**EXHIBIT      2**

**MANAGEMENT’S      REPORT**

**MANAGEMENT’S      RESPONSIBILITY FOR FINANCIAL STATEMENTS**

** **

**REPORT      ON INTERNAL CONTROLS OVER FINANCIAL REPORTING**

*Internal      Control - Integrated Framework*

|                                                                      |                                                                            |
|---------------------------------------------------------------------------|---------------------------------------------------------------------------------|
| */s/                Jay S. Hennick*Chief                Executive Officer | */s/                John B. Friedrichsen*Chief                Financial Officer |

----

**INDEPENDENT      AUDITORS’ REPORT**

*/s/      PricewaterhouseCoopers LLP*

----

| For                the years ended March 31                                                                       |   |   | **2007**      |   |   | 2006      |   |   | 2005    |   |
|-------------------------------------------------------------------------------------------------------------------|--------|--------|---------------|--------|--------|-----------|--------|--------|---------|--------|
| Revenues                                                                                                          |   |   |          |   |   |      |   |   |    |   |
|     Services                                                                                  |   | **$**  | **1,171,582** |   | $      | 914,273   |   | $      | 509,005 |   |
|     Products                                                                                  |   |   | **188,104**   |   |   | 153,861   |   |   | 142,371 |   |
| Total                revenues                                                                                     |   |   | **1,359,686** |   |   | 1,068,134 |   |   | 651,376 |   |
| Cost                of revenues (exclusive of depreciation shown below)                                           |   |   |          |   |   |      |   |   |    |   |
|     Services                                                                                  |   |   | **728,460**   |   |   | 589,659   |   |   | 336,569 |   |
|     Products                                                                                  |   |   | **131,776**   |   |   | 94,621    |   |   | 86,215  |   |
| Selling,                general and administrative expenses                                                       |   |   | **384,875**   |   |   | 295,050   |   |   | 172,179 |   |
| Depreciation                                                                                                      |   |   | **16,650**    |   |   | 12,340    |   |   | 9,603   |   |
| Amortization                of intangible assets other than brokerage backlog                                     |   |   | **6,773**     |   |   | 3,684     |   |   | 2,769   |   |
| Amortization                of brokerage backlog                                                                  |   |   | **8,164**     |   |   | 7,554     |   |   | 8,735   |   |
|                                                                                                              |   |   | **82,988**    |   |   | 65,226    |   |   | 35,306  |   |
| Interest                expense                                                                                   |   |   | **16,807**    |   |   | 13,128    |   |   | 7,192   |   |
| Interest                income                                                                                    |   |   | **(6,853**    | **)**  |   | (1,249    | )      |   | -       |   |
| Other                income, net (note 5)                                                                         |   |   | **(4,848**    | **)**  |   | (3,776    | )      |   | (375    | )      |
| Impairment                loss on available-for-sale securities (note 7)                                          |   |   | **3,139**     |   |   | -         |   |   | -       |   |
| Earnings                before income taxes and minority interest                                                 |   |   | **74,743**    |   |   | 57,123    |   |   | 28,489  |   |
| Income                taxes (note 14)                                                                             |   |   | **21,738**    |   |   | 17,208    |   |   | 7,014   |   |
| Earnings                before minority interest                                                                  |   |   | **53,005**    |   |   | 39,915    |   |   | 21,475  |   |
| Minority                interest share of earnings                                                                |   |   | **16,318**    |   |   | 11,881    |   |   | 6,085   |   |
| Net                earnings from continuing operations                                                            |   |   | **36,687**    |   |   | 28,034    |   |   | 15,390  |   |
| Net                (loss) earnings from discontinued operations, net of income taxes                (note 4) |   |   | **(471**      | **)**  |   | 41,463    |   |   | 7,817   |   |
| Net                earnings before cumulative effect of change in accounting                principle             |   |   | **36,216**    |   |   | 69,497    |   |   | 23,207  |   |
| Cumulative                effect of change in accounting principle, net of income taxes (note                13)  |   |   | **(1,353**    | **)**  |   | -         |   |   | -       |   |
| Net                earnings                                                                                       |   | **$**  | **34,863**    |   | $      | 69,497    |   | $      | 23,207  |   |
|                                                                                                              |   |   |          |   |   |      |   |   |    |   |
| Net                earnings (loss) per share (note 15)                                                            |   |   |          |   |   |      |   |   |    |   |
| Basic                                                                                                             |   |   |          |   |   |      |   |   |    |   |
|     Continuing                operations                                                      |   | **$**  | **1.23**      |   | $      | 0.93      |   | $      | 0.52    |   |
|     Discontinued                operations                                                    |   |   | **(0.02**     | **)**  |   | 1.37      |   |   | 0.26    |   |
|     Cumulative                effect of change in accounting principle                        |   |   | **(0.04**     | **)**  |   | -         |   |   | -       |   |
|                                                                                                              |   | **$**  | **1.17**      |   | $      | 2.30      |   | $      | 0.78    |   |
| Diluted                                                                                                           |   |   |          |   |   |      |   |   |    |   |
|     Continuing                operations                                                      |   | **$**  | **1.14**      |   | $      | 0.87      |   | $      | 0.49    |   |
|     Discontinued                operations                                                    |   |   | **(0.02**     | **)**  |   | 1.34      |   |   | 0.25    |   |
|     Cumulative                effect of change in accounting principle                        |   |   | **(0.04**     | **)**  |   | -         |   |   | -       |   |
|                                                                                                              |   | **$**  | **1.08**      |   | $      | 2.21      |   | $      | 0.74    |   |

