Counsel Announces First Quarter 2012 Results

Net Income, Eps, and Revenues Soar

TORONTO, May 15, 2012 /CNW/ - Counsel Corporation ("Counsel" or the "Company") (TSX: CXS), a financial services company, today announced net income attributable to shareholders of $3.4 million, or $0.04 per basic and diluted share, for the first quarter of 2012 compared to a loss of $1.5 million, or $0.02 per basic and diluted share, for 2011's first quarter. Revenues increased more than ten-fold to $31.3 million for the quarter ended March 31, 2012 compared to revenues of $2.7 million in the same quarter in 2011. All amounts are stated in Canadian dollars, unless noted.

The significant year-over-year increase in Counsel's first quarter revenues and income was primarily due to two factors:

• having a full quarter of contributions from Counsel's mortgage lending business, Street Capital Financial Corporation ("Street Capital"), which was acquired on May 31, 2011; and
• the improved results from Counsel's other major operating company, Counsel RB Capital LLC ("Counsel RB"), a leading provider of capital asset solutions.

Street Capital generated $5.2 million in income from continuing operations in the first quarter of 2012 on $24.2 million in revenues. The company doubled its percentage share of mortgages underwritten through the Canadian mortgage broker channel to more than 8% in the first quarter of 2012 over the first quarter of 2011 and was ranked third in mortgage broker market share in terms of funded volume for the quarter ended March 31, 2012, according to an industry report.

Street Capital's revenues are comprised of the gain on sales of mortgages to institutional investors. The company sold $1.4 billion of mortgages in the first quarter of 2012 (it sold $3.7 billion in the full year 2011), placing it among the industry leaders in mortgage underwriting in Canada. Street Capital ended the first quarter with $8.3 billion in mortgages under administration, compared with $7.5 billion at the end of 2011.

Last month, Street Capital announced that it was expanding its business into the near prime segment of the Canadian mortgage market with the introduction of its new Street Options Program. Near prime is a segment of the mortgage credit market just below prime and comprised of borrowers who are unable to find financing through traditional sources. The company launched the Street Options Program to a small group of mortgage brokers in Ontario and will progressively expand it to additional approved mortgage brokers across Canada. Street Capital sells the mortgages it originates through its Street Options Program to institutional investors, as it does with the mortgages generated by its prime lending business.

"We're excited about the opportunities for Street Capital in the near prime mortgage market," said Allan Silber, Chairman and CEO of Counsel. "We believe the segment is underserved despite offering potentially higher profit margins and that Street Capital can become a significant participant in this space."

Counsel RB is a value driven, innovative leader in distressed and surplus capital asset transactions and a wholly owned subsidiary of Counsel RB Capital Inc. ("CRBCI") (OTCQB: CRBN), a publicly traded company controlled by Counsel. In the first quarter of 2012, Counsel RB's income from continuing operations increased 43%, to $0.9 million, and its revenues increased 81% to $4.1 million, from the comparative period in 2011. The company's first quarter revenues were comprised of the proceeds of:

• asset sales of $1.8 million (Q1 2011 - $0.6 million);
• earnings from equity accounted joint ventures of $1.1 million (Q1 2011 - $1.5 million); and,
• commissions and fees of $1.2 million (Q1 2011 - $0.1 million).

The substantial increase in commissions and fees was due to significantly higher deal activity through joint ventures and from approximately one month of revenues contributed by Heritage Global Partners Inc. ("HGP"), a leading full-service global auction and asset advisory firm acquired by CRBCI at the end of February.

"The addition of HGP was a transformational event for Counsel RB," said Mr. Silber, who serves as CRBCI's Chairman and President. "HGP diversifies Counsel RB's revenue streams, providing sustainable, recurring fee income, and will also be a source of new deal flow. In addition, the acquisition of an in-house industrial auction division results in cost savings for Counsel RB and broadens the array of capital asset solutions the company can offer its client base. Finally, it will increase Counsel RB's profile and brand recognition in the industry."

"The first quarter of 2012 was pivotal for both of our major operating businesses," concluded Mr. Silber. "After growing into profitable industry leaders in just a few years, they have taken important steps in the execution of their growth strategies: Street Capital, with its expansion into near prime mortgage lending; and Counsel RB, with its acquisition of an industrial auction and appraisal division. We look forward to reporting on their progress, and that of Counsel, throughout the rest of 2012."

