Xtrackers ETC Public Limited Company
Directors’ Report and Audited Financial Statements
For the year ended 30 September 2023
Registered number: 627079
Xtrackers ETC Public Limited Company
Contents
Page (s)
Directors and other information 1
Directors' report
2
- 9
Statement of Directors'
responsibilities
10
Independent auditor's report 11 - 17
Statement of comprehensive income 18
Statement of financial position 19
Statement of changes in equity 20
Statement of cash flows 21
Notes to the financial statements 22 - 43
Xtrackers ETC Public Limited Company
Page 1
DIRECTORS AND OTHER INFORMATION
Directors
Authorised Participants
Claudio Borza
HSBC Bank Plc
Eileen Starrs
1 Grand Canal Harbour
Dublin 2, Ireland
Company Secretary
Susquehanna International Securities Limited
Wilmington Trust SP Services (Dublin) Limited
6th Floor Pinnacle 2
Fourth Floor
Eastpoint Business Park
3 George’s Dock
Dublin, Ireland
IFSC, Dublin 1, Ireland
Flow Traders B. V.
Registered Office
Jacob Bontiusplaats 9
Fourth Floor
1018 LL Amsterdam, The Netherlands
3 George’s Dock
IFSC, Dublin 1, Ireland
Deutsche Bank AG
Fourth Floor
Mainzer Landstr 11-17
60329 Frankfurt, Germany
Independent Auditors
KPMG
Morgan Stanley & Co. International plc
1 Harbormaster Place, IFSC
20 Bank Street,
Dublin 1, Ireland
London E14 4AD, United Kingdom
Corporate Administrator
Citigroup Global Markets Limited
Wilmington Trust SP Services (Dublin) Limited
Citigroup Centre, Canada Square
Fourth Floor
Canary Wharf
3 George’s Dock
London E14 5LB, United Kingdom
IFSC
Dublin 1, Ireland
Optiver VOF
Strawinskylaan 3095
Programme Administrator
1077 ZX Amsterdam,
DWS International GmbH
The Netherlands
4th Floor Meinzer Landstrasse 11-17,
60329 Frankfurt am Main
Virtu Financial Ireland Limited
Germany
North Dock One, Fifth Floor
91/92 North Wall Quay, Dublin 1
Secured Account Custodian, Subscription Account Custodian,
D01 H7V7, Ireland
Fee Account Custodian and Metal Agent
JP Morgan Chase Bank, N.A. London
Determination and Issuing Agent
25 Bank Street, Canary Wharf, London E14 5JP
State Street Fund Service (Ireland) Limited
United Kingdom
78 Sir John Rogerson’s Quay,
Dublin 2, Ireland
Authorised Participants
Jane Street Financial Limited
Trustee
30
th
Floor, 20 Fenchurch Street
Wilmington Trust SP Services (Dublin) Limited
London EC3M 3BY
Fourth Floor, 3 George’s Dock IFSC
United Kingdom
Dublin 1, Ireland
Series Counterparty
J. P. Morgan AG
Taunus Turm, Taunustor 1,
60310 Frankfurt am Main,
Germany
Xtrackers ETC Public Limited Company
Page 2
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 2023.
Principal activities, business review and future activities
Xtrackers ETC Public Limited Company (the “Company”) was incorporated in Ireland under registration number 627079 on 21 May 2018 with limited liability
and is organised under the laws of Ireland as a Public Limited Company (“plc”) pursuant to the Companies Act, 2014 (the “Companies Act”). It has been
established as a special purpose vehicle for the purpose of issuing asset backed securities. The Company is taxable as a securitisation company pursuant to
section 110 of the Taxes Consolidation Act 1997. Profits arising to the Company is taxable at a rate of 25 per cent. The Company has commenced trading on
16 April 2020.
The principal activity of the Company, under the Secured Xtrackers ETC Precious Metal Linked Securities Programme (the “Programme”), is issuance of
several series (each a "Series/ETC Security") of ring-fenced notes listed on one or more of the following stock exchanges: the Frankfurt Stock Exchange, the
Borsa Italiana, and the London Stock Exchange plc.
The metal for any Series of ETC Securities may consist of gold, silver, or platinum (the “Metal”). The main assets of the Company in respect of a Series of ETC
Securities are its holdings of Metal held by or on behalf of the Company (through the Secured Account Custodian, the Subscription Account Custodian) and its
interests under the related metal agent agreement entered into by the Company and the Metal Agent (the “Metal Agent Agreement”) and the Balancing
Agreement.
The ETC Securities are designed to provide purchasers with exposure to a Metal without having to take physical delivery of the Metal. Each ETC Security
relates to a specific amount in weight of Metal, specified in the relevant Final Terms, known as the metal entitlement per ETC Security. On any particular day,
the ETC Security can be viewed as giving an exposure to that amount of Metal as the amount payable in respect of the ETC Securities and the Value per ETC
Security is linked to the value of the Metal. In order to back its obligations under the ETC Securities, the Company will seek to hold enough Metal to meet its
obligations under the ETC Securities. The precise amount it holds at any time may be more or less than the aggregate amount of the metal entitlement per ETC
Security to reflect the periodic payment of product fees and, in respect of FX Hedged ETC Securities, an adjustment for any foreign exchange gains or losses.
Because the Company obtains its exposure to the precious Metal by physically investing directly in the relevant Metal, these types of ETC Securities are known
as physical replication exchange traded commodities. The proceeds from the disposal of the Underlying Metal, plus (where applicable) any interest received on
the proceeds of such disposal less any negative interest, net of any deductions (and, in the case of FX Hedged ETC Securities, converted into the currency of
the ETC Securities at the rate the Metal Agent determines would be obtainable at the time of conversion which shall be on or about the day of such sale (or, if
such day is not an FX Business Day, the immediately following FX Business Day), and which may take into account a bid/offer spread quoted by a dealer), will
equal the amount due under the ETC Securities (subject to certain minimum amounts owed).
The Master Balancing Terms (the “Balancing Agreement”) sets out the arrangements between the Company and J.P. Morgan AG (the “Series Counterparty”)
with respect to the rebalancing of the Metal held by the Company for the relevant ETC securities. Such rebalancing will be made in respect of FX Hedged ETC
Securities to reflect gains or losses in respect of the foreign exchange hedge element of the metal entitlement per ETC Security. The Balancing Agreement
broadly seeks to account for any currency hedging gains or losses by requiring deliveries of Precious Metal to be made between the Company and the Series
Counterparty so that, as a result of such deliveries, the amount of Underlying Metal held by the Company should equal the aggregate metal entitlement in the
foreign currency of the ETC Security in respect of all outstanding ETC Securities of the relevant Series. Where there are foreign exchange gains and the metal
entitlement per ETC Security consequently increases, the Series Counterparty will be required to deliver additional Metal equivalent to such increase to the
Company under the Balancing Agreement. Where there are losses and the metal entitlement per ETC Security consequently decreases, the Company will be
required to deliver Metal equivalent to such decrease to the Series Counterparty under the Balancing Agreement.
With respect to each Series of ETC Securities, the Company’s primary assets are its holdings of underlying metal and its interests under the related Balancing
Agreement (the ''Balancing Agreement''). The obligations of the Company under the ETC Securities of a Series will be secured in favour of the Trustee by an
assignment by way of security of all the Company’s rights, title, interest and benefit present and future against the secured account custodian (the ''Secured
Account Custodian''), the subscription account custodian (the ''Subscription Account Custodian'') relating to the underlying metal in respect of this Series of
ETC Securities. Subscription and redemption terms of the ETC Securities are disclosed in the notes of the financial statements.
Irish law requires the Directors to prepare financial statements for each financial period. Under that law they have elected to prepare these financial statements
in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (“EU”).
Significant Events during the financial year
New Interest Limitation Rules (ILR) were enacted in December 2021. These rules limit the net borrowing cost deductions of Irish companies in certain
circumstances. The financial year ended 30 September 2023 is the first reporting period where such rules were applicable to the Company as the relevant
legislation only came into affect for reporting periods commencing on/after 1 January 2022. Based on the advice of external legal counsel, the effect of the ILR
did not increase the Irish corporation tax liability of the Company. Therefore, the Directors have considered that the ILR rules have a limited impact on the
Company.
Xtrackers ETC Public Limited Company
Page 3
Directors' report (continued)
Significant Events during the financial year (continued)
On 24 February 2022, Russia launched a large-scale military invasion of Ukraine and is now engaged in a broad military conflict with Ukraine. In response, the
United States, the European Union, the United Kingdom and other countries have imposed broad, far-reaching sanctions against Russia, certain Russian persons
and certain activities involving Russia or Russian persons. This conflict has continued into 2023. The business of the Company can by affected by a number of
factors that are beyond the Company's control, such as geopolitical, economic and business conditions. The Ukraine Conflict and possible outbreaks elsewhere
in the world may lead to instability in certain regions together with sanctions being imposed against certain countries and airlines which could have an adverse
economic impact.
Directors and secretary and their interests in shares of the Company
The Directors and secretary who served the Company during the period together with their beneficial interests in the shares of the Company were as follows:
Ordinary Shares of €1 each
30 September 2023
Ordinary Shares of €1 each
30 September 2022
Claudio Borza
-
-
Eileen Starrs
-
-
Wilmington Trust SP Services (Dublin) Limited
25,000
25,000
Wilmington Trust SP Services (Dublin) Limited is acting as Secretary of the Company and not in the capacity as a Director or Directors.
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 2023 and 30 September 2022. 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:
Description
Underlying Metal
Xtrackers IE Physical Platinum ETC Securities
Platinum Price
Xtrackers IE Physical Gold ETC Securities
Gold Price
Xtrackers IE Physical Silver ETC Securities
Silver Price
Xtrackers IE Physical Silver EUR Hedged ETC Securities
Silver Price
Xtrackers IE Physical Gold EUR Hedged ETC Securities
Gold Price
Xtrackers IE Physical Gold GBP Hedged ETC Securities
Gold Price
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.
Xtrackers ETC Public Limited Company
Page 4
Directors' report (continued)
Product fee
Each Series pays a product fee prepared by the Determination Agent, which accrues on a daily basis. The Product fee is the rate set out below for each Series as
of 30 September 2023 and is applied to the Metal Entitlement on a daily basis to determine a daily deduction of an amount of Metal from the Metal Entitlement:
Series
Description
Annual Product fee as a
% of metal entitlement
30 Sep 2023
Annual Product fee as a
% of metal entitlement
30 Sep 2022
Series 1
Xtrackers IE Physical Platinum ETC Securities
0.38
0.38
Series 2
Xtrackers IE Physical Gold ETC Securities
0.12
0.12
Series 3
Xtrackers IE Physical Silver ETC Securities
0.20
0.20
Series 4
Xtrackers IE Physical Silver EUR Hedged ETC Securities
0.73
0.73
Series 5
Xtrackers IE Physical Gold EUR Hedged ETC Securities
0.28
0.28
Series 6
Xtrackers IE Physical Gold GBP Hedged ETC Securities
0.28
0.28
Series 7
Xtrackers IE Physical Platinum EUR Hedged ETC Securities
0.73
0.73
Key performance indicators
The Company is a Special Purpose Vehicle (the ''SPV'') whose sole business is the issue of asset-backed securities. The Company has established a programme
for the issue of ETC Securities whose return is linked to the performance of a specified precious metal: either gold, silver, platinum. Each series of ETC
Securities will be separate (or ‘ring-fenced’) from each other series of ETC Securities. The ETC uses a hedging mechanism (“Balancing Agreement”) which is
designed to reduce exposure of the underlying precious metal to exchange rate fluctuations between US dollars and the currency in which the ETC is
denominated.
Metal
Price in USD per ounce
30 September 2023
Price in USD per ounce
30 September 2022
Increase in price
Gold
1,870.50
1,671.75
11.89%
Silver
23.075
19.02
21.32%
Platinum
923.00
864.00
6.83%
The prices of all three commodities rose between September 2022 and September 2023. The performance of a precious metal is dependent upon macroeconomic
factors including (without limitation) supply and demand, liquidity, conflicts, natural disasters, direct investment costs, location and changes in tax rates and
changes in laws, regulations and the activities of governmental or regulatory bodies.
The Directors confirm that the key performance indicators as disclosed below are those that are used to assess the performance of the Company.
