TIDM3LOI
Boost Issuer plc
Financial statements
For the Year Ended 31 December 2016
Registered Number: 515981
BOOST ISSUER plc
FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2016
CONTENTS PAGE
DIRECTORS AND OTHER INFORMATION 2 - 3
DIRECTORS' REPORT 4 - 10
DIRECTORS' RESPONSIBILITIES STATEMENT 11
INDEPENT AUDITOR'S REPORT 12 - 13
STATEMENT OF COMPREHENSIVE INCOME 14
STATEMENT OF FINANCIAL POSITION 15
STATEMENT OF CHANGES IN EQUITY 16
STATEMENT OF CASH FLOWS 17
NOTES TO THE FINANCIAL STATEMENTS 18 - 39
BOOST ISSUER plc
DIRECTORS AND OTHER INFORMATION
DIRECTORS
John Walsh (Irish) (Independent and Non-Executive)
Lisa Hand (Irish) (Independent and Non-Executive) (appointed 15 November
2016)
David Abner (American) (Independent and Non-Executive) (appointed 4 July
2016)
Hector McNeil (Brittish) (Independent and Non-Executive) (resigned 4
July 2016)
Marion Walsh (Irish) (Independent and Non-Executive) (resigned 15
November 2016)
REGISTERED OFFICE 2 Grand Canal Square
Grand Canal Harbour
Dublin 2
TRUSTEE AND SECURITY TRUSTEE The Law Debenture
Trust Corporation plc
Fifth Floor, 100 Wood Street
London EC2V 7EX
United Kingdom
ISSUING & PAYING AGENT ("IPA") Capita
International Financial Services (Ireland) Limited
2 Grand Canal Square
Grand Canal Harbour
Dublin 2
MANAGER Boost Management Limited
12 Castle Street
St. Helier
Jersey JE2 3RT
SECRETARY
Capita International Financial Services (Ireland) Limited
2 Grand Canal Square
Grand Canal Harbour
Dublin 2
REGISTRAR Capita IRG Trustees Limited
The Registry, 34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
INDEPENT AUDITORS Ernst & Young
Ernst & Young Building
Harcourt Centre
Harcourt Street
Dublin 2
BOOST ISSUER plc
DIRECTORS AND OTHER INFORMATION (continued)
BANKERS Allied Irish Banks plc
Bankcentre
Ballsbridge
Dublin 4
SOLICITORS Matheson
70 Sir John Rogerson's Quay
Dublin 2
INITIAL SWAP PROVIDER ("Swap Provider") BNP Paribas Arbitrage
S.N.C.
160-162 Boulevard Macdonald
75019 Paris
France
CUSTODIAN The Bank of New York Mellon
One Canada Square
London E14 5AL
Registered Number: 515981
BOOST ISSUER plc
DIRECTORS' REPORT
The Directors present their annual report and audited financial
statements of Boost Issuer PLC (the "Company" or the "Issuer") for the
year ended 31 December 2016.
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
The Company is a limited liability company, incorporated in Ireland on
30 July 2012 under Irish Company Law. The Company is an orphan vehicle,
with the shares held for the benefit of a charitable trust (see note 9).
The Company is registered in Ireland as a Section 110 vehicle. The
Company has been established as a special purpose vehicle for the
purpose of issuing exchange traded securities. The Company commenced
trading on 5 December 2012.
The Company established a Collateralised ETP Securities Programme (the
"Programme") under which the Company issues, on an ongoing basis,
collateralised exchange traded securities (the "ETPs") of different
classes (each a "Class") linked to indices providing exposure to a range
of asset classes including equities, commodities, fixed income and
currencies. The ETP Securities may have long or short, and leveraged or
unleveraged, exposure to the daily performance of the referenced index.
Each Class constitutes limited recourse obligations of the Company,
secured on and payable solely from the assets constituting the ETP in
respect of such Class. Each Class of ETPs may comprise one or more
tranches.
The ETPs have been listed for trading on the London Stock Exchange,
Frankfurt Stock Exchange and/or Borsa Italiana and applications may be
made to other European Stock Exchanges. The Company uses the net
proceeds of the issuance of ETPs to enter into Total Return Swap
Transactions ("TRS") to hedge its payment obligations in respect of each
Class of the ETPs with one or more Swap Providers once the Swap Provider
has delivered eligible collateral. The TRS for each Class of ETPs will
produce cash flows to service all of the Company's payment obligations
in respect of that Class.
Cash flows are only as a result of subscriptions and redemptions of ETPs
and expenses incurred. A movement in collateral does not generate a cash
flow. The proceeds of the issuance of a tranche of ETPs of a Class will
be paid by the Issuer to one or more of the Swap Providers with whom the
Issuer has entered into a TRS in connection with that Class, in order to
increase the aggregate number of Index Units in respect of the TRS
entered into by the Issuer in relation to that Class in proportion to
the increase in the number of ETPs of that Class then outstanding. The
Issuer's payment obligations in respect of the ETPs of a Class will be
covered entirely from payments received by the Issuer from the Swap
Provider(s) in respect of such TRS(s). Pursuant to the terms of each
Credit Support Document, the Issuer will be obliged to pay amounts equal
to each distribution made on collateral held by it to the relevant Swap
Provider upon receipt.
The ETPs do not bear interest at a prescribed rate. The return (if any)
on the ETPs shall be calculated in accordance with the redemption
provisions.
Four new products were launched during 2016, namely Boost Emerging
Markets 3x Leverage Daily ETP, Boost Emerging Markets 3x Short Daily ETP,
Boost S&P 500 VIX Short-term Futures 2.25x Leverage Daily ETP and Boost
FTSE MIB Banks ETP.
BOOST ISSUER plc
DIRECTORS' REPORT (continued)
The following Classes of ETPs were in issue at 31 December 2016:
ETP ISIN Launch Date
BOOST FTSE 100 3X LEVERAGE DAILY ETP IE00B88D2999 06 December 2012
BOOST FTSE 100 3X SHORT DAILY ETP IE00B7VB3908 06 December 2012
BOOST EURO STOXX 50 3X LEVERAGE DAILY ETP IE00B7SD4R47 12 December 2012
BOOST EURO STOXX 50 3X SHORT DAILY ETP IE00B8JF9153 12 December 2012
BOOST LEVDAX 3X DAILY ETP IE00B878KX55 12 December 2012
BOOST SHORTDAX 3X DAILY ETP IE00B8GKPP93 12 December 2012
BOOST US LARGE CAP 3X LEVERAGE DAILY ETP IE00B7Y34M31 12 December 2012
BOOST US LARGE CAP 3X SHORT DAILY ETP IE00B8K7KM88 12 December 2012
BOOST NASDAQ 100 3X LEVERAGE DAILY ETP IE00B8W5C578 12 December 2012
BOOST NASDAQ 100 3X SHORT DAILY ETP IE00B8VZVH32 12 December 2012
BOOST WTI OIL 3X LEVERAGE DAILY ETP IE00B7ZQC614 20 December 2012
BOOST WTI OIL 3X SHORT DAILY ETP IE00B7SX5Y86 20 December 2012
BOOST GOLD 3X LEVERAGE DAILY ETP IE00B8HGT870 20 December 2012
BOOST GOLD 3X SHORT DAILY ETP IE00B6X4BP29 20 December 2012
BOOST COPPER 3X LEVERAGE DAILY ETP IE00B8JVMZ80 20 December 2012
BOOST COPPER 3X SHORT DAILY ETP IE00B8KD3F05 20 December 2012
BOOST NATURAL GAS 3X LEVERAGE DAILY ETP IE00B8VC8061 20 December 2012
BOOST NATURAL GAS 3X SHORT DAILY ETP IE00B76BRD76 20 December 2012
BOOST SILVER 3X LEVERAGE DAILY ETP IE00B7XD2195 20 December 2012
BOOST SILVER 3X SHORT DAILY ETP IE00B8JG1787 20 December 2012
BOOST FTSE 100 2X SHORT DAILY ETP IE00B94QKF15 05 July 2013
BOOST FTSE 100 1X SHORT DAILY ETP IE00B94QKG22 05 July 2013
BOOST FTSE 100 2X LEVERAGE DAILY ETP IE00B94QKC83 05 July 2013
BOOST FTSE 250 1X SHORT DAILY ETP IE00BBGBF313 05 July 2013
BOOST FTSE 250 2X LEVERAGE DAILY ETP IE00B94QKJ52 05 July 2013
BOOST TOPIX 1X SHORT DAILY ETP IE00BBGBF420 05 July 2013
BOOST TOPIX 2X LEVERAGE DAILY ETP IE00BBGBF537 05 July 2013
BOOST PALLADIUM 1X SHORT DAILY ETP IE00B94QLR02 05 July 2013
BOOST PALLADIUM 2X LEVERAGE DAILY ETP IE00B94QLN63 05 July 2013
BOOST NATURAL GAS 2X SHORT DAILY ETP IE00B94QL251 05 July 2013
BOOST NATURAL GAS 2X LEVERAGE DAILY ETP IE00B94QKX96 05 July 2013
BOOST GOLD 2X SHORT DAILY ETP IE00B94QKT50 05 July 2013
BOOST GOLD 1X SHORT DAILY ETP IE00B94QKW89 05 July 2013
BOOST GOLD 2X LEVERAGE DAILY ETP IE00B94QKS44 05 July 2013
BOOST SILVER 2X SHORT DAILY ETP IE00B94QL921 05 July 2013
BOOST SILVER 2X LEVERAGE DAILY ETP IE00B94QL699 05 July 2013
BOOST FTSE MIB 3X LEVERAGE DAILY ETP IE00B8NB3063 31 October 2013
BOOST ISSUER plc
DIRECTORS' REPORT (continued)
ETP ISIN Launch Date
BOOST FTSE MIB 3X SHORT DAILY ETP IE00B873CW36 31 October
2013
BOOST BTP 10Y 3X SHORT DAILY ETP IE00BKS8QM96 01 August
2014
BOOST BUND 10Y 3x SHORT DAILY ETP IE00BKS8QN04 01 August
2014
BOOST US TREASURIES 10Y 3X SHORT DAILY ETP IE00BKS8QT65 01 August
2014
BOOST GILTS 10Y 3X SHORT DAILY ETP IE00BKS8QQ35 05 August
2014
BOOST GILTS 10Y 3X LEVERAGE DAILY ETP IE00BKT09479 25 November
2014
BOOST 5X LONG USD SHORT EUR DAILY ETP IE00BLNMQS92 09 December
2014
BOOST 5X SHORT USD LONG EUR DAILY ETP IE00BLNMQT00 09 December
2014
BOOST EURO STOXX BANKS 3X LEVERAGE DAILY ETP IE00BLS09N40 09 December
2014
BOOST EURO STOXX BANKS 3X SHORT DAILY ETP IE00BLS09P63 09 December
2014
BOOST BTP 10Y 3X LEVERAGE DAILY ETP IE00BKT09149 09 December
2014
BOOST BUND 10Y 3X LEVERAGE DAILY ETP IE00BKT09255 09 December
2014
BOOST US TREASURIES 10Y 3X LEVERAGE DAILY ETP IE00BKT09032 09 December
2014
BOOST WTI OIL ETC IE00BVFZGC04 09 April
2015
BOOST BRENT OIL ETC IE00BVFZGD11 09 April
2015
BOOST GOLD ETC IE00BVFZGK87 09 April
2015
BOOST NATURAL GAS ETC IE00BVFZGL94 09 April
2015
BOOST WTI OIL 1X SHORT DAILY ETP IE00BVFZGF35 09 April
2015
BOOST WTI OIL 2X LEVERAGE DAILY ETP IE00BVFZGG42 09 April
2015
BOOST WTI OIL 2X SHORT DAILY ETP IE00BVFZGH58 09 April
2015
BOOST BTP 10Y 5X SHORT DAILY ETP IE00BYNXNS22 15 July
2015
BOOST BUND 10Y 5X SHORT DAILY ETP IE00BYNXPH56 15 July
2015
BOOST US TREASURIES 10Y 5X SHORT DAILY ETP IE00BYNXPJ70 15 July
2015
BOOST LONG USD SHORT EUR 4X DAILY ETP IE00BYNXPK85 15 July
2015
BOOST SHORT USD LONG EUR 4X DAILY ETP IE00BYNXPM00 15 July
2015
BOOST BRENT OIL 3X LEVERAGE DAILY ETP IE00BYTYHS72 16 October
2015
BOOST BRENT OIL 3X SHORT DAILY ETP IE00BYTYHR65 16 October
2015
BOOST EMERGING MARKETS 3X LEVERAGE DAILY ETP IE00BYTYHN28 15 March
2016
BOOST EMERGING MARKETS 3X SHORT DAILY ETP IE00BYTYHM11 15 March
2016
BOOST S&P 500 VIX SHORT-TERM FUTURES 2.25X LEVERAGE IE00BYTYHQ58 15 March
DAILY ETP 2016
BOOST FTSE MIB BANKS ETP IE00BYMB4Q22 24 November
2016
At 31 December 2016, the total fair value of ETPs in issue was EUR
605,550,151 (2015: EUR 412,182,915).
