Counsel announces second quarter results

MUA GROWS TO $19.3B

TORONTO, Aug. 14, 2014 /CNW/ - Counsel Corporation ("Counsel" or the "Company") (TSX: CXS), a financial services company, today announced financial results for the three months ended June 30, 2014.  All amounts are stated in Canadian dollars unless otherwise noted.

Second Quarter 2014 Highlights

• Mortgages under administration grew to $19.3 billion.
• $1.9 billion of mortgages sold in Q2 2014 compared to $1.4 billion in Q1 2014 and $2.5 billion in Q2 2013.
• $36.1 million of revenue in Q2 2014 compared to $29.8 million in Q1 2014 and $46.4 million in Q2 2013.
• Pre-tax income from continuing operations increased to $12.3 million in Q2 2014 from $8.9 million in Q1 2014 and $9.5 million in Q2 2013.
• Diluted earnings per share from continuing operations were $0.06, in line with Q2 2013.

"I am pleased to report our first full quarter as a financial services focused business," said Allan Silber, Chairman and CEO of Counsel Corporation. "We are on track with the implementation and execution of our strategy as evidenced by our solid bottom-line results."

Income before income taxes and discontinued operations for the quarter was $12.3 million, an increase of over 29% from $9.5 million in the same period one year ago.

Net income attributable to shareholders in the second quarter 2014 was $6.2 million, compared with net income of $4.5 million for the same period one year ago reflecting the increase in the fair value of the Company's private equity portfolio. In the second quarter 2014, diluted earnings per share from continuing operations were $0.06 in line from one year ago.

Mr. Silber added "The pace and success of the monetization of our private equity investments will further enhance the Company's financial position and ability to focus on its financial services operations."

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 second quarter 2014, the business generated $35.8 million in mortgage lending revenues compared to $46.3 million in the same period one year ago. Mortgages sold experienced a decrease as management focused on credit quality over volume.

Operating expenses, consisting of the cost to source and underwrite mortgages sold by Street Capital, totaled $20.7 million in the second quarter 2014, down 30%, compared with $29.5 million recorded in the same period last year.

During the second quarter, Street Capital sold $1.9 billion of mortgages, compared with $2.5 billion recorded in the same period one year ago. The business continued to experience growth in its portfolio of mortgages under administration to $19.3 billion at June 30, 2014 compared to $15.0 billion at June 30, 2013.

Street Capital's bank license application is proceeding in accordance with expectations and management is pleased with the progress to date.

Counsel's Management's Discussion and Analysis and Condensed Consolidated Interim Financial Statements for the three months and six months ended June 30, 2014 will be available on SEDAR (www.sedar.com).

Conference Call

Counsel will host a conference call on Thursday, August 14, 2014 at 5:00 p.m. EDT to discuss its 2014 second 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 Thursday, September 11, 2014 by calling 416-849-0833 or 1-855-859-2056, reference number 74182840.

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 AND SIX MONTHS ENDED JUNE 30
(In thousands of Canadian dollars, except per share data) (Unaudited)

		Three months ended June 30				Six months ended June 30
		2014 $	2013 $			2014 $	2013 $
Revenues
	Operating revenue	36,062	46,440			61,773	72,132
	Other	-	-			4,125	-
		36,062	46,440			65,898	72,132
Expenses
	Operating costs	20,748	29,464			36,402	47,101
	Selling, general and administrative expense	8,782	9,463			16,893	14,953
	Foreign exchange	9	-			(344)	-
	Depreciation and amortization	322	330			616	663
	Interest expense	344	540			709	1,111
		30,205	39,797			54,276	63,828
Income before fair value adjustments		5,857	6,643			11,622	8,304
Fair value adjustments		6,420	2,901			9,519	4,768
Income before income taxes and discontinued operations		12,277	9,544			21,141	13,072
Income tax provision		2,125	1,767			3,572	2,225
Income from continuing operations		10,152	7,777			17,569	10,847
Income (loss) from discontinued operations		169	(1,468)			(11,613)	(2,800)
Net income		10,321	6,309			5,956	8,047
Net income attributable to non-controlling interest		4,082	1,823			6,143	2,820
Net income attributable to shareholders		6,239	4,486			(187)	5,227
Basic and diluted net income (loss) per share:
	Continuing operations	0.06	0.06			0.13	0.08
	Discontinued operations	0.00	(0.01)			(0.13)	(0.02)
Basic and diluted net income (loss) per share		0.06	0.05			0.00	0.06
Weighted average number of common shares outstanding (in thousands) - basic and diluted		99,071	90,621			99,067	88,249

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 JUNE 30, 2014 AND DECEMBER 31, 2013
(In thousands of Canadian dollars) (Unaudited)

			June 30,		December 31,
			2014 $	2013 $
Assets
	Current assets
		Cash and cash equivalents	19,282	17,580
		Marketable securities	427	410
		Mortgages, loans, accounts and deferred interest receivable	39,320	22,004
		Prepaid expenses, deposits and deferred charges	6,212	4,655
		Assets of discontinued operations	860	18,415
			66,101	63,064
Non-current assets
		Deferred interest and mortgages receivable	22,358	19,403
		Mortgages receivable - securitized financing	10,961	-
		Deferred charges and other assets	38,766	35,557
		Property, plant and equipment	4,023	3,079
		Portfolio investments	61,868	53,220
		Intangible assets	5,348	5,594
		Goodwill	24,919	24,919
		Assets of discontinued operations	471	53,367
Total assets			234,815	258,203
Liabilities
	Current liabilities
		Accounts payable and accrued liabilities	46,518	29,458
		Income taxes payable	2	4
		Current portion of mortgages and loans payable	20,476	14,025
		Contingent consideration	2,600	4,027
		Liabilities of discontinued operations	983	20,550
			70,579	68,064
	Non-current liabilities
		Mortgages and loans payable	-	6,703
		Securitization liabilities	10,981	-
		Contingent consideration	2,163	4,543
		Deferred income tax liabilities	12,806	9,349
		Derivative liability	-	9
		Liabilities of discontinued operations	150	318
Total liabilities			96,679	88,986
Equity
		Share capital	203,719	203,333
		Share based compensation	12,389	12,202
		Foreign currency translation	273	2,392
		Contributed surplus	50,215	50,215
		Retained earnings (deficit)	(168,738)	(152,035)
		Shareholders' equity	97,858	116,107
Non-controlling interest			40,278	53,110
Total Equity			138,136	169,217
Total liabilities and equity			234,815	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