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((Note: All dollar amounts in this press release are expressed in US dollars, unless otherwise indicated. Financial results are prepared using the accounting and valuation requirements of international financial reporting standards, unless otherwise indicated, and are not audited.)
TORONTO, April 30, 2020 (GLOBE NEWSWIRE) – Fairfax Africa Holdings Corporation (TSX: FAH.U) reports net loss of $ 121.8 million in the first quarter of 2020 ($ 2.05 net loss per diluted share) , compared to a net loss of $ 21.5 million in the first quarter of 2019 (net loss of $ 0.35 per diluted share), reflecting an increase in net unrealized losses on investments and net foreign exchange losses over the trimester.
The highlights of the first quarter of 2020 were as follows:
- The net loss of $ 121.8 million includes a net change in unrealized losses on investments of $ 68.6 million, mainly due to the lower market price for the company’s investment in common shares of ‘Atlas Mara ($ 36.3 million), as well as the company’s fair indirect equity interest in AGH ($ 18.8 million) and net foreign exchange losses of $ 52.5 million reflecting a weakening the South African rand against the US dollar. The net loss in the first quarter of 2020 reflects negative market reactions to the COVID-19 pandemic and related government interventions, combined with a simultaneous shock to the global energy markets.
- On February 28, 2020, Fairfax Africa invested an additional $ 3.1 million (49.3 million South African rand) in GroCapital Holdings. Following this transaction, the company had invested a total cash consideration of $ 17.6 million (South African rand 253.7 million) and as of March 31, 2020, the fair value of its interest in GroCapital was $ 10.0 million (179.2 million South African rand).
- On March 30, 2020, the company entered into a secured loan agreement with Atlas Mara under which Fairfax Africa agreed to provide up to $ 40.0 million in financing. The facility will bear interest at a rate of 10% per annum and will mature on March 31, 2021. As of March 31, 2020, the facility was not used by Atlas Mara. Subsequently, on April 2, 2020, $ 20.5 million was advanced to Atlas Mara under the facility.
- During the first quarter of 2020, the Company purchased for cancellation 463,506 subordinate voting shares under the normal course issuer bid at a price of $ 1.9 million (approximately 3, $ 99 per subordinate voting share).
- During this period of uncertainty, Fairfax Africa remains in good financial health, with sufficient undrawn cash and marketable securities.
- As at March 31, 2020, equity attributable to common shareholders was $ 395.2 million, or a book value per share of $ 6.69, compared to $ 518.8 million, or a book value per share of 8 , $ 72, at December 31, 2019, a decrease of 23.3% mainly related to the net loss in the first quarter of 2020.
There were 59.4 million and 62.0 million weighted average shares, respectively, outstanding during the first quarters of 2020 and 2019. As of March 31, 2020, 29,032,975 subordinate voting shares and 30,000,000 Multiple voting shares were outstanding.
Fairfax Africa’s first quarter detailed report is available on its website www.fairfaxafrica.ca.
In presenting the company’s results in this press release, management has included the basic book value per share. The basic book value per share is calculated by the company as the equity of ordinary shareholders divided by the number of ordinary shares in circulation.
Fairfax Africa is an investment holding company whose investment objective is to achieve long-term capital appreciation, while preserving capital, by investing in equity securities and public and private debt securities in Africa and in African companies or other companies with customers, suppliers or activities mainly carried out in or dependent on Africa.
|For more information, contact:||Keir Hunt, Secretary General|
This press release may contain forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may relate to the future prospects of the company or of an African investment and to expected events or results and may include statements regarding the financial condition, business strategy, growth strategy, budgets, operations, financial results, taxes, dividends, plans and business goals. In particular, statements regarding future results, performance, achievements, prospects or opportunities for the business, an African investment or the African market are forward-looking statements. In some cases, forward-looking statements may be identified by the use of forward-looking terminology such as “plans”, “is waiting” or “not expected”, “is expected”, “budget”, “planned”, “Estimates” “,” anticipates “,” intends “,” anticipates “or” does not anticipate “or” believes “, or variations of these words and expressions or declares that certain actions, events or results” may “,” could “,” “,” could “,” will “or” will be caught “,” will happen “or” failed “.
Forward-looking statements are based on our opinions and estimates as of the date of this press release and are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results, level of activity , the performance or achievements be materially different from those expressed or implied by these forward-looking statements, including, but not limited to, the following factors: taxation of the company, its shareholders and its subsidiaries; risk of substantial loss of capital; geographic concentration of investments; the risks associated with the global pandemic caused by COVID-19, the associated global reduction in trade, and significant declines in stock markets around the world; fluctuations in the financial markets; control or significantly influence the position risk; minority investments; risks when disposing of investments; bridge financing; dependence on key personnel and the risks associated with the investment advisory agreement; effect of fees; operational and financial risks of investments; evaluation methodologies involve subjective judgments; prosecutions; fluctuation of foreign currencies; unknown benefits and risks of future investments; illiquidity of investments; competitive market for investment opportunities; use of leverage; a significant participation by Fairfax may adversely affect the market price of the subordinate voting shares; trading price of subordinate voting shares based on book value per share; Emerging Markets; volatility of African securities markets; political, economic, social and other factors; risks of natural disasters; sovereign debt risk; economic risk; climate risk, oil price risk and the adverse consequences on the business, investments and personnel of the company resulting from or related to the COVID-19 pandemic. Other risks and uncertainties are described in the company’s annual information form dated March 6, 2020 which is available on SEDAR at www.sedar.comand on the company’s website at www.fairfaxafrica.ca. These factors and assumptions are not intended to represent a complete list of factors and assumptions that could affect the company. These factors and assumptions must however be carefully considered.
Although the company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking statements, there may be other factors that cause the results to be less than than planned, estimated or planned. There can be no assurance that these statements will prove to be accurate as actual results and future events may differ materially from those predicted in these statements. Therefore, readers should not place undue reliance on forward-looking statements. The company does not undertake to update the forward-looking statements contained in this document, unless required by applicable securities laws.
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