WisdomTree Hedged Commodity
Securities Limited
Registered No: 109413
Annual Report and Audited Financial Statements for the
Year ended 31 December 2024
WisdomTree Hedged Commodity Securities Limited
Contents
Management and Administration 1
Directors' Report 2 - 9
Statement of Directors' Responsibilities 10
Independent Auditor's Report 11-18
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 23-38
www.wisdomtree.eu
WisdomTree Hedged Commodity Securities Limited
Management and Administration
AdministratorDirectors
(Up to14 June 2024)Peter Ziemba
R&H Fund Services (Jersey) LimitedBryan Governey
Ordnance House
PO Box 83
Christopher Foulds (Resigned on 21 January 2025)
Steven Ross (Resigned on 21 January 2025)
Olivia Vuillemin (Appointed on 21 January 2025)
Vinod Rajput (Appointed on 21 January 2025)
Registered Office
(As from 14 June 2024)
Apex Financial Services (Alternative Funds)Limited(Up to14 June 2024)
IFC 5Ordnance House
St Helier31 Pier Road
Jersey, JE1 1STSt Helier
Jersey, JE4 8PW
Company Secretary
(Up to14 June 2024)(As from 14 June 2024)
R&H Fund Services (Jersey) LimitedIFC 5
Ordnance HouseSt Helier
31 Pier RoadJersey, JE1 1ST
St Helier
Manager
Jersey, JE4 8PW
WisdomTree Management Jersey Limited
Ordnance House
Commodity Contract Counterparty
Merrill Lynch International31 Pier Road
2 King Edward StreetSt Helier
London, EC1A 1HQJersey, JE4 8PW
United Kingdom
(As from 14 June 2024)
Apex Financial Services (Secretaries)Limited
IFC 5
Jersey Legal Advisers
Mourant Ozannes (Jersey) LLPSt Helier
22 Grenville StreetJersey, JE1 1ST
St Helier
Commodity Contract Counterparty
Jersey, JE4 8PX
Citigroup Global Markets Limited
Citigroup Centre
Registrar
Computershare Investor Services (Jersey) LimitedCanada Square, Canary Wharf
1 Castle StreetLondon, E14 5LB
St HelierUnited Kingdom
Jersey, JE1 1ES
David Middleton (Appointed on 03 July 2024 and
Resigned on 09 August 2024)
31 Pier Road
St Helier
Jersey, JE4 8PW
www.wisdomtree.eu- 1 -
Trustee
The Law Debenture Trust Corporation plc
8th Floor
100 Bishopsgate
London, EC2N 4AG
United Kingdom
Auditor
Ernst & Young LLP
Royal Chambers
St Julian's Avenue
St Peter Port
Guernsey
GY1 4AF
WisdomTree Hedged Commodity Securities Limited
Directors’ Report
Directors
Peter Ziemba
Bryan Governey
David Middleton (Appointed on 03 July 2024 and Resigned on 09 August 2024)
Christopher Foulds (Resigned on 21 January 2025)
Olivia Vuillemin (Appointed on 21 January 2025)
Vinod Rajput (Appointed on 21 January 2025)
Directors’ Interests
Principal Activities
No director has an interest in the Shares of the Company as at the date of this report.
The Company’s principal activity is the issue and listing of currency-hedged commodity securities (“Currency- Hedged Commodity Securities”).
Currency-Hedged Commodity Securities are undated secured limited recourse financial instruments designed to track the price of individual
commodity futures contracts or baskets of commodity futures contracts for which the effects of foreign exchange risks are hedged, and give investors
an exposure similar to that which could be achieved by managing a long fully cash collateralised unleveraged position in futures contracts of specific
maturities, less applicable fees. However, unlike managing a futures position, Currency-Hedged 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 other costs in holding Currency-Hedged Commodity Securities). No trading or management of futures contracts is required by the Company.
Currency-Hedged 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.
Currency-Hedged Commodity Securities are backed by commodity contracts (“Commodity Contracts”) with terms corresponding to the terms of
Currency-Hedged 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 Currency-Hedged 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 Currency-Hedged 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 Currency-Hedged
Commodity Security will primarily be based on the performance of the relevant commodity index.
Each currency-hedged commodity index is calculated by reference to the corresponding un-hedged commodity index and provides a hedge against
movements in the exchange rate between the US Dollar and the currency of denomination of that commodity index, which is rebalanced on a daily
basis. As the Company issues securities which provide exposure to the daily movements in one of the currency-hedged Commodity Indices and the
Company gains exposure to the movements in that Commodity Index by holding corresponding Commodity Contracts, the Company is not required to
undertake any currency hedging activities.
The Company earns a management fee and a licence allowance based upon the number of Currency-Hedged Commodity Securities in issue. These fees
are expressed as an annual percentage, calculated on a daily basis and reflected in the net asset value (“NAV”) of the Currency-Hedged Commodity
Securities on a daily basis, and paid monthly in arrears.
The directors of WisdomTree Hedged Commodity Securities Limited (“HCSL” or the “Company”) submit herewith the annual report and financial
statements of the Company for the year ended 31 December 2024.
The names and particulars of the directors of the Company during and since the end of the financial year are:
Steven Ross (Resigned on 21 January 2025)
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WisdomTree Hedged Commodity Securities Limited
Directors’ Report (Continued)
Principal Activities (continued)
Review of Operations
Classic and Longer Dated GBP-Hedged Commodity Securities 3 - -
Classic and Longer Dated EUR-Hedged Commodity Securities - 17 12
Total Currency-Hedged Commodity Securities 3 17 12
The Company is entitled to a management fee and licence allowance which are calculated on a daily basis:
all Commodity Securities are subject to the licence allowance of 0.05% per annum.
The Company has entered into contractual obligations to issue and redeem Currency-Hedged Commodity Securities at set prices on each trading day.
These prices are based on an agreed formula published in the Prospectus, and are equal to the published NAVs of each class of Currency-Hedged
Commodity Security. Each time Currency-Hedged Commodity Securities are issued or redeemed, matching Currency-Hedged Commodity Contracts
between the Company and a Currency-Hedged Commodity Contract Counterparty are created or cancelled by the Company.
IFRS 13 requires the Company to identify the principal market for the Currency-Hedged Commodity Securities and to utilise the available price within
that principal market. The directors consider the stock exchanges where the Currency-Hedged Commodity Securities are listed to be the principal
market and as a result the fair value of the Currency-Hedged 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 Currency-Hedged 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 Currency-Hedged Commodity
Securities.
The Company recognises its financial assets (Commodity Contracts) and financial liabilities (Currency-Hedged Commodity Securities) at fair value in
the Statement of Financial Position. The gain or loss on Currency- Hedged 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 note 7 to these financial statements.
classic and longer dated GBP-Hedged Commodity Securities have a management fee rate of 0.49% per annum;
classic and longer Dated EUR-Hedged Commodity Securities have a management fee rate of 0.69% per annum; and
The Company is also entitled to apply creation and redemption fees on the creation and redemption of Currency-Hedged Commodity Securities.
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 Currency-Hedged 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.
