MOST NOTABLY, IN May 2006, Altus brought All West Surveys, a leading provider of surveying, mapping and geomatic solutions, into the fold. This important deal was the largest acquisition completed to date and it gave Altus a strategic window into the booming oil and gas sector. With more than 230 staff, All West brings a team of exceptional professionals that adds breadth to the Altus Group. Moreover, they are matching their leadership in the energy sector with a vigorous focus on information technology and other areas, thereby ensuring their capacity to ride out resource-sector cycles.

DEMONSTRATING THERE IS more to come, Altus closed on two further acquisitions in February 2007. The purchase of Ezra Consulting, an Alberta-based firm, confirmed Altus’ determination to stay ahead of its market peers. With a highly respected environmental assessment practice, catering to the Forestry and Energy sectors, Ezra’s 19 employees position Altus at the vanguard of the next great growth area in real estate consulting services. The inclusion of sustainability considerations in cost and valuation services will be commonplace in the years to come. Altus will lead the way.

AT THE SAME time, the addition of Clayton Research deepens Altus’ in-house group of urban and real estate economists, as well as market analysts. With a proven specialty in real-estate market analysis, land-use planning issues, consumer spending and borrowing research, and building-products demand, the 14 employees of Clayton distinguish Altus as the leading market expert. Financial growth should also be realized from the firm’s varied client base of real estate developers and builders, investors, financial institutions, manufacturers, retailers, industry associations and all levels of government.

FINALLY, EARLIER THIS month, Altus acquired Condon Survey Group Inc., further enriching our existing expertise in geomatics, land and GPS surveys, and expanding our geographic profile by moving into the province of Saskatchewan. Condon provides an additional 45 staff, including some of Western Canada’s best-respected survey experts. With a mature client base concentrated in the oil and gas and mines and minerals sectors, Condon expands Altus Group’s prairie profile, and improves our strategic presence in one of the country’s highest-growth areas.

COMCOMITANT WITH OUR strategy of growth and expansion of specialized services has been a focus on fostering the health of the Altus Group brand. Over the coming months, we will move forward with a plan to stamp all of our practice groups with the Altus Group name, while retaining our commitment to the attentive and individualized service levels for which our professionals are known.

IN THE SAME vein, Altus dedicated considerable attention in 2006 to the structural and procedural priorities that allow the firm to operate as a coherent, unified body. Capturing the unique character of each practice group, while ensuring the involved participation of all employees in a single strategic plan, is crucial to sustainable growth. The firm now boasts a fully integrated human resources platform, and has been able to augment business development and marketing departments.

THE SUCCESS OF this approach is reflected in our high employee-retention rate. Keeping our highly valued staff members motivated and professionally satisfied is a perpetual preoccupation. That said, attracting top professionals remains a persistent challenge for every practice group. This task is made more manageable thanks to the quality of our management-team structure, which enables more employees to take an ownership stake in Altus.

AS AN INCOME fund, the announcement in October 2006, and the more definitive proposals announced in December 2006, regarding proposed changes to the tax treatment of income trusts, prompted Altus to undertake an immediate examination of our options under the proposed new rules. The Board of Trustees and management of Altus are looking at all options and are confident that, given our industry fundamentals and leadership position, we will be able to continue and better our record of consistent organic and strategic growth.

LOOKING TO THE future, Altus definitely sees more to come. The process of successfully integrating new partners, new employees and new service offerings will continue in 2007, as our recent acquisitions realize even greater return. A larger, stronger Altus Group is even better poised to distinguish itself in the marketplace and meet the growing demand for best-in-class consulting expertise.

PROSPECTS FOR EVEN stronger growth in 2007 are demonstrable. Domestic demand for our services is on the rise, sparking organic growth, as the market further appreciates the competitive advantages our specialized consulting services generate. At the same time, further acquisitions are intended, both in Canada and internationally. Increasingly, the Altus outlook is reaching beyond national borders, as our services are proactively sought by foreign jurisdictions.

IN SHORT, OUR professionals are consistently seen as the most talented in the industry, and demand for our expertise flows from a variety of sources — insulating us from economic ups and downs. The firm’s revenues are strong and growing; our balance sheet is healthy; and our unit price is stable. Each Altus practice group has a long history of success — and, as a unified force, we have stayed true to our vision, and enjoyed a level of success that benefits our clients, our employees and our unitholders.

