Cervus Financial Group Inc. Announces Financial Results For The First Quarter Ended December 31, 2005.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- "Mortgage Assets increased to $926.7 million" Cervus Cervus a genus of true deer in the family Cervidae. Includes C. canadensis (wapiti), C. elaphus (red deer) and C. elaphus nannodes (tule elk). Financial Group Inc. ("Cervus"), (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :CFG CFG Configuration (File Name Extension) CFG Control Flow Graph CFG Context-Free Grammar CFG Club for Growth CFG Cienfuegos, Cuba (city/airport code) CFG Critical Friends Groups ), is pleased to announce results of operations for the first quarter ended December December: see month. 31, 2005 with revenues of $2.3 million and residential mortgage originations of $297.8 million. Total Administered Assets increased to $926.7 million. Highlights for the first quarter ended December 31, 2005 and subsequent developments: - Increased Total Administered Assets to $926.7 million compared to $645.0 million as at September September: see month. 30, 2005; - The Company has future mortgage commitments of $141.7 million, compared to $218.1 million as at September 30, 2005; - Completed whole loan sales, totalling $277.6 million, to Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. financial institutions under existing sales and servicing agreements compared to $28.4 million in the same period last year; - Gain on sale revenue was lower by approximately $2.4 million in the three months ended December 31, 2005 as compared to the three months ended September 30, 2005 as a result of lower funding volume and reduced spreads on our fixed rated mortgage products; - Cervus ranked 12th out of 47 mortgage broker lenders in the monthly Filogix Canadian Mortgage Broker Market Report (TM) for the month of December 2005 as compared to 20th for December 2004; - Announced closing of private placement financing of $6,240,000 in the form of unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. ; - The company paid its first trailer fee Trailer Fee A fee that a mutual fund manager pays to a salesperson who sells the fund to investors. Notes: The trailer fee pays the salesperson for providing the investor with ongoing investment advice and services. and renewal fee to the mortgage broker industry delivering on the "Customer for Life" model. Subsequent to the first quarter ended December 31, 2005: - Launched a Conventional Mortgage Program including fixed and adjustable rate Adjustable rate Applies mainly to convertible securities. Refers to interest rate or dividend that is adjusted periodically, usually according to a standard market rate outside the control of the bank or savings institution, such as that prevailing on Treasury bonds or notes. products under the company's "Customer for Life" business model; - Peter Williams Peter Williams can mean:
- Actively considering a number of strategic financial options that have been presented to the Company that would improve business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets ; - Mortgage volumes and spreads have improved since the end of the first quarter.
Cervus Financial Group Inc.
Interim Unaudited Consolidated Balance Sheets
December 31, 2005
December September
31, 2005 30, 2005
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ASSETS audited
CURRENT
Cash $ 2,243,673 $ 3,890,362
Restricted cash (Note 9) 1,500,000 1,500,000
Residential mortgages
(Note 8) 20,389,698 4,448,436
Accounts receivable 1,091,470 1,866,587
Sales tax receivable - 30,524
Prepaid expenses 656,103 385,544
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25,880,944 12,121,453
OTHER ASSETS 540,062 444,363
DEFERRED FINANCING COSTS
(Note 11) 353,184 -
SECURITIZATION - RETAINED
INTEREST (Note 7) 551,383 553,139
CAPITAL ASSETS (Note 5) 2,936,753 2,863,254
INTANGIBLE ASSETS (Note 6) 3,459,558 3,557,976
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$ 33,721,884 $ 19,540,185
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LIABILITIES
CURRENT
Accounts payable
and accrued expenses $ 6,864,201 $ 8,655,126
Sales tax payable 70,191 39,606
Warehouse credit facility
(Note 9) 13,500,000 -
Other liabilities 49,272 48,490
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20,483,664 8,743,222
TRAILER COMMISSIONS 1,961,355 1,401,161
FUTURE SERVICING LIABILITY 47,256 48,960
LEASE INDUCEMENT 166,890 177,540
LEASE OBLIGATIONS 5,046 7,376
CONVERTIBLE DEBENTURE (Note 11) 3,577,885 -
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26,242,096 10,378,259
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SHAREHOLDERS' EQUITY
COMMON SHARES (Note 12) 19,574,420 19,574,420
EQUITY COMPONENT OF CONVERTIBLE
DEBENTURE (Note 12(f)) 1,689,062 -
CONTRIBUTED SURPLUS
(Note 12 (e)) 1,832,077 1,034,635
DEFICIT (15,615,771) (11,447,129)
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7,479,788 9,161,926
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$ 33,721,884 $ 19,540,185
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Please see the SEDAR website at www.sedar.com for the accompanying
notes which are integral to these interim unaudited consolidated
financial statements and for Management's Discussion & Analysis.
