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

Counsel Corporation, Stephen Weintraub, EVP, Secretary & CFO, [email protected], Tel: [phone]; TMX Equicom, Renée Lam, [email protected], Tel: [phone] ext. 258