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

----

| As                at March 31                                                                                                                                                                                                                                                                             |   |   | **2007**    |   |   | 2006    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|---------|--------|
| **Assets**                                                                                                                                                                                                                                                                                                |   |   |        |   |   |    |   |
| **Current                assets**                                                                                                                                                                                                                                                                         |   |   |        |   |   |    |   |
|     Cash                and cash equivalents                                                                                                                                                                                                                                          |   | **$**  | **99,038**  |   | $      | 167,938 |   |
|     Restricted                cash                                                                                                                                                                                                                                                    |   |   | **16,930**  |   |   | -       |   |
|     Accounts                receivable, net of an allowance of $8,637 (2006 - $7,482)                                                                                                                                                                                                 |   |   | **163,581** |   |   | 128,276 |   |
|     Mortgage                loans                receivable                                                                                                                                                                                                                           |   |   | **13,716**  |   |   | 6,874   |   |
|     Income                taxes recoverable                                                                                                                                                                                                                                           |   |   | **8,796**   |   |   | 6,665   |   |
|     Inventories                (note 6)                                                                                                                                                                                                                                               |   |   | **31,768**  |   |   | 27,267  |   |
|     Prepaid                expenses and other assets                                                                                                                                                                                                                                  |   |   | **17,593**  |   |   | 12,858  |   |
|     Deferred                income                taxes (note 14)                                                                                                                                                                                                                     |   |   | **10,935**  |   |   | 5,531   |   |
|                                                                                                                                                                                                                                                                                                      |   |   | **362,357** |   |   | 355,409 |   |
|  Other                receivables                                                                                                                                                                                                                                                                    |   |   | **7,215**   |   |   | 8,311   |   |
| Fixed                assets (note 8)                                                                                                                                                                                                                                                                      |   |   | **66,297**  |   |   | 48,733  |   |
| Other                assets (note 7)                                                                                                                                                                                                                                                                      |   |   | **28,952**  |   |   | 26,908  |   |
| Deferred                income taxes (note 14)                                                                                                                                                                                                                                                            |   |   | **5,238**   |   |   | 4,381   |   |
| Intangible                assets (note 9)                                                                                                                                                                                                                                                                 |   |   | **95,809**  |   |   | 70,775  |   |
| Goodwill                (note 10)                                                                                                                                                                                                                                                                         |   |   | **251,130** |   |   | 196,487 |   |
|                                                                                                                                                                                                                                                                                                      |   |   | **454,641** |   |   | 355,595 |   |
|                                                                                                                                                                                                                                                                                                      |   | **$**  | **816,998** |   | $      | 711,004 |   |
| **Liabilities****Current                liabilities**                                                                                                                                                                                                                                                     |   |   |        |   |   |    |   |
|     Accounts                payable                                                                                                                                                                                                                                                   |   | **$**  | **35,668**  |   | $      | 41,790  |   |
|     Accrued                liabilities (note 6)                                                                                                                                                                                                                                       |   |   | **169,861** |   |   | 108,085 |   |
|     Income                taxes payable                                                                                                                                                                                                                                               |   |   | **5,229**   |   |   | 5,726   |   |
|     Unearned                revenues                                                                                                                                                                                                                                                  |   |   | **20,632**  |   |   | 5,349   |   |
|     Long-term                debt                - current (note 11)                                                                                                                                                                                                                  |   |   | **22,119**  |   |   | 18,646  |   |
|     Deferred                income                taxes (note 14)                                                                                                                                                                                                                     |   |   | **3,318**   |   |   | 5,112   |   |
|                                                                                                                                                                                                                                                                                                      |   |   | **256,827** |   |   | 184,708 |   |
|  Long-term                debt - non-current (note 11)                                                                                                                                                                                                                                               |   |   | **213,030** |   |   | 230,040 |   |
| Other                liabilities                                                                                                                                                                                                                                                                          |   |   | **4,876**   |   |   | -       |   |
| Deferred                income taxes (note 14)                                                                                                                                                                                                                                                            |   |   | **29,084**  |   |   | 30,041  |   |
| Minority                interest                                                                                                                                                                                                                                                                          |   |   | **48,306**  |   |   | 28,463  |   |
|                                                                                                                                                                                                                                                                                                      |   |   | **295,296** |   |   | 288,544 |   |
| **Shareholders’                equity**                                                                                                                                                                                                                                                             |   |   |        |   |   |    |   |
| Capital                stock (note 12)                                                                                                                                                                                                                                                                    |   |   | **80,108**  |   |   | 75,687  |   |
|     Issued                and outstanding: 28,597,194 (2006 - 28,730,094) Subordinate    Voting                Shares and 1,325,694 (2006 - 1,325,694) convertible Multiple    Voting                SharesContributed                surplus |   |   | **6,557**   |   |   | 2,163   |   |
| Receivables                pursuant to share purchase plan (note 12)                                                                                                                                                                                                                                      |   |   | **(1,232**  | **)**  |   | (1,635  | )      |
| Retained                earnings                                                                                                                                                                                                                                                                          |   |   | **175,346** |   |   | 160,392 |   |
| Cumulative                other comprehensive earnings                                                                                                                                                                                                                                                    |   |   | **4,096**   |   |   | 1,145   |   |
|                                                                                                                                                                                                                                                                                                      |   |   | **264,875** |   |   | 237,752 |   |
|                                                                                                                                                                                                                                                                                                      |   | **$**  | **816,998** |   | $      | 711,004 |   |
| **Commitments                and contingencies (notes 12 and 18)**                                                                                                                                                                                                                                        |   |   |        |   |   |    |   |

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

**On      behalf of the Board of Directors,**

| */s/                Bernard I.                Ghert* | */s/                Jay S.                Hennick* |   |   |
|------------------------------------------------------|----------------------------------------------------|--------|--------|
| Director                                             | Director                                      |   |   |

