Notes to the Financial Statements
(Unaudited)
1. Organization
The abrdn
Platinum ETF Trust (known as Aberdeen Standard Platinum ETF Trust prior to March 31, 2022) (the “Trust”)
is a common law trust formed on December 30, 2009 under New York law pursuant to a depositary trust agreement (the “Trust
Agreement”) executed by abrdn ETFs Sponsor LLC (known as Aberdeen Standard Investments ETFs Sponsor LLC prior to March 1,
2022) (the “Sponsor”) and The Bank of New York Mellon as Trustee (the “Trustee”). The Trust holds
platinum bullion and issues abrdn Physical Platinum Shares ETF (known as Aberdeen Standard Physical Platinum
Shares ETF prior to March 31, 2022) (“Shares”) in minimum blocks of 50,000 Shares (also referred to as “Baskets”)
in exchange for deposits of platinum and distributes platinum in connection with the redemption of Baskets. Shares represent
units of fractional undivided beneficial interest in and ownership of the Trust which are issued by the Trust. The Sponsor is
a Delaware limited liability company and a wholly-owned subsidiary of abrdn Inc. (known as Aberdeen Standard Investments Inc.
prior to January 1, 2022). abrdn Inc. is a wholly-owned indirect subsidiary of abrdn (formerly known as Standard Life Aberdeen)
plc. The Trust is governed by the Trust Agreement.
The
investment objective of the Trust is for the Shares to reflect the performance of the price of platinum, less the Trust’s
expenses and liabilities. The Trust is designed to provide an individual owner of beneficial interests in the Shares (a “Shareholder”)
an opportunity to participate in the platinum market through an investment in securities. The fiscal year end for the Trust
is December 31.
The
accompanying financial statements were prepared in accordance with the accounting principles generally accepted in the United
States of America (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q. In the
opinion of the Trust’s management, all adjustments (which consist of normal recurring adjustments) necessary to present
fairly the financial position and results of operations as of June 30, 2022, and for the three and six month periods then ended have been made.
These
financial statements should be read in conjunction with the Trust’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2021. The results of operations for the three and six months ended June 30, 2022 are not necessarily
indicative of the operating results for the full year.
2. Significant
Accounting Policies
The
preparation of financial statements in accordance with U.S. GAAP requires those responsible for preparing financial statements
to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the Trust.
2.1. Basis
of Accounting
The
Sponsor has determined that the Trust falls within the scope of Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 946, Financial Services—Investment Companies, and has concluded that for
reporting purposes, the Trust is classified as an Investment Company. The Trust is not registered as an investment company under
the Investment Company Act of 1940 and is not required to register under such act.
2.2. Valuation
of Platinum
The
Trust follows the provisions of ASC 820, Fair Value Measurement (“ASC 820”). ASC 820 provides guidance for
determining fair value and requires increased disclosure regarding the inputs to valuation techniques used to measure fair value.
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
abrdn
Platinum ETF Trust
Notes to the Financial Statements
(Unaudited)
The
Trust’s platinum is held by JPMorgan Chase Bank, N.A. (the “Custodian”), on behalf of the Trust, at its London,
England vaulting premises. The Trust’s platinum may also be held by UBS AG, or any other firm selected by the Custodian to hold
the Trust’s platinum in the Trust’s allocated account in the firm’s vault premises on a segregated basis
and whose appointment has been approved by the Sponsor. At June 30, 2022, approximately 2.48% of the Trust’s platinum
was held by one or more sub-custodians.
The
Trust’s platinum is recorded at fair value. The cost of platinum is determined according to the average cost method and the fair
value is based on the afternoon session of the twice daily fix of an ounce of platinum administered by the London Metal Exchange
(“LME”). Realized gains and losses on transfers of platinum, or platinum distributed for the redemption of Shares,
are calculated on a trade date basis as the difference between the fair value and average cost of platinum transferred.
The
LME is responsible for the administration of the electronic platinum price fixing system (“LMEbullion”) that replicates
electronically the manual London platinum fix processes previously employed by the London Platinum and Palladium Fixing Company
Ltd (“LPPFCL”), as well as providing electronic market clearing processes for platinum bullion transactions at the
fixed prices established by the LME pricing mechanism. LMEbullion, like the previous London platinum fix processes, establishes
and publishes fixed prices for troy ounces of platinum twice each London trading day during fixing sessions beginning at 9:45
a.m. London time (the “LME AM Fix”) and 2:00 p.m. London time (the “LME PM Fix”).
