Counsel Announces 2012 Fiscal Year Results Revenues Increase 75% Over 2011

Counsel Announces 2012 Fiscal Year Results Revenues Increase 75% Over 2011 
TORONTO, March 28, 2013 /CNW/ - Counsel Corporation ("Counsel" or the 
"Company") (TSX: CXS), a financial services company, today announced net 
income attributable to shareholders of $10.0 million, or $0.12 per basic and 
$0.11 per diluted share, for the fiscal year ended December 31, 2012 compared 
to $25.5 million, or $0.32 per basic and $0.30 per diluted share, in fiscal 
2011. 2012 net income attributable to shareholders, excluding a $5.7 million 
impairment charge taken on the Company's case goods business segment in the 
fourth quarter, was $14.1 million, or $0.17 per basic and $0.16 per diluted 
share. For the fourth quarter of 2012, Counsel had net income of $0.7 million 
($4.7 million excluding the goodwill impairment charge), or $0.01 ($0.06 
excluding the goodwill impairment charge) per basic and diluted share, 
compared to $23.0 million, or $0.21 per basic and $0.20 per diluted share, in 
the same period of 2011. Counsel recorded revenues of $32.4 million and $139.5 
million for the three and twelve month periods ended December 31, 2012, 
respectively, compared to $32.3 million and $79.8 million for the respective 
corresponding periods ended December 31, 2011. All amounts are stated in 
Canadian dollars, unless noted. 
The decrease in net income in both the fourth quarter and full year fiscal 
2012 was primarily due to an income tax recovery of $26.3 million recorded in 
the fourth quarter of fiscal 2011, compared to a recovery of $5.3 million in 
the fourth quarter of fiscal 2012, as well as the goodwill impairment charge 
noted above.. (Income from continuing operations before fair value adjustments 
and income taxes was $10.6 million in fiscal 2012 compared to $2.8 million in 
2011.) The year-over-year increase in Counsel's revenues in fiscal 2012 was 
primarily attributable to having a full year of contributions from Counsel's 
residential mortgage lending business, Street Capital Financial Corporation 
("Street Capital"), which was acquired on May 31, 2011. The mortgage lending 
business made up approximately 80% of Counsel's 2012 revenues. 
"2012 was an exceptional year for Counsel's mortgage lending business," said 
Allan Silber, Chairman and CEO of Counsel Corporation. "Street Capital sold 
almost 40% more mortgages than in 2011 and is now one of the top lenders 
working through the mortgage broker channel. Additionally, the size of its 
mortgage portfolio increased by 60% during the year, which is an important 
measure of future success and profitability as the business benefits from 
higher margin mortgage renewals when its portfolio matures. Looking ahead, we 
expect to see mortgage renewals grow in importance as Street Capital launched 
its current business approximately five years ago, which corresponds to the 
length of term for the bulk of its mortgage loans. 
Mortgage Lending Business 
Counsel carries on its mortgage lending business through its wholly owned 
subsidiary Street Capital. 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 $17.7 million in after tax income from continuing 
operations on $111.3 million in revenues in 2012 compared to $8.2 million on 
$51.8 million in revenues in 2011 (the period from June 1 to December 31, 2011 
following its acquisition by Counsel). 
The business originated and sold $1.6 billion and $6.0 billion of mortgages in 
the three and twelve months ended December 31, 2012, compared to $0.6 billion 
and $3.7 billion in the respective corresponding periods in 2011. The business 
increased its portfolio of mortgages under administration to $12.0 billion as 
at December 31, 2012, compared to $10.7 billion at September 30, 2012 and $7.5 
billion at December 31, 2011. 
In December 2012, Street Capital applied to Canada's Minister of Finance for 
approval to operate as a federally regulated Schedule I bank with its banking 
business primarily focused on residential mortgage lending as well as allowing 
it to expand into consumer lending and related services. Street Capital's 
application requires approvals from the Office of the Superintendent of 
Financial Institutions (OSFI) and the Minister of Finance and there is no 
assurance these will be received. As was noted when the company announced its 