The most recent Prospectus was issued on 30 September 2024. As at 31 December 2024, the Company had the following number of classes, in
aggregate, of Currency-Hedged Commodity Securities in issue and admitted to trading on the following exchanges:
London
Stock
Exchange
Borsa
Italiana
Deutsche
Börse
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WisdomTree Hedged Commodity Securities Limited
Directors’ Report (Continued)
Review of Operations (continued)
2024 2023
USD USD
Creation and Redemption Fees 165,215 227,903
Management Fees and Licence Allowance 1,261,743 1,292,645
Total Fee Income 1,426,958 1,520,548
Non-GAAP Performance Measures
Recent Developments
Vinod Rajput
Olivia Vuillemin
Peter Ziemba
Bryan Governey
Future Developments
Dividends
Going Concern
Board members are not aware of any developments that might have a significant effect on the operations of the Company in subsequent financial
periods not already disclosed in this report or attached financial statements.
There were no dividends declared or paid during the year (2023: 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.
The directors continue to monitor and assess the impact of geopolitical conflicts on the assets under management of the Company and will take any
potential actions needed or as required under the terms of the prospectus, as facts and circumstances are subject to change and may be specific to
investments and jurisdictions.
The nature of the Company’s business dictates that the outstanding Currency-Hedged 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 Currency-Hedged Commodity Securities will always coincide with the cancellation of an equal amount of Commodity
Contracts, liquidity risk is mitigated such that there is no material residual 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.
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During the year, the Company generated income from creation and redemption fees, management fees and licence allowance as follows:
Under the terms of the service agreement with ManJer, the Company accrued expenses equal to the management fees, licence allowance and creation
and redemptions 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 (2023: USD Nil).
As the difference in the valuation of Commodity Contracts (held to support the Currency-Hedged Commodity Securities) and Currency-Hedged
Commodity Securities would be reversed on a subsequent redemption of the Currency-Hedged Commodity Securities and cancellation of the
corresponding Commodity Contracts (as described further in note 6), the Company presents an adjusted Statement of Profit or Loss and Other
Comprehensive Income and an adjusted Statement of Changes in Equity in note 14 of the financial statements.
As of 21 January 2025, the administration and company secretarial services provided to ManJer changed from R&H Fund Services (Jersey) Limited
("R&H" or the "Administrator") to Apex Financial Services (Alternative Funds) Limited, resulting in a change of ManJer's registered office and
directors. At reporting date, the directors of ManJer are as follows:
WisdomTree Hedged Commodity Securities Limited
Directors’ Report (Continued)
Going Concern (continued)
Corporate Social Responsibility
Directors’ Remuneration
Employees
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 11 (g) to the financial
statements are categorised as Level 2 of the fair value hierarchy 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 year 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.
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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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 Currency-Hedged Commodity Securities
due to the accounting measurement basis applied in accordance with IFRS. As Commodity Contracts are held to support Currency-Hedged
Commodity Securities, any deficit or surplus reported on unrealised positions would be reversed on a subsequent redemption of the Currency-Hedged
Commodity Securities and the related cancellation 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 Currency-Hedged Commodity 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 30 April 2026, and accordingly these financial
statements have been prepared on the going concern basis.
Sustainability and corporate responsibility are embedded throughout the business of the WisdomTree group as I believe this benefits shareholders,
employees of the WisdomTree group, investors in WisdomTree’s products as well as the 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 business, and which included 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 directors, leveraging the work undertaken by the ESG Steering Committee. More information on WisdomTree’s
corporate social responsibility strategy can be found on the WisdomTree group 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 2024.
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.
WisdomTree Hedged Commodity Securities Limited
Directors’ Report (Continued)
Auditor
Principal Risks and Uncertainties
Movement in
Securities NAV USD Securities NAV USD NAV
572,767 7.26 4,159,373 730,814 6.93 5,065,142 4.79%
782,750 3.79 2,964,937 1,074,007 3.52 3,775,827 7.61%
463,695 9.27 4,297,264 606,406 9.27 5,622,151 (0.03%)
230,686 6.30 1,453,295 282,986 7.21 2,039,297 (12.62%)
194,812 5.85 1,139,432 196,507 6.10 1,199,028 (4.12%)
2024 2023
WisdomTree GBP Daily
Hedged Brent Crude Oil
WisdomTree GBP Daily
Hedged WTI Crude Oil
WisdomTree GBP Daily
Hedged Industrial Metals
WisdomTree EUR Daily
Hedged Agriculture
The Currency-Hedged Commodity Securities provide investors with exposure to the performance of the relevant commodity index. Each Currency-
Hedged Commodity Security is a debt instrument whose redemption price is linked to the performance of the underlying commodity index. Each class
of Currency-Hedged Commodity Security is issued under limited recourse arrangements whereby the holders have recourse only to the relevant
Commodity Contracts held to support the Currency-Hedged Commodity Securities and not to the Commodity Contracts of any other class of
Currency-
Hedged Commodity Security or the Company.
Any price movements in the value of the Commodity Contracts are wholly attributable to the holders of the Currency-Hedged 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 Currency-Hedged 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 at each reporting date. As a result, the principal risks and uncertainties to which the Company is exposed has not materially
changed during the year ended 31 December 2024.
Each Currency-Hedged Commodity Security is a debt instrument whose redemption price is linked to the performance of the underlying hedged
commodity index. Each class of Currency-Hedged Commodity Security is issued under limited recourse arrangements whereby the holders have
recourse only to the relevant Commodity Contracts held to support the Currency-Hedged Commodity Security and not to the Commodity Contracts of
any other class of Currency-Hedged Commodity Security or the Company.
There is an inherent risk from the point of view of investors as the values of commodities, and thus the value of the Currency-Hedged 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 Currency-Hedged Commodity
Securities is (and will remain) a function of supply and demand amongst investors wishing to buy and sell Currency-Hedged Commodity Securities
and the bid or offer spread that the market makers are willing to quote.
Movements in the value of the underlying hedged commodity index, and thus the value of the Currency- Hedged Commodity Securities, may vary
widely which could have an impact on the demand for the Currency- Hedged Commodity Securities issued by the Company. These movements are
shown in notes 6 and 7 to the financial statements.
WisdomTree EUR Daily
Hedged All Commodities
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The Independent Auditor is Ernst & Young LLP. A resolution to re-appoint Ernst & Young LLP will be proposed at the next Board meeting of the
director on behalf of the sole shareholder.
