Amica Mature Lifestyles Inc.
TSX : ACC

Amica Mature Lifestyles Inc.

August 08, 2008 08:30 ET

Amica Mature Lifestyles Announces Year End Results for Fiscal 2008

Board of Directors Announces First Quarter Dividend

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 8, 2008) - Mr. Samir Manji, Chairman, President and CEO of Amica Mature Lifestyles Inc. ("Amica" or the "Company") (TSX:ACC), is pleased to announce the Company's operating and financial results for the fiscal year and fourth quarter ended May 31, 2008.

Mr. Manji commented: "As we enter our ninth year as Amica Mature Lifestyles Inc., we have much to be proud of when reflecting back on what we have achieved since establishing our brand in the year 2000. During this time, Amica has transformed the definition of luxury retirement living in Canada. This has made, and continues to make, a significant difference in the health and lives of thousands of Canadian seniors. All of us at Amica are proud of what we have accomplished and are committed to building on our achievements and reaching new heights of success for the Company, our residents and our shareholders."

Fiscal 2008 was a challenging year on many fronts for the Company. By the end of the first quarter, major events hit the market place that have had a significant impact on organizations nationally and internationally, including Amica. The "credit crunch" in the U.S. followed by the "Asset-Backed Commercial Paper (ABCP) crisis" in Canada contributed to a meltdown of the conventional long term debt market. While this has had a minor impact on Amica's ability to secure construction financing for new developments, it has had a more significant impact on the Company and its Co-Tenancy investors' ability to achieve desired levels of takeout financing when Communities achieve lease-up or when seeking refinancing of existing long term debt that has matured.

Meeting the Company's growth objective has been challenging this year with only one new long term management contract achieved during fiscal 2008, Amica at Richmond Hill, located in Richmond Hill, Ontario. Many factors contributed to this, including the Company's decision to change the manner and timing in which it presents opportunities to prospective project investors.

Fiscal 2008 saw high turnover in existing Communities, affecting occupancy results. Despite this, the Company achieved its objective to increase Monthly Average Revenue Per Available Suite (MARPAS(1)) by 4% in fiscal 2008 and ended the fiscal year with overall occupancy of 95.2% in the Company's mature Residences. This compared to overall occupancy of 96% in the Company's mature Residences at the end of fiscal 2007 and MARPAS growth of 3.3% during fiscal 2007.

The Company has decided not to proceed with its development in Kingston, Ontario. The Company's developer partner is in the process of identifying another operator who may be interested in developing the site for a seniors retirement residence. As the development is being discontinued before commencement of construction, the Company has provided for the return of design and marketing fees totaling $615,600 which were recognized for this development over the last quarter of fiscal 2007 and the first three quarters of fiscal 2008.

The decision to not proceed with the Kingston development brings the total number of Amica Wellness & Vitality™ Retirement Residences to 24, eight of which are currently under development. All eight projects under development are located in Ontario which represents the Company's largest cluster of Communities under development and in operation. In fiscal 2009, the Company looks forward to the opening of four new Amica Communities: Amica at Westboro Park in Ottawa, Ontario; Amica at London in London, Ontario; Amica at Thornhill in Thornhill, Ontario; and Amica at Whitby in Whitby, Ontario. The opening of these Communities will bring the total number of Amica Communities in operation to 20.

The impact on design fee revenues from fewer than anticipated new developments will continue to have an impact on earnings through the 2009 fiscal year.

Mr. Manji continued, "As we begin fiscal 2009, we are committed to remaining focused, while simultaneously being prudent in our decision making and evaluation of various issues and opportunities. This is critical to realizing our goal of delivering long term value to our shareholders."

First Quarter Dividend

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 September 15, 2008, to shareholders of record on August 29, 2008.



