2020
Annual
Report
Accelerating success.
World of Colliers
Annualized Revenue
Established in
$3.3B
67
Countries
54,000
Lease/Sale
Transactions
$40B
Assets Under
Management
Managing
Comprised of
2B
square feet
18,000
professionals
All statistics for 2020 are in U.S.
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Why invest in Colliers?
Enterprising culture drives success
• Unique enterprising culture attracts
the highest caliber of professionals
and leaders that bring the best
opportunities and business
intelligence to clients
• Partnership philosophy and
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ensures alignment of stakeholders’
interests
Experienced leadership team
with proven track record
• Nearly 20% CAGR in total
shareholders’ return over 26 years
Compelling industry dynamics
and growth opportunities
• $340 billion global market for
real estate related professional
services
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to increase market share,
consolidate and add services in
a highly fragmented, growing
industry
• Increasing trends toward
greater institutional real estate
investment and outsourcing of
related services
• Disciplined growth strategy
Asset-light business model
• Strong balance sheet with ample
access to capital
• Modest CapEx requirement
supports strong EBITDA to free
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• Proven record of disciplined
capital allocation focused on
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invested capital
focused on strong internal growth,
augmented by strategic acquisitions
• More than $2 billion invested in 88
strategic acquisitions
Recurring revenues and
scalable services
• Majority of revenues and more than
60% of adjusted EBITDA generated
from higher margin, higher
value-add recurring professional
services and investment
management
• Global scale and service line
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resilience to business model
Letter to Shareholders
At Colliers, we are
always at the
forefront of our
industry, backed by
an exceptional
record of success.
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professional services and investment
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In 2020, Colliers delivered strong
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the global pandemic. Our remarkable
performance is a testament to our
enterprising culture and the bold
steps we have taken over the past
four years to transform Colliers into a
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continue to build our business faster
than others by augmenting internal
growth with strategic acquisitions that
increase market share, expand service
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unique, decentralized operating model
undoubtedly allowed us to respond
to challenges and seize opportunities
faster than most.
In fact, we completed two of the
largest acquisitions in our history,
both of which are outperforming our
expectations. The addition of these
new services, now branded Colliers
Mortgage and Colliers Engineering &
Design, represents another important
step in our strategy to add more
highly valued, essential services to
further diversify our business. Our
high-quality, recurring services like
Investment Management, Property
and Project Management, Engineering
& Design and Mortgage Servicing,
now represent more than 50% of our
revenues and more than 60% of our
adjusted EBITDA.
The balance comes from transactional
services, Leasing and Capital Markets.
While volumes in these areas were
down somewhat, it is reassuring to see
their resilience despite the challenges
of the past year. It is important to
remember that while these services
may be delayed at times, they will
continue to be essential to owners
and occupiers of property around the
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asset class, which adds to our stability
as market conditions may vary around
the world.
Jay S. Hennick
Global Chairman and CEO
2020 Highlights
Increased assets under
management
Our investment management
business now accounts for 18% of
our adjusted EBITDA. Comprised
of two platforms – Harrison Street
and Colliers Global Investors – we
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enduring value to Colliers, with $40
billion of assets under management,
up 20 per cent from last year.
Key acquisitions
We completed four acquisitions and
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Colliers Mortgage, a specialty
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primarily for multifamily, healthcare
and senior housing real estate; and
Colliers Engineering & Design, a
trusted provider of best-in-class,
multi-discipline engineering, design
and consulting services.
on topics related to the environment
and society. As leaders in our industry,
we recognize the importance of driving
positive impact and are committed
to fostering Environment, Social and
Governance (ESG) strategies that will
align our business to maximize our
positive impact. We are addressing
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global Impact Report, followed by
the establishment of a strong impact
position, strategy and targets to ensure
that ESG is an integral part of how we
do business.
Also core to our business are
technologies that deliver the best
service and expertise to our clients.
In 2020, we engaged leaders across
our business to focus our approach
to technology investments and shape
our innovation roadmap to meet the
needs of our clients and our people.
As part of this, we continue to work
with our Colliers Proptech Accelerator
companies. In 2020, we partnered
to develop virtual solutions that help
navigate the impacts of COVID-19,
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to give our people and clients a
competitive advantage.
Our highly recognized global brand
and platform continues to be one
of our competitive advantages. We
have worked very hard to build the
Colliers brand into what it is today: an
undisputed global leader in professional
services and investment management.
This February, we launched the
new Colliers visual identity, which is
designed for today’s evolving digital
era. It is a natural evolution of the
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commitment to accelerating success
and leading our company and industry
into the future.
Recognizing the powerful role that
our people and brand play across
the organization, we were proud to
announce Becky Finley’s promotion
to the newly created role of Global
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This is a testament to her many
accomplishments with Colliers and
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(cid:71)(cid:76)(cid:909)(cid:72)(cid:85)(cid:72)(cid:81)(cid:87)(cid:76)(cid:68)(cid:87)(cid:72)(cid:3)(cid:38)(cid:82)(cid:79)(cid:79)(cid:76)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:87)(cid:85)(cid:72)(cid:81)(cid:74)(cid:87)(cid:75)(cid:72)(cid:81)(cid:3)
our brand and people services
worldwide in the years to come.
We were also pleased to appoint Jane
Gavan to our Board of Directors in
2020. Bringing more than 30 years of
experience in the real estate industry
in North America and Europe, Jane
is a distinguished leader with deep
knowledge and global perspective on
the industry and will help us advance
our strategy and enhance shareholder
value for years to come.
Colliers Shanghai
I am incredibly proud of our
achievements this year and deeply
thankful to our business leaders and
professionals for their enterprising spirit
and their dedication to our company
values. As we continue to build our
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will emerge from the pandemic stronger
than before. Together, we take pride in
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service and investment management
company that will continue to grow from
strength to strength.
Jay S. Hennick
Student Housing Development | Harrison Street
Together with our
competitive advantages,
proven 26-year track
record, strong balance
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ownership, we are
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will emerge from this
pandemic stronger and
more balanced than ever.
Our success is made possible by our
15,000 people around the world who
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in a challenging year. As always, our
people are our most important assets,
and we continue to safeguard their
health and wellness. Early in the
pandemic, we responded swiftly to
focus on safety, business continuity,
people engagement and support. We
were able to seamlessly transition
our people to remote working
environments, and as an essential
service in many countries, we kept our
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with local regulations. I am deeply
grateful for the commitment and
enterprising spirit shown by our people
all through the year.
In addition to health and safety, the
pandemic has shed an important light
Colliers
International
Group Inc.
MD&A and Consolidated Financial Statements
Year Ended
December 31, 2020
COLLIERS INTERNATIONAL GROUP INC.
Management’s discussion and analysis
For the year ended December 31, 2020
(in US dollars)
February 18, 2021
The following management’s discussion and analysis (“MD&A”) should be read together with the unaudited consolidated
financial statements and the accompanying notes (the “Consolidated Financial Statements”) of Colliers International
Group Inc. (“we,” “us,” “our,” the “Company” or “Colliers”) for the year ended December 31, 2020. The consolidated
financial statements have been prepared in accordance with generally accepted accounting principles in the United
States (“GAAP”). All financial information herein is presented in United States dollars.
The Company has prepared this MD&A with reference to National Instrument 51-102 – Continuous Disclosure
Obligations of the Canadian Securities Administrators (the “CSA”). Under the U.S./Canada Multijurisdictional Disclosure
System, the Company is permitted to prepare this MD&A in accordance with the disclosure requirements of Canada,
which requirements are different from those of the United States. This MD&A provides information for the year ended
December 31, 2020 and up to and including February 18, 2021.
Additional information about the Company can be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
This MD&A includes references to “adjusted EBITDA” and “adjusted EPS”, which are financial measures that are not
calculated in accordance with GAAP. For a reconciliation of these non-GAAP measures to the most directly comparable
GAAP financial measures, see “Reconciliation of non-GAAP financial measures”.
Consolidated review
Our consolidated revenues for the year ended December 31, 2020 were $2.79 billion, a decrease of 9% versus
the prior year (9% in local currency). The decrease was primarily attributable to lower transactional activity due
to the impact of the COVID-19 pandemic (see “Impact of COVID-19 pandemic and 2021 outlook” below). Our
recurring Outsourcing & Advisory and Investment Management revenue streams were largely resilient. Recent
acquisitions positively impacted our Outsourcing & Advisory and Capital Markets revenues. Diluted net earnings
per common share were $1.22 relative to $2.57 in the prior year with the decrease primarily attributable to (i)
higher amortization expense and contingent consideration expense, both related to recent acquisitions, (ii)
higher non-controlling interest with greater proportion of earnings coming from non-wholly owned Investment
Management and Outsourcing & Advisory businesses and (iii) an increase in diluted share count related to an
offering of 4% Convertible Senior Subordinated Notes due 2025 (the “Convertible Notes”) in May 2020. Adjusted
earnings per share, which exclude restructuring costs, non-controlling interest redemption increment and
amortization of intangible assets (see “Reconciliation of non-GAAP financial measures” below) were $4.18, down
10% from $4.67 in the prior year. Adjusted earnings per share and GAAP net earnings per share for the year
ended December 31, 2020 would have been approximately $0.04 lower excluding the impact of changes in
foreign exchange rates.
On May 19, 2020, we completed an offering of 4% Convertible Senior Subordinated Notes due 2025 for $223.8
million in net proceeds.
On May 29, 2020, we acquired a controlling interest in four subsidiaries of Dougherty Financial Group LLC –
Dougherty Mortgage LLC, Dougherty & Company LLC, Dougherty Funding LLC and Dougherty Insurance Agency
LLC. Dougherty’s mortgage banking operations have rebranded as “Colliers Mortgage” which provides specialty
debt financing through its relationships with US government agencies while all brokerage, investment banking,
capital markets and public finance services are carried on through newly branded “Colliers Securities” which is
licensed under the Securities and Exchange Commission and is a member of the Financial Industry Regulatory
Authority (“FINRA”).
1
On July 13, 2020, we acquired a controlling interest in Maser Consulting P.A. (“Maser”), a leading multi-disciplinary
engineering design and consulting firm in the U.S. This operation will be rebranded as “Colliers Engineering &
Design Services” in the first half of 2021.
In 2020, we also completed the acquisitions of our Colliers International affiliates in Austin, Texas and Nashville,
Tennessee.
In the second quarter of 2020, the Company renamed its Sales Brokerage service line to Capital Markets, which
includes sales brokerage, mortgage origination and mortgage investment banking revenues. In addition, the
Company added mortgage loan servicing under its Outsourcing & Advisory revenues. With the closing of the
Maser Consulting acquisition in July 2020, the Company added engineering and design services to its Outsourcing
& Advisory service line.
For both the three month and twelve month ended December 31, 2020 periods, local currency revenue declines
were primarily attributable to reduced transactional Leasing activity due to the pandemic.
(in thousands of US$)
(LC = local currency)
Three months ended
December 31
2020
2019
Change Change
in US$
%
in LC%
Twelve months ended
December 31
2020
2019
Change Change
in US$
%
in LC%
Outsourcing & Advisory
$ 377,191 $ 331,152
Investment Management
43,676
44,722
14%
-2%
12%
-3%
$ 1,226,877 $ 1,148,915
172,594
174,588
Leasing
Capital Markets
Total revenues
215,516
292,489
-26%
-29%
686,482
946,399
277,333
259,925
$ 913,716 $ 928,288
7%
-2%
4%
-4%
700,904
775,909
$ 2,786,857 $ 3,045,811
-9%
7%
-1%
-27%
-10%
7%
-1%
-28%
-10%
-9%
Results of operations – year ended December 31, 2020
For the year ended December 31, 2020, revenues were $2.79 billion, 9% lower compared to the 2019 (9% in local
currency). Acquisitions contributed 7% to local currency revenue growth while internally generated revenues
were down 16% with the impact of the COVID-19 pandemic beginning in March 2020.
Operating earnings were $164.6 million in 2020 versus $218.2 million in 2019. The operating earnings margin
was 5.9% versus 7.2% in the prior year. The decline in operating earnings margin is attributable to lower
transactional revenues and fair value adjustments related to contingent considerations, partially offset by (i) the
impact of higher-margin acquisitions of Colliers Mortgage and Maser as well as (ii) cost savings implemented to
adjust costs to expected revenues in light of the pandemic. Adjusted EBITDA (see “Reconciliation of non-GAAP
financial measures” below) was $361.4 million, up 1% versus $359.5 million in the prior year. Adjusted EBITDA
margin increased by 120 basis points to 13.0% as compared to 11.8% in 2019.
Depreciation expense was $39.3 million relative to $33.4 million in 2019, with the increase attributable to the
impact of recent acquisitions and increased investments in office leaseholds.
Amortization expense was $86.6 million relative to $61.3 million in 2019, with the increase attributable mainly to
intangible assets recognized in connection with recent business acquisitions, including those of Colliers Mortgage
and Maser.
Net interest expense was $30.9 million, up from $29.5 million in the prior year and included the incremental
interest from our Convertible Notes offering in May 2020. The average interest rate on our debt during the period
was 3.0%, versus 3.8% in the prior year with the decline attributable to a decline in floating reference rates.
Consolidated income tax expense was $42.0 million relative to $53.0 million in 2019, reflecting effective tax rates
of 31% and 28%, respectively. The tax rate in 2020 was impacted by (i) the reversal of a $2.0 million tax benefit
2
recorded in 2019 due to a change in tax law applied retroactively and (ii) a change in valuation allowance of $5.2
million related to certain operations.
Net earnings were $94.5 million, compared to $137.6 million in the prior year.
Revenues in the Americas region totalled $1.63 billion for the full year compared to $1.69 billion in the prior year,
down 4% (3% in local currency). The decline was primarily attributable to lower Leasing activity due to the
pandemic, which was partly offset by contributions from recent acquisitions. Internally generated Outsourcing &
Advisory revenues were flat versus prior year. Adjusted EBITDA was $180.4 million, up 19% from $151.3 million
in the prior year and included the impact of (i) recent acquisitions of Colliers Mortgage and Colliers Engineering
& Design and (ii) measures implemented to manage operating costs as a result of the pandemic. GAAP operating
earnings were $121.4 million, versus $103.7 million in 2019.
EMEA region revenues totalled $516.5 million for the year compared to $636.5 million in the prior year, down
19% (20% in local currency) on lower activity attributable to the pandemic across all service lines. Foreign
exchange tailwinds positively impacted revenue growth by 1%. Adjusted EBITDA was $45.9 million, versus $80.3
million in the prior year. GAAP operating earnings were $8.3 million as compared to $48.5 million in 2019.
Asia Pacific region revenues totalled $470.6 million for the year compared to $542.6 million in the prior year,
down 13% (15% in local currency) primarily on lower Leasing and Capital Markets activity due to the pandemic,
partially offset by a small increase in Outsourcing & Advisory revenues. Foreign exchange tailwinds positively
impacted revenue growth by 2%. Adjusted EBITDA was $66.3 million, versus $76.2 million in the prior year. GAAP
operating earnings were $45.2 million, versus $67.1 million in the prior year.
Investment Management revenues were $172.6 million compared to $174.6 million in the prior year, down 1%
(1% in local currency). Pass-through revenue from historical carried interest represented $4.2 million in the
current year versus $19.2 million in the prior year. Excluding the impact of pass-through revenue, revenues were
up 8% (8% in local currency) and were positively impacted by strong fundraising in closed end funds and growth
in open-end funds. Adjusted EBITDA was $69.5 million relative to $61.9 million in the prior year. GAAP operating
earnings were $40.7 million, versus $35.0 million in 2019. Assets under management were $39.5 billion at
December 31, 2020, up 9% from $36.2 billion at September 30, 2020 and up 20% from $32.9 billion at December
31, 2019.
Unallocated global corporate costs as reported in Adjusted EBITDA were $0.7 million in 2020, relative to $10.3
million in the prior year with the change attributable to lower compensation and variable expenses. The
corporate GAAP operating loss was $51.1 million, relative to $36.2 million in 2019 attributable to an increase in
the fair value of contingent acquisition consideration based on strong operating performance of recently
acquired businesses.
3
Selected annual information - last five years
(in thousands of US$, except share and per share amounts)
Year ended December 31
2020
2019
2018
2017
2016
Operations
Revenues
Operating earnings
Net earnings
Financial position
Total assets
Long-term debt
Convertible Notes
Redeemable non-controlling interests
Shareholders' equity
Common share data
Net earnings (loss) per common share:
Basic
Diluted
Weighted average common shares
outstanding (thousands)
Basic
Diluted
Cash dividends per common share
Other data
Adjusted EBITDA
Adjusted EPS
$ 2,786,857 $ 3,045,811 $ 2,825,427 $ 2,435,200 $ 1,896,724
146,173
91,571
167,376
94,074
218,197
137,585
201,398
128,574
164,578
94,489
$ 3,292,167 $ 2,892,714 $ 2,357,580 $ 1,507,560 $ 1,194,779
262,498
-
134,803
212,513
672,123
-
343,361
391,973
611,404
-
359,150
517,299
249,893
-
145,489
303,014
479,895
223,957
442,375
586,109
1.23
1.22
2.60
2.57
2.49
2.45
1.32
1.31
1.76
1.75
39,986
40,179
39,550
39,981
39,155
39,795
38,830
39,308
0.10 $
0.10 $
0.10 $
0.10 $
38,596
38,868
0.09
361,442 $
4.18
359,476 $
4.67
311,435 $
4.09
242,823 $
3.16
203,062
2.44
$
$
New revenue guidance was adopted retrospectively effective January 1, 2018 and accordingly, comparative
information for the year ended December 31, 2017 and as at December 31, 2017 has been restated. Data for
2016 and prior periods in the table above has not been restated.
Results of operations – fourth quarter ended December 31, 2020
Consolidated revenues for the fourth quarter declined 4% on a local currency basis to $913.7 million, driven by
pandemic-related declines primarily in Leasing activity. Consolidated internal revenues measured in local
currencies were down 15%, while acquisitions contributed 11% to revenue growth. Operating earnings for the
fourth quarter ended December 31, 2020 were $79.4 million, down 20% and adjusted EBITDA was $154.9 million,
up 7%.
Summary of quarterly results (unaudited)
The following table sets forth our unaudited quarterly consolidated results of operations data. The information
in the table below has been derived from unaudited interim consolidated financial statements that, in
management’s opinion, have been prepared on a consistent basis and include all adjustments necessary for a
fair presentation of information. The information below is not necessarily indicative of results for any further
quarter.
4
Summary of quarterly results - years ended December 31, 2020, 2019 and 2018
(in thousands of US$, except per share amounts)
Year ended December 31, 2020
Revenues
Operating earnings
Net earnings
Basic net earnings per common share
Diluted net earnings per common share
Year ended December 31, 2019
Revenues
Operating earnings
Net earnings
Basic net earnings per common share
Diluted net earnings per common share
Year ended December 31, 2018
Revenues
Operating earnings
Net earnings
Basic net earnings per common share
Diluted net earnings per common share
Other data
Adjusted EBITDA - 2020
Adjusted EBITDA - 2019
Adjusted EBITDA - 2018
Adjusted EPS - 2020
Adjusted EPS - 2019
Adjusted EPS - 2018
Q1
Q2
Q3
Q4
$
$
$
$
630,628 $
18,537
6,458
0.12
0.11
550,206 $
14,523
6,483
(0.26)
(0.26)
692,307
52,074
31,979
0.53
0.52
913,716
79,443
49,568
0.84
0.80
635,123 $
13,397
5,463
0.04
0.04
745,517 $
57,198
35,575
0.60
0.60
736,883 $
48,175
28,672
0.75
0.74
928,288
99,428
67,877
1.21
1.20
552,473 $
15,745
8,541
0.13
0.13
667,350 $
45,569
28,804
0.61
0.60
715,721 $
41,956
25,382
0.41
0.41
889,883
98,128
65,847
1.34
1.33
54,454 $
43,571
36,140
0.54
0.51
0.45
59,962 $
87,323
69,427
0.70
1.10
0.95
92,120
84,262 $
72,665
1.08
1.04
0.92
154,906
144,320
133,203
1.79
2.01
1.77
Impact of COVID-19 pandemic and 2021 outlook
The COVID-19 pandemic resulted in a sharp reduction in Leasing and Capital Markets transaction activity
beginning in March 2020 as governments around the world implemented lockdowns and other measures to
contain the virus. The impact of the pandemic is expected to subside over the course of 2021, although the timing
and extent remain uncertain. Transactional revenues are anticipated to rebound in the second half of the year,
while Outsourcing & Advisory and Investment Management revenues are expected to remain resilient
throughout the year. The outlook for the full year 2021 (relative to 2020), including the full year impact of
acquisitions completed during 2020, is as follows:
Full Year 2021 Outlook
Revenue
+10% to +25%
Adjusted EBITDA
+10% to +25%
This outlook is based on the Company’s best available information as of the date of this MD&A and remains
subject to change based on numerous macroeconomic, health, social, geo-political and related factors (see “Risks
associated with COVID-19 pandemic” below).
During 2020, the Company took significant measures to maintain business continuity across all service lines,
including steps to optimize the level of all critical functions across our business. Expenses incurred in connection
5
with these adjustments are recorded as restructuring costs and were primarily severance related. The Company
may take further cost management measures in future quarters.
The Company also received wage subsidies totalling $10.9 million during the fourth quarter ($34.8 million for the
full year) from governments in several countries. These subsidies were recorded in earnings as an offset to
employment costs. The Company may receive further government wage subsidies in future quarters.
As of December 31, 2020, the Company’s financial leverage ratio expressed in terms of net debt to pro forma
Adjusted EBITDA was 1.0x (1.4x as of December 31, 2019), relative to a maximum of 3.5x permitted under its debt
agreements. As of the same date, the Company had $777 million of unused credit under its committed revolving
credit facility maturing in April 2024.
