Counsel Corporation
TSX : CXS

Counsel Corporation

November 09, 2006 18:21 ET

Counsel Corporation Announces 2006 Third Quarter Results

TORONTO, ONTARIO--(CCNMatthews - Nov. 9, 2006) - Counsel Corporation (TSX:CXS) today reported its financial results for the three and nine months ended September 30, 2006. All amounts are stated in Canadian dollars.

For the third quarter ended September 30, 2006, the Company's consolidated revenue from continuing operations was $23.6 million, an increase of 108% from $11.3 million in the same period of 2005. The increase in revenue is primarily 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 $0.7 million, or $0.01 per share, basic and diluted, for the three months ended September 30, 2006, compared with income of $3.8 million, or $0.08 per share, basic and $0.06 per share, diluted, for the three months ended September 30, 2005. Including discontinued operations, the Company had net income of $0.8 million or $0.01 per share, basic and diluted, for the three months ended September 30, 2006, compared with net income of $15.4 million, or $0.32 per share, basic and $0.26 per share, diluted, for the three months ended September 30, 2005.

For the nine months ended September 30, 2006, the Company's consolidated revenue from continuing operations was $55.4 million, an increase of 58% from $35.0 million in the same period of 2005. The increase in revenue is primarily 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 $2.2 million, or $0.06 per share, basic and diluted, for the nine months ended September 30, 2006, compared with a loss of $3.5 million, or $0.08 per share, basic and diluted, for the nine months ended September 30, 2005. Including discontinued operations, the Company had net income of $4.7 million or $0.08 per share, basic and diluted, for the nine months ended September 30, 2006, compared with a net loss of $1.4 million, or $0.03 per share, basic and diluted, for the same period of 2005.

Significant developments in the third quarter of 2006:

- On August 11, 2006, Counsel's 91%-owned subsidiary, C2 Global Technologies Inc. (OTCBB:COBT) was awarded a patent from the Hong Kong Special Administrative Region that is equivalent to its U.S. Patent No. 6,243,373. On October 10, 2006, C2 was granted a Canadian patent that is equivalent to its U.S. Patent No. 6,437,124. The two patents are foundational patents in VoIP technology.

- On September 5, 2006, Counsel entered into an agreement to sell Imperial Square, a 60,000 sq. ft. income producing property in Guelph, Ontario for approximately $14.5 million. The sale is expected to close in the fourth quarter of 2006. Imperial Square is now accounted for as a discontinued asset.

- On September 8, 2006, Counsel acquired the 50% of the limited partnership units of the Diversicare I Limited Partnership owned by third parties, for a nominal amount. The Company now controls 100% of the partnership, which owns seven long-term care nursing homes.

"We are pleased with the performance of our acquisitions and continue to seek out new opportunities," said Allan Silber, Chairman and CEO of Counsel.

The Company's Management's Discussion and Analysis and Financial Statements for the three and nine months ended September 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, case goods, real estate, and patent licensing. 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 Nine months ended
September 30, September 30,
2006 2005 2006 2005
$ $ $ $

Revenues
Long-term care 13,398 11,180 38,108 34,499
Case goods 8,477 - 14,014 -
Real estate 1,692 160 3,229 477
Patent licensing - - - -
-----------------------------------
23,567 11,340 55,351 34,976
-----------------------------------

Operating costs and expenses
Long-term care (exclusive of
depreciation and amortization
shown below) 12,147 10,371 35,271 32,174
Case goods (exclusive of
depreciation and amortization
shown below) 6,018 - 9,789 -
Real estate (exclusive of
depreciation and amortization
shown below) 901 223 1,915 899
Selling, general and administrative 3,074 1,943 6,913 8,285
Depreciation and amortization 1,105 229 2,087 694
-----------------------------------

23,245 12,766 55,975 42,052
-----------------------------------

Operating income(loss) before
undernoted items 322 (1,426) (624) (7,076)

Gains and other income
Gain on sale of short-term investments 315 - 1,330 643
Other - 191 631 191

Impairments and other losses
Write-down of short-term investments (345) - (679) -
Write-down of portfolio investments - (656) - (1,446)
Other - (44) - (44)
-----------------------------------

Income(loss) before the undernoted 292 (1,935) 658 (7,732)

Interest income 261 49 1,188 165
Interest expense (1,345) (1,140) (5,141) (3,510)
-----------------------------------
Loss before income taxes,
non-controlling interest and
discontinued operations (792) (3,026) (3,295) (11,077)

Income tax provision(recovery) (1,748) (6,838) (1,406) (7,565)
Non-controlling interest 228 - 335 -
-----------------------------------
Income(loss) from continuing operations 728 3,812 (2,224) (3,512)

Income from discontinued operations 61 11,557 6,893 2,151
-----------------------------------

Net income(loss) 789 15,369 4,669 (1,361)
-----------------------------------
-----------------------------------

Basic net income(loss) per share:
Continuing operations 0.01 0.08 (0.06) (0.08)
Discontinued operations 0.00 0.24 0.14 0.05
-----------------------------------

Basic net income(loss) per share 0.01 0.32 0.08 (0.03)
-----------------------------------
-----------------------------------

Weighted average number of common shares
outstanding (in thousands) - basic 46,816 47,797 47,060 47,797

Diluted net income(loss) per share:
Continuing operations 0.01 0.06 (0.06) (0.08)
Discontinued operations 0.00 0.20 0.14 0.05
-----------------------------------

Diluted net income(loss) per share 0.01 0.26 0.08 (0.03)
-----------------------------------
-----------------------------------

Weighted average number of common shares
outstanding (in thousands) - diluted 46,816 58,430 47,060 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)

September 30, December 31,
2006 2005
$ $
------------------------

Assets

Current assets
Cash and cash equivalents 5,262 15,541
Short-term investments (market value
$7,608; 2005 - $15,819) 7,596 15,414
Accounts receivable (net of allowance for
doubtful accounts of $297; 2005 - $189) 4,357 907
Inventories 1,966 -
Prepaid expenses and deposits 1,747 911
Assets of discontinued operations 14,175 16,782
------------------------
35,103 49,555

Long-term assets
Income producing properties, net 41,792 -
Property, plant and equipment, net 16,087 15,123
Portfolio investments 1,277 1,277
Intangible assets, net 3,478 69
Goodwill 24,571 201
Other assets 896 289
Assets of discontinued operations 10,826 11,018
------------------------

134,030 77,532
------------------------
------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities 23,282 24,605
Customer deposits 2,992 -
Income taxes payable 391 63
Current portion of mortgages and loans payable 6,798 3,540
Liabilities of discontinued operations 20,351 26,482
------------------------
53,814 54,690
Long-term liabilities
Mortgages and loans payable 80,494 38,470
Convertible preferred shares 16,922 16,053
Intangible liabilities 1,115 -
Future income tax liabilities 11,353 12,257
Liabilities of discontinued operations 1,600 1,710
------------------------
165,298 123,180

Non-controlling interest 11,178 -

Shareholders' equity (deficiency) (42,446) (45,648)
------------------------

134,030 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
    Website: www.counselcorp.com