Xtrackers ETC Public Limited Company
Directors’ Report and Audited Financial Statements
For the year ended 30 September 2022
Registered number: 627079
Xtrackers ETC Public Limited Company
Contents
Page (s)
Directors and other information 1
Directors' report 2 - 9
Statement of Directors' responsibilities 10
Independent auditor's report 11 - 16
Statement of comprehensive income 17
Statement of financial position 18
Statement of changes in equity 19
Statement of cash flows 20
Notes to the financial statements 21 - 42
Page 1
Xtrackers ETC Public Limited Company
DIRECTORS AND OTHER INFORMATION
Directors
Authorised Participants
Claudio Borza
HSBC Bank Plc
Eileen Starrs (appointed 9
th
May 2022)
1 Grand Canal Harbour
Cliona O’Faolain (resigned 9
th
May 2022)
Dublin 2, Ireland
Company Secretary
Susquehanna International Securities Limited
6th Floor Pinnacle 2
Fourth Floor
Eastpoint Business Park
3 George’s Dock
Dublin, Ireland
IFSC, Dublin 1, Ireland
Flow Traders B. V.
Registered Office
Jacob Bontiusplaats 9
Fourth Floor
1018 LL Amsterdam, The Netherlands
3 George’s Dock
IFSC, Dublin 1, Ireland
Deutsche Bank AG
Fourth Floor
Mainzer Landstr 11-17
60329 Frankfurt, Germany
Independent Auditors
KPMG
Morgan Stanley & Co. International plc
1 Harbormaster Place, IFSC
20 Bank Street,
Dublin 1, Ireland
London E14 4AD, United Kingdom
Corporate Administrator
Citigroup Global Markets Limited
Citigroup Centre, Canada Square
Fourth Floor
Canary Wharf
3 George’s Dock
London E14 5LB, United Kingdom
IFSC
Dublin 1, Ireland
Optiver VOF
Strawinskylaan 3095
Programme Administrator
1077 ZX Amsterdam,
DWS International GmbH
The Netherlands
4th Floor Meinzer Landstrasse 11-17,
60329 Frankfurt am Main
Determination and Issuing Agent
Germany
State Street Fund Service (Ireland) Limited
78 Sir John Rogerson’s Quay,
Secured Account Custodian, Subscription Account Custodian,
Dublin 2, Ireland
JP Morgan Chase Bank, N.A. London
Trustee
Wilmington Trust SP Services (Dublin) Limited
United Kingdom
Fourth Floor, 3 George’s Dock IFSC
Dublin 1, Ireland
Authorised Participants
Series Counterparty
Jane Street Financial Limited
J. P. Morgan AG
30
th
Floor, 20 Fenchurch Street
Taunus Turm, Taunustor 1,
London EC3M 3BY
60310 Frankfurt am Main,
United Kingdom
Germany
Page 2
Xtrackers ETC Public Limited Company
Directors' report
The Board of Directors (the “Board”) present the Directors' report and audited financial statements of Xtrackers ETC plc (the “Company”) for the year ended
30 September 2022.
Principal activities, business review and future activities
Xtrackers ETC Public Limited Company (the “Company”) was incorporated in Ireland under registration number 627079 on 21 May 2018 with limited liability
and is organised under the laws of Ireland as a Public Limited Company (“plc”) pursuant to the Companies Act, 2014 (the “Companies Act”). It has been
established as a special purpose vehicle for the purpose of issuing asset backed securities. The Company is taxable as a securitisation company pursuant to
section 110 of the Taxes Consolidation Act 1997. Profits arising to the Company is taxable at a rate of 25 per cent. The Company has commenced trading on
16 April 2020.
The principal activity of the Company, under the Secured Xtrackers ETC Precious Metal Linked Securities Programme (the “Programme”), is issuance of
several series (each a "Series/ETC Security") of ring-fenced notes listed on one or more of the following stock exchanges: the Frankfurt Stock Exchange, the
Borsa Italiana, and the London Stock Exchange plc.
The metal for any Series of ETC Securities may consist of gold, silver, or platinum (the “Metal”). The main assets of the Company in respect of a Series of ETC
Securities are its holdings of Metal held by or on behalf of the Company (through the Secured Account Custodian, the Subscription Account Custodian) and its
interests under the related metal agent agreement entered into by the Company and the Metal Agent (the “Metal Agent Agreement”) and the Balancing
Agreement.
