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
Wilmington Trust SP Services (Dublin) 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
Wilmington Trust SP Services (Dublin) 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
Fee Account Custodian and Metal Agent
JP Morgan Chase Bank, N.A. London
Trustee
25 Bank Street, Canary Wharf, London E14 5JP
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 considered to arise. The Directors are closely monitoring the advice and developments relating to the
spread of COVID-19. The continuance of is adding a major uncertainty in terms of both macroeconomic developments, mainly due to the restrictive
measures imposed and the cost resulting from the financial support of sector business and private individuals mostly affected by the coronavirus. Directors
did not recognise significant impact on performance of the Company, but they continue to monitor situation after COVID-19 spread.
On 24 February 2022, Russia launched a large-scale military invasion of Ukraine and is now engaged in a broad military conflict with Ukraine. For
analysis of impact please refer to Significant Events during the financial year section of the report.
Post the financial year end, as at 2 January 2023, the prices of the precious metals have remained stable or positive. The Administrator has
taken measures to ensure business continuity. Refer to subsequent events note within the Director's report and Note 19.
The Directors consider the Company to be a going concern.
Principle risks and uncertainties
The Company is subject to various risks. The principal risks facing the Company are outlined in Note 15 to the financial statements.
Price Risk
Price risk is the risk that the value of Precious metals will fluctuate as a result of changes in market prices, whether caused by factors specific to an
individual investment, its issuer or other factors affecting all instruments traded in the market. Refer to note 15 for further details.
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 from external
factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of
corporate behaviour.
Operational risk arises 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 Wilmington Trust SP Services (Dublin) Limited. Deutsche Bank AG, Jane Street Financial
Limited, HSBC Bank Plc, Susquehanna International Securities Limited and Flow Traders B.V. Morgan Stanley & Co. International Plc, Citigroup
Global Markets Limited, Optiver VOF act as the Company's authorised participants (the " Authorised Participants"), DWS International GmbH acts as
arranger (the "Arranger") and Programme Administrator, JPMorgan Chase Bank N.A. acts as metal agent (the "Metal Agent"), Secured Account
Custodian, Fee Account Custodian, Subscription Account Custodian and Series Counterparty (“Series Counterparty”) and State Street Fund Services
(Ireland) Limited acts as issuing and determination agent.
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, Amounts Receivable on Precious metals awaiting settlement and Precious
metals due from the Series Counterparty which represents the Company's maximum exposure to credit risk. All credit risks are ultimately borne by the
ETC Security holders.
The Directors have also considered the credit risk and counterparty risk with JPMorgan as custodian (the "Custodian") and Series Counterparty
respectively, of the Precious metals held by the Company given the significance of the Precious metals to the overall financial position of the Company.
With an overall credit rating status of JPMorgan 2022: S&P A+ (2021: S&P A+), the Directors are of opinion that counterparty risk is acceptable.
Ultimately, all credit and counterparty risks associated with JP Morgan are borne by the ETC Security holders.
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
through the purchase of Precious metals. All liquidity risk associated with the Precious metals are ultimately borne by the ETC Security holders. Due to
the fact that the ETC Security holders have the option to redeem the securities before the final scheduled maturity date, the ETC securities at fair value
have been classified as due in less than one year. Maturity dates across the ETC Securities range between April 2080 and May 2080.
Currency Risk
In
addition to metal price risk, the Company has exposure to currency risk as some of the ETC Securities are priced in currencies other than US Dollars
and hedged against exchange rate movements between the US Dollar
and the Euro or Pound Sterling.
An ETC Security is a debt instrument whose redemption price is linked to the value of the relevant underlying Precious metals and Precious metals due
from Series Counterparty. The ETC Securities are issued under limited recourse arrangements whereby the holders have recourse only to the Precious
metals and Precious metals due from Series Counterparty attributable to the class of Security held and not to the Company. In addition, since any
movements in the value of the Precious metals and Precious metals due from Series Counterparty are wholly attributable to the holders of the ETC
Securities, the Company has no residual exposure to movements in the value of the Precious metals and Precious metals due from Series Counterparty.
From a commercial perspective, the gains or losses on the liability represented by the ETC Securities are matched economically by corresponding losses
or gains attributable to the Precious metals and Precious metals due to/from Series Counterparty under the Balancing Agreement. The Company does not
retain any net gains or losses or net risk exposures. Further details surrounding the value of the Precious metals and Precious metals due to/from Series
Counterparty are disclosed in note 11.
Xtrackers ETC Public Limited Company
Page 7
Directors' report (continued)
Principal risks and uncertainties (continued)
Currency Risk (continued)
Movements in the value of the underlying Precious metals and Precious metals due from Series Counterparty, and thus the value of the ETC Securities,
may vary widely which could have an impact on the demand for the ETC Securities issued by the Company. These movements are shown in note 11 and
12.
Climate Risk
The directors acknowledge that climate change is an emerging risk impacting the global economy and will continue to be of interest to all stakeholders
with a focus on how climate change is expected to impact the operations of the precious metals industry in areas such as mining, processing,
warehousing, transportation, societal response and the regulatory environment in the future. However, having considered such factors relating to
climate change, the directors have determined that there are no direct or immediate impacts of climate change on the business operations of the
Company. Given this, there is no basis on which to provide extended information of analysis relating to climate change risks on the business operations
of the Company. Furthermore, the directors conclude that at present there is no material impact to the fair value of financial instruments, assets and
liabilities of the company. The directors recognise that governmental and societal responses to climate change risks are still developing and the future
impact cannot be predicted. Therefore, the future fair value of assets and liabilities may fluctuate as the market responds to climate change policies,
physical events and changes in societal behaviours.
Results and dividends for the year
The results for the year are set out on page 15. The Directors do not recommend the payment of a dividend for the year ended 30 September 2022 (2021:
Nil).
Corporate Governance Statement
General Principles
The Company is subject to and complies with Irish statute comprising the Companies Act 2014. As the Company’s ETC Securities have been admitted
to trade on the regulated market of the Frankfurt Stock Exchange, the Borsa Italiana, and the London Stock Exchange plc., the Company adheres to the
Listing Rules of these exchanges in so far as it relates to an overseas company trading in secured metal linked debt securities.
The Board of Directors of the Company is responsible for establishing and maintaining adequate internal control and risk management systems for the
Company in relation to the financial reporting process. Such systems are designed to manage rather than eliminate the risk of failure to achieve the
Company’s financial reporting objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.
Board Composition
In accordance with the Company’s Articles of Association, the number of Directors, from time to time, shall be not less than two and not more than
twelve. The Company may from time to time, by ordinary resolution, increase or reduce the number of Directors provided that any resolution to appoint
a director approved by the members that would result in the maximum number of Directors being exceeded shall be deemed to constitute an ordinary
resolution increasing the number of Directors to the number in office following such a resolution of appointment.
The Directors are responsible for managing the business affairs of the Company in accordance with the Constitution of the Company, which allows it
to enter into contracts and perform all tasks necessary to conduct the business of the Company. The directors may delegate certain functions to the
Administrator and other parties, subject to supervision and direction by the directors.
Internal Control and Risk Management Systems in Relation to Financial Reporting
The Directors are responsible for establishing and maintaining adequate internal control and risk management systems of the Company in relation to
the financial reporting process. Such systems are designed to manage rather than eliminate the risk of failure to achieve the Company's financial
reporting objectives. The Board has put in place a formal procedure to ensure that relevant accounting records for the Company are properly maintained
and are readily available and includes the procedure for the production of half yearly and annual audited financial statements for the Company. The
annual audited financial statements of the Company are produced by the Corporate Administrator, reviewed by the Programme Administrator, then
presented to the Board of Directors for consideration and approval and are filed with the Companies Registration Office in accordance with the
provisions of the Transparency Directive (2004/109/EC Regulations 2007).
European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006
The Company is not subject to the European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006 and therefore not required to
include information relating to voting rights and other matters required by those Regulations and specified by the Companies Act 2014 for our
consideration.
Board Appointments
The Directors who served during the financial year are shown on page 1.
Audit Committee
As set out in Section 1551 (11) (c) of the Act, a Company issuing asset backed securities may avail itself of an exemption from the requirements to
establish an audit committee. The sole business of the Company relates to the issuing of asset-backed securities. Given the contractual obligations of
the Administrator and the limited recourse nature of the securities issued by the Company, the Board of Directors have concluded that there is currently
no need for the Company to have a separate audit committee in order for the Board to perform effective monitoring and oversight of the internal control
and risk management systems of the Company. The Board monitors the audit process and the independence of the statutory auditor. Accordingly, the
Company has availed itself of the exemption under Section 1551 (11) (c) of the Act not to establish an audit committee.
Programme Administrator
The Company has appointed DWS International GmbH as its Programme Administrator pursuant to a Programme Administrator Agreement.
Xtrackers ETC Public Limited Company
Page 8
Directors' report (continued)
Remuneration
Details of remuneration paid to the Directors are set out in Note 17.
Changes in Directors, Secretary and registered office
With effect from 9
th
of May 2022, Eileen Starrs replaced Cliona O’Faolain as a director of the Company. There has been no change in Secretary and
registered office during the year.
Accounting records
The Directors are responsible for ensuring that adequate accounting records, as outlined in Section 281 to 285 of the Companies Act 2014, are kept by
the Company. The measures taken by Directors to secure compliance with the Company’s obligation to keep adequate accounting records are the use
of appropriate systems and procedures and ensuring that competent persons are responsible for the accounting records. The accounting records are kept
at the following address: Wilmington Trust SP Services (Dublin) Limited, Fourth Floor, 3 George’s Dock, IFSC, Dublin 1, Ireland.
Political donations
The Electoral Act 1997 (as amended by the Electoral Amendment Political Funding Act 2012) requires companies to disclose all political donations
over €200 in aggregate made during the financial year. The Directors, on enquiry, have satisfied themselves that no such donation in excess of this
amount has been made by the company.
Significant events since the financial year end
Gold price which is the main collateral (96.39%) of the Company's ETC Securities touched $1,671.75 per ounce as at 30 September 2022 and continued
steady growth reaching $1,920.70 as at 18 January 2023 whilst Silver reached $19.02 per ounce as at 30 September 2022 and changed to $24.185 as at
18 January 2023. Platinum presented a similar trend with $864 per ounce as at 30 September 2022 and high of $1,068 per ounce as at 18 January 2023.
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.
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.
Independent Auditor
KPMG, Chartered Accountants and Statutory Audit Firm, are willing to continue in office in accordance with section 383(2) of the Companies Act
2014.
Relevant audit information
Each Director at the date of approval of this report confirms that:
so far as the Directors are aware, there is no relevant audit information of which the Company’s auditors are unaware; and
the Directors have taken all steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information
and to establish that the Company’s auditors are aware of this information.
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 Company, together with a
description of the principal risks and uncertainties that they face. The principal risks facing the Company are outlined in Note 15 to the financial
statements.
