Amica Mature Lifestyles Inc.
TSX : ACC

Amica Mature Lifestyles Inc.

August 10, 2005 08:01 ET

Amica Mature Lifestyles Announces Year End Results for 2005

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 10, 2005) - Amica Mature Lifestyles Inc. (TSX:ACC) - Mr. Samir Manji, Chairman, President and CEO of Amica Mature Lifestyles Inc. is pleased to announce the Company's results for the fourth quarter of 2005 and for the year ended May 31, 2005.

Mr. Manji stated, "Fiscal 2005 was another instrumental year during which significant milestones and accomplishments were achieved, further strengthening our foundation that will enable us to realize our long term vision, to be the best in the world at delivering superior Wellness & Vitality™ within exceptional independent living retirement communities. It was also a year during which the Company generated the strongest cash flow and strongest growth in same community(1) occupancy in our history. We were extremely pleased with our 6.4% increase in MARPAS(2) which contributed to our increase in cash flow from operations. It was also a year that was also highlighted by the completion of our first equity offering in six years.

Added Mr. Manji, "Amica continued its expansion strategy with three new long term management contracts established during the year. Two of the contracts were historical milestones as they represented 99-year management contracts. Entering new markets will be a key aspect of our long term growth plans with initiatives already under way to establish relationships with developers in Montreal, Seattle and Portland. Over time, we believe that the Amica brand and model will generate opportunities in other US markets with the strong possibility of a global expansion strategy that would include expansion into Europe. With thirteen Wellness & Vitality™ Residences currently under management, a further four at various stages of development, and additional opportunities currently on the drawing board, our momentum has never been stronger. This is further supported by a balance sheet that includes our strongest cash position in our history that will provide the necessary capital to fuel our growth objectives."



Financial Highlights

Management Operations
---------------------------------------------------------------------
3 Months Ended 12 Months Ended
(Expressed in thousands May 31 May 31
of dollars) 2005 2004 2005 2004
---------------------------------------------------------------------
Management operations:
Revenues
Management fees from 100%
owned communities $ 482 $ 425 $ 1,703 $ 1,530
Management fees from 13%
to 62.5% owned
communities 338 188 1,121 781
Design and marketing fees
from new developments
under construction 255 581 1,349 1,575
Other - - 52 -
---------------------------------------------------------------------
$ 1,075 $ 1,194 $ 4,225 $ 3,886

General and
administrative expenses (1,136) (1,146) (4,452) (3,793)
---------------------------------------------------------------------
$ (61) $ 48 $ (227) $ 93
---------------------------------------------------------------------
---------------------------------------------------------------------


Ownership and Corporate Operations
---------------------------------------------------------------------
3 Months Ended 12 Months Ended
(Expressed in thousands May 31 May 31
of dollars) 2005 2004 2005 2004
---------------------------------------------------------------------
Ownership and corporate
operations:
Residential operating
revenues $ 9,286 $ 8,271 $ 36,376 $ 32,114
Distributions from
investments 79 - 133 -
Expenses:
Residential operating (5,670) (5,054) (22,351) (19,526)
Corporate (78) (76) (427) (424)
Fees to management
operations (605) (469) (2,188) (1,837)
---------------------------------------------------------------------
$ 3,012 $ 2,672 $ 11,543 $ 10,327
---------------------------------------------------------------------
---------------------------------------------------------------------


Earnings Before Other Operating Items (EBITDA(3))
---------------------------------------------------------------------
3 Months Ended 12 Months Ended
(Expressed in thousands May 31 May 31
of dollars) 2005 2004 2005 2004
---------------------------------------------------------------------
$ 2,951 $ 2,720 $ 11,316 $ 10,420
---------------------------------------------------------------------
---------------------------------------------------------------------


Cash Flow from Operations
---------------------------------------------------------------------
3 Months Ended 12 Months Ended
(Expressed in thousands May 31 May 31
of dollars) 2005 2004 2005 2004
---------------------------------------------------------------------
Cash flow from continuing
operations $ 1,428 $ 1,383 $ 5,657 $ 4,877
Cash flow from
discontinued operations 57 173 368 803
---------------------------------------------------------------------
$ 1,485 $ 1,556 $ 6,025 $ 5,680
---------------------------------------------------------------------
---------------------------------------------------------------------


