Amica Mature Lifestyles Inc.
TSX : ACC

Amica Mature Lifestyles Inc.

October 09, 2008 08:15 ET

Amica Mature Lifestyles Announces First Quarter Results for Fiscal 2009

Conference Call to Be Held October 9th, 2008 at 1:00 PM (ET)

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 9, 2008) - Mr. Samir Manji, Chairman, President and CEO of Amica Mature Lifestyles Inc. (TSX:ACC) ("Amica" or the "Company"), a leader in the management, marketing, design and development of luxury housing and services for mature lifestyles, is pleased to announce the Company's results for the three month period ended August 31, 2008.

FIRST QUARTER HIGHLIGHTS

THREE MONTHS ENDED AUGUST 31, 2008

(Compared with the three months ended August 31, 2007)

- EBITDA(1) decreased $1.0 million to $2.5 million.

- MARPAS(2) increased 2.1% on a same community(3) basis.

- Cash flow from operations(4) decreased $0.3 million to $1.8 million.

- Net earnings decreased $0.6 million to $0.5 million.

- Per share net earnings decreased $0.03 per share to $0.03 per share.

- Diluted cash flow per share decreased $0.02 per share to $0.10 per share.

Overall occupancy in Amica's mature residences at the end of the first quarter fell slightly to 94.5% compared to 95.2% at the end of the fiscal year ended May 31, 2008. Although occupancy has slightly decreased in the first quarter, the Company has entered into one of its busiest marketing periods between September and November. The focus of all of its communities is to increase MARPAS through occupancy, rent increases and ancillary revenue. MARPAS for the quarter increased 2.1% on a same community basis compared to an increase of 3.9% for the same quarter ended August 31, 2007.

One key milestone for the fiscal year-to-date was the opening of Amica at Westboro Park, located in Ottawa, Ontario, just subsequent to the end of the first quarter. Amica's first new luxury independent living retirement residence in Ottawa, since the redevelopment of Amica at Bearbrook in 2005, is located just west of Ottawa's downtown core and offers state-of-the-art services and amenities for active, independent seniors, as well as 29-suites of Vitalis™ living for those who require additional care. Amica has a 6% equity interest in the 138-suite luxury, independent living residence. Amica is very pleased with the lease-up of this Retirement Residence, with 41% of the independent living suites reserved to date.

Amica at Thornhill, located in Thornhill, Ontario, in which the Company has a 10% equity interest, is scheduled to open during the second quarter of this fiscal year. Good pre-leasing momentum has been achieved in recent months for the independent living suites. The Company looks forward to opening this beautiful Wellness & Vitality™ Residence in the weeks ahead.

Amica at London, located in London, Ontario will open in March 2009 with Amica at Whitby, located in Whitby, Ontario expected to open in Spring 2009.

Throughout the first quarter of the fiscal year, the Company's focus has been and will continue to be on maximizing financial results, managing cash resources and working hard to advance the Amica brand. These three objectives are the core to every decision made as an organization and remain top priority. These are challenging times in the financial markets and the Company has experienced declines in management operations revenues primarily as a result of lower levels of communities under development which the Company believes is a prudent strategy.

Samir Manji, commenting on the results, said, "As I have indicated before, the challenges in the financial markets and the resulting credit crunch call for re-ordering of the Company's priorities. While the fundamentals of our business of providing industry-leading communities for seniors continues to be strong, the difficulties in the financial markets will require renewed efforts to secure financing commitments for our developments. Since last Fall, we have been and will continue to be more cautious and selective in entering into new development commitments. Our priorities for the balance of this fiscal year are to continue intensive management of our communities, lease-up of newly-opened communities, be disciplined on operating and overhead costs and complete the financing program to ensure adequate capital is in hand for selective growth opportunities."

During the first three months of fiscal 2009, Amica has purchased 162,100 shares under a Normal Course Issuer Bid ("NCIB") at an average purchase price of $5.44 per share. A total of 404,200, shares have been purchased under the NCIB at an average purchase price of $6.57 per share since the commencement of the NCIB on January 15, 2008. The NCIB will terminate on January 14, 2009, or such earlier date as the Company may complete its purchases pursuant to its Notice of Intention. The shares purchased under the bid are cancelled by the Company.