----

| FIRSTSERVICE                CORPORATIONCONSOLIDATED                STATEMENTS OF SHAREHOLDERS’ EQUITY(in                thousands of US dollars, except share amounts) |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                           |   |   | Issued                and outstanding shares (note                12) |   |   | Capital                stock |   |   | Contributed                surplus |   |   | Receivables                pursuant to share purchase plan |   |   | Retained                earnings |   |   | Cumulative                other comprehensive earnings (loss | )      |   | Total                shareholders’ equity |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------|--------|--------|------------------------------|--------|--------|------------------------------------|--------|--------|------------------------------------------------------------|--------|--------|----------------------------------|--------|--------|--------------------------------------------------------------|--------|--------|-------------------------------------------------|--------|
| Balance,                March 31, 2004                                                                                                                                                                                                                         |   |   | 29,499,730                                                            |   | $      | 68,557                       |   | $      | 183                                |   | $      | (2,148                                                     | )      | $      | 81,972                           |   | $      | 6,537                                                        |   | $      | 155,101                                         |   |
| Comprehensive                earnings:                                                                                                                                                                                                                         |   |   |                                                                  |   |   |                         |   |   |                               |   |   |                                                       |   |   |                             |   |   |                                                         |   |   |                                            |   |
|     Net                earnings                                                                                                                                                                                                            |   |   | -                                                                     |   |   | -                            |   |   | -                                  |   |   | -                                                          |   |   | 23,207                           |   |   | -                                                            |   |   | 23,207                                          |   |
|     Foreign                currency translation                adjustments                                                                                                                                                                 |   |   | -                                                                     |   |   | -                            |   |   | -                                  |   |   | -                                                          |   |   | -                                |   |   | 4,124                                                        |   |   | 4,124                                           |   |
| Comprehensive                earnings                                                                                                                                                                                                                          |   |   |                                                                  |   |   |                         |   |   |                               |   |   |                                                       |   |   |                             |   |   |                                                         |   |   | 27,331                                          |   |
| Subordinate                Voting Shares:                                                                                                                                                                                                                      |   |   |                                                                  |   |   |                         |   |   |                               |   |   |                                                       |   |   |                             |   |   |                                                         |   |   |                                            |   |
|     Stock                option expense                                                                                                                                                                                                    |   |   | -                                                                     |   |   | -                            |   |   | 622                                |   |   | -                                                          |   |   | -                                |   |   | -                                                            |   |   | 622                                             |   |
|     Stock                options exercised                                                                                                                                                                                                 |   |   | 911,130                                                               |   |   | 5,515                        |   |   | -                                  |   |   | -                                                          |   |   | -                                |   |   | -                                                            |   |   | 5,515                                           |   |
|     Purchased                for                cancellation                                                                                                                                                                               |   |   | (218,072                                                              | )      |   | (530                         | )      |   | -                                  |   |   | -                                                          |   |   | (2,168                           | )      |   | -                                                            |   |   | (2,698                                          | )      |
| Balance,                March 31, 2005                                                                                                                                                                                                                         |   |   | 30,192,788                                                            |   |   | 73,542                       |   |   | 805                                |   |   | (2,148                                                     | )      |   | 103,011                          |   |   | 10,661                                                       |   |   | 185,871                                         |   |
| Comprehensive                earnings:                                                                                                                                                                                                                         |   |   |                                                                  |   |   |                         |   |   |                               |   |   |                                                       |   |   |                             |   |   |                                                         |   |   |                                            |   |
|     Net                earnings                                                                                                                                                                                                            |   |   | -                                                                     |   |   | -                            |   |   | -                                  |   |   | -                                                          |   |   | 69,497                           |   |   | -                                                            |   |   | 69,497                                          |   |
|     Foreign                currency translation                adjustments                                                                                                                                                                 |   |   | -                                                                     |   |   | -                            |   |   | -                                  |   |   | -                                                          |   |   | -                                |   |   | (7,988                                                       | )      |   | (7,988                                          | )      |
|     Unrealized                loss                on available-for-sale                equity securities, net of                income         taxes                of $335                        |   |   | -                                                                     |   |   | -                            |   |   | -                                  |   |   | -                                                          |   |   | -                                |   |   | (1,528                                                       | )      |   | (1,528                                          | )      |
| Comprehensive                earnings                                                                                                                                                                                                                          |   |   |                                                                  |   |   |                         |   |   |                               |   |   |                                                       |   |   |                             |   |   |                                                         |   |   | 59,981                                          |   |
| Subordinate                Voting Shares:                                                                                                                                                                                                                      |   |   |                                                                  |   |   |                         |   |   |                               |   |   |                                                       |   |   |                             |   |   |                                                         |   |   |                                            |   |
|     Stock                option expense                                                                                                                                                                                                    |   |   | -                                                                     |   |   | -                            |   |   | 1,380                              |   |   | -                                                          |   |   | -                                |   |   | -                                                            |   |   | 1,380                                           |   |
|     Stock                options exercised                                                                                                                                                                                                 |   |   | 434,650                                                               |   |   | 3,740                        |   |   | (22                                | )      |   | -                                                          |   |   | -                                |   |   | -                                                            |   |   | 3,718                                           |   |
|     Purchased                for                cancellation                                                                                                                                                                               |   |   | (571,650                                                              | )      |   | (1,595                       | )      |   | -                                  |   |   | -                                                          |   |   | (12,116                          | )      |   | -                                                            |   |   | (13,711                                         | )      |
| Cash                payments on share purchase                plan                                                                                                                                                                                             |   |   | -                                                                     |   |   | -                            |   |   | -                                  |   |   | 513                                                        |   |   | -                                |   |   | -                                                            |   |   | 513                                             |   |
| Balance,                March 31, 2006                                                                                                                                                                                                                         |   |   | 30,055,788                                                            |   |   | 75,687                       |   |   | 2,163                              |   |   | (1,635                                                     | )      |   | 160,392                          |   |   | 1,145                                                        |   |   | 237,752                                         |   |
| SAB                108 adjustment (note 21)                                                                                                                                                                                                                    |   |   | -                                                                     |   |   | -                            |   |   | -                                  |   |   | -                                                          |   |   | (5,377                           | )      |   | -                                                            |   |   | (5,377                                          | )      |
| Comprehensive                earnings:                                                                                                                                                                                                                         |   |   |                                                                  |   |   |                         |   |   |                               |   |   |                                                       |   |   |                             |   |   |                                                         |   |   |                                            |   |
|     Net                earnings                                                                                                                                                                                                            |   |   | -                                                                     |   |   | -                            |   |   | -                                  |   |   | -                                                          |   |   | 34,863                           |   |   | -                                                            |   |   | 34,863                                          |   |
|     Foreign                currency translation                adjustments                                                                                                                                                                 |   |   | -                                                                     |   |   | -                            |   |   | -                                  |   |   | -                                                          |   |   | -                                |   |   | 1,423                                                        |   |   | 1,423                                           |   |
|     Reclass                to earnings of unrealized                loss on available-for-sale                equity securities,         net                of                income taxes of $335 |   |   | -                                                                     |   |   | -                            |   |   | -                                  |   |   | -                                                          |   |   | -                                |   |   | 1,528                                                        |   |   | 1,528                                           |   |
| Comprehensive                earnings                                                                                                                                                                                                                          |   |   |                                                                  |   |   |                         |   |   |                               |   |   |                                                       |   |   |                             |   |   |                                                         |   |   | 37,814                                          |   |
| Subsidiaries’                equity transactions                                                                                                                                                                                                         |   |   | -                                                                     |   |   | -                            |   |   | 2,562                              |   |   | -                                                          |   |   | -                                |   |   | -                                                            |   |   | 2,562                                           |   |
| Subordinate                Voting Shares:                                                                                                                                                                                                                      |   |   |                                                                  |   |   |                         |   |   |                               |   |   |                                                       |   |   |                             |   |   |                                                         |   |   |                                            |   |
|     Stock                option expense                                                                                                                                                                                                    |   |   | -                                                                     |   |   | -                            |   |   | 1,879                              |   |   | -                                                          |   |   | -                                |   |   | -                                                            |   |   | 1,879                                           |   |
|     Stock                options exercised                                                                                                                                                                                                 |   |   | 564,800                                                               |   |   | 6,482                        |   |   | (47                                | )      |   | -                                                          |   |   | -                                |   |   | -                                                            |   |   | 6,435                                           |   |
|     Purchased                for                cancellation                                                                                                                                                                               |   |   | (697,700                                                              | )      |   | (2,061                       | )      |   | -                                  |   |   | -                                                          |   |   | (14,532                          | )      |   | -                                                            |   |   | (16,593                                         | )      |
| Cash                payments on share purchase                plan                                                                                                                                                                                             |   |   | -                                                                     |   |   | -                            |   |   | -                                  |   |   | 403                                                        |   |   | -                                |   |   | -                                                            |   |   | 403                                             |   |
| **Balance,                March 31, 2007**                                                                                                                                                                                                                     |   |   | **29,922,888**                                                        |   | **$**  | **80,108**                   |   | **$**  | **6,557**                          |   | **$**  | **(1,232**                                                 | **)**  | **$**  | **175,346**                      |   | **$**  | **4,096**                                                    |   | **$**  | **264,875**                                     |   |