Per Share Cash Flow from Operations
---------------------------------------------------------------------
3 Months Ended 12 Months Ended
(Expressed in thousands May 31 May 31
of dollars) 2005 2004 2005 2004
---------------------------------------------------------------------
Cash flow from continuing
operations $ 0.12 $ 0.12 $ 0.46 $ 0.42
Cash flow from discontinued
operations 0.00 0.01 0.03 0.07
---------------------------------------------------------------------
$ 0.12 $ 0.13 $ 0.49 $ 0.49
---------------------------------------------------------------------
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Financial Review and Analysis

Three Months and Year Ended May 31, 2005 Compared to Three Months and Year Ended May 31, 2005

Overview

For the three month period ended May 31, 2005 cash flow from operations decreased $0.1 million to $1.5 million. EBITDA increased $0.2 million to $3.0 million. During the quarter, the Company successfully completed its first public financing in six years raising $11.0 million (before issue costs) at $5.00 per share by way of private placement.

In fiscal 2005, the Company increased cash flow from operations by 6% to a record $6.0 million. EBITDA increased 9% to $11.3 million, another milestone for the Company.

Management Operations

For the three month period ended May 31, 2005 fee revenue decreased $0.1 million to $1.1 million and general and administrative expenses remained the same at $1.1 million resulting in a loss from operations of $0.1 million.

The $0.1 million decrease in fee revenues is mainly due to a $0.3 million decrease in design and marketing fees from new developments under construction due to the timing of signing new joint venture agreements, offset by a $0.2 million increase in management fees earned on properties in which the Company has less than a 100% ownership interest due to increased occupancy and rents and the lease-up of Amica at Bayview (15% owned) located in Toronto, Ontario.

For the year ended May 31, 2005 fee revenues increased $0.3 million (9%) to $4.2 million and general and administrative expenses increased $0.7 million (17%) to $4.5 million resulting in a loss from management operations of $0.2 million as compared to a profit of $0.1 million in fiscal 2004.

The $0.3 million increase in fee revenues is primarily due to: a $0.2 million increase in recurring management fees on properties in which the Company has a 100% ownership interest due to increased occupancy and rents; a $0.3 million increase in recurring management fees on properties in which the Company has less than a 100% ownership interest primarily due to increased occupancy and rents and the lease-up of Amica at Bayview; offset by a decrease of $0.2 million in design and marketing fees earned on new developments under construction. Design and marketing fees are a function of the number of projects under development.

The $0.7 million increase in general and administrative expenses is attributable to a number of factors including increases in wages and benefits, staffing levels, professional fees and other expenses. Increased staffing levels have increased the Company's capacity to manage the Company's anticipated growth. Included in general and administrative expenses is $0.2 million in stock option expense as compared to $11,000 in fiscal 2004.

Ownership and Corporate Operations

Revenues

In the fourth quarter of fiscal 2005, residential operating revenues increased $1.0 million to $9.3 million as same community revenues increased $0.5 million due to increased occupancy and rents and a $0.5 million increase in revenues due to the increase in ownership of Amica at Villa Da Vinci, located in Woodbridge, Ontario from 50% in fiscal 2004 to 62.5% in fiscal 2005 which resulted in the 100% consolidation of Amica at Villa Da Vinci effective June 1, 2004.

For the year ended May 31, 2005 residential operating revenues increased $4.3 million (13%) to $36.4 million. The $4.3 million increase in residential operating revenues is due to a combination of factors: a $1.9 million (6%) increase in revenues from same communities due to increased occupancy and rents; and a $2.4 million increase in revenues due to the increase in ownership of Amica at Villa Da Vinci and the 100% consolidation thereof.

Expenses

For the three month period ended May 31, 2005 residential operating expenses increased $0.6 million to $5.7 million due to: a $0.2 million increase in same community expenses; and a $0.4 million increase due to the 100% consolidation of Amica at Villa Da Vinci.

Residential operating expenses increased $2.8 million (14%) to $22.4 million for the year ended May 31, 2005. The increase in residential operating expenses is mainly due to a $1.0 million (5%) increase in same community expenses; and an increase of $1.8 million due to the 100% consolidation of Amica at Villa Da Vinci.

Fees paid and reported in management operations increased $0.1 million in the fourth quarter and $0.4 million for the full year mainly due to increased revenues at communities and the 100% consolidation of Amica at Villa Da Vinci.

