Half Yearly Report

Terra Capital plc/ Market: AIM/ Epic: TCA/ Sector: Equity Investment Instruments

17 August 2015

Terra Capital Plc ('Terra' or 'the Fund')

Interim Results

Terra Capital Plc, the AIM quoted investment company focussed on investing in value opportunities globally, primarily in frontier markets, announces interim results for the six month period ended 30 June 2015.

The Fund undertakes its activities in line with its strategy to provide high absolute returns by investing in under-evaluated companies which present significant deep value opportunities. Due to market inefficiencies, the Fund and its Investment Manager, Terra Partners Asset Management Limited, believe that frontier markets provide many such prospects.

For more information, please visit www.terracapitalplc.com or contact:

Galileo Fund Services Limited (Administrator)

David Parnell

+44 1624 692600

Panmure Gordon (UK) Limited (Nominated adviser and corporate broker)

Paul Fincham or Jonathan Becher

+44 20 7886 2500

Terra Capital plc.

Ian Dungate, Director

+44 1624 692600

St Brides Partners Ltd

Elisabeth Cowell / Frank Buhagiar

+44 (0) 20 7236 1177

NOTES:

Terra Capital plc is an AIM quoted investment trust focussed on generating high absolute returns while ensuring volatility is kept to a minimum. The fund predominantly invests in under-researched and under-valued companies. The Fund Manager targets companies that are trading at less than their intrinsic worth and so, aside from any potential growth prospects, provide scope for capital appreciation as a result of a reversion towards underlying value. Investments are also made in companies which are viewed as fair value but offer opportunities for growth at a reasonable price. Due to inherent market inefficiencies, the Investment Manager believes many such 'value' opportunities can be found in Frontier Markets and utilises in-house teams of analysts on the ground in areas of interest to investigate suitable opportunities rather than rely on third party research.

Chairman's Statement

The Net Asset Value at 30 June 2015 stood at $0.967 against $0.979 at the end of 2014. When taking in to account the dividend of 3.72 cents per share paid in February, this NAV represents a total return for the six month period of 2.6% and a dividend yield based on the closing sales midpoint of the Company's shares on January 27 2015 (the declaration date) of 4.35%.

As noted in our annual report, following the Extraordinary General Meeting (the "EGM") held in January, the Board has negotiated with our Investment Manager to reduce its fees from 2 per cent. per annum of the aggregate net asset value to 1.25 per cent. per annum. Additionally the performance fee has been reduced from 20 per cent. of the increase (if any) in the Net Asset Value per Ordinary Share to 12 per cent. Both concessions which will inure to the benefit of the shareholders and hopefully make the company more interesting to new investors.

The EGM also saw the introduction of further measures to mitigate the discount to Net Asset Value at which our shares trade in the Market. These include the undertaking of a tender offer in the event that the Company's shares trade at an average discount of 12 per cent. over the 9 month period ending 31 December in any year and now providing an opportunity for investors to realise their investment at Net Asset Value less costs in 2018. It was the Board's belief that the provision of a termination date for the fund would be the very best way to finally eliminate the persistent discount to NAV which the Company's shares have traded in the past and the narrowing of the discount seems to have vindicated this view.

The full details of these changes can be found in the circular to shareholders on our website www.terracapitalplc.com .

The fund's holdings at June 30 comprised 61 positions with exposure to 26 currencies and is performing quite well on both an absolute basis and a relative basis as outlined in the Investment Manger's report below.

Sincerely yours,

Dirk Van den Broeck

Chairman

14 August 2015

Report of the Investment Manager

TCA's 2nd Quarter 2015 Return & Portfolio

The Fund's NAV rose to 0.9672 at June 30, 2015 from 0.0.9394 as of March 31, 2015, resulting in a net NAV return of 2.96% for the quarter.

The Fund's investment level (equity, fixed income and hedging) decreased from 92.08% at March 31 (including its commitment to Terra Argentine Fund) to 87.80% at June 30 due to decreases in its positions in Europe, Middle East and the Americas with only slight additions to the portfolio.

Europe

The Fund's exposure to Europe declined slightly from 25.18% to 24.10%, while still retaining the crown as being the Fund's largest regional allocation. The Fund increased its holdings in three current positions and reduced three positions. Investments were increased in Italy and Bulgaria while its holdings in Switzerland, Germany and Serbia were reduced.

Asia

The Fund's holdings in Asia remained stable at 19.16%; however this was a result of the Fund reducing its holding in China while increasing its position in Kazakhstan.

Middle East

The Fund's exposure to the Middle East declined from 16.98% to 15.04% on sales in three of the Fund's four Qatari positions, one of which was liquidated entirely. One position in Qatar was increased, while current positions, Lebanon and Oman were increased.

