Mr. Robert Courteau reports

ALTUS GROUP REPORTS SECOND QUARTER FINANCIAL RESULTS FOR 2014

Altus Group Ltd. has released its financial and operating results for the second quarter ended June 30, 2014.

The company's organic growth initiatives, acquisitions and continuing focus on strengthening operational execution continued to drive double-digit year-over-year increases in gross revenue and adjusted earnings before interest, taxes, depreciation and amortization. On a consolidated basis, gross revenue increased 15 per cent in the second quarter to $90.3-million (compared with $78.6-million for the same period in 2013) and adjusted EBITDA increased 16 per cent to $16.0-million (from $13.8-million in the same period last year), achieving an adjusted EBITDA margin of 18 per cent.

"We are pleased to report another quarter of sustained growth and sound financial performance driven by the strong execution of our strategy," said Robert Courteau, chief executive officer, Altus Group. "We continue to perform well across all of our business units, and enjoy robust demand for our advisory services, and software and data solutions. These results reflect the strategic decisions we made late last year to strengthen our operations, and demonstrate our ability to deliver strong operating results on an organic growth platform while continuing to make longer term investments."

Highlights from the quarter:

• Sustained growth from high-margin global asset and investment management (GAIM) market-focused businesses:
  • Rising licence sales at ARGUS Software continued to deliver double-digit year-over-year 23-per-cent growth in gross revenues and adjusted earnings before interest, taxes, depreciation and amortization.
  • New client wins and increased diversification of services drove 10-per-cent year-over-year gross revenue growth at North America research, valuation and advisory (RVA).
• North America property tax achieved double-digit year-over-year growth as organic initiatives and acquisitions in the United States drove a 33-per-cent increase in gross revenue and 53-per-cent increase in adjusted EBITDA.
• Strong sector performance in Western Canada drove 19-per-cent growth in gross revenues and 15 per cent growth in adjusted EBITDA at Geomatics, which benefited from expanded market share and service offerings from the acquisition of Maltais Geomatics Inc. (MGI) during the quarter.
• Adjusted basic earnings per share were 28 cents for the quarter, compared with 27 cents in the second quarter of 2013.
• The company generated $20.5-million in cash flow provided by operating activities.
• The company declared dividends of 15 cents per common share.
• Subsequent to quarter end:
  • Reduced long-term debt by $50-million and realized approximately $500,000 annual savings in net cash distributions through the early redemption of its 5.75-per-cent convertible debentures;
  • Strengthened RVA Canada's data and market research offering through acquisition of RealNet Canada Inc., a prominent Canadian real estate information services company.

Summary of operating and financial performance:

ARGUS Software sustained double-digit year-over-year growth during the second quarter, benefiting from increasing licence sales, growing maintenance fees from high retention rates and a favourable exchange rate against the Canadian dollar (which benefited gross revenues and adjusted EBITDA by approximately 6.5 per cent). AEGUS Software continues to experience strong adoption of its ARGUS Enterprise (AE) product both from converting its DCF customers and winning new clients. As a testament to the momentum, ARGUS was awarded the 2014 technology innovation Digie award at the Realcomm industry conference in June, a prominent industry gathering that brings together global executives from the commercial, corporate, institutional and government real estate industry to explore the latest technology innovations impacting the industry. In the second quarter, ARGUS Software's year-over-year gross revenue grew by 23.2 per cent, or $2.3-million, to $11.9-million (from $9.6-million), and adjusted EBITDA grew by 22.8 per cent, or $700,000, to $3.9-million (from $3.2-million), achieving an adjusted EBITDA margin of 33 per cent. During the quarter, $200,000 of costs were capitalized related to the software development of the latest release of AE, which expands functionality for the European market and delivers a world-class property budgeting solution.

The steady performance from North America RVA was strengthened by increased value-added, higher-margin engagements in Canada (such as right-of-way and economic advisory work) and increased due diligence work in the U.S. Year over year, RVA's gross revenue increased by 9.9 per cent, or $2.0-million, to $21.8-million (from $19.8-million) and adjusted EBITDA was comparable with the prior year at $5.6-million, as the company continued to make investments to support future revenue growth. RVA's adjusted EBITDA margin in the second quarter was 26 per cent.

Following a strong start to the year, the North America property tax business unit experienced another robust quarter. Performance was bolstered by organic and acquisitive growth in the U.S., as well as the favourable tax cycles in Canada. Compared with the same period in 2013, North America property tax gross revenue increased by 33.3 per cent, or $4.8-million, to $19.3-million (from $14.5-million) and adjusted EBITDA increased by 52.8 per cent, or $2.0-million, to $5.9-million (from $3.9-million), representing an adjusted EBITDA margin of 31 per cent.

The United Kingdom property tax group also had a strong quarter, benefiting from favourable exchange rates which improved gross revenues by 16.4 per cent and adjusted EBITDA by 15.2 per cent. Gross revenue grew 14.3 per cent, or $800,000, to $7.0-million (from $6.2-million) and adjusted EBITDA declined by 11.3 per cent, or $200,000, to $2.0-million (from $2.2-million), representing an adjusted EBITDA margin of 28 per cent.