At 31 December 2016, the total fair value of TRS instruments entered
into was EUR 605,550,151 (2015: EUR 412,182,915).
BOOST ISSUER plc
DIRECTORS' REPORT (continued)
INVESTMENT MANAGER'S REPORT
Listings
During the year, the Company had the following number of Classes, in
aggregate, in issue, in the following exchanges:
2016
London Stock Frankfurt Stock
Classes Exchange Borsa Italiana Exchange Total
Commodity ETPs 28 23 17 28
Equity ETPs 19 15 12 24
Fixed Income ETPs 3 9 2 11
FX ETPs 0 4 2 4
Other ETPs 1 1 1 1
Total Classes
Listed 51 52 34 68
2015
London Stock Frankfurt Stock
Classes Exchange Borsa Italiana Exchange Total
Commodity ETPs 28 23 12 28
Equity ETPs 19 12 10 21
Fixed Income ETPs 3 9 2 11
FX ETPs 0 4 2 4
Total Classes
Listed 51 48 26 64
AUM
As at 31 December 2016 the total assets under management amounted to EUR
605,550,151 (2015: EUR 412,182,915).
Fees
During the period ended 31 December 2016, the Company generated income
as follows:
2016 2015
EUR EUR
Management Fees 4,132,907 2,711,529
Order Fees 19,850 19,600
Boost Management Limited Fees 2,107 1,836
Total Fee Income 4,154,864 2,732,965
Under the terms of the agreement with Boost Management Limited, the
Company accrued expenses equal to the management fees and, after taking
into account other operating expenses, the Company's operating profit
before tax for the year ended 31 December 2016 was EUR 1,000 (2015: EUR
1,000).
FUTURE DEVELOPMENTS
The Directors expect the current level of activity to continue to grow
into the foreseeable future.
The Directors are satisfied that the derivative financial instruments in
place appropriately manage the risk exposure of the Company as detailed
in note 11.
BOOST ISSUER plc
DIRECTORS' REPORT (continued)
RESULTS AND DIVIDS FOR THE PERIOD
The results for the year are set out on page 14.
DIVIDS
The Directors do not recommend the payment of a dividend (2015: nil).
DIRECTORS AND SECRETARY
Mr. Hector McNeil resigned as a director on 4 July 2016 and was replaced
by Mr. David Abner with effect from 4 July 2016. Ms. Marion Walsh
resigned as a director on 15 November 2016 and was replaced by Ms. Lisa
Hand with effect from 15 November 2016. There have been no other
appointments or resignations of Directors during or subsequent to the
year.
DIRECTORS, SECRETARY AND THEIR INTERESTS
As at 31 December 2016 or at any time during the year, the Directors and
the secretary did not hold any interests in the shares and ETPs of the
Company (2015: none).
PRINCIPAL RISKS AND UNCERTAINTIES
The key risks to the business relate to the use of financial
instruments. A summary of these risks are set out in note 11 to the
financial statements.
POST BALANCE SHEET EVENTS
The post balance sheet events are disclosed in note 12 to the financial
statements.
ACCOUNTING RECORDS
The Directors are responsible for ensuring that accounting records, as
outlined in Section 281 to 285 of the Companies Act 2014 are kept by the
Company. To achieve this, the Directors have appointed professionally
qualified accounting personnel with appropriate expertise and have
provided adequate resources to the finance function who ensure that the
requirements of Sections 281-285 of the Companies Act 2014 are complied
with. The books of account are maintained at the Company's registered
office at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.
GOING CONCERN
The Directors believe the Company is a going concern. The nature of
the Company's business dictates that the outstanding ETPs may be
redeemed at any time by the holders thereof and in certain circumstances
may be redeemed by the Company. As the redemption of ETPs will
coincide with the termination of an equal amount of TRS, no
liquidity risk is considered to arise. All other liabilities of the
Company are being met by Boost Management Ltd; therefore the Directors
consider the Company to be a going concern and have prepared the
financial statements on this basis.
BOOST ISSUER plc
DIRECTORS' REPORT (continued)
CORPORATE GOVERNANCE STATEMENT
INTRODUCTION
The Company is subject to and complies with the Irish statute comprising
the Companies Act 2014 and the listing rules of the London Stock
Exchange, Frankfurt Stock Exchange and Borsa Italiana which are
applicable to companies listing instruments like the ETPs.
No Director has a significant direct or indirect holding of securities
in the Company. No Director has any special rights of control over the
Company's share capital.
There are no restrictions on voting rights.
Appointment and replacement of Directors and Amendments in the Articles
of Association
With regard to the appointment and replacement of Directors, the Company
is governed by its Articles of Association and Irish Statute comprising
the Companies Act 2014. The Articles of Association themselves may be
amended by special resolution of the shareholders.
Powers of Directors
The Board is responsible for managing the business affairs of the
Company in accordance with the Articles of Association. The Directors
may delegate certain functions to the Issuing and Paying Agent ("IPA")
and other parties, subject to the supervision and direction of the
Directors. The Directors have delegated the day to day administration
of the Company to the IPA.
Financial Reporting Process
The Board of Directors (the "Board") is responsible for establishing and
maintaining adequate internal control and risk management systems of the
Company in relation to the financial reporting process. Such systems are
designed to manage rather than eliminate the risk of failure to achieve
the Company's financial reporting objectives and can only provide
reasonable and not absolute assurance against material misstatement or
loss.
The Board has established processes regarding internal control and risk
management systems to ensure its effective oversight of the financial
reporting process. These include appointing the IPA to maintain the
accounting records of the Company independently of the Manager. The IPA
is contractually obliged to maintain proper books and records as
required by the Corporate Administration agreement. The IPA is also
contractually obliged to prepare for review and approval by the Board
the annual report including financial statements intended to give a true
and fair view.
The Board evaluates and discusses significant accounting and reporting
issues as the need arises. From time to time the Board also examines and
evaluates the IPA's financial accounting and reporting routines and
monitors and evaluates the external auditors' performance,
qualifications and independence. The IPA has operating responsibility
for internal control in relation to the financial reporting process and
the IPA's report to the Board.
Risk Assessment
The Board is responsible for assessing the risk of irregularities
whether caused by fraud or error in financial reporting and ensuring the
processes are in place for the timely identification of internal and
external matters with a potential effect on financial reporting. The
Board has also put in place processes to identify changes in accounting
rules and recommendations and to ensure that these changes are
accurately reflected in the Company's financial statements.
Control Activities
The IPA is contractually obliged to design and maintain control
structures to manage the risks which the Board judges to be significant
for internal control over financial reporting. These control structures
include appropriate division of responsibilities and specific control
activities aimed at detecting or preventing the risk of significant
deficiencies in financial reporting for every significant account in the
financial statements and the related ETPs' in the Company's annual
report.
BOOST ISSUER plc
DIRECTORS' REPORT (continued)
Transfer of shares
The instrument of transfer of any share shall be executed by or on
behalf of the transferor and, in cases where the share is not fully paid,
by or on behalf of the transferee. The transferor shall be deemed to
remain the holder of the share until the name of the transferee is
entered on the register in respect thereof. The Directors in their
absolute discretion and without assigning any reason therefore may
decline to register any transfer of a share. If the Directors refuse to
register a transfer they shall, within two months after the date on
which the transfer was lodged with the Company, send to the transferee
notice of the refusal.
Audit Committee
The sole business of the Company relates to the issuance of exchange
traded securities.
Given the functions performed by the IPA and the limited recourse nature
of the securities issued by the Company, the Board of Directors has
concluded that there is currently no need for the Company to have a
separate audit committee in order for the Board to perform effective
monitoring and oversight of the internal controls and risk management
systems of the Company in relation to the financial reporting process.
Accordingly the Company has availed itself of the exemption under 91(9)
(d) of S.I. No. 220/2010 - European Communities (Statutory Audits)
(Directive 2006/43/EC) Regulations 2010.
AUDITORS
In accordance with Section 383 (2) of the Companies Act, 2014, the
auditors, Ernst & Young, Chartered Accountants and registered Auditors
have expressed their willingness to continue in office.
RELEVANT AUDIT INFORMATION
As at the date this Directors' Report was approved and signed each
Director is satisfied that:
1. there is no relevant audit information of which the Company's statutory
auditors are unaware;
2. s/he has taken all the steps that he or she ought to have taken as a
director in order to make herself or himself aware of any relevant audit
information and to establish that the Company's statutory auditors are
aware of that information; and
3. where "relevant audit information" means information needed by the
Company's statutory auditors in connection with preparing their report.
DIRECTORS COMPLIANCE STATEMENT
The Directors are responsible for securing the company's compliance with
its "relevant obligations" undersection 225 of the Companies Act 2014
(as defined in section 225(1) thereof).