Xtrackers ETC Public Limited Company
Page 9
Director’s Report
(continued)
Directors’ Compliance Statement
The Directors, in accordance with section 225(2) of the Companies Act, acknowledge that they are responsible for securing the Company’s compliance
with certain obligations specified in that section arising from the Companies Act and Tax laws (“relevant obligations”).
The Directors confirm that:
a compliance policy statement has been drawn up setting out the Company’s policies that in their opinion are appropriate with regard to such
compliance;
appropriate arrangements and structures have been put in place that, in their opinion, are designed to provide reasonable assurance of compliance
in all material respects with those relevant obligations; and
a review has been conducted, during the financial period, of those arrangements and structures.
In discharging their responsibilities under section 225 of the Companies Act, the Directors relied upon, among other things, the services provided,
advice and/or representations from third parties whom the Directors believe have the requisite knowledge and experience in order to secure material
compliance with the Company’s relevant obligations.
On behalf of the Board
_____________________________ _____________________________
Eileen Starrs Claudio Borza
Director Director
Date: 23 January 2023
Xtrackers ETC Public Limited Company Page 10
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 have elected to prepare the
financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).
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 the financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• 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 which disclose with reasonable accuracy at any time the assets, liabilities,
financial position and profit or loss of the Company and enable them to ensure that its financial statements comply with the Companies Act
2014. They are responsible for such internal controls 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. In this regard they have entrusted the assets of the Company to a trustee for safe-keeping. They
have general responsibility for taking such steps as are reasonably open to them to prevent and detect fraud and other irregularities. The directors
are also responsible for preparing a directors’ report that complies with the requirements of the Companies Act 2014.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
On behalf of the Board
_____________________________ _____________________________
Eileen Starrs Claudio Borza
Director Director
Date: 23 January 2023
Xtrackers ETC Public Limited Company
Page 11
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Xtrackers ETC Plc (‘the Company’) for the year ended 30
September 2022 set out on pages 17 to 42, which comprise the Statement of comprehensive income,
Statement of financial position, Statement of changes in equity, Statement of cash flows and related notes,
including the summary of significant accounting policies set out in note 3.The financial reporting framework
that has been applied in their preparation is Irish Law and International Financial Reporting Standards
(IFRS) as adopted by the European Union.
In our opinion:
the financial statements give a true and fair view of the assets, liabilities and financial position of
the Company as at 30 September 2022 and of its profit for the year then ended;
the financial statements have been properly prepared in accordance with IFRS as adopted by the
European Union; and
the financial statements have been properly prepared in accordance with the requirements of the
Companies Act 2014.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland))
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities section of our report. We believe that the audit evidence we have obtained is a sufficient
and appropriate basis for our opinion. Our audit opinion is consistent with our report to the Board of
Directors.
We were appointed as auditor by the directors on 4 June 2020. The period of total uninterrupted
engagement is the 3 years ended 30 September 2022. We have fulfilled our ethical responsibilities under,
and we remained independent of the Company in accordance with, ethical requirements applicable in
Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority
(IAASA) as applied to listed public interest entities. No non-audit services prohibited by that standard were
provided.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis
of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the director’s assessment of the entity’s ability to continue to adopt the going concern
basis of accounting included our knowledge of the Company and the asset management industry to identify
the inherent risks to the Company’s business model and analysing how those risks might affect the
Company’s financial resources or ability to continue as a going concern over the twelve months from the
date of when the financial statements are authorised for issue. As part of our evaluation we note that the
Company issued, and continues to issue, a large number of certificates, through different series of
certificates and have assessed management plan. The Company also has a diversified portfolio of several
different metals, post the financial year end. The Company continues to generate substantial cash flows to
meet its contractual obligations in relation to the payment of the product fee.
Xtrackers ETC Public Limited Company Page 12
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC
(CONTINUED)
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to
continue as a going concern for a period of at least twelve months from the date when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in
the relevant sections of this report.
Detecting irregularities including fraud
We identified the areas of laws and regulations that could reasonably be expected to have a material effect
on the financial statements and risks of material misstatement due to fraud, using our understanding of the
entity's industry, regulatory environment and other external factors and inquiry with the directors. In
addition, our risk assessment procedures included:
• Inquiring with the directors and other management as to the Company’s policies and procedures
regarding compliance with laws and regulations, identifying, evaluating and accounting for litigation
and claims, as well as whether they have knowledge of non-compliance or instances of litigation or
claims.
• Inquiring of directors as to the Company’s high-level policies and procedures to prevent and detect
fraud, as well as whether they have knowledge of any actual, suspected or alleged fraud.
• Inquiring of directors regarding their assessment of the risk that the financial statements may be
materially misstated due to irregularities, including fraud.
• Inspecting the Company’s regulatory and legal correspondence.
• Reading Board minutes.
• Performing planning analytical procedures to identify any usual or unexpected relationships.
We discussed identified laws and regulations, fraud risk factors and the need to remain alert among the
audit team.
Firstly, the Company is subject to laws and regulations that directly affect the financial statements including
companies and financial reporting legislation. We assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial statement items, including assessing the
financial statement disclosures and agreeing them to supporting documentation when necessary.
Secondly, the Company is subject to many 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. We identified the following areas as those most likely to have
such an effect: certain aspects of company legislation recognising the financial and regulated nature of the
Company’s activities and its legal form.
Auditing standards limit the required audit procedures to identify non-compliance with these non-direct
laws and regulations to inquiry of the directors and inspection of regulatory and legal correspondence, if
any. These limited procedures did not identify actual or suspected non-compliance.
We assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide
an opportunity to commit fraud. As required by auditing standards, we performed procedures to address
the risk of management override of controls and the risk of fraudulent revenue recognition. On this audit
we do not believe there is a fraud risk related to revenue recognition. We did not identify any additional
fraud risks.
Xtrackers ETC Public Limited Company Page 13
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC
(CONTINUED)
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, 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, in decreasing order of audit significance, were
as follows (unchanged from 2021):
Accuracy of precious metals at fair value through profit or loss $4,155,236,718 (2021:
$3,405,169,768)
Refer to note 3 (Significant accounting policies) and note 11 (Precious metals at fair value and Precious
Metals due to/from Series Counterparty)
The key audit matter - Accuracy of precious
metals at fair value through profit or loss
How the matter was addressed in our audit
The Company’s investment in precious metals
make up 99.4% of the total asset value of the
Company and are considered to be the key driver
of the Company’s results.
While the nature of the precious metals held do
not require a significant level of judgement as
they comprise of precious metals which have
observ
able quoted prices on actively traded
markets, due to their significance in the context of
the financial statements as a whole, the precious
metals were identified as a matter which had the
greatest effect on our overall audit strategy and
allocation of re
sources in planning and
completing our audit.
Our audit procedures over the accuracy of the
Company’s precious metals included but were
not limited to:
—
Obtained and documented our
understanding of the process in place to value
the precious metals; and
—
With the assistance of our valuation
specialists, independently revalued the
precious metals held by the Company and
determined that the prices were within a
reasonable range.
Based on the audit procedures performed, we
concluded that the accuracy of the precious
metals was not materially misstated.
Existence of precious metals at fair value $4,155,236,718 (2021: $3,405,169,768)
Refer to note 3 (Significant accounting policies) and note 11 (Precious metals at fair value and Precious
Metals due to/from Series Counterparty)
The key audit matter - Existence of precious
metals at fair value
How the matter was addressed in our audit
Due to the size of the portfolio and the fact that
the precious metal are the main asset owned by
the Company, the existence of precious metals at
fair value was identified as a key audit matter
which had a significant effect on our overall audit
strategy and allocation of resources in planning
and completing our audit.
Our procedures over the existence of precious
metals portfolio included, but were not limited
to:
—
Obtained and documented our
understanding of the process in place for
existence of precious metals; and
— We obtained an independent third-party
confirmation directly from the custodian,
Xtrackers ETC Public Limited Company Page 14
NDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC
(CONTINUED)
JPMorgan Chase Bank, N.A. and agreed the
confirmation to the quantity of precious metals
held at year end.
Based on the evidenced obtained, we
concluded that the existence of precious metals
was not materially misstated.
Our application of materiality and an overview of the scope of our audit
The materiality for the Company financial statements as a whole was set at $41.8million (2021:
$34.1million). This has been calculated with reference to a benchmark of the Company's total asset value,
(of which it represents 100 basis points) as at 30 September 2022, which we consider to be one of the
principal considerations for members of the Company in assessing the financial performance of the
Company.
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%
(2021: 75%) of materiality for the financial statements as a whole, which equates to $31.3 million (2021:
$25.6 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 report to the directors all corrected and uncorrected misstatements we identified through our audit with
a value in excess of 5 basis points of the Company's total asset value, in addition to other audit
misstatements below that threshold that we believe warranted reporting on qualitative grounds.
In planning the audit, we applied materiality to assist us in determining audit scoping and risk assessment.
Our audit of the Company was undertaken to the materiality level specified above and was all performed
by the one engagement team in Dublin.
Other information
The directors are responsible for the other information presented in the Annual Report together with the
financial statements. The other information comprises the information included in the Directors and other
information, Directors’ report and Statement of Directors' responsibilities. The financial statements and our
auditor’s report thereon do not comprise part of the other information. Our opinion on the financial
statements does not cover the other information and, accordingly, we do not express an audit opinion or,
except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial
statements audit work, the information therein is materially misstated or inconsistent with the financial
statements or our audit knowledge. Based solely on that work we have not identified material
misstatements in the other information.
Based solely on our work on the other information undertaken during the course of the audit , we report
that:
we have not identified material misstatements in the directors’ report;
in our opinion, the information given in the directors’ report is consistent with the financial
statements;
in our opinion, the directors’ report has been prepared in accordance with the Companies Act 2014.
Xtrackers ETC Public Limited Company Page 15
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC
(CONTINUED)
Corporate governance statement
As required by the Companies Act 2014, we report, in relation to information given in the Corporate
Governance Statement on page 7, that:
based on the work undertaken for our audit, in our opinion, the description of the main features of
internal control and risk management systems in relation to the financial reporting process is
consistent with the financial statements and has been prepared in accordance with the Act;
the Company is not subject to the European Communities (Takeover Bids (Directive 2004/25/EC))
Regulations 2006 and therefore not required to include information relating to voting rights and
other matters required by those Regulations and specified by the Companies Act 2014 for our
consideration in the Corporate Governance Statement; and
based on our knowledge and understanding of the Company and its environment obtained in the
course of our audit, we have not identified any material misstatements in that information.
We also report that, based on work undertaken for our audit, the information required by the Act is
contained in the Corporate Governance Statement.
Our opinions on other matters prescribed the Companies Act 2014 are unmodified
We have obtained all the information and explanations which we consider necessary for the purpose of
our audit.
In our opinion, the accounting records of the Company were sufficient to permit the financial statements to
be readily and properly audited and the Company’s financial statements are in agreement with the
accounting records.
We have nothing to report on other matters on which we are required to report by exception
The Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of directors’
remuneration and transactions required by Sections 305 to 312 of the Act are not made. We have nothing
to report in this regard.