SECOND QUARTER DIVIDEND

The Company's Board of Directors has approved a dividend of $0.06 per share on all issued and outstanding common shares which will be payable on December 15, 2008, to shareholders of record on November 28, 2008.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following Management's Discussion and Analysis ("MD&A") for the three months ended August 31, 2008, is provided as of October 8, 2008. This MD&A should be read in conjunction with the interim consolidated financial statements for the same period and the MD&A (which includes a discussion of business risks) and audited consolidated financial statements for the year ended May 31, 2008. Except as disclosed in this MD&A, there has been no material change in the information disclosed in the MD&A for the year ended May 31, 2008. A summary of selected financial data for the past eight quarters is disclosed in Note 2.

All dollar amounts referred to in this document are in Canadian dollars.

The interim consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles ("GAAP").

This document makes reference to the following terms - EBITDA, MARPAS, same communities, and cash flow from operations which are defined in footnotes 1, 2, 3 and 4, respectively.

FINANCIAL HIGHLIGHTS



MANAGEMENT OPERATIONS
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THREE MONTHS ENDED AUGUST 31
(Expressed in thousands of Canadian dollars) 2008 2007
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MANAGEMENT OPERATIONS:
Revenues
Management fees from 100% owned communities $ 460 $ 451
Management fees from less than 100%
owned communities 661 572
Design and marketing fees from new
developments under construction 477 1,562
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1,598 2,585
General and administrative expenses (1,923) (1,861)
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$ (325) $ 724
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OWNERSHIP AND CORPORATE OPERATIONS
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THREE MONTHS ENDED AUGUST 31
(Expressed in thousands of Canadian dollars) 2008 2007
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OWNERSHIP AND CORPORATE OPERATIONS:
Retirement communities operating revenues $ 9,368 $ 9,172
Income from equity-accounted investment 23 157
Distributions from cost-accounted investments 71 39
Expenses:
Retirement communities operating (5,888) (5,885)
Corporate (177) (167)
Fees paid to and reported in
management operations (600) (583)
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$ 2,797 $ 2,733
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CASH FLOW FROM OPERATIONS
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THREE MONTHS ENDED AUGUST 31
(Expressed in thousands of Canadian dollars) 2008 2007
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Cash flow $ 1,759 $ 2,121
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PER SHARE CASH FLOW FROM OPERATIONS
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THREE MONTHS ENDED AUGUST 31 2008 2007
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Basic cash flow $ 0.10 $ 0.12
Diluted cash flow $ 0.10 $ 0.12

Weighted average basic number of shares 17,324,438 17,566,164
Weighted average diluted number of shares 17,440,401 17,943,260
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THREE MONTHS ENDED AUGUST 31, 2008

(Compared with the three months ended August 31, 2007)

OPERATIONAL REVIEW AND ANALYSIS

(All properties are 100% owned unless stated otherwise.)

OVERVIEW

A comparison of the financial results for the three month period ended
August 31, 2008, to the comparative period ended August 31, 2007, reflects the following: a decrease in cash flow from operations of $0.3 million to $1.8 million; a 2.1% increase in MARPAS; diluted cash flow per share decreased $0.02 per share to $0.10 per share; a decrease in consolidated revenues of $0.8 million to $10.4 million; a decrease in EBITDA of $1.0 million to $2.5 million; and a decrease in net earnings of $0.6 million to $0.5 million.

MANAGEMENT OPERATIONS

For the three month period ended August 31, 2008, management fee revenues decreased $1.0 million to $1.6 million and general and administrative expenses remained unchanged at $1.9 million resulting in a loss from management operations of $0.3 million, $1.0 million behind the comparative period ended August 31, 2007.

The $1.0 million decrease in management fee revenues is primarily due to a decrease of $1.1 million in design and marketing fees from communities under development because of the lower levels of new developments. During the quarter, the Company deferred the recognition of $0.3 million in design and marketing fees related to Amica at Richmond Hill, located in Richmond Hill, Ontario and Amica at Oakville, located in Oakville, Ontario, due to temporary delays in obtaining zoning approval. The decrease was partially offset by an increase of $0.1 million in management fees resulting from increased rents and occupancy levels at the retirement communities. Included in general and administrative expenses is $0.2 million in stock compensation expense for the quarter.

OWNERSHIP AND CORPORATE OPERATIONS

Revenues

Retirement communities operating revenues increased $0.2 million to $9.4 million due to an increase in revenues from same communities as a result of increased rents and revenue from ancillary services provided by the communities.

