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Press release from Marketwire

Amica Mature Lifestyles Announces Year End Results for Fiscal 2010

Wednesday, August 11, 2010

Amica Mature Lifestyles Announces Year End Results for Fiscal 201019:28 EDT Wednesday, August 11, 2010VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 11, 2010) - Amica Mature Lifestyles Inc. ("Amica" or the "Company") (TSX:ACC), a leader in the management, marketing, design, development and ownership of luxury housing and services for mature lifestyles, is pleased to announce the Company's operating and financial results for the fiscal year and fourth quarter ended May 31, 2010. FINANCIAL HIGHLIGHTS Twelve Months Ended May 31, 2010 A review of the financial results for the twelve month period ended May 31, 2010 ("Fiscal 2010"), compared to the twelve month period ended May 31, 2009 ("Fiscal 2009"), reflects the following: -- consolidated revenues decreased $1.0 million to $41.3 million; -- mature same community(1) MARPAS(2) decreased by 0.5%; -- EBITDA(3) decreased by $1.7 million to $8.7 million; -- net loss increased $3.7 million to a loss of $4.3 million; -- basic and diluted net loss per share increased $0.22 to $0.25 per share; and -- cash flow from operations(4) was unchanged at $6.0 million ($0.35 per share). The increase in net loss of $3.7 million was primarily due to a $4.4 million write-down of a deposit related to the potential purchase of a development site in Bellevue, WA; a $1.7 million reduction in earnings from operations; and a $1.5 million reduction in interest and other income, which were partially offset by a $1.7 million change in income taxes (Fiscal 2010 - $1.1 million recovery; Fiscal 2009 - $0.6 million expense) and a Fiscal 2009 $2.2 million write-down of investments, mortgages and loans receivable. Not included in net earnings or cash flow from operations for Fiscal 2010 are $0.9 million (Fiscal 2009 - $0.9 million) in management, design and marketing fees and $1.5 million (Fiscal 2009 - $0.3 million) in interest credited to co-tenancy investments. This is attributed to the Company having acquired additional ownership interest in certain co-tenancies during Fiscal 2009, which resulted in a switch from cost to equity accounting for such investments. Previously, management, design and marketing fees and interest earned by the Company on these co-tenancies was reflected in earnings and cash flow from operations whereas under equity accounting, they are netted against the Company's co-tenancy investments and reported in cash flow from investing activities until the properties are considered to be income-producing.Three Months Ended May 31, 2010A review of the financial results for the three month period ended May 31, 2010, compared to the three month period ended May 31, 2009, reflects the following: -- consolidated revenues remained unchanged at $10.7 million; -- mature same community MARPAS increased by 0.7%; -- net loss decreased $1.6 million to $0.2 million; -- EBITDA decreased by $0.6 million to $2.0 million; -- basic and diluted net loss decreased $0.10 per share to a loss of $0.01 per share; -- cash flow from operations increased $0.8 million to $1.5 million; and -- basic and diluted cash flow from operations per share increased by $0.04 to $0.08 per share. The decrease in the net loss of $1.6 million was primarily due to a $2.2 million write-down recorded in the fourth quarter of Fiscal 2009.Not included in net earnings or cash flow from operations for the three months ended May 31, 2010 are $0.2 million (three months ended May 31, 2009 - $0.5 million) in management, design and marketing fees and $0.4 million (three months ended May 31, 2009 - $0.2 million) in interest credited to co-tenancy investments. This is attributed to the switch from cost to equity accounting described above.ACQUISITION OF ADDITIONAL OWNERSHIP INTERESTS IN CO-TENANCIES In March 2010, the Company received an additional 32.51% interest in Amica at West Vancouver pursuant to the settlement of the Bellevue dispute, increasing its ownership interest to 45.19% from 12.68%. Accordingly, the Company changed from a cost basis of accounting for this investment to the equity basis of accounting effective April 1, 2010.In July 2010, the Company completed the acquisition of an additional 35.16% in Amica at West Vancouver, bringing the Company's ownership position to 80.35%. In August 2010, Amica anticipates completing the acquisition of an additional 34% in Amica at City Centre, bringing the Company's ownership position to 68%. As a result of the Company's ownership position increasing to greater than 50%, the Company will consolidate the assets, liabilities, operating results and cash flows of both these communities in its financial statements commencing in the first quarter of Fiscal 2011 (June 1, 2010 - August 31, 2010). The aggregate purchase price for these acquisitions was $24.7 million (West Vancouver $14.8 million; City Centre $9.9 million), including: cash consideration of $3.7 million; and the assumption of the vendors' share of mortgages payable on the properties of $20.5 million (West Vancouver $12.7 million; and City Centre $7.8 million) and $0.5 million in other net liabilities. The Amica at West Vancouver property has a total of 121 units of which 9 are condominium units connected to the rental residences (2 of these units are currently listed for sale and the other 7 are operated as part of the rental operations). Amica at West Vancouver is currently at 90% occupancy. The Amica at City Centre property has a total of 136 rental units and is currently at 