Once
the value of platinum has been determined, the net asset value (the “NAV”) is computed by the Trustee by
deducting all accrued fees, expenses and other liabilities of the Trust, including the remuneration due to the Sponsor (the “Sponsor’s
Fee”), from the fair value of the platinum and all other assets held by the Trust.
The
Trust recognizes changes in fair value of the investment in platinum as changes in unrealized gains or losses on investment
in platinum through the Statement of Operations.
The
per Share amount of platinum exchanged for a purchase or redemption is calculated daily by the Trustee using the LME PM Fix
to calculate the platinum amount in respect of any liabilities for which covering platinum sales have not yet been made,
and represents the per Share amount of platinum held by the Trust, after giving effect to its liabilities, to cover expenses
and liabilities and any losses that may have occurred.
Fair
Value Hierarchy
ASC
820 establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The three levels of inputs
are as follows:
– Level
1. Unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access.
– Level
2. Observable inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly
or indirectly. These inputs may include quoted prices for the identical instrument on
an inactive market, prices for similar instruments and similar data.
– Level
3. Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing
the Trust’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability,
and that would be based on the best information available.
To
the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination
of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for
instruments categorized in level 3.
abrdn
Platinum ETF Trust
Notes to the Financial Statements
(Unaudited)
The
inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes,
the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the
lowest level input that is significant to the fair value measurement in its entirety.
The
Trust’s investment in platinum is classified as a level 1 asset, as its value is calculated using unadjusted
quoted prices from primary market sources.
The
categorization of the Trust’s assets is as shown below:
| (Amounts
in 000’s of US$) | |
June
30, 2022 | | |
December
31, 2021 | |
| Level 1 | |
| | | |
| | |
| Investment in
platinum | |
$ | 1,064,886 | | |
$ | 1,138,264 | |
There
were no transfers between levels during the six months ended June 30, 2022 or the year ended December 31, 2021.
2.3. Platinum
Receivable and Payable
Platinum receivable
or payable represents the quantity of platinum covered by contractually binding orders for the creation or redemption of
Shares respectively, where the platinum has not yet been transferred to or from the Trust’s account. Generally, ownership
of platinum is transferred within two business days of the trade date. At June 30, 2022, the Trust had no platinum receivable
or payable for the creation or redemption of Shares. At December 31, 2021, the Trust had no platinum receivable
for the creation of Shares and $4,461,443 of platinum payable for the redemption of Shares.
2.4. Creations
and Redemptions of Shares
The
Trust expects to create and redeem Shares from time to time, but only in one or more Baskets (a Basket equals a block of 50,000 Shares).
The Trust issues Shares in Baskets to Authorized Participants on an ongoing basis. Individual investors cannot purchase or redeem
Shares in direct transactions with the Trust. An Authorized Participant is a person who (1) is a registered broker-dealer or other
securities market participant such as a bank or other financial institution which is not required to register as a broker-dealer
to engage in securities transactions; (2) is a participant in The Depository Trust Company; (3) has entered into an Authorized
Participant Agreement with the Trustee and the Sponsor; and (4) has established an Authorized Participant Unallocated Account
with the Trust’s Custodian or other platinum bullion clearing bank. An Authorized Participant Agreement is an agreement
entered into by each Authorized Participant, the Sponsor and the Trustee which provides the procedures for the creation and redemption
of Baskets and for the delivery of the platinum required for such creations and redemptions. An Authorized Participant
Unallocated Account is an unallocated platinum account, either loco London or loco Zurich, established with the Custodian
or a platinum bullion clearing bank by an Authorized Participant.
The
creation and redemption of Baskets is only made in exchange for the delivery to the Trust or the distribution by the Trust of
the amount of platinum represented by the Baskets being created or redeemed, the amount of which is based on the combined
NAV of the number of Shares included in the Baskets being created or redeemed determined on the day the order to create or redeem
Baskets is properly received.
abrdn
Platinum ETF Trust
Notes to the Financial Statements
(Unaudited)
Authorized
Participants may, on any business day, place an order with the Trustee to create or redeem one or more Baskets. The typical settlement
period for Shares is two business days. In the event of a trade date at period end, where a settlement is pending, a respective
account receivable and/or payable will be recorded. When platinum is exchanged in settlement of a redemption, it is considered
a sale of platinum for financial statement purposes.
The
amount of platinum represented by the Baskets created or redeemed can only be settled to the nearest 1/1000th of an ounce.
As a result, the value attributed to the creation or redemption of Shares may differ from the value of platinum to be
delivered or distributed by the Trust. In order to ensure that the correct amount of platinum is available at all times to
back the Shares, the Sponsor accepts an adjustment to its Sponsor’s Fee in the event of any shortfall or excess on each transaction.