The ETC Securities are designed to provide purchasers with exposure to a Metal without having to take physical delivery of the Metal. Each ETC Security
relates to a specific amount in weight of Metal, specified in the relevant Final Terms, known as the metal entitlement per ETC Security. On any particular day,
the ETC Security can be viewed as giving an exposure to that amount of Metal as the amount payable in respect of the ETC Securities and the Value per ETC
Security is linked to the value of the Metal. In order to back its obligations under the ETC Securities, the Company will seek to hold enough Metal to meet its
obligations under the ETC Securities. The precise amount it holds at any time may be more or less than the aggregate amount of the metal entitlement per ETC
Security to reflect the periodic payment of product fees and, in respect of FX Hedged ETC Securities, an adjustment for any foreign exchange gains or losses.
Because the Company obtains its exposure to the precious Metal by physically investing directly in the relevant Metal, these types of ETC Securities are known
as physical replication exchange traded commodities. The proceeds from the disposal of the Underlying Metal, plus (where applicable) any interest received on
the proceeds of such disposal less any negative interest, net of any deductions (and, in the case of FX Hedged ETC Securities, converted into the currency of
the ETC Securities at the rate the Metal Agent determines would be obtainable at the time of conversion which shall be on or about the day of such sale (or, if
such day is not an FX Business Day, the immediately following FX Business Day), and which may take into account a bid/offer spread quoted by a dealer), will
equal the amount due under the ETC Securities (subject to certain minimum amounts owed).
The Master Balancing Terms (the “Balancing Agreement”) sets out the arrangements between the Company and J.P. Morgan AG (the “Series Counterparty”)
with respect to the rebalancing of the Metal held by the Company for the relevant ETC securities. Such rebalancing will be made in respect of FX Hedged ETC
Securities to reflect gains or losses in respect of the foreign exchange hedge element of the metal entitlement per ETC Security. The Balancing Agreement
broadly seeks to account for any currency hedging gains or losses by requiring deliveries of Precious Metal to be made between the Company and the Series
Counterparty so that, as a result of such deliveries, the amount of Underlying Metal held by the Company should equal the aggregate metal entitlement in the
foreign currency of the ETC Security in respect of all outstanding ETC Securities of the relevant Series. Where there are foreign exchange gains and the metal
entitlement per ETC Security consequently increases, the Series Counterparty will be required to deliver additional Metal equivalent to such increase to the
Company under the Balancing Agreement. Where there are losses and the metal entitlement per ETC Security consequently decreases, the Company will be
required to deliver Metal equivalent to such decrease to the Series Counterparty under the Balancing Agreement.
With respect to each Series of ETC Securities, the Company’s primary assets are its holdings of underlying metal 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'') relating to the underlying metal in respect of this Series of
ETC Securities. Subscription and redemption terms of the ETC Securities are disclosed in the notes of the financial statements.
Irish law requires the Directors to prepare financial statements for each financial period. Under that law they have elected to prepare these financial statements
in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”).
Significant Events during the financial year
The impact of COVID-19 during the financial period did not have a material impact on the series.
New Interest Limitation Rules (ILR) were enacted in December 2021. These rules limit the net borrowing cost deductions of Irish companies in certain
circumstances. ILR was introduced for the next financial year of the Company (1 October 2022 to 30 September 2023). Based on the advice of external legal
counsel, the effect of the ILR should not increase the Irish corporation tax liability of the Company. Therefore, the Directors have considered that the ILR rules
have a limited impact on the Company.
Page 3
Xtrackers ETC Public Limited Company
Directors' report (continued)
Significant Events during the financial year (continued)
On 24 February 2022, Russia launched a large-scale military invasion of Ukraine and is now engaged in a broad military conflict with Ukraine. In response, the
United States, the European Union, the United Kingdom and other countries have imposed broad, far-reaching sanctions against Russia, certain Russian persons
and certain activities involving Russia or Russian persons. The business of the Company can by affected by a number of factors that are beyond the Company's
control, such as geopolitical, economic and business conditions. The Ukraine Conflict and possible outbreaks elsewhere in the world may lead to instability in
certain regions together with sanctions being imposed against certain countries and airlines which could have an adverse economic impact.
