Xtrackers ETC Public Limited Company
Directors’ Report and Audited Financial Statements
For the year ended 30 September 2021
Registered number: 627079
Xtrackers ETC Public Limited Company
Contents
Page (s)
Directors and other information 1
Directors' report 2 - 11
Statement of Directors' responsibilities 12
Independent auditor's report 13 - 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 - 45
Page 1
Xtrackers ETC Public Limited Company
DIRECTORS AND OTHER INFORMATION
Directors
Authorised Partici
p
ants
Claudio Borza
HSBC France Dublin Branch
Cliona O’Faolain
1 Grand Canal Harbour
Dublin 2, Ireland
Company Secretary
Wilmington Trust SP Services (Dublin) Limited
Susquehanna International Securities Limited
Fourth Floor
6th Floor Pinnacle 2 East
p
oint Business Park
3 Geor
g
e’s Dock
Dublin, Ireland
IFSC, Dublin 1, Ireland
Flow Traders B. V.
Re
g
istered Office
Jacob Bontius
p
laats 9
Fourth Floor
1018 LL Amsterdam, The Netherlands
3 George’s Dock
IFSC
Deutsche Bank AG
Dublin 1, Ireland
Mainzer Landstr 11-17
60329 Frankfurt, Germany
Inde
p
endent Auditors
KPMG
Morgan Stanley & Co. International plc
1 Harbormaster Place, IFSC
20 Bank Street,
Dublin 1, Ireland
London E14 4AD, United Kin
g
dom
Corporate Administrator
Citigroup Global Markets Limited
Wilmin
g
ton Trust SP Services
(
Dublin
)
Limited
Citi
g
rou
p
Centre, Canada S
q
uare
Fourth Floor
Canar
y
Wharf
3 Geor
g
e’s Dock
London E14 5LB, United Kin
g
dom
IFSC
Dublin 1, Ireland
O
p
tiver VOF
Strawinsk
y
laan 3095
Programme Administrator
1077 ZX Amsterdam,
DWS International GmbH
The Netherlands
4th Floor Meinzer Landstrasse 11-17,
60329 Frankfurt am Main
Determination and Issuin
g
A
g
ent
German
y
State Street Fund Service
(
Ireland
)
Limited
78 Sir John Ro
g
erson’s Qua
y
,
Secured Account Custodian, Subscription Account Custodian,
Dublin 2, Ireland
Fee Account Custodian and Metal A
g
ent
JP Mor
g
an Chase Bank, N.A.
(
“JPMor
g
an”
)
, London Branch
Trustee
25 Bank Street, Canar
y
Wharf, London E14 5JP
Wilmin
g
ton Trust SP Services
(
Dublin
)
Limited
United Kingdom
Fourth Floor, 3 George’s Dock IFSC
Dublin 1, Ireland
Authorised Participants
Series Counter
p
art
y
Jane Street Financial Limited
J. P. Mor
g
an AG
30
th
Floor, 20 Fenchurch Street
Taunus Turm, Taunustor 1,
London EC3M 3BY
60310 Frankfurt am Main,
United Kin
g
dom
German
y
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 2021.
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/or
sub-custodians) 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'') and any sub-custodian (the ''Sub-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
From 11 March 2020, the World Health Organization officially declared COVID-19, the disease caused by novel coronavirus, a pandemic. The Directors
have assessed the impact of market conditions arising from the outbreak on the Company’s ability to meet its investment objective. Based on the latest available
information, the Company continues to be managed in line with its investment objective, with no disruption to the operation of the Company and the publication
of the net asset values. The impact of COVID-19 during the financial period did not have a material impact on the series.
On 07 October 2020, the Company informed Securityholders of certain changes to the FX Hedging Fee Percentage and the Product Fee wording contained in
the Terms and Conductions of the Base Prospectus to require a 30 days' notice only when the Base Fee Percentage and/or the FX Hedging Fee Percentage
increases.
On 30 November 2020, the Company informed Securityholders of Series 3 Xtrackers IE Physical Silver ETC Securities, that the Product Fee Percentage of
the Series was reduced from 38 bps to 20 bps as of 02 December 2020. As a result, the Base Fee Percentage changed from 38 bps to 20 bps.
Page 3
Xtrackers ETC Public Limited Company
Directors' report (continued)
Significant Events during the financial year (continued)
On 26 February 2021, the Company informed Securityholders of the below Series that the FX Bid-Offer Spread was adjusted as follows, with effect from 29
March 2021: Increase in Product Fee percentage increased revenue and expenses, similarly decrease in Product Fee percentage reduce the revenue and
expenses of the Company.
Series
Old FX Bid-Offer Spread
Ad
j
ustment
New FX Bid-Offer Spread
Ad
j
ustment
Series 4 Xtrackers IE Physical Silver EUR Hedged ETC 12 15
Series 5 Xtrackers IE Physical Gold EUR Hedged ETC 12 15
Series 6 Xtrackers IE Physical Gold GBP Hedged ETC 12 18
Series 7 Xtrackers IE Physical Platinum EUR Hedged ETC 12 15
On 22 March 2021, the Company informed Securityholders of the below Series of the following fee changes, with effect from 24 March 2021:
Series
Base Fee
Percentage*
Old FX Hedging
Fee Percentage
Old
Product Fee
Percenta
g
e
Base Fee
Percentage*
New FX Hedging
Fee Percentage
New Product Fee
Percentage
Series 5 Xtrackers
IE Physical Gold
EUR Hed
ed ETC
15 bps 28 bps 43 bps 15 bps 18 bps 33 bps
Series 6 Xtrackers
IE Physical Gold
GBP Hed
ed ETC
15 bps 28 bps 43 bps 15 bps 18 bps 33 bps
*For the avoidance of doubt, the Base Fee Percentage of each Series remained unchanged.
On 24 August 2021, the Company informed Securityholders of the below Series of the following fee changes, with effect from 01 September 2021:
Series
Base Fee
Percentage*
Old FX Hedging
Fee Percentage
Old
Product Fee
Percenta
g
e
Base Fee
Percentage*
New FX Hedging
Fee Percentage
New Product Fee
Percentage
Series 5 Xtrackers
IE Physical Gold
EUR Hed
g
ed ETC
15 bps 18 bps 33 bps 15 bps 13 bps 28 bps
Series 6 Xtrackers
IE Physical Gold
GBP Hed
g
ed ETC
15 bps 18 bps 33 bps 15 bps 13 bps 28 bps
*For the avoidance of doubt, the Base Fee Percentage of each Series remained unchanged.
The overall Product Fees decreased on certain Series making the Company more market competitive.
Exchange Offer
On 16 March 2020, the Company established a Secured Xtrackers ETC Precious Metal Linked Securities Programme (the “Programme”). DWS International
GmbH acts as the Programme Administrator in respect of the Programme (the “Programme Administrator”).
The Secured Xtrackers ETC Precious Metal Linked Securities Programme (the “Programme”) was updated on 11 March 2021.
DB 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”).
The purpose of the Exchange Offers was for the Company to increase the number of new Xtrackers ETC Securities. The Exchange Offers provided the
Company 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 details of which series of DB ETC Securities corresponded with each Series issued by the Company were contained in the EU Exchange Offer
Memorandum and the UK Exchange Offer Memorandum. At the time of the Exchange Offers, the value of the DB ETC Securities and the ETC Securities
were not exactly equal. As a result, an Exchange Ratio was calculated by the Programme Administrator for each series to determine the correct number of
ETC Securities to be delivered to the Existing Securityholders.
The Exchange Offers expired on 23 April 2021 and on 26 April 2021 the 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.