For each transaction, this amount is not more than 1/1000th of an ounce of platinum.
As
the Shares of the Trust are subject to redemption at the option of Authorized Participants, the Trust has classified the outstanding
Shares as Net Assets. Changes in the number of Shares outstanding are presented in the Statement of Changes in Net Assets.
2.5. Income
Taxes
The
Trust is classified as a “grantor trust” for U.S. federal income tax purposes. As a result, the Trust itself will
not be subject to U.S. federal income tax. Instead, the Trust’s income and expenses will “flow through” to the
Shareholders, and the Trustee will report the Trust’s proceeds, income, deductions, gains, and losses to the Internal Revenue
Service on that basis.
The
Sponsor has evaluated whether or not there are uncertain tax positions that require financial statement recognition and has determined
that no reserves for uncertain tax positions are required as of June 30, 2022 or December 31, 2021.
2.6. Investment
in Platinum
Changes
in ounces of platinum and their respective values for the three and six months ended June 30, 2022 and 2021
are set out below:
| | |
Three Months Ended
June 30, 2022 | | |
Three Months Ended
June 30, 2021 | |
| (Amounts in 000’s of US$, except for ounces data) | |
| | | |
| | |
| Ounces of platinum | |
| | | |
| | |
| Opening balance | |
| 1,194,436.5 | | |
| 1,290,494.1 | |
| Creations | |
| 51,074.2 | | |
| 23,341.8 | |
| Redemptions | |
| (69,636.5 | ) | |
| (28,035.1 | ) |
| Transfers of platinum to pay expenses | |
| (1,799.6 | ) | |
| (1,933.3 | ) |
| Closing balance | |
| 1,174,074.6 | | |
| 1,283,867.5 | |
| | |
| | | |
| | |
| Investment in platinum | |
| | | |
| | |
| Opening balance | |
$ | 1,174,131 | | |
$ | 1,525,364 | |
| Creations | |
| 49,404 | | |
| 26,148 | |
| Redemptions | |
| (67,570 | ) | |
| (33,465 | ) |
| Realized gain on platinum distributed for the redemption of Shares | |
| 66 | | |
| 6,484 | |
| Transfers of platinum to pay expenses | |
| (1,779 | ) | |
| (2,318 | ) |
| Realized gain on platinum transferred to pay expenses | |
| 34 | | |
| 457 | |
| Change in unrealized (loss) on investment in platinum | |
| (89,400 | ) | |
| (163,055 | ) |
| Closing balance | |
$ | 1,064,886 | | |
$ | 1,359,615 | |
abrdn
Platinum ETF Trust
Notes to the Financial Statements
(Unaudited)
| | |
Six Months
Ended
June 30, 2022 | | |
Six Months
Ended
June 30, 2021 | |
| (Amounts in 000’s of US$, except for ounces data) | |
| | | |
| | |
| Ounces of platinum | |
| | | |
| | |
| Opening balance | |
| 1,186,927.7 | | |
| 1,245,573.6 | |
| Creations | |
| 111,479.8 | | |
| 107,531.7 | |
| Redemptions | |
| (120,778.5 | ) | |
| (65,450.4 | ) |
| Transfers of platinum to pay expenses | |
| (3,554.4 | ) | |
| (3,787.4 | ) |
| Closing balance | |
| 1,174,074.6 | | |
| 1,283,867.5 | |
| | |
| | | |
| | |
| Investment in platinum | |
| | | |
| | |
| Opening balance | |
$ | 1,138,264 | | |
$ | 1,330,272 | |
| Creations | |
| 112,164 | | |
| 123,371 | |
| Redemptions | |
| (119,818 | ) | |
| (79,008 | ) |
| Realized gain on platinum distributed for the redemption of Shares | |
| 2,956 | | |
| 16,240 | |
| Transfers of platinum to pay expenses | |
| (3,529 | ) | |
| (4,394 | ) |
| Realized gain on platinum transferred to pay expenses | |
| 91 | | |
| 768 | |
| Change in unrealized (loss) on investment in platinum | |
| (65,242 | ) | |
| (27,634 | ) |
| Closing balance | |
$ | 1,064,886 | | |
$ | 1,359,615 | |
2.7. Expenses
/ Realized Gains / Losses
The primary expense of the Trust is the Sponsor’s Fee, which is paid by the Trust through in-kind transfers of platinum
to the Sponsor.