intention to file the application in September, it is expected the application 
process will take an extended period of time, likely at least two years. If 
approved, the bank will carry on business in Canada under the name of Street 
Capital Bank of Canada in English and Street Capital Banque du Canada in 
French with its head office being located in Toronto. 
In April, 2012, Street Capital entered the near prime segment of the Canadian 
residential mortgage market, which is comprised of borrowers, such as the 
self-employed and new immigrants, who may be unable to obtain financing 
through traditional sources. Near prime mortgages offer potentially higher 
profit margins as the company can charge higher interest rates than on prime 
mortgages along with an acceptance fee. The company's strategy is to prudently 
expand this business over time, but it expects its prime business will account 
for the vast majority of mortgages originated for the foreseeable future. 
Asset Liquidation Business 
Counsel's asset liquidation business is carried on by Counsel's 71.3%-owned 
publically traded subsidiary, Counsel RB Capital Inc. ("CRBCI") through its 
subsidiaries: Counsel RB Capital LLC ("Counsel RB"), EP USA, LLC ("Equity 
Partners") and Heritage Global Partners, Inc. ("HGP"). Counsel RB acquires and 
disposes of distressed and surplus manufacturing facilities primarily in the 
United States and Canada. HGP, acquired at the end of February 2012, provides 
industrial auction and asset appraisal services globally. Equity Partners 
provides M&A advisory services and other advice, arranges for funding in the 
form of debt refinancing and equity investments, and organizes both going 
concern and liquidation sales of business assets. 
In 2012, income from continuing asset liquidation operations was $1.1 million 
on $16.1 million in revenues, compared to $5.0 million on $18.9 million in 
revenues in 2011. 2012 revenues were comprised of the proceeds of asset sales 
of $7.9 million (2011 - $14.3 million), earnings from equity accounted joint 
ventures of $2.0 million (2011 - $2.1 million) and commissions and fees of 
$6.2 million (2011 - $2.5 million). The decrease in revenues in 2012 was 
primarily due to the sale of a paper mill in New Hampshire in the second 
quarter of 2011, a significant transaction recorded in asset sales, partially 
offset by higher commissions and fees in 2012 stemming from the acquisition of 
HGP in February, 2012. The decrease in income from continuing operations in 
2012 was primarily due to higher SG&A expenses, comprised primarily of 
additional personnel expenses from the acquisition and integration of HGP and 
costs stemming from the international expansion of the business in order to 
create additional global opportunities. On October 1, 2012, the business 
opened three new European-based offices in the UK, Germany and Spain, all led 
by seasoned industry veterans with expertise in the field of surplus capital 
asset valuations and dispositions on behalf of many European-based 
subsidiaries of global entities. These investments were necessary for HGP to 
successfully compete for forward flow accounts from large, global companies 
for the disposition of their surplus assets. 
Other 
On December 31, 2012, Counsel's management contract with Terra Firma Capital 
Corporation ("Terra Firma") (TSX-V: TII) ended, pursuant to the Company's 
announcement in September, 2012 that it was terminating the contract effective 
at the end of the calendar year. The decision is consistent with Counsel's 
strategy to focus on its financial services business. Subsequent to year end 
in January, 2013, the Company paid a special dividend-in-kind (valued at 
approximately $1.9 million) of its entire holding of common shares in Terra 
Firma, which represented an approximately 20% stake. Counsel founded Terra 
Firma in 2007 and was its Manager from the time it began commercial operations 
in 2008 until December 31, 2012. During this time, Counsel took Terra Firma 
public and grew it into a profitable real estate finance company. 
Counsel's Management's Discussion and Analysis and Financial Statements for 
the year ended December 31, 2012 will be available on SEDAR (www.sedar.com). 
About Counsel Corporation (www.counselcorp.com) 
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 and private equity 
investment. 
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 amounts) 
(Audited) 


