Mr. Robert Courteau reports

ALTUS GROUP REPORTS THIRD QUARTER FINANCIAL RESULTS FOR 2014

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

Altus Group's organic growth initiatives, acquisitions and strong continuing operational execution continued to drive double-digit year-over-year increases in gross revenue and adjusted earnings before interest, taxes, depreciation and amortization in the third quarter. On a consolidated basis, gross revenue increased 15.2 per cent to $92.3-million (compared with $80.1-million for the same period in 2013), and adjusted EBITDA increased 18.8 per cent to $17.4-million (from $14.6-million in the same period last year), achieving a quarterly adjusted EBITDA margin of 18.8 per cent. Year to date for the nine-month period, the company's gross revenues stand at $269.3-million (up 14.7 per cent year over year), and adjusted EBITDA totalled $48.3-million (up 18.6 per cent year over year).

"We are very satisfied with Altus Group's third quarter financial performance, which delivered the fourth consecutive quarter of year-over-year double-digit growth in both gross revenue and adjusted EBITDA," said Robert Courteau, chief executive officer, Altus Group. "Our ability to sustain earnings growth and healthy EBITDA margins, while continuing to make investments for the future, reflects the strength of our business model. Looking ahead to 2015 and beyond, the investments we have undertaken this year established a solid foundation for long-term sustained growth."

Highlights from the quarter:

• Continued to achieve strong year-over-year growth from high-margin businesses focused on the global asset and investment management (GAIM) market:
  • Rising licence sales at Argus Software delivered a 21.6-per-cent increase in gross revenue and a 5.9-per-cent increase in adjusted EBITDA.
  • Organic growth and acquisitions in global research, valuation and advisory (RVA) drove a 24.8-per-cent increase in gross revenue and a 9.1-per-cent increase in adjusted EBITDA.
• Organic growth and acquisitions saw Geomatics deliver 23.2-per-cent gross revenue growth and 35.4-per-cent adjusted EBITDA growth;
• Adjusted basic earnings per share were 30 cents for the quarter, in line with the third quarter of 2013;
• Returned $4.8-million to shareholders in the third quarter through quarterly declared dividends of 15 cents per common share;
• Subsequent to quarter-end, Altus Group strengthened its data analytics capabilities by acquiring the remaining 70.3-per-cent interest in Voyanta Ltd. and signed a data sharing agreement with the National Council of Real Estate Investment Fiduciaries (NCREIF).

Summary of quarterly operating and financial performance

Argus Software maintained year-over-year growth while continuing to make investments during the third quarter, benefiting from strong licence sales, growing maintenance fees and favourable exchange rates against the Canadian dollar (which benefited gross revenues by 6.0 per cent and adjusted EBITDA by 5.2 per cent). The company continues to experience strong adoption of its Argus Enterprise (AE) product both from converting its legacy DCF product customer base, as well as from new client engagements. Second quarter enhancements to AE's European functionality drove strong sales out of Europe during the third quarter and contributed to AE surpassing the 400-corporate-client milestone. In the third quarter, gross revenue grew by 21.6 per cent year over year to $11.5-million (from $9.5-million), and adjusted EBITDA grew by 5.9 per cent to $3.1-million year over year (from $2.9-million), achieving a quarterly adjusted EBITDA margin of 26.9 per cent.

In the third quarter, Argus capitalized $300,000 of costs related to the software development of the latest release of AE 10.5, which now encompasses global functionality by incorporating Australian valuation standards. Continued investments in areas such as professional talent, marketing capabilities and product development will be central to the company's growth initiatives and efforts at increasing Argus's market share in existing and new markets.

During the third quarter, the steady performance from RVA was strengthened by the recent acquisition of RealNet Canada Inc., increased advisory services work in Canada and the addition of new clients in the United States. Year over year, RVA's gross revenue increased by 24.8 per cent to $22.8-million (from $18.2-million) and adjusted EBITDA grew by 9.1 per cent to $5.3-million (from $4.9-million), resulting in a quarterly adjusted EBITDA margin of 23.3 per cent. RealNet, which was acquired on July 23, 2014, contributed 8.0 per cent of the 24.8-per-cent revenue growth and was the key driver for earnings growth.

The company is making good progress executing on its strategy for growing RVA globally by enhancing its data offerings and exporting its outsourced appraisal management model into Europe. Recent achievements include: significant advancements in updating RVA's benchmarking analytics offerings; added international capabilities through Voyanta's data management platform; opened an office in Luxembourg to market the outsourced appraisal management model in Europe, a market that now, by law, requires alternative investment funds to set up an independent valuation review process; recently signed two new big European RVA clients; and initiated a strategic data sharing agreement with NCREIF in the U.S. to create a new product that will enable users to perform investment analytics. Continuing investments in 2015 will be required to allow RVA to continue to more fully implement its global strategy.

During the third quarter, gross revenue in the North America property tax benefited from organic growth in the U.S., which increased by 2.5 per cent to $16.1-million (from $15.8-million), but adjusted EBITDA, impacted by operational investments, decreased by 20.7 per cent to $3.3-million (from $4.1-million), representing a quarterly adjusted EBITDA margin of 20.2 per cent. The North American property tax business unit continues to represent a significant growth opportunity for Altus Group, particularly in the U.S. market where the company's business model is well positioned as one of the few independent companies equipped to service large multinational cross-border clients.

The U.K. property tax group had double-digit year-over-year growth, bolstered by a higher closure of cases for tax ratings and empty rates cases, as well as favourable exchange rate movements which benefited gross revenue by 12.6 per cent. Year-over-year gross revenue grew 23.3 per cent to $6.3-million (from $5.1-million) and adjusted EBITDA improved by 79.8 per cent to $1.6-million (from $900,000), representing a quarterly adjusted EBITDA margin of 24.7 per cent.