WisdomTree Hedged Commodity Securities Limited
Directors’ Report (Continued)
Principal Risks and Uncertainties (Continued)
Movement in
Securities NAV USD Securities NAV USD NAV
1,717,685 6.28 10,788,787 6,544,585 6.55 42,896,764 (4.11%)
3,437,230 5.41 18,581,474 2,951,330 5.49 16,205,027 (1.53%)
212,596 6.54 1,390,909 306,596 3.84 1,178,787 70.38%
5,139,515 7.05 36,217,610 5,088,115 7.37 37,479,371 (4.38%)
286,871 3.60 1,032,507 191,071 4.44 848,314 (18.94%)
40,545 8.83 358,064 30,845 11.55 356,406 (23.54%)
10,930,085 2.74 29,908,584 8,259,985 2.64 21,827,305 3.65%
1,846,645 9.75 17,996,686 2,130,545 8.47 18,036,996 15.06%
1,694,932 7.92 13,415,805 2,009,371 8.42 16,922,351 (5.99%)
26,307,516 0.31 8,220,160 18,880,816 0.46 8,771,863 (32.07%)
140,924 5.84 823,662 157,624 7.02 1,107,225 (16.74%)
116,465 8.32 969,464 158,161 7.31 1,156,809 13.87%
5,792,816 5.03 29,155,446 5,279,688 4.6 24,300,452 9.41%
26,150 8.72 228,015 39,650 11.88 471,196 (26.60%)
73,523 4.17 306,926 65,323 4.51 294,874 (7.44%)
1,752,708 2.28 3,988,923 1,291,008 3.09 3,991,416 (26.35%)
37,438 11.83 442,807 27,338 11.62 317,531 1.79%
WisdomTree EUR Daily
Hedged Coffee
WisdomTree EUR Daily
Hedged Copper
WisdomTree EUR Daily
Hedged Corn
WisdomTree EUR Daily
Hedged Cotton
WisdomTree EUR Daily
Hedged WTI Crude Oil
WisdomTree EUR Daily
Hedged Gold
2024 2023
WisdomTree EUR Daily
Hedged Sugar
WisdomTree EUR Daily
Hedged Wheat
WisdomTree EUR Daily
Hedged Zinc
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WisdomTree EUR Daily
Hedged Industrial Metals
WisdomTree EUR Daily
Hedged Natural Gas
WisdomTree EUR Daily
Hedged Nickel
WisdomTree EUR Daily
Hedged Precious Metals
WisdomTree EUR Daily
Hedged Silver
WisdomTree EUR Daily
Hedged Soybeans
www.wisdomtree.eu
WisdomTree EUR Daily
Hedged Aluminium
WisdomTree EUR Daily
Hedged Brent Crude
WisdomTree Hedged Commodity Securities Limited
Directors’ Report (Continued)
Principal Risks and Uncertainties (Continued)
Movement in
Securities NAV USD Securities NAV USD NAV
257,399 8.00 2,060,371 189,899 8.3 1,575,870 (3.56%)
91,749 2.87 263,156 131,958 3.11 410,631 (7.77%)
190,163,657 215,850,633
Corporate Governance
Internal Control
In addition, whilst the table above also reflects the NAV at 31 December 2024 and 31 December 2023, together with the movement, this does not
reflect the recommended holding period for Currency-Hedged Commodity Securities, which in some cases is one day.Further information on the
contractual value (at NAV) of the Currency-Hedged 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 Currency-Hedged Commodity Securities and the Commodity Contracts are disclosed in note 11 of these financial statements.
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 structure 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.
2024 2023
WisdomTree EUR Daily
Hedged Forward All
Commodities
WisdomTree EUR Daily
Hedged Energy
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 Currency- Hedged Commodity Securities, has not undertaken any business, save for issuing
and redeeming Currency- Hedged Commodity Securities, entering into the required documents, 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 Currency-Hedged
Commodity Securities and performing the obligations and exercising its rights in relation thereto.
The Company is dependent upon ManJer for the provision of 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 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.
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WisdomTree Hedged Commodity Securities Limited
Directors’ Report (Continued)
Audit Committee
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The
Board
has
not
established
a
separate
audit
committee;
instead
the
Board
meets
to
consider
the
financial
reporting
of
the
Company,
the
internal
controls, and relations with the external auditor. In addition, the Board reviews the independence and objectivity of the auditor.
Vinod Rajput
Director
Jersey
Date: 28/04/2025
WisdomTree Hedged Commodity Securities Limited
Statement of Directors' Responsibilities
•
•
•
•
•
•
•
By order of the Board
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:
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 2024 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.
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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
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.
Vinod Rajput
Director
Jersey
Date: 28/04/2025
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE HEDGED COMMODITY SECURITIES LIMITED
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Opinion
We have audited the financial statements of WisdomTree Hedged Commodity Securities Limited (the
“company”) for the year ended 31 December 2024 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 14, including 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 2024 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 2026. 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.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE HEDGED COMMODITY SECURITIES (continued)
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► 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.
► 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 2026.
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
Key audit
matters
► Valuation of Financial Assets at fair value through profit and loss – Commodity
Contracts
► Valuation of Financial Liabilities at fair value through profit and loss –
Currency-Hedged Commodity Securities
Materiality ► Overall materiality of US$1.9m which represents 1% of total assets.
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.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE HEDGED COMMODITY SECURITIES (continued)
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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.
Risk Our response to the risk
Key observations
communicated to the Board
Valuation of Financial Assets
at fair value through profit and
loss – Commodity Contracts
USD 190,163,656
(2023: USD 215,850,633)
Refer to the Accounting policies
(pages 25-26); and Note 6 of the
Financial Statements (pages 28-
29)
Risk that Commodity Contracts
values are misstated or that
valuations are incorrectly
calculated, including as a result
of management override of
internal controls.
The Commodity Contracts held
comprise a range of commodity
derivatives that are used by the
company to provide holders of
issued securities with exposure
that is designed to track the
price of commodity futures.
The Commodity Contracts are
carried at fair value as a
Financial Asset.
Our response to the risk
comprised:
We walked through the
company’s systems, controls
and process implemented in
respect of the valuation of
Commodity Contracts.
We assessed the design of the
company’s systems and controls
implemented in respect of
Commodity Contract valuation.
In executing our strategy, we
adopted a fully substantive
approach.
We obtained independent
confirmation, from the contract
counterparty, of the contractual
value of contracts as at the
reporting date.
We agreed the valuation
methodology applied to the
definition set out in the
prospectus and validation of key
inputs used to derive the value
of the Commodity Contracts.
This included agreement on a
sample basis of the price of the
referenced commodities or
commodities indices to external
pricing sources as at 31
December 2024 against
relevant IFRS requirements.
There were no matters identified
during our audit work on
valuation of Commodity
Contracts that we brought to the
attention of the Board of
Directors of the company.
Based on our testing we are
satisfied that the valuation of the
Commodity Contracts is not
materially misstated.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE HEDGED COMMODITY SECURITIES (continued)
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Risk Our response to the risk Key observations
communicated to the Board
The risk comprises the risk of
errors in both the valuation
methodology applied (including
the risk that the valuation
methodology has not been
determined in accordance with
the terms of the applicable
prospectus) and in the source
and timing of valuation inputs
utilised.
The balance of Commodity
Contracts represents in excess
of 99% of the company’s total
assets as at 31 December 2024
(2023: 99%) and therefore any
error in valuation approach could
be significant.
The risk has remained
consistent with that observed in
the prior year.
We recalculated the value of a
sample of Commodity Contracts
held at 31 December 2024,
representing 98.7% of the total
value of Commodity Contracts
held.
Specifically, in addressing the
risks of management override of
controls, we assessed the
Commodity Contracts valuation
for evidence of management
bias, considered whether any
significant unusual transactions
arose based on our
understanding of the Company
and its activities and tested the
appropriateness of journal
entries recorded in the general
ledger and other adjustments
made in the preparation of the
financial statements.
Valuation of Financial
Liabilities at fair value through
profit or loss –
Currency-Hedged Commodity
Securities
USD 192,137,223
(2023: USD 216,608,430)
Refer to the Accounting policies
(pages 25-26); and Note 7 of the
Financial Statements (pages 29-
30)
Risk that values of securities in
issue are misstated or that
valuations are incorrectly
captured.
