Terra Firma Capital Corporation
TSX VENTURE : TII

Terra Firma Capital Corporation

April 30, 2013 20:49 ET

Terra Firma Capital Corporation Reports 2012 Fourth Quarter and Year End Results

Significant Growth in Revenue and Net Income With Increased Loan Origination and Syndication Activities

TORONTO, ONTARIO--(Marketwired - April 30, 2013) -

All amounts are stated in Canadian dollars.

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 months and year ended December 31, 2012.

2012 HIGHLIGHTS:

  • Total revenue is $5.5 million, an increase of $3.9 million or 260%, compared to the last year.
  • Net income and comprehensive income is $1.3 million, an increase of $964,658 or 336%, compared to last year.
  • Total assets increased by 57% to $46.4 million from $29.5 million.

"We have made significant strides in 2012 and we will continue to prudently build on this and expand the Company's presence in the market," commented Dov Meyer, President and Chief Executive Officer. "There are still significant investment opportunities in the market, but we will continue to be prudent in our approach to selection of new investments."

Results of operations - year ended December 31, 2012

Income from continuing operations for the year ended December 31, 2012 increased by 209% to $1.5 million, or $0.05 per basic and diluted share, from $480,164, or $0.03 per basic and diluted share in the previous year.

For the year ended December 31, 2012, interest and fees income grew 281% to $5.2 million compared to $1.4 million in the previous year.

The significant growth in Terra Firma's revenues and income from continuing operations for the year ended December 31, 2012 as compared to the year earlier periods was primarily due to increase in loan and mortgage investments originations. The Company's loan portfolio increased to $32.0 million with a weighted average effective interest rate of 19.9%, at December 31, 2012 compared to $16.7 million with a weighted average effective interest rate of 19.3% at December 31, 2011.

Interest expense for the year ended December 31, 2012 was $2.6 million compared to $457,719 for the year ended December 31, 2011, primarily due to increase in the syndicated portion of the Company's loan and mortgage investments, which increased from $43.8 million at December 31, 2011 to $17.0 million at December 31, 2012 and the issuance of $10.1 million of 3-year, 7% convertible debentures in September 2011. These funding leveraged the Company's shareholders' equity and fueled the growth in loan and mortgage investments, while reducing its overall portfolio risk profile.

Net Income for the year ended December 31, 2012 was $1.3 million, an increase of $964,658 or 336% compared to previous year.

Results of operations - fourth quarter ended December 31, 2012

Income from continuing operations for the three months ended December 31, 2012 was $728,689, an increase of $422,544 or 138% compared to the same period in previous year.

Interest and fees earned for the three months ended December 31, 2012 was $1.9 million compared to $749,883 for the comparable period last year. The increase in interest and fees earned was primarily due to the growth in the Company's loan and mortgage investments with higher weighted average effective interest rate.

Net income for the three months ended December 31, 2012 was $496,376, an increase of $188,303 or 61% from net income of $308,073 in the same period in the previous year.

Termination of Management Agreement

Terra Firma was formerly managed by Counsel Asset Management, L.P., a wholly owned subsidiary of Counsel Corporation (TSX:CXS). Counsel Corporation owned 6,168,333 or approximately 20.2% of the outstanding common shares of Terra Firma as at December 31, 2012. On December 31, 2012, Counsel Asset Management L.P. ended its management of Terra Firma and on January 1, 2013, Counsel distributed its entire holding of Terra Firma shares as a dividend to its shareholders.

Following the termination of the management agreement, the Company's overall strategy remains unchanged and management believes that the Company will be better positioned to deliver on its strategy and objectives with a new manager or alternatively, internalizing the management structure. Management is evaluating both options, among others.

The Company's Management's Discussion & Analysis and Financial Statements as at and for the year ended December 31, 2012 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.terrafirmacapital.ca.

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 months and year ended December 31, 2012
(Unaudited)
Three months ended Year ended
December 31,
2012
December 31,
2011
December 31,
2012
December 31,
2011
Revenue
Interest and fees earned $ 1,897,945 $ 749,883 $ 5,156,665 $ 1,352,124
Rental income 195,113 55,305 343,958 174,195
2,093,058 805,188 5,500,623 1,526,319
Expenses
Property operating costs 76,623 17,834 129,186 55,901
General and administrative expenses 134,629 93,829 538,978 245,327
Share based compensation 15,369 32,608 216,840 284,998
Interest expense 888,303 294,562 2,569,006 457,719
1,114,924 438,833 3,454,010 1,043,945
Fair value adjustment of investment properties - 50,000 - 195,000
Income from continuing operations before income taxes 978,134 416,355 2,046,613 677,374
Income tax provision 249,445 110,210 562,320 197,210
Income from continuing operations 728,689 306,145 1,484,293 480,164
Income (loss) from discontinued operations (232,313 ) 1,928 (232,313 ) (192,842 )
Net income and comprehensive income $ 496,376 $ 308,073 $ 1,251,980 $ 287,322
Basic and diluted earnings (loss) per share
Continuing operations $ 0.02 $ 0.01 $ 0.05 $ 0.03
Discontinued operations (0.01 ) - (0.01 ) (0.01 )
$ 0.01 $ 0.01 $ 0.04 $ 0.02
Terra Firma Capital Corporation
Consolidated Statements of Financial Position
As at December 31, 2012 and 2011
(Unaudited)
2012 2011
Assets
Cash and cash equivalents $ 3,223,291 $ 8,771,557
Amounts receivable and prepaid expenses 2,396,180 805,412
Loan and mortgage investments 31,996,731 16,724,774
Investment properties 7,834,576 3,234,658
Portfolio investment 950,000 -
Total assets $ 46,400,778 $ 29,536,401
Liabilities
Accounts payable and accrued liabilities $ 1,192,616 $ 1,052,582
Provision for discontinued operations 445,957 251,864
Unearned income 16,965 52,624
Income taxes payable 474,297 82,169
Deferred income taxes 15,602 10,260
Loans and mortgages payable 21,406,070 6,777,907
Convertible debentures 10,093,325 10,061,869
Total liabilities 33,644,832 18,289,275
Shareholders' Equity
Share capital $ 10,757,405 $ 10,687,105
Contributed surplus 573,139 386,599
Retained earnings 1,425,402 173,422
Total shareholders' equity 12,755,946 11,247,126
Total liabilities and Shareholders' Equity $ 46,400,778 $ 29,536,401

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.

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