Page 4
Xtrackers ETC Public Limited Company
Directors' report (continued)
Significant Events during the financial year (continued)
Exchange Offer (continued)
The Exchange Ratio for each series of Existing DB ETC Securities is shown in the table below:
DB ETC plc ETC Securities
Series
New Xtrackers ETC Securities
Series
Settlement
Date
Total
number of
DB ETC plc
ETC
securities
surrendered
pursuing to
the
exchange
offer
Exchange
Ratio as
on 27-
Apr-21
Metal
Entitlement
per DB ETC
plc ETC
Security as at
the
Subscription
Trade Date
Metal
Entitlement
per New
Xtrackers
ETC
Security as
at the
Subscription
Trade Date
Total
number of
New
Xtrackers
ETC
Securities
to be
issued
pursuant
to the
Exchange
Offers
Series 5 Xtrackers Physical
Platinum (ISIN:
GB00B57GJC05
)
Series 1 Xtrackers IE Physical
Platinum (ISIN:
DE000A2T0VT7
)
27/04/2021 22,138 3.823 0.095194279 0.0249007 84,629
Series 1 Xtrackers Physical
Gold
(
ISIN: GB00B5840F36
)
Series 2 Xtrackers IE Physical
Gold
(
ISIN: DE000A2T0VU5
)
27/04/2021 2,504,172 6.269 0.09700686 0.0154741 15,698,568
Series 9 Xtrackers Physical
Gold (EUR) (ISIN:
DE000A1E0HR8
)
Series 2 Xtrackers IE Physical
Gold (ISIN: DE000A2T0VU5)
27/04/2021 2,244,351 6.273 0.097063942 0.0154741 14,078,048
Series 3 Xtrackers Physical
Silver
(
ISIN: GB00B57Y9462
)
Series 3 Xtrackers IE Physical
Silver
(
ISIN: DE000A2T0VS9
)
27/04/2021 53,516 6.596 9.534960321 1.4454943 353,000
Series 10 Xtrackers Physical
Silver (EUR) (ISIN:
DE000A1E0HS6
)
Series 3 Xtrackers IE Physical
Silver (ISIN: DE000A2T0VS9)
27/04/2021 325,108 6.602 9.543665042 1.4454943 2,146,463
Series 4 Xtrackers Physical
Silver EUR Hedged (ISIN:
DE000A1EK0J7
)
Series 4 Xtrackers IE Physical
Silver EUR Hedged (ISIN:
DE000A2UDH55
)
27/04/2021 144,370 4.717 7.403944494 1.5697367 680,933
Series 2 Xtrackers Physical
Gold EUR Hedged (ISIN:
DE000A1EK0G3
)
Series 5 Xtrackers IE Physical
Gold EUR Hedged (ISIN:
DE000A2T5DZ1
)
27/04/2021 2,634,101 4.655 0.07846656 0.0168566 12,261,583
Series 13 Xtrackers Physical
Gold GBP Hedged (ISIN:
GB00B68FL050
)
Series 6 Xtrackers IE Physical
Gold GBP Hedged (ISIN:
DE000A2UDH48
)
27/04/2021 435,700 0.437 0.007532656 0.0172426 190,326
Series 6 Xtrackers Physical
Platinum EUR Hedged (ISIN:
DE000A1EK0H1
)
Series 7 Xtrackers IE Physical
Platinum EUR Hedged (ISIN:
DE000A2UDH63
)
27/04/2021 123,362 2.754 0.073559309 0.0267099 339,726
45,833,276
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 the aggregated 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.
Details of fractional metal sale are presented below:
Series Description
Settlement
date
Fractional
metal in
ounces
Price of
Metal in
currency
Value of
fractional
metal in
currenc
y
Exchange
rate on the
settlement
date
Value of
fractional
metal in USD
Series 1 Xtrackers IE Physical Platinum
10/05/2021
(0.09) 1,240 (110) 1.0000 (110)
Series 2 Xtrackers IE Physical Gold
10/05/2021
(0.77) 1,794 (1,372) 1.0000 (1,373)
Series 3 Xtrackers IE Physical Silver
10/05/2021
(35.39) 27 (947) 1.0000 (947)
Series 4 Xtrackers IE Physical Silver EUR Hedged
10/05/2021
(21.97) 22 (488) 1.2060 (589)
Series 5 Xtrackers IE Physical Gold EUR Hedged
10/05/2021
(0.41) 1,490 (617) 1.2060 (744)
Series 6 Xtrackers IE Physical Gold GBP Hedged
10/05/2021
(0.26) 1,290 (339) 1.3909 (472)
Series 7 Xtrackers IE Physical Platinum EUR Hedged
10/05/2021
(0.36) 1,030 (371) 1.2060 (447)
(59.25) (4,682)
The details of the Exchange Offers were made available to the Existing Securityholders by way of announcements released by the Company additionally the Company
made an announcement on behalf of the Jersey Issuer in respect of certain DB ETC Securities listed on Euronext Dublin.
Page 5
Xtrackers ETC Public Limited Company
Directors' report (continued)
Significant Events during the financial year (continued)
Exchange Offer (continued)
The details of new Xtrackers ETC Securities issued pursuant to the Exchange Offer:
Series
New Xtrackers ETC Securities
Series
Settlement Date
Number of New
Xtrackers ETC
Securities to be
issued pursuant to
the Exchange Offers
ETC FV in USD
Series 1
Xtrackers IE Physical Platinum
(
ISIN: DE000A2T0VT7
)
27/04/2021 84,629 2,591,896
Series 2
Xtrackers IE Physical Gold (ISIN:
DE000A2T0VU5
)
27/04/2021 15,698,568 430,783,264
Series 2
Xtrackers IE Physical Gold (ISIN:
DE000A2T0VU5
)
27/04/2021 14,078,048 386,315,922
Series 3
Xtrackers IE Physical Silver (ISIN:
DE000A2T0VS9
)
27/04/2021 353,000 13,321,928
Series 3
Xtrackers IE Physical Silver (ISIN:
DE000A2T0VS9
)
27/04/2021 2,146,463 81,011,495
Series 4
Xtrackers IE Physical Silver EUR
Hed
g
ed
(
ISIN: DE000A2UDH55
)
27/04/2021 680,933 27,908,012
Series 5
Xtrackers IE Physical Gold EUR
Hed
g
ed
(
ISIN: DE000A2T5DZ1
)
27/04/2021 12,261,583 366,530,182
Series 6
Xtrackers IE Physical Gold GBP
Hed
g
ed
(
ISIN: DE000A2UDH48
)
27/04/2021 190,326 5,819,159
Series 7
Xtrackers IE Physical Platinum
EUR Hedged (ISIN:
DE000A2UDH63
)
27/04/2021 339,726 11,160,651
Total 45,833,276 1,325,442,509
Details of Metal received pursuant to the Exchange Offer:
Series
New Xtrackers ETC Securities
Series
Settlement Date
Amount of Metal
received in ounces
FV of Metal Received in
USD
Series 1
Xtrackers IE Physical Platinum
(
ISIN: DE000A2T0VT7
)
27/04/2021 2,107.32 2,592,006
Series 2
Xtrackers IE Physical Gold (ISIN:
DE000A2T0VU5
)
27/04/2021 242,921.38 430,784,636
Series 2
Xtrackers IE Physical Gold (ISIN:
DE000A2T0VU5
)
27/04/2021 217,845.28 386,315,922
Series 3
Xtrackers IE Physical Silver (ISIN:
DE000A2T0VS9
)
27/04/2021 510,259.47 13,322,875
Series 3
Xtrackers IE Physical Silver (ISIN:
DE000A2T0VS9
)
27/04/2021 3,102,699.93 81,011,495
Series 4
Xtrackers IE Physical Silver EUR
Hed
g
ed
(
ISIN: DE000A2UDH55
)
27/04/2021 1,068,885.50 27,908,600
Series 5
Xtrackers IE Physical Gold EUR
Hed
g
ed
(
ISIN: DE000A2T5DZ1
)
27/04/2021 206,688.43 366,530,926
Series 6
Xtrackers IE Physical Gold GBP
Hed
g
ed
(
ISIN: DE000A2UDH48
)
27/04/2021 3,281.72 5,819,631
Series 7
Xtrackers IE Physical Platinum EUR
Hed
g
ed
(
ISIN: DE000A2UDH63
)
27/04/2021 9,074.06 11,161,099
Total 5,363,763.09 1,325,447,190
The Exchange Offers made to Existing Securityholders in various jurisdictions were subject to various regulatory requirements. For Existing Securityholders
based in certain EU jurisdictions, an Exchange Offer Memorandum was submitted to the Central Bank of Ireland (the “Central Bank”) for approval (the “EU
Exchange Offer Memorandum”) and passported to the relevant jurisdictions.
