Altus Group Income Fund
TSX : AIF.UN

Altus Group Income Fund

March 07, 2007 14:10 ET

Altus Group Income Fund Announces Year-End Results

Management to Hold Conference Call On Thursday, March 8, 2007 at 11:00 a.m. EST

TORONTO, ONTARIO--(CCNMatthews - March 7, 2007) - Altus Group Income Fund ("Fund") (TSX:AIF.UN) today announced financial and operating results for the year ended December 31, 2006.

2006 Performance Highlights:

- Successfully completed $56 million in accretive acquisitions

- Achieved strong organic growth and effective integration of acquired businesses

- Year-over-year revenue growth of 52%

- Generated distributable cash of $1.25 per unit and distributed $1.18 per unit to unitholders

"Aggressive but strategic growth characterized 2006 for Altus as we generated superior results, expanded our geographic reach and enhanced our service offering," said Gary Yeoman, CEO of Altus Group Income Fund. "Through the synergy of coordinated marketing initiatives and the integration of key acquisitions, including the addition of a fourth practice area, the Fund's reputation as Canada's leading multidisciplinary provider of independent real estate consulting and professional advisory services was solidified by year's end."

Altus' 2006 acquisitions comprised the following:

- InSite Real Estate Information Systems Inc., considered the commercial real estate industry's primary provider of national office market data and perspective, was acquired for approximately $3 million in April

- All West Surveys Ltd., one of Western Canada's leading providers of land surveying solutions, specializing in oil and gas sector projects, was acquired for approximately $49.5 million in May

- The Property Tax Practice of KPMG LP, a group of 15 realty tax professionals with a portfolio of 500 clients, was acquired for approximately $0.5 million in June

- Roy Sanche Gold & Associates, one of Quebec's most prominent real estate consulting firms, was acquired for approximately $2.5 million in June

Internally at Altus, significant strides were made in 2006 with respect to infrastructure initiatives. The Research, Valuation and Advisory group introduced a new sales database and capitalized on investments in its automated valuation model. In addition, the Cost Consulting business unit completed enhancements to its proprietary Capital Expense Control System. Nationally, Altus consolidated offices in both Calgary and Ottawa and added new offices in southwestern Ontario and Winnipeg.

This is the first full-year reporting period of the Fund since its IPO on May 19, 2005. For reference purposes only, certain financial and operating results of the Fund are compared with the unaudited financial results of the Fund combined with those of Altus Group, Helyar Group and Derbyshire Viceroy Consultants Limited (the Fund's predecessor entities) for the period January 1 to December 31, 2005.

Revenue for the fourth quarter was $29.7 million, compared to $16.3 million for the comparable period in 2005, an 82% increase, due in large part to the Fund's acquisitions during the year. Revenue for the year ended December 31, 2006 was $96.1 million, compared to $63.4 million on a combined basis for the 12 months ended December 31, 2005. On a year-over-year basis, revenue increased 52%, of which 39% is attributable to revenue from acquired entities and 13% from organic growth.

Revenue per person, a key productivity measure in the consulting industry, averaged $0.157 million for the 12 months ended December 31, 2006, compared with $0.155 million for the same period in 2005.

Salaries and benefits were $16.1 million for the fourth quarter, compared to $8.7 million in the same period last year. Salaries and benefits for the year were $53.1 million, 60% higher than 2005, reflecting the growth in staff which numbered 741 at year end. Salaries have remained relatively constant as a percentage of revenue: 54% of revenue for the fourth quarter of 2006 compared to 53% for the same period last year, and 55% for the year ended December 31, 2006.

Other operating expenses were up 45% versus the 12-month period in 2005, from $15.4 million to $22.4 million, as a result of the larger size of the Fund's operations. Other operating expenses increased slightly as a percentage of revenue from 22% for the year ended December 31, 2005 compared to 23% for the year ended December 31, 2006 primarily due to increased billable disbursements in 2006.

Net earnings for the fourth quarter 2006 were $2.1 million or 20 cents per unit compared to $1.3 million or 16 cents per unit for the fourth quarter 2005; net earnings for the full year were $6.4 million or 66 cents per unit. Comparisons between net earnings for 2005 and 2006 are not meaningful. Net earnings per unit are basic and diluted.

In the fourth quarter 2006, the Fund generated $4.8 million of distributable cash, or 32 cents per unit, available to both the Fund's units and the Class B limited partnership units of Altus Group Limited Partnership, outstanding at year end. Distributable cash generated for the year ended December 31, 2006 was $17.4 million, or $1.25 per unit.