Same community MARPAS (monthly average revenue per available suite) increased 2.1%.

Expenses

Retirement communities operating expenses remained unchanged at $5.9 million.

EARNINGS BEFORE OTHER OPERATING ITEMS (EBITDA)

For the three month period ended August 31, 2008, EBITDA decreased $1.0 million to $2.5 million.

OTHER ITEMS

Interest Expense

Interest expense increased $0.1 million to $1.6 million, mainly due to higher mortgage principal balances partially offset by lower interest rates on new mortgages and refinancing on existing mortgages.

Interest and Other Income

Interest and other income increased $0.3 million to $0.8 million as a result of higher mortgages and loans receivable balances.

Income Taxes

Income taxes expense decreased $0.2 million to $0.3 million as a result of lower taxable income.

NET EARNINGS AND EARNINGS PER SHARE

For the three month period ended August 31, 2008, the Company had net earnings of $0.5 million ($0.03 per share basic and diluted earnings). For the three month period ended August 31, 2007, the Company had net earnings of $1.1 million ($0.06 per share basic and diluted earnings).

The weighted average number of shares outstanding at August 31, 2008, was 17,324,438 shares (August 31, 2007 - 17,566,164 shares) and on a dilutive basis was 17,440,401 shares (August 31, 2007 - 17,943,260 shares).

BALANCE SHEET ANALYSIS

The following table summarizes the significant changes from May 31, 2008, in Amica's assets, liabilities and shareholders' equity:



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(Expressed in
millions of Increase/
Canadian dollars) (Decrease) Explanation of Significant Balances
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Income-producing $ (0.4) - Capital expenditures increased
properties income-producing properties (IPP) by $0.5
- Depreciation expense decreased IPP by $0.9

Properties under 0.1 - Capital expenditures increased properties
development under development by $0.1

Mortgages and loans 0.5 - Loans advanced to co-tenancy investments,
receivable net of amounts repaid, increased mortgages
and loans receivable by $3.5
- Proceeds from a vendor-take-back mortgage
decreased mortgages and loans receivable
by $3.0

Other assets 1.6 - Deposits on land held for a future
co-tenancy investment increased other
assets by $1.3
- Net increases in prepaids, receivables,
and sundry categories increased other
assets by $0.3

Mortgages payable (0.6) - Monthly principal payments decreased
mortgages payable by $0.6

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CASH FLOW

Cash flow from operations decreased $0.3 million to $1.8 million. After taking into consideration other changes in non-cash operating working capital, total cash flow decreased $0.7 million to $(0.3) million.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash balance at August 31, 2008, was $6.5 million. For the three month period ended August 31, 2008, cash flow generated from operations before changes in non-cash operating working capital was $1.8 million compared to $2.1 million for the comparative period in the prior year.

The Company anticipates that its cash on hand and cash generated from operations, together with, should the need arise, the equity available in its wholly-owned assets available for mortgaging will be sufficient for it to meet its obligations and growth objectives for fiscal 2009 including capital expenditure commitments, absent unusual investment occurrences.

The Company, in conjunction with its development participants, funds all funding shortfalls in operating co-tenancies and co-tenancy investments under development. The Company charges interest on these advances and is indemnified by the other capital participants or co-tenancy investors. As at August 31, 2008, advances to co-tenancies totaled $26.5 million compared to $23.0 million at May 31, 2008. The Company also has provided guarantees on behalf of certain co-tenancies that are accounted for on a cost or equity basis which are not included in these interim consolidated financial statements. The Company's proportionate share of the underlying mortgages on these specific properties totaled $21.3 million at August 31, 2008, compared to $20.8 million at May 31, 2008. Guarantees provided by the Company in excess of the proportionate share of underlying mortgages totaled $33.5 million at August 31, 2008, compared to $34.1 million at May 31, 2008. The Company is indemnified by the other investors. In the opinion of management, these properties have a value in excess of the indebtedness that is guaranteed. Independent third party appraisals have been performed on many of these properties and they indicate that they have a value in excess of the indebtedness that is guaranteed. The underlying properties are available to satisfy any claims under these guarantees and to reimburse the Company for any advances made to the co-tenancies.