As required under section 225(3), the Directors confirm that:
1. a compliance policy statement has been drawn up setting out the Company's
policies (that, in the Directors' opinion, are appropriate to the
Company) respecting compliance by the Company with its relevant
obligations';
2. appropriate arrangements or structures are in place that, in the
Directors' opinion, are designed to secure material compliance with the
Company's relevant obligations; and
3. a review has been conducted during the financial year ending 31 December
2016 of the arrangements or structures referred to in paragraph (b)
above.
Approved and authorised for issue on behalf of the Board:
________________________ _______________________
John Walsh Lisa Hand
Director Director
Date: 27 April 2017
BOOST ISSUER plc
DIRECTORS' RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Directors' Report and
financial statements, in accordance with applicable law and regulations.
Irish Company law requires the Directors to prepare financial statements
giving a true and fair view of the state of affairs of the Company and
the profit or loss of the Company for each financial year. Under that
law the Directors have elected to prepare the financial statements in
accordance with International Financial Reporting Standards ("IFRS") as
adopted by the EU.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the assets, liabilities and financial position, of the Company, and
otherwise comply with the Companies Act 2014.
ln preparing the financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether the financial statements have been prepared in accordance
with IFRS and ensure that they contain the additional information
required by the Companies Act 2014; and
-- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The Directors are responsible for ensuring that the Company keeps or
causes to be kept adequate accounting records which correctly explain
and record the transactions of the Company, enable at any time the
assets, liabilities, financial position and profit or loss of the
Company to be determined with reasonable accuracy, enable them to ensure
that the financial statements and Directors' Report comply with the
Companies Act 2014 and enable the financial statements to be audited.
They are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are also responsible for preparing a Directors' Report
that complies with the requirements of the Companies Act 2014.
Approved and authorised for issue on behalf of the Board:
________________________ _______________________
John Walsh Lisa Hand
Director Director
Date: 27 April 2017
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF BOOST ISSUER PLC
We have audited the financial statements of Boost Issuer plc for the
year ended 31 December 2016 which comprise the Statement of
Comprehensive Income, the Statement of Financial Position, the Statement
of Changes in Equity, the Statement of Cash Flow and the related notes 1
to 15. The financial reporting framework that has been applied in their
preparation is Irish law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union and as applied in accordance
with the provisions of the Companies Act 2014.
This report is made solely to the company's members, as a body, in
accordance with section 391 of the Companies Act 2014. Our audit work
has been undertaken so that we might state to the company's members
those matters we are required to state to them in an auditor's report
and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the company and
the company's members as a body, for our audit work, for this report, or
for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors' Responsibilities Statement set
out on page 11, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and
fair view and otherwise comply with the Companies Act 2014. Our
responsibility is to audit and express an opinion on the financial
statements in accordance with Irish law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures
in the financial statements sufficient to give reasonable assurance that
the financial statements are free from material misstatement, whether
caused by fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the company's circumstances and
have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the
directors; and the overall presentation of the financial statements. In
addition, we read all the financial and non-financial information in the
Directors' Report and the Directors' Responsibilities Statement to
identify material inconsistencies with the audited financial statements
and to identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired by us
in the course of performing the audit. If we become aware of any
apparent material misstatements or inconsistencies we consider the
implications for our report.
Continued /...
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF BOOST ISSUER PLC
(Continued)
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the assets,
liabilities and financial position of the company as at 31 December 2016
and of its profit for the year then ended;
-- have been properly prepared in accordance with IFRSs as
adopted by the European Union as applied in accordance with the
provisions of the Companies Act 2014; and
-- have been properly prepared in accordance with
the requirements of the Companies Act 2014.
Matters on which we are required to report by the Companies Act 2014
-- We have obtained all the information and explanations which
we consider necessary for the purposes of our audit.
-- In our opinion the accounting records of the company were
sufficient to permit the financial statements to be readily and properly
audited.
-- The financial statements are in agreement with the
accounting records.
-- In our opinion, the information given in the directors'
report is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of sections 305 to 312 of the
Companies Act 2014 which require us to report to you if, in our opinion,
the disclosures of directors' remuneration and transactions specified by
law are not made.
Lisa Kealy
for and on behalf of Ernst & Young
Chartered Accountants and Statutory Audit Firm
Dublin
Date
BOOST ISSUER plc
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2016
Year Year
Note ended ended
31 Dec 2016 31 Dec 2015
EUR EUR
Revenue 3 4,154,864 2,732,965
Realised gains on financial liabilities designated
at FV through the profit or loss 155,335,883 68,537,123
Realised (losses) on financial assets designated at
FV through profit or loss (155,335,883) (68,537,123)
Unrealised (depreciation) / appreciation on financial
liabilities designated at FV through the profit or
loss (175,771,465) 160,199,037
Unrealised appreciation / (depreciation) on financial
assets designated at FV through the profit or loss 175,771,465 (160,199,037)
Operating expenses 4 (4,153,864) (2,731,965)
Other comprehensive income - -
Operating Profit before Tax 1,000 1,000
Tax on profit on ordinary activities 5 (250) (250)
Total Comprehensive Income 750 750
All of the items dealt with in arriving at the profit for the year are
from continuing operations.
The accompanying Notes form an integral part of the Statement of
Comprehensive Income
BOOST ISSUER plc
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
As at As at
Note 31 Dec 2016 31 Dec 2015
EUR EUR
Assets
Cash and cash equivalents 11,084 10,611
Financial Assets at Fair Value through profit or
loss 6 605,550,151 412,182,915
Debtors: (Amounts falling due within one year) 7 460,743 320,589
Total assets 606,021,978 412,514,115
Liabilities
Financial Liabilities at Fair Value through profit
or loss 8 6 605,550,151 412,182,915
Other Payables 7 8 458,839 318,962
Total liabilities 606,008,990 412,501,877
Total assets less total liabilities 12,988 12,238
Share capital and Retained earnings
Share capital - equity 9 10,000 10,000
Retained earnings 2,988 2,238
Total shareholders' funds 12,988 12,238
The financial statements were approved by the Board of Directors on 27
April 2017 and signed on its behalf by:
___________________________
___________________________
John Walsh Lisa Hand
Director Director
The accompanying Notes form an integral part of the Statement of
Financial Position
BOOST ISSUER plc
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2016
Share capital Retained earnings Total equity
EUR EUR EUR
As at 31 December 2015 10,000 2,238 12,238
Total comprehensive income - 750 750
Balance at 31 December
2016 10,000 2,988 12,988
Share capital Retained earnings Total equity
EUR EUR EUR
As at 31 December 2014 10,000 1,488 11,488
Total comprehensive
income - 750 750
Balance at 31 December
2015 10,000 2,238 12,238
The accompanying Notes form an integral part of these financial
statements
BOOST ISSUER plc
STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2016
Note Year ended Year ended
31 Dec 2016 31 Dec 2015
EUR EUR
Adjustments to reconcile total comprehensive income
to net cash used in operating activities Total Comprehensive
Income 750 750
Realised gains on financial liabilities designated
at fair value through the profit or loss (155,335,883) (68,537,123)
Realised losses on financial assets designated at
fair value through profit or loss 155,335,883 68,537,123
Unrealised depreciation on financial liabilities designated
at fair value through the profit or loss (175,771,465) 160,199,037
Unrealised appreciation on financial assets designated
at fair value through the profit or loss 175,771,465 (160,199,037)
Executions during the period (1,827,888,828) (1,812,355,061)
Terminations during the period 1,656,081,875 1,317,177,789
Increase in debtors (140,154) (205,137)
Increase in creditors 139,877 202,216
Net cash used in operating activities (171,806,480) (495,179,443)
Cash flows from financing activities
Issued during the period 1,827,888,828 1,812,355,061
Redemptions during the period (1,656,081,875) (1,317,177,789)
Net cash provided in financing activities 171,806,953 495,177,272
Net Increase/(Decrease) in cash and cash equivalents 473 (2,171)
Cash and cash equivalents at beginning of the period 10,611 12,782
Cash and cash equivalents at end of the period 11,084 10,611
The accompanying Notes form an integral part of these financial
statements
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016
1. GENERAL INFORMATION
Boost Issuer plc (the "Company") was incorporated on 30 July 2012 in the
Republic of Ireland with registered number 515981. The registered office
of the Company is 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.
The Company commenced trading on 5 December 2012.
The Company is a special purpose company which has been established for
the purpose of issuing exchange traded securities linked to different
indices providing exposure to a range of asset classes including
equities, commodities, currencies and fixed income.
The Company has no direct employees (2015: Nil).
The Company established a Collateralised ETP Securities Programme under
which the Company issues on an ongoing basis collateralised exchange
traded securities (the "ETPs") of different classes (each a "Class")
linked to indices providing exposure to a range of asset classes
including equities, commodities, fixed income and currencies. The ETP
Securities may have long or short, and leveraged or unleveraged,
exposure to the daily performance of the referenced index. During the
year the Company issued ETPs under the terms of the Collateralised ETP
Securities Programme prospectus.
The Company's principal activity is the listing and issue of ETPs. These
securities are issued as demand requires. The Company purchases a
matching TRS from swap provider(s) to hedge its liabilities and ensure
the assets can service its liabilities. The number and terms of ETP
Securities outstanding will match the number and terms of ETP Swap
Contracts so that the obligations of Boost and the Swap Provider (the
"SP") match. The SP will use the same pricing formulae as the
Determination Agent (DA) so both the DA and the SP should be able to
calculate the same price independently of each other - the price of an
ETP Swap Contract will equal the price of an ETP Security. Boost
Management Limited supplied and/or arranged for the supply of all
administrative services to the Company and paid all management and
administration costs of the Company, in return for which the Company
pays Boost Management Limited a Management Fee.
The Company considers the capital management and its current capital
resources to be adequate to maintain the on-going listing and issue of
ETPs.
ETPs had been issued through series in Euro, US Dollar, Pound Sterling
and Japanese Yen.
All ETPs in issue at 31 December 2016 are listed on the main market of
the London Stock Exchange, Frankfurt Stock Exchange and/or on the Borsa
Italiana.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Going Concern
The nature of the Company's business dictates that the
outstanding ETPs may be redeemed at any time by the holders thereof
and in certain circumstances may be redeemed by the Company. As the
redemption of ETPs will coincide with the termination of an
equal amount of TRS, no liquidity risk is considered to arise. All
other liabilities of the Company are being met by Boost Management Ltd.
Management have confirmed that the business is running in accordance
with its business plan therefore the Directors consider the Company to
be a going concern and have prepared the financial statements on this
basis.
(b) Basis of preparation
The financial statements are prepared in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European Union,
and comply with those parts of the Companies Act, 2014 applicable to
Companies reporting under IFRS.
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Basis of measurement
The financial statements have been prepared on the historical cost basis
except financial assets and liabilities designated at fair value through
profit or loss which are measured at fair value.
