Annual Report
2022
Table of Contents
Management’s Discussion & Analysis
1. Forward-looking Information
1
2. Non-GAAP and Other Measures
3
2.1. Non-GAAP Financial Measures
3
2.2. Non-GAAP Ratios
4
2.3. Total of Segments Measures
5
2.4. Capital Management Measures
5
2.5. Supplementary Financial and Other Measures
6
3. Business Overview
8
3.1. About Altus Group
8
3.2. Understanding our Business
8
4. Business Strategy
13
5. Financial and Operating Highlights
15
5.1. Annual Financial Highlights
15
5.2. Annual Operating Highlights
15
5.3. Annual Operating Highlights – Events After the Reporting Period
17
6. Discussion of Operations
18
6.1. Revenues and Adjusted EBITDA by Reportable Segment
22
6.2. Operations by Reportable Segment
23
6.3. Corporate Costs
26
7. Business Outlook
27
8. Liquidity and Capital Resources
29
8.1. Cash from Operating Activities
29
8.2. Cash from Financing Activities
31
8.3. Cash from Investing Activities
32
8.4. Free Cash Flow
33
9. Reconciliation of Non-GAAP Measures
34
9.1. Reconciliation of Profit (Loss) to Adjusted EBITDA and Adjusted Earnings (Loss)
34
9.2. Constant Currency
36
10. Summary of Quarterly Results
36
11. Selected Annual Information
37
12. Share Data
38
13. Financial Instruments and Other Instruments
38
14. Contingencies
39
15. Accounting Policies, Estimates, and Judgments
40
15.1. Critical Accounting Estimates and Judgments
40
15.2. Changes in Significant Accounting Policies and Pronouncements
41
15.2.1. Adoption of Recent Accounting Pronouncements
41
15.2.2. Future Accounting Pronouncements
41
16. Disclosure Controls and Procedures and Internal Controls over Financial Reporting
43
17. Additional Information
43
Consolidated Financial Statements
Management’s Responsibility for Financial Reporting
45
Independent Auditor’s Report
46
Consolidated Statements of Comprehensive Income (Loss)
50
Consolidated Balance Sheets
51
Consolidated Statements of Changes in Equity
52
Consolidated Statements of Cash Flows
53
Notes to Consolidated Financial Statements
54
Altus Group | Management’s Discussion & Analysis December 31, 2022
1. Forward‐looking Information
Certain information in this MD&A may constitute “forward-looking information” within the meaning of applicable
securities legislation. All information contained in this MD&A, other than statements of current and historical fact, is
forward-looking information. Forward-looking information includes, but is not limited to, the discussion of our
business, strategies and expectations of future performance, including any guidance on financial expectations, and
our expectations with respect to cash flows and liquidity. Generally, forward-looking information can be identified
by use of words such as “may”, “will”, “expect”, “believe”, “plan”, “would”, “could”, “remain” and other similar
terminology.
Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking
information is based on, among other things, opinions, assumptions, estimates and analyses that inherently are
subject to significant risks, uncertainties, contingencies and other factors that may not be known and may cause
actual results, performance or achievements, industry results or events to be materially different from those
expressed or implied by the forward-looking information. The material factors or assumptions that we identified and
applied in drawing conclusions or making forecasts or projections set out in the forward-looking information include,
but are not limited to: engagement and product pipeline opportunities in Analytics will result in associated definitive
agreements; continued adoption of cloud subscriptions by our customers; retention of material clients and bookings;
sustaining our software and subscription renewals; settlement volumes in the Property Tax reportable segment
occurring on a timely basis and assessment authorities processing appeals in a manner consistent with
expectations; successful execution of our business strategies; consistent and stable economic conditions or
conditions in the financial markets; consistent and stable legislation in the various countries in which we operate;
consistent and stable foreign exchange conditions; no disruptive changes in the technology environment;
opportunity to acquire accretive businesses and the absence of negative financial and other impacts resulting from
The following Management’s Discussion and Analysis (the “MD&A”) is intended to assist readers in understanding Altus
Group Limited’s consolidated business, its business environment, strategies, performance, outlook and applicable risks.
References to the “Company” or “Altus Group” are to the consolidated group of entities, and this should be read in
conjunction with our consolidated financial statements and accompanying notes (the “financial statements”) as at and for
the year ended December 31, 2022, which have been prepared on the basis of International Financial Reporting Standards
(“IFRS”) and reported in Canadian dollars. Unless otherwise indicated herein, references to “$” are to Canadian dollars and
percentages are in comparison to the same period in 2021.
Unless the context indicates otherwise, all references to “we”, “us”, “our” or similar terms refer to Altus Group, and, as
appropriate, our consolidated operations.
Within this document are certain non-GAAP and other measures denoted by a “*”. This includes non-GAAP financial
measures such as Adjusted Earnings (Loss), and Constant Currency; non-GAAP ratios such as Adjusted EPS; total of
segments measures such as Adjusted EBITDA; capital management measures such as Free Cash Flow; and supplementary
financial and other measures such as Adjusted EBITDA margin, Net debt to Adjusted EBITDA leverage ratio, New Bookings,
Organic New Bookings, Recurring New Bookings, Non-Recurring New Bookings, Organic Revenue, Recurring Revenue,
Non-Recurring Revenue, Organic Recurring Revenue, DSO, AE Software Maintenance Retention Rate, and Cloud Adoption
Rate. Since the measures, used herein, are not standard measures under IFRS, they may not be comparable to similar
measures reported by other entities. Refer to the “Non-GAAP and Other Measures” section for definitions of, and more
information on, each measure. For non-GAAP financial measures and total of segments measures, refer to the
“Reconciliation of Non-GAAP Measures” section for reconciliations to the most directly comparable IFRS measure. For
capital management measures, refer to the “Free Cash Flow” section for a reconciliation to the most directly comparable
IFRS measure.
This MD&A is dated as of February 23, 2023.
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Altus Group | Management’s Discussion & Analysis December 31, 2022
strategic investments or acquisitions on short term results; successful integration of acquired businesses; and
continued availability of qualified professionals.
Inherent in the forward-looking information are known and unknown risks, uncertainties and other factors that could
cause our actual results, performance or achievements, or industry results, to differ materially from any results,
performance or achievements expressed or implied by such forward-looking information. Those risks include, but
are not limited to: the general state of the economy; the COVID-19 pandemic; our financial performance; our
financial targets; the commercial real estate market; acquisitions; industry competition; business interruption events;
third party information; cybersecurity; professional talent; our cloud subscriptions transition; software renewals; our
sales pipeline; enterprise transactions; customer concentration and loss of material clients; product enhancements
and new product introductions; technological strategy; intellectual property; property tax appeals and seasonality;
legislative and regulatory changes; privacy and data protection; our brand and reputation; fixed-price and
contingency engagements; the Canadian multi-residential market; currency fluctuations; interest rates; credit;
income tax matters; health and safety hazards; our contractual obligations; legal proceedings; our insurance limits;
our ability to meet the solvency requirements necessary to make dividend payments; our leverage and financial
covenants; our share price; our capital investments; and the issuance of additional common shares and debt, as
described in this document under “Key Factors Affecting the Business” as well as those described in our annual
publicly filed documents, including the Annual Information Form for the year ended December 31, 2021 (which are
available on SEDAR at www.sedar.com).
The COVID-19 pandemic has cast additional uncertainty on each of these factors and assumptions. The duration,
extent and the resulting economic impact the COVID-19 pandemic will have on our business remains uncertain and
difficult to predict at this time.
Investors should not place undue reliance on forward-looking information as a prediction of actual results. The
forward-looking information reflects management’s current expectations regarding future events and operating
performance and is based on reasonable assumptions and information currently available to management. The
forward-looking information contained herein is current as of the date of this MD&A and, except as required under
applicable law, we do not undertake to update or revise it to reflect new events or circumstances. Additionally, we
undertake no obligation to comment on analyses, expectations or statements made by third parties in respect of
Altus Group, our financial or operating results, or our securities.
Certain information in this MD&A, including sections entitled “Business Outlook”, may be considered as “financial
outlook” within the meaning of applicable securities legislation. The purpose of this financial outlook is to provide
readers with disclosure regarding Altus Group’s reasonable expectations as to the anticipated results of its proposed
business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate
for other purposes.
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Altus Group | Management’s Discussion & Analysis December 31, 2022
2. Non‐GAAP and Other Measures
We use certain non-GAAP financial measures, non-GAAP ratios, total of segments measures, capital management
measures, and supplementary and other financial measures as defined in National Instrument 52-112 - Non-GAAP
and Other Financial Measures Disclosure (“NI 52-112”). We believe that these measures may assist investors in
assessing an investment in our shares as they provide additional insight into our performance. Readers are
cautioned that they are not defined performance measures, and do not have any standardized meaning under IFRS
and may differ from similar computations as reported by other similar entities and, accordingly, may not be
comparable to financial measures as reported by those entities. These measures should not be considered in
isolation or as a substitute for financial measures prepared in accordance with IFRS.
2.1. Non‐GAAP Financial Measures
Adjusted Earnings (Loss)
How is it useful:
We use Adjusted Earnings (Loss) to facilitate the calculation of Adjusted Earnings (Loss)
per Share (“Adjusted EPS”).
How we calculate it
Profit (loss) added or (deducted) by: profit (loss) from discontinued operations;
occupancy costs calculated on a similar basis prior to the adoption of IFRS 16;
depreciation of right-of-use assets; amortization of intangibles of acquired businesses;
acquisition and related transition costs (income); unrealized foreign exchange losses
(gains); (gains) losses on disposal of right-of-use assets, property, plant and equipment
and intangibles; share of (profit) loss of joint venture; non-cash share-based
compensation costs; (gains) losses on equity derivatives net of mark-to-market
adjustments on related RSUs and DSUs; (gains) losses on derivatives; interest accretion
on contingent consideration payables; restructuring costs (recovery); impairment
charges; (gains) losses on investments; (gains) losses on hedging transactions and
interest expense (income) on swaps; other costs or income of a non-operating and/or
non-recurring nature; finance costs (income), net - leases; and the tax impact of these
items.
Refer to page 34 for a reconciliation of Adjusted Earnings (Loss) to our financial
statements.
Most directly comparable IFRS
financial measure:
Profit (loss)
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Altus Group | Management’s Discussion & Analysis December 31, 2022
Constant Currency
How is it useful:
We use Constant Currency to allow current financial and operational performance to be
understood against comparative periods without the impact of fluctuations in foreign
currency exchange rates against the Canadian dollar.
How we calculate it
The financial results and non-GAAP measures presented at Constant Currency within
this document are obtained by translating monthly results denominated in local currency
(U.S. dollars, British pound, Euro, Australian dollars, and other foreign currencies) to
Canadian dollars at the foreign exchange rates of the comparable month in the previous
year.
Refer to page 36 for a reconciliation of Constant Currency between foreign exchange
rates used.
Most directly comparable IFRS
financial measure:
Corresponding IFRS amount, as presented
2.2. Non‐GAAP Ratios
Adjusted EPS
How is it useful:
We use Adjusted EPS to assess the performance of our business, on a per share basis,
before the effects of the noted items because they affect the comparability of our financial
results and could potentially distort the analysis of trends in business performance.
How we calculate it
Adjusted Earnings (Loss) divided by basic weighted average number of shares, adjusted
for the effects of the weighted average number of restricted shares.
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Altus Group | Management’s Discussion & Analysis December 31, 2022
2.3. Total of Segments Measures
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)
How is it useful:
We use Adjusted EBITDA to evaluate the performance of our business, as well as when
making decisions about the ongoing operations of the business and our ability to
generate cash flows.
How we calculate it
Profit (loss) added or (deducted) by: profit (loss) from discontinued operations;
occupancy costs calculated on a similar basis prior to the adoption of IFRS 16;
depreciation of right-of-use assets; depreciation of property, plant and equipment and
amortization of intangibles; acquisition and related transition costs (income); unrealized
foreign exchange (gains) losses; (gains) losses on disposal of right-of-use assets,
property, plant and equipment and intangibles; share of (profit) loss of joint venture; non-
cash share-based compensation costs; (gains) losses on equity derivatives net of mark-
to market adjustments on related restricted share units (“RSUs”) and deferred share units
(“DSUs”); (gains) losses on derivatives, restructuring costs (recovery); impairment
charges; (gains) losses on investments; other costs or income of a non-operating and/or
non-recurring nature; finance costs (income), net - leases; finance costs (income), net -
other; and income tax expense (recovery).
Refer to page 34 for a reconciliation of Adjusted EBITDA to our financial statements. This
measure represents Adjusted EBITDA determined on a consolidated basis as a total of
our reportable segments. All other Adjusted EBITDA references are disclosed in our
financial statements and are not considered to be non-GAAP financial measures
pursuant to NI 52-112.
Most directly comparable IFRS
financial measure:
Profit (loss)
2.4. Capital Management Measures
Free Cash Flow
How is it useful:
We use Free Cash Flow to understand how much of the cash generated from operating
activities is available to repay borrowings and to reinvest in the Company.
How we calculate it
Net cash provided by (used in) operating activities deducted by capital expenditures.
Refer to page 33 for a reconciliation of Free Cash Flow to our financial statements.
Most directly comparable IFRS
financial measure:
Net cash provided by (used in) operating activities
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Altus Group | Management’s Discussion & Analysis December 31, 2022
2.5. Supplementary Financial and Other Measures
Adjusted EBITDA Margin
How is it useful:
We use Adjusted EBITDA margin to evaluate the performance of our business, as well
as when making decisions about the ongoing operations of the business and our ability
to generate cash flows.
How we calculate it
Adjusted EBITDA divided by revenue.
Net debt to Adjusted EBITDA leverage ratio
How is it useful:
We use Net debt to Adjusted EBITDA leverage ratio as a measure of our ability to service
our debt and other long-term obligations.
How we calculate it
Net debt (total borrowings less cash and cash equivalents, net of short-term deposits)
divided by Adjusted EBITDA.
New Bookings, Organic New Bookings, Recurring New Bookings and Non-Recurring New Bookings
How is it useful:
For our Analytics reportable segment, we use New Bookings, Organic New Bookings,
Recurring New Bookings and Non-Recurring New Bookings as measures to track the
performance and success of our sales initiatives, and as an indicator of future revenue
growth.
New Bookings is inclusive of any new signed contracts as well as any additional solutions
and services added by existing customers within our Analytics reportable segment. The
contract value of renewals is excluded from this metric with the exception of additional
capacity or products purchased at the time of renewal.
How we calculate it:
New Bookings: The total of annual contract values for new sales of our recurring solutions
and services (software subscriptions, Valuation Management Solutions, and data
subscriptions) plus the total of contract values for one-time engagements (consulting,
training, and due diligence). The value of contract renewals is excluded from this metric
with the exception of additional capacity or products purchased at the time of renewal.
Organic New Bookings: The total of New Bookings deducted by New Bookings from
business acquisitions that are not fully integrated (up to the first anniversary of the
acquisition).
Recurring New Bookings: The total of annual contract values for new sales of our
recurring solutions and services.
Non-Recurring New Bookings: The total of contract values for one-time engagements.
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Altus Group | Management’s Discussion & Analysis December 31, 2022
Organic Revenue
How is it useful:
We use Organic Revenue to evaluate and assess revenue trends in our business on a
comparable basis versus the prior year, and as an indicator of future revenue growth.
How we calculate it:
Revenue deducted by revenues from business acquisitions that are not fully integrated
(up to the first anniversary of the acquisition).
Recurring Revenue, Non-Recurring Revenue, Organic Recurring Revenue
How is it useful:
For our Analytics reportable segment, we use Recurring Revenue, Non-Recurring
Revenue, and Organic Recurring Revenue as measures to assess revenue trends in our
business, and as an indicator of future revenue growth.
How we calculate it:
Recurring Revenue: Revenue from software subscriptions recognized on an over time
basis in accordance with IFRS 15, software maintenance revenue associated with our
legacy licenses sold on perpetual terms, Valuation Management Solutions, and data
subscriptions.
Non-Recurring Revenue: Revenue deducted by Recurring Revenue.
Organic Recurring Revenue: Recurring Revenue deducted by Recurring Revenue from
business acquisitions that are not fully integrated (up to the first anniversary of the
acquisition).
Days Sales Outstanding (“DSO”)
How is it useful:
We use DSO as a measure of our ability to convert our revenue into cash.
How we calculate it:
Five-quarter average balance of net trade receivables and unbilled revenue on customer
contracts net of deferred revenue, divided by the trailing 12-month revenues plus any pre
acquisition revenues (as applicable), and multiplied by 365 days.
ARGUS Enterprise (“AE”) Software Maintenance Retention Rate
How is it useful:
For our Analytics reportable segment, we use AE Software Maintenance Retention Rate
as a measure to evaluate our success in retaining our AE software customers.
With the majority of our AE customer base having now converted from legacy
maintenance contracts to subscription contracts this metric is now less relevant and will
be updated in the future.
How we calculate it:
Percentage of the available AE software maintenance renewal opportunity in a fiscal
period that renews, calculated on a dollar basis, excluding any growth in user count or
product expansion.
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Altus Group | Management’s Discussion & Analysis December 31, 2022
Cloud Adoption Rate
How is it useful:
For our Analytics reportable segment, we use Cloud Adoption Rate as a measure of our
progress in transitioning the AE user base to our cloud-based platform, a key component
of our overall product strategy.
How we calculate it:
Percentage of the total AE user base contracted on the ARGUS Cloud platform.
3. Business Overview
3.1. About Altus Group
Altus Group (TSX: AIF) is a leading provider of asset and fund intelligence for commercial real estate. We deliver
intelligence as a service to our global client base through a connected platform of industry-leading technology,
advanced analytics and advisory services.
Trusted by the largest CRE leaders, our capabilities help commercial real estate investors, developers, proprietors,
lenders, and advisors manage risk and improve performance throughout the asset and fund lifecycle.
Altus Group is a global company headquartered in Toronto with approximately 2,700 employees across North
America, EMEA and Asia Pacific. For more about Altus Group, please visit altusgroup.com.
3.2. Understanding our Business
Valuations are at the core of everything we do
Our core competency is the valuation of commercial real estate (“CRE”) assets. The value of a commercial property
is one of the most important factors for CRE investment, ownership and development. It drives decision making
across the CRE value chain – from discovery to acquisition/disposition, development, leasing and planning, property
tax and debt management, and portfolio strategy. Our business reaches across the entire value chain through our
two business units: Analytics and CRE Consulting.
We apply our expertise in valuations towards various use cases across our business units. The primary use cases
include: tax appeals, fund mark-to-market reporting, equity and debt portfolio appraisals, transactions, and
development investments. Our business units generate highly differentiated, high quality exhaust data. As we
connect this data, we are building out new advanced analytics capabilities that also expand our use cases to
performance management. By leveraging our asset and fund intelligence at scale, we can correlate valuations with
asset performance attributes to help our clients maximize performance and better manage risk.
Our valuation capabilities, data and expertise are relied on by many CRE professionals in the industry to reduce
their risks and maximize returns. In our Analytics business unit, our ARGUS Enterprise software valuation
methodology has been deployed for over 30 years for property cash flow and valuation modelling throughout North
America and the U.K., and is taught in over 200 academic institutions worldwide. In collaboration with the National
Council of Real Estate Investment Fiduciaries (“NCREIF”) our Valuation Management Solutions data forms the
benchmark for the Open-End Diversified Core Equity (“ODCE”) index, the official institutional real estate
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Altus Group | Management’s Discussion & Analysis December 31, 2022
performance benchmark in the U.S. In our CRE Consulting business unit, our expertise in valuations is a key
differentiator in our ability to maximize successful client outcomes.
Serving a global and diverse client base
Our customers include many market participants across the CRE industry. Key customer segments include CRE
investors, developers, proprietors, lenders and their advisors. We have the privilege of having long-standing
relationships with many of the world’s largest CRE leaders and enjoy a strong network effect by leveraging our
mission-critical AE software.
Our customers vary in size, focus and complexity. Our go-to-market plans segment customers under two categories
to optimize how we serve them: high touch (those who require more hands-on support or are strategic customers);
and scale (those who are more self-reliant). Our approach also segments customers by geography, by offers that
can best solve their unique challenges, and specific client personas. The majority of our revenues come from
medium-to-large firms.
Enhancing client value through our Intelligence as a Service offer portfolio
With the mounting challenges of increased competition, globalization, regulatory pressures, and ever-changing
market dynamics, CRE professionals are looking for objective expert advice and actionable insights to make faster
and data-informed decisions. Our end-to-end technology, analytics and advisory services help our clients manage
and react to key asset, fund and market events, helping them to improve performance and manage risk.
One of our key competitive differentiators is our unique combination of deep CRE industry expertise and proprietary
technology tailored for the CRE industry. Altus Group professionals are not only experts in their practice areas but
also in the CRE industry, earning us the reputation as trusted advisors to many of our clients. Our technology and
data analytics solutions are trusted by the industry and embedded in key client workflows, with our AE software
regarded as a mission critical application for the valuation of commercial assets. This combination of industry and
technology expertise enables us to help our clients navigate complex business challenges and gives us a significant
advantage compared to single-focus traditional consulting or technology firms.
In 2022, Altus Group initiated the transition from selling individual products and services to a model that combines
our technology, analytics and advisory capabilities under offers. Each offer category includes a variety of capabilities
for each of our key customer profiles so that our sales professionals can easily identify which offer will drive the
greatest impact for their clients’ business and help them solve their most critical business problems. Our offers are
delivered as intelligence as a service.
Value selling under offers simplifies our customers’ experience with us and enables us to serve them better while
enhancing our prospects for higher value enterprise contracts that broaden our engagement. Recognizing that
customer requirements differ by client type, we sell our offers under three editions: essentials, advanced, and
premium:
Essentials
“Do it myself”
Provides clients with base editions that are self-service and technology led.
Products and services can still be purchased stand-alone.
Advanced
“Show me”
Combines the essentials edition with added capabilities.
Includes technology with added data, analytics or services.
Premium
“Do it for me”
Combines the advanced edition with added capabilities.
Includes technology-enabled, expert-led, outcome-based delivery services.
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Altus Group | Management’s Discussion & Analysis December 31, 2022
We have four offer categories that support different critical asset and fund-level challenges:
Offer
category
Offer description
Includes the following legacy
solutions and services
Altus Valuation
An offer for cash flow modelling, valuations and reporting.
We help clients produce reliable valuations of assets,
investments and loans that are trusted by partners,
investors and regulators.
Software
products
(including
ARGUS
Enterprise, ARGUS Developer and ARGUS
EstateMaster) and Valuation Management
Solutions (including ARGUS ValueInsight).
Altus Portfolio
Performance
An offer to connect asset data, modelling, and analytics to
optimize asset and portfolio management.
We help clients maximize financial performance across
real estate investments by identifying risks, understanding
portfolio impacts and finding opportunities to add value
throughout their lifecycle.
Software
products
(including
ARGUS
Enterprise, ARGUS Developer, ARGUS
EstateMaster,
ARGUS
Taliance,
and
Fairways Debt), as well as advisory
solutions previously sold under the One11
brand and our Development Advisory
services.
Altus Market
Insights
An offer to provide instant access to asset, market and
fund-level intelligence.
We help clients make faster, informed decisions in key
CRE workflows and activities by leveraging market data
and predictive analytics.
Data and analytics tools (including Altus
Data Studio, Reonomy and StratoDem
Analytics),
including
related
advisory
services.
Altus Property
Tax
An offer to optimize property tax liability.
We help clients optimize and effectively manage a CRE
portfolio’s largest operating expense, property taxes.
Our property tax management and appeal
services, as well as the Itamlink property tax
management software.
Our Intelligence as a Service offer portfolio is powered by our internal Altus Performance Platform (“APP”). The
APP delivers a scalable, diverse, and extensible data model designed to support advanced analytics applications.
The APP is where we house the most relevant industry asset data, apply that data for performance and risk
management use cases, and derive insight and intelligence through advanced analytics. We are transitioning our
entire technology stack onto this platform.
Our reportable segments
We report the results of our operations through the following reportable segments: (1) Analytics; (2) Property Tax
and (3) Appraisals and Development Advisory (rebranded from Valuation and Cost Advisory). Our business units
are also supported by a corporate centre that primarily includes our finance, information technology, human
resources, marketing, legal, corporate development and communications functions.
Analytics
Principal activities
Our Analytics portfolio includes software, data analytics and advisory solutions primarily for
CRE asset valuations for the purpose of performance, development and investment
management.
Key revenue streams
Our key revenue streams comprise software, data analytics, market data, Valuation
Management Solutions, and technology consulting services. We help clients gain data-based
transparency and digitize their CRE asset and fund management valuation processes to
empower better decision-making to maximize valuations, reduce risk, and enhance the value
of their CRE investments.
o
Our software suite includes ARGUS-branded solutions (including the flagship AE
product) and Finance Active-branded debt management solutions. Our software
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Altus Group | Management’s Discussion & Analysis December 31, 2022
Analytics
87% of fiscal year 2022
Analytics revenue was
Recurring Revenue
solutions are deployed globally and primarily used to value, manage and increase the
transparency of equity and debt CRE portfolios.
o
Our market data and related data analytics capabilities cover key North American
markets and are used to support acquisition, investment, and development decisions.
o
Our Valuation Management Solutions (formerly referred to as appraisal
management), primarily offered in the U.S., include valuation management and
advisory services for CRE portfolios and funds with tools for attribution analysis and
data-benchmarking.
o
Our technology consulting services include strategic advisory for front-to-back-office
strategies, processes and technology. It also captures traditional software services
related to education, training, and implementation.
Approximately 87% of fiscal year 2022 Analytics revenues were Recurring Revenue. Our
Recurring Revenue includes software subscription revenues recognized on an over time basis,
market data and data analytics subscription offerings, fees from our Valuation Management
Solutions that are supported by multi-year contracts, as well as legacy software maintenance
fees (which we continue to upgrade to cloud subscriptions).
Our Non-Recurring Revenue includes services related to technology consulting as well as
software education, training, and implementation. Although diminishing in size, for customers
who have on-premise software and wish to add more on-premise seats, the software license
component of the subscription contract is captured as point-in-time revenue when delivered as
required by IFRS, and captured in this revenue stream.
Revenue model
Our Recurring Revenue streams are sold primarily on subscription contracts supported by
cloud-based solutions. Recurring Revenue provides us with a stable and predictable revenue
base that we expect the high majority to repeat every year. Our Analytics subscription
agreements vary in length between one to five years with the fee primarily dependent on the
number of users and applications deployed. Many of our “high touch” client contracts,
particularly for our Valuation Management Solutions, are priced based on the number of real
estate assets on our platform and subject to adjustments based on complexity of asset type
and frequency of valuations. An asset-based pricing model allows us to grow with our
customers, while also enhancing our opportunity to expand the users on our platform and
broaden our reach across workflows.
Our Non-Recurring Revenue service engagements are charged primarily on a time and
materials basis, billed and recognized as delivered.
Key geographies
Our Analytics solutions are sold globally, primarily targeting our Tier 1 geographies including
U.S., Canada, U.K., France, and Australia (a geographic revenue split is provided in section
6.2. Operations by Reportable Segment).
Key customer
segments
Our key client segments include high-touch and scale clients. The high-touch clients include
large, global, and strategic firms that account for the majority of our revenues. The scale
segment clients predominately include small-to-medium sized businesses.
Our customer base is globally dispersed and diversified by type. Key customers include equity
and debt investors, service providers, owner operators and developers.
Primary revenue
growth drivers
Our existing customer base continues to represent an attractive opportunity to deepen our
engagement with them and cross-sell new capabilities. As we continue to make deeper inroads
across our clients’ organizations and become more embedded in their workflows, our “land-
and-expand” approach allows us to efficiently increase revenue from our existing customer
base. Growth within our existing customer base also captures higher-value contracts from
multi-solution sales facilitated through offer selling and migration of customers to our cloud-
based subscription pricing. Albeit additive, pricing is not a material driver of growth at this stage.
New customers also represent an attractive opportunity, including outside of North America
where our market penetration is still modest relative to the opportunity. As we expand our
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Altus Group | Management’s Discussion & Analysis December 31, 2022
Analytics
capabilities, we have increased opportunities to capture new customer segments and user
types/personas in the industry that we have not served historically.
Property Tax
Principal activities
Our Property Tax portfolio includes expert services and technology for property tax
management. Our core offering is conducting property tax assessment reviews for their
commercial properties, based on which we selectively pursue appeals with government
agencies to minimize our clients’ tax liability.
Key revenue streams
Property tax is influenced by government-assessed asset valuations and often represents the
largest operating expense in CRE property ownership after debt service. Additionally, property
tax obligations and processes vary significantly between jurisdictions, requiring regional and
asset specific expertise. We help clients proactively manage this expense and their complex
appeal processes through our technology-enabled expert services, striving to help them
minimize the tax burden.
Revenue model
Approximately 70% of our revenues are derived on a contingency basis, where we receive a
percentage of the savings we achieve for our clients. As such, we recognize contingency
revenues only when settlements are made, which in some cases could span multiple years.
Approximately 30% of our Property Tax fees are based on a time and materials basis. We also
have a growing recurring revenue stream related to the Itamlink software (acquired in 2022)
which we sell on recurring subscription contracts.
Of note, this business has an element of cyclicality in the U.K., its biggest geographic market.
Starting in the second year of the national multi-year U.K. cycle, we record annuity billings in
the U.K. that occur only in the second quarter beginning in the second year of the national
multi-year tax cycle. Unlike the North American practice where we bill a client once for the
savings we achieve for them for an entire cycle, we bill our clients in the U.K. annually based
on savings for that year. Revenues from the annuity billings generally grow over the cycle as
we add more clients and as more cases are settled with the volume of billable clients increasing
concurrently with case settlements.
Key geographies
Our Property Tax services are offered in Canada, the U.S. and the U.K. where we are relied
on by our clients to help manage their property tax and business rates liabilities.
Key customer
segments
Our key client segments include proprietors in the high-touch segments in North America
(where the property tax obligations are with landlords and owners), and largely property tenants
under the scale segment in the U.K. (where the property tax obligation rests predominantly with
tenants).
Primary revenue
growth drivers
Revenue growth is primarily driven by increasing both the volume and value of our appeal
settlement pipeline and our ability to leverage data and automation to scale successful client
outcomes. Market share gains drive volume, and value is driven by our expertise and data
which allows us to selectively pursue appeals that have a high probability of successful client
outcomes. Our ongoing digitization efforts support revenue growth by helping us scale, better
identify high-margin opportunities, and increase our sales productivity.
12
Altus Group | Management’s Discussion & Analysis December 31, 2022
Appraisals and Development Advisory
Principal activities
Our Appraisals and Development Advisory portfolio also includes expert services in the areas
of commercial property valuation appraisals and commercial development advisory.
Key revenue streams
The Appraisals practice core services include valuation appraisals of real estate portfolios.