Earnings Before Other Operating Items (EBITDA)

As a result of the changes in management operations and ownership and corporate operations, EBITDA increased $0.2 million in the fourth quarter of fiscal 2005 to $3.0 million and $0.9 million (9%) to $11.3 million for the full year.

Other Items

Depreciation and Amortization

For the three month period ended May 31, 2005 depreciation and amortization increased $0.3 million to $0.9 million and for fiscal 2005 increased $1.4 million to $3.4 million mainly due to the adoption on June 1, 2004 of the straight-line method of depreciation. Previously the Company had used the sinking fund method of depreciation under which an increasing amount consisting of a fixed annual sum together with interest compounded at a rate of 5% per annum, is charged over their estimated useful lives of 40 years. Had the Company implemented the straight-line method of depreciation in fiscal 2004, depreciation and amortization would have increased by $1.4 million in that year.

Interest Expense

For the three month period ended May 31, 2005 interest expense decreased $0.2 million to $1.7 million mainly due to interest savings on mortgages payable and due to the conversion and redemption of the Company's convertible debentures.

Interest expense for fiscal 2005 remained the same at $7.3 million. Interest savings of $0.3 million on mortgages payable and due to the conversion and redemption of the Company's convertible debentures were offset by an increase in interest expense of $0.3 million due to the 100% consolidation of Amica at Villa Da Vinci.

Gain on Sale of Income-Producing Property

The sale of Amica at Bearbrook Court located in the Ottawa, Ontario region in the fourth quarter, to a joint venture in which the Company has a 10% interest resulted in a gain on sale of $1.5 million. The sale of the property resulted in the Company receiving $1.2 million in cash. The Company invested $0.2 million in the joint venture to acquire its 10% interest.

Income Taxes

In fiscal 2005, the Company's tax expense was $1.0 million as compared to an income tax recovery of $30,000 in fiscal 2004. The $1.0 million increase in tax expense is mainly due to the $3.1 million increase in earnings before income taxes and non-controlling interest.

Earnings (Loss) From Discontinued Operations, Net Of Income Taxes

During fiscal 2005 the Company sold its remaining non-core property, Amica at Terrace Gardens at a loss of $0.4 million. All revenues and expenses relating to the operations of this non-core property and the loss on sale of this property have been aggregated and shown net of income taxes. The sale of Amica at Terrace Gardens netted the Company $3.0 million in cash. The Company anticipates that the foregone net income and cash flow from this discontinued property will be offset through redeployment of capital, increased earnings and cash flow from its existing portfolio of seniors communities and through increased management operations revenues.

Net Earnings (Loss) And Earnings (Loss) Per Share

For the three month period ended May 31, 2005 the Company had $1.4 million ($0.10 basic and diluted earnings per share from continuing operations) in earnings from continuing operations and net earnings attributable to common shareholders of $1.1 million ($0.08 basic and diluted per share net earnings attributable to common shareholders). In the comparative period the Company had a loss from continuing operations of $0.3 million ($0.03 basic and diluted per share loss from continuing operations). The net loss attributable to common shareholders in the fourth quarter of fiscal 2004 was $0.3 million ($0.03 basic and diluted per share loss attributable to common shareholders).

In fiscal 2005 the Company had $1.5 million ($0.11 basic and diluted earnings per share from continuing operations) in earnings from continuing operations and net earnings attributable to common shareholders of $0.5 million ($0.04 basic and diluted per share net earnings attributable to common shareholders). In fiscal 2004 the Company had a loss from continuing operations of $0.8 million ($0.10 basic and diluted per share loss from continuing operations). The net loss attributable to common shareholders in fiscal 2004 was $0.5 million ($0.04 basic and diluted per share loss attributable to common shareholders).

Cash Flow

For the three month period ended May 31, 2005 cash flow from continuing operations remained the same at $1.4 million. Total cash flow decreased $0.1 million to $1.5 million. After taking into consideration other changes in non-cash operating working capital, total cash flow in the fourth quarter of 2005 increased to $3.0 million as compared to $2.2 million in the prior year.

In fiscal 2005 cash flow from continuing operations increased $0.8 million (16%) to $5.7 million. Total cash flow increased $0.3 million (6%) to $6.0 million. After taking into consideration other changes in non-cash operating working capital, total cash flow in 2005 was reduced to $5.9 million (2005) and to $4.8 million (2004).

