Counsel Announces Fourth Quarter and Year-End 2013 Results

MORTGAGE SALES RISE 30%; MUA GROWS TO $17.5B; REVENUES INCREASE 24%

TORONTO, March 31, 2014 /CNW/ - Counsel Corporation ("Counsel" or the "Company") (TSX: CXS), a financial services company, today announced year-end financial results for the twelve-month period ended December 31, 2013.  All amounts are stated in Canadian dollars unless otherwise noted.

2013 Financial Highlights

  • Revenue increased by 24% to $139.0 million from $112.1 million in 2012.
  • Pre-tax income from continuing operations increased by 42% to $27.6 million from $19.5 million in 2012.
  • Mortgages under administration increased by 46% to $17.5 billion from $12.0 billion in 2012.
  • Mortgages sold increased by 30% to $7.8 billion, from $6.0 billion in the previous year.
  • Fully diluted earnings per share from continuing operations decreased to $0.16, from $0.18 in 2012.

2013 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.
  • Received Canada Mortgage and Housing Corporation approval to be an issuer of National Housing Act mortgage-backed securities ("NHA MBS") and an approved seller under the Canada Mortgage Bond ("CMB") program.

"We are very pleased with our strong results in 2013 which were driven by the exceptional performance of our residential mortgage lending business," said Allan Silber, Chairman and CEO of Counsel Corporation. "We have grown to be one of the market leaders in the residential mortgage lending industry, which we expect will continue to drive positive results in 2014."

Counsel's revenues are almost entirely generated from its mortgage lending business. The year-over-year increase of Counsel's revenue in 2013 reflects growth in the volume of mortgages sold by Street Capital Financial Corporation ("Street Capital").

Revenue for 2013 was $139.0 million, compared to $112.1 million in 2012. The increase in 2013 was attributable to an increase in mortgages sold. For the fourth quarter of 2013, revenue was $28.4 million compared to $26.4 million for the same period one year ago. Over the past five years, Street Capital has experienced steady growth in both mortgages originated and sold, which continues to be a primary driver for the business.

Income before income tax and discontinued operations for 2013 was $27.6 million, an increase of over 40% from $19.5 million in 2012. The increase was primarily attributable to growth in mortgage sales throughout the year and an increase in the fair value of the Company's Private Equity portfolio. For the fourth quarter of 2013, income before income tax and discontinued operations was $10.3 million, up 292%, from $2.6 million for the same period in 2012.

Net income attributable to shareholders in 2013 was $9.5 million, compared with $10.0 million for the same period one year ago. In the fourth quarter 2013, net income attributable to shareholders was $655,000 compared with $672,000 for the same period one year ago. In 2013, fully diluted earnings per share from continuing operations was $0.16, down slightly from $0.18 one year ago. For the fourth quarter 2013, fully diluted earnings per share from continuing operations was $0.05, compared with $0.06 in the same period 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.

The business generated $136.8 million in mortgage lending revenues in 2013 compared to $111.3 million in 2012. The increase was due to growth in the volume of mortgages sold. Operating expenses, consisting of the cost to source and underwrite mortgages sold by Street Capital, totaled $87.0 million in 2013 compared with $65.7 million in 2012. The increase reflects the increase in mortgages sold and costs incurred to expand Street Capital's share of the mortgage broker channel.

Street Capital sold $7.8 billion of mortgages in 2013, compared to $6.0 billion in 2012. The business increased its portfolio of mortgages under administration to $17.5 billion at December 31, 2013 compared to $12.0 billion at December 31, 2012.

Counsel's Management's Discussion and Analysis and Condensed Consolidated Interim Financial Statements for the twelve months ended December 31, 2013 will be available on SEDAR (www.sedar.com).

Conference Call
Counsel will host a conference call on Monday, March 31, 2014 at 5:00 p.m. EDT to discuss its 2013 third 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 Wednesday, April 30, 2014 by calling 416-849-0833 or 1-855-859-2056, reference number 8443184.

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.


CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31
(In thousands of Canadian dollars, except per share data)






2013

2012



$

$





Revenues


137,627

112,111

   Operating revenue


1,372

3

   Other 


138,999

112,114





Expenses




   Operating costs


87,028

65,731

   Selling, general and administrative expense


30,902

27,290

   Foreign exchange 


105

44

   Depreciation and amortization


1,334

1,394

   Interest expense 


1,942

2,270

   Other 


(214)

-



121,097

96,729





Income before fair value adjustments


17,902

15,385





Fair value adjustments 


9,740

4,122

Income before income taxes and discontinued operations


27,642

19,507





Income tax provision (recovery)


5,728

(946)





Income from continuing operations


21,914

20,453





Income (loss) from discontinued operations 


(8,649)

(9,996)





Net income


13,265

10,457





net income attributable to non-controlling interest


3,799

454





Net income (loss) attributable to shareholders


9,466

10,003





Basic  net income (loss) per share :




  Continuing operations


0.16

0.19

  Discontinued operations


(0.06)

(0.07)





Basic net income per share 


0.10

0.12





Weighted average number of common shares




outstanding (in thousands) - basic 


92,705

85,525









Diluted net income (loss) per share:




  Continuing operations


0.16

0.18

  Discontinued operations


(0.06)

(0.07)





Diluted net income (loss) per share 


0.10

0.11





Weighted average number of common shares




outstanding (in thousands) - diluted


92,705

96,608





 

The accompanying notes in the Company's audited consolidated financial statements are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION   
AS AT DECEMBER 31, 2013 AND 2012
(In thousands of Canadian dollars)






December 31, 

December 31,






2013

2012






$

$

Assets







Current assets






Cash and cash equivalents 



17,580

12,196

Marketable securities 



410

109

Mortgages, accounts and deferred interest receivable 

22,004

26,360

Inventory




-

6,863

Prepaid expenses, deposits and deferred charges

4,655

4,637

Investment held for sale



-

1,851

Income tax receivable



-

70

Assets of discontinued operations



18,415

91






63,064

52,177

Non-current assets





Deferred interest and mortgage receivable 

19,403

17,086

Deferred charges



35,508

24,692

Investment properties



-

3,969

Properties under development 



-

6,739

Property, plant and equipment 



3,079

3,216

Interests in joint ventures



-

3,600

Investment in associates



-

20

Portfolio investments



53,220

53,454

Intangible assets



5,594

11,324

Goodwill




24,919

43,837

Deferred income tax assets



-

27,438

Other assets




49

64

Assets of discontinued operations



53,367

-








Total assets





258,203

247,616








Liabilities







Current liabilities






Accounts payable and accrued liabilities 

29,458

30,395

Customer deposits



-

587

Income taxes payable 



4

19

Current portion of mortgages and loans payable 

14,025

24,659

Contingent consideration



4,027

2,757

Liabilities of discontinued operations 

20,550

575






68,064

58,992

Non-current liabilities





Mortgages and loans payable 



6,703

16,144

Convertible debentures



-

11,937

Contingent consideration



4,543

9,264

Deferred income tax liabilities 



9,349

3,608

Derivative liability



9

27

Other liabilities



-

643

Liabilities of discontinued operations


318

-

Total liabilities





88,986

100,615








Equity





           Share Capital



203,333

188,349

           Share based compensation



12,202

8,627

           Foreign currency translation



2,392

498

           Contributed surplus



50,215

49,579

           Accumulated other comprehensive income



-

75

           Retained earnings (deficit)



(152,035)

(161,576)

           Shareholders' equity 



116,107

85,552






        Non-controlling interest



53,110

61,449






Total Equity



169,217

147,001








Total liabilities and shareholders' equity



258,203

247,616

 

The notes contained in the Company's audited consolidated financial statements are an integral part of these statements.

SOURCE Counsel Corporation

For further information: Counsel Corporation, Stephen Weintraub, EVP, Secretary & CFO, saw@counselcorp.com, Tel: (416) 866-3058; TMX Equicom, Renée Lam, rlam@tmxequicom.com, Tel: (416) 815-0700 ext. 258