THIS ENTHUSIASTICALLY POSITIVE picture comes as the product of the hard work of all members of the Altus Group family, from staff to professionals, through to management. The guidance of our Board of Trustees has been pivotal during this exciting period of growth.

FINALLY, THE CONFIDENCE that you, our unitholders, have shown in Altus inspires us to continue to strive for excellence.
Our message is simple: more to come.

he Research, Valuation and Advisory (RVA) practice posted another successful year in 2006, recording strong earnings and reaching a number of milestones in the area of infrastructure development.

THE RVA PRACTICE was responsible for $30.8 million of Altus’ 2006 revenue, compared with $16.1 million for the period May 19 to December 31, 2005.

IN KEEPING WITH Altus’ company-wide dedication to maintaining our competitive edge through investments in technology, RVA launched a web-based sales database last year that is a master repository of commercial sales information in the Canadian real estate market. It went online at the beginning of September 2006, and by the end of the year, it contained more than 3,000 sales transactions.

RVA ALSO BEGAN to develop the second component of our data infrastructure, which tracks lease information. This module entered a test phase during the second week of January 2007, and went live in mid-February. We analyze approximately 18,000 leases a year, all of which will be fed into the database. That proprietary repository of information is then searchable by tenant type, property, location and other variables. In turn, RVA personnel at every level of our organization have instant access to more actual information about the lease market in Canada than anyone else in the industry.

THE THIRD AND final piece of RVA’s intellectual leadership to be developed is our automated report writer, which will result in each individual appraisal forming part of a searchable database. The upshot of aggregating these three levels of intelligence is to elevate the overall quality, speed and accuracy of the real estate information our clients demand.

IN ADDITION TO leveraging proprietary data, RVA systematically compiles publicly available information in a robust database. We are in the process of assessing the potential to commercialize all of this information, and are exploring which new products we ought to bring to market.

INSITE, ONE OF several key accretive acquisitions Altus completed in 2006, has outperformed our projected revenue estimates for the year. We are delighted, to say the least, at the positive effect InSite has had on the RVA group.

THE INSTITUTIONALIZATION OF property ownership continues to be a major driver of growth in RVA. The critical need for independent, third-party expert advice, as required by large property owners, has worked in our favour. Beyond governance concerns, in many cases RVA wins mandates out of practical economic reasons: it often makes sense for client companies to outsource work of this nature.

INTEGRATION OF RVA within the growing Altus family also continues to proceed well. The willing attitude among Altus team members across the organization to create a seamless company is impressive and speaks to the cohesive culture that has emerged within the firm.

CONSEQUENTLY, WE CONTINUE to find ways to cross-sell services among other Altus groups. In some cases, the process is as simple as referring a client we already work with. For example, the tax group recently introduced us to a client involved in a high-profile takeover. RVA was successful in winning that business.

A RISING AND potentially massive opportunity for business going forward is the migration in accounting standards from Canadian GAAP to International Financial Reporting Standards. Over a five-year period, International Financial Reporting Standards will be phased in, a process that began in 2006 and will continue until 2010.

FOR FOREIGN OWNERS of Canadian properties, there are immediate consequences to this move. Those companies seeking to raise money on international capital markets must immediately apply International Financial Reporting Standards in respect of their Canadian property holdings. The RVA group has already begun securing six- and seven-figure mandates for this work, and the scope of our operations gives us a competitive edge in this area. Given our size and national coverage, we’re able to carry out large valuation mandates in multiple cities in a very short period of time.

A FURTHER ADVANTAGE unique to Altus is our status as a publicly traded entity. This profile gives us a stamp of legitimacy, and is a sign of overall market confidence in our capabilities. In one recent case, a large international company, unfamiliar with the Altus brand, chose us for a significant mandate, in part because we are traded on the TSX.

FOR 2007, WE see Altus RVA growing again. Having exceeded our 2006 revenue forecasts by a considerable margin, we believe that another strong year of achievement lies ahead. A number of service agreements with larger clients were renewed and will extend the work we do for them for several years. We also intend to continue to spend time and resources on completing upgrades to our data infrastructure. Our leadership position is established and growing and Altus, its unitholders and our clients all stand to win by this.