Financial Highlights

Management Operations
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3 MONTHS ENDED 12 MONTHS ENDED
(Expressed in thousands of May 31, May 31, May 31, May 31,
Canadian dollars) 2008 2007 2008 2007
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Management operations:
Revenues
Management fees from 100%
owned communities $ 462 $ 430 $ 1,836 $ 1,751
Management fees from less
than 100% owned communities 639 551 2,389 2,113
Design and marketing fees
from new developments under
construction 647 1,821 4,829 4,679
Other 324 528 324 528
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2,072 3,330 9,378 9,071
General and administrative
expenses (2,381) (2,047) (8,186) (6,997)
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$ (309) $ 1,283 $ 1,192 $ 2,074
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Ownership and Corporate Operations
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3 MONTHS ENDED 12 MONTHS ENDED
(Expressed in thousands of May 31, May 31, May 31, May 31,
Canadian dollars) 2008 2007 2008 2007
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Ownership and corporate
operations:
Retirement communities
operating revenues $ 9,386 $ 8,894 $ 37,363 $ 35,640
Income (loss) from equity-
accounted investment (69) 43 35 213
Distributions from cost-
accounted investments 51 39 410 158
Expenses:
Retirement communities
operating (5,675) (5,439) (22,823) (21,740)
Corporate (72) (87) (795) (673)
Fees paid to and reported on
management operations (619) (559) (2,410) (2,257)
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$ 3,002 $ 2,891 $ 11,780 $ 11,341
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Earnings Before Other Operating Items (EBITDA)
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3 MONTHS ENDED 12 MONTHS ENDED
(Expressed in thousands of May 31, May 31, May 31, May 31,
Canadian dollars) 2008 2007 2008 2007
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Earnings before other operating
items $ 2,693 $ 4,174 $ 12,972 $ 13,415
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Cash Flow From Operations
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3 MONTHS ENDED 12 MONTHS ENDED
(Expressed in thousands of May 31, May 31, May 31, May 31,
Canadian dollars) 2008 2007 2008 2007
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Cash flow $ 1,506 $ 3,292 $ 8,196 $ 8,637
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Per Share Cash Flow From Operations
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3 MONTHS ENDED 12 MONTHS ENDED
May 31, May 31, May 31, May 31,
2008 2007 2008 2007
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Basic cash flow $ 0.09 $ 0.19 $ 0.47 $ 0.56
Diluted cash flow $ 0.09 $ 0.18 $ 0.46 $ 0.55

Weighted average basic number
of shares 17,402,857 17,515,471 17,534,068 15,475,578
Weighted average diluted
number of shares 17,557,007 17,986,879 17,806,985 15,813,567
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FINANCIAL REVIEW AND ANALYSIS

Three Months and Year Ended May 31, 2008 Compared to Three Months and Year Ended May 31, 2007

Overview

The Company has decided not to proceed with its development in Kingston, Ontario. The Company's developer partner is in the process of identifying another operator who may be interested in developing the site for a seniors retirement residence. As the development is being discontinued before commencement of construction, the Company has provided for the return of design and marketing fees totaling $0.6 million which were recognized for this development over the last quarter of fiscal 2007 and the first three quarters of fiscal 2008. A provision for this amount has been recorded during the fourth quarter and is reflected in interest and other income (expense).

In the fourth quarter of fiscal 2008, the Company's cash flow from operations(2) was $1.5 million as compared to $3.3 million in the same period in the prior year. Earnings Before Other Operating Items(3) (EBITDA) for Q4 fiscal 2008 was $2.7 million, compared to $4.2 million in the same period in the prior year. This was due primarily to a $1.2 million decrease in design and marketing fees from new developments under construction and $0.3 million in severance costs recorded in the fourth quarter.

However, the decrease in fourth quarter earnings were significantly offset by a decrease from $0.9 million to $0.1 million in income taxes expense, resulting in net earnings of $0.2 million in Q4 fiscal 2008, compared to net earnings of $1.4 million in the prior comparative period.

In fiscal 2008, EBITDA decreased from $13.4 million to $13.0 million, primarily due to an increase of $1.2 million in general and administrative expenses, of which $0.3 million relates to severance costs. The decrease was partially offset by an increase of $0.7 million from retirement communities operating revenues, net of retirement communities operating expenses. As a result, cash flow from operations decreased $0.4 million to $8.2 million.

In fiscal 2008, management fees from same communities(4) were unchanged at $1.8 million. Management fees from less than 100% owned communities increased by $0.3 million to $2.4 million, and earnings from design and marketing fees increased $0.1 million to $4.8 million in comparison with the prior fiscal period. General and administrative expenses increased $1.2 million to $8.2 million. As a result, earnings from management operations decreased $0.9 million to $1.2 million in fiscal 2008, compared to $2.1 million in fiscal 2007.

