Fairfax Africa Holdings Corporation: Financial Results for the Year Ended December 31, 2017

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR 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. 15, 2018 (GLOBE NEWSWIRE) -- Fairfax Africa Holdings Corporation (TSX:FAH.U) announces fiscal year 2017 net earnings of $23.5 million ($0.54 per basic and diluted share), principally reflecting net realized gains relating to the purchase of Atlas Mara ordinary shares, net foreign exchange gains on the company's indirect investment in and loan to AFGRI, and interest income.

Highlights for 2017 included the following:

• At December 31, 2017 common shareholders' equity was $516.7 million and book value per share was $10.21.
   
• On December 22, 2017 the company acquired an additional 1,200,000 ordinary shares of Atlas Mara for total consideration of $2.4 million. On December 31, 2017, the company held an aggregate of 71,958,670 ordinary shares of Atlas Mara with a fair value of $168.7 million, representing a 43.3% equity interest in the company. Atlas Mara is a Sub-Saharan African financial services group listed on the London Stock Exchange.
   
• At December 31, 2017, Nova Pioneer had issued the final tranche of $20 million of secured debentures and issued 2 million warrants to the company.

Subsequent to year-end:

• In November 2017, AFGRI initiated a rights issue to raise 518.6 million South African rand (approximately $42 million) from existing shareholders, with proceeds to be used to fund growth, primarily in the Foods division, and to repay the 300 million South African rand AFGRI bridge facility provided by the company in June 2017. The company, through Joseph Investment Holdings, contributed $18.5 million into the rights issue. Following closing of the rights issue on January 31, 2018, the company's indirect voting interest in AFGRI increased from 42.2% to 43.8%. On January 31, 2018, the AFGRI bridge facility including accrued interest was repaid.
  
  
• On January 12, 2018, the company terminated its letter of credit facility related to the partial offer to purchase shares of PPC Limited, resulting in $162 million of cash used as collateral to be released from restricted cash.
  
  
• On January 31, 2018, the company extended the maturity of its $150 million corporate secured term loan to August 31, 2018.

There were 50.6 million weighted average shares outstanding during the fourth quarter of 2017. At December 31, 2017 there were 20,620,189 subordinate voting shares and 30,000,000 multiple voting shares outstanding.

Unaudited consolidated balance sheet, 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 Africa is an investment holding company.  Its investment objective is to achieve long-term capital appreciation, while preserving capital, by investing in public and private equity securities and debt instruments in Africa and African businesses or other businesses with customers, suppliers or business primarily conducted in, or dependent on, Africa.

For further information, contact:
Guy Bentinck, Chief Financial Officer and Corporate Secretary
(416) 646-4181

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 African 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 African securities markets; political, economic, social and other factors; governance issues risk; African tax law; changes in law; exposure to permanent establishment; enforcement of rights; smaller company risk; due diligence and conduct of potential investment entities; African 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 31, 2017 which is available on SEDAR at www.sedar.com and on the company’s website at www.fairfaxafrica.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.

Consolidated Balance Sheets
as at December 31, 2017 and December 31, 2016
(unaudited - US$ thousands)
		December 31, 2017			December 31, 2016
Assets
Cash and cash equivalents		13,012			—
Restricted cash		313,000			—
Short term investments		32,968			—
Loans		24,233			—
Bonds		19,934			—
Common stocks		261,917			—
Total cash and investments		665,064			—
Interest receivable		3,506			—
Other assets		541			786
Total assets		669,111			786
Liabilities
Accounts payable and accrued liabilities		811			—
Payable to related parties		1,482			860
Income taxes payable		82			—
Term loan		150,000			—
Total liabilities		152,375			860
Equity
Common shareholders' equity (deficit)		516,736			(74)
		669,111			786

Consolidated Statements of Earnings and Comprehensive Income
for the three months ended December 31, 2017 and 2016, year ended December 31, 2017 and the period April 28, 2016 (date of incorporation) to December 31, 2016
(unaudited - US$ thousands except share and per share amounts)
	Fourth quarter							Year ended				April 28 - December 31
	2017				2016			2017				2016
Income
Interest	2,950				—			7,589				—
Net realized gains (losses) on investments	(151		)		—			11,274				—
Net unrealized gains (losses) on investments	(28,912		)		—			2,362				—
Net foreign exchange gains	9,684				—			10,626				—
	(16,429		)		—			31,851				—
Expenses
Investment and advisory fees	1,395				—			3,400				—
Performance fees (recovery)	(5,314		)		—			319				—
General and administration expenses	636				71			2,076				74
Interest expense	1,195				—			2,087				—
	(2,088		)		71			7,882				74
Earnings (loss) before income taxes	(14,341		)		(71	)		23,969				(74	)
Provision for (recovery of) income taxes	(492		)		—			485				—
Net earnings (loss) and comprehensive income (loss)	(13,849		)		(71	)		23,484				(74	)
Net earnings (loss) per share	$	(0.27	)		—			$	0.54			—
Net earnings (loss) per diluted share	$	(0.27	)		—			$	0.54			—
Shares outstanding (weighted average - basic)	50,620,189				1			43,329,044				1