Respective responsibilities and restrictions on use
Responsibilities of directors for the financial statements
As explained more fully in their statement set out on page 10, 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.
Xtrackers ETC Public Limited Company Page 16
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC
(CONTINUED)
Auditor’s responsibilities for the audit of the financial statements
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 an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (Ireland) will always detect a material misstatement when
it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
A fuller description of our responsibilities is provided on IAASA’s website at:
http://www.iaasa.ie/Publications/Auditing-standards/International-Standards-on-Auditing-for-use-in-
Ire/Description-of-the-auditor-s-responsibilities-for.
The purpose of our audit work and to whom we owe our responsibilities
Our report is made solely to the Company’s members, as a body, in accordance with Section 391 of the
Companies Act 2014. Our audit work has been undertaken so that we might state to the Company’s
members those 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 our report, or for the opinions
we have formed.
Jorge Fernandez Revilla Date: 23 January 2023
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Harbourmaster Place
IFSC
Dublin 1
Statement of comprehensive income
Xtrackers ETC Public Limited Company Page 17
For the year ended 30 September 2022
Year ended Year ended
30-Sep-22 30-Sep-21
Notes USD USD
Revenue 6 7,633,028 4,268,406
Net fair value loss on Precious metals at fair value and Precious metals due from
Series Counterparty
4 (538,548,298) (233,296,438)
Net fair value gain on ETC Securities at fair value 5 538,548,298 233,296,438
Operating expenses 7 (7,630,103) (4,263,324)
Operating profit before taxation
2,925 5,082
Taxation 9 (732) (1,271)
Profit and total comprehensive income for the year
2,193 3,811
Xtrackers ETC Public Limited Company Page 18
Statement of financial position
As at 30 September 2022
30-Sep-22 30-Sep-21
Notes USD USD
Assets
Cash and cash equivalents 10 2,415,218 2,225,034
Precious metals at fair value 3e,11 4,155,236,718 3,405,169,768
Precious metals due from Series Counterparty 3f,11 5,833,251 349,373
Amounts receivable on Precious metals awaiting settlement 3e 16,251,868 -
Amounts receivable on ETC Securities awaiting settlement 3g - 2,452,787
Other receivables 3i 79,103 23,782
Total assets
4,179,816,158
3,410,220,744
Liabilities and equity
ETC securities at fair value 3h,12 4,159,401,905 3,365,613,642
Precious metals due to Series Counterparty 3f,11 - 5,231,029
Amounts payable on Precious metals awaiting settlement 3e - 4,617,295
Amounts payable on ETC Securities awaiting settlement 3g 17,927,883 32,505,280
Other payables
3i 2,453,143 2,222,464
Total liabilities
4,179,782,931
3,410,189,710
Equity
Share capital 13 27,223 27,223
Retained earnings 6,004 3,811
Total equity 33,227 31,034
Total liabilities and equity
4,179,816,158
3,410,220,744
The financial statements on pages 1 to 42 were approved by the Board and authorised for issue on 23 January 2023.
On behalf of the Board
_____________________________ _____________________________
Eileen Starrs Claudio Borza
Director Director
Statement of changes in equity
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 19
Note
Called up Share
Capital
Retained
Earnings
Total Equity
USD
USD
USD
Balance as at 1
st
October 2020
27,223
-
27,223
Issued share capital
13
-
-
-
Comprehensive income for the financial year
-
3,811
3,811
Balance as at 30 September 2021
27,223
3,811
31,034
Note
Called up Share
Capital
Retained
Earnings
Total Equity
USD
USD
USD
Balance as at 1
st
October 2021
27,223
3,811
31,034
Issued share capital
13
-
-
-
Comprehensive income for the financial year
-
2,193
2,193
Balance as at 30 September 2022
27,223
6,004
33,227
Statement of cash flows
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 20
Year ended
30-Sept-22
Year ended
30-Sept-21
USD USD
Notes
Cash flows from operating activities
Amount received from metal sold 7,652,581 4,273,088
Amount paid for operating expenses (7,462,397) (2,209,224)
Net cash inflows from operating activities 190,184 2,063,864
Cash flows from financing activities
Fractional Metal sale - (4,682)
Net cash generated from financing activities - (4,682)
Movement in cash and cash equivalents
190,184
2,059,182
Cash and cash equivalents at start of the year 2,225,034 165,852
Cash and cash equivalents at end of the year 10
2,415,218 2,225,034
Non-cash transactions during the year include:
USD USD
Issuance of ETC Securities
2,940,808,903
3,693,308,640
Redemptions of ETC Securities (1,608,472,342) (516,016,593)
Additions of Precious metals
2,943,249,057
3,723,067,928
Disposals of Precious metals (1,857,045,536) (514,067,949)
Settlements of Precious metals due to/from Series Counterparty (220,779,215)* (39,650,900)*
*Settlements of Precious metals due to/from Series Counterparty comprise of gross inflows amounting to USD418,276,927 (2021:
USD206,448,148) and gross outflows amounting to USD639,056,142 (2021: USD246,099,048).
Notes to the financial statement
For year ending 30 September
2022
Xtrackers ETC Public Limited Company Page 21
1 General information
Xtrackers ETC Plc (the “Company”), the reporting entity, was incorporated on 18 May 2018 as a public limited company with limited liability
under the Companies Act 2014, as amended, with registration number 627079. The Company commenced operations on 16 April 2020. The
registered office of the Company is at 4th Floor, 3 George’s Dock, IFSC, Dublin 1, Ireland.
The purpose of the Company is to provide a vehicle that facilitates the issuance and subsequent listing and trading of ETC Securities. The ETC
Securities are issued under limited recourse arrangements whereby the Company has no residual exposure to the value of the Precious metals and
Precious metals due from Series Counterparty, therefore from a commercial and accounting perspective the aggregate gains and losses in respect
of Precious metals and Precious metals due from Series Counterparty will always be offset by a corresponding loss or gain on the ETC Securities.
Further details regarding the risks of the Company are disclosed in note 15. Further details regarding the application of IFRS 13 are disclosed in
note 16.
Exchange traded products are not typically actively managed, are significantly lower in cost when compared to actively managed mutual funds
and are easily accessible to investors. No active trading or management of Precious metals and Precious metals due from Series Counterparty is
required because the Company only receives or delivers Precious metals on the issue and redemption of ETC Securities, and only holds Precious
metals to support the ETC Securities.
The ETC Securities issued are listed on the following exchanges: the Frankfurt Stock Exchange, the Borsa Italiana and the London Stock Exchange
plc. In all cases, the ETC securities issued by the Company are limited recourse.
Each ETC Security of a Series has metal entitlement (the “Metal Entitlement”) expressed as an amount in weight (in troy or fine troy ounces) of
the relevant metal linked to such Series. This Metal Entitlement starts at a predetermined initial Metal Entitlement for the relevant Series and is
reduced weekly by a Product fee (in metal) for the Series, and in respect of FX Hedged ETC Securities, an adjustment is also required for any
exchange gains or losses under the relevant Balancing Agreement.
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 per 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. The balancing agreement is recognised as a derivative in the financial statements of the Company. Refer to note 3(b) and
3(f) for more detail.
Subscriptions
Only Authorised Participants may subscribe for ETC Securities from the Company. The Authorised Participant(s) in respect of each Series of
ETC Securities at the relevant Tranche Issue Date of such Series will be specified in the relevant Final Terms and have been disclosed on page 1.
The Company will, as subscription proceeds for the issue of ETC Securities, receive an amount of the relevant Metal from the Authorised
Participants subscribing for the ETC Securities sufficient to cover the relevant metal entitlement per ETC Security.
Securities may be offered by the Authorised Participant to any category of potential investors on the secondary market provided that the offer
complies with the selling restrictions set out in the Company’s prospectus.
Redemptions and Buy-backs
Buy-backs
An Authorised Participant may request that the Company buys back ETC Securities from such Authorised Participant. Prior to settlement of a
Buy-Back, the Authorised Participant will be required to deliver to the Issuing Agent acting on behalf of the Company the relevant ETC Securities
being bought back. The Company will not cancel such ETC Securities and deliver to the Authorised Participant an amount of Metal equal to the
product of the Metal Entitlement on the relevant trade date and the total number of ETC Securities being bought back, until the Issuing Agent has
confirmed receipt of such ETC Securities.
Notes to the financial statement
For year ending 30 September
2022
Xtrackers ETC Public Limited Company Page 22
1. General information (continued)
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 (defined below) plus the Specified
Interest Amount (as defined in the Company’s prospectus) and (ii) the Minimum Debt Principal Amount (as defined in the Company’s prospectus)
plus the Specified Interest Amount.
The “Early Metal Redemption Amount” is determined by multiplying (i) the metal entitlement per ETC Security as at the Early Redemption
Valuation Date (defined below); and (ii) the Average Metal Sale Price during the Early Redemption Disposal Period (defined below), net of
associated fees, deductions and taxes.
The “Early Redemption Valuation Date” is (i) the date specified as such in relation to the relevant Early Redemption Event or if not specified, the
date of the occurrence of such Early Redemption Event or (ii) the date on which the Trustee gives notice that due to the occurrence of an event of
default, the ETC Securities shall become due and payable at their Early Redemption Amount on the Scheduled Early Redemption Date, or if such
day is not a business day, the next following business day.
The “Early Redemption Disposal Period” is the period which lasts for the number of days specified in the Final Terms, which shall start from (but
exclude) the date falling four non-disrupted business days following the /Early Redemption Valuation Date.
On the Scheduled Maturity Date, each ETC Security will become due and payable at an amount (the “Final Redemption Amount”) equal to the
greater of (i) the Final Metal Redemption Amount (defined below) plus the Specified Interest Amount and (ii) 10 per cent. of the Issue Price per
ETC Security as at the Series Issue Date (the “Minimum Debt Principal Amount”) plus the Specified Interest Amount.
The “Final Metal Redemption Amount” is determined by multiplying (i) the metal entitlement per ETC Security as at the Final Redemption
Valuation Date (defined below); and (ii) the volume-weighted average prices per metal unit at which the Metal Agent is able to sell the Underlying
Metal (“Average Metal Sale Price”) during the Final Redemption Disposal Period (defined below), net of associated fees, deductions and taxes.
“Final Redemption Valuation Date” is the date specified in the Final Terms or, if such day is not business day, the next following business day.
The “Final Redemption Disposal Period” is the period which lasts for the number of days specified in the Final Terms, which shall start from (but
exclude) the date falling four non-disrupted business days following the Final Redemption Valuation Date.
2. Basis of preparation
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 September 2022; the
comparative information for the year ended 30 September 2021 presented in these financial statements has been prepared using the same accounting
policies.
These financial statements have been prepared on a going concern basis as disclosed in the Directors' report.
a. Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted for use in the
European Union (“EU”) and in accordance with the Companies Act 2014.
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:
i. Precious metals measured at fair value;
ii. Precious metals due to/from Series Counterparty measured at fair value; and
iii. ETC securities at fair value.