Page 6
Xtrackers ETC Public Limited Company
Directors' report (continued)
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 Se
p
tember 2021
Ordinary Shares of €1 each
30 Se
p
tember 2021
Claudio Borza - -
Cliona O’Faolain - -
Wilmin
g
ton 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 2021 and 30 September 2020. 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
Descri
p
tion
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.
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 agreed fees of service providers
of the Company. The Product fee is the rate set out below for each Series as of 30 September 2021 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 Ph
y
sical Platinum ETC Securities 0.38
Series 2
Xtrackers IE Ph
y
sical Gold ETC Securities 0.15
Series 3
Xtrackers IE Ph
y
sical Silver ETC Securities 0.20*
Series 4
Xtrackers IE Ph
y
sical Silver EUR Hed
g
ed ETC Securities
0.73
Series 5
Xtrackers IE Ph
y
sical Gold EUR Hed
g
ed ETC Securities
0.28**
Series 6
Xtrackers IE Ph
y
sical Gold GBP Hed
g
ed ETC Securities
0.28**
Series 7
Xtrackers IE Ph
y
sical Platinum EUR Hed
g
ed ETC Securities
0.73
* As of 2 December 2020, the Product Fee Percentage of this Series was reduced from 38 bps to 20 bps. Please see the Significant events section of this report.
** As of 24 March 2021, the Product Fee Percentages of these Series were reduced from 43 bps to 33 bps.
Further to this change, as of 1 September 2021 the
Product Fee Percentages of these Series were reduced from 33 bps to 28 bps. Please see the Significant events section of this report.
Where the fees of other service providers of the Company exceed the product fee accrued, DWS International GmbH will pay excess of such fees in accordance
with the relevant Disbursement Agreement, where operating expenses of the Company are below product fee charged to ETC Security holders, the excess is
payable to DWS under the same disbursement agreement which is consistent with Note 7. Disclosures in respect of Disbursement Agreement are made in notes
3 and 17 of the financial statements.
Page 7
Xtrackers ETC Public Limited Company
Directors' report (continued)
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.
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 3,811 (2020: USD Nil);
the net fair value loss on Precious metals at fair value and Precious metals due from Series Counterparty amounted
to USD 233,296,438 (2020: gain of
USD
11,960,29
), for details please refer to note 4;
the net fair value gain on ETC securities at fair value amounted to USD 233,296,438 (2020: loss of USD
11,960,291
), for details of prices of metal
please refer to note 11;
there were new subscriptions in the following Series of ETC Securities (including subscriptions from the exchange offer):
Series Description
Issuances in USD*
30-Sep-21
Issuances in USD*
30-Sep-20
1
Xtrackers IE Physical Platinum ETC Securities
19,007,796 25,016,892
2
Xtrackers IE Physical Gold ETC Securities
2,162,622,588 184,344,231
3
Xtrackers IE Physical Silver ETC Securities
284,863,531 3,346,878
4
Xtrackers IE Physical Silver EUR Hedged ETC Securities
191,977,644 5,295,784
5
Xtrackers IE Physical Gold EUR Hedged ETC Securities
914,170,221 118,758,943
6
Xtrackers IE Physical Gold GBP Hedged ETC Securities
91,582,487 103,974,080
7
Xtrackers IE Physical Platinum EUR Hedged ETC Securities
29,084,373 286,000
the following Series of ETC Securities were partially redeemed:
Series Description
Redemption in USD*
30-Sep-21
Redemption in USD*
30-Sep-20
1 Xtrackers IE Physical Platinum ETC Securities (793,695) (23,632,316)
2 Xtrackers IE Physical Gold ETC Securities (275,685,315) (4,314,357)
3 Xtrackers IE Physical Silver ETC Securities (76,549,474) (2,532,016)
4 Xtrackers IE Physical Silver EUR Hedged ETC Securities (6,323,235) (886,377)
5 Xtrackers IE Physical Gold EUR Hedged ETC Securities (152,746,535) -
6
Xtrackers IE Physical Gold GBP Hedged ETC Securities
(3,799,197) -
7
Xtrackers IE Physical Platinum EUR Hedged ETC Securities
(119,142)
*The timing of issuances/redemptions will impact the gains/losses of the relevant Series.
As at 30 September 2021:
the Company’s total ETC Securities issued had a fair value of USD
3,365,613,642
(2020: USD
421,618,033
);
the Company has invested in Precious metals with a fair value of USD
3,405,169,768
(2020: USD
389,471,120);
Precious metals with a value of USD 349,373 (2020: USD 9,001) was due to the Company from the Series Counterparty and Precious metals with a
value of USD 5,231,029 (2020: USD 291,204) was due from the Company to the Series Counterparty, Amounts receivable on Precious metals awaiting
settlement amounted to USD Nil (2020: USD 428,188) and Amounts payable on Precious metals waiting settlement amounted to USD 4,617,295 (USD:
Nil) under the terms of the Balancing Agreement;
the net assets were USD 31,034 (2020: USD 27,223); 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 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 27.6421 145,734,767 Silver
5 Xtrackers IE Physical Gold EUR Hedged
ETC Securities*
21-May-80 EUR 28,866,083 24.1522 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.
Xtrackers ETC Public Limited Company Page 8
Key performance indicators (continued)
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 metal
s
held
1 Xtrackers IE Physical Platinum ETC Securities 17-Apr-80 USD 78,000 22.0606 1,720,729 Platinum
2 Xtrackers IE Physical Gold ETC Securities 23-Apr-80 USD 6,231,000 29.2234 182,091,101 Gold
3 Xtrackers IE Physical Silver ETC Securities 30-Apr-80 USD 25,000 34.3446 858,616 Silver
4 Xtrackers IE Physical Silver EUR Hedged ETC
Securities*
15-Apr-80 EUR 120,000 31.3067 4,399,772 Silver
5 Xtrackers IE Physical Gold EUR Hedged ETC
Securities*
21-May-80 EUR 3,930,000 26.6781 122,638,553 Gold
6 Xtrackers IE Physical Gold GBP Hedged ETC
Securities**
23-May-80 GBP 3,605,000 23.6426 109,588,661 Gold
7 Xtrackers IE Physical Platinum EUR Hedged ETC
Securities*
29-May-80 EUR 13,750 19.9103 320,601 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.
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, particularly with its impact on the Programme Administrator, its assets under management, and therefore its related revenue
streams, in respect of fulfilling the obligations under the Programme Administrator Agreement. The continuance of COVID-19 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.
The UK left the European Union ("EU") at 23:00 GMT on 31 January 2020 and the 11-month transition period ended on the 31 December 2020. The
decision to leave the EU created economic and other uncertainties about both the process and its consequences which represent risks that may have
affected investors abilities. Although there is no evidence at present that Brexit has adversely affected the Company’s activities, the uncertainty in relation
to the impact on the UK and EU economies remains and therefore the Directors are closely monitoring the Company’s operations.
Post the financial year end, as at 28 January 2022, the prices of the precious metals have remained stable. 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.
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.
Xtrackers ETC Public Limited Company Page 9
Directors' report (continued)
Risks and Uncertainties (continued)
Operational risk (continued)
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 France Dublin Branch, 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"), Sub-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 (2021: S&P A+) (2020: 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.