93% occupancy. Based on stabilized net operating income at 95% occupancy the Company estimates that the cap rate paid was 7.25% on the Amica at West Vancouver acquisition (excluding the condominium units) and 8.25% on the Amica at City Centre acquisition. COMMUNITY UPDATE Overall occupancy in the Company's mature communities at May 31, 2010, was 91.3%, an increase of 0.5% from 90.8% at May 31, 2009. Although mature same community MARPAS increased by 0.7% for the quarter ended May 31, 2010, compared to the same period the prior year, MARPAS for the year ended May 31, 2010 was down 0.5% compared to the previous year. The lease-up in Amica's new communities continue to make progress: -- Amica at Dundas (opened March 2008) has 87.1% occupancy. -- Amica at Westboro Park (opened September 2008) has 54.1% occupancy, which is anticipated to increase to 60.7% following 9 additional net pending move-ins. Net pending move-ins reflects suites that have been reserved with a deposit made for the reservation, less suites for which notice of termination has been received. -- Amica at Thornhill (opened November 2008) has 50.3% occupancy, which is anticipated to increase to 55.9% following an additional 8 net pending move-ins. -- Amica at London (opened March 2009) has 34.2% occupancy, which is anticipated to increase to 40.4% following an additional 10 net pending move-ins. -- Amica at Whitby (opened November 2009) has 29.9% occupancy, which is anticipated to increase to 35% following an additional 7 net pending move-ins. -- Amica at Bayview Gardens (opened June 2010) has 19.2% occupancy, which is anticipated to increase to 28.8% following an additional 14 net pending move-ins. -- Amica at Windsor (opened July 2010) has 11.7% occupancy, which is anticipated to increase to 19.6% following an additional 14 net pending move-ins. Construction was completed on the 101 condominium units that form part of the Amica at Bayview Gardens development. Seventy per cent (70%) of the units have been sold and the sales closed since May 31, 2010. At May 31, 2010, Amica had a 3.2% equity interest in these condominiums and in July 2010 Amica acquired an additional 0.8% ownership interest, increasing its ownership interest to 4% and in August 2010 the Company anticipates completing the acquisition of an additional 0.4% increasing its ownership interest to 4.4%. The Company is evaluating the opportunity to commence construction on one or more new developments in 2010 or 2011, including those currently in pre-development. The Company has three new communities and one expansion of an existing community in pre-development: Amica at Oakville (Oakville, ON), Amica at Richmond Hill (Richmond Hill, ON), Amica at Aspen Woods (Calgary, AB), and Amica at Swan Lake (Markham, ON). FINANCIAL POSITION The Company's consolidated cash and cash equivalents balance at May 31, 2010 was $8.2 million compared to $12.9 million at May 31, 2009. The $4.7 million decrease in cash and cash equivalents is primarily attributable to: -- $5.4 million cash used in financing activities, including: $16.2 million in mortgage principal payments net of mortgage proceeds; less $14.1 million net proceeds (before future income tax benefit) from a bought deal equity financing and $0.8 million in proceeds from the exercise of stock options, less $4.1 million in dividends paid; -- $2.4 million cash provided by operations after changes in non-cash working capital items; and -- $1.7 million cash used in investing activities, including: $3.9 million in capital expenditures, less $1.5 million received from co-tenancy investments, $0.6 million recovery of land deposit, and $0.1 million from loans and mortgages receivable. Amica has financed its operating and investing activities to date primarily through debt financings on its real estate investments, co-tenancy investor participation in its real estate investments, operating cash flows and equity financings. On February 18, 2010, the Company completed a bought deal public offering of 2,655,000 common shares at a price of $5.65 per common share for gross proceeds of $15.0 million. Expenses of the transaction are $0.6 million net of future tax savings of $0.3 million, for net proceeds of $14.4 million (after tax effect).In March 2010, the Company used $13.8 million of its cash and cash equivalents to pay out the maturing mortgage on Amica at Somerset House, a 100% company owned community. In August 2010, the Company obtained a $20 million corporate line of credit secured by this property.FIRST QUARTER DIVIDENDThe 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 September 15, 2010, to shareholders of record on August 31, 2010. RESULTS CONFERENCE CALLAmica has scheduled a conference call to discuss the results on Thursday, August 12th, 2010 at 10:00 am Pacific Time (1:00 pm Eastern Time). To access the call, dial (647) 438-4398 (Local/International access) or 1-866-971-7629 (North American toll-free access). To access a replay of the call, which will be available until August 15th, 2010, dial (416) 915-1035 or toll-free 1-866-245-6755 (Passcode: 612559). Participants may also listen to the simultaneous webcast of the conference call by logging on to the Company's website at www.amica.ca and choosing the Investor Relations section of the website. The Company's audited consolidated financial statements for the year ended May 31, 2010 and management's discussion and analysis, are available on SEDAR at www.sedar.com. FINANCIAL HIGHLIGHTS CONSOLIDATED BALANCE SHEET HIGHLIGHTS (Expressed in thousands of Canadian dollars) Assets 2010 2009 -------------------------------------------------------------------- $ $ -------------------------------------------------------------------- Properties and co-tenancy investments 144,510 145,519 Cash and cash equivalents 8,212 12,876 Receivables and other assets 32,620 35,097 -------------------------------------------------------------------- Total assets 185,342 193,492 -------------------------------------------------------------------- Liabilities and Shareholders' Equity Mortgages payable 103,714 119,253 Payables and accrued liabilities 6,745 6,672 Future income taxes 5,491 5,020 Non-controlling interest 1,161 1,249 -------------------------------------------------------------------- Total liabilities 117,111 132,194 -------------------------------------------------------------------- Share capital and contributed surplus 78,225 62,688 Deficit (9,994) (1,390) -------------------------------------------------------------------- Total shareholders' equity 68,231 61,298 -------------------------------------------------------------------- OPERATING HIGHLIGHTS (Expressed in thousands of Canadian dollars, except per share amounts) Q4/10 Q4/09 2010 2009 --------------------------------------------------------------------------- $ $ $ $ --------------------------------------------------------------------------- Consolidated Revenues 10,652 10,703 41,334 42,382 --------------------------------------------------------------------------- MANAGEMENT OPERATIONS: Revenues Management fees from 100% owned communities 467 455 1,840 1,841 Management fees from less than 100% owned properties 1,025 883 3,478 2,987 Design and marketing fees - new developments under construction 90 558 667 2,054 --------------------------------------------------------------------------- 1,582 1,896 5,985 6,882 General and administrative expenses (1,340) (1,212) (4,885) (5,542) --------------------------------------------------------------------------- 242 684 1,100 1,340 --------------------------------------------------------------------------- OWNERSHIP AND CORPORATE OPERATIONS: Retirement communities operating revenues 9,470 9,310 37,329 37,567 Income (loss) from equity-accounted investments (153) (12) (322) (14) Distributions from cost-accounted investments 217 71 429 330 --------------------------------------------------------------------------- 9,534 9,369 37,436 37,883 Expenses: Retirement communities operating (6,586) (6,018) (25,100) (23,981) Corporate and ownership (546) (814) (2,281) (2,401) Fees paid to and reported in management operations (617) (574) (2,409) (2,397) --------------------------------------------------------------------------- 1,785 1,963 7,646 9,104 --------------------------------------------------------------------------- EARNINGS (LOSS): EBITDA 2,027 2,647 8,746 10,444 Net loss and comprehensive loss (230) (1,848) (4,333) (585) Basic and diluted loss per share (0.01) (0.11) (0.25) (0.03) Weighted average basic and diluted number of shares 19,168 17,115 17,176 17,048 --------------------------------------------------------------------------- CASH FLOW: Cash flow from operations 1,532 685 5,976 6,024 Basic cash flow from operations per share 0.08 0.04 0.35 0.35 Diluted cash flow from operations per share 0.08 0.04 0.35 0.35 Weighted average basic number of shares 19,168 17,115 17,176 17,048 Weighted average diluted number of shares 19,254 17,130 17,238 17,048 --------------------------------------------------------------------------- Reallocation of Certain General and Administration Expenses Between Operating SegmentsFor the year ended May 31, 2010, and the prior year ending May 31, 2009, the Company has reallocated certain expenses formerly reported as general and administrative expenses in its Management Operations segment. This reallocation was done to better reflect the expenses associated with the revenues generated from Management Operations. Formerly the Company had reported all general and administrative costs in the Management Operations segment. Management conducted a detailed review of the composition of general and administrative expenses to identify those that relate to the Management Operations business. Expenses not attributable to Management Operations have been reallocated to the corporate and ownership expenses in the Company's Ownership and Corporate Operations segment. The following costs formerly reported as general and administrative expenses in the Management Operations segment have now been allocated to corporate and ownership expenses in the Ownership and Corporate Operations segment: -- legal, audit and insurance costs of $0.5 million (Fiscal 2009 - $0.4 million); -- salaries, wages, benefits and stock-based compensation of $0.8 million (Fiscal 2009 - $0.9 million) for staff not engaged in the Management Operations segment; -- allocation of administrative and corporate office expenses of $0.2 million (Fiscal 2009 - $0.1 million) related to staff in the Ownership and Corporate Operations segment; and -- $nil (Fiscal 2009 - $0.4 million) of costs incurred during due diligence of potential business development opportunities. The following table summarizes the impact of the reallocation of general and administrative expenses on the previously reported Fiscal 2009 results of the two operating segments: (Expressed in thousands of Canadian dollars) Before After Change --------------------------------------------------------------------------- $ $ $ --------------------------------------------------------------------------- MANAGEMENT OPERATIONS: General and administrative expenses 7,294 5,542 (1,752) --------------------------------------------------------------------------- Contribution