,822 ( 848,250,198 ) 137,216,589 923,999,394
  Series 2 Gold EUR   2,262,395,191 1,764,635,872 ( 1,696,723,156 ) 551,078,396 2,881,386,303
  Series 3 Silver USD   31,719,024 18,187,815 ( 18,829,094 ) 17,957,677 49,035,422
  Series 4 Silver EUR   153,963,821 88,462,230 ( 121,904,555 ) 49,803,802 170,325,298
  Series 5 Platinum USD   31,600,972 20,800,409 ( 15,691,448 ) ( 237,696 ) 36,472,237
  Series 6 Platinum EUR   140,159,869 48,702,493 ( 20,384,068 ) 13,714,331 182,192,625
  Series 7 Palladium USD   10,148,180 18,279,879 ( 24,838,135 ) 3,005,304   6,595,228
  Series 8 Palladium EUR   17,698,937 17,786,887 ( 12,069,593 ) 3,944,816 27,361,047
  Series 9 Gold EUR   2,981,983,888 1,409,870,739 ( 1,570,210,363 ) 362,279,116 3,183,923,380
  Series 10 Silver EUR   325,541,258 584,364,522 ( 155,052,611 ) 196,701,799 951,554,968
  Series 11 Rhodium USD   65,820,709   - ( 37,508,400 ) 89,688,645 118,000,954
  Series 12 Rhodium EUR   30,226,725   - ( 23,633,054 ) 38,985,128 45,578,799
  Series 13 Gold GBP   223,961,730 140,845,646 ( 158,907,040 ) 29,120,433 235,020,769
          7,337,487,485 4,684,702,314 ( 4,704,001,715 ) 1,493,258,339 8,811,446,423
Page 29
    DB ETC plc          
              Page 28
    Notes to the financial statements (continued)          
    For the year ended 31 December 2021          
    10 Other payables     31-Dec-21   31-Dec-20
          EUR   EUR
    ETC securities payables*     249,672   -
          249,672   -
    * As at 31 December 2021, there were unsettled redemption of 221 units of Xtrackers Physical Rhodium ETC at $1,279.577 each. (31 December 2020: no unsettled redemption of ETC Securities).
    11 Financial liabilities designated at fair value through profit or loss          
      31-Dec-21   31-Dec-20  
      Nominal Fair value Nominal   Fair value
      units   units    
      issued EUR issued   EUR
    ETC Securities issued 55,988,193 5,903,037,311 80,586,162   8,811,446,423
    Movement in ETC Securities issued     31-Dec-21   31-Dec-20
          EUR   EUR
    At beginning of the year     8,811,446,423   7,337,487,485
    Non-cash transactions          
    Issue of ETC Securities issued during the year     1,531,033,751 4,684,702,313
    Redemption of ETC Securities issued during the year*     (4,191,509,216)   (4,704,001,713)
    Net changes in fair value during the year     ( 247,933,647 )   1,493,258,338
    At end of the year     5,903,037,311   8,811,446,423

The ETC Securities issued are listed on various exchanges including London, Switzerland, Milan and Frankfurt. Refer to note 14 for a description of the key risks regarding the issue of these instruments. The Company's obligations under the financial liabilities issued are secured by the precious metals as per note 9. The investors' recourse per Series is limited to the assets of that particular Series. The Series have an option for early redemption.

* Includes an amount of EUR 1,097,751,597 which relates to the ETC Securities transferred under the Exchange Offer. Refer to Note 20 to the financial statements for further details.

 

The financial liabilities in issue at 31 December 2021 are as follows:    

Series Description CCY Product fees Maturity Units Value per unit Fair value
        date Outstanding (CCY) EUR
          31-Dec-21 31-Dec-21 31-Dec-21
Series 1 Xtrackers USD 0.25 % 15-Jun-60 2,798,048 176.2571 433,649,608
  Physical Gold            
  ETC            
Series 2 Xtrackers EUR 0.59 % 15-Jun-60 14,702,882 117.04 1,720,867,242
  Physical Gold            
  EUR Hedged            
  ETC            
Series 4 Xtrackers EUR 0.75 % 15-Jun-60 1,213,804 139.45 169,259,897
  Physical            
  Silver EUR            
  Hedged ETC            
Series 6 Xtrackers EUR 0.75 % 14-Jul-60 2,396,611 57.81 138,542,893
  Physical            
  Platinum            
  EUR Hedged            
  ETC            
Series 9 Xtrackers USD 0.25 % 27-Aug-60 14,667,240 155.61 2,282,372,620
  Physical Gold            
  ETC (EUR)            
Page 30

DB ETC plc    

Page 29

Notes to the financial statements (continued)    

For the year ended 31 December 2021    

11 Financial liabilities designated at fair value through profit or loss (continued)

The financial liabilities in issue at 31 December 2021 are as follows: (continued)

