Net Income, Eps, and Revenues Soar
TORONTO, May 15, 2012 /CNW/ - Counsel Corporation ("Counsel" or the "Company") (TSX: CXS), a financial services company, today announced net income attributable to shareholders of $3.4 million, or $0.04 per basic and diluted share, for the first quarter of 2012 compared to a loss of $1.5 million, or $0.02 per basic and diluted share, for 2011's first quarter. Revenues increased more than ten-fold to $31.3 million for the quarter ended March 31, 2012 compared to revenues of $2.7 million in the same quarter in 2011. All amounts are stated in Canadian dollars, unless noted.
The significant year-over-year increase in Counsel's first quarter revenues and income was primarily due to two factors:
- having a full quarter of contributions from Counsel's mortgage lending business, Street Capital Financial Corporation ("Street Capital"), which was acquired on May 31, 2011; and
- the improved results from Counsel's other major operating company, Counsel RB Capital LLC ("Counsel RB"), a leading provider of capital asset solutions.
Street Capital generated $5.2 million in income from continuing operations in the first quarter of 2012 on $24.2 million in revenues. The company doubled its percentage share of mortgages underwritten through the Canadian mortgage broker channel to more than 8% in the first quarter of 2012 over the first quarter of 2011 and was ranked third in mortgage broker market share in terms of funded volume for the quarter ended March 31, 2012, according to an industry report.
Street Capital's revenues are comprised of the gain on sales of mortgages to institutional investors. The company sold $1.4 billion of mortgages in the first quarter of 2012 (it sold $3.7 billion in the full year 2011), placing it among the industry leaders in mortgage underwriting in Canada. Street Capital ended the first quarter with $8.3 billion in mortgages under administration, compared with $7.5 billion at the end of 2011.
Last month, Street Capital announced that it was expanding its business into the near prime segment of the Canadian mortgage market with the introduction of its new Street Options Program. Near prime is a segment of the mortgage credit market just below prime and comprised of borrowers who are unable to find financing through traditional sources. The company launched the Street Options Program to a small group of mortgage brokers in Ontario and will progressively expand it to additional approved mortgage brokers across Canada. Street Capital sells the mortgages it originates through its Street Options Program to institutional investors, as it does with the mortgages generated by its prime lending business.
"We're excited about the opportunities for Street Capital in the near prime mortgage market," said Allan Silber, Chairman and CEO of Counsel. "We believe the segment is underserved despite offering potentially higher profit margins and that Street Capital can become a significant participant in this space."
Counsel RB is a value driven, innovative leader in distressed and surplus capital asset transactions and a wholly owned subsidiary of Counsel RB Capital Inc. ("CRBCI") (OTCQB: CRBN), a publicly traded company controlled by Counsel. In the first quarter of 2012, Counsel RB's income from continuing operations increased 43%, to $0.9 million, and its revenues increased 81% to $4.1 million, from the comparative period in 2011. The company's first quarter revenues were comprised of the proceeds of:
- asset sales of $1.8 million (Q1 2011 - $0.6 million);
- earnings from equity accounted joint ventures of $1.1 million (Q1 2011 - $1.5 million); and,
- commissions and fees of $1.2 million (Q1 2011 - $0.1 million).
The substantial increase in commissions and fees was due to significantly higher deal activity through joint ventures and from approximately one month of revenues contributed by Heritage Global Partners Inc. ("HGP"), a leading full-service global auction and asset advisory firm acquired by CRBCI at the end of February.
"The addition of HGP was a transformational event for Counsel RB," said Mr. Silber, who serves as CRBCI's Chairman and President. "HGP diversifies Counsel RB's revenue streams, providing sustainable, recurring fee income, and will also be a source of new deal flow. In addition, the acquisition of an in-house industrial auction division results in cost savings for Counsel RB and broadens the array of capital asset solutions the company can offer its client base. Finally, it will increase Counsel RB's profile and brand recognition in the industry."
"The first quarter of 2012 was pivotal for both of our major operating businesses," concluded Mr. Silber. "After growing into profitable industry leaders in just a few years, they have taken important steps in the execution of their growth strategies: Street Capital, with its expansion into near prime mortgage lending; and Counsel RB, with its acquisition of an industrial auction and appraisal division. We look forward to reporting on their progress, and that of Counsel, throughout the rest of 2012."
The Company's Management's Discussion and Analysis and Financial Statements for the quarter ended March 31, 2012 have been filed and are available on SEDAR (www.sedar.com).
About Counsel Corporation
Counsel Corporation (TSX: CXS) is a financial services company that operates through its individually branded businesses in residential mortgage lending, distressed and surplus capital asset transactions, real estate finance and private equity investment. For further information, please visit Counsel's website at www.counselcorp.com.
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, 2012 and 2011
(in thousands of Canadian Dollars, except per share amounts)
|Three months ended March 31,|
Expenses (exclusive of depreciation, amortization and interest expense
shown below) and other (income) losses
|Selling, general and administrative expense||8,562||2,978|
|Foreign exchange (gain) loss||863||1,283|
|Depreciation and amortization||411||30|
|Income (loss) before fair value adjustments||3,699||(3,567)|
|Fair value adjustments||538||(419)|
|Income (loss) before income taxes and discontinued operations||4,237||(3,986)|
|Income tax provision (recovery)||1,221||(588)|
|Income (loss) from continuing operations||3,016||(3,398)|
|Less: Income (loss) attributable to non-controlling interest||(382)||(1,822)|
|Income (loss) attributable to shareholders||3,398||(1,576)|
|Income from discontinued operations||(4)||117|
|Less: Income (loss) attributable to non-controlling interest||-||-|
|Income (loss) attributable to shareholders||(4)||117|
|Net income (loss) attributable to shareholders||3,394||(1,459)|
|Basic and diluted net income (loss) per share:|
|Basic and diluted net income (loss) per share||0.04||(0.02)|
|Weighted average number of common shares outstanding (in thousands) - basic and diluted||85,148||72,631|
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
|March 31,||December 31,|
|Cash and cash equivalents||13,471||15,212|
|Mortgages, accounts and deferred interest receivable||22,290||15,643|
|Prepaid expenses, deposits and deferred charges||4,329||2,262|
|Assets of discontinued operations||170||180|
|Deferred interest receivable||15,405||12,483|
|Properties under development||12,774||11,502|
|Property, plant and equipment||3,460||3,502|
|Interests in joint ventures||1,029||3,514|
|Investment in associates||2,492||2,482|
|Deferred income tax assets||28,473||29,271|
|Accounts payable and accrued liabilities||32,824||21,441|
|Income taxes payable||134||284|
|Current portion of mortgages and loans payable||7,755||8,728|
|Liabilities of discontinued operations||654||629|
|Mortgages and loans payable||18,807||20,035|
|Deferred income tax liabilities||5,373||4,463|
|Total liabilities and shareholders' equity||231,134||214,408|
|The notes contained in the Company's condensed consolidated interim financial statements are an integral part of these statements.|
EVP, Secretary & CFO
Tel: (416) 866-3058
The Equicom Group
Tel: (416) 815-0700 ext. 251