During the year:
•
the Company made a profit of USD 2,384 (2022: USD 2,193);
•
the net fair value gain on Precious metals at fair value and Precious metals due from Series Counterparty amounted
to USD 565,233,010 (2022: USD
538,548,298 loss), for details please refer to note 4;
•
the net fair value loss on ETC securities at fair value amounted to USD 565,233,010 (2022: USD 538,548,298 gain
), for details please refer to note 5;
•
there were new subscriptions in the following Series of ETC Securities:
Series
Description
Issuances in USD*
30-Sep-23
Issuances in USD*
30-Sep-22
1
Xtrackers IE Physical Platinum ETC Securities
6,544,609
18,527,227
2
Xtrackers IE Physical Gold ETC Securities
507,721,658
2,228,304,569
3
Xtrackers IE Physical Silver ETC Securities
14,062,884
40,547,711
4
Xtrackers IE Physical Silver EUR Hedged ETC Securities
10,628,688
19,155,994
5
Xtrackers IE Physical Gold EUR Hedged ETC Securities
205,703,259
389,694,794
6
Xtrackers IE Physical Gold GBP Hedged ETC Securities
87,355,684
238,759,551
7
Xtrackers IE Physical Platinum EUR Hedged ETC Securities
4,052,000
5,819,057
*The timing o
f issuances will impact the gains/losses of the relevant Series.
Xtrackers ETC Public Limited Company
Page 5
Directors' report (continued)
Key performance indicators (continued)
•
the following Series of ETC Securities were partially redeemed:
Series
Description
Redemption in USD*
30-Sep-23
Redemption in USD*
30-Sep-22
1
Xtrackers IE Physical Platinum ETC Securities
(9,233,517)
(16,016,492)
2
Xtrackers IE Physical Gold ETC Securities
(1,050,424,334)
(824,419,717)
3
Xtrackers IE Physical Silver ETC Securities
(11,466,591)
(111,120,656)
4
Xtrackers IE Physical Silver EUR Hedged ETC Securities
(14,618,707)
(129,189,400)
5
Xtrackers IE Physical Gold EUR Hedged ETC Securities
(260,414,245)
(466,785,120)
6
Xtrackers IE Physical Gold GBP Hedged ETC Securities
(134,944,576)
(47,320,336)
7
Xtrackers IE Physical Platinum EUR Hedged ETC Securities
(8,661,908)
(13,620,621)
*The timing of redemptions will impact the gains/losses of the relevant Series.
As at 30 September 2023:
•
the Company’s total ETC Securities issued had a fair value of USD 4,070,939,819
(2022: USD
4,159,401,905);
•
the Company has invested in Precious metals with a fair value of USD 4,067,249,325
(2022: USD
4,155,236,718);
• Precious metals with a fair value of USD 2,689,877 (2022: USD 5,833,251) was due to the Company from the Series Counterparty and Precious metals
with a value of Nil (2022: Nil) were due from the Company to the Series Counterparty, Amounts receivable on Precious metals awaiting settlement
amounted to USD 2,814,106 (2022: USD 16,251,868), Amounts payable on Precious metals awaiting settlement amounted to USD 73,566 (2022: Nil),
Amounts payable on ETC securities awaiting settlement amounted to USD 6,243,267 (2022: USD: 17,927,883) and Amounts receivable on ETC
securities awaiting settlement amounted to USD 4,571,760 (2022: Nil);
•
the net assets were USD 35,611 (2022: USD 33,227); 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
756,734
22.7694
17,230,386
Platinum
2
Xtrackers IE Physical Gold ETC Securities
23-Apr-80
USD
102,823,390
28.8515
2,966,605,505
Gold
3
Xtrackers IE Physical Silver ETC Securities
30-Apr-80
USD
3,292,199
33.1910
109,271,386
Silver
4
Xtrackers IE Physical Silver EUR Hedged ETC
Securities*
15-Apr-80
EUR
1,274,583
27.3572
36,999,552
Silver
5
Xtrackers IE Physical Gold EUR Hedged ETC
Securities*
21-May-80
EUR
24,453,307
24.4665
632,986,670
Gold
6
Xtrackers IE Physical Gold GBP Hedged ETC
Securities**
23-May-80
GBP
10,960,773
22.3046
298,650,999
Gold
7
Xtrackers IE Physical Platinum EUR Hedged
ETC Securities*
29-May-80
EUR
463,770
18.7077
9,195,321
Platinum
* with a EUR/USD hedge in terms of the Balancing Agreement.
** with a GBP/USD hedge in terms of the Balancing Agreement.
***The timing of issuances/redemptions will impact gains/losses in the Statement of Comprehensive Income.
•
The Company had the following ETC Securities in issue in prior year as at 30 September 2022:
Series
Description
Maturity date
Ccy
Nominal
(in units)
Local price
of ETCs***
FV in USD
Precious metals
held
1
Xtrackers IE Physical Platinum ETC Securities
17-Apr-80
USD
866,539
21.3960
18,540,464
Platinum
2
Xtrackers IE Physical Gold ETC Securities
23-Apr-80
USD
121,623,255
25.8172
3,139,966,835
Gold
3
Xtrackers IE Physical Silver ETC Securities
30-Apr-80
USD
3,220,624
27.4137
88,289,172
Silver
4
Xtrackers IE Physical Silver EUR Hedged ETC
Securities*
15-Apr-80
EUR
1,382,177
23.6503
31,912,511
Silver
5
Xtrackers IE Physical Gold EUR Hedged ETC
Securities*
21-May-80
EUR
26,298,241
22.6351
581,841,157
Gold
6
Xtrackers IE Physical Gold GBP Hedged ETC
Securities**
23-May-80
GBP
12,643,627
20.3778
286,737,804
Gold
7
Xtrackers IE Physical Platinum EUR Hedged ETC
Securities*
29-May-80
EUR
677,576
18.3284
12,113,962
Platinum
* with a EUR/USD hedge in terms of the Balancing Agreement.
** with a GBP/USD hedge in terms of the Balancing Agreement.
***The timing of issuances/redemptions will impact gains/losses in the Statement of Comprehensive Income.
The financial statements and notes to the financial statements are presented in US Dollar (“USD” or “$”) which is the Company’s functional currency. Functional
currency is the currency of the primary economic environment in which the entity operates. The Directors of the Company believe that USD most faithfully
represents the economic effects of the underlying transactions, events and conditions.
Xtrackers ETC Public Limited Company
Page 6
Directors' report (continued)
Future developments
The Directors expect that the present level of activity will be sustained for the foreseeable future. The Board will continue to seek new opportunities for
the Company and will continue to ensure proper management of the current portfolio of Series of the Company.
Going concern
The nature of the Company’s business dictates that the outstanding ETC Securities may be redeemed at any time by the holder and in certain
circumstances may be compulsorily redeemed by the Company. As the redemption of ETC Securities will always coincide with the transfer of an equal
amount of Precious metals, no net liquidity risk is considered to arise.
On 24 February 2022, Russia launched a large-scale military invasion of Ukraine and are still now engaged in a broad military conflict with Ukraine.
This conflict has continued into 2023. For analysis of impact please refer to Significant Events during the financial year section of the report.
Post the financial year end, as at 18 January 2024, the prices of the precious metals have remained stable or positive. The Administrator has taken
measures to ensure business continuity. The Company also has a diversified portfolio of several different metals, post the financial year end. The Company
continues to generate substantial cash flows to meet its contractual obligations in relation to the payment of the product fee. Refer to subsequent events
note within the Director's report and Note 19.
The Directors consider the Company to be a going concern.
Principle risks and uncertainties
The Company is subject to various risks. The principal risks facing the Company are outlined in Note 15 to the financial statements.
Price Risk
Price risk is the risk that the value of Precious metals will fluctuate as a result of changes in market prices, whether caused by factors specific to an
individual investment, its issuer or other factors affecting all instruments traded in the market. Refer to note 15 for further details.
Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Company’s processes and from external
factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of
corporate behaviour.
Operational risk arises from all of the Company’s operations. The Company was incorporated with the purpose of engaging in those activities outlined
in note 1. All administration functions are undertaken by Wilmington Trust SP Services (Dublin) Limited. Deutsche Bank AG, Jane Street Financial
Limited, HSBC Bank Plc, Susquehanna International Securities Limited and Flow Traders B.V. Morgan Stanley & Co. International Plc, Citigroup
Global Markets Limited, Optiver VOF act as the Company's authorised participants (the " Authorised Participants"), DWS International GmbH acts as
arranger (the "Arranger") and Programme Administrator, JPMorgan Chase Bank N.A. acts as metal agent (the "Metal Agent"), Secured Account
Custodian, Fee Account Custodian, Subscription Account Custodian and Series Counterparty (“Series Counterparty”) and State Street Fund Services
(Ireland) Limited acts as issuing and determination agent.
Credit Risk
Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. The Company’s
principal financial assets are cash and cash equivalents, other receivables, Amounts Receivable on Precious metals awaiting settlement and Precious
metals due from the Series Counterparty which represents the Company's maximum exposure to credit risk. All credit risks are ultimately borne by the
ETC Security holders.
The Directors have also considered the credit risk and counterparty risk with JPMorgan as custodian (the "Custodian") and Series Counterparty
respectively, of the Precious metals held by the Company given the significance of the Precious metals to the overall financial position of the Company.
With an overall credit rating status of JPMorgan 2023: S&P A+ (2022: S&P A+), the Directors are of opinion that counterparty risk is acceptable.
Ultimately, all credit and counterparty risks associated with JP Morgan are borne by the ETC Security holders.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company limits its exposure to liquidity risk
through the purchase of Precious metals. All liquidity risk associated with the Precious metals are ultimately borne by the ETC Security holders. Due to
the fact that the ETC Security holders have the option to redeem the securities before the final scheduled maturity date, the ETC securities at fair value
have been classified as due in less than one year. Maturity dates across the ETC Securities range between April 2080 and May 2080.
Currency Risk
In addition to metal price risk, the Company has exposure to currency risk as some of the ETC Securities are priced in currencies other than US Dollars
and hedged against exchange rate movements between the US Dollar and the Euro or Pound Sterling.
An ETC Security is a debt instrument whose redemption price is linked to the value of the relevant underlying Precious metals and Precious metals due
from Series Counterparty. The ETC Securities are issued under limited recourse arrangements whereby the holders have recourse only to the Precious
metals and Precious metals due from Series Counterparty attributable to the class of Security held and not to the Company. In addition, since any
movements in the value of the Precious metals and Precious metals due from Series Counterparty are wholly attributable to the holders of the ETC
Securities, the Company has no residual exposure to movements in the value of the Precious metals and Precious metals due from Series Counterparty.
From a commercial perspective, the gains or losses on the liability represented by the ETC Securities are matched economically by corresponding losses
or gains attributable to the Precious metals and Precious metals due to/from Series Counterparty under the Balancing Agreement. The Company does not
retain any net gains or losses or net risk exposures. Further details surrounding the value of the Precious metals and Precious metals due to/from Series
Counterparty are disclosed in note 11.
Xtrackers ETC Public Limited Company
Page 7
Directors' report (continued)
Principal risks and uncertainties (continued)
Currency Risk (continued)
Movements in the value of the underlying Precious metals and Precious metals due from Series Counterparty, and thus the value of the ETC Securities,
may vary widely which could have an impact on the demand for the ETC Securities issued by the Company. These movements are shown in note 11 and
12.
Climate Risk
The directors acknowledge that climate change is an emerging risk impacting the global economy and will continue to be of interest to all stakeholders
with a focus on how climate change is expected to impact the operations of the precious metals industry in areas such as mining, processing,
warehousing, transportation, societal response and the regulatory environment in the future. However, having considered such factors relating to
climate change, the directors have determined that there are no direct or immediate impacts of climate change on the business operations of the
Company. Given this, there is no basis on which to provide extended information of analysis relating to climate change risks on the business operations
of the Company. Furthermore, the directors conclude that at present there is no material impact to the fair value of financial instruments, assets and
liabilities of the company. The directors recognise that governmental and societal responses to climate change risks are still developing and the future
impact cannot be predicted. Therefore, the future fair value of assets and liabilities may fluctuate as the market responds to climate change policies,
physical events and changes in societal behaviours.
Results and dividends for the year
The results for the year are set out on page 18. The Directors do not recommend the payment of a dividend for the year ended 30 September 2023 (2022:
Nil).
Corporate Governance Statement
General Principles
The Company is subject to and complies with Irish statute comprising the Companies Act 2014. As the Company’s ETC Securities have been admitted
to trade on the regulated market of the Frankfurt Stock Exchange, the Borsa Italiana, and the London Stock Exchange plc., the Company adheres to the
Listing Rules of these exchanges in so far as it relates to an overseas company trading in secured metal linked debt securities.
The Board of Directors of the Company is responsible for establishing and maintaining adequate internal control and risk management systems for the
Company in relation to the financial reporting process. Such systems are designed to manage rather than eliminate the risk of failure to achieve the
Company’s financial reporting objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.