Series Description CCY Product fees Maturity Units Value per unit Fair value
        date Outstanding (CCY) EUR
          31-Dec-21 31-Dec-21 31-Dec-21
Series 10 Xtrackers USD 0.40 % 27-Aug-60 4,428,282 194.10 859,511,181
  Physical            
  Silver ETC            
  (EUR)            
Series 11 Xtrackers USD 0.95 % 19-May-61 74,313 1,283.15 83,845,671
  Physical            
  Rhodium            
  ETC            
Series 12 Xtrackers EUR 0.95 % 19-May-61 28,410 1,132.13 32,163,763
  Physical            
  Rhodium            
  ETC (EUR)            
Series 13 Xtrackers GBP 0.69 % 01-Apr-61 15,678,603 9.80 182,824,436
  Physical Gold            
  GBP Hedged            
  ETC            
          55,988,193   5,903,037,311

The financial liabilities in issue at 31 December 2020 are as follows:      

Series Description CCY Product fees Maturity Units Value per unit Fair value
        date outstanding (CCY) EUR
          31-Dec-20 31-Dec-20 31-Dec-20
Series 1 Xtrackers USD 0.25 % 15-Jun-60 6,147,990 183.6 923,999,394
  Physical Gold            
  ETC            
Series 2 Xtrackers EUR 0.59 % 15-Jun-60 23,299,920 123.67 2,881,386,303
  Physical Gold            
  EUR Hedged            
  ETC            
Series 3 Xtrackers USD 0.40 % 15-Jun-60 236,897 252.86 49,035,422
  Physical            
  Silver ETC            
Series 4 Xtrackers EUR 0.75 % 15-Jun-60 1,042,200 163.43 170,325,298
  Physical            
  Silver EUR            
Series 5 Xtrackers USD 0.45 % 14-Jul-60 434,752 102.48 36,472,238
  Physical            
  Platinum ETC            
Series 6 Xtrackers EUR 0.75 % 14-Jul-60 2,760,055 66.01 182,192,625
  Physical            
  Platinum            
    EUR Hedged            
Series 7 Physical USD 0.45 % 14-Jul-60 35,659 225.94 6,595,228
  Palladium            
  ETC            
Series 8 Physical EUR 0.75 % 14-Jul-60 189,927 144.06 27,361,046
  Palladium            
  EUR Hedged            
  ETC            
Series 9 Xtrackers USD 0.25 % 27-Aug-60 21,285,887 149.58 3,183,923,379
  Physical Gold            
  ETC (EUR)            
Page 31

DB ETC plc   

Page 30

Notes to the financial statements (continued)   

For the year ended 31 December 2021   

11 Financial liabilities designated at fair value through profit or loss (continued)

The financial liabilities in issue at 31 December 2020 are as follows: (continued)

Series Description   CCY Product fees Maturity   Units Value per unit Fair value
          date   outstanding (CCY) EUR
              31-Dec-20 31-Dec-20 31-Dec-20
Series 10 Xtrackers   USD 0.40 % 27-Aug-60   4,614,529 206.21 951,554,967
  Physical                
  Silver ETC              
  (EUR)                
Series 11 Xtrackers   USD 0.95 % 19-May-61   92,222 1,563.07 118,000,954
  Physical                
  Rhodium                
  ETC                
Series 12 Xtrackers   EUR 0.95 % 19-May-61   35,779 1,273.90 45,578,800
  Physical                
  Rhodium                
  ETC (EUR)                
Series 13 Xtrackers   GBP 0.69 % 01-Apr-61   20,410,345 10.29 235,020,769
  Physical Gold              
  GBP Hedged              
  ETC                
              80,586,162   8,811,446,423
Movement in fair values by Series for the period ended 31 December 2021            
Series Description     Opening balance Issuances     Redemptions   Net changes in   Closing
                    fair values   balance
        01-Jan-21               31-Dec-21
        EUR EUR     EUR   EUR   EUR
Series 1 Xtrackers Physical Gold 923,999,394 108,871,896   ( 588,599,866 ) ( 10,621,816 )   433,649,608
  ETC              
Series 2 Xtrackers Physical Gold 2,881,386,303 585,860,678 ( 1,575,048,874 ) ( 171,330,865 ) 1,720,867,242
  EUR Hedged ETC                      
Series 4 Xtrackers Physical Silver 170,325,298 161,452,805   ( 136,177,306 ) ( 26,340,900 )   169,259,897
  EUR Hedged EC                      
Series 6 Xtrackers Physical Platinum 182,192,625 40,852,679   ( 66,104,990 ) ( 18,397,421 )   138,542,893
  EUR Hedged ETC                      
Series 9 Xtrackers Physical Gold 3,183,923,379 453,071,799 ( 1,396,190,431 ) 41,567,873 2,282,372,620
  ETC (EUR)                        
Series 10 Xtrackers Physical Silver 951,554,967 109,966,425   ( 146,472,088 ) ( 55,538,123 )   859,511,181
  ETC (EUR)                        
Series 11 Xtrackers Physical Rhodium 118,000,954 -   ( 34,975,401 )   820,118   83,845,671
  ETC                        
Series 12 Xtrackers Physical Rhodium 45,578,800 -   ( 12,348,376 ) ( 1,066,661 )   32,163,763
  ETC (EUR)                        
Series 13 Xtrackers Physical Gold 235,020,769 37,070,837   ( 89,903,234 )   636,064   182,824,436
  GBP Hedged ETC                      
Series 3 Xtrackers Physical Silver 49,035,422 12,434,844   ( 58,251,232 ) ( 3,219,034 )     -
  ETC                  
Series 5 Xtrackers Physical Platinum 36,472,238 7,013,208   ( 43,629,396 )   143,950     -
  ETC                        
Series 7 Xtrackers Physical   6,595,228 1,936,347     ( 7,648,604 )   ( 882,971 )     -
  Palladium ETC                        
Series 8 Xtrackers Physical   27,361,046 12,502,233   ( 36,159,418 ) ( 3,703,861 )     -
  Palladium EUR Hedged                    
        8,811,446,423 1,531,033,751 ( 4,191,509,216 ) ( 247,933,647 ) 5,903,037,311
Page 32