Management Operations

For the three month period ended May 31, 2008, fee revenue decreased $1.2 million to $2.1 million and general and administrative expenses increased $0.4 million to $2.4 million, resulting in a loss from management operations of $0.3 million. The $1.2 million decrease in fee revenues is primarily due to a $1.2 million decrease in design and marketing fees earned on new developments.

For the year ended May 31, 2008, management fee revenues increased $0.3 million (3%) to $9.4 million, and general and administrative expenses increased $1.2 million (17%) to $8.2 million resulting in management operations decreasing to $1.2 million in fiscal 2008 as compared to an increase to $2.1 million in fiscal 2007. The $0.3 million increase in management fee revenues is primarily due to a $0.3 million increase in recurring management fees on properties in which the Company has less than a 100% ownership interest - due primarily to increased occupancy and rents of Amica at West Vancouver (12.68% owned), Amica at City Centre (34% owned), Amica at Newmarket (16% owned), and Amica at Dundas (17% owned) which opened in March 2008. In the current year, the Company also earned guarantee fees of $0.2 million, a decrease of $0.1 million from the prior year.

The $1.2 million increase in general and administrative expenses is partly attributable to severance payments of $0.3 million. Other factors contributing to the increase in general and administrative expenses include: increases in wages and benefits, staffing levels, professional fees and other expenses. In fiscal 2008 and fiscal 2007, the Company has continued to increase corporate staffing in order to meet requirements to support the number of new developments and programs and initiatives that help to maintain the Company as the premier brand in the luxury independent living retirement sector. The Company intends to manage expenses tightly in fiscal 2009 to limit expense growth. Included in general and administrative expenses is $0.6 million in stock option expense in comparison to $0.4 million in fiscal 2007.

Ownership and Corporate Operations

Revenues

In the fourth quarter of fiscal 2008, retirement communities operating revenues increased $0.5 million to $9.4 million compared to the three months ended May 31, 2007.

For the year ended May 31, 2008, retirement communities operating revenues increased $1.8 million (5%) to $37.4 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.

The Company also recorded an increase of $0.2 million to $0.4 million in distributions from investments, including distributions received from the condominium sales at Claridges, Amica at Bayview (17% owned).

Expenses

For the three month period ended May 31, 2008, retirement communities operating expenses increased $0.3 million to $5.7 million compared to the three month comparative period at $5.4 million.

Retirement communities operating expenses increased $1.1 million (5%) to $22.8 million for the year ended May 31, 2008, primarily due to a $1.1 million increase in same community expenses incurred to earn higher revenues from ancillary services.

Corporate expenses increased by $0.1 million to $0.8 million due to an increase in capital taxes paid in fiscal 2008.

Fees paid and reported in management operations increased from $2.3 million to $2.4 million for the current fiscal year.

Earnings Before Other Operating Items (EBITDA)

As a result of the changes in management operations and ownership and corporate operations, EBITDA decreased $1.5 million in the fourth quarter of fiscal 2008 to $2.7 million.

For the full year, as a result of the changes in management operations and ownership and corporate operations, EBITDA decreased $0.4 million (3%) to $13.0 million. The primary factor impacting EBITDA was an increase of $1.2 million in general and administrative expenses, of which $0.3 million relates to severance costs. The decrease was partially offset by an increase of $0.7 million from retirement communities operating revenues, net of retirement communities operating expenses.

Other Items

Depreciation and Amortization

For the three month period ended May 31, 2008, depreciation and amortization were unchanged at $0.9 million.

Depreciation and amortization increased $0.2 million to $3.7 million from fiscal 2007 to fiscal 2008, mainly attributable to an increase of $0.4 million to $3.8 million on expenditures on income-producing properties.

Interest Expense

For the three month period ended May 31, 2008, interest expense remained the same at $1.6 million.

Interest expense for fiscal 2008 decreased $0.3 million to $6.2 million primarily due to a decrease in corporate interest expense.

Interest and Other Income (Expense)

For the three month period ended May 31, 2008, interest and other income (expense) decreased $0.5 million to $0.1 million primarily as a result of the Company recording a $0.6 million provision for the possible return of design and marketing fees received from the Kingston, Ontario development which is no longer proceeding; and offset by interest earned on higher mortgages and loans receivable outstanding compared to Q4 fiscal 2007.