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

----

** **

| For                the years ended March 31                                        |   |   | **2007**     |   |   | 2006    |   |   | 2005    |   |
|------------------------------------------------------------------------------------|--------|--------|--------------|--------|--------|---------|--------|--------|---------|--------|
| **Cash                provided by (used in)**                                      |   |   |         |   |   |    |   |   |    |   |
| **Operating                activities**                                            |   |   |         |   |   |    |   |   |    |   |
| Net                earnings from continuing operations                             |   | **$**  | **36,687**   |   | $      | 28,034  |   | $      | 15,390  |   |
| Items                not affecting cash:                                           |   |   |         |   |   |    |   |   |    |   |
|     Depreciation                and amortization               |   |   | **31,587**   |   |   | 23,578  |   |   | 21,107  |   |
|     Deferred                income                taxes        |   |   | **(9,531**   | **)**  |   | (4,901  | )      |   | 473     |   |
|     Minority                interest share of earnings         |   |   | **16,318**   |   |   | 11,881  |   |   | 6,085   |   |
|     Stock                option expense                        |   |   | **3,707**    |   |   | 1,932   |   |   | 799     |   |
|     Other                                                      |   |   | **2,103**    |   |   | 716     |   |   | 166     |   |
|                                                                               |   |   |         |   |   |    |   |   |    |   |
| Changes                in operating assets and liabilities:                        |   |   |         |   |   |    |   |   |    |   |
|     Accounts                receivable                         |   |   | **(27,039**  | **)**  |   | (8,483  | )      |   | (3,171  | )      |
|     Mortgage                loans                receivable    |   |   | **(6,842**   | **)**  |   | (6,874  | )      |   | -       |   |
|     Inventories                                                |   |   | **(4,684**   | **)**  |   | (8,622  | )      |   | (6,678  | )      |
|     Prepaid                expenses and other assets           |   |   | **(1,806**   | **)**  |   | (2,585  | )      |   | 2,319   |   |
|     Accounts                payable                            |   |   | **(11,847**  | **)**  |   | 9,640   |   |   | (8,337  | )      |
|     Accrued                liabilities                         |   |   | **33,159**   |   |   | 12,612  |   |   | 5,387   |   |
|     Income                taxes                                |   |   | **(3,345**   | **)**  |   | (4,846  | )      |   | (3,051  | )      |
|     Unearned                revenues                           |   |   | **1,554**    |   |   | 166     |   |   | 1,386   |   |
| Discontinued                operations                                             |   |   | **(231**     | **)**  |   | 7,101   |   |   | 4,566   |   |
| Net                cash provided by operating activities                           |   |   | **59,790**   |   |   | 59,349  |   |   | 36,441  |   |
|                                                                               |   |   |         |   |   |    |   |   |    |   |
| **Investing                activities**                                            |   |   |         |   |   |    |   |   |    |   |
| Acquisitions                of businesses, net of cash acquired                    |   |   | **(66,826**  | **)**  |   | (14,105 | )      |   | (56,830 | )      |
| Purchases                of minority shareholders’ interests in subsidiaries |   |   | **(6,603**   | **)**  |   | (11,998 | )      |   | (2,148  | )      |
| Sales                of interests in subsidiaries to minority shareholders         |   |   | **3,167**    |   |   | -       |   |   | -       |   |
| Purchases                of fixed assets                                           |   |   | **(26,723**  | **)**  |   | (18,837 | )      |   | (12,499 | )      |
| (Increase)                decrease in other assets                                 |   |   | **(1,367**   | **)**  |   | 109     |   |   | 1,236   |   |
| Decrease                (increase) in other receivables                            |   |   | **1,967**    |   |   | (600    | )      |   | 1,928   |   |
| Proceeds                on sale of equity securities                               |   |   | **4,875**    |   |   | -       |   |   | -       |   |
| Disposals                of businesses                                             |   |   | **-**        |   |   | 110,476 |   |   | -       |   |
| Changes                in restricted cash                                          |   |   | **(9,797**   | **)**  |   | -       |   |   | -       |   |
| Discontinued                operations                                             |   |   | **(838**     | **)**  |   | (8,563  | )      |   | (142    | )      |
| Net                cash (used in) provided by investing activities                 |   |   | **(102,145** | **)**  |   | 56,482  |   |   | (68,455 | )      |
|                                                                               |   |   |         |   |   |    |   |   |    |   |
| **Financing                activities**                                            |   |   |         |   |   |    |   |   |    |   |
| Increase                in long-term debt                                          |   |   | **5,935**    |   |   | 102,614 |   |   | 59,586  |   |
| Repayment                of long-term debt                                         |   |   | **(21,430**  | **)**  |   | (74,100 | )      |   | (10,956 | )      |
| Financing                fees paid                                                 |   |   | **(150**     | **)**  |   | (1,396  | )      |   | (124    | )      |
| Proceeds                received on exercise of stock options                      |   |   | **6,435**    |   |   | 3,740   |   |   | 5,515   |   |
| Repurchase                of Subordinate Voting Shares                             |   |   | **(16,593**  | **)**  |   | (13,711 | )      |   | (2,698  | )      |
| Collection                of receivables pursuant to share purchase plan           |   |   | **403**      |   |   | 513     |   |   | -       |   |
| Dividends                paid to minority shareholders of subsidiaries             |   |   | **(3,524**   | **)**  |   | (1,939  | )      |   | (606    | )      |
| Net                cash (used in) provided by financing activities                 |   |   | **(28,924**  | **)**  |   | 15,721  |   |   | 50,717  |   |
| Effect                of exchange rate changes on cash and cash equivalents        |   |   | **2,379**    |   |   | (1,072  | )      |   | 3,135   |   |
| (Decrease)                increase in cash and cash equivalents during the year    |   |   | **(68,900**  | **)**  |   | 130,480 |   |   | 21,838  |   |
| Cash                and cash equivalents, beginning of year                        |   |   | **167,938**  |   |   | 37,458  |   |   | 15,620  |   |
| Cash                and cash equivalents, end of year                              |   | **$**  | **99,038**   |   | $      | 167,938 |   | $      | 37,458  |   |

