stnemtsevnI ELPMET EMORHC
12/60/03 - 02/70/10
2021
Annual Report
MACH 1 FUND
DISCLAIMER CHROME TEMPLE Investments Pty Ltd ACN 640 888 026 (Investment Manager), a corporate authorised representative (number 001284056) of Specialised Investment and Lending Corporation Pty Ltd ACN 149 520 918 (AFS licence number 407100) (Trustee and AFSL Holder). The authority of the Investment Manager is limited to general advice and deal by arranging services to wholesale clients relating to the CHROME TEMPLE Investments Mach 1 Fund (Fund) only. Specialised Investment and Lending Corporation Pty Ltd ACN 149 520 918 is the trustee of the Fund and the issuer of the information memorandum and supplementary information memorandums. This document contains general information only and is not intended to provide any person with financial advice or offer of any kind. Prospective investors should carefully consider the contents in the information memorandum and supplementary information memorandums in full and seek professional advice prior to making any decision regarding an investment in the Fund. No reliance may be placed on this document for any purpose nor used for the purpose of making a decision about a financial product or transaction. Information relating to the Fund contained in this document has been prepared without taking into account the objectives, circumstances, financial situation or needs of any person, and may differ to information contained in the information memoranda. This document may also contain forward looking statements regarding our intent, belief or current expectations with respect to market conditions. Past performance and/or forward-looking statements are not a reliable indicator of future performance. Except as required by law and only to the extent so required, neither the Investment Manager, Trustee, AFSL Holder nor its affiliates warrant or guarantee, whether expressly or implicitly, the accuracy, validity, timeliness, merchantability or completeness of any information or data (whether prepared by us or by any third party) within this document for any particular purpose or use or that the information or data will be free from error. Further, the Investment Manager, Trustee and its affiliates expressly disclaim any responsibility and shall not be liable for any loss, damage, claim, liability, proceeding, cost or expense arising directly or indirectly and whether in tort (including negligence), contract, equity or otherwise out of or in connection with or from the use of the information in this document.
CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page i
REFERENCES IMPORTANT REFERENCE NOTE ON ANY NUMERICAL FIGURES: Past performance is not indicative of future performance and the expected returns of the Fund may not occur as expected or at all. An investor's balance in the Fund may decrease as well as increase in value. All statements that indicate expressly or by implication an expectation of investment returns are based on reasonable assumptions and commercial judgement and no representation is made or assurance given that such statements, views, projections or forecasts are correct or that the expected returns will arise or that investment balances in the Fund may not decrease. You must read the Disclaimer and the contents of the Information Memorandum in full to understand the risks involved in an investment in the CTi Fund.
1. Past performance is not indicative of future performance. 2. Returns are calculated before fees. Mach 1 Fund returns represent the percentage increase in value as at 30 June 2021 vs acquisition price ("Return"). All returns stated in relation to the Fund and the Fund's vehicle fleet are on this basis. Any references to a 45-day return for the Fund and the Fund's vehicles are based on the same calculation noted herein, with '45-days' serving as a contextual reference on the number of days between the first Fund vehicle acquisition of 17 May 2021 and 30 June 2021. 3. Results for the S&P/ASX 200, FTSE100, S&P500 and Gold (in AUD) indices represent the return from 17 May 2021 to 30 June 2021. For HAGI and Hagerty indices, returns are based on values from 01 May 2021 to 30 June 2021. 4. Hagerty Online. "8 lessons we learned at Amelia Island 2021." May 2021. 5. Historic Automobile Group International (“HAGI”) 6. ABC News. "COVID drives up demand for cars." July 2021. 7. Autoweek. "Here's Why Used Car Prices Are Skyrocketing." June 2021. 8. Hagerty Online. "In-person auctions haven't gotten back to where they were before the pandemic." May 2021. 9. Hagerty Online. "2021 is shaping up to be the best year, ever, for classic car auctions." July 2021. 10. Target returns (net of all fees and expenses) are not a promise or a forecast and actual returns may be above or below target range. Past performance is not a reliable indicator of future performance. 11. All statements that indicate expressly or by implication an expectation of investment returns are based on reasonable assumptions and commercial judgement and no representation is made or assurance given that such statements, views, projections or forecasts are correct or that the expected returns will arise or that investment balances in the Fund may not decrease. 12. Hagerty Online. "The people driving up prices of youngtimer cars." June 2021. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page ii
dnuF 1 hcaM iTC
TABLE OF CONTENTS LETTER FROM THE PORTFOLIO MANAGER
01
Lex Pedersen takes a look at the Fund's achievements to date and what the current market means for the Fund
PORTFOLIO IN REVIEW TROPER LAUNNA 12YF
04
Overview of the Fund's portfolio composition, performance to date and current industry trends
THIS QUARTER'S PODIUM 12
Meet some of the portfolio's prized acquisitions
FINANCIAL STATEMENTS 20
Management accounts prepared by the Custodian
OUTLOOK 37
CHROME TEMPLE Investments Mach 1 Fund
A snapshot of where the strategy is pointed.
FY21 Annual Report
Page iii
As at 30 June 2021
dnuF 1 hcaM iTC
KEY FIGURES FUM
$3.8 million $3.0 million VEHICLE RETURN
1,2
11.4%
TROPER LAUNNA 12YF
VEHICLE VALUATION @ 30 JUNE
MESSAGE FROM THE PORTFOLIO MANAGER Welcome to the first CTi Mach 1 Fund Annual Report. It is with great excitement that I share with you the early successes, results and trajectory already experienced in the Fund's first six weeks.
