-- Reports net loss of $1.3 million for the year -- Assets under
administration at $1.2 billion TORONTO, Jan. 12, 2012 /CNW/ - Xceed
Mortgage Corporation [TSX: XMC], a Canadian provider of residential
mortgages, today announced its financial results for the fiscal
2011 year ended October 31, 2011. All references to quarters
or years are for the fiscal periods and all currency amounts are in
Canadian dollars unless otherwise noted. "We began the year," said
Michael Jones, Chief Executive Officer, "focusing on three primary
objectives. Firstly, protecting shareholder value by ensuring
that qualifying mortgage loans that were originally financed in an
ABCP conduit (or related vehicle), were offered renewal terms
thereby avoiding an unnecessary default at maturity." "Secondly,
managing the company's investments in its legacy portfolio (notes,
cash collateral accounts, whole mortgages etc), so as to ensure
those investments would be ultimately returned to the company in
the form of cash." "Thirdly, exploring financing opportunities in
the insured and uninsured residential mortgage lines of business,
that would allow us to originate and service mortgage loans at a
profit." "To these ends", Mr. Jones continued, "management
undertook a series of initiatives that have had the effect of
minimizing defaults and losses, and turning hitherto illiquid
assets into cash and more liquid assets." "In December 2010, we
exercised a clean-up call option for Xceed Mortgage Trust Series
2006 T-1 repaying existing note holders and thereby closing out one
of the trust transactions. This transaction resulted in the
company taking back $3.0 million of outstanding mortgages, $2.8
million of which have since been repaid, or refinanced in full; one
mortgage for $0.2 million outstanding at year-end." "In January
2011, the company suspended broker origination activities. During
the following 6 months, sales and underwriting teams were
reorganized, and new insured products designed and made available
to renewal customers. In the fourth quarter, we renewed our broker
origination activities on a limited scale, with a small set of
mortgage brokers," continued Mr. Jones "In March 2011, the company
refinanced the assets owned by Okanagan Funding Trust (a trust to
which the company had sold mortgages, and took back notes from in
the past), with a Canadian financial institution. The primary goal
of this initiative was to convert an illiquid $21.9 million
subordinated investment in the trust owned by the company, into a
combination of notes and whole mortgages, most of which were at or
past maturity. As a result of this transaction, a $21.9 million
illiquid note was transformed into $13.5 million of cash, a $3.9
million participation note and $5.8 million of mortgages by the end
of fiscal 2011, including fair value changes." Mr. Jones also
noted, "In August 2011, the company settled its outstanding
litigation with HSBC Financial Corporation Limited ("HSBC") for
$1.7 million without admitting any liability or wrongdoing.
This provided the company with an opportunity to eliminate a
material uncertainty, based on the size of the initial claim of
$18.0 million." "In August 2011, in conjunction with other parties,
the company resolved a number of outstanding issues related to
QSPE-XCD Trust, that resulted from the Montreal Accord settlement
in 2009. This resolution enabled the company to convert an $8.3
million cash balance held in escrow, and a further $2.3 million of
cash held on its balance sheet into a senior subordinated note
investment in the trust. This had the result of generating
additional yield and providing additional certainty as to the
timing of repayment, and conversion into cash, of escrow balances
administered by a third party." "These and other initiatives have
improved the company's liquidity and balance sheet strength, such
that as at October 31(st) 2011, cash and cash equivalents , now
stand at $12.0 million, compared to $6.0 million at the end of
fiscal 2010. Additionally, the company has commenced
utilizing additional cash to offer short-term renewals to customers
with insured and uninsured mortgages on a limited basis." "The
company continues to seek new funding sources to support both
insured and uninsured mortgage originations. This continues
to remain the company's primary challenge and focus." Mr. Jones
also announced that "the company recorded a net loss after tax of
$1.3 million for fiscal 2011. Most of this loss was
attributable to the $1.7 settlement (pre-tax) of the litigation
noted earlier." "The basic and diluted loss per share for 2011 was
$0.05, compared with a basic and diluted loss per share of $0.64 in
2010." Mr. Jones highlighted "that for fiscal 2012, continuing on
from 2011, our primary focus will be to continue to maximize value
for our shareholders by completing the orderly exit from the
company's legacy portfolio of securitized mortgages, continuing to
service and manage the existing mortgage portfolios by provide
refinancing offers to qualifying customers in a manner that will