The method used to measure fair values are discussed further in note 3(e, f, h) and 16.
c. Functional and presentation currency
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.
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 23
2. Basis of preparation (continued)
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 notes 3(e), 3(f), 3(h) and note 16.
Judgements
The following are the critical judgements and estimates 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 the financial statements.
Accounting for Precious metals at fair value
Under IFRS there is no standard treatment for the classification of physical metals. The Precious metals are held to provide the security holders
with the exposure to changes in the fair value of Precious metals and therefore the Directors consider that carrying the Precious metals at fair
value through profit or loss, consistent with the treatment that would be applicable to a financial instrument, reflects the objectives and the purpose
of holding this asset.
e. Accounting standards
New effective EU endorsed standards for 01 October 2021 to 30 September 2022
Standards/interpretations
Effective date
Extension of the Temporary Exemption from Applying IFRS 9 (Amendments to IFRS 4)
1 January 2021
Interest Rate Benchmark Reform Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 14)
1 January 2021
Covid-19-Related Rate Concessions beyond 30 June 2021 (Amendments to IFRS 16)
1 January 2021
None of the above standards, amendments and interpretations had a significant impact on the Company’s financial statements.
Standards available for early adoption
Standards/interpretations
Effective date
Onerous Contracts Cost of Fulfilling a Contract (amendments to IAS 37)
1 January 2022
Annual Improvements to IFRS Standards 2018-2020
1 January 2022
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
1 January 2022
Reference to Conceptual Framework (Amendments to IFRS 3)
1 January 2022
IFRS 17 Insurance Contracts
1 January 2023
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practise Statement 2)
1 January 2023
Definition of Accounting Estimate (Amendments to IAS 8)
1 January 2023
The amendments are not expected to have a significant impact on the Company’s financial statements.
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 translated 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 translated 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 translation are recognised in the
Statement of comprehensive income.
Gains and losses arising on translation of ETC securities at fair value and Precious metals at fair value are included in the Statement of
comprehensive income together with fair value gains and losses as noted in note 3b and 3c.
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 24
3. Significant accounting policies (continued)
b)
Net fair value gain/loss on Precious Metal at fair value and Precious metals due to/from Series Counterparty
Net fair value gain on Precious metals and Precious metals due to/from Series Counterparty relates to the movement in the prices of metals and
hedging in respect of the derivative embedded in the Balancing Agreement and includes all realised and unrealised fair value changes. Any gains
and losses arising from changes in fair value of the Precious metals and changes in fair value of Precious metals due to/from Series Counterparty
are recorded in net fair value gain/loss on Precious metals at fair value and Precious metals due to/from Series Counterparty in the Statement of
comprehensive income.
c) Net fair value gain/loss on ETC securities at fair value
Net fair value gain/loss on ETC securities at fair value relates to ETC Securities issued 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 ETC securities at fair value are recorded in
net fair value gain/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(h)). Further details regarding the application of IFRS 13 are
disclosed in note 16.
d) Revenue and Expenses
Revenue is measured based on a consideration of the amount to which the Company expects to be entitled. All other income and expenses are
recognised on an accrual basis.
i) Product Fees
Each Series pays a product fee prepared by the Determination Agent, which accrues on a daily basis. This fee is used to pay the agreed fees of
other service providers of the Company at an annual rate ranging between 0.12% and 0.73% (2021: between 0.15% and 0.73%) and is applied to
the Metal Entitlement of the ETC Securities on a daily basis to determine a daily deduction of an amount of Metal from the Metal Entitlement of
the ETC Securities.
ii) Corporate Benefit
During the financial period until the termination of the Disbursement Agreement as of 1 August 2022, in line with the Disbursement Agreement
between the Company and DWS International GmbH (“DWS” or the “Programme Administrator”), to the extent that the Company did not have
sufficient funds to make such payments, or where total expenses exceeded product fee accrued, DWS International GmbH agreed to reimburse
the Company against certain fees, costs, charges, disbursements and expenses paid or payable by the Company.
e) Precious metals at fair value
The Company hold 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 Security holders”).
Initial recognition
The precious metal is recognised when the metal is received into the vault of the Custodian. The precious metal is derecognised when the risks
and rewards of ownership have all been substantially transferred.
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.
Valuation of Precious metals
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
AM fix (the “AM fix”) on 30 September 2022 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 30 September 2022 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 30 September 2022 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.
Amounts receivable/(payable) on Precious metals awaiting settlement
Amounts receivable/(payable) on Precious metals awaiting settlement is the metal amount pending to be settled due to the balancing agreement
that settle post year end.
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 25
3. Significant accounting policies (continued)
f) Precious metals due to/from Series Counterparty
Precious metals due to/from Series Counterparty (the Balancing Agreement) comprise a financial instrument whose value is linked to the
Precious Metal and foreign exchange. These instruments are mandatorily classified as financial assets/liabilities at fair value through profit or
loss upon initial recognition under IFRS 9 in consideration of contractual terms.
g) Amounts receivable/(payable) on ETC Securities awaiting settlement
Amounts receivable/(payable) on ETC Securities awaiting settlement is the ETC Securities that settle post year end in metal and are held at
amortised cost.
h) Financial instruments
Initial recognition
Financial liabilities at fair value through profit or loss are recognised initially at the trade date at which the Company becomes a party to the
contractual provisions of the instrument. Other financial liabilities are recognised on the date they are originated.
Classification
The Company has classified financial assets and financial liabilities into the following categories:
Financial assets and liabilities at fair value through profit or loss:
Precious metals due to/from the Series Counterparty
Counterparty Financial liabilities at fair value through profit or loss:
ETC securities at fair value through profit or loss
Financial assets at amortised cost:
Cash and cash equivalents, receivables awaiting settlement and other receivables
Financial liabilities at amortised cost:
Other payables and payables awaiting settlement
ETC Securities comprise a financial instrument whose redemption price is linked to exchange quoted prices. The ETC Securities are classified
as financial liabilities at fair value through profit or loss upon initial recognition under IFRS 9 as they are irrevocably designated by the entity
as such. The Company designates the ETC Securities issued as financial liabilities at fair value through profit or loss both on initial recognition
and on an ongoing basis as a result of the derivative embedded in the ETC securities.
The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured 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.
Subsequent measurement
After initial measurement, the Company measures financial instruments which are classified as at fair value through profit or loss at their fair
value. Subsequent changes in the fair value of financial instruments designated at fair value through profit or loss are recognised directly in the
profit or loss in the Statement of comprehensive income. Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
Derecognition
The Company derecognises a financial asset when the contractual rights to the asset expire, or it transfers the rights to 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.
Fair value measurement principles
Financial assets designated at fair value through profit or loss are valued using the appropriate metal prices and/or forward foreign exchange
prices consistent with the description in the accounting policy for Precious metals and Precious metals due to/from Series Counterparty above.
The exchange quoted value of the ETC Securities is determined by reference to exchange quoted prices. Changes in the fair value of the ETC
Securities are recognised in the Statement of Comprehensive Income.
Identification and measurement of impairment
IFRS 9 requires an impairment assessment to be carried out on its financial assets. The Directors have assessed that impairment does not
apply to financial assets classified as fair value through profit or loss. The Directors consider the probability of default to be close to zero, as
these instruments have a low risk of default and the counterparties have a strong capacity to meet their contractual obligations in the near
term. As a result, no loss allowance has been recognised in the financial statements based on 12-month expected credit losses as any such
impairment would be wholly insignificant to the Company.
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 26
3. Significant accounting policies (continued)
i) Other receivables and payables
Other receivables and payables are accounted for at amortised cost.
j) 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.
k) Share capital
Share capital is issued in Euro ("EUR"). Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds.
l) Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from
those of other business segments. The Directors are responsible for ensuring that the Company carries out business activities in line with the transaction
documents. They may delegate some or all of the day-to-day management of the business including the decisions to purchase and sell securities to other parties
both internal and external to the Company. The decisions of such parties are reviewed on a regular basis to ensure compliance with the policies and legal
responsibilities of Directors. Therefore, the Directors, as chief operating decision maker, retain full responsibility as to major allocation decisions of the
Company.
The Board believe that each Series can be treated as a segment. Furthermore, financial information reviewed by the Board of Directors is split out by Series
and decisions are made on the basis of this information. The split of financial liabilities designated at fair value through profit or loss by Series is shown in
note 12 to the financial statements. Details of the fair value movement by Series and the year-end unit price by Series are included in note 12 which are the
key measures of performance for each Series. There were no transactions between reportable segments during the year. All the entity-wide disclosures are
covered in the Statement of financial position and the Statement of comprehensive income and the related notes. In addition, the Company has no single major
customer from which greater than 10% of revenue is generated.
The below table provides segmental reporting breakdown for the year ended 30 September 2022:
Series
Revenue
Net fair value loss on
Precious metals at
fair value through
profit or loss
Net fair value gain on
ETC securities at fair
value
Operating
expenses
Operating
profit before
taxation
Series 1
437,400
(2,418,881)
2,418,881
(436,982)
418
Series 2
2,464,669
(270,747,060)
270,747,060
(2,464,251)
418
Series 3
702,226
(17,413,452)
17,413,452
(701,808)
418
Series 4
559,633
(3,788,850)
3,788,850
(559,215)
418
Series 5
1,949,025
(148,642,933)
148,642,933
(1,948,607)
418
Series 6
1,029,568
(91,935,564)
91,935,564
(1,029,150)
418
Series 7
490,507
(3,601,558)
3,601,558
(490,090)
417
Total
7,633,028
(538,548,298)
538,548,298
(7,630,103)
2,925
The below table provides segmental reporting breakdown for the year ended 30 September 2021:
Series
Revenue
Net fair value loss on
Precious metals at
fair value through
profit or loss
Net fair value gain on
ETC securities at fair
value
Operating
expenses
Operating
profit before
taxation
Series 1
21,841
(1,486,220)
1,486,220
(21,115)
726
Series 2
233,001
(62,199,332)
62,199,332
(232,275)
726
Series 3
1,437,794
(32,897,105)
32,897,105
(1,437,068)
726
Series 4
455,634
(44,319,414)
44,319,414
(454,908)
726
Series 5
1,420,218
(76,487,823)
76,487,823
(1,419,492)
726
Series 6
580,778
(10,137,797)
10,137,797
(580,052)
726
Series 7
119,140
(5,768,747)
5,768,747
(118,414)
726
Total
4,268,406
(233,296,438)
233,296,438
4,263,324
5,082
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 27
4. Net fair value loss on Precious Metals and Precious metals due to/from the Series
Counterparty
Year ended
30-Sept-22
Year ended
30-Sept-21
USD USD
Net fair value loss on Precious metals
(328,483,990)
(189,046,085)
Net fair value loss on Precious metals due from Series Counterparty
(210,064,308)
(44,250,353)
(538,548,298)
(233,296,438)
5. Net fair value gain on ETC Securities
Year ended
30-Sept-22
Year ended
30-Sept-21
USD USD
Net fair value gain on ETC Securities
538,548,298
233,296,438
538,548,298
233,296,438
6. Revenue
Year ended
30-Sept-22
Year ended
30-Sept-21
Revenue relates to:
USD USD
Revenue from contracts with customers – product fee
7,633,028
4,268,406
7,633,028
4,268,406
7.
