Financial Results for the Year Ended December 31, 2018 NOT

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News Desk 2022
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Financial Results for the Year Ended December 31, 2018

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

( Note : All dollar amounts in this news release are expressed in U.S. dollars except as otherwise noted. The financial results are prepared using the recognition and measurement requirements of International Financial Reporting Standards except as otherwise noted, and are unaudited.)

TORONTO, Feb. 14, 2019 (GLOBE NEWSWIRE) -- Fairfax India Holdings Corporation (TSX: FIH.U) announces fiscal year 2018 net earnings of $96.4 million ($0.63 net earnings per diluted share) compared to fiscal year 2017 net earnings of $452.5 million ($2.94 net earnings per diluted share), reflecting decreased net unrealized gains on investments, partially offset by no performance fee being earned by Fairfax Financial Holdings in fiscal year 2018.

Highlights for 2018 (with comparisons to 2017 except as otherwise noted) included the following:

  • Net earnings of $96.4 million included a net change in unrealized gains on investments of $179.0 million, principally from an increase in the fair values of the company's investments in the private companies Sanmar of $221.5 million and Bangalore International Airport of $84.3 million, and of the company's investment in Sanmar bonds of $90.1 million, partially offset by a decrease in the market prices of the company's investments in the public companies IIFL and Fairchem that depreciated by $203.2 million and $40.7 million respectively.
  • During the fourth quarter of 2018, the company purchased for cancellation 1,201,362 subordinate voting shares under the terms of its normal course issuer bid at a cost of $16.0 million (approximately $13.35 per subordinate voting share).
  • At December 31, 2018 common shareholders' equity was $2,117.9 million, or book value per share of $13.86, compared to $2,132.5 million, or book value per share of $14.46, at December 31, 2017, a decrease of 4.1%, primarily related to unrealized foreign currency translation losses as a result of the weakening of the Indian rupee relative to the U.S. dollar, partially offset by the fiscal year 2018 net earnings.

There were 153.3 million and 147.4 million weighted average shares outstanding during the fourth quarters of 2018 and 2017 respectively. At December 31, 2018 there were 122,861,534 subordinate voting shares and 30,000,000 multiple voting shares outstanding.

Unaudited consolidated balance sheets, earnings and comprehensive income information follow and form part of this news release.

In presenting the company’s results in this news release, management has included book value per basic share. Book value per basic share is calculated by the company as common shareholders' equity divided by the number of common shares outstanding.

Fairfax India is an investment holding company whose objective is to achieve long term capital appreciation, while preserving capital, by investing in public and private equity securities and debt instruments in India and Indian businesses or other businesses with customers, suppliers or business primarily conducted in, or dependent on, India.

For further information, contact:  John Varnell, Vice President, Corporate Affairs
  (416) 367-4755

This press release may contain forward-looking information within the meaning of applicable securities legislation. Forward-looking statements may relate to the company's future outlook and anticipated events or results and may include statements regarding the financial position, business strategy, growth strategy, budgets, operations, financial results, taxes, dividends, plans and objectives of the company. Particularly, statements regarding future results, performance, achievements, prospects or opportunities of the company or the Indian market are forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”.

Forward-looking statements are based on the opinions and estimates of the company as of the date of this press release, and they are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements, including but not limited to the following factors: taxation of the company and its subsidiaries; substantial loss of capital; long-term nature of investment; limited number of investments; geographic concentration of investments; potential lack of diversification; financial market fluctuations; pace of completing investments; control or significant influence position risk; minority investments; ranking of company investments and structural subordination; follow-on investments; prepayments of debt investments; risks upon dispositions of investments; bridge financings; reliance on key personnel; effect of fees; performance fee could induce Fairfax to make speculative investments; operating and financial risks of investments; allocation of personnel; potential conflicts of interest; employee misconduct at the portfolio advisor could harm the company; valuation methodologies involve subjective judgments; lawsuits; foreign currency fluctuation; derivative risks; unknown merits and risks of future investments; resources could be wasted in researching investment opportunities that are not ultimately completed; investments may be made in foreign private businesses where information is unreliable or unavailable; illiquidity of investments; competitive market for investment opportunities; use of leverage; investing in leveraged businesses; regulation; investment and repatriation restrictions; aggregation restrictions; restrictions relating to debt securities; pricing guidelines; emerging markets; corporate disclosure, governance and regulatory requirements; legal and regulatory risks; volatility of the Indian securities markets; political, economic, social and other factors; governance issues risk; Indian tax law; changes in law; exposure to permanent establishment; enforcement of rights; smaller company risk; due diligence and conduct of potential investment entities; Asian economic risk; reliance on trading partners risk; natural disaster risks; government debt risk; and economic risk. Additional risks and uncertainties are described in the company’s annual information form dated March 9, 2018 which is available on SEDAR at www.sedar.com  and on the company’s website at www.fairfaxindia.ca . These factors and assumptions are not intended to represent a complete list of the factors and assumptions that could affect the company. These factors and assumptions, however, should be considered carefully.