MARKET INFORMATION
AND PERSPECTIVE

The 2006 acquisition of InSite Real Estate Information Services Inc., as well as the 2007 acquisition of Clayton Research, has given Altus an unparalleled depth of expertise in real estate market analysis, property valuation, land-use planning issues, consumer spending and other areas of real estate intelligence. Altus is now the clear leader in gathering, analyzing and selling the critical market data that informs major real estate decisions in Canada.

he Cost Consulting group had another outstanding year of achievement in 2006, both in terms of our progress as an organization and in our financial performance. We worked on a number of high-profile projects, invested in our people and established a permanent office in Calgary.

AT $21.5 MILLION, the Cost Consulting group’s revenues were up considerably over the $11.0 million recorded from May 19 to December 31, 2005.

ALTUS HELYAR REMAINS the industry’s first choice to manage the development costs of important construction projects. Our professionals are involved with many of the significant new projects being developed in this country today. In fact, our reach extends to global mandates as well. We were selected in an international competition to consult on a major project in Chicago, the tallest tower to be built in the U.S. Winning that business, and our numerous domestic mandates, are testaments to our enviable reputation, critical mass and demonstrated ability to deliver.

A PARALLEL KEY success for Altus Helyar last year was the roll out of our performance management platform, which brings another level of structure to guiding the growth of our team. As a result, our retention rate for key personnel is stronger than ever. Surrounding all of this is Altus Helyar’s emphasis on strategic planning, which leads to the best choices in determining how and where we build business.

GROWING DEMAND FOR cost consulting services comes from a number of sources. Public-sector infrastructure investment is moving rapidly and is expected to continue as the federal government and the provinces work to meet the demands of Canada’s growing and increasingly sophisticated population base. Private-sector development is also booming, thanks to a healthy investment climate and strong economic fundamentals.

LAND IS BECOMING scarce in some regions because of urban-density regulations, and construction costs are rising, while the need for new buildings of all descriptions continues unabated. The complexities of new developments, like mixed-use buildings, carry inherent costs that we can effectively identify and manage. In all cases, Cost Consulting is selective about the mandates we accept, with the vast majority of business coming from referrals.

COUPLED WITH EXTERNAL referrals is work that is generated from internal cross-selling. Synergies between Cost Consulting and other Altus practice areas continue to generate significant revenue for us.

OUR SUCCESS IN being retained for high-profile projects serves as an ongoing advantage in recruiting top talent. Ambitious professionals at all stages of their career are attracted to the level of work they are exposed to at Altus Helyar. In 2006, we increased our focus on hiring recent graduates, both at home and through international exchange programs, which benefits both the candidates and the firm as a whole. Furthermore, a recent formalization of our mentoring system is designed to create greater team cohesion, and enable our people to develop and achieve their full potential.

ON THE STRATIGIC side, if an appropriate acquisition emerges, we would look seriously at growing in that manner as well.

COST CONSULTING'S RESULTS were encouraging in every respect last year, and we are confident that our positive momentum will lead to another strong year in 2007.

ltus Derbyshire Realty Tax had a busy and productive 2006, working for an impressive array of clients while completing the transition to a smooth-functioning, national practice group that had begun the year before. As backoffice systems and new procedures became fully operational and widely adopted, the professionals in our group were able to dedicate more energy and focus to meeting the increasing demand for our services.

THE TAX PRACTICE generated $22.5 million of Altus’ total 2006 revenue, compared with $12.2 million for the 7.5 months ended December 31, 2005.

ORGANIC REVENUE GROWTH occurred as our practice group took advantage of the market for our highly regarded expertise in tax services. Property tax remains a considerable expense for land owners, with solid demand from commercial enterprises continuing last year, and a higher volume of industrial work emerging as well. Healthy activity in mergers and acquisitions transactions also fed mandates to our practice.

WE ALSO GREW strategically, by acquiring Roy, Sanche Gold and Associates, as well as the national tax practice of KPMG. Those acquisitions enhanced the union of Altus Tax and Derbyshire a year earlier, and complemented our national vision.

MERGING THE OPERATIONS of these various firms posed both challenges and opportunities for us. We have mitigated the challenges by working hard to roll out new universal standards for IT systems, file management and accounting software. Transitioning to these platforms was an important and empowering development for us, creating a uniform standard for a team that hailed from a number of predecessor firms. Expectations and revenue targets are now clear, work product can be shared more effortlessly and employment policies are consistent. The Tax practice has essentially completed all necessary steps to move forward as a single cohesive unit.

