Altus Group Limited

2020 Financial Statements

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Consolidated Financial Statements December 31, 2020 and 2019 (Expressed in Thousands of Canadian Dollars)

Contents
Management’s Responsibility for Financial Reporting	1
Independent Auditor’s Report	2
Consolidated Statements of Comprehensive Income (Loss)	8
Consolidated Balance Sheets	9
Consolidated Statements of Changes in Equity	10
Consolidated Statements of Cash Flows	11
Notes to Consolidated Financial Statements	12

Altus Group Limited

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Management’s Responsibility for Financial Reporting

The accompanying consolidated financial statements of Altus Group Limited are the responsibility of management and have been reviewed and approved by the Board of Directors of Altus Group Limited. The consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards and, where appropriate, reflect management’s best estimates and judgments. Management has also prepared financial and all other information in the Annual Shareholders’ Report and has ensured that this information is consistent with the consolidated financial statements.

Altus Group Limited maintains appropriate systems of internal control, policies and procedures, which provide management with reasonable assurance that assets are safeguarded and the financial records are reliable and form a proper basis for the preparation of the consolidated financial statements.

The Board of Directors of Altus Group Limited ensures that management fulfills its responsibilities for financial reporting and internal control through an Audit Committee. This committee reviews the consolidated financial statements and reports to the Board of Directors. The committee meets with the auditor to discuss the results of the audit, the adequacy of internal accounting controls and financial reporting matters.

The consolidated financial statements have been independently audited by Ernst & Young LLP in accordance with Canadian generally accepted auditing standards. Their report that follows expresses their opinion on the consolidated financial statements of the Company.

“Michael Gordon”

“Angelo Bartolini”

Michael Gordon Chief Executive Officer February 24, 2021

Angelo Bartolini Chief Financial Officer February 24, 2021

Altus Group Limited

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Independent auditor’s report

To the Shareholders of

Altus Group Limited

Opinion

We have audited the consolidated financial statements of Altus Group Limited and its subsidiaries (the “Group”), which comprise the consolidated balance sheets as at December 31, 2020 and 2019, and the consolidated statements of comprehensive income (loss), consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRSs”).

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period. These matters were addressed in the context of the audit of the consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

Altus Group Limited

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How our audit addressed the key audit matter

Key audit matter

Revenue Recognition – Software

Our audit procedures included, among others:

Updated understanding of the revenue class of transactions.

As disclosed in Note 7 to the consolidated financial  statements, revenues from external customers of the Altus Analytics segment amounts to $204  million for the year ended December 31, 2020. The Group has a significant revenue stream relating to  subscription‐based software licences within the Altus Analytics segment.

We reviewed the Group’s revenue recognition policy and assessed its compliance with IFRS 15. For significant multiyear contracts with multiple performance obligations, we reviewed the Group’s assessment of the standalone selling price for subscription‐based software licenses, and maintenance services or support services, that is used in the allocation of the transaction price to its various components. We assessed the standalone selling price of software license and maintenance services or support services by ensuring it is consistent with the Group’s approved pricing ranges.

The accounting for revenue from significant multiyear contracts with multiple performance obligations requires significant auditor judgment because of the significance of these revenues and the risks related to the many inherent complexities and critical judgments in the measurement and timing of revenues from multi‐element contracts found in the software industry. The separation of  these elements requires management to use estimates in relation to the determination of the fair value of each component. This creates a risk  that the significant multiyear contacts with multiple performance obligations will not be properly recorded in the correct period and in accordance with IFRS 15.

We validated the approved pricing ranges by testing a sample of maintenance service or support services renewals during the year.

We reviewed significant multiyear contracts with multiple performance obligations for any unusual terms and conditions to assess the appropriateness of management’s accounting treatment and independently calculated the revenue and deferred revenue from these contracts to assess the reasonableness of the revenue recognized by the Group.

Altus Group Limited

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Goodwill Asset Impairment

As at December 31, 2020, the Group has $261 million of goodwill. Management assesses at least annually, or at any time if an indicator of impairment exists, whether there has been an impairment loss in the carrying value of goodwill.  When performing impairment tests, the Group estimates the recoverable amount of the cash generating units (“CGUs”) to which goodwill have been allocated using a discounted cash flow model  to estimate the fair value less costs to sell. The Group discloses significant judgments, estimates and assumptions and the result of its analysis in  respect of impairment in Note 19 to the consolidated financial statements.

To test the estimated recoverable amount of the Canada RVA and North America Cost CGUs, our audit procedures included, among others:

Assessing methodologies and the significant assumptions discussed above and underlying data used by the Group in its analysis with the assistance of our valuation specialists.

We assessed the selection and application of the discount rate by evaluating the inputs and mathematical accuracy of the calculation. We assessed the historical accuracy of management’s estimates on cash flow projections, revenue growth rate and earnings margins by comparing management’s past projections to actual and historical performance. We also compared the revenue growth rate to current industry, market and economic trends.

Significant assumptions included cash flow projections, revenue growth rate, EBITDA margins, perpetual growth rates, and business specific discount rates, which are affected by  expectations about future market and economic conditions including impacts of the global pandemic (COVID‐19).

We performed sensitivity analysis on significant assumptions, including EBITDA margins and discount rate, to evaluate impact on the recoverable amount of the Canada RVA and North America Cost CGUs that would result from changes in the assumptions.

Based on our knowledge of the Group’s businesses and considering the performance of the different  CGUs, we identify CGUs with significant goodwill balances, specific risk factors, and lower excess headroom in recoverable value compared to net book value of the related CGUs.

We also assessed the adequacy of the Group’s disclosures included in Note 19 of the accompanying consolidated financial statements in relation to this matter.

This matter was identified as a key audit matter in respect of the Canada RVA and North America Cost CGUs due to the significant estimation uncertainty and judgment applied by management in determining the recoverable amount, primarily due to the sensitivity of the significant assumptions described above to the future cash flows and the effect that changes in these assumptions would have on the recoverable amount of these CGUs.

Altus Group Limited

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Other Information

Management is responsible for the other information. The other information comprises:

Management’s Discussion and Analysis; and
The information, other than the consolidated financial statements and our auditor’s report thereon, in the Annual Report.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information, and in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

We obtained Management’s Discussion and Analysis and the Annual Report prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Altus Group Limited

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Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Altus Group Limited

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We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The partner in charge of the audit resulting in this independent auditor’s report is Mark Vrooman, CPA, CA.

“Ernst & Young LLP”

Toronto, Canada February 24, 2021

Chartered Professional Accountants Licensed Public Accountants

Altus Group Limited

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Consolidated Statements of Comprehensive Income (Loss) For the Years Ended December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Per Share Amounts)

Notes	For the year ended December 31, 2020 For the year ended December 31, 2019(1)
Revenues 7	$ 561,156 $525,717
Expenses Employee compensation 8 Occupancy 16 Office and other operating Depreciation of right‐of‐use assets 16 Depreciation of property, plant and equipment 17 Amortization of intangibles 18 Acquisition and related transition costs (income) 6 Share of (profit) loss of joint venture 15 Restructuring costs (recovery) 20 (Gain) loss on investments 14 Finance costs (income), net ‐ leases 9, 16 Finance costs(income),net ‐ other 9	354,951 329,092 7,591 7,288 102,193 101,893 11,210 12,316 5,620 5,854 24,784 29,533 (887) 188 (459) ‐ 11,984 (296) (21) (276) 2,494 2,711 4,138 6,567
Profit(loss) from continuing operations before income taxes	37,558 30,847
Income tax expense(recovery) 10	10,549 6,956
Profit(loss) for theyear from continuing operations	$ 27,009 $23,891
Profit(loss)for theyear from discontinued operations 11	(5,576) (5,697)
Profit(loss) for theyear attributable to shareholders	$ 21,433 $18,194
Other comprehensive income (loss): Items that may be reclassified to profit or loss in subsequent periods: Currency translation differences 24 Items that are not reclassified to profit or loss in subsequent periods: Change in fair value of FVOCI investments,net of tax 14,24	1,533 (13,772) (987) 92
Other comprehensive income(loss), net of tax	546 (13,680)
Total comprehensive income (loss) for the year, net of tax, attributable to shareholders	$ 21,979$ 4,514

Earnings (loss) per share attributable to the shareholders of the Company during the year Basic earnings (loss) per share: Continuing operations 26 Discontinued operations 26 Diluted earnings (loss) per share: Continuing operations 26 Discontinued operations 26	$0.67 $0.61 $(0.14) $(0.14) $0.66 $0.60 $(0.14) $(0.14)

The accompanying notes are an integral part of these consolidated financial statements.

(1) Comparative figures have been restated to reflect discontinued operations (Notes 3, 7, 11 and 32).

Altus Group Limited

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Consolidated Balance Sheets

As at December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars)

Consolidated Balance Sheets As at December 31, 2020 and 2019 (Expressed in Thousands of Canadian Dollars)
Notes	December 31, 2020 December 31, 2019
Assets Current assets Cash and cash equivalents Trade receivables and other 12 Income taxes recoverable Derivative financial instruments 13	$ 69,637$ 60,262 193,072 181,955 3,385 2,403 2,477 1,449
	268,571 246,069
Non‐current assets Trade receivables and other 12 Derivative financial instruments 13 Investments 14 Investment in joint venture 15 Deferred tax assets 10 Right‐of‐use assets 16 Property, plant and equipment 17 Intangibles 18 Goodwill 19	1,370 3,696 8,800 5,975 10,356 11,481 15,309 ‐ 19,930 22,163 51,690 63,729 20,376 29,037 77,928 92,595 261,070 260,380
	466,829 489,056
Total Assets	$ 735,400$ 735,125
Liabilities Current liabilities Trade payables and other 20 Income taxes payable Lease liabilities 16 Borrowings 21	$ 140,294$ 128,566 1,190 4,548 11,700 12,564 ‐ 137,929
	153,184 283,607
Non‐current liabilities Trade payables and other 20 Lease liabilities 16 Borrowings 21 Deferred tax liabilities 10	17,206 16,197 51,883 63,419 122,432 334 7,246 11,916
	198,767 91,866
Total Liabilities	351,951 375,473
Shareholders’ Equity Share capital 22 Contributed surplus 23 Accumulated other comprehensive income (loss) 24 Retained earnings(deficit)	529,866 509,646 30,428 24,447 40,791 40,245 (217,636) (214,686)
Total Shareholders’ Equity	383,449 359,652
Total Liabilities and Shareholders’ Equity	$ 735,400$ 735,125

The accompanying notes are an integral part of these consolidated financial statements.

Commitments and Contingencies (Note 30)

Approved on behalf of the Board of Directors

“Raymond Mikulich”

“Janet Woodruff”

Raymond Mikulich Janet Woodruff

Altus Group Limited

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Consolidated Statements of Changes in Equity For the Years Ended December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars)

				Accumulated
				Other	Retained	Total
			Contributed	Comprehensive	Earnings	Shareholders’
	Notes	Share Capital	Surplus	Income (Loss)	(Deficit)	Equity
As at January 1, 2019		$ 491,542	$ 21,882	$ 54,558 $	(209,556)	$ 358,426
Profit (loss) for the year		‐	‐	‐	18,194	18,194
Other comprehensive income (loss), net of
tax:
Currency translation differences		‐	‐	(13,772)	‐	(13,772)
Change in fair value of FVOCI
investments		‐	‐	92	‐	92
Total comprehensive income (loss) for the
year		‐	‐	(13,680)	18,194	4,514
Transfer of loss on disposal of FVOCI
investments		‐	‐	(633)	633	‐
Transactions with owners:
Dividends declared		‐	‐	‐	(23,957)	(23,957)
Share‐based compensation		‐	9,839	‐	‐	9,839
Dividend Reinvestment Plan		4,624	‐	‐	‐	4,624
Shares issued on exercise of options		8,166	(1,289)	‐	‐	6,877
Shares issued on acquisitions		4,282	‐	‐	‐	4,282
Shares issued for share‐based
compensation		5,243	(2,891)	‐	‐	2,352
Treasury shares reserved for share‐based
compensation		(7,705)	‐	‐	‐	(7,705)
Release of treasury shares		3,494	(3,001)	‐	‐	493
Gain (loss) on sale of RSs and shares held
in escrow		‐	(93)	‐	‐	(93)
		18,104	2,565	(633)	(23,324)	(3,288)
As at December 31, 2019		$ 509,646	$ 24,447	$ 40,245 $	(214,686)	$ 359,652
As at January 1, 2020		$ 509,646	$ 24,447	$ 40,245 $	(214,686)	$ 359,652
Profit (loss) for the year		‐	‐	‐	21,433	21,433
Other comprehensive income (loss), net of
tax:
Currency translation differences	24	‐	‐	1,533	‐	1,533
Change in fair value of FVOCI
investments	24	‐	‐	(987)	‐	(987)
Total comprehensive income (loss) for the
year		‐	‐	546	21,433	21,979
Transactions with owners:
Dividends declared	27	‐	‐	‐	(24,383)	(24,383)
Share‐based compensation	23, 25	‐	15,398	‐	‐	15,398
Dividend Reinvestment Plan	22	2,429	‐	‐	‐	2,429
Shares issued on exercise of options	22, 23, 25	14,150	(2,162)	‐	‐	11,988
Shares issued for share‐based
compensation	22, 23, 25	6,984	(2,098)	‐	‐	4,886
Treasury shares reserved for share‐based
compensation	22, 25	(8,923)	‐	‐	‐	(8,923)
Release of treasury shares	22, 23, 25	5,580	(5,144)	‐	‐	436
Gain (loss) on sale of RSs and shares held
in escrow	23	‐	(13)	‐	‐	(13)
		20,220	5,981	‐	(24,383)	1,818
As at December 31, 2020		$ 529,866	$ 30,428	$ 40,791 $	(217,636)	$ 383,449

The accompanying notes are an integral part of these consolidated financial statements.

Altus Group Limited

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Consolidated Statements of Cash Flows

For the Years Ended December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars)

Consolidated Statements of Cash Flows For the Years Ended December 31, 2020 and 2019 (Expressed in Thousands of Canadian Dollars)
Notes	For the year ended December 31, 2020 For the year ended December 31, 2019
Cash flows from operating activities Profit (loss) from continuing operations before income taxes Profit(loss)from discontinued operations before income taxes 11	$ 37,558$ 30,847 (5,576) (5,697)
Profit (loss) before income taxes Adjustments for: Depreciation of right‐of‐use assets 16 Depreciation of property, plant and equipment 17 Amortization of intangibles 18 Finance costs (income), net ‐ leases 9 Finance costs (income), net ‐ other 9 Share‐based compensation 23, 25 Unrealized foreign exchange (gain) loss (Gain) loss on investments 14 (Gain) loss on disposal of property, plant and equipment and intangibles (Gain) loss on equity derivatives and interest rate swaps 13 Share of (profit) loss of joint venture 15 Impairment charge ‐ leases Impairment charge ‐ goodwill 11, 19 Fair value loss (gain) on net assets directly associated with discontinued operations 11 (Gain) loss on sale of the discontinued operations 11 Net changes in operatingworkingcapital	$ 31,982$ 25,150 11,262 13,440 5,731 7,838 24,785 29,995 2,559 2,885 4,123 6,567 15,398 9,839 165 994 (21) (276) 518 274 (3,991) (6,837) (459) ‐ 36 69 ‐ 6,400 5,163 ‐ (483) ‐ (1,910) (23,110)
Net cash generated by (used in) operations Less: interest paid on borrowings Less: interest paid on leases Less: income taxes paid Add: income taxes refunded	94,858 73,228 (3,547) (5,045) (2,559) (2,885) (19,051) (15,454) 2,599 2,581
Net cashprovided by (used in) operating activities	72,300 52,425
Cash flows from financing activities Proceeds from exercise of options 22, 23, 25 Financing fees paid Proceeds from borrowings 21 Repayment of borrowings 21 Payments of principal on lease liabilities 16 Dividends paid 27 Treasurysharespurchased under the Restricted Share Plan 22,25	11,988 6,877 (723) ‐ 38,135 21,600 (53,265) (12,872) (11,960) (11,844) (21,859) (19,199) (3,614) (5,353)
Net cashprovided by (used in) financing activities	(41,298) (20,791)
Cash flows from investing activities Purchase of investments 14 Cash contribution to investment in joint venture 11 Purchase of intangibles 18 Purchase of property, plant and equipment 17 Proceeds from disposal of property, plant and equipment and intangibles Proceeds from disposal of investment 14 Acquisitions,net of cash acquired 6	(365) (708) (3,794) ‐ (770) (155) (3,580) (5,786) 96 147 ‐ 549 (12,490) (12,477)
Net cashprovided by (used in) investing activities	(20,903) (18,430)
Effect of foreign currencytranslation	(724) (1,680)
Net increase (decrease) in cash and cash equivalents Cash and cash equivalents,beginningofyear	9,375 11,524 60,262 48,738
Cash and cash equivalents, end of year	$ 69,637$ 60,262

The accompanying notes are an integral part of these consolidated financial statements.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

1. Business and Structure

Altus Group Limited (the “Company”) is a leading provider of software, data solutions and independent advisory services to the global commercial real estate (“CRE”) industry. The Company’s businesses, Altus Analytics and Commercial Real Estate Consulting, reflect decades of experience, a range of expertise, and technology‐enabled capabilities. The Company’s solutions empower clients to analyze, gain insight and recognize value on their real estate investments. Headquartered in Canada, the Company has approximately 2,200 employees around the world, with operations in North America, Europe and Asia Pacific. The Company’s clients include many of the world’s largest CRE industry participants.