Although the company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The company does not undertake to update any forward-looking statements contained herein, except as required by applicable securities laws.

Information on CONSOLIDATED BALANCE SHEETS as at December 31, 2018 and December 31, 2017 (unaudited - US$ thousands)

    December 31, 2018     December 31, 2017
Assets            
Cash and cash equivalents   21,240         13,244  
Restricted cash   13,833         10,598  
Short term investments           27,481  
Bonds   576,386         694,252  
Common stocks   2,084,961         1,913,993  
Total cash and investments   2,696,420         2,659,568  
             
Interest receivable   7,039         9,422  
Income taxes refundable   1,423         3,098  
Other assets   668         133  
Total assets   2,705,550         2,672,221  
             
Liabilities            
Accounts payable and accrued liabilities   1,034         977  
Payable for rights issue           15,954  
Payable for partly paid shares   29,827          
Payable to related parties   8,827         122,826  
Deferred income taxes   689          
Term loans   547,228         400,000  
Total liabilities   587,605         539,757  
             
Equity            
Common shareholders' equity   2,117,945         2,132,464  
    2,705,550         2,672,221  
             

Information on CONSOLIDATED STATEMENTS OF EARNINGS for the three and twelve months ended December 31, 2018 and 2017 (unaudited - US$ thousands except per share amounts)

  Fourth quarter   Year ended December 31,
  2018   2017   2018   2017
Income              
Interest 3,769     6,788     21,659     21,848  
Dividends 713     539     8,699     8,627  
Net realized gains (losses) on investments (4,650 )       (7,985 )   1,195  
Net change in unrealized gains on investments and other costs 40,883     113,773     178,998     592,277  
Net foreign exchange gains (losses) 20,215     8,937     (34,853 )   (14,277 )
  60,930     130,037     166,518     609,670  
Expenses              
Investment and advisory fees 8,651     8,228     33,908     27,531  
Performance fee     27,884         112,218  
General and administration expenses 802     648     4,079     4,166  
Interest expense 9,519     4,825     28,898     15,664  
  18,972     41,585     66,885     159,579  
               
Earnings before income taxes 41,958     88,452     99,633     450,091  
Provision for (recovery of) income taxes (1,116 )   387     3,201     (2,418 )
Net earnings 43,074     88,065     96,432     452,509  
               
Net earnings per share $ 0.28     $ 0.60     $ 0.63     $ 3.10  
Net earnings per diluted share $ 0.28     $ 0.57     $ 0.63     $ 2.94  
Shares outstanding (weighted average) 153,301,475     147,434,365     153,108,655     146,035,470  
               

Information on CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME for the three and twelve months ended December 31, 2018 and 2017 (unaudited - US$ thousands)

  Fourth quarter   Year ended December 31,
  2018   2017   2018   2017
               
Net earnings 43,074     88,065     96,432     452,509  
Other comprehensive income (loss), net of income taxes              
Item that may be subsequently reclassified to net earnings              
  Unrealized foreign currency translation gains (losses), net of income taxes of nil (2017 - nil) 76,516     47,754     (193,141 )   110,910  
Other comprehensive income (loss), net of income taxes 76,516     47,754     (193,141 )   110,910  
Comprehensive income (loss) 119,590     135,819     (96,709 )   563,419  
               

 

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