Additional related services include valuation appraisals of properties for transactional
purposes, due diligence and litigation support, and economic consulting. The Development
Advisory practice provides services in the areas of construction feasibility studies, budgeting,
cost and loan monitoring and project management.
Revenue model
Pricing is primarily based on a fixed fee or time and materials basis. Many of our Development
Advisory contracts are multi-year.
Key geographies
Our Appraisals services are primarily offered in Canada, and our Development Advisory
services are primarily offered in Canada and Australia.
Key customer
segments
Our key client segments primarily include high-touch clients. Our Appraisals customers include
institutional CRE clients, whereas our Development Advisory clients include CRE developers,
lenders, and government agencies for infrastructure related projects.
Primary revenue
growth drivers
Growth is primarily driven by an expansion of market size and by market share gains.
4. Business Strategy
Market opportunity
Commercial real estate is one of the largest asset classes in the world yet despite its scale and influence, the CRE
industry has historically been slow to digitize. Consequently, CRE asset and fund level intelligence remains largely
fragmented and behind in comparison to other established industries such as financial services.
This is rapidly changing as the influx of institutional ownership, together with globalization and demographic shifts,
demands more sophisticated processes and data-driven transparency. Jobs, functions and workflows are changing
and challenging the status quo of how this industry has historically operated. With ever increasing competition,
intensifying reporting requirements, and the desire to modernize, the industry is looking for partners to help it
innovate, unlock insights, discover new opportunities, and better manage risks and costs.
Value creation strategy
Our strategic focus is to deliver actionable asset and fund level intelligence to help our clients improve performance
and better manage risk. Our long-term value creation strategy is grounded in this mission.
Our strategic intent is to maximize client value, enhance our foundational capabilities – organically and through
partnerships and acquisitions – continuously improve our operational effectiveness, and methodically allocate
capital to drive profitable growth as measured by Adjusted EBITDA margin expansion, Adjusted EPS growth and
optimized Free Cash Flow.
Our growth strategy is focused on: 1) defending, connecting and growing our core business units; 2) extending
those business units through carefully selected adjacencies; and 3) reaching into new market segments through
advanced analytics-driven capabilities.
13
Altus Group | Management’s Discussion & Analysis December 31, 2022
To deliver on our mission, effectively and at scale, we are completing our business transformation to operate more
efficiently. This includes integrating all aspects of our business – optimizing our operating model, our go-to-market
approach, platform architecture, as well as our front and back-office infrastructure – to deliver an exceptional
experience for our clients and employees. We believe this critical initiative will drive operational excellence, platform
economics, and maximize our operating leverage so that we can scale more effectively as we grow.
To meet the evolving needs of our clients and position ourselves for our next phase of growth we are on a journey
to deliver comprehensive asset and fund level intelligence through advanced analytics. Our strategic focus is to
connect high quality asset data and technology with advanced analytics, complemented by our deep industry
expertise, to deliver predictive and prescriptive foresight essential to CRE performance. Our future-state predictive
and prescriptive models will deliver intelligence at scale, enabling our clients to improve and de-risk their
performance by helping them better anticipate opportunities and adapt accordingly.
Strategic priorities in 2023
In 2023, our strategic priorities move from business transformation to scaling profitable growth. The following four
2023 strategic priorities will drive the growth and long-term success of Altus Group:
1. Scale Altus Group
Accelerate the expansion of Altus Group by defending and extending our core
business units and reaching into new market segments
2. Operate efficiently
Maximize operating leverage through improved efficiencies, prudent expense
management and optimized investments
3. Create customer value
Build on and evolve our capabilities to meet client needs for improved performance
and better risk management
4. Engage talent
Place best people in the right roles and empower colleagues for greater performance
in an inclusive environment
Our key success measures include revenue growth, continued New Bookings growth, Adjusted EBITDA margin
expansion, Adjusted EPS growth, optimized Free Cash Flow and employee retention.
We believe that delivering on these objectives will position Altus Group for sustainable and profitable growth over
the long term. It strengthens our foundation to be an efficient, growth-oriented company that delivers exceptional
stakeholder value.
14
Altus Group | Management’s Discussion & Analysis December 31, 2022
5. Financial and Operating Highlights
5.1. Annual Financial Highlights
Selected Financial Information
Year ended December 31,
In thousands of dollars, except for per share amounts
2022
2021
Revenues
$ 735,451 $ 625,387
Canada
27%
30%
U.S.
45%
37%
EMEA
24%
28%
Asia Pacific
4%
5%
Adjusted EBITDA*
$ 135,322 $ 109,755
Adjusted EBITDA margin*
18.4%
17.5%
Profit (loss)
$ (889) $ 25,573
Earnings (loss) per share:
Basic
$(0.02)
$0.62
Diluted
$(0.02)
$0.60
Adjusted*
$1.89
$1.90
Dividends declared per share
$0.60
$0.60
Funded debt to EBITDA ratio
2.13:1
2.47:1
Net debt to Adjusted EBITDA leverage ratio*
1.96:1
2.17:1
Free Cash Flow*
$ 52,605 $ 45,679
5.2. Annual Operating Highlights
Leadership Transition and New Board Appointments
Effective April 1, 2022, Jim Hannon, formerly the President of Analytics, assumed the role of Chief Executive Officer
(“CEO”), succeeding Mike Gordon who remains on our Board of Directors. Concurrently, Jorge Blanco was
promoted to the role of President, Analytics and the newly created role of Chief Commercial Officer. Effective
January 1, 2023, Pawan Chhabra joined the Company as our new Chief Financial Officer.
Effective June 29, 2022, we welcomed two new independent directors, Wai-Fong Au and Carolyn Schuetz, to our
Board of Directors.
Launched Normal Course Issuer Bid (“NCIB”)
On February 3, 2022, we received approval from the Toronto Stock Exchange (“TSX”) to enter into a NCIB. Pursuant
to the NCIB, we were permitted to purchase for cancellation up to 1,345,142 of our outstanding common shares
during the period from February 8, 2022 to February 7, 2023. The total number of common shares that we were
permitted to purchase was subject to a daily purchase limit of 20,336 common shares, other than block purchase
exemptions. During the year ended December 31, 2022, we purchased 155,400 common shares for cancellation
under the NCIB at a weighted average price of approximately $48.54 per common share.
15
Altus Group | Management’s Discussion & Analysis December 31, 2022
Completed Restructuring Activities
Throughout 2022, we implemented a restructuring program that resulted in restructuring costs of $38.9 million for
the year. This program was completed at the end of the year. Approximately $9.8 million of the costs related to
rationalizing our leased office space in certain markets. The remainder of the restructuring costs were primarily
related to employee severance costs reflecting the synergies we obtained from recent acquisitions, efficiencies
gained from investments in technology, and the ongoing evolution of our operating models in support of our strategic
initiatives.
Implemented Interest Rate Hedging
On April 29, 2022, we entered into interest rate swap agreements for a total notional amount of GBP57.0 million.
Under the agreement, we are obligated to pay the counterparty to the swap agreements an amount based upon a
fixed interest rate of 2.07% per annum and the counterparty is obligated to pay us an amount equal to the GBP -
SONIA. These agreements expire on April 13, 2027.
Acquired Rethink Solutions Inc.
On May 1, 2022, we acquired all of the issued and outstanding shares of Rethink Solutions for $40.7 million, subject
to adjustments. Founded in 2001 in Toronto, Rethink Solutions developed the itamlink property tax management
software, a comprehensive tax management solution used by many organizations across the U.S. and Canada to
optimize property tax processes. The acquisition added a complementary software offering, property tax-focused
technical talent and strong customer relationships. It is also an important building block for our technology strategy
to develop an end-to-end property tax management platform, representing significant time and cost savings to bring
it to market. Rethink Solutions results are reported under our Property Tax reportable segment.
Increased Long-Term Equity Incentive Plan Share Pool
On May 3, 2022, our shareholders approved a resolution to increase the number of authorized common shares to
be reserved for issuance under our Long-Term Equity Incentive Plan. The resolution increased the maximum
number of common shares reserved for issuance by 2,689,000 shares, from 4,075,000 shares to 6,764,000 shares.
Purchase of Verifino Non-controlling Interest
On May 3, 2022, we purchased the remaining 30% minority interest in Verifino GmbH & Co. KG (“Verifino”) and
settled our non-controlling interest liability for $2.8 million in cash. We acquired our interest in Verifino through the
acquisition of Finance Active in 2021, which owned a 70% majority interest in the subsidiary at the time of the
acquisition.
Amended Bank Credit Facilities
On June 28, 2022, we amended our bank credit facilities to further strengthen our financial and liquidity position by
increasing our borrowing capacity to $550.0 million from $400.0 million with certain provisions that allow us to further
increase the limit to $650.0 million. The amended bank credit facilities also include an increase to the maximum
Funded debt to EBITDA financial covenant ratio from 4.0 to 4.5 with provisions that allow for a short-term increase
up to 5.0 following certain business acquisitions and are secured on certain of our assets. The bank credit facilities
mature on March 24, 2027, with an additional two-year extension available at our option.
Launched Employee Share Purchase Plan
During the third quarter of 2022, we launched an Employee Share Purchase Plan (“ESPP”). Under the terms of this
plan, employees may contribute up to 8% of their base salary or base hourly wages toward the purchase of our
shares. For each eligible contribution, we contribute an additional 33% of the employees’ contribution toward their
purchase of our shares, up to an annual limit per employee each year. These shares will be purchased from the
open market at the prevailing market price on the date of purchase.
16
Altus Group | Management’s Discussion & Analysis December 31, 2022
5.3. Annual Operating Highlights – Events After the Reporting Period
Renewed NCIB
On February 3, 2023, the TSX approved the renewal of our NCIB. Pursuant to the NCIB, we may purchase for
cancellation up to 1,364,718 of our outstanding common shares during the period from February 8, 2023 to February
7, 2024, representing approximately 3% of its issued and outstanding common shares as of January 31, 2023. The
total number of common shares that we are permitted to purchase is subject to a daily purchase limit of 17,933
common shares, representing 25% of the average daily trading volume as of January 31, 2023, other than block
purchase exemptions. The Company intends to enter into an automatic share purchase plan with a designated
broker in relation to the NCIB following the end of its current blackout period.
17
Altus Group | Management’s Discussion & Analysis December 31, 2022
6. Discussion of Operations
Quarter and Year Ended December 31, 2022
Quarter ended December 31,
Year ended December 31,
In thousands of dollars
2022
2021
2022
2021
Revenues
$ 183,762 $ 162,909 $ 735,451 $ 625,387
Expenses
Employee compensation
114,015
107,334
463,949
401,455
Occupancy
1,567
1,925
7,032
7,743
Office and other operating
37,541
32,254
152,893
123,023
Depreciation of right-of-use assets
2,831
3,209
11,968
12,119
Depreciation and amortization
11,290
9,815
47,557
34,463
Acquisition and related transition costs (income)
207
2,025
4,928
10,137
Share of (profit) loss of joint venture
(786)
(745)
(3,013)
(1,187)
Restructuring costs (recovery)
17,001
(238)
38,896
15
(Gain) loss on investments
47
(1,091)
164
(2,930)
Finance costs (income), net - leases
463
515
1,913
2,219
Finance costs (income), net - other
7,918
1,322
5,284
4,130
Profit (loss) before income taxes
(8,332)
6,584
3,880
34,200
Income tax expense (recovery)
427
(306)
4,769
8,627
Profit (loss) for the period
$ (8,759) $ 6,890 $ (889) $ 25,573
Revenues
Revenues were $183.8 million for the quarter ended December 31, 2022, up 12.8% (10.3% on a Constant Currency*
basis) or $20.9 million ($16.8 million on a Constant Currency basis) from $162.9 million in the same period in 2021.
Organic Revenue* growth was 10.1% (7.8% on a Constant Currency basis) for the quarter ended December 31,
2022. For the year ended December 31, 2022, revenues were $735.5 million, up 17.6% (17.8% on a Constant
Currency basis) or $110.1 million ($111.2 million on a Constant Currency basis) from $625.4 million in 2021. Organic
Revenue growth was 12.0% (12.7% on a Constant Currency basis) for the year ended December 31, 2022. For the
quarter and year ended December 31, 2022, the revenue growth was driven by strong performance at Analytics.
Employee Compensation
Employee compensation represents amounts pertaining to employee salaries, bonuses, benefits, share-based
compensation, and gains or losses on equity derivatives related to our RSUs and DSUs. Employee compensation
was $114.0 million for the quarter ended December 31, 2022, up 6.2% or $6.7 million from $107.3 million in the
same period in 2021. The increase in employee compensation was due to headcount additions mainly within Altus
Analytics including the acquisition of Scryer, Inc. d/b/a Reonomy) (“Reonomy”) ($3.5 million), the acquisition of
Rethink Solutions ($1.0 million), and increased expense related to the accounting treatment of common shares
issued in connection with our acquisitions and other share-based compensation ($1.9 million). For the year ended
December 31, 2022, employee compensation was $463.9 million, up 15.6% or $62.4 million from $401.5 million in
2021. The increase in employee compensation was mainly due to headcount additions mainly within Analytics
18
Altus Group | Management’s Discussion & Analysis December 31, 2022
including the acquisitions of Finance Active, StratoDem Analytics, and Scryer, Inc. (d/b/a Reonomy) ($34.5 million),
the acquisition of Rethink Solutions ($2.5 million), increased expense related to the accounting treatment of
common shares issued in connection with our acquisitions and other share-based compensation ($10.3 million),
and other increases in headcount and compensation to support our growth. For the quarter and year ended
December 31, 2022, employee compensation as a percentage of revenues was 62.0% and 63.1%, as compared
to 65.9% and 64.2% in the corresponding periods in 2021, respectively.
Occupancy
Occupancy represents amounts pertaining to short-term leases, low-value assets, and variable lease payments
including property taxes, utilities, and common area maintenance costs. Occupancy was $1.6 million for the quarter
ended December 31, 2022, down 18.6% or $0.3 million from $1.9 million in the same period in 2021. For the year
ended December 31, 2022, occupancy was $7.0 million, down 9.2% or $0.7 million from $7.7 million in 2021.
Occupancy costs calculated on a similar basis prior to the adoption of IFRS 16 would have been $4.5 million and
$19.0 million for the quarter and year ended December 31, 2022, as compared to $5.4 million and $20.9 million in
the corresponding periods in 2021, respectively. The reduction in occupancy was primarily due to our rationalization
of our leased office space in certain markets. For the quarter and year ended December 31, 2022, occupancy as a
percentage of revenues was 0.9% and 1.0%, as compared to 1.2% and 1.2% in the corresponding periods in 2021,
respectively. Occupancy costs calculated on a similar basis prior to the adoption of IFRS 16 as a percentage of
revenues would have been 2.4% and 2.6% for the quarter and year ended December 31, 2022, as compared to
3.3% and 3.3% in the corresponding periods in 2021, respectively.
Office and Other Operating Costs
Office and other operating costs represent amounts related to hosting fees, software and data subscriptions,
professional fees, travel and entertainment, insurance, office supplies, foreign exchange gains or losses, bad debt
expenses, and other service costs. From time to time, it also includes income or costs not classified elsewhere in
the statement of comprehensive income (loss). Office and other operating costs were $37.5 million for the quarter
ended December 31, 2022, up 16.4% or $5.2 million from $32.3 million in the same period in 2021, primarily due to
increased Information Technology spend post the cybersecurity incident ($2.1 million), increased travel and
marketing costs ($4.0 million), offset by lower professional fees ($1.0 million). For the year ended December 31,
2022, office and other operating costs were $152.9 million, up 24.3% or $29.9 million from $123.0 million in 2021.
The increase was primarily due to the inclusion of full-year operating costs from business acquisitions and related
changes to our operating model ($13.2 million), increased travel and marketing costs ($10.4 million), and increased
Information Technology spend post the cybersecurity incident ($10.0 million). These were slightly offset by lower
bad debts and foreign exchange gains. For the quarter and year ended December 31, 2022, office and other
operating costs as a percentage of revenues were 20.4% and 20.8%, as compared to 19.8% and 19.7% in the
corresponding periods in 2021, respectively.
Depreciation of Right-of-Use Assets
Depreciation of right-of-use assets represents the depreciation charge of our office and equipment leases that are
capitalized as right-of-use assets and was $2.8 million and $12.0 million for the quarter and year ended December
31, 2022, as compared to $3.2 million and $12.1 million in the corresponding periods in 2021, respectively. The
decrease for the quarter and year ended December 31, 2022 was primarily due to benefits being realized from our
efforts to rationalize our leased office space.
Depreciation and Amortization
Depreciation and amortization represent the depreciation charge of our property, plant and equipment and
amortization charge of our intangible assets, and were $11.3 million and $47.6 million for the quarter and year
ended December 31, 2022, as compared to $9.8 million and $34.5 million in the corresponding periods in 2021,
respectively. The increase was mainly due to the amortization of intangible assets related to acquisitions.
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Altus Group | Management’s Discussion & Analysis December 31, 2022
Acquisition and Related Transition Costs (Income)
Acquisition and related transition costs (income) represent amounts related to professional fees for due diligence
and facilitating the purchase and integration of our acquisitions, and the subsequent changes in the fair value of our
acquisition-related contingent consideration payables. Acquisition and related transition costs (income) were $0.2
million and $4.9 million for the quarter and year ended December 31, 2022, as compared to $2.0 million and $10.1
million in the corresponding periods in 2021, respectively. Costs incurred for the quarter and year ended December
31, 2022 were primarily related to the acquisition of Rethink Solutions and the integrations of Finance Active and
Reonomy which are largely complete.
Share of (Profit) Loss of Joint Venture
Share of (profit) loss of joint venture represents our share of the profit/loss in GeoVerra Inc. (“GeoVerra”) and was
$(0.8) million and $(3.0) million for the quarter and year ended December 31, 2022, as compared to $(0.7) million
and $(1.2) million in the corresponding periods in 2021, respectively.
Restructuring Costs (Recovery)
Restructuring costs (recovery) represent amounts related to employee termination benefits, lease and other
contract terminations, and professional fees to facilitate the reorganization of our functions and structure and the
closure of offices. Restructuring costs (recovery) were $17.0 million and $38.9 million for the quarter and year ended
December 31, 2022, as compared to $(0.2) million and $nil in the corresponding periods in 2021, respectively.
Costs of $29.1 million incurred in the year ended December 31, 2022 relate to our 2022 global restructuring
program, which primarily included employee severance costs reflecting the synergies we obtained from recent
acquisitions, efficiencies gained from investments in technology, and the ongoing evolution of our operating models
in support of our strategic initiatives. The remainder of the costs of approximately $9.8 million related to rationalizing
our leased office space in certain markets.
(Gain) Loss on Investments
(Gain) loss on investments represents the changes in the fair value of our investments in partnerships and was $nil
and $0.2 million for the quarter and year ended December 30, 2022, as compared to $(1.1) million and $(2.9) million
in the corresponding periods in 2021, respectively.
Finance Costs (Income), Net
Finance costs (income), net represents amounts related to interest incurred on our credit facility borrowings, lease
liabilities, or long-term payables. It also includes income received from short-term investments and deposits, and
gains or losses from changes in fair value of interest rate swaps. Finance costs (income), net for the quarter ended
December 31, 2022 were $8.4 million, up 356.2% or $6.6 million from $1.8 million in the same period in 2021. Our
finance costs for the quarter increased primarily due to rising interest rates and costs on our bank credit facilities,
and the change in fair value of our interest rate swaps. For the year ended December 31, 2022, finance costs
(income), net were $7.2 million, up 13.4% or $0.9 million from $6.3 million in 2021. Our finance costs for the year
increased primarily due to rising interest rates and costs on our bank credit facilities drawn for acquisitions, offset
by the change in fair value of our interest rate swaps and lower interest costs on our leases.
Income Tax Expense (Recovery)
Income tax expense (recovery) for the quarter and year ended December 31, 2022 was $0.4 million and $4.8 million,
as compared to $(0.3) million and $8.6 million in the corresponding periods in 2021, respectively. A significant
amount of our earnings is derived outside of Canada and as a result a change in the mix of earnings and losses in
countries with differing statutory tax rates has impacted our effective tax rates for the quarter and year ended
December 31, 2022.
20
Altus Group | Management’s Discussion & Analysis December 31, 2022
Profit (loss)
Profit (loss) for the quarter ended December 31, 2022 was $(8.8) million and $(0.20) per share, basic and diluted,
as compared to $6.9 million and $0.16 per share, basic and $0.15 diluted, in the same period in 2021. The greatest
driver of the change were costs associated to our 2022 global restructuring program, the increase in our interest
costs and fair value loss on our interest rate swaps. For the year ended December 31, 2022, profit (loss) was $(0.9)
million and $(0.02) per share, basic and diluted, as compared to $25.6 million and $0.62 per share, basic and $0.60
per share, diluted, in 2021. The biggest impact on the year-over-year change was the 2022 global restructuring
program and amortization of our acquired intangibles.
21
Altus Group | Management’s Discussion & Analysis December 31, 2022
6.1. Revenues and Adjusted EBITDA by Reportable Segment
Revenues
Quarter ended December 31,
Year ended December 31,
In thousands of dollars
2022
2021 % Change
Constant
Currency
% Change
2022
2021 % Change
Constant
Currency
% Change
Analytics
$ 96,061 $ 72,407
32.7%
27.1% $ 346,103 $ 251,084
37.8%
36.4%
Property Tax
55,830
60,060
(7.0%)
(7.3%)
268,583
259,911
3.3%
4.8%
Appraisals and
Development Advisory
32,049
30,517
5.0%
5.6%
121,469
114,693
5.9%
6.7%
Intercompany eliminations
(178)
(75)
(137.3%)
(136.8%)
(704)
(301)
(133.9%)
(133.8%)
Total
$ 183,762 $ 162,909
12.8%
10.3% $ 735,451 $ 625,387
17.6%
17.8%
Adjusted EBITDA
Quarter ended December 31,
Year ended December 31,
In thousands of dollars
2022
2021 % Change
Constant
Currency
% Change
2022
2021 % Change
Constant
Currency
% Change
Analytics
$ 25,824 $ 10,698
141.4%
133.0% $ 71,730 $ 41,567
72.6%
68.9%
Property Tax
14,412
18,222
(20.9%)
(21.0%)
87,533
87,616
(0.1%)
2.1%
Appraisals and
Development Advisory
5,578
5,948
(6.2%)
(5.6%)
17,099
16,440
4.0%
4.7%
Corporate
(10,886)
(9,007)
(20.9%)
(21.4%)
(41,040)
(35,868)
(14.4%)
(15.6%)
Total
$ 34,928 $ 25,861
35.1%
31.4% $ 135,322 $ 109,755
23.3%
23.4%
126
151
168
183
202
204
251
346
134
151
159
177
213
245
260
268
90
96
103
107
111
113
114
121
-
100
200
300
400
500
600
700
800
2015
2016
2017
2018
2019
2020
2021
2022
Altus Analytics
Property Tax
Appraisals and Development Advisory
$350M
C$M
$398M
$430M
$467M
$526M
$562M
$625M
$735M
14.1%
14.3%
13.4%
12.0%
11.9%
11.7%
12.5%
11.6%
32.6%
33.7%
31.4%
29.5%
20.4%
25.4%
26.5%
20.8%
20.7%
16.6%
17.6%
18.2%
22.6%
27.9%
27.1%
24.0%
Adjusted EBITDA Margin
Revenue
22
Altus Group | Management’s Discussion & Analysis December 31, 2022
6.2. Operations by Reportable Segment
Analytics
Quarter ended December 31,
Year ended December 31,
In thousands of dollars
2022
2021 % Change
Constant
Currency
% Change
2022
2021 % Change
Constant
Currency
% Change
Revenues
$ 96,061
$ 72,407
32.7%
27.1%
$ 346,103
$ 251,084
37.8%
36.4%
Adjusted EBITDA
$ 25,824
$ 10,698
141.4%
133.0%
$ 71,730
$ 41,567
72.6%
68.9%
Adjusted EBITDA margin
26.9%
14.8%
20.7%
16.6%
Other Measures
Recurring Revenue*
$ 85,834
$ 59,802
43.5%
37.8%
$ 301,709
$ 207,805
45.2%
43.7%
New Bookings*
$ 34,173
$ 31,119
9.8%
3.6%
$ 112,540
$ 95,066
18.4%
15.3%
Recurring New Bookings*
$ 20,849
$ 17,150
21.6%
14.6%
$ 74,434
$ 48,017
55.0%
44.5%
Non-Recurring New
Bookings*
$ 13,324
$ 13,969
(4.6%)
(9.8%)
$ 38,106
$ 47,049
(19.0%)
(14.4%)
AE Software Maintenance
Retention Rate*
97%
94%
97%
94%
Geographical revenue split
North America
79%
75%
77%
75%
International
21%
25%
23%
25%
Cloud Adoption Rate* (as at
end of period)
64%
42%
64%
42%
Revenues
Fourth quarter revenues were $96.1 million, up 32.7% (27.1% on a Constant Currency basis) or $23.7 million ($19.6
million on a Constant Currency basis) from $72.4 million in the same period in 2021. Organic Revenue growth was
28.3% (23.1% on a Constant Currency basis) whereas the acquisition of Reonomy represented 4.4% of the total
32.7% revenue growth. The purchase price accounting adjustment to Reonomy’s deferred revenues had a negative
impact of $0.1 million, or 0.1%, to revenue growth.
Full year revenues were $346.1 million, up 37.8% (36.4% on a Constant Currency basis) or $95.0 million ($91.3
million on a Constant Currency basis) from $251.1 million in 2021. Organic Revenue growth was 25.0% (23.8% on
a Constant Currency basis) whereas the acquisitions of Finance Active, StratoDem Analytics and Reonomy
represented 12.8% of the total 37.8% revenue growth. The purchase price accounting adjustment to Reonomy’s
deferred revenues had a negative impact of $2.0 million, or 0.8%, to revenue growth.
Revenue growth in the fourth quarter and full year was primarily driven by customer expansion across our key
solutions and supported by steady new customer additions. While most of our growth continues to come from North
America, we also posted notable growth internationally in 2022, both in Europe and Asia Pacific.
23
Altus Group | Management’s Discussion & Analysis December 31, 2022
Recurring Revenue
Fourth quarter Recurring Revenue was $85.8 million, up 43.5% (37.8% on a Constant Currency basis) or $26.0
million ($22.6 million on a Constant Currency basis) from $59.8 million in the same period in 2021. Organic
Recurring Revenue* was up 38.2% (up 32.5% on a Constant Currency basis). Sequentially, Recurring Revenue
grew 11.6% from $76.9 million in the third quarter of 2022.
Full year Recurring Revenue was $301.7 million, up 45.2% (43.7% on a Constant Currency basis) or $93.4 million
($90.8 million on a Constant Currency basis) from $207.8 million in 2021. Organic Recurring Revenue was up
34.6% (up 28.6% on a Constant Currency basis).
New Bookings
Fourth quarter New Bookings were $34.2 million, up 9.8% (3.6% on a Constant Currency basis) or $3.1 million
($1.1 million on a Constant Currency basis) from $31.1 million in the same period in 2021. Organic New Bookings*
growth was 8.6% (2.4% on a Constant Currency basis) from the same period in 2021. Recurring New Bookings
were up 21.6% (14.6% on a Constant Currency basis).
Full year New Bookings were $112.5 million, up 18.4% (15.3% on a Constant Currency basis) or $17.4 million
($14.6 million on a Constant Currency basis) from $95.1 million in 2021. Organic New Bookings growth was 11.7%
(8.2% on a Constant Currency basis) from 2021. Recurring New Bookings were up 55.0% (44.5% on a Constant
Currency basis).
Adjusted EBITDA
Fourth quarter Adjusted EBITDA was $25.8 million, up 141.4% (133.0% on a Constant Currency basis) or $15.1
million ($14.2 million on a Constant Currency basis) from $10.7 million in the same period in 2021. Adjusted EBITDA
margin was 26.9%, up 1,210 basis points. Adjusted EBITDA growth and margin expansion benefitted from higher
revenues, improving operating efficiencies, ongoing cost optimization efforts, and foreign exchange fluctuations.
Full year Adjusted EBITDA was $71.7 million, up 72.6% (68.9% on a Constant Currency basis) or $30.1 million
($28.6 million on a Constant Currency basis) from $41.6 million in 2021. Adjusted EBITDA margin improved by 410
basis points. Adjusted EBITDA growth and margin expansion benefitted from higher revenues, improving operating
efficiencies, ongoing cost optimization efforts, and foreign exchange fluctuations. The purchase price accounting
adjustments had a 40 basis points impact to Adjusted EBITDA margin.
24
Altus Group | Management’s Discussion & Analysis December 31, 2022
Property Tax
Quarter ended December 31,
Year ended December 31,
In thousands of dollars
2022
2021 % Change
Constant
Currency
% Change
2022
2021 % Change
Constant
Currency
% Change
Revenues
$ 55,830
$ 60,060
(7.0%)
(7.3%)
$ 268,583
$ 259,911
3.3%
4.8%
Adjusted EBITDA
$ 14,412
$ 18,222
(20.9%)
(21.0%)
$ 87,533
$ 87,616
(0.1%)
2.1%
Adjusted EBITDA margin
25.8%
30.3%
32.6%
33.7%
Revenues
Fourth quarter revenues were $55.8 million, down 7.0% (7.3% on a Constant Currency basis) or $4.3 million ($4.4
million on a Constant Currency basis) from $60.1 million in the same period in 2021. The robust growth in the U.S.
and steady performance in Canada was offset by a decline in the U.K. which continued to be impacted by the
ongoing slowed cadence of settlement volumes. Our U.K. pipeline of cases to be settled in upcoming quarters
remains robust.
Full year revenues were a record $268.6 million, up 3.3% (4.8% on a Constant Currency basis) or $8.7 million
($12.6 million on a Constant Currency basis) from $259.9 million in 2021. The growth from the U.S. and Canada
was offset by a decline in the U.K. which was impacted by the slowed cadence of settlement volumes.
Adjusted EBITDA
Fourth quarter Adjusted EBITDA was $14.4 million, down 20.9% (21.0% on a Constant Currency basis) or $3.8
million ($3.8 million on a Constant Currency basis) from $18.2 million in the same period in 2021. Adjusted EBITDA
was down primarily due to the impacts of the slow settlement volumes in the U.K., more than offsetting the growth
from the U.S. operations.
Full year Adjusted EBITDA was $87.5 million, down 0.1% (2.1% on a Constant Currency basis) or $0.1 million ($1.8
million on a Constant Currency basis) from $87.6 million in 2021. The decline in the U.K. was offset by the growth
from the U.S. operations.
