Counsel Announces 2015 First Quarter Results

Mortgage lending revenue +26%, Mortgages under Administration +22%

TORONTO, May 14, 2015 /CNW/ - Counsel Corporation ("Counsel" or the "Company") (TSX: CXS), a financial services company, today announced financial results for the first quarter ended March 31, 2015.

All amounts are stated in thousands of Canadian dollars unless otherwise noted.

Q1-2015 Financial Highlights

• Revenues increased by 8% to $32,130 from $29,836 in Q1-2014.
• Income before fair value adjustments and a non-recurring gain increased to $4,162 from $1,640 in Q1-2014.
• Diluted earnings per share from continuing operations were $0.04, compared with $0.07 in Q1-2014.

Q1-2015 Mortgage Lending Highlights

• Street Capital maintained its #3 market share position in the mortgage broker channel.
• Revenues grew 26% to $32,058 in Q1-2015 from $25,539 in Q1-2014.
• Operating expense, which represents the cost of acquiring mortgages for sale, increased by only 8% year-over-year.
• Mortgages sold were $1.617 billion, compared to $1.376 billion in Q1-2014.
• Mortgages under administration were $22.163 billion, up 22% from $18.208 billion last year.

"Our Q1 results mark an excellent start to the year for our mortgage lending business, Street Capital Financial Corporation," said Allan Silber, Chairman and CEO of Counsel Corporation. "The team at Street Capital continues to focus on generating high quality underwriting volume. Our growing base of mortgages under administration will continue to feed our renewal pipeline and provide a source of customers for the additional products and services we plan to offer if, and when, our application to become a Schedule I bank is approved."

Revenues

For the first quarter of 2015, revenues were $32,130 compared to $29,836 for the same period one year ago. Of the 2015 amount, revenues of $31,121 represent gains on the sale of mortgages sourced and underwritten by Street Capital compared to $25,357 in 2014. The revenues for the first quarter of 2014 included a one-time gain of $4,125. 

Counsel's revenues are almost entirely generated from its Street Capital mortgage lending business. The year-over-year increase of Counsel's revenues in Q1-2015 reflects the growth in the volume of mortgages sold by Street Capital, which increased to $1.617 billion from $1.376 billion. Renewals accounted for approximately 20% of loan sales in the current quarter versus approximately 12% in Q1-2014. Approximately 79% of mortgages expiring in the quarter were renewed.

Income before fair value adjustments

Income before fair value adjustments for the first quarter of 2015 was $4,162, which compares to $1,640 in the same period one year ago prior to a non-recurring gain of $4,125.

Q1-2015 results include a non-cash fair value impairment of $2,710 primarily related to the sale of the Knight's Bridge Capital Partners Fund's investment in TubeMogul Inc. The fair value impairment was more than offset by the carried interest earned by the Corporation in the TubeMogul investment and the Fund investors' pick-up of their share of the impairment.

Net Income

In the first quarter of 2015, net income attributable to shareholders was $3,750 compared with a loss of $6,426 for the same period one year ago. Q1-2014 results included a $11,782 loss from discontinued operations, related to the distribution of the Company's asset liquidation business to shareholders.

Diluted net earnings per share were $0.04 in the first quarter of 2015, compared with a loss of $0.06 per share in the same period one year ago.

Mortgage Lending Business

Counsel carries on its residential mortgage lending business through its subsidiary Street Capital (www.streetcapital.ca). Street Capital sources its mortgages primarily through a network of independent, high quality mortgage brokers across Canada with whom it has built relationships. Street Capital offers a broad lineup of high ratio and conventional mortgages, predominantly to prime borrowers, and sells the mortgages it underwrites to top-tier financial institutions. Business revenues are almost entirely from the gain on sale of mortgages.

Counsel's Management's Discussion and Analysis and Unaudited Condensed Consolidated Interim Financial Statements for the quarter ended March 31, 2015 will be available on SEDAR (www.sedar.com).

Conference Call

Counsel will host a conference call later today, Thursday, May 14, 2015 at 11:00 a.m. ET to discuss its financial results as well as the organizational realignment and Share Exchange announced today. Allan Silber, CEO of Counsel Corporation and Ed Gettings, CEO of Street Capital Financial Corporation will chair the call.

PLEASE NOTE: The Q1 conference call will be accompanied by a webcast and slides related to the organizational realignment and share exchange announced today.

