Counsel Corporation
TSX : CXS

Counsel Corporation

November 08, 2007 17:26 ET

Counsel Corporation 2007 Third Quarter Results

TORONTO, ONTARIO--(Marketwire - Nov. 8, 2007) - Counsel Corporation (TSX:CXS) today reported its financial results for the three and nine months ended September 30, 2007. All amounts are stated in Canadian dollars.

Net income for the three and nine months ended September 30, 2007 was $6.0 million and $8.3 million, respectively, compared with $0.8 million and $4.7 million for the comparable periods in 2006.

Significant developments since the beginning of the third quarter of 2007 to date are:

- In August 2007, Counsel entered into an agreement to sell its long-term care business, comprised of the assets and operations of seven nursing homes in Ontario with 1,127 beds. The purchase price is approximately $67 million, subject to usual closing adjustments for a transaction of this nature. Subject to regulatory approval, the sale is expected to close in the first half of 2008 and yield a gain of over $50 million. As a result of the agreement to sell the long-term care business, the operations of this segment, including those reported for prior periods, have been reclassified as discontinued operations.

- On September 25, 2007, Counsel invested $65,000 in the seed round of Terra Firma Capital Corporation ("Terra Firma"), a capital pool company. Counsel is considered to be the promoter of Terra Firma in that it took the initiative in founding and organizing Terra Firma. On October 10, 2007, Terra Firma filed a preliminary prospectus for an initial public offering of common shares in accordance with and subject to the rules of the TSX Venture Exchange. A total of 3.5 million common shares of Terra Firma are being offered under the prospectus, on a best efforts basis, at a price of $0.20 per share. Terra Firma has no ongoing commercial operations and the purpose of the offering is to provide the funds necessary to identify and evaluate businesses and assets with a view to completing a "Qualifying Transaction" pursuant to the rules of the TSX Venture Exchange. Terra Firma currently anticipates pursuing a Qualifying Transaction through the acquisition of real property, focusing primarily on the commercial, industrial and institutional sectors.

- On October 3, 2007, Counsel acquired, for its own account and on behalf of a group of investors, 575 Park Road North, a retail centre located in Brantford, Ontario. The centre contains approximately 84,000 square feet of net rentable space, situated on an 8.2 acre site. The purchase price was approximately $4 million, including closing and related costs, which is being financed with $2.2 million of combined first and vendor two-year mortgages at 5.61%.

- During the third quarter of 2007, C2 Global Technologies Inc., Counsel's 93%-owned, publicly traded US subsidiary (OTCBB:COBT) made several investments in Internet-based e-commerce businesses: LIMOS.com LLC, Buddy Media, Inc. and MyTrade.com, Inc.

For the third quarter ended September 30, 2007, the Company's consolidated revenue from continuing operations was $16.0 million, an increase of 56.9% from $10.2 million in the same period of 2006. The increase is attributable to $4.7 million of fees earned for constructing and leasing new space at two of the properties we manage and the acquisition of Yorkgate Mall acquired in April 2007. The Company had income from continuing operations of $5.1 million, or $0.11 per share, basic, and $0.10 per share, diluted, for the three months ended September 30, 2007, compared with income of $0.3 million, or $0.00 per share, basic and diluted, for the three months ended September 30, 2006. Including discontinued operations, the Company had net income of $6.0 million or $0.13 per share, basic, and $0.11 per share, diluted, for the three months ended September 30, 2007, compared with net income of $0.8 million, or $0.01 per share, basic and diluted, for the three months ended September 30, 2006.

For the nine months ended September 30, 2007, the Company's consolidated revenue from continuing operations was $34.9 million, an increase of 101.7% from $17.3 million in the same period of 2006. The increase in revenue is attributable to the acquisition of a case goods business and three income producing properties in the first half of 2006 and Yorkgate Mall acquired in April 2007, as well as $6.0 million of fees earned for constructing and leasing new space at two of the properties we manage. The Company had income from continuing operations of $6.3 million, or $0.14 per share, basic and diluted, for the nine months ended September 30, 2007, compared with a loss of $2.5 million, or $0.07 per share, basic and diluted, for the nine months ended September 30, 2006. Including discontinued operations, the Company had net income of $8.3 million or $0.18 per share, basic, and $0.17 per share, diluted, for the nine months ended September 30, 2007, compared with net income of $4.7 million, or $0.08 per share, basic and diluted, for the same period of 2006.

"We are very pleased with the progress made in 2007 to date in all of our businesses, from both an operational and value creation aspect. We look forward to continued positive results over the balance of the year" said Allan Silber, Counsel's Chairman and CEO.

The Company Management's Discussion and Analysis and Financial Statements have been filed and are available on SEDAR (www.sedar.com).

About Counsel Corporation

Counsel Corporation (TSX:CXS) is a diversified company focused on the acquisition of businesses in diverse industry sectors and at various stages of their business life cycles. Its goal for acquired businesses is to create value within these businesses and to realize on the value creation at the appropriate time. Counsel currently operates in three specific sectors: real estate, patent licensing and custom case goods. For further information, please visit Counsel's website at www.counselcorp.com.