Interest and other income (expense) increased $0.1 million in fiscal 2008 primarily due to a $1.0 million increase in interest income; offset by a $0.3 million write down of a vendor-take-back mortgage and loan receivable; and a $0.6 million provision recorded in the fourth quarter of fiscal 2008 for the possible return of design and marketing fees received from the Kingston, Ontario development which is no longer proceeding. The increase in interest income is the result of the Company's mortgages and loans receivable increasing by $9.4 million to $27.4 million at May 31, 2008.

The Company recognized a loss of $0.1 million in the three month period ended May 31, 2007, on its 50% share of a loss on a property in Ottawa that it had contracted to purchase. Subsequent to the signing of the binding purchase agreement, the Company and other investors entered into a co-tenancy agreement with a developer that included the purchase of land near the property purchased in January 2006, rendering this property surplus to the Company's needs. The loss was included as a reduction in interest and other income (expense) in fiscal 2007.

Income Taxes

Decreases in income tax expense in Q4 fiscal 2008 resulted from lower earnings before tax.

In fiscal 2008, the Company's tax expense was $0.3 million, compared to tax expense of $1.9 million in fiscal 2007. Of the $1.6 million decrease in tax expense $0.9 million is due to the reductions in the Company's future tax rates resulting from substantively enacted changes in federal and provincial tax rates, and $0.7 million is due to non-capital losses the Company was able to reclaim through amendments to prior year tax returns.

Net Earnings and Earnings Per Share

For the three month period ended May 31, 2008, the Company had $0.2 million (2007 - $1.4 million) in net earnings. This resulted in $0.01 in basic earnings per share (2007 - $0.08 basic earnings per share) and $0.01 in diluted earnings per share (2007 - $0.08 diluted earnings per share).

In fiscal 2008, the Company had $4.6 million (2007 - $3.3 million) in net earnings. This resulted in $0.26 in basic earnings per share (2007 - $0.21 basic earnings per share) and $0.26 in diluted earnings per share (2007 - $0.21 diluted earnings per share) from operations.

In fiscal 2007, the company issued 2,750,000 common shares on February 14, 2007, which resulted in a significant dilutive impact on per share calculations in fiscal 2008.

Cash Flow

For the three month period ended May 31, 2008, the Company's cash flow from operations was $1.5 million as compared to $3.3 million in the same period in the prior year. As a result, basic per share cash flow from operations decreased $0.10 per share to $0.09; and diluted per share cash flow from operations decreased $0.9 per share to $0.09. After taking into consideration other changes in non-cash operating working capital, total cash flow for the three month period ended May 31, 2008, decreased to $2.8 million from $3.7 million in the same period in the prior year.

In fiscal 2008, cash flow from operations decreased $0.4 million to $8.2 million. As a result, basic per share cash flow from operations decreased $0.09 per share to $0.47, and diluted per share cash flow from operations also decreased $0.09 per share to $0.46. The decrease is due to the dilutive impact of the issuance of 2,750,000 common shares on February 14, 2007, which has a significant impact on the basic and dilutive earnings per share in fiscal 2008. The decrease is also due to the delays in redeploying all of the capital in structuring new developments which was raised from the share issuance. After taking into consideration other changes in non-cash operating working capital, total cash flow in 2008 increased to $8.9 million in fiscal 2008 from $8.8 million in fiscal 2007.

Liquidity and Capital Resources

The Company's cash balance at the end of the year was $11.7 million. Cash flow generated from operations before changes in non-cash operating working capital was $8.2 million in 2008.

The following chart documents the Company's annual repayments of principal on mortgage and loans payable, which are the Company's material contractual obligations as at May 31, 2008:



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(Expressed in thousands of Canadian dollars) Mortgages Payable
------------------------------------------------------------------

2009 $ 33.4
2010 15.5
2011 7.9
2012 1.1
2013 5.8
Thereafter 40.7

Deferred financing costs (1.1)
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Total $ 103.3
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The $33.4 million in principal repayments due in fiscal 2009 includes: first mortgages totaling $12.5 million on two of the Company's 100% owned properties, $8.0 million relating to the mortgage on Amica at Erin Mills, in which the Company has a 50% interest, and $9.5 million relating to the bridge financing for Amica at Villa Da Vinci which is due on demand but no later than September 1, 2008. The Company is currently in the process of refinancing the Amica at Erin Mills and Amica at Villa Da Vinci mortgages which both mature on September 1, 2008. The Company does not anticipate any issues refinancing a major portion or all of the mortgage amounts successfully.