In accordance with the co-tenancy agreements, the Company, sometimes in conjunction with its development participants, elects to fund its co-investors' share of funding shortfalls in co-tenancy investments. A Board member and the Chief Executive Officer participated in certain co-tenancy investments on terms identical to the other investors. They have direct or indirect equity interests of between 2% and 20% in ten (May 31, 2008 - ten) co-tenancies, and they benefit from the guarantees and funding shortfalls provided by the Company. The share of guarantees provided by the Company on behalf of related parties at August 31, 2008, totaled $2.9 million (May 31, 2008 - $1.5 million).

Funds advanced to co-tenancies in which the related parties participated at August 31, 2008, totaled $10.9 million (May 31, 2008 - $10.0 million) and are included in mortgages and loans receivable. The Company charges interest on these advances in accordance with the contracted terms.

On August 8, 2008, the Board approved a quarterly dividend of $0.06 per share on all issued and outstanding common shares which was payable on September 15, 2008, to shareholders of record on August 29, 2008.

The Company's Board of Directors has approved a quarterly dividend of $0.06 per share on all issued and outstanding common shares which will be payable on December 15, 2008, to shareholders of record on November 28, 2008. The Board approved the quarterly dividend on October 8, 2008.

In January 2008, the Company received approval from the Toronto Stock Exchange (the "TSX") for its notice of intention to acquire up to 880,663 of its common shares, representing 5% of the Company's issued and outstanding shares, by way of normal course issuer bid through the facilities of the TSX. The normal course issuer bid commenced on January 15, 2008, and will terminate on January 14, 2009, or such earlier date as the Company may complete its purchases pursuant to the notice of intention. During the current quarter, the Company repurchased 162,100 shares as part of the normal course issuer bid at an average cost of $5.44 per share. As at August 31, 2008, 122,800 shares of the total repurchased amount have been cancelled, and the remaining 39,300 shares were cancelled in September 2008.

On September 24, 2008, the Company executed a commitment letter to refinance a first mortgage on Amica at Erin Mills for $9.0 million (50% share), including Canada Mortgage and Housing Corporation ("CMHC") premium, at a stated interest rate of 4.56% for a five year term. On September 24, 2008, the Company executed a commitment letter to refinance a first mortgage on Amica at Villa Da Vinci for $10.5 million, including CMHC premium, at a stated interest rate of 4.56% for a five year term. On September 24, 2008, the Company executed a commitment letter to refinance a first mortgage on Amica at Rideau Manor for $12.1 million, including CMHC premium, at a stated interest rate of 4.56% for a five year term. Proceeds on each of these refinancings are in excess of the current mortgage balances and are expected to be received by the end of October 2008.

In fiscal 2009, the Company expects to spend approximately $2.6 million on capital expenditures on its wholly-owned or proportionately consolidated communities and corporate operations, excluding further capital expenditures on a major renovation of Amica at Arbutus Manor. The renovation of Amica at Arbutus Manor is expected to be completed over an eighteen month period commencing in August 2008 at a total cost of $5.8 million; $3.8 million of this amount is expected to be spent in fiscal 2009.

OUTSTANDING SHARE DATA



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Designation Outstanding as of October 8, 2008
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Common shares 17,217,024
Options to acquire common shares 1,251,950

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LOOKING AHEAD

The Company's business plan for fiscal 2009 has been developed with consideration towards the challenging credit conditions that currently exist. While the Company is committed to its long term commitment and goal of establishing itself as the premier brand in the luxury independent living sector, it recognizes that in the short term, it must remain focused on ensuring all current commitments and initiatives are achieved and completed in an effective manner. At the same time, where certain changes are required due to varying factors, the Company will approach such changes in a prudent manner that attempts to ensure long term sustainability is not compromised.

Three key Company objectives in fiscal 2009 are:

- Increase MARPAS by at least 4.0%.

- Generate a minimum of two new long term management contracts.

- Manage cash resources to position the Company to be able to capitalize on new opportunities that may surface.

From a long term perspective, the Company is focused on increasing shareholder value through improving EBITDA from management operations and creating a stable of five-star luxury Retirement Residences branded as Amica Wellness & Vitality™ Residences. As new communities open and lease-up, this will enhance revenues from management operations. This combined with the effective management of general and administration expenses will contribute towards the achievement of the above goal.