Board Composition
In accordance with the Company’s Articles of Association, the number of Directors, from time to time, shall be not less than two and not more than
twelve. The Company may from time to time, by ordinary resolution, increase or reduce the number of Directors provided that any resolution to appoint
a director approved by the members that would result in the maximum number of Directors being exceeded shall be deemed to constitute an ordinary
resolution increasing the number of Directors to the number in office following such a resolution of appointment.
The Directors are responsible for managing the business affairs of the Company in accordance with the Constitution of the Company, which allows it
to enter into contracts and perform all tasks necessary to conduct the business of the Company. The directors may delegate certain functions to the
Administrator and other parties, subject to supervision and direction by the directors.
Internal Control and Risk Management Systems in Relation to Financial Reporting
The Directors are responsible for establishing and maintaining adequate internal control and risk management systems of the Company in relation to
the financial reporting process. Such systems are designed to manage rather than eliminate the risk of failure to achieve the Company's financial
reporting objectives. The Board has put in place a formal procedure to ensure that relevant accounting records for the Company are properly maintained
and are readily available and includes the procedure for the production of half yearly and annual audited financial statements for the Company. The
annual audited financial statements of the Company are produced by the Corporate Administrator, reviewed by the Programme Administrator, then
presented to the Board of Directors for consideration and approval and are filed with the Companies Registration Office in accordance with the
provisions of the Transparency Directive (2004/109/EC Regulations 2007).
European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006
The Company is not subject to the European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006 and therefore not required to
include information relating to voting rights and other matters required by those Regulations and specified by the Companies Act 2014 for our
consideration.
Board Appointments
The Directors who served during the financial year are shown on page 1.
Audit Committee
As set out in Section 1551 (11) (c) of the Act, a Company issuing asset backed securities may avail itself of an exemption from the requirements to
establish an audit committee. The sole business of the Company relates to the issuing of asset-backed securities. Given the contractual obligations of
the Administrator and the limited recourse nature of the securities issued by the Company, the Board of Directors have concluded that there is currently
no need for the Company to have a separate audit committee in order for the Board to perform effective monitoring and oversight of the internal control
and risk management systems of the Company. The Board monitors the audit process and the independence of the statutory auditor. Accordingly, the
Company has availed itself of the exemption under Section 1551 (11) (c) of the Act not to establish an audit committee.
Programme Administrator
The Company has appointed DWS International GmbH as its Programme Administrator pursuant to a Programme Administrator Agreement.
Xtrackers ETC Public Limited Company
Page 8
Directors' report (continued)
Remuneration
Details of remuneration paid to the Directors are set out in Note 17.
Changes in Directors, Secretary and registered office
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 (95.73%) of the Company's ETC Securities touched $1,870.50 per ounce as at 30 September 2023 and continued
steady growth reaching $2,013.20 as at 18 January 2024 whilst Silver reached $23.075 per ounce as at 30 September 2023 and changed to $22.605 as at
18 January 2024. Platinum presented a similar trend with $923 per ounce as at 30 September 2023 and high of $894 per ounce as at 18 January 2024. The
continuing Ukraine Conflict and possible outbreaks elsewhere in the world may lead to instability in certain regions together with sanctions being
imposed against certain countries which could have an adverse economic impact.
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, were appointed statutory auditor on 4 June 2020 and pursuant tosection 383(2) will continue in office.
Relevant audit information
Each Director at the date of approval of this report confirms that:
• so far as the Directors are aware, there is no relevant audit information of which the Company’s auditors are unaware; and
• the Directors have taken all steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information
and to establish that the Company’s auditors are aware of this information.
Responsibility statement of the Directors in respect of the Directors’ Report
We confirm that to the best of our knowledge:
•
the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
•
the Directors’ report includes a fair review of the development and performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that they face. The principal risks facing the Company are outlined in Note 15 to the financial
statements.
Xtrackers ETC Public Limited Company
Page 9
Director’s Report (continued)
Directors’ Compliance Statement
The Directors, in accordance with section 225(2) of the Companies Act, acknowledge that they are responsible for securing the Company’s compliance
with certain obligations specified in that section arising from the Companies Act and Tax laws (“relevant obligations”).
The Directors confirm that:
• a compliance policy statement has been drawn up setting out the Company’s policies that in their opinion are appropriate with regard to such
compliance;
• appropriate arrangements and structures have been put in place that, in their opinion, are designed to provide reasonable assurance of compliance
in all material respects with those relevant obligations; and
• a review has been conducted, during the financial period, of those arrangements and structures.
In discharging their responsibilities under section 225 of the Companies Act, the Directors relied upon, among other things, the services provided,
advice and/or representations from third parties whom the Directors believe have the requisite knowledge and experience in order to secure material
compliance with the Company’s relevant obligations.
On behalf of the Board
Eileen Starrs
Director
Date: 23/01/2024
Claudio Borza
Director
_
Xtrackers ETC Public Limited Company Page 10
Statement of Directors' responsibilities
The directors are responsible for preparing the directors’ report and financial statements, in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the
financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of affairs of the Company and of its profit or loss for that year. In preparing the financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial
statements;
• assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
The directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets, liabilities,
financial position and profit or loss of the Company and enable them to ensure that its financial statements comply with the Companies Act
2014. They are responsible for such internal controls as they determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Company. In this regard they have entrusted the assets of the Company to a trustee for safe-keeping. They
have general responsibility for taking such steps as are reasonably open to them to prevent and detect fraud and other irregularities. The directors
are also responsible for preparing a directors’ report that complies with the requirements of the Companies Act 2014.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in the Republic of Ireland governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
On behalf of the Board
Eileen Starrs
Director
Date: 23/01/2024
Claudio Borza
Director
_
Xtrackers ETC Public Limited Company Page 11
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Xtrackers ETC Public Limited Company (‘the Company’) for the year
ended September 30, 2023 set out on pages 18 to 43, which comprise the Statement of Comprehensive Income,
Statement of financial position, Statement of changes in equity, Statement of cash flows and related notes, including
the summary of significant accounting policies set out in note 3.
The financial reporting framework that has been applied in their preparation is Irish Law and International Financial
Reporting Standards (IFRS) as adopted by the European Union.
In our opinion:
- the financial statements give a true and fair view of the assets, liabilities and financial position of the Company
as at September 30, 2023 and of its profit for the year then ended;
- the financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
and
- the financial statements have been properly prepared in accordance with the requirements of the Companies Act
2014.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s Responsibilities
section of our report. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for
our opinion. Our audit opinion is consistent with our report to the Board of Directors.
We were appointed as auditor by the directors on 4 June 2020. The period of total uninterrupted engagement is the
4 years ended September, 30 2023.
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 directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment
of the entity’s ability to continue to adopt the going concern basis of accounting included using 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.
Xtrackers ETC Public Limited Company
Page 12
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC
(CONTINUED)
Conclusions relating to going concern (continued)
As part of our evaluation we note that the Company issued, and continues to issue, a large number of certificates,
through different series of certificates and have assessed management plan. The Company also has a diversified
portfolio of several different metals, post the financial year end.The Company continues to generate substantial
cash flows to meet its contractual obligations in relation to the payment of the product fee.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a
going concern for a period of at least twelve months from the date when the financial statements are authorised for
issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Detecting irregularities including fraud
We identified the areas of laws and regulations that could reasonably be expected to have a material effect on the
financial statements and risks of material misstatement due to fraud, using our understanding of the entity's industry,
regulatory environment and other external factors and inquiry with the directors. In addition, our risk assessment
procedures included:
- Inquiring with the directors and other management as to the Company’s policies and procedures regarding
compliance with laws and regulations, identifying, evaluating and accounting for litigation and claims, as well
as whether they have knowledge of non-compliance or instances of litigation or claims.
- Inquiring of directors as to the Company’s high-level policies and procedures to prevent and detect fraud, as well
as whether they have knowledge of any actual, suspected or alleged fraud.
- Inquiring of directors regarding their assessment of the risk that the financial statements may be materially
misstated due to irregularities, including fraud.
- Inspecting the Company’s regulatory and legal correspondence, if any.
- Reading Board minutes.
- Performing planning analytical procedures to identify any usual or unexpected relationships.
We discussed identified laws and regulations, fraud risk factors and the need to remain alert among the audit team.
Firstly, the Company is subject to laws and regulations that directly affect the financial statements including
companies and financial reporting legislation. We assessed the extent of compliance with these laws and regulations
as part of our procedures on the related financial statement items, including assessing the financial statement
disclosures and agreeing them to supporting documentation when necessary.
Secondly, the Company is subject to many other laws and regulations where the consequences of non-compliance
could have a material effect on amounts or disclosures in the financial statements, for instance through the
imposition of fines or litigation . We identified the following areas as those most likely to have such an effect:
certain aspects of company legislation recognising the financial and regulated nature of the Company’s activities
and its legal form.
Xtrackers ETC Public Limited Company
Page 13
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC
(CONTINUED)
Detecting irregularities including fraud (continued)
Auditing standards limit the required audit procedures to identify non-compliance with these non-direct laws and
regulations to inquiry of the directors and inspection of regulatory and legal correspondence, if any. These limited
procedures did not identify actual or suspected non-compliance.
We assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an
opportunity to commit fraud. As required by auditing standards, we performed procedures to address the risk of
management override of controls. We did not identify any additional fraud risks.
In response to the fraud risks, we also performed procedures including:
- Identifying journal entries and other adjustments to test based on risk criteria and comparing the identified entries
to supporting documentation.
- Evaluating the business purpose of significant unusual transactions, if any.
- Assessing significant accounting estimates for bias.
- Assessing the disclosures in the financial statements.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some
material misstatements in the financial statements, even though we have properly planned and performed our audit
in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations
(irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently
limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as these may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not
responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and
regulations.
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of
the financial statements and include the most significant assessed risks of material misstatement (whether or not
due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed
in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
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)
In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as
follows (unchanged from 2022):
Accuracy of precious metals at fair value through profit or loss $4,067,249,325 (2022: $4,155,236,718)
Refer to note 3 (Significant Accounting Policies) and note 11 (Precious metals at fair value and Precious metals
due to/from Series Counterparty)
The key audit matter
How the matter was addressed in our audit
The Company's investment in precious metals make up
99.7% of the total asset value of the Company and is
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 the financial statements as a whole, the
precious metals were identified as a matter which had the
greatest effect on our overall audit strategy and
allocation of resources in planning and completing our
audit.
Our audit procedures 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 evidence obtained, we found that that the
accuracy of the precious metals was not materially
misstated.
Existence of precious metals at fair value $4,067,249,325 (2022: $4,155,236,718)
Refer to note 3 (Significant accounting policies) and note 11 (Precious metals at fair value and Precious metals
due to/from Series Counterparty)
The key audit matter
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 audit procedures 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 evidence obtained, we found that that the
existence of precious metals was not materially
misstated.
Xtrackers ETC Public Limited Company
Page 15
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC
(CONTINUED)
Our application of materiality and an overview of the scope of our audit
Materiality for the financial statements as a whole was set at $40.7million (2022: $41.8million), determined with
reference to a benchmark of the Company’s total asset value (of which it represents 100 basis points (2022: 100
basis points)) as at 30 September 2023, which we consider to be one of the principal considerations for members
of the Company in assessing the financial performance of the Company.
In line with our audit methodology, our procedures on individual account balances and disclosures were performed
to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually
immaterial misstatements in individual account balances add up to a material amount across the financial statements
as a whole. Performance materiality for the financial statements as a whole was set at 75% (2022: 75%) of
materiality for the financial statements as a whole, which equates to $30.6million (2022: $31.3million). We applied
this percentage in our determination of perfomance materiality because we did not identify any factors indicating
an elevated level of risk
We reported to the Board of Directors any corrected or uncorrected identified misstatements exceeding 5 basis
points (2022: 5 basis points), in addition to other identified misstatements that warranted reporting on qualitative
grounds.
In planning the audit, we applied materiality to assist in determining what risks were significant risks, including
those set out above, and to determine the nature, timing and extent of our audit response.
Our audit was undertaken to the materiality and performance materiality level specified above and was all
performed by a single engagement team in Dublin.
Other information
The directors are responsible for the other information presented in the Annual Report together with the financial
statements. The other information comprises the information included in the Directors’ report, Directors and Other
Information 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.
Xtrackers ETC Public Limited Company
Page 16
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF XTRACKERS ETC PLC
(CONTINUED)
Corporate governance statement
As required by the Companies Act 2014, we report, in relation to information given in the Corporate Governance
Statement on page 7, that:
- based on the work undertaken for our audit, in our opinion, the description of the main features of internal
control and risk management systems in relation to the financial reporting process is consistent with the financial
statements and has been prepared in accordance with the Act;
- based on the work undertaken for our audit, the Company is not subject to the European Communities (Takeover
Bids (Directive 2004/25/EC)) Regulations 2006 and therefore not required to include information relating to
voting rights and other matters required by those Regulations and specified by the Companies Act 2014 for our
consideration in the Corporate Governance Statement; and
- based on our knowledge and understanding of the Company and its environment obtained in the course of our
audit, we have not identified any material misstatements in that information We also report that, based on work
undertaken for our audit, the information required by the Act is contained in the Corporate Governance
Statement.