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

----

| **1.** | **Description                of the business** |
|--------|------------------------------------------------|

| **2.** | **Summary                of significant accounting                policies** |
|--------|------------------------------------------------------------------------------|

**Basis      of consolidation**

**Cash      and cash equivalents**

**Restricted      cash**

**Mortgage      loans receivable**

----

**Inventories**

**Fixed      assets**

|   | Buildings                                                | 20              to 40              years straight-line          |   |
|--------|----------------------------------------------------------|----------------------------------------------------------------------|--------|
|   | Vehicles                                            | 3              to 5 years              straight-line            |   |
|   | Furniture              and              equipment        | 3              to 10 years              straight-line           |   |
|   | Computer              equipment and software   | 3              to 5 years              straight-line            |   |
|   | Leasehold              improvements                      | term              of the              lease to a maximum of 10 years |   |

**Investments      in securities**

**Financial      instruments and derivatives**

**Financing      fees**

**Goodwill      and intangible assets**

|   | Customer              lists and relationships                                                        | straight-line              over 4 to 25 years                                            |   |
|--------|------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|--------|
|   | Franchise              rights                                                                        | by              pattern of              use, currently estimated at 2.5% to 15% per year |   |
|   | Trademarks              and trade names:                                                             |                                                                                          |   |
|   |             Indefinite              life | not              amortized                                                               |   |
|   |             Finite              life     | straight-line              over              15 to 35 years                              |   |
|   | Management              contracts and other                                                     | straight-line              over              life of contract ranging from 2 to 15 years |   |
|   | Brokerage              backlog                                                                       | as underlying              brokerage transactions are completed                          |   |

----

**Revenue      recognition and unearned revenue**

|   | *(a)* | *Real                estate brokerage operations* |
|--------|-------|---------------------------------------------------|

|   | *(b)* | *Service                operations other than real estate brokerage* |
|--------|-------|----------------------------------------------------------------------|

|   | *(c)* | *Franchise                operations* |
|--------|-------|---------------------------------------|

**Foreign      currency translation**

----

**Income      taxes**

| **3.** | **Acquisitions** |
|--------|------------------|

*2007      acquisitions:*

|                                      |   | **2007** |
|-------------------------------------------|--------|----------|
|                                      |   |     | **PRDnationwide                Group** |   |   | **Aggregate                other acquisitions** |   |   | **Purchases                of minority shareholders’ interests** |   |
|                                      |   |     |   |   |   |   |   |   |   |   |
| Current                assets             |   | **$**    | **2,134** |   | **$** | **16,390** |   | **$** | **-** |   |
| Long-term                assets           |   |     | **2,627** |   |   | **22,162** |   |   | **(1,561** | **)** |
| Current                liabilities        |   |     | **(4,796** | **)** |   | **(34,096** | **)** |   | **201** |   |
| Long-term                liabilities      |   |     | **(4,892** | **)** |   | **(7,074** | **)** |   | **(48** | **)** |
| **-**                                     |   |     |   |   |   |   |   |   |   |   |
| Minority                interest          |   |     | **(223** | **)** |   | **(6,200** | **)** |   | **645** |   |
|                                      |   |     |   |   |   |   |   |   |   |   |
|                                      |   |     | **(5,150** | **)** |   | **(8,818** | **)** |   | **(763** | **)** |
| Note                consideration         |   | **$**    | **-** |   | **$** | **2,522** |   | **$** | **1,044** |   |
| Cash                consideration         |   | **$**    | **21,475** |   | **$** | **43,604** |   | **$** | **6,603** |   |
|                                      |   |     |   |   |   |   |   |   |   |   |
| Acquired                intangible assets |   |     | **9,519** |   |   | **29,156** |   |   | **2,376** |   |
| Goodwill                                  |   |     | **17,106** |   |   | **25,788** |   |   | **6,034** |   |

----

*2006      acquisitions:*

|                                      |   | 2006   |
|-------------------------------------------|--------|--------|
|                                      |   |   | Acquisitions |   |   | Purchases                of minority shareholders’ interests |   |
|                                      |   |   |   |   |   |   |   |
| Current                assets             |   | $      | 5,915 |   | $ | - |   |
| Long-term                assets           |   |   | 2,257 |   |   | - |   |
| Current                liabilities        |   |   | (11,931 | ) |   | - |   |
| Long-term                liabilities      |   |   | (5,899 | ) |   | (2,254 | ) |
|                                      |   |   |   |   |   |   |   |
| Minority                interest          |   |   | (840 | ) |   | 2,679 |   |
|                                      |   |   |   |   |   |   |   |
|                                      |   |   | (10,498 | ) |   | 425 |   |
| Note                consideration         |   | $      | 3,050 |   | $ | - |   |
| Cash                consideration         |   | $      | 11,346 |   | $ | 11,998 |   |
|                                      |   |   |   |   |   |   |   |
| Acquired                intangible assets |   |   | 14,854 |   |   | 6,213 |   |
| Goodwill                                  |   |   | 10,040 |   |   | 5,360 |   |

*2005      acquisitions:*

----

|                                      |   | 2005   |
|-------------------------------------------|--------|--------|
|                                      |   |   | CMN |   |   | Aggregate                other acquisitions |   |   | Purchases                of minority shareholders’ interests |   |
|                                      |   |   |   |   |   |   |   |   |   |   |
| Current                assets             |   | $      | 57,150 |   | $ | 1,281 |   | $ | - |   |
| Long-term                assets           |   |   | 16,807 |   |   | 1,747 |   |   | - |   |
| Current                liabilities        |   |   | (83,644 | ) |   | (2,351 | ) |   | - |   |
| Long-term                liabilities      |   |   | (15,167 | ) |   | (2,604 | ) |   | - |   |
|                                      |   |   |   |   |   |   |   |   |   |   |
| Minority                interest          |   |   | (3,720 | ) |   | (89 | ) |   | 272 |   |
|                                      |   |   |   |   |   |   |   |   |   |   |
|                                      |   |   | (28,574 | ) |   | (2,016 | ) |   | 272 |   |
| Note                consideration         |   | $      | - |   | $ | 405 |   | $ | - |   |
| Cash                consideration         |   | $      | 39,833 |   | $ | 10,512 |   | $ | 2,148 |   |
|                                      |   |   |   |   |   |   |   |   |   |   |
| Acquired                intangible assets |   |   | 29,402 |   |   | 6,289 |   |   | - |   |
| Goodwill                                  |   |   | 39,005 |   |   | 6,644 |   |   | 1,876 |   |