During the year, the Company conducted its business through three business units: Altus Analytics, Commercial Real Estate Consulting and Geomatics. Effective June 27, 2020, the Company combined its Geomatics business segment with WSP Global Inc.’s (“WSP”) respective geomatics business unit. The combined entity launched as GeoVerra Inc. (“GeoVerra”), forming a Canadian geomatics firm with offices and employees in Western Canada and Ontario, with the Company receiving a 49.5% equity interest and 50% of the voting rights (Note 15). Accordingly, Geomatics is presented as discontinued operations (Note 11). The Company continues to conduct its business through its two remaining business units: Altus Analytics and Commercial Real Estate Consulting.

The address of the Company’s registered office is 33 Yonge Street, Suite 500, Toronto, Ontario, Canada. The Company is listed on the Toronto Stock Exchange (“TSX”) under the symbol AIF and is domiciled in Canada.

“Altus Group” refers to the consolidated operations of the Company.

2. Basis of Preparation

The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The consolidated financial statements have been prepared on a going concern basis using the historical cost convention, except for the revaluation of certain financial assets and financial liabilities, including investments, derivatives, and debt and equity instruments and contingent consideration that have been measured at fair value.

Changes to significant accounting policies and estimates are described in Note 4.

These consolidated financial statements were approved by the Board of Directors for issue on February 24, 2021.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies

The significant accounting policies applied in the preparation of these consolidated financial statements are set out below.

Consolidation

Subsidiaries

Investments in other entities where the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee, are considered subsidiaries. Subsidiaries are fully consolidated from the date at which control is determined to have occurred and are de‐consolidated from the date that the Company no longer controls the entity. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. All intercompany transactions and balances are eliminated.

The Company uses the acquisition method of accounting to account for business combinations, when control is acquired. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Company. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

The excess of the consideration transferred, the amount of any non‐controlling interest in the acquiree and the acquisition‐date fair value of any previous equity interest in the acquiree over the fair value of the Company’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the identifiable net assets acquired in the case of a bargain purchase, the difference is recognized directly in profit or loss.

Joint Venture

Joint ventures are joint arrangements over which the Company has joint control along with the other parties to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. The Company’s investment in its joint venture, GeoVerra, was initially recognized at fair value and is accounted for using the equity method.

The Company’s share of (profit) loss of joint venture subsequent to the initial combination is recognized in profit or loss, and its share of movements in other comprehensive income (loss), if any, is recognized in other comprehensive income (loss). Such movements are adjusted against the carrying amount of the Company’s investment in joint venture.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

Unrealized gains on transactions between the Company and its joint venture are eliminated to the extent of the Company’s interest in the joint venture. Unrealized losses are also eliminated unless the transactions provide evidence of an impairment of the asset transferred. The accounting policies of its joint venture are consistent with the Company’s accounting policies.

The Company reviews its investment in joint venture for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, the carrying amount of the Company’s investment in joint venture is written down to its estimated recoverable amount, being the higher of fair value less costs to sell and value in use, and charged to profit or loss.

Segment Reporting

Segments are reported in a manner consistent with the internal reporting provided to the chief operating decision‐maker. Operating segments are aggregated when the criteria in IFRS 8, Operating Segments , are met. The chief operating decision‐maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer (“CEO”).

Discontinued Operations

A discontinued operation is a component of the Company’s business, with operations and cash flows that are distinguishable from those of the rest of the Company, and which represents a separate major line of business or geographical area of operations, and which is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively for resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the major line of business or geographical operation meets the criteria to be classified as assets held for sale or distribution. When an operation is classified as a discontinued operation, IFRS 5, Non‐current Assets Held for Sale and Discontinued Operations , requires that the comparative statements of comprehensive income (loss) are re‐presented as if the operation was discontinued from the start of the comparative year. As a result, the Company’s discontinued operations are excluded from the profit (loss) from continuing operations and are presented as an amount, net of tax, as profit (loss) from discontinued operations in the consolidated statements of comprehensive income (loss). Furthermore, the Company has made the accounting policy choice to present net cash flows related to its discontinued operations in the notes to the consolidated financial statements.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

Foreign Currency Translation

The consolidated financial statements are presented in Canadian dollars ($), which is the Company’s functional and presentation currency. Items included in the financial statements of each of the Company’s subsidiaries are measured using the currency of the primary economic environment in which each respective entity operates.

Foreign currency transactions are translated into the appropriate functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss within office and other operating expenses.

The results and financial position of the Company’s subsidiaries that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities are translated at the closing rate at the date of the balance sheet;
income and expenses are translated at average exchange rates; and
all resulting exchange differences are recognized in other comprehensive income (loss) within currency translation differences.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate at the date of the balance sheet.

Leases

Right‐of‐use assets

The Company recognizes right‐of‐use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right‐of‐use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right‐of‐use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, right‐of‐use assets are depreciated on a straight‐line basis over the shorter of its estimated useful life and the lease term.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

The Company’s right‐of‐use assets are depreciated over the following:

Property	1 ‐ 10 years
Equipment	1 ‐ 4 years

Right‐of‐use assets are also subject to impairment.

Lease liabilities

At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in‐substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees, if applicable. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as occupancy expense in the period on which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in‐substance fixed lease payments or a change in the assessment to purchase the underlying asset.

Short‐term leases and leases of low‐value assets

The Company applies the short‐term lease recognition exemption to its short‐term leases (i.e., those leases that have a lease term of 12 months or less from commencement date and do not contain a purchase option). It also applies the lease of low‐value assets recognition exemption to leases of equipment that are considered of low value (i.e., below $5). Payments on such leases are recognized as occupancy expense on a straight‐line basis over the lease term.

Current and Deferred Income Taxes

The tax expense for the year consists of current and deferred income tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income (loss) or directly in equity, in which case the tax is recognized accordingly.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

Current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax filings in different jurisdictions with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax liabilities are not recognized if they arise from the initial recognition of goodwill or the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax assets are recognized only to the extent that it is probable that the assets can be recovered. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred income tax assets and liabilities are presented as non‐current.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liabilities where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.

The Company applies judgment in identifying and assessing uncertainties over income tax treatments, including those relating to transfer pricing and other tax deductions. The Company recognizes tax treatments (including those of its subsidiaries) to the extent that it is probable that it will be accepted by the applicable taxation authorities.

Tax assets and liabilities are offset when there is a legally enforceable right to offset and when they relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Investment Tax Credits

Investment tax credits, arising from qualifying scientific research and experimental development efforts pursuant to existing tax legislation, are recorded as a reduction of employee compensation expense when there is reasonable assurance of their ultimate realization.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

Employee Benefits

Termination benefits

Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination benefits at the earlier of the date at which the Company can no longer withdraw the offer of these benefits, and, in the case of restructuring, the date at which the Company has recognized costs for a restructuring within the scope of IAS 37, Provisions, Contingent Liabilities and Contingent Assets , which involves the payment of termination benefits. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

Profit‐sharing and bonus plans

The Company recognizes the expense and related liability for bonuses and profit‐sharing awards over the service period where contractually obliged or when there is a past practice that has created a constructive obligation, which can be reliably measured.

Revenue Recognition

Revenue is recognized upon transfer of control of the promised goods or services to customers in an amount that reflects the consideration to which the Company expects to receive in exchange for those goods or services. Performance obligations are satisfied and revenue is recognized, either over time or at a point in time.

Payment terms vary by contract type; however, terms are typically 30 to 60 days.

Unbilled revenue on customer contracts, contract assets under IFRS 15, Revenue from Contracts with Customers , relates to conditional rights to consideration for satisfied performance obligations of contracts with customers. Trade receivables are recognized when the right to consideration becomes unconditional. Customer deposits included in trade payables and other, and deferred revenue, contract liabilities under IFRS 15, relate to payments received or due in advance of performance under contracts with customers. Contract liabilities are recognized as revenue as (or when) the Company satisfies its performance obligations under the contracts.

Costs to obtain customer contracts represent commissions incurred and would not otherwise have been incurred if the contracts had not been obtained. These costs are incremental and capitalized when the Company expects to recover these costs under each respective customer contract. The asset is amortized over the term of the specific contract it relates to, consistent with the associated pattern of revenue recognition, and is recorded in employee compensation expenses. As a practical expedient, incremental costs of obtaining a contract have been expensed when incurred if the related term is one year or less.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

Services

The Company provides services on a time and materials basis, fixed fee basis or contingency basis. Services are offered by all segments of the Company.

Performance obligations for services on a time and materials or fixed fee basis are typically satisfied over time as services are rendered. In contracts where the Company is not entitled to payment until specific performance obligations are satisfied, revenue is recognized at the time the services are delivered. At contract inception, the Company expects that the period between when the Company transfers control of a promised service to a customer and when the customer pays for that service will be one year or less. As such, the Company applies the practical expedient of not adjusting the consideration for such services for the effects of a significant financing component.

Revenue is recognized based on the extent of progress towards completion of performance obligations, on a project‐by‐project basis. The method used to measure progress depends on the nature of the services. Revenue is recognized on the basis of time and materials incurred to date relative to the total budgeted inputs. The output method on the basis of milestones is used when the contractual terms align the Company’s performance with measurements of value to the customer. Revenue is recognized for services performed to date based on contracted rates and/or milestones that correspond to the consideration that the Company is entitled to invoice.

Performance obligations for contingency arrangements are satisfied at a point in time upon completion of the services. The consideration for such arrangements is performance‐based and variable. The estimated variable consideration included in the transaction price considers the extent that it is highly probable that a significant reversal of revenue will not occur when the uncertainty is resolved. This is reassessed at the end of each reporting period.

Service contracts are generally billed subsequent to revenue recognition and result in contract assets. In some contracts, customer deposits render contract liabilities to the extent that they exceed the contract assets, on a project‐by‐project basis.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

Software and data products

The Company’s Altus Analytics business offers customers licenses for on‐premise software that provide the customer with a right to use the software as it exists when the license is granted to the customer. Customers may purchase perpetual licenses or subscription licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. Revenue from distinct on‐premise licenses is recognized upfront at the point in time when the software is delivered to the customer. Perpetual licenses are initially sold with one year of ongoing maintenance and the option to renew thereafter. Support services are sold with subscriptions in all cases. Revenue allocated to ongoing maintenance or support services is recognized ratably over the term of the contract. The standard warranty period is 30 days and it is not considered to be a distinct performance obligation. Contracts related to perpetual licenses and ongoing maintenance are billed upfront and prior to revenue recognition, which generally results in the initial recognition of a contract liability. Contracts related to licenses sold on a subscription basis and support services will vary depending on the contractual terms.

Access to hosted and cloud software and data products over a specified contract term is provided on either a subscription or usage basis. Revenue for software and data products provided on a subscription basis is recognized ratably over the contract term, and contracts are billed upfront and prior to revenue recognition, which generally results in contract liabilities. Revenue for software products provided on a usage basis, such as the quantity of transactions processed or assets on the Company’s platform, is recognized based on the customer utilization of such services. Such contracts are billed subsequent to revenue recognition, which generally results in contract assets.

Financial Assets and Liabilities

Financial assets

The Company classifies its financial assets as amortized cost, fair value through other comprehensive income (“FVOCI”) or fair value through profit or loss (“FVPL”).

The Company classifies cash and cash equivalents, and trade receivables at amortized cost as the contractual cash flows are solely payments of principal and interest and the asset is held within a business model with the objective of holding and collecting the contractual cash flows. Cash and cash equivalents are deposits held with reputable financial institutions that pose minimal credit risk. The deposits are repayable on demand and interest, if any, is paid at a fixed or floating market rate.

The Company classifies its equity investments that are not held for trading at FVOCI as the Company has made an irrevocable election at initial recognition to recognize changes in FVOCI rather than FVPL as these are strategic investments. Upon disposal of these equity investments, any balance within the other comprehensive income reserve for these equity investments is reclassified to retained earnings and is not reclassified to profit or loss.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

The Company classifies its debt investments at FVOCI where the contractual cash flows are solely principal and interest and the objective of the Company’s business model is achieved both by collecting contractual cash flows and selling financial assets.

The Company classifies its investments in partnerships and derivative financial instruments at FVPL.

Financial liabilities

The Company classifies its financial liabilities as subsequently measured at amortized cost except for those at FVPL, such as derivative financial instruments and contingent consideration payables. Financial liabilities measured at FVPL recognize changes in fair value attributable to the Company’s own credit risk in other comprehensive income instead of profit or loss, unless this would create an accounting mismatch.

Impairment

The Company assesses financial assets for impairment on a forward‐looking basis, with the expected credit losses associated with its debt instruments carried at amortized cost and FVOCI. Expected credit losses are based on the difference between the contractual cash flows due in accordance with the contract and all cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. For trade receivables and contract assets, the Company applies the simplified approach permitted by IFRS 9, Financial Instruments, which requires lifetime expected credit losses to be recognized from initial recognition of the financial assets, and re‐assesses at each reporting period. The Company utilizes a provision matrix based on its historical credit loss experience, adjusted for forward‐looking factors specific to customers and the economic environment.

The Company includes the effect of losses and recoveries due to expected credit losses through office and other operating expenses.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the financial assets and settle the financial liabilities simultaneously.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, bank balances and short‐term, highly liquid investments, which generally have original maturities of three months or less at the time of acquisition, and that are subject to an insignificant risk of changes in value.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

Derivative Financial Instruments and Hedging Activities

The Company enters into equity derivatives to manage its exposure to changes in the fair value of its RSUs and DSUs issued under their respective plans due to changes in the fair value of the Company’s common shares. The Company also periodically enters into interest rate swap agreements for the purposes of managing interest rate exposure and into currency forward contracts to manage its foreign exchange exposures. Derivatives are not for trading or speculative purposes.

Derivatives are initially recognized at fair value when a derivative contract is entered into and are subsequently remeasured at their fair value. Depending on the nature of the derivative, changes in fair value are recognized within finance costs (income), net ‐ other, office and other operating expenses, or employee compensation expense.

Property, Plant and Equipment

All property, plant and equipment are stated at historical cost less depreciation and accumulated impairment losses, if any. Historical cost includes expenditures that are directly attributable to the acquisition of the assets. Costs incurred with respect to a specific asset are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any replaced part is written off. All other repairs and maintenance are charged to profit or loss during the period in which they are incurred.

Property, plant and equipment are depreciated over the useful life of the assets using the diminishing balance method as follows:

Furniture, fixtures and equipment	20 ‐ 35%
Computer equipment	30%

Leasehold improvements are depreciated on a straight‐line basis over the shorter of the respective lease term and useful life.

The residual values and useful lives of property, plant and equipment are reviewed, and adjusted if appropriate, at the end of each reporting period.

Gains and losses on disposals of property, plant and equipment are determined by comparing the net proceeds with the carrying amount and recognized in office and other operating expenses.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

Intangibles

Intangible assets consist of: software, non‐compete agreements, and certain identifiable intangible assets acquired through the Company’s business acquisitions such as brands, customer backlog, and customer lists.

The Altus Group and ARGUS brands are intangibles with an indefinite life and are not amortized. Intangibles acquired as part of a business combination are recognized at fair value at the acquisition date and carried at cost less accumulated amortization subsequent to acquisition. Software is recorded at cost less accumulated amortization.

Intangibles with a finite life are amortized over the useful life of the assets using the straight‐line or diminishing balance method as follows:

Brands of acquired businesses	1 ‐ 5 years straight‐line
Computer application software	30% diminishing balance
Custom software applications	2 ‐ 5 years straight‐line
Internally generated software	2 ‐ 7 years straight‐line
Customer backlog	straight‐line over remaining life of contracts
Customer lists	5 ‐ 10 years straight‐line
Databases	2 ‐ 4 years straight‐line
Non‐compete agreements	straight‐line over life of agreements

Costs associated with maintaining computer software applications or incurred during the research phase are recognized as an expense as incurred. Development costs that are directly attributable to the design, build and testing of identifiable and unique software applications controlled by the Company are recognized as intangibles when the following criteria are met:

it is technically feasible to complete the software application so that it will be available for use or sale;
management intends to complete the software application and either use or sell it;
there is an ability to use or sell the software application;
it can be demonstrated how the software application will generate probable future economic benefits;
adequate technical, financial and other resources to complete the development and to use or sell the software application are available; and
the expenditure attributable to the software application during its development can be reliably measured.

Development costs that do not meet these criteria are recognized as an expense as incurred.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

Impairment of Non‐financial Assets

Goodwill and intangibles that have an indefinite useful life are tested annually for impairment and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non‐financial assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value less costs to sell and value in use. For the purposes of assessing impairment, non‐financial assets are grouped at the lowest levels for which there are separately identifiable independent cash inflows. Non‐financial assets other than goodwill are reviewed for possible reversal of impairment at each reporting date.

Goodwill is allocated to cash‐generating units (“CGUs”) for the purpose of impairment testing. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from synergies of the business combination in which the goodwill arose. Goodwill is tested for impairment in the CGUs for which it is monitored by the Company. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the disposed entity.

Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost with any difference between the proceeds, net of transaction costs, and the redemption value recognized in finance costs (income), net ‐ other over the term of the borrowings using the effective interest method.

Borrowings are classified as current liabilities if the payment is due within one year or less. If the Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period, or any payments are due after more than one year, these are classified as non‐current liabilities.

Provisions

Provisions represent liabilities of the Company for which the amount or timing is uncertain. Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognized for future operating losses.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The difference between the nominal amount of the provision and the discounted amount is amortized as a finance cost and correspondingly increases the carrying amount of the provision over the period to settlement.

Share‐based Compensation

The Company operates a number of share‐based compensation plans as follows:

(i) Executive Compensation Plan and Long‐Term Equity Incentive Plan

The Company’s Executive Compensation Plan is comprised of two elements: a common share option plan (“Share Option Plan”) and an equity compensation plan (the “Equity Compensation Plan”). These are both equity‐settled compensation arrangements.