Long Term Management Contracts

Historically, the Company has presented new development opportunities to its pool of project investors at the earliest stage possible in the development process and the risk of rezoning and rising construction costs has been borne by Amica's project investors. While this has been a successful strategy, it has limited the Company's pool of project investors and has created a long investment cycle before investors receive a return on their investment. The Company has determined that, in the long term, the project investor pool would be better served by having Amica and its developer partner assume the initial development risk until zoning is in place and construction documents have been completed to the point where the risk of budget overruns are minimized. This change in strategy combined with current market conditions is expected to impact the previously stated goal of achieving four to five new long term management contracts per year. This will impact, amongst other things, the level of design and marketing fees achieved.

Recent challenges in the overall credit markets have also impacted the Company's near term plans in the area of financing strategy. While the market for construction financing appears to have held steady for the most part with many of the Company's historical lenders continuing to express interest in financing new developments (on overall terms that offer lower levels of loans and stricter covenants), the long term financing market is where significant changes have occurred. The commercial mortgage market has been reduced to limited players whose terms have changed to lower ratios and higher spreads over comparable period bond rates. This has led to a higher likelihood of Amica pursuing CMHC financing for existing mortgages that mature and for takeout mortgages on those developments which reach maturity. CMHC financing will also result in a lower ratio of overall financing given CMHC underwriting parameters, however, it will also produce lower borrowing costs.

DISCLOSURE CONTROLS AND PROCEDURES

The Company's management under the supervision of, and with the participation of the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), has designed and evaluated the effectiveness and operation of its disclosure controls and procedures, as defined under Multilateral Instrument 52 - 109 of the Canadian Securities Administrators ("MI 52-109").

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in reports filed with Canadian securities regulatory authorities is recorded, processed, summarized and reported in a timely fashion. The disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in such reports is then accumulated and communicated to the Company's management, including the CEO and the CFO, as appropriate, to allow timely decisions regarding required disclosure. Due to the inherent limitations in all control systems, an evaluation of the disclosure controls can only provide reasonable assurance over the effectiveness of the controls. The disclosure controls are not expected to prevent and detect all misstatements due to error or fraud.

Based on the evaluation of disclosure controls and procedures, management has concluded that, subject to the inherent limitations noted above, the Company's disclosure controls and procedures are effective as at August 31, 2008.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

The Company's management under the supervision of, and with the participation of the Company's CEO and CFO, has designed and implemented internal controls over financial reporting, as defined under MI 52-109. The purpose of internal controls over financial reporting is to provide reasonable assurance regarding the reliability of financial reporting, in accordance with Canadian GAAP, focusing in particular on controls over information contained in the annual and interim consolidated financial statements. The internal controls are not expected to prevent and detect all misstatements due to error or fraud. The design of internal controls over financial reporting was evaluated as defined in MI 52-109. Based on the results of this evaluation, management has concluded that the design of internal controls over financial reporting was effective as of August 31, 2008. As required under MI 52-109, management advises that there have been no changes in the Company's internal controls over financial reporting during the first quarter ended August 31, 2008, that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

OPERATING RISKS

The business of the Company is subject to many risks and uncertainties, and these remain substantially unchanged from those outlined in the Company's 2008 annual MD&A dated August 8, 2008, available on the System for Electronic Document Analysis and Retrieval ("SEDAR"), which can be accessed at www.sedar.com.

CRITICAL ACCOUNTING POLICIES

The significant accounting policies used by the Company in preparing its interim consolidated financial statements are described in Note 2 to the Company's annual consolidated financial statements for the year ended May 31, 2008, available on www.sedar.com, and should be read to ensure proper understanding and evaluation of the estimates and judgments made by management in preparing these interim consolidated financial statements. The Company's interim consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles.

CHANGES IN ACCOUNTING POLICIES

During the first three months of fiscal 2009 there were no changes in the Company's accounting policies with the following exceptions:

Capital Disclosures

In December 2006, the Canadian Institute of Chartered Accountants ("CICA") issued Handbook Section 1535, Capital Disclosures. Section 1535 specifies the disclosure of (i) an entity's objectives, policies and processes for managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any capital requirements; and (iv) if it has not complied, the consequences of such non-compliance. This new standard is effective for the Company in the first quarter beginning June 1, 2008.

Financial Instruments - Disclosures and Presentation

In December 2006, the CICA issued two new accounting standards: Handbook Section 3862, Financial Instruments - Disclosures, and Handbook Section 3863, Financial Instruments - Presentation. The new Sections 3862 and 3863 replace Handbook Section 3861, Financial Instruments - Disclosure and Presentation, revising and enhancing disclosure requirements, and carrying forward, unchanged, existing presentation requirements. These new sections place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the entity manages those risks. These new standards are effective for the Company the first quarter beginning June 1, 2008.