Standards issued but not yet effective
The standards and interpretations that are issued, but not yet effective,
up to the date of issuance of the Company's financial statements are
disclosed below.
IFRS 9, 'Financial instruments', addresses the classification,
measurement and recognition of financial assets and financial
liabilities
IFRS 9 requires financial assets to be classified into two
measurement categories: those measured as at fair value and
those measured at amortised cost. The determination is made at initial
recognition. The classification depends on the entity's business model
for managing its financial instruments and the contractual cash flow
characteristics of the instrument. For financial liabilities, the
standard retains most of the IAS 39 requirements. The main change is
that, in cases where the fair value option is taken for financial
liabilities, the part of a fair value change due to an entity's own
credit risk is recorded in other comprehensive income rather than
the income statement, unless this creates an accounting mismatch.
The Company is assessing the standard's full impact.
Impairment: IFRS 9 requires the Company to record expected credit losses
on all of its debt securities, loans and trade receivables, either on a
12 month or lifetime basis. The company does not expect a significant
impact as a result of applying this aspect of IFRS 9.
Hedge Accounting: IFRS 9 does not change the principles of how an entity
accounts for effective hedges. The Company does not have any existing
hedge relationships and does not expect a significant impact as a result
of applying this aspect of IFRS 9.
IFRS 9 is effective for all accounting periods beginning on or after 1
January 2018, however, all aspects of the above, except "Hedge
Accounting" can be early adopted.
(d) Functional and presentation currency
These financial statements are presented in Euro (EUR) which is the
Company's functional currency. The Directors have elected to present the
Company's financial statements in Euro. Functional currency is the
currency of the primary economic environment in which the entity
operates. The Directors of the Company believe that Euro (EUR) most
faithfully represents the economic effects of the underlying investing
and financing activities of the Company.
Transactions in currencies other than Euro are recorded at the rates of
exchange prevailing on the dates of the transactions. At each balance
sheet date, monetary items denominated in foreign currency are
retranslated at the rates prevailing at the balance sheet date.
Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at period-end exchange rates of
monetary items that are denominated in foreign currencies are recognised
in profit or loss in the period. Foreign exchange gains and losses on
financial assets and financial liabilities are included in the net
foreign exchange gain/(loss).
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
(e) Use of estimates and judgements
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that may affect the application of
accounting policies and the reported amounts of assets, liabilities,
income and expenses. The estimates and associated assumptions are based
on historical experience and various other factors that are believed to
be reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period or in
the period of the revision and in future periods affected.
Key sources of estimation uncertainty: Fair value of financial
instruments
Determining fair values
The determination of fair value for financial assets and liabilities for
which there is no observable market price requires the use of valuation
techniques as described in accounting policy (f) "Financial
Instruments". For financial instruments that trade infrequently and have
little price transparency, fair value is less objective, and requires
varying degrees of judgment depending on liquidity, concentration,
uncertainty of market factors, pricing assumptions and other risks
affecting the specific instrument.
Fair values of ETPs are calculated on a daily basis using predetermined
formula, where prices of underlying indices and swap costs are used as
inputs to the formula. These prices are compared to prior day prices and
any variation results in either an unrealised gain or loss.
(f) Financial instruments
Classification
The Company classifies its financial assets and financial liabilities as
financial assets and liabilities at fair value through profit or loss at
initial recognition in accordance with IAS 39 Financial Instruments:
Recognition and Measurement. The category of financial assets and
liabilities at fair value through the profit or loss is sub-divided
into:
Financial assets and liabilities held for trading: Financial assets are
classified as held for trading if they are acquired for the purpose of
selling and/or repurchasing in the near term. These assets are acquired
principally for the purpose of generating a profit from short-term
fluctuations in price. The Company's policy is not to apply hedge
accounting.
Financial instruments designated as at fair value through profit or loss
upon initial recognition: these comprise financial assets designated
upon initial recognition on the basis that they are part of a group of
financial assets which are managed and have their performance evaluated
on a fair value basis, in accordance with risk management and investment
strategies of the Company, as set out in the Company's offering
document.
The Company has designated its investments in the total return swaps, as
well as the ETPs, as financial assets and liabilities at fair value
through profit or loss respectively.
Recognition
The Company initially recognises all financial assets and liabilities on
the trade date at which the Company becomes a party to the contractual
provisions of the instruments.
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(f) Financial instruments (continued)
Purchases or sales of financial assets that require delivery of assets
within the time frame generally established by regulation or convention
in the market place (regular way trades) are recognised on the trade
date, i.e., the date that the Company commits to purchase or sell the
asset.
Initial measurement
Financial assets and financial liabilities at fair value through profit
or loss are recorded in the statement of financial position at fair
value. All transaction costs for such instruments are recognised
directly in profit or loss.
Financial liabilities (other than those classified as held for trading
or designated at fair value) are measured initially at their fair value
plus any directly attributable incremental costs of acquisition or
issue. For financial assets and liabilities where the fair value at
initial recognition does not equal the transaction price, the Company
recognises the difference in the Statement of Comprehensive Income,
unless specified otherwise.
Subsequent measurement
After initial measurement, the Company measures financial instruments
which are classified as at fair value through profit or loss, at fair
value. Subsequent changes in the fair value of those financial
instruments are recorded in net gain or loss on financial assets and
liabilities at fair value through profit or loss. Interest and dividend
earned or paid on these instruments are recorded separately in interest
revenue or expense and dividend revenue or expense.
Total return swaps are valued at fair value utilising predefined
formulae and market prices consistent with the ETP valuation process. In
the absence of readily available market prices the Swap Provider will
provide the inputs for the valuation. Where possible the Company
independently calculates the fair value and verifies the Swap Providers
valuation with any variation investigated. The valuation determined by
the swap counterparty may be based on assumptions of market conditions
at the time of valuation, similar arms' length market transactions if
available, reference to the current fair value of similar instruments
and a variety of different valuation techniques such as the discounted
cash flow techniques, option pricing models or any other valuation
technique that provides a reliable estimate of prices obtained in actual
market transactions. All total return swaps are carried as assets when
fair value is positive and as liabilities when fair value is negative.
Derecognition
A financial asset is derecognised where the rights to receive cash flows
from the asset have expired or the Company has transferred its rights to
receive cash flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay to a third party
under a pass-through arrangement and either the Company has neither
transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
When the Company has transferred its right to receive cash flows from an
asset (or has entered into a pass-through arrangement), and has neither
transferred nor retained substantially all of the risks and rewards of
the asset nor transferred control of the asset, the asset is recognised
to the extent of the Company's continuing involvement in the asset. In
that case, the Company also recognises an associated liability. The
transferred asset and the associated liability are measured on a basis
that reflects the rights and obligations that the Company has retained.
The Company derecognises a financial liability when the obligation under
the liability is discharged, cancelled or expired.
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(f) Financial instruments (continued)
Offsetting
Financial assets and liabilities are offset and the net amount presented
in the Statement of Financial Position when, and only when, the Company
has a legal right to set off the amounts and intends either to settle on
a net basis or to realise the asset and settle the liability
simultaneously. Income and expenses are presented on a net basis only
when permitted by the accounting standards, or for gains and losses
arising from a group of similar transactions.
(g) Interest income and expense
Interest income and expense are recognised using the effective interest
rate method.
(h) Taxation
Corporation tax is provided on taxable profits at current rates
applicable to the Company's activities in accordance with Section 110 of
the Taxes Consolidation Act 1997. Deferred taxation is accounted for,
without discounting, in respect of all temporary differences between the
treatment of certain items for taxation and accounting purposes which
have arisen but not reversed by the Statement of Financial Position
date.
Provision is made at the tax rates which are expected to apply in the
periods in which the timing differences reverse. Deferred tax assets
are recognised only to the extent that it is considered more likely than
not that they will be recovered.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against which the
asset can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer
probable that related tax benefit will be realised.
Withholding tax is a generic term used for the amount of withholding tax
deducted at source of the income and is not significant for the Company.
When applicable, the Company will present the withholding tax separately
from the gross investment income in the Statement of Comprehensive
Income. For the purpose of the Statement of Cash Flows, cash inflows
from investments are presented net of withholding taxes, when
applicable.
(j) Revenue and Operating Expenses
The Company is entitled to receive a management fee calculated by
reference to a management fee rate under the specified terms of each
relevant TRS and is calculated by the Manager by charging the applicable
fee rate on the daily market value of each security.
The Company pays a management fee to the Manager calculated based on the
amount of fees received from the Swap Provider.
The management fees are accrued on a daily basis and are recorded in the
Statement of Comprehensive Income.
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(k) Net gain/loss on financial assets and liabilities at fair value
through profit or loss
This item includes changes in the fair value of financial assets and
liabilities held for trading or designated upon initial recognition as
'at fair value through profit or loss' and excludes interest and
dividend income and expense.
Unrealised gains and losses comprise changes in the fair value of
financial instruments for the period.
Realised gains and losses on disposals of financial instruments are
calculated and classified as 'at fair value through profit or loss'.
They represent the difference between an instrument's initial carrying
amount and disposal amount, or cash payments or receipts made on
derivative contracts (excluding payments or receipts on collateral
margin accounts for such instruments).
(l) Segmental reporting
The standard on segmental reporting puts emphasis on the "management
approach" to reporting on operating segments. An operating segment is a
component of the Company that engages in business activities from which
it may earn revenue and incur expenses.
The Company is engaged as one segment in a Collateralised ETP Securities
Programme under which the Company issues on an ongoing basis ETP
Securities of different classes linked to indices providing exposure to
a range of asset classes including equities, commodities, fixed income
and currencies.
(m) Share Capital
The Authorised Share capital of the Company is EUR100,000 divided into
100,000 ordinary shares of EUR1 each. The Issued and called-up Share
Capital is EUR10,000 divided into 40,000 Ordinary Shares of EUR0.25
each. The Issued and called-up Share Capital is presented under Equity
in the Statement of Financial Position.
3. REVENUE Year ended Year ended
31 Dec 2016 31 Dec 2015
EUR EUR
Management Fee Income 4,132,907 2,711,529
Order Fees 19,850 19,600
Boost Management Ltd. Annual Corporate Benefit Fee 2,107 1,836
4,154,864 2,732,965
The Company is entitled to receive a management fee under the terms of
each TRS. The Swap Provider will pay the Company variable amounts by way
of payments under the terms of the relevant TRS, calculated by reference
to the management fee rate as specified in Note 6 and in the manner
specified in note 2(j).
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
4. OPERATING EXPENSES Year ended Year ended
31 Dec 2016 31 Dec 2015
EUR EUR
Management Fee Expense 4,132,907 2,711,529
Order fees payable to Boost Management Ltd. 19,850 19,600
Other Expenses 1,107 836
4,153,864 2,731,965
The Company pays a management fee under the terms of a management
agreement entered into between the Manager and the Company, calculated
based on the management fees received from the Swap Provider (current
annual management fee rates outlined in note 6) plus any order form fees
received by the Company.