The combination of organic growth and the successful integration of Maltais Geomatics Inc. (MGI) (acquired in April, 2014), yielded positive results for the Geomatics business unit. Compared with the third quarter in 2013, gross revenue increased by 23.2 per cent to $23.7-million (from $19.2-million) and adjusted EBITDA increased by 35.4 per cent to $7.0-million (from $5.2-million), representing a quarterly adjusted EBITDA margin of 29.6 per cent. The year-over-year growth reflects the strong performance from MGI, which better positioned the business to optimize crew utilization and broaden its service offering into the electric power and industrial segments.

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 increased operational efficiencies, cost savings and the focus on higher-margin engagements. While gross revenue in North America was slightly down by 2.4 per cent to $7.1-million (from $7.3-million) compared with the same period in 2013, adjusted EBITDA improved by 4.8 per cent to $1.7-million (from $1.6-million), representing a quarterly adjusted EBITDA margin of 23.4 per cent. In Asia-Pacific, gross revenue was slightly down year over year by 4.3 per cent to $4.8-million (from $5.0-million); however, adjusted EBITDA improved by 452.1 per cent to $900,000 (from $200,000), representing an improved quarterly adjusted EBITDA margin of 18.6 per cent.

Corporate costs were $5.5-million for the three months ended Sept. 30, 2014, up 7.2 per cent, or $400,000, from $5.1-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 business as well as additional professional fees related to various corporate initiatives.

As previously disclosed, due to the strong performance of Altus Group's share price, during the third quarter the company redeemed all outstanding 5.75-per-cent convertible debentures issued in 2010. 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. This represented a substantial economic benefit to Altus Group, resulting in cash savings of approximately $500,000 per year, or approximately $1.8-million over the life of the debentures that would have otherwise been incurred in interest payments.

Under international financial reporting standards accounting, profit for the quarter ended Sept. 30, 2014, was $3.9-million, or 13 cents per share basic and 12 cents diluted, compared with $1.6-million, or seven cents per share basic and six cents per share diluted, in the same period in 2013. Profit for the quarter reflected a $2.6-million charge for an increase in the contingent consideration payable to the vendor of the assets of MGI.

At the end of the third quarter, the company's bank debt was $87.0-million, representing a funded-debt-to-EBITDA ratio of 1.24 times. As at Sept. 30, 2014, the company had $17.2-million in cash and $72.7-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.

Subsequent to quarter-end, Altus Group strengthened its data analytics capabilities through the acquisition of the 70.3-per-cent interest in Voyanta it did not previously own for approximately $7.3-million, financed through a combination of cash and equity. Founded in 2012, Voyanta is a global provider of real estate data management and analytics software, which cloud-based data management platform enables its users to aggregate, validate and analyze commercial real estate information in a streamlined and standardized way. Voyanta's team of 25 professionals will join the company's RVA business unit and its platform will provide a foundational structure for RVA's new analytics offering in support of its European expansion initiatives. This acquisition also enhances Altus Group's future product road map with Argus Enterprise, as well as the development of new products tailored to the global asset and investment management market.

Although this transaction is not expected to be immediately accretive to Altus Group's adjusted basic earnings per share, it represents substantial time and cost savings to Altus Group that would have been incurred to build out its own data collection tool in support of RVA's product road map and longer-term strategy of enhancing its data offerings. Management estimates that continued investments will be required into 2015 before Voyanta will be cash flow positive on a stand-alone basis.

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

                                     Three months ended     Nine months ended
                                               Sept. 30,             Sept. 30,
                                        2014       2013       2014       2013
Revenues
Gross revenues                    $   92,310 $   80,139 $  269,349 $  234,865
Less disbursements                     7,494      6,694     21,983     20,130
Net revenue                           84,816     73,445    247,366    214,735
Expenses
Employee compensation                 54,639     46,676    161,273    139,894
Occupancy                              3,664      3,338     10,797     10,326
Office and other operating             9,850      9,094     28,426     25,198
Amortization of intangibles            4,577      3,306     11,796     10,201
Depreciation of property,
plant and equipment                    1,568      1,258      4,088      3,554
Acquisition-related expenses
(income)                               2,772        444      2,968        699
Share of (profit) loss of
associates                               548        836      1,361        893
Restructuring costs                       34        804         64      1,954
(Gain) loss on sale of certain
business assets                            -          -          -     (5,219)
Operating profit (loss)                7,164      7,689     26,593     27,235
Finance costs (income), net            1,912      5,600     14,447     13,090
Profit (loss) before income
taxes                                  5,252      2,089     12,146     14,145
Income tax expense (recovery)          1,367        489      4,051      2,495
Profit (loss) for the period
attributable to equityholders     $    3,885 $    1,600 $    8,095 $   11,650
Other comprehensive income
(loss)
Items that may be reclassified
to profit or (loss) in
subsequent periods
Cash flow hedges                         180         22        539        604
Currency translation
differences                            5,366     (1,146)     6,583      4,796
Share of other comprehensive
income (loss) of associates               78          -        112          -
Other comprehensive income
(loss), net of tax                     5,624     (1,124)     7,234      5,400
Total comprehensive income
(loss) for the period, net of
tax, attributable to equity
holders                           $    9,509 $      476 $   15,329 $   17,050
Earnings (loss) per share
attributable to the
equityholders of the company
duringthe period
Basic earnings (loss) per share   $     0.13 $     0.07 $     0.28 $     0.51
Diluted earnings (loss) per
share                             $     0.12 $     0.06 $     0.27 $     0.47

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