generate an acceptable return to the company, and continuing to
investigate other business opportunities and strategies in the
markets that we understand, and that can produce attractive
returns." Financial Highlights -- The company recorded a net loss
for 2011 of $1.3 million, including a net loss of $0.4 million in
the fourth quarter. This compares with a net loss of $17.6 million
in 2010 (net loss of $7.6 million in the fourth quarter). The net
loss for 2011 is mainly attributable to the settlement of law suit
with HSBC for $1.7 million (pre-tax) in the fourth quarter. -- The
company earned residual securitization income of $1.8 million for
2011 (2010 - loss of $2.7 million). The 2011 income was mainly due
to the receipt of penalty interest payments from XMT-2, an off
balance sheet trust to which the company sold mortgages. -- The
basic and diluted loss per share for 2011 was $0.05, compared with
a basic and diluted loss per share of $0.64 in 2010. For the 2011
fourth quarter, the basic and diluted loss per share were both
$0.01, compared with a basic and diluted loss per share of $0.28
for the 2010 period. -- The origination of new mortgages totaled
$75.6 million in 2011, compared with $403.4 million in 2010. For
the 2011 fourth quarter, originations amounted to $24.8 million,
compared with $51.1 million in the prior-year period. All new
originations were of insured mortgage products. Reductions in
origination volumes from the prior year are primarily the result of
reduced broker volumes originated in 2011, caused by the suspension
of new broker originations for approximately 7 months. -- The
company's primary source of revenue comes from the sale of pools of
insured mortgages to off-balance sheet entities. In 2011, the
company sold $107.5 million ($12.2 million in the fourth quarter)
of insured mortgages, compared with $360.1 million in 2010 ($5.5
million in the fourth quarter). -- For 2011, the company reported a
net gain on the sale of mortgages (gross gain on sale less hedging
costs) of $1.7 million (including a net loss in the fourth quarter
of $0.1 million). In 2010, the net gain amounted to $7.8 million
(including a loss of $0.4 million in the fourth quarter). --
Interest earned amounted to $3.4 million in 2011 ($1.0 million in
the fourth quarter), compared with $3.0 million in 2010 ($0.8
million in the fourth quarter). -- Net origination costs for 2011
were $0.3 million, compared with $4.2 million in 2010 ($0.8 million
in the fourth quarter). -- Total 2011 revenues were $7.6 million
($1.3 million in the fourth quarter), compared with $5.0 million in
2010 ( negative $0.4 million in the fourth quarter). -- Mortgages
and other assets under administration were $1.175 billion at the
end of 2011, down from $1.252 billion at the end of the 2011 third
quarter, and down from $1.557 billion at the end of 2010. -- Return
on average shareholders' equity for 2011 was negative 2.1%,
compared with negative 25.1% for 2010. -- The company's management
believes that cash flow from operations, while a non-GAAP
(generally accepted accounting principles) measure, is a useful
indicator of the performance of its business. The company defines
cash flow from operations as the cash generated by its operating
activities, before taking into consideration the net change in
other non-cash net asset balances which are related to operating
activities. This can be calculated by removing the effects of
amortization and other items not affecting operating cash from net
income. However, this also can be calculated by subtracting
expenses that are operating cash outflows from the revenues that
generate operating cash inflows. On that basis, cash flow from
operations was negative $3.6 million in 2011 (negative $0.5 million
for the fourth quarter), compared with negative $2.0 million in
2010 (negative $0.6 million for the fourth quarter). On a basic and
diluted basis, 2011 cash flow was a negative $0.13 per share
(negative $0.02 per share for the fourth quarter). This compares
with basic and diluted negative cash flow per share of $0.07 for
2010 (negative $0.02 in the fourth quarter). Cash securitization
income was $4.0 million in 2011 ($0.7 million in the fourth
quarter), compared with $9.2 million in 2010 ($0.6 million in the
fourth quarter). Cash-based revenues in 2011 were $7.4 million
($1.7 million in the fourth quarter), compared with $12.2 million a
year earlier ($1.4 million in the fourth quarter). Net origination
costs and other cash-based expenses in 2011 were $10.9 million
($2.2 million in the fourth quarter), compared with $14.2 million
in 2010 ($2.0 million in the fourth quarter). -- In 2011, the
company employed an average of 31 full-time employees, compared
with an average of 52 people in 2010. The company's core workforce
was comprised of 27 employees at the fiscal year ended October 31,
2011. -- As at October 31, 2011, the company had cash and cash
equivalents of $12.0 million, compared with $6.0 million at October
31, 2010. The company believes that cash and funding resources will
be sufficient to meet its short-term and long-term requirements.