General operational expenses such as IPA fees, Determination Agent fees,
Registrar fees, Trustee fees, London Stock Exchange (LSE) and Regulatory
News Service (RNS) fees, audit fees, tax fees and legal fees are borne
by Boost Management Limited on behalf of the Company.
The auditor's remuneration for 2016 was EUR10,200 (2015: EUR10,200).
There was no directors' remuneration during 2016 (2015: nil).
The Company had no employees during the year.
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
Corporation tax has been calculated based on results for the period at a
rate of 25%. Please refer to Note 2 (h) for further information. There
were no deferred tax assets or liabilities at 31 December 2016.
6. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT
OR LOSS
Financial assets designated at fair value through profit or loss - Total
Return Swaps
All unrealised appreciation/depreciation on assets are attributable to
market risk arising from price, commodity, currency and interest rate
risk.
The Company enters into a derivative contract with the Swap Provider
(BNP Paribas as at 31 December 2016 and 31 December 2015) each time ETPs
are issued or redeemed to eliminate its exposure to market risk,
interest rate risk and currency risk within the Company.
The TRS entered into as at 31 December 2016 and 31 December 2015 have a
value equal but opposite in sign to the value of the ETPs in issue as at
31 December 2016 and 31 December 2015, as disclosed in the table on
pages 25 - 28.
Financial liabilities designated at fair value through profit or loss -
Exchange Traded Products
All unrealised appreciation/depreciation on liabilities are attributable
to market risk arising from price, commodity and interest rate risk.
All ETPs in issue are listed on either the London Stock Exchange,
Frankfurt Stock Exchange or the Borsa Italiana. All ETPs in issue have
a maturity date as at 30 November 2062.
"Subscription Amount" means, in relation to a Subscription Order, an
amount per ETP Security equal to:
(A) an amount calculated by the Determination Agent equal to the product
of (i) the Price per ETP Security as at the relevant Subscription Trade
Date; and (ii) one (1) plus the Swap Execution Rate; or
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
6. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT
OR LOSS (continued)
(B) such other amount as may be agreed in relation to such subscription
between the Authorised Participant subscribing for ETP Securities in
accordance with the terms of the Operating Manual, and one or more of
the Swap Providers for the ETP Securities who have agreed to provide
hedging to the Issuer in respect of such newly issued ETP Securities.
"Redemption Amount" means an amount per ETP Security calculated by the
Determination Agent
equal to the greater of:
(A) the Principal Amount of such ETP Security; and
(B) the product of (i) the Weighted Average Price per ETP Security and
(ii) one (1) minus the Swap Execution Rate,
provided that, where the ETP Securities have fallen for redemption
following the delivery of an Event of Default Redemption Notice or a
Connected Class Acceleration Notice, the Redemption Amount shall be an
amount equal to the most recently published Price per ETP Security as at
the date of delivery of the Event of Default Redemption Notice or
Connected Class Acceleration Notice, as the case may be.
The ETPs in Issue at 31 December 2016 are as follows:
Market Value Management Fee
ETP ISIN Notional Amount EUR Rate
BOOST LEVDAX 3X
DAILY ETP IE00B878KX55 8,423,857 8,423,857 0.75%
BOOST SHORTDAX
3X DAILY ETP IE00B8GKPP93 4,140,358 4,140,358 0.80%
BOOST EURO
STOXX 50 3X
LEVERAGE DAILY
ETP IE00B7SD4R47 11,692,765 11,692,765 0.75%
BOOST EURO
STOXX 50 3X
SHORT DAILY
ETP IE00B8JF9153 16,414,373 16,414,373 0.80%
BOOST FTSE MIB
3X LEVERAGE
DAILY ETP IE00B8NB3063 40,409,845 40,409,845 0.75%
BOOST FTSE MIB
3X SHORT DAILY
ETP IE00B873CW36 22,649,101 22,649,101 0.80%
BOOST BUND 10Y
3X SHORT DAILY
ETP IE00BKS8QN04 48,583,999 48,583,999 0.30%
BOOST BUND 10Y
3X LEVERAGE
DAILY ETP IE00BKT09255 685,343 685,343 0.30%
BOOST BTP 10Y
3X SHORT DAILY
ETP IE00BKS8QM96 6,798,979 6,798,979 0.60%
BOOST BTP 10Y
3X LEVERAGE
DAILY ETP IE00BKT09149 1,479,691 1,479,691 0.60%
BOOST 5X SHORT
USD LONG EUR
DAILY ETP IE00BLNMQT00 1,950,736 1,950,736 0.89%
BOOST 5X LONG
USD SHORT EUR
DAILY ETP IE00BLNMQS92 717,694 717,694 0.89%
BOOST EURO
STOXX BANKS 3X
LEVERAGE DAILY
ETP IE00BLS09N40 15,143,160 15,143,160 0.89%
BOOST EURO
STOXX BANKS 3X
SHORT DAILY
ETP IE00BLS09P63 7,793,032 7,793,032 0.89%
BOOST BTP 10Y
5X SHORT DAILY
ETP IE00BYNXNS22 2,783,451 2,783,451 0.99%
BOOST BUND 10Y
5X SHORT DAILY
ETP IE00BYNXPH56 1,692,773 1,692,773 0.49%
BOOST LONG USD
SHORT EUR 4X
DAILY ETP IE00BYNXPK85 242,356 242,356 0.69%
BOOST SHORT USD
LONG EUR 4X
DAILY ETP IE00BYNXPM00 677,072 677,072 0.69%
BOOST FTSE 100
3X LEVERAGE
DAILY ETP IE00B88D2999 4,635,601 5,430,606 0.75%
BOOST FTSE 100
3X SHORT DAILY
ETP IE00B7VB3908 4,875,849 5,712,058 0.80%
BOOST FTSE 100
2X LEVERAGE
DAILY ETP IE00B94QKC83 1,000,616 1,172,222 0.49%
BOOST FTSE 100
2X SHORT DAILY
ETP IE00B94QKF15 2,157,687 2,527,730 0.55%
BOOST FTSE 100
1X SHORT DAILY
ETP IE00B94QKG22 2,146,757 2,514,926 0.49%
BOOST FTSE 250
1X SHORT DAILY
ETP IE00BBGBF313 14,320,816 16,776,836 0.65%
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
6. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT
OR LOSS (continued)
Market Value Management Fee
ETP ISIN Notional Amount EUR Rate
BOOST FTSE 250
2X LEVERAGE
DAILY ETP IE00B94QKJ52 6,220,328 7,287,114 0.60%
BOOST GILTS 10Y
3X LEVERAGE
DAILY ETP IE00BKT09479 110,394 129,327 0.30%
BOOST GILTS 10Y
3X SHORT DAILY
ETP IE00BKS8QQ35 6,838,461 8,011,257 0.30%
BOOST TOPIX 2X
LEVERAGE DAILY
ETP IE00BBGBF537 125,111,850 1,013,406 0.75%
BOOST TOPIX 1X
SHORT DAILY
ETP IE00BBGBF420 68,910,153 558,172 0.75%
BOOST NASDAQ
100 3X
LEVERAGE DAILY
ETP IE00B8W5C578 6,259,005 5,934,163 0.75%
BOOST NASDAQ
100 3X SHORT
DAILY ETP IE00B8VZVH32 13,366,662 12,672,932 0.80%
Boost S&P 500
3x Leverage
Daily ETP IE00B7Y34M31 2,896,533 2,746,203 0.75%
Boost S&P 500
3x Short Daily
ETP IE00B8K7KM88 37,842,758 35,878,719 0.80%
BOOST WTI OIL
3X LEVERAGE
DAILY ETP IE00B7ZQC614 154,535,966 146,515,549 0.99%
BOOST WTI OIL
3X SHORT DAILY
ETP IE00B7SX5Y86 24,021,583 22,774,863 0.99%
BOOST GOLD 3X
LEVERAGE DAILY
ETP IE00B8HGT870 10,384,365 9,845,416 0.99%
BOOST GOLD 3X
SHORT DAILY
ETP IE00B6X4BP29 2,664,188 2,525,916 0.99%
BOOST COPPER 3X
LEVERAGE DAILY
ETP IE00B8JVMZ80 2,927,289 2,775,362 0.99%
BOOST COPPER 3X
SHORT DAILY
ETP IE00B8KD3F05 1,275,169 1,208,988 0.99%
BOOST NATURAL
GAS 3X
LEVERAGE DAILY
ETP IE00B8VC8061 28,012,878 26,559,010 0.99%
BOOST NATURAL
GAS 3X SHORT
DAILY ETP IE00B76BRD76 18,911,095 17,929,609 0.99%
BOOST SILVER 3X
LEVERAGE DAILY
ETP IE00B7XD2195 15,756,562 14,938,796 0.99%
BOOST SILVER 3X
SHORT DAILY
ETP IE00B8JG1787 2,507,317 2,377,187 0.99%
BOOST PALLADIUM
1X SHORT DAILY
ETP IE00B94QLR02 461,241 437,302 0.95%
BOOST PALLADIUM
2X LEVERAGE
DAILY ETP IE00B94QLN63 1,042,374 988,275 0.95%
BOOST NATURAL
GAS 2X SHORT
DAILY ETP IE00B94QL251 697,364 661,171 0.70%
BOOST NATURAL
GAS 2X
LEVERAGE DAILY
ETP IE00B94QKX96 625,178 592,732 0.44%
BOOST GOLD 2X
SHORT DAILY
ETP IE00B94QKT50 150,126 142,335 0.70%
BOOST GOLD 1X
SHORT DAILY
ETP IE00B94QKW89 735,668 697,487 0.44%
BOOST GOLD 2X
LEVERAGE DAILY
ETP IE00B94QKS44 457,077 433,354 0.44%
BOOST SILVER 2X
SHORT DAILY
ETP IE00B94QL921 1,283,293 1,216,690 0.70%
