Cervus Financial Group Inc.
TSX : CFG

Cervus Financial Group Inc.

July 28, 2005 08:25 ET

Cervus Financial Group Inc. Announces Financial Results For The Nine Months Ended June 30, 2005

TORONTO, ONTARIO--(CCNMatthews - July 28, 2005) -

"Mortgage Assets increased by 182% and Total Mortgage Commitments
increased by 150% over the previous quarter"

Cervus Financial Group Inc. ("Cervus"), (TSX:CFG), is a financial services company dedicated to providing mortgages to selected mortgage broker firms. The company announced results of operations for the quarter ended June 30, 2005 with revenues of $2.5 million and residential mortgage originations of $181.5 million. Total Administered Assets increased 182% over the previous quarter ended March 31, 2005 to $276.8 million.

Highlights for the quarter ended June 30, 2005:

- Increased total Administered Assets by $178.8 million or 182% in the quarter to $276.8 million compared to $98.0 million as at March 31, 2005.

- The Company has future mortgage commitments of $214.1 million, compared to $85.9 million and $11.3 million at March 31, 2005 and September 30, 2004, respectively.

- Completed whole loan sales, totaling $177.1 million, to Canadian financial institutions under existing sales and servicing agreements compared to $65.7 million in the previous quarter.

- Commenced trading on the Toronto Stock Exchange on Monday April 11, 2005 under
the trading symbol "CFG".

- Launched a multi-tiered mortgage partners program and further penetrated the
mortgage broker market.



CERVUS FINANCIAL GROUP INC.
Interim Unaudited Consolidated Balance Sheet

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As at June September
30, 2005 30, 2004
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ASSETS

CURRENT
Cash $ 3,136,719 $ 2,296,206
Restricted cash 1,500,000 2,500,000
Residential mortgages (Note 6) 6,107,732 2,085,752
Accounts receivable 84,708 -
Sales tax receivable 39,429 -
Prepaid expenses 384,849 364,188
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11,253,437 7,246,146

OTHER ASSETS 55,340 22,019

CAPITAL ASSETS (Note 4) 2,768,149 1,037,356

INTANGIBLE ASSETS (Note 5) 3,575,121 3,461,133

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$ 17,652,047 $ 11,766,654
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LIABILITIES

CURRENT
Accounts payable and accrued
expenses $ 5,215,998 $ 1,353,692
Sales tax payable - 134,443
Warehouse credit facility - 2,450,000
Other liabilities 48,647 -
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5,264,645 3,938,135

TRAILER COMMISSIONS 586,895 6,351

LEASE INDUCEMENT 188,190 -

LEASE OBLIGATIONS 8,729 -

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6,048,459 3,944,486
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SHAREHOLDERS' EQUITY

COMMON SHARES (Note 8) 19,525,811 9,993,955

CONTRIBUTED SURPLUS 980,387 301,163
DEFICIT (8,902,610) (2,472,950)
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11,603,588 7,822,168
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$ 17,652,047 $ 11,766,654
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---------------------------------------------------------------------

Please see the SEDAR website at www.sedar.com for the accompanying
notes which are integral to these interim unaudited consolidated
financial statements and for Management's Discussion & Analysis.



CERVUS FINANCIAL GROUP INC.
Interim Unaudited Consolidated Statement of Operations and Deficit

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For the For the For the For the
three three nine period from
months months months January 16,
ended ended ended 2004
June 30, June 30, June 30, to June 30,
2005 2004 2005 2004

INTEREST INCOME $ 78,148 $ 9,836 $ 305,270 $ 10,366

INTEREST EXPENSE (42,963) - (204,471) -
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NET INTEREST
INCOME 35,185 9,836 100,799 10,366

PROVISION FOR
CREDIT LOSSES (9,807) - (15,082) -
GAIN ON SALE OF
LOANS 2,397,749 - 3,599,915 -
FEES AND OTHER
INCOME 94,565 - 150,772 -
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2,517,692 9,836 3,836,404 10,366

BROKER
COMMISSIONS (1,826,313) - (2,814,053) -
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691,379 9,836 1,022,351 10,366
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OPERATING
EXPENSES
Human
resources 1,384,159 372,338 3,517,444 640,126
Business
processing 416,743 54,717 958,022 70,274
Selling,
general and
administration 365,927 75,641 1,333,316 141,893
Governance and
public markets 320,968 163,613 984,990 402,137
Premises 135,446 30,695 242,976 62,039
Amortization 225,492 14,493 549,957 14,493
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2,848,735 711,497 7,586,705 1,330,962
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NET LOSS BEFORE
INCOME TAXES 2,157,356 701,661 6,564,354 1,320,596

Future income
tax benefit - - (134,694) -
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NET LOSS FOR
THE PERIOD $ 2,157,356 $ 701,661 $ 6,429,660 $ 1,320,596

DEFICIT -
BEGINNING OF
PERIOD 6,745,254 618,935 2,472,950 -

NET LIABILITIES
ACQUIRED - 236,840 - 236,840

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DEFICIT - END
OF PERIOD $ 8,902,610 $ 1,557,436 $ 8,902,610 $ 1,557,436
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NET LOSS PER
COMMON SHARE
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Basic and
diluted
(Note 8(e)) $ 0.05 $ 0.04 $ 0.16 $ 0.08
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Please see the SEDAR website at www.sedar.com for the accompanying
notes which are integral to these interim unaudited consolidated
financial statements and for Management's Discussion & Analysis.



