WisdomTree Commodity Securities Limited
Registered No: 90959
Annual Report and Audited Financial Statements for the
Year ended 31 December 2023
Management and Administration
1
Directors’ Report
2-10
Statement of Directors’ Responsibilities
11
Independent Auditor’s Report
12-18
Statement of Profit or Loss and Other Comprehensive Income
19
Statement of Financial Position
20
Statement of Cash Flows
21
Statement of Changes in Equity
22
Notes to the Financial Statements
23-40
www.wisdomtree.eu
Directors
Administrator
Registered Office
Registrar
Manager
Trustee
Commodity Contract Counterparty
Commodity Contract Counterparty
Collateral Custodian
Jersey Legal Advisers
Company Secretary
Auditor
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The directors of WisdomTree Commodity Securities Limited (“CSL” or the “Company”) submit herewith the
annual report and financial statements of the Company for the year ended 31 December 2023.
Directors
The names and particulars of the directors of the Company during and since the end of the financial year are:
Directors’ Interests
No director has an interest in the Shares of the Company as at the date of this report.
Principal Activities
The Company’s principal activity is the issue and listing of commodity securities (“Commodity Securities”). The
Company’s portfolio of Commodity Securities includes classic, longer dated, short and leveraged Commodity
Securities.
Commodity Securities are undated secured limited recourse financial instruments designed to track the price of
commodity futures, and give investors an exposure similar to that which could be achieved by managing a fully
cash-collateralised position in near-term futures contracts, less applicable fees. However, unlike managing a
futures position, Commodity Securities involve no need to roll from one futures contract to another, no margin
calls, and no other brokerage or other costs in holding or rolling futures contracts (although security holders
incur costs in holding Commodity Securities). No trading or management of futures contracts is required by the
Company. Commodity Securities allow investors to buy and sell their interest through the trading of a security
on the London Stock Exchange and any other exchange to which that security may be admitted to trading from
time to time.
Commodity Securities are backed by commodity contracts (“Commodity Contracts”) with terms corresponding
to the terms of Commodity Securities. The Company gains exposure to the movements in the commodity
indices by holding corresponding Commodity Contracts. The Company is currently party to two facility
agreements, one with Citigroup Global Markets Limited (“Citigroup”) and one with Merrill Lynch International
(“Merrill Lynch”) (together the “Commodity Contract Counterparties”), enabling the Company to create and
cancel Commodity Contracts on an ongoing basis. Each time Commodity Securities are issued or redeemed,
matching Commodity Contracts between the Company and a Commodity Contract Counterparty are created or
cancelled by the Company.
The price of each class of Commodity Security is calculated on a daily basis and reflects movements in the
commodity index relevant to that class since the previous day, adjusted by any applicable fees. Therefore, the
return for a particular class of Commodity Security will primarily be based on the performance of the relevant
commodity index.
The Company earns a management fee and a licence allowance based upon the number of Commodity
Securities in issue. These fees are expressed as an annual percentage (as set out below), calculated on a daily
basis and reflected in the net asset value (“NAV”) of the Commodity Securities on a daily basis, and paid
monthly in arrears.
The Company has entered into a service agreement with WisdomTree Management Jersey Limited (“ManJer”
or the “Manager”), whereby ManJer is responsible for supplying or procuring the supply of all management and
administration services required by the Company (including marketing), as well as the payment of costs
relating to the listing and issue of Commodity Securities. In return for these services, the Company has an
obligation to remunerate ManJer with an amount equal to the aggregate of the management fee, licence
allowance and the creation and redemption fees (the “ManJer Fee”). The management fee and licence
allowance are transferred directly to ManJer by the Commodity Contract Counterparties under the terms of the
Commodity Contracts.
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Principal Activities (continued)
Creation and redemption fees are included and settled between the Authorised Participants and the
Commodity Contract Counterparties as part of each creation or redemption, and are transferred directly to
ManJer by the Commodity Contract Counterparties on a monthly basis. Accordingly, there are no cash flows
through the Company.
Review of Operations
The most recent Prospectuses were issued on 27 October 2023 (Classic and Longer Dated) and 24 October
2023 (Short and Leveraged). As at 31 December 2023, the Company had the following number of classes, in
aggregate, of Commodity Securities in issue and admitted to trading on the following exchanges:
* Whilst Micro Securities are admitted to trading on the Stock Exchanges, it is not anticipated that any active
secondary market will develop in any of the Micro Securities. Furthermore, on an ongoing basis the Micro
Securities themselves are not traded, with Security Holders receiving the Commodity Securities in
transactions. As a result, Micro Securities have been excluded from the table above.
In April 2023 the Company created and launched a new class of Classic Commodity Securities, WisdomTree
California Carbon Securities, which provide exposure to the performance of the Solactive California Carbon
Rolling Futures ER Index.
The Company has entered into contractual obligations to issue and redeem Commodity Securities at set prices
on each trading day. These prices are based on agreed formulae published in the Prospectuses, and are equal
to the published NAV of each class of Commodity Security. Each time Commodity Securities are issued or
redeemed, matching Commodity Contracts between the Company and a Commodity Contract Counterparty
are created or cancelled by the Company.
IFRS 13 requires the Company to identify the principal market for the Commodity Securities and to utilise the
available price within that principal market. The directors consider the stock exchanges where the Commodity
Securities are listed to be the principal market and as a result the fair value of the Commodity Securities is the
on-exchange price as quoted on the stock exchange demonstrating active trading with the highest trading
volume on each day that the price is obtained.
As a result of the difference in valuation between Commodity Contracts and Commodity Securities there is a
mis-match between the values recognised, and the results of the Company reflect a gain or loss on the
difference between the NAV of the Commodity Contracts and the price of Commodity Securities. The
Company recognises its assets (Commodity Contracts) and financial liabilities (Commodity Securities) at fair
value in the Statement of Financial Position. The gain or loss on Commodity Securities and Commodity
Contracts is recognised through profit or loss in line with the Company’s accounting policy. This is presented in
more detail in notes 7 and 8 to these financial statements.
The Company is entitled to a management fee and licence allowance which are calculated on a daily basis:
classic and longer dated Commodity Securities have a management fee rate of 0.49% per annum, with
the exception of WisdomTree Carbon Securities which has management fee rate of 0.35% per annum;
short and leveraged Commodity Securities have a management fee rate of 0.98% per annum; and
all Commodity Securities are subject to the licence allowance of 0.05% per annum.
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Review of Operations (continued)
The Company is also entitled to apply creation and redemption fees on the issue and redemption of Commodity
Securities.
During the year, the Company generated income from creation and redemption fees, management fees and
licence allowance as follows:
Non-GAAP Performance Measures
Under the terms of the service agreement with ManJer, the Company accrued expenses equal to the
management fee, licence allowance and creation and redemption fees, which, after taking into account other
operating income and expenses, resulted in a result before fair value movements for the year of USD Nil (2022:
USD Nil).
As the difference in the valuation of Commodity Contracts (held to support the Commodity Securities) and
Commodity Securities would be reversed on a subsequent redemption of the Commodity Securities and
cancellation of the corresponding Commodity Contracts (as described further in note 7), the Company presents
an adjusted Statement of Profit or Loss and Other Comprehensive Income and an adjusted Statement of
Changes in Equity in note 15 of the financial statements.
Ukraine Invasion
Russia has continued military action in the sovereign territory of Ukraine throughout the year ended 31
December 2023 (the “Crisis”). The Crisis has resulted in the implementation of sanctions and further actions by
governments which, as well as the Crisis itself, have impacted financial and commodities markets.
As the Crisis continues, the board of directors (the “Board”) also continues to closely monitor and assess the
impact on the Company’s portfolio operations and valuation and will take any further actions needed or as
required under the terms of the applicable Prospectuses, as facts and circumstances are subject to change and
may be specific to investments and jurisdictions. Whilst it is not currently possible to predict future market
conditions and therefore determine if any further action may be required on any other classes of Commodity
Securities, the action that may be required includes, but is not limited to, temporarily not accepting applications
for Commodity Securities, temporarily suspending Commodity Securities from trading on Stock Exchanges or a
compulsory redemption of Commodity Securities. The Company has not initiated any of these further actions
during the current year or subsequently to date. Any such action will be undertaken in accordance with the
constitutive documents of the Commodity Securities. Furthermore, there are mechanisms within the
constitutive documents of the Commodity Securities that enable the Commodity Contract Counterparties to
request a compulsory redemption in certain circumstances as set out and explained within the Prospectuses.
Future Developments
The Board are not aware of any other developments that might have a significant effect on the operations of the
Company in subsequent financial periods not already disclosed in this report or the attached financial
statements.