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 has been no substantial impact on the Company's activities arising from the suspension of the refiners and there is no impact on the ability of investors
to redeem due to the sanctions.
On 3 March 2022, the Company informed Securityholders of the below Series of the following fee changes, with effect from 7 March 2022:
Series
Old Base Fee
Percentage*
Old
Product Fee
Percentage
New Base Fee
Percentage*
New Product Fee
Percentage
Series 5 Xtrackers
IE Physical Gold
EUR Hedged ETC
15 bps 15 bps 12 bps 12 bps
*The Base Fee Percentage of Series 5 was updated with change as per the table above, for remaining series Base Fee Percentage remains unchanged.
The overall Product Fee decreased on Series 5 making the Company more market competitive.
With effect from 7 March 2022, the Company amended the existing 2021 Base Prospectus together with the Final Terms for the relevant ETC Securities for the
purposes of Regulation (EU) 2017/1129 (Prospectus Regulation”). The 2021 Base Prospectus was replaced with 2022 UK Base Prospectus and EU Base
Prospectus.
With effect from 1 August 2022, the Company amended the existing Programme Administrator Agreement with DWS International to provide that DWS
International GmbH as the Programme administrator receives 100% of the Product fee for each series issued. In return DWS International GmbH pays a
designated list of Programme expenses as set out in the amended Programme Administrator Agreement, including where the aggregate of such expenses exceeds
the Product Fee due to DWS International GmbH. For more information please refer to note 3, 7 and 17.
Directors and secretary and their interests in shares of the Company
The Directors and secretary who served the Company during the period together with their beneficial interests in the shares of the Company were as follows:
Ordinary Shares of €1 each
30 September 2022
Ordinary Shares of €1 each
30 September 2021
Claudio Borza
-
-
Eileen Starrs (appointed 9
th
of May 2022)
-
-
Cliona O’Faolain (resigned 9
th
of May 2022)
-
-
Wilmington Trust SP Services (Dublin) Limited
25,000
25,000
Wilmington Trust SP Services (Dublin) Limited is acting as Secretary of the Company and not as Director.
General information
The Company is a public company limited by shares incorporated in Ireland with registered office at Fourth Floor, 3 George’s Dock, IFSC, Dublin 1.
ETC Securities Details
The following Series of ETC Securities were in operation at 30 September 2022 and 30 September 2021. The Series are priced daily, based on the metal
reference price source from the LBMA in the table below. In respect of FX Hedged ETC Securities, an adjustment is also required for any exchange gains or
losses under the relevant Balancing Agreement:
Series
Description
Underlying Metal
Series 1
Xtrackers IE Physical Platinum ETC Securities Platinum Price
Series 2
Xtrackers IE Physical Gold ETC Securities Gold Price
Series 3
Xtrackers IE Physical Silver ETC Securities Silver Price
Series 4
Xtrackers IE Physical Silver EUR Hedged ETC Securities Silver Price
Series 5
Xtrackers IE Physical Gold EUR Hedged ETC Securities Gold Price
Series 6
Xtrackers IE Physical Gold GBP Hedged ETC Securities
Gold Price
Series 7
Xtrackers IE Physical Platinum EUR Hedged ETC Securities Platinum Price
Please refer to note 16 of the financial statements for the Company’s fair value consideration under IFRS 13.
Stock Exchange Listings
The Company maintains a listing on the Frankfurt Stock Exchange, the Borsa Italiana and the London Stock Exchange plc.
Page 4
Xtrackers ETC Public Limited Company
Directors' report (continued)
Product fee
Each Series pays a product fee prepared by the Determination Agent, which accrues on a daily basis. This fee is used to pay the expenses of the Company. The
Product fee is the rate set out below for each Series as of 30 September 2022 and is applied to the Metal Entitlement on a daily basis to determine a daily
deduction of an amount of Metal from the Metal Entitlement:
Series
Description
Annual Product fee as a
% of metal entitlement
30 Sep 2022
Annual Product fee as a
% of metal entitlement
30 Sep 2021
Series 1
Xtrackers IE Physical Platinum ETC Securities
0.38
0.38
Series 2
Xtrackers IE Physical Gold ETC Securities
0.12*
0.15
Series 3
Xtrackers IE Physical Silver ETC Securities
0.20
0.20
Series 4
Xtrackers IE Physical Silver EUR Hedged ETC Securities
0.73
0.73
Series 5
Xtrackers IE Physical Gold EUR Hedged ETC Securities
0.28
0.28
Series 6
Xtrackers IE Physical Gold GBP Hedged ETC Securities
0.28
0.28
Series 7
Xtrackers IE Physical Platinum EUR Hedged ETC Securities
0.73
0.73
* As of 7 March 2022, the Product Fee Percentage of this Series was reduced from 15 bps to 12 bps. Please see the Significant Events During the Financial Year
section of this report.
