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Terra Firma Capital Corporation Reports Results for the Second Quarter Ended June 30, 2014

All amounts are stated in Canadian dollars

TORONTO, ONTARIO--(Marketwired - Aug. 21, 2014) -

198% INCREASE IN NET INCOME COMPARED TO Q2 2013

48% TOTAL REVENUE GROWTH YEAR OVER YEAR

43% GROWTH IN LOANS AND MORTGAGE INVESTMENTS

Terra Firma Capital Corporation (TSX VENTURE:TII) ("Terra Firma" or the "Company"), a real estate finance company, today released its financial results for the three and six months ended June 30, 2014.

SECOND QUARTER 2014 HIGHLIGHTS:

  • Total revenue is $2.9 million, an increase of $933,000 or 48%, compared to the same period last year.

  • Net income and comprehensive income in the second quarter is $786,000, an increase of $522,000 or 198%, compared to the second quarter of 2013.

  • Basic earnings per share in the second quarter were $0.03, compared to basic earnings per share of $0.01 for the same quarter in the prior year, an increase of 200% over last year.

  • Loan and mortgage investments increased by 43% or $18.3 million from $42.9 million at June 30, 2013 to $61.3 million at June 30, 2014.

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"The growth of our loan portfolio, increase in total revenue and significant growth in net income year-over-year, reflect our success in penetrating the market, matching capital to fund our commitments and ability to achieve strong profitability. Our financial results for the first half of the year demonstrate our continued commitment to building a loan portfolio to enhance our earnings and shareholder value", commented Y. Dov Meyer, President and Chief Executive Officer. "Our loan originations and commitments are consistently growing and our pipeline of transactions going into Q3 is well diversified. We are on track for a record breaking year." he further said.

Results of operations - three months ended June 30, 2014

Net income in the second quarter ended June 30, 2014 was $786,000 or $0.03 per basic share and $0.02 per diluted share, compared to $264,000, or $0.01 per basic and diluted share, in the second quarter ended June 30, 2013.

Interest and fee income for the second quarter ended June 30, 2014 aggregated $2.8 million, an increase of 54% over the $1.8 million in the same period in the previous year, and an increase of 8% over $2.6 million in the first quarter ended March 31, 2014.

Interest expense for the second quarter ended June 30, 2014 was $1.5 million, compared to $1.2 million for the comparative period last year and $1.5 million for the first quarter ended March 31, 2014, representing the growth of our business and the increase in loan syndications to fund the investment activities.

The company's loan and mortgage investments increased from $55.3 million at December 31, 2013 to $61.3 million at June 30, 2014, an increase of 11%. The average interest rate in the mortgage portfolio at June 30, 2014 was 18.8% compared to 18.6% at December 31, 2013.

The Company's Management's Discussion & Analysis and Financial Statements as at and for the three months ended March 31, 2014 have been filed and are available on SEDAR (www.sedar.com).

About Terra Firma

Terra Firma is a full service, publicly traded real estate finance company that provides customized equity and debt solutions to the real estate industry. Our focus is to arrange and provide financing with flexible terms to property owners looking to improve or add to their existing real estate assets but who may be limited by conventional bank financing, as well as to invest in quality commercial and residential developments by proven real estate developers. Terra Firma offers a full spectrum of real estate financing under the guidance of strict corporate governance, clarity and transparency. For further information please visit Terra Firma's website at www.tfcc.ca.

The TSXV has neither approved nor disapproved the contents of this press release. The TSXV does not accept responsibility for the adequacy or accuracy of this press release.

This Press Release contains forwardlooking statements with respect matters concerning the business, operations, strategy and financial performance of Terra Firma. These statements generally can be identified by use of forward looking word such as "may", "will", "expects", "estimates", "anticipates", "intends", "believe" or "could" or the negative thereof or similar variations. The future business, operations and performance of Terra Firma could differ materially from those expressed or implied by such statements. Such forwardlooking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forwardlooking statements are based on a number of assumptions which may prove to be incorrect. Additional, important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, local real estate conditions, competition, changes in government regulation, dependence on tenants' financial conditions, interest rates, the availability of equity and debt financing, environmental and tax related matters, and reliance on key personnel. There can be no assurances that forwardlooking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forwardlooking statements. The cautionary statements qualify all forwardlooking statements attributable to Terra Firma and persons acting on its behalf. Unless otherwise stated, all forward looking statements speak only as of the date of this Press Release and Terra Firma has no obligation to update such statements except as required by law.

Terra Firma Capital Corporation

Consolidated Statements of Income and Comprehensive Income

For the three and six months ended June 30, 2014 and 2013

(Unaudited)

Three months ended

Six months ended

June 30,
2014

June 30,
2013

June 30,
2014

June 30,
2013

Revenue

Interest and fees

$

2,841,816

$

1,840,180

$

5,462,356

$

3,426,395

Rental

47,319

115,558

162,756

222,654

2,889,135

1,955,738

5,625,112

3,649,049

Expenses

Property operating costs

15,225

21,238

57,301

68,853

General and administrative

529,678

372,923

884,195

740,086

Share based compensation

423,994

32,345

436,602

32,345

Interest

1,451,536

1,157,172

2,930,455

2,094,584

Gain on conversion of interest in joint operation

(487,000

)

-

(487,000

)

-

1,933,433

1,583,678

3,821,553

2,935,868

Income from operations before income taxes

955,702

372,060

1,803,559

713,181

Income taxes

321,563

108,503

551,211

184,279

Income from continuing operations

634,139

263,557

1,252,348

528,902

Income from discontinued operations

151,644

-

151,644

-

Net income and comprehensive income

$

785,783

$

263,557

$

1,403,992

$

528,902

Earnings per share

Basic

$

0.03

$

0.01

$

0.05

$

0.02

Diluted

$

0.02

$

0.01

$

0.04

$

0.02

Terra Firma Capital Corporation

Consolidated Statements of Financial Position

As at June 30, 2014 and December 31, 2013

June 30,
2014

December 31,
2013

Assets

Cash and cash equivalents

$

5,285,223

$

7,721,115

Funds held in trust

199,059

383,526

Amounts receivable and prepaid expenses

2,256,149

1,661,352

Loan and mortgage investments

61,266,320

55,278,303

Investment properties

1,915,336

7,671,452

Portfolio investments

3,148,234

954,073

Deferred income tax asset

31,818

-

Total assets

$

74,102,139

$

73,669,821

Liabilities

Accounts payable and accrued liabilities

$

2,168,940

$

1,366,708

Provision for discontinued operations

27,500

321,490

Unearned income

298,077

472,924

Income taxes payable

274,494

82,375

Deferred income tax liability

-

6,348

Loans and mortgages payable

44,907,558

46,569,921

Convertible debentures

10,141,697

10,125,074

Total liabilities

57,818,266

58,944,840

Shareholders' Equity

Share capital

$

10,834,175

$

10,795,790

Contributed surplus

720,477

603,962

Retained earnings

4,529,221

3,125,229

Total shareholders' equity

16,083,873

14,524,981

Non-controlling interest

200,000

200,000

Total liabilities and Shareholders' Equity

$

74,102,139

$

73,669,821