Oslo, London, Luxembourg, Scottsdale
The Chairman's report
We are a private investment company with a diversified portfolio of both stocks and bonds listed on a stock exchange as well as privately held businesses. During the last 20 years we have taken an active role in the development of most of the companies and businesses we have an interest in, with generally speaking positive results.
The conservative risk profile which we follow every year has not stopped us from earning an average of about 9 % p.a. on our equity capital during the last two decades. The year 2008 was not very different for our company while most investment funds – not excluding the Norwegian Sovereign Fund - lost around 40% of investors' money. It is often forgotten how hard it is to re-build asset value from 60 back up to 100. If in the first year after the crash you earn 10%, you are only back to 66, a long way behind the 109 which we could show at the end of 2008.
The calendar year 2016
During 2016 we consolidated our Norwegian property portfolio by selling the last 25 freehold apartments which were built for us by Skanska in conjunction with our successful Haslekollen project. It is pleasing to observe how the 5 hectare property of the former ABB factory now presents itself as a modern and well designed residential area with its own park and school as well as a convenience store. The fact that the new tram station (direct to Oslo city) was opened recently next door to our development, is a great plus for the residents and for the users of our business centre.
Generally, our property investments in Arizona and in Monaco were steadily improving while some sales generated reasonable returns both for Centennial and its local managers.
We continued our engagement with new businesses, notably in the area of “voice and signals over the internet”. Our long struggle to make a success of the “Vyke” business may finally show some return. In the meantime we have managed to transfer some of the technology and principles to “COM4” where we have increased our ownership interest in order to support the impressive organic growth of their “machine to machine” internet sim-card business. A buy-out offer from a US private equity firm was declined as we believe COM4 has a technological advantage and will continue growing even without certain possible acquisitions.
Another fast growing business is that of drones. We decided to support the Drone team of “Robot Aviation” who have delivered an impressive array of working drones based on its triple secure navigation system. There are important orders signed for the use of the fixed wing long endurance drone for surveying activities.
In October we bought 75% of a small dry cargo ship-owning company managed from Bergen, Norway, containing two older dry cargo vessels trading internationally with a small monthly positive contribution. Many of the shipping experts tell us that the market for shipping services has bottomed out despite the obvious threat of Donald Trump´s promise to reduce international trade.
Last year we participated actively in the start-up of a new bank, “Maritime and Merchant Bank ASA” to be based in Oslo but with an international outlook to the shipping industry which is suffering from the inability of bigger banks to lend to (at least) smaller ship-owners. Centennial will take a small shareholding and will, together with its Chairman, (who was voted in as Chair of the new bank for 4 years) control 25% of the shares of the bank. We are pleased that the regulatory Authorities decided to provide an exception to the regulatory limit of 10% (of bank-ownership) to our group. This should enable us to put all our experience and energy into building a solid and useful financial institution, which hopefully will have a long, profitable and independent life.
We are now able to confirm that the Maritime and Merchant Bank has had ha successful start-up period (14 months) and that more than NOK 1 billion has been lent to 22 shipping projects with first priority mortgages and other security in place. Negotiations with Pareto Bank ASA aiming to buy their shipping portfolio did not reach agreement due to somewhat differing views of the inherent risk profile of their portfolio.
Centennial Italia SRL has started road building in SanRemo apartment project. Digging and foundations are coming next. One apartment is already sold.
In the UK, we sold our North Cottage in Woodstock (with borders shared with Blenheim Palace). The sale was agreed in 2017 but final exchange of contract happened this year, resulting in a good result after paying off a small mortgage loan in pound sterling.
At the old ABB-factory office building, we have obtained a building/reconstruction permit from the Authorities to convert four storeys of offices to apartments and studios. The building which will remain offices, is undergoing refurbishment which will be finished with the top floor in the near future.
Recently, we completed the purchase of the neighbouring building next to our Økernveien 121; Eikenga 31-33 covers more than 11,000 m2 and will give us a total of 2,2 hectares of buildable land when a roof is constructed over the local train lines running between the properties. Several serious buyers have approached us with a view to acquire the project which we were planning to carry out on our own, emulating the success we had at Haslekollen nearby.
In our 75% owned ship-owning company, R-Bulk KS, the three dry cargo vessels have been performing without any problems. MV Bonas is on a $ 9,000/day T/C to specialist traders ContiLines in Antwerp, Belgium till October 2018.
We are receiving good reports from our Scholarship candidate at Harvard Business School, Hans Kristian Furuseth, a former NHH graduate. Centennial AS is setting aside funds each profitable year to cover the next full 2 year students which we shall pay for at Harvard University. This arrangement is intended for perpetuity.
Centennial is looking forward to the “year of the Dog” with great hope and confidence as our financial position is conservatively geared and we enjoy contractual earnings covering our financial obligations many times over.