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. Each series of ETC
Securities will be separate (or ‘ring-fenced’) from each other series of ETC Securities. The ETC uses a hedging mechanism (“Balancing Agreement”) which is
designed to reduce exposure of the underlying precious metal to exchange rate fluctuations between US dollars and the currency in which the ETC is
denominated.
Metal
Price in USD per ounce
30 September 2022
Price in USD per ounce
30 September 2021
Decrease in price
Gold
1,671.75
1,742.8
-4.08%
Silver
19.02
21.53
-11.64%
Platinum
864.00
963.00
-10.28%
The prices of all three commodities fell between September 2021 and September 2022. The performance of a precious metal is dependent upon macroeconomic
factors including (without limitation) supply and demand, liquidity, natural disasters, direct investment costs, location and changes in tax rates and changes in
laws, regulations and the activities of governmental or regulatory bodies. Some of the reasons these metals struggled may be due to geopolitical uncertainty
caused by the Russia/Ukraine war, inflationary pressures and various supply chain constraints.
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 USD 2,193 (2021: USD 3,811);
the net fair value loss on Precious metals at fair value and Precious metals due from Series Counterparty amounted
to USD 538,548,298 (2021: USD
233,296,438), for details please refer to note 4;
the net fair value gain on ETC securities at fair value amounted to USD 538,548,298 (2021: USD
233,296,438
), for details please refer to note 5;
there were new subscriptions in the following Series of ETC Securities:
Series
Description
Issuances in USD*
30-Sep-22
Issuances in USD*
30-Sep-21
1
Xtrackers IE Physical Platinum ETC Securities
18,527,227
19,007,796
2
Xtrackers IE Physical Gold ETC Securities
2,228,304,569
2,162,622,588
3
Xtrackers IE Physical Silver ETC Securities
40,547,711
284,863,531
4
Xtrackers IE Physical Silver EUR Hedged ETC Securities
19,155,994
191,977,644
5
Xtrackers IE Physical Gold EUR Hedged ETC Securities
389,694,794
914,170,221
6
Xtrackers IE Physical Gold GBP Hedged ETC Securities
238,759,551
91,582,487
7
Xtrackers IE Physical Platinum EUR Hedged ETC Securities
5,819,057
29,084,373
Page 4
Xtrackers ETC Public Limited Company
Directors' report (continued)
Key performance indicators (continued)
the following Series of ETC Securities were partially redeemed:
Series
Description
Redemption in USD*
30-Sep-22
Redemption in USD*
30-Sep-21
1
Xtrackers IE Physical Platinum ETC Securities
(16,016,492)
(793,695)
2
Xtrackers IE Physical Gold ETC Securities
(824,419,717)
(275,685,315)
3
Xtrackers IE Physical Silver ETC Securities
(111,120,656)
(76,549,474)
4
Xtrackers IE Physical Silver EUR Hedged ETC Securities
(129,189,400)
(6,323,235)
5
Xtrackers IE Physical Gold EUR Hedged ETC Securities
(466,785,120)
(152,746,535)
6
Xtrackers IE Physical Gold GBP Hedged ETC Securities
(47,320,336)
(3,799,197)
7
Xtrackers IE Physical Platinum EUR Hedged ETC Securities
(13,620,621)
(119,142)
*The timing of issuances/redemptions will impact the gains/losses of the relevant Series.