Also included in principal repayments due in fiscal 2009 is a mortgage loan payable of $2.0 million for Amica at Richmond Hill, in which the Company has a 50% interest. The mortgage loan payable bears interest at prime plus 1.0% and is due on demand but no later than December 31, 2010. The loan is secured by a first mortgage charge against the property.

Based on the equity in the properties and the operating results of the properties, the Company does not anticipate difficulty in extending or refinancing these, and any other, mortgages as they become due.

On August 1, 2007, the Company refinanced the mortgage on Amica at Swan Lake for $9.4 million (50% share) at an interest rate of 6.142% for a ten year term. Excess proceeds of $2.8 million (50% share) were used to pay out a vendor-take-back mortgage of $0.6 million (50% share) and a second mortgage of $0.8 million (50% share) and will also be used to finance the equity component of the construction of future expansion at Amica at Swan Lake.

On September 1, 2007, the Company refinanced a first mortgage on Amica at Mayfair for $5.8 million. The mortgage is for a five year term with an interest rate of 4.83%.

On May 1, 2008, the Company refinanced a first mortgage on Amica at Douglas House for $13.7 million at an interest rate of 4.32% for a five year term. The mortgage is secured by a personal guarantee of an officer limited to $6.9 million.

In March 2007, the Company obtained a $10 million operating facility that bears interest at prime + 1.00% or bankers acceptances + 2.25%. In addition, there is a stand-by fee of 0.125% per annum on the undrawn portion of the operating facility. The operating facility was reduced to $8.5 million as a result of refinancing Amica at Douglas House which was one of the three properties that secured the facility through a second mortgage. The loan is now secured by second mortgage charges on two of the Company's wholly-owned properties. As at May 31, 2008, there was nothing drawn on the operating facility.

In January 2008, the Company received acceptance from the TSX for its notice of intention (the "Notice") to acquire up to 880,663 of its common shares, representing 5% of its 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. As at May 31, 2008, the Company has purchased 242,100 common shares under its normal course issuer bid at an average cost of $7.33 per share. As at August 7, 2008, all shares purchased under the normal course issuer bid have been cancelled by the Company.

The Company otherwise 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 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 May 31, 2008, advances to co-tenancies totaled $23.0 million compared to $14.1 million in 2007. 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 the consolidated financial statements. The Company's proportionate share of the underlying mortgages on these specific properties totaled $20.8 million at May 31, 2008, compared to $14.0 million at May 31, 2007. Guarantees provided by the Company in excess of the proportionate share of underlying mortgages totaled $30.4 million at May 31, 2008, compared to $31.0 million at May 31, 2007. 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 fiscal 2008 the Company spent $3.8 million on capital expenditures, including $1.4 million of suite renovations at Amica at Arbutus Manor. 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



Designation Outstanding as of August 7, 2008
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Common shares 17,379,124
Options to acquire common shares 1,029,450

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Dividend Policy

On August 8, 2007, the Company's Board of Directors approved a 20% increase in the Company's quarterly dividend to $0.06 per share from $0.05 per share. In the fiscal year ending May 31, 2008, the Company declared dividends totaling $4.2 million, and had paid dividends totaling $4.0 million. The dividend of $0.06 per common share which was declared April 11, 2008, to shareholders of record at May 31, 2007, is recorded as a dividend payable of $1.0 million in the financial statements as at May 31, 2008, and was paid on June 15, 2008.

Looking Ahead

The Company's business plan for fiscal 2009 has been developed with consideration towards the challenging market 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 are consistent with historical transactions), the long term financing market is where significant changes have occurred. The commercial mortgage backed securities 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 Canada Mortgage and Housing Corporation ("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.

Additional Information

A two year summary by quarter of selected financial data is included in 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, 2007, and Interim Consolidated Financial Statements) is available online at www.sedar.com.

The Company expects to file with the securities regulators within the next three weeks its Annual Report for the year ended May 31, 2008, which will include the MD&A and Audited Financial Statements.