KEY FUND 1,2 HIGHLIGHTS CTi reputation across buyers & sellers builds
A dozen of the finest examples of tomorrow's Validated acquisition classics are already safely tucked away under the strategy with an 11.4% Fund's custodianship, with several more already Return that was the product of strong added in FY22 and more in the crosshairs. Through vehicle sourcing 30 June, vehicles acquired by the Fund have Trading Returns already generated an +11.4% Return as we deliver on our on track for FY22 1,2 promised acquisition capabilities. Further capital Vehicle appreciation trajectory set to appreciation is now intended to be delivered continue into future through unemotional trading of these assets coupled with the value expansion to be enjoyed as demand for these calibre specimens continues to show potential for growth. You will often hear me refer to yesterday's price, today's price, and tomorrow's price when forecasting value movements, and it's because this is important for yielding good results in any market condition, but especially in the current environment where commuters are influencing values more than collectors. Global media remains abuzz about the market surge across new, used and classic cars. We see the new and used car market (commuter market) set to experience a readjustment when the world establishes some normality around supply and demand. And like a wolf amongst the sheep, we remain bullish that classic and enthusiast cars will continue to appreciate as we believe they are influenced by more structural and lasting drivers than the commuter market. For the Fund, it means early wins are not the only expected wins we are at the beginning of a long journey of continued value expansion. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 1
Message from the Portfolio Manager Continued
Restoring superconductor manufacturing and battery destined precious metals will only fuel momentum to the divergence of value trajectory for commuter vs collector assets. As ever, the urgency to capitalise whilst others fear a bubble is a key element of our opportunity - unlike new cars, there is a finite pool of supply, particularly in the examples of distinction.
And the launch of CHROME TEMPLE Motors (CTm), an industry-leading vehicle auction platform, further fortifies the Fund for strong acquisition, and importantly, divestment channels. We’re extremely excited to maintain and lift this early enjoyed momentum and thank you for your ongoing support.
"Buckle up, these early results are just the As demand continues to expand beyond beginning as we cement ourselves as the two generations of enthusiasts, headed towards three, we are in a commanding market leader in this emerging space." position (as planned) and we find ourselves supremely poised to capitalise on our investment thesis. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Thanks, Page 2
VEHICLE PERFORMANCE CTi valuations are based on the mid-point of the third-party assessment valuation range.
1,2,3
RETURNS SINCE 17 MAY 2021 11.4%
3.5x
3.0%
2.8x
4.1%
3.7% 1.3%
3.2% 0.1% (1.65%)
CTI MACH 1 FUND
HAGI TOP INDEX
HAGERTY MARKET INDEX
The Mach 1 Fund enjoyed an 11% valuation lift in 45 days, with all Mach 1 Fund classes experiencing positive gains.1,2 This was largely driven by the first of three valuecreating Fund strategies - sharp acquisition.
S&P/ASX 200
CLASS
FTSE 100
S&P 500
QTY
FUM WEIGHT
GOLD
RETURNS 1,2
Mk-I Mk-II Mk-III Mk-IV
3 5 2 0
27% 32% 19% 0%
VEHICLES
10
78%
11%
Cash + GST
n/a
22%
n/a
10% 15% 7% n/a
Buying well during the current bubble requires an extensive network to source the best examples off-market, and close monitoring of price movements and collector sentiment to identify targets that have short and long term return potential whilst still priced at pre-bubble prices. These types of target acquisitions do exist in the current environment, and we believe that the Fund has the reach, resources and knowledge to find and capitalise on these opportunities. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 4
VEHICLE PERFORMANCE CONTINUED With a 41% fleet value weighting (as outlined in the Portfolio Composition), the Mk-II class has the strongest representation amongst vehicle classes for the simple reason that the Fund was able to source well in this class, as evidenced by the 15% Return generated in the first valuation.1,2 Mk-III enjoyed a more modest 7% increase (vs acquisition price) with the transaction of a Ferrari F12 that along with the Aston Martin DBS account for 19% of FUM. Although the F12 only generated a 5% Return, it has promising significant mid-tolong term performance potential. 1,2 Short-term gains can still be expected as buying well remains a key Fund pillar, but as the Fund evolves, trading and capital appreciation strategies are expected to become equally important to future performance. The Mk-IV (Inside Line) trading strategy, commencing in Q1 FY22, is expected to become a significant source of short-term wins. And as vehicle hold strategies kick in, significant long-term capital appreciation can be expected even if subsequent months see more modest gains on existing vehicles. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 5
PORTFOLIO COMPOSITION As at 30 June 2021
Mk-III 24.8%
Mk-I 34% % of Vehicle Weight
% of FUM Mk-I Mk-II Mk-III Mk-IV
27% 32% 19% n/a
TOTAL VEHICLE % OF FUM
78%
CASH + GST % OF FUM
22 %
Mk-II 41.2%
Mk-III 20%
Vehicle Quantity Mk-I Mk-II Mk-III Mk-IV TOTAL FUND VEHICLES
3 5 2 0
Mk-I 30% % of Vehicle Quantity
10
Mk-II 50% CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 6
MARQUE PROFILE As at 30 June 2021
% OF FUM
% RETURNS SINCE MAY
(Rounded)
FERRARI
%84.6 %33.6
ASTON MARTIN
%33.6
