Counsel Announces Third Quarter 2013 Results

MORTGAGE SALES RISE 32%; MUA GROWS TO $16.7B; REVENUES INCREASE 33%; CONSOLIDATED EPS DOUBLES

TORONTO, Nov. 14, 2013 /CNW/ - Counsel Corporation ("Counsel" or the "Company") (TSX: CXS), a financial services company, today announced income from continuing operations attributable to shareholders of $3.0 million, or $0.03 per basic and diluted share, on $38.5 million in revenue in the third quarter ended September 30, 2013, compared to $4.0 million, or $0.05 per basic and diluted share, on $29.0 million in revenue in the same period of 2012. For the nine months ended September 30, 2013, income from continuing operations attributable to shareholders was $10.0 million, or $0.11 per basic and diluted share, on $110.6 million in revenue compared to $11.4 million, or $0.13 per basic and diluted share, on $85.7 million in revenue in the same period of 2012. Excluding the expense related to the increase in the market value of the Company's deferred share units (DSUs), income from continuing operations attributable to shareholders was $4.0 million and $11.8 million in the three and nine months ended September 30, 2013 respectively, compared to $4.1 million and $11.6 million in the respective corresponding periods in 2012. All amounts are stated in Canadian dollars, unless noted.

"We're quite pleased with our results in the third quarter. Our core residential mortgage lending business, Street Capital, continued to grow rapidly, recording $2.3 billion in mortgage sales compared to $1.7 billion in Q3 2012," said Allan Silber, Chairman and CEO of Counsel Corporation. "The company's mortgage sales have grown significantly year-to-date as well, and this strong growth has counteracted the impact of lower spreads in the credit market compared to the same period in 2012."

"Street Capital's mortgages under administration also grew to $16.7 billion, a 56% increase over the past year," added Mr. Silber. "We are now one of Canada's largest non-bank residential mortgage lenders, the result of our focus on cultivating a healthy portfolio of mortgages through stringent underwriting and robust quality assurance combined with the provision of excellent customer service and competitive mortgage products for mortgage brokers and borrowers."

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

Counsel's overall net income attributable to shareholders, including discontinued operations, increased to $3.6 million, or $0.04 per basic and diluted share, in the third quarter of 2013 versus $1.9 million, or $0.02 per basic and diluted share, in the third quarter of 2012. The year-over-year increase was primarily attributable to $0.6 million in income from the Company's discontinued operations attributable to shareholders versus a loss of $2.2 million in the third quarter of 2012. For the nine months ended September 30, 2013, net income attributable to shareholders was $8.8 million, or $0.10 per basic and diluted share, versus $9.3 million, or $0.11 per basic and diluted share, in the same period in 2012. The result includes an expense of $1.8 million due to the increase in market value of the Company's DSUs in the first nine months of 2013, versus an increase of $0.2 million in the nine months ended September 30. In June 2011, the Company ceased granting DSUs. In November, 2013, the Company and the existing DSU holders agreed to amend the DSU Plan to provide for payment in shares rather than cash; therefore, there will be no further impact on the statement of operations.

As part of its focus on financial services, the Company continues to pursue its plan to dispose of its non-core businesses, which were classified as discontinued operations in the first quarter of 2013, by the end of the first quarter of 2014. As part of this process, during and subsequent to the quarter, the Company completed the sale of two of its remaining real estate properties.

Mortgage Lending Business

Counsel carries on its 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 $38.3 million and $110.0 million in revenues in the three and nine months ended September 30, 2013 compared to $28.9 million and $85.0 million in the respective corresponding periods in 2012. The increase in both periods 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 $24.5 million and $71.6 million in the three and nine months ended September 30, 2013 compared to $15.7 million and $47.6 million in the respective corresponding periods in 2012. The increases reflect the increase in mortgages sold and costs incurred to expand Street Capital's share of the mortgage broker channel.

Street Capital sold $2.266 billion and $6.316 billion of mortgages in the three and nine months ended September 30, 2013, compared to $1.674 billion and $4.385 billion in the respective corresponding periods in 2012. The business increased its portfolio of mortgages under administration to $16.7 billion at September 30, 2013 compared to $10.7 billion at September 30, 2012 and $15.0 billion at June 30, 2013.