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Going Concern
The nature of the Company’s business dictates that the outstanding Commodity Securities may be redeemed
at any time by Authorised Participants and in certain circumstances by individual holders and also, in certain
circumstances, may be compulsorily redeemed by the Company. As the redemption of Commodity Securities
will always coincide with the cancellation of an equal amount of Commodity Contracts, liquidity risk is mitigated
through this process which is considered to minimize exposure to liquidity risk. All other expenses of the
Company are met by ManJer. The directors closely monitor the financial position and performance of ManJer,
its assets under management, and therefore its related revenue streams, in respect of fulfilling the obligations
under the services agreement. The net reported position on balance sheet, including in instances where a
deficit is reported, is not considered to impact the going concern position of the Company as this position
results solely due to the unrealised gains or losses on Commodity Contracts and Commodity Securities due to
the accounting measurement basis applied in accordance with IFRS. As Commodity Contracts are held to
support Commodity Securities, any deficit or surplus reported on unrealised positions would be reversed on a
subsequent redemption of the Commodity Securities and the related transfer of Commodity Contracts. A
reported deficit is not considered indicative of any issues relating to solvency of the Company and the directors
are satisfied that any obligations arising in respect of the Commodity Securities can be managed in accordance
with the terms of the applicable prospectus. The directors consider the operations of the Company to be
ongoing, with a reasonable expectation that the Company has adequate resources to continue in operational
existence until at least 30 April 2025 (being the period of assessment), and accordingly these financial
statements have been prepared on the going concern basis.
Corporate Social Responsibility
Sustainability and corporate responsibility are embedded throughout the business of WisdomTree, Inc and its
subsidiaries (the “WisdomTree group”) as we believe this benefits shareholders and employees of the
WisdomTree group, investors in WisdomTree’s products as well as wider society.
Environmental, Social and Governance (“ESG”) investing is guided at the WisdomTree group level by an ESG
Steering Committee, which includes senior leaders from across the WisdomTree group, and which includes
several sub-committees focused on particular ESG considerations, such as improving data and transparency
into the ESG attributes of WisdomTree’s products. Particular ESG considerations relevant to the Company’s
products are overseen by the Board, leveraging the work undertaken by the ESG Steering Committee. More
information on WisdomTree’s corporate social responsibility strategy can be found on the WisdomTree website
(https://www.wisdomtree.eu/en-gb/wisdomtree-corporate-responsibility).
The Board acknowledges that climate change and its impact on the global economy is of increasing interest
and focus for stakeholders and that, where relevant, stakeholders will seek information from companies
regarding how climate change is expected to impact the operations of the business and how climate change
risk has been considered in the context of reported results.
In acknowledging the above, the Board has considered the Company’s exposure to climate change and
determined that due to the nature of the Company and its operations there are no directly observed impacts of
climate change on the business. As a result, the Board concluded that there is no basis on which to provide
extended information of analysis relating to climate change, including as part of the basis of accounting or
individual accounting policies adopted by the Company.
In the above determination, the Board has concluded specifically that climate change, including physical and
transition risks, does not have a material impact on the recognition and separate measurement considerations
of the assets and liabilities in these financial statements as at 31 December 2023.
This conclusion is based on the fact that assets are reported at fair value under IFRS, are short dated, and as
set out in note 12 are categorised as level 2 due to the use of observable, verifiable inputs, including use of third
party information sources within the agreed pricing formulae (set out in the Prospectus). The liabilities are
valued utilising listed market prices at the period end. These observable inputs and market prices will reflect
wider market sentiment, which inherently includes market perspectives relating to the impact of climate
change.
The Board recognises that government and societal responses to climate change risks are still developing and
the future impact cannot be predicted. Future valuations of assets and liabilities may therefore differ as the
market responds to these changing impacts or assesses the impact of current requirements differently.
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Dividends
There were no dividends declared or paid in the year (2022: USD nil). It is the Company’s policy that dividends
will only be declared when the directors are of the opinion that there are sufficient distributable reserves.
Directors’ Remuneration
No director has a service contract with the Company. The directors of the Company who are employees within
the WisdomTree, Inc group do not receive separate remuneration in their capacity as directors of the Company.
The directors of the Company who are employees of R&H Fund Services (Jersey) Limited (“R&H” or the
“Administrator”) do not receive separate remuneration in their capacity as directors of the Company, however
R&H receives a fee from ManJer which includes services in respect of the provision of directors who are
employees of R&H.
Employees
The Company does not have any employees. It is the Company’s policy to use the services of specialist
subcontractors or consultants as far as possible.
Auditor
The Independent Auditor is Ernst & Young LLP. A resolution to re-appoint Ernst & Young LLP will be proposed
at the next Board meeting.
Principal Risks and Uncertainties
The Commodity Securities provide investors with long or short exposure to the performance of the relevant
commodity index. Each Commodity Security is a debt instrument whose redemption price is linked to the
performance of the underlying commodity index. Each class of Commodity Security is issued under limited
recourse arrangements whereby the holders have recourse only to the relevant Commodity Contracts held to
support the Commodity Securities and not to the Commodity Contracts of any other class of Commodity
Security or the Company.
Any movements in the value of the Commodity Contracts are wholly attributable to the holders of the
Commodity Securities, therefore the Company has no residual exposure to movements in the value of the
Commodity Contracts. From a commercial perspective the Company does not retain any net gains or losses or
net risk exposures, as (with the exception of the impact of management fees and licence allowance) the gains
or losses on the liability represented by the Commodity Securities are matched economically by corresponding
losses or gains attributable to the Commodity Contracts (see detail on page 3 regarding the accounting mis-
match).
Furthermore, the Company has an obligation to remunerate ManJer with the ManJer Fee, which results in the
Company recognising a result before fair value movements of nil for each period. As a result, the principal risks
and uncertainties to which the Company is exposed has not materially changed during the year ended 31
December 2023.
There is an inherent risk from the point of view of investors as the values of commodities, and thus the value of
the Commodity Securities, may vary widely due to, amongst other things, changing supply and demand for a
particular commodity, government and monetary policy or intervention, interest rate levels and global or
regional political, economic or financial events. The market price of Commodity Securities is (and will remain) a
function of supply and demand amongst investors wishing to buy and sell Commodity Securities and the bid or
offer spread that the market makers are willing to quote.
Movements in the value of the underlying Commodity Contracts, and thus the value of the Commodity
Securities, may vary widely which could have an impact on the demand for the Commodity Securities issued by
the Company. These movements are shown in notes 7 and 8.
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Principal Risks and Uncertainties (continued)
The contractual value (at NAV) of the Commodity Securities as at 31 December, and the movement over the period amounted to:
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Principal Risks and Uncertainties (continued)
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Principal Risks and Uncertainties (continued)
Whilst Micro Securities are admitted to trading on the Stock Exchanges, it is not anticipated that any active secondary market will develop in any of the Micro Securities.
Furthermore, on an ongoing basis the Micro Securities themselves are not traded, with Security Holders receiving the Commodity Securities in transactions. As a result,
Micro Securities which in aggregate, had a fair value at 31 December 2023 of $732 (2022: $563) have been excluded from the table above.
1 On 27 October 2023 the Company announced the consolidation of certain Commodity Securities, effective on 1 December 2023 (the “Consolidation”). The
Consolidation would reduce the number of Commodity Securities in issue and increase the NAV of those Commodity Securities by an equivalent ratio. The
Consolidation and related ratios were: WisdomTree Coffee – 23; WisdomTree Corn – 22; WisdomTree Lean Hogs – 75; WisdomTree Natural Gas – 1,783; and
WisdomTree Wheat – 46. The NAV in the table above as at 31 December 2022 has not been adjusted, however the movement in the NAV in the period has been
adjusted to reflect the impact of the Consolidation.
In addition, whilst the table above also reflects the NAV at 31 December 2022 and 31 December 2023, together with the movement, this does not reflect the
recommended holding period for Commodity Securities, which in some cases is one day. Further information on the contractual value (at NAV) of the Commodity
Securities on a daily basis can be found on the WisdomTree website (https://www.wisdomtree.eu/en-gb/products).
Additional information on other financial and operational risks and uncertainties faced by the Company, including further details surrounding the value of Commodity
Securities and the Commodity Contracts are disclosed in note 12 of these financial statements.
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Corporate Governance
There is no standard code of corporate governance in Jersey. The operations, as previously described in the
Directors’ Report, are such that the directors have determined that the Company is not required to apply, and
has elected not to voluntarily apply, the UK Corporate Governance Code.
As the Board is small, there is no nomination committee and appointments of new directors are considered by
the Board as a whole. The Board does not consider it appropriate that directors should be appointed for a
specific term. Furthermore, the corporate governance framework implemented and constitution of the Board is
such that it is considered unnecessary to identify a senior non-executive director.