HSV
%13.1
%33.6
DUCATI
%13.1
%33.6
2%
JAGUAR
%44.1
4%
17.0% 11.8%
%44.1
6%
6.5%
%62.1
8%
LAMBORGHINI
%75.0
11%
MERCEDES BENZ
%88.0
22%
%62.1 %47.0
25%
1,2,3
9.6% 13.1% 13.5% 9.6%
Hagerty HAGI Mach 1 Fund CTi marque returns compared to most relevant marque indices reported on by HAGI and Hagerty
Ferrari generated the smallest returns for the Mach 1 Fund partly because the weighting and returns were influenced by the purchase of the F12 on 24 June 2021 (excluding the F12, Ferrari generated an 8% Return).1,2 When comparing May to June, both indices also experienced a similar trend with Ferrari returning some of the lowest returns across all marques. From an industry perspective, this seems to be a temporary overcorrection to recent trends that lead to May having the highest values in the indices for Ferrari in the last 12 months. Moving forward, we are bullish on the anticipated performance of Ferrari, particularly the manual transmission variants which our internal analysis indicate are outpacing their automatic counterparts by 2x presently in market and climbing. Two such examples are presently inbound. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 7
Marque Profiles Continued Mercedes-Benz is having a welcome surge. After seeing continuous monthly decline on the international HAGI MBC Index (see figure below), June represented the first time since December 2020 that the marque showed growth. And in the recent May Amelia Island auction, Mercedes-Benz beat estimates by 33%, with all but one of the 1,4 13 cars offered, sold. So, it is not surprising that the marque generated a 17% Return for the Fund,1,2 driven by the second AMG CLK63 Black Series. With only 32 of these brought to Australia, two of which are now owned by the Fund, the Fund has the opportunity to not only capitalise on the upside potential but also influence valuation as time only further diminishes supply. Notably absent from the Fund marques is Porsche. Having enjoyed a strong run over recent years, preceding even the COVID-19 pandemic, the Fund has lower hanging opportunities to capitalise on before diversifying into the Stuttgart marque. Further, this manufacturer will likely be one of the last bastions of naturally aspirated motors, so further 'awakening' may be somewhat delayed when compared to peers. HAGI Marques Indexed to 100
1,5
+0.74%
$108
$107 $106
+0.57%
$100
$96 % 8 4.6 +
HAGI Lamborghini (LPS) Index HAGI Ferrari ((F) Index HAGI Mercedes-Benz Classic (MBC) Index
$88 July 2020 CHROME TEMPLE Investments Mach 1 Fund
Dec 2020 FY21 Annual Report
May 2021
June 2021 Page 8
vehicle market overview
WHERE WE ARE NOW The Australian domestic vehicle market has seen an unprecedented level of activity, with prices 37% above pre-pandemic highs set last February and new car sales up 68% year over year.1,6 This seemingly insatiable frenzy is being driven by the commuter vehicle market where, thanks to COVID, supply is limited and demand has increased. The lack of new car manufacturing and super-conductor components has had far-reaching implications on shortages in both the new and used car market, as the lack of new cars means one of the largest suppliers of used cars (rental companies) has been unable to buy new cars and has had to hold onto inventory that would normally feed the used car market. Add to this that stimulus packages have further shortened supply by reduced repo 1,7 collections.
CHROME TEMPLE Investments Mach 1 Fund
As supply has restricted, demand has increased, buoyed by a surplus of dry-powder from budgets usually reserved for international travel and other lavishes being steered towards indulgences closer to home (like road trips). As concerns over the end of the current "car bubble" draws nearer, some owners are hurriedly listing their cars to capitalise on the current environment. Some of this "new norm" has passed into the vehicle collector market - the average selling price at auctions rose 28% vs last year. But1,8 this is misleading to what the Fund can expect. Vehicles in the $50k-$100k price range are driving this trend. Outside of this range, vehicle pricing growth has been less influenced1,9 by the current market bubble.
FY21 Annual Report
Page 9
Market Overview Continued The key to generating continued short and long-term gains in this bull market is buying well, and knowing when to release to market. For this reason, the acquisition efforts for the Fund have been cast wide and far across open markets, private networks and wholesale channels, with sourcing efforts largely successful across all these avenues. Encouragingly, a number of private collectable sellers have expressed a preference to sell to the Fund, preferring a buyer that understands the value of the asset and will continue to preserve and grow its value over time over the 'fair weather' investors seen today. In truth, many sellers are motivated to sell to a buyer that negates the need for an on-market frenzy of inquiry, 'tyre kickers' and 'keyboard warriors'. Sales by Price Brackets (2020 vs 2021) S A L E S
+38%
+71%
+86%
1,9
(44%)
+54%
$1,500mm
$1,064mm
Current target average vehicle price range
$192mm
$113mm $70mm $38mm
$44mm $25mm
Price Bracket
$0 to <$50k
$50k to <$100k
$100k to <$250k
$250k to <$1,000k
$3mm
$4mm
$1,000k +
International markets have been similarly affected by pandemic frenzies, with shared forces, however at about 15% less explosive as Australian patterns, according to our internal analysis. Herein presents an opportunity to expand the Fund's acquisition reach as FUM builds. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 10
first look
THIS QUARTER'S PODIUM Each quarter, three Fund vehicles will be featured in depth.