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.
Results and dividends for the year
The results for the year are set out on page 17. The Directors do not recommend the payment of a dividend for the year ended 30 September 2021 (2020:
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.
Xtrackers ETC Public Limited Company Page 10
Directors' report (continued)
Corporate Governance Statement (continued)
General Principles (continued)
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.
Remuneration
Details of remuneration paid to the Directors are set out in Note 17.
Changes in Directors, Secretary and registered office
There has been no change in Directors, 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 (89.29%) of the Company's ETC Securities touched $1,743 per ounce as at 30 September 20
21 and recovered
reaching $1,830.30 as at 26 January 2022 whilst Silver reached $21.53 per ounce as at 30 September 2021 and changed slightly touching $23.79 per
ounce as at 26 January 2022. Platinum presented a similar trend with $963 per ounce as at 30 September 2021 and high of $1,052 per ounce as at 26
January 2022.
Xtrackers ETC Public Limited Company Page 11
Director’s Report (continued)
Significant events since the financial year end (continued)
On 11 March 2020, the World Health Organization officially declared COVID-19, the disease caused by novel coronavirus, a pandemic. The Directors
have assessed the impact of market conditions arising from the outbreak on the Company's ability to meet its investment objective. Based on the latest
available information, the Company continues to be managed in line with its investment objective, with no disruption to the operation of the Company
and the publication of the net asset values.
New Interest Limitation Rules (ILR) were enacted in December 2021. These rules will limit the net borrowing cost deductions of Irish companies in
certain circumstances. ILR will apply for the next financial year of the Company (1 October 2022 to 30 September 2023). Based on the advice of
external legal counsel, the Company believes that it can avail of relieving measures which should eliminate or neutralise any material effect arising
from ILR. Therefore, the Directors have considered that the ILR rules will have a limited impact on the Company.
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.
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
_____________________________ _____________________________
Cliona O’Faolain Claudio Borza
Director Director
Date: 28 January 2022
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Xtrackers ETC Public Limited Company Page 12
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
_____________________________ _____________________________
Cliona O’Faolain Claudio Borza
Director Director
Date: 28 January 2022
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laudio Borza
Xtrackers ETC Public Limited Company
Page 13
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 2021 set out on
pages 17 to 45, which comprise the Statement of comprehensive income, Statement of financial pos
ition, 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 2021 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 audit committee.
We were appointed as auditor by the directors on 4 June 2020. The period of total uninterrupted engagement for the EU Public
Interest Entity is 2 years ended 30 September 2021. 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.
O
ur 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
plans. 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 management fees and expenses
as they fall due.
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.
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
I
n arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows:
Xtrackers ETC Public Limited Company Page 14
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC (continued)
Key audit matters: our assessment of risks of material misstatement (continued)
Accuracy of precious metals at fair value through profit or loss $3,405,169,768 (2020: $389,471,120)
Refer to note 3 (accounting policy) 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
99.8% 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 observable quoted prices
on actively traded markets, due to their significance in the
context of th
e 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 resources 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 $3,405,169,768 (2020: $389,471,120)
Refer to note 3 (accounting policy) 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, 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 materiall
y
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 $34.1million (2020: $4.2 Million). 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 2021,
which we consider to be one of the principal considerations for members of the Company in assessing the financial performance of
the Company. 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.
Xtrackers ETC Public Limited Company Page 15
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC (continued)
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; and
in our opinion, the directors’ report has been prepared in accordance with the Companies Act 2014.
Corporate governance disclosures
As required by the Companies Act 2014, we report, in relation to information given in the Corporate Governance Statement on page
9, 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 Companies Act 2014;
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 Companies Act 2014 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
Directors’ responsibilities
As explained more fully in their statement set out on page 12, the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going
concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of
assurance but does not guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material
misstatement when it exists. Misstatements can arise from fraud, other irregularities or error and are considered material if, individually
or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial
statements. The risk of not detecting a material misstatement resulting from fraud or other irregularities is higher than for one resulting
from error, as they may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control and
may involve any area of law and regulation and not just those directly affecting the financial statements.
Xtrackers ETC Public Limited Company Page 16
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC (continued)
Respective responsibilities and restrictions on use (continued)
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: 28 January 2022
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Harbourmaster Place
IFSC
Dublin 1
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Statement of com
p
rehensive income
Xtrackers ETC Public Limited Company Page 17
For the year ended 30 September 2021
Year ended Year ended
30-Sep-21 30-Sep-20
Notes USD USD
Revenue 6 4,268,406 761,508
Net fair value (loss)/gain on Precious metals at fair value and Precious metals due
from Series Counter
p
art
y
4 (233,296,438) 11,960,291
Net fair value gain/(loss) on ETC Securities at fair value 5 233,296,438 (11,960,291)
Operating expenses 7 (4,263,324) (761,508)
Operating profit before taxation
5,082 -
Taxation 9 (1,271) -
Profit and total com
p
rehensive income for the
y
ear
3,811 -
Xtrackers ETC Public Limited Company Page 18
Statement of financial position
As at 30 September 2021
30-Sep-21 30-Sep-20
Notes USD USD
Assets
Cash and cash equivalents 10 2,225,034 165,852
Precious metals at fair value 3e,11 3,405,169,768 389,471,120
Precious metals due from Series Counterparty 3f,11 349,373 9,001
Amounts receivable on Precious metals awaiting settlement 3e - 428,188
Amounts receivable on ETC Securities awaiting settlement 3g 2,452,787 32,000,928
Other receivables 23,782 12,570
Total assets
3,410,220,744 422,087,659
Liabilities and equity
ETC securities at fair value 3h,12 3,365,613,642 421,618,033
Precious metals due to Series Counterparty 3f,11 5,231,029 291,204
Amounts payable on Precious metals awaiting settlement 3e 4,617,295 -
Amounts payable on ETC Securities awaiting settlement 3g 32,505,280 -
Other payables
3h 2,222,464 151,199
Total liabilities 3,410,189,710 422,060,436
Equity
Share capital 13 27,223 27,223
Retained earnings 3,811 -
Total equity 31,034 27,223
Total liabilities and equity 3,410,220,744 422,087,659
The financial statements on pages 1 to 45 were approved by the Board and authorised for issue on 28 January 2022.
On behalf of the Board
_____________________________ _____________________________
Cliona O’Faolain Claudio Borza
Director Director
_____________________
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_
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_
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Cla
udi
o Borza
Statement of changes in equity
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 19
Note
Called up Share
Ca
p
ital
Retained
Earnin
g
s
Total Equity
USD USD USD
Balance as at 1
st
October 2019 27,223
- 27,223
Issued share capital 13
-
- -
Comprehensive income for the financial year -
- -
Balance as at 30 September 2020
27,223
- 27,223
Note
Called up Share
Ca
p
ital
Retained
Earnin
g
s
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
Statement of cash flows
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 20
Year ended
30-Se
p
t-21
Year ended
30-Se
p
t-20
USD USD
Notes
Cash flows from operating activities
Amount received from metal sold 4,273,088 207,684
Amount received from Programme Administrator - 541,254
Amount paid for operating expenses (2,209,224) (610,309)
Net cash inflows from operating activities 2,063,864 138,629
Cash flows from financing activities
Issuance of share capital 13 - 27,223
Fractional Metal sale (4,682) -
Net cash generated from financing activities (4,682) 27,223
Movement in cash and cash equivalents
2,059,182 165,852
Cash and cash equivalents at start of the year 165,852 -
Cash and cash equivalents at end of the year 10 2,225,034 165,852
Non-cash transactions during the year include:
USD
USD
Issuance of ETC Securities
3,693,308,640 441,022,808
Redemptions of ETC Securities (516,016,593) (31,365,066)
Additions of Precious metals 3,723,067,928 412,580,962
Disposals of Precious metals (514,067,949) (31,157,382)
Settlements of Precious metals due to/from Series Counterparty 39,650,900* (3,987,270)*
*Settlements of Precious metals due to/from Series Counterparty comprise of gross outflows amounting to USD206,448,148 (2020: USD23,956,175) and gross
inflows amounting to USD246,099,048 (2020: USD19,968,905).