DB ETC plc   

Page 31

Notes to the financial statements (continued)   

For the year ended 31 December 2021   

11 Financial liabilities designated at fair value through profit or loss (continued)

Movement in fair values by Series for the year ended 31 December 2020

  Series Description Opening balance Issuances Redemptions   Net changes in   Closing
              fair values   balance
      01-Jan-20           31-Dec-20
      EUR EUR  EUR EUR    EUR
  Series 1 Xtrackers Physical Gold 1,062,267,181 572,765,822 ( 848,250,198 ) 137,216,589   923,999,394
  Series 2 Xtrackers Physical Gold 2,262,395,191 1,764,635,872 ( 1,696,723,156 ) 551,078,396 2,881,386,303
    EUR Hedged ETC                
  Series 3 Xtrackers Physical Silver 31,719,024 18,187,815 ( 18,829,094 )   17,957,677   49,035,422
    ETC                
  Series 4 Xtrackers Physical Silver 153,963,821 88,462,230 ( 121,904,555 )   49,803,802   170,325,298
    EUR Hedged EC                
  Series 5 Xtrackers Physical Platinum 31,600,972 20,800,409 ( 15,691,448 )   ( 237,695 )   36,472,238
    ETC                
  Series 6 Xtrackers Physical Platinum 140,159,869 48,702,493 ( 20,384,068 )   13,714,331   182,192,625
    EUR Hedged ETC                
  Series 7 Xtrackers Physical 10,148,180 18,279,879 ( 24,838,135 )   3,005,304     6,595,228
    Palladium ETC                
  Series 8 Xtrackers Physical 17,698,937 17,786,887 ( 12,069,593 )   3,944,815   27,361,046
    Palladium EUR Hedged                
  Series 9 Xtrackers Physical Gold 2,981,983,888 1,409,870,739 ( 1,570,210,363 ) 362,279,115 3,183,923,379
    ETC (EUR)                
  Series 10 Xtrackers Physical Silver 325,541,258 584,364,521 ( 155,052,610 ) 196,701,798   951,554,967
    ETC (EUR)                
  Series 11 Xtrackers Physical Rhodium 65,820,709 - ( 37,508,400 )   89,688,645   118,000,954
    ETC                
  Series 12 Xtrackers Physical Rhodium 30,226,725 - ( 23,633,053 )   38,985,128   45,578,800
    ETC (EUR)                
  Series 13 Xtrackers Physical Gold 223,961,730 140,845,646 ( 158,907,040 )   29,120,433   235,020,769
    GBP Hedged ETC                
      7,337,487,485 4,684,702,313 (4,704,001,713) 1,493,258,338   8,811,446,423
                 
12 Share capital           31-Dec-21   31-Dec-20
  Authorised:           GBP     GBP
  10,000 ordinary shares of GBP 1 each         10,000     10,000
  Issued and fully paid:         EUR     EUR
  2 ordinary shares of GBP 1 each         2     2
              2     2
As at 31 December 2021, the ordinary share capital was held by the following non-beneficial nominees:    
  31-Dec-21 31-Dec-20
  GBP GBP
Vistra Nominees I Limited 1 1
Vistra Nominees II Limited 1 1
  2 2

The authorised share capital of the Company is GBP 10,000, out of which 2 ordinary shares have been issued and fully paid. The nominees have no beneficial interest in and derives no benefit from its holding of the shares. There are no other rights that pertain to the shares and the shareholders.