Note 1

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4th Quarter 3rd Quarter
(Expressed in thousands of Canadian ----------------- -----------------
dollars, except per share amounts) 2008 2007 2008 2007
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Consolidated revenues from
operations $ 10,890 $ 11,704 $ 11,266 $ 10,472

Earnings (loss):
Management operations $ (309)$ 1,283 $ 346 $ 474
Ownership and corporate
operations 3,002 2,891 2,936 2,812

Earnings before other
operating items (EBITDA) $ 2,693 $ 4,174 $ 3,282 $ 3,286

Net earnings and comprehensive
income $ 202 $ 1,430 $ 1,529 $ 752

Basic earnings per share $ 0.01 $ 0.08 $ 0.09 $ 0.05

Diluted earnings per share $ 0.01 $ 0.08 $ 0.09 $ 0.05

Cash flow from operations $ 1,506 $ 3,292 $ 1,763 $ 1,768

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

Diluted per share
cash flow from operations: $ 0.09 $ 0.18 $ 0.10 $ 0.11

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2nd Quarter 1st Quarter
(Expressed in thousands of Canadian ----------------- -----------------
dollars, except per share amounts) 2008 2007 2008 2007
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Consolidated revenues from
operations $ 11,372 $ 10,458 $ 11,213 $ 9,978

Earnings (loss):
Management operations $ 431 $ 254 $ 724 $ 63
Ownership and corporate
operations 3,109 2,727 2,733 2,911

Earnings before other
operating items (EBITDA) $ 3,540 $ 2,981 $ 3,457 $ 2,974

Net earnings and comprehensive
income $ 1,767 $ 599 $ 1,071 $ 525

Basic earnings per share $ 0.10 $ 0.04 $ 0.06 $ 0.04

Diluted earnings per share $ 0.10 $ 0.04 $ 0.06 $ 0.04

Cash flow from operations $ 2,806 $ 1,744 $ 2,121 $ 1,833

Basic per share
cash flow from operations: $ 0.16 $ 0.12 $ 0.12 $ 0.13

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

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Consolidated Balance Sheets

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May 31 May 31
2008 2007
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(Expressed in thousands of Canadian dollars) (audited) (audited)

ASSETS

Properties:
Income-producing $ 120,238 $ 119,576
Properties under development 5,256 1,355
Co-tenancy investments 11,287 11,887
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136,781 132,818

Cash and cash equivalents 11,731 14,565
Management fees receivable 1,824 1,773
Mortgages and loans receivable 27,432 17,997
Land held for sale - 4,026
Other assets 10,533 8,162
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$ 188,301 $ 179,341
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LIABILITIES AND SHAREHOLDERS' EQUITY

Mortgages payable $ 103,294 $ 93,526
Accounts payable and accrued liabilities 6,372 6,344
Income taxes payable 1,537 951
Dividends payable 1,045 877
Future income taxes 5,282 6,072
Non-controlling interest 1,453 1,574
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118,983 109,344
Shareholders' equity:
Share capital 64,261 64,878
Contributed surplus 1,787 2,120
Retained earnings 3,270 2,999
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69,318 69,997
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$ 188,301 $ 179,341
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Consolidated Statements of Operations and Retained Earnings

--------------------------------------------------------------------------
3 MONTHS 3 MONTHS 12 MONTHS 12 MONTHS
ENDED ENDED ENDED ENDED
May 31, May 31, May 31, May 31,
2008 2007 2008 2007
--------------------------------------------------------------------------
(Expressed in thousands of (unaudited)(unaudited) (audited) (audited)
Canadian dollars)

Consolidated revenues $ 10,890 $ 11,704 $ 44,741 $ 42,612
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Management operations:
Revenues 2,072 3,330 9,378 9,071
General and administrative
expenses (2,381) (2,047) (8,186) (6,997)
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(309) 1,283 1,192 2,074
Ownership and corporate
operations:
Retirement communities
operating revenues 9,386 8,894 37,363 35,640
Income (loss) from
equity-accounted investment (69) 43 35 213
Distributions from
cost-accounted investments 51 39 410 158
Expenses:
Retirement communities
operating (5,675) (5,439) (22,823) (21,740)
Corporate (72) (87) (795) (673)
Fees to management operations (619) (559) (2,410) (2,257)
-------------------------------------------------------------------------
3,002 2,891 11,780 11,341
--------------------------------------------------------------------------

Earnings before other operating
items 2,693 4,174 12,972 13,415

Depreciation and amortization (912) (860) (3,655) (3,479)
--------------------------------------------------------------------------

Earnings from operations 1,781 3,314 9,317 9,936

Interest expense (1,614) (1,635) (6,234) (6,515)
Interest and other income
(expense) 91 600 1,670 1,600
--------------------------------------------------------------------------