25
Altus Group | Management’s Discussion & Analysis December 31, 2022
Appraisals and Development Advisory
Quarter ended December 31,
Year ended December 31,
In thousands of dollars
2022
2021 % Change
Constant
Currency
% Change
2022
2021 % Change
Constant
Currency
% Change
Revenues
$ 32,049
$ 30,517
5.0%
5.6%
$ 121,469
$ 114,693
5.9%
6.7%
Adjusted EBITDA
$ 5,578
$ 5,948
(6.2%)
(5.6%)
$ 17,099
$ 16,440
4.0%
4.7%
Adjusted EBITDA margin
17.4%
19.5%
14.1%
14.3%
Revenues
Fourth quarter revenues were $32.0 million, up 5.0% (5.6% on a Constant Currency basis) or $1.5 million ($1.7
million on a Constant Currency basis) from $30.5 million in the same period in 2021. Growth was driven by strong
performance in Development Advisory, both in Canada and in the APAC region, supported by large public sector
projects.
Full year revenues were $121.5 million, up 5.9% (6.7% on a Constant Currency basis) or $6.8 million ($7.7 million
on a Constant Currency basis) from $114.7 million in 2021. Growth was driven by strong performance in
Development Advisory, both in Canada and in the APAC region, supported by large public sector projects. On a
year-over-year basis, in 2021 the Appraisals practice had some impact from the cybersecurity incident.
Adjusted EBITDA
Fourth quarter Adjusted EBITDA was $5.6 million, down 6.2% (5.6% on a Constant Currency basis) or $0.3 million
($0.3 million on a Constant Currency basis) from $5.9 million in the same period in 2021. Adjusted EBITDA improved
on increased revenues from the Development Advisory practice. The decline in margin for the quarter comes from
a number of one-time expense recoveries that occurred during the comparative quarter.
Full year Adjusted EBITDA was $17.1 million, up 4.0% (4.7% on a Constant Currency basis) or $0.7 million ($0.8
million on a Constant Currency basis) from $16.4 million in 2021. Adjusted EBITDA improved on increased revenues
from the Development Advisory practice.
6.3. Corporate Costs
Corporate costs
Corporate costs were $10.9 million for the quarter ended December 31, 2022, as compared to $9.0 million in the
same period in 2021. Corporate costs were $41.0 million for the year ended December 31, 2022, as compared to
$35.9 million in 2021. Corporate costs increased primarily due to higher expenditures in Information Technology,
compensation, travel, professional fees, and costs related to organizational and strategic initiatives.
26
Altus Group | Management’s Discussion & Analysis December 31, 2022
7. Business Outlook
Forecasting future results or trends is inherently difficult for any business and actual results or trends may vary
significantly. The discussion of our expectations relating to the business outlook in this section is forward-looking
information that is based upon the assumptions and subject to the material risks discussed under the heading
“Forward-Looking Information” beginning on page 1 of this MD&A.
Altus Group is well positioned in 2023 to sustain year-over-year Constant Currency growth in our consolidated
revenue and Adjusted EBITDA. Our strong execution in 2022 enables us to capitalize on continued momentum and
meet growing demand from our customers. Our outlook is underpinned by the execution of our growth strategy and
the visibility we have into our revenue backlog and pipeline of our various recurring and highly repeatable revenue
streams. Our business outlook for 2023 includes double-digit revenue and Adjusted EBITDA growth in Analytics, a
down year in Property Tax due to market cyclicality, and single-digit revenue and Adjusted EBITDA growth in
Appraisals and Development Advisory – all on an organic, Constant Currency basis over fiscal year 2022.
We continue to closely monitor leading indicators and the impact of inflation and interest rate increases on our
industry and customer activity. Our business continues to be resilient, and we have flexibility to respond to changing
client needs and to pursue our business strategy across various economic cycles and market environments. The
investments we made in 2022 to enhance our operational effectiveness provide us with sustainable improvements
in our cost structure that give us confidence in our ability to successfully navigate a dynamic global business
environment.
We maintain a positive growth outlook in the medium to long term and are poised for continued profitable growth
as we maximize revenue opportunities and enhance our operating leverage over the next few years.
2023 outlook by reportable segment
Analytics
Analytics remains well positioned to deliver double-digit revenue growth and expanded Adjusted
EBITDA margins. This is underpinned by a strong Recurring Revenue base and steady New
Bookings growth. We expect that margin expansion will be driven by higher revenues, disciplined
expense management and an overall improvement in operating efficiencies.
With 64% of our AE user base contracted on the cloud as at the end of 2022, we expect sustained
adoption throughout 2023 to capture the large majority of users by the end of 2023.
In 2019, we introduced a long-term aspirational goal to achieve $400 million in revenue in Analytics
for fiscal 2023. In fiscal 2022, we re-affirmed that we were on track to meet this aspirational long-
term goal by the end of 2023. We remain confident in this statement. Our confidence is based on
strong New Bookings, a growing Recurring Revenue base, and the high contract renewal rates from
our legacy clients. $400 million revenue in 2023 would represent a 15.6% growth rate over 2022.
That compares to an Organic Revenue growth of 23.8% (at Constant Currency) in 2022. Please refer
to our "forward looking information" on page 1 for more information on the risks and assumptions.
27
Altus Group | Management’s Discussion & Analysis December 31, 2022
2023 outlook by reportable segment
Property Tax
The Property Tax revenues and Adjusted EBITDA are expected to decline year-over-year primarily
driven by cyclicality of the U.K. tax assessments. We will continue to invest in our go-to-market
activities to expand our client base and backlog of tax appeals.
o
In the U.K., we will commence a new tax cycle that was previously extended due to
pandemic related factors. As detailed on page 12 of this MD&A, the majority of our U.K.
clients are billed on annuity contracts through which we receive a percentage of the fees
we save them per year. This annuity revenue stream resets the first year of a new cycle.
On a comparative view, the portion of our revenues related to the annuity stream (which
was $33.2 million in 2022) will not repeat in 2023. The annuity revenue stream will begin to
build again in 2024 as we add more clients throughout the cycle. The anticipated growth
from other markets is not expected to fully offset the financial impact of the cyclicality of our
U.K. annuity billings.
o
Additionally, in Ontario, a key market for the Canadian operations, the tax cycle is expected
to be extended for an additional year. The prolonged extension of the cycle generally limits
revenue growth as we will have already addressed the more substantive appeals.
Appraisals and
Development
Advisory
Appraisals and Development Advisory is expected to continue growing modestly in the single-
digits. Our focus on operating efficiencies is expected to translate to an improvement in Adjusted
EBITDA.
*The business outlook is presented on an organic Constant Currency basis over fiscal 2022.
Seasonality and Cyclicality
Some of our businesses are subject to cyclical trends and seasonality that may impact overall quarterly results.
As is typical for many technology companies, Analytics tends to have a seasonally stronger fourth quarter, and first
quarter revenue and Adjusted EBITDA margins of a new year may be sequentially lower than in the fourth quarter
of the preceding year (excluding the impact of unusual or nonrecurring items). We believe the strength in the fourth
quarter generally reflects customer spending patterns and budget cycles, as well as the impact of incentive
compensation plans for our sales personnel. The first quarter of a new year also includes additional expenses, such
as payroll taxes, that impact the sequential Adjusted EBITDA margin trend.
The Property Tax reportable segment experiences stronger second quarters driven by the annuity billings (as
described above and on page 12 of the MD&A), however only starting in the second year of a new cycle. In the
U.S., where market cycles are annual, we also tend to experience higher volumes of settlements in the second and
third quarters. Overall, the Property Tax reportable segment tends to experience more quarterly variability due to
timing of contingency settlements and other factors, such as the wide-ranging variety of tax cycles across our
various jurisdictions (which range from annual to several years). It should also be noted that since a higher portion
of our revenues come from contingency contracts, the front-end of a cycle typically requires a ramp-up period in
preparation for the appeals. Therefore, it tends to have lower earnings than later in the cycle, when more settlements
are made and a high majority of those revenues flow directly to the bottom line.
While these seasonal and cyclical factors have historically been relevant, given the evolution of our businesses
through our growth and acquisitions, this pattern should not be considered as a reliable indicator of our future
revenue or financial performance. Many other factors, including general economic conditions, may also have an
impact on our business and financial results, and are described in our Annual Information Form for the year ended
December 31, 2021.
28
Altus Group | Management’s Discussion & Analysis December 31, 2022
8. Liquidity and Capital Resources
Cash Flow
Year ended December 31,
In thousands of dollars
2022
2021
Net cash related to operating activities
$ 77,085 $ 56,308
Net cash related to financing activities
(18,665)
300,430
Net cash related to investing activities
(54,057)
(373,315)
Effect of foreign currency translation
(367)
(1,789)
Change in cash position during the year
$ 3,996 $ (18,366)
Free Cash Flow
$ 52,605 $ 45,679
Dividends paid
$ 24,699 $ 21,564
We expect to fund operations with cash on hand and cash derived from operating activities. Deficiencies arising
from short-term working capital requirements and capital expenditures may be financed on a short-term basis with
bank indebtedness or on a permanent basis with offerings of securities. Our liquidity may be affected by a reduction
to future cash generated from operating activities, or by a limitation of access to short-term financing and tightening
credit markets due to factors such as: significant erosion in the general state of the economy, prolonged impacts of
the COVID-19 pandemic, or further unforeseen impacts of the cybersecurity incident. In 2022, we further amended
and expanded our bank credit facilities to continue strengthening our liquidity position. For further details regarding
the amendments, refer to the “Cash from Financing Activities” discussion below and Note 21 - Borrowings in the
notes to the annual financial statements.
We returned $27.1 million to shareholders in 2022 through quarterly dividends of $0.15 per common share, or $0.60
per common share for the year.
8.1. Cash from Operating Activities
Working Capital
In thousands of dollars
December 31, 2022
December 31, 2021
Current assets
$ 319,878 $ 283,734
Current liabilities
239,860
209,931
Working capital
$ 80,018 $ 73,803
Current assets are composed primarily of cash and cash equivalents and trade receivables and other. It also
includes income taxes recoverable and derivative financial instruments for our equity derivatives on RSUs and
DSUs. The increase is primarily due to the generation of cash and cash equivalents and additional contract assets
(unbilled revenue on customer contracts) from operations.
Current liabilities are composed primarily of trade payables and other, and lease liabilities. It also includes income
taxes payable. The increase is primarily due to the increase in contract liabilities (deferred revenue) and provisions
related to our 2022 global restructuring program.
29
Altus Group | Management’s Discussion & Analysis December 31, 2022
As at December 31, 2022, trade receivables, net and contract assets (unbilled revenue on customer contracts) net
of contract liabilities (deferred revenue) were $134.9 million, up 7.3% or $9.1 million from $125.8 million as at
December 31, 2021. As a percentage of the trailing 12-month revenues, trade receivables and unbilled revenue on
customer contracts net of deferred revenue was 18.3% as at December 31, 2022, as compared to 19.2% as at
December 31, 2021.
Our DSO* was 62 days as at December 31, 2022, as compared to 72 days as at December 31, 2021, representing
our ability to convert revenue into cash which has returned back to pre-COVID levels. This is in addition to our
revenue mix continuing to increasingly shift to a subscription-based model under which our customers are billed on
or in advance of the commencement of agreements.
Current and long-term liabilities include amounts owing to the vendors of acquired businesses on account of excess
working capital, contingent consideration payable, deferred purchase price payments and other closing
adjustments. As at December 31, 2022, the amounts owing to the vendors of acquired businesses were $7.5 million,
as compared to $10.0 million as at December 31, 2021. We intend to satisfy the payments with cash on hand.
We expect to satisfy the balance of our current liabilities through the realization of our current assets.
Changes in working capital affecting net cash generated by (used in) operations
In thousands of dollars
December 31, 2022
December 31, 2021
Net changes in:
Operating working capital
$ 177 $ (34,831)
Liabilities for cash-settled share-based compensation
(5,303)
9,199
Deferred consideration payables
(3,384)
6,668
Contingent consideration payables
3,010
132
Net changes
$ (5,500) $ (18,832)
Operating working capital is composed primarily of trade receivables and other, trade payables and other excluding
the impacts of liabilities for cash-settled share-based compensation and contingent consideration payables, and
income taxes recoverable and payable. The movement in operating working capital was primarily driven by
additional contract assets resulting from increased activity levels, offset by an increase in our contract liabilities
resulting from growth in New Bookings, in addition to an increase in our restructuring provision due to the global
restructuring program.
Liabilities for cash-settled share-based compensation represent awards granted through our Long-Term Incentive
Restricted Share Unit Plan, Restricted Share Unit Plan, or Deferred Share Unit Plan, which are to be settled in the
future. These liabilities are linked, and therefore exposed, to movements in the price of our common shares. The
decrease in liabilities for cash-settled share-based compensation was primarily due to the decrease in the closing
price of our common shares from $70.97 per share on December 31, 2021 to $54.04 per share on December 31,
2022. For further details regarding liabilities for cash-settled share-based compensation, refer to Note 26 - Share-
based Compensation in the notes to the financial statements.
From time to time, we become party to deferred or contingent consideration payables which are assumed as part
of an acquisition. Deferred consideration payments represent unconditional portions of the purchase consideration
of our acquisitions that are payable at a date after the closing date of the related transaction. The decrease in
deferred consideration payables was due to the payment made in relation to our acquisition of Finance Active in
April of 2021. Contingent consideration payments are generally based on acquired businesses achieving certain
future-oriented performance targets from the date of acquisition and may differ from our initial estimates. The
30
Altus Group | Management’s Discussion & Analysis December 31, 2022
movement in contingent consideration payables was primarily due to the recognition of a $3.0 million contingent
consideration payable related to the acquisition of Rethink Solutions during the second quarter of 2022.
8.2. Cash from Financing Activities
Our revolving bank credit facilities are unsecured and used for general corporate purposes and the funding of our
acquisitions. From time to time, we amend our bank credit facilities to further strengthen our liquidity position. Most
recently, on June 28, 2022, we further amended our bank credit facilities to increase our borrowing capacity from
$400.0 million to $550.0 million, with certain provisions that allow us to further increase the limit to $650.0 million.
The bank credit facilities mature on March 24, 2027, with an additional two-year extension available at our option.
As at December 31, 2022, our total borrowings on our bank credit facilities amounted to $319.6 million, an increase
of $32.0 million from December 31, 2021, primarily to fund the acquisition of Rethink Solutions as well as working
capital and operational requirements. We continue to pay down the total outstanding balance with cash flows
generated from our operations.
Loans under the bank credit facilities bear interest at a floating rate, based on the Canadian prime rates, Canadian
bankers’ acceptance rates, U.S. base rates, or SONIA, SOFR, and €STR rates plus, in each case, an applicable
margin to those rates. The applicable margin for Canadian bankers’ acceptance and SONIA, SOFR and €STR
borrowings depends on a trailing four-quarter calculation of the Funded debt to EBITDA ratio. The weighted average
effective rate of interest for the year ended December 31, 2022 on our bank credit facilities was 3.66%, as compared
to 1.58% in 2021. To mitigate our exposure to interest rate fluctuations, on April 29, 2022, we entered into interest
rate swap agreements for a total notional amount of GBP57.0 million to pay the counterparties a fixed interest rate
of 2.07% per annum in exchange for an amount equal to the GBP - SONIA.
In addition, the Company and certain of its subsidiaries, collectively the guarantors, must account for at least 80%
of consolidated revenues on a trailing 12-month basis. The bank credit facilities require repayment of the principal
at such time as we receive proceeds of insurance, equity or debt issuances, or sale of assets in excess of certain
thresholds. Letters of credit are also available on customary terms for bank credit facilities of this nature.
Furthermore, we have provided a security interest to the lenders over certain of our assets in connection with the
bank credit facilities.
We also have outstanding letters of credit under our bank credit facilities in the total amount of $1.5 million
(December 31, 2021 - $1.5 million).
As at December 31, 2022, we were in compliance with the financial covenants and other requirements of our
amended bank credit facilities. The financial covenants are summarized below:
December 31, 2022
Funded debt to EBITDA (maximum of 4.50:1)
2.13:1
Interest coverage (minimum of 3.00:1)
11.56:1
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Altus Group | Management’s Discussion & Analysis December 31, 2022
Other than long-term debt and letters of credit, we are subject to other contractual obligations, such as leases and
amounts owing to the vendors of acquired businesses as discussed above.
Contractual Obligations (1)
Payments Due by Period (undiscounted)
In thousands of dollars
Total
Less than
1 year
1 to 3 years
4 to 5 years
Over 5 years
Bank credit facilities
$ 319,584
$ - $ -
$ 319,584
$ -
Lease obligations
65,083
16,455
24,827
14,255
9,546
Deferred consideration payables
3,482
1,741
1,741
-
-
Contingent consideration payables
3,200
3,000
200
-
-
Other liabilities
223,734
146,313
41,849
12,628
22,944
Total contractual obligations
$ 615,083
$ 167,509
$ 68,617
$ 346,467
$ 32,490
(1) Contractual obligations exclude aggregate unfunded capital contributions of $3.9 million to certain partnerships as the amount and timing of
such payments are uncertain.
8.3. Cash from Investing Activities
We invest in property, plant and equipment and intangible assets to support the activities of the business. Capital
expenditures for accounting purposes include property, plant and equipment in substance and in form, and
intangible assets.
Capital expenditures are reconciled as follows:
Capital Expenditures
Quarter ended December 31,
Year ended December 31,
In thousands of dollars
2022
2021
2022
2021
Property, plant and equipment additions
$ 1,783 $ 2,591 $ 5,433
$ 5,965
Intangibles additions
6,502
1,456
19,047
4,664
Capital expenditures
$ 8,285 $ 4,047 $ 24,480
$ 10,629
We made additional investments in 2022 to transform our internal systems across all of Altus Group for how we
operate, collaborate and go-to-market which includes upgrading our finance back-office systems, optimizing CRM
front offices systems, investing in our global human resources systems, and streamlining our solution architecture.
These incremental investments will simplify how we engage with our employees and customers and maximize our
internal systems to efficiently and effectively scale as we continue to grow and enhance our productivity metrics.
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Altus Group | Management’s Discussion & Analysis December 31, 2022
8.4. Free Cash Flow
We proactively manage and optimize our Free Cash Flow available for reinvestment in our business. Free Cash
Flow is reconciled as follows:
Free Cash Flow
Quarter ended December 31,
Year ended December 31,
In thousands of dollars
2022
2021
2022
2021
Net cash provided by (used in) operating activities
$ 27,465 $ 10,773 $ 77,085 $ 56,308
Less: Capital Expenditures
(8,285)
(4,047)
(24,480)
(10,629)
Free Cash Flow
$ 19,180 $ 6,726 $ 52,605 $ 45,679
33
Altus Group | Management’s Discussion & Analysis December 31, 2022
9. Reconciliation of Non‐GAAP Measures
9.1. Reconciliation of Profit (Loss) to Adjusted EBITDA and Adjusted
Earnings (Loss)
The following table provides a reconciliation of Profit (Loss) to Adjusted EBITDA and Adjusted Earnings (Loss):
Quarter ended December 31,
Year ended December 31,
In thousands of dollars, except for per share amounts
2022
2021
2022
2021
Profit (loss) for the period
$ (8,759)
$ 6,890 $ (889)
$ 25,573
Occupancy costs calculated on a similar basis prior to the adoption of IFRS 16 (1)
(2,905)
(3,477)
(11,993)
(13,199)
Depreciation of right-of-use assets
2,831
3,209
11,968
12,119
Depreciation of property, plant and equipment and amortization of intangibles (7)
11,290
9,815
47,557
34,463
Acquisition and related transition costs (income)
207
2,025
4,928
10,137
Unrealized foreign exchange (gain) loss (2)
(1,821)
(145)
(3,854)
1,104
Gain (loss) on disposal of right-of-use assets, property, plant and equipment and
intangibles (2)
825
-
825
(248)
Share of (profit) loss of joint venture
(786)
(745)
(3,013)
(1,187)
Non-cash share-based compensation costs (3)
7,123
6,178
24,544
19,455
(Gain) loss on equity derivatives net of mark-to-market adjustments on related
RSUs and DSUs (3)
(1,890)
(1,035)
2,481
(2,040)
Restructuring costs (recovery)
17,001
(238)
38,896
15
(Gain) loss on investments (4)
47
(1,091)
164
(2,930)
Other non-operating and/or non-recurring (income) costs (5)
2,957
2,944
11,742
11,517
Finance costs (income), net - leases
463
515
1,913
2,219
Finance costs (income), net - other (8)
7,918
1,322
5,284
4,130
Income tax expense (recovery) (9)
427
(306)
4,769
8,627
Adjusted EBITDA
$ 34,928
$ 25,861
$ 135,322
$ 109,755
Depreciation of property, plant and equipment and amortization of intangibles of
non-acquired businesses (7)
(2,376)
(2,161)
(8,955)
(6,028)
Finance (costs) income, net - other (8)
(7,918)
(1,322)
(5,284)
(4,130)
(Gain) loss on hedging transactions, including currency forward contracts and
interest expense (income) on swaps
3,396
-
(6,856)
-
Interest accretion on contingent consideration payables
-
-
6
-
Tax effect of adjusted earnings (loss) adjustments (9)
(7,939)
(3,534)
(28,511)
(19,283)
Adjusted earnings (loss)*
$ 20,091
$ 18,844
$ 85,722
$ 80,314
Weighted average number of shares - basic
44,715,291
43,945,167
44,635,448
41,684,077
Weighted average number of restricted shares
597,408
680,150
633,675
580,280
Weighted average number of shares - adjusted
45,312,699
44,625,317
45,269,123
42,264,357
Adjusted earnings (loss) per share (6)
$0.44
$0.42
$1.89
$1.90
(1) Management uses the non-GAAP occupancy costs calculated on a similar basis prior to the adoption of IFRS 16 when analyzing financial
and operating performance.
(2) Included in office and other operating expenses in the consolidated statements of comprehensive income (loss).
34
Altus Group | Management’s Discussion & Analysis December 31, 2022
(3) Included in employee compensation expenses in the consolidated statements of comprehensive income (loss).
(4) Gain (loss) on investments relates to changes in the fair value of investments in partnerships.
(5) Other non-operating and/or non-recurring income (costs) for the quarter and year ended December 31, 2022 relate to legal, advisory, and
other consulting costs related to organizational and strategic initiatives, including those related to the transition of certain members of our
leadership team. For the quarter and year ended December 31, 2021, other non-operating and/or non-recurring income (costs) relate to (i)
costs relating to the June 13, 2021 cybersecurity incident net of insurance proceeds received and receivable, and (ii) transaction and other
related costs. These are included in office and other operating expenses in the consolidated statements of comprehensive income (loss).
(6) Refer to page 4 of this MD&A for the definition of Adjusted EPS.
(7) For the purposes of reconciling to Adjusted Earnings (Loss), the amortization of intangibles of acquired businesses is adjusted from Profit
(loss) for the period. Per the quantitative reconciliation above, we have added back depreciation of property, plant and equipment and
amortization of intangibles and then deducted the depreciation of property, plant and equipment and amortization of intangibles of non-
acquired businesses to arrive at the amortization of intangibles of acquired businesses.
(8) For the purposes of reconciling to Adjusted Earnings (Loss), the interest accretion on contingent consideration payables and (gains) losses
on hedging transactions and interest expense (income) on swaps is adjusted from Profit (loss) for the period. Per the quantitative reconciliation
above, we have added back finance costs (income), net – other and then deducted finance costs (income), net – other prior to adjusting for
interest accretion on contingent consideration payables and (gains) losses on hedging transactions and interest expense (income) on swaps.
(9) For the purposes of reconciling to Adjusted Earnings (Loss), only the tax impacts for the reconciling items noted in the definition of Adjusted
Earnings (Loss) is adjusted from Profit (loss) for the period. Please refer to page 3 of this MD&A for the definition of Adjusted Earnings (Loss).
35
Altus Group | Management’s Discussion & Analysis December 31, 2022
9.2. Constant Currency
The following tables provide a summarization of the foreign exchange rates used as presented based on the
average monthly rates, and the foreign exchange rates used for Constant Currency for currencies in which we
primarily transact in:
Quarter ended
December 31, 2022
Year ended
December 31, 2022
As presented
For Constant
Currency
As presented
For Constant
Currency
Canadian Dollar
1.000
1.000
1.000
1.000
United States Dollar
1.357
1.260
1.301
1.254
Pound Sterling
1.593
1.699
1.608
1.724
Euro
1.386
1.441
1.370
1.483
Australian Dollar
0.892
0.918
0.903
0.942
Quarter ended
December 31, 2021
Year ended
December 31, 2021
As presented
For Constant
Currency
As presented
For Constant
Currency
Canadian Dollar
1.000
1.000
1.000
1.000
United States Dollar
1.260
1.303
1.254
1.341
Pound Sterling
1.699
1.721
1.724
1.719
Euro
1.441
1.554
1.483
1.529
Australian Dollar
0.918
0.953
0.942
0.924
10. Summary of Quarterly Results
2022
2021
In thousands of dollars,
except for per share amounts
Fiscal
2022
Dec 31
Sep 30
Jun 30
Mar 31
Fiscal 2021
Dec 31
Sep 30
Jun 30
Mar 31
Results of Operations
Revenues
$ 735,451
$ 183,762 $ 177,691 $ 206,414 $ 167,584 $ 625,387 $ 162,909 $ 151,797 $ 173,523 $ 137,158
Adjusted EBITDA
$ 135,322
$ 34,928 $ 32,910 $ 49,743 $ 17,741 $ 109,755 $ 25,861 $ 24,415 $ 42,239 $ 17,240
Adjusted EBITDA margin
18.4%
19.0%
18.5%
24.1%
10.6%
17.5%
15.9%
16.1%
24.3%
12.6%
Profit (loss) for the period
$ (889) $ (8,759) $ 6,827 $ 12,499 $ (11,456) $ 25,573 $ 6,890
$ (295) $ 16,341 $ 2,637
Basic earnings (loss) per
share:
$(0.02)
$(0.20)
$0.15
$0.28
$(0.26)
$0.62
$0.16
$(0.01)
$0.40
$0.07
Diluted earnings (loss) per
share:
$(0.02)
$(0.20)
$0.15
$0.28
$(0.26)
$0.60
$0.15
$(0.01)
$0.39
$0.06
Adjusted earnings (loss)
per share
$1.89
$0.44
$0.42
$0.77
$0.27
$1.90
$0.42
$0.39
$0.75
$0.34
Weighted average number
shares (‘000s):
Basic
Diluted
44,635
44,635
44,715
44,715
44,609
45,382
44,508
45,179
44,171
44,171
41,684
42,899
43,945
45,269
41,159
41,159
41,049
42,116
40,552
41,642
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Altus Group | Management’s Discussion & Analysis December 31, 2022
11. Selected Annual Information
Selected Financial Information
For the year ended December 31,
In thousands of dollars, except for per share amounts
2022
2021
2020
Operations
Revenues
$ 735,451 $ 625,387 $ 561,156
Revenue growth
17.6%
11.4%
6.7%
Organic Revenue growth
12.0%
5.2%
5.2%
Adjusted EBITDA
$ 135,322 $ 109,755 $ 98,928
Adjusted EBITDA growth
23.3%
10.9%
16.8%
Adjusted EBITDA margin
18.4%
17.5%
17.6%
Profit (loss) from continuing operations
$ (889) $ 25,573 $ 27,009
Profit (loss) from discontinued operations
$ - $ - $ (5,576)
Profit (loss)
$ (889) $ 25,573 $ 21,433
Earnings (loss) per share:
Basic
Continuing operations
Discontinued operations
Diluted
Continuing operations
Discontinued operations
Adjusted
$(0.02)
$0.00
$(0.02)
$0.00
$1.89
$0.62
$0.00
$0.60
$0.00
$1.90
$0.67
$(0.14)
$0.66
$(0.14)
$1.67
Dividends declared per share
$0.60
$0.60
$0.60
Balance Sheet
At December 31,
2022
2021
2020
Total assets
$ 1,263,886 $ 1,199,200 $ 735,400
Long-term liabilities (excluding deferred income taxes)
390,552
372,042
191,521
In each of the past three years we have declared and paid quarterly dividends totalling $0.60 annually, per common
share to the shareholders.
37
Altus Group | Management’s Discussion & Analysis December 31, 2022
12. Share Data
As at February 21, 2023, 44,935,421 common shares were outstanding and are net of 570,203 escrowed shares.
These escrowed shares are subject to restrictive covenants and may or may not vest. Accordingly, these shares
are not included in the total number of common shares outstanding for financial reporting purposes and are not
included in basic earnings per share calculations.
As at December 31, 2022, there were 2,330,062 share options outstanding (December 31, 2021 - 1,469,881 share
options outstanding) at a weighted average exercise price of $45.42 per share (December 31, 2021 - $41.39 per
share) and 561,324 share options were exercisable (December 31, 2021 - 454,286). All share options are
exercisable into common shares on a one-for-one basis.
Shareholders who are resident in Canada may elect to automatically reinvest quarterly dividends in additional Altus
Group common shares under our Dividend Reinvestment Plan (“DRIP”).
Pursuant to the DRIP, and in the case where common shares are issued from treasury, cash dividends will be
reinvested in additional Altus Group common shares at the weighted average market price of our common shares
for the five trading days immediately preceding the relevant dividend payment date, less a discount, currently set
at 4%. In the case where common shares will be purchased on the open market, cash dividends will be reinvested
in additional Altus Group common shares at the relevant average market price paid in respect of satisfying this
reinvestment plan.
For the year ended December 31, 2022, 46,638 common shares (2021 - 59,423 common shares) were issued
under the DRIP.
13. Financial Instruments and Other Instruments
Financial instruments held in the normal course of business included in our consolidated balance sheet as at
December 31, 2022 consist of cash and cash equivalents, trade receivables and other (excluding deferred costs to
obtain customer contracts and prepayments), trade payables and other (excluding contract liabilities), income taxes
recoverable and payable, investments, borrowings and derivative financial instruments. We do not enter into
financial instrument arrangements for speculative purposes.
The fair values of the short-term financial instruments approximate their carrying values. The fair values of
borrowings are not significantly different than their carrying values, as these instruments bear interest at rates
comparable to current market rates. The fair values of other long-term assets and liabilities, and contingent
consideration payables are measured using a discounted cash flow analysis of expected cash flows in future
periods. The investments in equity instruments are measured based on valuations of the respective entities.
Investments in partnerships are measured in relation to the fair value of assets in the respective partnerships.
The fair value of the liabilities for our RSUs and DSUs as at December 31, 2022 was approximately $22.8 million,
based on the published trading price on the TSX for our common shares.
We are exposed to interest rate risk in the event of fluctuations in the Canadian prime rates, Canadian bankers’
acceptance rates, U.S. base rates, or SONIA, SOFR, and €STR rates, as the interest rates on the bank credit
facilities fluctuate with changes in these rates.
To mitigate our exposure to interest rate fluctuations, we monitor interest rates and consider entering into interest
rate swap agreements in connection with our bank credit facilities. On April 29, 2022, we entered into interest rate
38
Altus Group | Management’s Discussion & Analysis December 31, 2022
swap agreements for a total notional amount of GBP57.0 million. The net fair value of this derivative is $7.4 million
in our favour.
We are exposed to price risk as the liabilities for cash-settled plans are classified as fair value through profit or loss,
and linked to the price of our common shares.