During the fourth quarter, distributions declared to the Fund unitholders and the unitholders of the Class B limited partnership units of Altus Group Limited Partnership were 30 cents per unit for a total of $3.1 million for the Fund Units and $1.4 million for the Class B limited partnership units of Altus Group Limited Partnership. For the full year, distributions declared to the Fund unitholders and the unitholders of the Class B limited partnership units of Altus Group Limited Partnership were $1.18 per unit for a total of $11.4 million for the Fund Units and $5.0 million for the Class B limited partnership units of Altus Group Limited Partnership.

The December 31, 2006 distribution in the amount of $1.0 million was declared to Fund unitholders in December 2006 and paid to unitholders on January 15, 2007. The distribution on the Altus LP Class B limited partnership units in the amount of $1.4 million was declared to unitholders for the three months ended December 31, 2006 and paid to unitholders on January 15, 2007.

Subsequent to year end, Altus announced two acquisitions: Ezra Consulting Ltd, and Clayton Research Associates Limited, for a combined value of approximately $9.2 million. Alberta-based Ezra Consulting is a leading provider of land-use management, mapping and field services to the forestry and energy sectors. Clayton Research comprises urban and real estate economists and market analysts who specialize in land-use planning, consumer spending and borrowing research and building products demand. Altus Group financed these acquisitions with cash and bank financing, and by issuing units of Altus Group Limited Partnership.

"The ongoing shift to larger and more regulated property owners, with the corresponding increased demand for professional consulting and advisory services, has been one of the key drivers of our success," said Yeoman. "External growth opportunities that place us at the leading edge of this changing landscape have already been realized this year and solid industry fundamentals are spurring demand in every practice group, creating opportunities for cross-selling and the provision of bundled consulting services."

"So much was accomplished in 2006 and we believe there is more to come," added Yeoman. "The firm's revenues are strong and growing and our balance sheet is healthy. Altus' strong financial and operational results in 2006 have benefited our clients, our employees and our unitholders. Given the business platform we have developed and the opportunities we see, we are very excited about our prospects for 2007."

Analyst Call Details

Altus Group Income Fund will hold an analyst conference call at 11:00 Eastern Standard Time on Thursday, March 8, 2007, to discuss these financial results and current industry conditions. Please dial 1-800-766-6630 or 416-695-9745 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 1:30 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.

About Altus Group Income Fund

Altus Group Income Fund is the leading independent multidisciplinary provider of real estate consulting and advisory services in Canada, with a staff of over 770 professionals. Altus has a national network of offices in 18 cities and operates as: Altus Helyar Research, Valuation and Advisory, Altus Helyar Cost Consulting, Altus InSite, Altus Derbyshire Realty Tax Consulting and Altus All West Surveys. Altus Group's clients include banks, financial institutions, governments, pension funds, asset and fund managers, developers and landlords, and participants in the oil and gas industry.

Forward-Looking Statements

Certain statements in this press release 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 Altus Group Limited Partnership, Altus Group Limited and All West Surveys Limited Partnership, 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 press release, such statements use words such as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in the Fund's publicly filed documents, including the Annual Information Form, Form 51-102F2, dated March 31, 2007 (which are available on SEDAR at www.sedar.com) and in this document under "Key Factors Affecting the Business". Those risks and uncertainties include: general state of the economy; dependence on residential market; dependence on oil & gas sector; risk of economic dependence; ability to maintain profitability and manage growth; possible acquisitions; reliance on and retention of professionals; competition; performance obligations and client satisfaction; fixed price and contingency engagements; revenue and cash flow volatility; seasonality and weather; collectibility of accounts receivable; possible future litigation; interest rate fluctuations; insurance limits; legislative and regulatory changes; operating risks; protection of intellectual property; appraisal mandates; restrictions on growth. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this press release. Although the forward-looking statements contained in this press release are based upon what management believes to be reasonable assumptions, the Fund cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this press release, and, except in accordance with applicable law, the Fund assumes no obligations to update or revise them to reflect new events or circumstances. Additionally, the Fund undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Fund, its financial or operating results, or its securities.

Non-GAAP Measures

Distributable Cash from Operations 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 from Operations as the periodic cash flows from operating activities as reported in the GAAP financial statements, including the change in non-cash working capital and excluding any cash flows from discontinued operations, less provisions for: capital expenditures; income taxes; debt obligations; funding of long-term unfunded contractual obligations arising from operations, such as unfunded pension obligations and asset retirement obligations; and restrictions on distributions arising from compliance with financial covenants.

Earnings before Interest, Taxes, Depreciation and Amortization, ("EBITDA"), represents revenue less salaries, general and administrative expenses but before interest, taxes, depreciation, amortization and non-controlling interest.

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
    Website: www.altusgroupincomefund.com