Notes to the financial statement
For year ending 30 September
2021
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.
Exchange Offer
On 16 March 2020, the Company established a Secured Xtrackers ETC Precious Metal Linked Securities Programme (the “Programme”). DWS
International GmbH acts as the Programme Administrator in respect of the Programme (the “Programme Administrator”).
The Secured Xtrackers ETC Precious Metal Linked Securities Programme (the “Programme”) was updated on 11 March 2021.
DB 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”).
The purpose of the Exchange Offers was for the Company to increase the number of new Xtrackers ETC Securities. The Exchange Offers provided
the Company 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 details of which series of DB ETC Securities corresponded with each Series issued by the Company were contained in the EU Exchange
Offer Memorandum and the UK Exchange Offer Memorandum. At the time of the Exchange Offers, the value of the DB ETC Securities and the
ETC Securities were not exactly equal. As a result, an Exchange Ratio was calculated by the Programme Administrator for each series to determine
the correct number of DB ETC Plc’s Securityholders to be delivered to the Existing Securityholders.
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.
Notes to the financial statement
For year ending 30 September
2021
Xtrackers ETC Public Limited Company Page 22
1. General information (continued)
Exchange Offer (continued)
The Exchange Ratio for each series of Existing DB ETC Securities is shown in the table below:
DB ETC plc ETC Securities Series
New Xtrackers ETC
Securities Series
Settlement
Date
Total
number of
DB ETC plc
ETC
securities
surrendered
pursuing to
the
exchange
offer
Exchange
Ratio as
on
27-Apr-
21
Metal
Entitlement
per DB ETC
plc ETC
Security as
at the
Subscription
Trade Date
Metal
Entitlemen
t per New
Xtrackers
ETC
Security as
at the
Subscripti
on Trade
Date
Total
number of
New
Xtrackers
ETC
Securities
to be
issued
pursuant
to the
Exchange
Offers
Series 5 Xtrackers Physical Platinum
(ISIN: GB00B57GJC05)
Series 1 Xtrackers IE Physical
Platinum (ISIN:
DE000A2T0VT7
)
27/04/2021 22,138 3.823 0.095194279 0.0249007 84,629
Series 1 Xtrackers Physical Gold
(
ISIN: GB00B5840F36
)
Series 2 Xtrackers IE Physical
Gold
(
ISIN: DE000A2T0VU5
)
27/04/2021 2,504,172 6.269 0.09700686 0.0154741 15,698,568
Series 9 Xtrackers Physical Gold
(
EUR
)
(
ISIN: DE000A1E0HR8
)
Series 2 Xtrackers IE Physical
Gold
(
ISIN: DE000A2T0VU5
)
27/04/2021 2,244,351 6.273 0.097063942 0.0154741 14,078,048
Series 3 Xtrackers Physical Silver
(ISIN: GB00B57Y9462)
Series 3 Xtrackers IE Physical
Silver (ISIN:
DE000A2T0VS9
)
27/04/2021 53,516 6.596 9.534960321 1.4454943 353,000
Series 10 Xtrackers Physical Silver
(EUR) (ISIN: DE000A1E0HS6)
Series 3 Xtrackers IE Physical
Silver (ISIN:
DE000A2T0VS9
)
27/04/2021 325,108 6.602 9.543665042 1.4454943 2,146,463
Series 4 Xtrackers Physical Silver
EUR Hedged (ISIN:
DE000A1EK0J7
)
Series 4 Xtrackers IE Physical
Silver EUR Hedged (ISIN:
DE000A2UDH55
)
27/04/2021 144,370 4.717 7.403944494 1.5697367 680,933
Series 2 Xtrackers Physical Gold
EUR Hedged (ISIN:
DE000A1EK0G3
)
Series 5 Xtrackers IE Physical
Gold EUR Hedged (ISIN:
DE000A2T5DZ1
)
27/04/2021 2,634,101 4.655 0.07846656 0.0168566 12,261,583
Series 13 Xtrackers Physical Gold
GBP Hedged (ISIN:
GB00B68FL050
)
Series 6 Xtrackers IE Physical
Gold GBP Hedged (ISIN:
DE000A2UDH48
)
27/04/2021 435,700 0.437 0.007532656 0.0172426 190,326
Series 6 Xtrackers Physical Platinum
EUR Hedged (ISIN:
DE000A1EK0H1
)
Series 7 Xtrackers IE Physical
Platinum EUR Hedged (ISIN:
DE000A2UDH63
)
27/04/2021 123,362 2.754 0.073559309 0.0267099 339,726
45,833,276
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 the aggregated 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.
Details of fractional metal sale are presented below:
Series Description
Settlement
date
Fractional
metal in ounces
Price of
Metal in
currency
Value of
fractional
metal in
currency
Exchange
rate on the
settlement
date
Value of
fractional
metal in USD
Series 1 Xtrackers IE Physical Platinum
10/05/2021
(0.09) 1,240 (110) 1.0000 (110)
Series 2 Xtrackers IE Physical Gold
10/05/2021
(0.77) 1,794 (1,372) 1.0000 (1,373)
Series 3 Xtrackers IE Physical Silver
10/05/2021
(35.39) 27 (947) 1.0000 (947)
Series 4 Xtrackers IE Physical Silver EUR Hedged
10/05/2021
(21.97) 22 (488) 1.2060 (589)
Series 5 Xtrackers IE Physical Gold EUR Hedged
10/05/2021
(0.41) 1,490 (617) 1.2060 (744)
Series 6 Xtrackers IE Physical Gold GBP Hedged
10/05/2021
(0.26) 1,290 (339) 1.3909 (472)
Series 7
Xtrackers IE Physical Platinum EUR
Hedged
10/05/2021
(0.36) 1,030 (371) 1.2060 (447)
Total
(59.25) (4,682)
The details of the Exchange Offers were made available to the Existing Securityholders by way of announcements released by the Company additionally the Company
made an announcement on behalf of the Jersey Issuer in respect of certain DB ETC Securities listed on Euronext Dublin.