As a result of the changes in the current economic environment related to the pandemic, management has
performed asset impairment testing across the Company’s reporting units. Management has concluded that no
impairment loss is required to be recognized for the 2020 financial year. The testing considered a range of
scenarios, but is subject to significant estimation uncertainty given the factors noted above. If there are future
adverse developments, impairment losses may be required to be recognized.
Seasonality and quarterly fluctuations
The Company generates peak revenues and earnings in the month of December followed by a low in January and
February as a result of the timing of closings on Capital Markets transactions. Revenues and earnings during the
balance of the year are relatively even. Historically, Capital Markets operations comprised approximately 25% of
consolidated annual revenues. Variations can also be caused by business acquisitions which alter the
consolidated service mix.
Liquidity and capital resources
The Company generated cash flow from operating activities of $166.5 million for the year ended December 31,
2020, relative to $310.8 million in the prior year. Adjusting for the cash proceeds generated from the AR Facility
as well as collections of the deferred purchase price related to AR Facility, net cash flow from operating activities
in 2020 was $245.9 million relative to $213.9 million. The increase in cash flow is primarily attributable to a
reduction of working capital in the business, primarily related to lower accounts receivable and lower accrued
compensation. We believe that cash from operations and other existing resources, including our $1.0 billion
multi-currency revolving credit facility (the “Revolving Credit Facility”), will continue to be adequate to satisfy the
ongoing working capital needs of the Company.
For the year ended December 31, 2020, capital expenditures were $40.4 million (2019 - $44.2 million). Capital
expenditures for the year ending December 31, 2021 are expected to be $65-$75 million with the increase
primarily attributable to investments in office space in major markets, some deferred investments from 2020 and
are expected to be funded with cash on hand.
We distributed $35.7 million (2019 - $31.9 million) to non-controlling shareholders of subsidiaries, in part to
facilitate the payment of income taxes on account of those subsidiaries organized as flow-through entities. The
increase in distributions is largely attributable to the acquisition of Harrison Street completed in July 2018.
During 2020, we invested cash in acquisitions as follows: an aggregate of $205.6 million (net of cash acquired) in
four new business acquisitions, $11.2 million in contingent consideration payments related to previously
completed acquisitions, and $26.0 million in net acquisitions of redeemable non-controlling interests.
Net indebtedness as at December 31, 2020 was $323.3 million, versus $496.4 million at December 31, 2019, which
excludes the Convertible Notes. Including the Convertible Notes, our net indebtedness as at December 31, 2020
would have been $547.2 million. Net indebtedness is calculated as the current and non-current portion of long-
term debt less cash and cash equivalents. We are in compliance with the covenants contained in our agreements
relating to our debt agreements as at December 31, 2020 and, based on our outlook for 2021, we expect to
remain in compliance with these covenants.
6
Colliers Mortgage utilizes warehouse credit facilities for the purpose of funding warehouse receivables.
Warehouse receivables represent mortgage loans receivable, the majority of which are offset by borrowings
under warehouse credit facilities which fund loans that financial institutions have committed to purchase. The
warehouse credit facilities are excluded from the financial leverage calculations under our debt agreements.
During 2019 and 2020, the Company acquired certain real estate assets in connection with the establishment of
new Investment Management funds. The real estate assets, as well as corresponding liabilities, were transferred
to the respective funds during 2020, without gain or loss, with no such assets or liabilities on the consolidated
balance sheet as of December 31, 2020.
On April 27, 2020, we renewed and extended our structured accounts receivable facility (the “AR Facility”) with a
third-party financial institution. The AR Facility has committed availability of $125,000 with a term of 364 days
extending to April 26, 2021 and includes selected US and Canadian trade accounts receivable (the “Receivables”).
During 2020, we amended our Revolving Credit Facility to make certain amendments to increase the flexibility of
our debt capital structure.
During 2020, we amended our Euro-denominated 2.23% senior unsecured notes due 2028 (the “Senior Notes”)
to make certain amendments to increase the flexibility of our debt capital structure. These amendments were
similar to the amendments made to our Revolving Credit Facility, which ranks equal in seniority to the Senior
Notes.
On May 19, 2020, we completed an offering of 4% Convertible Senior Subordinated Notes due 2025 for $223.8
million in net proceeds. The Convertible Notes are unsecured and subordinated to all of the existing and future
senior and/or secured indebtedness, and are treated as equity for financial leverage calculations under our
existing debt agreements. The Convertible Notes are convertible into 3.97 million subordinate voting shares or,
if not converted, may be settled at maturity with subordinate voting shares or cash at the option of the Company.
The Company’s Board of Directors declared two semi-annual dividends of $0.05 per common share (being the
Subordinate Voting Shares together with the Multiple Voting Shares) during 2020, unchanged from the prior year
amounts per share. These dividends are paid in cash after the end of the second and fourth quarters to
shareholders of record on the last business day of the quarter. The Company’s policy is to pay dividends on its
common shares in the future, subject to the discretion of our Board of Directors. Total common share dividends
paid by the Company during 2020 were $4.0 million.
In relation to acquisitions completed during the past three years, we have outstanding contingent consideration,
assuming all contingencies are satisfied and payment is due in full, totalling $208.6 million as at December 31,
2020 (December 31, 2019 - $187.5 million). The contingent consideration liability is recognized at fair value upon
acquisition and is updated to fair value each quarter, unless it contains an element of compensation, in which
case such element is treated as compensation expense over the contingency period. The fair value of contingent
consideration recorded on the consolidated balance sheet as at December 31, 2020 was $115.6 million
(December 31, 2019 - $85.0 million). The liability recorded on the consolidated balance sheet for the
compensatory element of contingent consideration arrangements as at December 31, 2020 was $17.6 million
(December 31, 2019 - $23.0 million). The contingent consideration is based on achieving specified earnings levels
and is paid or payable after the end of the contingency period, which extends to December 2024. We estimate
that approximately 85% of the contingent consideration outstanding as of December 31, 2020 will ultimately be
paid.
7
The following table summarizes our contractual obligations as at December 31, 2020:
Contractual obligations
(in thousands of US$)
Payments due by period
Less than
Total
1 year
1-3 years
4-5 years
After
5 years
Long-term debt
Warehouse credit facilities
Convertible Notes
Interest on long-term debt
and Convertible Notes
Finance lease obligations
Contingent acquisition consideration
Operating leases obligations
Purchase commitments
Co-investment Commitments
$
477,465 $
7,910 $
526 $ 213,239 $ 255,790
218,018
223,957
218,018
-
-
223,957
102,663
21,224
41,965
26,164
2,430
1,114
1,307
9
115,642
511,625
33,312
14,345
5,802
107,403
2,327
97,081
18,076
14,345
154,616
7,252
-
102,798
3,080
-
13,310
-
110
157,130
4,904
-
Total contractual obligations
$ 1,699,457 $ 383,570 $ 313,069 $ 571,574 $ 431,244
At December 31, 2020, we had commercial commitments totaling $15.7 million comprised of letters of credit
outstanding due to expire within one year.
In order to effectively manage our corporate risk and support our global insurance program, we supplement our
commercial insurance placements with the use of a wholly-owned captive insurance company to provide support
for our professional indemnity, general liability and US workers’ compensation programs. The level of risk
retained by our captive insurance company varies by coverage. Currently, the captive insures up to $0.75 million
per claim with respect to professional indemnity and $2.0 million with respect general liability. All limits are
inclusive of commercial market self-insured retentions. Liability insurance claims can be complex and take a
number of years to resolve. Within our captive insurance company, we estimate the ultimate cost of these claims
by way of specific claim accruals developed through periodic reviews of the circumstances of individual claims,
validated annually by a third-party actuary. As of December 31, 2020, the captive insurance company has reserves
for unpaid claim liabilities of $7.6 million.
Redeemable non-controlling interests
In most operations where managers or employees are also non-controlling owners, the Company is party to
shareholders’ agreements. These agreements allow us to “call” the redeemable non-controlling interests (“RNCI”)
at a value determined with the use of a formula price, which is in most cases equal to a multiple of trailing two-
year average earnings, less debt. Non-controlling owners may also “put” their interest to the Company at the
same price, with certain limitations including (i) the inability to “put” more than 50% of their holdings in any twelve-
month period and (ii) the inability to “put” any holdings for at least one year after the date of our initial acquisition
of the business or the date the non-controlling shareholder acquired their interest, as the case may be.
The total value of the RNCI (the “redemption amount”), as calculated in accordance with shareholders’
agreements, was $415.1 million as of December 31, 2020 (December 31, 2019 - $333.1 million). The amount
recorded on our balance sheet under the caption “redeemable non-controlling interests” is the greater of (i) the
redemption amount (as above) or (ii) the amount initially recorded as RNCI at the date of inception of the minority
equity position. As at December 31, 2020, the RNCI recorded on the balance sheet was $442.4 million (December
31, 2019 - $359.2 million). The purchase prices of the RNCI may be paid in cash or in Subordinate Voting Shares
of Colliers. If all RNCI were redeemed in cash, the pro forma estimated accretion to diluted net earnings per share
for 2020 would be $0.81, and the accretion to adjusted EPS would be $0.39.
8
Critical accounting estimates
Critical accounting estimates are those that we deem to be most important to the portrayal of our financial
condition and results of operations, and that require management’s most difficult, subjective or complex
judgments due to the need to make estimates about the effects of matters that are inherently uncertain. We have
identified seven critical accounting estimates, which are discussed below.
1. Revenue recognition. We earn revenues from brokerage transaction commissions, advisory fees, debt
finance fees, property management fees, project management fees, engineering and design fees and
investment management fees. Some of the contractual terms related to the process of earning revenue
from these sources, including potentially contingent events, can be complex and may require us to make
judgments about the timing of when we should recognize revenue and whether revenue should be
reported on a gross basis or net basis. Changes in judgments could result in a change in the period in
which revenues are reported, or in the amounts of revenue and cost of revenue reported.
2. Goodwill. Goodwill impairment testing involves assessing whether events have occurred that would
indicate potential impairment and making estimates concerning the fair values of reporting units and
then comparing the fair value to the carrying amount of each unit. The determination of what constitutes
a reporting unit requires significant management judgment. We have four reporting units, consistent
with our four operating segments. Goodwill is attributed to the reporting units at the time of acquisition.
Estimates of fair value can be impacted by changes in the business environment, prolonged economic
downturns or declines in the market value of the Company’s own shares and therefore require
significant management judgment in their determination. When events have occurred that which would
suggest a potential decrease in fair value, the determination of fair value is done with reference to a
discounted cash flow model which requires management to make certain estimates. The most sensitive
estimates are estimated future cash flows and the discount rate applied to future cash flows. Changes
in these assumptions could result in a materially different fair value.
3. Business combinations. The determination of fair values of assets acquired and liabilities assumed in
business combinations requires the use of estimates and management judgment, particularly in
determining fair values of intangible assets acquired. For example, if different assumptions were used
regarding the profitability and expected attrition rates of acquired customer relationships or asset
management contracts, different amounts of intangible assets and related amortization could be
reported.
4. Contingent acquisition consideration. Contingent consideration is required to be measured at fair value at
the acquisition date and at each balance sheet date until the contingency expires or is settled. The fair
value at the acquisition date is a component of the purchase price; subsequent changes in fair value are
reflected in earnings. Most acquisitions made by us have a contingent consideration feature, which is
usually based on the acquired entity’s profitability (measured in terms of adjusted EBITDA) during a one
to five year period after the acquisition date. Significant estimates are required to measure the fair value
of contingent consideration, including forecasting profits for the contingency period and the selection of
an appropriate discount rate.
5. Deferred income tax assets. Deferred income tax assets arise primarily from the recognition of the benefit
of certain net operating loss carry-forwards. We must weigh the positive and negative evidence
surrounding the future realization of the deferred income tax assets to determine whether a valuation
allowance is required, or whether an existing valuation allowance should remain in place. These
determinations, which involve projections of future taxable income, require significant management
judgment. Changes in judgments, in particular of future taxable earnings, could result in the recognition
or de-recognition of a valuation allowance which could impact income tax expense materially.
6. Uncertain tax positions. In the ordinary course of business, there is inherent uncertainty in quantifying
our income tax positions. We assess our income tax positions and record tax benefits for all years subject
to examination by tax authorities based upon an evaluation of the facts and circumstances at the
9
reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained,
we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized
upon ultimate settlement with a tax authority that has full knowledge of all relevant information. For
those income tax positions where it is not more likely than not that a tax benefit will be sustained, no
tax benefit has been recognized in the financial statements.
7. Allowance for uncollectible accounts receivable. Accounts receivable allowances are determined using a
combination of historical experience, current information, and management judgment. Actual
collections may differ from our estimates. A 10% increase in the accounts receivable allowance as of
December 31, 2020 would increase bad debt expense by $2.6 million.
Reconciliation of non-GAAP financial measures
In this MD&A, we make reference to “adjusted EBITDA” and “adjusted EPS,” which are financial measures that are
not calculated in accordance with GAAP.
Adjusted EBITDA is defined as net earnings, adjusted to exclude: (i) income tax; (ii) other expense (income) other
than equity earnings from non-consolidated investments; (iii) interest expense; (iv) depreciation and
amortization, including amortization of mortgage servicing rights (“MSRs”); (v) gains attributable to MSRs; (vi)
acquisition-related items (including transaction costs, contingent acquisition consideration fair value adjustments
and contingent acquisition consideration-related compensation expense); (vii) restructuring costs and (viii) stock-
based compensation expense. We use adjusted EBITDA to evaluate our own operating performance and our
ability to service debt, as well as an integral part of our planning and reporting systems. Additionally, we use this
measure in conjunction with discounted cash flow models to determine the Company’s overall enterprise
valuation and to evaluate acquisition targets. We present adjusted EBITDA as a supplemental measure because
we believe such measure is useful to investors as a reasonable indicator of operating performance because of
the low capital intensity of the Company’s service operations. We believe this measure is a financial metric used
by many investors to compare companies, especially in the services industry. This measure is not a recognized
measure of financial performance under GAAP in the United States, and should not be considered as a substitute
for operating earnings, net earnings or cash flow from operating activities, as determined in accordance with
GAAP. Our method of calculating adjusted EBITDA may differ from other issuers and accordingly, this measure
may not be comparable to measures used by other issuers. A reconciliation of net earnings to adjusted EBITDA
appears below.
(in thousands of US$)
Net earnings
Income tax
Other income, net
Interest expense, net
Operating earnings
Depreciation and amortization
Gains attributable to MSRs
Equity earnings from non-consolidated investments
Acquisition-related items
Restructuring costs
Stock-based compensation expense
Adjusted EBITDA
Three months ended
December 31
2020
2019
Twelve months ended
December 31
2020
2019
$
49,568
22,980
(1,427)
8,322
79,443
38,795
(9,668)
1,468
34,349
6,947
3,572
$ 154,906
$
$
67,877
25,742
(868)
6,677
99,428
25,382
-
-
9,767
7,110
2,633
144,320
$
94,489
42,046
(2,906)
30,949
164,578
125,906
(17,065)
2,919
45,848
29,628
9,628
$ 361,442
$
$
137,585
53,013
(1,853)
29,452
218,197
94,664
-
-
28,532
10,252
7,831
359,476
Adjusted EPS is defined as diluted net earnings per share as calculated under the If-Converted method, adjusted
for the effect, after income tax, of: (i) the non-controlling interest redemption increment; (ii) amortization expense
related to intangible assets recognized in connection with acquisitions and MSRs; (iii) gains attributable to MSRs;
(iv) acquisition-related items; (v) restructuring costs and (vi) stock-based compensation expense. We believe this
measure is useful to investors because it provides a supplemental way to understand the underlying operating
10
performance of the Company and enhances the comparability of operating results from period to period.
Adjusted EPS is not a recognized measure of financial performance under GAAP, and should not be considered
as a substitute for diluted net earnings per share from continuing operations, as determined in accordance with
GAAP. Our method of calculating this non-GAAP measure may differ from other issuers and, accordingly, this
measure may not be comparable to measures used by other issuers. A reconciliation of net earnings to adjusted
net earnings and of diluted net earnings per share to adjusted EPS appears below.
Adjusted EPS is calculated using the “if-converted” method of calculating earnings per share in relation to the
Convertible Notes, which were issued on May 19, 2020. As such, the interest (net of tax) on the Convertible Notes
is added to the numerator and the additional shares issuable on conversion of the Convertible Notes are added
to the denominator of the earnings per share calculation to determine if an assumed conversion is more dilutive
than no assumption of conversion. The “if-converted” method is used if the impact of the assumed conversion is
dilutive. For the year ended December 31, 2020, the “if-converted” method is anti-dilutive for the GAAP diluted
EPS calculation but dilutive for the adjusted EPS calculation
(in thousands of US$)
Net earnings
Non-controlling interest share of earnings
Interest on Convertible Notes
Amortization of intangible assets
Gains attributable to MSRs
Acquisition-related items
Restructuring costs
Stock-based compensation expense
Income tax on adjustments
Non-controlling interest on adjustments
Adjusted net earnings
(in US$)
Diluted net earnings per common share
Non-controlling interest redemption increment
Amortization expense, net of tax
Gains attributable to MSRs, net of tax
Acquisition-related items
Restructuring costs, net of tax
Stock-based compensation expense, net of tax
Adjusted EPS
Diluted weighted average shares for Adjusted EPS
(thousands)
Three months ended
December 31
2020
2019
Twelve months ended
December 31
2020
2019
49,568
(15,666)
2,300
27,544
(9,668)
34,349
6,947
3,572
(15,115)
(4,257)
79,574
$
$
67,877
(12,930)
-
16,437
-
9,767
7,110
2,633
(7,493)
(2,769)
80,632
$
94,489
(29,572)
5,673
86,557
(17,065)
45,848
29,628
9,628
(35,350)
(11,479)
$ 178,357
$
$
137,585
(26,829)
-
61,273
-
28,532
10,252
7,831
(22,232)
(9,868)
186,544
Three months ended
December 31
2020
0.80
0.01
0.35
(0.09)
0.53
0.12
0.07
1.79
$
$
Twelve months ended
December 31
2020
2019
1.25
0.37
1.23
(0.22)
0.82
0.51
0.22
4.18
$
$
2.57
0.20
0.93
-
0.58
0.19
0.20
4.67
2019
1.20
0.17
0.25
-
0.19
0.13
0.07
2.01
$
$
$
$
$
$
44,365
40,109
42,647
39,980
We believe that the presentation of adjusted EBITDA and adjusted earnings per share, which are non-GAAP
financial measures, provides important supplemental information to management and investors regarding
financial and business trends relating to the Company’s financial condition and results of operations. We use
these non-GAAP financial measures when evaluating operating performance because we believe that the
inclusion or exclusion of the items described above, for which the amounts are non-cash or non-recurring in
nature, provides a supplemental measure of our operating results that facilitates comparability of our operating
performance from period to period, against our business model objectives, and against other companies in our
industry. We have chosen to provide this information to investors so they can analyze our operating results in
11
the same way that management does and use this information in their assessment of our core business and the
valuation of the Company. Adjusted EBITDA and adjusted earnings per share are not calculated in accordance
with GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial
measures calculated in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not
reflect all of the costs or benefits associated with the operations of our business as determined in accordance
with GAAP. As a result, investors should not consider these measures in isolation or as a substitute for analysis
of our results as reported under GAAP.
Percentage revenue variances presented on a local currency basis are calculated by translating the current period
results of our non-US dollar denominated operations to US dollars using the foreign currency exchange rates
from the periods against which the current period results are being compared. Percentage revenue variances
presented on an internal growth basis are calculated assuming no impact from acquired entities in the current
and prior periods. Revenue from acquired entities, including any foreign exchange impacts, are treated as
acquisition growth until the respective anniversaries of the acquisitions. We believe that these revenue growth
rate methodologies provide a framework for assessing the Company’s performance and operations excluding
the effects of foreign currency exchange rate fluctuations and acquisitions. Since these revenue growth rate
measures are not calculated under GAAP, they may not be comparable to similar measures used by other issuers.
We use the term assets under management (“AUM”) as a measure of the scale of our Investment Management
operations. AUM is defined as the gross market value of operating assets and the projected gross cost of
development properties of the funds, partnerships and accounts to which we provide management and advisory
services, including capital that such funds, partnerships and accounts have the right to call from investors
pursuant to capital commitments. Our definition of AUM may differ from those used by other issuers and as such
may not be directly comparable to similar measures used by other issuers.
Impact of recently adopted accounting standards
Current Expected Credit Losses
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. This ASU creates a new
framework to evaluate financial instruments, such as trade receivables, for expected credit losses. This new
framework replaces the previous incurred loss approach and is expected to result in more timely recognition of
credit losses.
The Company has adopted Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments effective January 1, 2020 using the modified retrospective basis recording a cumulative
catch-up adjustment to retained earnings. Following adoption of the standard, the Company’s methodology of
reserving for Accounts receivable and other receivable-related financial assets, including contract assets has
changed. See note 2 for details on the significant accounting policies related to receivables and allowance for
doubtful accounts. The adoption of the standard has had the impact of accelerating the recognition of credit
losses on certain receivables and the Company recognized a non-cash cumulative catch-up adjustment to
retained earnings in the amount of $3.6 million, net of $0.8 million in taxes, on the opening consolidated balance
sheet as of January 1, 2020.
Goodwill impairment testing
In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other: Simplifying the Accounting
for Goodwill Impairment to remove Step 2 of the goodwill impairment test, which requires a hypothetical
purchase price allocation. Under this guidance, a goodwill impairment will now be the amount by which a
reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The Company
has adopted the standard effective January 1, 2020. Adoption of the ASU simplifies the goodwill impairment
testing process for the Company without any direct impact on the financial statements.
Capitalization of implementation costs in relation to hosting arrangements
In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic
350-40). This ASU aligns the capitalizing of implementation costs incurred in relation to a hosting arrangement
12
with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.