2008 Mercedes-Benz AMG CLK63 1995 Lamborghini Diablo 2016 Jaguar Type F Project 7
CHROME TEMPLE Investments Mach 1 Fund
Bucking the obvious choice of highlighting the three cars with the highest returns, this quarter's podium round-up features three cars that are downright envy inducing. They earned their place on the podium for being unapologetically outrageous (as its name suggests, the Diablo is temptation on wheels), sleek and steeped in racing pedigree (the Project 7 is an ode to Jaguar's 7 Le Mans wins) and an automotive powerhouse (AMG CLK63-BS). FY21 Annual Report
Page 12
AMG CLK63 Black Series # Produced: 500 AU Delivered: 32 Year produced: 2008 Transmission: Automatic Horsepower: 500hp Odometer: 31,083 km Provenance: Impeccable Service History: FSH
Patterned on the CLK63 used as the safety car at Formula 1 races, the Black Series is immediately identifiable by its aggressive air-scoop-rich front end and muscular wheel arches. The CLK63 is not for the fainthearted, as can be gleaned upon start up and the distinct absence of rear seats. Wrestle with it at your own peril, it can and has punished many a punter (hence constricting supply!). Mercedes Benz is steeped in racing pedigree and AMG is the spearhead of these efforts in the modern
CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 13
20%
1
30 June Return
107%
11
Target Return
4yrs
Target Hold
"The CLK63 Black Series is intriguing, suitably bonkers and surprisingly capable"
Car Magazine, UK
era. Homologation in certain race classes requires road going variants of race cars to be produced, in almost Frankenstein manners. Here we have an example of exactly that in the CLK 63 Black Series.
Target Return +107% 11 V A L U E
MSRP Acquisition Price
The phenomenal engine is an SLS 2008 May 2021 2024 derived 6.2L V8 with smooth yet angry undertones. The M159 engine was the first developed from the ground up by AMG with 500hp and a 0-100 sprint in 4.3 seconds. Not necessarily impressive by today's standings but when experienced in the flesh remains an analogue experience that can stand the hairs up on the back of your neck. Just 500 examples were built worldwide with 32 reaching our shores, several of which have met their designed fate - raced/thrashed. The Mach 1 Fund owns #1 and #2 of these vehicles. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 14
LAMBORGHINI DIABLO Lamborghini has traditionally been more about outrageous speed and macho styling than practicality and ease of use, especially when it comes to its range topping V12 models. And the Diablo is no exception.
# Produced: 900 (est)
The scissor doors, wide rear haunches and cabforward design were pure Lamborghini. The smoother yet still imposing lines were initially the design work of Marcello Gandini but, when Lamborghini was sold to Chrysler midway through development, Tom Gale took over for the finishing touches.
Provenance: Strong
CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Year produced: 1995 Transmission: Manual Horsepower: 485hp Odometer: 7,6481 km Service History: PSH
Page 15
12%
Return 30 June
74%
Target Return
3yrs
Target Hold
1
11
"You buy a Ferrari when you want to be somebody. You buy a Lamborghini when you are somebody." Frank Sinatra
The Diablo had an 11-year production life and was the first Lamborghini production to reach 200mph.
V A L MSRP U E
Target Return +74% 11
With Lamborghini changing ownership three times in quick Acquisition Price succession, the Diablo, aptly named after a famous fighting bull 1995 May 2021 2024 became known as one of the most entertaining experiences to leave the Sant 'Agata Bolognese factory. This RWD variant produced in 1995, is often regarded as the best of the series and practically came with the warning label that driving the car required a racing driver’s reflexes and a lot of self-control. With less than 9,000km on the clock, it would be hard to find one with lower mileage or a better example, in such a desirable specification. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 16
JAGUAR PROJECT 7 # Produced: 250 (total) AU Delivered: 10 Year produced: 2016 Transmission: Automatic Horsepower: 575hp Odometer: 1,148 km Provenance: Impeccable Service History: FSH
CHROME TEMPLE Investments Mach 1 Fund
With only 250 produced globally and 10 delivered to Australia, spotting a Jaguar F Type Project 7 is considered a rare event. The limited-edition Project 7, is a collectors’ edition sports car. It’s the fastest and most powerful Jaguar ever, capable of reaching 60mph in just 3.8 seconds and a top speed of 186mph. Designed by Jaguar's Special Vehicle Operations (SVO) team it was built with one pure purpose – driving pleasure. FY21 Annual Report
Page 17
10%
Return 30 June
65%
Target Return
3yrs
Target Hold
1
11
"Its looks were always going to be the main guide to its behaviour on the road"
Paul Newsome, Jaguar Special Vehicle Operations
Jaguar's idea for a short-screen speedster concept came to life as a way of celebrating Jaguar’s seven Le Mans wins and the achievements of the Ecurie Ecosse racing team responsible for two of them. It was also a way for Jaguar to show how far the F-Type model could be pushed to make something harder edged.