Operating expenses
Year ended
30-Sept-22
Year ended
30-Sept-21
USD USD
Product fees to the Programme Administrator
2,282,761 1,176,752
Other expenses
5,347,342 3,086,572
7,630,103
4,263,324
Each Series pays a product fee prepared by the Determination Agent, which accrues on a daily basis. This fee is used to pay the agreed fees of service
providers of the Company. The Product fee is the rate set out 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. Refer to note 3 and 17 for more information.
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.
8. Auditor’s remuneration
Fees for the statutory auditor, KPMG Ireland:
*Audit Fee (excluding VAT): EUR 105,600 (2021: EUR 114,428)
*Tax fee (excluding VAT): EUR 5,800 (2021: EUR 5,800)
30-Sep-22 30-Sep-21
USD USD
Audit fees
Statutory audit of financial statements 102,939* 132,496*
Other Non-Audit Services fees
Tax advisory services 5,654* 8,260*
108,593
140,756
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 28
9. Taxation
The Company has been advised that it should fall within the Irish regime for the taxation of qualifying companies as set out in Section 110 of the Taxes
consolidation Act 1997 (“Section 110”), and as such should be taxed only on the amount of its retained profit after deducting all amounts of interest and
other revenue expenses due to be paid by the Company. If, for any reason, the Company is not or ceases to be entitled to the benefits of Section 110, then
profits or losses could arise in the Company which could have tax effects not contemplated in the cashflows for the transaction and as such adversely affect
the tax treatment of the Company and consequently the payments on the ETC Securities.
The Company will be taxable as a securitisation Company pursuant to Section 110 of the Taxes Consolidation Act (“TCA”) 1997. Profits arising to the
Company are charged at a corporate tax rate of 25%. All expenses that are not capital in nature and are for the purposes of the Company’s activities will be
deductible from income in order to determine taxable profits.
The Company is a qualifying Company within the meaning of Section 110 of the TCA. As such, the profits are chargeable to corporation tax under Case III
of Schedule D of the TCA at the rate of 25% but are computed in accordance with the provisions applicable to Case I Schedule D of the TCA.
Year ended
30-Sept-22
Year ended
30-Sept-21
USD
USD
Net result for the financial year before tax 2,925
5,082
Corporation tax rate 25% (732)
(1,271)
Taxation charge
(732)
(1,271)
10. Cash and cash equivalents
30-Sep-22 30-Sep-21
USD
USD
Cash at bank
2,415,218
2,225,034
2,415,218
2,225,034
Settlements of Net Precious metals due to/from Series Counterparty were in respect of Precious metals per the Balancing agreement into metals at fair value of
USD 220,779,215.
*Disposals/settlements during the year incorporates the value of the metals sold during the year to cover the expenses of the Company of USD 7,652,581.
However, this fee is excluded from the disposals of precious metals amount in the non-cash transactions during the year listing in the Statement of Cash
Flows as it is a cash transaction.
11.
Precious metals at fair value and Precious metals due to/from Series
Counterparty
Precious Metal
Net Precious
metals
due
to/from
Series
Counterparty
30-Sep-22
30-Sep-2
2
USD
USD
Precious metals at fair value
4,155,236,718
-
Precious metals due from Series Counterparty
-
5,833,251
4,155,236,718
5,833,251
Movement in Precious metals and Precious metals due to/from Series
Counterparty
30-Sep-22
30-Sep-22
USD
USD
Precious Metal
Net
Precious
metals
due to/from
Series
Counterparty
At beginning of the year
3,405,169,768
(4,881,656)
Additions during the year
2,943,249,057
-
Disposals/settlements during the year*
(1,864,698,117)
220,779,215
Net changes in fair value during the year
(328,483,990)
(210,064,308)
At end of the year
4,155,236,718
5,833,251
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 29
Settlements of Net Precious metals due to/from Series Counterparty were in respect of Precious metals per the Balancing Agreement into metals at fair value
of USD 39,650,900.
*Total ounces of metal received from Exchange Offer amounted to 5,363,763.09 troy ounces and FV of metal transferred USD 1,325,447,190. Fractional
cash transaction back to new ETC holders amounted to USD 4,682. Please refer to Note 17 of the Notes to the financial statements for more details.
Movement in Metal in troy ounces for the year ended 30 September 2022
Opening
balance
Metal
Metal
Metal
Price of metal
Fair value
USD
Series
Description
1-Oct-21
Troy
Ounces
contributed
Troy Ounces
distributed
Troy Ounces
30- Sep -22
Troy Ounces
per ounce
30-Sep-22
30-Sept-22
USD
Series 1
Xtrackers IE Physical
Platinum ETC
18,115
20,303
(16,958)
21,460
$864.00
18,541,858
Series 2
Xtrackers IE Physical Gold
ETC
1,158,097
1,186,577
(458,502)
1,886,172
$1,671.75
3,153,207,783
Series 3
Xtrackers IE Physical Silver
ETC
8,189,579
1,741,483
(5,288,969)
4,642,093
$19.02
88,292,607
Series 4
Xtrackers IE Physical Silver
EUR Hedged EC
6,838,961
1,661,283
(6,853,943)
1,646,301
$19.02
31,312,636
Series 5
Xtrackers IE Physical Gold
EUR Hedged ETC
479,387
359,365
(495,422)
343,330
$1,671.75
573,961,844
Series 6
Xtrackers IE Physical Gold
GBP Hedged ETC
107,135
207,205
(148,039)
166,301
$1,671.75
278,010,266
Series 7
Xtrackers IE Physical
Platinum EUR Hedged ETC
24,618
13,149
(23,983)
13,784
$864.00
11,909,724
16,815,892
5,189,364
(13,285,816)
8,719,439
4,155,236,718
Metal has been rounded to the nearest troy ounce in table above.
11.
Precious metals
at fair value and Precious metals due to/from Series Counterparty (continued)
Precious metals at fair value and Precious metals due to/from Series
Counterparty
Precious Metal
Net Precious metals
due to/from
Series
Counterparty
30-Sep-21
30-Sep-2
1
USD
USD
Precious metals at fair value
3,405,169,768
-
Precious metals due from Series Counterparty
-
349,373
Precious metals due to Series Counterparty
-
(5,231,029)
3,405,169,768
(4,881,656)
30-Sep-21 30-Sep-2
1
USD
USD
Precious Metal
Net Precious metals
due to/from
Series
Counterparty
At beginning of the year
389,471,120
(289,203)
Additions during the year*
3,723,085,770
-
Disposals/settlements during the year*
(518,341,037)
39,650,900
Net changes in fair value during the year
(189,046,085)
(44,250,353)
At end of the year
3,405,169,768
(4,881,656)
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 30
Movement in Metal in troy ounces for the year ended 30 September 2021
Series
Description
Opening
balance
1-Oct-20
Troy Ounces
Metal
contributed
Troy Ounces
Metal
distributed
Troy Ounces
Metal
30-Sep-21
Troy Ounces
Price of
metal per
ounce
30-Sep-21
Fair value
USD
30-Sept-21
USD
Series 1
Xtrackers IE Physical
Platinum ETC
1,947
16,812
(644)
18,115
$963.00
17,444,262
Series 2
Xtrackers IE Physical Gold
ETC
83,634
1,221,290
(146,827)
1,158,097
$1,742.80
2,018,333,776
Series 3
Xtrackers IE Physical Silver
ETC
36,192
11,228,499
(3,075,112)
8,189,579
$21.53
176,281,445
Series 4
Xtrackers IE Physical Silver
EUR Hedged EC
153,925
7,807,156
(1,122,120)
6,838,961
$21.53
147,209,109
Series 5
Xtrackers IE Physical Gold
EUR Hedged ETC
61,142
573,947
(155,702)
479,387
$1,742.80
835,476,847
Series 6
Xtrackers IE Physical Gold
GBP Hedged ETC
58,142
87,900
(38,907)
107,135
$1,742.80
186,716,872
Series 7
Xtrackers IE Physical
Platinum EUR Hedged ETC
361
29,522
(5,265)
24,618
$963.00
23,707,457
395,343
20,965,126
(4,544,577)
16,815,892
3,405,169,768
Metal has been rounded to the nearest troy ounce in table above.
12.
ETC securities at fair value through profit or loss
30-Sep-22
30-Sep-21
Nominal units
issued
Fair value
Nominal units issued
Fair value
USD
USD
ETC Securities issued
166,712,039
4,159,401,905
121,744,281
3,365,613,642
Movement in ETC Securities issued
30-Sep-22
30-Sep-21
USD
USD
At beginning of the year
3,365,613,642 421,618,033
Issue of ETC Securities issued during the year*
2,940,808,903 3,693,308,640
Redemption of ETC Securities issued during the year
(1,608,472,342) (516,016,593)
Net changes in fair value during the year
(538,548,298) (233,296,438)
At end of the year
4,159,401,905
3,365,613,642
The ETC Securities issued are listed on following exchanges: the Frankfurt Stock Exchange, the Borsa Italiana and the London Stock Exchange plc.
Refer to note 15 for a description of the key risks regarding the issue of these instruments.
*Total units of ETC Securities issued 45,833,276 at FV of USD 1,325,442,509 as part of the 2021 Exchange Offer. Please refer to Note 17 of the financial
statements for more details.
11. Precious metals at fair value and Precious metals due to/from Series Counterparty (continued)
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 31
12.
ETC securities at fair value through profit and loss (continued)
The ETC securities in issue at 30 September 2022 are as follows:
Series
Description
CCY
Maturity
D
ate
Units
outstanding
30 -Sep-22
Metal entitlement
per ETC Security*
(ounces)
Value per ETC
Security
(Local CCY)
30-Sept-22
Value per ETC
Security USD
30-Sept-22
Fair value
USD
30-Sept-22
Series 1
Xtrackers IE Physical
Platinum ETC
USD
17-Apr-80
866,539
0.0248
$21.3960
$21.3960
18,540,464
Series 2
Xtrackers IE Physical
Gold ETC
USD
23-Apr-80
121,623,255
0.0154
$25.8172
$25.8172
3,139,966,835
Series 3
Xtrackers IE Physical
Silver ETC
USD
30-Apr-80
3,220,624
1.4413
$27.4137
$27.4137
88,289,172
Series 4
Xtrackers IE Physical
Silver EUR
EUR
23-Apr-80
1,382,177
1.2139
€23.6503
$23.0886
31,912,511
Series 5
Hedged ETC
Xtrackers IE Physical
Gold EUR
EUR
21
-May-80
26,298,241
0.0132
€22.6351
$22.1247
581,841,157
Hedged ETC
Series 6
Xtrackers IE Physical
Gold GBP
GBP
23-May-80
12,643,627
0.0137
£20.3778
$22.6785
286,737,804
Series 7
Hedged ETC
Xtrackers IE Physical
Platinum EUR
EUR
29-May-80
677,576
0.0207
€18.3284
$17.8784
12,113,962
Hedged ETC
Total
166,712,039
4,159,401,905
*Metal entitlement per ETC security is calculated exclusive of ETC securities awaiting settlement.