We enter into equity derivatives to manage our exposure to changes in the fair value of RSUs and DSUs, issued
under their respective plans, due to changes in the fair value of our common shares. Changes in the fair value of
these derivatives are recorded as employee compensation expense and offset the impact of mark-to-market
adjustments on the RSUs and DSUs that have been accrued.
As at December 31, 2022, we have equity derivatives relating to RSUs and DSUs outstanding with a notional
amount of $17.1 million. The net fair value of these derivatives is $12.8 million in our favour.
We are exposed to credit risk with respect to our cash and cash equivalents, trade receivables and other and
derivative financial instruments. Credit risk is not concentrated with any particular customer. In certain parts of our
business, it is often common business practice of our customers to pay invoices over an extended period of time
and/or at the completion of the project or on receipt of funds. We assess lifetime expected credit losses for all trade
receivables and contract assets for unbilled revenue on customer contracts by grouping customers with shared
credit risk characteristics, the days past due, and by incorporating forward-looking information as applicable.
Liquidity risk is the risk that we will not be able to meet our financial obligations as they become due. We manage
liquidity risk through the management of our capital structure and financial leverage. We also manage liquidity risk
by continuously monitoring actual and projected cash flows, taking into account the seasonality of our revenues
and receipts and the maturity profile of our financial assets and liabilities. Our Board of Directors reviews and
approves our operating and capital budgets, as well as any material transactions outside the ordinary course of
business, including proposals on mergers, acquisitions or other major investments.
14. Contingencies
From time to time, we or our subsidiaries are involved in legal proceedings, claims and litigation in the ordinary
course of business with customers, former employees and other parties. Although it is not possible to determine the
final outcome of such matters, based on all currently available information, we believe that our liabilities, if any,
arising from such matters will not have a material adverse effect on our financial position or results of operations
and have been adequately provided for in the financial statements.
In the ordinary course of business, we are subject to tax audits from various government agencies relating to income
and commodity taxes. As a result, from time to time, the tax authorities may disagree with the positions and
conclusions we made in our tax filings, which could lead to assessments and reassessments. These assessments
and reassessments may have a material adverse effect on our financial position or results of operations.
39
Altus Group | Management’s Discussion & Analysis December 31, 2022
15. Accounting Policies, Estimates, and Judgments
15.1. Critical Accounting Estimates and Judgments
The preparation of the financial statements requires management to make estimates and assumptions concerning
the future. It also requires management to exercise its judgment in applying our accounting policies and the reported
amounts of assets and liabilities, revenue and expenses, and related disclosures. Estimates and judgments are
continually evaluated and are based on current facts, historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances. Accounting estimates will, by definition,
seldom equal the actual results.
The following discussion sets forth management’s most significant estimates and assumptions in determining the
value of assets and liabilities and the most significant judgments in applying accounting policies.
Revenue Recognition and Determination and Allocation of the Transaction Price
We estimate variable consideration for contingency arrangements on a project-by-project basis. Variable
consideration is not constrained only to the extent that it is highly probable that the amount will not be subject to
significant reversal when the uncertainty is resolved, which is when savings are realized by the customer, unless
the contractual terms provide for an enforceable right to payment for performance completed.
The transaction price is allocated on the basis of the relative standalone selling prices for contracts with more than
one performance obligation. Estimation of the standalone selling price involves reasonably available data points,
market conditions, entity-specific factors and information about the customer or class of customer and to similar
customers as evidence of the standalone selling price for each performance obligation; however when one is not
available, the standalone selling price is estimated. Where the observable price is not available, based on the
specific facts and circumstances, either the adjusted market assessment or the expected cost plus a margin
approach is applied. The determination of the standalone selling prices requires significant judgment.
Impairment of Trade Receivables and Contract Assets
The impairment provisions for trade receivables and contract assets determined under IFRS 9, Financial
Instruments, are based on assumptions about the risk of default and expected loss rates. We use judgment in
making these assumptions and selecting the inputs to the impairment calculation based on our past history, existing
market conditions, including COVID-19 considerations, and forward-looking estimates at the end of each reporting
period. Such estimates and judgments could impact trade receivables, contract assets for unbilled revenue on
customer contracts and office and other operating expenses.
Estimated Impairment of Goodwill
We test at least annually whether goodwill is subject to any impairment. Goodwill impairment is evaluated between
annual tests upon the occurrence of events or changes in circumstances. Goodwill is allocated to cash-generating
units (“CGUs”) for the purpose of impairment testing. The allocation is made to those CGUs or group of CGUs that
are expected to benefit from synergies of the business combination in which the goodwill arose. Goodwill is tested
for impairment in the groups of CGUs for which it is monitored by management. An impairment loss is recognized
for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount for
any CGU is determined based on the higher of fair value less costs to sell and value in use. Both of the valuation
approaches require the use of estimates. Significant erosion in the general state of the economy could result in
increased impairment losses. For the year ended December 31, 2022, no goodwill impairment charge was recorded
(2021 - $nil).
40
Altus Group | Management’s Discussion & Analysis December 31, 2022
Determination of Purchase Price Allocations and Contingent Consideration
Estimates are made in determining the fair value of assets and liabilities, including the valuation of separately
identifiable intangibles acquired as part of an acquisition. Judgments are also made in determining whether any
consideration transferred for an acquisition relates to future compensation arrangements and are therefore to be
excluded from the purchase price allocation. Furthermore, estimates are made in determining the value of
contingent consideration payments that should be recorded as part of the consideration on the date of acquisition
and changes in contingent consideration payable in subsequent reporting periods. Contingent consideration
payments are generally based on acquired businesses achieving certain performance targets. The estimates are
based on our best assessment of the related inputs used in the valuation models, such as future cash flows and
discount rates. Future performance results that differ from our estimates could result in changes to liabilities
recorded, which are recorded as they arise through profit or loss.
Income Taxes
We are subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the
provision for income taxes. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the current and deferred income taxes in the period in which such
determination is made.
15.2. Changes in Significant Accounting Policies and Estimates
15.2.1. Adoption of Recent Accounting Pronouncements
Amendments to IAS 37: Onerous Contracts - Cost of Fulfilling a Contract
In May 2020, the International Accounting Standards Board (“IASB”) issued amendments to IAS 37, Provisions,
Contingent Liabilities and Contingent Assets, to specify that the cost of fulfilling a contract comprises the costs that
relate directly to the contract and can either be incremental costs of fulfilling that contract or an allocation of other
costs that relate directly to fulfilling contracts.
The new guidance is effective for annual periods beginning on or after January 1, 2022 and is applied to contracts
that have unfulfilled obligations as at the beginning of that period. The amendment did not have a material impact
on our financial statements.
Amendments to IFRS 3: Reference to the Conceptual Framework
In May 2020, the IASB issued amendments to IFRS 3, Business Combinations - Reference to the Conceptual
Framework. The amendments are intended to replace a reference to a previous version of the IASB’s Conceptual
Framework (1989) with a reference to the current version issued in March 2018 without significantly changing its
requirements. The amendments add an exception to the recognition principle of IFRS 3 to avoid the issue of
potential “day 2” gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS
37 or IFRIC 21, Levies, if incurred separately. The amendments also added a new paragraph to IFRS 3 to clarify
that contingent assets do not qualify for recognition at the acquisition date.
The new guidance is effective for annual periods beginning on or after January 1, 2022 and is applied prospectively.
The amendment did not have a material impact on our financial statements.
15.2.2. Future Accounting Pronouncements
We have not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
41
Altus Group | Management’s Discussion & Analysis December 31, 2022
Amendments to IAS 8: Definition of Accounting Estimate
In February 2021, the IASB issued amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates
and Errors, which introduces a new definition of ‘accounting estimates’. The amendments clarify the distinction
between changes in accounting estimates and changes in accounting policies and the correction of errors. The
amendments also clarify the measurement techniques and inputs used to develop accounting estimates.
The new guidance will be effective for annual periods beginning on or after January 1, 2023, with earlier application
permitted, and apply to changes in accounting policies and changes in accounting estimates that occur on or after
the start of the effective date. We expect the impact of these amendments on our financial statements to not be
material.
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies
In February 2021, the IASB issued amendments to IAS 1, Presentation of Financial Statements, and IFRS Practice
Statement 2, Making Materiality Judgments, to provide guidance in the application of materiality judgments to
accounting policy disclosures. These amendments also replaced the requirement for disclosures around ‘significant’
accounting policies with a requirement to disclose ‘material’ accounting policies.
The amendment is effective for annual periods beginning on or after January 1, 2023, with earlier application
permitted as long as this fact is disclosed. We expect the impact of these amendments on our financial statements
to not be material.
Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
In May 2021, the IASB issued amendments to IAS 12, Income Taxes, to provide clarity to whether certain deductions
are attributable for tax purposes to the liability recognized in the financial statements or to the related asset
component. These amendments also narrow the scope for exemption when recognizing deferred taxes under the
initial recognition exemption.
These amendments are effective for annual periods beginning on or after January 1, 2023 and should apply these
amendments to transactions that occur on or after the beginning of the earliest comparative period presented. We
expect the impact of these amendments on our financial statements to not be material.
Amendments to IAS 1: Classification of Liabilities as Current or Non-Current and Deferral of Effective
Date
In January 2020, the IASB issued amendments to IAS 1, Presentation of Financial Statements, to provide a more
general approach to the presentation of liabilities as current or non-current based on contractual arrangements in
place at the reporting date. These amendments:
specify that the rights and conditions existing at the end of the reporting period are relevant in determining
whether we have a right to defer settlement of a liability by at least twelve months;
require disclosures around the relevant information about the covenants to be complied with in order to have
the right to defer settlement of a liability by at least twelve months;
provide that management’s expectations are not a relevant consideration as to whether we will exercise our
rights to defer settlement of a liability; and
clarify when a liability is considered settled.
On October 31, 2022, the IASB issued a deferral of the effective date for the new guidance to annual periods
beginning on or after January 1, 2024 and is to be applied retrospectively. We have not yet determined the impact
of these amendments on our financial statements.
42
Altus Group | Management’s Discussion & Analysis December 31, 2022
16. Disclosure Controls and Procedures and Internal
Controls over Financial Reporting
Management is responsible for establishing and maintaining disclosure controls and procedures (“DC&P”) and
internal controls over financial reporting (“ICFR”), as those terms are defined in National Instrument 52-109 -
Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”).
Management has caused such DC&P to be designed under its supervision to provide reasonable assurance that
our material information, including material information of our consolidated subsidiaries, is made known to our Chief
Executive Officer and our Chief Financial Officer for the period in which the annual and interim filings are prepared.
Further, such DC&P are designed to provide reasonable assurance that information we are required to disclose in
our annual filings, interim filings or other reports we have filed or submitted under securities legislation is recorded,
processed, summarized and reported within the time periods specified in the applicable securities legislation.
Management has caused such ICFR to be designed under its supervision using the framework established in
Internal Control - Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”) to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of the financial statements for external purposes in accordance with IFRS.
Section 3.3(1)(b) of NI 52-109 allows an issuer to limit its design of DC&P and ICFR to exclude controls, policies
and procedures of a business that the issuer acquired not exceeding 365 days from the date of acquisition.
Management has not limited the scope of the design of DC&P and ICFR to exclude controls, policies and procedures
of any acquired businesses as at December 31, 2022.
Management has caused to be evaluated under its supervision the effectiveness of its DC&P as of December 31,
2022 and has concluded that the design and effectiveness of these controls and procedures provide reasonable
assurance that material information relating to Altus Group, including our consolidated subsidiaries, was made
known to management on a timely basis to ensure adequate disclosure.
Management has caused to be evaluated under its supervision the effectiveness of its ICFR as of December 31,
2022, using the COSO framework. Management has concluded that the overall design and effectiveness of these
controls provide reasonable assurance of the reliability of financial reporting and the preparation of the consolidated
financial statements for external purposes in accordance with IFRS.
There have been no significant changes in our internal controls over financial reporting that occurred for the quarter
ended December 31, 2022, the most recently completed interim period, that have materially affected, or are
reasonably likely to materially affect, our internal controls over financial reporting.
The audit committee and our Board of Directors have reviewed and approved this MD&A and the annual financial
statements as at and for the year ended December 31, 2022.
17. Additional Information
Additional information relating to Altus Group Limited, including our Annual Information Form, is available on
SEDAR at www.sedar.com and on our corporate website at www.altusgroup.com under the Investors tab. Our
common shares trade on the TSX under the symbol “AIF”.
43
Altus Group Limited
Consolidated Financial Statements
December 31, 2022 and 2021
(Expressed in Thousands of Canadian Dollars)
44
Altus Group | Consolidated Financial Statements December 31, 2022
Management’s Responsibility for Financial Reporting
The accompanying consolidated financial statements of Altus Group Limited are the responsibility of management
and have been reviewed and approved by the Board of Directors of Altus Group Limited. The consolidated financial
statements have been prepared by management in accordance with International Financial Reporting Standards
and, where appropriate, reflect management’s best estimates and judgments. Management has also prepared
financial and all other information in the Annual Shareholders’ Report and has ensured that this information is
consistent with the consolidated financial statements.
Altus Group Limited maintains appropriate systems of internal control, policies and procedures, which provide
management with reasonable assurance that assets are safeguarded and the financial records are reliable and
form a proper basis for the preparation of the consolidated financial statements.
The Board of Directors of Altus Group Limited ensures that management fulfills its responsibilities for financial
reporting and internal control through an Audit Committee. This committee reviews the consolidated financial
statements and reports to the Board of Directors. The committee meets with the auditor to discuss the results of the
audit, the adequacy of internal accounting controls and financial reporting matters.
The consolidated financial statements have been independently audited by Ernst & Young LLP in accordance with
Canadian generally accepted auditing standards. Their report that follows expresses their opinion on the
consolidated financial statements of the Company.
“James V. Hannon”
“Pawan Chhabra”
James V. Hannon
Pawan Chhabra
Chief Executive Officer
Chief Financial Officer
February 23, 2023
February 23, 2023
45
Altus Group | Consolidated Financial Statements December 31, 2022
Independent auditor’s report
To the Shareholders of
Altus Group Limited
Opinion
We have audited the consolidated financial statements of Altus Group Limited and its subsidiaries [the “Group”], which comprise
the consolidated balance sheets as at December 31, 2022 and 2021, and the consolidated statements of comprehensive income
(loss), consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and
notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as at December 31, 2022 and 2021, and its consolidated financial performance and its
consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards [“IFRS”] as
issued by the International Accounting Standards Board.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of
our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the
consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matter
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated
financial statements of the current period. These matters were addressed in the context of the audit of the consolidated financial
statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a separate opinion on these matters.
For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report, including in relation to this matter. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements.
The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our
audit opinion on the accompanying consolidated financial statements.
46
Altus Group | Consolidated Financial Statements December 31, 2022
Key audit matter
How our audit addressed the key audit matter
Goodwill asset impairment
As at December 31, 2022, the Group has $498M of
goodwill. Management assesses at least annually, or at
any time if an indicator of impairment exists, whether
there has been an impairment loss in the carrying value of
goodwill. When performing impairment tests, the Group
estimates the recoverable amount of the cash generating
units [“CGUs”] to which goodwill has been allocated using
a discounted cash flow model to estimate the fair value
less costs to sell. The Group discloses significant
judgments, estimates and assumptions and the result of
their analysis in respect of impairment in Note 19 to the
consolidated financial statements.
Significant assumptions included cash flow projections,
revenue growth rate, EBITDA margins, perpetual growth
rates, and business-specific discount rates, which are
affected by expectations about future market and
economic conditions.
Based on our knowledge of the Group’s businesses and
considering the performance of the different CGUs, we
identify CGUs with significant goodwill balances, specific
risk factors, and lower excess headroom in the
recoverable amount compared to carrying amount of the
related CGUs.
This matter was identified as a key audit matter in respect
of the Appraisals and North America Development
Advisory CGUs due to the significant estimation
uncertainty and judgment applied by management in
determining the recoverable amount. This is primarily due
to the sensitivity of the significant assumptions described
above to the future cash flows and the effect that changes
in these assumptions would have on the recoverable
amount of these CGUs.
To test the estimated recoverable amount of the Appraisals and
North America Development Advisory CGUs, our audit
procedures included the following, among others:
We assessed methodologies and the significant
assumptions discussed above and underlying data used
by the Group in its analysis with the assistance of our
valuation specialists.
We assessed the selection and application of the discount
rate by evaluating the inputs and mathematical accuracy
of the calculation.
We assessed the historical accuracy of management’s
estimates on cash flow projections, revenue growth rates
and earnings margins by comparing management’s past
projections to actual and historical performance. We also
compared the revenue growth rates to current industry,
market and economic trends.
We performed a sensitivity analysis on significant
assumptions, including EBITDA margins and discount
rates, to evaluate impact on the recoverable amount of the
Appraisals and North America Development Advisory
CGUs that would result from changes in the assumptions.
We also assessed the adequacy of the Group’s
disclosures included in note 19 of the accompanying
consolidated financial statements in relation to this matter.
Other information
Management is responsible for the other information. The other information comprises:
Management’s Discussion and Analysis; and
The information, other than the consolidated financial statements and our auditor’s report thereon, in the Annual Report.
47
Altus Group | Consolidated Financial Statements December 31, 2022
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information, and in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis and the Annual Report prior to the date of this auditor’s report. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian generally
accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
48
Altus Group | Consolidated Financial Statements December 31, 2022
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within
the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision
and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance
in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter, or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The partner in charge of the audit resulting in this independent auditor’s report is Laura Sluce.
Toronto, Canada
February 23, 2023
49
Altus Group | Consolidated Financial Statements December 31, 2022
Consolidated Statements of Comprehensive Income (Loss)
For the Years Ended December 31, 2022 and 2021
(Expressed in Thousands of Canadian Dollars, Except for Per Share Amounts)
The accompanying notes are an integral part of these consolidated financial statements.
Notes
For the year ended
December 31, 2022
For the year ended
December 31, 2021
Revenues
7 $ 735,451 $ 625,387
Expenses
Employee compensation
8
463,949
401,455
Occupancy
16
7,032
7,743
Office and other operating
152,893
123,023
Depreciation of right-of-use assets
16
11,968
12,119
Depreciation of property, plant and equipment
17
6,562
5,446
Amortization of intangibles
18
40,995
29,017
Acquisition and related transition costs (income)
6
4,928
10,137
Share of (profit) loss of joint venture
15
(3,013)
(1,187)
Restructuring costs (recovery)
20
38,896
15
(Gain) loss on investments
14
164
(2,930)
Finance costs (income), net - leases
9, 16
1,913
2,219
Finance costs (income), net - other
9
5,284
4,130
Profit (loss) before income taxes
3,880
34,200
Income tax expense (recovery)
10
4,769
8,627
Profit (loss) for the year
$ (889) $ 25,573
Profit (loss) for the period attributable to:
Non-controlling interest
$ (3) $ (115)
Shareholders of the Company
$ (886) $ 25,688
Other comprehensive income (loss):
Items that may be reclassified to profit or loss in subsequent periods:
Currency translation differences
11,027
(4,828)
Items that are not reclassified to profit or loss in subsequent periods:
Changes in investments measured at fair value through other
comprehensive income, net of tax
14
(328)
2,476
Other comprehensive income (loss), net of tax
10,699
(2,352)
Total comprehensive income (loss) for the year, net of tax
$ 9,810 $ 23,221
Comprehensive income (loss) for the year, net of tax, attributable to:
Non-controlling interest
$ (3) $ (115)
Shareholders of the Company
$ 9,813 $ 23,336
Earnings (loss) per share attributable to the shareholders of the
Company during the year
Basic earnings (loss) per share
25
$(0.02)
$0.62
Diluted earnings (loss) per share
25
$(0.02)
$0.60
50
Altus Group | Consolidated Financial Statements December 31, 2022
Consolidated Balance Sheets
As at December 31, 2022 and 2021
(Expressed in Thousands of Canadian Dollars)
Notes
December 31, 2022
December 31, 2021
Assets
Current assets
Cash and cash equivalents
11 $ 55,267 $ 51,271
Trade receivables and other
12
255,518
223,315
Income taxes recoverable
7,399
3,280
Derivative financial instruments
13
1,694
5,868
Total current assets
319,878
283,734
Non-current assets
Trade receivables and other
12
6,969
2,818
Derivative financial instruments
13
18,519
15,661
Investments
14
19,313
20,806
Investment in joint venture
15
19,509
16,496
Deferred tax assets
10
28,855
24,089
Right-of-use assets
16
38,873
59,992
Property, plant and equipment
17
21,582
21,624
Intangibles
18
292,806
286,670
Goodwill
19
497,582
467,310
Total non-current assets
944,008
915,466
Total assets
$ 1,263,886 $ 1,199,200
Liabilities
Current liabilities
Trade payables and other
20 $ 222,941 $ 193,388
Income taxes payable
2,063
2,629
Lease liabilities
16
14,856
13,914
Total current liabilities
239,860
209,931
Non-current liabilities
Trade payables and other
20
27,265
24,913
Lease liabilities
16
45,459
57,225
Borrowings
21
317,828
286,924
Deferred tax liabilities
10
33,604
27,864
Non-controlling interest
22
-
2,980
Total non-current liabilities
424,156
399,906
Total liabilities
664,016
609,837
Shareholders’ equity
Share capital
23
747,668
726,325
Contributed surplus
48,608
42,364
Accumulated other comprehensive income (loss)
47,165
38,439
Other equity
6
-
(244)
Retained earnings (deficit)
(243,571)
(217,406)
Equity attributable to the shareholders of the Company
599,870
589,478
Non-controlling interest
22
-
(115)
Total shareholders’ equity
599,870
589,363
Total liabilities and shareholders’ equity
$ 1,263,886 $ 1,199,200
The accompanying notes are an integral part of these consolidated financial statements.
Commitments and contingencies (Note 29)
Approved on behalf of the Board of Directors
“Raymond Mikulich”
“Janet Woodruff”
Raymond Mikulich
Janet Woodruff
51
Altus Group | Consolidated Financial Statements December 31, 2022
Consolidated Statements of Changes in Equity
For the Years Ended December 31, 2022 and 2021
(Expressed in Thousands of Canadian Dollars)
The accompanying notes are an integral part of these consolidated financial statements.
Notes
Share
Capital
Contributed
Surplus
Accumulated
Other
Comprehensive
Income (Loss)
Other
Equity
Retained
Earnings
(Deficit)
Total
Non-
controlling
Interest
Total
Shareholders’
Equity
As at January 1, 2021
$ 529,866
$ 30,428
$ 40,791
$ -
$ (217,636)
$ 383,449
$ -
$ 383,449
Profit (loss) for the year
-
-
-
-
25,688
25,688
(115)
25,573
Other comprehensive income
(loss), net of tax:
Currency translation
differences
-
-
(4,828)
-
-
(4,828)
-
(4,828)
Changes in investments
measured at fair value
through other comprehensive
income
-
-
2,476
-
-
2,476
-
2,476
Total comprehensive income
(loss) for the year
-
-
(2,352)
-
25,688
23,336
(115)
23,221
Change in fair value of non-
controlling interest liability
-
-
-
(244)
-
(244)
-
(244)
Transactions with owners:
Dividends declared
-
-
-
-
(25,458)
(25,458)
-
(25,458)
Share-based compensation
-
23,938
-
-
-
23,938
-
23,938
Issued on bought deal
financing
164,771
-
-
-
-
164,771
-
164,771
Dividend Reinvestment Plan
3,294
-
-
-
-
3,294
-
3,294
Shares issued on exercise of
options
16,296
(2,482)
-
-
-
13,814
-
13,814
Shares issued for share-based
compensation
26,971
(2,585)
-
-
-
24,386
-
24,386
Treasury shares reserved for
share-based compensation
(30,786)
-
-
-
-
(30,786)
-
(30,786)
Shares issued on acquisition
8,362
-
-
-
-
8,362
-
8,362
Release of treasury shares
7,551
(7,023)
-
-
-
528
-
528
Gain (loss) on sale of RSs and
shares held in escrow
-
88
-
-
-
88
-
88
Total
196,459
11,936
-
(244)
(25,458)
182,693
-
182,693
As at December 31, 2021
$ 726,325
$ 42,364
$ 38,439
$ (244)
$ (217,406)
$ 589,478
$ (115)
$ 589,363
As at January 1, 2022
$ 726,325
$ 42,364
$ 38,439
$ (244)
$ (217,406)
$ 589,478
$ (115)
$ 589,363
Profit (loss) for the year
-
-
-
-
(886)
(886)
(3)
(889)
Other comprehensive income
(loss), net of tax:
Currency translation
differences
-
-
11,027
-
-
11,027
-
11,027
Changes in investments
measured at fair value
through other comprehensive
income
-
-
(328)
-
-
(328)
-
(328)
Total comprehensive income
(loss) for the year
-
-
10,699
-
(886)
9,813
(3)
9,810
Change in fair value of non-
controlling interest liability
22
-
-
-
258
-
258
-
258
Transfer of gain on disposal of
FVOCI investments
-
-
(1,973)
-
1,973
-
-
-
Purchase of subsidiary shares
from non-controlling interest
22
-
-
-
(14)
(104)
(118)
118
-
Transactions with owners:
Dividends declared
26
-
-
-
-
(27,148)
(27,148)
-
(27,148)
Share-based compensation
24
-
29,380
-
-
-
29,380
-
29,380
Deferred tax arising from
share-based payment
transactions
-
300
-
-
-
300
-
300
Dividend Reinvestment Plan
23
2,357
-
-
-
-
2,357
-
2,357
Shares issued on exercise of
options
23, 24
9,582
(1,421)
-
-
-
8,161
-
8,161
Shares issued for share-based
compensation
23, 24
11,364
(3,264)
-
-
-
8,100
-
8,100
Treasury shares reserved for
share-based compensation
24
(12,859)
-
-
-
-
(12,859)
-
(12,859)
Release of treasury shares
23, 24
21,068
(18,687)
-
-
-
2,381
-
2,381
Cancellation of shares
23
(10,169)
-
-
-
-
(10,169)
-
(10,169)
Gain (loss) on sale of RSs and
shares held in escrow
-
(64)
-
-
-
(64)
-
(64)
Total
21,343
6,244
(1,973)
244
(25,279)
579
118
697
As at December 31, 2022
$ 747,668
$ 48,608
$ 47,165
$ -
$ (243,571)
$ 599,870
$ -
$ 599,870
52
Altus Group | Consolidated Financial Statements December 31, 2022
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2022 and 2021
(Expressed in Thousands of Canadian Dollars)
Notes
For the year ended
December 31, 2022
For the year ended
December 31, 2021
Cash flows from operating activities
Profit (loss) before income taxes
$ 3,880 $ 34,200
Adjustments for:
Depreciation of right-of-use assets
16
11,968
12,119
Depreciation of property, plant and equipment
17
6,562
5,446
Amortization of intangibles
18
40,995
29,017
Finance costs (income), net - leases
9
1,913
2,219
Finance costs (income), net - other
9
5,284
4,130
Share-based compensation
26
29,380
23,938
Unrealized foreign exchange (gain) loss
(3,854)
1,104
(Gain) loss on investments
14
164
(2,930)
(Gain) loss on disposal of right-of-use assets, property, plant and equipment
and intangibles
825
(248)
(Gain) loss on equity derivatives
13
8,740
(10,252)
Share of (profit) loss of joint venture
15
(3,013)
(1,187)
Impairment of right-of-use assets, net of (gain) loss on sub-leases
16, 20
6,906
-
Net changes in:
Operating working capital
177
(34,831)
Liabilities for cash-settled share-based compensation
(5,303)
9,199
Deferred consideration payables
(3,384)
6,668
Contingent consideration payables
3,010
132
Net cash generated by (used in) operations
104,250
78,724
Less: interest paid on borrowings
(11,729)
(3,606)
Less: interest paid on leases
(1,913)
(2,219)
Less: income taxes paid
(14,832)
(19,547)
Add: income taxes refunded
1,309
2,956
Net cash provided by (used in) operating activities
77,085
56,308
Cash flows from financing activities
Proceeds from exercise of options
23, 24
8,161
13,814
Proceeds from share issuance, net of transaction costs
23
-
164,771
Financing fees paid
(1,898)
(414)
Proceeds from borrowings
21
84,500
341,024
Repayment of borrowings
21
(57,136)
(178,819)
Payments of principal on lease liabilities
16
(14,982)
(12,070)
Dividends paid
26
(24,699)
(21,564)
Treasury shares purchased for share-based compensation
23, 24
(4,608)
(6,312)
Cancellation of shares
(8,003)
-
Net cash provided by (used in) financing activities
(18,665)
300,430
Cash flows from investing activities
Purchase of investments
14
(858)
(4,157)
Purchase of intangibles
18
(19,047)
(4,664)
Purchase of property, plant and equipment
17
(5,433)
(5,965)
Proceeds from investments
14
22
326
Proceeds from disposal of investments
14
1,112
-
Acquisitions, net of cash acquired
6, 22
(29,853)
(358,855)
Net cash provided by (used in) investing activities
(54,057)
(373,315)
Effect of foreign currency translation
(367)
(1,789)
Net increase (decrease) in cash and cash equivalents
3,996
(18,366)
Cash and cash equivalents, beginning of year
51,271
69,637
Cash and cash equivalents, end of year
$ 55,267 $ 51,271
The accompanying notes are an integral part of these consolidated financial statements.
53
Altus Group | Consolidated Financial Statements December 31, 2022
1. Business and Structure
Altus Group Limited (the “Company”) is a leading provider of asset and fund intelligence for commercial real
estate. The Company delivers intelligence as a service to its global client base through a connected platform
of industry-leading technology, advanced analytics and advisory services. The Company is a global company
headquartered in Toronto with approximately 2,700 employees across North America, EMEA and Asia Pacific.
The Company conducts its business through two business units: Analytics and Commercial Real Estate
Consulting.
The address of the Company’s registered office is 33 Yonge Street, Suite 500, Toronto, Ontario, Canada. The
Company is listed on the Toronto Stock Exchange (“TSX”) under the symbol AIF and is domiciled in Canada.
“Altus Group” refers to the consolidated operations of the Company.
2. Basis of Preparation
The Company prepares its consolidated financial statements in accordance with International Financial
Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The
consolidated financial statements have been prepared on a going concern basis using the historical cost
convention, except for the revaluation of certain financial assets and financial liabilities, including investments,
derivatives, and debt and equity instruments and contingent consideration that have been measured at fair
value.
Changes to significant accounting policies and estimates are described in Note 4.
These consolidated financial statements were approved by the Board of Directors for issue on February 23,
2023.
3. Summary of Significant Accounting Policies
The significant accounting policies applied in the preparation of these consolidated financial statements are
set out below.
Consolidation
Subsidiaries
Investments in other entities where the Company is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee,
are considered subsidiaries. Subsidiaries are fully consolidated from the date at which control is determined
to have occurred and are de-consolidated from the date that the Company no longer controls the entity. The
financial statements of the subsidiaries are prepared for the same reporting period as the Company, using
consistent accounting policies. All intercompany transactions and balances are eliminated.