Notes to the financial statement
For year ending 30 September
2021
Xtrackers ETC Public Limited Company Page 23
1. General information (continued)
Exchange Offer (continued)
The details of new Xtrackers ETC Securities issued pursuant to the Exchange Offer:
Series
New Xtrackers ETC Securities
Series
Settlement Date
Number of New
Xtrackers ETC
Securities to be issued
pursuant to the
Exchange Offers
ETC FV in USD
Series 1
Xtrackers IE Physical Platinum
(ISIN: DE000A2T0VT7)
27/04/2021 84,629 2,591,896
Series 2
Xtrackers IE Physical Gold (ISIN:
DE000A2T0VU5)
27/04/2021 15,698,568 430,783,264
Series 2
Xtrackers IE Physical Gold (ISIN:
DE000A2T0VU5)
27/04/2021 14,078,048 386,315,922
Series 3
Xtrackers IE Physical Silver (ISIN:
DE000A2T0VS9)
27/04/2021 353,000 13,321,928
Series 3
Xtrackers IE Physical Silver (ISIN:
DE000A2T0VS9)
27/04/2021 2,146,463 81,011,495
Series 4
Xtrackers IE Physical Silver EUR
Hedged (ISIN: DE000A2UDH55)
27/04/2021 680,933 27,908,012
Series 5
Xtrackers IE Physical Gold EUR
Hedged (ISIN: DE000A2T5DZ1)
27/04/2021 12,261,583 366,530,182
Series 6
Xtrackers IE Physical Gold GBP
Hedged (ISIN: DE000A2UDH48)
27/04/2021 190,326 5,819,159
Series 7
Xtrackers IE Physical Platinum EUR
Hedged (ISIN: DE000A2UDH63)
27/04/2021 339,726 11,160,651
Total 45,833,276 1,325,442,509
Details of Metal received pursuant to the Exchange Offer:
Series
New Xtrackers ETC Securities
Series
Settlement Date
Amount of Metal
received in ounces
FV of Metal Received in
USD
Series 1
Xtrackers IE Physical Platinum (ISIN:
DE000A2T0VT7)
27/04/2021 2,107.32 2,592,006
Series 2
Xtrackers IE Physical Gold (ISIN:
DE000A2T0VU5)
27/04/2021 242,921.38 430,784,636
Series 2
Xtrackers IE Physical Gold (ISIN:
DE000A2T0VU5)
27/04/2021 217,845.28 386,315,922
Series 3
Xtrackers IE Physical Silver (ISIN:
DE000A2T0VS9)
27/04/2021 510,259.47 13,322,875
Series 3
Xtrackers IE Physical Silver (ISIN:
DE000A2T0VS9)
27/04/2021 3,102,699.93 81,011,495
Series 4
Xtrackers IE Physical Silver EUR
Hedged (ISIN: DE000A2UDH55)
27/04/2021 1,068,885.50 27,908,600
Series 5
Xtrackers IE Physical Gold EUR
Hedged (ISIN: DE000A2T5DZ1)
27/04/2021 206,688.43 366,530,926
Series 6
Xtrackers IE Physical Gold GBP
Hedged (ISIN: DE000A2UDH48)
27/04/2021 3,281.72 5,819,631
Series 7
Xtrackers IE Physical Platinum EUR
Hedged (ISIN: DE000A2UDH63)
27/04/2021 9,074.06 11,161,099
Total 5,363,763.09 1,325,447,190
The Exchange Offers made to Existing Securityholders in various jurisdictions were subject to various regulatory requirements. For Existing Securityholders
based in certain EU jurisdictions, an Exchange Offer Memorandum was submitted to the Central Bank of Ireland (the “Central Bank”) for approval (the
“EU Exchange Offer Memorandum”) and passported to the relevant jurisdictions.
Notes to the financial statement
For year ending 30 September
2021
Xtrackers ETC Public Limited Company Page 24
1. General information (continued)
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.
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.
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 25
2. Basis of preparation
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 September 2021; the comparative
information for the year ended 30 September 2020 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.
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 standards, amendments and interpretations to existing standards which are effective from 1 January 2020
Standards/interpretations
Effective date
Amendments to References to the Conceptual Framework in
IFRS Standards
1 January 2020
Amendments to IFRS 3: Definition of Business 1 January 2020
Amendments to IAS 1 and IAS 8: Definition of Material 1 January 2020
Amendments IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform 1 January 2020
None of the above standards, amendments and interpretations had a significant impact on the Company’s financial statements.
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 26
2. Basis of preparation (continued)
e. Accounting standards (continued)
New standards and amendments to standards which are not yet effective and have not been early adopted
Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
On August 27, 2020, the International Accounting Standards Board (IASB) published "Interest Rate Benchmark Reform - Phase 2 (Amendments
to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)" with amendments that address issues that might affect financial reporting after the reform of an
interest rate benchmark, including its replacement with alternative benchmark rates. Phase 1 dealt with pre-replacement issues, Phase 2 of the
project deals with replacement issues.
The amendments relate to the modification of financial assets and financial liabilities, specific hedge accounting requirements, and disclosure
requirements applying IFRS 7 to accompany the amendments regarding modifications and hedge accounting. The amendments are applied for
annual periods beginning on or after 1 January 2021 with earlier application permitted.
COVID-19-Related Rent Concessions (Amendment to IFRS 16)
In 2020, the International Accounting Standards Board (the Board) issued amendments to IFRS 16 Covid-19-Related Rent Concessions (the 2020
amendments) to simplify how lessees account for rent concessions.
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.
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.
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 27
3. Significant accounting policies (continued)
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 0.15% and 0.73% (2020: 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
In line with the Disbursement agreement between the Company and DWS International GmbH (“DWS” or the “Programme Administrator”),
to the extent that the Company does not have sufficient funds to make such payments, or where total expenses exceed product fee accrued,
DWS agrees 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 2021 was used to value the gold as this was the last fix price available from the London Bullion
Market Association for the year.
The silver is recorded at fair value using the last available price, nearest or at year-end, quoted by the London Bullion Market Association.
The fix on 30 September 2021 was used to value the silver as this was the last fix price available from the London Bullion Market Association
for the year.
The platinum is recorded at fair value using the last available price, nearest or at year-end, quoted by the London Platinum and Palladium
Market. The AM fix on 30 September 2021 was used to value the platinum as this was the last available fix price available from the London
Platinum and Palladium Market for the year.
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.
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.
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 28
3. Significant accounting policies (continued)
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 2021
Xtrackers ETC Public Limited Company Page 29
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.
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 30
4. Net fair value (loss)/gain on Precious Metals and Precious metals
due to/from the Series Counterparty
Year ended
30-Sept-21
Year ended
30-Sept-20
USD USD
Net fair value (loss)/gain on Precious metals (189,046,085) 8,255,224
Net fair value (loss)/gain on Precious metals due from Series Counterparty (44,250,353) 3,705,067
(233,296,438) 11,960,291
5. Net fair value gain/(loss) on ETC Securities
Year ended
30-Sept-21
Year ended
30-Sept-20
USD USD
Net fair value gain/(loss) on ETC Securities 233,296,438 (11,960,291)
233,296,438 (11,960,291)
6. Revenue
Revenue relates to:
Year ended
30-Sept-21
Year ended
30-Sept-20
USD USD
Revenue from contracts with customers – product fee 4,268,406 207,684
Corporate benefit - 553,824
4,268,406 761,508
7. Operating expenses
Year ended
30-Sept-21
Year ended
30-Sept-20
USD USD
Fees payable to the Programme Administrator
910,244 -
Other expenses
3,353,080 761,508
4,263,324 761,508
Each Series pays a product fee prepared by the Determination Agent, which accrues on a daily basis. Where the fees of other service providers of the
Company exceed the product fee accrued, DWS International GmbH (“DWS” or the “Programme Administrator”) will pay the excess of such fees in
accordance with the relevant disbursement agreement. Where operating expenses of the Company are below the product fee charged to ETC Security
holders, the excess is payable to DWS under same disbursement agreement. Refer to note 3 and 17 for more information. Refer to note 6 for amounts
earned through the Corporate Benefit and Product Fee.
8. Auditor’s remuneration
Fees for the statutory auditor, KPMG Ireland:
*Audit Fee (excluding VAT): EUR 87,500 (2020: EUR 50,000)
*Tax fee (excluding VAT): EUR 5,800 (2020: EUR 5,000)
30-Sep-21 30-Sep-20
USD USD
Audit fees
Statutory audit of financial statements 124,619* 72,004*
Other Non-Audit Services fees
Tax advisory services 8,260* 7,200*
132,879 79,204
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 31
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-21
Year ended
30-Sept-20
USD USD
Net result for the financial year before tax 5,082 -
Corporation tax rate 25% (1,271) -
Taxation charge (1,271) -
10. Cash and cash equivalents
30-Sep-21 30-Sep-20
USD USD
Cash at bank 2,225,034 165,852
2,225,034 165,852
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 Directors Report, Notes 1 and 17 of the Notes to the financial statements for
more details.
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-21 30-Sep-21
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)
Movement in Precious metals and Precious metals due to/from Series
Counterparty
30-Sep-21 30-Sep-21
USD USD
Precious Metal
Net Precious
metals
due to/from
Series
Counterparty
At beginning of the year
389,471,120 (282,203)
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 2021
Xtrackers ETC Public Limited Company Page 32
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 (3,987,270).