FUTURE ACCOUNTING POLICIES

The following accounting policy change will be adopted by the Company in future accounting periods:

Goodwill and Intangible Assets

In February 2008, the CICA issued Handbook Section 3064, Goodwill and Intangible Assets, replacing Handbook Sections 3062, Goodwill and Other Intangible Assets and 3450, Research and Development Costs. Various changes have been made to other sections of the CICA Handbook for consistency purposes. The new section establishes standards for the recognition, measurement, presentation and disclosure of intangible assets. Standards concerning goodwill are unchanged from the standards included in the previous Section 3062. This new standard will be effective for the Company the first quarter beginning June 1, 2009.

The Company is currently in the process of evaluating the potential impact of this new standard on the consolidated financial statements.

International Financial Reporting Standards

In 2006, the Canadian Accounting Standards Board ("AcSB") published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with International Financial Reporting Standards ("IFRS") over an expected five year transitional period. In February 2008, the AcSB announced that 2011 is the changeover date for publicly accountable companies to use IFRS, replacing Canadian GAAP. Consequently, IFRS will be applicable for interim and annual financial statements relating to the fiscal periods beginning on or after January 1, 2011. The transition date for the Company is June 1, 2011, and will require the restatement for comparative purposes amounts reported by the Company for the year ended May 31, 2011. While the Company has begun assessing the adoption of IFRS, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.

ADDITIONAL INFORMATION

Additional information about the Company, including the most recent Annual Information Form, is available through the internet on SEDAR, which can be accessed at www.sedar.com.

(1) EBITDA is equal to net earnings and comprehensive income plus (i) income tax expense plus (ii) interest expense plus (iii) depreciation and amortization less (iv) interest and other income less (v) non-controlling interest. EBITDA is the same as earnings before other operating items as disclosed in the consolidated financial statements. EBITDA is not intended to represent cash flow from operations as defined by Canadian generally accepted accounting principles, and EBITDA should not be considered as an alternative to net earnings, cash flow from operations or any other measure of performance prescribed by Canadian generally accepted accounting principles. EBITDA of Amica Mature Lifestyles Inc. may also not be comparable to EBITDA used by other companies, which may be calculated differently. EBITDA is included because the Company's management believes it can be used to measure the Company's ability to service debt, fund capital expenditures and expand its business. See Note 1 for a reconciliation of net earnings to EBITDA.

(2) MARPAS is defined by the Company as Monthly Average Revenue Per Available Suite and is equal to gross monthly revenues generated at the seniors residences divided by the number of suites. MARPAS is used by the Company to measure period-over-period performance of its properties.

(3) Same communities is defined by the Company as mature communities that were classified as income-producing properties for thirteen months after reaching 95% occupancy.

(4) Cash flow from operations is a supplemental non-GAAP measure of operating performance and is equal to net earnings and comprehensive income plus (i) stock-based compensation plus (ii) depreciation and amortization plus (iii) amortization of deferred financing charges plus (iv) future income taxes (recovery) plus (v) cash distributions in excess of income (loss) from equity-accounted investment plus (vi) non-controlling interest plus (vii) other. Cash flow from operations may not be comparable to similar measures presented by other entities in the same industry. Management considers cash flow from operations to be a useful measure for reviewing the Company's operating and financial performance because, by excluding non-cash expenses and depreciation and amortization which can vary based on estimates of useful lives of real estate assets, cash flow from operations can help to compare the operating performance of the Company between financial reporting periods and with other entities in the same industry.

NOTES

1. Reconciliation of EBITDA



THREE MONTHS ENDED AUGUST 31
(Expressed in thousands of Canadian dollars) 2008 2007
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Net earnings and comprehensive income $ 539 $ 1,071
Add:
Interest expense 1,608 1,496
Depreciation and amortization 912 909
Income tax expense 268 495
Deduct:
Interest and other income (833) (455)
Non-controlling interest (22) (59)
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EBITDA $ 2,472 $ 3,457
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2. Two Year Summary By Quarter



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1st Quarter 4th Quarter
(Expressed in thousands of Canadian ------------------------------------
dollars, except per share amounts) 2009 2008 2008 2007
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Consolidated revenues from
operations $ 10,437 $ 11,213 $ 10,890 $ 11,704