Africa

The allocation to Africa remained stable at 11.77%. The Fund's two positions in Kenya were reduced, while the Fund added one new position in Nigeria.

Americas

The portfolio's allocation to the Americas decreased from 18.52% to 16.90%. The Fund sold off a portion of one Argentine position which had increased substantially during the first half of the year, while adding a new position in Jamaica.

Fund Details

The following page details the Fund's holdings, changes from the prior quarter, and the local currency performance of each company's shares over the quarter.

Respectfully Submitted by: 

Terra Partners Asset Management Limited

Suite 8/5A, Portomaso Tower, Portomaso Avenue,

St. Julian's STJ 4011 Malta

Regulated by the Malta Financial Services Authority, Reg. No. C 56353

Unaudited consolidated income statement

The accompanying notes form an integral part of these interim consolidated financial statements

Unaudited consolidated statement of comprehensive income

The accompanying notes form an integral part of these interim consolidated financial statements

Unaudited consolidated balance sheet

Approved by the Board of Directors on 14 August 2015

Ian Dungate Filip Montfort

Director Director

The accompanying notes form an integral part of these interim consolidated financial statements

Unaudited consolidated statement of changes in equity

For the six months ended 30 June 2015

For the six months ended 30 June 2014

The accompanying notes form an integral part of these consolidated financial statements

Unaudited consolidated statement of cash flows

The accompanying notes form an integral part of these consolidated interim financial statements

Notes to the consolidated financial statements

1. The Company

Terra Capital plc (formerly named Speymill Macau Property Company plc) was incorporated and registered in the Isle of Man under the Isle of Man Companies Acts 1931 to 2004 on 31 October 2006 as a public company with registered number 118202C.

Pursuant to the Extraordinary General Meeting held on 24 May 2012 a tender offer was made for ordinary shares of US$0.10 each in the issued ordinary share capital of the Company at a price of US$0.835 per ordinary share. As a result of the tender 36,896,674 shares were tendered and were purchased by the Company. At that same meeting the shareholders approved a plan to sell off the Company's real estate portfolio and change its investment mandate to investing in equities primarily in the Frontier and Emerging markets. This investment mandate was subsequently refined in an EGM held on the 26th January 2015 when the fees paid to the investment manager were also reduced and a potential wind up date for the fund in 2018. To obtain full details, all of the documentation may be found on the Company's website http://www.terracapitalplc.com/regulatory-news.

The interim consolidated financial statements of Terra Capital plc as at, and for, the six months ended 30 June 2015 comprise the Company and its subsidiaries (together referred to as the "Group").

The consolidated financial statements of the Group as at, and for, the year ended 31 December 2014 are available upon request from the Company's registered office at Millennium House, 46 Athol Street, Douglas, Isle of Man, IM1 1JB or at www.terracapitalplc.com.

The Company's investment objective is to achieve capital appreciation while attempting to reduce risk primarily by applying a disciplined and diversified value investing philosophy in purchasing securities in Frontier markets for its portfolio.

2 Statement of compliance and significant accounting policies

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at, and for, the year ended 31 December 2014.

These condensed consolidated interim financial statements were approved by the Board of Directors on 14 August 2015.

The Group has one segment focusing on achieving capital appreciation while attempting reduce risk primarily by applying a disciplined and diversified value investing philosophy. No additional disclosure is included in relation to segment reporting as the Group's activities are limited to one business segment.

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at, and for, the year ended 31 December 2014.

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2014.

3 Use of estimates and judgements

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

Following the sale of its real estate investment property,(see note 1) the only significant area requiring estimation is the finalisation of the tax liability relating to the sale of that property (note 11).

4 Finance income and costs

5 Net asset value per share

The net asset value per share as at 30 June 2015 is US$0.97 based on 68,299,236 ordinary shares in issue as at that date (excluding 8,956,423 shares held in treasury) (31 December 2014: US$0.98 based on 68,299,236 ordinary shares).

6 Related party transactions

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence over the party making financial or operational decisions.

A total of $3.4 million has been committed to be invested in the Terra Argentine Fund ("TAF") a fund managed by the Manager. It was determined by the Board that this was the most efficient method of obtaining a diversified investment in this market and the Manager has waived all duplicate fees on this investment pursuant to an agreement 

Directors of the Company

Howard Golden and Filip Montfort are directors of the Manager. The Manager was appointed at the EGM held on 24 May 2012. Following the EGM, Mr Golden and Mr Yarden Mariuma resigned as directors of the Company and Mr Dirk van den Broeck was elected Chairman of the Board of Directors as an independent non-executive director and Mr Ian Dungate was elected as an independent director.

Filip Montfort is a director of the Investment Manager and remained as a Director of the Company following the above noted EGM.