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.



Counsel Corporation
Consolidated Statements of Operations
(in thousands of Cdn Dollars, except per share amounts)
(Unaudited)

Three months Nine months
ended September 30, ended September 30,
2007 2006 2007 2006
$ $ $ $
-------------------- --------------------

Revenues
Case goods 8,114 8,477 21,584 14,014
Real estate 7,911 1,734 13,289 3,307
Patent licensing - - - -
-------------------- --------------------
16,025 10,211 34,873 17,321
-------------------- --------------------

Operating costs and expenses
Case goods (exclusive of
depreciation and amortization
shown below) 6,194 6,018 15,774 9,789
Real estate (exclusive of
depreciation and
amortization shown below) 1,752 901 4,616 1,915
Selling, general and
administrative 3,039 2,985 7,972 8,304
Foreign exchange (gains)
losses (2,110) 35 (5,755) (1,579)
Depreciation and amortization 802 978 3,031 1,658
-------------------- --------------------

9,677 10,917 25,638 20,087
-------------------- --------------------

Operating income(loss)
before undernoted items 6,348 (706) 9,235 (2,766)


Other income and losses
Gain(loss) on short-term
investments 35 (99) (6) 582
Earnings(loss) from
equity-accounted portfolio
investments (348) - 1,313 -
Other 7 - (303) 631
-------------------- --------------------

Income(loss) before the
undernoted 6,042 (805) 10,239 (1,553)

Interest income 129 330 459 1,257
Interest expense (1,685) (762) (4,954) (3,378)
-------------------- --------------------
Income(loss) before income
taxes, non-controlling interest
and discontinued operations 4,486 (1,237) 5,744 (3,674)

Income tax provision(recovery) (896) (1,805) (849) (1,523)
Non-controlling interest 257 228 259 335
-------------------- --------------------
Income(loss) from continuing
operations 5,125 340 6,334 (2,486)

Income from discontinued
operations 864 449 1,962 7,155
-------------------- --------------------

Net income 5,989 789 8,296 4,669
-------------------- --------------------
-------------------- --------------------

Basic net income(loss) per share:
Continuing operations 0.11 0.00 0.14 (0.07)
Discontinued operations 0.02 0.01 0.04 0.15
-------------------- --------------------

Basic net income per share 0.13 0.01 0.18 0.08
-------------------- --------------------
-------------------- --------------------

Weighted average number of
common shares outstanding
(in thousands) - basic 46,492 46,816 46,492 47,060

Diluted net income(loss)
per share:
Continuing operations 0.10 0.00 0.14 (0.07)
Discontinued operations 0.01 0.01 0.03 0.15
-------------------- --------------------

Diluted net income per share 0.11 0.01 0.17 0.08
-------------------- --------------------
-------------------- --------------------

Weighted average number of
common shares outstanding
(in thousands) - diluted 59,678 46,816 59,478 47,060

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



Counsel Corporation
Consolidated Balance Sheets
(in thousands of Cdn Dollars)
(Unaudited)

September 30, December 31,
2007 2006
$ $
--------------------------

Assets

Current assets
Cash and cash equivalents 4,397 5,615
Short-term investments (market value
$197; 2006 - $6,213) 197 5,718
Accounts receivable (net of allowance
for doubtful accounts of $59; 2006 - $15) 8,682 5,251
Inventories 2,767 1,427
Prepaid expenses and deposits 4,180 1,479
Assets of discontinued operations 7,662 15,831
--------------------------
27,885 35,321

Long-term assets
Income producing properties, net 70,182 41,499
Property, plant and equipment, net 2,883 2,871
Portfolio investments 7,088 5,355
Intangible assets, net 4,211 2,918
Goodwill 24,568 24,555
Other assets 1,675 792
Assets of discontinued operations 12,842 13,374
--------------------------
151,334 126,685
--------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities 9,457 7,524
Customer deposits 9,672 1,756
Income taxes payable 140 156
Future income tax liabilities 1,185 240
Current portion of mortgages and loans
payable 3,801 6,173
Liabilities of discontinued operations 18,751 31,250
--------------------------
43,006 47,099

Long-term liabilities
Mortgages and loans payable 62,910 44,719
Convertible preferred shares 16,670 18,192
Intangible liabilities 1,336 1,053
Future income tax liabilities 7,683 11,071
Liabilities of discontinued operations 34,777 35,817
--------------------------
166,382 157,951

Non-controlling interest 18,066 11,645
Shareholders' equity (deficiency) (33,114) (42,911)
--------------------------
151,334 126,685
--------------------------
--------------------------

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

Contact Information

  • Counsel Corporation
    Stephen Weintraub
    EVP, Secretary & CFO
    (416) 866-3058
    Website: www.counselcorp.com