It also requires these capitalized costs to be expensed over the term of the hosting arrangement and to the same
line as the hosting arrangement. As this ASU clarifies the previously existing ambiguity related to capitalization,
it was determined that the guidance under the ASU is consistent with the Company’s existing capitalization
process for development costs as relate to hosting arrangements without any impact on the financial statements.
Recently issued accounting guidance, not yet adopted
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting. With LIBOR ceasing at the end of 2021, a significant volume of
contracts and other arrangements will be impacted by the transition required to alternative reference rates. This
ASU provides optional expedients and exceptions to reduce the costs and complexity of applying existing GAAP
to contract modifications and hedge accounting if certain criteria are met. The standard is effective from the
beginning of an interim period that includes the March 12, 2020 issuance date of the ASU through December 31,
2022. On March 25, 2020, the Alternative Reference Rates Committee (the “ARRC”), which is a group of private-
market participants convened by the Federal Reserve Board and the New York Fed, reiterated the end of 2021
timeline for the phase out of LIBOR amid the uncertainty surrounding the COVID-19 pandemic. The Company is
currently assessing the options available under this ASU and their potential impacts on its consolidated financial
statements.
In August 2020, the FASB issued ASU No. 2020-06, Debt- Debt with Conversion and Other Options (Subtopic 470-20)
and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible
Instruments and Contract in an Entity’s Own Equity. The ASU simplifies the accounting for convertible instruments
and reduces the number of embedded conversion features being separately recognized from the host contract
as compared to current GAAP. The ASU also enhances information transparency through targeted improvements
to the disclosures for convertible instruments and earnings-per-share guidance. The standard is effective for
fiscal years beginning after December 15, 2021. Early adoption is permitted, but no earlier than fiscal years
beginning after December 15, 2020. The standard can be applied using the modified retrospective method of
transition or a fully retrospective method of transition. The Company is currently assessing the options available
under this ASU and their potential impacts on its consolidated financial statements.
Impact of IFRS
On January 1, 2011, many Canadian companies were required to adopt IFRS. In 2004, in accordance with the rules
of the CSA, Old FSV elected to report exclusively using US GAAP and further elected not to adopt IFRS on January
1, 2011. Under the rules of the CSA, the Company is permitted to continue preparing financial statements in
accordance with US GAAP going forward.
Financial instruments
We use financial instruments as part of our strategy to manage the risk associated with interest rates and
currency exchange rates. We do not use financial instruments for trading or speculative purposes. On April 11,
2017 we entered into interest rate swap agreements to convert the LIBOR floating interest rate on $100.0 million
of US dollar denominated debt into a fixed interest rate of 1.897%. In December 2018, the Company entered into
interest rate swap agreements to convert the LIBOR floating interest rate on $100.0 million of US dollar
denominated debt into a fixed interest rate of 2.7205% plus the applicable margin. Hedge accounting is being
applied to these interest rate swaps. Financial instruments involve risks, such as the risk that counterparties may
fail to honor their obligations under these arrangements. If we have financial instruments outstanding and such
events occur, our results of operations and financial position may be adversely affected.
Off-balance sheet arrangements
The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a
current or future material effect on the Company’s financial performance or financial condition other than (i) the
payments which may be required to be made under the long term arrangement contained in the restated
management services agreement with Colliers, Jayset Management CIG Inc. and Jay S. Hennick, (see Note 19 to
the Consolidated Financial Statements for a full description) and (ii) the AR Facility. As of December 31, 2020, the
Company had drawn $115.9 million under the AR Facility. The AR Facility is recorded as a sale of accounts
13
receivable, and accordingly sold Receivables are derecognized from the consolidated balance sheet. The AR
Facility results in a significant decrease to our borrowing costs.
Transactions with related parties
As at December 31, 2020, the Company had $3.4 million of loans receivable from non-controlling shareholders
(December 31, 2019 - $3.4 million). The majority of the loans receivable represent amounts assumed in
connection with acquisitions and amounts issued to non-controlling interests to finance the sale of non-
controlling interests in subsidiaries to senior managers. The loans are of varying principal amounts and interest
rates which range from nil to 4.0%. These loans are due on demand or mature on various dates up to 2026, but
are open for repayment without penalty at any time.
Outstanding share data
The authorized capital of the Company consists of an unlimited number of preference shares, issuable in series,
an unlimited number of Subordinate Voting Shares and an unlimited number of Multiple Voting Shares. The
holders of Subordinate Voting Shares are entitled to one vote in respect of each Subordinate Voting Share held
at all meetings of the shareholders of the Company. The holders of Multiple Voting Shares are entitled to twenty
votes in respect of each Multiple Voting Share held at all meetings of the shareholders of the Company. Each
Multiple Voting Share is convertible into one Subordinate Voting Share at any time at the election of the holders
thereof.
As of the date hereof, the Company has outstanding 38,863,742 Subordinate Voting Shares and 1,325,694
Multiple Voting Shares. In addition, as at the date hereof 2,190,125 Subordinate Voting Shares are issuable upon
exercise of options granted under the Company’s stock option plan.
On July 16, 2020, the Company announced a Normal Course Issuer Bid (“NCIB”) effective from July 20, 2020 to July
19, 2021. The Company is entitled to repurchase up to 3,000,000 Subordinate Voting Shares on the open market
pursuant to the NCIB. Any shares purchased under the NCIB will be cancelled.
Canadian tax treatment of common share dividends
For the purposes of the enhanced dividend tax credit rules contained in the Income Tax Act (Canada) and any
corresponding provincial and territorial tax legislation, all dividends (and deemed dividends) paid by us to
Canadian residents on our Subordinate Voting Shares and Multiple Voting Shares are designated as “eligible
dividends”. Unless stated otherwise, all dividends (and deemed dividends) paid by us hereafter are designated
as “eligible dividends” for the purposes of such rules.
Disclosure controls and procedures
Disclosure controls and procedures are designed to provide reasonable assurance that information required to
be disclosed in reports filed or submitted by us under U.S. and Canadian securities legislation is recorded,
processed, summarized and reported within the time periods specified in those rules, and include controls and
procedures designed to ensure that information required to be disclosed in reports filed or submitted by us
under U.S. and Canadian securities legislation is accumulated and communicated to management, including the
Chief Executive Officer and Chief Financial Officer, as appropriate, to permit timely decisions regarding required
disclosure. Management, including the Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the design and operation of our disclosure controls and procedures, as defined in the rules of
the U.S. Securities and Exchange Commission and the Canadian Securities Administrators, as at December 31,
2020. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures were effective as at December 31, 2020.
Changes in internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting. Any system of internal control over financial reporting, no matter how well-designed, has inherent
limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation. Management has used the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) 2013 framework to evaluate the effectiveness of
14
our internal control over financial reporting. Based on this assessment, management has concluded that as at
December 31, 2020, our internal control over financial reporting was effective.
During the year ended December 31, 2020, there were no changes in our internal control over financial reporting
that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
Legal proceedings
Colliers is involved in various legal claims associated with the normal course of operations and believes it has
made adequate provision for such legal claims.
Spin-off risk
On June 1, 2015, the predecessor to our Company, FirstService Corporation (“Old FSV”), completed a plan of
arrangement (the “Spin-off”) which separated Old FSV into two independent publicly traded companies – Colliers
International Group Inc., a global leader in commercial real estate services and new FirstService Corporation
(“FirstService”), a North American leader in residential property management and related services. Under the
Spinoff, Old FSV shareholders received one Colliers share and one FirstService share of the same class as each
Old FSV share previously held.
Although the Spin-off is complete, the transaction exposes Colliers to certain ongoing risks. The Spin-off was
structured to comply with all the requirements of the public company “butterfly rules” in the Income Tax Act
(Canada). However, there are certain requirements of these rules that depend on events occurring after the Spin-
off is completed or that may not be within the control of Colliers and/or FirstService. If these requirements are
not met, Colliers could be exposed to significant tax liabilities which could have a material effect on the financial
position of Colliers. In addition, Colliers has agreed to indemnify FirstService for certain liabilities and obligations
related to its business at the time of the Spin-off. These indemnification obligations could be significant. These
risks are more fully described in the Management Information Circular of Old FSV dated March 16, 2015, which
is available under Colliers’ SEDAR profile at www.sedar.com and on EDGAR at www.sec.gov.
Risks associated with COVID-19 pandemic
We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it
will impact our clients, employees, and services. We expect that we will continue to be adversely impacted on a
global basis in future periods, and we are unable to predict the ultimate impact that it may have on our business,
future results of operations, financial position or cash flows. The extent to which our operations may be impacted
by the pandemic will depend largely on future developments, which are uncertain and cannot be accurately
predicted, including new information which may emerge concerning the severity of the outbreak and actions by
government authorities to contain the pandemic or treat its impact. Furthermore, the impacts of a potential
worsening of global macroeconomic conditions and the continued disruptions to and volatility in the financial
markets remain unknown.
Operating during the global pandemic exposes the Company to multiple risks which, individually or in the
aggregate, could have a material adverse effect on the Company’s business, financial condition, results of
operations and cash flows, including following:
•
•
•
•
•
a reduction in commercial real estate transactions and decreases in expenditure at our clients and
therefore a reduction in the demand for the services the Company provides;
a decrease in property values and vacancy rates, which could negatively impact Leasing and Capital
Markets commissions;
liquidity challenges, including impacts related to delayed customer payments and payment defaults
associated with customer liquidity issues and bankruptcies;
inability to access capital or financing at favorable terms due to possible adverse effect on our liquidity
and financial position; and
the occurrence of asset impairment losses.
15
Further, many of the risks discussed in the “Risk Factors” section of the Company’s Annual Information Form are,
and could be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic
environment as a result. Given the dynamic nature of these events, the Company cannot reasonably estimate
the period of time that the COVID-19 pandemic and related market conditions will persist, the full extent of the
impact they will have on our business, financial condition, results of operations or cash flows or the pace or extent
of any subsequent recovery. Even after the pandemic and related containment measures subside, we may
continue to experience adverse impacts to our business, financial condition and results of operations, the extent
of which may be material.
Risks associated with Colliers Mortgage
Our recently acquired Colliers Mortgage operations have certain key risk factors unique to the services provided.
The following is a summary of key risk factors:
•
•
•
•
a change in or loss of our relationship with US government agencies, such as Fannie Mae or Ginnie Mae
could significantly impact our ability to originate mortgage loans;
defaults by borrowers on loans originated under the Fannie Mae Delegated Underwriting and Servicing
Program could materially affect our profitability as we are subject to sharing up to one-third of incurred
losses;
a decline in origination volumes or termination of our current servicing agreements, could significantly
impact profitability, with a majority of our earnings generated from loan servicing; and
a termination or changes to our warehouse credit facilities could lead to unfavourable replacement
terms and may significantly impact our ability to originate new loans.
Forward-looking statements and risks
This MD&A contains forward-looking statements with respect to expected financial performance, strategy and
business conditions. The words “believe,” “anticipate,” “estimate,” “plan,” “expect,” “intend,” “may,” “project,” “will,”
“would,” and similar expressions are intended to identify forward-looking statements, although not all forward-
looking statements contain these identifying words. These statements reflect management's current beliefs with
respect to future events and are based on information currently available to management. Forward-looking
statements involve significant known and unknown risk and uncertainties. Many factors could cause our actual
results, performance or achievements to be materially different from any future results, performance or
achievements that may be expressed or implied by such forward-looking statements. Factors which may cause
such differences include, but are not limited to those set out below, those set out above under “Spin-off risk”,
“Risks associated with the COVID-19 pandemic” , “Risks associated with Colliers Mortgage” and those set out in
detail in the “Risk Factors” section of the Company’s Annual Information Form:
•
•
•
The COVID-19 pandemic and its related impact on global, regional and local economic conditions, and
in particular its impact on client demand for our services, our ability to deliver services and ensure the
health and productivity of our employees.
Economic conditions, especially as they relate to commercial and consumer credit conditions and
business spending, particularly in regions where our operations may be concentrated.
Commercial real estate property values, vacancy rates and general conditions of financial liquidity for
real estate transactions.
Trends in pricing and risk assumption for commercial real estate services.
The effect of significant movements in average cap rates across different property types.
•
•
• A reduction by companies in their reliance on outsourcing for their commercial real estate needs, which
•
•
would affect our revenues and operating performance.
Competition in the markets served by the Company.
The impact of changes in the market value of assets under management on the performance of our
Investment Management business.
• A decline in our ability to attract, recruit and retain talent.
• A decline in our ability to attract new clients and to retain major clients and renew related contracts.
•
•
Reliance on subcontractors.
Labor shortages or increases in wage and benefit costs.
16
• A decline in our performance impacting our continued compliance with the financial covenants under
our debt agreements, or our ability to negotiate a waiver of certain covenants with our lenders.
The effect of increases in interest rates on our cost of borrowing.
•
• Unexpected increases in operating costs, such as insurance, workers’ compensation and health care.
•
Changes in the frequency or severity of insurance incidents relative to our historical experience.
•
The effects of changes in foreign exchange rates in relation to the US dollar on the Company’s Euro,
Canadian dollar, Australian dollar and UK pound sterling denominated revenues and expenses.
• A decline in our ability to identify and make acquisitions at reasonable prices and successfully integrate
acquired operations.
• Disruptions or security failures in our information technology systems.
•
The ability to comply with laws and regulations related to our global operations, including real estate
and mortgage banking licensure, labour and employment laws and regulations, as well as the anti-
corruption laws and trade sanctions.
Political conditions, including political instability, elections, referenda, trade policy changes, immigration
policy changes and any outbreak or escalation of hostilities or terrorism and the impact thereof on our
business.
The ability to protect against cybersecurity threats as well as to monitor new threats.
Changes in climate and environment-related policies that directly impact our businesses.
Changes in government laws and policies at the federal, state/provincial or local level that directly
impact our businesses.
Conversion of the Convertible Notes to subordinate voting shares may dilute the ownership of existing
shareholders.
•
•
•
•
•
We caution that the foregoing list is not exhaustive of all possible factors, as other factors could adversely affect
our results, performance or achievements. The reader is cautioned against undue reliance on these forward-
looking statements. Although we believe that the assumptions underlying our forward-looking statements are
reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the
results contemplated in such forward-looking statements will be realized. The inclusion of such forward-looking
statements should not be regarded as a representation by the Company or any other person that the future
events, plans or expectations contemplated by the Company will be achieved. We note that past performance in
operations and share price are not necessarily predictive of future performance, particularly in light of the
ongoing and developing COVID-19 pandemic and its impact on the global economy and its anticipated impact on
our business. We disclaim any intention and assume no obligation to update or revise any forward-looking
statement even if new information becomes available, as a result of future events or for any other reason.
Additional information
Additional information about Colliers, including our Annual Information Form for the year ended December 31,
2020, is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Further information about us can
also be obtained at www.colliers.com.
17
Colliers
International
Group Inc.
Consolidated Financial Statements
Year Ended
December 31, 2020
COLLIERS INTERNATIONAL GROUP INC.
MANAGEMENT’S REPORT
MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The accompanying consolidated financial statements and management discussion and analysis (“MD&A”) of
Colliers International Group Inc. (“Colliers” or the “Company”) and all information in this annual report are the
responsibility of management and have been approved by the Board of Directors.
The consolidated financial statements have been prepared by management in accordance with accounting
principles generally accepted in the United States of America using the best estimates and judgments of
management, where appropriate. The most significant of these accounting principles are set out in Note 2 to the
consolidated financial statements. Management has prepared the financial information presented elsewhere in
this annual report and has ensured that it is consistent with the consolidated financial statements.
The MD&A has been prepared in accordance with National Instrument 51-102 of the Canadian Securities
Administrators, taking into consideration other relevant guidance, including Regulation S-K of the US Securities
and Exchange Commission.
The Board of Directors of the Company has an Audit & Risk Committee consisting of four independent directors.
The Audit & Risk Committee meets regularly to review with management and the independent auditors any
significant accounting, internal control, auditing and financial reporting matters.
These consolidated financial statements have been audited by PricewaterhouseCoopers LLP, which have been
appointed as the independent registered public accounting firm of the Company by the shareholders. Their
report outlines the scope of their examination and opinion on the consolidated financial statements. As auditors,
PricewaterhouseCoopers LLP have full and independent access to the Audit & Risk Committee to discuss their
findings.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal control over financial reporting
for the Company. Internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of its effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Management has excluded four individually insignificant entities acquired by the Company during the last fiscal
period from its assessment of internal control over financial reporting as at December 31, 2020. The total assets
and total revenues of the four majority-owned entities represent 16.5% and 7.0%, respectively of the related
consolidated financial statement amounts as at and for the year ended December 31, 2020. The most significant
of these entities, representing 13.5% and 2.8% of consolidated total assets and 3.6% and 3.0% of consolidated
total revenues were related to the four subsidiaries of Dougherty Financial Group LLC – Dougherty Mortgage LLC,
Dougherty & Company LLC, Dougherty Funding LLC and Dougherty Insurance Agency LLC (renamed “Colliers
Mortgage” and “Colliers Securities”) and Maser Consulting P.A., respectively.
Management has assessed the effectiveness of the Company’s internal control over financial reporting as at
December 31, 2020, based on the criteria set forth in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management
has concluded that, as at December 31, 2020, the Company’s internal control over financial reporting was
effective.
19
The effectiveness of the Company's internal control over financial reporting as at December 31, 2020, has been
audited by PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm as stated
in their report which appears herein.
/s/ Jay S. Hennick
Chairman and Chief Executive Officer
February 18, 2020
/s/ Christian Mayer
Chief Financial Officer
20
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Colliers International Group Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Colliers International Group Inc. and its
subsidiaries (together, the Company) as of December 31, 2020 and 2019, and the related consolidated statements
of earnings, comprehensive earnings, shareholders’ equity and cash flows for the years then ended, including
the related notes (collectively referred to as the consolidated financial statements). We also have audited the
Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Management’s Report on Internal Control over Financial
Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on
the Company’s internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
As described in Management’s Report on Internal Control over Financial Reporting, management has excluded
four entities from its assessment of internal control over financial reporting as of December 31, 2020 because
they were acquired by the Company in purchase business combinations during 2020. We have also excluded
these four entities from our audit of internal control over financial reporting. These entities comprised, in the
aggregate, total assets and total revenues excluded from management’s assessment and our audit of internal
control over financial reporting of approximately 16.5% and 7.0% of consolidated total assets and consolidated
total revenues, respectively, as of and for the year ended December 31, 2020. The most significant of these
entities, representing 13.5% and 2.8% of consolidated total assets and 3.6% and 3.0% of consolidated total
21
revenues, were related to the four subsidiaries of Dougherty Financial Group LLC: Dougherty Mortgage LLC,
Dougherty & Company LLC, Dougherty Funding LLC and Dougherty Insurance Agency LLC (renamed “Colliers
Mortgage” and “Colliers Securities”); and Maser, Consulting P.A., respectively.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company; and (iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the
consolidated financial statements that were communicated or required to be communicated to the audit
committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements
and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit
matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and
we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
Revenue recognition – sales brokerage and leasing revenue
As described in notes 2 and 28 to the consolidated financial statements, the Company recognized leasing revenue
of $686.5 million, and revenue from real estate sales brokerage services, which makes up a significant portion of
capital markets revenue, of $700.9 million for the year ended December 31, 2020. Revenue is recognized upon
the transfer of control of promised services to customers in an amount that reflects the consideration the
Company expects to receive in exchange for those services. Management has determined that control of sales
brokerage services rendered transfer to a customer when a sale and purchase agreement becomes
unconditional and leasing services rendered transfer to a customer when a lease between the landlord and the
tenant is executed. At these points in time, the customer has received substantially all of the benefit of the
services provided by the Company. Sales brokerage and leasing revenue contracts may include terms that result
in variability to the transaction price and ultimate revenues earned beyond the underlying value of the
transaction, which may include contingencies. As described by management, sales brokerage and leasing
revenue is constrained when it is probable that the Company may not be entitled to the total amount of the
revenue under the contract, which is associated with the occurrence or non-occurrence of an event that is outside
of the Company’s control or where the facts and circumstances of the contract limit the Company’s ability to
predict whether this event will occur. When sales brokerage and leasing revenue is constrained, revenue is not
recognized until the uncertainty has been resolved. Management estimates variable consideration and performs
a constraint analysis for these contracts on the basis of historical information to estimate the amount the
Company will ultimately be entitled. Management used significant judgment to determine whether sales
brokerage and leasing revenue should be constrained and the timing of when such revenue should be
recognized.
The principal considerations for our determination that performing procedures relating to sales brokerage and
leasing revenue recognition is a critical audit matter are (i) the significant judgment by management in
22
determining whether sales brokerage and leasing revenue should be constrained and the timing of when such
revenue should be recognized, which in turn led to (ii) significant auditor judgment, subjectivity and effort in
performing procedures and evaluating management’s assessment of sales brokerage and leasing revenue
recognition.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness
of controls relating to the sales brokerage and leasing revenue recognition process, including controls over
management’s review and approval of revenue recognition based upon the supporting evidence available for
each sales brokerage and leasing revenue contract. These procedures also included, among others, evaluating
the appropriateness of management’s assessment of sales brokerage and leasing revenue recognition for a
sample of sales brokerage and leasing revenue transactions recognized, including evaluating the contractual
terms identified in the underlying brokerage transaction agreements and considering other supporting evidence
such as customer or third party correspondence and cash receipts.
Acquisition of Colliers Mortgage – Fair value of intangible assets
As described in notes 2 and 4 to the consolidated financial statements, the Company acquired controlling
interests in four subsidiaries of Dougherty Financial Group LLC (renamed “Colliers Mortgage”), which included
mortgage servicing rights of $99.9 million and licenses of $29.2 million among the intangible assets recognized
as a result of the acquisition. Management records intangible assets at fair value on the date they are acquired
using valuation methods. Management applied significant judgment in estimating the fair value of intangible
assets acquired, which included the use of assumptions related to revenue growth rates, attrition rates,
conditional prepayment rates, interest on escrow deposits and discount rates.