In March 2017, a long‐term equity incentive plan (“Long‐Term Equity Incentive Plan”) was established to simplify and replace the Executive Compensation Plan as a means of compensating designated employees of the Company for services provided and promoting share ownership and alignment with the shareholders’ interests. This plan contains comprehensive and consistent provisions to govern subsequent awards, including share options, Performance Share Units (“PSUs”) and share‐based equity awards.

Options granted under the Executive Compensation Plan and Long‐Term Equity Incentive Plan Share options issued under both plans have a maximum term of 72 months to expiry, generally vest annually over a three‐to‐four‐year period from the date of grant, and are exercisable at the designated common share price, which is calculated as the volume weighted average closing price of the Company’s common shares on the TSX for the five business days immediately preceding the grant date. Except in specific defined circumstances, options and all rights to purchase common shares are forfeited by an employee upon ceasing to be an employee of the Company.

The Company recognizes the fair value of options on the grant date using the Black‐Scholes option pricing model as employee compensation expense with a corresponding credit to contributed surplus over the vesting period, which is the period over which all of the specified vesting conditions are satisfied. For awards with graded vesting, the fair value of each tranche is recognized over its respective vesting period. On the exercise of options to purchase common shares, the consideration paid by the employee and the associated amount of contributed surplus are credited to share capital within shareholders’ equity.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

At the end of each reporting period, the Company re‐assesses its estimate of the number of options that are expected to vest and recognizes the impact of any revisions within employee compensation expense.

Other awards granted under the Equity Compensation Plan and Long‐Term Equity Incentive Plan Under the Equity Compensation Plan, the Company was entitled at its sole discretion to issue each participant a portion of his or her annual discretionary bonus in common shares and/or PSUs. Under the Long‐Term Equity Incentive Plan, the Company is entitled at its sole discretion to issue each participant a portion of his or her annual discretionary bonus in common shares and/or PSUs. Common shares and PSUs granted under both plans are subject to certain vesting conditions and generally vest over a three‐or‐four‐year period from the date of grant. The number of such common shares granted are initially determined as an amount equal to the amount of annual discretionary bonus allocated divided by the volume weighted average closing price of the Company’s common shares on the TSX for the five business days ending on the day prior to issuance. The PSUs granted under both plans can be settled at the Company’s discretion in cash, common shares, or a combination of both. Except in specific defined circumstances, common shares and PSUs are forfeited by an employee upon ceasing to be an employee of the Company.

The number of PSUs that vest under the Equity Compensation Plan may range from 50% to 150% based on the Company’s total shareholder return (“TSR”) relative to a set peer group’s average TSR, according to the percentages below, subject to the recipient fulfilling the service condition:

20% on December 31 of each year for a period of three years; and
40% at the end of the three‐year period.

The number of PSUs that vest under the Long‐Term Equity Incentive Plan may range from 0% to 200% based on the Company’s TSR relative to a set peer group’s average TSR, according to the percentages below, subject to the recipient fulfilling the service condition:

20% on December 31 of each year for a period of three years; and
40% at the end of the three‐year period.

As the Company typically settles these awards in common shares, the Company recognizes the fair value of the award when granted using the Monte Carlo valuation method as employee compensation expense with a corresponding credit to contributed surplus over the vesting period, which is the period over which all of the specified vesting conditions are satisfied. When common shares are issued to settle the obligation, the amount previously recorded in contributed surplus is transferred to share capital within shareholders’ equity.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

At the end of each reporting period, the Company re‐assesses its estimate of the number of awards that are expected to vest and recognizes the impact of any revisions within employee compensation expense.

(ii) Deferred Compensation Plans

The Company established Deferred Compensation Plans that are structured as a restricted share plan (“RS Plan”) in Canada and as a restricted share unit plan (“RSU Plan”) outside of Canada. Annual grants of restricted shares (“RSs”) or restricted share units (“RSUs”) form part of the total annual discretionary bonus awarded based on the Company exceeding certain annual performance targets, which typically consists of an annual cash bonus of 60‐80% and a RS or RSU award of 20‐40%. On occasion, RSs or RSUs may be granted to certain employees upon acceptance of employment, subject to certain restrictions similar to those applicable for annual grants.

If annual performance targets are met, RSs and RSUs are awarded within three months of the performance year and will not be available to the employee until three years following the grant date. After three years from the date of grant, the RSs and RSUs will be released, provided, subject to certain exceptions such as retirement, disability or death, and that the individual is employed with the Company at the time of release. Participants are entitled to receive cash dividends or notional distributions that are paid on common shares, respectively. If an employee resigns from the Company or is terminated for cause, all RSs and RSUs that have not yet been released from the three‐year restriction period will be forfeited.

With respect to RSs that are equity‐settled, the Company contributes funds to purchase common shares in the open market (through the facilities of the TSX or by private agreement) and are held by the Company as treasury shares until they vest. This amount is shown as a reduction in the carrying value of the Company’s common shares. The Company recognizes the fair value of the award when granted as employee compensation expense with a corresponding credit to contributed surplus over a 17‐quarter period beginning in the year in which performance commences and ending on the vesting date. As RSs are released, the portion of the contributed surplus relating to the RSs is credited to share capital within shareholders’ equity.

With respect to RSUs that are cash‐settled, the Company recognizes the fair value of the award when granted as employee compensation expense with a corresponding credit to trade payables and other over a 17‐quarter period beginning in the year in which performance commences and ending on the vesting date. Changes in the liability subsequent to the grant date and prior to settlement due to changes in fair value of the Company’s common shares are recorded as employee compensation expense in the period incurred.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

(iii) Deferred Share Unit Plans

Directors’ Deferred Share Unit Plan

The Company has a Directors’ Deferred Share Unit Plan (“Directors’ DSU Plan”) under which members of the Company’s non‐executive Board of Directors elect annually to receive all or a portion of their annual retainers and fees in the form of deferred share units (“Directors’ DSUs”). The Directors’ DSUs vest on the grant date and are settled in cash upon termination of Board service. Participants are also entitled to receive notional distributions in additional Directors’ DSUs equal to dividends that are paid on common shares. These additional Directors’ DSUs immediately vest on the grant date.

For each Directors’ DSU granted, the Company recognizes the market value of the Company’s common shares on the grant date as employee compensation expense with a corresponding credit to trade payables and other. Changes in the liability subsequently due to changes in fair value of the Company’s common shares are recorded as employee compensation expense in the period incurred.

CEO Deferred Share Unit Plan

The Company has a CEO Deferred Share Unit Plan (“CEO DSU Plan”) under which the CEO receives compensation in the form of deferred share units (“CEO DSUs”). The CEO DSUs vest on the third anniversary of the grant date and are settled in cash upon termination of employment. The CEO is also entitled to receive notional distributions in additional CEO DSUs equal to dividends that are paid on common shares. These additional CEO DSUs will, up to the vesting date, vest on the vesting date, and after the vesting date, will vest on the grant date. If the CEO resigns from the Company or is terminated for cause, all CEO DSUs that have not yet vested will be forfeited.

The Company recognizes the fair value of the initial award as employment compensation expense with a corresponding credit to trade payables and other over a three year period. For the grant of CEO DSUs in respect of notional distributions, the Company recognizes the market value of the Company’s common shares on the grant date as employee compensation expense with a corresponding credit to trade payables and other. Changes in the liability subsequently due to changes in fair value of the Company’s common shares are recorded as employee compensation expense in the period incurred.

The Directors’ DSU Plan and the CEO DSU Plan will herein be referred to as “DSU Plans”.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

3. Summary of Significant Accounting Policies, cont’d

Share Capital

Common shares issued by the Company are classified as equity.

Incremental costs directly attributable to the issuance of common shares are shown in equity as a deduction, net of tax, from the proceeds.

When the Company purchases its own share capital (treasury shares), the consideration paid, including any directly attributable incremental costs, net of tax, is deducted from equity attributable to the Company’s shareholders until the shares are cancelled or reissued. Where such common shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s shareholders.

Dividends

Dividends to the Company’s shareholders are recognized as a liability in the Company’s consolidated financial statements in the period in which the dividends are declared by the Company’s Board of Directors.

Government Grants

Government grants that compensate or reimburse the Company for expenses incurred are recorded as a reduction of the related expense when there is reasonable assurance of their ultimate realization.

4. Changes in Significant Accounting Policies and Estimates

Adoption of Recent Accounting Pronouncements

Amendment to IFRS 16, COVID‐19‐Related Rent Concessions

In May 2020, the IASB issued an amendment to permit lessees, as a practical expedient, not to assess whether particular rent concessions that reduce lease payments occurring as a direct consequence of the COVID‐19 pandemic are lease modifications and instead to account for those rent concessions as if they are not lease modifications.

The amendment is effective for annual reporting periods beginning on or after June 1, 2020, with earlier application permitted. The amendment did not have an impact on the consolidated financial statements.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

4. Changes in Significant Accounting Policies and Estimates, cont’d

Amendments to IFRS 3, Business Combinations

In October 2018, the IASB issued amendments to the guidance in IFRS 3, Business Combinations , which revise the definition of a business for acquisition accounting purposes. To be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs. The new guidance provides a framework to evaluate when an input and a substantive process are present. To be considered a business without outputs, there will now need to be an organized workforce present. Under the new standard, the changes to the definition of a business will likely result in more acquisitions being accounted for as asset acquisitions.

The amendments to IFRS 3 were effective for business combinations and asset acquisitions for which the acquisition date is on or after the first annual reporting periods beginning on or after January 1, 2020. The amendment did not have an impact on the consolidated financial statements. The Company will continue to assess the impact of this standard on a case‐by‐case basis upon future acquisitions performed but does not anticipate a material impact due to the nature and structure of its historical acquisitions.

Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark Reform

In September 2019, the IASB issued amendments to IFRS 7, Financial Instruments and Disclosures , IFRS 9, Financial Instruments , and IAS 39, Financial Instruments: Recognition and Measurement , to provide reliefs applying to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainties about the timing and/or amount of benchmark‐based cash flows of the hedged item or the hedging instrument. These amendments were effective for annual periods beginning on or after January 1, 2020.

In August 2020, the IASB issued further amendments to provide a practical expedient from discontinuing hedging relationships and the related hedge accounting treatment as a result of the interest rate benchmark reform as well as additional disclosures. The disclosures are to provide additional information on the effect of the reform on the Company’s financial instruments and risk management strategy. These amendments apply retrospectively and are effective for annual periods beginning on or after January 1, 2021 with earlier application permitted; however, companies are not required to restate prior periods. These amendments had no impact on the consolidated financial statements.

Amendments to IAS 1 and IAS 8: Definition of Material

In October 2018, the IASB issued amendments to IAS 1, Presentation of Financial Statements , and IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors , to align the definition of “material” across the standards and to clarify certain aspects of the definition. The new definition states that, “Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity”.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

4. Changes in Significant Accounting Policies and Estimates, cont’d

These amendments were effective for annual periods beginning on or after January 1, 2020. The amendments to the definition of material did not have a significant impact on the consolidated financial statements.

Future Accounting Pronouncements

The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Amendments to IAS 1: Classification of Liabilities as Current or Non‐Current and Deferral of Effective Date

In January 2020, the IASB issued amendments to IAS 1, Presentation of Financial Statements , to provide a more general approach to the presentation of liabilities as current or non‐current based on contractual arrangements in place at the reporting date. These amendments:

specify that the rights and conditions existing at the end of the reporting period are relevant in determining whether the Company has a right to defer settlement of a liability by at least twelve months;
provide that management’s expectations are not a relevant consideration as to whether the Company will exercise its rights to defer settlement of a liability; and
clarify when a liability is considered settled.

On July 15, 2020, the IASB issued a deferral of the effective date for the new guidance by one year to annual reporting periods beginning on or after January 1, 2023 and is to be applied retrospectively. The Company has not yet determined the impact of these amendments on its consolidated financial statements.

Amendments to IAS 37: Onerous Contracts ‐ Cost of Fulfilling a Contract

In May 2020, the IASB issued amendments to IAS 37, Provisions, Contingent Liabilities and Contingent Assets , to specify that the cost of fulfilling a contract comprises the costs that relate directly to the contract, and can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts.

The new guidance will be effective for annual periods beginning on or after January 1, 2022 and is to be applied to contracts that have unfulfilled obligations as at the beginning of that period. The Company has not yet determined the impact of these amendments on its consolidated financial statements.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

5. Critical Accounting Estimates and Judgments

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions concerning the future. It also requires management to exercise judgment in applying the Company’s accounting policies and the reported amounts of assets and liabilities, revenue and expenses, and related disclosures. Estimates and judgments are continually evaluated and are based on current facts, historical experience and other factors, including expectations of future events that are believed are reasonable under the circumstances. Accounting estimates will, by definition, seldom equal the actual results.

In March 2020, the World Health Organization declared COVID‐19 a global pandemic. The continued spread of this contagious disease outbreak and related public health developments have adversely affected workforces, economies, and financial markets globally, leading to an economic downturn and to legislative and regulatory changes that have impacted the Company’s business and operations. The duration and magnitude of the impact of the outbreak and its potential adverse effects on the Company’s business or results of operations continue to be uncertain and will depend on future developments. Judgments made in these consolidated financial statements reflect management’s best estimates as of the year end, taking into consideration the most significant judgments that may be directly impacted by COVID‐19. Management’s significant estimates and assumptions that could be impacted most by COVID‐19 are: revenue recognition and determination and allocation of the transaction price, impairment of trade receivables and contract assets, and estimated impairment of goodwill.

The following discussion sets forth management’s most significant estimates and assumptions in determining the value of assets and liabilities and the most significant judgments in applying its accounting policies.

Revenue Recognition and Determination and Allocation of the Transaction Price

The Company estimates variable consideration for contingency arrangements on a project‐by‐project basis. Variable consideration is constrained to the extent that it is highly probable that the amount will not be subject to significant reversal when the uncertainty is resolved, which is when savings are realized by the customer, unless the contractual terms provide for an enforceable right to payment for performance completed.

The transaction price is allocated on the basis of the relative standalone selling prices for contracts with more than one performance obligation. Estimation of the standalone selling price involves reasonably available data points, market conditions, entity‐specific factors and information about the customer or class of customer and to similar customers as evidence of the standalone selling price for each performance obligation; however, when one is not available, the standalone selling price is estimated. Where the observable price is not available, based on the specific facts and circumstances, either the adjusted market assessment or the expected cost plus a margin approach is applied. The determination of the standalone selling prices requires significant judgment.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

5. Critical Accounting Estimates and Judgments, cont’d

Impairment of Trade Receivables and Contract Assets

The impairment provisions for trade receivables and contract assets disclosed in Notes 12 and 28 determined under IFRS 9 are based on assumptions about the risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation based on the Company’s past history, existing market conditions, including COVID‐19 considerations, and forward‐looking estimates at the end of each reporting period. Such estimates and judgments could impact trade receivables, contract assets for unbilled revenue on customer contracts and office and other operating expenses.

Estimated Impairment of Goodwill

The Company tests at least annually whether goodwill is subject to any impairment in accordance with the accounting policy stated in Note 3. The recoverable amount for any CGU is determined based on the higher of fair value less costs to sell and value in use. Both of the valuation approaches require the use of estimates.

Determination of Purchase Price Allocations and Contingent Consideration

Estimates are made in determining the fair value of assets and liabilities, including the valuation of separately identifiable intangibles acquired as part of an acquisition. Furthermore, estimates are made in determining the value of contingent consideration payments that should be recorded as part of the consideration on the date of acquisition and changes in contingent consideration payable in subsequent reporting periods. Contingent consideration payments are generally based on acquired businesses achieving certain performance targets. The estimates are based on management’s best assessment of the related inputs used in the valuation models, such as future cash flows and discount rates. Future performance results that differ from management’s estimates could result in changes to liabilities recorded, which are recorded as they arise through profit or loss. Refer to Notes 20 and 28 for the carrying value of contingent consideration payable.

Income Taxes

The Company is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the provision for income taxes. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income taxes in the period in which such determination is made. Refer to Note 10 for the income tax movements.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

6. Acquisitions

Acquisition in 2020

Acquisition of Property Tax Assistance Company Inc.

On December 1, 2020, the Company acquired certain operating assets of Property Tax Assistance Company Inc. (“PTA”) for USD10,125 (CAD13,139) in cash, subject to closing working capital adjustments of USD2,203 (CAD2,859). As part of the transaction, the Company entered into non‐ compete agreements with key members of management of PTA. On closing, the Company paid cash of USD9,625 (CAD12,490). In addition, the Company granted common shares of USD3,375 (CAD4,376) to key members of management of PTA, which were issued from treasury. The common shares will be held in escrow and will vest and be released equally over four years on each anniversary of the closing date, subject to continued employment with the Company and compliance with certain terms and conditions. PTA is a U.S. property tax consulting firm based in California that provides personal property and real estate tax services for commercial, industrial and multifamily properties.

For accounting purposes, the common shares granted are held as treasury shares. As these common shares vest, the fair value of the award will be recognized as employee compensation expense with a corresponding amount recognized in contributed surplus. When these common shares are released, the amounts recognized in contributed surplus will be transferred to share capital within shareholders’ equity.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

6. Acquisitions, cont’d

The purchase price allocation, subject to finalization, is based on management’s best estimate of fair value, and at the acquisition date is as follows:

	December 1, 2020	December 1, 2020
		PTA
Acquisition‐related costs(included in acquisition and related transition costs
(income)in the consolidated statements of comprehensive income(loss))	$	219
Consideration:
Cash	$	15,998
Less: consideration transferred for non‐compete agreements		(1,019)
Consideration transferred for acquired business		14,979
Recognized amounts of identifiable assets acquired and liabilities assumed:
Trade receivables and other		4,511
Trade payables and other		(30)
Right‐of‐use assets		489
Intangibles		7,907
Lease liabilities		(489)
Total identifiable net assets of acquired business		12,388
Goodwill	$	2,591
Goodwill and intangibles deductible for taxpurposes	$	11,517

Goodwill arising from the acquisition relates to expected synergies with the existing businesses and the opportunities to strengthen and complement offerings with greater breadth and depth to both existing and acquired clients.

