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Authorised Investment Fund Limited (AIY)
is a publicly listed company on the Australian Securities Exchange (ASX).
About Authorised Investment Fund Limited
Authorised Investment Fund is a Pooled Development Fund and is registered under Federal Government regulations. Pooled Development Funds have unique Tax benefits.
It is with pleasure that I report on behalf of the Directors, that the company has achieved another year of growth with net profit of Authorised Investment Fund increasing by 1095%. This is their third successive annual gain and reflects the strong progress in building value by the managements of their investee companies.
Over the past few years, they have worked hard to restructure their investment portfolio by either selling non-core holdings or writing off under-performing investments. This process is now complete and the portfolio now comprises two core holdings; NSX listed Endless Solar Corporation Ltd (9%), and unlisted SpeedPanel Australia Ltd (11%).
Endless Solar is rebounding strongly after several very difficult years and is well advanced on a number of potentially very valuable technology development projects. SpeedPanel is growing strongly as production capacity is being expanded to meet rapidly rising demand in response to the increasing acceptance of its innovative lightweight building panel in the commercial construction industry.
They have every confidence that their investments in these two companies will enjoy large valuation gains into the medium term.
Authorised Investment Fund is now well placed to pursue opportunities to grow its investment portfolio. Management has reviewed a number of opportunities over the past year but they did not meet their investment criteria.
Authorised Investment Fund has a number of advantages for investee companies due to its status as a listed pooled development fund and management has developed a number of strategies to utilise these advantages in pursuing further investments. Accordingly, they are now actively seeking opportunities to grow their investment portfolio and they would like to add a number of investments to their current core holdings.
The Board looks to the future with confidence as they seek new growth investments to add to their current investments, which are well placed to drive growth.
Investment Portfolio Review
Endless Solar Corporation
Authorised Investment Fund owns 9% of the Limited Voting Ordinary shares of Endless Solar Corporation Ltd.
2014 financial performance
Endless Solar designs and supplies evacuated tube solar hot water systems for residential and commercial purposes. The company’s principal office is located in Sydney from where it services commercial customers and 12 retail distributors around Australia. A small sales office has recently been established in Melbourne.
The company has experienced a roller-coaster environment over the past five years as sales initially boomed in response to government subsidies and support for everything solar followed by a collapse in sales as this support was wound back.
The company responded to the changed market and slump in residential demand by restructuring its operations, changing management, relocating its premises and redirecting its sales focus to the commercial market.
Management has also looked to innovation as a source of competitive advantage and driver of long term growth. In particular, it has invested considerable capital in a major research project called CoolSolar, the objective of which is to harness heat from a solar hot water system for conversion into cool air through an air-conditioning system.
The strategy to reposition the business toward the commercial market looks like it will be successful. The commercial market is growing as more sophisticated customers appreciate the long term benefits solar water heating. Whereas the residential market is highly competitive and dominated by flat panels, the commercial market is under-serviced with clients demanding a greater emphasis on design, quality and support. Also commercial projects generally have higher sales values. Endless Solar has been successful in this market in securing design and supply contracts with a range of government, institutional and commercial customers.
Authorised Investment Fund Limited
Innovation is a core element of Endless Solar’s growth strategy with the potential to generate substantial long term value. A number of projects are being pursued but the most important is CoolSolar, a unique project to produce cool air from solar heat. The project has successfully demonstrated a proof of concept and designed the ejector, which is the key component of the technology. A major outcome has been the receipt of 4 PCTs (the step between provisional and final patents).
The next step is to undertake field trials which will test the technology in prototype configuration, encompassing evacuated tubes as the heat source to test performance under a variety of environmental (temperature) conditions. These tests will seek to prove that the technology can reduce ambient heat to 20 degrees and maintain this temperature as well as establishing the number of tubes required to deliver sufficient heat.
The field trial is in effect a performance test under heavy duty operating conditions. This test will be a critical milestone as it will validate the technology and provide the data necessary for potential licensees and investors with which to fully assess its potential. These tests will also provide a basis for valuation of the technology. The field trial is expected to be completed during the following financial year.
Authorised Investment Fund owns 11% of the Ordinary shares of Speedpanel Australia Ltd.
2014 financial performance
Speedpanel is a new age, lightweight building product. It is used for non-load bearing fire rated and acoustic walls in the construction industry due to its superior performance and speed of installation. It is lightweight & easily handled making for fast installation. Speedpanel can be installed both vertically and horizontally and has the ability to span large distances between supports satisfying fire, acoustic and relative wind load requirements.
Ease of handling and rapid installation have made Speedpanel a compelling proposition for builders. Acceptance is growing rapidly and the product is now being used in many major construction projects including Barrangaroo in Sydney and the Royal Adelaide Hospital. It is also features in the current edition of The Block (on the Nine Network) where it has been designed as the fire-rated inter-tenancy wall solution between all of the competitors apartments and will be installed in the car park area with a Monument (Colorbond) finish. Meriton, Australia’s largest builder of apartments, is undertaking evaluation trails of Speedpanel which could see widespread use of the products in their developments throughout Sydney and South East Queensland.
Management focus over the past few years has been on commercialisation and driving market acceptance for this innovative product. In response to accelerating growth in demand for Speedpanel, the company will move to new premises in November 2014 which will enable capacity to be expanded from the current level of 20,000m2 per month to 60,000m2 per month. This expanded capacity is expected to be quickly absorbed by the market which will drive a big uplift in sales and profits over the next eighteen months.
Authorised Investment Fund Limited
406 Collins Street
+61 3 9600 3242
Fax: +61 3 9600 3245
The General Overview, Services, Products and Projects information for this profile was last edited on 28 Jul 2015.