The constitution of the Board is disclosed on page 1. The Board meets regularly as required by the operations
of the Company, but at least quarterly to review the overall business of the Company and to consider matters
specifically reserved for its review.
Internal Control
During the year the Company did not have any employees or subsidiaries, and there is no intention that this will
change. The Company, being a special purpose company established for the purpose of issuing Commodity
Securities, has not undertaken any business, save for issuing and redeeming Commodity Securities, entering
into the required documents and performing the obligations and exercising its rights in relation thereto, since its
incorporation. The Company does not intend to undertake any business other than issuing and redeeming
Commodity Securities and performing the obligations and exercising its rights in relation thereto.
The Company is dependent upon ManJer to provide management and administration services to it. ManJer is
licensed under the Financial Services (Jersey) Law 1998 to conduct classes U and Z of Fund Services
Business. ManJer outsources the administration services in respect of the Company to the Administrator.
Documented contractual arrangements are in place with the Administrator which define the areas where the
authority is delegated to them. The performance of the Manager and Administrator are reviewed on an ongoing
basis by the Board, through their review of periodic reports.
ManJer provides management and other services to both the Company and other related party companies
issuing exchange-traded products.
The Board, having reviewed the effectiveness of the internal control systems of the Manager and the
Administrator, does not consider that there is a need for the Company to establish its own internal audit
function.
Audit Committee
The Board has not established a separate audit committee; instead the Board meets to consider the financial
reporting by the Company, the internal controls, and relations with the external auditor. In addition, the Board
reviews the independence and objectivity of the auditor.
Christopher Foulds
Director
Jersey
24 April 2024
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The directors are responsible for preparing the 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 (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”) and applicable law.
Under company law the directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that
period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable 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 that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the Companies (Jersey) Law
1991. They are responsible for such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the
Company and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information
included on the Company’s website. Legislation in Jersey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
With regard to Directive 2004/109/EC, amended by Directive 2013/50/EU (collectively the Transparency
Directive), the Central Bank (Investment Market Conduct) Rules of the Central Bank of Ireland and the
Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the directors confirm that to
the best of their knowledge that:
the financial statements for the year ended 31 December 2023 give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company as required by law and in accordance with
IFRS as issued by the IASB; and
the Directors’ Report gives a fair view of the development and performance of the Company’s
business, including financial position and the important events that have occurred during the year, and
their impact on these financial statements, together with a description of the principal risks and
uncertainties they face.
By order of the Board
Christopher Foulds
Director
Jersey
24 April 2024
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE COMMODITY SECURITIES LIMITED
Opinion
We have audited the financial statements of WisdomTree Commodity Securities Limited (the “company”) for the
year ended 31 December 2023 which comprise the Statement of Profit or Loss and Other Comprehensive Income,
the Statement of Financial Position, the Statement of Cash Flows, the Statement of Changes in Equity and the
related notes 1 to 15, including a summary of material accounting policy information. The financial reporting
framework that has been applied in their preparation is applicable law and International Financial Reporting
Standards as issued by the International Accounting Standards Board (“IFRS”).
In our opinion, the financial statements:
►
give a true and fair view of the state of the company’s affairs as at 31 December 2023 and of its loss for the
year then ended;
►
have been properly prepared in accordance with IFRS;
►
have been properly prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We are independent of the company in accordance with the ethical
requirements that are relevant to our audit of the financial statements, including the UK FRC’s Ethical Standard as
applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with
these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 company’s ability to continue to adopt the going concern basis of accounting included:
We obtained an understanding of management’s rationale for using the going concern basis of accounting and
confirmed our understanding of management’s Going Concern assessment process including the process they
adopted to capture all key factors in their assessment;
We obtained management’s board approved going concern assessment covering the period of assessment
from the date of signing to 30 April 2025. Management’s assessment has focussed on a combination of;
►
Assessing the ongoing viability of the company through continued involvement of its Commodity Contract
Counterparties and Authorised Participants;
►
Assessing the ongoing ability of WisdomTree Management Jersey Limited (“ManJer”) to continue to meet
its obligations as manager and pay all expenses of the company. This includes consideration of the
assets under management of all managed issuer entities (“Issuer Platform”) which includes this company.
In assessing this ability management considered the fixed and variable operating costs that could be
supported under varying levels of total assets under management for the Issuer Platform.
►
Using our understanding of the business, we evaluated whether the considerations and method adopted
by management in assessing going concern was appropriate.
►
We performed reverse stress testing on the forecasts to understand how severe the downside scenarios
would have to be, and the reduction in platform assets under management, to result in the platform
generating insufficient management fees to cover operating costs. We observed significant headroom in
management fee income, at current Assets Under Management (“AUM”) levels, in excess of fixed and
AUM based costs which supports management’s assumption that the Issuer Platform is able to absorb
heightened levels of volatility in AUM.
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE COMMODITY SECURITIES LIMITED (continued)
We considered whether management’s disclosures, in the Annual Report and financial statements, sufficiently
and appropriately discloses information required in respect of the going concern assumption applied through
consideration of relevant disclosure standards.
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 to 30 April 2025.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report. However, because not all future events or conditions can be predicted, this
statement is not a guarantee as to the company’s ability to continue as a going concern.
Overview of our audit approach
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine
our audit scope for the company. This enables us to form an opinion on the financial statements. We take into
account size, risk profile, the organisation of the company and effectiveness of controls, changes in the business
environment and the potential impact of climate change when assessing the level of work to be performed. All audit
work was performed directly by the audit engagement team.
Changes from the prior year
There were no scoping changes compared to the prior year.
Climate change
There has been increasing interest from stakeholders as to how climate change will impact companies. The company
has determined that there are no directly observed impacts of climate change on the business due to the nature of the
company and its operations. This is explained on page 5 in the corporate social responsibility section, which form part of
the “Other information,” rather than the audited financial statements. Our procedures on these disclosures therefore
consisted solely of considering whether they are materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appear to be materially misstated.
Our audit effort in considering climate change was focused on evaluating management’s assessment of the impact
of climate risk, physical and transition, the adequacy of the company’s disclosures in the financial statements as set
out in note 2 and conclusion that there was no further impact of climate change to be taken into account as the
material assets and liabilities are valued based on market pricing as required by IFRS.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters included 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 our opinion thereon, and we do not provide a separate opinion on these matters.
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE COMMODITY SECURITIES LIMITED (continued)
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE COMMODITY SECURITIES LIMITED (continued)
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified
misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected
to influence the economic decisions of the users of the financial statements. Materiality provides a basis for
determining the nature and extent of our audit procedures.
We determined materiality for the company to be US$60.1 million (2022: US$55.5 million), which is 1% (2022: 1%)
of Total .Assets. We believe that Total Assets provides us with an appropriate basis for audit materiality as Total
Assets reflects the relevant exposure of holders of issued securities to the underlying asset base,
There has been no change in the basis of materiality used compared to the prior year.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an
appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds
materiality.
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE COMMODITY SECURITIES LIMITED (continued)
On the basis of our risk assessments, together with our assessment of the company’s overall control environment,
our judgement was that performance materiality was 50% (2022: 50%) of our planning materiality, namely
US$30.05m (2022: US$27.75m). We have set performance materiality in both periods at this percentage in
response to the value of errors identified and corrected in the financial statement close process.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Board that we would report to them all uncorrected audit differences in excess of US$3.01m
(2022: US$2.78m), which is set at 5% of materiality, as well as differences below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above
and in light of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report set out on pages 1 to 11, other than
the financial statements and our auditor’s report thereon. The directors are responsible for the other information
contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise
explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or
otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies (Jersey) Law 1991
requires us to report to you if, in our opinion:
►
proper accounting records have not been kept by the company, or proper returns adequate for our audit have
not been received from branches not visited by us; or
►
the financial statements are not in agreement with the company’s accounting records and returns; or
►
we have not received all the information and explanations we require for our audit
Responsibilities of directors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 11, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view,
and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for 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 the directors either intend to liquidate the company or to cease operations, or have no realistic
alternative but to do so.
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE COMMODITY SECURITIES LIMITED (continued)
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The
extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with
governance of the company and management.