As at 30 September 2022:
the Company’s total ETC Securities issued had a fair value of USD
4,159,401,905
(2021: USD
3,365,613,642);
the Company has invested in Precious metals with a fair value of USD
4,155,236,718
(2021: USD
3,405,169,768);
Precious metals with a value of USD 5,833,251 (2021: USD 349,373) was due to the Company from the Series Counterparty and Precious metals with
a value of Nil (2021: USD 5,231,029) was due from the Company to the Series Counterparty, Amounts receivable on Precious metals awaiting settlement
amounted to USD 16,251,868 (2021: USD Nil) and Amounts payable on ETC securities waiting settlement amounted to USD 17,927,883 (USD:
32,505,280) under the terms of the Balancing Agreement;
the net assets were USD 33,227 (2021: USD 31,034); and
the Company had the following ETC Securities in issue:
Series
Description
Maturity
date
Ccy
Nominal
(in units)
Local price
of ETCs***
FV in USD
Precious metals
held
1
Xtrackers IE Physical Platinum ETC
Securities
17-Apr-80
USD
866,539
21.3960
18,540,464
Platinum
2
Xtrackers IE Physical Gold ETC Securities
23-Apr-80
USD
121,623,255
25.8172
3,139,966,835
Gold
3
Xtrackers IE Physical Silver ETC Securities
30-Apr-80
USD
3,220,624
27.4137
88,289,172
Silver
4
Xtrackers IE Physical Silver EUR Hedged
ETC Securities*
15-Apr-80
EUR
1,382,177
23.6503
31,912,511
Silver
5
Xtrackers IE Physical Gold EUR Hedged
ETC Securities*
21-May-80
EUR
26,298,241
22.6351
581,841,157
Gold
6
Xtrackers IE Physical Gold GBP Hedged
ETC Securities**
23-May-80
GBP
12,643,627
20.3778
286,737,804
Gold
7
Xtrackers IE Physical Platinum EUR Hedged
ETC Securities*
29-May-80
EUR
677,576
18.3284
12,113,962
Platinum
* with a EUR/USD hedge in terms of the Balancing Agreement.
** with a GBP/USD hedge in terms of the Balancing Agreement.
***The timing of issuances/redemptions will impact gains/losses in the Statement of Comprehensive Income.
the Company had the following ETC Securities in issue in prior year:
Series
Description
Maturity date
Ccy
Nominal
(in units)
Local price
of
ETCs***
FV in USD
Precious metals
held
1
Xtrackers IE Physical Platinum ETC Securities
17-Apr-80
USD
770,629
23.9397
18,448,610
Platinum
2
Xtrackers IE Physical Gold ETC Securities
23-Apr-80
USD
74,463,120
26.9506
2,006,829,043
Gold
3
Xtrackers IE Physical Silver ETC Securities
30-Apr-80
USD
5,670,370
31.0871
176,275,569
Silver
4
Xtrackers IE Physical Silver EUR Hedged ETC
Securities*
15-Apr-80
EUR
4,556,577
27.6422
145,734,767
Silver
5
Xtrackers IE Physical Gold EUR Hedged ETC
Securities*
21-May-80
EUR
28,866,083
24.1521
807,574,416
Gold
6
Xtrackers IE Physical Gold GBP Hedged ETC
Securities**
23-May-80
GBP
6,454,026
21.5203
187,234,153
Gold
7
Xtrackers IE Physical Platinum EUR Hedged ETC
Securities*
29-May-80
EUR
963,476
21.0591
23,517,084
Platinum
* with a EUR/USD hedge in terms of the Balancing Agreement.
** with a GBP/USD hedge in terms of the Balancing Agreement.
***The timing of issuances/redemptions will impact gains/losses in the Statement of Comprehensive Income.
The financial statements and notes to the financial statements are presented in US Dollar (“USD” or “$”) which is the Company’s functional currency. Functional
currency is the currency of the primary economic environment in which the entity operates. The Directors of the Company believe that USD most faithfully
represents the economic effects of the underlying transactions, events and conditions.
Xtrackers ETC Public Limited Company
Page 6
Directors' report (continued)
Future developments
The Directors
expect that the present level of activity will be sustained for the foreseeable future. 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 nature of the Company’s business dictates that the outstanding ETC Securities may be redeemed at any time by the holder and in certain
circumstances may be compulsorily redeemed by the Company. As the redemption of ETC Securities will always coincide with the transfer of an equal
amount of Precious metals, no net liquidity risk is con