13 Capital risk management

The Company is a special purpose vehicle set up to issue ETC Securities for the purpose of making investments as defined under the programme memorandum and in each of the Series memorandum agreements. Share capital of GBP 2 was issued in line with Jersey Company Law and is not used for financing the investment activities of the Company. The Company is not subject to any other externally imposed capital requirements.

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DB ETC plc  

Page 32

Notes to the financial statements (continued) 

For the year ended 31 December 2021 

14 Financial risk management

Risk management framework

The Company, and ultimately the holders of the ETC Securities, have exposure to the following risks from its use of financial instruments:

(a) Market risk;

(b) Credit risk;

(c) Liquidity risk; and

(d) Operational risk.

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 these risks.

(a) Market risk  

Market risk comprises three types of risk: interest rate risk, currency risk and other price risk. The ETC Securityholders are  exposed to the market risk of the financial instruments.  

(i) Interest rate risk 

Interest rate risk is the risk that the fair value or future cash flows of financials instruments will fluctuate as a result of a change in interest rates. The ETC Securities, the Precious metal due from the Programme Counterparty and the Precious metals do not bear interest. As such, the Company and ETC Securityholders have limited exposure to interest rate risk.

(ii) Currency risk  

Currency risk is the risk which arises where the assets and liabilities of the Company are denominated in currencies other  than its functional currency. As at 31 December 2021, the Company is exposed to assets and liabilities denominated in US Dollars (USD) and Pound Sterling (GBP).

The Company is not exposed to net currency risk since the foreign exchange movements in its financial liabilities will be offset by the foreign exchange movements in its Precious metals. Any net foreign currency risk is borne by the ETC Securityholders.

As at the reporting date, the carrying value of the Company's assets and liabilities held in individual foreign currencies
were as follows:        
31-Dec-21   Metals ETC Securities Net exposure
Series name Currency EUR EUR EUR
Series 1 USD 433,649,608 433,649,608 -
Series 11 USD 83,845,671 83,845,671 -
Series 13 GBP 182,824,436 182,824,436 -
    700,319,715 700,319,715 -
As at the reporting date, the carrying value of the Company's assets and liabilities held in individual foreign currencies
were as follows:        
31/12/2020   Metals ETC Securities Net exposure
    EUR EUR EUR
Series 1 USD 923,999,394 923,999,394 -
Series 3 USD 49,035,422 49,035,422 -
Series 5 USD 36,472,238 36,472,238 -
Series 7 USD 6,595,228 6,595,228 -
Series 11 USD 118,000,954 118,000,954 -
Series 13 GBP 235,020,769 235,020,769 -
    1,369,124,005 1,369,124,005 -

Details of the currencies under each series for the Precious Metals and Financial liabilities designated at fair value through profit or loss have been disclosed under the respective notes 9 and 11 to the financial statements.

The value of Precious metal due from the Programme Counterparty represents quantity of metal bullion, accordingly it is not considered to be a currency exposure.

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DB ETC plc  

Page 33

Notes to the financial statements (continued)  

For the year ended 31 December 2021  

14 Financial risk management (continued)

(a) Market risk (continued)

(ii) Currency risk (continued)   

The following exchange rates have been applied during the year:   

  Average rate - year ended Closing rate
  31-Dec-21 31-Dec-20 31-Dec-21 31-Dec-20
USD-EUR 0.84594 0.87706 0.87930 0.81860
GBP-EUR 1.16341 1.12510 1.18930 1.11850

The impact of changes in foreign exchange rates on the Precious metals at fair value is offset by the impact of foreign exchange rate changes on the financial liabilities. Therefore any change in the exchange rates would have no net effect on the equity or the profit or loss of the Company.

(iii) Price risk

Price risk is the risk that changes in market prices of metals will affect the Company's income, expense, Precious metals and financial liabilities designated at fair value through profit or loss. The Company's liabilities are exposed to the market prices of the metals. However, the risk is mitigated by the Company holding quantities of physical Precious metals equivalent to the weight of metal entitlement for each Series of ETC Securities issued.

When a shortfall of Precious metal occurs, the shortfall is made up, in accordance with the terms of the Balancing Agreement, through a balance of Precious metal being due from the Programme Counterparty. Accordingly, the ETC Securityholders are exposed to the market price risk of their metal entitlement under the ETC Securities.

Any changes in the metal spot prices on the Precious metals held by the Company would not have any net effect on the equity or the profit or loss of the Company since changes in the fair value of Precious metals or in the balance of Precious metal due from the Programme Counterparty would be offset by corresponding changes in the fair value of the ETC Securities and as such any price risk is ultimately borne by the ETC Securityholders.