Movement in fair values by Series for the year ended 30 September 2022
Opening balance
Net changes in
Closing balance
Series
Description
1-Oct-21
USD
Issuances
USD
Redemptions
USD
fair values
USD
30-Sept-22
USD
Series 1
Xtrackers IE Physical
Platinum ETC
18,448,610
18,527,227
(16,016,492)
(2,418,881)
18,540,464
Series 2
Xtrackers IE Physical Gold
ETC
2,006,829,043
2,228,304,569
(824,419,717)
(270,747,060)
3,139,966,835
Series 3
Xtrackers IE Physical Silver
ETC
176,275,569
40,547,711
(111,120,656)
(17,413,452)
88,289,172
Series 4
Xtrackers IE Physical Silver
EUR Hedged ETC
145,734,767
19,155,994
(129,189,400)
(3,788,850)
31,912,511
Series 5
Xtrackers IE Physical Gold
EUR Hedged ETC
807,574,416
389,694,794
(466,785,120)
(148,642,933)
581,841,157
Series 6
Xtrackers IE Physical Gold
GBP Hedged ETC
187,234,153
238,759,551
(47,320,336)
(91,935,564)
286,737,804
Series 7
Xtrackers IE Physical
Platinum EUR Hedged ETC
23,517,084
5,819,057
(13,620,621)
(3,601,558)
12,113,962
3,365,613,642
2,940,808,903
(1,608,472,342)
(538,548,298)
4,159,401,905
Xtrackers ETC Public Limited Company
Page 32
Notes to the financial statements (continued)
For the year ended 30 September 2022
12.
ETC securities at fair value through profit and loss (continued)
The ETC securities in issue at 30 September 2021 are as follows:
Series
Description
CCY
Maturity
Date
Units
outstanding
30 -Sep-21
Metal entitlement
per ETC Security*
(ounces)
Value per ETC
Security
(Local CCY)
30-Sept-21
Value per ETC
Security USD
30-Sept-21
Fair value
USD
30-Sept-2
1
Series 1
Xtrackers IE Physical
Platinum ETC
USD
17-Apr-80
770,629
0.0249
$23.9397
$23.9397
18,448,610
Series 2
Xtrackers IE Physical
Gold ETC
USD
23-Apr-80
74,463,120
0.0155
$26.9506
$26.9506
2,006,829,043
Series 3
Xtrackers IE Physical
Silver ETC
USD
30-Apr-80
5,670,370
1.4442
$31.0871
$31.0871
176,275,569
Series 4
Xtrackers IE Physical
Silver EUR
EUR
23-Apr-80
4,556,577
1.4859
€27.6422
$31.9834
145,734,767
Series 5
Hedged ETC
Xtrackers IE Physical
Gold EUR
EUR
21
-May-80
28,866,083
0.0161
€24.1521
$27.9766
807,574,416
Hedged ETC
Series 6
Xtrackers IE Physical
Gold GBP
GBP
23-May-80
6,454,026
0.0166
£21.5203
$29.0104
187,234,153
Series 7
Hedged ETC
Xtrackers IE Physical
Platinum EUR
EUR
29-May-80
963,476
0.0253
€21.0591
$24.4086
23,517,084
Hedged ETC
Total
121,744,281
3,365,613,642
*Metal entitlement per ETC security is calculated exclusive of ETC securities awaiting settlement.
Movement in fair values by Series for the year ended 30 September 2021
Opening balance
Net changes in
Closing balance
Series
Description
1-Oct-21
USD
Issuances
USD
Redemptions
USD
fair values
USD
30-Sept-21
USD
Series 1
Xtrackers IE Physical
Platinum ETC
1,720,729
19,007,796
(793,695)
(1,486,220)
18,448,610
Series 2
Xtrackers IE Physical Gold
ETC
182,091,101
2,162,622,588
(275,685,315)
(62,199,332)
2,006,829,043
Series 3
Xtrackers IE Physical Silver
ETC
858,616
284,863,531
(76,549,474)
(32,897,105)
176,275,569
Series 4
Xtrackers IE Physical Silver
EUR Hedged ETC
4,399,772
191,977,644
(6,323,235)
(44,319,414)
145,734,767
Series 5
Xtrackers IE Physical Gold
EUR Hedged ETC
122,638,553
914,170,221
(152,746,535)
(76,487,823)
807,574,416
Series 6
Xtrackers IE Physical Gold
GBP Hedged ETC
109,588,661
91,582,487
(3,799,197)
(10,137,797)
187,234,153
Series 7
Xtrackers IE Physical
Platinum EUR Hedged ETC
320,601
29,084,373
(119,142)
(5,768,748)
23,517,084
421,618,033
3,693,308,640
(516,016,593)
(233,296,438)
3,365,613,642
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 33
13.
Share Capital
30-Sep-22 30-Sep-21
Authorised:
EUR EUR
1,000,000 ordinary shares of EUR 1 each 1,000,000 1,000,000
Issued and fully paid:
USD USD
25,000 ordinary shares of EUR 1 each 27,223 27,223
27,223
27,223
As at 30 September 2022 and as at 30 September 2021, the ordinary share capital was held by the following non-beneficial nominees:
30-Sep-21 30-Sep-20
USD
USD
Wilmington Trust SP Services (Dublin) Limited
27,223 27,223
27,223
27,223
The issued share capital of the Company is EUR 25,000 divided into 25,000 ordinary shares of EUR 1 each, all of which have been issued and fully paid
up (2021: issued and fully paid). The nominee has 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.
14. Capital risk management
The Company views the share capital as its capital. 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 EUR 25,000 was issued in
line with Irish 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. The Company can issue further series of ETC Securities to meet the demand of its investors.
15. 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 Security holders 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 metals due from the Series Counterparty and the Precious metals do not bear interest. As such, the
Company and ETC Security holders have limited exposure to interest rate risk.
(ii) Currency risk
The Company has exposure to currency risk as some of the Currency-Hedged Metal Securities are priced in currencies other than US
Dollars and hedged against exchange rate movements between the US Dollar and the Euro or Pound Sterling. However, the Directors do
not consider the Company to have a significant exposure to currency risk arising from the current economic uncertainties facing a number
of countries around the world as the gains or losses on the liability represented by the Currency-Hedged Metal Securities are matched
economically by corresponding losses or gains attributable to the Precious metals and Precious metals due to/from Series Counterparty as
result of the Balancing Agreement. Refer to note 1 and note for more detail.
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 34
15. Financial risk management (continued)
a) Market risk (continued)
(ii) Currency risk (continued)
As at the reporting date, the carrying value of the Company’s assets and liabilities held in individual foreign currencies were as follows:
Series 4
Xtrackers IE Physical Silver EUR Hedged ETC
USD
USD
USD
ETC Security at fair value
Notional amount of the
Balancing Agreement
Net exposure
EUR
(31,912,511)
31,912,511
-
Total
(31,912,511)
31,912,511
-
In the event that the Euro moved by either +1% or -1% against the USD, the value of the ETC Security would move
by USD 319,125 and USD (319,125) respectively. However, the Balancing Agreement would offset these movements
by USD (319,125) and USD 319,125 respectively, resulting in a zero net exposure.
Series 5
Xtrackers IE Physical Gold EUR Hedged ETC
USD
USD
USD
ETC Security at fair value
Notional amount of the
Balancing Agreement
Net exposure
EUR
(581,841,157)
581,841,157
-
Total
(581,841,157)
581,841,157
-
In the event that the Euro moved by either +1% or -1% against the USD, the value of the ETC Security would move
by USD 5,818,412 and USD (5,818,412) respectively. However, the Balancing Agreement would offset these
movements by USD (5,818,412) and USD 5,818,412 respectively, resulting in a zero net exposure.
Series 6
Xtrackers IE Physical Gold GBP Hedged ETC
USD
USD
USD
ETC Security at fair value
Notional amount of the
Balancing Agreement
Net exposure
GBP
(286,737,804)
286,737,804
-
Total
(286,737,804)
286,737,804
-
In the event that the Pound Sterling moved by either +1% or -1% against the USD, the value of the ETC Security
would move by USD 2,867,378 and USD (2,867,378) respectively. However, the Balancing Agreement would
offset these movements by USD (2,867,378) and USD 2,867,378 respectively, resulting in a zero net exposure.
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 35
15. Financial risk management (continued)
a) Market risk (continued)
(ii) Currency risk (continued)
Series 7
Xtrackers IE Physical Platinum EUR Hedged ETC
USD
USD
USD
ETC Security at fair value
Notional amount of the
Balancing Agreement
Net Exposure
EUR
(12,113,962)
12,113,962
-
Total
(12,113,962)
12,113,962
-
In the event that the Euro moved by either +1% or -1% against the USD, the value of the ETC Security would move by
USD 121,140 and USD (121,140) respectively. However, the Balancing Agreement would offset these movements by
USD (121,140) and USD 121,140 respectively, resulting in a zero net exposure.
Currency risk exposure as at 30 September 2021:
Series 4
Xtrackers IE Physical Silver EUR Hedged ETC
USD
USD
USD
ETC Security at fair value
Notional amount of the
Balancing Agreement
Net exposure
EUR
(145,734,767)
145,734,767
-
Total
(145,734,767)
145,734,767
-
In the event that the Euro moved by either +1% or -1% against the USD, the value of the ETC Security would move
by USD 1,457,348 and USD (1,457,348) respectively. However, the Balancing Agreement would offset these
movements by USD (1,457,348) and USD 1,457,348 respectively, resulting in a zero net exposure.
Series 5
Xtrackers IE Physical Gold EUR Hedged ETC
USD
USD
USD
ETC Security at fair value
Notional amount of the
Balancing Agreement
Net exposure
EUR
(807,574,416)
807,574,416
-
Total
(807,574,416)
807,574,416
-
In the event that the Euro moved by either +1% or -1% against the USD, the value of the ETC Security would move
by USD 8,075,744 and USD (8,075,744) respectively. However, the Balancing Agreement would offset these
movements by USD (8,075,744) and USD 8,075,744 respectively, resulting in a zero net exposure.
Series 6
Xtrackers IE Physical Gold GBP Hedged ETC
USD
USD
USD
ETC Security at fair value
Notional amount of the
Balancing Agreement
Net exposure
GBP
(187,234,153)
187,234,153
-
Total
(187,234,153)
187,234,153
-
In the event that the Pound Sterling moved by either +1% or -1% against the USD, the value of the ETC Security would
move by USD 1,872,342 and USD (1,872,342) respectively. However, the Balancing Agreement would offset these
movements by USD (1,872,342) and USD 1,872,342 respectively, resulting in a zero net exposure.