Intangibles acquired are as follows:

existing and acquired clients. Intangibles acquired are as follows:
	December 1, 2020
	PTA
Finite life assets
Non‐compete agreements	$ 1,019
Customer lists	2,006
Customer backlog	5,901
	$ 8,926

Revenues and profit (loss) for PTA for the period from December 1, 2020 to December 31, 2020 included in the consolidated statements of comprehensive income (loss) are $261 and $(476), respectively.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

6. Acquisitions, cont’d

Acquisitions in 2019

Acquisition of One11 Advisors, LLC

On July 1, 2019, the Company acquired all the issued and outstanding shares of One11 Advisors, LLC (“One11”) and its subsidiaries for USD11,000 (CAD14,395) in cash and common shares, subject to closing working capital adjustments of USD629 (CAD823). As part of the transaction, the Company entered into non‐compete agreements with key members of management of One11. On closing, the Company paid cash of USD7,700 (CAD10,077). The common shares USD3,300 (CAD4,318) were issued from treasury. The common shares will be held in escrow and released on the fourth anniversary of the closing date, subject to compliance with certain terms and conditions. One11 is a U.S.‐based real estate software consulting firm that provides integrated advisory and managed services for real estate organizations’ front to back office strategies, processes and technology.

For accounting purposes, the consideration transferred for the acquired business includes a discount on the value of the common shares to reflect the trading restrictions placed on these common shares.

Acquisition of Caruthers & Associates, Inc.

On July 1, 2019, the Company acquired certain operating assets of Caruthers & Associates, Inc. (“Caruthers”) for USD4,000 (CAD5,235) in cash, common shares and contingent consideration, subject to working capital adjustments of USD119 (CAD156). As part of the transaction, the Company entered into a non‐compete agreement with a key member of management of Caruthers. As consideration for these assets on closing, the Company paid cash of USD2,000 (CAD2,617) and common shares of USD1,000 (CAD1,309). The common shares will be held in escrow and released on the third anniversary of the closing date, subject to compliance with certain terms and conditions. The purchase agreement provides for contingent consideration of USD1,000 (CAD1,309), subject to certain performance targets being achieved over a 30‐month period from the closing date. If mutually agreed upon, the contingent consideration may be settled in cash or common shares. Caruthers is a U.S.‐based property tax consulting firm. Its team of seven employees based out of Memphis has been integrated with the Company’s U.S. Property Tax business, expanding its geographic footprint in tax services in the U.S.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

6. Acquisitions, cont’d

The purchase price allocation is based on management’s best estimate of fair value, and at the acquisition date is as follows:

			July1,2019
	One11	Caruthers	Total
Acquisition‐related costs(included in acquisition and related
transition costs (income) in the consolidated statements of
comprehensive income(loss))	$154	$123	$277
Consideration:
Cash	$ 10,900	$ 2,773	$ 13,673
Common shares	4,318	1,309	5,627
Contingent consideration	‐	1,309	1,309
	15,218	5,391	20,609
Less: discount on common shares	(1,083)	(262)	(1,345)
Less: discount on contingent consideration	‐	(151)	(151)
	14,135	4,978	19,113
Less: consideration transferred for non‐compete agreements	(1,552)	(363)	(1,915)
Consideration transferred for acquired businesses	12,583	4,615	17,198
Recognized amounts of identifiable assets acquired and
liabilities assumed:
Cash and cash equivalents	1,040	‐	1,040
Trade receivables and other	3,442	417	3,859
Income taxes recoverable	123	‐	123
Trade payables and other	(2,928)	(111)	(3,039)
Intangibles	6,367	2,745	9,112
Total identifiable net assets of acquired businesses	8,044	3,051	11,095
Goodwill	$ 4,539	$ 1,564	$ 6,103
Goodwill and intangibles deductible for taxpurposes	$ 12,458	$ 4,672	$ 17,130

Goodwill arising from the acquisitions relate to expected synergies with the existing businesses and the opportunities to strengthen and complement offerings with greater breadth and depth to both existing and acquired clients.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

6. Acquisitions, cont’d

Revenues and profit (loss) for One11 for the period from July 1, 2019 to December 31, 2019 included in the consolidated statements of comprehensive income (loss) are $7,953 and $211, respectively.

Revenues and profit (loss) for Caruthers for the period from July 1, 2019 to December 31, 2019 included in the consolidated statement of comprehensive income (loss) are $735 and $(110), respectively.

Intangibles acquired were as follows:

Intangibles acquired were as follows:
			July1,2019
	One11	Caruthers	Total
Finite life assets
Non‐compete agreements	$ 1,552	$ 363	$ 1,915
Customer lists	6,190	1,781	7,971
Customer backlog	177	964	1,141
	$ 7,919	$ 3,108	$ 11,027

7. Segmented Information

The segmentation reflects the way the CEO allocates resources and assesses performance. The CEO considers the business from a core service perspective. The areas of core service are Altus Analytics and Commercial Real Estate Consulting. As the Company combined its Geomatics business segment with WSP’s respective business unit to launch GeoVerra on June 27, 2020, the Geomatics business is no longer considered core and is presented as discontinued operations in these consolidated financial statements (Notes 3, 11 and 32). Accordingly, the results of the Geomatics business are not reflected in the segmented information presented.

Altus Analytics provides data, analytics software and technology‐related services. Proprietary data and data analytics platforms provide comprehensive real estate information and enable performance reviews, benchmarking and attribution analysis of commercial real estate portfolios. Software, such as ARGUS branded products, represents comprehensive global solutions for managing commercial real estate portfolios and improve the visibility and flow of information throughout critical processes.

Commercial Real Estate Consulting provides Property Tax, and Valuation and Cost Advisory solutions that span the life cycle of commercial real estate ‐ feasibility, development, acquisition, management and disposition. Property Tax performs assessment reviews, management, appeals and personal property and state and local tax advisory services. Valuation and Cost Advisory provides appraisals of real estate portfolios, valuation of properties for transactional purposes, due diligence and litigation and economic consulting, in addition to services in the areas of construction feasibility studies, budgeting, cost and loan monitoring and project management.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

7. Segmented Information, cont’d

The accounting policies of the segments are the same as those applied in these consolidated financial statements. Revenue transactions between segments are valued at market rates and eliminated on consolidation. Revenues represent those recognized from contracts with customers.

The CEO assesses the performance of the operating segments based on a measure of Adjusted EBITDA. This measurement basis represents profit (loss) from continuing operations before income taxes, adjusted for the effects of: occupancy costs calculated on a similar basis prior to the adoption of IFRS 16, finance costs (income), net ‐ other, depreciation of property, plant and equipment and amortization of intangibles, depreciation of right‐of‐use assets, finance costs (income), net ‐ leases, acquisition and related transition costs (income), unrealized foreign exchange (gains) losses, (gains) losses on disposal of property, plant and equipment and intangibles, share of (profit) loss of joint venture, impairment charges, non‐cash share‐based compensation costs, (gains) losses on equity derivatives net of mark‐to‐market adjustments on related RSUs and DSUs being hedged, (gains) losses on derivatives, restructuring costs (recovery), (gains) losses on investments, (gains) losses on hedging transactions, and other costs or income of a non‐operating and/or non‐recurring nature.

Subsequent to the classification of the Geomatics business as discontinued operations and the launch of GeoVerra, the measurement of Adjusted EBITDA has been modified to reflect adjustments for: profit (loss) from discontinued operations and share of (profit) loss of joint venture.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

7. Segmented Information, cont’d

The following table provides a reconciliation between Adjusted EBITDA and profit (loss):

	Year ended December 31, 2020 Year ended December 31, 2019(1)
Adjusted EBITDA Occupancy costs calculated on a similar basis prior to the adoption of IFRS 16(2) Depreciation of right‐of‐use assets Depreciation of property, plant and equipment and amortization of intangibles Acquisition and related transition (costs) income Unrealized foreign exchange gain (loss)(3) Gain (loss) on disposal of property, plant and equipment and intangibles(3) Share of profit (loss) of joint venture Non‐cash share‐based compensation costs(4) Gain (loss) on equity derivatives net of mark‐to‐market adjustments on related RSUs and DSUs being hedged(4) Restructuring (costs) recovery Gain (loss) on investments(5) Impairment charge ‐ leases Other non‐operatingand/or non‐recurringincome(costs) (6)	$ 98,928$ 84,709 12,312 12,473 (11,210) (12,316) (30,404) (35,387) 887 (188) (165) (994) (457) (359) 459 ‐ (10,261) (5,638) (471) 1,109 (11,984) 296 21 276 (36) (69) (3,429) (3,787)
Earnings (loss) from continuing operations before finance costs and income taxes	44,190 40,125
Finance (costs) income, net ‐ leases Finance(costs)income,net ‐ other	(2,494) (2,711) (4,138) (6,567)
Profit(loss) from continuing operations before income taxes	37,558 30,847
Income tax(expense)recovery	(10,549) (6,956)
Profit(loss) for theyear from continuing operations	$ 27,009 $23,891
Profit(loss)for theyear from discontinued operations	(5,576) (5,697)
Profit (loss) for theyear	$ 21,433$ 18,194

(1) Comparative figures have been restated to reflect discontinued operations (Notes 3, 11 and 32).

(2) Management uses the non‐GAAP occupancy costs calculated on a similar basis prior to the adoption of IFRS 16 when analyzing operating performance, which may provide useful information to investors in measuring the Company’s financial performance.

(3) Included in office and other operating expenses in the consolidated statements of comprehensive income (loss).

(4) Included in employee compensation expenses in the consolidated statements of comprehensive income (loss).

(5) Gain (loss) on investments relates to changes in the fair value of investments in partnerships.

(6) Other non‐operating and/or non‐recurring income (costs) for the years ended December 31, 2020 and 2019 relate to (i) transitional costs related to the departure of senior executives, (ii) legal, advisory, and other consulting costs related to a Board strategic initiative, and (iii) transaction and other related costs. These are included in office and other operating expenses in the consolidated statements of comprehensive income (loss).

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

7. Segmented Information, cont’d

The following summary presents certain financial information regarding the Company’s segments:

Segment Revenues and Expenditures

					Year ended December 31, 2020	Year ended December 31, 2020	Year ended December 31, 2020
	Altus
	Analytics	Commercial Real Estate Consulting			Corporate(1)	Eliminations	Total
			Valuation
		Property	and Cost
		Tax	Advisory	Total
Revenues from external
customers	$203,235	$245,161	$112,760	$357,921	$‐	$‐	$ 561,156
Inter‐segment revenues	472	1	(168)	(167)	‐	(305)	‐
Total segment revenues	203,707	245,162	112,592	357,754	‐	(305)	561,156
Adjusted EBITDA	35,845	76,961	15,127	92,088	(29,005)	‐	98,928
Depreciation of right‐of‐use
assets	4,644	3,231	2,792	6,023	543	‐	11,210
Depreciation of property,
plant and equipment and
amortization of intangibles	13,537	13,144	2,189	15,333	1,534	‐	30,404
Finance costs (income), net
‐ leases	509	744	617	1,361	624	‐	2,494
Finance costs (income), net
‐ other	‐	‐	‐	‐	4,138	‐	4,138
Income tax expense
(recovery)	‐	‐	‐	‐	10,549	‐	10,549

(1) Corporate includes global corporate office costs, finance costs (income), net ‐ other and income tax expense (recovery).

Unsatisfied performance obligations on fixed long‐term customer contracts, mainly within Altus Analytics and the Cost Advisory practice, are $77,861 as of December 31, 2020 (2019 ‐ $41,161). It is expected that approximately 47% of the fixed customer contract value will be recognized as revenue over the next 12 months, approximately 28% in the year following, and the balance thereafter. This amount excludes contract values that have variable or contingency based arrangements, which account for a significant portion of the revenue recognized in the current year.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

7. Segmented Information, cont’d

						Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019
	Altus
	Analytics	Commercial Real Estate Consulting				Corporate(1)(2)	Eliminations	Total(2)
			Valuation
		Property	and Cost
		Tax	Advisory		Total
Revenues from external
customers	$201,408	$213,483	$110,826	$	324,309	$‐	$‐	$525,717
Inter‐segment revenues	543	‐	(177)		(177)	‐	(366)	‐
Total segment revenues	201,951	213,483	110,649		324,132	‐	(366)	525,717
Adjusted EBITDA	36,803	62,746	13,337		76,083	(28,177)	‐	84,709
Depreciation of right‐of‐
use assets(3)	4,250	3,732	3,228		6,960	1,106	‐	12,316
Depreciation of property,
plant and equipment and
amortization of intangibles	13,199	17,867	2,573		20,440	1,748	‐	35,387
Finance costs (income), net
‐ leases(3)	820	831	705		1,536	355	‐	2,711
Finance costs (income), net
‐ other	‐	‐	‐		‐	6,567	‐	6,567
Income tax expense
(recovery)	‐	‐	‐		‐	6,956	‐	6,956

(1) Corporate includes global corporate office costs, finance costs (income), net ‐ other and income tax expense (recovery).

(2) Comparative figures have been restated to reflect discontinued operations (Notes 3, 11 and 32).

(3) Comparative figures have been restated to reflect the allocation to various business units for Corporate and shared leases previously reported within Corporate.

Geographic Information ‐ Revenue from External Customers

	Year ended December 31, 2020 Year ended December 31, 2019(1)
Canada U.S. Europe Asia Pacific	$ 183,042$ 181,513 212,807 207,152 136,161 105,024 29,146 32,028
Total	$ 561,156$ 525,717

(1) Comparative figures have been restated to reflect discontinued operations (Notes 3, 11 and 32).

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

8. Employee Compensation

Employee Compensation
	Year ended December 31, 2020 Year ended December 31, 2019(1)
Salaries and benefits Share‐based compensation(Note 25)	$ 340,595$ 319,625 14,356 9,467
	$ 354,951$ 329,092

(1) Comparative figures have been restated to reflect discontinued operations (Notes 3, 7, 11 and 32).

During 2020, the Company incurred termination benefits of $1,408, of which $1,137 was recorded in office and other operating expense (2019 ‐ $2,620 and $1,750, respectively). During 2020, the Company incurred $750 of additional share‐based compensation related to the departure of senior executives, which was recorded in office and other operating expenses (2019 ‐ $nil).

9. Finance Costs (Income), Net

	Year ended December 31, 2020 Year ended December 31, 2019(1)
Interest on bank credit facilities Interest on lease liabilities (Note 16) Contingent consideration payables: unwinding of discount (Note 28) Provisions: unwinding of discount (Note 20) Change in fair value of interest rate swaps	$ 3,943$ 5,627 2,494 2,711 102 467 34 116 138 505
Finance costs	6,711 9,426
Finance income	(79) (148)
Finance costs (income), net	$ 6,632$ 9,278

(1) Comparative figures have been restated to reflect discontinued operations (Notes 3, 7, 11 and 32).

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

10. Income Taxes

	Year ended December 31, 2020 Year ended December 31, 2019
Current income taxes Current income tax on profits for the year Adjustments in respect ofprioryears	$ 12,372$ 14,571 336 (263)
Total current income taxes	12,708 14,308
Deferred income taxes Origination and reversal of temporary differences Adjustments in respect of prior years Change in income tax rates	(2,006) (7,332) (413) (20) 260 ‐
Total deferred income taxes	(2,159) (7,352)
Income tax expense (recovery)	$ 10,549$ 6,956

The reconciliation between income tax expense and the tax applicable to profits in Canada is as follows:

The reconciliation between income tax follows:	expense and the tax applicable to profits in Canada is as
	Year ended December 31, 2020 Year ended December 31, 2019
Profit (loss) from continuing operations before income taxes Profit(loss)from discontinued operations	$ 37,558 $ 30,847 (5,576) (5,697)
Profit (loss) before income taxes	$ 31,982 $ 25,150
Tax calculated at domestic income tax rate applicable toprofits in Canada	8,603 26.90% 6,765 26.90%
Tax effects of: Impact of countries with different income tax rates Impairment charge Losses and deductible temporary differences for which no deferred tax asset has been recognized Change in income tax rates Expenses not deductible for income tax purposes Other	(2,245) (7.02%) (2,395) (9.52%) 656 2.05% 1,070 4.25% 2,764 8.64% 424 1.69% 259 0.81% ‐ ‐ 1,525 4.77% 1,564 6.22% (1,013) (3.17%) (472) (1.88%)
Income tax expense (recovery)	$ 10,549 32.98%$ 6,956 27.66%

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

10. Income Taxes, cont’d

Deferred Income Taxes

The gross movement on the deferred income taxes account is as follows:

	Amount
Balance as at January 1, 2019	$ 3,339
(Charged) credited to profit or loss	7,352
(Charged) credited to other comprehensive income (loss)	(35)
Exchange differences and others	(409)
Balance as at December 31, 2019	10,247
(Charged) credited to profit or loss	2,159
(Charged) credited to other comprehensive income (loss)	745
Exchange differences and others	(467)
Balance as at December 31, 2020	$ 12,684

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

	Non‐capital	Tax
	Income Tax	Deductible
	Losses	Goodwill	Other	Total
Deferred income tax assets
Balance as at January 1, 2019	$ 3,745	$ 15,702 $	12,225 $	31,672
(Charged) credited to profit or loss	(825)	532	2,436	2,143
Exchange differences and others	(148)	(706)	(381)	(1,235)
Balance as at December 31, 2019	2,772	15,528	14,280	32,580
(Charged) credited to profit or loss	811	(6,629)	2,343	(3,475)
(Charged) credited to other comprehensive
income (loss)	‐	‐	1,081	1,081
Exchange differences and others	(22)	(212)	35	(199)
Balance as at December 31, 2020	$ 3,561	$ 8,687 $	17,739 $	29,987

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

10. Income Taxes, cont’d

		Unbilled
	Accelerated	Revenue on
	Tax	Customer
	Depreciation	Contracts	Intangibles	Other	Total
Deferred income tax liabilities
Balance as at January 1, 2019	$ (86)	$ (578)	$ (27,136) $	(533) $ (28,333)
(Charged) credited to profit or loss	(112)	338	4,809	174	5,209
(Charged) credited to other
comprehensive income (loss)	‐	‐	‐	(35)	(35)
Exchange differences and others	‐	‐	793	33	826
Balance as at December 31, 2019	(198)	(240)	(21,534)	(361)	(22,333)
(Charged) credited to profit or loss	100	173	4,983	378	5,634
(Charged) credited to other
comprehensive income (loss)	‐	‐	‐	(336)	(336)
Exchange differences and others	(5)	(7)	(224)	(32)	(268)
Balance as at December 31, 2020	$ (103)	$ (74)	$ (16,775) $	(351) $ (17,303)

Deferred income tax assets are recognized for tax loss carryforwards to the extent that the realization of the related tax benefit through future taxable profits is probable based on future estimated profits in excess of the profits arising on the reversal of existing taxable temporary differences. Evidence supporting recognition of these deferred income tax assets includes earnings forecasts and the utilization of tax losses in the current year.