(b) 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. The Company's principal financial assets are cash and cash equivalents, other receivables and Precious metal due from the Programme Counterparty which represents the Company's maximum exposure to credit risk. All credit risks are ultimately borne by the ETC Securityholders.

    31-Dec-21 31-Dec-20
    EUR EUR
  Precious metal due from the Programme Counterparty 7,086,475 31,110,083
  Other receivables 279,672 30,000
  Cash and cash equivalents 2 2
    7,366,149 31,140,085

The Company has no net credit risk given its obligations to the ETC Securityholders are limited in recourse to the amount received on the Precious metals for each series of ETC Securities.

As at 31 December 2021, no financial assets carried at amortised cost were past due or impaired (2020: Nil). Assets that have been pledged as collateral for financial liabilities are disclosed in note 9.

The Directors have also considered the credit risk and counterparty risk with JPMorgan as custodian (the "Custodian"), Johnson Matthey (the "Sub-Custodian") and Deutsche Bank AG, London Branch as the Programme Counterparty, respectively of the allocated and unallocated Precious metals held by the Company given the significance of the Precious metals to the overall financial position of the Company. As at 31 December 2021, the Company held Precious metals at fair value of EUR 5,779,957,454 and EUR 115,993,381 respectively (2020: EUR 8,616,756,588 and EUR 163,579,752) with JPMorgan and Johnson Matthey, and Precious metal due from the Programme Counterparty with a fair value of EUR 7,086,475 (2020: EUR 31,110,083) from Deutsche Bank AG, London Branch.

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DB ETC plc  

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Notes to the financial statements (continued) 

For the year ended 31 December 2021 

14 Financial risk management (continued)

(b) Credit risk (continued)

As the credit rating of JP Morgan Chase Bank NA, London Branch, is not available, the Directors have considered the overall long term credit rating status of JPMorgan Chase Bank N.A (2021: S&P A+) (2020: S&P A-), and are of the opinion that counterparty risk is acceptable. The Directors have considered the overall credit rating status of Deutsche Bank AG (2021: S&P bbb) (2020: S&P BBB+) as the credit ratings for Deutsche Bank AG, London Branch is not available. The Directors are of the opinion that counterparty risk is acceptable. The Directors believe that the counterparty risk and credit risk exposure of the Company to the Sub-Custodian is not significant given that only approximately 2% (2020: 2%) of the total value of Precious metals are held with this Sub-Custodian.

Ultimately, all credit and counterparty risks associated with JP Morgan are borne by the ETC Securityholders.

Concentration risk

At the reporting date, the Company's Precious metals at fair value were concentrated in the following asset types and geographical location:

By industry 31-Dec-21 31-Dec-20
Types of collaterals %   %
Gold 78   82
Silver 17   13
Platinum 2   3
Rhodium 3   2
  100   100
By Geographical location 31-Dec-21 31-Dec-20
Country of origin %   %
United Kingdom 100   100
  100   100

Other receivables

Other receivables are mainly ETC securities receivable. It also comprises an amount receivable from Vistra Fund Services Limited at the year end. The credit ratings of Deutsche Bank AG, London Branch are as follows:

  2021 2021 2020 2020
  Short term ratings Long term ratings Short term ratings Long term ratings
Moody P-1 A2 P-2 A3
Standard & Poor's A-2 A- A-2 BBB+
Fitch F2 BBB+ F2 BBB+

(c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company limits its exposure to liquidity risk given the Company's ability to realise the Precious metals in cash and the Precious metals held by each series match the securities issued and redemptions made. The ultimate amount repaid to the ETC Securityholders is limited in recourse to the proceeds from the Precious metals. All liquidity risk associated with the Precious metals are ultimately borne by the ETC Securityholders.

The contractual maturity profile of financial liabilities as at 31 December 2021 is as follows:      
  Carrying amount Gross contractual Less than one
    cash flows year
  EUR EUR EUR
Financial liabilities designated at fair value through profit or loss 5,903,037,311 5,903,037,311 5,903,037,311
Other payables 249,672 249,672   249,672
  5,903,286,983 5,903,286,983   5,903,286,983

 

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DB ETC plc 

Page 35

Notes to the financial statements (continued) 

For the year ended 31 December 2021 

14 Financial risk management (continued)

(c) Liquidity risk (continued)

The contractual maturity profile of financial liabilities as at 31 December 2020 is as follows:    
  Carrying amount Gross contractual Less than one
    cash flows year
  EUR EUR EUR
Financial liabilities designated at fair value through profit or loss 8,811,446,423 8,811,446,423 8,811,446,423
  8,811,446,423 8,811,446,423 8,811,446,423

Due to the fact that the ETC Securityholders have the option to redeem the securities before the final scheduled maturity date, the financial liabilities designated at fair value through profit or loss have been classified as due in less than one year.

The carrying amount and the gross contractual cashflows are equal to the fair value of each liability as stated in the Statement of financial position.