The principal considerations for our determination that performing procedures relating to the fair value of
intangible assets recorded in the acquisition of Colliers Mortgage is a critical audit matter are (i) the judgment by
management when developing the fair value estimates of intangible assets acquired; (ii) the high degree of
auditor judgment, subjectivity and effort in performing procedures and evaluating management’s assumptions
related to revenue growth rates, attrition rates, conditional prepayment rates, interest on escrow deposits and
discount rates; and (iii) the audit effort that involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness
of controls relating to the acquisition accounting, including controls over management’s valuation of the
intangible assets acquired, including controls over the development of the aforementioned assumptions. These
procedures also included, among others, reading the purchase agreement, testing management’s process for
developing the fair value estimates of intangible assets acquired, evaluating the appropriateness of the valuation
methods used, testing the completeness and accuracy of underlying data used in the valuation methods, and
evaluating the reasonableness of the assumptions used by management. Evaluating the reasonableness of the
assumptions used by management related to the revenue growth rates and attrition rates involved considering
the past performance of the acquired business and consistency with external industry data. Professionals with
specialized skill and knowledge were used to assist in testing management’s process, including evaluating the
appropriateness of the valuation methods and the reasonableness of the assumptions used by management
relating to conditional prepayment rates, interest on escrow deposits and discount rates.
/s/ PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Canada
February 18, 2021
We have served as the Company’s auditor since 1995.
23
COLLIERS INTERNATIONAL GROUP INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands of US dollars, except per share amounts)
Year ended December 31,
Revenues (note 28)
Cost of revenues (exclusive of depreciation and
amortization shown below)
Selling, general and administrative expenses
Depreciation
Amortization of intangible assets
Acquisition-related items (note 6)
Operating earnings
Interest expense, net
Equity earnings from unconsolidated investments
Other income, net (note 7)
Earnings before income tax
Income tax expense (note 22)
Net earnings
Non-controlling interest share of earnings
Non-controlling interest redemption increment (note 18)
2020
2019
$
2,786,857
$
3,045,811
1,740,860
709,665
39,349
86,557
45,848
164,578
30,949
(2,919)
13
136,535
42,046
94,489
29,572
15,843
1,959,544
744,874
33,391
61,273
28,532
218,197
29,452
(2,065)
212
190,598
53,013
137,585
26,829
7,853
Net earnings attributable to Company
$
49,074
$
102,903
Net earnings per common share (note 20)
Basic
Diluted
$
$
1.23
1.22
$
$
2.60
2.57
The accompanying notes are an integral part of these consolidated financial statements.
24
COLLIERS INTERNATIONAL GROUP INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(in thousands of US dollars)
Year ended December 31,
Net earnings
Foreign currency translation gain (loss)
Unrealized loss on interest rate swaps, net of tax
Pension liability adjustments, net of tax
Comprehensive earnings
Less: Comprehensive earnings attributable to non-
controlling interests
Comprehensive earnings attributable to Company
2020
2019
$
94,489
$
137,585
2,591
(2,448)
(753)
93,879
(185)
(4,073)
(811)
132,516
39,620
35,559
$
54,259
$
96,957
The accompanying notes are an integral part of these consolidated financial statements.
25
COLLIERS INTERNATIONAL GROUP INC.
CONSOLIDATED BALANCE SHEETS
(in thousands of US dollars)
As at December 31,
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable, net of allowance of $25,632 (December 31, 2019 - $9,131)
Contract assets (note 28)
(note 16)
Warehouse receivables (note 25)
Income tax recoverable
Prepaid expenses and other current assets (note 8)
Real estate assets held for sale (note 5)
Other receivables
Contract assets (note 28)
Other assets (note 8)
Fixed assets (note 10)
Operating lease right-of-use assets (note 9)
Deferred tax assets, net (note 22)
Intangible assets (note 11)
Goodwill (note 12)
Real estate assets held for sale (note 5)
Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued expenses
Accrued compensation
Income tax payable
Contract liabilities (note 28)
Long-term debt - current (note 13)
Contingent acquisition consideration - current (note 25)
Warehouse credit facilities (note 15)
Operating lease liabilities (note 9)
Liabilities related to real estate assets held for sale (note 5)
Long-term debt - non-current (note 13)
Contingent acquisition consideration (note 25)
Operating lease liabilities (note 9)
Other liabilities
Deferred tax liabilities, net (note 22)
Convertible notes (note 14)
Liabilities related to real estate assets held for sale (note 5)
Redeemable non-controlling interests (note 18)
Shareholders' equity
Common shares (note 19)
Contributed surplus
Retained earnings
Accumulated other comprehensive loss
Total Company shareholders' equity
Non-controlling interests
Total shareholders' equity
2020
2019
$
$
$
$
156,614
20,919
372,149
61,101
232,207
15,041
177,780
-
1,035,811
14,989
5,335
74,355
129,221
288,134
45,008
610,330
1,088,984
-
2,256,356
3,292,167
297,766
450,894
26,783
21,076
9,024
5,802
218,018
78,923
-
1,108,286
470,871
109,841
251,680
48,525
50,523
223,957
-
1,155,397
442,375
457,993
66,971
119,421
(61,979)
582,406
3,703
586,109
3,292,167
$
$
$
$
114,993
-
393,945
42,772
-
10,435
145,171
10,741
718,057
16,678
6,162
69,510
107,197
263,639
37,420
477,454
949,221
247,376
2,174,657
2,892,714
261,910
495,374
15,756
24,133
4,223
16,813
-
69,866
36,191
924,266
607,181
68,180
229,224
31,693
28,018
-
127,703
1,091,999
359,150
442,153
60,706
77,181
(67,164)
512,876
4,423
517,299
2,892,714
Commitments and contingencies (notes 19 and 26)
The accompanying notes are an integral part of these consolidated financial statements.
On behalf of the Board of Directors,
/s/Frederick Sutherland /s/Jay S. Hennick
Director Director
26
Balance, December 31, 2019
39,845,211 $ 442,153
$ 60,706 $
77,181
$
(67,164) $
4,423 $ 517,299
COLLIERS INTERNATIONAL GROUP INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands of US dollars, except share information)
Common shares
Issued and
outstandin
shares
g
Contributed
surplus
Amount
Accumulated
other
Total
Retained
Earnings comprehensive controlling shareholders'
equity
(Deficit) earnings (loss)
interests
Non-
Balance, December 31, 2018
39,213,136 $ 415,805
$ 54,717 $
(21,751)
$
(61,218) $
4,420 $ 391,973
-
137,585
-
-
137,585
-
Net earnings
Pension liability adjustment,
net of tax
Foreign currency translation
Unrealized loss on interest rate
loss
swaps, net of tax
Other comprehensive loss
attributable to NCI
NCI share of earnings
NCI redemption increment
Distributions to NCI
Acquisitions of businesses, net
Subsidiaries’ equity
transactions
Subordinate Voting Shares:
Stock option expense
Stock options exercised
Dividends
Cumulative effect adjustment:
Current expected credit
losses, net of tax (note 3)
Net earnings
Pension liability adjustment,
net of tax
Foreign currency translation
Unrealized loss on interest rate
gain
swaps, net of tax
Other comprehensive loss
attributable to NCI
NCI share of earnings
NCI redemption increment
Distributions to NCI
Acquisition of businesses, net
Subsidiaries’ equity
transactions
Subordinate Voting Shares:
Stock option expense
Stock options exercised
Dividends
Balance, December 31, 2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(26,829)
(7,853)
-
-
2,567
-
-
632,075
-
-
26,348
-
7,831
(4,409)
-
-
-
(3,971)
(811)
(185)
(4,073)
(877)
-
-
-
-
-
-
-
-
-
-
-
233
2,270
-
(2,305)
(195)
-
-
-
-
(811)
(185)
(4,073)
(644)
(24,559)
(7,853)
(2,305)
(195)
2,567
7,831
21,939
(3,971)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,824)
94,489
-
-
-
-
(29,572)
(15,843)
-
-
134
-
-
-
15,840
344,225
-
-
40,189,436 $ 457,993
9,628
(3,497)
-
-
-
(4,010)
$ 66,971 $ 119,421
-
-
(753)
2,591
(2,448)
5,795
-
-
-
-
-
-
-
-
$
(61,979) $
-
-
-
-
-
(154)
2,023
-
(2,524)
(65)
(2,824)
94,489
(753)
2,591
(2,448)
5,641
(27,549)
(15,843)
(2,524)
(65)
-
134
-
-
-
3,703
9,628
12,343
(4,010)
$ 586,109
27
The accompanying notes are an integral part of these consolidated financial statements.
COLLIERS INTERNATIONAL GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of US dollars)
Year ended December 31,
Cash provided by (used in)
Operating activities
Net earnings
Items not affecting cash:
Depreciation and amortization
Gains attributable to mortgage servicing rights
Gains attributable to the fair value of mortgage
premiums and origination fees
Deferred tax
Earnings from equity method investments
Stock option expense (note 21)
Allowance for credit losses
Amortization of advisor loans
Contingent consideration (note 6)
Other
(Increase) decrease in accounts receivable,
prepaid expenses and other assets
(Decrease) increase in accounts payable, accrued
expenses and other liabilities
(Decrease) increase in accrued compensation
Contingent acquisition consideration paid
Proceeds from sale of mortgage loans
Origination of mortgage loans
Increase in warehouse credit facilities
Sale proceeds from AR Facility, net of repurchases (note 16)
Net cash provided by operating activities
Investing activities
Acquisitions of businesses, net of cash acquired (note 4)
Purchases of fixed assets
Advisor loans issued
Purchase of held for sale real estate assets (note 5)
Proceeds from sale of held for sale real estate assets (note 5)
Collections of AR facility deferred purchase price (note 16)
Other investing activities
Net cash used in investing activities
Financing activities
Increase in long-term debt
Repayment of long-term debt
Issuance of convertible notes (note 14)
Purchases of non-controlling interests' subsidiary shares, net
Contingent acquisition consideration paid
Proceeds received on exercise of stock options
Dividends paid to common shareholders
Distributions paid to non-controlling interests
Financing fees paid (note 14)
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash
Net change in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of year
Cash, cash equivalents and restricted cash, end of year
The accompanying notes are an integral part of these consolidated financial statements.
28
2020
2019
$
94,489
$
137,585
125,906
(17,065)
(38,531)
(13,184)
(2,919)
9,628
15,275
20,871
29,679
7,963
94,664
-
-
(6,699)
(2,065)
7,831
5,414
20,424
22,808
3,108
49,039
(89,235)
(13,901)
(78,591)
(18,224)
1,226,041
(1,395,734)
193,168
(27,431)
166,479
(205,608)
(40,353)
(14,695)
(84,382)
178,604
51,994
982
(113,458)
616,121
(779,185)
230,000
(19,791)
(11,181)
12,343
(3,992)
(35,698)
(7,568)
1,049
8,470
62,540
114,993
177,533
$
(15,692)
16,580
(8,928)
-
-
-
124,963
310,758
(80,576)
(44,197)
(21,457)
(94,223)
-
28,100
(5,915)
(218,268)
585,358
(644,670)
-
(11,480)
(15,033)
21,939
(3,940)
(31,858)
(1,304)
(100,988)
(3,541)
(12,039)
127,032
114,993
$
COLLIERS INTERNATIONAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of US dollars, except share and per share amounts)
1.
Description of the business
Colliers International Group Inc. (“Colliers” or the “Company”) provides commercial real estate oriented
professional services and investment management to corporate and institutional clients in 36 countries
around the world (67 countries including affiliates and franchisees). Colliers’ primary services are
Outsourcing & Advisory services, Leasing, Capital Markets and Investment Management. Operationally,
Colliers is organized into four distinct segments: Americas; Europe, Middle East and Africa (“EMEA”); Asia
and Australasia (“Asia Pacific”) and Investment Management.
2.
Summary of presentation
The preparation of consolidated financial statements in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. The most significant estimates are related to the judgments used
to determine the timing and amount of revenue recognition, recoverability of goodwill and intangible
assets, determination of fair values of assets acquired and liabilities assumed in business combinations,
estimated fair value of contingent consideration related to acquisitions, quantification of uncertain tax
positions, recoverability of deferred tax assets, warehouse receivables, capitalized mortgage servicing
rights, derivative financial instruments and current expected credit losses on financial assets including
collectability of accounts receivable and allowance for loss sharing obligations. Actual results could be
materially different from these estimates.
The Company revised the name of its Sales Brokerage revenue line to Capital Markets. The Company
has also combined project management, property management and engineering & design into a
Property Services revenue line. Loan servicing revenues are included in Other revenue.
Significant accounting policies are summarized as follows:
Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company, its majority-
owned subsidiaries and those variable interest entities where the Company is the primary beneficiary.
Where the Company does not have a controlling interest but has the ability to exert significant influence,
the equity method is used. Inter-company transactions and accounts are eliminated on consolidation.
When applying the principles of consolidation, the Company begins by determining whether an investee
is a variable interest entity (“VIE”) or a voting interest entity (“VOE”). Assessing whether an entity is a VIE
or a VOE involves judgment and analysis. Factors considered in this assessment include the entity’s legal
organization, the entity’s capital structure and equity ownership, and any related party or de facto agent
implications of the Company’s involvement with the entity.
VOEs are embodied by common and traditional corporate and certain partnership structures. For VOEs,
the interest holder with control through majority ownership and majority voting rights consolidates the
entity.
For VIEs, identification of the primary beneficiary determines the accounting treatment. In evaluating
whether the Company is the primary beneficiary, it evaluates its direct and indirect economic interests
in the entity. A reporting entity is determined to be the primary beneficiary if it holds a controlling
29
financial interest in the VIE. Determining which reporting entity, if any, has a controlling financial interest
in a VIE is primarily a qualitative approach focused on identifying which reporting entity has both (1) the
power to direct the activities of a VIE that most significantly impact such entity’s economic performance
and (2) the obligation to absorb losses or the right to receive benefits from such entity that could
potentially be significant to such entity.
The primary beneficiary analysis is performed at the inception of the Company’s investment and upon
the occurrence of a reconsideration event. When the Company determines it is the primary beneficiary
of a VIE, it consolidates the VIE; when it is determined that the Company is not the primary beneficiary
of the VIE, the investment in the VIE is accounted for at fair value or under the equity method, based
upon an election made at the time of investment.
Cash and cash equivalents
Cash equivalents consist of short-term interest-bearing securities and money market mutual funds.
These cash equivalents are readily convertible into cash and the interest-bearing securities have original
maturities at the date of purchase of three months or less. The Company also maintains custodial escrow
accounts, agency and fiduciary funds relating to its debt finance operations and as an agent for its
property management operations. These amounts are not included in the accompanying consolidated
balance sheets as they are not assets of the Company.
Restricted cash
Restricted cash consists primarily of cash amounts set aside to satisfy legal or contractual requirements
arising in the normal course of business, primarily at Colliers Mortgage.
Receivables and allowance for credit losses
Accounts receivable are recorded when the Company has a right to payment within customary payment
terms or it recognizes a contract asset if revenue is recognized prior to when payment is due. From the
point of initial recognition, the carrying value of such receivables and contract assets, net of allowance
for doubtful accounts, represents their estimated net realizable value after deducting for potential credit
losses. The Company’s expected loss allowance methodology uses historical collection experience, the
current status of customers’ accounts receivable and considers both current and expected future
economic and market conditions. Due to the short-term nature of such receivables, the estimate of
accounts receivable that may be collected is based on the aging of the receivable balances and the
financial condition of customers. Additionally, specific allowance amounts are established to record the
appropriate provision for customers that have a higher probability of default. The allowances are then
reviewed on a quarterly basis to ensure that they are appropriate. After all collection efforts have been
exhausted by management, the outstanding balance considered not collectible is written off against the
allowance. In providing for credit losses as at December 31, 2020, the Company considered the current
and expected future economic and market conditions surrounding the novel coronavirus (“COVID-19”)
pandemic and determined to adjust its historical loss rates for the increased credit risk with an
associated credit loss expense included in Selling, general and administrative expenses.
In some cases, the Company may record a receivable or a contract asset which corresponds with
payables which the Company is only obligated to pay upon collection of the receivable (“Reimbursable
receivables”). These receivables correspond with commissions payable, payables to facilitate collection
from the customer and make payments to subcontractors or relate to collection from tenants for
payment to the landlord. These corresponding payables are typically satisfied on a pay-when-paid basis.
In relation to Reimbursable receivables, an allowance is only recorded to the extent that the Company
will incur credit losses.
Fixed assets
Fixed assets are carried at cost less accumulated depreciation. The costs of additions and improvements
are capitalized, while maintenance and repairs are expensed as incurred. Fixed assets are reviewed for
impairment whenever events or circumstances indicate that the carrying value of an asset group may
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not be recoverable. An impairment loss is recorded to the extent the carrying amount exceeds the
estimated fair value of an asset group. Fixed assets are depreciated over their estimated useful lives as
follows:
Buildings
Vehicles
Furniture and equipment
Computer equipment and software
Leasehold improvements
20 to 40 years straight-line
3 to 5 years straight-line
3 to 10 years straight-line
3 to 5 years straight-line
term of the lease to a maximum of 10 years
Investments
Equity method investments
For equity investments where it does not control the investee, and where it is not the primary beneficiary
of a VIE, but can exert significant influence over the financial and operating policies of the investee the
Company utilizes the equity method of accounting. The evaluation of whether the Company exerts
control or significant influence over the financial and operation policies of the investees requires
significant judgement based on the facts and circumstances surrounding each individual investment.
Factors considered in these evaluations may include the type of investment, the legal structure of the
investee, any influence the Company may have on the governing board of the investee.
The Company’s equity method investees that are investment companies record their underlying
investments at fair value. Therefore, under the equity method of accounting, the Company’s share of the
investee’s underlying net income predominantly represents fair value adjustments in the investments
held by the equity method investees.
The Company’s share of the investee’s underlying net income or loss is based upon the most currently
available information, which may precede the date of the consolidated statement of financial condition
and is realized in other (income) expense. Distributions received reduce the Company’s carrying value
of the investee.
Investments in debt and equity securities
The Company invests in debt and equity securities primarily in relation to its wholly owned captive
insurance company and Colliers Securities, a broker-dealer licensed under the Securities and Exchange
Commission and a member of the Financial Industry Regulatory Authority (“FINRA”). These investments
are accounted for at fair value with changes recorded in net earnings (loss).
Financial instruments and derivatives
Certain loan commitments and forward sales commitments related to the Company’s warehouse
receivables meet the definition of a derivative asset and are recorded at fair value in the consolidated
balance sheets upon the execution of the commitment to originate a loan with a borrower and to sell
the loan to an investor, with a corresponding amount recognized as revenue in the consolidated
statements of earnings. The estimated fair value of loan commitments includes the value of loan
origination fees and premiums on anticipated sale of the loan, net of related costs and broker fees, a
loss sharing reserve, the fair value of the expected net cash flows associated with servicing of the loan,
and the effects of interest rate movements. The estimated fair value of the forward sales commitments
includes the effects of interest rate movements. Adjustments to the fair value related to loan
commitments and forward sale commitments are included within Capital Markets revenue on the
consolidated statements of earnings.
From time to time, the Company may use interest rate swaps to hedge a portion of its interest rate
exposure on long-term debt. Hedge accounting is applied and swaps are carried at fair value on the
consolidated balance sheets, with gains or losses recognized in interest expense. The carrying value of
the hedged item is adjusted for changes in fair value attributable to the hedged interest rate risk; the
associated gain or loss is recognized currently in earnings and the unrealized gain or loss is recognized
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in other comprehensive income. If swaps are terminated and the underlying item is not, the resulting
gain or loss is deferred and recognized over the remaining life of the underlying item using the effective
interest method. In addition, the Company may enter into short-term foreign exchange contracts to
lower its cost of borrowing, to which hedge accounting is not applied.
Derivative financial instruments are recorded on the consolidated balance sheets as other assets or
other liabilities and carried at fair value. See note 25 for additional information on derivative financial
instruments.
Fair value
The Company uses the fair value measurement framework for financial assets and liabilities and for non-
financial assets and liabilities that are recognized or disclosed at fair value on a non-recurring basis. The
framework defines fair value, gives guidance for measurement and disclosure, and establishes a three-
level hierarchy for observable and unobservable inputs used to measure fair value. An asset or liability’s
classification within the hierarchy is determined based on the lowest level input that is significant to the
fair value measurement. The three levels are as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – Observable market-based inputs other than quoted prices in active markets for identical
assets or liabilities
Level 3 – Unobservable inputs for which there is little or no market data, which requires the Company
to develop its own assumptions
Convertible notes
The Company issued Convertible Notes in May 2020 (see note 14). The Convertible Notes are accounted
for entirely as debt as no portion of the proceeds is required to be accounted for as attributable to the
conversion feature. Interest on the Convertible Notes is recorded as interest expense. Financing fees are
amortized over the life of the Convertible Notes as additional non-cash interest expense utilizing the
effective interest method.
The earnings per share impact of the Convertible Notes is calculated using the “if-converted” method, if
dilutive, where coupon interest expense, net of tax, is added to the numerator and the number of
potentially issuable subordinate voting shares is added to the denominator.
Financing fees
Financing fees related to the Revolving Credit Facility are recorded as an asset and amortized to interest
expense using the effective interest method. Financing fees related to the Senior Notes and Convertible
Notes are recorded as a reduction of the debt amount and are amortized to interest expense using the
effective interest method.
Financial guarantees and allowance for loss sharing obligations
For certain loans originated and sold under the Fannie Mae Delegated Underwriting and Servicing
(“DUS”) Program the Company undertakes an obligation to partially guarantee performance of the loan
typically up to one-third of any losses on loans originated.
When the Company commits to making a loan to a borrower, it recognizes a liability equal to the
estimated fair value of this loss sharing obligation (the “Loss Reserve”), which reduces the gain on sale
of the loan reported in Capital Markets revenue.