►
We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and
determined that the most significant are those that relate to the reporting framework, comprising IFRS and the
Companies (Jersey) Law 1991. In addition, we concluded that there are certain significant laws and
regulations that may have an effect on the presentation and disclosure of the financial statements being the
applicable Listing Rules of the Central Bank of Ireland (Investment Market Conduct) and UK Listing Authority
Rules;
►
We understood how WisdomTree Commodity Securities Limited is complying with those frameworks by
making enquiries of the directors and key management of the administrative service provider. We corroborated
our enquiries through our review of minutes of Board meetings, papers provided to the board and
correspondence received from regulatory bodies and noted no contradictory evidence;
►
We assessed the susceptibility of the company’s financial statements to material misstatement, including how
fraud might occur by understanding the investment objectives of the Company and discussing with
management to understand where reporting was considered susceptible to fraud. Where this risk was
considered to be higher, we performed audit procedures in response to the identified fraud risk. These
procedures included testing of transactions to supporting documentation, testing of specific accounting journal
entries, and focussed testing, including that referred to in the key audit matters section above. These
procedures were designed to provide reasonable assurance that the financial statements were free from fraud
or error;
►
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and
regulations. Our procedures involved reading board minutes to identify any non-compliance with laws and
regulations, a review of any associated reporting submitted to the board on compliance with laws and
regulations and enquiries of members of management of the appointed administrative service provider;
►
As the Company operates in the asset management industry the Audit Partner assessed the experience of the
engagement team and concluded that the team had the appropriate competence and capabilities.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE COMMODITY SECURITIES LIMITED (continued)
Other matters we are required to address
►
Following the recommendation from those charged with governance, we were appointed by the company on 3
December 2019 to audit the financial statements for the year ending 31 December 2019 and subsequent
financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is 5 years,
covering the years ending 31 December 2019 to 31 December 2023.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the company and we
remain independent of the company in conducting the audit. The audit opinion is consistent with the
additional report to those charged with governance.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Article 113A of the Companies
(Jersey) Law 1991. Our audit work has been undertaken so that we might state to the company’s members those
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.
Christopher David Gordon Barry, FCA
for and on behalf of Ernst & Young LLP
Jersey, Channel Islands
Date: 24 April 2024
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The directors consider the Company’s activities as continuing.
1 A non-statutory and non-GAAP Statement of Profit or Loss and Other Comprehensive Income reflecting adjustments
representing the movement in the difference between the value of the Commodity Contracts and the price of Commodity
Securities is set out in note 15.
2 There are no items of Other Comprehensive Income, therefore the (Loss) / Profit for the Year also represented the Total
Comprehensive Income for the Year.
The notes on pages 23 to 40 form part of these financial statements
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The assets and liabilities in the above Statement of Financial Position are presented in order of liquidity from
most to least liquid.
The financial statements on pages 19 to 40 were approved and authorised for issue by the board of directors
and signed on its behalf on 24 April 2024.
Christopher Foulds
Director
The notes on pages 23 to 40 form part of these financial statements
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Commodity Securities are issued through a direct transfer of cash from the Authorised Participants to the
Commodity Contract Counterparties or redeemed by the direct transfer of cash by the Commodity Contract
Counterparties to the Authorised Participants. As such the Company is not a party to any cash transactions.
The creations and redemptions of Commodity Securities and creations and cancellations of Commodity
Contracts, which are non-cash transactions for the Company, are disclosed in notes 7 and 8 respectively, in the
reconciliation of opening to closing Commodity Securities and Commodity Contracts.
The Company has entered into a service agreement with WisdomTree Management Jersey Limited (“ManJer”
or the “Manager”), whereby ManJer is responsible for supplying or procuring the supply of all management and
administration services required by the Company (including marketing), as well as the payment of costs relating
to the listing and issue of Commodity Securities. In return for these services, the Company has an obligation to
remunerate ManJer with an amount equal to the aggregate of the management fee, licence allowance and the
creation and redemption fees (the “ManJer Fee”). The management fee and licence allowance are transferred
directly to ManJer by the Commodity Contract Counterparties under the terms of the Commodity Contracts.
Creation and redemption fees are included and settled between the Authorised Participants and the
Commodity Contract Counterparties as part of each creation or redemption, and are transferred directly to
ManJer by the Commodity Contract Counterparties on a monthly basis. Accordingly, there are no cash flows
through the Company. These fees are disclosed in note 3.
The notes on pages 23 to 40 form part of these financial statements
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3 A non-statutory and non-GAAP Statement of Changes in Equity reflecting adjustments representing the difference between the value of Commodity Contracts and the price of
Commodity Securities is set out in note 15.
The notes on pages 23 to 40 form part of these financial statements
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1.
General Information
WisdomTree Commodity Securities Limited (the “Company”) is a company incorporated and domiciled in
Jersey. The address of the registered office is Ordnance House, 31 Pier Road, St. Helier, Jersey, JE4 8PW.
The Company’s principal activity is the issue and listing of commodity securities (“Commodity Securities”). The
Company’s portfolio of Commodity Securities includes classic, longer dated, short and leveraged Commodity
Securities. Commodity Securities are undated secured limited recourse financial instruments designed to track
the price of commodity futures, and give investors an exposure similar to that which could be achieved by
managing a fully cash-collateralised position in near-term futures contracts, less applicable fees. However,
unlike managing a futures position, Commodity Securities involve no need to roll from one futures contract to
another, no margin calls, and no other brokerage or other costs in holding or rolling futures contracts (although
security holders incur costs in holding Commodity Securities). No trading or management of futures contracts is
required by the Company. Commodity Securities allow investors to buy and sell their interest through the
trading of a security on the London Stock Exchange and any other exchange to which that security may be
admitted to trading from time to time.
Commodity Securities are backed by commodity contracts (“Commodity Contracts”) with terms corresponding
to the terms of Commodity Securities. Each class of Commodity Security is issued under limited recourse
arrangements whereby the holders have recourse only to the relevant Commodity Contracts held to support
the Commodity Securities and not to the Commodity Contracts of any other class of Commodity Security or to
the Company. The Company does not make gains from trading in the underlying Commodity Contracts. As a
result, (and with the exception of the impact of management fees and licence allowance), from a commercial
perspective gains and losses in respect of Commodity Contracts will always be offset by a corresponding loss
or gain on the Commodity Securities and therefore commercially the Company does not retain any net gains or
losses or net risk exposures. However, the difference in valuation between Commodity Contracts and
Commodity Securities creates a mis-match between values reported within these financial statements. This
difference in valuation would be reversed on a subsequent redemption of the Commodity Securities and
cancellation of the corresponding Commodity Contracts. Further details are disclosed within the Accounting
Policies and in note 15, with additional information regarding the risks of the Company disclosed in note 12.
Furthermore, the Company presents an adjusted Statement of Profit or Loss and Other Comprehensive
Income and an adjusted Statement of Changes in Equity in note 15 of the financial statements to reflect the
economic results of the Company through the reversal of the difference in valuation between Commodity
Contracts and Commodity Securities given the gain or loss would be reversed on a subsequent redemption of
the Commodity Securities and transfer of the corresponding Commodity Contracts, and therefore will not be
realised.
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 trading or management of futures
contracts is required of the Company because the Company has entered into arrangements to acquire an
equivalent asset exposure represented by the Commodity Securities from third parties which fully hedges the
exposure of the Company.
The Company is entitled to:
(1)
a management fee and a licence allowance which are calculated by applying a fixed percentage to the
Contractual Value of Commodity Securities in issue on a daily basis (the “Management Fee and
Licence Allowance”); and
(2)
apply creation and redemption fees on the issue and redemption of the Commodity Securities.
No creation or redemption fees are payable to the Company when investors trade in the Commodity Securities
on a listed market such as the London Stock Exchange.
The Company has entered into a service agreement with WisdomTree Management Jersey Limited (“ManJer”
or the “Manager”), whereby ManJer is responsible for supplying or procuring the supply of all management and
administration services required by the Company (including marketing), as well as the payment of costs relating
to the listing and issuance of Commodity Securities. In return for these services the Company has an obligation
to remunerate ManJer with an amount equal to the management fee, licence allowance and the creation and
redemption fees earned (the “ManJer Fee”). As a result, the Company recognises a result before fair value
movements of nil for each period.
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2.
Accounting Policies
The material accounting policies of the Company are described below.
Basis of Preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRSs”) as issued by the International Accounting Standards Board (“IASB”), and interpretations issued by
the International Financial Reporting Interpretations Committee of the IASB. The financial statements have
been prepared under the historical cost convention, except for certain financial assets and financial liabilities
held at fair value through profit or loss.
The board of directors (the “Board”) has concluded specifically that climate change, including physical and
transition risks, does not have a material impact on the recognition and separate measurement considerations
of the assets and liabilities in these financial statements as at 31 December 2023.