Our opinions on other matters prescribed by the Companies Act 2014 are unmodified
We have obtained all the information and explanations which we consider necessary for the purposes 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 financial statements are in agreement with the accounting records.
We have nothing to report on other matters on which we are required to report by exception
The Companies Act 2014 requires us to report to you if, in our opinion, the disclosures of directors’ remuneration
and transactions required by Sections 305 to 312 of the Act are not made. We have nothing to report in this regard.
Respective responsibilities and restrictions on use
Responsibilities of directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities statement set out on page 10 the directors
are responsible for: the preparation of the financial statements including being satisfied that they give a true and
fair view; such internal control as they determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error; assessing the Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of
accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative
but to do so.
Xtrackers ETC Public Limited Company
Page 17
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
A fuller description of our responsibilities is provided on IAASA’s website at:
https://iaasa.ie/publications/description-of-the-auditors-responsibilities-for-the-audit-of-the- financial-statements/.
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 this report, or for the opinions we have formed.
Jorge Fernandez Revilla Date: 23 January 2024
for and on behalf of
KPMG
Chartered Accountants, Statutory Audit Firm
1 Harbourmaster Place
IFSC
Dublin 1
D01 F6F5
Xtrackers ETC Public Limited Company
Page 18
Statement of comprehensive income
For the year ended 30 September 2023
Year ended
Year ended
30-Sep-23
30-Sep-22
Notes
USD
USD
Revenue
6
7,431,840
7,633,028
Net fair value gain/(loss) on Precious metals at fair value and Precious metals due
from Series Counterparty
4
565,233,010
(538,548,298)
Net fair value (loss)/gain on ETC Securities at fair value
5
(565,233,010)
538,548,298
Operating expenses
7
(7,428,662)
(7,630,103)
Operating profit before taxation
3,178
2,925
Taxation
9
(794)
(732)
Profit and total comprehensive income for the year
2,384
2,193
Xtrackers ETC Public Limited Company
Page 19
Statement of financial position
As at 30 September 2023
30-Sep-23
30-Sep-22
Notes
USD
USD
Assets
Cash and cash equivalents
10
765,044
2,415,218
Precious metals at fair value
3e,11
4,067,249,325
4,155,236,718
Precious metals due from Series Counterparty
3f,11
2,689,877
5,833,251
Amounts receivable on Precious metals awaiting settlement
3e
2,814,106
16,251,868
Amounts receivable on ETC Securities awaiting settlement
3g
4,571,761
-
Other receivables
3i
1,121,952
79,103
Total assets
4,079,212,065
4,179,816,158
Liabilities and equity
ETC securities at fair value
3h,12
4,070,939,819
4,159,401,905
Precious metals due to Series Counterparty
3f,11
-
-
Amounts payable on Precious metals awaiting settlement
3e
73,566
-
Amounts payable on ETC Securities awaiting settlement
3g
6,243,267
17,927,883
Other payables
3i
1,919,802
2,453,143
Total liabilities
4,079,176,454
4,179,782,931
Equity
Share capital
13
27,223
27,223
Retained earnings
8,388
6,004
Total equity
35,611
33,227
Total liabilities and equity
4,079,212,065
4,179,816,158
The financial statements on pages 1 to 43 were approved by the Board and authorised for issue on 23 January 2024.
On behalf of the Board
Eileen Starrs Claudio Borza
Director Director
Xtrackers ETC Public Limited Company
Page 20
Statement of changes in equity
For the year ended 30 September 2023
Note
Called up Share
Capital
Retained
Earnings
Total Equity
USD
USD
USD
Balance as at 1
st
October 2021
27,223
3,811
31,034
Issued share capital
13
-
-
-
Comprehensive income for the financial year
-
2,193
2,193
Balance as at 30 September 2022
27,223
6,004
33,227
Note
Called up Share
Capital
Retained
Earnings
Total Equity
USD
USD
USD
Balance as at 1
st
October 2022
27,223
6,004
33,227
Issued share capital
13
-
-
-
Comprehensive income for the financial year
-
2,384
2,384
Balance as at 30 September 2023
27,223
8,388
35,611
Xtrackers ETC Public Limited Company
Page 21
Statement of cash flows
For the year ended 30 September 2023
Year ended
30-Sept-23
Year ended
30-Sept-22
USD
USD
Notes
Cash flows from operating activities
Amount received from metal sold
7,428,662
7,652,581
Amount paid for operating expenses
(9,078,836)
(7,462,397)
Net cash inflows from operating activities
(1,650,174)
190,184
Movement in cash and cash equivalents
(1,650,174)
190,184
Cash and cash equivalents at start of the year
2,415,218
2,225,034
Cash and cash equivalents at end of the year 10 765,044 2,415,218
Non-cash transactions during the year include:
USD
USD
Issuance of ETC Securities
836,068,782
2,940,808,903
Redemptions of ETC Securities
(1,489,763,877)
(1,608,472,342)
Additions of Precious metals
848,154,524
2,943,249,057
Disposals of Precious metals
(1,428,836,399)
(1,857,045,536)
Settlements of Precious metals due to/from Series Counterparty
(68,253,239)*
(220,779,215)*
*Settlements of Precious metals due to/from Series Counterparty comprise of gross inflows amounting to USD 599,208,915 (2022: USD
418,276,927) and gross outflows amounting to USD 530,955,676 (2022: USD 639,056,142).
Xtrackers ETC Public Limited Company
Page 22
Notes to the financial statement
For year ending 30 September
2023
1 General information
Xtrackers ETC Plc (the “Company”), the reporting entity, was incorporated on 18 May 2018 as a public limited company with limited liability
under the Companies Act 2014, as amended, with registration number 627079. The Company commenced operations on 16 April 2020. The
registered office of the Company is at 4th Floor, 3 George’s Dock, IFSC, Dublin 1, Ireland.
The purpose of the Company is to provide a vehicle that facilitates the issuance and subsequent listing and trading of ETC Securities. The ETC
Securities are issued under limited recourse arrangements whereby the Company has no residual exposure to the value of the Precious metals and
Precious metals due from Series Counterparty, therefore from a commercial and accounting perspective the aggregate gains and losses in respect
of Precious metals and Precious metals due from Series Counterparty will always be offset by a corresponding loss or gain on the ETC Securities.
Further details regarding the risks of the Company are disclosed in note 15. Further details regarding the application of IFRS 13 are disclosed in
note 16.
Exchange traded products are not typically actively managed, are significantly lower in cost when compared to actively managed mutual funds
and are easily accessible to investors. No active trading or management of Precious metals and Precious metals due from Series Counterparty is
required because the Company only receives or delivers Precious metals on the issue and redemption of ETC Securities, and only holds Precious
metals to support the ETC Securities.
The ETC Securities issued are listed on the following exchanges: the Frankfurt Stock Exchange, the Borsa Italiana and the London Stock Exchange
plc. In all cases, the ETC securities issued by the Company are limited recourse.
Each ETC Security of a Series has metal entitlement (the “Metal Entitlement”) expressed as an amount in weight (in troy or fine troy ounces) of
the relevant metal linked to such Series. This Metal Entitlement starts at a predetermined initial Metal Entitlement for the relevant Series and is
reduced weekly by a Product fee (in metal) for the Series, and in respect of FX Hedged ETC Securities, an adjustment is also required for any
exchange gains or losses under the relevant Balancing Agreement.
The Balancing Agreement sets out the arrangements between the Company and J.P. Morgan AG (the “Series Counterparty”) with respect to the
rebalancing of the Metal held by the Company for the relevant ETC securities. Such rebalancing will be made in respect of FX Hedged ETC
Securities to reflect gains or losses in respect of the foreign exchange hedge element of the metal entitlement per ETC Security. The Balancing
Agreement broadly seeks to account for any currency hedging gains or losses by requiring deliveries of Precious Metal to be made between the
Company and the Series Counterparty so that, as a result of such deliveries, the amount of Underlying Metal held by the Company should equal
the aggregate metal entitlement per ETC Security in respect of all outstanding ETC Securities of the relevant Series. Where there are foreign
exchange gains and the metal entitlement per ETC Security consequently increases, the Series Counterparty will be required to deliver additional
Metal equivalent to such increase to the Company under the Balancing Agreement. Where there are losses and the metal entitlement per ETC
Security consequently decreases, the Company will be required to deliver Metal equivalent to such decrease to the Series Counterparty under the
Balancing Agreement. The balancing agreement is recognised as a derivative in the financial statements of the Company. Refer to note 3(b) and
3(f) for more detail.
Subscriptions
Only Authorised Participants may subscribe for ETC Securities from the Company. The Authorised Participant(s) in respect of each Series of
ETC Securities at the relevant Tranche Issue Date of such Series will be specified in the relevant Final Terms and have been disclosed on page 1.
The Company will, as subscription proceeds for the issue of ETC Securities, receive an amount of the relevant Metal from the Authorised
Participants subscribing for the ETC Securities sufficient to cover the relevant metal entitlement per ETC Security.
Securities may be offered by the Authorised Participant to any category of potential investors on the secondary market provided that the offer
complies with the selling restrictions set out in the Company’s prospectus.
Redemptions and Buy-backs
Buy-backs
An Authorised Participant may request that the Company buys back ETC Securities from such Authorised Participant. Prior to settlement of a
Buy-Back, the Authorised Participant will be required to deliver to the Issuing Agent acting on behalf of the Company the relevant ETC Securities
being bought back. The Company will not cancel such ETC Securities and deliver to the Authorised Participant an amount of Metal equal to the
product of the Metal Entitlement on the relevant trade date and the total number of ETC Securities being bought back, until the Issuing Agent has
confirmed receipt of such ETC Securities.
Xtrackers ETC Public Limited Company
Page 23
Notes to the financial statement
For year ending 30 September
2023
1. General information (continued)
Redemptions
The ETC Securities of a Series may become due and payable prior to their Scheduled Maturity Date, which is known as an “Early Redemption
Event” as defined in the Company’s Prospectus. If any of the Early Redemption Events occur, each ETC Security will become due and payable at
an amount (the “Early Redemption Amount”) equal to the greater of (i) the Early Metal Redemption Amount (defined below) plus the Specified
Interest Amount (as defined in the Company’s prospectus) and (ii) the Minimum Debt Principal Amount (as defined in the Company’s prospectus)
plus the Specified Interest Amount.
The “Early Metal Redemption Amount” is determined by multiplying (i) the metal entitlement per ETC Security as at the Early Redemption
Valuation Date (defined below); and (ii) the Average Metal Sale Price during the Early Redemption Disposal Period (defined below), net of
associated fees, deductions and taxes.
The “Early Redemption Valuation Date” is (i) the date specified as such in relation to the relevant Early Redemption Event or if not specified, the
date of the occurrence of such Early Redemption Event or (ii) the date on which the Trustee gives notice that due to the occurrence of an event of
default, the ETC Securities shall become due and payable at their Early Redemption Amount on the Scheduled Early Redemption Date, or if such
day is not a business day, the next following business day.
The “Early Redemption Disposal Period” is the period which lasts for the number of days specified in the Final Terms, which shall start from (but
exclude) the date falling four non-disrupted business days following the /Early Redemption Valuation Date.
On the Scheduled Maturity Date, each ETC Security will become due and payable at an amount (the “Final Redemption Amount”) equal to the
greater of (i) the Final Metal Redemption Amount (defined below) plus the Specified Interest Amount and (ii) 10 per cent. of the Issue Price per
ETC Security as at the Series Issue Date (the “Minimum Debt Principal Amount”) plus the Specified Interest Amount.
The “Final Metal Redemption Amount” is determined by multiplying (i) the metal entitlement per ETC Security as at the Final Redemption
Valuation Date (defined below); and (ii) the volume-weighted average prices per metal unit at which the Metal Agent is able to sell the Underlying
Metal (“Average Metal Sale Price”) during the Final Redemption Disposal Period (defined below), net of associated fees, deductions and taxes.
“Final Redemption Valuation Date” is the date specified in the Final Terms or, if such day is not business day, the next following business day.
The “Final Redemption Disposal Period” is the period which lasts for the number of days specified in the Final Terms, which shall start from (but
exclude) the date falling four non-disrupted business days following the Final Redemption Valuation Date.
2. Basis of preparation
The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 September 2023; the
comparative information for the year ended 30 September 2022 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.
