Counsel Corporation

Counsel Corporation

March 31, 2009 09:00 ET

Counsel Corporation Announces 2008 Fiscal Year Results

TORONTO, ONTARIO--(Marketwire - March 31, 2009) - Counsel Corporation (TSX:CXS) today reported its financial results for the year ended December 31, 2008. All amounts are stated in Canadian dollars, unless noted.

The Company had net income of $41.9 million or $0.91 per share, basic and diluted, for the year ended December 31, 2008, compared with $13.5 million, or $0.29 per share basic and $0.22 per share diluted, for the year ended December 31, 2007. Loss from continuing operations was $7.4 million, or $0.16 per share, basic and diluted, for the year ended December 31, 2008, compared with income of $12.3 million, or $0.26 per share basic and $0.20 per share diluted, for the year ended December 31, 2007.

For the year ended December 31, 2008, the Company's consolidated revenue from continuing operations was $73.1 million, an increase of 44 per cent from $50.9 million in 2007.

"2008 was a milestone year for Counsel" said Allan Silber, Chairman and CEO. "We strengthened our balance sheet and set the Company on a firm foundation as an alternate asset manager."

"Throughout 2008 Counsel implemented its three-part strategy, designed to build net asset value in the Company's real estate and private equity core businesses. First, we acquire assets or businesses - where we believe that we are able to add value. Second, we add value through active management, such as changing the business' direction, improving its capital structure or recruiting operating management. Finally, at the appropriate time, we realize on that increased value by selling the asset or otherwise locking in our gains, as we did with the divestiture of CJ Apparel and in 2008."

"We are pleased with the Company's progress in 2008 and look forward to continuing our momentum through 2009," he added.

Highlights of 2008:

- On January 31, 2008, Counsel completed the sale of its Long-term Care business comprised of the assets and operations of seven nursing homes in Ontario. The aggregate selling price was approximately $67 million and yielded a gain of approximately $55 million before provision for income taxes.

- During 2008, C2 Global Technologies Inc. ("C2") (OTCBB:COBT), which is a 91%-owned subsidiary of Counsel, entered into settlement and license agreements with the defendants in a patent infringement lawsuit filed on June 15, 2006 by C2 Communications Technologies Inc., a wholly owned subsidiary of C2, against six major U.S. telecommunications providers. The complaint was filed in the Marshall Division of the United States District Court for the Eastern District of Texas and alleged that the defendants' services and systems utilizing VoIP infringe one of C2's VoIP patents. Gross revenue from the settlement and license agreements totaled US$17.625 million.

- During 2008, Counsel acquired, for its own account and on behalf of investment partners, nine income producing properties for total consideration of approximately $24.2 million.

- On March 7, 2008, Knight's Bridge Capital Partners Inc., a wholly owned subsidiary of Counsel, closed Knight's Bridge Capital Partners Fund I (the "KBCP Fund I") with capital commitments in excess of $62 million, including $10 million of capital committed by Counsel and approximately $5 million committed by senior management. It is anticipated that the KBCP Fund I will invest in small to mid market companies, primarily throughout North America and in a variety of industries, which require between $2 and $10 million in equity financing.

- In April 2008, Counsel sold its portfolio investment in CJ Apparel Group, LLC for proceeds of approximately US$8 million, resulting in a cumulative profit of approximately US$4.8 million since its original investment in December 2006.

- In December 2008, Counsel acquired an additional 1,625,000 common shares of Terra Firma Capital Corporation ("Terra Firma") as partial consideration paid in connection with Terra Firma's purchase from the Company of 870 Red River Road. The purchase price of $2.4 million was payable by way of (i) the issuance by Terra Firma of 1,625,000 common shares, based on a value of $0.40 per share, (ii) the assumption of the first mortgage on the acquired property; and (iii) the payment of the remainder in cash. After acquiring these shares, Counsel owns approximately 23% of Terra Firma's outstanding shares. Terra Firma is a TSX Venture Exchange listed company that Counsel founded and organized.

The Company's Management's Discussion and Analysis and Financial Statements for the year ended December 31, 2008 have been filed and are available on SEDAR (

About Counsel Corporation

Counsel Corporation (TSX:CXS) is an international asset management firm that actively partners with businesses to achieve shared success and to unlock value through leveraging our relationships, our access to capital and our strategic market experience. For further information, please visit Counsel's website at

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)

Year ended December 31,
2008 2007
$ $
Case goods 33,634 32,533
Real estate 16,862 16,786
Patent licensing 18,130 -
Private equity 3,973 1,007
Interest 547 528
73,146 50,854
Expenses (exclusive of depreciation,
amortization and interest expense
shown below) and other (income) losses
Case goods expense 27,949 24,853
Real estate expense 9,496 6,575
Patent licensing expense 11,082 -
Selling, general and
administrative expense 13,379 12,176
Foreign exchange (gain)loss 6,516 (5,382)
(Gain)loss on short-term investments 1,121 205
Other (1,047) 303
68,496 38,730
Income before depreciation,
amortization, interest expense, income
taxes, non-controlling interest and
discontinued operations 4,650 12,124

Depreciation and amortization 4,662 3,991
Interest expense 7,658 6,721
Income(loss) before income taxes,
non-controlling interest and
discontinued operations (7,670) 1,412

Income tax provision(recovery) 66 (11,268)
Non-controlling interest (341) 398
Income(loss) from continuing operations (7,395) 12,282

Income from discontinued operations 49,246 1,186

Net Income 41,851 13,468
Basic net income(loss) per share:
Continuing operations (0.16) 0.26
Discontinued operations 1.07 0.03

Basic net income per share 0.91 0.29
Weighted average number of common shares
outstanding (in thousands) - basic 46,106 46,650

Diluted net income(loss) per share:
Continuing operations (0.16) 0.20
Discontinued operations 1.07 0.02

Diluted net income per share 0.91 0.22

Weighted average number of common shares
outstanding (in thousands) - diluted 46,106 58,874

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

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

December 31, December 31,
2008 2007
$ $

Current assets
Cash and cash equivalents 16,813 6,357
Short-term investments 2,879 977
Accounts receivable (net of allowance for
doubtful accounts
of $23; 2007 - $97) 5,001 3,735
Inventories 1,847 1,863
Prepaid expenses and deposits 1,872 4,777
Future income tax asset 1,084 8,402
Assets of discontinued operations 1,887 2,268
31,383 28,379
Long-term assets
Income producing properties, net 98,733 74,624
Properties under development 3,559 919
Property, plant and equipment, net 2,797 3,051
Portfolio investments 11,385 6,548
Intangible assets, net 3,789 3,853
Goodwill 26,090 26,035
Tenant related costs and other assets 4,380 2,001
Assets of discontinued operations 1,000 12,665

183,116 158,075

Current liabilities
Accounts payable and accrued liabilities 13,811 10,015
Customer deposits 3,342 7,174
Income taxes payable 282 184
Future income tax liabilities 179 -
Current portion of mortgages and loans payable 8,706 4,895
Convertible preferred shares 22,032 -
Liabilities of discontinued operations 237 15,543
48,589 37,811
Long-term liabilities
Mortgages and loans payable 74,934 66,607
Convertible preferred shares - 16,780
Intangible liabilities 858 1,225
Future income tax liabilities 10,076 7,856
Liabilities of discontinued operations 73 34,454
134,530 164,733

Non-controlling interest 34,190 19,440

Shareholders' equity (deficiency) 14,396 (26,098)

183,116 158,075

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

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