The strong oil and gas and pipeline activity levels in Western Canada continued into the second quarter and supported growth at the Geomatics business unit. Gross revenue increased by 19.2 per cent, or $3.0-million, to $18.9-million (from $15.9-million) and adjusted EBITDA increased by 14.7 per cent, or $500,000, to $4.0-million (from $3.5-million) from the same period in 2013, representing an adjusted EBITDA margin of 21 per cent. MGI, which was acquired during the second quarter, accounted for 17.9 per cent of the gross revenue growth over 2013.

Altus Group continues to see a positive trend in improving earnings at its cost consulting and project management business unit, both in North America and in Asia-Pacific, largely driven by cost savings and the pursuit of higher-margin engagements. Compared with the same period in 2013, gross revenue in North America declined by 11.5 per cent, or $800,000, to $6.7-million (from $7.5-million); however, adjusted EBITDA improved by 15.3 per cent, or $200,000, to $1.7-million (from $1.5-million), representing an adjusted EBITDA margin of 25 per cent.

In Asia-Pacific, gross revenue was slightly down year over year by 5.7 per cent, or $300,000, to $4.8-million (from $5.1-million) while adjusted EBITDA grew by 97.1 per cent, or $300,000, to $500,000 (from $200,000), representing an adjusted EBITDA margin of 10 per cent.

Corporate costs were $7.4-million for the three months ended June 30, 2014, up 21.8 per cent, or $1.3-million, from $6.1-million in the same period in 2013. The increase in corporate costs was mainly due to higher accrual of variable compensation due to improved performance in the businesses, as well as additional professional fees related to various corporate initiatives.

Under international financial reporting standards accounting, loss for the quarter ended June 30, 2014, was $700,000, or two cents per share basic and diluted, compared with $3.2-million, or 14 cents per share basic and 13 cents per share diluted, in the same period in 2013. The loss for the quarter reflected the accelerated amortization of $3.9-million of deferred financing charges related to the early redemption of the debentures.

The company continues to effectively manage its debt facilities. At the end of the second quarter, the company's bank debt was $69.6-million, representing a funded-debt-to-EBITDA ratio of 1.01 times. As at June 30, 2014, the company had $13.6-million in cash and $90.1-million available borrowing room under its credit facility. At the end of the quarter, Altus Group's balance sheet remained strong, giving the company the financial flexibility to pursue its growth strategy.

Due to the strong performance of Altus Group's share price, during the quarter the company announced its plans to redeem early all of its outstanding 2010 debentures in accordance with the terms of the debenture trust indenture. On July 28, 2014, the company redeemed all outstanding 2010 debentures. Prior to redemption, a total principal amount of $48.2-million was converted into 2,589,295 common shares at the conversion price of $18.60 per common share. The remaining principal amount of $1.8-million was redeemed using available cash on hand.

Subsequent to quarter-end, the company completed the acquisition of RealNet Canada. The acquisition broadens Altus Group's Canadian full service offering, enhances its data and market research revenue stream, and furthers the company's strategy of building out its data solutions. The transaction was valued at $20-million and was financed through bank debt. Once fully integrated into Altus Group's existing product offerings, management expects that the acquisition synergies will drive improved financial performance. The acquisition is expected to be immediately accretive to adjusted basic EPS (earnings per share).

                                                                                                                              
          CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                     (In thousands, except per share)

                                          Three months           Six months
                                         ended June 30,       ended June 30,
                                       2014       2013       2014      2013
Revenues
Gross revenues                    $  90,348  $  78,572  $ 177,039 $ 154,726
Less disbursements                    6,481      6,139     14,489    13,436
Net revenue                          83,867     72,433    162,550   141,290
Expenses
Employee compensation                54,316     47,475    106,634    93,218
Occupancy                             3,559      3,448      7,133     6,988
Office and other operating           11,030      9,046     18,576    16,104
Amortization of intangibles           3,827      3,374      7,219     6,895
Depreciation of property, plant
and equipment                         1,362      1,168      2,520     2,296
Acquisition-related expenses
(income)                                 37         45        196       255
Share of (profit) loss of
associates                              410        (21)       813        57
Restructuring costs                       8         17         30     1,150
(Gain) loss on sale of certain
business assets                           -         59          -    (5,219)
Operating profit (loss)               9,318      7,822     19,429    19,546
Finance costs (income), net           8,774      3,547     12,535     7,490
Profit (loss) before income tax         544      4,275      6,894    12,056
Income tax expense (recovery)         1,217      1,068      2,684     2,006
Profit (loss) for the period
attributable to equityholders     $    (673) $   3,207  $   4,210 $  10,050
Other comprehensive income
(loss)
Items that may be reclassified to
profit or loss in subsequent
periods
Cash flow hedges                        198        531        359       582
Currency translation
differences                          (4,326)     4,643      1,217     5,942
Share of other comprehensive
income (loss) of associates             (28)         -         34         -
Other comprehensive income
(loss), net of tax                   (4,156)     5,174      1,610     6,524
Total comprehensive income (loss)
for the period, net of tax,
attributable to equityholders        (4,829)     8,381      5,820    16,574
Earnings (loss) per share
attributable to the equityholders
Basic earnings (loss) per share       (0.02)      0.14       0.15      0.44
Diluted earnings (loss) per share     (0.02)      0.13       0.14      0.39

We seek Safe Harbor.