Counsel's Management's Discussion and Analysis and Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2013 will be available on SEDAR (www.sedar.com).

Conference Call
Counsel will host a conference call on Friday, November 15, 2013 at 9:00 a.m. ET 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 Monday, December 16, 2013 by calling 416-849-0833 or 1-855-859-2056, reference number 91519205.

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
(in thousands of Canadian Dollars, except per share amounts)
(Unaudited)
  Three months ended September 30,   Nine months ended September 30,
  2013 2012   2013 2012
  $ $   $ $
           
Revenues 38,473 28,986   110,605 85,719
           
Expenses          
  Operating costs 24,520 15,716   71,621 47,626
  Selling, general and administrative expense 9,049 7,319   24,002 19,634
  Foreign exchange (gain) loss (58)   (5)
  Depreciation and amortization 344 325   1,007 1,060
  Interest expense 447 557   1,558 1,708
  34,360 23,859   98,188 70,023
           
Income before fair value adjustments 4,113 5,127   12,417 15,696
           
Fair value adjustments 159 16   4,927 1,187
Income before income taxes and discontinued operations 4,272 5,143   17,344 16,883
           
Income tax provision 1,206 1,269   3,431 4,085
           
Income from continuing operations 3,066 3,874   13,913 12,798
Less: Income (loss) attributable to non-controlling interest 34 (159)   3,959 1,405
Income attributable to shareholders 3,032 4,033   9,954 11,393
           
Income from discontinued operations 307 (2,718)   (2,492) (3,141)
Less: Income (loss) attributable to non-controlling interest (245) (540)   (1,349) (1,079)
Income (loss) attributable to shareholders  552 (2,178)   (1,143) (2,062)
           
Net income attributable to shareholders 3,584 1,855    8,811 9,331
           
Basic and diluted net income (loss) per share :          
Continuing operations 0.03 0.05   0.11 0.13
Discontinued operations 0.01 (0.03)   (0.01) (0.02)
           
Basic and diluted net income per share 0.04 0.02   0.10 0.11
           
Weighted average number of common shares          
outstanding (in thousands) - basic and diluted 96,224 85,783   90,622 85,433
             

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
(in thousands of Canadian Dollars)
(Unaudited)
  September 30, December 31,
  2013 2012
  $ $
Assets    
  Current assets    
    Cash and cash equivalents 37,877 12,196
    Marketable securities 117 109
    Mortgages, accounts and deferred interest receivable 36,967 26,360
    Inventory 6,863
    Prepaid expenses, deposits and deferred charges 4,216 4,637
    Investment held for sale 1,851
    Income tax receivable 70
    Assets of discontinued operations 17,058 91
    96,235 52,177
  Non-current assets    
    Deferred interest and mortgage receivable 14,559 17,086
    Deferred charges 33,878 24,692
    Investment properties 3,969
    Properties under development 6,739
    Property, plant and equipment 3,141 3,216
    Interests in joint ventures 3,600
    Investment in associates 20
    Portfolio investments 45,751 53,454
    Intangible assets 5,718 11,324
    Goodwill 24,919 43,837
    Deferred income tax assets 27,438
    Other assets 49 64
    Assets of discontinued operations 68,197
     
Total assets 292,447 247,616
     
Liabilities    
  Current liabilities    
    Accounts payable and accrued liabilities 65,343 30,395
    Customer deposits 587
    Income taxes payable 19 19
    Current portion of mortgages and loans payable 14,933 24,659
    Contingent consideration 4,027 2,757
    Liabilities of discontinued operations 24,943 575
  109,265 58,992
  Non-current liabilities    
    Mortgages and loans payable 6,623 16,144
    Convertible debentures 11,937
    Contingent consideration 4,416 9,264
    Deferred income tax liabilities 6,972 3,608
    Derivative liability 14 27
    Other liabilities 643
    Liabilities of discontinued operations 319
Total liabilities 127,609 100,615
     
Shareholders' equity 164,838 147,001
     
Total liabilities and shareholders' equity 292,447 247,616
     

The notes contained in the Company's condensed consolidated interim 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
Tim Foran
tforan@tmxequicom.com
Tel: (416) 815-0700 ext. 251

Profil de l'entreprise

Counsel Corporation

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