In accordance with ASC 326, the Company estimates the credit losses expected over the life of the credit
exposure related to this loss sharing obligation and performs a quarterly analysis of the Loss Reserve.
The Company evaluates the Loss Reserve on an individual loan basis and the evaluation models consider
the specific details of the underlying property used as collateral, such as occupancy and financial
performance. The models also analyze historical losses, current and expected economic conditions, and
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reasonable and supportable forecasts. Changes to the Loss Reserve are recognized as an expense. For
the period ended December 31, 2020, the analysis incorporated specific economic conditions related to
the COVID-19 pandemic. See note 26 for further information on the DUS Program and the loss-sharing
obligation.
Warehouse receivables
The Company originates held for sale mortgage loans with commitments to sell to third party investors.
These loans are referred to as warehouse receivables and are funded directly to borrowers by the
warehouse credit facilities. The facilities are generally repaid within 45 days when the loans are
transferred while the Company retains the servicing rights. The Company elects the fair value option for
warehouse receivables.
Mortgage servicing rights (“MSRs”)
MSRs, or the rights to service mortgage loans for others, result from the sale or securitization of loans
originated by the Company and are recognized as intangible assets on the Consolidated Balance Sheets.
The Company initially recognizes MSRs based on the fair value of these rights on the date the loans are
sold. Subsequent to initial recognition, MSRs are amortized and carried at the lower of amortized cost
or fair value. They are amortized in proportion to and over the estimated period that net servicing
income is expected to be received based on projections and timing of estimated future net cash flows.
In connection with the origination and sale of mortgage loans for which the Company retains servicing
rights, an asset or liability is recognized based upon the fair value of the MSR on the date that the loans
are sold. Upon origination of a mortgage loan held for sale, the fair value of the retained MSR is included
in the forecasted proceeds from the anticipated loan sale and results in a net gain (which is reflected in
Capital Markets revenue).
MSRs do not actively trade in an open market with readily observable prices; therefore, fair value is
determined based on certain assumptions and judgments. The valuation model incorporates
assumptions including contractual servicing fee income, interest on escrow deposits, discount rates, the
cost of servicing, prepayment rates, delinquencies, the estimated life of servicing cash flows and ancillary
income and late fees. The assumptions used are subject to change based upon changes to estimates of
future cash flows and interest rates, among other things. The key assumptions used during the years
ended December 31, 2020 in measuring fair value were as follows:
Discount rate
Conditional prepayment rate
As at December 31,
2020
11.5 %
6.0 %
As at December 31, 2020, the estimated fair value of MSRs was $108,315. See notes 4 and 11 for the
acquisition date fair value and current carrying value of the MSR assets. The estimated fair value of
Impairment is evaluated quarterly through a comparison of the carrying amount and fair value of the
MSRs, and recognized with the establishment of a valuation allowance. Other than write-offs due to
prepayments of sold Warehouse receivables where servicing rights have been retained, there have been
no instances of impairment since acquiring Colliers Mortgage.
Goodwill and intangible assets
Goodwill represents the excess of purchase price over the fair value of assets acquired and liabilities
assumed in a business combination and is not subject to amortization.
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Intangible assets are recorded at fair value on the date they are acquired. Indefinite life intangible assets
are not subject to amortization. Where lives are finite, they are amortized over their estimated useful
lives as follows:
Customer lists and relationships
Investment management contracts
Trademarks and trade names
Franchise rights
Management contracts and other
Backlog
straight-line over 4 to 20 years
straight-line over 5 to 15 years
straight-line over 2 to 10 years
straight-line over 2 to 15 years
straight-line over life of contract ranging from 2 to 10 years
as underlying backlog transactions are completed
The Company reviews the carrying value of finite life intangible assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable
from the estimated future cash flows expected to result from their use and eventual disposition. If the
sum of the undiscounted expected future cash flows is less than the carrying amount of the asset group,
an impairment loss is recognized. Measurement of the impairment loss is based on the excess of the
carrying amount of the asset group over the fair value calculated using discounted expected future cash
flows.
Goodwill and indefinite life intangible assets are tested for impairment annually, on August 1, or more
frequently if events or changes in circumstances indicate the asset might be impaired, in which case the
carrying amount of the asset is written down to fair value.
Impairment of goodwill is tested at the reporting unit level. The Company has four distinct reporting
units. Impairment is tested by first assessing qualitative factors to determine whether it is more likely
than not that the fair value of a reporting unit is less than its carrying amount. Where it is determined to
be more likely than not that its fair value is greater than its carrying amount, then no further testing is
required. Where the qualitative analysis is not sufficient to support that the fair value exceeds the
carrying amount then a quantitative goodwill impairment test is performed. The quantitative test
compares the reporting unit’s carrying amount, including goodwill with the estimated fair value of the
reporting unit. The fair values of the reporting units are estimated using a discounted cash flow
approach. The fair value measurement is classified within Level 3 of the fair value hierarchy. If the
carrying amount of the reporting unit exceeds its fair value, the difference is reported as an impairment
loss. Certain assumptions are used to determine the fair value of the reporting units, the most sensitive
of which are estimated future cash flows and the discount rate applied to future cash flows. Changes in
these assumptions could result in a materially different fair value.
Impairment of indefinite life intangible assets is tested by comparing the carrying amount to the
estimated fair value on an individual intangible asset basis.
Redeemable non-controlling interests
Redeemable non-controlling interests (“RNCI”) are recorded at the greater of (i) the redemption amount
or (ii) the amount initially recorded as RNCI at the date of inception of the minority equity position. This
amount is recorded in the “mezzanine” section of the balance sheet, outside of shareholders’ equity.
Changes in the RNCI amount are recognized immediately as they occur.
Revenue
The Company generates revenue from contracts with customers through its provision of commercial
real estate services. These services consist of Leasing, Capital Markets, Outsourcing & Advisory and
Investment Management services.
(a) Leasing
Leasing includes landlord and tenant representation services. Landlord representation provides real
estate owners with services to strategically position properties and to secure appropriate tenants.
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Tenant representation focuses on assisting businesses to assess their occupancy requirements and
evaluating and negotiating leases and lease renewals.
(b) Capital Markets
Capital Markets revenue is generated through sales brokerage and other capital markets transactions.
These services include real estate sales, debt origination and placement, equity capital raising, market
value opinions, acquisition advisory and transaction management. The Company’s debt finance
operations relate to the origination and sale of multifamily and commercial mortgage loans
(c) Outsourcing & Advisory
Outsourcing & Advisory services consist of project management, engineering and design, valuation
services, property management as well as loan servicing. Project management services include design
and construction management, move management and workplace solutions consulting. Engineering &
design services consist of multidisciplinary planning, consulting and design engineering services to
multiple end-markets. Project management and engineering & design engagements range from single
project contracts with a duration of less than one year to multi-year contracts with multiple discrete
projects. Property management provides real estate service solutions to real estate owners. In addition
to providing on-site management and staffing, the Company provides support through centralized
resources such as technical and environmental services, accounting, marketing and human resources.
Consistent with industry standards, management contract terms typically range from one to three years,
although most contracts are terminable at any time following a notice period, usually 30 to 120 days.
Property management, project management and engineering & design are included in the Property
Services revenue line.
Valuation services consist of helping customers determine market values for various types of real estate
properties. Such services may involve appraisals of single properties or portfolios of properties. These
appraisals may be utilized for a variety of customer needs including acquisitions, dispositions, financing
or for tax purposes.
Loan servicing fees consist of revenues earned in accordance with the contractual arrangements
associated with the Company’s debt finance operations and represent fees earned for servicing loans
originated by the Company. Loan servicing revenues are included in the Other revenue line.
(d) Investment Management
Investment Management revenues include consideration for services in the form of asset management
advisory and administration fees, transaction fees and incentive fees (carried interest). The performance
obligation is to manage client’s invested capital for a specified period of time and is delivered over time.
Revenue recognition and unearned revenues
Revenue is recognized upon transfer of control of promised products or services to customers in an
amount that reflects the consideration the Company expects to receive in exchange for those products
or services. The Company enters into contracts that can include various combinations of services, which
are capable of being distinct and accounted for as separate performance obligations. Revenue is
recognized net of any taxes collected from customers, which are subsequently remitted to governmental
authorities.
(a) Nature of services
The Company has determined that control of real estate sales brokerage services rendered transfer to
a customer when a sale and purchase agreement becomes unconditional. Leasing services rendered
transfer to a customer when a lease between the landlord and the tenant is executed. At these points in
time the customer has received substantially all of the benefit of the services provided by the Company.
The transaction price is typically associated with the underlying asset involved in the transaction, most
commonly a percentage of the sales price or the aggregate rental payments over the term of the lease
which are generally known when revenue is recognized.
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Other Capital Market revenues are recorded when the Company’s performance obligation is satisfied.
Although the performance obligation varies based upon the contractual terms of the transaction or
service, the performance obligation is generally recognized at the point in time when a defined outcome
is satisfied, including completion of financing or closing of a transaction. At this time, the Company has
transferred control of the promised service and the customer obtains control.
Revenues from the Company’s debt finance operations, included in Capital Markets revenue, are
excluded from the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Revenue
is recognized and a derivative asset is recorded upon the commitment to originate a loan with a
borrower and corresponding sale to an investor. The derivative asset is recognized at fair value, which
reflects the fair value of the contractual loan origination, related fees and sale premium, the estimated
fair value of the expected net cash flows associated with the servicing of the loan and the estimated fair
value of guarantee obligations to be retained. Debt finance revenue also includes changes to the fair
value of loan commitments, forward sale commitments and loans held for sale that occur during their
respective holding periods. Upon sale of the loans, no gains or losses are recognized as such loans are
recorded at fair value during the holding periods. MSRs and guarantee obligations are recognized as
assets and liabilities, respectively, upon the sale of the loans.
Outsourcing & Advisory services including those provided in relation to property management, project
management and engineering & design transfer to the customer over time as the services are performed
and revenue from providing these services is recognized in the accounting period in which the services
are rendered. For fixed-price contracts, revenue is recognized based upon the actual labor hours spent
relative to the total expected labor hours or the project costs incurred relative to the total project costs.
For some projects certain obligations that are representative of the work completed may be used as an
alternative to recognize revenue. The use of labor hours or overall project costs is dependent upon the
input that best represents the progress of the work completed in relation to the specific contract. For
cost-reimbursable and hourly-fee contracts, revenue is recognized in the amount to which the Company
has a right to invoice.
For other advisory services, including valuation and appraisal review, the customer is unable to benefit
from the services until the work is substantially complete, revenue is recognized upon delivery of
materials to the customer because this faithfully represents when the service has been rendered. For
most fixed fee consulting assignments, revenue is recognized based upon the actual service provided to
the end of the reporting period as a proportion of the total services to be provided.
Loan servicing revenues are recognized over the contractual service period. Loan servicing fees related
to retained MSRs are governed by ASC 820 and ASC 860 and excluded from the scope of ASC 606. Loan
servicing fees earned from servicing contracts which the Company does not hold mortgage servicing
rights are in scope of ASC 606.
Investment Management advisory fees are recognized as the services are performed over time and are
primarily based on agreed-upon percentages of assets under management or committed capital.
Revenue recognition for transactional performance obligations are recognized at a point in time when
the performance obligation has been met. The Company receives investment management advisory
incentive fees (carried interest) from certain investment funds. These incentive fees are dependent upon
exceeding specified performance thresholds on a relative or absolute basis, depending on the product.
Incentive fees are recognized when it is determined that significant reversal is considered no longer
probable (such as upon the sale of a fund’s investment or when the amount of assets under
management becomes known as of the end of the specified measurement period). Pursuant to the
terms of the Harrison Street Real Estate Capital, LLC (“Harrison Street”) acquisition, incentive fees related
to assets that were invested prior to the acquisition date by its former owners are allocated to certain
employees and former owners; as such the full amount of these incentive fees is passed through as
compensation expense and recognized as cost of revenues in the consolidated statement of earnings.
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(b) Significant judgments
The Company’s contracts with customers may include promises to transfer multiple products and
services. Determining whether products and services are considered distinct performance obligations
that should be accounted for separately versus together may require significant judgment. Where a
contract contains multiple performance obligations, judgment is used to assess whether they are distinct
and accounted for separately or not distinct and are accounted for and recognized together.
Brokerage commission arrangement may include terms that result in variability to the transaction price
and ultimate revenues earned beyond the underlying value of the transaction, these may include rebates
and/or contingencies. The Company estimates variable consideration and performs a constraint analysis
for these contracts on the basis of historical information to estimate the amount the Company will
ultimately be entitled to. Generally, revenue is constrained when it is probable that the Company may
not be entitled to the total amount of the revenue as associated with the occurrence or non-occurrence
of an event that is outside of the Company’s control or where the facts and circumstances of the
arrangement limit the Company’s ability to predict whether this event will occur. When revenue is
constrained, this revenue is not recognized until the uncertainty has been resolved.
Outsourcing & Advisory arrangements may include incentives tied to achieving certain performance
targets. The Company estimates variable consideration or performs a constraint analysis for these
contracts on the basis of circumstances specific to the project and historical information in order to
estimate the amount the Company will ultimately be entitled to. Estimates of revenue, costs or extent of
progress toward completion are revised if circumstances change. Any resulting increases or decreases
in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances
that give rise to the revision become known by management.
In providing project management, engineering and design or property management services, the
Company may engage subcontractors to provide on-site staffing or to provide specialized technical
services, materials and/or installation services. These arrangements are assessed and require judgment
to determine whether the Company is a principal or an agent of the customer. When the Company acts
as a principal, because it is primarily responsible for the delivery of the completed project and controls
the services provided by the subcontractors, these amounts are accounted for as revenue on a gross
basis. However, when the Company acts as an agent, because it does not control the services prior to
delivery to the customer, these costs are accounted for on a net basis.
In some cases, the Company may facilitate collection from the customer and payments to subcontractors
or may facilitate collection from tenants for payment to the landlord. In these instances, balances are
recorded as accounts receivable and accounts payable until settled.
Investment Management fee arrangements are unique to each contract and evaluated on an individual
basis to determine the timing of revenue recognition and significant judgment is involved in making such
determination. At each reporting period, the Company considers various factors in estimating revenue
to be recognized. Incentive fees have a broad range of possible amounts and the determination of these
amounts is based upon the market value for managed assets which is highly susceptible to factors
outside of the Company’s influence. As a result, incentive fee revenue is generally constrained until
significant reversal is considered no longer probable.
Certain constrained Capital Markets and Leasing fees, Outsourcing & Advisory fees and Investment
Management fees may arise from services that began in a prior reporting period. Consequently, a
portion of the fees the Company recognizes in the current period may be partially related to the services
performed in prior periods. In particular, substantially all investment management incentive fees
recognized in the period were previously constrained.
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Contract balances
Timing of revenue recognition may differ from the timing of invoicing to customers. The Company
invoices the customer and records a receivable when it has a right to payment within customary payment
terms or it recognizes a contract asset if revenue is recognized prior to when payment is due. Contract
liabilities consist of payments received in advance of recognizing revenue. These liabilities consist
primarily of payments received for outsourcing and advisory engagements where a component of the
revenue may be paid by the customer prior to the benefits of the services transferring to the customer.
As a practical expedient, the Company does not adjust the promised amount of consideration for the
effect of a significant financing component when it is expected, at contract inception, that the period
between transfer of the service and when the customer pays for that service will be one year or less. The
Company does not typically include extended payment terms in its contracts with customers.
The Company generally does not incur upfront costs to obtain or fulfill contracts that are capitalizable to
contract assets and if capitalizable they would be amortized to expense within one year or less of
incurring the expense; consequently, the Company applies the practical expedient to recognize these
incremental costs as an expense when incurred. Any costs to obtain or fulfill contracts that exceed one
year are capitalized to contract assets and amortized over the term of the contract on a method
consistent with the transfer of services to the customer and the contract’s revenue recognition.
Payment terms and conditions vary by contract type, although terms generally include a requirement of
payment within 30 to 90 days. With the exceptions of sales brokerage and lease brokerage, the Company
does not expect to have any contracts where the period between the transfer of services to the customer
and the payment by the customer exceeds one year. With regard to sales brokerage and lease brokerage,
arrangements may exist where the service is transferred but payment is not received for a period greater
than one year. However, arrangements of this nature do not contain a significant financing component
because the amount and timing varies on the basis of the occurrence or non-occurrence of an event that
is outside the control of the Company or the customer. As a consequence, the Company does not adjust
the transaction prices for the time value of money.
Contract liabilities represent advance payments associated with the Company’s performance obligations
that have not yet been satisfied. The majority of the balances are expected to be recognized to revenue
or disbursed on behalf of the client within a year.
Remaining performance obligations
Remaining performance obligations represent the aggregate transaction prices for contracts where the
Company’s performance obligations have not yet been satisfied. The Company applies the practical
expedient related to remaining performance obligations that are part of a contract that has an original
expected duration of one year or less and the practical expedient related to variable consideration from
remaining performance obligations.
Stock-based compensation
For equity classified awards, compensation cost is measured at the grant date based on the estimated
fair value of the award adjusted for expected forfeitures. The related stock option compensation
expense is allocated using the graded attribution method.
Long-term incentive plans
Under these plans, certain subsidiary employees are compensated if the earnings before interest,
income tax and amortization of the subsidiary increases. Awards under these plans generally have a
term of up to ten years, a vesting period of five to ten years and are settled in cash at the end of the
term. If an award is subject to a vesting condition, then the graded attribution method is applied to the
fair value or intrinsic value of the award. The related compensation expense is recorded in selling,
general and administrative expenses and the liability is recorded in accrued compensation.
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Foreign currency translation and transactions
Assets, liabilities and operations of foreign subsidiaries are recorded based on the functional currency
of each entity. For certain foreign operations, the functional currency is the local currency, in which case
the assets, liabilities and operations are translated at current exchange rates from the local currency to
the reporting currency, the US dollar. The resulting unrealized gains or losses are reported as a
component of accumulated other comprehensive earnings. Realized and unrealized foreign currency
gains or losses related to any foreign dollar denominated monetary assets and liabilities are included in
net earnings.
Income tax
Income tax has been provided using the asset and liability method whereby deferred tax assets and
liabilities are recognized for the expected future income tax consequences of events that have been
recognized in the consolidated financial statements or income tax returns. Deferred tax assets and
liabilities are measured using enacted income tax rates expected to apply to taxable income in the years
in which temporary differences are expected to reverse, be recovered or settled. The effect on deferred
tax assets and liabilities of a change in income tax rates is recognized in earnings in the period in which
the change occurs. A valuation allowance is recorded unless it is more likely than not that realization of
a deferred tax asset will occur based on available evidence.
The Company recognizes uncertainty in tax positions taken or expected to be taken utilizing a two-step
approach. The first step is to determine whether it is more likely than not that the tax position will be
sustained upon examination by tax authorities on the basis technical merits of the position. The second
step is to recognize the largest amount of tax benefit that is more than 50 percent likely to be realized
upon ultimate settlement with the related tax authority.
The Company classifies interest and penalties associated with income tax positions in income tax
expense.
Leases
The Company recognizes an operating lease right-of-use (“ROU”) asset and a lease liability on the
consolidated balance sheet at the lease commencement date. Operating lease ROU assets represent the
Company’s right to use an underlying asset for the lease term and lease liabilities represent the
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are
recognized at commencement date based on the present value of lease payments over the lease term
adjusted for lease pre-payments and lease incentives. After the commencement date any modifications
to the leasing arrangement are assessed and the ROU asset and lease liability are remeasured to
recognize modifications to the lease term or fixed payments. As most of the Company’s leases do not
provide an implicit rate, the incremental borrowing rate based on the information available at
commencement date is used to determine the present value of lease payments. The Company uses the
implicit rate when readily determinable. The lease terms may include options to extend or terminate the
lease when it is reasonably certain that the Company will exercise that option. Operating leases ROU
assets are amortized to selling, general and administrative expenses (“SG&A”) straight-line over the lease
term.
Finance leases are included in fixed assets and long-term debt on the consolidated balance sheet.
Finance lease assets are depreciated using the straight-line method from the commencement date to
the earlier of the end of the useful life of the right-of-use asset or the end of lease term.
Variable lease payments and variable payments related to non-lease components are recorded to SG&A
as incurred. Variable lease payments include amounts related to changes in payments associated with
changes in an index or rate but which are not also associated with a remeasurement of the lease liability.
The Company has operating lease agreements with lease and non-lease components, and the Company
has elected to apply the practical expedient to not separate lease and nonlease components and
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therefore the ROU assets and lease liabilities include payments related to services included in the lease
agreement. Additionally, for certain leases the Company has elected to group leases that commence at
the same time and where accounting does not materially differ from accounting for the leases
individually as a portfolio of leases.
The Company has elected not to recognize ROU assets and lease liabilities for leases that have a term of
twelve months or less. Similarly, the Company will be applying the practical expedient to not recognize
assets or liabilities related to a business combination when the acquired lease has a remaining term of
twelve months or less at the acquisition date. The payments associated with these leases are recorded
to SG&A on a straight-line basis over the remaining lease term.
Business combinations
All business combinations are accounted for using the acquisition method of accounting. Transaction
costs are expensed as incurred.
The fair value of the contingent consideration is classified as a financial liability and is recorded on the
balance sheet at the acquisition date and is re-measured at fair value at the end of each period until the
end of the contingency period, with fair value adjustments recognized in earnings. However, if the
contingent consideration includes an element of compensation to the vendors (i.e. it is tied to continuing
employment or it is not linked to the business valuation), then the portion of contingent consideration
related to such element is treated as compensation expense over the expected employment period.
Government assistance related to the COVID-19 pandemic
The Company received $34,767 of wage subsidies from governments in several countries around the
world during the year ended December 31, 2020. $24,456 of the wage subsidies were recorded as
reduction to cost of revenues and $9,312 were recorded as a reduction to selling, general and
administrative expenses in the Consolidated Statements of Earnings.
3.
