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(Note: All dollar amounts in this news release are expressed in U.S. dollars except as otherwise noted. The financial results are derived from financial statements prepared using the recognition and measurement requirements of International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"), except as otherwise noted, and are unaudited. This news release contains certain non-GAAP and other financial measures, including book value per share and cash and marketable securities, that do not have a prescribed meaning under IFRS and may not be comparable to similar financial measures presented by other issuers. See "Glossary of non-GAAP and other financial measures" in the company's Interim Report for the three months ended March 31 for further details.)
TORONTO, April 28, 2022 (GLOBE NEWSWIRE) -- Fairfax India Holdings Corporation (TSX: FIH.U) announces net earnings of $55.8 million in the first quarter of 2022 ($0.38 net earnings per diluted share), compared to net earnings of $255.4 million in the first quarter of 2021 ($1.66 net earnings per diluted share), reflecting decreased net unrealized gains on investments and increased net foreign exchange losses, partially offset by a performance fee recovery and decreased income tax and interest expense.
Highlights for the first quarter of 2022 included the following:
Net change in unrealized gains on investments of $69.9 million, principally from an increase in the fair value of the company's investments in the private companies Sanmar ($49.0 million) and NSE ($18.0 million), and an increase in market prices of the company's investments in the public companies IIFL Wealth ($39.8 million) and IIFL Finance ($5.4 million), partially offset by a decrease in market prices of the company's investments in public companies CSB Bank ($22.0 million), Fairchem Organics ($16.4 million), and 5paisa ($6.1 million).
The company continued to buy back shares under its normal course issuer bid and in the first three months of 2022 purchased for cancellation 1,897,532 subordinate voting shares at a net cost of $24.0 million ($12.65 per subordinate voting share).
In accordance with the Investment Advisory Agreement, which provides for the payment of a performance fee of 20% of the increase in book value per share in excess of a hurdle rate of 5% per annum, the company recorded a performance fee recovery of $3.1 million for first quarter of 2022 and at March 31, 2022 had accrued $80.0 million to the benefit of Fairfax Financial Holdings. The performance fee, if any, will only be finally determined on December 31, 2023 at the end of the three year measurement period.
On February 11, 2022 the company completed its investment of $32.5 million (approximately 2.5 billion Indian rupees) for a 70.0% equity interest in Jaynix Engineering Private Limited.
On March 30, 2022 the company entered into an agreement to sell 9.8% of its 13.6% equity interest in IIFL Wealth for total consideration of approximately $191 million (approximately 14.5 billion Indian rupees). The transaction is subject to customary closing conditions and approvals and is expected to close in the third quarter of 2022.
At March 31, 2022 common shareholders' equity was $2,754.0 million, or book value per share of $19.77, compared to $2,774.8 million, or book value per share of $19.65, at December 31, 2021, an increase of 0.6%, primarily related to net earnings and the impact of share purchases for cancellation during the first three months of 2022, partially offset by unrealized foreign currency translation losses as a result of the weakening of the Indian rupee relative to the U.S. dollar.
Fairfax India is in strong financial health, with cash and marketable securities of approximately $227 million.
There were 139.7 million and 149.4 million weighted average common shares outstanding during the first quarters of 2022 and 2021 respectively. At March 31, 2022 there were 109,337,820 subordinate voting shares and 30,000,000 multiple voting shares outstanding.
Fairfax India's detailed first quarter report can be accessed at its website www.fairfaxindia.ca.
Fairfax India Holdings Corporation 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
This press release may contain forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements may relate to the company's or an Indian Investment'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, an Indian Investment, 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 our opinions and estimates 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: the COVID-19 pandemic; oil price risk; geographic concentration of investments; foreign currency fluctuation; volatility of the Indian securities markets; investments may be made in foreign private businesses where information is unreliable or unavailable; valuation methodologies involve subjective judgments; financial market fluctuations; pace of completing investments; minority investments; reliance on key personnel and risks associated with the Investment Advisory Agreement; lawsuits; use of leverage; significant ownership by Fairfax may adversely affect the market price of the subordinate voting shares; weather risk; taxation risks; emerging markets; MLI; economic risk; and trading price of subordinate voting shares relative to book value per share risk. Additional risks and uncertainties are described in the company's annual information form dated March 4, 2022 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.