Mr Dungate is a director and principal of the administrator.

With effect from the date of appointment of the Manager, Mr Montfort has agreed to waive his entitlement to Directors remuneration going forward.

The Investment Manager

Following the EGM held on 24 May 2012, the Company appointed the immediate predecessor to the current investment manager until the current investment manager, Terra Partners Asset Management, Limited ("TPAM") received its license in Malta and then the Investment Management Contract was assigned to TPAM to be the Group's investment manager (the "Manager").

Term and termination

The Investment Management Agreement may be terminated by either party giving to the other not less than 12 months' notice expiring on, or at any time after, the third anniversary of the commencement date of the agreement or otherwise, in circumstances, inter alia, where one of the parties has a receiver appointed over its assets or if an order is made or an effective resolution passed for the winding-up of one of the parties.

Management fee

Following an EGM held on 26 January 2015, the Manager shall be entitled to receive a management fee equal to 1.25 per cent. per annum of the aggregate Net Asset Value of the Company during the relevant fee payment period (previously 2.0 per cent.), calculated on the first day of each month, accrued on a daily basis and payable monthly in arrears (or pro rata for lesser periods).

Performance fee

Following the EGM held on 26 January 2015, the Manager is also entitled to receive a performance fee equal to 12 per cent. (previously 20 per cent.) of the increase (if any) in the Net Asset Value per Share (with dividends and other distributions added back and ignoring any accrued performance fee) as at each semi-annual performance fee calculation period above the Net Asset Value as at the commencement of each such semi-annual performance fee calculation period, provided that any performance fee shall be payable only to the extent that the Net Asset Value of the Share exceeds the Net Asset Value immediately following the settlement of the Tender Offer or, if a performance fee has been paid, the Net Asset Value per Share when a performance fee was last paid. The performance fee shall be calculated on 30 June and 31 December in each year and paid following such calculation. The performance fee for the period ending 30 June 2015 was US$ Nil (30 June 2014: US$1,472,639).

Expenses

In addition, the Company shall be responsible for the payment of certain out-of-pocket expenses reasonably incurred by the Manager in the proper performance of the Investment Management Agreement up to a maximum of US$75,000 per annum and any other put-of-pocket expenses in excess of this maximum shall be borne by the Investment Manager.

The Administrator

The Administrator is entitled to receive a fee of 10 basis points per annum of the net assets of the Company between £0 and £100m and 7.5 basis points of the net asset value of the Company in excess of £100m, subject to a minimum monthly fee of £4,000, and a maximum monthly fee of £11,250 payable quarterly in arrears.

The Administrator assists in the preparation of the financial statements of the Company for which it receives a fee of £1,750 per set and provides general secretarial services to the Company for which it receives a minimum annual fee of £5,000.

7 Financial assets at fair value through profit or loss

Group

30 June 2015: Financial assets at fair value through profit or loss (all quoted equity securities, except Terra Argentina Fund LP):

8 Trade and other receivables

9 Earnings per share

Basic earnings per share is calculated by dividing the profit for the period attributable to equity holders of the Company by the weighted-average number of ordinary shares in issue during the period.

10 Share capital

During the 6 month period to 30 June 2014 the Company repurchased 1,250,000 Ordinary shares at a cost of US$1,000,000. As at 30 June 2015, 8,956,423 Ordinary shares are retained in treasury (31 December 2014 8,956,423). The Ordinary shares held in treasury have no voting rights and are not entitled to dividends

11 Taxation

Following disposal of the AIA Tower in Macau in 2011 the local authorities imposed a tax liability which the Directors and Investment Manager felt was wrongly calculated. This liability remains outstanding until confirmation of the final tax assessment from the Macau authorities, but it has been fully provisioned for in the accounts and does not affect the calculation of the Net Assets of the Group.

Isle of Man taxation

The Company is resident in the Isle of Man which means that it pays income tax at 0%. The Company pays a corporate charge of £390 to the Isle of Man Government for each tax year.

12 Directors' remuneration

Mr Van den Broeck, as Chairman, is entitled to remuneration of US$45,000 per annum from the date of his appointment and Mr Dungate and Mr Montfort are each entitled to remuneration of US$30,000 per annum. Mr Montfort has agreed to waive his director's fees for so long as he is associated with the Manager.

13 Trade and other payables

14 Contingent liabilities and capital commitments

The Company has committed to invest a total $3,400,000 in Terra Argentine Fund L.P. A total of $1,360,000 has been called and paid as at 30 June 2015 leaving a total commitment outstanding of $2,040,000. It is not known whether this amount will be called up during the limited life of this investment.

15 Post balance sheet events

There have been no material events since the balance sheet date that require disclosure in the interim financial statements.