V A L U E MSRP
Target Return +65%
11
Acquisition Price
2008
May 2021
2025
The most prominent retro styling cue is the distinctive ‘hump’ behind the driver’s head which helps smooth departing air and makes the driver-side airflow quite comfortable. Its combination of high horsepower, less-than-optimal grip, and the trait that the British love in their cars above all things - hyper-reactive steering combined with rock-rigid roll control - will entertain you and blanche your passenger. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 18
CHROME TEMPLE Investments Mach 1 Fund
Annual Financial Report
For the year ending 30 June 2021
PREPARED BY
PREPARED FOR
Specialised Investment and Lending Corporation Pty. Ltd. ACN 149 520 918 Holder of AFSL number 407100
Specialised Investment and Lending Corporation Pty Ltd ATF Chrome Temple Investments Mach I Fund ABN 35 710 821 827
CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 20
DIRECTORS' REPORT CHROME TEMPLE Investments Mach I Fund | Financial Report for the year ended 30 June 2021
The directors of Specialised Investment and Lending Corporation Pty Ltd as trustee of the Chrome Temple Investments Mach I Fund (the Fund), present their report together with the financial statements of the Fund for the financial year ended 30 June 2021. Review of Operations
The Fund is an unregistered managed investment scheme pursuant to section 601 ED(2) of the Corporations Act 2001 (Cth) (Corporations Act). Since inception the Fund has issued 3,527,821 Units. The first units were issued on 17 May 2021. The Fund was established on 9 October 2020. Currency
Target Returns p.a.
Units Allocated
Value of Units
25
AUD
8% +
3,527,821
$3,525,000.00
-
-
-
3,527,821
$3,525,000.00
No. of Unitholders
Alpha Round Units Total
Unit Class
The principal activity of the Fund is to manage a portfolio of carefully selected vehicles of the present and past and apply a view of the vehicles of the future to generate strong medium to long term returns through the capital appreciation of those vehicles. There were no significant changes in the nature of the Fund's activities during the period. The Fund did not have any employees during the period. The various service providers for the Fund are detailed below: Service
Provider
Trustee
Specialised investment and Lending Corporation Pty Ltd
Custodian
Not applicable
Investment Manager
Chrome Temple Investments Pty Ltd
Fund Administrator
SILC Funds Administration Pty Ltd
CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 21
DIRECTORS' REPORT CONT'D CHROME TEMPLE Investments Mach I Fund | Financial Report for the year ended 30 June 2021
DIRECTORS
The following persons held office as directors of the Trustee during the financial year are: Koby Jones
Appointed 24 February 2011
Michelle Tay
Appointed 31 July 2012
The directors have been in office since the establishment of the Fund to the date of this report unless otherwise stated. Operating Results
The net operating profit of the Units for the year before tax was $285,268.04. Units held by the Trustee, Investment Manager or Related Parties
There were 1,000,806 units held by a related party of the Investment Manager as at 30 June 2021. Value of Scheme Assets
The Gross Asset Value (GAV) of the Fund’s assets at the end of the reporting period was $3,817,264.66 of which $731,082.83 is held in cash with the balance being investment loans. The Net Asset Value (NAV) at the end of the reporting period was $3,810,268.04. Buy Back Arrangements
As detailed in the Fund Constitution the Trustee is not under any obligation to buy back, purchase or redeem units from unitholders. Consequently, no units were redeemed by the Trustee during the reporting period. Unit Price
The Unit Price is based on the underlying value of the Fund’s assets and is calculated in accordance with the terms of the Constitution. The Unit Price (cum-distribution) as at 30 June 2021 was $1.08006. The Unit Price (ex-distribution) as at 30 June 2021 was $1.08006. Applications Pending
As at 30 June 2021 there are no applications pending. All applications received to the date of this report have been processed. Significant Changes in State of Affairs
Apart from those matters referred to in the previous sections of this Report, there have been no other significant changes to the state of affairs of the Fund (or Units) during the financial year. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 22
DIRECTORS' REPORT CONT'D CHROME TEMPLE Investments Mach I Fund | Financial Report for the year ended 30 June 2021
After Balance Date Events
No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Fund, the results of those operations, or the state of affairs of the Fund in future financial years. Likely Developments and Expected Results of Operations
The Fund will continue to be managed in accordance with the investment objectives and guidelines as set out in the governing documents of the Fund and in accordance with the provisions of the Fund Constitution. The results of the Fund's operations will be affected by a number of factors, including the performance of investment markets in which the Fund invests. Investment performance is not guaranteed, and future returns may differ from past returns. As investment conditions change over time, past returns should not be used to predict future returns. Indemnifying Officers or Auditor
During or since the end of the financial year, the Trustee has paid insurance premiums to insure the Trustee and its officers against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of the Trustee, other than conduct involving a wilful breach of duty in relation to the Trustee. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Trustee has not otherwise, during or since the end of the financial year indemnified or agreed to indemnify an officer or auditor of the Trustee or of any related body corporate against a liability incurred as such an officer or auditor. Interests in the Fund
The movement in units on issue in the Fund during the year is disclosed in the Statement of changes in equity. The value of the Fund’s assets and liabilities is disclosed on the balance sheet and derived using the basis set out in note 1 to the financial statements. The report is made in accordance with the resolution of the Directors.