As at December 31, 2020, there are recognized net operating loss carryforwards from U.S. acquisitions, which may be applied against taxable income of future years, no later than as follows:

		Amount
2021	$	3,416
2022		1,321
2023		1,865
2024		370
	$	6,972

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

10. Income Taxes, cont’d

Net operating losses of $56,285 in the U.S. were not benefitted on acquisition due to certain limitations. These losses will expire in 2021. In addition, there are unrecognized net operating loss carryforwards in the U.S. of approximately $1,415 that are available to reduce taxable income of a foreign subsidiary; $828 of losses expire between 2034 and 2037 and $587 of losses may be carried forward indefinitely.

In Europe, there are unrecognized loss carryforwards of approximately $1,938 that may be carried forward indefinitely. Net operating losses of approximately $6,439 are recognized that may be carried forward indefinitely, which may be applied against taxable income of future years.

The Company has net operating losses of approximately $1,298 in Asia Pacific that are recognized and may be carried forward indefinitely. It has unrecognized net operating loss carryforwards in Asia Pacific of approximately $7,142 that are available to reduce taxable income of certain foreign subsidiaries; $2,886 of losses expire between 2021 and 2028 and $4,256 of losses may be carried forward indefinitely.

The Company has unrecognized loss carryforwards of approximately $10,074 in Canada that may be carried forward 20 years. It has deductible temporary differences of approximately $2,739 in Canada for which no deferred tax asset is recognized.

11. Discontinued Operations

On January 21, 2020, the Company announced its intention to combine its Geomatics business segment with WSP’s respective geomatics business unit. Effective June 27, 2020, the combined entity launched as GeoVerra Inc., forming a Canadian geomatics firm with employees in offices in Western Canada and Ontario, with the Company receiving a 49.5% equity interest and 50% of the voting rights (Note 15). Accordingly, the comparative consolidated statement of comprehensive income (loss) has been re‐presented separately between continuing and discontinued operations. Furthermore, the Geomatics segment is no longer presented in the segmented information (Note 7), and the Company has made an accounting policy choice to present details of net cash flows from discontinued operations in this note to the consolidated financial statements. Unless otherwise specified, all other notes to the consolidated financial statements do not include amounts from discontinued operations.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

11. Discontinued Operations, cont’d

Financial information relating to the discontinued operations for the period is set out below.

The results of the Geomatics business presented as profit (loss) for the year from discontinued operations in the consolidated statements of comprehensive income (loss) are as follows:

	Year ended December 31, 2020 Year ended December 31, 2019
Revenues	$ 13,962 $41,698
Expenses Employee compensation(1) Occupancy Office and other operating Depreciation of right‐of‐use assets Depreciation of property, plant and equipment Amortization of intangibles Restructuring costs (recovery) Finance costs (income), net ‐ leases Finance costs (income), net ‐ other Impairment charge ‐ goodwill Fair value loss (gain) on net assets directly associated with discontinued operations (Gain)loss on sale of the discontinued operations	8,295 26,228 331 811 4,406 10,369 52 1,124 111 1,984 1 462 1,612 (157) 65 174 (15) ‐ ‐ 6,400 5,163 ‐ (483) ‐
Profit (loss) for theyear from discontinued operations	$ (5,576)$(5,697)

(1) During the year ended December 31, 2020, the Geomatics business recorded government grants related to COVID‐19 wage subsidies of $2,571 as a reduction to employee compensation expense.

Following the classification of the Geomatics business segment as discontinued operations on January 21, 2020 to its disposal on June 27, 2020 in exchange for the Company’s investment in GeoVerra, fair value losses of $5,163 were recognized in profit (loss) from discontinued operations during the year to reduce the carrying value of the assets held for sale to the lower of their carrying value or their fair value less costs to sell.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

11. Discontinued Operations, cont’d

The net cash flows provided by (used in) the Geomatics discontinued operations to the date of disposal are as follows:

	Year ended December 31, 2020 Year ended December 31, 2019
Net cash provided by (used in) operating activities Net cash provided by (used in) financing activities Net cashprovided by (used in)investingactivities	$ 3,184$ 4,062 (651) (1,218) (4,073) (1,892)
Cash flows from discontinued operations	$ (1,540)$ 952

The assets and liabilities disposed of in connection with the Geomatics business in exchange for the Company’s interest in GeoVerra (Note 15), subject to final closing adjustments, are as follows:

		June 27, 2020
Consideration received:
Common shares ofjoint venture	$	14,850

Assets and liabilities contributed:
Cash and cash equivalents		3,794
Trade receivables and other		8,279
Right‐of‐use assets		2,912
Property, plant and equipment		5,134
Intangibles		9
Trade payables and other		(2,093)
Lease liabilities		(3,395)
Borrowings		(273)
Total net assets contributed	$	14,367
Gain on sale of the discontinued operations	$	483

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

12. Trade Receivables and Other

	December 31, 2020 December 31, 2019
Trade receivables Less: loss allowanceprovision(Note 28)	$ 145,427$ 127,462 (16,869) (10,924)
Trade receivables, net Contract assets: unbilled revenue on customer contracts(1) Deferred costs to obtain customer contracts Prepayments Due from related party (GeoVerra) Other receivables	128,558 116,538 48,120 53,136 2,205 1,745 13,229 12,516 1,675 ‐ 655 1,716
Less: non‐currentportion	194,442 185,651 (1,370) (3,696)
	$ 193,072$ 181,955

(1) On December 31, 2020, contract assets are stated net of expected credit losses of $670 (2019 ‐ $1,364) (Note 28).

For the year ended December 31, 2020, $1,616 of amortization associated with deferred costs to obtain customer contracts was expensed to the consolidated statements of comprehensive income (loss) (2019 ‐ $1,128). For the years ended December 31, 2020 and 2019, no impairment losses on deferred costs were recognized.

13. Derivative Financial Instruments

	December 31, 2020 December 31, 2019
Assets Equity derivatives Interest rate swaps	$ 11,277$ 7,287 ‐ 137
Less: non‐currentportion	11,277 7,424 (8,800) (5,975)
	$ 2,477$ 1,449

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

13. Derivative Financial Instruments, cont’d

The following equity derivatives were outstanding as at December 31, 2020 and 2019:

Derivative Financial Instruments,cont’d The following equity derivatives were outstanding	as at December 31, 2020 and 2019:
	December 31, 2020 December 31,2019
Effective Date Description Contract Expiry	Notional Amount Fair Value(2) Notional Amount Fair Value(2)
March 28, 2014 Hedging 173,836 (2019 ‐ 161,663) DSUs March 22, 2021(1) April 3, 2017 Hedging nil (2019 ‐ 93,891) RSUs relating to 2016 performance year March 31, 2020 March 8, 2018 Hedging 100,420 (2019 ‐ 106,223) RSUs relating to 2017 performance year March 31, 2021 March 13, 2019 Hedging 125,001 (2019 ‐ 129,472) RSUs relating to 2018 performance year March 31, 2022 March 24, 2020 Hedging 78,322 (2019 ‐ nil) RSUs relating to 2019 performanceyear March 27, 2023	$ 5,218 $ 3,324$ 3,859 $ 2,263 ‐ ‐ 2,244 1,312 2,457 2,477 2,599 1,423 2,563 3,582 2,619 2,289 1,956 1,894 ‐ ‐
	$ 12,194 $ 11,277$ 11,321 $ 7,287

(1) Subject to an automatic one‐year extension, unless prior notice is given by the Company.

(2) The fair values indicated for the equity derivatives are where the values are in excess of/(deficit from) the notional amounts.

The following interest rate swaps were outstanding in aggregate as at December 31, 2020 and 2019:

	December 31, 2020 December 31,2019
Effective Date Fixed Interest Rate (per annum) Notional Amount	Fair Value Fair Value Contract Expiry
May 15, 2015 1.48% $ 65,000	$ ‐$ 137 May 15, 2020

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

14. Investments

	December 31, 2020 December 31, 2019
Investments in equity instruments Investments inpartnerships	$ 7,811$ 9,288 2,545 2,193
	$ 10,356$ 11,481

During the year ended December 31, 2020, the Company contributed $365 towards capital in various partnerships (2019 ‐ $526) and purchased $nil equity instruments (2019 ‐ $182 in common shares of REIX Corporation).

During the year ended December 31, 2020, fair value adjustments related to the Company’s investments in partnerships and equity instruments of $21 and $(1,337) have been recorded through profit (loss) and other comprehensive income (loss), respectively (2019 ‐ $276 and $(470), respectively).

On March 15, 2019, the Company converted its promissory note receivable and accrued interest receivable in Waypoint Building Group Inc. into preferred shares.

During the year ended December 31, 2019, Honest Buildings Inc. (“Honest Buildings”) was acquired by Procore Technologies, Inc. (“Procore”). Prior to the transaction, a fair value gain of $722 was recorded through other comprehensive income (loss). The disposal of the Company’s equity investment in Honest Buildings was settled in cash and preferred shares of Procore. Following the exchange, accumulated other comprehensive income (loss) relating to Honest Buildings of $633 net of tax was transferred to retained earnings (deficit).

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

15. Investment in Joint Venture

On June 27, 2020, the Company obtained a 49.5% interest (that provides joint control through an equal 50% of the voting rights) in GeoVerra, a joint venture offering a broad variety of geomatics services across Canada, by contributing certain assets and liabilities of the Company’s Geomatics discontinued operations (Note 11). WSP contributed an equal amount of net assets that have a similar nature to those contributed by the Company.

The activity in the Company’s investment in GeoVerra during the year is as follows:

	Amount
Balance as at January 1, 2020	$ ‐
Contribution to investment in joint venture on June 27, 2020 (Note 11)	14,850
Share ofprofit(loss)	459
Balance as at December 31, 2020	$ 15,309

A summary of GeoVerra’s financial information is as follows:

	December 31, 2020
Current assets, including cash and cash equivalents of $7,118 Non‐current assets Current liabilities, including financial liabilities of $7,083 Non‐current liabilities,includingfinancial liabilities of$10,083	$ 36,290
	22,310
	(17,590)
	(10,083)
Equity	$ 30,927
Company’s share of equity‐ 49.5%	$ 15,309

	Period from June 27, 2020 to December 31, 2020
Revenues Expenses, including depreciation and amortization of $2,766; finance costs of $370; income tax expense of$316	$ 47,303
	46,376
Profit(loss)and total comprehensive income(loss)	$ 927

As at December 31, 2020, GeoVerra has commitments of $4,356.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

16. Leases

The following are continuities of the cost and accumulated depreciation of right‐of‐use assets for the years ended December 31, 2020 and 2019:

		Year ended December 31, 2020	Year ended December 31, 2020
		Right‐of‐Use Assets
	Property	Equipment	Total
Cost
Balance, beginning of year	$ 75,637	$ 3,047 $ 78,684
Additions	1,792	46	1,838
Acquisition (Note 6)	489	‐	489
Disposals	(730)	(39)	(769)
Contribution to joint venture (Note 11)	(4,337)	(344)	(4,681)
Impairment	(36)	‐	(36)
Exchange differences	242	(2)	240
Balance,end ofyear	73,057	2,708	75,765
Accumulated depreciation
Balance, beginning of year	(12,014)	(2,941)	(14,955)
Depreciation charge(1)	(11,234)	(28)	(11,262)
Disposals	730	35	765
Fair value loss on net assets directly associated with
discontinued operations (Note 11)	(412)	‐	(412)
Contribution to joint venture (Note 11)	1,418	351	1,769
Exchange differences	14	6	20
Balance,end ofyear	(21,498)	(2,577)	(24,075)
Net book value as at December 31, 2020	$ 51,559	$ 131 $ 51,690

(1) Of the amounts presented, $52 was charged to discontinued operations (Note 11).

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

16. Leases, cont’d

		Year ended December 31,2019	Year ended December 31,2019
		Right‐of‐Use Assets
	Property	Equipment	Total
Cost
Balance, beginning of year	$ 71,160	$ 3,380 $	74,540
Additions	8,357	‐	8,357
Disposals	(2,425)	(293)	(2,718)
Impairment	(69)	‐	(69)
Exchange differences	(1,386)	(40)	(1,426)
Balance,end ofyear	75,637	3,047	78,684
Accumulated depreciation
Balance, beginning of year	‐	(2,026)	(2,026)
Depreciation charge(1)	(12,229)	(1,211)	(13,440)
Disposals	162	268	430
Exchange differences	53	28	81
Balance,end ofyear	(12,014)	(2,941)	(14,955)
Net book value as at December 31, 2019	$ 63,623	$ 106 $	63,729

(1) Of the amounts presented, $1,124 was charged to discontinued operations (Note 11).

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

16. Leases, cont’d

The following is a continuity of the movements of lease liabilities for the years ended December 31, 2020 and 2019:

	Lease Liabilities	Lease Liabilities
As at January 1, 2019	$	82,328
Additions		8,354
Disposals		(1,219)
Interest expense(1)		2,885
Payments		(14,729)
Exchange differences		(1,636)
As at December 31, 2019		75,983
Additions		2,138
Acquisition (Note 6)		489
Interest expense(1)		2,559
Payments		(14,519)
Contribution to joint venture (Note 11)		(3,395)
Exchange differences		328
As at December 31, 2020		63,583
Less: non‐currentportion as at December 31,2020		(51,883)
Currentportion as at December 31, 2020	$	11,700

(1) During the years ended December 31, 2020 and 2019, $65 and $174 was charged to finance costs (income), net ‐ leases in discontinued operations, respectively (Note 11).

For the year ended December 31, 2020, the Company paid a total cash outflow of $14,519 for leases (2019 ‐ $14,729), and recognized rent expense from short‐term leases of $313 (2019 ‐ $412), leases of low‐value assets of $56 (2019 ‐ $72) and variable lease payments of $6,354 in occupancy expense (2019 ‐ $6,235). The weighted average incremental borrowing rate on lease liabilities as at December 31, 2020 is 3.70% (December 31, 2019 ‐ 3.79%).

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

17. Property, Plant and Equipment

The following are continuities of the cost and accumulated depreciation of property, plant and equipment for the years ended December 31, 2020 and 2019:

			Year ended December 31, 2020	Year ended December 31, 2020
		Furniture,
	Leasehold	Fixtures and	Computer
	Improvements	Equipment	Equipment	Total
Cost
Balance, beginning of year	$ 25,508	$ 30,031	$ 16,484 $	72,023
Additions	604	626	2,350	3,580
Disposals	(1,255)	(3,871)	(2,613)	(7,739)
Contribution to joint venture (Note 11)	(2,089)	(14,176)	(1,995)	(18,260)
Exchange differences	67	(61)	15	21
Balance,end ofyear	22,835	12,549	14,241	49,625
Accumulated depreciation
Balance, beginning of year	(11,843)	(21,611)	(9,532)	(42,986)
Depreciation charge(1)	(2,431)	(1,112)	(2,188)	(5,731)
Disposals	1,120	3,767	2,254	7,141
Fair value loss on net assets directly
associated with discontinued
operations (Note 11)	(164)	(560)	(108)	(832)
Contribution to joint venture (Note 11)	1,114	10,813	1,199	13,126
Exchange differences	(24)	45	12	33
Balance,end ofyear	(12,228)	(8,658)	(8,363)	(29,249)
Net book value as at December 31, 2020	$ 10,607	$ 3,891	$ 5,878 $	20,376

(1) Of the amounts presented, $111 was charged to discontinued operations (Note 11).

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

17. Property, Plant and Equipment, cont’d

			Year ended December 31,2019	Year ended December 31,2019
		Furniture,
	Leasehold	Fixtures and	Computer
	Improvements	Equipment	Equipment	Total
Cost
Balance, beginning of year	$ 24,716	$ 29,071	$ 14,858 $	68,645
Additions	1,191	2,088	2,507	5,786
Disposals	(27)	(1,036)	(798)	(1,861)
Exchange differences	(372)	(92)	(83)	(547)
Balance,end ofyear	25,508	30,031	16,484	72,023
Accumulated depreciation
Balance, beginning of year	(9,481)	(19,586)	(7,644)	(36,711)
Depreciation charge(1)	(2,463)	(2,936)	(2,439)	(7,838)
Disposals	14	931	615	1,560
Exchange differences	87	(20)	(64)	3
Balance,end ofyear	(11,843)	(21,611)	(9,532)	(42,986)
Net book value as at December 31, 2019	$ 13,665	$ 8,420	$ 6,952 $	29,037

(1) Of the amounts presented, $1,984 was charged to discontinued operations (Note 11).