----

| (unaudited)                                                                |   |   | 2007      |   |   | 2006      |   |
|----------------------------------------------------------------------------|--------|--------|-----------|--------|--------|-----------|--------|
|                                                                       |   |   |      |   |   |      |   |
| Pro                forma revenues                                          |   | $      | 1,422,659 |   | $      | 1,220,902 |   |
| Pro                forma net earnings from continuing operations           |   |   | 38,369    |   |   | 32,114    |   |
|                                                                       |   |   |      |   |   |      |   |
| Pro                forma net earnings per share from continuing operations |   |   |      |   |   |      |   |
|     Basic                                              |   | $      | 1.28      |   | $      | 1.06      |   |
|     Diluted                                            |   |   | 1.19      |   |   | 1.00      |   |

| **4.** | **Dispositions** |
|--------|------------------|

----

| **Operating                results for years ended March 31**                                            |   |   | **2007**  |   |   | 2006    |   |   | 2005    |   |
|----------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|---------|--------|--------|---------|--------|
|                                                                                                     |   |   |      |   |   |    |   |   |    |   |
| Revenues                                                                                                 |   | **$**  | **-**     |   | $      | 160,204 |   | $      | 174,078 |   |
| Operating                (loss) earnings from discontinued operations                before income taxes |   |   | **(728**  | **)**  |   | 7,429   |   |   | 10,452  |   |
| (Recovery                of) provision for income taxes                                                  |   |   | **(257**  | **)**  |   | 1,785   |   |   | 3,835   |   |
| Net                operating (loss) earnings from discontinued operations                                |   |   | **(471**  | **)**  |   | 5,644   |   |   | 6,617   |   |
| Net                gain on disposal                                                                      |   |   | **-**     |   |   | 35,819  |   |   | 1,200   |   |
| Net                (loss) earnings from discontinued operations                                          |   |   | **(471**  | **)**  |   | 41,463  |   |   | 7,817   |   |
|                                                                                                     |   |   |      |   |   |    |   |   |    |   |
| Net                (loss) earnings per share from discontinued operations                                |   |   |      |   |   |    |   |   |    |   |
|     Basic                                                                            |   | **$**  | **(0.02** | **)**  | $      | 1.37    |   | $      | 0.26    |   |
|     Diluted                                                                          |   |   | **(0.02** | **)**  |   | 1.34    |   |   | 0.25    |   |

| **5.** | **Other                income** |
|--------|---------------------------------|

|                                                        |   |   | **2007**  |   |   | 2006   |   |   | 2005   |   |
|-------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|
|                                                        |   |   |      |   |   |   |   |   |   |   |
| Earnings                from available-for-sale securities  |   | **$**  | **2,078** |   | $      | -      |   | $      | -      |   |
| Earnings                from equity method investments      |   |   | **1,625** |   |   | 1,329  |   |   | 125    |   |
| Net                gain (loss) on sale of equity securities |   |   | **1,145** |   |   | 2,211  |   |   | (62    | )      |
| Gain                on foreign exchange contracts           |   |   | **-**     |   |   | 121    |   |   | 200    |   |
| Dilution                gain on sale of subsidiary shares   |   |   | **-**     |   |   | 115    |   |   | 112    |   |
|                                                        |   | **$**  | **4,848** |   | $      | 3,776  |   | $      | 375    |   |

| **6.** | **Components                of working capital                accounts** |
|--------|--------------------------------------------------------------------------|

|                                                                                                         |   |   | **2007**    |   |   | 2006    |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|---------|--------|
| **Inventories**                                                                                              |   |   |        |   |   |    |   |
|     Work-in-progress                                                                     |   | **$**  | **18,040**  |   | $      | 14,459  |   |
|     Finished                goods                                                        |   |   | **11,249**  |   |   | 11,014  |   |
|     Supplies                and                other                                     |   |   | **2,479**   |   |   | 1,794   |   |
|                                                                                                         |   | **$**  | **31,768**  |   | $      | 27,267  |   |
|                                                                                                         |   |   |        |   |   |    |   |
| **Accrued                liabilities**                                                                       |   |   |        |   |   |    |   |
|     Accrued                payroll, commission and benefits                              |   | **$**  | **103,360** |   | $      | 71,155  |   |
|     Customer                advances                                                     |   |   | **11,531**  |   |   | 2,363   |   |
|     Contingent                acquisition consideration payable                          |   |   | **4,864**   |   |   | -       |   |
|     Accrued                interest                                                      |   |   | **4,159**   |   |   | 4,447   |   |
|     Liabilities                in                connection with discontinued operations |   |   | **2,912**   |   |   | 3,387   |   |
|     Other                                                                                |   |   | **43,035**  |   |   | 26,733  |   |
|                                                                                                         |   | **$**  | **169,861** |   | $      | 108,085 |   |

----

| **7.** | **Other                assets** |
|--------|---------------------------------|

|                                                                                                    |   |   | **2007**   |   |   | 2006   |   |
|---------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|
| Available-for-sale                equity securities                                                     |   | **$**  | **17,419** |   | $      | 18,845 |   |
| Equity                method investments                                                                |   |   | **5,046**  |   |   | 4,965  |   |
| Held-to-maturity                debt securities                                                         |   |   | **3,763**  |   |   | **-**  |   |
| Financing                fees, net of accumulated amortization of $1,554                (2006 - $1,094) |   |   | **1,690**  |   |   | 2,143  |   |
| Other                                                                                                   |   |   | **1,034**  |   |   | 955    |   |
|                                                                                                    |   | **$**  | **28,952** |   | $      | 26,908 |   |

| **8.** | **Fixed                assets** |
|--------|---------------------------------|

| **2007**                                       |   |   |    |   |   | Accumulated  |   |   | **Net**    |   |
|------------------------------------------------|--------|--------|---------|--------|--------|--------------|--------|--------|------------|--------|
|                                           |   |   | Cost    |   |   | depreciation |   |   | **2007**   |   |
| **Fixed                assets**                |   |   |    |   |   |         |   |   |       |   |
| Land                                           |   | $      | 3,070   |   | $      | -            |   | **$**  | **3,070**  |   |
| Buildings                                      |   |   | 11,225  |   |   | 2,093        |   |   | **9,132**  |   |
| Vehicles                                       |   |   | 19,209  |   |   | 11,363       |   |   | **7,846**  |   |
| Furniture                and equipment         |   |   | 39,598  |   |   | 19,758       |   |   | **19,840** |   |
| Computer                equipment and software |   |   | 36,552  |   |   | 19,977       |   |   | **16,575** |   |
| Leasehold                improvements          |   |   | 18,545  |   |   | 8,711        |   |   | **9,834**  |   |
|                                           |   | $      | 128,199 |   | $      | 61,902       |   | **$**  | **66,297** |   |