Michelle Tay
Director 6 August 2021
CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 23
Statement of Financial Position Specialised Investment and Lending Corporation Pty Ltd ATF Chrome Temple Investments Mach I Fund As at 30 June 2021
ASSETS
NOTES
Bank Accounts Operations Account Total Bank Accounts
Current Assets GST
30 JUNE 2021
30 JUNE 2020
$731,082.83
$0.00
2
$731,082.83
$0.00
7
$104,795.46
$0.00
$104,795.46
$0.00
$2,981,386.37
$0.00
$2,981,386.37
$0.00
$3,817,264.66
$0.00
$0.00 $6,996.62 $0.00
$0.00 $0.00 $0.00
$6,996.62
$0.00
$6,996.62
$0.00
$3,810,268.04
$0.00
$3,525,000.00 $285,268.04 $0.00
$0.00 $0.00 $0.00
$3,810,268.04
$0.00
Total Current Assets
Non-Current Assets Investment Asset - Vehicles
5
Total Non-Current Assets
Total Assets
LIABILITIES Current Liabilities Distributions Payable Accrued Management Fees - Ongoing Provision for tax return fees
6 3
Total Current Liabilities Total Liabilities
Net Assets
EQUITY
Units on Issue Retained Earnings Current Year Earnings
Equity
The accompanying notes form part of the financial statements CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 24
Statement of Comprehensive Income Specialised Investment and Lending Corporation Pty Ltd ATF Chrome Temple Investments Mach I Fund For The Year Ended 30 June 2021
NOTES
JUNE 2021
JUNE 2020
$17.46 $172.61 $304,113.64
$0.00 $0.00 $0.00
$304,303.71
$0.00
$304,303.71
$0.00
$4,991.06 $9,552.16 $4,492.45
$0.00 $0.00 $0.00
Investment Income Investment Income - Bank Interest Investment Income - Default Interest Asset Revaluation Gain/(Loss)
2
Total Investment Income
Profit/(Loss) Before Distributi on
Expenses Insurance Management Fees - Ongoing Vehicle Acquisition & Storage Expenses
Total Expenses
$19,035.67
$0.00
$0.00
$0.00
$0.00
$0.00
$285,268.04
$0.00
Distributions To Beneficiaries Distributions to Beneficiaries
6
Total Distributions To Benefici aries
Undistributed Income/(Loss)
The accompanying notes form part of the financial statements CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 25
Statement of Cash Flows Specialised Investment and Lending Corporation Pty Ltd ATF Chrome Temple Investments Mach I Fund For The Year Ended 30 June 2021
NOTES
JUNE 2021
JUNE 2020
$17.46 $172.61 $(12,965.34)
$0.00 $0.00 $0.00
$(12,775.27)
$0.00
$(2,781,141.90) $0.00
$0.00 $0.00
$(2,781,141.90)
$0.00
$3,525,000.00 $0.00 $0.00
$0.00 $0.00 $0.00
$3,525,000.00
$0.00
Operating Activities Investment Income - Bank Interest Investment Income - Default Interest Expenses Paid Net Cash Flows from Operating Activities
Investing Activities Payment for Investment Assets Other cash items from investing activities
5
Net Cash Flows from Investing Activities
Financing Activities Proceeds from Unit Issue Payments for Unit Redemption Distributions Paid
6
Net Cash Flows from Other Activities
Net Cash Flows
$731,082.83
$0.00
Cash & Cash Equivalents Cash & cash equivalents at beginning of period Cash & cash equivalents at end of period 2
$0.00 $731,082.83
$0.00 $0.00
Net Change in cash for period
$731,082.83
$0.00
The accompanying notes form part of the financial statements CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 26
Statement of Changes in Equity Specialised Investment and Lending Corporation Pty Ltd ATF Chrome Temple Investments Mach I Fund For The Year Ended 30 June 2021
$0.00
Total Equity as at 30 June 2020
Comprehensive Income for the Year Profit/(loss) for the year Other Comprehensive Income
$285,268.04 0.00
Total Comprehensive Income for the Year
$285,268.04
Transactions with Unit Holders Applications Distributions Paid
$3,525,000.00 $0.00
Total Equity as at 30 June 2021
$3,810,268.04
The accompanying notes form part of the financial statements CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 27
Notes To The Financial Statements CHROME TEMPLE Investments Mach I Fund | Financial Report for the year ended 30 June 2021
Note 1: Significant Accounting Policies Reporting Entity
The Financial report is for the entity Chrome Temple Investments Mach I Fund (the Fund) as an individual entity. The Fund is an unlisted managed investment scheme established and domiciled in Australia. The trustee of the Fund is Specialised investment and Lending Corporation Pty Ltd, Chrome Temple Investments Pty Ltd is appointed as the investment manager of the Fund and the administrator is SILC Funds Administration Pty Ltd. Financial Reporting Framework
The Fund is not a reporting entity, because in the opinion of the directors of the Trustee, there are unlikely to exist users of the financial report who are unable to command the preparation of reports tailored to specifically satisfy all their information needs. Accordingly, this special purpose financial report has been prepared to satisfy the directors of the Trustee’s reporting requirements under the Corporations Act 2001. Basis of Preparation
The financial report is a special purpose financial report that has been prepared in accordance with the recognition and measurement requirements of all Australian Accounting Standards (including Australian Accounting Interpretations), and the disclosure requirements of AASB 101: Presentation of Financial Statements, AASB 107: Statement of cash flows and AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors. Significant Accounting Policies
The financial report is a special purpose financial report that has been prepared in accordance with the recognition and measurement requirements of all Australian Accounting Standards (including Australian Accounting Interpretations), and the disclosure requirements of AASB 101: Presentation of Financial Statements, AASB 107: Statement of cash flows and AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors. (a) Financial instruments Financial assets and financial liabilities are recognised on the Fund’s Statement of Financial Position when the Fund becomes a party to the contractual agreement and recognises changes in the fair value of the financial assets or financial liabilities from this date. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 28