Impact of recently issued accounting standards
Recently adopted accounting guidance
Current Expected Credit Losses
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses. This ASU creates a
new framework to evaluate financial instruments, such as trade receivables, for expected credit losses.
This new framework replaces the previous incurred loss approach and is expected to result in more
timely recognition of credit losses.
The Company has adopted Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments effective January 1, 2020 using the modified retrospective basis recording a
cumulative catch-up adjustment to retained earnings. Following adoption of the standard, the
Company’s methodology of reserving for Accounts receivable and other receivable-related financial
assets, including contract assets has changed. See note 2 for details on the significant accounting policies
related to receivables and allowance for doubtful accounts. The adoption of the standard has had the
impact of accelerating the recognition of credit losses on certain receivables and the Company
recognized a non-cash cumulative catch-up adjustment to retained earnings in the amount of $3,629,
net of $805 in taxes, on the opening consolidated balance sheet as of January 1, 2020.
Goodwill impairment testing
In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other: Simplifying the
Accounting for Goodwill Impairment to remove Step 2 of the goodwill impairment test, which requires a
hypothetical purchase price allocation. Under this guidance, a goodwill impairment will now be the
amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying
amount of goodwill. The Company has adopted the standard effective January 1, 2020. Adoption of the
40
ASU simplifies the goodwill impairment testing process for the Company without any direct impact on
the financial statements.
Capitalization of implementation costs in relation to hosting arrangements
In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software
(Subtopic 350-40). This ASU aligns the capitalizing of implementation costs incurred in relation to a
hosting arrangement with the requirements for capitalizing implementation costs incurred to develop
or obtain internal-use software. It also requires these capitalized costs to be expensed over the term of
the hosting arrangement and to the same line as the hosting arrangement. As this ASU clarifies the
previously existing ambiguity related to capitalization, it was determined that the guidance under the
ASU is consistent with the Company’s existing capitalization process for development costs related to
hosting arrangements without any impact on the financial statements.
Recently issued accounting guidance, not yet adopted
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the
Effects of Reference Rate Reform on Financial Reporting. With LIBOR ceasing at the end of 2021, a significant
volume of contracts and other arrangements will be impacted by the transition required to alternative
reference rates. This ASU provides optional expedients and exceptions to reduce the costs and
complexity of applying existing GAAP to contract modifications and hedge accounting if certain criteria
are met. The standard is effective from the beginning of an interim period that includes the March 12,
2020 issuance date of the ASU through December 31, 2022. On March 25, 2020, the Alternative Reference
Rates Committee (the “ARRC”), which is a group of private-market participants convened by the Federal
Reserve Board and the New York Fed, reiterated the end of 2021 timeline for the phase out of LIBOR
amid the uncertainty surrounding the COVID-19 pandemic. The Company is currently assessing the
options available under this ASU and their potential impacts on its consolidated financial statements.
In August 2020, the FASB issued ASU No. 2020-06, Debt- Debt with Conversion and Other Options (Subtopic
470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for
Convertible Instruments and Contract in an Entity’s Own Equity. The ASU simplifies the accounting for
convertible instruments and reduces the number of embedded conversion features being separately
recognized from the host contract as compared to current GAAP. The ASU also enhances information
transparency through targeted improvements to the disclosures for convertible instruments and
earnings-per-share guidance. The standard is effective for fiscal years beginning after December 15,
2021. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.
The standard can be applied using the modified retrospective method of transition or a fully
retrospective method of transition. The Company is currently assessing the options available under this
ASU and their potential impacts on its consolidated financial statements.
4.
Acquisitions
2020 acquisitions:
On May 29, 2020, the Company acquired controlling interests in four subsidiaries of Dougherty Financial
Group LLC – Dougherty Mortgage LLC, Dougherty & Company LLC, Dougherty Funding LLC and
Dougherty Insurance Agency LLC. Headquartered in Minneapolis, Dougherty operates across 21 states
in the U.S. Dougherty’s mortgage banking operations have been renamed as “Colliers Mortgage” while
all brokerage, investment banking, capital markets and public finance services were renamed “Colliers
Securities” which operates as a broker-dealer and is licensed under the Securities and Exchange
Commission and is a member of the Financial Industry Regulatory Authority.
Colliers Mortgage is licensed as a U.S. Department of Housing and Urban Development (“HUD”) title II
non-supervised mortgagee, a Government National Mortgage Association (“Ginnie Mae”) issuer, and a
Federal National Mortgage Association (“Fannie Mae”) approved Delegated Underwriting and Servicing
Program (“DUS”) lender for multifamily affordable and market rate housing and senior housing mortgage
41
loans. Colliers Mortgage is also an approved lender in the United States Department of Agriculture
(“USDA”) Community Facilities Guaranteed Loan Program. Ginnie Mae and Fannie Mae together are
referred to as government sponsored enterprises (“GSEs”).
On July 13, 2020, the Company acquired a controlling interest in Maser Consulting P.A. (“Maser”),
headquartered in New Jersey. Maser operates in the Americas segment across 13 U.S. states. Maser is a
leading multi-disciplinary engineering design and consulting firm in the U.S.
During the year ended December 31, 2020 the Company acquired controlling interests in two Colliers
International affiliates operating in the Americas segment (Austin, Texas and Nashville, Tennessee).
The acquisition date fair value of consideration transferred and purchase price allocation was as follows:
Current assets, excluding cash
Warehouse receivables
Non-current assets
Current liabilities
Warehouse credit facilities
Long-term liabilities
Cash consideration, net of cash acquired of
Acquisition date fair value of contingent
$50,331
consideration
Total purchase consideration
Acquired intangible assets (note 11)
Indefinite life
Finite life
Goodwill
Redeemable non-controlling interest
Colliers
Mortgage
Maser
Aggregate
Other Acquisitions
$
$
$
$
$
46,510
31,282
9,021
(55,881)
(25,850)
(6,266)
(1,184) $
$
57,533
-
37,516
(32,582)
-
(54,739)
$
7,728
$
2,800
-
3,449
(3,156)
-
(2,951)
$
142
106,843
31,282
49,986
(91,619)
(25,850)
(63,956)
6,686
(134,204) $
(9,250)
(143,454) $
(59,355) $
(12,204)
(71,559) $
(12,049) $
(2,263)
(14,312) $
(205,608)
(23,717)
(229,325)
$
29,200
$ 105,150
53,530
$
43,242
$
$
$
$
$
-
51,100
56,838
44,107
$
$
$
$
-
11,430
7,616
4,876
$
$
$
$
29,200
167,680
117,984
92,225
Indefinite life intangible assets consist mainly of the mortgage licenses acquired, and the fair value of
these licenses are determined using revenue growth rates, attrition rates and applicable discount rates.
The MSR intangible asset acquired with Colliers Mortgage had a fair value of $99,900 at the acquisition
date and had a weighted average useful life of 8.15 years. The key assumptions used in measuring the
fair value of the MSR intangible assets at acquisition date included a discount rate of 11.20% and a
conditional prepayment rate of 6.30%.
2019 acquisitions:
The Company acquired controlling interests in four businesses, two operating in the Americas (Virginia;
North Carolina), one operating in EMEA (Sweden), and one operating in Asia Pacific (India).
42
The acquisition date fair value of consideration transferred and purchase price allocation was as follows:
Current assets, excluding cash
Non-current assets
Current liabilities
Long-term liabilities
Cash consideration, net of cash acquired of $4,765
Acquisition date fair value of contingent consideration
Total purchase consideration
Acquired intangible assets
Goodwill
Redeemable non-controlling interest
Aggregate
Acquisitions
$
$
$
$
$
$
$
29,720
7,989
(18,616)
(11,913)
7,180
(80,576)
-
(80,576)
42,226
58,221
27,051
In all years presented, the fair values of non-controlling interests were determined using an income
approach with reference to a discounted cash flow model using the same assumptions implied in
determining the purchase consideration.
The purchase price allocations of acquisitions resulted in the recognition of goodwill. The primary factors
contributing to goodwill are assembled workforces, synergies with existing operations and future growth
prospects. For acquisitions completed during the year ended December 31, 2020, goodwill in the amount
of $61,146 is deductible for income tax purposes (2019 - $12,816).
The Company typically structures its business acquisitions to include contingent consideration. Certain
vendors, at the time of acquisition, are entitled to receive a contingent consideration payment if the
acquired businesses achieve specified earnings levels during the one- to five-year periods following the
dates of acquisition. The ultimate amount of payment is determined based on a formula, the key inputs
to which are (i) a contractually agreed maximum payment; (ii) a contractually specified earnings level and
(iii) the actual earnings for the contingency period. If the acquired business does not achieve the specified
earnings level, the maximum payment is reduced for any shortfall, potentially to nil.
Unless it contains an element of compensation, contingent consideration is recorded at fair value each
reporting period. The fair value recorded on the consolidated balance sheet as at December 31, 2020
was $115,643 (December 31, 2019 - $84,992). See note 25 for discussion on the fair value of contingent
consideration. Contingent consideration with a compensatory element is revalued at each reporting
period and recognized on a straight-line basis over the term of the contingent consideration
arrangement. The liability recorded on the balance sheet for the compensatory element of contingent
consideration arrangements as at December 31, 2020 was $17,646 (December 31, 2019 - $23,014). The
estimated range of outcomes (undiscounted) for all contingent consideration arrangements, including
those with an element of compensation is determined based on the formula price and the likelihood of
achieving specified earnings levels over the contingency period, and ranges from $184,660 to a
maximum of $208,610. These contingencies will expire during the period extending to December 2024.
The consideration for the acquisitions during the year ended December 31, 2020 was financed from
borrowings on the Revolving Credit Facility and cash on hand. During the year ended December 31, 2020,
$29,405 was paid with reference to contingent consideration (2019 - $23,962).
The amounts of revenues and earnings contributed from the dates of acquisition and included in the
Company’s consolidated results for the year ended December 31, 2020, and the supplemental pro forma
43
revenues and earnings of the combined entity had the acquisition dates been January 1, 2019, are as
follows:
Actual from acquired entities for 2020
Supplemental pro forma for 2020 (unaudited)
Supplemental pro forma for 2019 (unaudited)
Revenues
Net earnings
$
194,977
2,927,994
3,378,981
$
24,449
104,662
163,942
Supplemental pro forma results were adjusted for non-recurring items.
5.
Real estate assets held for sale
From time to time, the Company’s Investment Management segment purchases real estate assets for
placement into a fund. This typically occurs in the early stages of fundraising where temporary liquidity
is needed to fund investment opportunities that arise prior to the availability of fund capital. The
purchased assets are recorded as real estate assets held for sale prior to the ultimate sale to the
identified fund. The assets are typically held for a short period of time not expected to exceed twelve
months. The transactions are not intended as an alternative source of operating earnings and the
arrangements to sell the assets to a fund are generally structured not to generate any gain or loss. The
purchases are accounted for by the acquisition method of accounting for asset purchases that do not
constitute the acquisition of a business.
In December 2019, the Company acquired a controlling interest in a portfolio of land and buildings
located in the United Kingdom and associated liabilities (“Asset A”) from an unrelated party. In May 2020,
the Company sold Asset A to a fund, without gain or loss.
In July 2020, the Company acquired a controlling interest in an undeveloped parcel of land located in the
United Kingdom and associated liabilities (“Asset B”) from an unrelated party. In December 2020, the
Company sold Asset B to a fund, without gain or loss.
In November 2020, the Company acquired a controlling interest in an undeveloped parcel of land located
in the United States and associated liabilities (“Asset C”) from an unrelated party. In December 2020, the
Company sold Asset C to a fund, without gain or loss.
Each of these transactions are related to newly established closed-end funds which are managed by the
Company and as is customary for closed-end funds, the Company has a limited partner equity interest
of between 1% and 2%.
During the year ended December 31, 2020, the real estate assets generated $2,396 of net earnings (2019
- $195) which was included in the Company’s consolidated net earnings.
44
6.
Acquisition-related items
Acquisition-related expense comprises the following:
Transaction costs (note 4)
Contingent consideration fair value adjustments
Contingent consideration compensation expense
Year ended December 31,
2019
2020
$ 16,169 $
23,393
6,286
5,725
10,849
11,958
$ 45,848 $ 28,532
Contingent consideration compensation expense and contingent consideration fair value adjustments
relate to acquisitions made in the current year as well as the preceding four years.
7.
Other income, net
Loss (gain) on investments
Fair value adjustment on DPP (note 16)
Other
8.
Prepaid expenses and other assets
Prepaid expenses
Advisor loans receivable
Investments in equity securities
Investments in debt securities
Deferred Purchase Price (notes 16, 25)
Other
Prepaid and other assets (Current Assets)
Advisor loans receivable
Equity method investments
Investments in equity securities
Investments in debt securities
Financing fees, net of accumulated amortization of
$4,956 (December 31, 2019 - $3,632)
Other
Year ended December 31,
2019
2020
$
$
271 $
142
(400)
13 $
(109)
465
(144)
212
As at December 31,
2020
2019
$
$ 35,956
18,571
3,918
12,525
87,957
18,853
42,826
18,448
10,788
1,862
69,873
1,374
$ 177,780
$ 145,171
As at December 31,
2020
2019
$ 42,900
$
48,283
11,154
5,261
3,948
3,751
7,341
5,926
5,565
4,189
4,469
1,078
Other assets (Non-Current Assets)
$ 74,355
$
69,510
Held to maturity investments
Investments in debt securities include held-to-maturity investments current $2,585 and non-current
$3,948, both of which are recorded at amortized cost. The amortized cost (carrying value) of these
45
investments approximated fair value. At December 31, 2020, all of these investments mature within 10
years.
Investments in equity securities
Investments in equity securities (current) include $3,847 (2019 - $3,887) recorded at fair value (see note
25). The remainder of current and non-current investments in equity securities are recorded at fair value
following the net asset value practical expedient or recorded at cost less impairment adjusted for
observable prices.
9.
Leases
The Company enters into premise leases and equipment leases as a lessee.
(a) Premise leases
The Company leases office space where the remaining lease term ranges from less than one year to
fifteen years. Leases generally include an initial contract term but some leases include an option to
renew the lease for an additional period at the end of this initial term. These renewal periods range in
length up to a period equivalent to the initial term of the lease. All of the Company’s premise leases are
classified as operating leases.
(b) Equipment leases
The Company leases certain equipment in its operations, including furniture and equipment, computer
equipment and vehicles. Equipment leases may consist of operating leases or finance leases based upon
the assessment of the facts at the commencement date of the lease. The remaining lease terms for
equipment leases range from one year to five years. Certain leases may have the option to extend the
leases for a short period or to purchase the asset at the end of the lease term.
The components of lease expense were as follows:
Operating lease cost
Finance lease cost
Amortization of right-of-use assets
Interest on lease liabilities
Variable lease cost
Short term lease cost
Total lease expense
Sublease revenues
Total lease cost, net of sublease revenues
Supplemental information related to leases was as follows:
Operating leases recognized on transition to ASC 842
Right-of-use assets obtained in exchange for new operating
lease obligations
Right-of-use assets obtained in exchange for new finance
lease obligations
Cash paid for amounts included in the measurement of
lease liabilities:
Operating cash flows from operating leases
46
Year ended December 31,
2020
2019
$ 82,643 $ 77,394
898
17
25,297
3,662
920
19
26,030
4,712
$ 112,517 $ 109,075
(2,844)
(3,124)
$ 109,673 $ 105,951
Year ended December 31,
2020
2019
$
- $ 274,696
91,575
36,945
2,160
400
$ (83,351) $
(79,764)
Operating cash flows from finance leases
Financing cash flows from finance leases
(17)
(884)
(19)
(874)
Supplemental balance sheet information related to leases was as follows:
Operating leases
Operating lease right-of-use assets
Operating lease liabilities - current
Operating lease liabilities - non-current
Total operating lease liabilities
Finance leases
Fixed assets, gross
Accumulated depreciation
Fixed assets, net
Long-term debt - current
Long-term debt - non-current
Total finance lease liabilities
Maturities of lease liabilities were as follows:
As at December 31,
2020
2019
$ 288,13
$ 263,639
$ (78,923) $ (69,866)
4
(229,224
(251,680
$ (299,090
$ (330,603
)
)
)
)
$
$
$
$
4,662 $
(2,327)
2,335 $
(1,113) $
(1,316)
(2,429) $
3,164
(2,320)
844
(550)
(303)
(853)
One
year
Two
years
Three
years
Four
years
Five
years Thereafter
Total
Operating leases $ 87,112 $ 74,269 $ 59,617 $ 46,302 $ 33,393 $ 60,239 $ 360,932
Present value of operating lease liabilities
Difference between undiscounted cash flows and discounted cash flows
330,603
$ 30,329
Finance leases
$
1,115 $
855 $
470 $
9 $
- $
- $
2,449
Present value of finance lease liabilities
Difference between undiscounted cash flows and discounted cash flows
2,429
20
$
Weighted average remaining lease term
Operating leases
Finance leases
Weighted average discount rate
Operating leases
Finance leases
As at December 31,
2020
5.4 years
2.0 years
3.1 %
1.5 %
As of December 31, 2020, the Company has additional operating leases, primarily for premises, that have
not yet commenced of $150,692. These operating leases will commence within the next year and have
lease terms ranging from one to fifteen years.
47
10.
Fixed assets
December 31, 2020
Buildings
Vehicles
Furniture and equipment
Computer equipment and software
Leasehold improvements
Accumulated
Cost depreciation
Net
$
2,558
8,539
82,117
151,246
113,786
$ 358,246
$
1,321
2,505
53,353
114,429
57,417
$ 229,025
$
1,237
6,034
28,764
36,817
56,369
$ 129,221
ROU assets - Finance leases are included in these balances.
December 31, 2019
Buildings
Vehicles
Furniture and equipment
Computer equipment and software
Leasehold improvements
11.
Intangible assets
Accumulated
Cost depreciation
Net
$
2,521
2,563
66,338
139,685
96,102
$ 307,209
$
1,178
1,628
48,194
101,532
47,480
$ 200,012
$
1,343
935
18,144
38,153
48,622
$ 107,197
The following table summarizes the gross value, accumulated amortization and net carrying value of the
Company’s indefinite life and finite life intangible assets:
December 31, 2020
Indefinite life intangible assets:
Licenses
Trademarks and trade names
Finite life intangible assets:
Customer lists and relationships
Investment management contracts
Mortgage servicing rights ("MSRs")
Franchise rights
Trademarks and trade names
Management contracts and other
Backlog
Gross
carrying Accumulated
amount amortization
Net
$
$
29,200
24,096
53,296
$
$
-
-
-
$
$
29,200
24,096
53,296
$ 345,511
270,600
114,909
5,630
14,803
20,813
16,307
$ 788,573
$ 123,368
60,723
13,121
5,322
4,355
12,406
12,244
$ 231,539
$ 222,143
209,877
101,788
308
10,448
8,407
4,063
$ 557,034
$ 841,869
$ 231,539
$ 610,330
48
December 31, 2019
Indefinite life intangible assets:
Trademarks and trade names
Finite life intangible assets:
Customer lists and relationships
Investment management contracts
Franchise rights
Trademarks and trade names
Management contracts and other
Backlog
Gross
carrying Accumulated
amount amortization
Net
$
$
23,810
23,810
$
$
-
-
$
$
23,810
23,810
$ 310,856
270,600
5,163
12,435
16,088
8,558
$ 623,700
$ 115,987
36,434
4,505
2,398
9,306
1,426
$ 170,056
$ 194,869
234,166
658
10,037
6,782
7,132
$ 453,644
$ 647,510
$ 170,056
$ 477,454
In May 2020, the Company acquired MSR intangible assets in its acquisition of Colliers Mortgage. MSR
intangible assets represent the carrying value of servicing assets in the Americas segment. The MSR asset
is being amortized over the estimated period that the net servicing income is expected to be received.
The amount of MSRs recognized in 2020 are summarized in the table below.
Balance, January 1
Recognized on business acquisitions
Additions, following the sale of loan
Amortization expense
Prepayments and write-offs
Balance, December 31
2020
$
-
99,900
15,009
(8,553)
(4,568)
$ 101,788
During the year ended December 31, 2020, the Company acquired the following intangible assets:
Indefinite life intangible assets:
Licenses - indefinite life
Finite life intangible assets:
Customer lists and relationships
Mortgage servicing rights (MSR)
Trademarks and trade names - finite life
Customer backlog
Other
Amount
$
29,200
$
52,193
99,900
3,500
8,740
4,800
$
198,333
Estimated
weighted
average
amortization
period (years)
-
9.8
8.2
2.0
0.7
4.6
8.1
49
The following is the estimated future expense for amortization of the recorded MSRs and other
intangible assets for each of the next five years and thereafter:
For the year ended December 31,
2021
2022
2023
2024
2025
Thereafter
$
MSRs
13,469
12,376
11,516
10,730
9,652
44,045
Other
Intangibles
68,831 $
62,153
58,429
48,828
41,493
175,512
$
101,788
455,246
$
Total
82,300
74,529
69,945
59,558
51,145
219,557
557,034
12.
Goodwill
Americas
EMEA
Balance, December 31, 2018
Goodwill acquired during the year
Other items
Foreign exchange
Balance, December 31, 2019
Goodwill acquired during the year
Other items
Foreign exchange
Balance, December 31, 2020
Goodwill
Accumulated impairment loss
$ 207,799
11,970
330
311
220,410
117,984
-
(667)
337,727
363,998
(26,271)
253,752
846
4,404
(1,669)
257,333
-
-
18,213
275,546
278,858
(3,312)
Asia
Pacific
46,931
45,405
-
(9)
92,327
-
150
2,942
95,419
95,419
-
$ 337,727 $ 275,546 $
95,419 $
Investment
Manageme
nt
Consolidated
379,412 $
-
-
(261)
379,151
-
-
1,141
380,292
380,292
-
887,894
58,221
4,734
(1,628)
949,221
117,984
150
21,629
1,088,984
1,118,567
(29,583)
380,292 $ 1,088,984
A test for goodwill impairment is required to be completed annually, in the Company’s case as of August
1, or more frequently if events or changes in circumstances indicate the asset might be impaired. No
goodwill impairments were recorded in 2020 or 2019. The accumulated impairment loss reflects a
goodwill impairment incurred in 2009.