Cervus Financial Group Inc.
Interim Unaudited Consolidated Statements of Operations and Deficit
December 31, 2005
For the three For the three
months ended months ended
December 31, December 31,
2005 2004
(restated see
Note 4)
INTEREST INCOME (Note 4) $171,651 $114,993
INTEREST EXPENSE (Note 4) (91,764) (106,524)
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NET INTEREST INCOME 79,887 8,469
GAIN ON SALE OF LOANS (Note 4) 1,766,004 461,332
FEES AND OTHER INCOME 478,873 3,731
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2,324,764 473,532
BROKER COMMISSIONS (Note 4) (2,831,198) (296,887)
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(506,434) 176,645
OPERATING EXPENSES
Human resources 1,267,212 1,059,667
Business processing (Note 4) 685,512 303,646
Selling, general and administration 764,218 400,576
Governance and public markets 546,139 264,680
Premises 103,739 45,933
Amortization 243,105 143,520
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3,609,925 2,218,022
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LOSS BEFORE INTEREST ON CONVERTIBLE
DEBENTURE AND INCOME TAXES 4,116,359 2,041,377
Interest on convertible debenture 52,283 -
Future income tax benefit - (84,504)
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NET LOSS FOR THE PERIOD $ 4,168,642 $ 1,956,873
DEFICIT - BEGINNING OF PERIOD 11,447,129 2,472,950
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DEFICIT - END OF PERIOD $ 15,615,771 $ 4,429,823
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NET LOSS PER COMMON SHARE
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Basic and diluted (Note 12(g)) $ (0.10) $ (0.06)
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Please see the SEDAR website at www.sedar.com for the accompanying
notes which are integral to these interim unaudited consolidated
financial statements and for Management's Discussion & Analysis.
Cervus Financial Group Inc.
Interim Unaudited Consolidated Statements of Cash Flows
December 31, 2005
For the three For the three
months ended months ended
December 31, December 31,
2005 2004
NET INFLOW (OUTFLOW) OF CASH RELATED (restated see
TO THE FOLLOWING ACTIVITIES Note 4)
OPERATING
Net loss for the period $ (4,168,642) $ (1,956,873)
Items not affecting cash
Amortization of capital assets 144,687 52,861
Amortization of intangibles 98,418 90,659
Future income tax benefit - (84,504)
Stock option expense 71,015 -
Amortization of convertible
debenture discount 22,240 -
Amortization of deferred financing
costs 2,950 -
Lease inducement (10,650) -
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(3,839,982) (1,897,857)
Net changes in non-cash working
capital balance
Prepaid expenses (Note 4) (270,559) (256,332)
Residential mortgages (Note 4) (15,941,262) (9,879,872)
Accounts receivable 775,117 -
Other assets (95,699) 657
Accounts payable and accrued expenses (1,790,873) 437,676
Sales tax payable 61,109 16,755
Proceeds from credit facility
borrowings 13,500,000 1,000,000
Deferred revenue (Note 4) - 18,162
Trailer commissions 560,194 78,134
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(7,041,955) (10,482,677)
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INVESTING
Acquisition of capital assets (218,186) (548,601)
Acquisition of intangible assets - (13,860)
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(218,186) (562,461)
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FINANCING
Proceeds from issuance of common shares - 10,000,000
Proceeds from exercise of common
share warrants - 330,000
Common share issue costs - (720,515)
Proceeds from issuance of convertible
debenture 6,240,000 -
Convertible debenture issue costs (625,000) -
Secured borrowings (Note 4) - 3,298,416
Repayment of obligations under
capital leases (1,548) -
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5,613,452 12,907,901
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NET INCREASE (DECREASE) IN CASH
FOR THE PERIOD (1,646,689) 1,862,763
CASH, BEGINNING OF PERIOD 3,890,362 2,296,206
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CASH, END OF PERIOD $ 2,243,673 $ 4,158,969
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CASH IS REPRESENTED BY:
Cash in bank $ 2,243,673 $ 4,158,969
Short term investments - -
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$ 2,243,673 $ 4,158,969
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SUPPLEMENTARY INFORMATION
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Interest paid on convertible debenture $ 27,093 $ -
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Please see the SEDAR website at www.sedar.com for the accompanying
notes which are integral to these interim unaudited consolidated
financial statements and for Management's Discussion & Analysis.