	Participant Dial-in	Webcast/Slides	Reference Number
Conference Call May 14, 2015 at 11:00AM	647-427-7450; or 1-888-231-8191	http://bit.ly/1zwmUEr
Replay (available for 2 weeks)	416-849-0833; or 1-855-859-2056		34422223

About Counsel Corporation (www.counselcorp.com)

Counsel Corporation (TSX: CXS) is a financial services company operating in residential mortgage lending through its wholly owned subsidiary Street Capital Financial Corporation, one of the largest non-bank mortgage lenders in Canada. Founded in 1979 and a public company for more than a quarter century, Counsel's goal is to build consistently profitable, industry-leading financial services companies by investing in great leaders and providing them with the strategic guidance and financial resources they need to succeed.

Forward-Looking Statements

The statements made in this release that are not historical facts contain forward-looking information that involves risks and uncertainties. All statements, other than statements of historical facts, which address Counsel Corporation's expectations, should be considered as forward-looking statements. Such statements are based on knowledge of the environment in which Counsel Corporation currently operates, but because of the factors listed herein, as well as other factors beyond Counsel Corporation's control, actual results may differ materially from the expectations expressed in the forward-looking statements. Important factors that may cause actual results to differ from anticipated results include, but are not limited to, obtaining necessary approvals and other risks detailed from time to time in the Company's securities and other regulatory filings.

COUNSEL CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31
(in thousands of Canadian dollars, except per share data) Unaudited
		Three months ended March 31,
		2015	2014
		$	$
Revenues
	Gain on sale of mortgages	31,121	25,357
	Interest and fee income	1,009	354
	Other	-	4,125
		32,130	29,836
Expenses
	Operating costs	16,877	15,654
	Selling, general and administrative expense	9,637	8,111
	Foreign exchange	(24)	(353)
	Depreciation and amortization	363	294
	Interest expense	1,115	365
		27,968	24,071
Income before fair value adjustments		4,162	5,765
Fair value adjustments		(2,710)	3,099
Income before income taxes and discontinued operations		1,452	8,864
Income tax provision		857	1,447
Income from continuing operations		595	7,417
Income (loss) from discontinued operations		8	(11,782)
Net income (loss)		603	(4,365)
Net income (loss) attributable to non-controlling interest		(3,147)	2,061
Net income (loss) attributable to shareholders		3,750	(6,426)
Basic and diluted  net income (loss) per share :
Continuing operations		0.04	0.07
Discontinued operations		0.00	(0.13)
Basic and diluted net income (loss) per share		0.04	(0.06)
Weighted average number of common shares
outstanding (in thousands) - basic and diluted		99,817	99,063
The notes contained in the Company's condensed consolidated interim financial statements are an integral part of these statements.

COUNSEL CORPORATION
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
AS AT MARCH 31, 2015 AND DECEMBER 31, 2014
(in thousands of Canadian dollars) Unaudited
							March 31,	December 31,
							2015	2014
							$	$
Assets
		Current assets
			Cash and cash equivalents				33,083	36,152
			Marketable securities				425	419
			Mortgages, loans, accounts and deferred fees receivable				33,855	29,366
			Securitized mortgage loans				4,765	4,731
			Portfolio investments				13,495	30,910
			Prepaid expenses				5,655	7,058
			Assets of discontinued operations				854	854
							92,132	109,490
		Non-current assets
			Deferred fees and mortgages receivable				24,504	26,594
			Securitized mortgage loans				43,918	45,587
			Prepaid expenses				50,028	44,796
			Property, plant and equipment				4,538	4,706
			Portfolio investments				9,100	9,100
			Intangible assets				4,977	5,101
			Goodwill				23,465	23,465
			Deferred income tax assets				10,399	9,939
			Assets of discontinued operations				494	486
Total assets							263,555	279,264
Liabilities
		Current liabilities
			Accounts payable and accrued liabilities				40,504	45,961
			Income taxes payable				3	3
			Loans payable				18,290	11,973
			Securitization liabilities				4,658	4,576
			Contingent consideration				2,600	2,600
			Liabilities of discontinued operations				1,017	1,017
							67,072	66,130
		Non-current liabilities
			Loans payable				-	6,934
			Securitization liabilities				43,825	45,970
			Contingent consideration				2,382	2,308
			Deferred income tax liabilities				27,536	26,219
			Liabilities of discontinued operations				150	150
Total liabilities							140,965	147,711
Equity							122,590	131,553
Total liabilities and equity							263,555	279,264
The notes contained in the Company's condensed consolidated interim financial statements are an integral part of these statements.

SOURCE Counsel Corporation

Counsel Corporation, Stephen Weintraub, EVP, Secretary & CFO, [email protected], Tel: [phone]; Loderock Advisors, Jonathan Ross, [email protected], Tel: [phone]