BOOST SILVER 2X
LEVERAGE DAILY
ETP IE00B94QL699 1,373,428 1,302,147 0.44%
BOOST US
TREASURIES 10Y
3X LEVERAGE
DAILY ETP IE00BKT09032 255,231 241,985 0.30%
BOOST US
TREASURIES 10Y
3X SHORT DAILY
ETP IE00BKS8QT65 12,302,903 11,664,383 0.30%
BOOST GOLD ETC IE00BVFZGK87 2,531,101 2,399,737 0.25%
BOOST NATURAL
GAS ETC IE00BVFZGL94 1,275,055 1,208,879 0.25%
BOOST WTI OIL
ETC IE00BVFZGC04 3,798,650 3,601,500 0.25%
BOOST BRENT OIL
ETC IE00BVFZGD11 4,100,590 3,887,770 0.25%
BOOST WTI OIL
1X SHORT DAILY
ETP IE00BVFZGF35 3,339,435 3,166,119 0.49%
BOOST WTI OIL
2X LEVERAGE
DAILY ETP IE00BVFZGG42 844,025 800,220 0.65%
BOOST WTI OIL
2X SHORT DAILY
ETP IE00BVFZGH58 671,724 636,861 0.65%
BOOST US
TREASURIES 10Y
5X SHORT DAILY
ETP IE00BYNXPJ70 2,296,850 2,177,643 0.50%
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
6. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT
OR LOSS (continued)
Notional Market Value Management
ETP ISIN Amount EUR Fee Rate
BOOST BRENT OIL 3X LEVERAGE DAILY ETP IE00BYTYHS72 4,190,026 3,972,563 0.99%
BOOST BRENT OIL 3X SHORT DAILY ETP IE00BYTYHR65 2,488,781 2,359,613 0.99%
BOOST EMERGING MARKETS 3X LEVERAGE DAILY ETP IE00BYTYHN28 830,108 787,026 0.99%
BOOST EMERGING MARKETS 3X SHORT DAILY ETP IE00BYTYHM11 710,276 673,413 0.99%
BOOST S&P 500 VIX SHORT-TERM FUTURES 2.25X LEVERAGE
DAILY ETP IE00BYTYHQ58 6,513,547 6,175,494 0.99%
BOOST FTSE MIB BANKS ETP IE00BYMB4Q22 7,230,500 7,230,500 0.35%
810,173,018 605,550,151
The ETPs in Issue at 31 December 2015 are as follows:
Market Value Management
ETP ISIN Notional Amount EUR Fee Rate
BOOST
LEVDAX
3X DAILY
ETP IE00B878KX55 16,736,603.37 16,736,603.37 0.75%
BOOST
SHORTDAX
3X DAILY
ETP IE00B8GKPP93 6,388,003.27 6,388,003.27 0.80%
BOOST
EURO
STOXX 50
3X
LEVERAGE
DAILY
ETP IE00B7SD4R47 13,230,550.67 13,230,550.67 0.75%
BOOST
EURO
STOXX 50
3X SHORT
DAILY
ETP IE00B8JF9153 6,054,134.34 6,054,134.34 0.80%
BOOST
FTSE MIB
3X
LEVERAGE
DAILY
ETP IE00B8NB3063 38,267,763.48 38,267,763.48 0.75%
BOOST
FTSE MIB
3X SHORT
DAILY
ETP IE00B873CW36 10,109,492.07 10,109,492.07 0.80%
BOOST
BUND 10Y
3X SHORT
DAILY
ETP IE00BKS8QN04 3,340,446.51 3,340,446.51 0.30%
BOOST
BUND 10Y
3X
LEVERAGE
DAILY
ETP IE00BKT09255 731,084.78 731,084.78 0.30%
BOOST BTP
10Y 3X
SHORT
DAILY
ETP IE00BKS8QM96 3,890,446.97 3,890,446.97 0.60%
BOOST BTP
10Y 3X
LEVERAGE
DAILY
ETP IE00BKT09149 1,062,258.92 1,062,258.92 0.60%
BOOST 5X
SHORT
USD LONG
EUR
DAILY
ETP IE00BLNMQT00 1,949,077.65 1,949,077.65 0.89%
BOOST 5X
LONG USD
SHORT
EUR
DAILY
ETP IE00BLNMQS92 3,613,167.12 3,613,167.12 0.89%
BOOST
EURO
STOXX
BANKS 3X
LEVERAGE
DAILY
ETP IE00BLS09N40 3,251,502.54 3,251,502.54 0.89%
BOOST
EURO
STOXX
BANKS 3X
SHORT
DAILY
ETP IE00BLS09P63 999,733.99 999,733.99 0.89%
BOOST BTP
10Y 5X
SHORT
DAILY
ETP IE00BYNXNS22 702,852.96 702,852.96 0.99%
BOOST
BUND 10Y
5X SHORT
DAILY
ETP IE00BYNXPH56 717,972.85 717,972.85 0.49%
BOOST
LONG USD
SHORT
EUR 4X
DAILY
ETP IE00BYNXPK85 320,297.19 320,297.19 0.69%
BOOST
SHORT
USD LONG
EUR 4X
DAILY
ETP IE00BYNXPM00 283,990.27 283,990.27 0.69%
BOOST
FTSE 100
3X
LEVERAGE
DAILY
ETP IE00B88D2999 13,173,758.84 17,874,156.00 0.75%
BOOST
FTSE 100
3X SHORT
DAILY
ETP IE00B7VB3908 2,900,986.77 3,936,058.85 0.80%
BOOST
FTSE 100
2X
LEVERAGE
DAILY
ETP IE00B94QKC83 548,912,.31 744,764.23 0.49%
BOOST
FTSE 100
2X SHORT
DAILY
ETP IE00B94QKF15 1,217,726.31 1,652,211.05 0.55%
BOOST
FTSE 100
1X SHORT
DAILY
ETP IE00B94QKG22 517,937.31 702,737.34 0.49%
BOOST
FTSE 250
2X
LEVERAGE
DAILY
ETP IE00B94QKJ52 3,784,271.97 5,134,500.20 0.60%
BOOST
FTSE 250
1X SHORT
DAILY
ETP IE00BBGBF313 966,615.63 1,311,504.09 0.65%
BOOST
GILTS
10Y 3X
LEVERAGE
DAILY
ETP IE00BKT09479 296,223.14 401,915.56 0.30%
BOOST
GILTS
10Y 3X
SHORT
DAILY
ETP IE00BKS8QQ35 426,607.27 578,820.74 0.30%
BOOST
TOPIX 2X
LEVERAGE
DAILY
ETP IE00BBGBF537 218,056,293.06 1,679,033.46 0.75%
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
6. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT
OR LOSS (continued)
Market Value Management
ETP ISIN Notional Amount EUR Fee Rate
BOOST TOPIX
1X SHORT
DAILY ETP IE00BBGBF420 74,543,976.19 573,988.62 0.75%
BOOST
NASDAQ 100
3X
LEVERAGE
DAILY ETP IE00B8W5C578 3,812,241.50 3,509,549.53 0.75%
BOOST
NASDAQ 100
3X SHORT
DAILY ETP IE00B8VZVH32 8,503,740.85 7,828,543.83 0.80%
Boost S&P
500 3x
Leverage
Daily ETP IE00B7Y34M31 1,857,365.69 1,709,890.85 0.75%
Boost S&P
500 3x
Short
Daily ETP IE00B8K7KM88 5,649,876.12 5,201,275.95 0.80%
BOOST WTI
OIL 3X
LEVERAGE
DAILY ETP IE00B7ZQC614 144,206,629.67 132,756,623.27 0.99%
BOOST WTI
OIL 3X
SHORT
DAILY ETP IE00B7SX5Y86 10,166,341.29 9,359,133.79 0.99%
BOOST GOLD
3X
LEVERAGE
DAILY ETP IE00B8HGT870 8,804,643.47 8,105,554.78 0.99%
BOOST GOLD
3X SHORT
DAILY ETP IE00B6X4BP29 2,324,923.30 2,140,324.39 0.99%
BOOST
COPPER 3X
LEVERAGE
DAILY ETP IE00B8JVMZ80 15,436,894.48 14,211,205.06 0.99%
BOOST
COPPER 3X
SHORT
DAILY ETP IE00B8KD3F05 1,796,087.97 1,653,478.58 0.99%
BOOST
NATURAL
GAS 3X
LEVERAGE
DAILY ETP IE00B8VC8061 43,472,317.02 40,020,615.05 0.99%
BOOST
NATURAL
GAS 3X
SHORT
DAILY ETP IE00B76BRD76 4,228,175.34 3,892,458.22 0.99%
BOOST
SILVER 3X
LEVERAGE
DAILY ETP IE00B7XD2195 9,626,676.20 8,862,318.11 0.99%
BOOST
SILVER 3X
SHORT
DAILY ETP IE00B8JG1787 1,531,180.69 1,409,604.94 0.99%
BOOST
PALLADIUM
1X SHORT
DAILY ETP IE00B94QLR02 401,105.50 369,257.72 0.95%
BOOST
PALLADIUM
2X
LEVERAGE
DAILY ETP IE00B94QLN63 650,135.73 598,514.96 0.95%
BOOST
NATURAL
GAS 2X
SHORT
DAILY ETP IE00B94QL251 943,237.23 868,344.19 0.70%
BOOST
NATURAL
GAS 2X
LEVERAGE
DAILY ETP IE00B94QKX96 468,052.43 430,889.06 0.44%
BOOST GOLD
2X SHORT
DAILY ETP IE00B94QKT50 190,521.99 175,394.54 0.70%
BOOST GOLD
1X SHORT
DAILY ETP IE00B94QKW89 86,428.11 79,565.72 0.44%
BOOST GOLD
2X
LEVERAGE
DAILY ETP IE00B94QKS44 412,082.05 379,362.74 0.44%
BOOST
SILVER 2X
SHORT
DAILY ETP IE00B94QL921 343,004.03 315,769.51 0.70%
BOOST
SILVER 2X
LEVERAGE
DAILY ETP IE00B94QL699 201,219.66 185,242.82 0.44%
BOOST US
TREASURIES
10Y 3X
LEVERAGE
DAILY ETP IE00BKT09032 256,991.93 236,586.77 0.30%
BOOST US
TREASURIES
10Y 3X
SHORT
DAILY ETP IE00BKS8QT65 14,502,556.99 13,351,053.96 0.30%
BOOST GOLD
ETC IE00BVFZGK87 266,757.66 245,577.11 0.25%
BOOST
NATURAL
GAS ETC IE00BVFZGL94 1,347,490.42 1,240,499.68 0.25%
BOOST WTI
OIL ETC IE00BVFZGC04 1,502,995.75 1,383,657.89 0.25%
BOOST BRENT
OIL ETC IE00BVFZGD11 896,605.87 825,415.36 0.25%
BOOST WTI
OIL 1X
SHORT
DAILY ETP IE00BVFZGF35 1,286,249.28 1,184,121.09 0.49%
BOOST WTI
OIL 2X
LEVERAGE
DAILY ETP IE00BVFZGG42 712,113.76 655,571.93 0.65%
BOOST WTI
OIL 2X
SHORT
DAILY ETP IE00BVFZGH58 937,986.96 863,510.80 0.65%
BOOST US
TREASURIES
10Y 5X
SHORT
DAILY ETP IE00BYNXPJ70 601,112.68 553,384.33 0.50%
BOOST BRENT
OIL 3X
LEVERAGE
DAILY ETP IE00BYTYHS72 585,307.89 538,834.45 0.99%
BOOST BRENT
OIL 3X
SHORT
DAILY ETP IE00BYTYHR65 871,946.65 802,714.08 0.99%
716,963,684 412,182,915
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
6. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT
OR LOSS (continued)
The net proceeds of issuance of ETPs are paid to the Swap Provider under
the swap transactions entered into by the Company to hedge its
obligations in connection with the ETPs, provided that prior to payment
the Swap Provider has delivered eligible collateral to the collateral
administrator on behalf of the Issuer. Any increase in the Issuer's
exposure to the Swap Provider resulting from the entry into, or increase
in the size of, a swap transaction must be collateralised by delivering
eligible collateral meeting the relevant requirements.
