Counsel Announces First Quarter Results

MUA GROWS TO $18.2B; REVENUE UP 16%

TORONTO, May 15, 2014 /CNW/ - Counsel Corporation ("Counsel" or the "Company") (TSX: CXS), a financial services company, today announced financial results for the three months ended March 31, 2014.  All amounts are stated in Canadian dollars unless otherwise noted.

First Quarter 2014 Financial Highlights

• Achieved record mortgages under administration of $18.2 billion
• Mortgages sold decreased slightly to $1.4 billion from $1.6 billion in Q1 2013.
• Revenue increased by 16% to $29.8 million from $25.7 million in Q1 2013.
• Pre-tax income from continuing operations increased by over 150% to $8.9 million from $3.5 million in Q1 2013.
• Diluted earnings per share from continuing operations increased to $0.07, from $0.02 in Q1 2013.

First Quarter Operational Highlights

• In the first quarter of 2013, Counsel's Board of Directors approved a plan to dispose of the Company's non-core operating business segments - Asset Liquidation, Case Goods and Real Estate - in order to focus on its financial services business. By the end of the first quarter of 2014, the Company had successfully completed this plan.
• A special dividend-in-kind was declared on March 20, 2014, payable on April 30, 2014, to Counsel's shareholders of record as at April 1, 2014, in the amount of approximately 0.2084 shares of Heritage Global Inc. for each Counsel share owned on the record date.  The dividend comprised all of the Company's 20,644,481 shares of Heritage Global, its Asset Liquidation business.
• In March, the Company sold its Case Goods business to an investor group led by the President of Fleetwood Fine Furniture.
• Street Capital Financial Corporation ("Street Capital"), the Company's residential mortgage lending business, announced the launch of a Rental Program for the small rental market to further expand its product portfolio and customer offerings.

"During the quarter, we completed the divestiture of our non-core assets in line with our strategy announced last year," said Allan Silber, Chairman and CEO of Counsel Corporation. "We are now solely focused on investing in and growing our financial services business as the platform to create value for our shareholders."

Counsel's revenues are almost entirely generated from its Mortgage Lending business. For the first quarter 2014 revenue was $29.8 million, an increase of 16%, compared to $25.7 million in first quarter 2013. The increase in 2014 was attributable to higher spreads in the credit market and a gain of approximately $4 million from the extinguishment of a debt below face value

Income before income taxes and discontinued operations for the quarter was $8.9 million, an increase of over 150% from $3.5 million in the same period one year ago.

Net loss attributable to shareholders in the first quarter 2014 was $6.4 million, compared with net income of $0.7 million for the same period one year ago reflecting the divesture from the Asset Liquidation and Case Goods businesses and the last Real Estate property. In the first quarter 2014, diluted earnings per share from continuing operations was $0.07, up significantly compared with $0.02 from one year ago.

Mortgage Lending Business

Counsel carries on its residential mortgage lending business through its wholly owned subsidiary Street Capital (www.streetcapital.ca). The company sources its mortgages solely through a network of independent, high quality mortgage brokers across Canada with whom it has built relationships. The company 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.

In the first quarter 2014, the business generated $25.5 million in mortgage lending revenues consistent with the results recorded in the same period of last year. Mortgages sold experienced a slight decline, which was offset by higher credit spreads.

Operating expenses, consisting of the cost to source and underwrite mortgages sold by Street Capital, totaled $15.6 million in the first quarter 2014, down 11%, compared with $17.6 million recorded in the same period last year.

During the first quarter, Street Capital sold $1.4 billion of mortgages, compared with $1.6 billion recorded in the same period one year ago. The business experienced further growth in its portfolio of mortgages under administration to $18.2 billion at March 31, 2014 compared to $13.3 billion at March 31, 2013.

Counsel's Management's Discussion and Analysis and Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2014 will be available on SEDAR (www.sedar.com).

Conference Call
Counsel will host a conference call on Thursday, May 15, 2014 at 5:00 p.m. EDT to discuss its 2014 first quarter financial results. Allan Silber, CEO of Counsel Corporation and Ed Gettings, CEO of Street Capital Financial Corporation will chair the call. To participate in the call, please dial 647-427-7450 or 1-888-231-8191 ten minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until Monday, June 16, 2014 by calling 416-849-0833 or 1-855-859-2056, reference number 41007843.

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.

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
	2014 $	2013 $
Revenues
Operating revenue	25,711	25,692
Other	4,125	-
	29,836	25,692
Expenses
Operating costs	15,654	17,637
Selling, general and administrative expense	8,111	5,490
Foreign exchange (gain) loss	(353)	-
Depreciation and amortization	294	333
Interest expense	365	571
	24,071	24,031
Income before fair value adjustments	5,765	1,661
Fair value adjustments	3,099	1,867
Income before income taxes and discontinued operations	8,864	3,528
Income tax provision	1,447	458
Income from continuing operations	7,417	3,070
Less: Income attributable to non-controlling interest	1,008	1,534
Income from continuing operations attributable to shareholders	6,409	1,536
Loss from discontinued operations	(11,782)	(1,332)
Less: Income (loss) attributable to non-controlling interest	1,053	(537)
Loss from discontinued operations attributable to shareholders	(12,835)	(795)
Net income (loss) attributable to shareholders	(6,426)	741
Basic and diluted net income (loss) per share:
Continuing operations	0.07	0.02
Discontinued operations	(0.13)	(0.01)
Basic and diluted net income (loss) per share	(0.06)	0.01
Weighted average number of common shares outstanding (in thousands) - basic and diluted	99,063	85,851

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, 2014 AND DECEMBER 31, 2013
(In thousands of Canadian dollars) (Unaudited)

	March 31		December 31
	2014 $	2013 $
Assets
Current assets
Cash and cash equivalents	11,880	17,580
Marketable securities	413	410
Mortgages, loans, accounts and deferred interest receivable	36,009	22,004
Prepaid expenses, deposits and deferred charges	4,875	4,655
Shares held for dividend-in-kind	15,749	-
Assets of discontinued operations	863	18,415
	69,789	63,064
Non-current assets
Deferred interest and mortgages receivable	17,871	19,403
Deferred charges	36,753	35,508
Property, plant and equipment	3,659	3,079
Portfolio investments	65,006	53,220
Intangible assets	5,471	5,594
Goodwill	24,919	24,919
Other assets	49	49
Assets of discontinued operations	622	53,367
Total assets	224,139	258,203
Liabilities
Current liabilities
Accounts payable and accrued liabilities	31,279	29,458
Dividend payable	15,749	-
Income taxes payable	2	4
Current portion of mortgages and loans payable	9,003	14,025
Contingent consideration	4,027	4,027
Liabilities of discontinued operations	1,021	20,550
	61,081	68,064
Non-current liabilities
Mortgages and loans payable	11,069	6,703
Contingent consideration	4,672	4,543
Deferred income tax liabilities	10,746	9,349
Derivative liability	3	9
Liabilities of discontinued operations	238	318
Total liabilities	87,809	88,986
Total equity	136,330	169,217
Total liabilities and equity	224,139	258,203

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]

TMX Equicom
Renée Lam
[email protected]
Tel: [phone] ext. 258