Altus Group Income Fund
TSX : AIF.UN

Altus Group Income Fund

November 10, 2005 17:12 ET

Altus Group Income Fund Announces Third Quarter Results

TORONTO, ONTARIO--(CCNMatthews - Nov. 10, 2005) - Altus Group Income Fund ("the Fund")(TSX:AIF.UN) today announced financial and operating results (unaudited) for the third quarter ended September 30, 2005.

Performance Highlights:

- Made significant progress in integrating the three practice areas in terms of geographic expansion and consolidation

- Began merging databases and technology to strengthen research capabilities

- Generated distributable cash of 47 cents per Unit since IPO, higher than anticipated in the Fund's prospectus, on a pro-rata basis

This is the second reporting period of the Fund since it commenced business operations on May 19th, and consequently, no comparative information is provided in the Fund's interim consolidated financial statements. However, certain financial and operating results of the Fund and the Fund's predecessor entities for the three months and nine months ended September 30, 2005, are compared to the unaudited results of Altus Group, Helyar Group and Derbyshire Viceroy Consultants Limited (the Fund's predecessor entities).

Revenue for the three months ended September 30, 2005 was $15.5 million, compared to $16.1 million for the three months ended September 30, 2004. Revenue was down 4% in 2005 over the same period in 2004, but 3% ahead of budget expectations.

EBITDA for the quarter was $3.6 million, compared with $(2.4) million in 2004. The increase in earnings in 2005 over 2004 is attributable to non-recurring employee and shareholder bonuses in 2004 related to fiscal year-end planning for the predecessor entities when they were privately held. Net earnings for the quarter were $1.0 million or 13 cents per Unit, after accounting for the non-controlling interest of the LP Class B exchangeable Partnership Units.

The Fund generated $3.4 million of distributable cash, or 29 cents per Unit, available to both the Fund's Units and the LP Class B exchangeable Partnership Units during the third quarter. Distributable cash from May 19 to September 30, 2005 was $5.4 million, or 47 cents per Unit compared to $5.1 million, or 44 cents per Unit anticipated in the Fund's prospectus, pro-rated for the same period.

"We're pleased with our progress to integrate the Fund's three practices into one firm with a shared vision," said Gary Yeoman, President and CEO of Altus Group. "Proprietary databases are being consolidated which, in conjunction with the expansion and merging of the technology infrastructure, will facilitate research nationally across all practice areas."

"The Tax Practice and Cost Consulting Practice have started to expand their services to offices in geographic areas where these practices lack a significant presence," added Yeoman. "Also, operations are being reviewed in four cities where we have more than one office for consolidation opportunities to reduce overhead - and, more importantly, facilitate cross-selling of business services."

During the quarter, a distribution of 9.58 cents per Unit was declared each month, for a total of 28.7 cents per Unit. Total cash requirement for the distributions was $2.3 million. The first distribution of 42.2 cents per Unit was declared for the LP Class B exchangeable Partnership Units for the period from May 19 to September 30, 2005, payable October 15, 2005. Total cash requirement for these distributions are $1.46 million.

During the three months, the Fund had cash flow from operating activities of $1.9 million. During the period, the Fund made payments of $5.5 million in partial settlement of the funds held in escrow on account of working capital. Capital expenditures for the period were $0.7 million. Cash distributions to Unitholders were $2.3 million during the same period.

"Demand for our services is stable and growing," said Yeoman. "As we integrate our distinct practice areas and grow, both organically and through strategic acquisitions, the Altus Group will continue to distance itself as the dominant provider of research, real estate knowledge, and independent advice to Canada's business owners and property developers."

Altus Group Income Fund will hold an analyst conference call at 11:00 AM EST on November 14, 2005, to discuss these financial results and current industry conditions. Please dial 1-877-888-4605 or 416-695-5261 to access the call. You will be required to identify yourself and your organization. A recording of this call will be made available beginning at 1:00 PM EST. To access the recording, please call 1-888-509-0081 or 416-695-5275. The recording will also be available at www.altusgroupincomefund.com

Altus Group Income Fund is the leading independent multidisciplinary provider of real estate consulting and advisory services in Canada, with a staff of over 300 professionals. The Fund has a national network of offices in 13 cities and operates as Altus Helyar Research, Valuation and Advisory, Altus Helyar Cost Consulting and Altus Derbyshire Realty Tax. Altus' clients include banks, financial institutions, governments, pension funds, asset and fund managers, developers and landlords. The Fund's Units trade on the Toronto Stock Exchange under the symbol AIF.un.

Forward-Looking Statements

Certain statements in this MD&A may constitute "forward-looking" statements, which involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Fund and its subsidiary entities, including LP, or the industry, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this MD&A, such statements use words such as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance, and speak only as of the date of this MD&A. These forward-looking statements involve a number of risks and uncertainties, including those set out under the heading "Risk Factors" in the Fund's prospectus, dated May 11, 2005. New risk factors may arise from time to time, and it is not possible for management of the Fund to predict all of those risk factors, or the extent to which any factor or combination of factors may cause actual results, performance or achievements of the Fund to be materially different from those contained in forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Although the forward-looking statements contained in this MD&A are based upon what management believes to be reasonable assumptions, the Fund cannot assure prospective investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this MD&A, and the Fund assumes no obligations to update or revise them to reflect new events or circumstances.