7. DEBTORS: (Amounts falling due within one year)
Year ended Year ended
31 Dec 2016 30 Dec 2015
EUR EUR
Management fees receivable 403,486 283,453
Order fees receivable 55,150 35,300
Other receivables 2,107 1,836
460,743 320,589
The Company earns a management fee on each swap transaction from the
Swap Provider. The swap management fee is calculated as defined in each
swap transaction supplement which is entered into between the Swap
Provider and the Company.
8. OTHER PAYABLES Year ended Year ended
31 Dec 2016 31 Dec 2015
EUR EUR
Management fees payable 403,489 283,455
Order fees payable to Boost Management Ltd. 55,350 35,500
Corporation tax payable - 7
458,839 318,962
9. SHARE CAPITAL - EQUITY Year ended Year ended
31 Dec 2016 31 Dec 2015
EUR EUR
Authorised
100,000 Ordinary Shares @ EUR 1 each 100,000 100,000
Issued
40,000 Shares @ EUR 0.25 each 10,000 10,000
The principal shareholder of the Company is Capita Nominee Services
Limited, holding 39,994 shares in the Company. Capita Trustee Services
Limited, Capita Nominee Services 2 Limited, Capita Nominee Services 3
Limited, Forbrit Corporate Director 3 Limited, Forbrit Corporate
Director 4 Limited and Capita Foundations Services Limited hold one
share each in the Company. All Shares are held in trust for charity
under the terms of the declaration of trust.
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
9. SHARE CAPITAL - EQUITY (continued)
The holders of ordinary shares are entitled to receive dividends as
declared from time to time and are entitled to one vote per share at
meetings. No dividends were paid during the year or proposed by the
Directors at the Statement of Financial Position date.
10. COLLATERAL RECEIVED ON TRS
Year Ended Year Ended
31 Dec 2016 31 Dec 2015
Assets EUR EUR
Bonds (Market Value) 297,157,973 101,619,232
Equities (Market Value) 340,095,594 321,544,543
Total Market Value 637,253,567 423,163,775
The Swap Provider transfers collateral to the Issuer in respect of its
obligations under a relevant swap agreement. Collateral is in the form
of government bonds or listed equities. The Bank of New York Mellon, as
collateral administrator determines the market value of the collateral
held on behalf of the Company.
Collateral consists of equities and/or bonds satisfying certain criteria
and subject to certain margin percentages and concentration limits. All
collateral as at 31 December 2016 consists of listed equities and
Government bonds (minimum rating Fitch AA and S&P BBB) (2015: Fitch AA)
meeting the following required criteria:
Equities
All equity positions provided as collateral by the Swap Provider must be
listed within one of the following indices:
STOXX Europe Large 200 (LCXP)
Nikkei 225 (NKY)
CAC 40 (CAC)
German Stock Index (DAX)
S&P 500 (SPX)
FTSE 100 (UKX)
Nasdaq 100 Stock (NDX)
STOXX Europe 600 (SXXP)
Russell 1000 (RIY)
Russell 2000 (RTY)
S&P/TSX Composite (SPTSX)
IBEX 35 (IBEX)
FTSE MIB (FTSEMIB)
AEX (AEX)
Swiss Market Index (SMI)
Hang Seng (HSI)
Hang Seng China Enterprises (HSCEI)
S&P /ASX 200 (AS51)
Bonds
Money Market Companies: AAA Government or Treasury money market
companies only with no asset backed securities or collateralised debt
obligations.
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
10. COLLATERAL RECEIVED ON TRS (continued)
Sovereign Fixed income: Stripped and unstripped national bonds
issued by one of the following countries:
-- Stripped and unstripped national bonds issued by USA, G10 and other
European government bonds with minimal rating of AA
-- Supranational bonds with a L-T issuer rating not lower than AAA
-- US Agencies 100 per cent backed by the US Government
11. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
(a) Fair value of financial instruments
Fair Value Measurement Principles of ETPs
The price per ETP is calculated daily to reflect the daily change in the
relevant Index of the ETP, and will take into account all applicable
fees and adjustments. On the issue date of the class, the price per ETP
will be equal to its Issue Price. On any Valuation Date thereafter, the
price per ETP is calculated according to a formula which reflects the
price per ETP on the immediately preceding valuation date, and adjusted
by:
1. the change in the level of the Index since such preceding valuation date,
2. Index Adjustments (if applicable), and
3. Fees.
"Index Adjustments" reflect any cash borrowing costs, cash lending
revenues, stock borrowing costs, revenues on collateral or costs of
transaction taxes, which are not already reflected in the Index. Costs
and revenues such as these would be incurred by a hypothetical investor
seeking to gain a leveraged or a short exposure to a Benchmark Index.
Derivatives
Derivatives comprise TRSs and are valued at fair value utilising
predefined formulae and market prices consistent with the ETP valuation
process. In the absence of readily available market prices the Swap
Provider will provide the inputs for the valuation. Where possible
management independently calculate the fair value and verify to the Swap
Providers valuation and any variation is investigated. The valuation
determined by the swap counterparty may be based on assumptions of
market conditions at the time of valuation, similar arms' length market
transactions if available, reference to the current fair value of
similar instruments and a variety of different valuation techniques such
as the discounted cash flow techniques, option pricing models or any
other valuation technique that provides a reliable estimate of prices
obtained in actual market transactions.
The fair value of financial instruments carried at fair value is
determined according to the following hierarchy:
(i) Level 1: Financial instruments, whose values are based on quoted
market prices in active markets, and therefore classified within level
1, include active listed equities and exchange traded derivatives.
Quoted prices for these instruments are not adjusted.
(ii) Level 2: Financial instruments that trade in markets that are not
considered to be active but are valued based on quoted market prices,
dealer quotations or alternative pricing sources supported by observable
inputs are classified within level 2. These include investment-grade
corporate bonds and over-the-counter derivatives. As level 2 financial
instruments include positions that are not traded in active markets
and/or are subject to transfer restrictions, valuations may be adjusted
to reflect illiquidity and/or non-transferability, which are generally
based on available market information.
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
11. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (continued)
(a) Fair value of financial instruments (continued)
(iii) Level 3: Financial instruments classified within level 3 have
significant unobservable inputs, as they trade infrequently. Pricing
inputs are unobservable for the financial instrument and include
situations where there is little, if any, market activity for the
financial instrument. As observable prices are not available for these
securities, the Company has used valuation techniques to derive the fair
value, if applicable.
The Company's policy is to recognise transfers into and transfers out of
fair value hierarchy levels as at the last day of the accounting period.
There were no transfers during the year between levels of the fair value
hierarchy for financial assets which are recorded at fair value.
At the reporting date the TRS and ETPs are classed as level 2 as all
inputs are observable.
Level 1 Level 2 Level 3 Net Total
Quoted price Valuation Valuation
31 December 2016 EUR EUR EUR EUR
Financial Assets at Fair Value
TRS - Commodities - 275,955,453 - 275,955,453
TRS - Equities - 235,582,517 - 235,582,517
TRS - Fixed Income - 84,248,830 - 84,248,830
TRS - FX - 3,587,857 - 3,587,857
TRS - Other - 6,175,494 - 6,175,494
Total - 605,550,151 - 605,550,151
Level 1 Level 2 Level 3 Net Total
Quoted price Valuation Valuation
31 December 2016 EUR EUR EUR EUR
Financial Liabilities at Fair Value
ETPs - Commodities - (275,955,453) - (275,955,453)
ETPs - Equities - (235,582,517) - (235,582,517)
ETPs - Fixed Income - (84,248,830) - (84,248,830)
ETPs - FX - (3,587,857) - (3,587,857)
ETPs - Other - (6,175,494) - (6,175,494)
Total - (605,550,151) - (605,550,151)
There have been no transfers between levels 1 and 2 during the year
ended 31 December 2016.
Level 1 Level 2 Level 3 Net Total
Quoted price Valuation Valuation
31 December 2015 EUR EUR EUR EUR
Financial Assets at Fair Value
TRS - Commodities - 233,553,560 - 233,553,560
TRS - Equities - 146,895,998 - 146,895,998
TRS - Fixed Income - 25,566,825 - 25,566,825
TRS - FX - 6,166,532 - 6,166,532
Total - 412,182,915 - 412,182,915
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
11. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (continued)
(a) Fair value of financial instruments (continued)
Level 1 Level 2 Level 3 Net Total
Quoted price Valuation Valuation
31 December 2015 EUR EUR EUR EUR
Financial Liabilities at Fair Value
ETPs - Commodities - (233,553,560) - (233,553,560)
ETPs - Equities - (146,895,998) - (146,895,998)
ETPs - Fixed Income - (25,566,825) - (25,566,825)
ETPs - FX - (6,166,532) - (6,166,532)
Total - (412,182,915) - (412,182,915)
There have been no transfers between levels 1 and 2 during the year
ended 31 December 2015.
(b) Risk management
The Company is exposed to a variety of financial risks as a result of
its activities. These risks include interest rate risk, credit
/counterparty risk, market risk, price risk, currency risk and liquidity
risk.
The Company has attempted to match the properties of its financial
liabilities to its financial assets, to avoid significant elements of
risk generated by mismatches of investment performance against its
obligations together with any maturity or interest rate risk. The
Company uses the net proceeds of the issuance of ETPs to enter into a
TRS transaction to hedge its payment obligations in respect of each
Class of the ETPs with one or more Swap Providers once the Swap Provider
has delivered eligible collateral. The TRS for each Class of ETPs will
produce net cash flows to service all of the Company's payment
obligations in respect of that Class. This provides a hedge for the
Company against market risk, price risk, currency risk and liquidity
risk.
This hedge is executed through the company's activities as described
above and through its agreements with its counterparties, including in
particular the Swap Providers, the Collateral Administrator and
Authorised Participants. Certain of the Company's daily operational
activities and processes are outsourced to Capita International
Financial Service (Ireland) Limited. See "Operational Risk" section
below.
The risk profile of the Company is such that market, credit, liquidity
and other risks of the investment securities are borne fully by the
holders of ETPs issued. The ETPs issued are initially recorded at the
value of the net proceeds received and are carried as financial
liabilities at fair value through profit or loss. The ultimate amount to
be repaid to the ETP holders will depend on the proceeds from the
related TRS. All substantial risks and rewards associated with the
performance of the TRS are ultimately borne by the ETP holders.
Therefore any change in risk variables would not affect the equity or
the results of the Company.
Following on below is an analysis and description of the risk types.
(c) Operational Risk
Operational risk is the risk of direct or indirect loss arising from a
wide variety of causes associated with the Company's processes,
personnel and infrastructure, and from external factors other than
credit, markets and liquidity issues such as those arising from legal
and regulatory requirements and generally accepted standards to
corporate behaviour.