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

18. Intangibles

The following are continuities of the cost and accumulated amortization of intangible assets for the years ended December 31, 2020 and 2019:

								Year	ended December 31, 2020	ended December 31, 2020
	Brands of	Computer	Custom	Internally
	Acquired	Application	Software	Generated	Customer	Customer		Non‐compete	Indefinite
	Businesses	Software	Applications	Software	Backlog	Lists	Databases	Agreements	Life Brands	Total
Cost
Balance, beginning of
year	$ 24,551	$ 5,309	$ 25,610	$ 34,265	$ 39,862	$ 220,345	$ 6,890	$ 39,384	$ 27,998	$ 424,214
Additions	‐	757	‐	‐	‐	‐	13	‐	‐	770
Acquisition (Note 6)	‐	‐	‐	‐	5,901	2,006	‐	1,019	‐	8,926
Disposals	(2,300)	(113)	(75)	‐	(30)	(17,590)	‐	(2,365)	‐	(22,473)
Contribution to joint
venture (Note 11)	‐	(626)	‐	‐	‐	‐	‐	‐	‐	(626)
Exchange differences	219	38	(378)	1,231	38	(1,452)	‐	(14)	(459)	(777)
Balance,end ofyear	22,470	5,365	25,157	35,496	45,771	203,309	6,903	38,024	27,539	410,034
Accumulated
amortization and
impairment
Balance, beginning of
year	(24,165)	(4,202)	(25,096)	(21,350)	(27,229)	(192,230)	(6,675)	(30,672)	‐	(331,619)
Amortization charge (1)	(181)	(473)	(513)	(3,520)	(5,293)	(11,378)	(228)	(3,199)	‐	(24,785)
Disposals	2,300	101	75	‐	30	17,590	‐	2,365	‐	22,461
Fair value loss on net
assets directly
associated with
discontinued
operations (Note 11)	‐	(58)	‐	‐	‐	‐	‐	‐	‐	(58)
Contribution to joint
venture (Note 11)	‐	617	‐	‐	‐	‐	‐	‐	‐	617
Exchange differences	(200)	(32)	378	(495)	(24)	1,617	‐	34	‐	1,278
Balance,end ofyear	(22,246)	(4,047)	(25,156)	(25,365)	(32,516)	(184,401)	(6,903)	(31,472)	‐	(332,106)
Net book value as at
December 31, 2020	$ 224	$ 1,318	$ 1	$ 10,131	$ 13,255	$ 18,908	$ ‐	$ 6,552	$ 27,539	$ 77,928

(1) Of the amounts presented, $1 was charged to discontinued operations (Note 11).

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

18. Intangibles, cont’d

								Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019	Year ended December 31,2019
	Brands of	Computer	Custom	Internally
	Acquired	Application	Software	Generated	Customer	Customer		Non‐compete	Indefinite
	Businesses	Software	Applications	Software	Backlog	Lists	Databases	Agreements	Life Brands		Total
Cost
Balance, beginning of
year	$ 24,728	$ 5,796	$ 26,510	$ 35,804	$ 39,324	$ 217,747	$ 6,884	$ 38,098	$	29,024	$ 423,915
Additions	‐	149	‐	‐	‐	‐	6	‐		‐	155
Acquisitions (Note 6)	‐	‐	‐	‐	1,141	7,971	‐	1,915		‐	11,027
Disposals	‐	(607)	‐	‐	‐	‐	‐	‐		‐	(607)
Exchange differences	(177)	(29)	(900)	(1,539)	(603)	(5,373)	‐	(629)		(1,026)	(10,276)
Balance,end ofyear	24,551	5,309	25,610	34,265	39,862	220,345	6,890	39,384		27,998	424,214
Accumulated
amortization and
impairment
Balance, beginning of
year	(24,134)	(4,259)	(25,982)	(17,527)	(23,365)	(180,658)	(6,647)	(26,449)		‐	(309,021)
Amortization charge(1)	(179)	(454)	(31)	(4,425)	(4,247)	(15,968)	(28)	(4,663)		‐	(29,995)
Disposals	‐	487	‐	‐	‐	‐	‐	‐		‐	487
Exchange differences	148	24	917	602	383	4,396	‐	440		‐	6,910
Balance,end ofyear	(24,165)	(4,202)	(25,096)	(21,350)	(27,229)	(192,230)	(6,675)	(30,672)		‐	(331,619)
Net book value as at
December 31, 2019	$ 386	$ 1,107	$ 514	$ 12,915	$ 12,633	$ 28,115	$ 215	$ 8,712	$	27,998	$ 92,595

(1) Of the amounts presented, $462 was charged to discontinued operations (Note 11).

Indefinite life intangibles, consisting of the Altus Group and ARGUS brands, have been assessed for impairment along with goodwill as outlined in Note 19. These assets are considered to have indefinite lives as management believes that there is an indefinite period over which the assets are expected to generate net cash flows.

The finite life intangibles will be amortized over the remaining useful life as follows:

	December 31, 2020
	Average RemainingUseful Life
Brands of acquired businesses	15 months
Custom software applications	1 month
Internally generated software	14 months ‐ 54 months
Customer backlog	22 months ‐ 47 months
Customer lists	3 months ‐ 119 months
Non‐compete agreements	13 months ‐ 47 months

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

19. Goodwill

The following are continuities of the cost and accumulated impairment losses of goodwill for the years ended December 31, 2020 and 2019:

	Year ended December 31, 2020 Year ended December 31, 2019
Cost Balance, beginning of year Acquisitions (Note 6) Disposals Exchange differences	$ 342,858$ 344,093 2,591 6,103 (36,461) ‐ 1,227 (7,338)
Balance,end ofyear	310,215 342,858
Accumulated impairment losses Balance, beginning of year Impairment charge (Note 11) Fair value loss on net assets directly associated with discontinued operations (Note 11) Disposals Exchange differences	(82,478) (77,610) ‐ (6,400) (3,861) ‐ 36,461 ‐ 733 1,532
Balance,end ofyear	(49,145) (82,478)
Net book value as at December 31, 2020	$ 261,070$ 260,380

The carrying value of the Altus Group brand, an indefinite life intangible asset, was tested for impairment at the Company level and no impairment was necessary.

The carrying values of goodwill and the ARGUS brand, an indefinite life intangible asset, were allocated to the Company’s CGUs as follows:

	December 31, 2020 December 31,2019
	Goodwill ARGUS Brand Goodwill ARGUS Brand
Canada RVA North America Cost North America Property Tax Geomatics Altus Analytics U.K. Property Tax Asia Pacific Cost	$ 36,019 $ ‐$ 36,019 $ ‐ 28,411 ‐ 28,411 ‐ 49,825 ‐ 47,567 ‐ ‐ ‐ 3,861 ‐ 97,564 21,278 95,923 21,737 49,095 ‐ 48,454 ‐ 156 ‐ 145 ‐
Total	$ 261,070 $ 21,278$ 260,380 $ 21,737

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

19. Goodwill, cont’d

Other than for the Geomatics CGU in 2019, the recoverable amounts of the CGUs were determined using a discounted cash flow analysis to estimate fair value less costs to sell (Level 3). This analysis incorporated assumptions used by market participants. The key assumptions used were as follows:

	December 31, 2020	December 31,2019
	Perpetual Growth Rate Discount Rate (after‐tax)	Perpetual Growth Rate Discount Rate (after‐tax)
Canada RVA North America Cost North America Property Tax Altus Analytics U.K. Property Tax Asia Pacific Cost	3.0% 13.8%	3.0% 13.8% 3.0% 13.3% 3.0% 12.5% 3.0% 14.5% 2.5% 14.5% 3.0% 23.0%
	3.0% 13.5%
	3.0% 12.5%
	3.0% 14.5%
	2.5% 14.5%
	3.0% 23.0%

The discounted cash flow analysis uses after‐tax cash flow projections based on five‐year financial budgets. Cash flows beyond the five‐year period were extrapolated using the estimated perpetual growth rates stated above. The growth rates do not exceed the long‐term average growth rate for the business in which the CGU operates. Management’s margin assumptions were based on historical performance and future expectations. The discount rates used are on an after‐tax basis and reflect risks related to the respective CGU.

For the Geomatics CGU, the recoverable amount as at December 31, 2019 was determined using the estimated fair value less costs to sell (Level 3).

Impairment

Management performed its annual impairment analysis as at October 1, 2020 and determined that the indefinite life intangibles and goodwill were not impaired.

In the fourth quarter of 2019, the Company recorded an impairment charge against the Geomatics CGU of $6,400 reflecting market conditions. The carrying amount of the Geomatics CGU was reduced to its recoverable amount of approximately $18,500 through recognition of an impairment charge against goodwill. This loss has been restated within comparative figures to reflect profit (loss) from discontinued operations.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

20. Trade Payables and Other

Trade Payables and Other
	December 31, 2020 December 31, 2019
Trade payables Accrued expenses Contract liabilities: deferred revenue Contingent consideration payables (Note 28) Dividends payable (Note 27) Provisions Due to relatedparty (GeoVerra)	$ 7,596$ 9,936 94,354 79,689 43,032 40,321 47 7,667 6,124 6,029 6,018 1,121 329 ‐
Less non‐current portion: Accrued expenses Contract liabilities: deferred revenue Contingent consideration payables Provisions	157,500 144,763 15,449 11,937 681 1,458 ‐ 2,289 1,076 513
	17,206 16,197
	$ 140,294$ 128,566

Revenue recognized in relation to contract liabilities

	Year ended December 31, 2020 Year ended December 31, 2019
Revenue recognized that was included in contract liabilities: deferred revenue at the beginning of the year Revenue recognized from performance obligations partially satisfied inpreviousyears	$ 38,441$ 32,974 18,070 12,174

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

20. Trade Payables and Other, cont’d

Provisions consist of:

	Restructuring	Other	Total
Balance as at January 1, 2019	$ 3,081 $	343 $	3,424
Charged to profit or loss:
Additional provisions, net of releases(1)	(453)	9	(444)
Unwinding of discount (Note 9)(2)	104	12	116
Used during the year	(1,744)	(188)	(1,932)
Exchange differences	(35)	(8)	(43)
Balance as at December 31, 2019	953	168	1,121
Charged to profit or loss:
Additional provisions, net of releases(1)	13,596	‐	13,596
Unwinding of discount (Note 9)(2)	27	12	39
Used during the year	(8,754)	25	(8,729)
Exchange differences	(22)	13	(9)
Balance as at December 31, 2020	5,800	218	6,018
Less: non‐currentportion	(858)	(218)	(1,076)
	$ 4,942 $	‐ $	4,942

(1) During the years ended December 31, 2020 and 2019, $1,612 and $(157) was charged to restructuring costs (recovery) in discontinued operations, respectively (Note 11).

(2) During the years ended December 31, 2020 and 2019, $5 and $nil was charged to finance costs (income), net ‐ other in discontinued operations, respectively (Note 11).

Restructuring

Beginning in the second quarter of 2020, the Company initiated a global restructuring program across all of its business segments which resulted in restructuring costs of $11,984 for the year ended December 31, 2020, of which a total of $4,712 related to Altus Analytics and the balance to CRE Consulting and Corporate segments. These costs relate primarily to employee severance costs. The restructuring was planned as part of the Company’s strategy to focus and invest in technology and information services platforms.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

21. Borrowings

Borrowings
	December 31, 2020 December 31, 2019
Bank credit facilities Leasehold improvement loans Less: deferred financingfees	$ 123,000$ 138,000 ‐ 403 (568) (140)
Less non‐current portion: Bank credit facilities Leasehold improvement loans Less: deferred financingfees	122,432 138,263 123,000 ‐ ‐ 334 (568) ‐
	122,432 334
	$ ‐$ 137,929

Amendment to bank credit facilities

On March 24, 2020, the Company amended its bank credit facilities to further strengthen its financial and liquidity position. The amended credit facilities increase the Company’s borrowing capacity to $275,000 from $200,000, with certain provisions that allow the Company to further increase the limit to $350,000. The amended agreement extends the term by three years expiring March 24, 2023, with an additional two‐year extension available at the Company’s option. The other significant amendment is that the bank credit facilities are unsecured.

Loans bear interest at a floating rate, based on the Canadian Prime rates, Canadian Bankers’ Acceptance rates, U.S. Base rates or LIBOR rates plus, in each case, an applicable margin to those rates. The applicable margin for Canadian Bankers’ Acceptance and LIBOR borrowings depends on a trailing four‐quarter calculation of the funded debt to EBITDA ratio. The weighted average effective interest rate for the bank credit facilities for the year ended December 31, 2020 was 2.37% (2019 ‐ 3.61%).

The amended bank credit facilities require the Company to comply with the following financial ratios:

Maximum Funded Debt to EBITDA ratio: maximum of 4.00:1
Minimum Interest Coverage ratio: minimum of 3.00:1

As at December 31, 2020, the Company was in compliance with the financial covenants of the amended bank credit facilities, which are summarized below:

bank credit facilities, which are summarized below:
	December 31, 2020
Funded debt to EBITDA (maximum of 4.00:1) Interest coverage(minimum of 3.00:1)	1.09:1
	27.88:1

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

21. Borrowings, cont’d

In addition, the Company and certain of its subsidiaries, collectively the guarantors, must account for at least 80% of consolidated revenues on a trailing 12‐month basis. The bank credit facilities require repayment of the principal at such time as the Company receives proceeds of insurance, equity or debt issuances, or sale of assets in excess of certain thresholds. Letters of credit are also available on customary terms for bank credit facilities of this nature.

Interest rate swap agreements

In 2015, the Company entered into interest rate swap agreements for a total notional amount of $65,000. The Company was obligated to pay the counterparty to the interest rate swap agreements an amount based upon a fixed interest rate of 1.48% per annum and the counterparty was obligated to pay the Company an amount equal to the Canadian Bankers’ Acceptance rate. These interest rate swaps were not designated as cash flow hedges and expired on May 15, 2020.

Leasehold improvement loans

The Company received various unsecured loans to finance leasehold improvements made to leased premises. The loans are payable in installments with maturity dates ranging from April 2025 to September 2025 and bear interest from 0% to 5.00%, and were transferred to GeoVerra (Note 11) upon formation of the joint venture on June 27, 2020. The weighted average effective interest rate for the year ended December 31, 2019 was 1.32%.

Contractual payments schedule

Contractual principal repayments on borrowings are as follows:

	December 31, 2020 December 31, 2019
Less than 1 year 1 to 3 years 4 to 5 years Over 5years	$ ‐$ 138,069 123,000 142 ‐ 145 ‐ 47
	$ 123,000$ 138,403

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

21. Borrowings, cont’d

Reconciliation of liabilities arising from financing activities, other than leases

		Leasehold	Bank Credit		Deferred
	Improvement Loans		Facilities	FinancingFees		Total
Balance as at January 1, 2019		$ 491	$ 129,178	$	(568) $	129,101
Net cash flows		(94)	8,822		‐	8,728
Non‐cash movements:
Interest accretion		6	‐		‐	6
Amortization		‐	‐		428	428
Balance as at December 31, 2019		403	138,000		(140)	138,263
Net cash flows		(130)	(15,000)		(723)	(15,853)
Non‐cash movements:
Contribution to joint venture (Note	11)	(273)	‐		‐	(273)
Amortization		‐	‐		295	295
Balance as at December 31, 2020		$ ‐	$ 123,000	$	(568) $	122,432

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

22. Share Capital

The Company is authorized to issue an unlimited number of common shares and an unlimited number of preference shares, issuable in series. The common shares have no par value. Common shares issued and outstanding are as follows:

shares issued and outstanding are as follows:
		Common Shares
	Number of Shares	Amount
Balance as at January 1, 2019	39,012,702	$ 491,542
Issued on exercise of options (Note 25)	282,488	8,166
Issued under the Dividend Reinvestment Plan	179,572	4,624
Issued on acquisitions (Note 6)	179,672	4,282
Issued for share‐based compensation (Note 25)	246,653	5,243
Treasury shares reserved for share‐based compensation (Note 25)	(181,755)	(7,705)
Release of treasuryshares(Note 25)	107,268	3,494
Balance as at December 31, 2019	39,826,600	509,646
Issued on exercise of options (Note 25)	426,856	14,150
Issued under the Dividend Reinvestment Plan	56,027	2,429
Issued for share‐based compensation (Note 25)	150,354	6,984
Treasury shares reserved for share‐based compensation (Note 25)	(147,062)	(8,923)
Release of treasuryshares(Note 25)	116,342	5,580
Balance as at December 31, 2020	40,429,117	$ 529,866

The 40,429,117 common shares as at December 31, 2020 are net of 395,584 treasury shares with a carrying value of $19,538 that are being held by the Company until vesting conditions are met (Note 25).

The Company has a Dividend Reinvestment Plan (“DRIP”) for shareholders of the Company who are resident in Canada. Under the DRIP, participants may elect to automatically reinvest quarterly dividends into additional common shares of the Company.