13.
Long-term debt
Revolving Credit Facility
Senior Notes
Capital leases maturing at various dates through 2022
Other long-term debt maturing at various dates up to 2022
Less: current portion
Long-term debt - non-current
As at December 31,
2020
2019
$ 213,239
255,790
2,430
8,436
479,895
9,024
$ 371,929
234,901
854
3,720
611,404
4,223
$ 470,871
$ 607,181
The Company has a multi-currency senior unsecured revolving credit facility (the “Revolving Credit
Facility”) of $1,000,000. The Revolving Credit Facility has a 5-year term ending April 30, 2024 and bears
interest at an applicable margin of 1.25% to 3.0% over floating reference rates, depending on financial
leverage ratios. The weighted average interest rate at December 31, 2020 was 3% (2019 – 3.4%). The
Revolving Credit Facility had $777,322 of available undrawn credit as at December 31, 2020. As of
December 31, 2020, letters of credit in the amount of $15,663 were outstanding ($9,836 as at December
31, 2019). The Revolving Credit Facility requires a commitment fee of 0.25% to 0.6% of the unused
50
portion, depending on certain leverage ratios. At any time during the term, the Company has the right
to increase the Revolving Credit Facility by up to $250,000 on the same terms and conditions.
The Company has outstanding €210,000 of senior unsecured notes with a fixed interest rate of 2.23%
(the “Senior Notes”), which are held by a group of institutional investors. The Senior Notes have a 10-
year term ending May 30, 2028.
The Revolving Credit Facility and the Senior Notes rank equally in terms of seniority and have similar
financial covenants. The Company is required to maintain financial covenants including leverage and
interest coverage. The Company was in compliance with these covenants as of December 31, 2020. The
Company is limited from undertaking certain mergers, acquisitions and dispositions without prior
approval.
The effective interest rate on the Company’s long-term debt for the year ended December 31, 2020 was
3.9% (2019 – 3.8%). The estimated aggregate amount of principal repayments on long-term debt
required in each of the next five years ending December 31 and thereafter to meet the retirement
provisions are as follows:
For the year ended December 31,
2021
2022
2023
2024
2025 and thereafter
14.
Convertible notes
$
9,023
1,120
713
213,248
255,791
$
479,895
On May 19, 2020, the Company issued $230,000 aggregate principal of 4.0% Convertible Senior
Subordinated Notes (the “Convertible Notes”) at par value. The Convertible Notes will mature on June 1,
2025 and bear interest of 4.0% per annum, payable semi-annually in arrears on June 1 and December 1
of each year, beginning on December 1, 2020. The Convertible Notes are accounted for entirely as debt
as no portion of the proceeds is required to be accounted for as attributable to the conversion feature.
The Convertible Notes are unsecured and subordinated to all of the Company’s existing and future
secured indebtedness, and are treated as equity for financial leverage calculations under the Company’s
Revolving Credit Facility and Senior Notes.
At the holder’s option, the Convertible Notes may be converted at any time prior to maturity into
Subordinate Voting Shares based on an initial conversion rate of approximately 17.2507 Subordinate
Voting Shares per $1,000 principal amount of Convertible Notes, which represents an initial conversion
price of $57.97 per Subordinate Voting Share.
The Company, at its option, may also redeem the Convertible Notes, in whole or in part, on or after June
1, 2023 at a redemption price equal to 100% of the principal amount of the Convertible Notes to be
redeemed, plus accrued and unpaid interest, provided that the last reported trading price of the
Subordinate Voting Shares for any 20 trading days in a consecutive 30 trading day period preceding the
date of the notice of redemption is not less than 130% of the conversion price.
Subject to specified conditions, the Company may elect to repay some or all of the outstanding principal
amount of the Convertible Notes, on maturity or redemption, through the issuance of Subordinate
Voting Shares.
51
In connection with the issuance of the Convertible Notes, the Company incurred financing costs of $6,795
which are being amortized over five years using the effective interest rate method. For the year ended
December 31, 2020 there was $752 of financing fee amortization included in interest expense within the
accompanying Consolidated Statements of Earnings. The effective interest rate on the Convertible Notes
is approximately 4.7%.
15.
Warehouse credit facilities
The following table summarizes the Company’s mortgage warehouse credit facilities as at December 31,
2020:
Facility A - LIBOR plus 1.60%
Facility B - SOFR plus 1.70%
December 31, 2020
Current
Maturity
Maximum
Capacity
Carrying
Value
January 11, 2021
On demand
$ 275,000
125,000
$ 400,000
$ 167,004
51,014
$ 218,018
Colliers Mortgage has warehouse credit facilities which are used exclusively for the purpose of funding
warehouse mortgages receivable. The warehouse credit facilities are recourse only to Colliers Mortgage;
these facilities are revolving and are secured by warehouse mortgages financed on the facilities, if any.
On January 11, 2021 Colliers Mortgage entered into an amendment to the financing agreement for
Facility A modifying the borrowing capacity to $175,000 and extending the maturity date to October 20,
2021. On January 15, 2021 Colliers Mortgage entered into an additional amendment for Facility A
temporarily increasing the borrowing capacity to $250,000 through March 31, 2021; The borrowing
capacity will decrease to $125,000 on October 20, 2021.
16.
AR Facility
On April 12, 2019, the Company established a structured accounts receivable facility (the “AR Facility”)
with committed availability of $125,000 and an initial term of 364 days, unless extended or an earlier
termination event occurs. On April 27, 2020, the Company extended the term of AR Facility for another
364 days. Under the AR Facility, certain of the Company's subsidiaries continuously sell trade accounts
receivable and contract assets (the “Receivables”) to wholly owned special purpose entities at fair market
value. The special purpose entities then sell 100% of the Receivables to a third-party financial institution
(the “Purchaser”). Although the special purpose entities are wholly owned subsidiaries of the Company,
they are separate legal entities with their own separate creditors who will be entitled, upon their
liquidation, to be satisfied out of their assets prior to any assets or value in such special purpose entities
becoming available to their equity holders and their assets are not available to pay other creditors of the
Company. As of December 31, 2020, the Company had drawn $97,959 under the AR Facility.
All transactions under the AR Facility are accounted for as a true sale in accordance with ASC 860,
Transfers and Servicing (“ASC 860”). Following the sale and transfer of the Receivables to the Purchaser,
the Receivables are legally isolated from the Company and its subsidiaries, and the Company sells,
conveys, transfers and assigns to the Purchaser all its rights, title and interest in the Receivables.
Receivables sold are derecognized from the consolidated balance sheet. The Company continues to
service, administer and collect the Receivables on behalf of the Purchaser, and recognizes a servicing
liability in accordance with ASC 860. The Company has elected the amortization method for subsequent
measurement of the servicing liability, which is assessed for changes in the obligation at each reporting
date. As of December 31, 2020, the servicing liability was nil.
52
Under the AR Facility, the Company receives a cash payment and a deferred purchase price (“Deferred
Purchase Price” or “DPP”) for sold Receivables. The DPP is paid to the Company in cash on behalf of the
Purchaser as the Receivables are collected; however, due to the revolving nature of the AR Facility, cash
collected from the Company's customers is reinvested by the Purchaser monthly in new Receivable
purchases under the AR Facility. For the year ended December 31, 2020, Receivables sold under the AR
Facility were $1,053,977 and cash collections from customers on Receivables sold were $1,065,650, all
of which were reinvested in new Receivables purchases and are included in cash flows from operating
activities in the consolidated statement of cash flows. As of December 31, 2020, the outstanding principal
on trade accounts receivable, net of Allowance for Doubtful Accounts, sold under the AR Facility was
$115,889; and the outstanding principal on contract assets, current and non-current, sold under the AR
Facility was $71,025. See note 25 for fair value information on the DPP.
For the year ended December 31, 2020, the Company recognized a loss related to Receivables sold of
$142 (2019 - $465) that was recorded in other expense in the consolidated statement of earnings. Based
on the Company’s collection history, the fair value of the Receivables sold subsequent to the initial sale
approximates carrying value.
The non-cash investing activities associated with the DPP for the year ended December 31, 2020 were
$70,079.
17.
Variable interest entities
The Company holds variable interests in certain Variable Interest Entities (“VIE”) in its Investment
Management segment which are not consolidated as it was determined that the Company is not the
primary beneficiary. The Company’s involvement with these entities is in the form of advisory fee
arrangements and equity co-investments (typically 1%-2%).
The following table provides the maximum exposure to loss related to these non-consolidated VIEs:
Investments in unconsolidated subsidiaries
Co-investment commitments
Maximum exposure to loss
18.
Redeemable non-controlling interests
As at December 31,
2020
$
$
6,158 $
14,345
20,503 $
2019
1,981
7,969
9,950
The minority equity positions in the Company’s subsidiaries are referred to as redeemable non-
controlling interests (“RNCI”). The RNCI are considered to be redeemable securities. Accordingly, the
RNCI is recorded at the greater of (i) the redemption amount or (ii) the amount initially recorded as RNCI
at the date of inception of the minority equity position. This amount is recorded in the “mezzanine”
section of the balance sheet, outside of shareholders’ equity. Changes in the RNCI amount are
recognized immediately as they occur. The following table provides a reconciliation of the beginning and
ending RNCI amounts:
Balance, January 1
RNCI share of earnings
RNCI redemption increment
Distributions paid to RNCI
Purchase of interests from RNCI, net
RNCI recognized on business acquisitions
Balance, December 31
2020
2019
$ 359,150
27,550
15,843
(33,293)
(19,100)
92,225
$ 442,375
$ 343,361
24,558
7,853
(29,662)
(14,011)
27,051
$ 359,150
53
The Company has shareholders’ agreements in place at each of its non-wholly owned subsidiaries. These
agreements allow the Company to “call” the RNCI at a price determined with the use of a formula price,
which is usually equal to a fixed multiple of average annual net earnings before income taxes, interest,
depreciation, and amortization. The agreements also have redemption features which allow the owners
of the RNCI to “put” their equity to the Company at the same price subject to certain limitations. The
formula price is referred to as the redemption amount and may be paid in cash or in Subordinate Voting
Shares. The redemption amount as of December 31, 2020 was $415,141 (2019 - $333,064). The
redemption amount is lower than that recorded on the balance sheet as the formula price of certain
RNCI are lower than the amount initially recorded at the inception of the minority equity position. If all
put or call options were settled with Subordinate Voting Shares as at December 31, 2020, approximately
4,600,000 such shares would be issued.
Increases or decreases to the formula price of the underlying shares are recognized in the statement of
earnings as the NCI redemption increment.
19.
Capital stock
The authorized capital stock of the Company is as follows:
An unlimited number of Preferred Shares, issuable in series;
An unlimited number of Subordinate Voting Shares having one vote per share; and
An unlimited number of Multiple Voting Shares having 20 votes per share, convertible at any
time into Subordinate Voting Shares at a rate of one Subordinate Voting Share for each
Multiple Voting Share outstanding.
The following table provides a summary of total capital stock issued and outstanding:
Subordinate Voting Shares Multiple Voting Shares
Number Amount
Number Amount
Total Common Shares
Number
Amount
Balances as at:
December 31, 2019
December 31, 2020
38,519,517 $441,780
38,863,742 457,620
1,325,694
1,325,694
$373 39,845,211 $442,153
373 40,189,436 457,993
During the year ended December 31, 2020, the Company declared dividends on its Common Shares of
$0.10 per share (2019 - $0.10).
Pursuant to an agreement approved in February 2004 and restated on June 1, 2015 (the “Long Term
Arrangement”), the Company agreed that it will make payments to Jay S. Hennick, its Chairman & Chief
Executive Officer (“CEO”), that are contingent upon the arm’s length acquisition of control of the
Company or upon a distribution of the Company’s assets to shareholders. The payment amounts will be
determined with reference to the price per Subordinate Voting Share received by shareholders upon an
arm’s length sale or upon a distribution of assets. The right to receive the payments may be transferred
among members of the Chairman & CEO’s family, their holding companies and trusts. The agreement
provides for the Chairman & CEO to receive each of the following two payments. The first payment is an
amount equal to 5% of the product of: (i) the total number of Subordinate and Multiple Voting Shares
outstanding on a fully diluted basis at the time of the sale and (ii) the per share consideration received
by holders of Subordinate and Multiple Voting Shares minus a base price of C$3.324. The second
payment is an amount equal to 5% of the product of (i) the total number of shares outstanding on a fully
diluted basis at the time of the sale and (ii) the per share consideration received by holders of
Subordinate Voting Shares minus a base price of C$6.472. Assuming an arm’s length acquisition of
control of the Company took place on December 31, 2020, the amount required to be paid to the
Chairman & CEO, based on a market price of C$113.28 per Subordinate Voting Share, would be
US$393,850.
54
20.
Net earnings per common share
Diluted EPS is calculated using the “if-converted” method of calculating earnings per share in relation to
the Convertible Notes, which were issued on May 19, 2020. As such, the interest (net of income tax) on
the Convertible Notes is added to the numerator and the additional shares issuable on conversion of
the Convertible Notes are added to the denominator of the earnings per share calculation to determine
if an assumed conversion is more dilutive than no assumption of conversion. The “if-converted” method
is used if the impact of the assumed conversion is dilutive. The “if-converted” method is dilutive for the
year ended December 31, 2020.
The following table reconciles the basic and diluted common shares outstanding:
(in thousands of US dollars, except share information)
Net earnings attributable to Company
Adjusted numerator under the If-Converted Method
Shares issued and outstanding at beginning of period
Weighted average number of shares:
Issued during the period
Weighted average number of shares used in computing
basic earnings per share
Assumed exercise of stock options
acquired under the Treasury Stock Method
Number of shares used in computing diluted earnings
per share
21.
Stock-based compensation
Year ended December 31,
2020
2019
$
$
49,074 $ 102,903
49,074 $ 102,903
39,845,21
1
140,657
39,985,86
8
193,296
40,179,16
4
39,213,136
336,426
39,549,562
431,456
39,981,018
The Company has a stock option plan for certain officers, key full-time employees and directors of the
Company and its subsidiaries, other than its Chairman & CEO who has a Long Term Arrangement as
described in note 19. Options are granted at the market price for the underlying shares on the day
immediately prior to the date of grant. Each option vests over a four-year term, expires five years from
the date granted and allows for the purchase of one Subordinate Voting Share. All Subordinate Voting
Shares issued are new shares. As at December 31, 2020, there were 352,500 options available for future
grants.
Grants under the Company’s stock option plan are equity-classified awards.
55
Stock option activity for the years ended December 31, 2020 and 2019 was as follows:
Number of
Weighted
average
options exercise price
Weighted
remaining Aggregate
average
intrinsic
contractual life
value
(years)
Shares issuable under options -
December 31, 2018
Granted
Exercised
Forfeited
Shares issuable under options -
December 31, 2019
Granted
Exercised
Forfeited
Shares issuable under options -
December 31, 2020
Options exercisable - December 31,2020
1,897,425
960,000
(632,075)
(223,750)
2,001,600
547,250
(344,225)
(14,500)
$
$
45.08
70.99
34.71
61.41
58.96
85.79
35.86
70.07
2,190,125
747,975
$
$
69.22
60.51
3.2 $ 43,606
2.3 $ 21,407
The Company incurred stock-based compensation expense related to these awards of $9,628 during the
year ended December 31, 2020 (2019 - $7,831). As at December 31, 2020, the range of option exercise
prices was $31.62 to $88.90 per share.
The following table summarizes information about option exercises:
Number of options exercised
Aggregate fair value
Intrinsic value
Amount of cash received
Tax benefit recognized
Year ended December 31,
2020
2019
344,225
632,075
$
25,919 $
43,873
13,576
12,343
21,934
21,939
$
102 $
1,322
As at December 31, 2020, there was $18,826 of unrecognized compensation cost related to non-vested
awards which is expected to be recognized over the next four years. During the year ended December
31, 2020, the fair value of options vested was $7,841 (2019 - $6,727).
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option
pricing model, utilizing the following weighted average assumptions:
Risk free rate
Expected life in years
Expected volatility
Dividend yield
As at December 31,
2020
0.2%
4.41
36.5%
0.1%
2019
2.1%
4.75
28.8%
0.1%
Weighted average fair value per option granted
$28.33
$19.87
The risk-free interest rate is based on the implied yield of a zero-coupon US Treasury bond with a term
equal to the option’s expected term. The expected life in years represents the estimated period of time
56
until exercise and is based on historical experience. The expected volatility is based on the historical
prices of the Company’s shares over the previous four years.
22.
Income tax
The following is a reconciliation stated as a percentage of pre-tax income of the combined statutory
corporate income tax rate of Ontario, Canada to the Company’s effective tax rate:
Combined statutory rate
Nondeductible expenses
Tax effect of flow through entities
Impact of changes in foreign exchange rates
Adjustments to tax liabilities for prior periods
Effect of changes in enacted tax rate in other jurisdictions
Changes in liability for unrecognized tax benefits
Stock-based compensation
Foreign, state, and provincial tax rate differential
Change in valuation allowance
Acquisition related costs and contingent consideration
Withholding taxes and other
Effective income tax rate
Earnings before income tax by jurisdiction comprise the following:
Canada
United States
Foreign
Total
Year ended December 31,
2019
2020
26.5 %
1.5
(4.6)
0.3
(0.2)
0.3
0.6
1.5
(2.3)
3.8
1.6
1.8
30.8 %
26.5 %
3.0
(2.0)
(0.1)
(0.1)
0.3
-
0.3
(1.5)
(0.4)
1.4
0.4
27.8 %
Year ended December 31,
2019
2020
$
8,257 $
10,876
49,884
129,838
$ 136,535 $ 190,598
53,111
75,167
Income tax expense (recovery) comprises the following:
Year ended December 31,
2019
2020
Current
Canada
United States
Foreign
Deferred
Canada
United States
Foreign
Total
$
3,309 $
19,577
32,344
55,230
2,939
15,029
41,745
59,713
2,154
(9,765)
(5,573)
(13,184)
238
(520)
(6,418)
(6,700)
$
42,046 $
53,013
57
The significant components of deferred tax assets and liabilities are as follows:
Loss carry-forwards and other credits
Expenses not currently deductible
Revenue not currently taxable
Stock-based compensation
Investments
Provision for doubtful accounts
Financing fees
Net unrealized foreign exchange losses
Depreciation and amortization
Operating leases
Less: valuation allowance
Net deferred tax (liabilities) assets
As at December 31,
2020
2019
$
$
18,314
33,442
(14,076)
526
10,696
8,308
(325)
560
(57,746)
8,110
(13,324)
$
(5,515) $
18,969
28,446
(6,212)
386
7,870
4,585
(330)
68
(44,577)
7,998
(7,801)
9,402
As at December 31, 2020, the Company believes that it is more likely than not that its deferred tax assets
of $45,008 will be realized based upon future income, consideration of net operating loss (“NOL”)
limitations, earnings trends, and tax planning strategies. The amount of deferred tax assets considered
realizable, however, could be reduced in the near term if estimates of future income are reduced.
The Company has pre-tax NOL carry-forward balances as follows:
Pre-tax loss carry forward Pre-tax losses not recognized Pre-tax losses recognized
2020
2019
2019
2020
2020
2019
Canada
United States
Foreign
$
$
5,632
3,059
53,997
16,525
3,144
40,006
$
$
65
924
32,091
$
24
922
21,476
$
5,567
2,135
21,906
16,501
2,222
18,530
The Company has pre-tax capital loss carry-forwards as follows:
Pre-tax loss carry forward Pre-tax losses not recognized Pre-tax losses recognized
2020
2019
2019
2020
2020
2019
Canada
United States
Foreign
$
$
1,922
1,698
6,876
$
1,864
1,698
6,271
$
1,922
1,698
6,876
$
1,758
1,698
6,271
$
-
-
-
106
-
-
These amounts above are available to reduce future, federal, state, and provincial income taxes in their
respective jurisdictions. NOL carry-forward balances attributable to Canada begin to expire in 2035. NOL
carry-forward balances attributable to the United States begin to expire in 2028. Foreign NOL carry-
forward balances begin to expire in 2021. The utilization of NOLs may be subject to certain limitations
under federal, provincial, state or foreign tax laws.
Cumulative unremitted foreign earnings of US subsidiaries is nil (2019 - nil). Cumulative unremitted
foreign earnings of international subsidiaries (other than the US) approximated $117,897 as at
December 31, 2020 (2019 - $107,323). The Company has not provided a deferred tax liability on the
unremitted foreign earnings as it is management’s intent to permanently reinvest such earnings outside
of Canada. In addition, any repatriation of such earnings would not be subject to significant Canadian or
foreign taxes.
58
A reconciliation of the beginning and ending amounts of the liability for unrecognized tax benefits is as
follows:
Balance, January 1
Gross increases for tax positions of prior periods
Reduction for lapses in applicable statutes of limitations
Foreign currency translation
$
2020
2019
1,468 $
908
(87)
55
1,460
71
(129)
66
Balance, December 31
$
2,344 $
1,468
Of the $2,344 (2019 - $1,468) in gross unrecognized tax benefits, $2,344 (2019 - $1,468) would affect the
Company’s effective tax rate if recognized. For the year-ended December 31, 2020, additional interest
and penalties of $224 related to uncertain tax positions was accrued (2019 - $72; 2018 - $6). The
Company reversed $44 of accrued interest and penalties related to positions lapsed in applicable statute
of limitations in 2020 (2019 - $80; 2018 - $173). As at December 31, 2020, the Company had accrued
$362 (2019 - $182) for potential income tax related interest and penalties.
Within the next twelve months, the Company believes it is reasonably possible that $262 of unrecognized
tax benefits associated with uncertain tax positions may be reduced due to lapses in statutes of
limitations.