Subscriptions

Only Authorised Participants may subscribe for ETC Securities from the Issuer. The Authorised Participant(s) in respect of each Series of ETC Securities at the Issue Date of such Series will be specified in the relevant Final Terms.

Securities may be offered to any category of potential investors provided that the offer complies with the selling restrictions set out below in this “Subscription and Sale” section (the “Selling Restrictions”).

Buy-backs

The Issuer may (without the consent of the Trustee or any Securityholder), from time to time, buy back all or some of the ETC Securities. Only an Authorised Participant may request that the Issuer buy back ETC Securities by delivering a valid Buy-Back Order subject to and in accordance with the terms of the Authorised Participant Agreement. The Issuer will only accept a Buy-

Back Order and buy back ETC Securities if a valid Buy-Back Order is given by an Authorised Participant and all conditions precedent to a purchase of the ETC Securities are satisfied.

Redemptions

The ETC Securities of a Series may become due and payable prior to their Scheduled Maturity Date, which is known as an “Early Redemption Event” as defined in the Company's Prospectus. If any of the Early Redemption Events occur, each ETC Security will become due and payable at an amount (the “Early Redemption Amount”) equal to the greater of (i) the Early Metal Redemption Amount (the metal entitlement per ETC Security multiply the Average metals sale Price).

Final Redemption

Unless previously redeemed in whole or purchased and cancelled by the Issuer, the ETC Securities of each series will become due and payable on their scheduled maturity date at their final redemption amount. The Issuer has the discretion to set the Scheduled Maturity Date of a series of ETC Securities prior to the issue of that series of ETC Securities.

Their Final Redemption Amount and Early Redemption Amount depend on the Value per ETC Security, which in turn depends on the value of the Underlying Metal and, in the case of FX Hedged ETC Securities, the Value per ETC Security and any gains or losses on the foreign exchange hedge.

(d) Operational risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Company's processes and infrastructure, and from external factors other than credit, markets and liquidity issues such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour.

Operational risks arise from all of the Company's operations. The Company was incorporated with the purpose of engaging in those activities outlined in note 1. All administration functions are undertaken by Vistra Fund Services Limited. Deutsche Bank AG, London Branch acts as the Company's Lead Authorised Participant, Arranger, Metal Agent, Issuing and Paying Agent and Programme Counterparty.

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DB ETC plc

Page 36

Notes to the financial statements (continued)

For the year ended 31 December 2021

15 Fair values

The Company's financial assets and financial liabilities at fair value through profit or loss are carried at fair value in the Statement of financial position.

The Company's accounting policy on fair value measurement for Precious metal is disclosed in note 3(e) to the financial statements. The Company's accounting policy on fair value measurement of financial assets designated at fair value through profit or loss and financial liabilities designated at fair value through profit or loss is disclosed in note 3(f). The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements.

 Level 1: Quoted market price in an active market for an identical instrument.

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

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

The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the reporting date that would have been determined by market participants acting at arm's length.

Level 2 prices use widely recognised valuation models for determining the fair value of common and more simple financial instruments that use only observable market data and require little management judgement and estimation. Availability of observable market prices and model inputs reduces the need for management judgement and estimation and also reduces the uncertainty associated with determination of fair values. Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial markets.

Transfers between levels are determined based on changes to the significant inputs used in their fair value measurement. The Directors evaluate whether significant inputs to the valuation models are observable at the year end in making a decision to change levelling from one level to another.

The Company determines the effective date of transfer at the beginning of the reporting year.

The Company does not have any financial instruments at level 1 or 3 and there has not been any transfer between levels during the year ended 31 December 2021.

At 31 December 2021, the carrying amounts of Precious metals at fair value, Precious metal due from the Programme Counterparty and financial liabilities issued by the Company are as follows:

        31-Dec-21      
  Level 1     Level 2 Level 3 Total
  EUR   EUR EUR EUR
Precious metal due from the Programme Counterparty -   7,086,475 - 7,086,475
Precious metals at fair value - 5,895,950,836 - 5,895,950,836
Financial liabilities designated at fair value through profit or - ( 5,903,037,311 ) - ( 5,903,037,311 )
loss            
  -     - -   -
At 31 December 2020, the carrying amounts of Precious metals at fair value, Precious metal due from the Programme Counterparty and
financial liabilities issued by the Company are as follows:              
        31-Dec-20      
  Level 1     Level 2   Level 3 Total
  EUR     EUR   EUR EUR
Precious metal due from the Programme Counterparty -     31,110,083   - 31,110,083
Precious metals at fair value - 8,780,336,340   - 8,780,336,340
Financial liabilities designated at fair value through profit or - ( 8,811,446,423 )   - ( 8,811,446,423 )
loss              
  -     -   - -

Although the Directors believe that their estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value as fair value estimates are made at a specific point in time, based on market conditions and information about the financial instrument.