Pursuant to the DRIP, and in the case where common shares are issued from treasury, cash dividends are reinvested into additional shares of the Company at the weighted average market price of common shares for the five trading days immediately preceding the relevant dividend payment date, less a discount of 4%. In the case where common shares are purchased on the open market, cash dividends are reinvested into additional shares of the Company at the relevant average market price paid in respect of satisfying this reinvestment plan.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

23. Contributed Surplus

	Amount
Balance as at January 1, 2019	$ 21,882
Share‐based compensation (Note 25)	9,839
Gain (loss) on sale of RSs and shares held in escrow	(93)
Shares issued on exercise of options (Note 25)	(1,289)
Release of treasury shares (Note 25)	(3,001)
Shares issued for share‐based compensation(Note 25)	(2,891)
Balance as at December 31, 2019	24,447
Share‐based compensation (Note 25)	15,398
Gain (loss) on sale of RSs and shares held in escrow	(13)
Shares issued on exercise of options (Note 25)	(2,162)
Release of treasury shares (Note 25)	(5,144)
Shares issued for share‐based compensation(Note 25)	(2,098)
Balance as at December 31, 2020	$ 30,428

24. Accumulated Other Comprehensive Income (Loss)

	Currency	FVOCI
	Translation	Investments
	Reserve	Reserves	Total
Balance as at January 1, 2019	$ 54,558 $ ‐ $		54,558
Currency translation differences	(13,772)	‐	(13,772)
Change in fair value of FVOCI investments,
net of tax	‐	92	92
Transfer of gain on disposal of FVOCI
investments(Note 14)	‐	(633)	(633)
Balance as at December 31, 2019	40,786	(541)	40,245
Currency translation differences	1,533	‐	1,533
Change in fair value of FVOCI investments,
net of tax	‐	(987)	(987)
Balance as at December 31, 2020	$ 42,319 $	(1,528) $	40,791

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

25. Share‐based Compensation

The Company’s share‐based compensation expense, which includes the Executive Compensation Plan (Share Option Plan and Equity Compensation Plan), Long‐Term Equity Incentive Plan, Deferred Compensation Plans (RS Plan and RSU Plan), DSU Plans and other share‐based awards, was $26,063 (2019 ‐ $19,883). The activity in the Company’s share‐based compensation plans is as follows:

(i) Executive Compensation Plan and Long‐Term Equity Incentive Plan

On May 6, 2020, the Company’s shareholders approved a resolution to increase the number of authorized common shares to be reserved for issuance under the Company’s Long‐Term Equity Incentive Plan and to ratify the grant of awards made under it to executives and key employees. The resolution increases the maximum number of common shares reserved for issuance by 1,850,000 to 4,075,000.

The following is a summary of the Company’s share option activity:

Movements in the number of options outstanding and the weighted average exercise price are as follows:

follows:
	Number of Options	Weighted Average
	Outstanding	Exercise Price
Balance as at January 1, 2019	1,518,670	$27.96
Granted	458,053	$29.92
Exercised	(282,488)	$24.35
Expired/Forfeited	(114,952)	$26.59
Balance as at December 31, 2019	1,579,283	$28.98
Granted	675,729	$46.65
Exercised	(426,856)	$28.08
Expired/Forfeited	(36,474)	$32.26
Balance as at December 31, 2020	1,791,682	$35.78

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

25. Share‐based Compensation, cont’d

Information about the Company’s share options outstanding and exercisable as at December 31, 2020 is as follows:

is as follows:
		Weighted
	Number of	Average Remaining	Number of
Exercise Price	Options Outstanding	Contractual Life	Options Exercisable
$19.29 ‐ $19.67	121,084	0.92 years	121,084
$25.56 ‐ $29.72	461,300	2.71 years	152,127
$30.70 ‐ $37.93	541,069	2.72 years	180,306
$45.11 ‐$52.84	668,229	4.32years	‐
$35.78	1,791,682	3.19years	453,517

The options granted vest over a period of up to 48 months. The fair value of the options granted was estimated on the date of grant using the Black‐Scholes option pricing model with the following assumptions:

assumptions:
	2020	2019
Risk‐free interest rate	0.31% ‐ 0.67%	1.29% ‐ 1.69%
Expected dividendyield	1.1% ‐ 1.3%	1.6% ‐ 2.3%
Expected volatility	25.42% ‐ 33.96%	24.13% ‐ 26.64%
Expected option life	3.00 ‐ 4.50years	3.00 ‐ 4.50years
Exerciseprice	$45.11 ‐$52.84	$26.23 ‐$37.93
Weighted averagegrant‐date fair valueper option	$7.19 ‐ $12.09	$4.06 ‐ $7.43

The following is a summary of the activity related to common shares held in escrow under the Equity Compensation Plan and Long‐Term Equity Incentive Plan:

	Number of common shares
Balance as at January 1, 2019	69,754
Granted	63,553
Forfeited	(7,211)
Balance as at December 31, 2019	126,096
Granted	7,007
Settled	(11,629)
Forfeited	(5,165)
Balance as at December 31, 2020	116,309

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

25. Share‐based Compensation, cont’d

The Company settled vested PSUs under the Equity Compensation Plan and Long‐Term Equity Incentive Plan through the issuance of common shares:

		Number of common shares
Settled in March	2019	162,086
Settled in March	2020	54,707

The Company granted the following PSUs under the Long‐Term Equity Incentive Plan:

		Number of PSUs
Granted in	2019	186,542
Granted in	2020	172,350

(ii) Deferred Compensation Plans

The following is a summary of the Company’s RS Plan activity:

(ii) Deferred Compensation Plans The following is a summary of the Company’s RS Plan activity:
	Number of RSs
Balance as at January 1, 2019 (all unvested)	220,623
Granted	118,202
Settled	(95,841)
Forfeited	(3,784)
Balance as at December 31, 2019 (all unvested)	239,200
Granted	55,714
Settled	(95,542)
Forfeited	(4,718)
Balance as at December 31, 2020 (all unvested)	194,654

In connection with the 2019 performance year, the Company granted a total of $4,017 under the RS Plan. In March 2020, the Company purchased 55,543 common shares in the open market (through the facilities of the TSX or by private agreement).

In connection with the 2018 performance year, the Company granted a total of $4,128 under the RS Plan. In March 2019, the Company purchased 100,482 common shares in the open market (through the facilities of the TSX or by private agreement).

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

25. Share‐based Compensation, cont’d

The following is a summary of the Company’s RSU Plan activity:

	Number of RSUs
Balance as at January 1, 2019 (all unvested)	352,670
Granted	141,361
Settled	(147,370)
Forfeited	(19,070)
Balance as at December 31, 2019 (all unvested)	327,591
Granted	84,102
Settled	(101,936)
Forfeited	(7,432)
Balance as at December 31, 2020 (all unvested)	302,325

(iii) Deferred Share Unit Plans

The following is a summary of the Company’s DSU Plans activity:

	Number of DSUs
Balance as at January 1, 2019	124,908
Granted	36,754
Balance as at December 31, 2019	161,662
Granted	53,677
Redeemed	(41,503)
Balance as at December 31, 2020	173,836

(iv) Other Share‐Based Awards

The following is a summary of the activity related to common shares held in escrow related to the PTA acquisition (Note 6):

		Number of common shares
Balance	as at January 1, 2020	‐
Granted		84,341
Balance	as at December 31, 2020	84,341

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

25. Share‐based Compensation, cont’d

(v) Compensation Expense by Plan

(v) Compensation Expense by Plan
	Year ended December 31, 2020 Year ended December 31, 2019
Share Option Plan Equity Compensation Plan Long‐Term Equity Incentive Plan RS Plan RSU Plan(1) DSU Plans(2) Other share‐based awards	$ 82$ 62 1,331 1,167 8,789 4,666 5,006 3,948 7,434 6,562 3,231 3,478 190 ‐

(1) For the years ended December 31, 2020 and 2019, the Company recorded mark‐to‐market adjustments of $3,657 and $3,273, respectively.

(2) For the years ended December 31, 2020 and 2019, the Company recorded mark‐to‐market adjustments of $1,876 and $2,388, respectively.

Included in compensation expense above, for the year ended December 31, 2020, is an amount related to the Geomatics discontinued operations totalling $292 (2019 ‐ $387).

(vi) Liabilities for Cash‐settled Plans

(vi) Liabilities for Cash‐settled Plans
	December 31, 2020 December 31, 2019
RSU Plan ‐ carrying value of liability recorded within trade payables and other DSU Plans ‐ carrying value of liability recorded within trade payables and other	$ 11,412$ 8,832 7,537 6,257

26. Earnings (Loss) per Share

Basic earnings (loss) per share is calculated by dividing profit (loss) by the weighted average number of common shares outstanding during the year.

The dilutive effect of share options, equity awards, PSUs and restricted shares is determined using the treasury stock method. For the purposes of the weighted average number of common shares outstanding, common shares are determined to be outstanding from the date they are issued.

For the year ended December 31, 2020, 668,229 share options and 90,638 restricted shares (including common shares issued in escrow as part of the Equity Compensation Plan and Long‐Term Equity Incentive Plan) were excluded from the diluted earnings (loss) per share calculations as the impact would have been anti‐dilutive.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

26. Earnings (Loss) per Share, cont’d

For the year ended December 31, 2019, 597,254 share options and 19,922 restricted shares (including common shares issued in escrow as part of the Equity Compensation Plan and Long‐Term Equity Incentive Plan) were excluded from the diluted earnings (loss) per share calculations as the impact would have been anti‐dilutive.

The following table summarizes the basic and diluted earnings (loss) per share and the basic and diluted weighted average number of common shares outstanding:

	Year ended December 31, 2020 Year ended December 31, 2019(1)
Profit (loss) for the year from continuing operations ‐ basic and diluted	$ 27,009 $23,891
Profit (loss) for the year from discontinued operations ‐ basic and diluted	(5,576) (5,697)
Profit(loss)for theyear ‐ basic and diluted	$ 21,433 $18,194
Weighted average number of common shares outstanding ‐ basic Dilutive effect of share options Dilutive effect of equity awards and PSUs Dilutive effect of restricted shares	40,158,543 39,460,603 392,449 141,940 410,462 303,819 247,612 177,195
Weighted average number of common shares outstanding ‐ diluted	41,209,066 40,083,557
Earnings (loss) per share: Basic Continuing operations Discontinued operations Diluted Continuing operations Discontinued operations	$0.67 $0.61 $(0.14) $(0.14) $0.66 $0.60 $(0.14) $(0.14)

(1) Comparative figures have been restated to reflect discontinued operations (Notes 3, 7, 11 and 32).

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

27. Dividends Payable

The Company declared a $0.15 dividend per common share to shareholders of record on the last business day of each quarter, and dividends were paid on the 15[th] day of the month following quarter end. Dividends are declared and paid in Canadian dollars.

A reconciliation of dividends payable is as follows:

A reconciliation of dividends payable is as follows:
	Dividends Payable
Balance as at January 1, 2019	$	5,895
Dividends paid		(19,199)
Non‐cash movements:
DRIP (Note 22)		(4,624)
Dividends declared		23,957
Balance as at December 31, 2019		6,029
Dividends paid		(21,859)
Non‐cash movements:
DRIP (Note 22)		(2,429)
Dividends declared		24,383
Balance as at December 31, 2020	$	6,124

28. Financial Instruments and Fair Values

The Company’s financial instruments consist of cash and cash equivalents, trade and other receivables (excluding deferred costs to obtain customer contracts, and prepayments), investments in equity instruments, investments in partnerships, derivative financial instruments, trade payables and other (excluding contract liabilities, RSU Plan and DSU Plans payables, and contingent consideration payables), contingent consideration payables, and borrowings.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

28. Financial Instruments and Fair Values, cont’d

Financial Instruments by Category

The tables below indicate the carrying values of financial assets and liabilities for each of the following categories:

categories:
	December 31, 2020 December 31,2019
	Fair Value Through Profit or Loss Fair Value Through Other Comprehensive Income Amortized Cost Fair Value Through Profit or Loss Fair Value Through Other Comprehensive Income Amortized Cost
Assets as per Consolidated Balance Sheet: Cash and cash equivalents Trade receivables and other (excluding deferred costs to obtain customer contracts, and prepayments) Investments in equity instruments Investments in partnerships Derivative financial instruments	$ ‐ $ ‐ $ 69,637$ ‐ $ ‐ $ 60,262 ‐ ‐ 179,008 ‐ ‐ 171,390 ‐ 7,811 ‐ ‐ 9,288 ‐ 2,545 ‐ ‐ 2,193 ‐ ‐ 11,277 ‐ ‐ 7,424 ‐ ‐
	$ 13,822 $ 7,811 $ 248,645$ 9,617 $ 9,288 $ 231,652

	December 31, 2020 December 31,2019
	Fair Value Through Profit or Loss Amortized Cost Fair Value Through Profit or Loss Amortized Cost
Liabilities as per Consolidated Balance Sheet: Trade payables and other (excluding contract liabilities, RSU Plan and DSU Plans payables and contingent consideration payables) Contingent consideration payables Borrowings	$ ‐ $ 95,472$ ‐ $ 81,686 47 ‐ 7,667 ‐ ‐ 122,432 ‐ 138,263
	$ 47 $ 217,904$ 7,667 $ 219,949

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

28. Financial Instruments and Fair Values, cont’d

Cash and cash equivalents, trade receivables and other (excluding deferred costs to obtain customer contracts, and prepayments) due within one year, and trade payables and other (excluding contract liabilities, RSU Plan and DSU Plans payables, and contingent consideration payables) due within one year, are all short‐term in nature and, as such, their carrying values approximate their fair values.

The fair values of non‐current trade receivables and other and trade payables and other are estimated by discounting the future contractual cash flows at the cost of borrowing to the Company, which approximate their carrying values.

The fair value of the bank credit facilities approximates its carrying value, as the instruments bear interest at rates comparable to current market rates.

Fair Values

Fair value measurements recognized in the consolidated balance sheets are classified in accordance with the fair value hierarchy established by IFRS 13, Fair Value Measurement , which reflects the significance of the inputs used in determining the measurements. The inputs can be either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect an entity’s pricing based upon its own market assumptions.

The tables below present financial instruments that are measured at fair value. The different levels in the hierarchy have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3: Inputs for the asset or liability that are not based on observable market data.

The fair value of financial instruments traded in active markets is based on quoted market prices at each balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s‐length basis.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity‐specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

If one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

28. Financial Instruments and Fair Values, cont’d

The following tables present the fair value hierarchy under which the Company’s financial instruments are valued:

instruments are valued:
	December 31, 2020
	Level 1 Level 2 Level 3 Total
Assets: Investments in equity instruments Investments in partnerships Derivative financial instruments Liabilities: Borrowings Contingent considerationpayables	$ ‐ $ ‐ $ 7,811$ 7,811 ‐ ‐ 2,545 2,545 ‐ 11,277 ‐ 11,277 ‐ 123,000 ‐ 123,000 ‐ ‐ 47 47

	December 31,2019
	Level 1 Level 2 Level 3 Total
Assets: Investments in equity instruments Investments in partnerships Derivative financial instruments Liabilities: Borrowings Contingent considerationpayables	$ ‐ $ ‐ $ 9,288 $ 9,288 ‐ ‐ 2,193 2,193 ‐ 7,424 ‐ 7,424 ‐ 138,403 ‐ 138,403 ‐ ‐ 7,667 7,667

For the year ended December 31, 2020, there were no transfers between the levels in the hierarchy.

Derivative financial instruments are recorded in Level 2. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves. The fair value of equity derivatives is calculated based on the movement in the Company’s common share price between the initial common share price on the effective date and the reporting date, which are observable inputs. The fair value of currency forward contracts is calculated based on the spread between the currency forward rate and the rate on the reporting date, which are observable inputs, and applied to the notional amount.

The investments in equity instruments, investments in partnerships and contingent consideration payables are recorded in Level 3 as the amounts are not based on observable inputs. Contingent consideration payables are measured using a discounted cash flow analysis of expected cash flows in future periods. The investments in equity instruments are measured based on valuations of the entity. Investments in partnerships are measured in relation to the fair value of assets reported in the respective partnerships.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

28. Financial Instruments and Fair Values, cont’d

The following table summarizes the movement in the Company’s contingent consideration payables:

	Contingent
	Consideration Payables
	(Discounted)
Balance as at January 1, 2019	$ 14,169
Contingent arrangements entered into during the year	1,158
Changes in expected payment recorded through profit or loss	(174)
Unwinding of discount (Note 9)	467
Settlements	(7,743)
Exchange differences	(210)
Balance as at December 31, 2019	7,667
Changes in expected payment recorded through profit or loss	(1,176)
Unwinding of discount (Note 9)	102
Settlements	(6,639)
Exchange differences	93
Balance as at December 31, 2020	$ 47

A 1% increase or decrease in the discount rate could decrease or increase the Company’s determination of fair value by approximately $nil as at December 31, 2020 (December 31, 2019 ‐ $6).

The estimated contractual amount of contingent consideration payables as at December 31, 2020 was $47 (December 31, 2019 ‐ $7,919), net of a discount of $nil (December 31, 2019 ‐ $252).

Financial Risk Management Objectives and Policies

The Company’s activities expose it to a variety of financial risks: market risk (including interest rate risk, currency risk and price risk), credit risk and liquidity risk. The Company’s overall risk management program seeks to minimize potential adverse effects on the Company’s financial performance.

The Company does not enter into derivative financial instruments for speculative purposes.

(a) Market Risk

Interest rate risk

The Company is exposed to interest rate risk in the event of fluctuations in the Canadian Prime rates, Canadian Bankers’ Acceptance rates, U.S. Base rates or LIBOR rates as the interest rates on the revolving term facility fluctuate with changes in these rates.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

28. Financial Instruments and Fair Values, cont’d

In order to limit interest rate exposure, the Company previously entered into floating‐to‐fixed interest rate swap agreements associated with its bank credit facilities. These interest rate swaps had the economic effect of converting borrowings from floating rates to fixed rates. Under the interest rate swaps, the Company agreed with other parties to exchange, at specified intervals, the difference between fixed contract rates and floating‐rate interest amounts calculated by reference to the agreed notional amounts. The notional principal amounts of the outstanding interest rate swap agreements as at December 31, 2020 were $nil (December 31, 2019 ‐ $65,000).

The Company monitors its interest rate exposure and its hedging strategy on an ongoing basis.