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 36
15. Financial risk management (continued)
a) Market risk (continued)
(ii) Currency risk (continued)
Series 7
Xtrackers IE Physical Platinum EUR Hedged ETC
USD
USD
USD
ETC Security at fair value
Notional amount of the
Balancing Agreement
Net Exposure
EUR
(23,517,084)
23,517,084
-
Total
(23,517,084)
23,517,084
-
In the event that the Euro moved by either +1% or -1% against the USD, the value of the ETC Security would move by USD 235,171
and USD (235,171) respectively. However, the Balancing Agreement would offset these movements by USD (235,171) and USD
235,171 respectively, resulting in a zero net exposure.
b. Price risk
Price risk is the risk that changes in market prices of metals will affect the Company’s income, expense, Precious metals and ETC
securities 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 Precious metals equivalent to the weight of metal entitlement for each Series
of ETC Securities issued.
The following table assess the sensitivity of the fair value of the series of assets to an impact of a 1% movement in the price of Precious
metals as at 30 September 2022:
Series
Fair value of ETC securities
for each series
1% increase in price
of Precious metals in
USD
1% decrease in price of
Precious metals in USD
Xtrackers IE Physical Platinum ETC Securities
18,540,464
185,405
(185,405)
Xtrackers IE Physical Gold ETC Securities
3,139,966,835
31,399,668
(31,399,668)
Xtrackers IE Physical Silver ETC Securities
88,289,172
882,892
(882,892)
Xtrackers IE Physical Silver EUR Hedged ETC
Securities
31,912,511
319,125
(319,125)
Xtrackers IE Physical Gold EUR Hedged ETC
Securities
581,841,157
5,818,412
(5,818,412)
Xtrackers IE Physical Gold GBP Hedged ETC
Securities
286,737,804
2,867,378
(2,867,378)
Xtrackers IE Physical Platinum EUR Hedged ETC
Securities
12,113,962
121,140
(121,140)
The following table assess the sensitivity of the fair value of the series of assets to an impact of a 1% movement in the price of Precious
metals as at 30 September 2021:
Series
Total for each series
1% increase in price of
Precious metals in
USD
1% decrease in price of
Precious metals in USD
Xtrackers IE Physical Platinum ETC Securities
18,448,610
184,486
(184,486)
Xtrackers IE Physical Gold ETC Securities
2,006,829,043
20,068,290
(20,068,290)
Xtrackers IE Physical Silver ETC Securities
176,275,569
1,762,756
(1,762,756)
Xtrackers IE Physical Silver EUR Hedged ETC
Securities
145,734,767
1,457,348
(1,457,348)
Xtrackers IE Physical Gold EUR Hedged ETC
Securities
807,574,416
8,075,744
(8,075,744)
Xtrackers IE Physical Gold GBP Hedged ETC
Securities
187,234,153
1,872,342
(1,872,342)
Xtrackers IE Physical Platinum EUR Hedged ETC
Securities
23,517,084
235,171
(235,171)
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 37
15. Financial risk management (continued)
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, Amounts Receivable on Precious metals awaiting
settlement and Precious metals due from the Series Counterparty which represents the Company's maximum exposure to credit risk. All
credit risks are ultimately borne by the ETC Security holders.
30-Sep-22 30-Sept-21
USD USD
Precious metals due from Series Counterparty
5,833,251
349,373
Amounts Receivable on Precious metals awaiting settlement
16,251,868
-
Amounts Receivable on ETC Securities awaiting settlement
-
2,452,787
Other receivables
79,103 23,782
Cash and cash equivalents
2,415,219 2,225,034
24,579,441
5,050,976
As at 30 September 2022, no financial assets carried at amortised cost were past due or impaired (2021: Nil). The Directors have also
considered the credit risk and counterparty risk with JPMorgan as custodian (the "Custodian") and Series Counterparty respectively, of the
Precious metals held by the Company given the significance of the Precious metals to the overall financial position of the Company. As at
30 September 2022, the Company held Precious metals at fair value of USD 4,155,236,718 (2021: 3,405,169,768) with JP Morgan. Precious
metals due from the Series Counterparty with a fair value of USD 5,833,251 (2021: USD 349,373) and Precious metals due to the Series
Counterparty with a fair value of USD Nil (2021: USD 5,231,029) was held with JPMorgan as at 30 September 2022. Amount payable on
Precious metals awaiting settlement with a fair value of USD Nil (2021: USD 4,617,295), amount receivable on the Precious metals awaiting
settlement USD 16,251,868 (2021: USD Nil) and cash and cash equivalents to the amount of USD 2,415,219 (2021: USD 2,225,034) were
held with JPMorgan.
With an overall credit rating status JPMorgan (2022: S&P A+ (2021: S&P A+)), the Directors are of the opinion that counterparty risk is
acceptable. Ultimately, all credit and counterparty risks associated with JP Morgan are borne by the ETC Security holders.
Custodian Risk
The Company’s Custodian is JPMorgan Chase Bank N.A., London Branch (the “Custodian”). The Company’s ability to meet its obligations
with respect to the ETC Securities is dependent upon the performance of the Custodian of its obligations under the relevant Custody
Agreement. Consequently, the Securityholders are relying on the creditworthiness of the Custodian and the precious metals are segregated
from the assets of the Custodian into allocated accounts, with ownership rights remaining with the Company. To mitigate the Company’s
exposure to the Custodian, the Programme Administrator employs specific procedures to ensure that the Custodian is a reputable institution
and that the counterparty credit risk is acceptable to the Company. The Company only transacts with Custodians with high credit-ratings
assigned by international credit-rating agencies. As outlined above, the credit rating status of the Custodian is A+ (2021: A+) (Standard and
Poor’s rating).
The precious metals are held by the Custodian in their vault premises in the United Kingdom. The Custodian has no obligation to maintain
insurance specific to the Company or specific only to the precious metal held for the Company against theft, damage or loss. However, the
Custodian maintains insurance in connection with its own business operation. The level of insurance and particulars remains at the discretion
of the Custodian. There is a risk that the precious metal could be lost, stolen or damaged and the Company would not be able to satisfy its
obligations in respect of the ETC Securities. In such an event the Company would adjust the Metal Entitlement of each Security of the
relevant Series to the extent necessary to reflect such damage or loss.
Concentration risk
At the reporting date, the Company's Precious metals due from Series Counterparty were concentrated in the following asset types and
geographical location:
By industry
30-Sep-22
30-Sep-21
Types of collaterals % %
Gold
96.39
89.29
Silver
2.88
9.50
Platinum
0.73
1.21
100
100
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 38
15. Financial risk management (continued)
b) Credit risk (continued)
Concentration risk (continued)
By Geographical location 30-Sep-22 30-Sep-21
Country of origin % %
United Kingdom*
100
100
*the Precious metals are held in a vault in the United Kingdom.
100
100
a) 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 through the purchase of Precious metals. All liquidity risk associated with the Precious metals are ultimately borne by the ETC Security
holders.
The contractual maturity profile of financial liabilities as at 30 September 2022 is as follows:
Carrying amount
Gross contractual
cash flows
Less than one year
USD
USD
USD
ETC securities at fair value through profit or loss
4,159,401,905
4,159,401,905
4,159,401,905
Amounts payable on ETC Securities awaiting settlement
17,927,883
17,927,883
17,927,883
Other payables
2,453,143
2,453,143
2,453,143
4,179,782,931
4,179,782,931
4,179,782,931
The contractual maturity profile of financial liabilities as at 30 September 2021 is as follows:
Carrying amount
Gross contractual
cash flows
Less than one year
USD
USD
USD
ETC securities at fair value through profit or loss
3,365,613,642
3,365,613,642
3,365,613,642
Amounts payable on Precious metals awaiting settlement
4,617,295
4,617,295
4,617,295
Precious metals due from Counterparty
5,231,029
5,231,029
5,231,029
Amounts payable on ETC Securities awaiting settlement
32,505,280
32,505,280
32,505,280
Other payables
2,222,464
,222,464
,222,464
3,410,189,710
3,410,189,710
3,410,189,710
Due to the fact that the ETC Security holders have the option to redeem the securities before the final scheduled maturity date, the ETC securities
at fair value have been classified as due in less than one year. Maturity dates across the ETC Securities range between April 2080 and May 2080.
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.
ETC holders can request redemption on demand in accordance with the terms stated below.
Subscriptions
Only Authorised Participants may subscribe for ETC Securities from the Company. The Authorised Participant(s) in respect of each Series of
ETC Securities at the relevant Tranche Issue Date of such Series will be specified in the relevant Final Terms. The Company will, as subscription
proceeds for the issue of ETC Securities, receive an amount of the relevant Metal from the Authorised Participants subscribing for the ETC
Securities sufficient to cover the relevant metal entitlement per ETC Security.
Securities may be offered to any category of potential investors provided that the offer complies with the selling restrictions set out in the
Company’s prospectus.
Redemptions and Buy-backs
Buy-backs
An Authorised Participant may request that the Company buys back ETC Securities from such Authorised Participant. Prior to settlement of a
Buy-Back, the Authorised Participant will be required to deliver to the Issuing Agent acting on behalf of the Company the relevant ETC Securities
being bought back. The Company will not cancel such ETC Securities and deliver to the Authorised Participant an amount of Metal equal to the
product of the Metal Entitlement on the relevant trade date and the total number of ETC Securities being bought back, until the Issuing Agent
has confirmed receipt of such ETC Securities.
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 39
15. Financial risk management (continued)
c) Liquidity risk (continued)
Redemptions and Buy-backs (continued)
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 (defined below) plus the Specified Interest Amount
and (ii) the Minimum Debt Principal Amount plus the Specified Interest Amount.
The “Early Metal Redemption Amount” is determined by multiplying (i) the metal entitlement per ETC Security as at the Early Redemption Valuation
Date (defined below); and (ii) the Average Metal Sale Price during the Early Redemption Disposal Period (defined below), net of associated fees,
deductions and taxes.
The “Early Redemption Valuation Date” is (i) the date specified as such in relation to the relevant Early Redemption Event or if not specified, the date
of the occurrence of such Early Redemption Event or (ii) the date on which the Trustee gives notice that due to the occurrence of an event of default,
the ETC Securities shall become due and payable at their Early Redemption Amount on the Scheduled Early Redemption Date, or if such day is not a
business day, the next following business day.
The “Early Redemption Disposal Period” is the period which lasts for the number of days specified in the Final Terms, which shall start from (but
exclude) the date falling four non-disrupted business days following the Early Redemption Valuation Date.
On the Scheduled Maturity Date, each ETC Security will become due and payable at an amount (the “Final Redemption Amount”) equal to the greater
of (i) the Final Metal Redemption Amount (defined below) plus the Specified Interest Amount and (ii) 10 per cent. of the Issue Price per ETC Security
as at the Series Issue Date (the “Minimum Debt Principal Amount”) plus the Specified Interest Amount.