The Commodity Securities in
issue comprise a range of
financial instruments that provide
holders of issued securities with
exposure to movements in
prices of associated
commodities without needing to
take physical delivery.
The Commodity Securities are
carried at fair value as a
Financial Liability.
Our response to the risk
comprised:
We walked through the
company’s systems, controls
and process implemented in
respect of the valuation of
Commodity Securities.
We assessed the design of the
company’s systems and controls
implemented in respect of
Commodity Securities valuation.
In executing our strategy, we
adopted a fully substantive
approach.
We assessed the
appropriateness of the valuation
methodology applied,
comprising the use of traded
security prices to value the
Commodity Securities, against
relevant IFRS requirements.
We independently obtained
security prices using external
pricing sources at the balance
sheet date.
There were no matters identified
during our audit work on
valuation of Commodity
Securities that we brought to the
attention of the Board of
Directors of the company.
Based on our testing we are
satisfied that the valuation of
Commodity Securities is not
materially misstated.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE HEDGED COMMODITY SECURITIES (continued)
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Risk Our response to the risk Key observations
communicated to the Board
The risk comprises the risk of
errors in both the valuation
methodology applied and, in the
source, and timing of valuation
inputs utilised.
The balance of Commodity
Securities represents in excess
of 99% of the company’s total
liabilities as at 31 December
2024 (2023: 99%) and therefore
any error in valuation approach
could be significant.
The risk has remained
consistent with that observed in
the prior year.
We recalculated the value of
Commodity Securities held at
31 December 2024, by
multiplying the security price by
the confirmed security balance
in issue. This represented 100%
of the total value of Commodity
Securities in issue.
Our application of materiality
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$1.9 million (2023: US$2.19 million), which is 1%
(2023: 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.
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% (2023: 50%) of our planning
materiality, namely US$0.95m (2023: US$1.10m). 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$0.095m (2023: US$0.11m), which is set at 5% of materiality, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE HEDGED COMMODITY SECURITIES (continued)
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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
10, 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 10, 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.
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.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE HEDGED COMMODITY SECURITIES (continued)
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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 Hedged 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 focused 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.
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 6
years, covering the years ending 31 December 2019 to 31 December 2024.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WISDOMTREE HEDGED COMMODITY SECURITIES (continued)
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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.
Ove Toennes Svejstrup
for and on behalf of Ernst & Young LLP
Guernsey, Channel Islands
Date: 28 April 2025
WisdomTree Hedged Commodity Securities Limited
Statement of Profit or Loss and Other Comprehensive Income
For the financial year ended 31 December 2024
2024 2023
Notes USD USD
Income 3 1,426,958 1,520,548
Expenses 3 (1,426,958) (1,520,548)
Result Before Fair Value Movements
3
-
-
Change in Contractual and Fair Value of Commodity Contracts 6 (1,465,565) (7,104,962)
Change in Fair Value of Currency-Hedged Commodity Securities 7 249,795 5,703,138
Loss for the Year
1,
2
(1,215,770) (1,401,824)
All items dealt with in arriving at the loss for the financial year are from continuing operations.
Year ended
31 December
Year ended
31 December
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 Currency- Hedged Commodity Securities is set out in note 14 to the financial statements.
2
There are no items of Other Comprehensive Income, the Loss for the Year also represented the Total Comprehensive Income for the Year.
The notes on pages 23 to 38 form part of these financial statements
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WisdomTree Hedged Commodity Securities Limited
Statement of Financial Position
As at 31 December 2024
20232024
USDUSDNotes
Assets
6 190,163,656Commodity Contracts 215,850,633
482,3746 3,050,444
8,3007 340,435
115,4285Trade and Other Receivables 139,751
Total Assets 190,769,758 219,381,263
Liabilities
192,137,2237Currency-Hedged Commodity Securities 216,608,430
8,3006 340,435
Trade and Other Payables 8 115,425 139,748
Total Liabilities 192,743,322 220,139,057
Equity
39Stated Capital 3
(1,973,567)14Revaluation Reserve (757,797)
(1,973,564)Total Equity (757,794)
190,769,758Total Equity and Liabilities 219,381,263
Vinod Rajput
Director
Amounts Receivable on Commodity Contracts
Awaiting Settlement
Amounts Receivable on Currency Hedged
Commodity Securities Awaiting Settlement
Amounts Payable on Currency Hedged Commodity
Securities Awaiting Settlement
482,3747 3,050,444
Year ended
31 December
Year ended
31 December
Amounts Payable on Commodity Contracts Awaiting
Settlement
The assets and liabilities in the above Statement of Financial Position are presented in order of liquidity from most to least liquid.
The notes on pages 23 to 38 form part of these financial statements
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The
financial
statements
on
pages
19
to
38
were
approved
and
authorised
for
issue
by
the
board
of
directors
and
signed
on
its
behalf
on
28 April 2025.
WisdomTree Hedged Commodity Securities Limited
Statement of Cash Flows
For the financial year ended 31 December 2024
2024 2023
Notes USD USD
Loss for the Year (1,215,770) (1,401,824)
Non-cash Reconciling Items
6 1,465,565 7,104,962
7 (249,795) (5,703,138)
Cash Generated from Operating Activities
- -
Net Movement in Cash and Cash Equivalents
- -
Cash and Cash Equivalents at the Beginning of the Year
- -
Net Movement in Cash and Cash Equivalents - -
Cash and Cash Equivalents at the End of the Year - -
Year ended
31 December
Year ended
31 December
Change in Contractual and Fair Value of Commodity
Contracts
Change in Fair Value of Currency-Hedged
Commodity Securities
Currency-Hedged 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 Currency-Hedged Commodity Securities and creations and
cancellations of Commodity Contracts, which are non-cash transactions for the Company, are disclosed in notes 6 and 7 in the reconciliation of
opening to closing Currency-Hedged Commodity Securities and Commodity Contracts.
Under the terms of the service agreement with ManJer' as written on page 4, the management fee and licence allowance are transferred directly to
ManJer by the Commodity Contract Counterparties under the terms of the Commodity Contracts. The creation and redemption fees are included and
settled between the Authorised Participants and the Commodity Contract Counterparties as part of each creation or redemption, being 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 38 form part of these financial statements
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WisdomTree Hedged Commodity Securities Limited
Statement of Changes in Equity
For the financial year ended 31 December 2024
Stated Retained Revaluation Total
Capital Earnings Reserve Equity
Notes USD USD USD USD
Balance at 1 January 2023
3 - 644,027 644,030
- (1,401,824) - (1,401,824)
Transfer to Revaluation Reserve 14 - 1,401,824 (1,401,824) -
Balance at 31 December 2023
3
3 - (757,797) (757,794)
Balance at 1 January 2024
3 - (757,797) (757,794)
- (1,215,770) - (1,215,770)
Transfer to Revaluation Reserve 14 - 1,215,770 (1,215,770) -
Balance at 31 December 2024
3
3 - (1,973,567) (1,973,564)
The notes on pages 23 to 38 form part of these financial statements
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Total Comprehensive Expense for the Year
Total Comprehensive Expense for the Year
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 Currency- Hedged Commodity Securities is set out in note 14 to the financial statements.