| 2006                                           |   |   |   |   |   | Accumulated  |   |   | Net    |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------------|--------|--------|--------|--------|
|                                           |   |   | Cost   |   |   | depreciation |   |   | 2006   |   |
| **Fixed                assets**                |   |   |   |   |   |         |   |   |   |   |
| Land                                           |   | $      | 1,915  |   | $      | -            |   | $      | 1,915  |   |
| Buildings                                      |   |   | 6,886  |   |   | 1,781        |   |   | 5,105  |   |
| Vehicles                                       |   |   | 17,519 |   |   | 10,004       |   |   | 7,515  |   |
| Furniture                and equipment         |   |   | 27,477 |   |   | 16,574       |   |   | 10,903 |   |
| Computer                equipment and software |   |   | 29,836 |   |   | 15,911       |   |   | 13,925 |   |
| Leasehold                improvements          |   |   | 13,268 |   |   | 3,898        |   |   | 9,370  |   |
|                                           |   | $      | 96,901 |   | $      | 48,168       |   | $      | 48,733 |   |

----

| **9.** | **Intangible                assets** |
|--------|--------------------------------------|

| **2007**                                               |   |   | Gross                carrying amount |   |   | Accumulated                amortization |   |   | **Net****2007** |   |
|--------------------------------------------------------|--------|--------|--------------------------------------|--------|--------|-----------------------------------------|--------|--------|-----------------|--------|
|                                                   |   |   |                                 |   |   |                                    |   |   |            |   |
| Customer                lists and relationships        |   | $      | 45,597                               |   | $      | 8,074                                   |   | **$**  | **37,523**      |   |
| Franchise                rights                        |   |   | 26,862                               |   |   | 6,597                                   |   |   | **20,265**      |   |
| Trademarks                and trade names:             |   |   |                                 |   |   |                                    |   |   |            |   |
|     Indefinite                life |   |   | 15,695                               |   |   | -                                       |   |   | **15,695**      |   |
|     Finite                life     |   |   | 18,930                               |   |   | 2,781                                   |   |   | **16,149**      |   |
| Management                contracts and other          |   |   | 6,502                                |   |   | 1,518                                   |   |   | **4,984**       |   |
| Brokerage                backlog                       |   |   | 23,639                               |   |   | 22,446                                  |   |   | **1,193**       |   |
|                                                   |   | $      | 137,225                              |   | $      | 41,416                                  |   | **$**  | **95,809**      |   |

| **2006**                                               |   |   | Gross                carrying amount |   |   | Accumulated                amortization |   |   | Net2006 |   |
|--------------------------------------------------------|--------|--------|--------------------------------------|--------|--------|-----------------------------------------|--------|--------|---------|--------|
|                                                   |   |   |                                 |   |   |                                    |   |   |    |   |
| Customer                lists and relationships        |   | $      | 25,663                               |   | $      | 3,758                                   |   | $      | 21,905  |   |
| Franchise                rights                        |   |   | 23,685                               |   |   | 4,068                                   |   |   | 19,617  |   |
| Trademarks                and trade names:             |   |   |                                 |   |   |                                    |   |   |    |   |
|     Indefinite                life |   |   | 15,446                               |   |   | -                                       |   |   | 15,446  |   |
|     Finite                life     |   |   | 12,517                               |   |   | 2,181                                   |   |   | 10,336  |   |
| Management                contracts and other          |   |   | 5,618                                |   |   | 2,354                                   |   |   | 3,264   |   |
| Brokerage                backlog                       |   |   | 15,829                               |   |   | 15,622                                  |   |   | 207     |   |
|                                                   |   | $      | 98,758                               |   | $      | 27,983                                  |   | $      | 70,775  |   |

|                                            |   |   | Amount |   |   | Estimated                weighted average amortization period (years | )      |
|-------------------------------------------------|--------|--------|--------|--------|--------|----------------------------------------------------------------------|--------|
|                                            |   |   |   |   |   |                                                                 |   |
| Customer                lists and relationships |   | $      | 16,602 |   |   | 7.1                                                                  |   |
| Franchise                rights                 |   |   | 7,549  |   |   | 21.0                                                                 |   |
| Trademarks                and trade names       |   |   | 6,439  |   |   | 22.8                                                                 |   |
| Management                contracts and other   |   |   | 2,922  |   |   | 7.4                                                                  |   |
| Brokerage                backlog                |   |   | 7,617  |   |   | 0.8                                                                  |   |
|                                            |   | $      | 41,129 |   |   | 10.9                                                                 |   |

| 2008 |   | $      | 9,545 |   |
|------|--------|--------|-------|--------|
| 2009 |   |   | 8,257 |   |
| 2010 |   |   | 7,954 |   |
| 2011 |   |   | 7,277 |   |
| 2012 |   |   | 5,444 |   |