The “Final Metal Redemption Amount” is determined by multiplying (i) the metal entitlement per ETC Security as at the Final Redemption Valuation
Date (defined below); and (ii) the volume-weighted average prices per metal unit at which the Metal Agent is able to sell the Underlying Metal (“Average
Metal Sale Price”) during the Final Redemption Disposal Period (defined below), net of associated fees, deductions and taxes.
“Final Redemption Valuation Date” is the date specified in the Final Terms or, if such day is not business day, the next following business day.
The “Final Redemption Disposal Period” is the period which lasts for the number of days specified in the Final Terms, which shall start from (but
exclude) the date falling four non-disrupted business days following the Final Redemption Valuation Date.
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 Wilmington Trust SP Services (Dublin) Limited. Deutsche Bank AG, Jane Street Financial
Limited, HSBC Bank Plc, Susquehanna International Securities Limited and Flow Traders B.V. Morgan Stanley & Co. International Plc, Citigroup
Global Markets Limited, Optiver VOF act as the Company’s authorised participants (the " Authorised Participants"), DWS International GmbH acts as
arranger (the "Arranger") and Programme Administrator, JPMorgan Chase Bank N.A. acts as metal agent (the "Metal Agent"), Secured Account
Custodian, Fee Account Custodian, Subscription Account Custodian and Series Counterparty (“Series Counterparty”) and State Street Fund Services
(Ireland) Limited acts as issuing and determination agent.
16. 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 metals is disclosed in note 3(e) to the financial statements. The Company's
accounting policy on fair value measurement of ETC securities at fair value is disclosed in note 3(h). The Company measures fair values using the
following fair value hierarchy that reflects the significance of the inputs used in making the measurements.
a.
Level 1: Quoted market price in an active market for an identical instrument.
b. 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).
c.
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.
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 40
16. Fair values (continued)
Level 2 prices use widely recognized 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 transfer a valuation from one level to another.
The Company determines the effective date of transfer at the beginning of the reporting year. There were some ETC series that were reclassified from
Level 1 to Level 2 on the basis of volume and market liquidity.
The Company does not have any financial instruments at Level 3 and there has not been any transfer between levels during the year ended 30 September
2022.
The following table presents financial assets, financial liabilities and precious metals measured at fair value on the Statement of Financial Position by
investment type and by level within the valuation hierarchy as at 30 September 2022:
Level 1
Level 2
Level 3
Total
USD
USD
USD
USD
Precious metals at fair value
4,155,236,718
-
-
4,155,236,718
Precious metals due from Series Counterparty - 5,833,251 - 5,833,251
4,155,236,718
5,833,251
-
4,161,069,969
Level 1
Level 2
Level 3
Total
USD
USD
USD
USD
ETC securities at fair value
(3,842,009,675)
(317,392,230)
-
(4,159,401,905)
(3,842,009,675)
(317,392,230)
-
(4,159,401,905)
The following table presents financial assets, financial liabilities and precious metals measured at fair value on the Statement of Financial Position by
investment type and by level within the valuation hierarchy as at 30 September 2021:
Level 1
Level 2
Level 3
Total
USD
USD
USD
USD
Precious metals at fair value 3,405,169,768 - - 3,405,169,768
Precious metals due from Series Counterparty
-
349,373
-
349,373
3,405,169,768
349,373
-
3,405,169,768
Level 1
Level 2
Level 3
Total
USD
USD
USD
USD
ETC securities at fair value
(3,365,613,642)
-
-
(3,365,613,642)
Precious metals due to Series Counterparty
-
(5,231,029)
-
(5,231,029)
(3,365,613,642)
(5,231,029)
-
(3,370,844,671)
Other financial assets and liabilities are classified as Level 2.
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 41
17. Related Party Transactions and Connected Parties
Related Parties
Parties are considered to be related if one party has the ability to control the other party or is able to exercise significant influence over the party, in
making financial or operational decisions.
The Company’s related parties are the Directors and Wilmington Trust SP Services (Dublin) Limited (“WTD”). The Company’s connected party is the
Programme Administrator. Amounts incurred during the year to these related and connected parties are disclosed in Note 7. During the financial year,
the Company received services to the value of USD 158,954 (2021: USD 122,198) from Wilmington Trust SP Services (Dublin) Limited (“WTD”) in
line with the Corporate Services Agreement dated 16 March 2020 of which €Nil was outstanding at year end. Claudio Borza is a Director of the
Company and is also Directors of WTD. Cliona O’Faolain was a director of the Company and WTD up to her resignation. Eileen Starrs is a director of
the Company and an employee of WTD. The Director’s fees are included as part of the above purchased services, and consideration paid to WTD that
can be said to relate to the provision of director services amounted to USD 2,000 (2021: USD 2,000).
All of the ordinary shares of the Company are held by Wilmington Trust SP Services (Dublin) Limited as share trustee on trust for charitable purposes
to the value of EUR 25,000.
Legal Ownership of the Company
The principle shareholders Wilmington Trust SP Services (Dublin) Limited hold 25,000 shares in trust of the Company as at 30 September 2022 (2021:
25,000). The shares are held under the terms of the declarations of trust dated 20 July 2018 under which the relevant share trustee holds the issued
shares of the Company on trust for charitable purposes. The profit of the Company is retained until the Company winds up its operation whereby any
excess profit will be distributed to its shareholders.
The Board of Directors are responsible for the day-to-day management of the Company. As of the year ended 30 September 2022, the Board is composed
of two Directors, whom are employees of the corporate services provider.
Connected Parties
Connected parties are those parties with significant agreements with the service providers which we have listed below.
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 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
Series 1
Xtrackers IE Physical Platinum ETC Securities
0.38
Series 2
Xtrackers IE Physical Gold ETC Securities
0.12*
Series 3
Xtrackers IE Physical Silver ETC Securities
0.20
Series 4
Xtrackers IE Physical Silver EUR Hedged ETC Securities
0.73
Series 5
Xtrackers IE Physical Gold EUR Hedged ETC Securities
0.28
Series 6
Xtrackers IE Physical Gold GBP Hedged ETC Securities
0.28
Series 7
Xtrackers IE Physical Platinum EUR Hedged ETC Securities
0.73
*As of 3 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 the Director's Report.
During the financial period DWS International GmbH was the holder of a Profit Participating Note in principal amount of EUR 100 issued by the
Company. The Note was issued for the period from 30 September 2019 to 30 September 2021 and reissued with a Note Issuing and Purchase Agreement
dated 1 October 2021 between the Company and DWS International GmbH for an additional period from 30 September 2021 to 30 September 2022.
Pursuant to the Profit Participating Note where the product fee received by the Company during the financial period was in excess of the fees and expenses
of the Company (in effect a “gain” for the Company) such excess was payable to DWS International GmbH in the form of an interest payment.
With effect from 1 August 2022, the Company amended the existing Programme Administrator Agreement with DWS International to provide DWS
International GmbH as Programme Administrator receives 100% of the Product fee for each series issued. In return DWS International GmbH pays
designated list of Programme expenses as set out in the amended Programme Administrator Agreement, even where the aggregate of such expenses
exceeds the Product Fee due to DWS International GmbH. As a result of these changes the Disbursement Agreement was terminated as of 1 August 2022
and the Profit Participating Note was left to expire until its maturity at 30 September 2022 and the Note Issuing and Purchase Agreement was not renewed
on its expiry on 30 September 2022.
The residual amount under the PPN agreement to the Programme Administrator is USD 1,102,459 (2021: USD 1,176,752) of which USD 1,102,459 is
payable at year-end (2021 payable: USD 1,176,752).
Notes to the financial statements (continued)
For the year ended 30 September 2022
Xtrackers ETC Public Limited Company Page 42
1
7
.
Related Party Transactions and Connected Parties (continued)
C
onnected Parties (continued)
Product fee (continued)
F
rom 1 August 2022, the Company pays the total product fee to the Programme Administrator in return for which the Programme Administrator pays a
designated list of Programme expenses under the amended Programme Administrator Agreement as well as its own costs of providing its service as
Programme Administrator. At year end the total product fee under the amended Programme Administrator Agreement is USD 1,180,302 of which USD
1,180,302 is payable to the Programme Administrator at year end.
A
dditionally, the Company was charged by the Programme Administrator for its services an expense (included in Note 7 as an other expense) of USD
1,707,308 (2021: USD 887,027) of which USD Nil is payable at year-end (2021 payable: USD 887,027).
2021
E
xchange Offer
D
B ETC PLC (the “Jersey Issuer”) had established a Secured DB ETC Precious Metal Linked Securities Programme under which it was issued different
series of ETC securities similar to those issued by the Company (the “DB ETC Securities”). The Company made an offer to the holders of the DB ETC
Securities (the “Existing Securityholders”) to exchange those DB ETC Securities for new securities in a corresponding Series of ETC Securities issued by
the Company (the “Exchange Offers”).
T
he purpose of the Exchange Offers was for the Company to increase the number of New Xtrackers ETC Securities. The Exchange Offers provided th
e
C
ompany with an opportunity to increase the number of New Xtrackers ETC Securities issued by it whilst simultaneously providing the Existing
Securityholders with the opportunity to exchange their holdings of the DB ETC Securities for certain of the New Xtrackers ETC Securities.
The Jersey Issuer transferred the relevant precious metal backing the DB ETC Securities to the Exchange Offer Account Custodian for the account of the
Company and the Company 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 Jersey Issuer.
The Exchange Offers expired on 23 April 2021 and on 26 April 2021 the Company announced 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. As a
result of Exchange offer the Company received 5,363,763.09 troy ounces of Precious Metals with a fair value of USD 1,325,447,190. In return the Company
issued 45,833,276 ETC Securities with a total fair value of USD 1,325,442,509.
If the application of the relevant Exchange Ratio resulted in a number of New Xtrackers ETC Securities which was not a whole number, there were no
fractional units of New Xtrackers ETC Securities delivered to an Existing Securityholder. Instead, the Metal Agent sold the Metal represented by th
e
a
ggregated fractional units within a specified period and discharged its obligations to the holders in respect of such fractional units by paying out a cash
amount from liquidating aggregate fractional units to third party buyers. The price of the Metal sold was dependent on market conditions. Fractional cash
transaction back to new ETC holders amounted to USD 4,682.
1
8. Charges
T
he ETC Securities issued by the Company are secured in favor of the Trustee for the benefit of the ETC Security holders by security over the portfolio of
Precious metals held by the Company and other assets not attributable to the equity holders.
1
9. Subsequent events
G
old price which is the main collateral (96.39%) of the Company's ETC Securities touched $1,671.75 per ounce as at 30 September 2022 and continue
d
s
teady growth reaching $1,920.70 as at 18 January 2023 whilst Silver reached $19.02 per ounce as at 30 September 2022 and changed to $24.185 as at 18
January 2023. Platinum presented a similar trend with $864 per ounce as at 30 September 2022 and high of $1,068 per ounce as at 18 January 2023.
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.
2
0. Approval of financial statements
T
he financial statements were approved and authorised for issue by the Board of Directors 23 January 2023.