Xtrackers ETC Public Limited Company
Page 24
Notes to the financial statements (continued)
For the year ended 30 September 2023
2. Basis of preparation (continued)
d. Use of estimates and judgements
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of
which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimates are revised and in any future periods affected. Details of material judgements and estimates have been further described in
accounting policy notes 3(e), 3(f), 3(h) and note 16.
Judgements
The following are the critical judgements and estimates that the Directors have made in the process of applying the Company’s accounting policies
and that have the most significant effect on the amounts recognised in the financial statements.
Accounting for Precious metals at fair value
Under IFRS there is no standard treatment for the classification of physical metals. The Precious metals are held to provide the security holders
with the exposure to changes in the fair value of Precious metals and therefore the Directors consider that carrying the Precious metals at fair
value through profit or loss, consistent with the treatment that would be applicable to a financial instrument, reflects the objectives and the purpose
of holding this asset.
e. Accounting standards
New effective EU endorsed standards for 01 October 2022 to 30 September 2023
Standards/interpretations
Effective date
Onerous Contracts Cost of Fulfilling a Contract (amendments to IAS 37)
1 January 2022
Annual Improvements to IFRS Standards 2018-2020
1 January 2022
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
1 January 2022
Reference to Conceptual Framework (Amendments to IFRS 3)
1 January 2022
None of the above standards, amendments and interpretations had a significant impact on the Company’s financial statements.
Standards available for early adoption
Standards/interpretations
Effective date
Amendments to IAS 12 Income Taxes - deferred tax related to assets and liabilities arising from a
single transaction
1 January 2023
IFRS 17 Insurance Contracts
1 January 2023
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practise Statement 2)
1 January 2023
Definition of Accounting Estimate (Amendments to IAS 8)
1 January 2023
The amendments are not expected to have a significant impact on the Company’s financial statements.
3. Significant accounting policies
a) Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency at the date of the transactions. Monetary assets and liabilities
denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into the functional currency at
the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical
cost are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on translation are recognised in the
Statement of comprehensive income.
Gains and losses arising on translation of ETC securities at fair value and Precious metals at fair value are included in the Statement of
comprehensive income together with fair value gains and losses as noted in note 3b and 3c.
Xtrackers ETC Public Limited Company Page 25
Notes to the financial statements (continued)
For the year ended 30 September 2023
3. Significant accounting policies (continued)
b) Net fair value gain/loss on Precious Metal at fair value and Precious metals due to/from Series Counterparty
Net fair value gain on Precious metals and Precious metals due to/from Series Counterparty relates to the movement in the prices of metals and
hedging in respect of the derivative embedded in the Balancing Agreement and includes all realised and unrealised fair value changes. Any gains
and losses arising from changes in fair value of the Precious metals and changes in fair value of Precious metals due to/from Series Counterparty
are recorded in net fair value gain/loss on Precious metals at fair value and Precious metals due to/from Series Counterparty in the Statement of
comprehensive income.
c) Net fair value gain/loss on ETC securities at fair value
Net fair value gain/loss on ETC securities at fair value relates to ETC Securities issued and includes all realised and unrealised fair value changes
and foreign exchange differences. Any gains and losses arising from changes in the fair value of the ETC securities at fair value are recorded in
net fair value gain/loss on ETC Securities in the Statement of comprehensive income. Details of recognition and measurement of financial
liabilities are disclosed in the accounting policy of financial instruments (note 3(h)). Further details regarding the application of IFRS 13 are
disclosed in note 16.
d) Revenue and Expenses
Revenue is measured based on a consideration of the amount to which the Company expects to be entitled. All other income and expenses are
recognised on an accrual basis.
Product Fees
Each Series pays a product fee prepared by the Determination Agent, which accrues on a daily basis. This fee is used to pay the agreed fees of
other service providers of the Company at an annual rate ranging between 0.12% and 0.73% 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.
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 2023 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 2023 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 2023 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.
Xtrackers ETC Public Limited Company
Page 26
Notes to the financial statements (continued)
For the year ended 30 September 2023
3. Significant accounting policies (continued)
f) Precious metals due to/from Series Counterparty
Precious metals due to/from Series Counterparty (the Balancing Agreement) comprise a financial instrument whose value is linked to the
Precious Metal and foreign exchange. These instruments are mandatorily classified as financial assets/liabilities at fair value through profit or
loss upon initial recognition under IFRS 9 in consideration of contractual terms.
g) Amounts receivable/(payable) on ETC Securities awaiting settlement
Amounts receivable/(payable) on ETC Securities awaiting settlement is the ETC Securities that settle post year end in metal and are held at
amortised cost.
h) Financial instruments
Initial recognition
Financial liabilities at fair value through profit or loss are recognised initially at the trade date at which the Company becomes a party to the
contractual provisions of the instrument. Other financial liabilities are recognised on the date they are originated.
Classification
The Company has classified financial assets and financial liabilities into the following categories:
Financial assets and liabilities at fair value through profit or loss:
• Precious metals due to/from the Series Counterparty
Counterparty Financial liabilities at fair value through profit or loss:
• ETC securities at fair value through profit or loss
Financial assets at amortised cost:
• Cash and cash equivalents, receivables awaiting settlement and other receivables
Financial liabilities at amortised cost:
• Other payables and payables awaiting settlement
ETC Securities comprise a financial instrument whose redemption price is linked to exchange quoted prices. The ETC Securities are classified
as financial liabilities at fair value through profit or loss upon initial recognition under IFRS 9 as they are irrevocably designated by the entity
as such. The Company designates the ETC Securities issued as financial liabilities at fair value through profit or loss both on initial recognition
and on an ongoing basis as a result of the derivative embedded in the ETC securities.
The amortised cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus
principal repayments, plus or minus the cumulative amortisation using the effective interest rate method or any difference between the initial
amount recognised and the maturity amount, minus any reduction for impairment.
Subsequent measurement
After initial measurement, the Company measures financial instruments which are classified as at fair value through profit or loss at their fair
value. Subsequent changes in the fair value of financial instruments designated at fair value through profit or loss are recognised directly in the
profit or loss in the Statement of comprehensive income. Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
Derecognition
The Company derecognises a financial asset when the contractual rights to the asset expire, or it transfers the rights to the financial asset in a
transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred
financial assets that is created or retained by the Company is recognised as a separate asset or liability. The Company derecognises a financial
liability when its contractual obligations are discharged, cancelled or expire.
Fair value measurement principles
Financial assets designated at fair value through profit or loss are valued using the appropriate metal prices and/or forward foreign exchange
prices consistent with the description in the accounting policy for Precious metals and Precious metals due to/from Series Counterparty above.
The exchange quoted value of the ETC Securities is determined by reference to exchange quoted prices. Changes in the fair value of the ETC
Securities are recognised in the Statement of Comprehensive Income.
Identification and measurement of impairment
IFRS 9 requires an impairment assessment to be carried out on its financial assets. The Directors have assessed that impairment does not
apply to financial assets classified as fair value through profit or loss. The Directors consider the probability of default to be close to zero, as
these instruments have a low risk of default and the counterparties have a strong capacity to meet their contractual obligations in the near
term. As a result, no loss allowance has been recognised in the financial statements based on 12-month expected credit losses as any such
impairment would be wholly insignificant to the Company.
Xtrackers ETC Public Limited Company
Notes to the financial statements (continued)
For the year ended 30 September 2023
Page 27
3. Significant accounting policies (continued)
i) Other receivables and payables
Other receivables and payables are accounted for at amortised cost.
j) Cash and cash equivalents
Cash and cash equivalents include deposits held at call with the cash custodian which are subject to insignificant risk of changes in their fair value and are
used by the Company in the management of its short-term commitments.
k) Share capital
Share capital is issued in Euro ("EUR"). Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction from the proceeds.
l) Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from
those of other business segments. The Directors are responsible for ensuring that the Company carries out business activities in line with the transaction
documents. They may delegate some or all of the day-to-day management of the business including the decisions to purchase and sell securities to other parties
both internal and external to the Company. The decisions of such parties are reviewed on a regular basis to ensure compliance with the policies and legal
responsibilities of Directors. Therefore, the Directors, as chief operating decision maker, retain full responsibility as to major allocation decisions of the
Company.
The Board believe that each Series can be treated as a segment. Furthermore, financial information reviewed by the Board of Directors is split out by Series
and decisions are made on the basis of this information. The split of financial liabilities designated at fair value through profit or loss by Series is shown in
note 12 to the financial statements. Details of the fair value movement by Series and the year-end unit price by Series are included in note 12 which are the
key measures of performance for each Series. There were no transactions between reportable segments during the year. All the entity-wide disclosures are
covered in the Statement of financial position and the Statement of comprehensive income and the related notes. In addition, the Company has no single major
customer from which greater than 10% of revenue is generated.
The below table provides segmental reporting breakdown for the year ended 30 September 2023:
Series
Revenue
Net fair value gain on
Precious metals at
fair value through
profit or loss
Net fair value loss on
ETC securities at fair
value
Operating
expenses
Operating
profit before
taxation
Series 1
75,560
1,378,831
(1,378,831)
(75,106)
454
Series 2
3,905,506
369,341,345
(369,341,345)
(3,905,052)
454
Series 3
216,130
18,385,922
(18,385,922)
(215,676)
454
Series 4
298,193
9,077,060
(9,077,060)
(297,739)
454
Series 5
1,928,754
105,856,498
(105,856,498)
(1,928,300)
454
Series 6
912,741
59,502,087
(59,502,087)
(912,287)
454
Series 7
94,956
1,691,267
(1,691,267)
(94,502)
454
Total
7,431,840
565,233,010
(565,233,010)
(7,428,662)
3,178
The below table provides segmental reporting breakdown for the year ended 30 September 2022:
Series
Revenue
Net fair value loss on
Precious metals at
fair value through
profit or loss
Net fair value gain on
ETC securities at fair
value
Operating
expenses
Operating
profit before
taxation
Series 1
437,400
(2,418,881)
2,418,881
(436,982)
418
Series 2
2,464,669
(270,747,060)
270,747,060
(2,464,251)
418
Series 3
702,226
(17,413,452)
17,413,452
(701,808)
418
Series 4
559,633
(3,788,850)
3,788,850
(559,215)
418
Series 5
1,949,025
(148,642,933)
148,642,933
(1,948,607)
418
Series 6
1,029,568
(91,935,564)
91,935,564
(1,029,150)
418
Series 7
490,507
(3,601,558)
3,601,558
(490,090)
417
Total
7,633,028
(538,548,298)
538,548,298
(7,630,103)
2,925
Xtrackers ETC Public Limited Company
Notes to the financial statements (continued)
For the year ended 30 September 2023
Page 28
4. Net fair value gain/(loss) on Precious Metals and Precious metals due to/from the Series
Counterparty
Year-ended
30-Sept-23
USD
Year-ended
30-Sept-22
USD
Net fair value gain/(loss) on Precious metals
500,123,145
(328,483,990)
Net fair value gain/(loss) on Precious metals due from Series Counterparty
65,109,865
(210,064,308)
565,233,010
(538,548,298)
5. Net fair value (loss)/gain on ETC Securities
Year-ended
30-Sept-23
USD
Year-ended
30-Sept-22
USD
Net fair value (loss)/gain on ETC Securities
(565,233,010)
538,548,298
(565,233,010)
538,548,298
6. Revenue
Year-ended
30-Sept-23
USD
Year-ended
30-Sept-22
USD
Revenue relates to:
Revenue from contracts with customers – product fee
7,431,840
7,633,028
7,431,840
7,633,028
7. Operating expenses
Year-ended
30-Sept-23
USD
Year-ended
30-Sept-22
USD
Product fees to the Programme Administrator
7,428,662
2,282,761
Other expenses
-
5,347,342
7,428,662
7,630,103
Each Series pays a product fee prepared by the Determination Agent, which accrues on a daily basis. This fee is used to pay the agreed fees of service
providers of the Company. The Product fee is the rate set out for each Series as of 30 September 2023 and is applied to the Metal Entitlement on a daily
basis to determine a daily deduction of an amount of Metal from the Metal Entitlement. Refer to note 3 and 17 for more information.
Pursuant to the Programme Administrator Agreement, DWS International GmbH the Programme Administrator receives 100% of the Product fee for each
series issued. In return DWS International GmbH pays a designated list of Programme expenses as set out in the amended Programme Administrator
Agreement, including where the aggregate of such expenses exceeds the Product Fee due to DWS International GmbH.