Earnings before income taxes
and non-controlling interest 258 2,279 4,753 5,021

Income taxes:
Current expense (recovery) (45) 636 1,095 951
Future expense (recovery) 127 298 (790) 980
-------------------------------------------------------------------------
82 934 305 1,931
--------------------------------------------------------------------------

Earnings before non-controlling
interest 176 1,345 4,448 3,090

Non-controlling interest 26 85 121 216
--------------------------------------------------------------------------

Net earnings and comprehensive
income 202 1,430 4,569 3,306

Retained earnings, beginning of
period 4,113 2,446 2,999 2,908

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

Dividends declared (1,045) (877) (4,204) (3,215)

--------------------------------------------------------------------------
Retained earnings, end of
period $ 3,270 $ 2,999 $ 3,270 $ 2,999
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Basic earnings per share $ 0.01 $ 0.08 $ 0.26 $ 0.21

Diluted earnings per share $ 0.01 $ 0.08 $ 0.26 $ 0.21
--------------------------------------------------------------------------
--------------------------------------------------------------------------



Consolidated Statements of Cash Flows

--------------------------------------------------------------------------
3 MONTHS 3 MONTHS 12 MONTHS 12 MONTHS
ENDED ENDED ENDED ENDED
May 31, May 31, May 31, May 31,
2008 2007 2008 2007
--------------------------------------------------------------------------
(Expressed in thousands of (unaudited)(unaudited) (audited) (audited)
Canadian dollars)

Cash provided by (used in):

Operations:
Net earnings and comprehensive
income $ 202 $ 1,430 $ 4,569 $ 3,306
Items not involving cash:
Stock-based compensation 93 73 565 363
Depreciation and amortization 912 860 3,655 3,479
Amortization of deferred
financing charges 27 55 128 180
Future income taxes (recovery) 127 298 (790) 980
Cash distributions in excess of
income from equity-accounted
investment 171 402 67 232
Non-controlling interest (26) (85) (121) (216)
Loss on land held for sale - 136 - 136
Other - 123 123 177
-------------------------------------------------------------------------
1,506 3,292 8,196 8,637
Other changes in non-cash
operating working capital 1,332 442 687 132
--------------------------------------------------------------------------
2,838 3,734 8,883 8,769

Investments:
Co-tenancy investments, net of
recoveries (100) (1,351) 410 (2,924)
Mortgages and loans receivable,
net of recoveries (945) 2,339 (9,435) (9,953)
Expenditures on
income-producing properties (321) (874) (3,795) (3,384)
Acquisition of income-producing
property - (363) (522) (627)
Restricted cash 90 (4) 102 (20)
Deposits on land (362) (3,658) (3,018) (3,658)
Land held for sale - (37) 4,026 (97)
Properties under development (196) (15) (3,901) (159)
-------------------------------------------------------------------------
(1,834) (3,963) (16,133) (20,822)
--------------------------------------------------------------------------

Financing:
Proceeds from mortgages payable 18,783 - 30,183 31,900
Principal repayments on
mortgages payable (11,194) (490) (20,050) (36,330)
Deferred financing costs (51) - (167) (300)
Issuance of common shares for
cash, net of costs 1 251 262 25,436
Repurchase of common shares (287) - (1,776) -
Dividends paid (1,046) (874) (4,036) (2,338)
-------------------------------------------------------------------------
6,206 (1,113) 4,416 18,368
--------------------------------------------------------------------------

Increase (decrease) in cash and
cash equivalents 7,210 (1,342) (2,834) 6,315

Cash and cash equivalents,
beginning of period 4,521 15,907 14,565 8,250
--------------------------------------------------------------------------

Cash and cash equivalents, end
of period $ 11,731 $ 14,565 $ 11,731 $ 14,565
--------------------------------------------------------------------------
--------------------------------------------------------------------------


(1) 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.

(2) 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 from equity-accounted investment plus (vi) non-controlling interest plus (vii) loss on land held for sale plus (viii) 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.

(3) 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 table under "Earnings Before Other Operating Items (EBITDA)" for a reconciliation of net earnings to EBITDA.

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

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 eight 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 press release and the documents incorporated by reference herein 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 press release or, in the case of documents incorporated by reference herein, as of the date of such documents, 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 17, 2007 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