Liquidity and Capital Resources

The Company's cash balance at the end of the year was $19.5 million. Cash flow generated from operations before changes in non-cash operating working capital was $6.0 million in 2005 and is anticipated to increase in 2006. In fiscal 2005, the Company issued 2.2 million shares at $5.00 per share by way of private placement. Net proceeds to the Company, after deducting associated costs, were $10.4 million. The Company anticipates disposing of its seven 100% owned properties over the next two years. The Company intends to retain management of these properties. The proceeds from these sales will be used to finance the Company's growth strategy.

The Company also anticipates that the equity available in its wholly owned assets available for mortgaging should the need arise, cash on hand and cash generated from operations will be sufficient for the Company to meet its obligations and growth objectives for fiscal 2006, absent unusual events.

The following chart documents the Company's annual repayments of principal on mortgage and loans payable being the Company's material contractual obligations as at May 31, 2005:



--------------------------------------------
(Expressed in millions
of dollars) Mortgages Payable
--------------------------------------------
2006 $ 40.6
2007 1.5
2008 19.1
2009 20.9
2010 14.4
Thereafter 6.9
--------------------------------------------
Total $ 103.4
--------------------------------------------


The $40.6 million in principal repayments due in fiscal 2006 includes the second mortgages totaling $13.3 million on three of the Company's properties the proceeds of which were used to redeem the Company's convertible debentures in December 2004. These mortgages are classified as payable on demand. Also included in fiscal 2006 principal repayments are: the second mortgage on Amica at Douglas House in the amount of $2.5 million due December 2005, which the Company does not anticipate problems in refinancing; the mortgage on Amica at Villa Da Vinci in the amount of $9.8 million which is in the process of being extended for another year; and the $13.6 million first mortgage on Amica at Arbutus Manor due October 2005 and which the Company does not anticipate problems in refinancing.

Generally, the Company, sometimes in conjunction with its development partner, funds all funding shortfalls in joint ventures and investments in co-tenancy properties under development. The Company charges interest on these advances and is indemnified by the other joint venture or co-tenancy investors. As well, the Company may provide guarantees in excess of its proportionate interest in the joint venture and co-tenancies and is indemnified by the other investors. As at May 31, 2005 the Company provided guarantees totaling $27.6 million as compared to $11.0 million in 2004 for the indebtedness on certain properties in excess of the indebtedness otherwise disclosed in the consolidated financial statements. In management's opinion, substantiated in some cases by third party appraisals, these properties have a value, in the aggregate, in excess of their obligations.



Outstanding Share Data

------------------------------------------------------------------
Designation Outstanding as of August 5, 2005
------------------------------------------------------------------
Common shares 14,480,021
Options to acquire common shares 551,533
------------------------------------------------------------------


Looking Ahead

The Company's business plan for fiscal 2006 focuses on improving all aspects of the Company's business with the goal of meeting the Company's vision - "To Be The Best in the World at Delivering Superior Wellness & Vitality™ Within Exceptional Independent Living Retirement Communities". The Company's long term goal of establishing itself as the premiere brand in the luxury independent living sector combined with strong, sustainable growth should result in increased shareholder value.

While the Company has many departmental and corporate objectives in its business plan, the three key Company objectives in fiscal 2006 are:

- Increase cash flow from operations over fiscal 2005 by at least 10%.

- Increase MARPAS by at least 6.0%.

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

A comprehensive business plan has been prepared in support of the execution of the aforementioned key objectives for fiscal 2006. All departments within the Company have contributed to the development of the business plan, the focus being in the evolution of the Company's business model. The Company is confident that these key objectives will be achieved.

From a long term perspective, the Company is focused on increasing shareholder value through an aggressive growth plan that extends beyond the Canadian landscape. It is anticipated that within the next five years, the Company will add five to seven new long term management contracts per year.

Executing this aggressive growth objective will result in increasing cash flow from operations, EBITDA and net earnings.

The Company expects to dispose of its seven 100% owned properties over the next two years. The Company intends to retain management of these properties.

Additional Information

A two year summary by quarter of selected financial data is included Note 1. Additional information about the Company (including its most recent Annual Information Form, Management's Discussion and Analysis (MD&A), Audited Financial Statements for the year ended May 31, 2004 and Interim Consolidated Financial Statements) is available on SEDAR are www.sedar.com.

The Company expects to file with the securities regulators within the next two weeks its Annual Report for the year ended May 31, 2005, which will include the MD&A and Audited Financial Statements.