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements
For the financial year ended 31 December 2024
1. General Information
(1)
(2)
WisdomTree Hedged Commodity Securities Limited (the “Company”) is a company incorporated and domiciled in Jersey. The address of the
registered office is
IFC 5
St. Helier
Jersey, JE1 1ST
The Company’s principal activity is the issue and listing of currency-hedged commodity securities (“Currency- Hedged Commodity Securities”).
Currency-Hedged Commodity Securities are undated secured limited recourse financial instruments designed to track the price of individual
commodity futures contracts or baskets of commodity futures contracts for which the effects of foreign exchange risks are hedged, and give investors
an exposure similar to that which could be achieved by managing a long fully cash collateralised unleveraged position in futures contracts of specific
maturities, less applicable fees. However, unlike managing a futures position, Currency-Hedged 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 other costs in holding Currency-Hedged Commodity Securities). No trading or management of futures contracts is required by the Company.
Currency-Hedged 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.
Currency-Hedged Commodity Securities are backed by commodity contracts (“Commodity Contracts”) with terms corresponding to the terms of
Currency-Hedged Commodity Securities. Each class of Currency-Hedged Commodity Security is issued under limited recourse arrangements whereby
the holders have recourse only to the relevant Commodity Contract held to support the Currency-Hedged Commodity Securities and not to the
Commodity Contracts of any other class of Currency-Hedged Commodity Securities 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 Currency-
Hedged 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 Currency-Hedged 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 Currency- Hedged Commodity
Securities and cancellation of the corresponding Commodity Contracts. Further details are disclosed within the Accounting Policies and in note 14 to
the financial statements, with additional information regarding the risks of the Company disclosed in note 11 to the financial statements. 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 14 to the financial statements to reflect the economic results of the Company through the reversal of the difference in valuation between
Commodity Contracts and Currency-Hedged Commodity Securities given the gain or loss would be reversed on a subsequent redemption of the
Currency-Hedged Commodity Securities and cancellation of the corresponding Commodity Contracts, and therefore will not be realised.
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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 Currency-Hedged Commodity Securities from third parties which fully hedges
the exposure of the Company.
The Company is entitled to:
a management fee and a licence allowance which are calculated by applying a fixed percentage to the Contractual Value of Currency-Hedged
Commodity Securities in issue on a daily basis (the “Management Fee and Licence Allowance”); and
apply creation and redemption fees on the issue and redemption of the Currency-Hedged Commodity Securities.
No creation or redemption fees are payable to the Company when investors trade in the Currency-Hedged Commodity Securities on a listed market
such as the London Stock Exchange.
Under the terms of the service agreement with ManJer', as a result, the Company recognises a result before fair value movements of nil for each period.
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
2. Accounting Policies
Basis of Preparation
Critical Accounting Estimates and Judgements
Significant Judgements
Significant Estimates
Going Concern
The material accounting policies of the Company are described below.
The financial statements of the Company 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 financial statements are presented in the United States Dollars (USD) and all values are rounded
to the nearest USD, except when otherwise indicated.
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 2024.
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 11 to the financial
statements are categorised as level 2 of the fair value hierarchy 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 year 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 presentation of financial statements in conformity with IFRS 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.
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 14 to
The directors do not consider that any significant estimates have been applied in the preparation of these financial statements.
The directors continue to monitor and assess the impact of geopolitical conflicts on the assets under management of the Company and will take any
potential actions needed or as required under the terms of the prospectus, as facts and circumstances are subject to change and may be specific to
investments and jurisdictions.
The nature of the Company’s business dictates that the outstanding Currency-Hedged Commodity Securities may be redeemed at any time by
Authorised Participants and in certain circumstances by individual holders or may be compulsorily redeemed by the Company. As the redemption of
Currency-Hedged Commodity Securities will always coincide with the cancellation of an equal amount of Commodity Contracts, liquidity risk is
mitigated such that there is no material residual 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 the statement of financial position, including instances where a deficit is reported, is not
considered to impact the going concern position of the Company as this would result solely due to the unrealised gains or losses on Commodity
Contracts and Currency-Hedged Commodity Securities in accordance with the accounting measurement basis applied as prescribed by IFRS. As
Commodity Contracts are held to support Currency-Hedged Commodity Securities, any deficit or surplus reported on unrealised positions would be
reversed on a subsequent redemption of the Currency-Hedged Commodity Securities and the related cancellation 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 Currency-Hedged Commodity 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 2026, and accordingly these financial statements have been prepared on the going concern basis.
- 24 - www.wisdomtree.eu
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
2. Accounting Policies (continued)
Accounting Standards
(a) Standards, amendments and interpretations considered by the Company:
•
Amendments to IAS 1-Classification of Liabilities as current or non-current
•
Amendments to IFRS 16-lease liability in a sale and leaseback transaction
(b) New and revised IFRSs in issue but not yet effective:
•
•
•
Lack of exchangeability - Amendments to IAS 21 (effective for annual periods beginning on or after 1 January 2025)
•
IFRS 18- Presentation and disclosure in financial statements (effective for annual periods beginning on or after 1 January 2027)
•
•
Currency-Hedged Commodity Securities and Commodity Contracts
i) Issue and Redemption
Financial assets and liabilities are recognised and de-recognised on the transaction (trade) date.
ii) Classification at fair value through Profit or Loss
The following are standards and amendments effective for accounting periods beginning on or after 1 January 2025 but which did not have any
effect on the financial statements of the Company:
There were no other new standards, amendments and interpretations adopted in the current year that resulted in a significant effect on these
financial statements.
The Company has not applied the following new and revised IFRSs that have been issued :
Supplier Finance Arrangements - IAS 7 and IFRS 7 (effective for annual periods beginning on or after 1 January 2025)
Amendments to IFRS 16 Lease liability in Sale and Leaseback (effective for annual periods beginning on or after 1 January 2025)
IFRS 19 - Subsidiaries without public accountability: disclosures (effective for annual periods beginning on or after 1 January 2027)
- 25 - www.wisdomtree.eu
IFRS 9 and IFRS 7 (amendments) - Classification and measurement of financial instruments (effective for annual periods beginning
on or after 1 January 2026)
The directors do not expect the adoption of the above standards, amendments and interpretations that are in issue will have a material impact on the
financial statements of the Company in future periods.
Each time a Currency-Hedged 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
Currency-Hedged 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).
Each Currency-Hedged 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 Currency-Hedged
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.
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
2. Accounting Policies (continued)
Currency-Hedged Commodity Securities and Commodity Contracts (continued)
iii) Pricing
Commodity Contracts and Securities Awaiting Settlement
Other Financial Assets and Liabilities
Reserves
Income
The Commodity Contracts are priced by reference to certain currency-hedged commodity indices calculated and published by Bloomberg L.P. or
Bloomberg Finance L.P. (together “Bloomberg”) and 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
incremental capital enhancement component of the Currency-Hedged Commodity Security, and is the same across all Currency-Hedged
Commodity Securities of the same type (i.e. all classic Currency-Hedged Commodity Securities use the same multiplier). This price (the
Contractual Value) is calculated based on the formula set out in the Prospectus and 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 Currency-Hedged Commodity Securities are listed to be the principal market and as a result the fair value of the
Currency-Hedged 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 Currency-Hedged Commodity Securities are priced using the latest traded mid-market
price on (or before) the reporting date.