Movement in Metal in troy ounces for the year ended 30 September 2021
Opening
balance
Metal
Metal
Metal
Price of metal
Fair value
USD
Series Description 1-Oct-20
Troy
Ounces
Contributed
Troy Ounces
distributed
Troy Ounces
30- Sep -21
Troy Ounces
per ounce
30-Sep-21
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.
11.
P
recious 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-20 30-Sep-20
USD USD
Precious metals at fair value
389,471,120 -
Precious metals due from Series Counterparty
- 9,001
Precious metals due to Series Counterparty
- (291,204)
389,471,120 (282,203)
Movement in Precious metals and Precious metals due to/from Series
Counterparty
30-Sep-20 30-Sep-20
USD USD
Precious Metal
Net Precious
metals
due to/from Series
Counterparty
At beginning of the year
- -
Additions during the year
412,580,962 -
Disposals/settlements during the year
(31,365,066) (3,987,270)
Net changes in fair value during the year
8,255,224 3,705,067
At end of the year 389,471,120 (282,203)
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 33
Movement in Metal in troy ounces for the year ended 30 September 2020
Series
Description
Opening
Balance
1-Oct-19
Troy Ounces
Metal
contributed
Troy Ounces
Metal distributed
Troy Ounces
Metal
30- Sep -20
Troy Ounces
Price of
Metal
per ounce
30-Sep-20
Fair value
USD
30-Sept-20
USD
Series 1 Xtrackers IE Physical
Platinum ETC
- 31,869 (29,922) 1,947 $884.00 1,720,729
Series 2
Xtrackers IE Physical Gold
ETC
- 85,886 (2,252) 83,634 $1,886.90 157,844,308
Series 3 Xtrackers IE Physical Silver
ETC
- 152,125 (115,933) 36,192 $23.73 858,616
Series 4 Xtrackers IE Physical Silver
EUR Hedged ETC
- 220,149 (66,223) 153,925 $23.73 3,651,828
Series 5 Xtrackers IE Physical Gold
EUR Hedged ETC
- 64,000 (2,858) 61,142 $1,886.90 115,369,309
Series 6 Xtrackers IE Physical Gold
GBP Hedged ETC
- 65,492 (7,351) 58,141 $1,886.90 109,706,874
Series 7
Xtrackers IE Physical
Platinum EUR Hedged ETC
- 415 (54) 361 $884.00 319,456
- 619,936 (224,593) 395,343 389,471,120
Metal has been rounded to the nearest troy ounce in table above.
12. ETC securities at fair value through profit or loss
30-Sep-21 30-Sep-20
Nominal units
issued
Fair value
Nominal units issued
Fair value
USD USD
ETC Securities issued 121,744,281 3,365,613,642 14,002,750 421,618,033
Movement in ETC Securities issued
30-Sep-21 30-Sep-20
USD USD
At beginning of the year
421,618,033 -
Issue of ETC Securities issued during the year *
3,693,308,640 441,022,808
Redemption of ETC Securities issued during the year
(516,016,593) (31,365,066)
Net changes in fair value during the year
(233,296,438) 11,960,291
At end of the year
3,365,613,642 421,618,033
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 Exchange Offer. Please refer to Directors Report, Note 1and
17 of the Notes 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 2021
Xtrackers ETC Public Limited Company Page 34
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-21
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-20
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
Xtrackers ETC Public Limited Company
Page 35
Notes to the financial statements (continued)
For the year ended 30 September 2021
12.
ETC securities at fair value through profit and loss (continued)
The ETC securities in issue at 30 September 2020 are as follows:
Series
Description CCY
Maturity
Date
Units
outstanding
30 -Sep-20
Metal entitlement
per ETC Security*
(ounces)
Value per ETC
Security
(Local CCY)
30-Sept-20
Value per ETC
Security USD
30-Sept-20
Fair value
USD
30-Sept-20
Series 1 Xtrackers IE Physical
Platinum ETC
USD 17-Apr-80 78,000 0.0250 $22.0606 $22.0606 1,720,729
Series 2
Xtrackers IE Physical
Gold ETC
USD 23-Apr-80 6,231,000 0.0155 $29.2234 $29.2234 182,091,101
Series 3 Xtrackers IE Physical
Silver ETC
USD 30-Apr-80 25,000 1.4476
$34.3446 $34.3446 858,616
Series 4 Xtrackers IE Physical
Silver EUR
EUR 23-Apr-80 120,000 1.5453
€31.3067 $36.6617 4,399,772
Series 5
Hedged ETC
Xtrackers IE Physical
Gold EUR
EUR
21-May-80
3,930,000
0.0165
€26.6781
$31.2040
122,638,553
Hedged ETC
Series 6 Xtrackers IE Physical
Gold GBP
GBP 23-May-80 3,605,000 0.0161
£23.6426 $30.3973 109,588,661
Series 7
Hedged ETC
Xtrackers IE Physical
Platinum EUR
EUR
29-May-80
13,750
0.0264
€19.9103
$23.3140
320,601
Hedged ETC
Total 14,002,750 421,618,033
*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 2020
Opening balance
Net changes in
Closing balance
Series Description 1-Oct-19
USD
Issuances
USD
Redemptions
USD
fair values
USD
30-Sept-20
USD
Series 1 Xtrackers IE Physical
Platinum ETC
- 25,016,892 (23,632,316) 336,153 1,720,729
Series 2 Xtrackers IE Physical Gold
ETC
- 184,344,231 (4,314,357) 2,061,227 182,091,101
Series 3 Xtrackers IE Physical Silver
ETC
- 3,346,878 (2,532,016) 43,754 858,616
Series 4 Xtrackers IE Physical Silver
EUR Hedged ETC
- 5,295,784 (886,377) (9,635) 4,399,772
Series 5 Xtrackers IE Physical Gold
EUR Hedged ETC
- 118,758,943 - 3,879,610 122,638,553
Series 6 Xtrackers IE Physical Gold
GBP Hedged ETC
- 103,974,080 - 5,614,581 109,588,661
Series 7 Xtrackers IE Physical
Platinum EUR Hedged ETC
- 286,000 - 34,601 320,601
- 441,022,808 (31,365,066) 11,960,291 421,618,033
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 36
13. Share Capital
30-Sep-21 30-Sep-20
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 2021 and as at 30 September 2020, 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 (2020: 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 2021
Xtrackers ETC Public Limited Company Page 37
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 (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 2021
Xtrackers ETC Public Limited Company Page 38
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.
Currency risk exposure as at 30 September 2020:
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 (4,399,772) 4,399,772 -
Total (4,399,772) 4,399,772 -
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 43,998 and USD (43,998) respectively. However, the Balancing Agreement would offset these movements
by USD (43,998) and USD 43,998 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 (122,638,553) 122,638,553 -
Total (122,638,553) 122,638,553 -
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 1,226,385 and USD (1,226,385) respectively. However, the Balancing Agreement would offset these
movements by USD (1,226,385) and USD 1,226,385 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 (109,588,661) 109,588,661 -
Total (109,588,661) 109,588,661 -
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 1,095,886 and USD (1,095,886) respectively. However, the Balancing Agreement would offset
these movements by USD (1,095,886) and USD 1,095,886 respectively, resulting in a zero net exposure.
