Oslo, London, Luxembourg, Monte Carlo, Scottsdale, SanRemo
January 2021
As a family investment-firm we have been building value through a diversified portfolio of both stocks and investment grade bonds in addition to our direct investments where we normally have a management role.
Over the last three decades, we have managed an average of 8,5% p.a. return after taxes which is a reasonable result given our deliberately conservative risk profile. Recently, the return has been somewhat higher as we have been selling properties that have been under development over a number of years.
Dry docking of both our vessels owned through R-Bulk KS went smoothly last month in China despite the New Year celebrations. Both are fixed on reasonable rates.
In Norway the economic growth stopped while prices paid for primary and especially secondary homes soared and employment fell. Our investments in machine-to-machine communication via COM4 and person-to-person communication through Vyke, have not been hurt to any extent by the pandemic. The Swedish IT-firm looking after many aspects of Vyke’s operation went bankrupt in 2020 and we have bought what is needed for the continued running of the services from the manager of the bankruptcy.
In late December 2020 we received an international offer for our shares in COM4. After 10 years as the major owner of Com4 AS, we agreed to sell early in 2021. The payment is based on an earn-out model over three years, with first instalment paid up front in January this year. The new owner is Wireless Logic, one of the leading IoT/M2M providers in the UK. With new owners, Com4 AS will continue their business in Scandinavia and the Baltics, and together with the rest of the Wireless Logic Group, in most of Europe and the rest of the world.
Centennial AS recently received permission from the Norwegian Authorities to own 25% of “Maritime and Merchant Bank ASA”, where we have been actively involved since the Bank’s inception. Despite dramatic reductions in international seaborne trade, the Bank has not had any loss on its loan portfolio, and we hope it will end the difficult year of 2020 with a return on invested equity capital (after tax) of better than 5% p.a. The directors have decided not to pay any dividends in the year 2020 despite its profitable operations in 2019 - following the appeal by the Finance Authorities.
The conversion of the old “ABB-university” building at Haslekollen in Oslo was finished in 2020 and the 25 very modern apartments sold within a short period of time. The reconstruction-loan provided by Handelsbanken was repaid in its entirety during the second half of 2020.
All-in-all, the past year has been quite good despite the fact that we have not participated much in the many new issues popping up almost daily. Many of these involve prices which are a function of multiples of up to ten times sales (and no profit history) and highly uncertain and sometimes non-existent plans for how the high pricing can be justified at some distant point in the future.
Centennial is starting 2021 with what we consider a solid financial balance sheet. If the pandemic turns out to last at least another 12 to 14 months, there will be many business failures and the financial stability of the Western World could be in danger. This is not a good time to be highly leveraged and invested in very speculative assets, as far as we can understand.