Fluctuations in interest rates will impact profit or loss. For the year ended December 31, 2020, every 1% increase or decrease in the revolving term facility interest rate results in a corresponding $1,299 decrease or increase in the Company’s profit (loss) (2019 ‐ $782).

Currency risk

The Company has operations in Canada, the U.S., Europe and Asia Pacific and, therefore, has exposure to currency risk. There is exposure to foreign exchange fluctuations on transactions between the Company’s entities and upon the consolidation of the Company’s foreign subsidiaries. Assets and liabilities of foreign subsidiaries are translated at the period‐end exchange rate and, therefore, have varying values from exchange rate fluctuations.

The statements of comprehensive income (loss) of the foreign subsidiaries are translated into Canadian dollars using the period’s average exchange rate and, accordingly, exchange rate fluctuations impact the Company’s revenues and profit (loss), denominated in Canadian dollars.

In order to limit some of its foreign exchange exposure, the Company periodically enters into currency forward contracts.

The Company monitors its foreign exchange exposure and its hedging strategy on an ongoing basis.

The following table summarizes the effect of a 10% strengthening of the Canadian dollar on the Company’s profit (loss) as a result of translating the statements of comprehensive income (loss) of foreign subsidiaries, assuming all other variables remain unchanged:

	Year ended December 31, 2020 Year ended December 31, 2019
U.S. Europe Australia Asia	$ (2,052)$ (2,401) (1,119) (520) 2 (175) 106 (124)

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

28. Financial Instruments and Fair Values, cont’d

A 10% weakening of the Canadian dollar would have an equal but opposite effect, assuming all other variables remain unchanged.

Price risk

The Company is exposed to price risk because the liabilities for cash‐settled RSU and DSU plans are classified as FVPL, and linked to the price of the Company’s common shares. If the market price of the Company’s common shares increases by 5% with all other variables held constant, the impact on profit (loss) would be a decrease of $947 (2019 ‐ $755). A 5% decrease in the market price of the Company’s common shares would have an equal but opposite effect on profit (loss), assuming all other variables remain unchanged.

In order to limit price risk exposure, the Company entered into equity derivatives. Changes in the fair value of these equity derivatives offset the impact of mark‐to‐market adjustments that are accrued. The notional amount outstanding on these equity derivatives as at December 31, 2020 was $12,194 (December 31, 2019 ‐ $11,321) (Note 13).

(b) Credit Risk

The Company is exposed to credit risk with respect to its cash and cash equivalents, trade receivables and other and derivative financial instruments. Credit risk is not concentrated with any particular customer. In certain parts of the Company’s business, it is often common business practice to pay invoices over an extended period of time and/or at the completion of the project or on receipt of funds. In addition, the COVID‐19 pandemic has introduced additional credit risk. The Company applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected loss provision for all trade receivables and contract assets for unbilled revenue on customer contracts. To measure the expected credit losses, trade receivables and contract assets for unbilled revenue on customer contracts have been grouped based on shared credit risk characteristics and the days past due, and incorporate forward‐looking information. The loss allowance provision as at December 31, 2020 is determined as follows:

			December 31, 2020	December 31, 2020
	0 to 120 days	121 to 365 days	More than 365
	past due	past due	dayspast due	Total
Expected loss rate	2.04%	29.87%	91.23%	9.03%
Gross carrying amount	$162,007	$24,697	$7,513	$194,217
Loss allowanceprovision	$(3,309)	$(7,376)	$(6,854)	$(17,539)

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

28. Financial Instruments and Fair Values, cont’d

Changes in the gross carrying amount of trade receivables and contract assets for unbilled revenue on customer contracts contributed to the changes in the loss allowance provision. The gross carrying amount was impacted by revenue recognized and amounts invoiced, offset by cash collections and amounts written off as not recoverable or uncollectible. Expected loss rates are determined on a portfolio basis. The expected loss rate for the Company will differ based on the contribution of balances by portfolio and age of those balances. For the year ended December 31, 2020, no significant changes were made to the expected loss rates on a portfolio basis. However, the Company recorded additional provisions on certain of its trade receivable and unbilled revenue balances to reflect credit risk introduced by COVID‐19 for customers in the oil and gas, hospitality, utilities and retail industries.

The loss allowance provision for trade receivables and contract assets for unbilled revenue on customer contracts as at December 31, 2020 reconciles to the opening loss allowance provision as follows:

follows:
	December 31, 2020
As at January 1, 2019	$	10,069
Net charges during the year		5,233
Amounts written off during the year as not recoverable or uncollectible		(2,822)
Exchange differences		(192)
As at December 31, 2019		12,288
Net charges during the year		13,990
Amounts written off during the year as not recoverable or uncollectible		(8,688)
Exchange differences		(51)
As at December 31, 2020	$	17,539

The movement of the loss allowance provision has been included in office and other operating expenses in the consolidated statements of comprehensive income (loss). In the event that the collectability of future trade receivables is in question, an adjustment is made to the corresponding contract assets for unbilled revenue on customer contracts. In addition, contract assets for unbilled revenue on customer contracts are assessed for impairment under IFRS 9. Amounts charged to the provision are generally written off when there are no expectations of recovering additional cash. The Company’s maximum exposure to credit risk at the reporting date, assuming no mitigating factors, is the carrying value of its cash and cash equivalents, trade receivables and other and derivative financial instruments. The Company does not hold any collateral as security.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

28. Financial Instruments and Fair Values, cont’d

(c) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages liquidity risk through the management of its capital structure and financial leverage. It also manages liquidity risk by continuously monitoring actual and projected cash flows, taking into account the seasonality of the Company’s revenues and cash receipts, and the maturity profile of its financial assets and liabilities. The Board of Directors reviews and approves the Company’s operating and capital budgets, as well as any material transactions outside the ordinary course of business, including proposals on mergers, acquisitions or other major investments.

Management believes that funds generated by operating activities and available through its amended bank credit facilities will allow the Company to satisfy its requirements for the purposes of working capital, investments and debt repayments.

The table below summarizes the contractual undiscounted cash flows related to the Company’s financial liabilities into relevant maturity groupings based on the remaining period as at the consolidated balance sheet date to the contractual maturity date.

						December 31, 2020	December 31, 2020
	Carrying	Contractual	Less than	1 to 3	4 to 5	Over
	amount	cash flows	1 year	years	years	5 years	Total
Trade payables and other
(excluding lease
inducements, contract
liabilities, RSU Plan
and DSU Plans
payables and
contingent
consideration
payables)	$ 95,472	$ 95,491	$ 93,662	$ 997	$ 262	$ 570	$ 95,491
RSU Plan and DSU Plans
payables	18,949	18,949	4,237	6,321	854	7,537	18,949
Contingent consideration
payables	47	47	47	‐	‐	‐	47
Borrowings	123,000	123,000	‐	123,000	‐	‐	123,000
Lease liabilities	63,583	70,432	13,788	25,742	18,490	12,412	70,432
	$ 301,051	$ 307,919	$ 111,734	$ 156,060	$ 19,606	$ 20,519	$ 307,919

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

29. Capital Management

The Company’s objective in managing capital is to ensure that adequate resources are available to fund organic growth and to enable it to undertake strategic acquisitions while continuing as a going concern. The Company’s capital is composed of borrowings and shareholders’ equity.

Operating cash flows are used to provide sustainable cash dividends to shareholders and fund capital expenditures in support of organic growth. In addition, operating cash flows, supplemented throughout the year with the revolving term facility, are used to fund working capital requirements.

The revolving term facility and equity are used to finance strategic acquisitions. Additionally, vendors of acquired businesses typically receive a portion of the consideration in the form of the Company’s common shares.

The Company’s capitalization is summarized in the following chart:

	December 31, 2020 December 31, 2019
Borrowings (Note 21) Less: cash and cash equivalents	$ 122,432$ 138,263 (69,637) (60,262)
Net debt Shareholders’ equity	52,795 78,001 383,449 359,652
Total capitalization	$ 436,244$ 437,653

The Company monitors certain financial covenants on a trailing 12‐month basis in line with its amended bank credit facilities. The financial covenant limits are summarized below:

Funded debt to EBITDA ratio: maximum of 4.00:1
Interest coverage (minimum of 3.00:1)

As at December 31, 2020, the Company is in compliance with the financial covenants of its bank credit facilities.

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

30. Commitments and Contingencies

The Company leases offices and equipment under non‐cancellable operating leases. The future aggregate minimum lease payments for short‐term and low‐value leases under such arrangements, and for other contractual commitments are as follows:

and for other contractual commitments are as follows:
	December 31, 2020 December 31, 2019
No later than 1 year Later than 1year and no later than 5years	$ 4,805$ 2,882 3,966 1,585
Total	$ 8,771$ 4,467

The future aggregate minimum sublease payments to be received under non‐cancellable subleases as at December 31, 2020 were $172 (December 31, 2019 ‐ $465).

As at December 31, 2020, the Company provided letters of credit of approximately $1,107 to its lessors (December 31, 2019 ‐ $1,074).

As at December 31, 2020, the Company has guaranteed up to $1,500 in connection with vehicle leases and related services entered into by GeoVerra.

As at December 31, 2020, the Company has committed to aggregate capital contributions of $418 (Note 14) to certain partnerships (December 31, 2019 ‐ $682).

From time to time, the Company or its subsidiaries are involved in legal proceedings, claims and litigation in the ordinary course of business with customers, former employees and other parties. Although it is not possible to determine the final outcome of such matters, based on all currently available information, management believes that liabilities, if any, arising from such matters will not have a material adverse effect on the Company’s financial position or results of operations and have been adequately provided for in these consolidated financial statements.

In the ordinary course of business, the Company is subject to tax audits from various government agencies relating to income and commodity taxes. As a result, from time to time, the tax authorities may disagree with the positions and conclusions made by the Company in its tax filings, which could lead to assessments and reassessments. These assessments and reassessments may have a material adverse effect on the Company’s financial position or results of operations.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

31. Related Party Transactions

Key Management Compensation

Key management includes the Board of Directors, officers and business unit presidents. The compensation paid or payable to key management for services is shown below:

	Year ended December 31, 2020 Year ended December 31, 2019
Salaries and other short‐term benefits Termination benefits Share‐basedpayments(1)	$ 9,226$ 9,764 1,777 1,750 9,742 8,123
	$ 20,745$ 19,637

(1) Includes mark‐to‐market adjustments on share‐based payments.

GeoVerra Joint Venture

The Company provides transitional administrative support services to GeoVerra, its joint venture (Note 15), as well as incurring costs for shared office space. During the year ended December 31, 2020, the Company recorded a net recovery of $231 for such services. As part of ongoing settlement of transactions related to the contribution of net assets into the joint venture, $1,675 was included in trade receivables and other and $329 was included in trade payables and other as at December 31, 2020. All related party transactions with GeoVerra were in the normal course of business and measured at the exchange amount.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

31. Related Party Transactions, cont’d

Controlled Entities

Altus Group Limited is the ultimate parent company. In certain circumstances, the Company has control over entities in which it does not own more than 50% voting interest. In making this determination, the Company considers all relevant facts and circumstances in assessing whether it has power over the entity including rights arising from contractual arrangements that allow the Company to direct the relevant activities and be exposed to variable returns of the entity, among other considerations. The consolidated financial statements consolidate the Company and the subsidiaries listed in the following table:

listed in the following table:
Entity’s Name	December 31, 2020
Altus Geomatics Limited Partnership	100%
Altus Geomatics General Partner Corporation	49%
Altus Group Asia Pacific Limited	100%
Altus Group U.S. Inc.	100%
Circle Software Acquisition Limited	100%
Argus Software (UK) Ltd.	100%
Circle Software International Limited (UK)	100%
Voyanta Limited (UK)	100%
Argus Software (Canada), Inc.	100%
Argus Software (Oceanic) Pty Ltd.	100%
Altus Group (UK) Limited	100%
2262070 Ontario Limited	100%
Altus Group Data Solutions Inc.	100%
Altus Group S.à.r.l.	100%
Altus Group (Vietnam) Limited	100%
Altus Group (India) Private Limited	100%
Altus Egypt LLC(1)	85%
Altus Group (Hong Kong) Limited	100%
Altus Group Consulting (Thailand) Company Limited	100%
Altus Group Management Holdings (Thailand) Company Limited	100%
Altus Group Services (Thailand) Company Limited	100%
Altus Group Construction Professionals (Thailand) Company Limited	100%
Altus Group Australia Pty Limited	100%
Altus Group (ACT) Pty Limited	100%
Altus GroupConsultingPtyLimited	100%

Altus Group Limited

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Notes to Consolidated Financial Statements December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

31. Related Party Transactions, cont’d

Related Party Transactions,cont’d
Entity’s Name	December 31, 2020
Altus Group Queensland Pty Limited	100%
Altus Group Cost Management Pty Limited	100%
Altus Group Bay Partnership Pty Limited	100%
Estate Master Group Holdings Pty Limited	100%
Estate Master Pty Limited	100%
Estate Master UK Limited	100%
Estate Master FZ LLC	100%
Altus Group (Hawaii) Inc.	100%
Altus Group II LLC	100%
Argus Software Inc.	100%
Argus Software (Asia) Pte. Ltd.	100%
One11 Advisors, LLC	100%
Altus UK LLP	100%
Altus Group (UK2) Limited	100%
R2G Limited	100%
Maxwell Brown Surveyors Group Limited	100%
Maxwell Brown Surveyors Limited	100%
Lambournes Holdings Limited	100%
Lambournes Trading Services Limited	100%
CVS (Commercial Valuers & Surveyors) Limited	100%
Taliance Group SAS	100%
Taliance, Inc.	100%
Taliance Limited	100%
Taliance Solutions Canada Inc.	100%

(1) An Egyptian national owns 15% of the remaining shares.

Altus Group Tax Consulting Paralegal Professional Corporation, Altus Group Manitoba Land Surveyors Limited and Altus Geomatics Land Surveying BC Limited are entities under control of the Company and have been consolidated in the Company’s consolidated financial statements. During the year ended December 31, 2020, Altus Group Manitoba Land Surveyors Limited was contributed to the GeoVerra joint venture. The Company also has joint control, and 49.5% equity interest, in GeoVerra, which has been accounted for as a joint venture under the equity method.

Altus Group Limited

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Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars, Except for Shares and Per Share Amounts)

32. Comparative Information

Certain prior year amounts have been restated or re‐presented for consistency with the current year presentation requirements under IFRS 5, Non‐current Assets Held for Sale and Discontinued Operations , to re‐present the comparative consolidated statement of comprehensive income (loss) upon classification and disposal of the Geomatics business as discontinued operations.

LISTINGS

Toronto Stock Exchange Stock trading symbol: AIF

AUDITORS

ERNST & YOUNG LLP

TRANSFER AGENT

AST TRUST COMPANY (CANADA) P.O. Box 700 Station B Montreal, Quebec, Canada H3B 3K3 Toronto: (416) 682-3860 Toll-free throughout North America: 1 (800) 387-0825 Facsimile: 1 (888) 249-6189 Website: www.astfinancial.com/ca-en Email: [email protected]

HEADQUARTERS

33 Yonge Street, Suite 500 Toronto, Ontario, Canada M5E 1G4 Telephone: (416) 641-9500 Toll-free Telephone: 1 (877) 953-9948 Facsimile: (416) 641-9501 Website: www.altusgroup.com Email: [email protected]

AI assistant

Altus Group Limited — Annual Report 2020

46705_rns_2021-02-24_6eaf1aa8-9c93-4df7-8446-f4e13974f4e0.pdf

Altus Group Limited

Altus Group Limited

Management’s Responsibility for Financial Reporting

Altus Group Limited

Independent auditor’s report

Altus Group Limited

Opinion

Basis for opinion

Key audit matters

Altus Group Limited

How our audit addressed the key audit matter

Key audit matter

Revenue Recognition – Software

Altus Group Limited

Goodwill Asset Impairment

Altus Group Limited

Other Information

Responsibilities of management and those charged with governance for the consolidated financial statements

Altus Group Limited

Auditor’s responsibilities for the audit of the consolidated financial statements

Altus Group Limited

Altus Group Limited

Consolidated Statements of Comprehensive Income (Loss) For the Years Ended December 31, 2020 and 2019

Altus Group Limited

Consolidated Balance Sheets

As at December 31, 2020 and 2019

(Expressed in Thousands of Canadian Dollars)

Altus Group Limited

Consolidated Statements of Changes in Equity For the Years Ended December 31, 2020 and 2019

Altus Group Limited

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2020 and 2019

Altus Group Limited

Notes to Consolidated Financial Statements December 31, 2020 and 2019

1. Business and Structure

2. Basis of Preparation

Altus Group Limited

Notes to Consolidated Financial Statements December 31, 2020 and 2019

3. Summary of Significant Accounting Policies

Consolidation

Subsidiaries

Joint Venture

Altus Group Limited

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

3. Summary of Significant Accounting Policies, cont’d

Segment Reporting

Discontinued Operations

Altus Group Limited

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

Foreign Currency Translation

Leases

Right‐of‐use assets

Altus Group Limited

Notes to Consolidated Financial Statements December 31, 2020 and 2019

3. Summary of Significant Accounting Policies, cont’d

Lease liabilities

Short‐term leases and leases of low‐value assets

Current and Deferred Income Taxes

Altus Group Limited

Notes to Consolidated Financial Statements December 31, 2020 and 2019

3. Summary of Significant Accounting Policies, cont’d

Investment Tax Credits

Altus Group Limited

Notes to Consolidated Financial Statements December 31, 2020 and 2019

Employee Benefits

Termination benefits

Profit‐sharing and bonus plans

Revenue Recognition

Altus Group Limited

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

Services

Altus Group Limited

Notes to Consolidated Financial Statements December 31, 2020 and 2019

3. Summary of Significant Accounting Policies, cont’d

Altus Group Limited Annual Report 2020