NOTES CONT'D CHROME TEMPLE Investments Mach I Fund | Financial Report for the year ended 30 June 2021
Cash & Cash Equivalents Cash and cash equivalents comprise cash on hand and demand deposits and other shortterm highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Net assets attributable to unitholders Units are classified as equity in accordance with AASB 101 Presentation of Financial Statements. (b) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables in the statement of financial position are shown inclusive of GST, and accruals are shown exclusive of GST. (c) Income tax Under current legislation, the Fund is not liable for income tax provided its taxable income is fully distributed to unitholders. (d) Comparatives As the first Units were issued on 17 May 2021 there are no comparative numbers for the year ending 30 June 2020. Note 2: Cash and Cash Equivalents
Cash on deposit is held at National Australia Bank. Current interest rate is 0.10% per annum paid monthly in arrears. Interest earned on all funds form the assets of each relevant unit class accordingly. Note 3: Trustee, Administration and Ongoing Management Fees
In accordance with the Trust Deed of the Fund, the Trustee is entitled to receive: (a) a monthly trustee fee calculated as the greater of: (i) $1,750 per month*; or a stepped fee of: (ii) 0.150% per annum calculated on the first $100 million of Gross Asset Value (GAV); (iii) 0.125% per annum calculated on the next $100million; and (iv) 0.100% per annum calculated on GAV over $200million. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 29
NOTES CONT'D CHROME TEMPLE Investments Mach I Fund | Financial Report for the year ended 30 June 2021
The Administration Manager is entitled to a fee of $1,200 per month per Class of Units plus (a) $50 per month per additional class of Units; (b) $50 per distribution per investor; and (c) $50 per unit registry activity (excluding applications, distributions and reinvestments) *subject to an annual increase of 3.5% from the anniversary of the date of first issue of the Fund’s Trust Deed. The Investment Manager is entitled to the following fees: (a) A management fee of up to 2.00% per annum of the Funds Under Management (FUM) of the Fund, charged semi-annually in advance; and (b) A performance fee calculated as 20% per annum of outperformance net of fees. This fee is calculated on an annual basis and is subject to a high-water mark. The Investment Manager has agreed to pay the Trustee Fee and Administration Fee on behalf of the Fund. In the event the Investment Manager fails to pay this fee, these Fees will be paid out of the assets of the Fund. Note 4: Sundry Debtors
Sundry Debtors balance is nil. Note 5: Investment Assets
VEHICLE PORTFOLIO Vehicle purchases are detailed below: Vehicle Classification
Total Purchase Price
Currency
Mk-I
$931,000
AUD
Mk-II
$1,141,500
AUD
Mk-III
$708,000
AUD
Total
$2,780,500
The vehicle portfolio will be subject to independent asset valuation updates on a calendar quarterly basis. As at 30 June 2021 the total independent valuation of the portfolio of vehicles is $2,981,386.37. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 30
NOTES CONT'D CHROME TEMPLE Investments Mach I Fund | Financial Report for the year ended 30 June 2021
Note 6: Distributions
In the event the Investment Manager determines that it will make a cash distribution, such distributions will be calculated and paid on the date which occurs within 25 Business Days of the end of each financial year. The following distributions have been paid to 30 June 2021: Asset Class Gross Distribution
Withholding Tax
Net Distribution Paid/Payable
30 June 2021
$0.00
$0.00
$0.00
Total
$0.00
$0.00
$0.00
Period
Note 7: GST/RITC receivable
As the Fund is considered to be making financial supplies (investing in underlying assets), it is generally not entitled to claim an input tax credit (ITC) on GST paid on acquisitions. However, the GST Act allows certain acquisitions to claim a reduced input tax credit (RITC). These include: Investment Management Services (75%) Trustee Services (75%) Fund Administration Services (75%) Furthermore, GST paid on expenses related to vehicle running and storage costs are deemed to be incurred for a creditable purpose, so the Fund is able to claim the full 10% GST credits on such expenses.
CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 31
NOTES CONT'D CHROME TEMPLE Investments Mach I Fund | Financial Report for the year ended 30 June 2021
Note 8: Cashflow Information
Reconciliation of cash flows from operating activities with profit/(loss) for the year
Profit/(loss) for the year Changes in assets and liabilities: (Increase)/Decrease in Receivables Increase/(Decrease) in Payables Asset Revaluation (Gain)/Loss Cashflows from Operating Activities
30 JUNE 2021
30 JUNE 2020
$285,268.04
$0.00
$(926.29) $6,996.62 $(304,113.64)
$0.00 $0.00 $0.00
$(12,775.27)
$0.00
Note 9: Related Party Transactions Trustee
The Trustee of the Fund is Specialised Investment and Lending Corporation Pty Ltd. The Investment Manager has agreed to pay the Trustee from its own funds for the work the Trustee does in fulfilling its role. However, if the Investment Manager fails to meet its obligation to pay the Trustee, then the Trustee may deduct its fee from the assets of the Fund. Investment Manager
The Investment Manager of the Fund is Chrome Temple Investment Pty Ltd. The Investment Manager will be paid its fees from the assets of the Fund. Administrator
The Administrator is SILC Fund Administration Pty Ltd. The Investment Manager has agreed to pay the Administration Manager from its own funds for work the Administration Manager does in fulfilling its role. However, if the Investment Manager fails to meet its obligation to pay the Administration Manager, then the Administration Manager may deduct its fee from the assets of the Fund.
CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 32
NOTES CONT'D CHROME TEMPLE Investments Mach I Fund | Financial Report for the year ended 30 June 2021
Note 10: Remuneration of Auditors
For the period ended 30 June 2021 the accounts of the Fund were not subject to audit and accordingly no audit fees were paid.
Note 11: Contingent Liabilities
There are no contingent liabilities at the end of the period.
Note 12: Events Subsequent to Reporting Date
There were no other events subsequent to the reporting date that require additional disclosure.
Note 13: Trustee Details
The registered office and the principal place of business of the Trustee is: Specialised Investment and Lending Corporation Pty Ltd The SILC Group Level 9, 179 Queen Street Melbourne Victoria 3000 Australia
CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 33
DIRECTORS' DECLARATION CHROME TEMPLE Investments Mach I Fund | Financial Report for the year ended 30 June 2021
In the opinion of the directors of the Trustee, Specialised Investment and Lending Corporation Pty Ltd, it is unlikely that there exist users who are unable to command the preparation of reports so as to satisfy, specifically, all of their information needs and therefore, have determined that the Fund is not a reporting entity. These special purpose financial statements have been prepared in accordance with the accounting policies described in Note 1 to the financial statements to satisfy the directors’ reporting requirements under the Fund’s Trust Deed. In the opinion of the directors of the Trustee: (1) the financial statements, comprising the statement of comprehensive income, statement of financial position, statement of cash flows, statement of changes in equity, and accompanying notes, are in accordance with the Corporations Act 2001: and (a) comply with Accounting Standards as described in Note 1 to the financial statements and Corporations Regulations 2001; and b) give a true and fair view of the Fund’s financial position as at 30 June 2021 and of its performance for the period on that date in accordance with the accounting policies described in Note 1 to the financial statements. (2) there are reasonable grounds to believe that the Fund will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors of Specialised Investment and Lending Corporation Pty Ltd by:
Michelle Tay
Director 6 August 2021
CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 34
LEX PEDERSEN, PORTFOLIO MANAGER
The automotive revolution gathers momentum as the awakening begins...
FY22 FOCUS As the automotive revolution continues on its exponential adoption, the focus for the Fund remains on expanding FUM and procuring the best examples of vehicles across Mk-I through Mk-III. Dogged scouring has been rewarded with several of the best examples available in Australia and this trajectory is strategically important to maintain. Effectively, if the Fund controls the best specimens in market then the Fund can potentially have a strong influence on the value prescribed to these vehicles at divestment. A conscious allocation of FUM and attention will be spent on expanding the Fund's Mk-IV position. This is our lead Q1 initiative, which should allow the Fund to capitalise on the recent flurry now, while markets are hot for certain vehicles. In that same vein, it is prudent to remain unemotional about these assets. As a result, some Fund vehicles will be released back to the open market to enjoy a short-term yield uplift. Several of the Fund's assets are under current negotiation. CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 37
FY22 FOCUS CONTINUED The Fund will continue to seek vehicles from both wholesale pre-market channels and on-market opportunities to ensure the acquisition quality remains strong. Early indications from auctions resuming in other international markets are that smaller, more curated auctions are yielding better results. With limited auction platforms in AU, the recently launched CHROME TEMPLE Motors (CTm) digital auction channel will become a new (but not exclusive) source of acquisition and importantly divestment, for the Fund's Mk-IV vehicles.
LIVE AUCTIONS 2020 VS 20211,8
CONSIGNMENTS (-23%)
TOTAL SALES
SHARE OF YOUNGTIMER CAR PURCHASES AT AUCTION
1,12
100%
100%
100%
100%
MILLENIALS
10%
10%
11%
9%
GEN-X
42%
46%
42%
42%
BOOMERS
48%
44%
47%
49%
2018
2019
2020
YTD 2021
CHROME TEMPLE Investments Mach 1 Fund
28%
AVERAGE PRICE
FY21 Annual Report
11%
Importantly for the Fund's short, mid and long term performance is that youngertimers (a term coined for collector cars from the 1980's, 1990's and early 00's) appeal to three generations of car collectors and enthusiasts - Millennials, the fastest growing enthusiast generation, boomers and GenX'ers. Interest in these eras across a wider audience has positive implications for the Fund's performance over time.
Page 38
DIRECTORY INVESTMENT MANAGER
CHROME TEMPLE Investments Pty Ltd ACN 640 888 026 CAR No 001284056 investments@chrometemple.com
PORTFOLIO MANAGER
Lex Pedersen lex@chrometemple.com
DIRECTORS
EXECUTIVE DIRECTORS Lex Pedersen
NON-EXECUTIVE CHAIRS Charlie Lanchester, Chairman Ryan Curnick, IC Chair NON-EXECUTIVE DIRECTORS Nicholas Adamo Simon Franklin
CUSTODIAN & TRUSTEE
Specialised Investment and Lending Corporation Pty Ltd AFSL number 407100 ACN 149 520 918 investors@silcgroup.com.au
OTHER FUND DETAILS
Specialised Investment and Lending Corporation Pty Ltd ATF CHROME TEMPLE Investments Mach I Fund ABN 35 710 821 827 CHROME TEMPLE Investments Mach 1 Fund
FY21 Annual Report
Page 39