Consequently, a difference arises between the value of Commodity Contracts (held to support the Currency-Hedged Commodity Securities) and
Currency-Hedged Commodity Securities (at market value) presented in the Statement of Financial Position. This difference is reversed on a
subsequent redemption of the Currency-Hedged Commodity Securities and cancellation of the corresponding Commodity Contracts.
The issue and redemption of Currency-Hedged 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 Currency-Hedged 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 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.
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 Currency-Hedged Commodity Securities) and Currency-Hedged Commodity Securities, which will be reversed on a subsequent redemption of the
Currency-Hedged Commodity Securities and the related cancellation of Commodity Contracts and will therefore not be realised.
- 26 - www.wisdomtree.eu
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:
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
2. Accounting Policies (continued)
Income (continued)
i) Management Fees and Licence Allowance
Classic and longer dated GBP-Hedged Commodity Securities have a management fee rate of 0.49% per annum;
all Commodity Securities are subject to the licence allowance of 0.05% per annum.
ii) Creation and Redemption Fees
Foreign Currency
Segmental Reporting
classic and longer Dated EUR-Hedged Commodity Securities have a management fee rate of 0.69% per annum; and
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.
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.
The financial statements of the Company are presented in the currency in which the majority of Currency- Hedged 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 (USD), which is the functional currency of the Company, and the presentation currency of the financial statements.
Transactions in foreign currencies are initially recorded at the spot rate at the date the transaction. Monetary assets and liabilities denominated in
foreign currencies at the year end date are translated at rates ruling at that date.
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.
Management Fees and Licence Allowance are calculated by applying a fixed percentage to the Contractual Value of Currency-Hedged Commodity
Securities in issue on a daily basis in accordance with the terms of the securities issued:
Whilst the Company has a number of different Currency-Hedged Commodity Securities in issue, the financial information reviewed by CODM is not
segregated by those different Currency-Hedged Commodity Securities and therefore the board of directors concluded that these components do not
meet the criteria of operating segments. Furthermore marketing of the Currency-Hedged Commodity Securities is undertaken on a centralised basis
and the terms of the Currency-Hedged Commodity Securities of any class rank pari passu in all respects irrespective of stock exchange listing.
As a result, the CODM determined that the Company is operating a single segment or product group, classic and longer dated Currency-Hedged
Commodity Securities, and one geographical segment which is Europe. Therefore the Company discloses its results on an equivalent aggregated form
and does not provide any further segmental information. In addition, the Company has no single major customer from which greater than 10% of
income is generated. All information relevant to the understanding of the Company’s activities is included in these financial statements.
- 27 - www.wisdomtree.eu
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
3. Result Before Fair Value Movements
2024 2023
USD USD
Creation and Redemption Fees 165,215 227,903
Management Fees 1,144,915 1,172,956
License Allowance 116,828 119,689
Total Income 1,426,958 1,520,548
ManJer Fees (1,426,958) (1,520,548)
Total Operating Expenses (1,426,958) (1,520,548)
Result Before Fair Value Movements
-
-
4. Taxation
5. Trade and Other Receivables
2024 2023
USD USD
Management Fee and Licence Allowance 93,930 121,843
Creation and Redemption Fees 21,495 17,905
Receivable from Related Party 3 3
115,428 139,751
6. Commodity Contracts
2024 2023
USD USD
Change in Contractual and Fair Value of Currency-Hedged Commodity Contracts
(1,465,565) (7,104,962)
Commodity Contracts at Fair Value
190,163,656 215,850,633
Audit Fees for the year of GBP 33,083 will be met by ManJer (2023: GBP 25,079).
The Company is subject to Jersey Income Tax. During the year the Jersey Income Tax rate applicable to the Company is zero percent (2023: zero
percent).
31 December 31 December
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 after the
year end.
31 December 31 December
Result Before Fair Value Movements for the year comprised:
Year ended
31 December
Year ended
31 December
- 28 - www.wisdomtree.eu
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
6. Commodity Contracts (continued)
The amount receivable on Commodity Contracts awaiting settlement is USD 482,374 (2023: UDS 3,050,444).
The amount payable on Commodity Contracts awaiting settlement is USD 8,300 (2023: USD 340,435).
The below reconciliation of changes in the Commodity Contracts includes only non-cash changes.
2024 2023
USD USD
Opening Commodity Contracts 215,850,633 202,849,561
Additions 178,839,361 276,008,809
Disposals (201,799,030) (254,610,130)
Management Fee and Licence Allowance (1,261,743) (1,292,645)
Change in Fair Value (1,465,565) (7,104,962)
Closing Commodity Contracts 190,163,656 215,850,633
7.
Currency-Hedged Commodity Securities
2024 2023
USD USD
Change in Fair Value of Currency-Hedged Commodity Securities
249,795 5,703,138
Currency-Hedged Commodity Securities at Fair Value
192,137,223 216,608,430
The Contractual Values and changes thereof during the year based on the contractual settlement values are:
2024 2023
USD USD
Change in Contractual Value for the Year
1,465,565 7,104,962
Currency-Hedged Commodity Securities at Contractual Value
190,163,656 215,850,633
The Company measures the Currency-Hedged 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 Currency-Hedged 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:
31 December 31 December
31 December 31 December
- 29 - www.wisdomtree.eu
As at 31 December 2024, there were certain Commodity Contracts awaiting settlement in respect of the creation or redemption of Currency-Hedged
Commodity Securities with transaction dates before the year end and settlement dates in the following year:
31 December 31 December
Whilst the Currency-Hedged Commodity Securities are quoted on the open market, the Company’s ultimate liability relates to its contractual
obligations to issue and redeem Currency-Hedged Commodity Securities at set prices on each trading day. These prices are based on an agreed
formula, and are equal to the published net asset value (“NAV”) of each class of Currency-Hedged Commodity Security. Therefore, the actual
contractual issue and redemption of Currency-Hedged 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 Currency-Hedged Commodity Securities and Commodity Contracts.
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
7.
Currency-Hedged Commodity Securities (continued)
2024 2023
USD USD
Balance at 1 January 216,608,430 202,205,534
Securities Created 178,839,361 276,008,809
Securities Redeemed (201,799,030) (254,610,130)
Management Fee and Licence Allowance (1,261,743) (1,292,645)
Change in Fair Value (249,795) (5,703,138)
Balance at 31 December
192,137,223 216,608,430
8.
Trade and Other Payables
2024 2023
USD USD
ManJer Fees Payable
115,425 139,748
9. Stated Capital
2024 2023
USD USD
2 Shares of Nil Par Value, Issued at GBP 1 Each and Fully Paid
3 3
31 December 31 December
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.
31 December 31 December
The Company can issue an unlimited capital of Nil par value shares in accordance with its Memorandum of Association.
The gain or loss on the difference between the value of the Commodity Contracts and the fair value of Currency-Hedged Commodity Securities would
be reversed on a subsequent redemption of the Currency- Hedged Commodity Securities and cancellation of the corresponding Commodity Contracts.