54
Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
The Company uses the acquisition method of accounting to account for business combinations, when control
is acquired. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred and the equity interests issued by the Company. The consideration
transferred includes the fair value of any asset or liability resulting from a contingent consideration
arrangement. Acquisition costs are expensed as incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Company’s
share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the
identifiable net assets acquired in the case of a bargain purchase, the difference is recognized directly in profit
or loss.
Joint Venture
Joint ventures are joint arrangements over which the Company has joint control along with the other parties to
the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists
only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
Investments in joint ventures are accounted for using the equity method and initially recognized at cost.
The Company’s share of (profit) loss of joint venture subsequent to the initial combination is recognized in
profit or loss, and its share of movements in other comprehensive income (loss), if any, is recognized in other
comprehensive income (loss) until the date on which joint control ceases. Such movements are adjusted
against the carrying amount of the Company’s investment in joint venture.
Unrealized gains on transactions between the Company and its joint venture are eliminated to the extent of
the Company’s interest in the joint venture. Unrealized losses are also eliminated unless the transactions
provide evidence of an impairment of the asset transferred. The accounting policies of its joint venture are
consistent with IFRS.
The Company reviews its investment in joint venture for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If impaired, the carrying amount of
the Company’s investment in joint venture is written down to its estimated recoverable amount, being the
higher of fair value less costs to sell and value in use, and charged to profit or loss.
Segment Reporting
Segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. Operating segments are aggregated when the criteria in IFRS 8, Operating Segments, are
met. The chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Chief Executive Officer (“CEO”).
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Foreign Currency Translation
The consolidated financial statements are presented in Canadian dollars ($), which is the Company’s functional
and presentation currency. Items included in the financial statements of each of the Company’s subsidiaries
are measured using the currency of the primary economic environment in which each respective entity
operates.
Foreign currency transactions are translated into the appropriate functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies
are recognized in profit or loss within office and other operating expenses.
The results and financial position of the Company’s subsidiaries that have a functional currency different from
the presentation currency are translated into the presentation currency as follows:
assets and liabilities are translated at the closing rate at the date of the balance sheets;
income and expenses are translated at average exchange rates; and
all resulting exchange differences are recognized in other comprehensive income (loss) within currency
translation differences.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate at the date of the balance sheets.
Leases
Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of a lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-
of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease incentives received. Unless the Company
is reasonably certain to obtain ownership of the leased asset at the end of the lease term, right-of-use assets
are depreciated on a straight-line basis over the shorter of their estimated useful life and the lease term. If the
Company is reasonably certain to obtain ownership of the leased asset, right-of-use assets are depreciated
over the estimated useful life of the underlying asset.
The Company’s right-of-use assets are depreciated over the following:
Property
1 - 10 years
Equipment
1 - 4 years
Right-of-use assets are also periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments include fixed payments
(including in-substance fixed payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value guarantees, if applicable.
The lease payments also include the exercise price of a purchase option reasonably certain to be exercised
by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company
exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are
recognized as occupancy expense in the period in which the event or condition that triggers the payment
occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the
lease commencement date if the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in
the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases
that have a lease term of 12 months or less from commencement date and do not contain a purchase option).
It also applies the lease of low-value assets recognition exemption to leases of equipment that are considered
of low value. Payments on such leases are recognized as occupancy expense on a straight-line basis over
the lease term.
Current and Deferred Income Taxes
The tax expense for the year consists of current and deferred income tax. Tax is recognized in profit or loss,
except to the extent that it relates to items recognized in other comprehensive income (loss) or directly in
equity, in which case the tax is recognized accordingly.
Current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the balance
sheet date in the countries where the Company and its subsidiaries operate and generate taxable income.
Management periodically evaluates positions taken in tax filings in different jurisdictions with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill or the initial
recognition of an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss. Deferred income tax assets are recognized
only to the extent that it is probable that the assets can be recovered. Deferred income tax is determined using
tax rates and laws that have been enacted or substantively enacted at the balance sheet date and are expected
to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets and liabilities are presented as non-current.
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and
associates, except for deferred income tax liabilities where the timing of the reversal of the temporary
difference is controlled by the group and it is probable that the temporary difference will not reverse in the
foreseeable future.
The Company applies judgment in identifying and assessing uncertainties over income tax treatments,
including those relating to transfer pricing and other tax deductions. The Company recognizes tax treatments
(including those of its subsidiaries) to the extent that it is probable that it will be accepted by the applicable
taxation authorities.
Tax assets and liabilities are offset when there is a legally enforceable right to offset and when they relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities
where there is an intention to settle the balances on a net basis.
Investment Tax Credits
Investment tax credits, arising from qualifying scientific research and experimental development efforts
pursuant to existing tax legislation, are recorded as a reduction of the corresponding expense when there is
reasonable assurance of their ultimate realization.
Revenue Recognition
Revenue is recognized upon transfer of control of the promised goods or services to customers in an amount
that reflects the consideration to which the Company expects to receive in exchange for those goods or
services. Performance obligations are satisfied and revenue is recognized either over time or at a point in time.
Payment terms vary by contract type; however, terms are typically 30 to 60 days.
Unbilled revenue on customer contracts, contract assets under IFRS 15, Revenue from Contracts with
Customers, relates to conditional rights to consideration for satisfied performance obligations of contracts with
customers. Trade receivables are recognized when the right to consideration becomes unconditional.
Customer deposits and contract liabilities included in trade payables and other relate to payments received or
due in advance of performance under contracts with customers. Contract liabilities are recognized as revenue
as (or when) the Company satisfies its performance obligations under the contracts.
Costs to obtain customer contracts represent commissions incurred and would not otherwise have been
incurred if the contracts had not been obtained. These costs are incremental and capitalized when the
Company expects to recover these costs under each respective customer contract. The asset is amortized
over the term of the specific contract it relates to, consistent with the associated pattern of revenue recognition,
and is recorded in employee compensation expenses. As a practical expedient, incremental costs of obtaining
a contract have been expensed when incurred if the related term is one year or less.
Services
The Company provides services on a time and materials basis, fixed fee basis or contingency basis. Services
are offered by all segments of the Company.
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Performance obligations for services on a time and materials or fixed fee basis are typically satisfied over time
as services are rendered. In contracts where the Company is not entitled to payment until specific performance
obligations are satisfied, revenue is recognized at the time the services are delivered. At contract inception,
the Company expects that the period between when the Company transfers control of a promised service to
a customer and when the customer pays for that service will be one year or less. As such, the Company applies
the practical expedient of not adjusting the consideration for such services for the effects of a significant
financing component.
Revenue is recognized based on the extent of progress towards completion of performance obligations, on a
project-by-project basis. The method used to measure progress depends on the nature of the services.
Revenue is recognized on the basis of time and materials incurred to date relative to the total budgeted inputs.
The output method on the basis of milestones is used when the contractual terms align the Company’s
performance with measurements of value to the customer. Revenue is recognized for services performed to
date based on contracted rates and/or milestones that correspond to the consideration that the Company is
entitled to invoice.
Performance obligations for contingency arrangements are satisfied at a point in time upon completion of the
services. The consideration for such arrangements is performance-based and variable. The estimated variable
consideration included in the transaction price considers the extent that it is highly probable that a significant
reversal of revenue will not occur when the uncertainty is resolved. This is reassessed at the end of each
reporting period.
Service contracts are generally billed subsequent to revenue recognition and result in contract assets. In some
contracts, customer deposits render contract liabilities to the extent that they exceed the contract assets, on a
project-by-project basis.
Software and data products
The Company’s Analytics business offers customers licenses for on-premise software that provide the
customer with a right to use the software as it exists when the license is granted to the customer. Customers
may purchase on-premise, perpetual licenses or subscription licenses, which provide customers with the same
functionality and differ mainly in the duration over which the customer benefits from the software. Revenue
from distinct on-premise licenses is recognized upfront at the point in time when the software is delivered to
the customer. Perpetual licenses are initially sold with one year of ongoing maintenance and the option to
renew thereafter. Support services are sold with subscriptions in all cases. Revenue allocated to ongoing
maintenance or support services is recognized ratably over the term of the contract. The standard warranty
period is 30 days and it is not considered to be a distinct performance obligation. Contracts related to perpetual
licenses and ongoing maintenance are billed upfront and prior to revenue recognition, which generally results
in the initial recognition of a contract liability. Contracts related to licenses sold on a subscription basis and
support services will vary depending on the contractual terms.
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Access to hosted and cloud software and data products over a specified contract term is provided on either a
subscription or usage basis. Revenue for software and data products provided on a subscription basis is
recognized ratably over the contract term, and contracts are billed upfront and prior to revenue recognition,
which generally results in contract liabilities. Revenue for software products provided on a usage basis, such
as the quantity of transactions processed or assets on the Company’s platform, is recognized based on the
customer utilization of such services. Such contracts are billed subsequent to revenue recognition, which
generally results in contract assets.
Financial Assets and Liabilities
Financial assets
The Company classifies its financial assets as amortized cost, fair value through other comprehensive income
(“FVOCI”) or fair value through profit or loss (“FVPL”).
The Company classifies cash and cash equivalents, and trade receivables at amortized cost as the contractual
cash flows are solely payments of principal and interest and the asset is held within a business model with the
objective of holding and collecting the contractual cash flows.
The Company classifies its equity investments that are not held for trading at FVOCI as the Company has
made an irrevocable election at initial recognition to recognize changes in FVOCI rather than FVPL as these
are strategic investments. Upon disposal of these equity investments, any balance within the other
comprehensive income reserve for these equity investments is reclassified to retained earnings (deficit) and
is not reclassified to profit or loss.
The Company classifies its debt investments at FVOCI where the contractual cash flows are solely principal
and interest and the objective of the Company’s business model is achieved both by collecting contractual
cash flows and selling financial assets.
The Company classifies its investments in partnerships and derivative financial instruments at FVPL.
Financial liabilities
The Company classifies its financial liabilities as subsequently measured at amortized cost except for those at
FVPL, such as derivative financial instruments and contingent consideration payables. Financial liabilities
measured at FVPL recognize changes in fair value attributable to the Company’s own credit risk in other
comprehensive income instead of profit or loss, unless this would create an accounting mismatch.
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Impairment
The Company assesses financial assets for impairment on a forward-looking basis, with the expected credit
losses associated with its debt instruments carried at amortized cost and FVOCI. Expected credit losses are
based on the difference between the contractual cash flows due in accordance with the contract and all cash
flows that the Company expects to receive, discounted at an approximation of the original effective interest
rate. For trade receivables and contract assets, the Company applies the simplified approach permitted by
IFRS 9, Financial Instruments, which requires lifetime expected credit losses to be recognized from initial
recognition of the financial assets, and re-assesses at each reporting period. The Company utilizes a provision
matrix based on its historical credit loss experience, adjusted for forward-looking factors specific to customers
and the economic environment.
The Company includes the effect of losses and recoveries due to expected credit losses in office and other
operating expenses.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported if there is a currently
enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, bank balances and short-term, highly liquid investments,
which generally have original maturities of three months or less at the time of acquisition, and that are subject
to an insignificant risk of changes in value. Deposits are repayable on demand and interest, if any, is paid at a
fixed or floating market rate.
Derivative Financial Instruments
The Company enters into equity derivatives to manage its exposure to changes in the fair value of its restricted
share units (“RSUs”) and deferred share units (“DSUs”) issued under their respective plans due to changes in
the fair value of the Company’s common shares. The Company also periodically enters into interest rate swap
agreements for the purposes of managing interest rate exposure and into currency forward contracts to
manage its foreign exchange exposures. Derivatives are not for trading or speculative purposes.
Derivatives are initially recognized at fair value when a derivative contract is entered into and are subsequently
remeasured at their fair value. Depending on the nature of the derivative, changes in fair value are recognized
within finance costs (income), net - other, office and other operating expenses, or employee compensation
expense.
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Property, Plant and Equipment
All property, plant and equipment are stated at historical cost less depreciation and accumulated impairment
losses, if any. Historical cost includes expenditures that are directly attributable to the acquisition of the assets.
Costs incurred with respect to a specific asset are included in the asset’s carrying amount or recognized as a
separate asset, as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any
replaced part is written off. All other repairs and maintenance are charged to profit or loss during the period in
which they are incurred.
Property, plant and equipment are depreciated over the useful life of the assets using the diminishing balance
method as follows:
Furniture, fixtures and equipment
20%
Computer equipment
30%
Leasehold improvements are depreciated on a straight-line basis over the shorter of the respective lease term
and useful life.
The residual values and useful lives of property, plant and equipment are reviewed, and adjusted if appropriate,
at the end of each reporting period.
Gains and losses on disposals of property, plant and equipment are determined by comparing the net proceeds
with the carrying amount and recognized in office and other operating expenses.
Intangibles
Intangible assets consist of: software, non-compete agreements, and certain identifiable intangible assets
acquired through the Company’s business acquisitions such as brands, customer backlog, customer lists,
databases and data agreements.
The Altus Group, ARGUS and Finance Active brands are intangibles with an indefinite life and are not
amortized. Intangibles acquired as part of a business combination are recognized at fair value at the acquisition
date and carried at cost less accumulated amortization subsequent to acquisition. Software is recorded at cost
less accumulated amortization.
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Intangibles with a finite life are amortized over the useful life of the assets using the straight-line or diminishing
balance method as follows:
Brands of acquired businesses
1 - 5 years straight-line
Computer application software
30% diminishing balance
Custom software applications
2 - 8 years straight-line
Internally generated software
2 - 10 years straight-line
Customer backlog
straight-line over remaining life of contracts
Customer lists
5 - 10 years straight-line
Databases
2 - 4 years straight-line
Data agreements
12 years straight-line
Non-compete agreements
straight-line over life of agreements
Costs associated with maintaining computer software applications or incurred during the research phase are
recognized as an expense as incurred. Development costs that are directly attributable to the design, build
and testing of identifiable and unique software applications controlled by the Company are recognized as
intangibles when the following criteria are met:
it is technically feasible to complete the software application so that it will be available for use or sale;
management intends to complete the software application and either use or sell it;
there is an ability to use or sell the software application;
it can be demonstrated how the software application will generate probable future economic benefits;
adequate technical, financial and other resources to complete the development and to use or sell the
software application are available; and
the expenditure attributable to the software application during its development can be reliably measured.
Development costs that do not meet these criteria are recognized as an expense as incurred.
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Impairment of Non-financial Assets
Goodwill and intangibles that have an indefinite useful life are tested annually for impairment and whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. Non-financial
assets that are subject to amortization are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for
the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is
the higher of fair value less costs to sell and value in use. For the purposes of assessing impairment, non-
financial assets are grouped at the lowest levels for which there are separately identifiable independent cash
inflows. Non-financial assets other than goodwill are reviewed for possible reversal of impairment at each
reporting date.
Goodwill is allocated to cash-generating units (“CGUs”) for the purpose of impairment testing. The allocation
is made to those CGUs or groups of CGUs that are expected to benefit from synergies of the business
combination in which the goodwill arose. Goodwill is tested for impairment in the CGUs for which it is monitored
by the Company. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an
entity include the carrying amount of goodwill relating to the disposed entity.
Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently
carried at amortized cost with any difference between the proceeds, net of transaction costs, and the
redemption value recognized in finance costs (income), net - other over the term of the borrowings using the
effective interest method.
Borrowings are classified as current liabilities if the payment is due within one year or less. If the Company
has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting
period, or any payments are due after more than one year, these are classified as non-current liabilities.
Provisions
Provisions represent liabilities of the Company for which the amount or timing is uncertain. Provisions are
recognized when the Company has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably
estimated. Provisions are not recognized for future operating losses.
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a discount rate that reflects current market assessments of the time value of money and the
risks specific to the obligation. The difference between the nominal amount of the provision and the discounted
amount is amortized as a finance cost and correspondingly increases the carrying amount of the provision
over the period to settlement.
Employee Benefits
Termination benefits
Termination benefits are payable when employment is terminated by the Company before the normal
retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The
Company recognizes termination benefits at the earlier of the date at which the Company can no longer
withdraw the offer of these benefits, and, in the case of restructuring, the date at which the Company has
recognized costs for a restructuring within the scope of IAS 37, Provisions, Contingent Liabilities and
Contingent Assets, which involves the payment of termination benefits. Benefits falling due more than 12
months after the end of the reporting period are discounted to their present value.
Profit-sharing and bonus plans
The Company recognizes the expense and related liability for bonuses and profit-sharing awards over the
service period where contractually obliged or when there is a past practice that has created a constructive
obligation, which can be reliably measured.
Employee Share Purchase Plan
The Company has an Employee Share Purchase Plan (“ESPP”), under which employees may contribute up
to 8% of their base salary or base hourly wages towards the purchase of the Company’s shares. For each
eligible contribution, the Company contributes an additional 33% of the employees’ contribution towards their
purchase of the Company’s shares, up to an annual limit per employee each year. These shares will be
purchased from the open market at the prevailing market price on the date of purchase. The Company’s
contributions are recorded as employee compensation expense in the period incurred.
Share-based Compensation
The Company operates a number of share-based compensation plans as follows:
(i) Executive Compensation Plan and Long-Term Equity Incentive Plan
The Company’s Executive Compensation Plan comprises two elements: a common share option plan (“Share
Option Plan”) and an equity compensation plan (“Equity Compensation Plan”). These are both equity-settled
compensation arrangements.
In March 2017, a long-term equity incentive plan (“Long-Term Equity Incentive Plan”) was established to
simplify and replace the Executive Compensation Plan as a means of compensating designated employees
of the Company for services provided and promoting share ownership and alignment with the shareholders’
interests. This plan contains comprehensive and consistent provisions to govern subsequent awards, including
share options, Performance Share Units (“PSUs”) and share-based equity awards.
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Options granted under the Executive Compensation Plan and Long-Term Equity Incentive Plan
Share options issued under both plans have a maximum term of 72 months to expiry, generally vest annually
over a three-to-four-year period from the date of grant, and are exercisable at the designated common share
price, which is calculated as the volume weighted average closing price of the Company’s common shares on
the TSX for the five business days immediately preceding the grant date. For options issued to certain non-
Canadian employees, the designated common share price for which they are exercisable is calculated as the
higher of: (a) the mean of the high and low trading prices of the Company's common shares on the TSX on
the trading day immediately preceding the grant date, or (b) the volume weighted average closing price of the
Company's common shares on the TSX for the five business days immediately preceding the grant date.
Except in specific defined circumstances, options and all rights to purchase common shares are forfeited by
an employee upon ceasing to be an employee of the Company.
The Company recognizes the fair value of options on the grant date using the Black-Scholes option pricing
model as employee compensation expense with a corresponding credit to contributed surplus over the vesting
period, which is the period over which all of the specified vesting conditions are satisfied. For awards with
graded vesting, the fair value of each tranche is recognized over its respective vesting period. On the exercise
of options to purchase common shares, the consideration paid by the employee and the associated amount
of contributed surplus are credited to share capital within shareholders’ equity.
At the end of each reporting period, the Company re-assesses its estimate of the number of options that are
expected to vest and recognizes the impact of any revisions within employee compensation expense.
Other awards granted under the Equity Compensation Plan and Long-Term Equity Incentive Plan
Under the Equity Compensation Plan, the Company was entitled at its sole discretion to issue each participant
a portion of his or her annual discretionary bonus in common shares and/or PSUs. Under the Long-Term
Equity Incentive Plan, the Company is entitled at its sole discretion to issue each participant a portion of his or
her annual discretionary bonus in common shares and/or PSUs. Common shares and PSUs granted under
both plans are subject to certain vesting conditions and generally vest over a three-or-four-year period from
the date of grant. The number of such common shares granted is initially determined as an amount equal to
the amount of annual discretionary bonus allocated divided by the volume weighted average closing price of
the Company’s common shares on the TSX for the five business days ending on the day prior to issuance.
The PSUs granted under both plans can be settled at the Company’s discretion in cash, common shares, or
a combination of both. Except in specific defined circumstances, common shares and PSUs are forfeited by
an employee upon ceasing to be an employee of the Company. All PSUs granted under the Equity
Compensation Plan have been vested and settled.
The number of PSUs that vest under the Long-Term Equity Incentive Plan may range from 0% to 200% based
on the Company’s total shareholder return (“TSR”) relative to a set peer group’s average TSR, according to
the percentages below, subject to the recipient fulfilling the service condition:
20% on December 31 of each year for a period of three years; and
40% at the end of the three-year period.
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
As the Company typically settles these awards in common shares, the Company recognizes the fair value of
the award when granted using the Monte Carlo valuation method as employee compensation expense with a
corresponding credit to contributed surplus over the vesting period, which is the period over which all of the
specified vesting conditions are satisfied. When common shares are issued to settle the obligation, the amount
previously recorded in contributed surplus is transferred to share capital within shareholders’ equity.
At the end of each reporting period, the Company re-assesses its estimate of the number of awards that are
expected to vest and recognizes the impact of any revisions within employee compensation expense.
(ii) Long-Term Incentive Restricted Share Plan and Long-Term Incentive Restricted Share Unit Plan
In March 2021, the Board of Directors approved two new long-term incentive plans, the Long-Term Incentive
Restricted Share Plan (“LTIRS Plan”) and Long-Term Incentive Restricted Share Unit Plan (“LTIRSU Plan”),
to complement the existing Long-Term Equity Incentive Plan.
Restricted shares (“RSs”) and RSUs granted under these plans will not be available to the employee until three
years following the grant date. After three years from the date of grant, the RSs and RSUs will be released,
provided, subject to certain exceptions such as retirement, disability or death, and that the individual is
employed with the Company at the time of the release. Participants are entitled to receive cash dividends or
notional distributions that are paid on common shares, respectively. If an employee resigned from the
Company or is terminated for cause, all RSs and RSUs that have not yet been released from the three-year
restriction period will be forfeited.
With respect to RSs that are equity-settled, the Company contributes funds to purchase common shares in the
open market, which are held by the Company as treasury shares until they vest. This amount is shown as a
reduction in the carrying value of the Company’s common shares. The Company recognizes the fair value of
the award when granted as employee compensation expense with a corresponding credit to contributed
surplus over a three-year period from the date of grant. As RSs are released, the portion of the contributed
surplus relating to the RSs is credited to share capital within shareholders’ equity.
With respect to RSUs that are cash-settled, the Company recognizes the fair value of the award when granted
as employee compensation expense with a corresponding credit to trade payables and other over a three-year
period from the date of grant. Changes in the liability subsequent to the grant date and prior to settlement due
to changes in fair value of the Company’s common shares are recorded as employee compensation expense
in the period incurred.
(iii) Deferred Compensation Plans
The Company has Deferred Compensation Plans that are structured as a restricted share plan (“RS Plan”) in
Canada and as a restricted share unit plan (“RSU Plan”) outside of Canada. Annual grants of RSs or RSUs
form part of the total annual discretionary bonus awarded based on the Company exceeding certain annual
performance targets, which typically consists of an annual cash bonus of 60%-80% and a RS or RSU award
of 20%-40%. On occasion, RSs or RSUs may be granted to certain employees upon acceptance of
employment, subject to certain restrictions similar to those applicable for annual grants.
If annual performance targets are met, RSs and RSUs are awarded within three months of the performance
year and will not be available to the employee until three years following the grant date. After three years from
the date of grant, the RSs and RSUs will be released, provided, subject to certain exceptions such as
retirement, disability or death, and that the individual is employed with the Company at the time of release.
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Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Participants are entitled to receive cash dividends or notional distributions that are paid on common shares,
respectively. If an employee resigns from the Company or is terminated for cause, all RSs and RSUs that have
not yet been released from the three-year restriction period will be forfeited.
With respect to RSs that are equity-settled, the Company contributes funds to purchase common shares in the
open market, which are held by the Company as treasury shares until they vest. This amount is shown as a
reduction in the carrying value of the Company’s common shares. The Company recognizes the fair value of
the award when granted as employee compensation expense with a corresponding credit to contributed
surplus over a 17-quarter period beginning in the year in which performance commences and ending on the
vesting date. As RSs are released, the portion of the contributed surplus relating to the RSs is credited to
share capital within shareholders’ equity.
With respect to RSUs that are cash-settled, the Company recognizes the fair value of the award when granted
as employee compensation expense with a corresponding credit to trade payables and other over a 17-quarter
period beginning in the year in which performance commences and ending on the vesting date. Changes in
the liability subsequent to the grant date and prior to settlement due to changes in fair value of the Company’s
common shares are recorded as employee compensation expense in the period incurred.
(iv) Deferred Share Unit Plans
Directors’ Deferred Share Unit Plan
The Company has a Directors’ Deferred Share Unit Plan (“Directors’ DSU Plan”) under which members of the
Company’s non-executive Board of Directors elect annually to receive all or a portion of their annual retainers
and fees in the form of deferred share units (“Directors’ DSUs”). The Directors’ DSUs vest on the grant date
and are settled in cash upon termination of Board service. Participants are also entitled to receive notional
distributions in additional Directors’ DSUs equal to dividends that are paid on common shares.
For each Directors’ DSU granted, the Company recognizes the market value of the Company’s common
shares on the grant date as employee compensation expense with a corresponding credit to trade payables
and other. Changes in the liability subsequently due to changes in fair value of the Company’s common shares
are recorded as employee compensation expense in the period incurred.
CEO Deferred Share Unit Plan
The Company has a CEO Deferred Share Unit Plan (“CEO DSU Plan”) under which the CEO may receive
compensation in the form of deferred share units (“CEO DSUs”). The CEO DSUs vest on the third anniversary
of the grant date and are settled in cash upon termination of employment. The CEO is also entitled to receive
notional distributions in additional CEO DSUs equal to dividends that are paid on common shares. These
additional CEO DSUs will, up to the vesting date, vest on the vesting date, and after the vesting date, will vest
on the grant date. If the CEO resigns from the Company or is terminated for cause, all CEO DSUs that have
not yet vested will be forfeited.
The Company recognizes the fair value of the initial award as employment compensation expense with a
corresponding credit to trade payables and other over a three-year period. For the grant of CEO DSUs in
respect of notional distributions, the Company recognizes the market value of the Company’s common shares
on the grant date as employee compensation expense with a corresponding credit to trade payables and other.
Changes in the liability subsequently due to changes in fair value of the Company’s common shares are
recorded as employee compensation expense in the period incurred.
The Directors’ DSU Plan and the CEO DSU Plan will herein be referred to as “DSU Plans”.
68
Altus Group | Consolidated Financial Statements December 31, 2022
3. Summary of Significant Accounting Policies, cont’d
Share Capital
Common shares issued by the Company are classified as equity.
Incremental costs directly attributable to the issuance of common shares are shown in equity as a deduction,
net of tax, from the proceeds.
When the Company purchases its own share capital (treasury shares), the consideration paid, including any
directly attributable incremental costs, net of tax, is deducted from equity attributable to the Company’s
shareholders until the shares are cancelled or reissued. Where such common shares are subsequently
reissued, any consideration received, net of any directly attributable incremental transaction costs and the
related income tax effects, is included in equity attributable to the Company’s shareholders.
Dividends
Dividends to the Company’s shareholders are recognized as a liability in the Company’s consolidated financial
statements in the period in which the dividends are declared by the Company’s Board of Directors.
4. Changes in Significant Accounting Policies and Estimates
Adoption of Recent Accounting Pronouncements
Amendments to IAS 37: Onerous Contracts - Cost of Fulfilling a Contract
In May 2020, the IASB issued amendments to IAS 37, Provisions, Contingent Liabilities and Contingent Assets,
to specify that the cost of fulfilling a contract comprises the costs that relate directly to the contract and can
either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling
contracts.
The new guidance is effective for annual periods beginning on or after January 1, 2022 and is applied to
contracts that have unfulfilled obligations as at the beginning of that period. The amendment did not have a
material impact on the consolidated financial statements.
Amendments to IFRS 3: Reference to the Conceptual Framework
In May 2020, the IASB issued amendments to IFRS 3, Business Combinations - Reference to the Conceptual
Framework. The amendments are intended to replace a reference to a previous version of the IASB’s
Conceptual Framework (1989) with a reference to the current version issued in March 2018 without
significantly changing its requirements. The amendments add an exception to the recognition principle of IFRS
3 to avoid the issue of potential “day 2” gains or losses arising for liabilities and contingent liabilities that would
be within the scope of IAS 37 or IFRIC 21, Levies, if incurred separately. The amendments also added a new
paragraph to IFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date.
The new guidance is effective for annual periods beginning on or after January 1, 2022 and is applied
prospectively. The amendment did not have a material impact on the consolidated financial statements.
Future Accounting Pronouncements
The Company has not early adopted any standard, interpretation or amendment that has been issued but is
not yet effective.
69
Altus Group | Consolidated Financial Statements December 31, 2022
4. Changes in Significant Accounting Policies and Estimates,
cont’d
Amendments to IAS 8: Definition of Accounting Estimate
In February 2021, the IASB issued amendments to IAS 8, Accounting Policies, Changes in Accounting
Estimates and Errors, which introduces a new definition of ‘accounting estimates’. The amendments clarify the
distinction between changes in accounting estimates and changes in accounting policies and the correction of
errors. The amendments also clarify the measurement techniques and inputs used to develop accounting
estimates.
The new guidance will be effective for annual periods beginning on or after January 1, 2023, with earlier
application permitted, and applies to changes in accounting policies and changes in accounting estimates that
occur on or after the start of the effective date. The Company expects the impact of these amendments on its
consolidated financial statements to not be material.
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies
In February 2021, the IASB issued amendments to IAS 1, Presentation of Financial Statements, and IFRS
Practice Statement 2, Making Materiality Judgments, to provide guidance in the application of materiality
judgments to accounting policy disclosures. These amendments also replaced the requirement for disclosures
around ‘significant’ accounting policies with a requirement to disclose ‘material’ accounting policies.
The amendment is effective for annual periods beginning on or after January 1, 2023, with earlier application
permitted as long as this fact is disclosed. The Company expects the impact of these amendments on its
consolidated financial statements to not be material.
Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
In May 2021, the IASB issued amendments to IAS 12, Income Taxes, to provide clarity to whether certain
deductions are attributable for tax purposes to the liability recognized in the financial statements or to the
related asset component. These amendments also narrow the scope for exemption when recognizing deferred
taxes under the initial recognition exemption.
These amendments are effective for annual periods beginning on or after January 1, 2023 and should apply
these amendments to transactions that occur on or after the beginning of the earliest comparative period
presented. The Company expects the impact of these amendments on its consolidated financial statements
to not be material.
Amendments to IAS 1: Classification of Liabilities as Current or Non-Current and Deferral of Effective
Date
In January 2020, the IASB issued amendments to IAS 1, Presentation of Financial Statements, to provide a
more general approach to the presentation of liabilities as current or non-current based on contractual
arrangements in place at the reporting date. These amendments:
specify that the rights and conditions existing at the end of the reporting period are relevant in determining
whether the Company has a right to defer settlement of a liability by at least 12 months;
require disclosures around the relevant information about the covenants to be complied with in order to
have the right to defer settlement of a liability by at least 12 months;
provide that management’s expectations are not a relevant consideration as to whether the Company will
exercise its rights to defer settlement of a liability; and
clarify when a liability is considered settled.