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DB ETC plc    

Page 37

Notes to the financial statements (continued)    

For the year ended 31 December 2021    

16 Classification of financial instruments               

  Carrying Fair Carrying Fair
  value value value value
  31-Dec-21 31-Dec-21 31-Dec-20 31-Dec-20
At fair value through profit or loss EUR EUR EUR EUR
Precious metal due from the Programme Counterparty 7,086,475 7,086,475 31,110,083 31,110,083
Financial liabilities designated at fair value through profit or ( 5,903,037,311 ) ( 5,903,037,311 ) (8,811,446,423) (8,811,446,423)
loss        
  ( 5,895,950,836 ) ( 5,895,950,836 ) (8,780,336,340) (8,780,336,340)
At amortised cost        
Cash and cash equivalents 2 2 2 2
Other receivables 279,672 279,672 30,000 30,000
Other payables ( 249,672 ) ( 249,672 ) - -
  30,002 30,002 30,002 30,002

17 Related Party Transactions

Visdirect Services Limited and Viscom Services Limited act solely in the capacity as Directors of Jersey companies, pursuant to the Companies (Jersey) Law 1991, as amended. Visdirect Services Limited and Viscom Services Limited are both part of the Vistra group of companies. No fee was charged or paid to the Vistra Group during the period under review by the Company for the provision of Directors. Most expenses of the Company are borne by Deutsche Bank AG, London Branch, as Arranger, including fees paid to Vistra. During the financial year, the Company incurred a cost of EUR 45,000 (2020: EUR 45,000) relating to administration services provided by Vistra Fund Services Limited.

Product fees incurred for the year ended 31 December 2021 due to Arranger amounted to EUR 30,017,153 (2020: EUR 35,678,372). Noamount was payable as at 31 December 2021 (2020: EUR Nil).

Marc Harris, a Director of the Company is an employee of an affiliate company of the administrator and Visdirect Services Limited and Viscom Services Limited are affiliates of the administrator.

As at 31 December 2021, all the corporate benefit fees were received and held under the Declaration of Trust. As at 31 December 2020, the amount of corporate benefit receivable from the Arranger amounted to EUR 30,000.

Deutsche Bank AG, London Branch, as Programme Counterparty, entered into a Balancing Agreement with the Company. The Programme Counterparty will provide deliveries of Precious metals to reflect deductions of fees and other rebalancing adjustments. Precious metal due from the Programme Counterparty amounting to EUR 7,086,475 (31 December 2020: EUR 31,110,083) were outstanding as at 31 December2021.

Authorised participants are the only entities allowed to buy and sell ETC securities directly from and to the Company. Deutsche Bank AG, London Branch acts as the Lead Authorised Participant. As at 31 December 2021, the number of ETC Securities held by the Lead Authorised Participant was 29,629 units (EUR 3,992,695) (31 December 2020: 60,480 units (EUR 8,311,893)).

18 Ultimate controlling party

The Directors of the Company consider Vistra Corporate Services Limited as trustee of the DB ETC Charitable Trust (the beneficial owner of the issued share capital of the Company) to be the ultimate controlling party of the Company.

19 Key management personnel

The key management personnel have been identified as being the Directors of the Company.

Marc Harris is an employee of Vistra (Jersey) Limited during the year ended 31 December 2021. His emoluments are paid by Vistra Fund Services Limited and other related entities and no re-charge is made to the Company. It is therefore not possible to make a reasonable apportionment of his emoluments in respect of the Company.

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DB ETC plc  

Page 38

Notes to the financial statements (continued) 

For the year ended 31 December 2021 

20 Exchange Offer

Under the Company's established Secured DB ETC Precious Metal Linked Securities Programme, the Xtrackers ETC Public Limited Company (the "Irish Issuer") made an offer to the holders (the "Existing Securityholders) of the Company's securities (the "DB ETC Securities") to exchange the DB ETC Securities for new securities in a corresponding Series of ETC Securities issued by the Irish Issuer (the "Exchange Offers").

The Company transferred the relevant precious metal backing the DB ETC Securities to the Exchange Offer Account Custodian for the account of the Irish Issuer and the Irish Issuer in turn issued new ETC Securities in the corresponding existing Series to the DB ETC Plc's Securityholders. Once the Exchange Offers were complete, the exchanged DB ETC Securities were cancelled by the Company. At the time of the Exchange Offers, the value of the DB ETC Securities and the ETC Securities were not exactly equal. As a result, an Exchange Ratio was calculated by DWS International GmbH (the "Programme Administrator") for each series to determine the correct number of ETC Securities to be delivered to the Existing Securityholders.