Refer to note 14 to the financial statements for the non-statutory and non-GAAP adjustments which reflect the results of this reversal.
As at 31 December 2024, there were certain Currency-Hedged 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 Currency-Hedged Commodity Securities awaiting settlement is USD 8,300 (2023: USD 340,435).
The amount payable on Currency-Hedged Commodity Securities awaiting settlement is USD 482,374 (2023 USD 3,050,444).
The below reconciliation of changes in the Commodity Securities, being liabilities arising from financing activities, includes only non-cash changes.
31 December 31 December
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”).
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WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
10.
Related Party Disclosures
Fees charged by ManJer during the year:
2024 2023
USD USD
ManJer Fees
1,426,958 1,520,548
The following balances were due to ManJer at year end:
2024 2023
USD USD
ManJer Fees Payable
115,425 139,748
At 31 December 2024, USD 3 is receivable from ManJer (2023: USD 3).
11.
Financial Risk Management
www.wisdomtree.eu
31 December 31 December
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 Apex Financial
Services (Alternative Funds) Limited (“Apex” or the “Administrator”) do not receive separate remuneration in their capacity as directors of the
Company, however Apex receives a fee from ManJer which includes services in respect of the Company, including for the provision of directors who
are employees of Apex.
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 1,209,042 (31
December 2023: GBP 1,221,529) translated in USD 1,515,534 (31 December 2023: USD 1,560,381), of which GBP 73,384 (31 December 2023: GBP
333,639) translated in USD 91,987 (31 December 2023: USD 426,190) was outstanding at the period end.
Subsequent to year end on 21st January 2025 R&H Fund Services (Jersey Limited (“R&H”) resigned as Administrator, and Apex Financial Services
(Alternative Funds) Limited were appointed as Administrator.
Vinod Rajput, and Olivia Vuillemin are employees of Apex.
Peter Ziemba is an executive officer of WisdomTree, Inc. and Bryan Governey is European General Counsel for the WisdomTree, Inc group.
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.
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.
Year ended
31 December
Year ended
31 December
The Currency-Hedged Commodity Securities are subject to normal market fluctuations and other risks inherent to 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 Currency-Hedged Commodity
Securities and investors should refer to the most recent Prospectus for a detailed summary of the risks inherent in investing in the Currency-Hedged
Commodity Securities. Any data provided should not be used or interpreted as a basis for future forecast or investment performance.
- 31 -
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
11.
Financial Risk Management (continued)
(a) Credit Risk
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 replacing 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 2024 totalled USD 193,735,960 (2023: USD 221,518,593), with collateral pledged with a
total value of USD 201,333,695 (2023: 230,749,525).
The realised value of the collateral may differ from the amount owed by the Currency Transaction Counterparty, 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+ (Fitch, 28 August 2024) ((2023: A+) (Fitch, 15 September 2023) and Merrill Lynch International: AA (Fitch, 12 June
2024) ((2023: 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.
www.wisdomtree.eu- 32 -
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
Currency-Hedged
Commodity
Security
is
issued
under
limited
recourse
arrangements
whereby
the
holders
have
recourse
only
to
the
relevant
Commodity
Contracts
(held
to
support
the
Currency-Hedged
Commodity
Securities)
and
not
to
the
Commodity
Contracts
of
any
other
class
of
Currency-Hedged
Commodity
Securities
or
to
the
Company,
therefore
limiting
the
credit
risk
of
the
Company in connection with the issue of the Currency-Hedged 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
Currency-Hedged
Commodity
Securities
in
issue
would
be
undertaken.
The
total
carrying
amounts
of
commodity
contracts,
the
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
commodity
contracts,
amounts
receivable awaiting settlement and trade and other receivables are detailed on the Statement of Financial Position.
The
value
of
Currency-Hedged
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, Citigroup and
Merrill
Lynch.
At
the
reporting
date
the
exposure to
the
Commodity Contract Counterparties was split approximately 34% and 66%
(2023: 27% and 73%), respectively.
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
11.
Financial Risk Management (continued)
(b) Settlement Risk
(c) Liquidity Risk
(d) Sensitivity Analysis
(e) Capital Management
The Company’s rights and liability in respect of Commodity Contracts and Currency-Hedged Commodity Securities, respectively, relates to its
contractual obligations to issue and redeem Currency-Hedged Commodity Securities at set prices on each trading day. The fair value of each creation
and redemption of Currency-Hedged Commodity Securities is recorded using the price by reference to the value of the commodity indices calculated
and published by Bloomberg. 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 14 to the financial statements this mismatch is reversed on the redemption of Currency Securities. As a result, the
Company’s contractual and economic liability in connection with the issue and redemption of Currency-Hedged Commodity Securities is matched by
movements in corresponding Commodity Contracts.
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.
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 Currency-Hedged Commodity Securities) and Currency-Hedged Commodity Securities, which are reversed
on a subsequent redemption of the Currency- Hedged 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.
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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 Currency-Hedged Commodity Securities on the settlement date. The directors feel that this risk is mitigated as a result of the cash or
Currency-Hedged 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 6 and 7 to the financial
statements.
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 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.
The Currency-Hedged 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 for the Company is reduced because the timing of redemptions of the Currency- Hedged 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 Currency-Hedged 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.
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.
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
11.
Financial Risk Management (continued)
(e) Capital Management (continued)
(f) Market Risk
i) Price Risk
ii) Interest Rate Risk
iii)
Currency Risk
The Company’s principal activity is the issue and listing of Currency-Hedged Commodity Securities. These Currency-Hedged 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 Currency-Hedged 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 pays ManJer a fee, which
under the terms of the service agreement is equal to the aggregate of the Management Fee, Licence Allowance .
The market price of Currency-Hedged Commodity Securities is (and will remain) a function of supply and demand amongst investors wishing to
buy and sell Currency-Hedged Commodity Securities and the bid- offer spread that the market makers are willing to quote. This is highlighted
further in note 11 (g) to the financial statement, and below under the Fair Value Hierarchy.
The multiplier used in the pricing of the Commodity Contracts or the Currency-Hedged Commodity Securities takes into account the incremental
capital enhancement component of the Currency-Hedged Commodity Security, which includes the impact of interest rates. This incremental capital
enhancement component of the Commodity Contracts and Currency-Hedged Commodity Securities is attributable to the security holder. As a
result, the Company does not have significant exposure to interest rate risk.
The Company has exposure to currency risk as the Currency-Hedged Commodity Securities are priced in US Dollars and hedged against exchange
rate movements between the US Dollar, Euro and Pound Sterling. However, the directors do not consider the Company to have a significant
exposure to currency risk arising from the current economic uncertainties facing a number of countries around the world as the gains or losses on
the liability represented by the Currency-Hedged Commodity Securities are matched economically by corresponding losses or gains attributable to
the Commodity Contracts.
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As all Currency-Hedged 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 Currency-Hedged Commodity Securities.
Market risk is the risk that changes in market prices (such as index and equity prices, interest rates and foreign exchange rates) will affect the
Company’s income or the value of its financial instruments held or issued.