8. Auditors’ remuneration
Fees for the statutory auditor, KPMG Ireland:
Year-ended
30-Sept-23
USD
Year-ended
30-Sept-22
USD
Audit fees:
Statutory audit of financial statements
117,593*
102,939*
Other Non-Audit Service fees:
Tax advisory services
6,230*
5,654*
123,823
108,593
*Audit Fee (excluding VAT): EUR 111,000 (2022: EUR 105,600)
*Tax fee (excluding VAT): EUR 5,880 (2022: EUR 5,800)
Xtrackers ETC Public Limited Company
Notes to the financial statements (continued)
For the year ended 30 September 2023
Page 29
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-23
USD
Year-ended
30-Sept-22
USD
Net result for the financial year before tax
3,178
2,925
Corporation tax rate 25%
(794)
(732)
Taxation charge
(794)
(732)
10. Cash and cash equivalents
Year-ended
30-Sept-23
USD
Year-ended
30-Sept-22
USD
Cash at bank
765,044
2,415,218
765,044
2,415,218
11. Precious metals at fair value and Precious metals due to/from Series
Counterparty
Precious Metal
30-Sept-23
USD
Net Precious
metals due
to/from Series
Counterparty
30-Sept-23
USD
Precious metals at fair value
4,067,249,325
-
Precious metals due from Series Counterparty
-
2,689,877
4,067,249,325
2,689,877
Movement in Precious metals and Precious metals due to/from Series
Counterparty
Precious Metal
30-Sept-23
USD
Net Precious
metals due
to/from Series
Counterparty
30-Sept-23
USD
At beginning of the year
4,155,236,718
5,833,251
Additions during the year
848,154,524
-
Disposals/settlements during the year*
(1,436,265,061)
(68,253,239)
Net changes in fair value during the year
500,123,144
65,109,865
At end of the year
4,067,249,325
2,689,877
Disposals 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 68,253,239.
*Disposals/settlements during the year incorporates the value of the metals sold during the year to cover the expenses of the Company of USD 7,428,662.
However, this fee is excluded from the disposals of precious metals amount in the non-cash transactions during the year listing in the Statement of Cash
Flows as it is a cash transaction.
Xtrackers ETC Public Limited Company
Notes to the financial statements (continued)
For the year ended 30 September 2023
Page 30
11. Precious metals at fair value and Precious metals due to/from Series
Counterparty (continued)
Precious Metal
30-Sept-22
USD
Net Precious
metals due
to/from Series
Counterparty
30-Sept-22
USD
Precious metals at fair value
4,155,236,718
-
Precious metals due from Series Counterparty
-
5,833,251
4,155,236,718
5,833,251
Movement in Precious metals and Precious metals due to/from Series
Counterparty
Precious Metal
30-Sept-22
USD
Net Precious
metals due
to/from Series
Counterparty
30-Sept-22
USD
At beginning of the year
3,405,169,768
(4,881,656)
Additions during the year
2,943,249,057
-
Disposals/settlements during the year*
(1,864,698,117)
220,779,215
Net changes in fair value during the year
(328,483,990)
(210,064,308)
At end of the year
4,155,236,718
5,833,251
Settlements of Net Precious metals due to/from Series Counterparty were in respect of Precious metals per the Balancing agreement into metals at fair value of
USD 220,779,215.
*Disposals/settlements during the year incorporates the value of the metals sold during the year to cover the expenses of the Company of USD 7,652,581.
However, this fee is excluded from the disposals of precious metals amount in the non-cash transactions during the year listing in the Statement of Cash
Flows as it is a cash transaction.
Movement in Metal in troy ounces for the year ended 30 September 2023
Opening
balance
Metal
Metal
Metal
Price of metal
Fair value
USD
Series
Description
1-Oct-22
Troy
Ounces
contributed
Troy Ounces
distributed
Troy Ounces
30- Sep -23
Troy Ounces
per ounce
30-Sep-23
30-Sept-23
USD
Series 1
Xtrackers IE Physical
Platinum ETC
21,460
6,613
(9,404)
18,669
$923.00
17,231,689
Series 2
Xtrackers IE Physical Gold
ETC
1,886,172
268,449
(568,273)
1,586,348
$1,870.50
2,967,263,841
Series 3
Xtrackers IE Physical Silver
ETC
4,642,093
598,260
(460,792)
4,779,561
$23.075
110,288,367
Series 4
Xtrackers IE Physical Silver
EUR Hedged EC
1,646,301
1,444,116
(1,494,892)
1,595,525
$23.075
36,816,735
Series 5
Xtrackers IE Physical Gold
EUR Hedged ETC
343,330
307,533
(314,242)
336,621
$1,870.50
629,649,302
Series 6
Xtrackers IE Physical Gold
GBP Hedged ETC
166,301
164,007
(171,611)
158,697
$1,870.50
296,843,189
Series 7
Xtrackers IE Physical
Platinum EUR Hedged ETC
13,784
11,496
(15,360)
9,920
$923.00
9,156,202
8,719,439
2,800,475
(3,034,573)
8,485,341
4,067,249,325
Metal has been rounded to the nearest troy ounce in table above.
Xtrackers ETC Public Limited Company
Notes to the financial statements (continued)
For the year ended 30 September 2023
Page 31
11.
Precious metals at fair value and Precious metals due to/from Series
Counterparty (continued)
Movement in Metal in troy ounces for the year ended 30 September 2022
Series
Description
Opening
balance
1-Oct-21
Troy Ounces
Metal
contributed
Troy Ounces
Metal
distributed
Troy Ounces
Metal
30-Sep-22
Troy Ounces
Price of
metal per
ounce
30-Sep-22
Fair value
USD
30-Sept-22
USD
Series 1
Xtrackers IE Physical
Platinum ETC
18,115
20,303
(16,958)
21,460
$864.00
18,541,858
Series 2
Xtrackers IE Physical Gold
ETC
1,158,097
1,186,577
(458,502)
1,886,172
$1,671.75
3,153,207,783
Series 3
Xtrackers IE Physical Silver
ETC
8,189,579
1,741,483
(5,288,969)
4,642,093
$19.02
88,292,607
Series 4
Xtrackers IE Physical Silver
EUR Hedged EC
6,838,961
1,661,283
(6,853,943)
1,646,301
$19.02
31,312,636
Series 5
Xtrackers IE Physical Gold
EUR Hedged ETC
479,387
359,365
(495,422)
343,330
$1,671.75
573,961,844
Series 6
Xtrackers IE Physical Gold
GBP Hedged ETC
107,135
207,205
(148,039)
166,301
$1,671.75
278,010,266
Series 7
Xtrackers IE Physical
Platinum EUR Hedged ETC
24,618
13,149
(23,983)
13,784
$864.00
11,909,724
16,815,892
5,189,364
(13,285,816)
8,719,439
4,155,236,718
Metal has been rounded to the nearest troy ounce in table above.
12.
ETC securities at fair value through profit or loss
30-Sep-23
30-Sep-22
Nominal units
issued
Fair value
Nominal units
issued
Fair value
USD
USD
ETC Securities issued
144,024,756
4,070,939,819
166,712,039
4,159,401,905
Movement in ETC Securities issued
30-Sep-23
30-Sep-22
USD
USD
At beginning of the year
4,159,401,905
3,365,613,642
Issue of ETC Securities issued during the year
836,068,782
2,940,808,903
Redemption of ETC Securities issued during the year
(1,489,763,878)
(1,608,472,342)
Net changes in fair value during the year
565,233,010
(538,548,298)
At end of the year
4,070,939,819
4,159,401,905
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.
Xtrackers ETC Public Limited Company
Notes to the financial statements (continued)
For the year ended 30 September 2023
Page 32
12.
ETC securities at fair value through profit and loss (continued)
The ETC securities in issue at 30 September 2023 are as follows:
Series
Description
CCY
Maturity
Date
Units
outstanding
30 -Sep-23
Metal entitlement
per ETC Security*
(ounces)
Value per ETC
Security
(Local CCY)
30-Sept-23
Value per ETC
Security USD
30-Sept-23
Fair value
USD
30-Sept-23
Series 1
Xtrackers IE Physical
Platinum ETC
USD
17-Apr-80
756,734
0.0247
$22.7694
$22.7694
17,230,386
Series 2
Xtrackers IE Physical
Gold ETC
USD
23-Apr-80
102,823,390
0.0154
$28.8515
$28.8515
2,966,605,505
Series 3
Xtrackers IE Physical
Silver ETC
USD
30-Apr-80
3,292,199
1.4384
$33.1910
$33.1910
109,271,386
Series 4
Xtrackers IE Physical
Silver EUR
EUR
23-Apr-80
1,274,583
1.2580
€27.3572
$29.0288
36,999,552
Series 5
Hedged ETC
Xtrackers IE Physical
Gold EUR
EUR
21-May-80
24,453,307
0.0138
€24.4665
$25.8855
632,986,670
Hedged ETC
Series 6
Xtrackers IE Physical
Gold GBP
GBP
23-May-80
10,960,773
0.0146
£22.3046
$27.2473
298,650,999
Series 7
Hedged ETC
Xtrackers IE Physical
Platinum EUR
EUR
29-May-80
463,770
0.0215
€18.7077
$19.8273
9,195,321
Hedged ETC
Total
144,024,756
4,070,939,819
*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 2023
Opening balance
Net changes in
Closing balance
Series
Description
1-Oct-22
USD
Issuances
USD
Redemptions
USD
fair values
USD
30-Sept-23
USD
Series 1
Xtrackers IE Physical
Platinum ETC
18,540,464
6,544,609
(9,233,517)
1,378,831
17,230,386
Series 2
Xtrackers IE Physical Gold
ETC
3,139,966,835
507,721,658
(1,050,424,334)
369,341,345
2,966,605,505
Series 3
Xtrackers IE Physical Silver
ETC
88,289,172
14,062,884
(11,466,591)
18,385,922
109,271,386
Series 4
Xtrackers IE Physical Silver
EUR Hedged ETC
31,912,511
10,628,688
(14,618,707)
9,077,060
36,999,552
Series 5
Xtrackers IE Physical Gold
EUR Hedged ETC
581,841,157
205,703,259
(260,414,245)
105,856,498
632,986,670
Series 6
Xtrackers IE Physical Gold
GBP Hedged ETC
286,737,804
87,355,684
(134,944,576)
59,502,087
298,650,999
Series 7
Xtrackers IE Physical
Platinum EUR Hedged ETC
12,113,962
4,052,000
(8,661,908)
1,691,267
9,195,321
4,159,401,905
836,068,782
(1,489,763,877)
565,233,010
4,070,939,819
Xtrackers ETC Public Limited Company Page 33
Notes to the financial statements (continued)
For the year ended 30 September 2023
12.
ETC securities at fair value through profit and loss (continued)
The ETC securities in issue at 30 September 2022 are as follows:
Series
Description
CCY
Maturity
Date
Units
outstanding
30 -Sep-22
Metal entitlement
per ETC Security*
(ounces)
Value per ETC
Security
(Local CCY)
30-Sept-22
Value per ETC
Security USD
30-Sept-22
Fair value
USD
30-Sept-22
Series 1
Xtrackers IE Physical
Platinum ETC
USD
17-Apr-80
866,539
0.0248
$21.3960
$21.3960
18,540,464
Series 2
Xtrackers IE Physical
Gold ETC
USD
23-Apr-80
121,623,255
0.0154
$25.8172
$25.8172
3,139,966,835
Series 3
Xtrackers IE Physical
Silver ETC
USD
30-Apr-80
3,220,624
1.4413
$27.4137
$27.4137
88,289,172
Series 4
Xtrackers IE Physical
Silver EUR
EUR
23-Apr-80
1,382,177
1.2139
€23.6503
$23.0886
31,912,511
Series 5
Hedged ETC
Xtrackers IE Physical
Gold EUR
EUR
21-May-80
26,298,241
0.0132
€22.6351
$22.1247
581,841,157
Hedged ETC
Series 6
Xtrackers IE Physical
Gold GBP
GBP
23-May-80
12,643,627
0.0137
£20.3778
$22.6785
286,737,804
Series 7
Hedged ETC
Xtrackers IE Physical
Platinum EUR
EUR
29-May-80
677,576
0.0207
€18.3284
$17.8784
12,113,962
Hedged ETC
Total
166,712,039
4,159,401,905
*Metal entitlement per ETC security is calculated exclusive of ETC securities awaiting settlement.