Non-GAAP Measures - Definition of EBITDA and Distributable Cash

Distributable Cash does not have a standardized meaning prescribed by GAAP, but is a measure generally used by Canadian open-ended income funds as an indicator of financial performance. The Fund defines distributable cash as net earnings before interest, depreciation, amortization, income taxes ("EBITDA"), and after interest paid, debt repayment, capital expenditures, income taxes paid and contributions to any reserves that the Trustees of the Fund deem to be reasonable and necessary for the operation of the Fund.

The Fund's method of calculating distributable cash may differ from similar computations as reported by other similar entities and, accordingly, may not be comparable to distributable cash as reported by such entities. The Fund believes that its distributable cash is a useful supplemental measure that may assist investors in assessing the return on their investment in Units. Distributable cash is not intended to be representative of cash flow, or results of operations determined in accordance with GAAP.



Selected Consolidated Financial Information

---------------------------------------------------------------------
2005 2004 2005 2005 2004
For Combined For Combined Combined
the For the the nine For the
in thousands three three period months nine
of months months May 19 ended months
dollars except ended ended to September ended
for per unit September September September 30 September
amounts 30 30 30 30
---------------------------------------------------------------------
(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
---------------------------------------------------------------------
Revenues $15,477 $16,160 $23,023 $47,051 $45,451
---------------------------------------------------------------------

Expenses
---------------------------------------------------------------------
Salaries,
general and
administrative 11,844 18,558 17,174 40,274 40,841
---------------------------------------------------------------------
Earnings before
income taxes,
interest and
amortization 3,633 (2,398) 5,849 6,777 4,610
---------------------------------------------------------------------

Amortization 2,668 311 3,915 4,390 581
---------------------------------------------------------------------

Interest 189 58 270 345 172
---------------------------------------------------------------------
Net earnings
before income
taxes
and non-
controlling
interest 776 (2,767) 1,664 2,042 3,857
---------------------------------------------------------------------

Income taxes(1) (705) - (1,045) - -
---------------------------------------------------------------------
Net earnings
before non-
controlling
interest(1) 1,481 - 2,709 - -
---------------------------------------------------------------------

Net earnings(1) 1,037 - 1,897 - -
---------------------------------------------------------------------
Earnings per
Fund Unit
(weighted
average # units) $0.13 - $0.24 - -
---------------------------------------------------------------------


(1) Income taxes and net earnings have not been presented on a
comparative basis due to the changes in the capital structure
of the sellers and the Fund in connection with the IPO on May 19,
2005.


Distributable Cash

---------------------------------------------------------------------
2005 2005
For the For the
in thousands three period
of dollars months Per Unit May Per Unit
except for ended 19 to
per unit September September
amounts 30 30
---------------------------------------------------------------------
(unaudited) (unaudited)
---------------------------------------------------------------------
Earnings before
income taxes,
interest and
amortization $3,633 $5,849
---------------------------------------------------------------------

Capital
expenditures(2) (295) (395)
---------------------------------------------------------------------

Interest (189) (270)
---------------------------------------------------------------------

Taxes paid(2) - -
---------------------------------------------------------------------

Benefit of
capital tax
reserve(3) 199 199
---------------------------------------------------------------------

Distributable
cash(4) 3,348 0.2915 5,383 0.4688
---------------------------------------------------------------------

Payout ratio 98% 90%
---------------------------------------------------------------------
Aggregate
distributions
declared(5), 4,871 0.4242

Fund units only 2,310 0.2874

Class B
subordinated,
exchangeable
partnership
units of LP 1,461 0.4242
---------------------------------------------------------------------

(2) Certain capital expenditures and taxes paid are excluded from
distributable cash as amounts were reserved from proceeds on
closing and were not paid out of the Fund's operating cash flow.

(3) An amount was reserved from proceeds on closing equivalent to the
net present value of capital taxes through fiscal 2011. The
benefit of the reserve is being recognized as taxes are expensed.

(4) Distributable cash and distributable cash per Unit amounts are
calculated for the combined interest of the Fund's Units and the
Class B subordinated, exchangeable Partnership Units of LP, which
total 11,482,195.
(5) Distributions on the Class B subordinated, exchangeable
Partnership Units of LP are declared quarterly, commencing
September 30, 2005, payable quarterly until the first conversion
date at which specific defined criteria are met.


Contact Information

  • Altus Group Income Fund
    Gary Yeoman
    President and CEO
    (905) 953-9948
    or
    Altus Group Income Fund
    Dale Lawr
    CFO
    (905) 953-9948
    www.altusgroupincomefund.com