The
Trust will transfer platinum to the Sponsor to pay the Sponsor’s Fee that accrues daily at an annualized rate equal
to of the adjusted daily net asset value (“ANAV”) of the Trust, paid monthly in arrears.
The
Sponsor has agreed to assume administrative and marketing expenses incurred by the Trust, including the Trustee’s monthly
fee and out of pocket expenses, the Custodian’s fee and the reimbursement of the Custodian’s expenses, exchange listing
fees, United States Securities and Exchange Commission (the “SEC”) registration fees, printing and mailing costs,
audit fees and up to $ per annum in legal expenses.
For
the three months ended June 30, 2022 and 2021, the Sponsor’s Fee was $ and $,
respectively. For the six months ended June 30, 2022 and 2021, the Sponsor’s Fee was $
and $, respectively.
At June
30, 2022 and at December 31, 2021, the fees payable to the Sponsor were $525,837 and $595,693, respectively.
abrdn
Platinum ETF Trust
Notes to the Financial Statements
(Unaudited)
With
respect to expenses not otherwise assumed by the Sponsor, the Trustee will, at the direction of the Sponsor or in its own discretion,
sell the Trust’s platinum as necessary to pay these expenses. When selling platinum to pay expenses, the Trustee
will endeavor to sell the smallest amounts of platinum needed to pay these expenses in order to minimize the Trust’s
holdings of assets other than platinum. Other than the Sponsor’s Fee, the Trust had no expenses during the three and six
months ended June 30, 2022 and 2021.
Unless
otherwise directed by the Sponsor, when selling platinum the Trustee will endeavor to sell at the price established by the
LME PM Fix. The Trustee will place orders with dealers (which may include the Custodian) through which the Trustee expects to
receive the most favorable price and execution of orders. The Custodian may be the purchaser of such platinum only if the
sale transaction is made at the next LME PM Fix or such other publicly available price that the Sponsor deems fair, in each case
as set following the sale order. A gain or loss is recognized based on the difference between the selling price and the average
cost of the platinum sold. Neither the Trustee nor the Sponsor is liable for depreciation or loss incurred by reason of any
sale.
Realized
gains and losses result from the transfer of platinum for Share redemptions and / or to pay expenses and are recognized on
a trade date basis as the difference between the fair value and average cost of platinum transferred.
2.8. Subsequent
Events
In
accordance with the provisions set forth in FASB ASC 855-10, Subsequent Events, the Trust’s management has evaluated
the possibility of subsequent events impacting the Trust’s financial statements through the filing date. During this period,
no material subsequent events requiring adjustment to or disclosure in the financial statements were identified.
3. Related
Parties
The
Sponsor and the Trustee are considered to be related parties to the Trust. The Trustee and the Custodian and their affiliates
may from time to time act as Authorized Participants and purchase or sell Shares for their own account, as agent for their customers
and for accounts over which they exercise investment discretion. In addition, the Trustee and the Custodian and their affiliates
may from time to time purchase or sell platinum directly, for their own account, as agent for their customers and for accounts
over which they exercise investment discretion. The Trustee’s and Custodian’s fees are paid by the Sponsor and are
not separate expenses of the Trust.
4. Concentration
of Risk
The
Trust’s sole business activity is the investment in platinum, and substantially all the Trust’s assets are holdings
of platinum, which creates a concentration of risk associated with fluctuations in the price of platinum. Several factors
could affect the price of platinum, including: (i) global platinum supply and demand, which is influenced by factors such as production
and cost levels in major platinum producing countries, recycling, autocatalyst demand, industrial demand, jewelry demand and investment
demand; (ii) investors’ expectations with respect to the rate of inflation; (iii) currency exchange rates; (iv) interest
rates; (v) investment and trading activities of hedge funds and commodity funds; and (vi) global or regional political, economic
or financial events and situations. In addition, there is no assurance that platinum will maintain its long-term value in
terms of purchasing power in the future. In the event that the price of platinum declines, the Sponsor expects the value
of an investment in the Shares to decline proportionately. Each of these events could have a material effect on the Trust’s
financial position and results of operations.
abrdn
Platinum ETF Trust
Notes to the Financial Statements
(Unaudited)
5. Indemnification
Under
the Trust’s organizational documents, the Trustee (and its directors, employees and agents) and the Sponsor (and its members,
managers, directors, officers, employees and affiliates) are indemnified by the Trust against any liability, cost or expense it
incurs without gross negligence, bad faith, willful misconduct or willful malfeasance on its part and without reckless disregard
on its part of its obligations and duties under the Trust’s organizational documents. The Trust’s maximum exposure
under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred.
abrdn Platinum ETF Trust