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 39
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 (320,601) 320,601 -
Total (320,601) 320,601 -
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 3,206
and USD (3,206) respectively. However, the Balancing Agreement would offset these movements by USD (3,206) and USD 3,206
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 2021:
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 18,448,610 184,486 (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)
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 2020:
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 1,720,729 17,207 (17,207)
Xtrackers IE Physical Gold ETC Securities 182,091,101 1,820,911 (1,820,911)
Xtrackers IE Physical Silver ETC Securities 858,616 8,586 (8,586)
Xtrackers IE Physical Silver EUR Hedged ETC
Securities 4,399,772 43,998 (43,998)
Xtrackers IE Physical Gold EUR Hedged ETC
Securities 122,638,553 1,226,259 (1,226,259)
Xtrackers IE Physical Gold GBP Hedged ETC
Securities 109,588,661 1,095,802 (1,095,802)
Xtrackers IE Physical Platinum EUR Hedged ETC
Securities 320,601 3,204 (3,204)
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 40
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-21 30-Sept-20
USD USD
Precious metals due from Series Counterparty
349,373
9,001
Amounts Receivable on Precious metals awaiting settlement
-
428,188
Amounts Receivable on ETC Securities awaiting settlement
2,452,787
32,000,928
Other receivables
23,782 12,570
Cash and cash equivalents
2,225,034 165,852
5,050,976 32,616,539
As at 30 September 2021, no financial assets carried at amortised cost were past due or impaired (2020: Nil). The Directors have also
considered the credit risk and counterparty risk with JPMorgan as custodian (the "Custodian"), Sub-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 2021, the Company held Precious metals at fair value of USD 3,405,169,768 (2020: 389,471,120) with
JP Morgan. Precious metals due from the Series Counterparty with a fair value of USD 349,373 (2020: USD 9,001) and Precious metals due
to the Series Counterparty with a fair value of USD 5,231,029 (2020: USD 291,204) was held with JPMorgan as at 30 September 2021.
Amount payable on Precious metals awaiting settlement with a fair value of USD 4,617,295 (2020: USD Nil), amount receivable on the
Precious metals awaiting settlement USD Nil (2020: USD 428,188) and cash and cash equivalents to the amount of USD 2,225,034 (2020:
USD 165,852) were held with JPMorgan.
With an overall credit rating status of JPMorgan (2021: S&P A+) (2020: 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.
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-21 30-Sep-20
Types of collaterals % %
Gold 89.29 98.31
Silver 9.50 1.16
Platinum 1.21 0.53
100 100
By Geographical location 30-Sep-21 30-Sep-20
Country of origin % %
United Kingdom* 100 100
*the Precious metals are held in a vault in the United Kingdom. 100 100
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 41
15. Financial risk management (continued)
c) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company limits its exposure to
liquidity risk 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 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 2,222,464 2,222,464
3,410,189,710 3,410,189,710 3,410,189,710
The contractual maturity profile of financial liabilities as at 30 September 2020 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 421,618,033 421,618,033 421,618,033
Precious metals due from Counterparty 291,204 291,204 291,204
Other payables 151,199 151,199 151,199
422,060,436 422,060,436 422,060,436
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.
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.
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.
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 42
15. Financial risk management (continued)
c) Liquidity risk (continued)
Redemptions and Buy-backs (continued)
Redemptions (continued)
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 France Dublin Branch, 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(g). 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.
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.
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 43
16. Fair values (continued)
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 transfers between level 1 and level 2
during the year as there was an increase in 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
2021.
At 30 September 2021, the fair values of ETC securities and Precious metals due to/from Series Counterparty are as follows:
30-Sep-21
Level 1 Level 2 Level 3 Total
USD USD USD USD
Precious metals due from Series Counterparty - 349,373 - 349,373
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) (4,881,656) - (3,370,495,298)
At 30 September 2020, the fair values of ETC securities and Precious metals due to/from Series Counterparty are as follows:
30-Sep-20
Level 1 Level 2 Level 3 Total
USD USD USD USD
Precious metals due from Series Counterparty - 9,001 - 9,001
ETC securities at fair value (419,897,304) (1,720,729) - (421,618,033)
Precious metals due to Series Counterparty - (291,204) - (291,204)
(419,897,304) (2,002,932) - (421,900,236)
Other financial assets and liabilities are classified as Level 2.
16. 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. 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 122,198 (2020: USD 98,148) from Wilmington Trust SP Services (Dublin) Limited (“WTD”) in line with the
Corporate Services Agreement dated 13 March 2020 of which €Nil was outstanding at year end. Cliona O’Faolain and Claudio Borza are Directors of
the Company and are also Directors 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 (2020: 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 2021 (2020:
25,000). The shares are held under the terms of the declarations of trust dated 14 April 2020 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 2021, the Board is composed
of two Directors, whom are employees of the corporate services provider.
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 44
17. Related Party Transactions and Connected Parties (continued)
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 and is payable to the Programme Administrator. This
fee is used to pay the agreed fees of other service providers of the Company. The Product fee is the rate set out below for each Series 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 0.15
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 2 December 2020, the Product Fee Percentage of this Series was reduced from 38 bps to 20 bps. Please see the Significant events section of this
report.
** As of 24 March 2021, the Product Fee Percentages of these Series were reduced from 43 bps to 33 bps.
Further to this change, as of 1 September
2021 the Product Fee Percentages of these Series were reduced from 33 bps to 28 bps. Please see the Significant events section of this report.
Where the fees of other service providers of the Company exceed the product fee accrued, DWS International GmbH will pay the excess of such fees in
accordance with the relevant disbursement agreement. Where operating expenses of the Company are below the product fee charged to ETC Security
holders, the excess is payable to DWS under same disbursement agreement. Disclosures in respect of the Disbursement Agreement are made in notes 3
and 7 of the financial statements.
DWS International GmbH the holder of a Profit Participating note in principal amount of EUR 100. The Note was issued for the period from 30 September
2019 to 30 September 2020 and reissued with a Note Issuing and Purchase Agreement dated 1 October 2020 for an additional period from 30 September
2020 to 30 September 2021, in consideration of the Disbursement agreement of the Company to issue limited recourse secured Notes under the Programme;
to the extent that the Company does not have sufficient funds to make such payments, DWS agrees to either settle on the Company’s behalf or provide
funds to the Company so that the Company can make such payments, or to reimburse the Company. The fees payable to the programme administrator
DWS is USD 910,244 (net of the corporate benefit of USD 3,485) (2020: Nil) by the Company subject to the receipt of evidence satisfactory to DWS in
its absolute discretion regarding the payment by the Company.
Exchange Offer
DB 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”).
The purpose of the Exchange Offers was for the Company to increase the number of New Xtrackers ETC Securities. The Exchange Offers provided the
Company 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.
Notes to the financial statements (continued)
For the year ended 30 September 2021
Xtrackers ETC Public Limited Company Page 45
17. Related Party Transactions and Connected Parties (continued)
Connected Parties (continued)
Exchange Offer (continued)
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 the
aggregated 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. For further details on Exchange Offer please refer to Directors Report, Notes 1, 11 and Note
12 of the Notes to the financial statements.
17. Charges
The 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.
18. Subsequent events
Gold price which is the main collateral (89.29%) of the Company's ETC Securities touched $1,743 per ounce as at 30 September 2021 and recovered
reaching $1,830.30 as at 26 January 2022 whilst Silver reached $21.53 per ounce as at 30 September 2021 and changed slightly touching $23.79 per
ounce as at 26 January 2022. Platinum presented a similar trend with $963 per ounce as at 30 September 2021 and high of $1,052 per ounce as at 26
January 2022.
On 11 March 2020, the World Health Organization officially declared COVID-19, the disease caused by novel coronavirus, a pandemic. The Directors have
assessed the impact of market conditions arising from the outbreak on the Company's ability to meet its investment objective. Based on the latest available
information, the Company continues to be managed in line with its investment objective, with no disruption to the operation of the Company and the
publication of the net asset values.
New Interest Limitation Rules (ILR) were enacted in December 2021. These rules will limit the net borrowing cost deductions of Irish companies in certain
circumstances. ILR will apply for the next financial year of the Company (1 October 2022 to 30 September 2023). Based on the advice of external legal
counsel, the Company believes that it can avail of relieving measures which should eliminate or neutralise any material effect arising from ILR. Therefore,
the Directors have considered that the ILR rules will have a limited impact on the Company.
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.
19. Approval of financial statements
The financial statements were approved and authorised for issue by the Board of Directors on 28 January 2022.