The company has filed its 2011 Annual Report including the
financial statements and management's discussion and analysis for
2011 with SEDAR and they will be posted on the company's
website. These filings provide additional details on the
above noted items along with additional information regarding
results for the quarter and cautions regarding forward-looking
statements. The materials can be accessed by clicking here
XCEED MORTGAGE CORPORATION CONSOLIDATED BALANCE SHEETS (in
thousands of dollars) October 31, October 31, 2011 2010 $ $ ASSETS
Cash and cash equivalents 12,005 5,952 Investment in notes 19,787
39,215 Cash collateral and other deposits receivable from Trusts
4,751 13,266 Mortgages 39,450 74,482 Accounts receivable 3,299
3,177 Current taxes receivable, net 1,083 5,375 Derivative
instruments — 148 Intangible assets, net 195 614 Future tax asset,
net 201 60 Fixed assets, net 127 191 80,898 142,480 LIABILITIES AND
SHAREHOLDERS' EQUITY Liabilities Credit facilities 14,342 76,427
Accounts payable and accrued liabilities 5,629 4,074 Mortgage
commitments — 1 Derivative instruments 97 — Total liabilities
20,068 80,502 Shareholders' equity Capital stock 56,365 56,767
Contributed surplus 2,508 1,944 Retained earnings 1,957 3,267 Total
shareholders' equity 60,830 61,978 80,898 142,480 XCEED MORTGAGE
CORPORATION CONSOLIDATED STATEMENTS OF LOSS AND RETAINED EARNINGS
(in thousands of dollars, except per share amounts) Years ended
October 31, October 31, 2011 2010 $ $ REVENUE Securitization income
3,583 5,073 Interest 3,401 2,998 Other income 962 1,126 7,946 9,197
Less: Net origination costs (317) (4,226) 7,629 4,971 EXPENSES
Compensation and benefits 3,797 5,636 Interest 1,257 1,622
Amortization and write down of intangible 159 1,360 assets
Settlement of law suit 1,700 — Other operating 3,928 3,675 10,841
12,293 Realized and unrealized gains (losses) on 2,022 (18,539)
financial instruments Loss before income taxes (1,190) (25,861)
Restructuring expenses 542 — Recovery of income taxes (422) (8,227)
Net loss for the year (1,310) (17,634) Retained earnings, beginning
of year 3,267 20,901 Retained earnings, end of year 1,957 3,267
Loss per share Basic $(0.05) $(0.64) Diluted $(0.05) $(0.64) XCEED
MORTGAGE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in
thousands of dollars) Years ended October 31, October 31, 2011 2010
$ $ OPERATING ACTIVITIES Net loss for the year (1,310) (17,634)
Items not affecting operating cash: Non-cash net loss (gain) on
sale of mortgages 328 (2,504) Amortization of deferred net mortgage
— 4,991 interest receivable Amortization of servicing liability
(1,030) (1,023) Amortization of fixed assets 86 106 Amortization
and write down of intangible 159 1,360 assets Unrealized losses
from financial instruments (2,321) 15,072 Net future income taxes
(141) (3,941) Restructuring expenses 542 — Net change in
securitization income accrual 129 1,564 (3,558) (2,009) Other
changes in non cash net assets 73,752 (40,109) 70,194 (42,118)
INVESTING ACTIVITIES Sale of notes 3,944 503 Purchase of notes
(7,431) (9,417) Net increase in intangible assets 260 (1,302)
Purchase of fixed assets (23) (162) (3,250) (10,378) FINANCING
ACTIVITIES Net increase (decrease) in credit facilities (61,052)
52,489 Share buyback (151) — Contributed surplus related to
issuance of 312 228 options (60,891) 52,717 Net increase in cash
and cash equivalents 6,053 221 Cash and cash equivalents, beginning
of year 5,952 5,731 Cash and cash equivalents, end of year 12,005
5,952 Supplemental cash flow information Interest paid 1,021 1,465
Income taxes paid 440 2,250 Investor Inquiries Michael Jones,
President and Chief Executive Officer, and Jeff Bouganim, Chief
Financial Officer will be available from Thursday, January 12, 2012
onwards to respond to investor inquiries regarding these results.
About Xceed Mortgage Xceed Mortgage Corporation, based in Toronto,
is a Canadian provider of residential mortgages that it originates
in Canada. The company has approximately $1.2 billion of
mortgages and other assets under administration. The
company's shares are traded on the Toronto Stock Exchange .
To find out more about Xceed Mortgage Corporation, visit our
website at www.xceedmortgage.com. Forward-Looking Statements
Forward-looking statements in this document are based on current
expectations that are subject to significant risks and
uncertainties. Actual results might differ materially due to
various factors such as the competitive nature of the mortgage
industry, the ability of the company to continue to execute its
growth and development strategy, and the reliance of the company on
key personnel. The company and the company's management
assume no obligation to update these forward-looking statements, or
to update the reasons why actual results could differ from those
reflected in these. Additional information identifying risks
and uncertainties is contained in the company's regulatory filings
available on its website and at www.sedar.com. Xceed
Mortgage Corporation CONTACT: Michael Jones can be reached
at:Telephone: (416) 364-7944 Ext.3434 E-mail:
MJones@XceedMortgage.comJeff Bouganim can be reached at:Telephone:
(416) 364-7944 Ext.3335 E-mail: JBouganim@XceedMortgage.com
Copyright
iShares S&P US Mid Cap I... (TSX:XMC)
Historical Stock Chart
From May 2024 to Jun 2024
iShares S&P US Mid Cap I... (TSX:XMC)
Historical Stock Chart
From Jun 2023 to Jun 2024