The Exchange Offers expired on 23 April 2021 and on 26 April 2021 the Irish Issuer announced the decision to accept all valid offers of Existing DB ETC Securities for exchange pursuant to the Exchange Offers and the final aggregate amount of each Series of DB ETC Securities accepted for exchange.

The Exchange Offers took place as per the Exchange Offer Memorandum, (“EOM”) subject to the “Offer and Distribution Restrictions” set out in the EOM. The details of which series of DB ETC Securities corresponded with each Series issued by the Company were contained in the EU Exchange Offer Memorandum and the UK Exchange Offer Memorandum.

The EOM constitutes a prospectus prepared in accordance with the EU Prospectus Regulation (Regulation (EU) 2017/1129). The EOM was submitted for approval to the Central Bank of Ireland as competent authority under the EU Prospectus Regulation.

The number of and the fair value of DB ETC Securities as well as the fair value of the metals transferred to the Irish Issuer following the Exchange Offer are as follows:

          Fair value of  
    Number of DB Fair value of ETC Weight of Precious metals  
    ETC Securities Securities Precious Metals transferred Exchange Offer
Series name Series currency transferred transferred (EUR) transaferred (OZ) (EUR) Ratio
Series 1 USD 2,504,172 356,431,911 242,922 356,431,911 6.27
Series 2 EUR 2,634,101 303,810,071 206,689 303,810,071 4.65
Series 3 USD 53,516 11,023,638 510,273 11,023,638 6.60
Series 4 EUR 144,370 23,079,739 1,068,907 23,079,739 4.72
Series 5 USD 22,138 2,144,716 2,107 2,144,716 3.82
Series 6 EUR 123,362 9,237,774 9,074 9,237,774 2.75
Series 9 EUR 2,244,351 320,209,220 217,846 320,209,220 6.27
Series 10 EUR 325,108 66,993,647 3,102,722 66,993,647 6.60
Series 13 GBP 435,700 4,820,881 3,282 4,820,881 0.44
      1,097,751,597   1,097,751,597  
Page 40

21 Subsequent events

The below table shows the post year end prices of the Precious Metals:

    Price per ounce Price per ounce Movement
Metals CCY 30-Mar-22 31-Dec-21 %
Gold USD 1,933.85 1,820.10 6 %
Silver USD 24.76 23.09 7 %
Platinum USD 992.00 849.45 12 %
Rhodium USD 20,250.00 14,250.00 42 %

       

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DB ETC plc          
          Page 39
Notes to the financial statements (continued)          
For the year ended 31 December 2021          
           
21 Subsequent events (continued)          
Russia-Ukraine conflict          
Russia began an invasion of Ukraine on 24 February 2022. The conflict has led to increased market price volatility in precious metals which is reflected in the daily value per ETC Security. There is also a general increase in the bid/offer spread of our ETC securities quoted by third party market markers on the secondary market as a consequence to increased volatility across the market. It is expected that prolonged conflict and sanctions could affect the structural supply of metal and therefore the price of metal on the international market given Russia is a large producer of gold, silver and platinum.
           
On 7 March 2022, the London Bullion Market Association (the "LBMA") announced sanctions in respect to 6 Russian gold/silver refiners. Following the sanction, the 6 refiners are no longer accepted as Good Delivery by LBMA.
           
For precious metals, sanctions are applied from the date of the sanction to bars refined from that point onwards. Anything refined prior to the sanctions date is still considered “Good Delivery” and as such, can still be held by the Company. There is no impact on the ability of investors to redeem due to the sanctions. The below table shows details of metal held by each series of ETC in the sanctioned Russian Refiners transacted prior to the sanction date.
           
    Russia Refined   % Russia    
Account Name Sum of Total oz Oz (from sanctioned   Refined (prior to    
    refiners prior to sanctions date)   sanctions date)    
Deutsche ETC PLC 1 Xtrackers Physical Gold ETC (USD) 264,309.96 8,105.93   3.10 %    
Deutsche ETC PLC 10 Xtrackers Physical Silver ETC (EUR) 41,914,240.60 8,202,486.90   19.60 %    
Deutsche ETC PLC 13 Xtrackers Physical Gold GBP Hedged ETC 30,615.45 -   0.00 %    
Deutsche ETC PLC 2 Xtrackers Physical Gold EUR Hedged ETC 1,089,247.96 77,639.83   7.10 %    
Deutsche ETC PLC 4 Xtrackers Physical Silver EUR Hedged ETC 6,870,309.80 798,390.40   11.60 %    
Deutsche ETC PLC 9 Xtrackers Physical Gold ETC (EUR) 1,641,170.62 63,755.74   3.90 %    
Grand Total 50,168,723.39 9,150,378.80 18.2 %    

The Directors will continue to monitor to the situation and appropriate steps will be taken for the smooth running of the Companies' business.

There have been no other significant events that requires disclosure to the financial statements since the year end and up to the date of approving the financial statements.

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