70
Altus Group | Consolidated Financial Statements December 31, 2022
4. Changes in Significant Accounting Policies and Estimates,
cont’d
On October 31, 2022, the IASB issued a deferral of the effective date for the new guidance to annual periods
beginning on or after January 1, 2024, and is to be applied retrospectively. The Company has not yet
determined the impact of these amendments on its consolidated financial statements.
5. Critical Accounting Estimates and Judgments
The preparation of consolidated financial statements in conformity with IFRS requires management to make
estimates and assumptions concerning the future. It also requires management to exercise judgment in
applying the Company’s accounting policies and the reported amounts of assets and liabilities, revenue and
expenses, and related disclosures. Estimates and judgments are continually evaluated and are based on
current facts, historical experience, and other factors, including expectations of future events that are believed
to be reasonable under the circumstances. Accounting estimates will, by definition, seldom equal the actual
results.
The following discussion sets forth management’s most significant estimates and assumptions in determining
the value of assets and liabilities and the most significant judgments in applying its accounting policies.
Revenue Recognition and Determination and Allocation of the Transaction Price
The Company estimates variable consideration for contingency arrangements on a project-by-project basis.
Variable consideration is constrained to the extent that it is highly probable that the amount will not be subject
to significant reversal when the uncertainty is resolved, which is when savings are realized by the customer,
unless the contractual terms provide for an enforceable right to payment for performance completed.
The transaction price is allocated on the basis of the relative standalone selling prices for contracts with more
than one performance obligation. Estimation of the standalone selling price involves reasonably available data
points, market conditions, entity-specific factors and information about the customer or class of customer and
to similar customers as evidence of the standalone selling price for each performance obligation; however,
when one is not available, the standalone selling price is estimated. Where the observable price is not
available, based on the specific facts and circumstances, either the adjusted market assessment or the
expected cost plus a margin approach is applied. The determination of the standalone selling prices requires
significant judgment.
Impairment of Trade Receivables and Contract Assets
The impairment provisions for trade receivables and contract assets disclosed in Notes 12 and 27 determined
under IFRS 9 are based on assumptions about the risk of default and expected loss rates. The Company uses
judgment in making these assumptions and selecting the inputs to the impairment calculation based on the
Company’s past history, existing market conditions, and forward-looking estimates at the end of each reporting
period. Such estimates and judgments could impact trade receivables, contract assets for unbilled revenue on
customer contracts and office and other operating expenses.
71
Altus Group | Consolidated Financial Statements December 31, 2022
5. Critical Accounting Estimates and Judgments, cont’d
Estimated Impairment of Goodwill
The Company tests at least annually whether goodwill is subject to any impairment in accordance with the
accounting policy stated in Note 3. The recoverable amount for any CGU is determined based on the higher
of fair value less costs to sell and value in use. Both of the valuation approaches require the use of estimates.
Refer to Note 19 for the results of the impairment assessment.
Determination of Purchase Price Allocations and Contingent Consideration
Estimates are made in determining the fair value of assets and liabilities, including the valuation of separately
identifiable intangibles acquired as part of an acquisition. Judgments are also made in determining whether
any consideration transferred for an acquisition relates to future compensation arrangements and is excluded
from the purchase price allocation. Furthermore, estimates are made in determining the value of contingent
consideration payments that should be recorded as part of the consideration on the date of acquisition and
changes in contingent consideration payable in subsequent reporting periods. Contingent consideration
payments are generally based on acquired businesses achieving certain performance targets. The estimates
are based on management’s best assessment of the related inputs used in the valuation models, such as
future cash flows and discount rates. Future performance results that differ from management’s estimates
could result in changes to liabilities recorded, which are recorded as they arise through profit or loss. Refer to
Note 6 for acquisitions and associated purchase price allocations as well as Notes 20 and 27 for the carrying
value of contingent consideration payables.
Income Taxes
The Company is subject to income taxes in numerous jurisdictions. Significant judgment is required in
determining the provision for income taxes. Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact the current and deferred income taxes in the
period in which such determination is made. Refer to Note 10 for the income tax movements.
6. Acquisitions
Acquisition in 2022
Acquisition of Rethink Solutions Inc.
On May 1, 2022, the Company acquired all of the issued and outstanding shares of Rethink Solutions Inc.
(“Rethink Solutions”) for $40,641, subject to adjustments. On closing, the Company paid a total of $28,641 in
cash, net of working capital adjustments, funded by drawing on its credit facilities. As part of the acquisition,
the Company entered into non-competition and non-solicitation agreements with the selling shareholders. In
addition, the Company issued 181,892 common shares, valued at $9,000 from treasury, to certain selling
shareholders who are continuing as employees of Rethink Solutions following the acquisition. The common
shares are held in escrow and will vest and be released subject to continued employment, compliance with
certain terms and conditions, and certain performance targets being achieved over a three-year period
beginning two months after the closing date. The purchase agreement also provides for contingent
consideration of $3,000 subject to certain performance targets being achieved by the third anniversary of the
closing date. Based in Canada, Rethink Solutions’ team has integrated into the Company’s Property Tax
reportable segment.
72
Altus Group | Consolidated Financial Statements December 31, 2022
6. Acquisitions, cont’d
For accounting purposes, the 181,892 common shares granted and subject to continued employment are held
as treasury shares. As these common shares vest, the fair value of the award will be recognized as employee
compensation expense with a corresponding amount recognized in contributed surplus. When these common
shares are released, the amounts recognized in contributed surplus will be transferred to share capital within
shareholders’ equity.
The purchase price allocation, is based on management’s best estimate of fair value, and at the acquisition
date is as follows:
Rethink Solutions
Acquisition-related costs (included in acquisition and related transition costs (income) in the
consolidated statements of comprehensive income (loss))
$ 935
Consideration:
Cash (including working capital payable)
$ 28,641
Common shares
9,000
Contingent consideration
3,000
Total consideration
40,641
Less: common shares subject to be recognized as employee compensation expense
(8,100)
Less: discount on shares
(900)
Consideration transferred for acquired business
31,641
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents
1,590
Trade receivables and other
162
Property, plant and equipment
272
Right-of-use assets
399
Intangibles
19,600
Trade payables and other
(1,964)
Lease liabilities
(399)
Deferred taxes, net
(5,168)
Total identifiable net assets of acquired business
14,492
Goodwill
$ 17,149
Goodwill and intangibles expected to be deductible for tax purposes
$ -
73
Altus Group | Consolidated Financial Statements December 31, 2022
6. Acquisitions, cont’d
Goodwill arising from the acquisition relates to expected synergies with the existing businesses and the
opportunities to strengthen and complement offerings with greater breadth and depth to both existing and
acquired clients.
Intangibles acquired are as follows:
Rethink Solutions
Finite-life assets
Brands of acquired business
$ 1,300
Customer lists
3,600
Custom application software
14,700
Total acquired intangibles
$ 19,600
Acquisitions in 2021
Acquisition of Finance Active SAS
On April 1, 2021, the Company acquired all of the issued and outstanding shares of Finance Active SAS
(“Finance Active”) and its subsidiaries for approximately EUR106,524 (CAD157,288) including a working
capital payable of EUR96 (CAD141). On closing, the Company paid a total of EUR89,211 (CAD131,866) in
cash, funded by drawing down on the Company’s credit facilities. In addition, the Company issued 303,177
common shares to the selling shareholders and certain members of Finance Active’s management team
valued at EUR12,410 (CAD18,324) from treasury. These common shares are held in escrow and will vest and
be released over two- or three-year periods on each anniversary of the closing date, subject to compliance
with certain terms and conditions. Of the shares issued, 156,405 valued at EUR6,402 (CAD9,453) are also
subject to continued employment over the vesting period. As part of the purchase price, EUR4,807 (CAD7,098)
is also payable in cash over three years after closing. As part of the transaction, the Company entered into
non-compete agreements with members of management of Finance Active. Founded in 2000, Finance Active
is a European provider of SaaS debt management and financial risk management SaaS solutions for treasury
and investment management serving public, corporate and financial institutions. Finance Active is
headquartered in Paris, France, with a wide geographic footprint in Europe including over 3,000 customers
ranging from small-to-medium businesses to large, global institutions. Finance Active’s team of approximately
160 professionals has integrated with the Company’s Analytics reportable segment.
74
Altus Group | Consolidated Financial Statements December 31, 2022
6. Acquisitions, cont’d
For accounting purposes, the 156,405 common shares granted and subject to continued employment are held
as treasury shares. As these common shares vest, the fair value of the award will be recognized as employee
compensation expense with a corresponding amount recognized in contributed surplus. When these common
shares are released, the amounts recognized in contributed surplus will be transferred to share capital within
shareholders’ equity. In addition, the Company recognized the settlement of a put option derivative liability with
the selling shareholders of Finance Active of EUR1,500 (CAD2,215) on the acquisition date as part of the
consideration transferred.
Acquisition of StratoDem Analytics
On May 4, 2021, the Company acquired certain assets of StratoDem Analytics, LLC (“StratoDem Analytics”)
for USD24,350 (CAD29,916) in cash and common shares. As part of the transaction, the Company entered
into a non-compete agreement with members of management of StratoDem Analytics. As consideration for
these assets, the Company paid cash of USD15,950 (CAD19,596). In addition, the Company issued 165,320
common shares to the vendors valued at USD8,400 (CAD10,320) from treasury. The common shares are held
in escrow, and will vest and be released 50% on the first anniversary and the remaining 50% equally at 25%
on each of the second and third anniversary of the closing date, subject to compliance with certain terms and
conditions. Of the shares issued, 139,977 valued at USD7,112 (CAD8,738) are also subject to continued
employment over the vesting period. StratoDem Analytics is an early-stage company offering data-science-
as-a-service for the real estate sector. Based in the U.S., StratoDem Analytics’ team has integrated with the
Company’s Analytics reportable segment.
For accounting purposes, the 139,977 common shares granted and subject to continued employment are held
as treasury shares. As these common shares vest, the fair value of the award will be recognized as employee
compensation expense with a corresponding amount recognized in contributed surplus. When these common
shares are released, the amounts recognized in contributed surplus will be transferred to share capital within
shareholders’ equity.
Acquisition of ArGil Property Tax Services Paralegal Professional Corporation
On August 16, 2021, the Company acquired certain assets of ArGil Property Tax Services Paralegal
Professional Corporation (“ArGil”) for CAD6,148 including a working capital payable of CAD2,148. As part of
the transaction, the Company entered into a non-compete agreement with members of management of ArGil.
As consideration for these assets, the Company paid cash of CAD1,400 and will pay to the vendors excess
working capital of CAD2,148. In addition, the Company issued 40,023 common shares to the vendors valued
at CAD2,400 from treasury. The common shares are held in escrow, and will vest and be released equally
over three years on each anniversary of the closing date, subject to compliance with certain terms and
conditions. The shares issued are also subject to continued employment over the vesting period. The purchase
agreement also provides for contingent consideration of CAD200, subject to certain performance targets being
achieved over a three-year period from the closing date. ArGil provides property tax services in Ontario,
Canada. Based in Canada, the ArGil team has integrated with the Company’s Property Tax reportable
segment.
75
Altus Group | Consolidated Financial Statements December 31, 2022
6. Acquisitions, cont’d
For accounting purposes, the 40,023 common shares granted and subject to continued employment are held
as treasury shares. As these common shares vest, the fair value of the award will be recognized as employee
compensation expense with a corresponding amount recognized in contributed surplus. When these common
shares are released, the amounts recognized in contributed surplus will be transferred to share capital within
shareholders’ equity.
Acquisition of Scryer, Inc. (d/b/a Reonomy) (“Reonomy”)
On November 12, 2021, the Company acquired all of the issued and outstanding shares of Reonomy for
USD201,500 (approximately CAD250,785) (on a cash-free debt-free basis), subject to adjustments. On
closing, the Company paid a total of USD218,094 (CAD271,438) in cash, funded with cash on hand and
drawing down on the Company’s credit facilities. In addition, there was a working capital payable of USD277
(CAD344) that was settled in 2022. As part of the transaction, the Company entered into non-compete
agreements with members of management of Reonomy. In addition, the Company issued 58,466 common
shares to employees of Reonomy valued at USD3,000 (CAD3,734) from treasury. These common shares are
held in escrow and will vest and be released in equal installments on each of the first and second anniversaries
of the grant date, subject to compliance with certain terms and conditions. Reonomy is an AI-powered data
platform for the CRE industry. Based in the U.S., Reonomy’s team has integrated into the Company’s Analytics
reportable segment.
For accounting purposes, the 58,466 common shares granted and subject to continued employment are held
as treasury shares. As these common shares vest, the fair value of the award will be recognized as employee
compensation expense with a corresponding amount recognized in contributed surplus. When these common
shares are released, the amounts recognized in contributed surplus will be transferred to share capital within
shareholders’ equity.
76
Altus Group | Consolidated Financial Statements December 31, 2022
6. Acquisitions, cont’d
The purchase price allocations are based on management’s best estimate of fair value, and at the
acquisition dates were as follows:
Finance
Active
StratoDem
Analytics
ArGil
Reonomy
Total
Acquisition-related costs (included in acquisition and related
transition costs (income) in the consolidated statements of
comprehensive income (loss))
$ 7,030 $ 810 $ 130 $ 2,420 $ 10,390
Consideration:
Cash (including working capital payable)
$131,866
$ 19,596
$ 3,548
$ 271,782
$ 426,792
Common shares
18,324
10,320
2,400
3,734
34,778
Deferred consideration
7,098
-
-
-
7,098
Contingent consideration
-
-
200
-
200
Total consideration
157,288
29,916
6,148
275,516
468,868
Less: common shares subject to be recognized as employee
compensation expense
(9,453)
(8,738)
(2,400)
(3,734)
(24,325)
Less: discount on shares
(1,774)
(316)
-
-
(2,090)
Less: discount on deferred consideration
(356)
-
-
-
(356)
Less: discount on contingent consideration
-
-
(27)
-
(27)
Less: settlement of put option derivative
(2,215)
-
-
-
(2,215)
Consideration transferred including non-compete agreements
143,490
20,862
3,721
271,782
439,855
Less: consideration transferred for non-compete agreements
(738)
(2,146)
(164)
(3,037)
(6,085)
Consideration transferred for acquired business
142,752
18,716
3,557
268,745
433,770
Recognized amounts of identifiable assets acquired and
liabilities assumed:
Cash and cash equivalents
11,160
-
-
56,448
67,608
Trade receivables and other
10,585
14
2,398
4,238
17,235
Investment in equity instruments
155
-
-
-
155
Property, plant and equipment
749
6
6
301
1,062
Trade payables and other
(23,083)
(270)
-
(35,444)
(58,797)
Right-of-use assets
4,756
-
-
3,338
8,094
Intangibles
105,721
7,262
562
114,340
227,885
Lease liabilities
(4,511)
-
-
(3,332)
(7,843)
Deferred taxes, net
(27,496)
-
-
623
(26,873)
Non-controlling interest
(2,805)
-
-
-
(2,805)
Total identifiable net assets of acquired business
75,231
7,012
2,966
140,512
225,721
Goodwill
$ 67,521 $ 11,704 $ 591 $ 128,233 $ 208,049
Goodwill and intangibles expected to be deductible for tax
purposes
$ - $ 30,149 $ 3,744 $ - $ 33,893
77
Altus Group | Consolidated Financial Statements December 31, 2022
6. Acquisitions, cont’d
Non-controlling interest for the Finance Active acquisition represents the fair value of the exercise price of a
put and call option derivative liability related to a 30% minority interest in a limited partnership in Germany,
Verifino GmbH & Co. KG, which was exercisable beginning in 2022. Changes in the fair value of the liability
were recorded with an offset to other equity and changes arising from foreign currency translation are recorded
in other comprehensive income (loss). This liability was settled in 2022 (Note 22).
Goodwill arising from the acquisitions relates to expected synergies with the existing businesses and the
opportunities to strengthen and complement offerings with greater breadth and depth to both existing and
acquired clients.
Intangibles acquired are as follows:
Finance
Active
StratoDem
Analytics
ArGil
Reonomy
Total
Finite-life assets
Brands of acquired businesses
$ - $ - $ - $ 460 $ 460
Customer lists
62,163
446
415
22,116
85,140
Custom application software
30,712
6,590
-
65,590
102,892
Data agreements
-
-
-
26,174
26,174
Customer backlog
-
226
147
-
373
Non-compete agreements
738
2,146
164
3,037
6,085
Total acquired finite-life intangibles
$ 93,613 $ 9,408 $ 726 $ 117,377 $ 221,124
Indefinite-life assets
Brands of acquired businesses
$ 12,846 $ - $ - $ - $ 12,846
Total acquired intangibles
$ 106,459 $ 9,408 $ 726 $ 117,377 $ 233,970
7. Segmented Information
The Company’s segmentation reflects the way the CEO allocates resources and assesses the performance
of operating segments, as well as when making decisions about the ongoing operations of the business and
the Company’s ability to generate cash flows based on the measures of revenue and Adjusted EBITDA. The
CEO considers the business from a core services perspective which are Analytics and Commercial Real Estate
(“CRE”) Consulting. The Company reports the results of its operations through reportable segments: (1)
Analytics; and under CRE Consulting services, (2) Property Tax and (3) Appraisals and Development Advisory
(rebranded from Valuation and Cost Advisory). These reportable segment results include directly attributable
items as well as those that can be allocated on a reasonable basis. Corporate and eliminations include the
Company’s interests in investments and other businesses that are not reportable operating segments,
corporate administrative functions, and eliminations of inter-segment revenue and costs.
78
Altus Group | Consolidated Financial Statements December 31, 2022
7. Segmented Information, cont’d
Adjusted EBITDA represents profit (loss) adjusted for the effects of: profit (loss) from discontinued operations;
occupancy costs calculated on a similar basis prior to the adoption of IFRS 16; finance costs (income), net -
other; depreciation of property, plant and equipment and amortization of intangibles; depreciation of right-of-
use assets; finance costs (income), net - leases; acquisition and related transition costs (income); unrealized
foreign exchange (gains) losses; (gains) losses on disposal of right-of-use assets; property, plant and
equipment and intangibles; share of (profit) loss of joint venture; impairment charges; non-cash share-based
compensation costs; (gains) losses on equity derivatives net of mark-to-market adjustments on related RSUs
and DSUs; (gains) losses on derivatives; restructuring costs (recovery); (gains) losses on investments; (gains)
losses on hedging transactions; other costs or income of a non-operating and/or non-recurring nature; and
income tax expense (recovery).
The following table provides a reconciliation between Adjusted EBITDA and profit (loss):
Year ended
December 31, 2022
Year ended
December 31, 2021
Profit (loss) for the year
$ (889) $ 25,573
Occupancy costs calculated on a similar basis prior to the adoption of
IFRS 16 (1)
(11,993)
(13,199)
Depreciation of right-of-use assets
11,968
12,119
Depreciation of property, plant and equipment and amortization of intangibles
47,557
34,463
Acquisition and related transition costs (income)
4,928
10,137
Unrealized foreign exchange (gain) loss (2)
(3,854)
1,104
(Gain) loss on disposal of right-of-use assets, property, plant and equipment
and intangibles (2)
825
(248)
Share of (profit) loss of joint venture
(3,013)
(1,187)
Non-cash share-based compensation costs (3)
24,544
19,455
(Gain) loss on equity derivatives net of mark-to-market adjustments on
related RSUs and DSUs (3)
2,481
(2,040)
Restructuring costs (recovery)
38,896
15
(Gain) loss on investments (4)
164
(2,930)
Other non-operating and/or non-recurring (income) costs (5)
11,742
11,517
Finance costs (income), net - leases
1,913
2,219
Finance costs (income), net - other
5,284
4,130
Income tax expense (recovery)
4,769
8,627
Adjusted EBITDA
$ 135,322 $ 109,755
(1) Management uses the non-GAAP occupancy costs calculated on a similar basis prior to the adoption of IFRS 16 when analyzing
financial and operating performance.
(2) Included in office and other operating expenses in the consolidated statements of comprehensive income (loss).
(3) Included in employee compensation expenses in the consolidated statements of comprehensive income (loss).
(4) Gain (loss) on investments relates to changes in the fair value of investments in partnerships.
(5) Other non-operating and/or non-recurring income (costs) for the year ended December 31, 2022 relate to legal, advisory, and other
consulting costs related to organizational and strategic initiatives, including those related to the transition of certain members of the
leadership team. For the year ended December 31, 2021, other non-operating and/or non-recurring income (costs) relate to (i) costs
relating to the June 13, 2021 cybersecurity incident net of insurance proceeds received or receivable, and (ii) transaction and other
related costs. These are included in office and other operating expenses in the consolidated statements of comprehensive income
(loss).
79
Altus Group | Consolidated Financial Statements December 31, 2022
7. Segmented Information, cont’d
The following summary presents certain financial information regarding the Company’s segments:
Segment Revenues and Expenditures
Year ended December 31, 2022
Analytics
Commercial Real Estate
Consulting
Corporate
Eliminations
Total
Property Tax
Appraisals and
Development
Advisory
Revenues from external
customers
$ 345,193 $ 268,567 $ 121,691 $ - $ - $ 735,451
Inter-segment revenues
910
16
(222)
-
(704)
-
Total segment revenues
346,103
268,583
121,469
-
(704)
735,451
Adjusted EBITDA
71,730
87,533
17,099
(41,040)
-
135,322
Depreciation of right-of-use
assets
6,361
2,408
2,350
849
-
11,968
Depreciation of property,
plant and equipment and
amortization of intangibles
30,714
14,377
1,633
833
-
47,557
Finance costs (income), net
- leases
391
478
373
671
-
1,913
Finance costs (income), net
- other
-
-
-
5,284
-
5,284
Income tax expense
(recovery)
-
-
-
4,769
-
4,769
Unsatisfied performance obligations on fixed long-term customer contracts, mainly within Analytics and the
Development Advisory practice, are $90,483 as of December 31, 2022 (December 31, 2021 - $81,820). It is
expected that approximately 53% of the fixed customer contract value will be recognized as revenue over the
next 12 months, approximately 32% in the year following, and the balance thereafter. This amount excludes
contract values that have variable or contingency-based arrangements, which account for a significant portion
of the revenue recognized in the current year. The Company applies the practical expedient to not disclose
the unsatisfied portions of performance obligations related to contracts with a duration of one year or less, or
the unsatisfied portions of performance obligations where the revenue recognized corresponds with the
amounts invoiced to customers.
80
Altus Group | Consolidated Financial Statements December 31, 2022
7. Segmented Information, cont’d
Year ended December 31, 2021
Analytics
Commercial Real Estate
Consulting
Corporate
Eliminations
Total
Property Tax
Appraisals and
Development
Advisory
Revenues from external
customers
$ 250,610 $ 259,908 $ 114,869 $ - $ - $ 625,387
Inter-segment revenues
474
3
(176)
-
(301)
-
Total segment revenues
251,084
259,911
114,693
-
(301)
625,387
Adjusted EBITDA
41,567
87,616
16,440
(35,868)
-
109,755
Depreciation of right-of-use
assets
6,077
2,955
2,496
591
-
12,119
Depreciation of property,
plant and equipment and
amortization of intangibles
19,334
12,866
1,363
900
-
34,463
Finance costs (income), net
- leases
464
674
483
598
-
2,219
Finance costs (income), net
- other
-
-
-
4,130
-
4,130
Income tax expense
(recovery)
-
-
-
8,627
-
8,627
Geographic Information - Revenue from External Customers
Year ended
December 31, 2022
Year ended
December 31, 2021
Canada
$ 199,700 $ 185,709
U.S.
328,316
232,712
U.K.
125,767
143,651
France
32,153
24,424
Rest of EMEA
15,775
10,726
Australia
25,530
23,576
Rest of Asia Pacific
8,210
4,589
Total
$ 735,451 $ 625,387
81
Altus Group | Consolidated Financial Statements December 31, 2022
8. Employee Compensation
Year ended
December 31, 2022
Year ended
December 31, 2021
Salaries and benefits
$ 434,569 $ 377,517
Share-based compensation (Note 24)
29,380
23,938
Employee compensation
$ 463,949 $ 401,455
During the year ended December 31, 2022, the Company’s contributions to the Employee Share Purchase
Plan were $353 and are recorded in employee compensation expense.
9. Finance Costs (Income), Net
Year ended
December 31, 2022
Year ended
December 31, 2021
Interest on bank credit facilities
$ 12,541 $ 3,918
Interest on lease liabilities
1,913
2,219
Interest - other
104
458
Change in fair value of interest rate swaps (Note 13)
(6,856)
-
Finance costs
7,702
6,595
Finance income
(505)
(246)
Finance costs (income), net
$ 7,197 $ 6,349
10. Income Taxes
Year ended
December 31, 2022
Year ended
December 31, 2021
Current income taxes
Current income tax on profits for the year
$ 11,494 $ 18,567
Adjustments in respect of prior years
(696)
482
Total current income taxes
10,798
19,049
Deferred income taxes
Origination and reversal of temporary differences
(6,427)
(10,538)
Adjustments in respect of prior years
327
(572)
Change in income tax rates
71
688
Total deferred income taxes
(6,029)
(10,422)
Income tax expense (recovery)
$ 4,769 $ 8,627
82
Altus Group | Consolidated Financial Statements December 31, 2022
10. Income Taxes, cont’d
The reconciliation between income tax expense and the tax applicable to profits in Canada is as follows:
Year ended
December 31, 2022
Year ended
December 31, 2021
Profit (loss) before income taxes
$ 3,880 $ 34,200
Tax calculated at domestic income tax rate applicable to profits in Canada
(26.9%)
1,044
9,200
Tax effects of:
Impact of countries with different income tax rates
(490)
(3,131)
Losses and deductible temporary differences for which no deferred tax
asset has been recognized
3,903
529
Change in income tax rates
64
688
Expenses not deductible for income tax purposes
507
837
Other
(259)
504
Income tax expense (recovery)
$ 4,769 $ 8,627
Effective tax rate
122.9%
25.2%
Deferred Income Taxes
The gross movement on the deferred income taxes account is as follows:
Amount
Balance as at January 1, 2021
$ 12,684
(Charged) credited to profit or loss
10,422
(Charged) credited to other comprehensive income (loss)
(550)
(Charged) credited to share capital or goodwill
(26,861)
Exchange differences and others
530
Balance as at December 31, 2021
(3,775)
(Charged) credited to profit or loss
6,029
(Charged) credited to other comprehensive income (loss)
(3,147)
(Charged) credited to share capital or goodwill
(5,168)
Exchange differences and others
1,312
Balance as at December 31, 2022
$ (4,749)
83
Altus Group | Consolidated Financial Statements December 31, 2022
10. Income Taxes, cont’d
The movement in deferred income tax assets and liabilities during the year, without taking into consideration
the offsetting of balances within the same tax jurisdiction, is as follows:
Non-capital
Income Tax
Losses
Tax Deductible
Goodwill
Other
Total
Deferred income tax assets
Balance as at January 1, 2021
$ 3,561 $ 8,687 $ 17,739 $ 29,987
(Charged) credited to profit or loss
31,050
430
7,103
38,583
(Charged) credited to other comprehensive income (loss)
-
-
(1,149)
(1,149)
Exchange differences and others
(136)
(53)
(241)
(430)
Balance as at December 31, 2021
34,475
9,064
23,452
66,991
(Charged) credited to profit or loss
(6,535)
9,332
(6,531)
(3,734)
(Charged) credited to other comprehensive income (loss)
-
-
(2,036)
(2,036)
Exchange differences and others
2,108
509
852
3,469
Balance as at December 31, 2022
$ 30,048 $ 18,905 $ 15,737 $ 64,690
Accelerated
Tax
Depreciation
Unbilled
Revenue on
Customer
Contracts
Intangibles
Other
Total
Deferred income tax liabilities
Balance as at January 1, 2021
$ (103) $ (74) $ (16,775)
$ (351) $ (17,303)
(Charged) credited to profit or loss
70
(14)
(27,909)
(308)
(28,161)
(Charged) credited to other comprehensive
income (loss)
-
-
-
599
599
(Charged) credited to share capital or goodwill
-
-
(26,861)
-
(26,861)
Exchange differences and others
2
4
952
2
960
Balance as at December 31, 2021
(31)
(84)
(70,593)
(58)
(70,766)
(Charged) credited to profit or loss
(25)
(11)
8,702
1,097
9,763
(Charged) credited to other comprehensive
income (loss)
(1,111)
(1,111)
(Charged) credited to share capital or goodwill
(5,168)
(5,168)
Exchange differences and others
7
1
(2,183)
18
(2,157)
Balance as at December 31, 2022
$ (49) $ (94) $ (69,242)
$ (54) $ (69,439)
Deferred income tax assets are recognized for tax loss carryforwards to the extent that the realization of the
related tax benefit through future taxable profits is probable based on future estimated profits in excess of the
profits arising on the reversal of existing taxable temporary differences. Evidence supporting recognition of
these deferred income tax assets includes earnings forecasts and the utilization of tax losses in the current
year.
84
Altus Group | Consolidated Financial Statements December 31, 2022
10. Income Taxes, cont’d
As at December 31, 2022, the following are the recognized net operating loss carryforwards from U.S.
acquisitions, which may be applied against taxable income of future years, no later than as follows:
Amount
2024
2036
Indefinite
$ 148
4,086
101,671
Total
$ 105,905
The unrecognized net operating loss carryforwards in the U.S. is approximately $1,120 and is available to
reduce taxable income of a foreign subsidiary; $631 of losses expire in 2037 and $489 of losses may be carried
forward indefinitely.
In EMEA, there are unrecognized loss carryforwards of approximately $6,129 that may be carried forward
indefinitely. Net operating losses of approximately $4,659 are recognized and may be carried forward
indefinitely to be applied against reversal of existing taxable temporary differences and taxable income of
future years.
The Company has net operating losses of approximately $492 in Asia Pacific that are recognized and may be
carried forward indefinitely. It has unrecognized net operating loss carryforwards in Asia Pacific of
approximately $6,717 that are available to reduce taxable income of certain foreign subsidiaries; $2,747 of
losses expire between 2023 and 2030 and $3,970 of losses may be carried forward indefinitely.
The Company has net operating losses of approximately $14,875 in Canada that are recognized and expire
between 2038 and 2041. It has unrecognized net operating losses of approximately $32,408, of which, $12,602
of losses expire in 2041 and $19,806 of losses expire in 2042. Further, one of the Canadian subsidiaries of
the Company has net operating losses of approximately $169 that are recognized and will expire in 2042.
