Counsel Corporation : Counsel Announces third Quarter 2013 Results

$4.0 million, or $0.05 per basic and diluted share, on $29.0 million in revenue in the same period of 2012. For the nine months ended September 30, 2013, income from continuing operations attributable to shareholders was $10.0 million, or $0.11 per basic and diluted share, on $110.6 million in revenue compared to $11.4 million, or $0.13 per basic and diluted share, on $85.7 million in revenue in the same period of 2012. Excluding the expense related to the increase in the market value of the Company's deferred share units (DSUs), income from continuing operations attributable to shareholders was $4.0 million and $11.8 million in the three and nine months ended September 30, 2013 respectively, compared to $4.1 million and $11.6 million in the respective corresponding periods in 2012. All amounts are stated in Canadian dollars, unless noted.
"We're quite pleased with our results in the third quarter. Our core residential mortgage lending business, Street Capital, continued to grow rapidly, recording $2.3 billion in mortgage sales compared to $1.7 billion in Q3 2012," said Allan Silber, Chairman and CEO of Counsel Corporation. "The company's mortgage sales have grown significantly year-to-date as well, and this strong growth has counteracted the impact of lower spreads in the credit market compared to the same period in 2012."
"Street Capital's mortgages under administration also grew to $16.7 billion, a 56% increase over the past year," added Mr. Silber. "We are now one of Canada's largest non-bank residential mortgage lenders, the result of our focus on cultivating a healthy portfolio of mortgages through stringent underwriting and robust quality assurance combined with the provision of excellent
customer service and competitive mortgage products for mortgage brokers and borrowers."

Counsel Corporation, 1 Toronto Street, Suite 700, P.O. Box 3 Toronto, Ontario M5C 2V6

Voice 416-866-3000 Fax: 416-866-3061 www.counselcorp.com
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Counsel's revenues are almost entirely generated from its mortgage lending business. The year- over-year increase in Counsel's revenue in the third quarter of 2013 reflects growth in the volume of mortgages sold by Street Capital Financial Corp. ("Street Capital").
Counsel's overall net income attributable to shareholders, including discontinued operations, increased to $3.6 million, or $0.04 per basic and diluted share, in the third quarter of 2013 versus
$1.9 million, or $0.02 per basic and diluted share, in the third quarter of 2012. The year-over- year increase was primarily attributable to $0.6 million in income from the Company's discontinued operations attributable to shareholders versus a loss of $2.2 million in the third quarter of 2012. For the nine months ended September 30, 2013, net income attributable to shareholders was $8.8 million, or $0.10 per basic and diluted share, versus $9.3 million, or $0.11 per basic and diluted share, in the same period in 2012. The result includes an expense of $1.8 million due to the increase in market value of the Company's DSUs in the first nine months of
2013, versus an increase of $0.2 million in the nine months ended September 30. In June 2011, the Company ceased granting DSUs. In November, 2013, the Company and the existing DSU holders agreed to amend the DSU Plan to provide for payment in shares rather than cash; therefore, there will be no further impact on the statement of operations.
As part of its focus on financial services, the Company continues to pursue its plan to dispose of its non-core businesses, which were classified as discontinued operations in the first quarter of
2013, by the end of the first quarter of 2014. As part of this process, during and subsequent to the
quarter, the Company completed the sale of two of its remaining real estate properties.