This conclusion is based on the fact that assets are reported at fair value under IFRS, are short dated, and as
set out in note 12 are categorised as level 2 due to the use of observable, verifiable inputs, including use of third
party information sources within the agreed pricing formulae (set out in the Prospectus). The liabilities are
valued utilising listed market prices at the period end. These observable inputs and market prices will reflect
wider market sentiment, which inherently includes market perspectives relating to the impact of climate
change.
Material Accounting Estimates and Judgements
The presentation of financial statements in conformity with IFRSs requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Company’s
accounting policies. The Company makes estimates and assumptions that affect the reported amounts of
assets and liabilities. Estimates are continually evaluated and based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Significant Estimates
The directors do not consider that any significant estimates have been applied in the preparation of these
financial statements.
Significant Judgements
The key accounting judgement required to prepare these financial statements is in respect of the presentation
of non-statutory and non-GAAP adjustments to the Statement of Profit or Loss and Other Comprehensive
Income and the Statement of Changes in Equity, as disclosed in note 15.
Going Concern
The nature of the Company’s business dictates that the outstanding Commodity Securities may be redeemed
at any time by Authorised Participants and in certain circumstances by individual holders and also, in certain
circumstances, may be compulsorily redeemed by the Company. As the redemption of Commodity Securities
will always coincide with the cancellation of an equal amount of Commodity Contracts, liquidity risk is mitigated
through this process which is considered to minimize exposure to liquidity risk. All other expenses of the
Company are met by ManJer. The directors closely monitor the financial position and performance of ManJer,
its assets under management, and therefore its related revenue streams, in respect of fulfilling the obligations
under the services agreement. The net reported position on balance sheet, including in instances where a
deficit is reported, is not considered to impact the going concern position of the Company as this position
results solely due to the unrealised gains or losses on Commodity Contracts and Commodity Securities due to
the accounting measurement basis applied in accordance with IFRS. As Commodity Contracts are held to
support Commodity Securities, any deficit or surplus reported on unrealised positions would be reversed on a
subsequent redemption of the Commodity Securities and the related transfer of Commodity Contracts.
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2.
Accounting Policies (continued)
Going Concern (continued)
A reported deficit is not considered indicative of any issues relating to solvency of the Company and the
directors are satisfied that any obligations arising in respect of the Commodity Securities can be managed in
accordance with the terms of the applicable prospectus. The directors consider the operations of the Company
to be ongoing, with a reasonable expectation that the Company has adequate resources to continue in
operational existence until at least 30 April 2025 (being the period of assessment), and accordingly these
financial statements have been prepared on the going concern basis.
Accounting Standards
(a)
Standards, amendments and interpretations adopted in the year:
The following standards that have been revised, issued and became effective but are not considered
applicable to the Company:
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
Amendments to IAS 12 Deferred Tax
IFRS 17 Insurance Contracts
There were no other new standards, amendments and interpretations adopted in the current year that
resulted in a significant effect on these financial statements.
(b)
New and revised IFRSs in issue but not yet effective:
The Company has not applied the following new and revised IFRSs that have been issued but are not yet
effective:
Amendments to IAS 1 Presentation of Financial Statements (effective for annual periods beginning
on or after 1 January 2024)
Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7 (effective for annual periods
beginning on or after 1 January 2024)
Amendments to IFRS 16 Lease Liability in Sale and Leaseback (effective for annual periods
beginning on or after 1 January 2025)
Lack of exchangeability - Amendments to IAS 21 (effective for annual periods beginning on or after 1
January 2025)
The directors do not expect the adoption of the above standards, amendments and interpretations that
are in issue but not yet effective will have a material impact on the financial statements of the Company in
future periods.
Commodity Securities and Commodity Contracts
i)
Issue and Redemption
Each time a Commodity Security is issued or redeemed by the Company a corresponding number and
value of Commodity Contracts are created or cancelled with Citigroup Global Markets Limited
(“Citigroup”) and Merrill Lynch International (“Merrill Lynch”) (collectively the “Commodity Contract
Counterparties”). The Commodity Contracts represent the financial assets of the Company and the
Commodity Securities give rise to the financial liabilities. Upon initial recognition, the fair value is
recorded using the price calculated based on the formula set out in the Prospectus, referred to as the
“Contractual Value” (see below).
Financial assets and liabilities are recognised and de-recognised on the transaction (trade) date.
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2.
Accounting Policies (continued)
Commodity Securities and Commodity Contracts (continued)
ii)
Classification at fair value through Profit or Loss
Each Commodity Security and Commodity Contract comprises a financial instrument whose redemption
or cancellation price is linked to the performance of the relevant commodity index adjusted by the
applicable fees and expenses.
The Commodity Contracts held are classified as financial assets at fair value through profit or loss under
IFRS 9 and the Commodity Securities are classified as financial liabilities measured at fair value through
profit or loss under IFRS 9 due to an embedded derivative. This also significantly reduces a
measurement or recognition inconsistency that would otherwise arise from measuring assets or
liabilities, or recognising the gains and losses on them, on different bases.
iii)
Pricing
The Commodity Contracts are priced by reference to the value of the commodity indices calculated and
published by Bloomberg L.P. or Bloomberg Finance L.P. (together “Bloomberg”) and Solactive AG
(“Solactive”) together with a multiplier calculated by the Company and agreed with the Commodity
Contract Counterparties. The multiplier takes into account the daily accrual of the Management Fee and
Licence Allowance and swap spread as well as the capital adjustment component of the Commodity
Security, and is the same across all Commodity Securities of the same type (i.e. all classic Commodity
Securities use the same multiplier). This price (the Contractual Value calculated based on the formula
set out in the Prospectus) is considered to be the fair value of the Commodity Contracts.
IFRS 13 requires the Company to identify the principal market and to utilise the available price within that
principal market. The directors consider the stock exchanges where the Commodity Securities are listed
to be the principal market and as a result the fair value of the Commodity Securities is the on-exchange
price as quoted on the stock exchange demonstrating active trading with the highest trading volume on
each day that the price is obtained. The Commodity Securities are priced using the latest traded price on
(or before) the Statement of Financial Position date.
Consequently, a difference arises between the value of Commodity Contracts (held to support the
Commodity Securities) and Commodity Securities (at market value) presented in the Statement of
Financial Position. This difference is reversed on a subsequent redemption of the Commodity Securities
and cancellation of the corresponding Commodity Contracts.
Commodity Contracts and Securities Awaiting Settlement
The issue and redemption of Commodity Securities, and the creation or cancellation of Commodity Contracts,
is accounted for on the transaction date. The transaction will not settle until two days after the transaction date.
Where transactions are awaiting settlement at the year end, the value of the Commodity Contracts and the
Commodity Securities due to be settled is separately disclosed within the relevant assets and liabilities on the
Statement of Financial Position. The fair value of these receivables and payables is considered equivalent to
their carrying value.
Other Financial Assets and Liabilities
Other financial assets and liabilities are non-derivative financial assets and liabilities including trade and other
receivables and trade and other payables with a fixed payment amount and are not quoted in an active market.
After initial measurement the other financial assets and liabilities are subsequently measured at amortised cost
using the effective interest method less any allowance for expected credit losses (in respect of financial assets
only). The effective interest method is a method of calculating the amortised cost of an instrument and of
allocating interest over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash flows (including all fees paid or received that form an integral part of the effective interest
rate, transaction costs and other premiums or discounts) through the expected life of the instrument, or, where
appropriate, a shorter period, to the net carrying amount on initial recognition. Impairment losses, including
reversals of impairment losses and impairment gains, are recorded through profit or loss.
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2.
Accounting Policies (continued)
Reserves
A revaluation reserve and a retained earnings reserve are maintained within equity. All profit or loss is taken to
the retained earnings reserve at the end of the accounting period to which it relates and the gain or loss relating
to the mis-match of accounting values is transferred to the revaluation reserve, which the directors have
deemed to be non-distributable, as the balance relates to unrealised gains and losses on Commodity Contracts
(held to support the Commodity Securities) and Commodity Securities, which will be reversed on a subsequent
redemption of the Commodity Securities and the related cancellation of Commodity Contracts and will
therefore not be realised.
Income
The Company derives its income over time (in respect of management fees), and at a point in time (in respect of
creation and redemption fees) as follows:
i)
Management Fees and Licence Allowance
Management Fees and Licence Allowance are calculated by applying a fixed percentage to the
Contractual Value of Commodity Securities in issue in accordance with the terms of the securities issued:
classic and longer dated Commodity Securities have a management fee rate of 0.49% per annum,
with the exception of WisdomTree Carbon Securities which has management fee rate of 0.35% per
annum;
short and leveraged Commodity Securities have a management fee rate of 0.98% per annum; and
all Commodity Securities are subject to the licence allowance of 0.05% per annum.