The Company files tax returns in Canada and multiple foreign jurisdictions. The number of years with
open tax audits varies depending on the tax jurisdiction. Generally, income tax returns filed with the
Canada Revenue Agency and related provinces are open for four to seven years and income tax returns
filed with the United States Internal Revenue Service and related states are open for three to five
years. Tax returns for significant other jurisdictions in which the Company conducts business are
generally open for four years.
The Company does not currently expect any other material impact on earnings to result from the
resolution of matters related to open taxation years, other than noted above. Actual settlements may
differ from the amounts accrued. The Company has, as part of its analysis, made its current estimates
based on facts and circumstances known to date and cannot predict changes in facts and circumstances
that may affect its current estimates.
23.
Pension plan
The Company has a defined benefit pension plan (the “Plan”), which was assumed in connection with a
business acquired during 2016. The Plan covers eligible employees in the Netherlands and provides old
age, survivor, orphan and disability benefits. Effective December 31, 2016, enrollment in the Plan was
frozen and no additional employees are entitled to join the Plan.
The Plan is covered by an insurance contract which limits the Company’s exposure to returns below a
fixed discount rate. Effective August 31, 2019, the Company amended its insurance contract reducing its
exposure to gains and losses as related to the fair value of the Plan assets and the projected benefit
obligations under the Plan. The amendment constituted a settlement of $45,388 under ASC 715, as a
result of the settlement, the insurance benefits were removed from the plan assets and the fair value of
Plan assets reduced to $10 and the projected benefit obligation reduced to $1,813 as at December 31,
2019.
On December 31, 2020 the amended contract with the insurance company expired. The Company and
the employees also completed an agreement to terminate the defined benefit plan and move to a
defined contribution plan. The Company fully curtailed and terminated the plan which resulted in a gain
of $2,093 recognized through net earnings in the year ended December 31, 2020.
59
24.
Other supplemental information
Cash payments made during the year
Income tax, net of refunds
Interest
Non-cash financing activities
Dividends declared but not paid
Other expenses
Rent expense
25.
Financial instruments
Year ended December 31,
2020
2019
$
46,492 $
73,031
29,148
27,685
2,009
1,992
$
79,795 $
76,893
Concentration of credit risk
The Company is subject to credit risk with respect to its cash and cash equivalents, accounts receivable,
unbilled revenues, other receivables and advisor loans receivable. Concentrations of credit risk with
respect to cash and cash equivalents are limited by the use of multiple large and reputable banks.
Concentrations of credit risk with respect to receivables are limited due to the large number of entities
comprising the Company’s customer base and their dispersion across different service lines in various
countries.
Foreign currency risk
Foreign currency risk is related to the portion of the Company’s business transactions denominated in
currencies other than US dollars. A significant portion of revenue is generated by the Company’s
Canadian, Australian, UK and Euro currency operations. The Company’s head office expenses are
incurred primarily in Canadian dollars which are hedged by Canadian dollar denominated revenue.
Fluctuations in foreign currencies impact the amount of total assets and liabilities that are reported for
foreign subsidiaries upon the translation of these amounts into US dollars. In particular, the amount of
cash, working capital, goodwill and intangibles held by these subsidiaries is subject to translation
variance caused by changes in foreign currency exchange rates as of the end of each respective reporting
period (the offset to which is recorded to accumulated other comprehensive income on the consolidated
balance sheets).
Interest rate risk
The Company utilizes an interest rate risk management strategy that may use interest rate hedging
contracts from time to time. The Company’s specific goals are to: (i) manage interest rate sensitivity by
modifying the characteristics of its debt and (ii) lower the long-term cost of its borrowed funds.
In April 2017, the Company entered into interest rate swap agreements to convert the LIBOR floating
interest rate on $100,000 of US dollar denominated debt into a fixed interest rate of 1.897% plus the
applicable margin. The swaps have a maturity of January 18, 2022.
In December 2018, the Company entered into additional interest rate swap agreements to convert the
LIBOR floating interest rate on $100,000 of US dollar denominated debt into a fixed interest rate of
2.7205% plus the applicable margin. The swaps have a maturity of April 30, 2023.
60
The swaps are being accounted for as cash flow hedges and are measured at fair value on the balance
sheet. Gains or losses on the swaps, which are determined to be effective as hedges, are reported in
other comprehensive income.
Fair values of financial instruments
The following table provides the financial assets and liabilities carried at fair value measured on a
recurring basis as of December 31, 2020:
Carrying value at
December 31, 2020
Fair value measurements
Level 1
Level 2
Level 3
Assets
Cash equivalents
Equity securities
Debt securities
Mortgage derivative assets
Warehouse receivables
Deferred Purchase Price on AR Facility
Total assets
Liabilities
Mortgage derivative liability
Interest rate swap liability
Contingent consideration liability
Total liabilities
$
$
$
$
10,974
3,983
9,940
18,383
232,207
87,957
363,444
$ 10,974
3,847
-
-
-
-
$ 14,821
$
-
136
9,940
18,383
232,207
-
$ 260,666
$
-
-
-
-
-
87,957
$ 87,957
7,062
7,946
115,643
130,651
$
$
-
-
-
$
7,062
7,946
-
$ 15,008
$
-
115,643
$ 115,643
There were no significant non-recurring fair value measurements recorded during the year ended
December 31, 2020 or 2019.
Cash equivalents
Cash equivalents include highly liquid investments with original maturities of less than three months.
Actively traded cash equivalents where a quoted price is readily available are classified as Level 1 in the
fair value hierarchy.
Warehouse receivables
As at December 31, 2020, all of the Company’s mortgage warehouse receivables were under
commitment to be purchased by a GSE or by a qualifying investor. These assets are classified as Level 2
in the fair value hierarchy as a substantial majority of the inputs are readily observable.
Mortgage-related derivatives
The fair value of interest rate lock commitments and forward sale commitments are derivatives and
considered Level 2 valuations. Fair value measurements for both interest rate lock commitments and
forward sales commitment consider observable market data, particularly changes in interest rates. In
the case of interest rate lock commitments, the fair value measurement also considers the expected net
cash flows associated with the servicing of the loans or the fair value of MSRs. However, the Company
has evaluated the impact of the fair value of the MSRs on the fair value of the derivatives and they do
not have a significant impact on the derivative fair values. The Company also considers the impact of
counterparty non-performance risk when measuring the fair value of these derivatives. Given the credit
quality of the Company’s counterparties, the short duration of interest rate lock commitments and
forward sales contracts and the Company’s historical experience, the risk of nonperformance by the
counterparties does not have a significant impact on the determination of fair value.
61
AR Facility deferred purchase price (“DPP”)
The Company recorded a DPP under its AR Facility. The DPP represents the difference between the fair
value of the Receivables sold and the cash purchase price and is recognized at fair value as part of the
sale transaction. The DPP is remeasured each reporting period in order to account for activity during the
period, including the seller’s interest in any newly transferred Receivables, collections on previously
transferred Receivables attributable to the DPP and changes in estimates for credit losses. Changes in
the DPP attributed to changes in estimates for credit losses are expected to be immaterial, as the
underlying Receivables are short-term and of high credit quality. The DPP is valued using Level 3 inputs,
primarily discounted cash flows, with the significant inputs being discount rates ranging from 2.5% to
5.0% depending upon the aging of the Receivables. See note 16 for information on the AR Facility.
Changes in the fair value of the DPP comprises the following:
Balance, January 1
Additions to DPP
Collections on DPP
Fair value adjustment
Foreign exchange and other
Balance, December 31
2020
$
69,873 $
2019
-
68,017
100,252
(51,994)
(28,100)
(142)
2,203
(465)
(1,814)
$
87,957 $
69,873
Contingent acquisition consideration
The inputs to the measurement of the fair value of contingent consideration related to acquisitions are
Level 3 inputs. The fair value measurements were made using a discounted cash flow model; significant
model inputs were expected future operating cash flows (determined with reference to each specific
acquired business) and discount rates (which range from 2.1% to 9.5%, with a weighted average of 4.6%).
The wide range of discount rates is attributable to level of risk related to economic growth factors
combined with the length of the contingent payment periods; and the dispersion was driven by unique
characteristics of the businesses acquired and the respective terms for these contingent payments. A
2% increase in the weighted average discount rate would reduce the fair value of contingent
consideration by $3,400.
Changes in the fair value of the contingent consideration liability comprises the following:
Balance, January 1
Amounts recognized on acquisitions
Fair value adjustments (note 6)
Resolved and settled in cash
Other
Balance, December 31
Less: current portion
Non-current portion
$
2020
84,993
23,717
23,393
(17,249)
788
$ 115,643
$
5,802
$ 109,841
$
$
$
$
2019
93,865
-
10,849
(19,665)
(56)
84,993
16,813
68,180
The carrying amounts for cash, restricted cash, accounts receivable, accounts payable and accrued
liabilities approximate fair values due to the short maturity of these instruments, unless otherwise
indicated. The inputs to the measurement of the fair value of non-current receivables, advisor loans and
long-term debt are Level 3 inputs. The fair value measurements were made using a net present value
approach; significant model inputs were expected future cash outflows and discount rates.
The following are estimates of the fair values for other financial instruments:
62
December 31, 2020
Carrying
amount
Fair
value
December 31, 2019
Carrying
amount
Fair
value
Other receivables
Advisor loans receivable (non-current)
Long-term debt (non-current)
Senior Notes
Convertible Notes
$
14,989 $
14,989 $
16,678 $
42,900
215,081
255,790
223,957
42,900
215,081
275,928
230,000
48,283
372,281
234,901
-
16,678
48,283
372,281
254,858
-
Other receivables include notes receivable from non-controlling interests and non-current income tax
recoverable.
26.
Commitments and Contingencies
(a) Purchase commitments
Minimum contractual purchase commitments for the years ended December 31 are as follows:
Year ended December 31,
2021
2022
2023
2024
2025
Thereafter
(b) Contingencies
$
$
18,076
4,695
2,557
1,540
1,540
4,904
33,312
In the normal course of operations, the Company is subject to routine claims and litigation incidental to
its business. Litigation currently pending or threatened against the Company includes disputes with
former employees and commercial liability claims related to services provided by the Company. The
Company believes resolution of such proceedings, combined with amounts set aside, will not have a
material impact on the Company’s financial condition or the results of operations.
In May 2020, the Company acquired a controlling interest in Colliers Mortgage, a lender in the Fannie
Mae DUS Program. Commitments for the origination and subsequent sale and delivery of loans to Fannie
Mae represent those mortgage loan transactions where the borrower has locked an interest rate and
scheduled closing and the Company has entered into a mandatory delivery commitment to sell the loan
to Fannie Mae. As discussed in note 25, the Company accounts for these commitments as derivatives
recorded at fair value.
Colliers Mortgage is obligated to share in losses, if any, related to mortgages originated under the DUS
Program. These obligations expose the Company to credit risk on mortgage loans for which the
Company is providing underwriting, servicing, or other services under the DUS Program. Net losses on
defaulted loans are shared with Fannie Mae based upon established loss-sharing ratios, and typically,
the Company is subject to sharing up to one-third of incurred losses on loans originated under the DUS
Program. As of December 31, 2020, the Company has funded and sold loans subject to such loss sharing
obligations with an aggregate unpaid principal balance of approximately $4,000,000. As at December 31,
2020, the Loss Reserve was $15,194 and was included within Other liabilities on the Consolidated
Balance Sheets.
63
Pursuant to the Company’s licenses with Fannie Mae, Ginnie Mae and HUD the Company is required to
maintain certain standards for capital adequacy which include minimum net worth and liquidity
requirements. If it is determined at any time that the Company fails to maintain appropriate capital
adequacy, the licensor reserves the right to terminate the Company’s servicing authority for all or some
of the portfolio. At December 31, 2020, the licensees were in compliance with all such requirements.
27.
Related party transactions
As at December 31, 2020, the Company had $3,356 of loans receivable from non-controlling
shareholders (2019 - $3,430). The majority of the loans receivable represent amounts assumed in
connection with acquisitions and amounts issued to non-controlling interests to finance the sale of non-
controlling interests in subsidiaries to senior managers. The loans are of varying principal amounts and
interest rates which range from nil to 4.0%. These loans are due on demand or mature on various dates
up to 2026, but are open for repayment without penalty at any time.
See note 19 for discussion of an arrangement between the Company and Jay S. Hennick, its CEO.
28.
Revenue
Disaggregated revenue
Colliers has disaggregated its revenue from contracts with customers by type of service and region as
presented in the following table.
OPERATING SEGMENT REVENUES
Americas
EMEA
Pacific
Mgmt Corporate Consolidated
Asia Investment
Year ended December 31,
2020
Leasing
$ 495,597 $ 107,947 $ 82,917 $
- $
21 $
686,482
Capital Markets
460,224
136,479
104,201
Property services
471,377
162,853
200,727
Valuation and advisory
162,672
104,498
71,463
-
-
-
IM - Advisory and other
IM - Incentive Fees
-
-
-
-
-
-
168,404
4,190
-
-
-
-
-
Other
36,502
4,730
11,324
-
731
700,904
834,957
338,633
168,404
4,190
53,287
Total Revenue
$ 1,626,372 $ 516,507 $ 470,632 $ 172,594 $
752 $ 2,786,857
2019
Leasing
$ 691,149 $ 139,141 $ 115,916 $
- $
193 $
946,399
Capital Markets
424,703
192,673
158,533
Property services
388,117
189,543
187,183
Valuation and advisory
167,919
109,517
69,028
-
-
-
IM - Advisory and other
IM - Incentive Fees
-
-
-
-
-
-
155,426
19,162
-
-
-
-
-
Other
18,619
5,592
11,949
-
1,448
775,909
764,843
346,464
155,426
19,162
37,608
Total Revenue
$ 1,690,507 $ 636,466 $ 542,609 $ 174,588 $
1,641 $ 3,045,811
Revenue associated with the Company’s debt finance and loan servicing operations are outside the
scope of ASC 606. In the year ended December 31, 2020, $75,975 of revenue was excluded from the
scope of ASC 606. These revenues were included entirely within the Americas segment within Capital
Markets and Other revenue.
64
Contract balances
The Company had contract assets totaling $66,436 of which $61,101 was current (2019 - $48,934 of which
$42,772 was current). During the year ended December 31, 2020, substantially all of the current contract
assets were either moved to accounts receivable or sold under the AR Facility (Note 16).
The Company had contract liabilities (all current) totaling $21,076 (2019 - $24,133). Revenue recognized
for the year ended December 31, 2020 totaled $22,338 (2019 - $26,568) that was included in the contract
liability balance at the beginning of the year.
Certain constrained brokerage fees, outsourcing & advisory fees and investment management fees may
arise from services that began in a prior reporting period. Consequently, a portion of the fees the
Company recognizes in the current period may be partially related to the services performed in prior
periods. Typically, less than 5% of brokerage revenue recognized in a period had previously been
constrained and substantially all investment management incentive fees, including carried interest,
recognized in the period were previously constrained.
29.
Segmented information
Operating segments
Colliers has identified four reportable operating segments. Three segments are grouped geographically
into Americas, Asia Pacific and EMEA. The Investment Management segment operates in the Americas
and EMEA. The groupings are based on the manner in which the segments are managed. Management
assesses each segment’s performance based on operating earnings or operating earnings before
depreciation and amortization. Corporate includes the costs of global administrative functions and the
corporate head office.
Included in segment total assets at December 31, 2020 are investments in non-consolidated subsidiaries
accounted for under the equity method: Americas $3,147 (2019 - $3,278), EMEA $1,550 (2019 - $1,427)
and Investment Management $7,518 (2019 - $2,161). The reportable segment information excludes
intersegment transactions.
2020
Asia Investment
Americas
EMEA
Pacific
Mgmt Corporate Consolidated
Revenues
Depreciation and
amortization
Operating earnings
(loss)
Equity earnings
Other income, net
Interest expense, net
Income tax expense
Net earnings
$ 1,626,372 $ 516,507 $ 470,632 $ 172,594 $
752 $ 2,786,857
56,667
22,391
14,616
27,464
4,768
125,906
121,371
1,469
8,336
75
45,221
-
40,738
1,181
(51,088)
193
164,578
2,919
(13)
(30,949)
(42,046)
$
94,489
Total assets
$ 1,640,046 $ 648,557 $ 384,001 $ 694,270 $ (74,707) $ 3,292,167
Total additions to
long-lived assets
357,187
8,194
4,593
3,669
2,255
375,898
65
2019
Americas
EMEA
Asia
Pacific
Investment
Mgmt Corporate Consolidated
Revenues
Depreciation and
amortization
Operating earnings
(loss)
Equity earnings
Other income, net
Interest expense, net
Income tax expense
Net earnings
$ 1,690,507 $ 636,466 $ 542,609 $ 174,588 $
1,641 $
3,045,811
34,113
22,489
7,969
26,504
3,589
94,664
103,731
1,361
48,510
35
67,062
-
35,048
669
(36,154)
-
218,197
2,065
(212)
(29,452)
(53,013)
$
137,585
Total assets
$ 917,997 $ 672,691 $ 388,606 $ 953,567 $
(40,147) $
2,892,714
Total additions to
long-lived assets
47,132
12,656
79,904
1,829
4,961
146,482
Geographic information
Revenues in each geographic region are reported by customer locations.
GEOGRAPHIC INFORMATION
Year ended December 31,
2020
2019
$ 1,432,288
1,378,648
$ 1,429,650
1,057,543
$ 304,039
82,520
$ 356,634
88,589
$ 280,853
306,472
$ 356,171
293,673
$ 190,106
84,758
$ 235,469
84,969
$ 135,572
79,738
$ 170,302
85,998
$ 443,999
184,533
$ 497,585
186,739
$ 2,786,857
2,116,669
$ 3,045,811
1,797,511
United States
Revenues
Total long-lived assets
Canada
Revenues
Total long-lived assets
Euro currency countries
Revenues
Total long-lived assets
Australia
Revenues
Total long-lived assets
United Kingdom
Revenues
Total long-lived assets
Other
Revenues
Total long-lived assets
Consolidated
Revenues
Total long-lived assets
66
Financial Highlights
(US$ thousands, except per share amounts)
Year ended December 31
Operations
Revenues
Operating earnings
Net earnings
Financial Position
Total assets
Long-term debt1
Financial leverage2
Shareholders’ equity
Earnings Data
Adjusted EBITDA3
Diluted net earnings per common share
Adjusted EPS4
Diluted weighted average common shares
outstanding (thousands)
2020
2019
2018
2017
2016
$2,786,857
$3,045,811
$2,825,427
$2,435,200
$1,896,724
164,578
94,489
218,197
137,585
201,398
128,574
167,376
94,074
146,173
91,571
$3,292,167
$2,892,714
$2,357,580
$1,507,560
$1,194,779
479,895
611,404
672,123
249,893
262,498
1.0
1.4
1.6
0.6
0.7
586,109
517,299
391,973
303,014
212,513
$361,442
$359,476
$311,435
$242,824
$203,062
1.22
4.18
2.57
4.67
2.45
4.09
1.31
3.16
1.75
2.44
40,179
39,981
39,795
39,308
38,868
Cash dividends per common share
0.10
0.10
0.10
0.10
0.09
1Excluding warehouse credit facilities and convertible notes.
2Financial leverage expressed in terms of (long term debt less cash) / pro forma adjusted EBITDA.
3(cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:40)(cid:37)(cid:916)(cid:55)(cid:39)(cid:36)(cid:3)(cid:76)(cid:86)(cid:3)(cid:71)(cid:72)(cid:564)(cid:81)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:15)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:15)(cid:3)(cid:71)(cid:72)(cid:83)(cid:85)(cid:72)(cid:70)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:68)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:74)(cid:68)(cid:76)(cid:81)(cid:86)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:82)(cid:85)(cid:87)(cid:74)(cid:68)(cid:74)(cid:72)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:15)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:16)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:87)(cid:72)(cid:80)(cid:86)(cid:15)(cid:3)(cid:85)(cid:72)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:16)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)
compensation expense.
4 (cid:36)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:40)(cid:51)(cid:54)(cid:3)(cid:76)(cid:86)(cid:3)(cid:71)(cid:72)(cid:564)(cid:81)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)(cid:71)(cid:76)(cid:79)(cid:88)(cid:87)(cid:72)(cid:71)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:15)(cid:3)(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:907)(cid:72)(cid:70)(cid:87)(cid:15)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:15)(cid:3)(cid:82)(cid:73)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:71)(cid:72)(cid:80)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:81)(cid:70)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:68)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:74)(cid:68)(cid:76)(cid:81)(cid:86)(cid:3)(cid:68)(cid:87)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:82)(cid:85)(cid:87)(cid:74)(cid:68)(cid:74)(cid:72)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)
(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:15)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:16)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:87)(cid:72)(cid:80)(cid:86)(cid:15)(cid:3)(cid:85)(cid:72)(cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:16)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:86)(cid:72)(cid:17)
Notice of
Shareholders
Meeting
The virtual annual meeting of shareholders
will be held on April 14, 2021 at 11:00am ET
(cid:42)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:43)(cid:72)(cid:68)(cid:71)(cid:3)(cid:50)(cid:605)(cid:70)(cid:72)
1140 Bay Street, Suite 4000
Toronto, Ontario, Canada
M5S 2B4
Phone: 416 960 9500
Registrar & Transfer Agent
TSX Trust Company
Phone: 1 866 393 4891
Email: tmxeinvestorservices@tmx.com
Stock Exchange Listing
NASDAQ Global Select Market – CIGI
Toronto Stock Exchange – CIGI
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About Colliers
About Colliers
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With operations in 67 countries, our more than 15,000 enterprising professionals work collaboratively to provide
With operations in 67 countries, our more than 15,000 enterprising professionals work collaboratively to provide
expert advice to real estate occupiers, owners and investors. For more than 25 years, our experienced leadership with
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we maximize the potential of property and accelerate the success of our clients and our people.
Accelerating success.