The Company's Management's Discussion and Analysis and Financial Statements for the quarter ended March 31, 2012 have been filed and are available on SEDAR (www.sedar.com).

About Counsel Corporation

Counsel Corporation (TSX: CXS) is a financial services company that operates through its individually branded businesses in residential mortgage lending, distressed and surplus capital asset transactions, real estate finance and private equity investment. For further information, please visit Counsel's website at www.counselcorp.com.

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.

Condensed Consolidated Interim Statements of Operations For the three months ended March 31, 2012 and 2011 (in thousands of Canadian Dollars, except per share amounts) (Unaudited)
		Three months ended March 31,
		2012	2011
		$	$
Revenues		31,329	2,686
Expenses (exclusive of depreciation, amortization and interest expense shown below) and other (income) losses
	Operating costs	17,330	1,534
	Selling, general and administrative expense	8,562	2,978
	Foreign exchange (gain) loss	863	1,283
	Depreciation and amortization	411	30
	Interest expense	1,006	383
	Other	(542)	45
		27,630	6,253
Income (loss) before fair value adjustments		3,699	(3,567)
Fair value adjustments		538	(419)
Income (loss) before income taxes and discontinued operations		4,237	(3,986)
Income tax provision (recovery)		1,221	(588)
Income (loss) from continuing operations		3,016	(3,398)
Less: Income (loss) attributable to non-controlling interest		(382)	(1,822)
Income (loss) attributable to shareholders		3,398	(1,576)
Income from discontinued operations		(4)	117
Less: Income (loss) attributable to non-controlling interest		-	-
Income (loss) attributable to shareholders		(4)	117
Net income (loss) attributable to shareholders		3,394	(1,459)
Basic and diluted net income (loss) per share:
Continuing operations		0.04	(0.02)
Discontinued operations		(0.00)	0.00
Basic and diluted net income (loss) per share		0.04	(0.02)
Weighted average number of common shares outstanding (in thousands) - basic  and diluted		85,148	72,631
The notes contained in the Company's condensed consolidated interim financial statements are an integral part of these statements.

Condensed Consolidated Interim Statements of Financial Position As at March 31, 2012 and December 31, 2011 (in thousands of Canadian Dollars) (Unaudited)
	March 31,	December 31,
	2012	2011
	$	$
Assets
Current assets
Cash and cash equivalents	13,471	15,212
Marketable securities	259	255
Mortgages, accounts and deferred interest receivable	22,290	15,643
Inventory	1,939	3,197
Prepaid expenses, deposits and deferred charges	4,329	2,262
Assets of discontinued operations	170	180
	42,458	36,749
Non-current assets
Deferred interest receivable	15,405	12,483
Deferred charges	17,527	15,880
Properties under development	12,774	11,502
Property, plant and equipment	3,460	3,502
Interests in joint ventures	1,029	3,514
Investment in associates	2,492	2,482
Portfolio investments	48,136	47,460
Intangible assets	6,458	6,654
Goodwill	52,855	44,844
Deferred income tax assets	28,473	29,271
Other assets	67	67
Total assets	231,134	214,408
Liabilities
Current liabilities
Accounts payable and accrued liabilities	32,824	21,441
Customer deposits	1,561	1,641
Income taxes payable	134	284
Notes payable	1,000	-
Current portion of mortgages and loans payable	7,755	8,728
Liabilities of discontinued operations	654	629
	43,928	32,723
Non-current liabilities
Mortgages and loans payable	18,807	20,035
Convertible debenture	11,904	11,893
Contingent consideration	10,871	10,715
Deferred income tax liabilities	5,373	4,463
Derivative liability	169	131
Other liabilities	2,267	2,353
Total liabilities	93,319	82,313
Shareholders' equity	137,815	132,095
Total liabilities and shareholders' equity	231,134	214,408
The notes contained in the Company's condensed consolidated interim financial statements are an integral part of these statements.

Counsel Corporation 
Stephen Weintraub 
EVP, Secretary & CFO 
[email protected] 
Tel: [phone]


The Equicom Group
Tim Foran
[email protected]
Tel: [phone] ext. 251