The Management Fees and Licence Allowance are accrued and recognised on a daily basis and are
invoiced on a monthly basis and settled directly between ManJer and the Commodity Contract
Counterparties.
ii)
Creation and Redemption Fees
Fees for the issue and redemption of Commodity Securities are recognised at the fair value of the
consideration expected to be received, on the date on which the transaction becomes legally binding.
Creation and redemption fees are included as part of each creation or redemption and settled between the
Authorised Participants and the Commodity Contract Counterparties, and transferred directly to ManJer
by the Commodity Contract Counterparties on a monthly basis.
Foreign Currency
The financial statements of the Company are presented in the currency in which the majority of the Commodity
Securities issued by the Company are denominated (its functional currency). For the purpose of the financial
statements, the results and financial position of the Company are expressed in United States Dollars, which is
the functional currency of the Company, and the presentational currency of the financial statements.
Transactions in foreign currencies are initially recorded at the spot rate at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the year-end date are translated at rates ruling at that
date. Prior to 30 June 2022, creation and redemption fees were translated at the average rate for the month in
which they are incurred. The resulting differences are accounted for through profit or loss.
Segmental Reporting
A segment is a distinguishable component of the Company that is engaged either in providing products or
services (business segment), or in providing products and services within a particular economic environment
(geographical segment), which is subject to risks and rewards that are different from those of other segments.
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the
Company that are regularly reviewed by the Chief Operating Decision Maker (“CODM”) in order to allocate
resources to the segments and to assess their performance. The CODM has been determined as the board of
directors.
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2.
Accounting Policies (continued)
Segmental Reporting (continued)
Whilst the Company has a number of different Commodity Securities in issue, the financial information
reviewed by the CODM is not segregated by those different Commodity Securities, but is segregated between
classic and longer dated Commodity Securities and short and leveraged Commodity Securities and therefore
the board of directors have concluded that these two components meet the criteria of operating segments.
Furthermore, marketing of the Commodity Securities is undertaken on a centralised basis and the terms of the
Commodity Securities of any class rank pari passu in all respects irrespective of stock exchange listing. In
addition, the Company has no single major customer from which greater than 10% of income is generated.
As a result, the CODM determined that the Company is operating two segment or product group, classic and
longer dated Commodity Securities and short and leveraged Commodity Securities, and one geographical
segment which is Europe. Therefore the Company discloses its results on an equivalent form on its operations
for each of the Company’s business segments only, in note 5.
3.
Result Before Fair Value Movements
Result Before Fair Value Movements for the year comprised:
Audit Fees for the year of GBP 51,761 will be met by ManJer (2022: GBP 43,079).
4.
Taxation
The Company is subject to Jersey Income Tax. During the year the Jersey Income Tax rate applicable to the
Company is zero percent (2022: zero percent).
5.
Segmental Reporting
The Company has two operating segments; classic & longer dated and short & leveraged Commodity
Securities in issue. The Company earns income from each of these sources.
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5.
Segmental Reporting (continued)
Additional information relating to the assets and liabilities associated with these Commodity Securities is
disclosed in notes 7 and 8.
6.
Trade and Other Receivables
The fair value of these receivables is equal to the carrying value. The Trade and Other Receivables are due
to be recovered within 12 months of the year end.
7.
Commodity Contracts
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7.
Commodity Contracts (continued)
As at 31 December 2023, there were certain Commodity Contracts awaiting settlement in respect of the
creation or redemption of Securities with transaction dates before the year end and settlement dates in the
following year:
The amount receivable on Commodity Contracts awaiting settlement is USD 18,861,634 (2022: USD
23,143,956).
The amount payable on Commodity Contracts awaiting settlement is USD 8,025,335 (2022: USD
15,924,251).
The below reconciliation of changes in the Commodity Contracts includes only non-cash changes.
8.
Commodity Securities
Whilst the Commodity Securities are quoted on the open market, the Company’s ultimate liability relates to its
contractual obligations to issue and redeem Commodity Securities at set prices on each trading day. These
prices are based on agreed formulae, and are equal to the published net asset values (“NAV”) of each class of
Commodity Security. Therefore, the actual contractual issue and redemption of Commodity Securities occur at
a price that corresponds to the fair value of the Commodity Contracts. As a result, the Company has no net
exposure to gains or losses on the Commodity Securities and Commodity Contracts.
The Company measures the Commodity Securities at their fair value in accordance with IFRS 13 rather than at
the Contractual Value (as described in the Prospectus). The fair value is the price quoted on stock exchanges
or other markets where the Commodity Securities are listed or traded.
The fair values and changes thereof during the year based on prices available on the open market as
recognised in the financial statements are:
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8.
Commodity Securities (continued)
The Contractual Values and changes thereof during the year based on the contractual settlement values are:
The gain or loss on the difference between the value of the Commodity Contracts and the fair value of
Commodity Securities would be reversed on a subsequent redemption of the Commodity Securities and
cancellation of the corresponding Commodity Contracts. Refer to note 15 for the non-statutory and non-GAAP
adjustments which reflect the results of this reversal.
As at 31 December 2023, there were certain Commodity Securities awaiting settlement in respect of creations
or redemptions with transaction dates before the year end and settlement dates in the following year:
The amount receivable on Commodity Securities awaiting settlement is USD 8,025,335 (2022: USD
15,924,251).
The amount payable on Commodity Securities awaiting settlement is USD 18,861,634 (2022: USD
23,143,956).
The below reconciliation of changes in the Commodity Securities, being liabilities arising from financing
activities, includes only non-cash changes.
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9.
Trade and Other Payables
The fair value of these payables is equal to the carrying value. The ManJer Fee Payable is due to be settled
within 12 months of the year end.
10.
Stated Capital
The Company can issue an unlimited capital of nil par value shares in accordance with its Memorandum of
Association.
All Shares issued by the Company carry one vote per Share without restriction and carry the right to dividends.
All Shares are held by WisdomTree Holdings Jersey Limited (“HoldCo”).
11.
Related Party Disclosures
Entities and individuals which have significant influence over the Company, either through ownership or by
virtue of being a director of the Company are considered to be related parties. In addition, entities with common
ownership to the Company and entities with common directors are also considered to be related parties.
Fees charged by ManJer during the year:
The following balances were due to ManJer at year end:
At 31 December 2023, USD 2 is receivable from ManJer (2022: USD 2).
No director has a service contract with the Company. The directors of the Company who are employees within
the WisdomTree, Inc group do not receive separate remuneration in their capacity as directors of the Company.
The directors of the Company who are employees of R&H Fund Services (Jersey) Limited (“R&H” or the
“Administrator”) do not receive separate remuneration in their capacity as directors of the Company, however
R&H receives a fee from ManJer which includes services in respect of the Company, including for the provision
of directors who are employees of R&H.
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11.
Related Party Disclosures (continued)
Steven Ross is a director of R&H Fund Services (Jersey) Limited (“R&H” or, the “Administrator”) and a partner
of Rawlinson & Hunter, Jersey Partnership, which wholly owns R&H. Christopher Foulds is a director of R&H.
During the period, R&H charged ManJer administration fees, which include the Company and other entities for
which ManJer is the Manager and R&H is the Administrator, in aggregate, of GBP 1,221,529 (31 December
2022: GBP 214,233), of which GBP 291,402 (31 December 2022: GBP nil) was outstanding at the period end.
Peter Ziemba is an executive officer of WisdomTree, Inc. and Bryan Governey is European General Counsel
for the WisdomTree, Inc group.
12.
Financial Risk Management
The Company is exposed to a number of risks arising from its activities, including credit risk, settlement risk,
liquidity risk and market risk. The Board is responsible for the overall risk management approach and for
approving the risk management strategies and principles. The Board meets frequently to consider the risk
exposures of the Company and to determine appropriate management policies. The risk management policies
employed by the Company to manage these are discussed below.
The Commodity Securities are subject to normal market fluctuations and other risks inherent in investing in
securities and other financial instruments. There can be no assurance that any appreciation in the value of
securities will occur, and the capital value of an investor’s original investment is not guaranteed. The value of
investments may go down as well as up, and an investor may not get back the original amount invested.
The information provided below is not intended to be a comprehensive summary of all the risks associated with
the Commodity Securities and investors should refer to the most recent Prospectuses for a detailed summary
of the risks inherent in investing in the Commodity Securities. Any data provided should not be used or
interpreted as a basis for future forecast or investment performance.
(a)
Credit Risk
Credit risk primarily refers to the risk that Authorised Participants or the Commodity Contract Counterparties
will default on their contractual obligations resulting in financial loss. Each class of Commodity Security is
issued under limited recourse arrangements whereby the holders have recourse only to the relevant
Commodity Contracts (held to support the Commodity Securities) and not to the Commodity Contracts of any
other class of Commodity Securities or to the Company, therefore limiting the credit risk of the Company in
connection with the issue of the Commodity Securities.