As described above, Currency-Hedged Commodity Securities provide investors with long exposure to the performance of the relevant commodity
The value of the Company’s liability in respect of the Currency-Hedged Commodity Securities fluctuates according to the performance of the
underlying commodity indices 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 Currency-Hedged Commodity Securities are quoted on the open market,
the Company’s ultimate liability relates to its contractual obligations to issue and redeem Currency-Hedged Commodity Securities at set prices on
each trading day. The Company measures the Currency-Hedged 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 Currency-Hedged Commodity Securities would be reversed on a subsequent redemption of the Currency-Hedged Commodity
Securities and cancellation of the corresponding Commodity Contracts. Refer to note 7 to the financial statements for the further details regarding
fair values.
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 value of commodities, and thus the value of the Currency-Hedged
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.
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
11.
Financial Risk Management (continued)
(g) Fair Value Hierarchy
The Levels in the hierarchy are defined as follows:
Level 1 fair value based on quoted prices in active markets for identical assets.
Level 2 fair values based on valuation techniques using observable inputs other than quoted prices.
Level 3 fair values based on valuation techniques using inputs that are not based on observable market data.
The categorisation of the Company’s assets and (liabilities) are as shown below:
2024 2023
USD USD
Level 1
Currency-Hedged Commodity Securities
178,556,324 214,951,459
Level 2
Currency-Hedged Commodity Securities (13,580,899) (1,656,971)
Commodity Contracts 190,163,656 215,850,633
176,582,757 214,193,662
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.
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 2024, Currency-Hedged Commodity Securities with a fair value of USD 13,047,100 (2023: USD 1,175,811) were transferred from Level 1
to Level 2, and Currency-Hedged Commodities with a fair value of USD 1,020,686 (2023: Nil) were transferred from Level 2 to Level 1.
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The Company is required to utilise the available on-market price as the Currency-Hedged Commodity Securities are quoted and traded on the open
market. Where the market on which the Currency-Hedged Commodity Securities prices are quoted is determined to be active at the relevant reporting
date, the Currency- Hedged Commodity Securities are classified as Level 1 financial liabilities. Where the market on which the Currency-Hedged
Commodity Securities prices are quoted is determined to be inactive at the relevant reporting date, the Currency-Hedged Commodity Securities are
classified as Level 2 financial liabilities.
The Company values the Level 2 Currency-Hedged Commodity Securities using the unadjusted 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 Currency-Hedged 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 Currency-Hedged 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.
Fair Value as at 31 December
The Currency-Hedged 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.
Transfers between levels would be recognised if there was a change in circumstances that prevented public information in respect of Level 1 inputs
from being available. Any such transfers would be recognised on the date of the change in circumstances that cause the transfer. Transfers between
levels may also be recognised if the primary market on which the Currency-Hedged 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 Currency-Hedged 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.
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
12.
Ultimate Controlling Party
13.
Events Occurring After the Reporting Period
14.
Non-GAAP and Non-Statutory Information
The mismatched accounting values are as shown below:
2024 2023
USD USD
Change Fair Value of Commodity Contracts (1,465,565) (7,104,962)
Change in Fair Value of Currency-Hedged Commodity Securities 249,795 5,703,138
(1,215,770) (1,401,824)
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.
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 2024 or on the results and
cash flows of the Company for the year then ended.
As a result of the mis-match in the accounting valuation of Commodity Contracts (held to support the Currency- Hedged Commodity Securities) and
Currency-Hedged Commodity Securities (as disclosed in notes 6 and 7 to the financial statements) the profits and losses and other 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 Currency-Hedged Commodity Securities. The
Statement of Changes in Equity also reflects the fair value movements on both the Commodity Contracts (held to support the Currency-Hedged
Commodity Securities) and the Currency-Hedged Commodity Securities.
These gains or losses on the difference between the value of the Commodity Contracts (held to support the Currency-Hedged Commodity Securities)
and the price of Currency-Hedged Commodity Securities would be reversed on a subsequent redemption of the Currency-Hedged Commodity
Securities and cancellation of the corresponding Commodity Contracts. Furthermore, each class of Currency-Hedged Commodity Security is issued
under limited recourse arrangements whereby the holders have recourse only to the relevant Commodity Contracts (held to support the Currency-
Hedged Commodity Securities) and not to the Commodity Contracts of any other class of Currency-Hedged 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 Currency-Hedged 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 Currency-Hedged Commodity Securities) will always be offset by a corresponding loss or gain on
the Currency-Hedged Commodity Securities and the Company does not retain any net gains or losses.
Year ended 31
December
Year ended 31 December
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 year which reflect an Adjustment from market value to contractual value (as set
out in the Prospectus) of Currency-Hedged Commodity Securities, together with those gains or losses being transferred to a separate reserve which is
deemed non-distributable.
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WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
For the financial year ended 31 December 2024
14.
Non-GAAP and Non-Statutory Information (continued)
(a) Non-GAAP and Non-Statutory Statement of Profit or Loss and Other Comprehensive Income
2024 2023
USD USD
Income 1,426,958 1,520,548
Expenses (1,426,958) (1,520,548)
Result Before Fair Value Movements
-
-
Change in Fair Value of Commodity Contracts (1,465,565) (7,104,962)
Change in Fair Value of Currency-Hedged Commodity Securities 249,795 5,703,138
Loss for the Year
(1,215,770) (1,401,824)
1,215,770 1,401,824
Adjusted Result
-
-
(b) Non-GAAP and Non-Statutory Statement of Changes in Equity
USD USD USD USD USD
Balance at 1 January 2023
3 - 644,027 644,030
3
- (1,401,824) - (1,401,824) (1,401,824)
Transfer to Revaluation Reserve - 1,401,824 (1,401,824) -
-
- - - -
1,401,824
Balance at 31 December 2023
3 - (757,797) (757,794)
3
Retained
Earnings
Revaluation
Reserve
4
Total
Equity
Adjusted
Total Equity
Loss/Total Comprehensive Expenses for
the Year
Adjustment from Market Value to
Contractual Value (as set out in the
Prospectus) of Currency-Hedged
Commodity Securities
4 This represents the difference between the value of the Commodity Contracts and the price of the Currency-Hedged Commodity Securities
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Year ended 31
December
Year ended 31 December
Adjustment from Market Value to Contractual Value (as set out in the Prospectus) of
Currency-Hedged Commodity Securities
Share Capital
WisdomTree Hedged Commodity Securities Limited
Notes to the Financial Statements (continued)
14.
Non-GAAP and Non-Statutory Information (continued)
(b) Non-GAAP and Non-Statutory Statement of Changes in Equity
USD USD USD USD USD
Balance at 1 January 2024
3 - (757,797) (757,794)
3
Loss/Total Comprehensive Expense for the Year - (1,215,770) - (1,215,770) (1,215,770)
Transfer to Revaluation Reserve - 1,215,770 (1,215,770) -
-
- - - -
1,215,770
Balance at 31 December 2024
3 - (1,973,567) (1,973,564)
3
Adjustment from Market Value to
Contractual Value (as set out in the
Prospectus) of Currency-Hedged
Commodity Securities
4 This represents the difference between the value of the Commodity Contracts and the price of the Currency-Hedged Commodity Securities
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Share Capital Retained
Earnings
Revaluation
Reserve
4
Total
Equity
Adjusted
Total Equity