IN TERMS OF opportunities, our latest acquisitions have introduced us to a new breed of client, and dozens of new professionals. We are now better able to respond to the full spectrum of tax management mandates in Canada.

IN PARTICULAR, WE currently represent a broader spectrum of clients than ever, and provide service not just to the large organizations we have historically done business with, but to smaller- and medium-sized companies, too. This has enlarged the range of available work and made the Altus Derbyshire brand even more dominant in the area of tax.

NEW PROSPECTS TO grow the Tax group through strategic acquisitions remain a possibility for Altus Derbyshire, but at the same time, we are focused on organic growth. The realities of today’s marketplace, as mentioned, have created a built-in demand for our services. And our deep local knowledge in multiple cities makes us a leader in Canada for regional expertise with a national scope. The strength of our various offices allows us to market nationally and win mandates that span the country.

THERE ARE ALSO synergistic opportunities related to cross-selling that the Tax group is increasingly taking advantage of. There are so many interrelated mandates, particularly in the requisite areas of due diligence involving cost, tax, and valuation, that Altus is becoming a one-stop service provider in this area. As we move closer to operating as a single brand, the notion that the industry standard in due diligence means a bundled service from Altus is beginning to take hold.

THUS, FROM THE standpoint of motivated professionals, healthy markets and newly integrated systems, 2006 was a year of tremendous progress for Altus Derbyshire Tax — and 2007 promises to be even more productive.

ith a history dating to 1974, All West is highly regarded as a leading surveying, mapping and geomatic solutions firm, primarily serving the Western Canadian oil and gas sector. In 2006, All West became a member of the Altus Group. It was a major event for our team of more than 230 staff, in a year that was already exciting on many fronts.

THE ENERGY MARKET HAS soared for the last several years, and All West has been aggressive in capitalizing on the enormous growth opportunities of this environment. In fact, our 2006 day-to-day operations, growth and sales were the best ever for All West. We posted a 14% increase in revenue last year, which followed strong results in 2005. Despite coming into Altus well into the year, All West contributed significantly to the Fund in 2006, accounting for 22% of revenue, or $21 million, in 7.5 months.

WITH SUCH IMPRESSIVE achievements, however, come corresponding challenges in managing infrastructure and back-office operations. Joining Altus gave All West an established set of sophisticated procedures and best practices in critical administrative areas. All West now has improved internal controls and operational processes, thanks to the Altus framework. We are currently migrating to the Altus IT platform and already benefiting from Altus’ human resources and accounting infrastructure.

ALL WEST’S BUSINESS involves facilitating the licensing process required to drill oil and gas wells in Western Canada. Clients typically approach us after they have completed geological and seismic tests that indicate a particular area shows the promise of holding oil or gas reserves. The next step involves targeting specific sites for drilling. All West is called in to survey the geographic and topographic elements of the land in question, to establish whether that property presents a feasible environment for drilling. In particular, we look for specific features, such as creeks, that might preclude drilling a well, and work with clients to ensure that exploration can proceed within all federal and/or provincial guidelines.

OUR WORK, WHICH is entirely fact-based and neutral with respect to interested parties, also includes staking out the boundaries of well sites and drawing plans, both of which are essential elements of the client’s eventual licence application to actuate land and drill wells. While the lion’s share of All West’s work falls into the survey category, we’re also proficient at performing drafting and mapping services, and frequently sell those to our existing clients.

TECHNOLOGY IS A major driver of change in our field, and All West has always embraced the newest developments on that front. We are far ahead of the competition in terms of our adoption of leading-edge applications. Our web-based platform, for example, offers clients remote access to all mapping and surveying information for every project we work on. Clients can view all of their existing dispositions, aerial photos and other documents at any time, to determine what they need before ordering a job. Similarly, once a project is underway, they can access and even add to their latest plans from our interactive website, enabling them to view a complete record of all the data All West has developed that affects a certain piece of land.

IT’S A VIRTUAL filing cabinet that delivers secure and confidential access to mission-critical information, which translates into a huge advantage for them in the ultra-competitive industry in which they operate. In fact, we’ve even had clients place documents created by our competitors on the site, because of the pressing need for 24/7 access to these materials. The web-based application also means that documents posted there are living documents, which can be constantly updated and altered. That tends to extend the mandates, since documents can continue to be worked on with minimal effort.