There are compulsory redemption provisions as outlined in the prospectus that can be triggered by the
Company or the Commodity Contract Counterparties in certain circumstances whereby a compulsory
redemption of all Commodity Securities in issue would be undertaken. Furthermore, there are restrike
mechanisms in certain classes of short and leveraged products that force a re-set of the price where there are
large swings in the relevant index during a trading day, or which may trigger a compulsory redemption of
Commodity Securities if the price of those Commodity Securities was to fall to zero within a specified intra-day
period.
The total carrying amounts of the commodity contracts, amounts receivable awaiting settlement and trade and
other receivables best represent the maximum credit risk exposure at the Statement of Financial Position date.
At the reporting date the Company’s amounts receivable awaiting settlement and trade and other receivables
are detailed on the Statement of Financial Position.
The value of Commodity Securities and the ability of the Company to repay the redemption price is dependent
on the receipt of such amount from the Commodity Contract Counterparties and may be affected by the credit
rating attached to each Commodity Contract Counterparty. Currently the Company has two Commodity
Contract Counterparties, Merrill Lynch International and Citigroup Global Markets Limited. At the reporting
date the exposure to the Commodity Contract Counterparties was split approximately 32% and 68% (2022:
45% and 55%), respectively.
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12.
Financial Risk Management (continued)
(a)
Credit Risk (continued)
In the event that a Commodity Contract Counterparty was to default, the Company would only transact with the
non-defaulting Commodity Contract Counterparty. Furthermore, the Company could use the proceeds
resulting from the sale of the collateral (see below) to transact with the non-defaulting Commodity Contract
Counterparty to replace the affected Commodity Contracts where possible.
To cover the credit risk under the Commodity Contracts, the Commodity Contract Counterparties are obliged to
place an amount of collateral, equal to or greater than the exposure, into a pledged account with a third party
custodian, being the Bank of New York Mellon (the “Collateral Custodian"). The level of collateral deposited into
the pledged account is assessed against the total outstanding value of the Commodity Contracts outstanding at
the end of the previous trading day, which on the 31 December 2023 totalled USD 6,040,635,291, with
collateral pledged with a total value of USD 6,220,815,842.
The collateral held with the Collateral Custodian is held in accounts in the names of the Commodity Contract
Counterparties. The Company publishes the collateral posted by the Commodity Contract Counterparties each
day on its website (http://www.wisdomtree.eu/pricing). In the event that a Commodity Contract Counterparty
defaults on its payment obligations, the Company is entitled to exercise control over the collateral amounts
placed in the pledged account.
The realised value of the collateral may differ from the amount owed by the Commodity Contract
Counterparties, as prices fluctuate intraday (i.e. from the last point the exposure and collateral were valued).
The collateral posted by the Commodity Contract Counterparties can include cash invested in Eligible Money
Market Funds with a minimum rating of AAA, publicly traded debt securities with a minimum rating of A- or in
eligible equities (that in summary also meet these minimum requirements). These collateral schemes also
apply strict margins and concentration limits (both by Issuer and Jurisdiction) to reduce the risk of such a loss,
but do not completely remove it. Full details of “Eligible Collateral” can be found in the Company’s prospectus.
The collateral pledged with the Collateral Custodian is re-assessed on a daily basis to ensure that the value of
the collateral in the pledged account is sufficient relative to value of the Commodity Contracts outstanding and
to ensure that the eligibility criteria for the collateral continues to be met on a daily basis. Should the quality of
the underlying collateral change on any day, it is removed from the collateral account and replaced with
collateral that meets the eligibility criteria.
The Board monitors credit risk exposure, including through an assessment of the credit rating of the Commodity
Contract Counterparties (Citigroup Global Markets Limited: A+ (2022: A+) (Fitch, 15 September 2023) and
Merrill Lynch International: AA (2022: AA) (Fitch, 15 September 2023)), in order to ensure the Company’s
exposure is managed, and has continued to do so more closely with a focus on any potential impact of, or
developments relating to the Ukraine Crisis.
(b)
Settlement Risk
Settlement risk primarily refers to the risk that an Authorised Participant or the Commodity Contract
Counterparty will default on its contractual obligations resulting in financial loss.
The directors believe that settlement risk would only be caused by the risk of the Company’s trading
counterparty not delivering cash, Commodity Contracts or Commodity Securities on the settlement date. The
directors feel that this risk is mitigated as a result of the cash or Commodity Securities settling through the
CREST system. The system ensures that the transaction does not settle until both parties have fulfilled their
contractual obligations. Amounts outstanding in respect of positions yet to settle are disclosed in notes 7 and 8.
(c)
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its
financial liabilities as they fall due. The Company’s receivables and payables are all payable on demand and
generally settled on a short-term basis. In addition, amounts in respect of the Management Fee, Licence
Allowance and creation and redemption fees are transferred from the relevant counterparties directly to ManJer
and there are no cash flows through the Company.
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12.
Financial Risk Management (continued)
(c)
Liquidity Risk (continued)
The Commodity Securities do not have a contractual maturity date and will only be redeemed at the request of
the holder of the security, which may be requested at any time, or in the case of a compulsory redemption.
Generally, only Authorised Participants can submit applications and redemptions directly with the Company.
Furthermore, liquidity risk of the Company is mitigated because the timing of redemptions of the Commodity
Securities and Commodity Contracts are matched, therefore the Company does not have to wait for a longer-
term contract to mature in order to pay its debts to ex-security holders. Furthermore, while the agreements with
the Commodity Contract Counterparties include limits (both daily and in the aggregate) on the issue and
cancellation of Commodity Contracts, the Company is not obliged to issue and redeem Commodity Securities
in excess of those limits under the terms of the security agreement. Consequently, the Company has not
presented any tabular information in respect of liquidity risk.
(d)
Capital Management
The primary objective of the Company’s capital management policy is to ensure that it maintains sufficient
resources for operational purposes. The capital being managed is the Stated Capital as presented in the
Statement of Changes in Equity. Retained Earnings and the Revaluation Reserve, as presented in the
Statement of Changes in Equity, are not considered managed capital as these balances relate to unrealised
gains and losses on Commodity Contracts (held to support the Commodity Securities) and Commodity
Securities, which are reversed on a subsequent redemption of the Commodity Securities and the related
cancellation of Commodity Contracts and will therefore not be realised. The Company is not subject to any
capital requirements imposed by a regulator and there were no changes in the Company’s approach to capital
management during the year.
The Company’s principal activity is the issue and listing of Commodity Securities. These Commodity Securities
are issued and redeemed as demand requires. The Company holds a corresponding number of Commodity
Contracts which matches the total liability of the Commodity Securities issued. ManJer supplies or arranges for
the supply of all management and administration services to the Company and pays all management and
administration costs of the Company. In return for these services the Company has an obligation to remunerate
ManJer, which under the terms of the service agreement is equal to the aggregate of the Management Fee,
Licence Allowance and creation and redemption fees earned.
As all Commodity Securities in issue are supported by an equivalent number of Commodity Contracts held with
the Commodity Contract Counterparties and the running costs of the Company are paid by ManJer, the
directors of the Company consider the capital management and its current capital resources are adequate to
maintain the ongoing listing and issue of Commodity Securities.
(e)
Market Risk
Market risk is the risk that changes in market prices (such as index prices, interest rates and foreign exchange
rates) will affect the Company’s income or the value of its financial instruments held or issued.
i)
Price Risk
As described above, Commodity Securities provide investors with long or short exposure to the
performance of the relevant commodity index. The value of the Company’s liability in respect of the
Commodity Securities fluctuates according to the performance of the underlying commodity index and the
risk of such change in price is managed by the Company by entering into Commodity Contracts with the
Commodity Contract Counterparties which match the liability. Whilst the Commodity Securities are quoted
on the open market, the Company’s ultimate liability relates to its contractual obligations to issue and
redeem Commodity Securities at set prices on each trading day. The Company measures the Commodity
Securities at their fair value in accordance with IFRS 13 rather than at the Contractual Value (as described
in the Prospectus). The gain or loss on the difference between the value of the Commodity Contracts and
the fair value of Commodity Securities would be reversed on a subsequent redemption of the Commodity
Securities and cancellation of the corresponding Commodity Contracts. Refer to note 8 for the further
details regarding fair values.
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12.
Financial Risk Management (continued)
(e)
Market Risk (continued)
i)
Price Risk (continued)
The Company therefore bears no residual financial risk on a contractual basis from a change in the value of
a commodity, commodity index or currency by reference to the futures price. Furthermore, the impact of
price sensitivity is considered immaterial to these financial statements.