Mortgage Lending Business

Counsel carries on its mortgage lending business through its wholly owned subsidiary Street Capital (www.streetcapital.ca). The company sources its mortgages solely through a network of independent, high quality mortgage brokers across Canada with whom it has built relationships. The company offers a broad lineup of high ratio and conventional mortgages, predominantly to prime borrowers, and sells the mortgages it underwrites to top-tier financial institutions. Business revenues are almost entirely from the gain on sale of mortgages.
The business generated $38.3 million and $110.0 million in revenues in the three and nine months ended September 30, 2013 compared to $28.9 million and $85.0 million in the respective corresponding periods in 2012. The increase in both periods was due to growth in the volume of mortgages sold. Operating expenses, consisting of the cost to source and underwrite mortgages sold by Street Capital, totaled $24.5 million and $71.6 million in the three and nine months ended September 30, 2013 compared to $15.7 million and $47.6 million in the respective corresponding periods in 2012. The increases reflect the increase in mortgages sold and costs incurred to expand Street Capital's share of the mortgage broker channel.
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Street Capital sold $2.266 billion and $6.316 billion of mortgages in the three and nine months ended September 30, 2013, compared to $1.674 billion and $4.385 billion in the respective corresponding periods in 2012. The business increased its portfolio of mortgages under administration to $16.7 billion at September 30, 2013 compared to $10.7 billion at September 30,
2012 and $15.0 billion at June 30, 2013.
Counsel's Management's Discussion and Analysis and Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2013 will be available on SEDAR (www.sedar.com).

Counsel will host a conference call on Friday, November 15, 2013 at 9:00 a.m. ET to discuss its
2013 third quarter financial results. Allan Silber, CEO of Counsel Corporation and Ed Gettings, CEO of Street Capital Financial Corporation, will chair the call. To participate in the call, please dial 647-427-7450 or 1-888-231-8191 ten minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until Monday, December 16, 2013 by calling 416-
849-0833 or 1-855-859-2056, reference number 91519205.
About Counsel Corporation (www.counselcorp.com)
Counsel Corporation (TSX: CXS) is a financial services company operating in residential mortgage lending through its wholly owned subsidiary Street Capital Financial Corporation, one of the largest non-bank mortgage lenders in Canada. Founded in 1979 and a public company for more than a quarter century, Counsel's goal is to build consistently profitable, industry-leading financial services companies by investing in great leaders and providing them with the strategic guidance and financial resources they need to succeed.

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.
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For further information, please contact:

Stephen Weintraub Tim Foran

EVP, Secretary & CFO tforan@tmxequicom.com saw@counselcorp.comTel: (416) 815-0700 ext. 251

Tel: (416) 866-3058

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Condensed Consolidated Interim Statements of Operations

(in thousands of Canadian Dollars, except per share amounts) (Unaudited)

Three months ended September 30, Nine months ended September 30,

Revenues

Expenses

Operating costs

Selling, general and administrative expense

Foreign exchange (gain) loss

Depreciation and amortization

Interest expense

Income before fair value adjustments

Fair value adjustments

Income before income taxes and discontinued operations

Income tax provision

Income from continuing operations

Less: Income (loss) attributable to non-controlling interest

Income attributable to shareholders

Income from discontinued operations

Less: Income (loss) attributable to non-controlling interest

Income (loss) attributable to shareholders

Net income attributable to shareholders

Basic and diluted net income (loss) per share :

Continuing operations

Discontinued operations

Basic and diluted net income per share

Weighted average number of common shares

outstanding (in thousands) - basic and diluted

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

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Condensed Consolidated Interim Statements of Financial Position

(in thousands of Canadian Dollars) (Unaudited)

Assets

Current assets

Cash and cash equivalents

Marketable securities

Mortgages, accounts and deferred interest receivable

Inventory

Prepaid expenses, deposits and deferred charges

Investment held for sale

Income tax receivable

Assets of discontinued operations

Non-current assets

Deferred interest and mortgage receivable

Deferred charges Investment properties Properties under development Property, plant and equipment Interests in joint ventures Investment in associates Portfolio investments Intangible assets

Goodwill

Deferred income tax assets

Other assets

Assets of discontinued operations

Total assets

Liabilities

Current liabilities

Accounts payable and accrued liabilities

Customer deposits

Income taxes payable

Current portion of mortgages and loans payable

Contingent consideration

Liabilities of discontinued operations

Non-current liabilities

Mortgages and loans payable Convertible debentures Contingent consideration Deferred income tax liabilities Derivative liability

Other liabilities

Liabilities of discontinued operations

Total liabilities

Shareholders' equity

Total liabilities and shareholders' equity

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

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