BY EMBRACING TECHNOLOGY, All West has also boosted its own productivity. We recently developed the ability to automate the drafting of certain types of plans, saving time while simultaneously preserving the high quality for which we’re well known.

GETTING THE MOST out of our professionals’ time is a constant priority for us since the chase for talent is intense in our business. Thankfully, our progressive work environment has helped All West attract and retain employees. We are considered the employer of choice in our field and have an enviable track record in keeping our best and brightest. All West is unique in having a diverse internal culture and a national recruiting strategy, which gives us access to a broad talent pool.

STRONG CONTINUED GROWTH is forecast not only in our current markets, but also in other Western Canadian regions. All West plans to move into Saskatchewan and northern B.C. in the months ahead, to capitalize on burgeoning oil exploration there, while a fair amount of business continues to be generated by the Mackenzie oil and gas pipeline, reflecting the 90% of our mandates that are energy-related.

RISING OIL AND GAS prices have undoubtedly fuelled our strong growth. But we are careful to note that All West’s business is not exclusively dependent on historically high energy markets, because we focus on providing our clients with a value-added product. In addition to our web-based platform, All West has been at the forefront of incorporating our maps onto handheld GPS technology, allowing clients to move about in the field with constant access to the critical information contained in our survey reports. That GPS leadership also extends to a vehicle tracking system we developed that we may be able to license and sell to other parties. We’ve launched these initiatives to capitalize on the current strong market by developing competitive advantages and business lines that will support us, if the oil and gas market softens at some future point. In contrast, the bulk of our competitors’ offerings are basically commoditized.

ALL WEST IS firmly within the Altus family: within our first year we’ve been able to cross-sell work from our clients to the Tax practice group, and we expect to refer more work to other practice areas in the future. In addition, the web-based application All West developed is now proprietary to Altus at large, and all practice areas can leverage this technology for the benefit of their clients.

WE SEE OUR growth remaining at 2006 levels in the coming year, given the signals we’ve been getting from our clients and the mandates that are flowing to All West. The market demand for our range of services remains strong, and our new home within the Altus family points to another positive year ahead for us.

ALL WEST SURVEYS INC.
The $49.5 million acquisition of All West constituted Altus’ largest transaction to date, and created the Land Surveying and Geomatics practice group. The firm of over 230 people and five regional offices provides complete and specialized surveying services to oil and gas companies across the West and into the North. All West’s history of strong growth has accelerated in recent years as a result of the extensive oil and gas infrastructure investments being made in these regions. This transaction marked an important step in Altus’ accretive growth strategy, enabling us to capitalize on the strength of our industry-leading position to expand our service offering, particularly to meet the real estate-related needs of the strategically important Canadian energy sector. The transaction, as expected, was immediately accretive to distributable cash per unit, on a pro forma basis.

INSITE REAL ESTATE INFORMATION SERVICES INC.
InSite built a reputation over ten years, through high-quality collection and publication of commercial real estate information for the Canadian market, providing its clients with national, accurate, timely and independent office-market data. Merging the research efforts of Altus RVA and InSite in a $3 million transaction was of significant strategic importance, and has been highly accretive for both enterprise value and distributable cash.

ROY, SANCHE GOLD & ASSOCIATES
In June, Altus completed the $2.5 million acquisition of RSGA , a professional real estate consulting firm with offices in Quebec. The company has more than 25 people providing complete and specialized appraisal and tax management services to the commercial, industrial and hospitality sectors in Quebec. One of the cornerstones of Altus is the strength of our property Tax and Valuation practices, which, as a result of the transaction with RSGA, became both stronger and more diversified in Quebec.

KPMG
KPMG’s property tax practice employs more than 20 professionals and support staff in Montreal, Ottawa, Toronto, Waterloo, London, Winnipeg and Calgary, managing approximately 1,800 tax appeals for around 500 clients. The client base is primarily mid-size commercial and industrial firms, along with a solid representation in the oil and gas sector. The $500,000 acquisition of this high-profile group strengthened our Realty Tax services across Canada, and provided us with a local presence in both Winnipeg and southwestern Ontario.