However, there is an inherent risk from the point of view of investors as the values of commodities, and thus
the value of the Commodity Securities, may vary widely due to, amongst other things, changing supply or
demand for a particular commodity, government and monetary policy or intervention, interest rate levels
and global or regional political, economic or financial events. The market price of Commodity Securities is
(and will remain) a function of supply and demand amongst investors wishing to buy and sell Commodity
Securities and the bid-offer spread that the market makers are willing to quote. This is highlighted further in
note 15, and below under the Fair Value Hierarchy.
Ukraine Invasion
Russia has continued military action in the sovereign territory of Ukraine throughout the year ended 31
December 2023 (the “Crisis”). The Crisis has resulted in the implementation of sanctions and further
actions by governments which, as well as the Crisis itself, have impacted financial and commodities
markets.
As the Crisis continues, the Board also continues to closely monitor and assess the impact on the
Company’s portfolio operations and valuation and will take any further actions needed or as required under
the terms of the applicable Prospectuses, as facts and circumstances are subject to change and may be
specific to investments and jurisdictions. Whilst it is not currently possible to predict future market
conditions and therefore determine if any further action may be required on any other classes of
Commodity Securities, the action that may be required includes, but is not limited to, temporarily not
accepting applications for Commodity Securities, temporarily suspending Commodity Securities from
trading on Stock Exchanges or a compulsory redemption of Commodity Securities. The Company has not
initiated any of these further actions during the current year or subsequently to date. Any such action will
be undertaken in accordance with the constitutive documents of the Commodity Securities. Furthermore,
there are mechanisms within the constitutive documents of the Commodity Securities that enable the
Commodity Contract Counterparties to request a compulsory redemption in certain circumstances as set
out and explained within the Prospectuses.
ii)
Interest Rate Risk
The multiplier used in the pricing of the Commodity Contracts or the Commodity Securities takes into
account the incremental capital enhancement component of the Commodity Security, which includes the
impact of interest rates. This incremental capital enhancement component of the Commodity Contracts
and Commodity Securities is attributable to the security holder. As a result, the Company does not have
significant exposure to interest rate risk.
iii)
Currency Risk
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 Commodity Securities are matched economically by corresponding losses or
gains attributable to the Commodity Contracts.
(f)
Sensitivity Analysis
IFRS 7 requires disclosure of a sensitivity analysis for each type of market risk to which the Company is
exposed to at the reporting date, showing how profit or loss and equity would have been affected by a
reasonably possible change to the relevant risk variable.
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12.
Financial Risk Management (continued)
(f)
Sensitivity Analysis (continued)
The Company’s rights and liability in respect of Commodity Securities and Commodity Contracts, respectively,
relates to its contractual obligations to issue and redeem Commodity Securities at set prices on each trading
day. The fair value of each creation and redemption of Commodity Securities is recorded using the price by
reference to the value of the commodity indices calculated and published by Bloomberg or Solactive. However,
under IFRS 13, the liability is recorded at fair value (being the on-exchange price) which results in a mismatch.
As described in note 15 this mismatch is reversed on the redemption of Commodity Securities.
As a result, the Company’s contractual and economic liability in connection with the issue and redemption of
Commodity Securities is matched by movements in corresponding Commodity Transactions. Whilst sensitivity
analysis could be performed on this mismatch, the Company does not have any net exposure to market price
risk. Furthermore, the result of the numeric sensitivity is considered not material by the directors and in their
opinion, no sensitivity analysis is required to be disclosed.
(g)
Fair Value Hierarchy
The levels in the hierarchy are defined as follows:
Categorisation within the hierarchy is determined on the basis of the lowest level input that is significant to the
fair value measurement of each relevant asset/liability.
The Company is required to utilise the available on-market price as the Commodity Securities are quoted and
traded on the open market. Where the market on which the Commodity Securities prices are quoted is
determined to be active at the relevant reporting date, the Commodity Securities are classified as level 1
financial liabilities. Where the market on which the Commodity Securities prices are quoted is determined to be
inactive at the relevant reporting date, the Commodity Securities are classified as level 2 financial liabilities.
The Company values the Level 2 Commodity Securities using the unadjusted latest traded market price
available at each reporting date. This is considered to most appropriately reflect the price at which transactions
would occur as at the reporting date.
The Company’s rights in respect of Commodity Contracts relate to its contractual obligations to issue and
redeem Commodity Securities at set prices on each trading day. These prices are based on an agreed formula
(set out in the Prospectus), and are equal to the published NAVs of each class of Commodity Security.
Therefore, Commodity Contracts are classified as level 2 financial assets, as the value is calculated using third
party pricing sources supported by observable, verifiable inputs.
The categorisation of the Company’s assets and (liabilities) measured at fair value are as shown below:
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12.Financial Risk Management (continued)
(g)
Fair Value Hierarchy (continued)
The Commodity Securities and the Commodity Contracts are recognised at fair value upon initial recognition
and revalued to fair value in line with the Company’s accounting policy. There are no assets or liabilities
classified in level 3. Transfers between levels are recognised if the primary market on which the Commodity
Securities prices are quoted was determined to be inactive at the relevant reporting date. The Company
considers both the last trade date and trading volumes during the 5 trading days leading up to each reporting
date to determine if the market for a particular Commodity Security is active. Transfers as a result of the
analysis of the activity levels of the market are identified and recognised at each reporting date.
There were no transfers or reclassifications between Level 1 and Level 2 for any of the assets during the year or
at the reporting date. As at 31 December 2023 Commodity Securities with a fair value of USD nil (2022: USD
12,285,749) were transferred from Level 1 to Level 2. Commodity Securities with a fair value of USD 7,006,966
(2022: USD 3,466,895) were transferred from Level 2 to Level 1.
13.
Ultimate Controlling Party
In accordance with the disclosure requirements of IFRS the directors have determined that no entity meets the
definition of immediate parent or ultimate controlling party. The holder of issued equity shares is HoldCo, a
Jersey registered company. WisdomTree, Inc (formerly WisdomTree Investments, Inc) is the ultimate
controlling party of HoldCo.
14.
Events Occurring After the Reporting Period
There have been no significant events that have occurred since the end of the reporting period up to the date of
signing the Financial Statements which would impact on the financial position of the Company disclosed in the
Statement of Financial Position as at 31 December 2023, or on the results and cash flows of the Company for
the year ended on that date.
15.
Non-GAAP and Non-Statutory Information
As a result of the mis-match in the accounting valuation of Commodity Contracts (held to support the
Commodity Securities) and Commodity Securities (as disclosed in notes 7 and 8) the profits and losses and
comprehensive income of the Company presented in the Statement of Profit or Loss and Other Comprehensive
Income reflect gains and losses which represent the movement in the cumulative difference between the value
of the Commodity Contracts and the price of Commodity Securities.
The Statement of Changes in Equity also reflects the fair value movements on both the Commodity Contracts
(held to support the Commodity Securities) and the Commodity Securities. These gains or losses on the
difference between the value of the Commodity Contracts (held to support the Commodity Securities) and the
price of Commodity Securities would be reversed on a subsequent redemption of the Commodity Securities
and cancellation of the corresponding Commodity Contracts.
Furthermore, each class of Commodity Security is issued under limited recourse arrangements whereby the
holders have recourse only to the relevant Commodity Contracts (held to support the Commodity Securities)
and not to the Commodity Contracts of any other class of Commodity Security or to the Company. As a result,
the Company does not make gains from trading in the underlying Commodity Contracts (held to support the
Commodity Securities) and, from a commercial perspective (with the exception of the impact of Management
Fees and Licence Allowance) gains and losses in respect of Commodity Contracts (held to support the
Commodity Securities) will always be offset by a corresponding loss or gain on the Commodity Securities and
the Company does not retain any net gains or losses.
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15.
Non-GAAP and Non-Statutory Information (continued)
The mismatched accounting values are as shown below:
To reflect the commercial results, the Company has presented below a non-GAAP and non-Statutory
Statement of Profit or Loss and Other Comprehensive Income and Statement of Changes in Equity for the
period which reflect an Adjustment from Market Value to Contractual Value (as set out in the Prospectus) of
Commodity Securities, together with those gains or losses being transferred to a separate reserve which is
deemed non-distributable.
(a)
Non-GAAP and Non-Statutory Statement of Profit or Loss and Other Comprehensive Income
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15.
Non-GAAP and Non-Statutory Information (continued)
(b)
Non-GAAP and Non-Statutory Statement of Changes in Equity
4 This represents the difference between the value of Commodity Contracts and the price of Commodity Securities.
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