Note 1

Two Year Summary by Quarter
---------------------------------------------------------------------
(Expressed in thousands 2005(1)
of dollars, except ----------------------------------
per share amount) Q4 Q3 Q2 Q1
---------------------------------------------------------------------

Consolidated revenues
from continuing operations $ 9,835 $ 9,685 $ 9,474 $ 9,552

Earnings (loss):
Management operations $ (61) $ (179) $ (84) $ 97
Ownership and corporate
operations 3,012 3,051 2,718 2,762

Earnings before other
operating items (EBITDA) 2,951 2,872 2,634 2,859

Earnings (loss) from
continuing operations 1,396 72 (34) 76

Earnings (loss) from
discontinued operations,
net of income taxes (317) (688) (16) 182

Net earnings (loss)
attributable to
common shareholders $ 1,091 $ (648) $ (44) $ 129

Basic and diluted earnings
(loss) per share:
Continuing operations $ 0.10 $ 0.00 $ 0.00 $ 0.00
Discontinued operations (0.02) (0.05) 0.00 0.01
Net earnings (loss)
attributable to common
shareholders
Total $ 0.08 $ (0.05) $ 0.00 $ 0.01

Cash flow from operations:
Continuing operations $ 1,428 $ 1,523 $ 1,319 $ 1,387
Discontinued operations 57 33 149 129
Total $ 1,485 $ 1,556 $ 1,468 $ 1,516

Basic and diluted per share
cash flow from operations:
Continuing operations $ 0.12 $ 0.12 $ 0.11 $ 0.11
Discontinued operations 0.00 0.00 0.02 0.01
Total $ 0.12 $ 0.12 $ 0.13 $ 0.12

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---------------------------------------------------------------------
(Expressed in thousands 2004(1)
of dollars, except ----------------------------------
per share amount) Q4 Q3 Q2 Q1
---------------------------------------------------------------------

Consolidated revenues
from continuing operations $ 8,996 $ 8,829 $ 8,552 $ 7,786

Earnings (loss):
Management operations $ 48 $ 259 $ (36) $ (178)
Ownership and corporate
operations 2,672 2,473 2,623 2,559

Earnings before other
operating items (EBITDA) 2,720 2,732 2,587 2,381

Earnings (loss) from
continuing operations (321) 543 (1,065) 7

Earnings (loss) from
discontinued operations,
net of income taxes (34) (113) 753 74

Net earnings (loss)
attributable to
common shareholders $ (306) $ 322 $ (433) $ (39)

Basic and diluted earnings
(loss) per share:
Continuing operations $ (0.03) $ 0.04 $ (0.10) $ (0.01)
Discontinued operations 0.00 (0.01) 0.06 0.01
Net earnings (loss)
attributable to
common shareholders
Total $ (0.03) $ 0.03 $ (0.04) $ 0.00

Cash flow from operations:
Continuing operations $ 1,383 $ 1,255 $ 1,206 $ 1,033
Discontinued operations 173 140 288 202
Total $ 1,556 $ 1,395 $ 1,494 $ 1,235

Basic and diluted per
share cash flow from operations:
Continuing operations $ 0.12 $ 0.11 $ 0.10 $ 0.09
Discontinued operations 0.01 0.01 0.03 0.02
Total $ 0.13 $ 0.12 $ 0.13 $ 0.11

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(1) Quarterly results have been restated to reflect reclassifying
Amica at Bearbrook as an income-producing property.


Amica Mature Lifestyles Inc., a Vancouver based public company, is a leading brand manager in the design, development, marketing and management of luxury housing and services for mature lifestyles. There are 17 Amica Wellness & Vitality™ Residences, including four under development. The common shares of Amica are traded on the Toronto Stock Exchange under the symbol "ACC".

(1) Same communities is defined by the Company as mature communities that were classified as income-producing properties for the full current fiscal year and the full prior comparative fiscal year.

(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) EBITDA is equal to net earnings (loss) plus (i) income taxes expense plus (ii) interest expense plus (iii) depreciation and amortization plus (iv) write-down of income-producing properties plus (v) loss from discontinued operations, net of income taxes (vi) plus other expense less (vii) gain on sale of income-producing property less (viii) earnings from discontinued operations, net of income taxes less (ix) income taxes recovery less (x) other income less (xi) 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 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 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.