CERVUS FINANCIAL GROUP INC.
Interim Unaudited Consolidated Statement of Cash Flows

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For the For the For the For the
three three nine period from
months months months January 16,
ended ended ended 2004
June 30, June 30, June 30, to June 30,
2005 2004 2005 2004

NET INFLOW (OUTFLOW)
OF CASH RELATED TO
THE FOLLOWING
ACTIVITIES

OPERATING
Net loss for
the period $ (2,157,356) $ (701,661) $ (6,429,660) $ (1,320,596)
Items not
affecting
cash
Amortization
of capital
assets 128,814 14,493 268,669 14,493
Amortization
of intangibles 96,403 - 281,012 -
Provision for
credit losses 9,807 - 15,082 -
Future income
tax benefit - - (134,694) -
Stock option
expense 128,284 - 158,032 -
Lease
inducement (10,206) - (14,289) -
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(1,804,254) (687,168) (5,855,848) (1,306,103)

Net changes in
non-cash
working capital
balance
Prepaid
expenses (15,751) (772) (20,661) (10,327)
Interest
receivable (1,087) - (1,082) -
Residential
mortgages (4,201,712) - (4,035,980) -
Accounts
receivable 178,233 - (84,708) -
Other assets (34,532) 229,139 (33,321) (20,861)
Accounts
payable and
accrued
expenses 3,011,320 203,517 4,120,306 519,279
Sales tax
payable (6,068) 130,312 (173,872) 130,312
Proceeds from
credit
facility
borrowings - - (2,450,000) -
Trailer
commissions 307,979 - 580,544 -
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(2,565,872) (124,972) (7,954,622) (687,700)
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INVESTING
Lease
inducement - - 245,160 -
Cash collateral
- restricted
cash - - 1,000,000 -
Acquisition of
capital assets (322,756) (225,133) (1,982,950) (302,909)
Acquisition of
intangible
assets - (327,105) (22,092) (327,105)
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(322,756) (552,238) (759,882) (630,014)
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FINANCING
Proceeds from
issuance of
common shares - - 10,000,000 1,574,000
Proceeds from
issuance of
subscription
receipts - 7,384,425 - 7,384,425
Proceeds from
exercise of
common share
warrants - - 330,000 -
Common share
issue costs - (17,176) (773,166) (17,176)
Subscription
receipts issue
costs (592,849) (592,849)
Repayment of
obligations
under capital
leases (1,198) - (1,817) -
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(1,198) 6,774,400 9,555,017 8,348,400
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NET INCREASE
(DECREASE) IN
CASH FOR THE
PERIOD (2,889,826) 6,097,190 840,513 7,030,686

CASH, BEGINNING
OF PERIOD 6,026,545 933,496 2,296,206 -
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CASH, END OF
PERIOD $ 3,136,719 $ 7,030,686 $ 3,136,719 $ 7,030,686
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CASH IS
REPRESENTED BY:
Cash in bank $ 3,136,719 $ 206,161 $ 3,136,719 $ 206,161
Cash held in
trust - 6,824,525 - 6,824,525
$ 3,136,719 $ 7,030,686 $ 3,136,719 $ 7,030,686
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Please see the SEDAR website at www.sedar.com for the accompanying
notes which are integral to these interim unaudited consolidated
financial statements and for Management's Discussion & Analysis.


About "Customer for Life"

The Cervus "Customer for Life" model enables the mortgage professional to retain the relationship with the borrower as a customer throughout the life of the mortgage. The compensation model also creates a continued revenue stream in the form of trailer fees, a one time origination fee and a renewal fee every time the customer renews with Cervus. This creates income security for the mortgage professional allowing a long-term relationship to be developed with the borrower. This long-term relationship subsequently gets passed along to the institutional investor of the mortgage security, creating a higher yield long-term investment cash flow stream. The Cervus "Customer for Life" model creates profitable relationships for the borrowers, mortgage professionals, institutional investors and for Cervus.

About Cervus

Cervus Financial Group Inc. is a Canadian financial services company created as an industry initiative with leading mortgage broker companies and fixed income investment banks to become a high-yield residential mortgage producer and the largest mortgage broker lender of conventional insured and insurable mortgages in Canada. Our new and innovative business model demonstrates contracted asset accumulation of $30B in mortgages over five to seven years by fusing industry ownership, technology, service delivery and long term recurring revenue for the mortgage brokers.

Cervus works on the basis of a "Customer for Life" model, where the borrower is the client of the mortgage broker and Cervus is effectively the "Back Office - Servicer" between borrowers and investors. Cervus has assembled an experienced management team and board of directors who are knowledgeable in banking, financial services and related businesses. Cervus is focused on funding and servicing insurable conventional and high ratio insured residential mortgages originated through mortgage brokers. Cervus is currently licensed under Ontario, Quebec, British Columbia and Alberta mortgage broker/lender legislation and is seeking similar regulatory approvals in other Canadian Provinces as required. Cervus' head office and Ontario operations centre is located in Toronto, with additional sales offices in Vancouver, Calgary and in Montreal. Cervus Financial Group Inc. conducts all lending operations through its wholly-owned subsidiary, Cervus Financial Corp.

Forward-looking (safe harbour) statement

Statements made in this news release that relate to future plans, events or performances are forward-looking statements. Any statement containing words such as "believes," plans," "expects" or "intends" and other statements which are not historical facts contained in this release are forward-looking, and these statements involve risks and uncertainties and are based on current expectations. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements.

Additional information about Cervus is available on SEDAR (www.sedar.com).

The TSX does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Cervus Financial Group Inc.
    Tracey McLaughlin
    Investor Relations
    (416) 861-1315 ext 262
    IR@cervus.com
    or
    Cervus Financial Group Inc.
    Gary Bartholomew
    CEO
    (416) 861-1315 ext 226
    gbartholomew@cervus.com