                                                        2012       2011
                                                           $          $
                                                                       

Revenues                                             139,459     79,810
                                                                       

Expenses (exclusive of depreciation, amortization
and                                                           
interest expense shown below) and other (income)
losses                                                                 
                                                                       

  Operating costs                                     81,899     48,084

  Selling, general and administrative expense         42,331     25,800

  Foreign exchange (gain) loss                             5      (622)

  Depreciation and amortization                        1,824        739

  Interest expense                                     3,456      3,033

  Other                                                (625)       (50)
                                                     128,890     76,984
                                                                       

Income (loss) before fair value adjustments           10,569      2,826
                                                                       

Fair value adjustments                                 3,449      2,044

Goodwill impairment                                  (5,700)          -

Income (loss) before income taxes and discontinued            
operations                                             8,318      4,870
                                                                       

Income tax provision (recovery)                      (1,828)   (27,853)
                                                                       

Income (loss) from continuing operations              10,146     32,723

Less: Income (loss) attributable to                           
non-controlling interest                                 454      7,740

Income (loss) attributable to shareholders             9,692     24,983
                                                                       

Income from discontinued operations                      311        561

Less: Income (loss) attributable to                           
non-controlling interest                                   -         33

Income (loss) attributable to shareholders               311        528
                                                                       

Net income (loss) attributable to shareholders        10,003     25,511
                                                                       
                                                                       

Basic net income (loss) per share :                                    

Continuing operations                                   0.11       0.31

Discontinued operations                                 0.01       0.01
                                                                       

Basic net income (loss) per share                       0.12       0.32
                                                                       

Weighted average number of common shares                               

outstanding (in thousands) - basic                    85,525     80,603
                                                                       
                                                                       

Diluted net income (loss) per share:                                   

Continuing operations                                   0.11       0.29

Discontinued operations                                 0.00       0.01
                                                                       

Diluted net income (loss) per share                     0.11       0.30
                                                                       

Weighted average number of common shares                               

outstanding (in thousands) - diluted                  96,608     87,285
                                                              

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

Consolidated Statements of Financial Position 
As at 
(in thousands of Canadian Dollars) 
(Audited)
                                              December 31, December 31,
                                                      2012         2011
                                                         $            $

Assets                                                                 

  Current assets                                                       
    Cash and cash equivalents                       12,196       15,212
    Marketable securities                              109          255
    Mortgages, accounts and deferred interest
    receivable                                      26,360       15,643
    Inventory                                        6,863        3,197
    Prepaid expenses, deposits and deferred
    charges                                          4,637        2,262
    Investment held for sale                         1,851            -
    Income tax receivable                               70            -
    Assets of discontinued operations                   91          180
                                                    52,177       36,749

  Non-current assets                                        
    Deferred interest receivable                    17,086       12,483
    Deferred charges                                24,692       15,880
    Investment properties                            3,969            -
    Properties under development                     6,739       11,502
    Property, plant and equipment                    3,216        3,502
    Interests in joint ventures                      3,600        3,514
    Investment in associates                            20        2,482
    Portfolio investments                           53,454       47,460
    Intangible assets                               11,324        6,654
    Goodwill                                        43,837       44,844
    Deferred income tax assets                      27,438       29,271
    Other assets                                        64           67
                                                                       

Total assets                                       247,616      214,408
                                                                       

Liabilities                                                            

  Current liabilities                                                  
    Accounts payable and accrued liabilities        30,395       21,441
    Customer deposits                                  587        1,641
    Income taxes payable                                19          284
    Current portion of mortgages and loans
    payable                                         24,659        8,728
    Convertible preferred shares                     2,757            -
    Liabilities of discontinued operations             575          629
                                                    58,992       32,723

  Non-current liabilities                                              
    Mortgages and loans payable                     16,144       20,035
    Convertible debenture                           11,937       11,893
    Contingent consideration                         9,264       10,715
    Deferred income tax liabilities                  3,608        4,463
    Derivative liability                                27          131
    Other liabilities                                  643        2,353

Total liabilities                                  100,615       82,313
                                                                       

Shareholders' equity                               147,001      132,095
                                                                       

Total liabilities and shareholders' equity         247,616      214,408



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

Counsel Corporation Stephen Weintraub EVP, Secretary & CFO saw@counselcorp.com 
Tel: (416) 866-3058

The Equicom Group Tim Foran tforan@tmxequicom.com Tel: (416) 815-0700 ext. 251

SOURCE: Counsel Corporation

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CO: Counsel Corporation
ST: Ontario
NI: FIN ERN 

-0- Mar/29/2013 02:05 GMT