Earnings (loss):
Management operations $ (325)$ 724 $ (309)$ 1,283
Ownership and corporate
operations 2,797 2,733 3,002 2,891

Earnings before other
operating items (EBITDA) $ 2,472 $ 3,457 $ 2,693 $ 4,174

Net earnings and comprehensive
income $ 539 $ 1,071 $ 202 $ 1,430

Basic earnings per share $ 0.03 $ 0.06 $ 0.01 $ 0.08

Diluted earnings per share $ 0.03 $ 0.06 $ 0.01 $ 0.08

Cash flow from operations $ 1,759 $ 2,121 $ 1,506 $ 3,292

Basic per share
cash flow from operations: $ 0.10 $ 0.12 $ 0.09 $ 0.19

Diluted per share
cash flow from operations: $ 0.10 $ 0.12 $ 0.09 $ 0.18

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3rd Quarter 2nd Quarter
(Expressed in thousands of Canadian ------------------------------------
dollars, except per share amounts) 2008 2007 2008 2007
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Consolidated revenues from
operations $ 11,266 $ 10,472 $ 11,372 $ 10,458

Earnings (loss):
Management operations $ 346 $ 474 $ 431 $ 254
Ownership and corporate
operations 2,936 2,812 3,109 2,727

Earnings before other
operating items (EBITDA) $ 3,282 $ 3,286 $ 3,540 $ 2,981

Net earnings and comprehensive
income $ 1,529 $ 752 $ 1,767 $ 599

Basic earnings per share $ 0.09 $ 0.05 $ 0.10 $ 0.04

Diluted earnings per share $ 0.09 $ 0.05 $ 0.10 $ 0.04

Cash flow from operations $ 1,763 $ 1,768 $ 2,806 $ 1,744

Basic per share
cash flow from operations: $ 0.10 $ 0.12 $ 0.16 $ 0.12

Diluted per share
cash flow from operations: $ 0.10 $ 0.11 $ 0.16 $ 0.12

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CONSOLIDATED BALANCE SHEETS

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August 31 May 31
(Expressed in thousands of Canadian dollars) 2008 2008
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ASSETS

PROPERTIES:
Income-producing $ 119,848 $ 120,238
Properties under development 5,381 5,256
Co-tenancy investments 11,262 11,287
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136,491 136,781

Cash and cash equivalents 6,472 11,731
Management fees receivable 1,801 1,824
Mortgages and loans receivable 27,901 27,432
Accounts receivable 2,092 2,270
Other assets 9,900 8,263
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$ 184,657 $ 188,301
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LIABILITIES AND SHAREHOLDERS' EQUITY

Mortgages payable $ 102,728 $ 103,294
Accounts payable and accrued liabilities 5,992 6,372
Income taxes payable 9 1,537
Dividends payable 1,035 1,045
Future income taxes 5,317 5,282
Non-controlling interest 1,431 1,453
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116,512 118,983

SHAREHOLDERS' EQUITY:
Share capital 63,666 64,261
Contributed surplus 1,705 1,787
Retained earnings 2,774 3,270
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68,145 69,318
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$ 184,657 $ 188,301
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CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

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THREE MONTHS ENDED AUGUST 31
(Expressed in thousands of Canadian dollars,
except per share amounts) 2008 2007
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Consolidated revenues $ 10,437 $ 11,213
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MANAGEMENT OPERATIONS:
Revenues 1,598 2,585
General and administrative expenses (1,923) (1,861)
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(325) 724
OWNERSHIP AND CORPORATE OPERATIONS:
Retirement communities operating revenues 9,368 9,172
Income from equity-accounted investment 23 157
Distributions from cost-accounted investments 71 39
Expenses:
Retirement communities operating (5,888) (5,885)
Corporate (177) (167)
Fees to management operations (600) (583)
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2,797 2,733
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Earnings before other operating items 2,472 3,457

Depreciation and amortization (912) (909)
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Earnings from operations 1,560 2,548

Interest expense (1,608) (1,496)
Interest and other income 833 455
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Earnings before income taxes and
non-controlling interest 785 1,507

Income taxes:
Current expense 233 512
Future expense (recovery) 35 (17)
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268 495
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Earnings before non-controlling interest 517 1,012

Non-controlling interest 22 59
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Net earnings and comprehensive income 539 1,071