Forward-Looking Information

Statements made in this news release that are not historical facts are forward-looking statements. Forward-looking statements can be identified because they generally contain the words "anticipate", "believe", "estimate", "plan", "expect", "project", or similar words. Such forward-looking statements are estimates reflecting the best judgment of the Company based upon current information and involve a number of risks and uncertainties and other factors that may cause actual results, performance, or achievements of the Company to differ materially from future results expressed, projected or implied by such forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on the Company's forward-looking statements. These statements are made as of the date of this document and, except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.



Consolidated Statements of Operations and Retained Earnings

---------------------------------------------------------------------
---------------------------------------------------------------------
THREE MONTHS ENDED YEAR ENDED
May 31 May 31 May 31 May 31
2005 2004 2005 2004
---------------------------------------------------------------------
(Expressed in (unaudited) (unaudited) (audited) (audited)
thousands of dollars, (restated) (restated)
except per share
amounts)

Consolidated
revenues from
continuing operations $ 9,835 $ 8,996 $ 38,546 $ 34,163
---------------------------------------------------------------------
---------------------------------------------------------------------

Management operations:
Revenues $ 1,075 $ 1,194 $ 4,225 $ 3,886
General and
administrative
expenses (1,136) (1,146) (4,452) (3,793)
--------------------------------------------------------------------
(61) 48 (227) 93
Ownership and corporate
operations:
Residential operating
revenues 9,286 8,271 36,376 32,114
Distributions from
investments 79 - 133 -
Expenses:
Residential operating (5,670) (5,054) (22,351) (19,526)
Corporate (78) (76) (427) (424)
Fees to management
operations (605) (469) (2,188) (1,837)
--------------------------------------------------------------------
3,012 2,672 11,543 10,327
---------------------------------------------------------------------

Earnings before other
operating items 2,951 2,720 11,316 10,420

Depreciation and
amortization (854) (559) (3,393) (2,031)
---------------------------------------------------------------------

Earnings from operations 2,097 2,161 7,923 8,389

Interest expense (1,670) (1,836) (7,298) (7,279)
Gain on sale of income
-producing property 1,508 - 1,508 -
Write-down of income
-producing property - - - (1,700)
Other income (expense) 100 (129) 119 (276)
---------------------------------------------------------------------

Earnings (loss) before
income taxes and non
-controlling interest 2,035 196 2,252 (866)

Income taxes:
Current expense
(recovery) 48 (73) 192 90
Future expense
(recovery) 693 590 836 (120)
--------------------------------------------------------------------
741 517 1,028 (30)
---------------------------------------------------------------------

Earnings (loss) before
non-controlling
interest 1,294 (321) 1,224 (836)

Non-controlling interest 102 - 286 -
---------------------------------------------------------------------

Earnings (loss) from
continuing operations 1,396 (321) 1,510 (836)

Earnings (loss) from
discontinued operations,
net of income taxes (317) (34) (839) 680
---------------------------------------------------------------------

Net earnings (loss) 1,079 (355) 671 (156)

Imputed interest on
convertible debentures,
net of income taxes 12 49 (143) (300)
---------------------------------------------------------------------

Net earnings (loss)
attributable to
common shareholders 1,091 (306) 528 (456)

Retained earnings
(deficit), beginning
of period (444) 469 119 647

Premium on purchase and
cancellation of
common shares - (44) - (72)
---------------------------------------------------------------------

Retained earnings,
end of period $ 647 $ 119 $ 647 $ 119
---------------------------------------------------------------------
---------------------------------------------------------------------

Basic and diluted
earnings (loss)
per share:
Continuing operations $ 0.10 $ (0.03)$ 0.11 $ (0.10)
Discontinued
operations (0.02) - (0.07) 0.06
---------------------------------------------------------------------
---------------------------------------------------------------------

Net earnings (loss)
attributable to
common shareholders $ 0.08 $ (0.03)$ 0.04 $ (0.04)
---------------------------------------------------------------------
---------------------------------------------------------------------



Consolidated Balance Sheets

---------------------------------------------------------------------
---------------------------------------------------------------------
May 31, 2005 and 2004 2005 2004

---------------------------------------------------------------------
(Expressed in thousands of dollars) (audited) (audited)

ASSETS

Properties:
Income-producing $ 120,826 $ 114,591
Investment in co-tenancy properties 7,016 6,065
Properties related to
discontinued operations - 22,805
--------------------------------------------------------------------
127,842 143,461