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
11. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (continued)
(c) Operational Risk (continued)
Operational risks arise from all of the Company's operations. The
Company was incorporated with the purpose of engaging in those
activities outlined in the preceding paragraphs. Certain management and
administration functions are outsourced to Capita International
Financial Services (Ireland) Limited and Boost Management Limited.
The Company is also exposed to operational risks such as custody risk.
Custody risk is the risk of loss of collateral held in custody
occasioned by the insolvency or negligence of the collateral
administrator. Although an appropriate legal framework is in place that
eliminates the risk of loss of value of the securities held by the
custodian, in the event of its failure, the ability of the Company to
transfer the securities might be temporarily impaired.
(d) Credit risk
Credit/Counterparty risk refers to the risk that each counterparty to a
Swap Agreement will default on its contractual obligations as Swap
Provider resulting in the Company being unable to make payment of
amounts due to the ETP holders. Accordingly, the Company and the ETP
holders are exposed to the creditworthiness of each relevant Swap
Provider.
In order to mitigate this risk the Swap Provider will collateralise its
obligations to the Issuer with eligible collateral being delivered with
respect to the Issuer's net exposure to the Swap Provider in respect of
all swap transactions entered into. Collateral is monitored on a daily
basis with the aggregate euro market value of eligible collateral
required to be transferred to the Issuer by the relevant Swap Provider
in respect of any London Business Day calculated based on the Issuer's
net exposure to the Swap Provider in respect of each swap transaction
entered into with that Swap Provider daily (converted, if applicable,
into euros at the prevailing currency exchange rate).
At the reporting date, the Company's investment securities at fair value
through profit or loss were concentrated in the following asset types:
2016 2015
EUR EUR
TRS - BNP Arbitrage S.N.C. 605,550,151 412,182,915
(credit rating as at date of signing of
financial statements S&P: A (2015: A))
The Collateral Administrator for all collateral held on 31 December 2016
is The Bank of New York Mellon (credit rating as at date of signing of
financial statements S&P: A (2015: A)).
The Company's cash is held at Allied Irish Banks Plc (credit rating as
at date of signing of financial statements S&P: BBB- (2015: BB+)) in
Ireland. The Directors feel that there is minimal risk to the Company by
holding the Company cash with the one bank, as the Company has minimal
cash held in the bank account at any given time.
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
11. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (continued)
(e)(i) Market risk
The Company's liabilities in respect of the ETPs issued is referenced to
various equity and commodity indices and is managed by the Company by
entering into a TRS with swap providers which exactly match the
liability created by the issue of ETPs. If the price of an underlying
index has gone up/down 5%, the prices of the ETPs and TRSs tracking that
index will go up/down depending on the "Product Leverage Factor" (as
defined in the base prospectus), in accordance with the formula for the
price of the ETP in the base prospectus. For example, if the Product
Leverage Factor is +3 then if the price of the underlying index has gone
up/down by 5% over a period of one day, then both the ETP's price and
the price of the matching TRS will go up/down respectively by 15% on
that day (neglecting fees and funding and borrowing adjustments as
detailed in the base prospectus). Any movement in the value of the ETPs
issued will be offset by an equal movement in the matching TRS.
Therefore the Company's sensitivity to market movements is fully hedged.
(e)(ii) Interest rate risk
As the Company has entered into TRS to match the ETPs in issue there is
deemed to be no interest rate risk to the Company.
The Company holds a current account at Allied Irish Banks Plc in
Ireland. Due to the level of cash held in the account the Directors do
not believe that any move in interest rates would affect the operations
of the Company.
(e)(iii) Currency risk
Currency risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in foreign
exchange rates. As the Company has entered into TRS to match the ETPs in
issue there is deemed to be no currency risk to the Company.
(e)(iv) Price risk
Price risk is the risk that the value of financial instruments will
fluctuate as a result of changes in market prices, whether caused by
factors specific to an individual investment, its issuer or all factors
affecting all instruments traded in the market. The Company does not
consider price risk to be a significant risk to the Company as any
fluctuation in the value of financial assets designated at fair value
through profit or loss held by the Company will be offset by movements
in the fair value of the issued ETPs.
Sensitivity Analysis
Any changes in the values of the TRS held by the Company would not have
any effect on the equity or profit or loss of the Company as any fair
value fluctuations are ultimately borne by either the swap
counterparties or the holders of the ETPs issued by the Company.
A change of 100 basis points in the underlying index of ETPs in issue at
the reporting date would have increased or (decreased) the fair value of
financial liabilities by EUR2,569,970 (2015: EUR6,302,772). A change of
100 basis points in the underlying index of TRSs entered into at the
reporting date would have increased (or decreased) the fair value of
financial assets by EUR2,569,970 (2015: EUR6,302,772).
BOOST ISSUER plc
NOTES FOR THE YEARED 31 DECEMBER 2016 (continued)
11. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (continued)
(f) Liquidity risk
Liquidity risk is the risk that the Company may be unable to fulfil its
obligations (by delivery of cash) whether expected or unexpected. The
legal maturity of the ETPs is 30 November 2062. ETPs cannot be issued
without a matching TRS being in place. The maturity profile of the TRS
is a minimum of two years with one year rolling contracts thereafter.
Should the swap counterparty wish to terminate there is a requirement
for one year notice of termination to be issued to the Company. This
allows the Company the time to obtain a new Swap Provider. If no
replacement Swap Provider can be identified the Issuer would redeem all
outstanding ETPs. ETPs can be issued and redeemed daily.
The following are the contractual maturities of financial assets as at
31 December 2016:
Carrying Less than One to More than
31 December 2016 Amount one year five years five years
EUR EUR EUR EUR
Cash and cash
equivalents 11,084 11,084 - -
Due from Swap
Provider 403,486 403,486 - -
Financial Assets at
fair value through
profit or loss 605,550,151 - 605,550,151 -
Other debtors 57,257 57,257 - -
606,021,978 471,827 605,550,151 -
Carrying Less than One to More than
31 December 2015 Amount one year five years five years
EUR EUR EUR EUR
Cash and cash
equivalents 10,611 10,611 - -
Due from Swap
Provider 283,453 283,453 - -
Financial Assets at
fair value through
profit or loss 412,182,915 - 412,182,915 -
Other debtors 37,136 37,136 - -
412,514,115 320,589 412,182,915 -
The following are the contractual maturities of financial liabilities:
Less
Carrying than One to More than
one five
31 December 2016 Amount year years five years
EUR EUR EUR EUR
Due to Manager 403,489 403,489 - -
Financial Liabilities at fair value through profit
or loss 605,550,151 - - 605,550,151
Other creditors 55,349 55,349 - -
606,008,990 458,838 - 605,550,151
BOOST ISSUER plc
NOTES FOR THE YEAR ENDED 31 DECEMBER 2016 (continued)
11. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (continued)
(f) Liquidity risk (continued)
Less One
Carrying than to More than
one five
31 December 2015 Amount year years five years
EUR EUR EUR EUR
Due to Manager 283,455 283,455 - -
Financial Liabilities at fair value through profit
or loss 412,182,915 - - 412,182,915
Other creditors 35,507 35,507 - -
412,501,877 318,962 - 412,182,915
(g) Offsetting Financial Assets and Financial Liabilities
The Company does not offset Financial Assets and Financial Liabilities.
These are presented separately in the Statement of Financial Position.
Financial assets and liabilities are offset and the net amount presented
in the Statement of Financial Position when, and only when, the Company
has a legal right to set off the amounts and intends either to settle on
a net basis or to realise the asset and settle the liability
simultaneously. Income and expenses are presented on a net basis only
when permitted by the accounting standards, or for gains and losses
arising from a group of similar transactions.
Financial assets and liabilities subject to offsetting, enforceable
master netting agreements and similar agreements:
As at 31 December 2016:
Gross Amount
of recognised Net Amount of Financial
financial Amount of recognised financial assets set recognized financial instruments
assets off in the statement of financial position assets set off in the statement of financial position received Net Amount
EUR EUR EUR EUR EUR
Financial Assets at fair value through profit or loss 605,550,151 - 605,550,151 605,550,151 -
Gross Amount
of recognised Amount of recognised Net Amount of Financial
financial financial liabilities set recognized financial instruments
liabilities off in the statement of financial position assets presented in the statement of financial position pledged Net Amount
EUR EUR EUR EUR EUR
Financial Liabilities at fair value through profit
or loss 605,550,151 - 605,550,151 - 605,550,151
BOOST ISSUER plc
NOTES FOR THE YEAR ENDED 31 DECEMBER 2016 (continued)
11. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS (continued)
(g) Offsetting Financial Assets and Financial Liabilities
(continued)
As at 31 December 2015:
Gross Amount
of recognised Net Amount of Financial
financial Amount of recognised financial assets set recognized financial instruments
assets off in the statement of financial position assets set off in the statement of financial position received Net Amount
EUR EUR EUR EUR EUR
Financial Assets at fair value through profit or loss 412,182,915 - 412,182,915 412,182,915 -
Gross Amount
of recognised Amount of recognised Net Amount of Financial
financial financial liabilities set recognized financial instruments
liabilities off in the statement of financial position assets presented in the statement of financial position pledged Net Amount
EUR EUR EUR EUR EUR
Financial Liabilities at fair value through profit
or loss 412,182,915 - 412,182,915 - 412,182,915
12. POST BALANCE SHEET EVENTS
There were no significant events since 31 December 2016.
13. COMMITMENTS AND CONTINGENCIES
The Company had no commitments or contingencies as at 31 December 2016.
14. RELATED PARTY TRANSACTIONS
Boost Management Limited provides management services to the Company.
The Company paid fees for such services amounting to EUR4,012,874 (2015:
EUR2,528,912) to Boost Management Limited during the year ended 31
December 2016.
In addition, Boost Management Limited pays directly to Monte Titoli
(Borsa Italiana) the Italian Financial Transaction Tax ("FTT") due from
the Company in respect of the ETPs listed in the Borsa Italiana. The
Company reimburses Boost Management Limited upon receipt of the FTT from
the Authorised Participants.
Capita International Financial Services (Ireland) Limited ("Capita")
provides services such as Accounting and Reporting, Company Secretarial,
Issuing and Paying Agent and other administration services to the
Company. John Walsh and Lisa Hand are both employees of Capita and
directors of the Company. Boost Management Limited, in respect of the
aforementioned services, paid fees amounting to EUR140,400 (2015:
EUR128,373) to Capita during the year ended 31 December 2016.
Other than the above, there were no related party transactions during
the year under review.
BOOST ISSUER plc
NOTES FOR THE YEAR ENDED 31 DECEMBER 2016 (continued)
15. APPROVAL OF FINANCIAL STATEMENTS
The Directors authorised the financial statements for issue on 27 April
2017.
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Boost Issuer PLC via Globenewswire
http://www.boostetp.com/
(END) Dow Jones Newswires
April 28, 2017 07:40 ET (11:40 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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