Counsel Corporation
TSX : CXS

Counsel Corporation

August 10, 2006 19:14 ET

Counsel Corporation Announces 2006 Second Quarter Results

TORONTO, ONTARIO--(CCNMatthews - Aug. 10, 2006) - Counsel Corporation (TSX:CXS) today reported its financial results for the three and six months ended June 30, 2006. All amounts are stated in Canadian dollars.

For the second quarter ended June 30, 2006, the Company's consolidated revenue from continuing operations was $20.1 million, an increase of 67.5% from $12.0 million in the same period of 2005. 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.

The Company had income from continuing operations of $0.6 million, or $0.01 per share, basic and diluted, for the three months ended June 30, 2006, compared with a loss of $2.9 million, or $0.06 per share, basic and diluted, for the three months ended June 30, 2005. Including discontinued operations, the Company had net income of $1.7 million or $0.03 per share, basic and diluted, for the three months ended June 30, 2006, compared with a net loss of $7.0 million, or $0.15 per share, basic and diluted, for the three months ended June 30, 2005.

For the six months ended June 30, 2006, the Company's consolidated revenue from continuing operations was $32.6 million, an increase of 34.2% from $24.3 million in the same period of 2005. 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.

The Company incurred a loss from continuing operations of $3.0 million, or $0.07 per share, basic and diluted, for the six months ended June 30, 2006, compared with a loss of $7.2 million, or $0.15 per share, basic and diluted, for the six months ended June 30, 2005. Including discontinued operations, the Company had net income of $3.9 million or $0.07 per share, basic and diluted, for the six months ended June 30, 2006, compared with a net loss of $16.7 million, or $0.35 per share, basic and diluted, for the same period of 2005.

Significant developments in 2006 to date are:

- On March 30, 2006, Counsel along with a group of investors, acquired the Lancaster Mall in Saint John, New Brunswick. Lancaster Mall is an enclosed shopping centre with approximately 199,000 sq. ft. of leaseable area, including three free standing pads. The area of the site is approximately 23 acres.

- On May 1, 2006, Counsel along with a group of investors, acquired McIntyre Centre in Thunder Bay, Ontario. McIntyre Centre is a strip centre with approximately 60,000 sq. ft. of leaseable area.

- On May 2, 2006, Counsel entered the case goods business with the acquisition of Fleetwood Fine Furniture Inc. Fleetwood is a custom case goods manufacturer which serves the North American hospitality industry, operating from 156,000 sq. ft. leased premises located in the west end of Toronto.

- On May 31, 2006, Counsel along with a group of investors, acquired Kingspoint Plaza in Brampton, Ontario. Kingspoint Plaza is a 165,000 sq. ft. strip plaza on a 17 acre site that includes a gas station and two land leased pads, with a newly opened Giant Tiger as its anchor tenant.

- On June 15, 2006, C2 Communications Technologies Inc., a wholly owned subsidiary of C2 Global Technologies Inc. (OTCBB:COBT), which is a 91 %-owned subsidiary of Counsel, filed a patent infringement lawsuit against AT&T, Inc., Verizon Communications, Inc., Qwest Communications International, Inc., Bellsouth Corporation, Sprint Nextel Corporation, Global Crossing Limited, and Level 3 Communications, Inc. The complaint was filed in the Marshall Division of the United States District Court for the Eastern District of Texas and alleges that the defendants' services and systems utilizing Voice over Internet Protocol infringes C2's U.S. Patent No. 6,243,373, entitled "Method and Apparatus for Implementing a Computer Network/Internet Telephone System". The complaint seeks an injunction, monetary damages and costs.

"We are pleased with the performance of our acquisitions during the first half of 2006," said Allan Silber, Chairman and CEO of Counsel.