Cash and cash equivalents 19,542 3,244
Management fees receivable 1,028 1,411
Mortgages receivable 4,500 600
Deferred financing costs, net of accumulated 482 754
amortization of $1,441 (2004 - $1,563)
Other assets 3,029 3,358
---------------------------------------------------------------------

$ 156,423 $ 152,828
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LIABILITIES AND SHAREHOLDERS' EQUITY

Mortgages payable $ 103,372 $ 87,006
Convertible debentures - 11,906
Accounts payable and accrued liabilities 5,056 4,573
Accrued interest payable 481 460
Future income taxes 5,017 3,747
Non-controlling interest 1,743 -
Liabilities related to
discontinued operations - 16,299
---------------------------------------------------------------------
115,669 123,991

Shareholders' equity:
Share capital 38,505 24,258
Contributed surplus 1,602 11
Equity portion of convertible debentures - 4,449
Retained earnings 647 119
--------------------------------------------------------------------
40,754 28,837
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$ 156,423 $ 152,828
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Consolidated Statements of Cash Flows

---------------------------------------------------------------------
---------------------------------------------------------------------
THREE MONTHS ENDED YEAR ENDED
May 31 May 31 May 31 May 31
2005 2004 2005 2004
---------------------------------------------------------------------
(Expressed in thousands (unaudited) (unaudited) (audited) (audited)
of dollars) (restated) (restated)

Cash provided
by (used in):

Operations:
Earnings (loss)
from continuing
operations $ 1,396 $ (321) $ 1,510 $ (836)
Items not involving
cash:
Stock-based
compensation - 11 186 11
Depreciation and
amortization 854 559 3,393 2,031
Amortization of deferred
financing costs 63 65 280 222
Amortization of deemed
debt discount
on convertible 2 339 1,161 1,341
debentures
Write-down of income
-producing property - - - 1,700
Gain on sale of income
-producing property (1,508) - (1,508) -
Other 30 140 85 528
Future income taxes
(recovery) 693 590 836 (120)
Non-controlling interest (102) - (286) -
-------------------------------------------------------------------

Cash flow from
continuing operations 1,428 1,383 5,657 4,877

Cash flow from
discontinued operations 57 173 368 803
---------------------------------------------------------------------

Cash flow from operations
before changes in non-cash
operating working capital $ 1,485 $ 1,556 $ 6,025 $ 5,680
---------------------------------------------------------------------
---------------------------------------------------------------------

Operations:
Cash flow from operations
before changes in
non-cash operating
working capital $ 1,485 $ 1,556 $ 6,025 $ 5,680
Other changes in
non-cash operating
working capital 1,517 690 (159) (888)
--------------------------------------------------------------------
3,002 2,246 5,866 4,792
Investments:
Proceeds on sale of
income-producing
properties 1,233 - 1,233 -
Proceeds on sale of
discontinued operations'
property - - 3,053 3,567
Increase in investment
in co-tenancy properties (150) (927) (1,888) (1,889)
Recovery of investment
in co-tenancy property (50) - 852 -
(Increase) decrease in
amounts due from
investors in co-
tenancy properties (112) 1,882 - 1,882
Increase in loans due
from co-tenancy
properties (1,188) (375) (1,188) (375)
Acquisition of additional
interest in income-
producing property 71 - (252) -
Expenditures on income-
producing properties (868) (716) (1,990) (1,783)
Expenditures on
properties under
development - - - (91)
Decrease (increase)
in restricted cash 41 (1,646) 1,682 (1,646)
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(1,023) (1,782) 1,502 (335)
Financing:
Redemption of
convertible debentures - - (12,314) -
Interest payments on
convertible debentures - (618) (712) (1,247)
Proceeds from
mortgages payable - - 13,500 8,875
Principal repayments
on mortgages payable (737) (526) (2,627) (9,372)
Issuance of common shares
for cash, net of costs 10,377 10 10,870 10
Repurchase of
common shares - (127) - (306)
Increase in deferred
financing costs (37) (24) (216) (117)
Capital contributions
from non-controlling
interest - - 429 -
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9,603 (1,285) 8,930 (2,157)
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Increase (decrease) in
cash and cash equivalents 11,582 (821) 16,298 2,300

Cash and cash equivalents,
beginning of period 7,960 4,065 3,244 944
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Cash and cash equivalents,
end of period $ 19,542 $ 3,244 $ 19,542 $ 3,244
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