Retained earnings, beginning of period 3,270 2,999

Adjustment for impact of adopting new
accounting policies - (94)

Dividends declared (1,035) (1,056)

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Retained earnings, end of period $ 2,774 $ 2,920
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Basic earnings per share $ 0.03 $ 0.06

Diluted earnings per share $ 0.03 $ 0.06
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CONSOLIDATED STATEMENTS OF CASH FLOWS

--------------------------------------------------------------------------
THREE MONTHS ENDED AUGUST 31
(Expressed in thousands of Canadian dollars) 2008 2007
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CASH PROVIDED BY (USED IN):

OPERATIONS:
Net earnings and comprehensive income $ 539 $ 1,071
Items not involving cash:
Stock-based compensation 200 295
Depreciation and amortization 912 909
Amortization of deferred financing charges 70 13
Future income taxes (recovery) 35 (17)
Cash distributions in excess of income
(loss) from equity-accounted investment 25 (157)
Non-controlling interest (22) (59)
Other - 66
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1,759 2,121
Other changes in non-cash
operating working capital (2,032) (1,741)
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(273) 380

INVESTMENTS:
Co-tenancy investments, net of recoveries - 170
Mortgages and loans receivable,
net of recoveries (469) (1,898)
Expenditures on income-producing properties (522) (842)
Restricted cash 8 -
Deposits on land (1,320) (2,656)
Land held for sale - 4,026
Properties under development (125) -
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(2,428) (1,200)
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FINANCING:
Proceeds from mortgages payable - 9,400
Principal repayments on mortgages payable (620) (7,790)
Deferred financing costs (16) -
Issuance of common shares for cash,
net of costs 1 185
Repurchase of common shares (878) -
Dividends paid (1,045) (877)
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(2,558) 918
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Increase (decrease) in cash and
cash equivalents (5,259) 98

Cash and cash equivalents, beginning of period 11,731 14,565
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Cash and cash equivalents, end of period $ 6,472 $ 14,663
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ABOUT AMICA MATURE LIFESTYLES INC.

Amica Mature Lifestyles Inc., a Vancouver based public company, is a leader in the management, marketing, design and development of luxury housing and services for mature lifestyles. There are 24 Amica Wellness & Vitality™ Residences, including seven under development. The common shares of Amica are traded on the Toronto Stock Exchange under the symbol "ACC". For more information, visit www.amica.ca.

FORWARD-LOOKING INFORMATION

This news release contains "forward-looking information" within the meaning of applicable securities laws ("forward-looking statements").

These forward-looking statements are made as of the date of this news release and the Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as otherwise required by law. Users of forward-looking statements are cautioned that actual results may vary from forward-looking statements contained herein. Forward-looking statements include, but are not limited to, statements concerning the number of management contracts expected to be added in this and future years, profit margin and earnings trends, expected future financing opportunities and other similar statements concerning anticipated future events, conditions or results that are not historical facts. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements were developed using the material factors or assumptions stated herein. However, there are known and unknown risk factors which could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Known risk factors include, among others, risks related to dependence on the ability of Amica's co-tenancy participants to meet their obligations; interest rate volatility in the marketplace; job actions including strikes and labour stoppages; possible liability under environmental laws and regulations, relating to removal or remediation of hazardous or toxic substances on properties owned or operated by Amica; risks associated with new developments, including cost overruns and start-up losses; the ability of seniors to pay for Amica's services; regulatory changes; risks inherent in the ownership of real property; operational risks inherent in owning and operating Residences; the risks associated with global events such as infectious diseases, extreme weather conditions and natural disasters; the availability of capital to finance growth; Amica's ability to attract seniors with its services and keep pace with changing consumer preferences, as well as those factors discussed in Amica's Annual Information Form dated
August 18, 2008, filed with the Canadian Securities Administrators and available at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements, or the material factors or assumptions used to develop such forward looking statements, will prove to be accurate. Accordingly, readers should not place undue reliance on forward-looking statements.

Contact Information

  • Amica Mature Lifestyles Inc.
    Mr. Douglas G. Allen
    Chief Financial Officer
    (604) 630-3473
    Email: d.allen@amica.ca
    or
    Amica Mature Lifestyles Inc.
    Ms. Alyssa Williams
    Investor Communications Administrator
    (604) 639-2171
    Email: a.williams@amica.ca
    Website: www.amica.ca