The Company Management's Discussion and Analysis and Financial Statements for the three and six months ended June 30, 2006 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 four specific sectors: long-term care, real estate, patent licensing and custom case goods. For further information, 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 ended Six months ended
June 30, June 30,
2006 2005 2006 2005
$ $ $ $
------------------ -------------------
Revenues
Long-term care 12,775 11,478 24,710 23,319
Case goods 5,537 - 5,537 -
Real estate 1,799 535 2,376 998
Patent licensing - - - -
------------------ -------------------
20,111 12,013 32,623 24,317
------------------ -------------------
Operating costs and expenses
Long-term care (exclusive of
depreciation and amortization
shown below) 11,964 10,684 23,124 21,803
Case goods (exclusive of
depreciation and amortization
shown below) 3,771 - 3,771 -
Real estate (exclusive of
depreciation and amortization
shown below) 901 426 1,379 893
Selling, general and
administrative 845 3,185 3,839 6,342
Depreciation and amortization 831 308 1,134 584
------------------ -------------------

18,312 14,603 33,247 29,622
------------------ -------------------

Operating income(loss) before
undernoted items 1,799 (2,590) (624) (5,305)

Gains and other income
Gain on sale of short-term
investments 780 - 1,015 643
Other 631 - 631 -

Impairments and other losses
Write-down of short-term
investments (128) - (334) -
Write-down of portfolio
investments - - - (790)
------------------ -------------------

Income(loss) before the
undernoted 3,082 (2,590) 688 (5,452)

Interest income 443 11 881 116
Interest expense (2,788) (1,259) (4,080) (2,590)
------------------ -------------------
Income(loss) before income
taxes, non-controlling
interest and discontinued
operations 737 (3,838) (2,511) (7,926)

Income tax provision(recovery) 88 (904) 342 (727)
Non-controlling interest 98 13 102 26
------------------ -------------------
Income(loss) from continuing
operations 551 (2,947) (2,955) (7,225)

Income(loss) from discontinued
operations 1,108 (4,054) 6,835 (9,505)
------------------ -------------------
Net income(loss) 1,659 (7,001) 3,880 (16,730)
------------------ -------------------
------------------ -------------------
Basic net income(loss) per
share:
Continuing operations 0.01 (0.06) (0.07) (0.15)
Discontinued operations 0.02 (0.09) 0.14 (0.20)
------------------ -------------------


Basic net income(loss) per
share 0.03 (0.15) 0.07 (0.35)
------------------ -------------------
------------------ -------------------

Weighted average number of
common shares outstanding
(in thousands) - basic 46,808 47,797 47,057 47,797

Diluted net income(loss) per
share:
Continuing operations 0.01 (0.06) (0.07) (0.15)
Discontinued operations 0.02 (0.09) 0.14 (0.20)
------------------ -------------------

Diluted net income(loss) per
share 0.03 (0.15) 0.07 (0.35)
------------------ -------------------
------------------ -------------------

Weighted average number of
common shares outstanding
(in thousands) - diluted 58,376 47,797 47,057 47,797

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)



June 30, December 31,
2006 2005
$ $
------------------------
Assets

Current assets
Cash and cash equivalents 4,671 15,632
Short-term investments (market value $8,786;
2005 - $15,819) 8,310 15,414
Accounts receivable (net of allowance for
doubtful accounts of $261; 2005 - $269) 4,752 1,030
Inventories 2,044 -
Prepaid expenses and deposits 1,964 917
Assets of discontinued operations 15,745 16,509
------------------------
37,486 49,502

Long-term assets
Income producing properties, net 52,995 11,018
Property, plant and equipment, net 15,925 15,123
Portfolio investments 1,277 1,277
Intangible assets, net 4,038 69
Goodwill 24,480 201
Other assets 596 342
------------------------

136,797 77,532
------------------------
------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities 24,880 25,496
Customer deposits 2,707 -
Intangible liabilities 1,176 -
Income taxes payable 165 63
Current portion of mortgages and loans
payable 12,397 8,413
Liabilities of discontinued operations 15,943 20,718
------------------------
57,268 54,690
Long-term liabilities
Mortgages and loans payable 84,199 38,470
Convertible preferred shares 16,227 16,053
Future income tax liabilities 13,204 12,257
Liabilities of discontinued operations 236 214
------------------------
171,134 121,684

Non-controlling interest 8,957 1,496

Shareholders' equity (deficiency) (43,294) (45,648)
------------------------

136,797 77,532
------------------------
------------------------

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
    Executive Vice President, Secretary & CFO
    (416) 866-3058