11. Cash and Cash Equivalents
December 31, 2022
December 31, 2021
Cash on hand
$ 54,771 $ 49,536
Short-term deposits
496
1,735
Cash and cash equivalents
$ 55,267 $ 51,271
85
Altus Group | Consolidated Financial Statements December 31, 2022
12. Trade Receivables and Other
December 31, 2022
December 31, 2021
Trade receivables
$ 188,596 $ 171,268
Less: loss allowance provision
(19,163)
(19,913)
Trade receivables, net
169,433
151,355
Contract assets: unbilled revenue on customer contracts (1)
56,028
47,677
Deferred costs to obtain customer contracts
4,598
1,942
Prepayments
23,777
20,903
Due from related party (GeoVerra)
-
3,074
Net investment in sub-leases
5,221
71
Other receivables
3,430
1,111
Total trade receivables and other
262,487
226,133
Less: non-current portion
(6,969)
(2,818)
Trade receivables and other - current
$ 255,518 $ 223,315
(1) As at December 31, 2022, contract assets are stated net of expected credit losses of $1,028 (December 31, 2021 - $787).
For the year ended December 31, 2022, amortization associated with deferred costs to obtain customer
contracts of $3,648 was expensed to the consolidated statements of comprehensive income (loss) (2021 -
$2,696). For the years ended December 31, 2022 and 2021, no impairment losses on deferred costs were
recognized.
13. Derivative Financial Instruments
December 31, 2022
December 31, 2021
Assets
Equity derivative contracts
$ 12,789 $ 21,529
Interest rate swaps
7,424
-
Total derivative financial instruments
20,213
21,529
Less: non-current portion
(18,519)
(15,661)
Derivative financial instruments - current
$ 1,694 $ 5,868
At the time of issuance of various share-based compensation instruments, the Company entered into equity
derivative contracts with counterparties to manage the exposure to the change in fair value of the share-based
compensation in relation to the change in fair value of the Company’s common shares.
86
Altus Group | Consolidated Financial Statements December 31, 2022
13. Derivative Financial Instruments, cont’d
The following table summarizes the equity derivative contracts outstanding as at December 31, 2022 and
2021, and number of RSUs, DSUs and LTIRSUs for which they relate:
December 31, 2022
December 31, 2021
Effective Date
Description
Contract Expiry
Notional
Amount
Fair
Value (2)
Notional
Amount
Fair
Value (2)
March 28, 2014
196,860 (2021 - 195,001)
DSUs
March 22, 2023 (1)
$ 6,220 $ 4,448 $ 5,989 $ 7,879
March 13, 2019
Nil (2021 - 115,923) RSUs
relating to 2018
performance year
March 31, 2022
-
-
2,377
5,868
March 24, 2020
57,969 (2021 - 69,022)
RSUs relating to 2019
performance year
March 29, 2023
1,448
1,694
1,724
3,185
March 29, 2021
61,733 (2021 - 76,351)
RSUs relating to 2020
performance year
April 2, 2024
1,822
1,523
2,254
3,176
March 29, 2021
116,973 (2021 - 53,662)
LTIRSUs
April 2, 2024
4,832
1,507
2,395
1,421
March 16, 2022
117,240 (2021 - nil) RSUs
relating to 2021
performance year
April 2, 2025
2,736
3,617
-
-
Total
$ 17,058 $ 12,789 $ 14,739 $ 21,529
(1) Subject to an automatic one-year extension, unless prior notice is given by the Company.
(2) The fair values indicated are the amounts in excess of/(deficit from) the notional amounts for each equity derivative. Changes in fair
value are recognized as gain (loss) on equity derivatives and included in employee compensation expenses in the consolidated
statements of comprehensive income (loss).
The following interest rate swaps were outstanding in aggregate as at December 31, 2022 and 2021:
December 31, 2022
December 31, 2021
Effective Date
Fixed Interest
Rate
(per annum)
Contract
Expiry
Notional Amount
Fair Value
Notional Amount
Fair Value
April 29, 2022
2.07%
April 13, 2027
$ 93,311 (1) $ 7,424 $ - $ -
(1) Notional amount equivalent to GBP57,000.
87
Altus Group | Consolidated Financial Statements December 31, 2022
14. Investments
December 31, 2022
December 31, 2021
Investments in equity instruments
$ 11,856 $ 14,412
Investments in partnerships
7,457
6,394
Investments
$ 19,313 $ 20,806
During the year ended December 31, 2022, the Company purchased $nil of preferred shares and $nil of
common shares as equity instruments (2021 - $2,788 and $148, respectively) and contributed $910 towards
capital in various partnerships (2021 - $1,221).
During the year ended December 31, 2022, fair value adjustments related to the Company’s investments in
partnerships and equity instruments of $(164) and $(1,118) have been recorded through profit (loss) and other
comprehensive income (loss), respectively (2021 - $2,930 and $3,383, respectively).
During the year ended December 31, 2022, the Company disposed of an investment in equity instruments as
the underlying investment was no longer aligned with the Company’s long-term investment strategy.
Investments disposed had a fair value of $2,224 (2021 - $nil) at the date of disposal, and the Company
recognized a gain (loss) on disposal of $nil (2021 - $nil).
15. Investment in Joint Venture
The Company holds a 49.0% interest (that provides joint control through an equal 50% of the voting rights) in
GeoVerra Inc. (“GeoVerra”), a joint venture offering a broad variety of geomatics services across Canada.
The activity in the Company’s investment in GeoVerra during the year is as follows:
Amount
Balance as at January 1, 2021
$ 15,309
Share of profit (loss)
1,187
Balance as at December 31, 2021
16,496
Share of profit (loss)
3,013
Balance as at December 31, 2022
$ 19,509
A summary of GeoVerra’s financial information is as follows:
December 31, 2022
December 31, 2021
Current assets, including cash and cash equivalents of $5,198
(2021 - $4,103)
$ 44,575 $ 40,961
Non-current assets
19,132
21,770
Current liabilities, including financial liabilities of $4,115 (2021 - $9,759)
(17,941)
(20,470)
Non-current liabilities, including financial liabilities of $6,083 (2021 - $8,936)
(6,083)
(8,936)
Equity
$ 39,683 $ 33,325
Company’s share of equity - 49.0% (2021 - 49.5%)
$ 19,445 $ 16,496
88
Altus Group | Consolidated Financial Statements December 31, 2022
15. Investment in Joint Venture, cont’d
December 31, 2022
December 31, 2021
Revenues
$ 114,030 $ 92,738
Expenses, including depreciation and amortization of $5,475 (2021 - $2,766);
finance costs of $387 (2021 - $370); income tax expense of $1,836 (2021 -
$316)
107,883
90,340
Profit (loss) and total comprehensive income (loss)
$ 6,147 $ 2,398
As at December 31, 2022, GeoVerra has commitments of $9,906 (December 31, 2021 - $14,515).
16. Leases
The following are continuities of the cost and accumulated depreciation of right-of-use assets for the years
ended December 31, 2022 and 2021:
Year ended December 31, 2022
Right-of-Use Assets
Property
Equipment
Total
Cost
Balance, beginning of year
$ 88,738 $ 2,890 $ 91,628
Additions
1,337
794
2,131
Acquisition (Note 6)
399
-
399
Disposals
(4,907)
(172)
(5,079)
Exchange differences
1,800
59
1,859
Balance, end of year
87,367
3,571
90,938
Accumulated depreciation and impairment
Balance, beginning of year
(28,999)
(2,637)
(31,636)
Depreciation charge
(11,713)
(255)
(11,968)
Impairment (1)
(8,920)
-
(8,920)
Disposals
1,272
118
1,390
Exchange differences
(884)
(47)
(931)
Balance, end of year
(49,244)
(2,821)
(52,065)
Net book value as at December 31, 2022
$ 38,123 $ 750 $ 38,873
(1) Included in restructuring costs (recovery) in the consolidated statements of comprehensive income (loss).
89
Altus Group | Consolidated Financial Statements December 31, 2022
16. Leases, cont’d
Year ended December 31, 2021
Right-of-Use Assets
Property
Equipment
Total
Cost
Balance, beginning of year
$ 73,057 $ 2,708 $ 75,765
Additions
12,158
163
12,321
Acquisition (Note 6)
8,007
87
8,094
Disposals
(3,548)
(89)
(3,637)
Exchange differences
(936)
21
(915)
Balance, end of year
88,738
2,890
91,628
Accumulated depreciation
Balance, beginning of year
(21,498)
(2,577)
(24,075)
Depreciation charge
(11,966)
(153)
(12,119)
Disposals
4,020
89
4,109
Exchange differences
445
4
449
Balance, end of year
(28,999)
(2,637)
(31,636)
Net book value as at December 31, 2021
$ 59,739 $ 253 $ 59,992
The following is a continuity of the movements of lease liabilities for the years ended December 31, 2022 and
2021:
Lease Liabilities
As at January 1, 2021
$ 63,583
Additions
12,321
Acquisition (Note 6)
7,843
Interest expense
2,219
Payments
(14,289)
Exchange differences
(538)
As at December 31, 2021
71,139
Additions
2,131
Acquisition (Note 6)
399
Interest expense
1,913
Payments
(16,895)
Exchange differences
1,628
As at December 31, 2022
60,315
Less: non-current portion
(45,459)
Current portion as at December 31, 2022
$ 14,856
90
Altus Group | Consolidated Financial Statements December 31, 2022
16. Leases, cont’d
For the year ended December 31, 2022, the Company recognized rent expense from short-term leases of
$458 (2021 - $598), leases of low-value assets of $75 (2021 - $74) and variable lease payments of $5,813 in
occupancy expense (2021 - $6,677). The weighted average incremental borrowing rate on lease liabilities as
at December 31, 2022 is 2.91% (December 31, 2021 - 2.93%).
The Company’s sub-leases of its right-of-use of office space are classified as finance leases. The right-of-use
asset relating to the head lease with sub-lease is derecognized and the net investment of the sub-lease is
recognized under “Trade receivables and other”. As at December 31, 2022, the Company’s net investment in
sub-leases is $5,221 (December 31, 2021 - $71).
17. Property, Plant and Equipment
The following are continuities of the cost and accumulated depreciation of property, plant and equipment for
the years ended December 31, 2022 and 2021:
Year ended December 31, 2022
Leasehold
Improvements
Furniture, Fixtures
and Equipment
Computer
Equipment
Total
Cost
Balance, beginning of year
$ 22,902 $ 13,828 $ 19,011 $ 55,741
Additions
2,574
430
2,990
5,994
Acquisitions (Note 6)
182
22
68
272
Disposals
(201)
(307)
(554)
(1,062)
Exchange differences
326
260
420
1,006
Balance, end of year
25,783
14,233
21,935
61,951
Accumulated depreciation
Balance, beginning of year
(14,308)
(9,337)
(10,472)
(34,117)
Depreciation charge
(2,402)
(1,053)
(3,107)
(6,562)
Disposals
197
268
493
958
Exchange differences
(199)
(165)
(284)
(648)
Balance, end of year
(16,712)
(10,287)
(13,370)
(40,369)
Net book value as at December 31, 2022
$ 9,071 $ 3,946 $ 8,565 $ 21,582
91
Altus Group | Consolidated Financial Statements December 31, 2022
17. Property, Plant and Equipment, cont’d
Year ended December 31, 2021
Leasehold
Improvements
Furniture, Fixtures
and Equipment
Computer
Equipment
Total
Cost
Balance, beginning of year
$ 22,835 $ 12,549 $ 14,241 $ 49,625
Additions
225
1,103
4,637
5,965
Acquisitions (Note 6)
365
253
444
1,062
Disposals
(209)
(117)
(276)
(602)
Exchange differences
(314)
40
(35)
(309)
Balance, end of year
22,902
13,828
19,011
55,741
Accumulated depreciation
Balance, beginning of year
(12,228)
(8,658)
(8,363)
(29,249)
Depreciation charge
(2,410)
(816)
(2,220)
(5,446)
Disposals
131
84
157
372
Exchange differences
199
53
(46)
206
Balance, end of year
(14,308)
(9,337)
(10,472)
(34,117)
Net book value as at December 31, 2021
$ 8,594 $ 4,491 $ 8,539 $ 21,624
18. Intangibles
The following are continuities of the cost and accumulated amortization of intangible assets for the years ended
December 31, 2022 and 2021:
Year ended December 31, 2022
Brands of
Acquired
Businesses
Computer
Application
Software
Custom
Software
Applications
Internally
Generated
Software
Data
Agreements
Customer
Backlog
Customer
Lists
Databases
Non-
compete
Agreements
Indefinite-
Life Brands
Total
Cost
Balance, beginning of year
$ 22,725
$ 9,902
$ 31,886
$ 130,880
$ 26,703
$ 45,781
$ 286,196
$ 6,876
$ 43,947
$ 39,999
$ 644,895
Additions
-
18,670
32
300
-
-
-
45
-
19,047
Acquisition (Note 6)
1,300
-
-
14,700
-
-
3,600
-
-
-
19,600
Disposals
-
(1,039)
-
-
-
-
-
-
-
-
(1,039)
Exchange differences
(485)
127
1,592
4,407
1,774
(132)
7,446
-
386
1,483
16,598
Balance, end of year
23,540
27,660
33,510
150,287
28,477
45,649
297,242
6,921
44,333
41,482
699,101
Accumulated
amortization and
impairment
Balance, beginning of year
(22,237)
(4,455)
(25,643)
(30,664)
(269)
(37,889)
(194,908)
(6,876)
(35,284)
-
(358,225)
Amortization charge
(494)
(2,394)
(873)
(13,217)
(2,308)
(4,803)
(12,227)
-
(4,679)
(40,995)
Disposals
-
318
-
-
-
-
-
-
-
-
318
Exchange differences
509
(62)
(1,212)
(682)
(112)
89
(5,696)
-
(227)
-
(7,393)
Balance, end of year
(22,222)
(6,593)
(27,728)
(44,563)
(2,689)
(42,603)
(212,831)
(6,876)
(40,190)
(406,295)
Net book value as at
December 31, 2022
$ 1,318
$ 21,067
$ 5,782
$ 105,724
$ 25,788
$ 3,046
$ 84,411
$ 45
$ 4,143
$ 41,482
$ 292,806
92
Altus Group | Consolidated Financial Statements December 31, 2022
18. Intangibles, cont’d
Year ended December 31, 2021
Brands of
Acquired
Businesses
Computer
Application
Software
Custom
Software
Applications
Internally
Generated
Software
Data
Agreements
Customer
Backlog
Customer
Lists
Databases
Non-
compete
Agreements
Indefinite-
Life Brands
Total
Cost
Balance, beginning of year
$ 22,470
$ 5,365
$ 25,157
$ 35,496
$ -
$ 45,771
$ 203,309
$ 6,903
$ 38,024
$ 27,539
$ 410,034
Additions
-
4,664
-
-
-
-
-
-
-
-
4,664
Acquisition (Note 6)
460
-
6,591
96,301
26,174
373
85,140
-
6,085
12,846
233,970
Disposals
-
(111)
-
-
-
-
-
(27)
-
-
(138)
Exchange differences
(205)
(16)
138
(917)
529
(363)
(2,253)
-
(162)
(386)
(3,635)
Balance, end of year
22,725
9,902
31,886
130,880
26,703
45,781
286,196
6,876
43,947
39,999
644,895
Accumulated
amortization and
impairment
Balance, beginning of year
(22,246)
(4,047)
(25,156)
(25,365)
-
(32,516)
(184,401)
(6,903)
(31,472)
-
(332,106)
Amortization charge
(194)
(516)
(561)
(6,254)
(269)
(5,623)
(11,577)
-
(4,023)
-
(29,017)
Disposals
-
102
-
-
-
-
-
27
-
-
129
Exchange differences
203
6
74
955
-
250
1,070
-
211
-
2,769
Balance, end of year
(22,237)
(4,455)
(25,643)
(30,664)
(269)
(37,889)
(194,908)
(6,876)
(35,284)
-
(358,225)
Net book value as at
December 31, 2021
$ 488
$ 5,447
$ 6,243
$ 100,216
$ 26,434
$ 7,892
$ 91,288
$ -
$ 8,663
$ 39,999
$ 286,670
Indefinite-life intangibles, consisting of the Altus Group, ARGUS and Finance Active brands, have been
assessed for impairment along with goodwill as outlined in Note 19. These assets are considered to have
indefinite lives as management believes that there is an indefinite period over which the assets are expected
to generate net cash flows.
The finite-life intangibles will be amortized over the remaining useful life as follows:
December 31, 2022
Average Remaining Useful Life
Brands of acquired businesses
22 months - 28 months
Custom software applications
76 months
Internally generated software
30 months - 112 months
Customer backlog
4 months - 23 months
Customer lists
1 month - 112 months
Data agreements
130 months
Non-compete agreements
6 months - 44 months
93
Altus Group | Consolidated Financial Statements December 31, 2022
19. Goodwill
The following are continuities of the cost and accumulated impairment losses of goodwill for the years ended
December 31, 2022 and 2021:
Year ended
December 31, 2022
Year ended
December 31, 2021
Cost
Balance, beginning of year
$ 515,954 $ 310,215
Acquisitions (Note 6)
17,149
208,049
Exchange differences
15,298
(2,310)
Balance, end of year
548,401
515,954
Accumulated impairment losses
Balance, beginning of year
(48,644)
(49,145)
Exchange differences
(2,175)
501
Balance, end of year
(50,819)
(48,644)
Net book value as at December 31, 2022
$ 497,582 $ 467,310
The carrying value of the Altus Group brand, an indefinite-life intangible asset, was tested for impairment at
the Company level and no impairment was necessary. The carrying values of goodwill and the ARGUS brand
and Finance Active brand, indefinite-life intangible assets, were allocated to the Company’s CGUs, or groups
of CGUs, as follows:
December 31, 2022
December 31, 2021
Goodwill
ARGUS Brand
and Finance
Active Brand
Goodwill
ARGUS Brand
and Finance
Active Brand
Analytics
$ 336,214 $ 35,217 $ 303,935 $ 33,734
North America Property Tax
68,557
-
50,362
-
U.K. Property Tax
46,244
-
48,437
-
North America Development Advisory
28,411
-
28,411
-
Appraisals
18,009
-
36,019
-
Asia Pacific Development Advisory
147
-
146
-
Total
$ 497,582 $ 35,217 $ 467,310 $ 33,734
94
Altus Group | Consolidated Financial Statements December 31, 2022
19. Goodwill, cont’d
The recoverable amounts of the CGUs, or groups of CGUs, were determined using a discounted cash flow
analysis to estimate fair value less costs to sell (Level 3). This analysis incorporated assumptions used by
market participants. The key assumptions used were as follows:
December 31, 2022
December 31, 2021
Perpetual Growth
Rate
Discount Rate
(after-tax)
Perpetual
Growth Rate
Discount Rate
(after-tax)
Analytics
3.0%
14.5%
3.0%
14.5%
North America Property Tax
3.0%
12.9%
3.0%
12.5%
U.K. Property Tax
3.0%
13.5%
5.0%
14.5%
North America Development Advisory
3.0%
14.1%
3.0%
13.1%
Appraisals
3.0%
14.5%
3.0%
12.4%
Asia Pacific Development Advisory
3.0%
15.3%
3.0%
23.0%
The discounted cash flow analysis uses after-tax cash flow projections based on five-year financial budgets.
Cash flows beyond the five-year period were extrapolated using the estimated perpetual growth rates stated
above. The growth rates do not exceed the long-term average growth rate for the business in which the CGU,
or group of CGUs, operates. Management’s margin assumptions were based on historical performance and
future expectations. The discount rates used are on an after-tax basis and reflect risks related to the respective
CGU, or group of CGUs.
Impairment
Management performed its annual impairment analysis as at October 1, 2022 and determined that the
indefinite-life intangibles and goodwill were not impaired.
95
Altus Group | Consolidated Financial Statements December 31, 2022
20. Trade Payables and Other
December 31, 2022
December 31, 2021
Trade payables
$ 7,348 $ 10,625
Accrued expenses
117,563
119,213
Contract liabilities: deferred revenue
90,565
73,255
Deferred consideration payables
3,284
6,668
Contingent consideration payables
3,189
179
Dividends payable (Note 26)
6,816
6,724
Provisions
21,441
1,551
Due to related party (GeoVerra)
-
86
Total trade payables and other
250,206
218,301
Less non-current portion:
Accrued expenses
20,609
20,778
Contract liabilities: deferred revenue
495
208
Deferred consideration payables
1,543
3,462
Contingent consideration payables
189
179
Provisions
4,429
286
Trade payables and other - non-current
27,265
24,913
Trade payables and other - current
$ 222,941 $ 193,388
Contract Liabilities: Deferred Revenue
Year ended
December 31, 2022
Year ended
December 31, 2021
Balance - beginning of year
$ 73,255 $ 43,032
Revenue deferred in previous years and recognized as revenue in current
year
(60,217)
(40,453)
Net additions from acquisitions
1,516
20,441
Net additions from contracts with customers
73,081
51,367
Exchange differences
2,930
(1,132)
Balance - end of year
$ 90,565 $ 73,255
Revenue recognized from performance obligations partially satisfied in previous years was $32,954 (2021 -
$23,847).
96
Altus Group | Consolidated Financial Statements December 31, 2022
20. Trade Payables and Other, cont’d
Provisions
Restructuring
Other
Total
Balance as at January 1, 2021
$ 5,800 $ 218 $ 6,018
Charged to profit or loss:
Additional provisions, net of releases
15
(25)
(10)
Unwinding of discount (Note 9)
-
5
5
Used during the year
(4,451)
(4)
(4,455)
Exchange differences
7
(14)
(7)
Balance as at December 31, 2021
1,371
180
1,551
Charged to profit or loss:
Additional provisions, net of releases
31,990
17
32,007
Unwinding of discount (Note 9)
-
9
9
Used during the year
(12,151)
-
(12,151)
Exchange differences
25
-
25
Balance as at December 31, 2022
21,235
206
21,441
Less: non-current portion
(4,223)
(206)
(4,429)
Provisions - current
$ 17,012 $ - $ 17,012
In 2022, the Company initiated a global restructuring program that resulted in restructuring costs of $38,896
for the year ended December 31, 2022, of which $6,906 related to the net impairment of right-of-use assets
and gain (loss) on sub-leases, and the remainder primarily related to employee severance costs.
21. Borrowings
December 31, 2022
December 31, 2021
Bank credit facilities
$ 319,584 $ 287,594
Less: deferred financing fees
(1,756)
(670)
Net borrowings
$ 317,828 $ 286,924
Amendments to Bank Credit Facilities
On June 28, 2022, the Company amended its bank credit facilities to further strengthen its liquidity position by
increasing the Company’s borrowing capacity to $550,000 from $400,000 with certain provisions that allow the
Company to further increase the limit to $650,000. The amended bank credit facilities also include an increase
to the maximum Funded debt to EBITDA financial covenant ratio from 4.0 to 4.5 with provisions that allow for
a short-term increase up to 5.0 following certain business acquisitions, and are secured on certain assets of
the Company. The bank credit facilities mature on March 24, 2027, with an additional two-year extension
available at the Company’s option.
97
Altus Group | Consolidated Financial Statements December 31, 2022
21. Borrowings, cont’d
Loans bear interest at a floating rate, based on the Canadian prime rates, Canadian bankers’ acceptance
rates, U.S. base rates, SONIA, SOFR or €STR rates plus, in each case, an applicable margin to those rates.
The applicable margin for Canadian bankers’ acceptance, SONIA, SOFR and €STR borrowings depends on
a trailing four-quarter calculation of the Funded debt to EBITDA ratio. The weighted average effective interest
rate for the bank credit facilities for the year ended December 31, 2022 was 3.66% (2021 - 1.58%).
As at December 31, 2022, the Company was in compliance with the financial covenants of the amended bank
credit facilities, which are summarized below:
December 31, 2022
Funded debt to EBITDA (maximum of 4.50:1)
2.13:1
Interest coverage (minimum of 3.00:1)
11.56:1
In addition, the Company and certain of its subsidiaries, collectively the guarantors, must account for at least
80% of consolidated revenues on a trailing 12-month basis. The bank credit facilities require repayment of the
principal at such time as the Company receives proceeds of insurance, equity or debt issuances, or sale of
assets in excess of certain thresholds, unless otherwise exempted. Letters of credit are also available on
customary terms for bank credit facilities of this nature.
Contractual Payments Schedule
Contractual principal repayments on borrowings are as follows:
December 31, 2022
December 31, 2021
1 to 3 years
$ - $ 287,594
4 to 5 years
319,584
-
$ 319,584 $ 287,594
98
Altus Group | Consolidated Financial Statements December 31, 2022
21. Borrowings, cont’d
Reconciliation of Liabilities arising from Financing Activities, other than Leases
Bank Credit
Facilities
Deferred Financing
Fees
Total
Balance as at January 1, 2021
$ 123,000 $ (568) $ 122,432
Net cash flows
162,205
(414)
161,791
Non-cash movements:
Amortization
-
312
312
Exchange differences
2,389
-
2,389
Balance as at December 31, 2021
287,594
(670)
286,924
Net cash flows
27,364
(1,898)
25,466
Non-cash movements:
Amortization
-
812
812
Exchange differences
4,626
-
4,626
Balance as at December 31, 2022
$ 319,584 $ (1,756) $ 317,828
22. Non‐controlling Interest
On May 3, 2022, the Company purchased the remaining 30% minority interest in Verifino GmbH & Co. KG
and settled the non-controlling interest liability for $2,802 in cash. Prior to the transaction, a fair value loss of
$258 was recorded through other equity. Upon settlement, the cumulative changes in the fair value of the non-
controlling interest liability in other equity and the carrying amount of the non-controlling interest’s share of
equity were transferred to retained earnings (deficit).
99
Altus Group | Consolidated Financial Statements December 31, 2022
23. Share Capital
The Company is authorized to issue an unlimited number of common shares and an unlimited number of
preference shares, issuable in series. The common shares have no par value and rank equally with regard to
the Company’s residual assets. Holders of these shares are entitled to participate equally in dividends.
Common shares issued and outstanding are as follows:
Common Shares
Number of Shares
Amount
Balance as at January 1, 2021
40,429,117
$ 529,866
Issued on bought deal financing
2,783,000
164,771
Issued on exercise of options
480,296
16,296
Issued under the Dividend Reinvestment Plan
59,423
3,294
Issued for share-based compensation
506,716
26,971
Treasury shares reserved for share-based compensation
(458,613)
(30,786)
Shares issued on acquisition
172,115
8,362
Release of treasury shares
147,049
7,551
Balance as at December 31, 2021
44,119,103
726,325
Issued on exercise of options (Note 24)
262,945
9,582
Issued under the Dividend Reinvestment Plan
46,638
2,357
Issued for share-based compensation (Note 24)
492,883
11,364
Treasury shares reserved for share-based compensation (Note 24)
(241,725)
(12,859)
Release of treasury shares (Note 24)
378,670
21,068
Cancellation of shares
(188,838)
(10,169)
Balance as at December 31, 2022
44,869,676
$ 747,668
As at December 31, 2022, the 44,869,676 common shares (December 31, 2021 - 40,429,117) are net of
570,203 treasury shares (December 31, 2021 - 395,584) with a carrying value of $34,564 (December 31, 2021
- $19,538) that are held in escrow until vesting conditions are met (Note 24).
On February 3, 2022, the Company announced that the TSX had approved the Company’s notice of intention
to enter into a Normal Course Issuer Bid (“NCIB”), which allows the Company to purchase up to 1,345,142
common shares for cancellation during the period from February 8, 2022 to February 7, 2023, subject to certain
daily limitations.
On June 29, 2022, the Company entered into an automatic share purchase plan (“ASPP”) with a designated
broker for the purpose of permitting the Company to purchase its common shares under the NCIB announced
on February 3, 2022, during self-imposed blackout periods. The volume of purchases is determined by the
broker in its sole discretion based on maximum purchase price and volume parameters established by the
Company under the ASPP. All purchases made under the ASPP will be included in computing the number of
common shares purchased under the NCIB.
100
Altus Group | Consolidated Financial Statements December 31, 2022
23. Share Capital, cont’d
During the year ended December 31, 2022, the Company repurchased 155,400 (2021 - nil) common shares
for total consideration of $7,544 for cancellation under the NCIB. As at December 31, 2022, there is no
obligation to purchase common shares under the ASPP.
The Company has a Dividend Reinvestment Plan (“DRIP”) for shareholders of the Company who are resident
in Canada. Under the DRIP, participants may elect to automatically reinvest quarterly dividends into additional
common shares of the Company.
Pursuant to the DRIP, and in the case where common shares are issued from treasury, cash dividends are
reinvested into additional shares of the Company at the weighted average market price of common shares for
the five trading days immediately preceding the relevant dividend payment date, less a discount of 4%. In the
case where common shares are purchased on the open market, cash dividends are reinvested into additional
shares of the Company at the relevant average market price paid in respect of satisfying this reinvestment
plan.
24. Share‐based Compensation
The Company’s share-based compensation expense, which includes the Executive Compensation Plan
(Share Option Plan and Equity Compensation Plan), Long-Term Equity Incentive Plan, Deferred
Compensation Plans (RS Plan and RSU Plan), DSU Plans and other share-based awards, was $31,702 (2021
- $38,570). The activity in the Company’s share-based compensation plans during the period is as follows:
(i) Executive Compensation Plan and Long-Term Equity Incentive Plan
The following is a summary of the Company’s share option activity:
Movements in the number of options outstanding and the weighted average exercise price are as follows:
Number of Options
Outstanding
Weighted Average
Exercise Price
Balance as at January 1, 2021
1,791,682
$35.78
Granted
226,891
$58.95
Exercised
(480,296)
$28.78
Expired/Forfeited
(68,396)
$41.02
Balance as at December 31, 2021
1,469,881
$41.39
Granted
1,253,137
$47.91
Exercised
(262,945)
$31.04
Expired/Forfeited
(130,011)
$52.95
Balance as at December 31, 2022
2,330,062
$45.42
101
Altus Group | Consolidated Financial Statements December 31, 2022
24. Share‐based Compensation, cont’d
Information about the Company’s share options outstanding and exercisable as at December 31, 2022 is as
follows:
Exercise Price
Number of Options
Outstanding
Weighted
Average Remaining
Contractual Life
Number of Options
Exercisable
$25.56 - $29.72
199,616
0.94 years
136,906
$30.70 - $37.93
198,620
1.00 years
152,448
$43.38 - $52.84
1,638,366
3.71 years
221,051
$53.95 - $65.67
293,460
3.76 years
50,919
$45.42
2,330,062
3.25 years
561,324
The options granted vest over a period of up to 48 months. The fair value of the options granted was estimated
on the date of grant using the Black-Scholes option pricing model with the following assumptions:
2022
2021
Risk-free interest rate
1.58% - 3.36%
0.77% - 0.78%
Expected dividend yield
1.1% - 1.4%
0.9% - 1.1%
Expected volatility
29.38% - 33.96%
30.11% - 32.92%
Expected option life
3.00 - 4.50 years
3.00 - 4.50 years
Exercise price
$43.38 - $54.29
$56.49 - $65.67
Weighted average grant-date fair value per option
$8.61 - $15.43
$11.39 - $15.38
Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price,
particularly over the historical period commensurate with the expected term. The expected term of the
instruments has been based on historical experience and general option holder behaviour.