Movement in fair values by Series for the year ended 30 September 2022
Opening balance
Net changes in
Closing balance
Series
Description
1-Oct-21
USD
Issuances
USD
Redemptions
USD
fair values
USD
30-Sept-22
USD
Series 1
Xtrackers IE Physical
Platinum ETC
18,448,610
18,527,227
(16,016,492)
(2,418,881)
18,540,464
Series 2
Xtrackers IE Physical Gold
ETC
2,006,829,043
2,228,304,569
(824,419,717)
(270,747,060)
3,139,966,835
Series 3
Xtrackers IE Physical Silver
ETC
176,275,569
40,547,711
(111,120,656)
(17,413,452)
88,289,172
Series 4
Xtrackers IE Physical Silver
EUR Hedged ETC
145,734,767
19,155,994
(129,189,400)
(3,788,850)
31,912,511
Series 5
Xtrackers IE Physical Gold
EUR Hedged ETC
807,574,416
389,694,794
(466,785,120)
(148,642,933)
581,841,157
Series 6
Xtrackers IE Physical Gold
GBP Hedged ETC
187,234,153
238,759,551
(47,320,336)
(91,935,564)
286,737,804
Series 7
Xtrackers IE Physical
Platinum EUR Hedged ETC
23,517,084
5,819,057
(13,620,621)
(3,601,558)
12,113,962
3,365,613,642
2,940,808,903
(1,608,472,342)
(538,548,298)
4,159,401,905
Xtrackers ETC Public Limited Company
Notes to the financial statements (continued)
Page 34
For the year ended 30 September 2023
13.
Share Capital
30-Sep-23
30-Sep-22
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 2023 and as at 30 September 2022, the ordinary share capital was held by the following non-beneficial nominees:
30-Sep-23
30-Sep-22
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 (2022: 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.
Xtrackers ETC Public Limited Company
Page 35
Notes to the financial statements (continued)
For the year ended 30 September 2023
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
(36,999,552)
36,999,552
-
Total
(36,999,552)
36,999,552
-
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 369,996 and USD (369,996) respectively. However, the Balancing Agreement would offset these movements by
USD (369,996) and USD 369,996 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
(632,986,670)
632,986,670
-
Total
(632,986,670)
632,986,670
-
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 6,329,867 and USD (6,329,867) respectively. However, the Balancing Agreement would offset these movements
by USD (6,329,867) and USD 6,329,867 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
(298,650,999)
298,650,999
-
Total
(298,650,999)
298,650,999
-
In the event that the Pound Sterling moved by either +1% or -1% against the USD, the value of the ETC Security would
move by USD 2,986,510 and USD (2,986,510) respectively. However, the Balancing Agreement would offset these
movements by USD (2,986,510) and USD 2,986,510 respectively, resulting in a zero net exposure.
Xtrackers ETC Public Limited Company
Page 36
Notes to the financial statements (continued)
For the year ended 30 September 2023
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
(9,195,321)
9,195,321
-
Total
(9,195,321)
9,195,321
-
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 91,953 and USD (91,953) respectively. However, the Balancing Agreement would offset these movements by USD
(91,953) and USD 91,953 respectively, resulting in a zero net exposure.
Currency risk exposure as at 30 September 2022:
Series 4
Xtrackers IE Physical Silver EUR Hedged ETC
USD
USD
USD
ETC Security at fair value
Notional amount of the
Balancing Agreement
Net exposure
EUR
(31,912,511)
31,912,511
-
Total
(31,912,511)
31,912,511
-
In the event that the Euro moved by either +1% or -1% against the USD, the value of the ETC Security would move by
USD 319,125 and USD (319,125) respectively. However, the Balancing Agreement would offset these movements by
USD (319,125) and USD 319,125 respectively, resulting in a zero net exposure.
Series 5
Xtrackers IE Physical Gold EUR Hedged ETC
USD
USD
USD
ETC Security at fair value
Notional amount of the
Balancing Agreement
Net exposure
EUR
(581,841,157)
581,841,157
-
Total
(581,841,157)
581,841,157
-
In the event that the Euro moved by either +1% or -1% against the USD, the value of the ETC Security would move by
USD 5,818,412 and USD (5,818,412) respectively. However, the Balancing Agreement would offset these movements
by USD (5,818,412) and USD 5,818,412 respectively, resulting in a zero net exposure.
Series 6
Xtrackers IE Physical Gold GBP Hedged ETC
USD
USD
USD
ETC Security at fair value
Notional amount of the
Balancing Agreement
Net exposure
GBP
(286,737,804)
286,737,804
-
Total
(286,737,804)
286,737,804
-
In the event that the Pound Sterling moved by either +1% or -1% against the USD, the value of the ETC Security would
move by USD 2,867,378 and USD (2,867,378) respectively. However, the Balancing Agreement would offset these
movements by USD (2,867,378) and USD 2,867,378 respectively, resulting in a zero net exposure.
Xtrackers ETC Public Limited Company
Page 37
Notes to the financial statements (continued)
For the year ended 30 September 2023
15. Financial risk management (continued)
a) Market risk (continued)
(ii) Currency risk (continued)
Series 7
Xtrackers IE Physical Platinum EUR Hedged ETC
USD
USD
USD
ETC Security at fair value
Notional amount of the
Balancing Agreement
Net exposure
EUR
(12,113,962)
12,113,962
-
Total
(12,113,962)
12,113,962
-
In the event that the Euro moved by either +1% or -1% against the USD, the value of the ETC Security would move by
USD 121,140 and USD (121,140) respectively. However, the Balancing Agreement would offset these movements by
USD (121,140) and USD 121,140 respectively, resulting in a zero net exposure.
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 ETC securities for each series to an impact of a 1% movement in the price of
Precious metals as at 30 September 2023:
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
17,230,386
172,304
(172,304)
Xtrackers IE Physical Gold ETC Securities
2,966,605,505
29,666,055
(29,666,055)
Xtrackers IE Physical Silver ETC Securities
109,271,386
1,092,714
(1,092,714)
Xtrackers IE Physical Silver EUR Hedged ETC
Securities
36,999,552
369,996
(369,996)
Xtrackers IE Physical Gold EUR Hedged ETC
Securities
632,986,670
6,329,867
(6,329,867)
Xtrackers IE Physical Gold GBP Hedged ETC
Securities
298,650,999
2,986,510
(2,986,510)
Xtrackers IE Physical Platinum EUR Hedged ETC
Securities
9,195,321
91,953
(91,953)
The following table assess the sensitivity of the fair value of ETC securities for each series to an impact of a 1% movement in the price of
Precious metals as at 30 September 2022:
Series
Total for each series
1% increase in price of
Precious metals in
USD
1% decrease in price of
Precious metals in USD
Xtrackers IE Physical Platinum ETC Securities
18,540,464
185,405
(185,405)
Xtrackers IE Physical Gold ETC Securities
3,139,966,835
31,399,668
(31,399,668)
Xtrackers IE Physical Silver ETC Securities
88,289,172
882,892
(882,892)
Xtrackers IE Physical Silver EUR Hedged ETC
Securities
31,912,511
319,125
(319,125)
Xtrackers IE Physical Gold EUR Hedged ETC
Securities
581,841,157
5,818,412
(5,818,412)
Xtrackers IE Physical Gold GBP Hedged ETC
Securities
286,737,804
2,867,378
(2,867,378)
Xtrackers IE Physical Platinum EUR Hedged ETC
Securities
12,113,962
121,140
(121,140)
Xtrackers ETC Public Limited Company
Page 38
Notes to the financial statements (continued)
For the year ended 30 September 2023
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-23
30-Sept-22
USD
USD
Precious metals due from Series Counterparty
2,689,877
5,833,251
Amounts Receivable on Precious metals awaiting settlement
2,814,106
16,251,868
Amounts Receivable on ETC Securities awaiting settlement
4,571,761
-
Other receivables
1,121,952
79,103
Cash and cash equivalents
765,044
2,415,219
11,962,740
24,579,441
As at 30 September 2023, no financial assets carried at amortised cost were past due or impaired (2022: Nil). The Directors have also
considered the credit risk and counterparty risk with JPMorgan as custodian (the "Custodian") and Series Counterparty respectively, of the
Precious metals held by the Company given the significance of the Precious metals to the overall financial position of the Company. As at
30 September 2023, the Company held Precious metals at fair value of USD 4,067,249,325 (2022: 4,155,236,718) with JP Morgan. Amounts
payable on ETC securities awaiting settlement amounted to USD 6,243,267 (2022: USD: 17,927,883) and Amounts receivable on ETC securities
awaiting settlement amounted to USD 4,571,760 (2022: Nil). Precious metals due from the Series Counterparty with a fair value of USD
2,689,877 (2022: USD 5,833,251) and Precious metals due to the Series Counterparty with a fair value of USD Nil (2022: USD Nil) was
held with JPMorgan as at 30 September 2023. Amount payable on Precious metals awaiting settlement with a fair value of USD 73,566 (2022:
USD Nil), amount receivable on the Precious metals awaiting settlement USD 2,814,106 (2022: USD 16,251,868) and cash and cash
equivalents to the amount of USD 765,044 (2022: USD 2,415,219) were held with JPMorgan.
Considering the credit rating status of JPMorgan (2023: S&P A+ (2022: S&P A+)), the Directors are of the opinion that counterparty risk is
acceptable. Ultimately, all credit and counterparty risks associated with JP Morgan are borne by the ETC Security holders.
Custodian Risk
The Company’s Custodian is JPMorgan Chase Bank N.A., London Branch (the “Custodian”). The Company’s ability to meet its obligations
with respect to the ETC Securities is dependent upon the performance of the Custodian of its obligations under the relevant Custody
Agreement. Consequently, the Securityholders are relying on the creditworthiness of the Custodian and the precious metals are segregated
from the assets of the Custodian into allocated accounts, with ownership rights remaining with the Company. To mitigate the Company’s
exposure to the Custodian, the Programme Administrator employs specific procedures to ensure that the Custodian is a reputable institution
and that the counterparty credit risk is acceptable to the Company. The Company only transacts with Custodians with high credit-ratings
assigned by international credit-rating agencies. As outlined above, the credit rating status of the Custodian is A+ (2022: A+) (Standard and
Poor’s rating).
The precious metals are held by the Custodian in their vault premises in the United Kingdom. The Custodian has no obligation to maintain
insurance specific to the Company or specific only to the precious metal held for the Company against theft, damage or loss. However, the
Custodian maintains insurance in connection with its own business operation. The level of insurance and particulars remains at the discretion
of the Custodian. There is a risk that the precious metal could be lost, stolen or damaged and the Company would not be able to satisfy its
obligations in respect of the ETC Securities. In such an event the Company would adjust the Metal Entitlement of each Security of the
relevant Series to the extent necessary to reflect such damage or loss.
Concentration risk
At the reporting date, the Company's Precious metals due from Series Counterparty were concentrated in the following asset types and
geographical location:
By industry
30-Sep-23
30-Sep-22
Types of collaterals
%
%
Gold
95.73
96.39
Silver
3.62
2.88
Platinum
0.65
0.73
100
100
Xtrackers ETC Public Limited Company
Page 39
Notes to the financial statements (continued)
For the year ended 30 September 2023
15. Financial risk management (continued)
b) Credit risk (continued)
Concentration risk (continued)
By Geographical location
30-Sep-23
30-Sep-22
Country of origin
%
%
United Kingdom*
100
100
*the Precious metals are held in a vault in the United Kingdom.
100
100
a) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company limits its exposure to liquidity
risk through the purchase of Precious metals. All liquidity risk associated with the Precious metals are ultimately borne by the ETC Security
holders. 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 contractual maturity profile of financial liabilities as at 30 September 2023 is as follows:
Carrying amount
Gross contractual
cash flows
Less than one year
USD
USD
USD
ETC securities at fair value through profit or loss
4,070,939,819
4,070,939,819
4,070,939,819
Amounts payable on ETC Securities awaiting settlement
6,243,267
6,243,267
6,243,267
Amounts payable on Precious metals awaiting settlement
73,566
73,566
73,566
Other payables
1,919,801
1,919,801
1,919,801
4,079,176,453
4,079,176,453
4,079,176,453
The contractual maturity profile of financial liabilities as at 30 September 2022 is as follows:
Carrying amount
Gross contractual
cash flows
Less than one year
USD
USD
USD
ETC securities at fair value through profit or loss
4,159,401,905
4,159,401,905
4,159,401,905
Amounts payable on ETC Securities awaiting settlement
17,927,883
17,927,883
17,927,883
Other payables
2,453,143
2,453,143
2,453,143
4,179,782,931
4,179,782,931
4,179,782,931
Due to the fact that the ETC Security holders have the option to redeem the securities before the final scheduled maturity date, the ETC securities
at fair value have been classified as due in less than one year. Maturity dates across the ETC Securities range between April 2080 and May 2080.
The carrying amount and the gross contractual cashflows are equal to the fair value of each liability as stated in the Statement of financial position.
ETC holders can request redemption on demand in accordance with the terms stated below.
Subscriptions
Only Authorised Participants may subscribe for ETC Securities from the Company. The Authorised Participant(s) in respect of each Series of
ETC Securities at the relevant Tranche Issue Date of such Series will be specified in the relevant Final Terms. The Company will, as subscription
proceeds for the issue of ETC Securities, receive an amount of the relevant Metal from the Authorised Participants subscribing for the ETC
Securities sufficient to cover the relevant metal entitlement per ETC Security.