of Management Operations to EBITDA (412) 1,340 1,752 --------------------------------------------------------------------------- OWNERSHIP AND CORPORATE OPERATIONS: Corporate and ownership expenses 649 2,401 1,752 --------------------------------------------------------------------------- Contribution of Ownership and Corporate Operations to EBITDA 10,856 9,104 (1,752) --------------------------------------------------------------------------- EBITDA 10,444 10,444 - --------------------------------------------------------------------------- ABOUT AMICA MATURE LIFESTYLES INC.Amica Mature Lifestyles Inc., a Vancouver based public company, is a leader in the management, marketing, design, development and ownership of luxury housing and services for mature lifestyles. There are 25 Amica Wellness & Vitality(TM) Residences, including three in pre-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 InformationThis 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 regarding the Company's growth prospects, including the completion of the acquisition of additional ownership interests in Amica at City Center and Amica at Bayview Gardens; the number of new developments it will undertake; commencing construction on one or more new developments in 2010 or 2011; the number of suites/condominium units that will be available for lease/sale; future occupancy rates; future changes in the Company's method of accounting for Amica at West Vancouver and Amica at City Center; the ability of the Company to refinance or extend mortgages on favorable terms; management of cash resources; dividends; 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". While the Company has based these forward-looking statements on its expectations about future events as at the date that such statements were prepared, the statements are not a guarantee of the Company's future performance and are subject to risks, uncertainties, assumptions and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such factors and assumptions include, amongst others, the effects of general economic and market conditions; actions by government authorities, including the granting of zoning and other approvals and permits; uncertainties associated with potential legal proceedings and negotiations, including negotiations with respect to construction financing and debt refinancing; and misjudgements in the course of preparing forward-looking statements. In addition, 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 or refinance debt as it comes due; Amica's ability to attract seniors with its services and keep pace with changing consumer preferences, as well as those factors discussed in the "Risks and Uncertainties" section of the Company's management's discussion and analysis for the three and twelve month periods ended May 31, 2010 and in Amica's Annual Information Form dated August 11, 2010, 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. (1 Mature same communities: Historically, the definition for same communities was mature communities that were classified as income-producing communities for thirteen months after reaching 95% occupancy. The definition was modified effective June 1, 2009 to be mature communities that are classified as income-producing properties for thirteen months after the earlier of reaching 95% occupancy or 24 months of operation. Amica at Bearbrook has been re-classified as a mature same community for both the current and comparative period.(2) MARPAS is defined by the Company as Monthly Average Revenue Per Available Suite and includes non-consolidated communities and is equal to gross monthly revenues generated at the seniors residences divided by the number of suites available for rental. MARPAS is used by the Company to measure period-over-period performance of its properties.(3) Earnings before interest, taxes, depreciation and amortization ("EBITDA") is equal to net earnings (loss) and comprehensive income (loss) before the following items: (i) interest expense; (ii) income tax expense (recovery); (iii) depreciation and amortization; (iv) interest and other income; (v) non-controlling interest; (vi) fees credited to investments, and (vii) write-down of deposits/investments. EBITDA is the same as earnings (loss) 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 (loss), cash flow from operations or any other measure of performance prescribed by Canadian generally accepted accounting principles. EBITDA of Amica Mature Lifestyles Inc. may 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 to the Company's Management's Discussion and Analysis for the year ended May 31, 2010 for a reconciliation of net earnings (loss) to EBITDA.(4) Cash flow from operations is a supplemental non-GAAP measure of operating performance and is equal to net earnings (loss) and comprehensive income (loss) adjusted for (i) stock-based compensation; (ii) depreciation and amortization; (iii) amortization of deferred financing charges; (iv) future income taxes (recovery); (v) cash distributions in excess of income (loss) from equity-accounted investments; (vi) non-controlling interest; (vii) accretion of discount on mortgage and loan receivable; (viii) unrealized interest rate swap and foreign exchange gains/losses; and (ix) write-down of deposits/investments. 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.FOR FURTHER INFORMATION PLEASE CONTACT: Amica Mature Lifestyles Inc. Mr. Art Ayres Chief Financial Officer (604) 630-3473 a.ayres@amica.ca or Amica Mature Lifestyles Inc. Ms. Alyssa Williams Manager, Investor Communications (604) 639-2171 a.williams@amica.ca www.amica.ca