About "Customer for Life" The Company is a financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. company dedicated to providing mortgages to selected mortgage broker firms. The Cervus "Customer for Life" model enables the mortgage professional to retain the relationship with the borrower as a customer throughout the life of the mortgage. The compensation model also creates a continued revenue stream in the form of trailer fees, a one time origination fee A charge imposed by a lending institution or a bank for the service of processing a loan. For example, a bank might charge an individual who has applied for a student loan an origination fee of one percent for processing the application and granting the loan. and a renewal fee every time the customer renews with Cervus. This creates income security for the mortgage professional allowing a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. relationship to be developed with the borrower. This long-term relationship subsequently gets passed along to the institutional investor Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. of the mortgage security, creating a higher yield long-term investment cash flow stream. The Cervus "Customer for Life" model creates profitable relationships for the borrowers, mortgage professionals, institutional investors and for Cervus. About Cervus Cervus Financial Group Inc. is a Canadian financial services company created as an industry initiative with leading mortgage broker companies and fixed income investment banks The following is a list of investment banks Financial conglomerates Large financial-services conglomerates combine commercial banking and investment banking, and sometimes insurance. to become a high-yield Adj. 1. high-yield - yielding a large amount of agricultural or industrial production fruitful - productive or conducive to producing in abundance; "be fruitful and multiply" residential mortgage producer and the largest mortgage broker lender of conventional insured and insurable in·sure v. in·sured, in·sur·ing, in·sures v.tr. 1. a. To provide or arrange insurance for: a company that insures homeowners and businesses. b. mortgages in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . Our new and innovative business model demonstrates contracted asset accumulation Accumulation 1) In the context of individual investing, it is the process of contributing cash to invest in securities over a period of time in order to build a portfolio of desired value. Dividends and capital gains are also reinvested during this process. of $22.5 billion in mortgages over five to seven years by fusing In electrophotography, making the toner adhere permanently to the paper. Heat fusing melts the toner, which is pressed into the paper. Cold fusing presses the toner into the paper without applying any heat. Flash fusing melts the toner with light, and no heat or pressure is used. industry ownership, technology, service delivery and long term recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue for the mortgage brokers. Cervus works on the basis of a "Customer for Life" model, where the borrower is the client of the mortgage broker and Cervus is effectively the "Back Office - Servicer" between borrowers and investors. Cervus has assembled as·sem·ble v. as·sem·bled, as·sem·bling, as·sem·bles v.tr. 1. To bring or call together into a group or whole: assembled the jury. 2. an experienced management team and board of directors who are knowledgeable in banking, financial services and related businesses. Cervus is focused on funding and servicing insurable conventional and high ratio insured residential mortgages originated through mortgage brokers. Cervus is currently licensed under Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. , Quebec Quebec, city, Canada Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. , British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography and Alberta Alberta (ălbûr`tə), province (2001 pop. 2,974,807), 255,285 sq mi (661,188 sq km), including 6,485 sq mi (16,796 sq km) of water surface, W Canada. mortgage broker/lender legislation and is seeking similar regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals in other Canadian Provinces Noun 1. Canadian province - Canada is divided into 12 provinces for administrative purposes province, state - the territory occupied by one of the constituent administrative districts of a nation; "his state is in the deep south" as required. Cervus's head office and Ontario operations centre is located in Toronto, with additional sales offices in Vancouver Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. , Calgary Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial and in Montreal Montreal (mŏn'trēôl`), Fr. Montréal (môNrāäl`), city (1991 pop. 1,017,666), S Que., Canada, on Montreal island, surrounded by St. Lawrence River and Rivière des Prairies. . Cervus Financial Group Inc. conducts all lending operations through its wholly-owned subsidiary, Cervus Financial Corp. Forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. (safe harbour) statement Statements made in this news release that relate to future plans, events or performances are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Any statement containing words such as "believes," plans," "expects" or "intends" and other statements which are not historical facts contained in this release are forward-looking, and these statements involve risks and uncertainties and are based on current expectations. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements. Additional information about Cervus is available on SEDAR SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review (www.sedar.com). The TSX does not accept responsibility for the adequacy or accurac y of this release. Cervus Financial Group Inc. (TSX:CFG) |
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