Securities may be offered to any category of potential investors provided that the offer complies with the selling restrictions set out in the
Company’s prospectus.
Redemptions and Buy-backs
Buy-backs
An Authorised Participant may request that the Company buys back ETC Securities from such Authorised Participant. Prior to settlement of a
Buy-Back, the Authorised Participant will be required to deliver to the Issuing Agent acting on behalf of the Company the relevant ETC Securities
being bought back. The Company will not cancel such ETC Securities and deliver to the Authorised Participant an amount of Metal equal to the
product of the Metal Entitlement on the relevant trade date and the total number of ETC Securities being bought back, until the Issuing Agent
has confirmed receipt of such ETC Securities.
Xtrackers ETC Public Limited Company
Page 40
Notes to the financial statements (continued)
For the year ended 30 September 2023
15. Financial risk management (continued)
c) Liquidity risk (continued)
Redemptions and Buy-backs (continued)
Redemptions
The ETC Securities of a Series may become due and payable prior to their Scheduled Maturity Date, which is known as an “Early Redemption Event”
as defined in the Company’s Prospectus. If any of the Early Redemption Events occur, each ETC Security will become due and payable at an amount
(the “Early Redemption Amount”) equal to the greater of (i) the Early Metal Redemption Amount (defined below) plus the Specified Interest Amount
and (ii) the Minimum Debt Principal Amount plus the Specified Interest Amount.
The “Early Metal Redemption Amount” is determined by multiplying (i) the metal entitlement per ETC Security as at the Early Redemption Valuation
Date (defined below); and (ii) the Average Metal Sale Price during the Early Redemption Disposal Period (defined below), net of associated fees,
deductions and taxes.
The “Early Redemption Valuation Date” is (i) the date specified as such in relation to the relevant Early Redemption Event or if not specified, the date
of the occurrence of such Early Redemption Event or (ii) the date on which the Trustee gives notice that due to the occurrence of an event of default,
the ETC Securities shall become due and payable at their Early Redemption Amount on the Scheduled Early Redemption Date, or if such day is not a
business day, the next following business day.
The “Early Redemption Disposal Period” is the period which lasts for the number of days specified in the Final Terms, which shall start from (but
exclude) the date falling four non-disrupted business days following the Early Redemption Valuation Date.
On the Scheduled Maturity Date, each ETC Security will become due and payable at an amount (the “Final Redemption Amount”) equal to the greater
of (i) the Final Metal Redemption Amount (defined below) plus the Specified Interest Amount and (ii) 10 per cent. of the Issue Price per ETC Security
as at the Series Issue Date (the “Minimum Debt Principal Amount”) plus the Specified Interest Amount.
The “Final Metal Redemption Amount” is determined by multiplying (i) the metal entitlement per ETC Security as at the Final Redemption Valuation
Date (defined below); and (ii) the volume-weighted average prices per metal unit at which the Metal Agent is able to sell the Underlying Metal (“Average
Metal Sale Price”) during the Final Redemption Disposal Period (defined below), net of associated fees, deductions and taxes.
“Final Redemption Valuation Date” is the date specified in the Final Terms or, if such day is not business day, the next following business day.
The “Final Redemption Disposal Period” is the period which lasts for the number of days specified in the Final Terms, which shall start from (but
exclude) the date falling four non-disrupted business days following the Final Redemption Valuation Date.
d) Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Company’s processes and infrastructure,
and from external factors other than credit, markets and liquidity issues such as those arising from legal and regulatory requirements and generally
accepted standards of corporate behaviour.
Operational risks arise from all of the Company’s operations. The Company was incorporated with the purpose of engaging in those activities outlined
in note 1. All administration functions are undertaken by Wilmington Trust SP Services (Dublin) Limited. Deutsche Bank AG, Jane Street Financial
Limited, HSBC Bank Plc, Susquehanna International Securities Limited and Flow Traders B.V. Morgan Stanley & Co. International Plc, Citigroup
Global Markets Limited, Optiver VOF and Virtu Financial Ireland Limited act as the Company’s authorised participants (the " Authorised Participants"),
DWS International GmbH acts as arranger (the "Arranger") and Programme Administrator, JPMorgan Chase Bank N.A. acts as metal agent (the "Metal
Agent"), Secured Account Custodian, Fee Account Custodian, Subscription Account Custodian and Series Counterparty (“Series Counterparty”) and
State Street Fund Services (Ireland) Limited acts as issuing and determination agent.
16. Fair values
The Company's financial assets and financial liabilities at fair value through profit or loss are carried at fair value in the Statement of financial position.
The Company’s accounting policy on fair value measurement for Precious metals is disclosed in note 3(e) to the financial statements. The Company's
accounting policy on fair value measurement of ETC securities at fair value is disclosed in note 3(h). The Company measures fair values using the
following fair value hierarchy that reflects the significance of the inputs used in making the measurements.
a.
Level 1: Quoted market price in an active market for an identical instrument.
b. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
c.
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the reporting date that
would have been determined by market participants acting at arm’s length.
Xtrackers ETC Public Limited Company
Page 41
Notes to the financial statements (continued)
For the year ended 30 September 2023
16. Fair values (continued)
Level 2 prices use widely recognized valuation models for determining the fair value of common and more simple financial instruments that use only
observable market data and require little management judgement and estimation. Availability of observable market prices and model inputs reduces the
need for management judgement and estimation and also reduces the uncertainty associated with determination of fair values. Availability of observable
market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the
financial markets. 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 and are valued using the appropriate metal price and forward foreign exchange price input.
Transfers between levels are determined based on changes to the significant inputs used in their fair value measurement. The Directors evaluate whether
significant inputs to the valuation models are observable at the year-end in making a decision to transfer a valuation from one level to another.
The Company determines the effective date of transfer at the beginning of the reporting year. There were some ETC series that were reclassified from
Level 1 to Level 2 and from Level 2 to Level 1 on the basis of volume and market liquidity.
The Company does not have any financial instruments at Level 3 and there has not been any transfer between levels during the year ended 30 September
2023.
The following table presents financial assets, financial liabilities and precious metals measured at fair value on the Statement of Financial Position by
investment type and by level within the valuation hierarchy as at 30 September 2023:
Level 1
Level 2
Level 3
Total
USD
USD
USD
USD
Precious metals at fair value
4,067,249,325
-
-
4,067,249,325
Precious metals due from Series Counterparty
-
2,689,877
-
2,689,877
4,067,249,325
2,689,877
-
4,069,939,202
Level 1
Level 2
Level 3
Total
USD
USD
USD
USD
ETC securities at fair value
(3,944,438,047)
(126,501,772)
-
(4,070,939,819)
(3,944,438,047)
(126,501,772)
-
(4,070,939,819)
The following table presents financial assets, financial liabilities and precious metals measured at fair value on the Statement of Financial Position by
investment type and by level within the valuation hierarchy as at 30 September 2022:
Level 1
Level 2
Level 3
Total
USD
USD
USD
USD
Precious metals at fair value
4,155,236,718
-
-
4,155,236,718
Precious metals due from Series Counterparty
-
5,833,251
-
5,833,251
4,155,236,718
5,833,251
-
4,161,069,969
Level 1
Level 2
Level 3
Total
USD
USD
USD
USD
ETC securities at fair value
(3,842,009,675)
(317,392,230)
-
(4,159,401,905)
(3,842,009,675)
(317,392,230)
-
(4,159,401,905)
Other financial assets and liabilities are classified as Level 2.
Xtrackers ETC Public Limited Company
Page 42
Notes to the financial statements (continued)
For the year ended 30 September 2023
17. Related Party Transactions and Connected Parties
Related Parties
Parties are considered to be related if one party has the ability to control the other party or is able to exercise significant influence over the party, in
making financial or operational decisions.
The Company’s related parties are the Directors and Wilmington Trust SP Services (Dublin) Limited (“WTD”). The Company’s connected party is the
Programme Administrator. Amounts incurred during the year to these related and connected parties are disclosed in Note 7. During the financial year,
the Company received services to the value of USD 43,415 (2022: USD 158,954) from Wilmington Trust SP Services (Dublin) Limited (“WTD”) in
line with the Corporate Services Agreement dated 16 March 2020 of which USD Nil (2022: USD Nil) was outstanding at year end. Claudio Borza is a
Director of the Company and is also a director of WTD. Eileen Starrs is a director of the Company and an employee of WTD. The Director’s fees are
included as part of the above purchased services, and consideration paid to WTD that can be said to relate to the provision of director services amounted
to USD 2,000 (2022: 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 2023 (2022:
25,000). The shares are held under the terms of the declarations of trust dated 20 July 2018 under which the relevant share trustee holds the issued
shares of the Company on trust for charitable purposes. The profit of the Company is retained until the Company winds up its operation whereby any
excess profit will be distributed to its shareholders.
The Board of Directors are responsible for the day-to-day management of the Company. As of the year ended 30 September 2023, the Board is composed
of two Directors, whom are employees of the corporate services provider.
Connected Parties
Connected parties are those parties with significant agreements with the service providers which we have listed below.
Product fee
Each Series pays a product fee calculated by the Determination Agent, which accrues on a daily basis. This fee is used to pay expenses of the Company
including Product fee paid to DWS International GmbH for providing its service as Programme Administrator. The Product fee rate for each Series
as of 30 September 2023 and 30 September 2022 is set out below. This rate is applied to the Metal Entitlement on a daily basis.
Series
Description
Annual Product fee as a
% of metal entitlement
Series 1
Xtrackers IE Physical Platinum ETC Securities
0.38
Series 2
Xtrackers IE Physical Gold ETC Securities
0.12
Series 3
Xtrackers IE Physical Silver ETC Securities
0.20
Series 4
Xtrackers IE Physical Silver EUR Hedged ETC Securities
0.73
Series 5
Xtrackers IE Physical Gold EUR Hedged ETC Securities
0.28
Series 6
Xtrackers IE Physical Gold GBP Hedged ETC Securities
0.28
Series 7
Xtrackers IE Physical Platinum EUR Hedged ETC Securities
0.73
Pursuant to the Programme Administrator Agreement, DWS International GmbH as Programme Administrator receives 100% of the Product fee for
each series issued. In return DWS International GmbH pays designated list of Programme expenses as set out in the amended Programme Administrator
Agreement, even where the aggregate of such expenses exceeds the Product Fee due to DWS International GmbH.
Xtrackers ETC Public Limited Company
Page 43
Notes to the financial statements (continued)
For the year ended 30 September 2023
17. Related Party Transactions and Connected Parties
(continued)
Connected Parties (continued)
Product fee (continued)
From 1 August 2022, the Company pays the total product fee to the Programme Administrator in return for which the Programme Administrator
pays a designated list of Programme expenses under the amended Programme Administrator Agreement as well as its own costs of providing its
service as Programme Administrator. At year end the total product fee under the amended Programme Administrator Agreement is USD 7,401,373
(2022: USD 1,180,302) of which USD 1,803,915 (2022: USD 1,180,302) is payable to the Programme Administrator at year end.
In the prior year, DWS International GmbH was the holder of a Profit Participating Note in principal amount of EUR 100 issued by the Company.
Pursuant to the Profit Participating Note, where the product fee received by the Company during the financial period was in excess of the fees
and expenses of the Company (in effect a “gain” for the Company) such excess was payable to DWS International GmbH in the form of an interest
payment. The Disbursement Agreement was terminated as of 1 August 2022 and the Profit Participating Note was left to expire until its maturity
at 30 September 2022. The Note Issuing and Purchase Agreement was not renewed on its expiry on 30 September 2022.
In the previous reporting period, the residual amount under the Profit Participating Note agreement which is no longer applicable in the current
reporting period to the Programme Administrator was USD 1,102,459 of which USD 1,102,459 was payable on 30 September 2022.
In the previous reporting period the Company was charged by the Programme Administrator for its services as an expense (included in Note 7 as
an other expense) of USD 1,707,308 of which USD Nil was payable at the year-end. This is no longer applicable in the current reporting period.
18. 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.
19. Subsequent events
Gold price which is the main collateral (95.73%) of the Company's ETC Securities touched USD 1,870.50 per ounce as at 30 September 2023
and continued steady growth reaching USD 2,013.20 as at 18 January 2024 whilst Silver reached USD 23.075 per ounce as at 30 September 2023
and changed to USD 22.605 as at 18 January 2024. Platinum presented a similar trend with USD 923 per ounce as at 30 September 2023 and high
of USD 894 per ounce as at 18 January 2024. The continuing Ukraine Conflict and possible outbreaks elsewhere in the world may lead to
instability in certain regions together with sanctions being imposed against certain countries which could have an adverse economic impact. 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.
20. Approval of financial statements
The financial statements were approved and authorised for issue by the Board of Directors on 23 January 2024.