The following is a summary of the activity related to common shares held in escrow under the Equity
Compensation Plan and Long-Term Equity Incentive Plan:
Number of common shares
Balance as at January 1, 2021
116,309
Settled
(61,946)
Forfeited
(2,520)
Balance as at December 31, 2021
51,843
Settled
(48,394)
Forfeited
(358)
Balance as at December 31, 2022
3,091
102
Altus Group | Consolidated Financial Statements December 31, 2022
24. Share‐based Compensation, cont’d
The Company settled vested PSUs under the Long-Term Equity Incentive Plan through the issuance of
common shares:
Number of common shares
Settled in March 2021
111,845
Settled in March 2022
310,991
The Company granted the following PSUs under the Long-Term Equity Incentive Plan:
Number of PSUs
Granted in 2021
101,709
Granted in 2022
233,898
(ii) Long-Term Incentive Restricted Share Plan and Long-Term Incentive Restricted Share Unit Plan
The following is a summary of the Company’s LTIRS Plan activity:
Number of LTIRSs
Balance as at January 1, 2021 (all unvested)
-
Granted
20,590
Settled
(263)
Balance as at December 31, 2021 (all unvested)
20,327
Granted
9,697
Settled
(2,684)
Forfeited
(558)
Balance as at December 31, 2022 (all unvested)
26,782
In 2022, the Company granted a total value of $778 under the LTIRS Plan and purchased 9,697 common
shares in the open market.
103
Altus Group | Consolidated Financial Statements December 31, 2022
24. Share‐based Compensation, cont’d
The following is a summary of the Company’s LTIRSU Plan activity:
Number of LTIRSUs
Balance as at January 1, 2021 (all unvested)
-
Granted
56,864
Settled
(1,080)
Forfeited
(2,632)
Balance as at December 31, 2021 (all unvested)
53,152
Granted
83,592
Settled
(4,771)
Forfeited
(5,127)
Balance as at December 31, 2022 (all unvested)
126,846
(iii) Deferred Compensation Plans
The following is a summary of the Company’s RS Plan activity:
Number of RSs
Balance as at January 1, 2021 (all unvested)
194,654
Granted
43,152
Settled
(54,492)
Forfeited
(3,334)
Balance as at December 31, 2021 (all unvested)
179,980
Granted
50,136
Settled
(116,968)
Forfeited
(2,267)
Balance as at December 31, 2022 (all unvested)
110,881
In connection with the 2021 performance year, the Company granted a total value of $3,981 under the RS
Plan. In March 2022, the Company purchased 50,136 common shares in the open market.
104
Altus Group | Consolidated Financial Statements December 31, 2022
24. Share‐based Compensation, cont’d
In connection with the 2020 performance year, the Company granted a total value of $4,191 under the RS
Plan. In March 2021, the Company purchased 42,705 common shares in the open market.
The following is a summary of the Company’s RSU Plan activity:
Number of RSUs
Balance as at January 1, 2021 (all unvested)
302,325
Granted
81,060
Settled
(93,614)
Forfeited
(30,080)
Balance as at December 31, 2021 (all unvested)
259,691
Granted
129,270
Settled
(140,020)
Forfeited
(11,999)
Balance as at December 31, 2022 (all unvested)
236,942
(iv) Deferred Share Unit Plans
The following is a summary of the Company’s DSU Plans activity:
Number of DSUs
Balance as at January 1, 2021
173,836
Granted
21,165
Balance as at December 31, 2021
195,001
Granted
27,562
Forfeited
(25,703)
Balance as at December 31, 2022
196,860
105
Altus Group | Consolidated Financial Statements December 31, 2022
24. Share‐based Compensation, cont’d
(v) Other Share-Based Awards
The following is a summary of the activity related to common shares held in escrow and subject to continued
employment related to the Company’s acquisition of Property Tax Assistance Company Inc., Finance Active,
StratoDem Analytics, ArGil, Reonomy, and Rethink Solutions:
Number of common shares
Balance as at January 1, 2021
84,341
Granted
394,871
Settled
(21,086)
Forfeited
(3,129)
Balance as at December 31, 2021
454,997
Granted
181,892
Settled
(174,003)
Forfeited
(33,438)
Balance as at December 31, 2022
429,448
(vi) Compensation Expense by Plan
Year ended
December 31, 2022
Year ended
December 31, 2021
Equity Compensation Plan
$ 85 $ 606
Long-Term Equity Incentive Plan
12,132
7,015
LTIRS Plan
913
576
LTIRSU Plan (1)
1,668
849
RS Plan
3,923
3,907
RSU Plan (2)
1,999
8,667
DSU Plans (3)
(1,345)
5,116
Other share-based awards
12,327
11,834
(1) For the years ended December 31, 2022 and 2021, the Company recorded mark-to-market adjustments of $(253) and $132,
respectively.
(2) For the years ended December 31, 2022 and 2021, the Company recorded mark-to-market adjustments of $(3,226) and $5,162,
respectively.
(3) For the years ended December 31, 2022 and 2021, the Company recorded mark-to-market adjustments of $(2,736) and $3,446,
respectively.
106
Altus Group | Consolidated Financial Statements December 31, 2022
24. Share‐based Compensation, cont’d
(vii) Liabilities for Cash-settled Plans (1)
December 31, 2022
December 31, 2021
LTIRSU Plan
$ 2,290 $ 781
RSU Plan
10,021
14,729
DSU Plans
10,534
12,638
(1) The carrying value of the liability related to these plans is recorded in accrued expenses within trade payables and other.
25. Earnings (Loss) per Share
Basic earnings (loss) per share is calculated by dividing profit (loss) by the weighted average number of
common shares outstanding during the year.
The dilutive effect of share options, equity awards, PSUs and restricted shares is determined using the treasury
stock method. For the purposes of the weighted average number of common shares outstanding, common
shares are determined to be outstanding from the date they are issued.
For the year ended December 31, 2022, 2,330,062 share options, 566,909 RSs (including common shares
issued in escrow as part of the LTIRS Plan) and 559,880 PSUs were excluded from the diluted earnings (loss)
per share calculations as the impact would have been anti-dilutive.
For the year ended December 31, 2021, 218,350 share options and 20,498 RSs (including common shares
issued in escrow as part of the LTIRS Plan) were excluded from the diluted earnings (loss) per share
calculations as the impact would have been anti-dilutive.
The following table summarizes the basic and diluted earnings (loss) per share and the basic and diluted
weighted average number of common shares outstanding:
Year ended
December 31, 2022
Year ended
December 31, 2021
Profit (loss) for the year attributable to Shareholders of the Company -
basic and diluted
$ (886) $ 25,688
Weighted average number of common shares outstanding - basic
44,635,448
41,684,077
Dilutive effect of share options
-
429,048
Dilutive effect of equity awards and PSUs
-
421,555
Dilutive effect of RSs
-
364,436
Weighted average number of common shares outstanding - diluted
44,635,448
42,899,116
Earnings (loss) per share:
Basic
$(0.02)
$0.62
Diluted
$(0.02)
$0.60
107
Altus Group | Consolidated Financial Statements December 31, 2022
26. Dividends Payable
The Company declared a $0.15 dividend per common share to shareholders of record on the last business
day of each quarter, and dividends were paid on the 15th day of the month following quarter end. Dividends
are declared and paid in Canadian dollars.
A reconciliation of dividends payable is as follows:
Dividends Payable
Balance as at January 1, 2021
$ 6,124
Dividends paid
(21,564)
Non-cash movements:
DRIP (Note 23)
(3,294)
Dividends declared
25,458
Balance as at December 31, 2021
6,724
Dividends paid
(24,699)
Non-cash movements:
DRIP (Note 23)
(2,357)
Dividends declared
27,148
Balance as at December 31, 2022
$ 6,816
108
Altus Group | Consolidated Financial Statements December 31, 2022
27. Financial Instruments and Fair Values
The Company’s financial instruments consist of cash and cash equivalents, trade receivables and other
(excluding deferred costs to obtain customer contracts, and prepayments), investments in equity instruments,
investments in partnerships, derivative financial instruments, trade payables and other (excluding contract
liabilities, LTIRSU Plan, RSU Plan and DSU Plan payables, contingent consideration payables, and deferred
consideration payables), contingent consideration payables, deferred consideration payables, and borrowings.
Financial Instruments by Category
The Company classifies its financial assets as FVPL, FVOCI, or amortized cost. The tables below indicate the
carrying values of financial assets and liabilities for each of the following categories:
December 31, 2022
December 31, 2021
FVPL
FVOCI
Amortized
Cost
FVPL
FVOCI
Amortized
Cost
Assets as per Consolidated Balance Sheets:
Cash and cash equivalents
$ - $ - $ 55,267 $ - $ - $ 51,271
Trade receivables and other (excluding
deferred costs to obtain customer contracts,
and prepayments)
-
-
234,112
-
-
203,288
Investments in equity instruments
-
11,856
-
-
14,412
-
Investments in partnerships
7,457
-
-
6,394
-
-
Derivative financial instruments
20,213
-
-
21,529
-
-
Total
$ 27,670 $ 11,856 $ 289,379 $ 27,923 $ 14,412 $ 254,559
December 31, 2022
December 31, 2021
FVPL
Amortized Cost
FVPL
Amortized Cost
Liabilities as per Consolidated Balance Sheets:
Trade payables and other (excluding contract
liabilities, LTIRSU Plan, RSU Plan and DSU
Plans payables, deferred consideration
payables, and contingent consideration
payables)
$ - $ 130,323
$ - $ 110,051
Lease liabilities
-
60,315
-
71,139
Deferred consideration payables
3,284
-
6,668
-
Contingent consideration payables
3,189
-
179
-
Borrowings
-
317,828
-
286,924
Total
$ 6,473 $ 508,466 $ 6,847 $ 468,114
109
Altus Group | Consolidated Financial Statements December 31, 2022
27. Financial Instruments and Fair Values, cont’d
Fair Values
The tables below present financial instruments that are measured at fair value. The different levels in the
hierarchy have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly; and
Level 3: Inputs for the asset or liability that are not based on observable market data.
The fair value of financial instruments traded in active markets is based on quoted market prices at each
balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an
exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent
actual and regularly occurring market transactions on an arm’s-length basis.
The fair value of financial instruments that are not traded in an active market is determined by using valuation
techniques. These valuation techniques maximize the use of observable market data where it is available and
rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument
are observable, the instrument is included in Level 2.
If one or more of the significant inputs are not based on observable market data, the instrument is included in
Level 3.
The following tables present the fair value hierarchy under which the Company’s financial instruments are
valued:
December 31, 2022
Level 1
Level 2
Level 3
Total
Assets:
Investments in equity instruments
$ 2,708
$ - $ 9,148 $ 11,856
Investments in partnerships
7,457
7,457
Derivative financial instruments
-
20,213
-
20,213
Liabilities:
Borrowings
-
319,584
-
319,584
Deferred consideration payables
-
-
3,284
3,284
Contingent consideration payables
-
-
3,189
3,189
110
Altus Group | Consolidated Financial Statements December 31, 2022
27. Financial Instruments and Fair Values, cont’d
December 31, 2021
Level 1
Level 2
Level 3
Total
Assets:
Investments in equity instruments
$ 4,303 $ - $ 10,109 $ 14,412
Investments in partnerships
-
-
6,394
6,394
Derivative financial instruments
-
21,529
-
21,529
Liabilities:
Borrowings
-
287,594
-
287,594
Deferred consideration payables
-
6,668
-
6,668
Contingent consideration payables
-
-
179
179
On April 29, 2022, the Company entered into interest rate swap agreements for a total notional amount of
GBP57,000. The Company is obligated to pay the counterparty to the swap agreements an amount based
upon a fixed interest rate of 2.07% per annum, and the counterparty is obligated to pay the Company an
amount equal to the GBP - SONIA. These agreements expire on April 13, 2027. These interest rate swaps are
not designated as cash flow hedges.
Cash and cash equivalents, trade receivables and other (excluding deferred costs to obtain customer
contracts, and prepayments) due within one year, and trade payables and other (excluding contract liabilities,
LTIRSU Plan, RSU Plan and DSU Plans payables, deferred consideration payables, and contingent
consideration payables) due within one year, are all short-term in nature and, as such, their carrying values
approximate their fair values. The fair values of non-current trade receivables and other and trade payables
and other are estimated by discounting the future contractual cash flows at the cost of borrowing to the
Company, which approximate their carrying values.
Derivative financial instruments are recorded in Level 2. The fair value of interest rate swaps is calculated as
the present value of the estimated future cash flows based on observable yield curves. The fair value of equity
derivatives is calculated based on the movement in the Company’s common share price between the initial
common share price on the effective date and the reporting date, which are observable inputs. The fair value
of currency forward contracts is calculated based on the spread between the currency forward rate and the
rate on the reporting date, which are observable inputs, and applied to the notional amount.
The fair value of the bank credit facilities approximates its carrying value, as the instruments bear interest at
rates comparable to current market rates. The fair value of deferred consideration payables approximates its
carrying value, as the valuation techniques and discount rates applied are comparable to those based on
observable market data, where available.
111
Altus Group | Consolidated Financial Statements December 31, 2022
27. Financial Instruments and Fair Values, cont’d
The investments in equity instruments, investments in partnerships and contingent consideration payables are
recorded in Level 3 as the amounts are not based on observable inputs, with the exception of instruments with
quoted sales or market prices. Contingent consideration payables are measured using a discounted cash flow
analysis of expected cash flows in future periods. The investments in equity instruments are measured based
on valuations of the entity. Investments in partnerships are measured in relation to the fair value of assets
reported in the respective partnerships.
The following table summarizes the movement in the Company’s contingent consideration payables:
Contingent Consideration Payables (Discounted)
Balance as at January 1, 2021
$ 47
Contingent arrangements entered into during the year
173
Unwinding of discount
6
Settlements
(47)
Balance as at December 31, 2021
179
Contingent arrangements entered into during the year
3,000
Unwinding of discount (Note 9)
10
Balance as at December 31, 2022
$ 3,189
A 1% increase or decrease in the discount rate could decrease or increase the Company’s determination of
fair value by approximately $nil as at December 31, 2022 (December 31, 2021 - $5).
The estimated contractual amount of contingent consideration payables as at December 31, 2022 was $3,200
(December 31, 2021 - $200), net of a discount of $11 (December 31, 2021 - $21).
Financial Risk Management Objectives and Policies
The Company’s activities expose it to a variety of financial risks: market risk (including interest rate risk,
currency risk and price risk), credit risk and liquidity risk. The Company’s overall risk management program
seeks to minimize potential adverse effects on the Company’s financial performance.
The Company does not enter into derivative financial instruments for speculative purposes.
112
Altus Group | Consolidated Financial Statements December 31, 2022
27. Financial Instruments and Fair Values, cont’d
(a) Market Risk
Interest rate risk
The Company is exposed to interest rate risk in the event of fluctuations in the Canadian prime rates, Canadian
bankers’ acceptance rates, U.S. base rates, SONIA, SOFR, or STR rates as the interest rates on the revolving
term facility fluctuate with changes in these rates.
The Company monitors its interest rate exposure and its hedging strategy on an ongoing basis.
Fluctuations in interest rates will impact profit or loss. For the year ended December 31, 2022, every 1%
increase or decrease in the revolving term facility interest rate results in a corresponding $712 increase or
decrease in the Company’s profit (loss) (2021 - $2,290).
Currency risk
The Company has operations in Canada, the U.S., EMEA and Asia Pacific and, therefore, has exposure to
currency risk. There is exposure to foreign exchange fluctuations on transactions between the Company’s
entities and upon the consolidation of the Company’s foreign subsidiaries. Assets and liabilities of foreign
subsidiaries are translated at the period-end exchange rate and, therefore, have varying values from exchange
rate fluctuations.
The statements of comprehensive income (loss) of the foreign subsidiaries are translated into Canadian dollars
using the period’s average exchange rate and, accordingly, exchange rate fluctuations impact the Company’s
revenues and profit (loss), denominated in Canadian dollars.
In order to limit some of its foreign exchange exposure, the Company periodically enters into currency forward
contracts.
The Company monitors its foreign exchange exposure and its hedging strategy on an ongoing basis.
The following table summarizes the effect of a 10% strengthening of the Canadian dollar on the Company’s
profit (loss) as a result of translating the statements of comprehensive income (loss) of foreign subsidiaries,
assuming all other variables remain unchanged:
Year ended
December 31, 2022
Year ended
December 31, 2021
U.S.
$ 766 $ (351)
EMEA
(606)
(1,822)
Asia Pacific
(389)
123
113
Altus Group | Consolidated Financial Statements December 31, 2022
27. Financial Instruments and Fair Values, cont’d
A 10% weakening of the Canadian dollar would have an equal but opposite effect, assuming all other variables
remain unchanged.
Price risk
The Company is exposed to price risk because the liabilities for cash-settled RSU and DSU plans are classified
as FVPL, and linked to the price of the Company’s common shares. If the market price of the Company’s
common shares increases by 5% with all other variables held constant, the impact on profit (loss) would be a
decrease of $1,129 (2021 - $1,407). A 5% decrease in the market price of the Company’s common shares
would have an equal but opposite effect on profit (loss), assuming all other variables remain unchanged.
In order to limit price risk exposure, the Company entered into equity derivatives. Changes in the fair value of
these equity derivatives offset the impact of mark-to-market adjustments that are accrued. The notional amount
outstanding on these equity derivatives as at December 31, 2022 was $17,058 (December 31, 2021 - $14,739)
(Note 13).
(b) Credit Risk
The Company is exposed to credit risk with respect to its cash and cash equivalents, trade receivables and
other and derivative financial instruments. Credit risk is not concentrated with any particular customer. In
certain parts of the Company’s business, it is often common business practice to pay invoices over an
extended period of time and/or at the completion of the project or on receipt of funds. The Company applies
the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of
the lifetime expected loss provision for all trade receivables and contract assets for unbilled revenue on
customer contracts. To measure the expected credit losses, trade receivables and contract assets for unbilled
revenue on customer contracts have been grouped based on shared credit risk characteristics and the days
past due, and incorporate forward-looking information. The loss allowance provision as at December 31, 2022
is determined as follows:
December 31, 2022
0 to 120 days
past due
121 to 365 days
past due
More than 365 days
past due
Total
Expected loss rate
1.61%
31.99%
97.64%
8.22%
Gross carrying amount
$ 213,582 $ 22,164 $ 9,906 $ 245,652
Loss allowance provision
$ (3,428) $ (7,091) $ (9,672) $ (20,191)
114
Altus Group | Consolidated Financial Statements December 31, 2022
27. Financial Instruments and Fair Values, cont’d
Changes in the gross carrying amount of trade receivables and contract assets for unbilled revenue on
customer contracts contributed to the changes in the loss allowance provision. The gross carrying amount was
impacted by revenue recognized and amounts invoiced, offset by cash collections and amounts written off as
not recoverable or uncollectible. Expected loss rates are determined on a portfolio basis. The expected loss
rate for the Company will differ based on the contribution of balances by portfolio and age of those balances.
For the year ended December 31, 2022, no significant changes were made to the expected loss rates on a
portfolio basis.
The loss allowance provision for trade receivables and contract assets for unbilled revenue on customer
contracts as at December 31, 2022 reconciles to the opening loss allowance provision as follows:
December 31, 2022
As at January 1, 2021
$ 17,539
Net charges during the year
10,090
Amounts written off during the year as not recoverable or uncollectible
(6,787)
Exchange differences
(142)
As at December 31, 2021
20,700
Net charges during the year
7,872
Amounts written off during the year as not recoverable or uncollectible
(8,130)
Exchange differences
(251)
As at December 31, 2022
$ 20,191
The movement of the loss allowance provision has been included in office and other operating expenses in
the consolidated statements of comprehensive income (loss). In the event that the collectability of future trade
receivables is in question, an adjustment is made to the corresponding contract assets for unbilled revenue on
customer contracts. In addition, contract assets for unbilled revenue on customer contracts are assessed for
impairment under IFRS 9. Amounts charged to the provision are generally written off when there are no
expectations of recovering additional cash. The Company’s maximum exposure to credit risk at the reporting
date, assuming no mitigating factors, is the carrying value of its cash and cash equivalents, trade receivables
and other and derivative financial instruments. The Company does not hold any collateral as security.
115
Altus Group | Consolidated Financial Statements December 31, 2022
27. Financial Instruments and Fair Values, cont’d
(c) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due.
The Company manages liquidity risk through the management of its capital structure and financial leverage. It
also manages liquidity risk by continuously monitoring actual and projected cash flows, taking into account the
seasonality of the Company’s revenues and cash receipts, and the maturity profile of its financial assets and
liabilities. The Board of Directors reviews and approves the Company’s operating and capital budgets, as well
as any material transactions outside the ordinary course of business, including proposals on mergers,
acquisitions or other major investments.
Management believes that funds generated by operating activities and available through its amended bank
credit facilities will allow the Company to satisfy its requirements for the purposes of working capital,
investments and debt repayments.
The table below summarizes the contractual undiscounted cash flows related to the Company’s financial
liabilities into relevant maturity groupings based on the remaining period as at the consolidated balance sheet
date to the contractual maturity date.
December 31, 2022
Carrying
amount
Contractual
cash flows
Less than
1 year
1 to 3
years
4 to 5
years
Over
5 years
Total
Trade payables and other (excluding
contract liabilities, RSU Plan,
LTIRSU Plan and DSU Plans
payables, deferred consideration
payables, and contingent
consideration payables)
$ 130,323 $ 130,323 $ 125,894 $ 4,429 $ - $ - $ 130,323
RSU Plan, LTIRSU Plan and DSU
Plans payables
22,845
22,845
2,923
7,587
1,801
10,534
22,845
Deferred consideration payables
3,284
3,482
1,741
1,741
-
-
3,482
Contingent consideration payables
3,189
3,200
3,000
200
-
-
3,200
Borrowings
317,828
319,584
-
-
319,584
-
319,584
Lease liabilities
60,315
65,083
16,455
24,827
14,255
9,546
65,083
Total
$ 537,784 $ 544,517 $ 150,013 $ 38,784 $ 335,640 $ 20,080 $ 544,517
116
Altus Group | Consolidated Financial Statements December 31, 2022
28. Capital Management
The Company’s objective in managing capital is to ensure that adequate resources are available to fund
organic growth and to enable it to undertake strategic acquisitions while continuing as a going concern. The
Company’s capital is composed of borrowings and shareholders’ equity.
Operating cash flows are used to provide sustainable cash dividends to shareholders and fund capital
expenditures in support of organic growth. In addition, operating cash flows, supplemented throughout the
year with the revolving term facility, are used to fund working capital requirements.
The revolving term facility and equity are used to finance strategic acquisitions. Additionally, vendors of
acquired businesses typically receive a portion of the consideration in the form of the Company’s common
shares.
The Company’s capitalization is summarized in the following chart:
December 31, 2022
December 31, 2021
Borrowings (Note 21)
$ 317,828 $ 286,924
Less: cash on hand (Note 11)
(54,771)
(49,536)
Net debt
263,057
237,388
Shareholders’ equity
599,870
589,363
Capitalization
$ 862,927 $ 826,751
The Company monitors certain financial covenants on a trailing 12-month basis in line with its amended bank
credit facilities (Note 21).
As at December 31, 2022, the Company is in compliance with the financial covenants of its bank credit facilities.
29. Commitments and Contingencies
The Company has the following commitments relating to future minimum payments for contractual
obligations that are not recognized as liabilities as at December 31, 2022:
December 31, 2022
December 31, 2021
No later than 1 year
$ 18,690
$ 10,694
Later than 1 year and no later than 5 years
40,136
21,477
Later than 5 years
12,410
7,166
Total
$ 71,236
$ 39,337
117
Altus Group | Consolidated Financial Statements December 31, 2022
29. Commitments and Contingencies, cont’d
As at December 31, 2022, the Company provided letters of credit of approximately $1,499 to its lessors
(December 31, 2021 - $1,485).
As at December 31, 2022, the Company has guaranteed up to $nil in connection with vehicle leases and
related services entered into by GeoVerra (December 31, 2021 - $1,500).
As at December 31, 2022, the Company has committed to aggregate capital contributions of $3,874 (Note 14)
to certain partnerships (December 31, 2021 - $4,847).
From time to time, the Company or its subsidiaries are involved in legal proceedings, claims, and litigation in
the ordinary course of business with customers, former employees, and other parties. Although it is not
possible to determine the final outcome of such matters, based on all currently available information,
management believes that liabilities, if any, arising from such matters will not have a material adverse effect
on the Company’s financial position or results of operations and have been adequately provided for in these
consolidated financial statements.
In the ordinary course of business, the Company is subject to tax audits from various government agencies
relating to income and commodity taxes. As a result, from time to time, the tax authorities may disagree with
the positions and conclusions made by the Company in its tax filings, which could lead to assessments and
reassessments. These assessments and reassessments may have a material adverse effect on the
Company’s financial position or results of operations.
30. Related Party Transactions
Key Management Compensation
Key management includes the Board of Directors and our most senior officers, who are primarily responsible
for planning, directing, and controlling business activities. The compensation paid or payable to key
management for services is shown below:
Year ended
December 31, 2022
Year ended
December 31, 2021
Salaries and other short-term benefits
$ 10,546 $ 10,674
Termination benefits
2,737
1,121
Share-based payments (1)
3,916
9,245
Key management compensation
$ 17,199 $ 21,040
(1) Includes mark-to-market adjustments on share-based payments.
118
Altus Group | Consolidated Financial Statements December 31, 2022
30. Related Party Transactions, cont’d
GeoVerra Joint Venture
The Company incurs costs associated to a shared office space that is sub-leased from GeoVerra, its joint
venture (Note 15). During the year ended December 31, 2022, the Company recorded a cost of $54 (2021 -
$13) relating to this. As at December 31, 2022, the Company had $nil (December 31, 2021 - $3,074) receivable
from the joint venture included in trade receivables and other, and $nil (December 31, 2021 - $86) payable to
the joint venture included in trade payables and other. All related party transactions with GeoVerra were in the
normal course of business and measured at the exchange amount.
Controlled Entities
Altus Group Limited is the ultimate parent company. In certain circumstances, the Company has control over
entities in which it does not own more than 50% voting interest. In making this determination, the Company
considers all relevant facts and circumstances in assessing whether it has power over the entity including
rights arising from contractual arrangements that allow the Company to direct the relevant activities and be
exposed to variable returns of the entity, among other considerations. The consolidated financial statements
consolidate the Company and the subsidiaries listed in the following table:
Entity’s Name
December 31, 2022
Altus Group Asia Pacific Limited
100%
Altus Group U.S. Inc.
100%
Circle Software Acquisition Limited
100%
Argus Software (UK) Ltd.
100%
Circle Software International Limited (UK)
100%
Voyanta Limited (UK)
100%
Argus Software (Canada), Inc.
100%
Argus Software (Oceanic) Pty Ltd.
100%
Altus Group (UK) Limited
100%
Altus Group Property Tax Legal Services Inc.
49%
2262070 Ontario Limited
100%
Altus Group Data Solutions Inc.
100%
Altus Group S.à.r.l.
100%
Altus Group (Vietnam) Limited
100%
Altus Group (India) Private Limited
100%
Altus Egypt LLC (1)
85%
Altus Group (Hong Kong) Limited
100%
119
Altus Group | Consolidated Financial Statements December 31, 2022
30. Related Party Transactions, cont’d
Entity’s Name
December 31, 2022
Altus Group Consulting (Thailand) Company Limited
100%
Altus Group Management Holdings (Thailand) Company Limited
100%
Altus Group Services (Thailand) Company Limited
100%
Altus Group Construction Professionals (Thailand) Company Limited
100%
Altus Group Australia Pty Limited
100%
Altus Group (ACT) Pty Limited
100%
Altus Group Consulting Pty Limited
100%
Altus Group Queensland Pty Limited
100%
Altus Group Cost Management Pty Limited
100%
Altus Group Bay Partnership Pty Limited
100%
Estate Master Group Holdings Pty Limited
100%
Estate Master Pty Limited
100%
Estate Master UK Limited
100%
Estate Master FZ LLC
100%
Altus Group II LLC
100%
Argus Software Inc.
100%
Argus Software (Asia) Pte. Ltd.
100%
One11 Advisors, LLC
100%
Altus UK LLP
100%
Altus Group (UK2) Limited
100%
R2G Limited
100%
Lambournes Holdings Limited
100%
Lambournes Trading Services Limited
100%
CVS (Commercial Valuers & Surveyors) Limited
100%
Taliance Group SAS
100%
Taliance, Inc.
100%
Taliance Limited
100%
Taliance Solutions Canada Inc.
100%
Altus Group (France) Holdings SAS
100%
Finance Active SAS
100%
Finance Active SPRL
100%
Finance Active UK Limited
100%
Finance Active SRL
100%
120
Altus Group | Consolidated Financial Statements December 31, 2022
30. Related Party Transactions, cont’d
Entity’s Name
December 31, 2022
Finance Active SàRL
100%
Finance Active GmbH
100%
Verifino GmbH & Co. KG
100%
Verifino Verwaltungs GmbH
100%
Finance Active SARL
100%
Scryer, Inc. d/b/a Reonomy
100%
Rethink Solutions Inc.
100%
(1) An Egyptian national owns 15% of the remaining shares.
Altus Group Tax Consulting Paralegal Professional Corporation is an entity under control of the Company and
has been consolidated in the Company’s consolidated financial statements. The Company also has joint
control, and 49.0% equity interest, in GeoVerra, which has been accounted for as a joint venture under the
equity method.
31. Events After the Reporting Period
Renewal of NCIB
On February 3, 2023, the Company announced that the TSX had approved the renewal of its NCIB. Pursuant
to the NCIB, the Company may purchase for cancellation up to 1,364,718 of its outstanding common shares
during the period from February 8, 2023 to February 7, 2024. The total number of common shares that the
Company is permitted to purchase is subject to a daily purchase limit of 17,933 common shares, other than
block purchase exemptions.
121
LISTINGS
Toronto Stock Exchange
Stock trading symbol: AIF
AUDITORS
ERNST & YOUNG LLP
TRANSFER AGENT
TSX Trust Company
P.O. Box 700
Station B
Montreal, Quebec, Canada H3B 3K3
Toronto: (416) 682-3860
Toll-free throughout North America:
1 (800) 387-0825
Facsimile: 1-888-249-6189
Website: www.tsxtrust.com
Email: shareholderinquiries@tmx.com
HEADQUARTERS
33 Yonge Street, Suite 500
Toronto, Ontario, Canada M5E 1G4
Telephone: (416) 641-9500
Toll-free Telephone: 1 (877) 953-9948
Facsimile: (416) 641-9501
Website: www.altusgroup.com
Email: info@altusgroup.com