----

| **10.** | **Goodwill** |
|---------|--------------|

|                                                                                                                                             |   |   | Commercial                Real Estate Services |   |   | Residential                Property Management |   |   | Property                Improvement Services |   |   | Integrated                Security Services |   |   | Business                Services |   |   | Consolidated |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------|--------|--------|------------------------------------------------|--------|--------|----------------------------------------------|--------|--------|---------------------------------------------|--------|--------|----------------------------------|--------|--------|--------------|--------|
|                                                                                                                                             |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |                             |   |   |         |   |
| Balance,                March 31, 2005                                                                                                           |   | $      | 38,962                                         |   | $      | 69,666                                         |   | $      | 41,003                                       |   | $      | 29,686                                      |   | $      | 57,223                           |   | $      | 236,540      |   |
|                                                                                                                                             |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |                             |   |   |         |   |
| Goodwill                resulting from adjustments                to purchase    price                allocations            |   |   | 78                                             |   |   | (190                                           | )      |   | (315                                         | )      |   | -                                           |   |   | -                                |   |   | (427         | )      |
| Goodwill                resulting from contingent                acquisition payments                                                            |   |   | -                                              |   |   | 1,035                                          |   |   | 1,575                                        |   |   | -                                           |   |   | -                                |   |   | 2,610        |   |
| Goodwill                resulting from purchases                of minority     shareholders’                interests |   |   | 4,084                                          |   |   | 681                                            |   |   | 222                                          |   |   | 373                                         |   |   | -                                |   |   | 5,360        |   |
| Goodwill                acquired during year                                                                                                     |   |   | 8,983                                          |   |   | 105                                            |   |   | 952                                          |   |   | -                                           |   |   | -                                |   |   | 10,040       |   |
| Goodwill                disposed during year                                                                                                     |   |   | (364                                           | )      |   | -                                              |   |   | (192                                         | )      |   | -                                           |   |   | (58,044                          | )      |   | (58,600      | )      |
| Foreign                exchange                                                                                                                  |   |   | 124                                            |   |   | -                                              |   |   | -                                            |   |   | 19                                          |   |   | 821                              |   |   | 964          |   |
| Balance,                March 31, 2006                                                                                                           |   |   | 51,867                                         |   |   | 71,297                                         |   |   | 43,245                                       |   |   | 30,078                                      |   |   | -                                |   |   | 196,487      |   |
|                                                                                                                                             |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |                             |   |   |         |   |
| Goodwill                resulting from adjustments                to purchase    price                allocations            |   |   | 363                                            |   |   | -                                              |   |   | (566                                         | )      |   | -                                           |   |   | -                                |   |   | (203         | )      |
| Goodwill                resulting from contingent                acquisition payments                                                            |   |   | -                                              |   |   | 5,654                                          |   |   | -                                            |   |   | 537                                         |   |   | -                                |   |   | 6,191        |   |
| Goodwill                resulting from purchases                of minority     shareholders’                interests |   |   | 4,985                                          |   |   | -                                              |   |   | 883                                          |   |   | 166                                         |   |   | -                                |   |   | 6,034        |   |
| Goodwill                acquired during year                                                                                                     |   |   | 40,389                                         |   |   | 1,296                                          |   |   | 1,209                                        |   |   | -                                           |   |   | -                                |   |   | 42,894       |   |
| Goodwill                disposed during year                                                                                                     |   |   | -                                              |   |   | -                                              |   |   | (836                                         | )      |   | -                                           |   |   | -                                |   |   | (836         | )      |
| Foreign                exchange                                                                                                                  |   |   | 560                                            |   |   | -                                              |   |   | -                                            |   |   | 3                                           |   |   | -                                |   |   | 563          |   |
| **Balance,                March 31, 2007**                                                                                                       |   | **$**  | **98,164**                                     |   | **$**  | **78,247**                                     |   | **$**  | **43,935**                                   |   | **$**  | **30,784**                                  |   | **$**  | **-**                            |   | **$**  | **251,130**  |   |

| **11.** | **Long-term                debt** |
|---------|-----------------------------------|

|                                                                                                                                                       |   |   | **2007**    |   |   | 2006        |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|-------------|--------|
|                                                                                                                                                       |   |   |        |   |   |        |   |
| Revolving                credit facility                                                                                                                   |   | **$**  | **-**       |   | **$**  | **-**       |   |
| 8.06%                Senior Notes                                                                                                                          |   |   | **71,428**  |   |   | **85,714**  |   |
| 6.40%                Senior Notes                                                                                                                          |   |   | **50,000**  |   |   | **50,000**  |   |
| 5.44%                Senior Notes                                                                                                                          |   |   | **100,000** |   |   | **100,000** |   |
| Capital                leases bearing interest ranging from 5% to 10%, maturing at various                dates                through                2010 |   |   | **4,455**   |   |   | **5,324**   |   |
| Other                long-term debt bearing interest at 4% to 10%, maturing at various                dates                through 2010                    |   |   | **9,266**   |   |   | **7,648**   |   |
|                                                                                                                                                       |   |   | **235,149** |   |   | **248,686** |   |
| Less:                current portion                                                                                                                       |   |   | **22,119**  |   |   | **18,646**  |   |
|                                                                                                                                                       |   | **$**  | **213,030** |   | **$**  | **230,040** |   |

----

| 2008       |   | $      | 22,119  |   |
|------------|--------|--------|---------|--------|
| 2009       |   |   | 17,979  |   |
| 2010       |   |   | 15,668  |   |
| 2011       |   |   | 14,890  |   |
| 2012       |   |   | 34,474  |   |
| Thereafter |   |   | 130,019 |   |

| **12.** | **Capital                stock** |
|---------|----------------------------------|

----

|                                       |   | *Subordinate                Voting Shares* | *Multiple                Voting Shares* |   | Total  |       |   | Total  |          |
|--------------------------------------------|--------|--------------------------------------------|-----------------------------------------|--------|--------|------------|--------|--------|---------------|
|                                       |   |                                       | Number                                  |   |   | Amount     |   |   | Number        |   |   | Amount |   |   | number |   |   | amount |   |
|                                       |   |                                       |                                    |   |   |       |   |   |          |   |   |   |   |   |   |   |   |   |   |
| Balance,                March 31, 2005     |   |                                       | 28,867,094                              |   | $      | 73,169     |   |   | 1,325,694     |   | $ | 373 |   |   | 30,192,788 |   | $ | 73,542 |   |
| Balance,                March 31, 2006     |   |                                       | 28,730,094                              |   |   | 75,314     |   |   | 1,325,694     |   |   | 373 |   |   | 30,055,788 |   |   | 75,687 |   |
| **Balance,                March 31, 2007** |   |                                       | **28,597,194**                          |   |   | **79,735** |   |   | **1,325,694** |   |   | **373** |   |   | **29,922,888** |   |   | **80,108** |   |

|   | During                the year ended March 31, 2007, the Company repurchased 697,700 (2006                -                571,650; 2005 - 218,072) Subordinate Voting Shares for cancellation                under                a Normal Course Issuer Bid filed with the Toronto Stock Exchange,                which                allowed the Company to repurchase up to 5% of its outstanding shares                on                the open market during a twelve-month period. The repurchase cost                is                allocated to capital stock for the weighted average book value and                to                retained earnings for any excess. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company has $1,232 (C$1,740) (2006 - $1,635 (C$2,309)) of interest                bearing                loans receivable related to the purchase of 240,000 Subordinate Voting                Shares (2006 - 440,000 shares). The loans, which are collateralized                by the                shares issued, have a ten-year term from the grant date; however,                they are                open for repayment at any time. The maturities of these loans are                as                follows, for the years ending March                31. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2008   | $      |  467 |   |
|--------|--------|-----------|--------|
| 2009   |   |      | 765    |   |
|   | $      |           | 1,232  |   |

|   | Pursuant                to an agreement approved in February 2004, the Company agreed that                it will                make payments to its Chief Executive Officer (“CEO”) that are contingent                upon the arm’s length sale of control of the Company or upon a                distribution of the Company’s assets to shareholders. The payment amounts                will be determined with reference to the price per Subordinate Voting                Share received by shareholders upon an arm’s length sale or upon a                distribution of assets. The right to receive the payments may be                transferred among members of the CEO’s family, their holding companies and                trusts. The agreement provides for the CEO to receive each of the                following two payments. The first payment is an amount equal to 5%                of the                product of: (i) the total number of shares outstanding on a fully                diluted                basis at the time of the sale and (ii) the per share consideration                received by holders of Subordinate Voting Shares minus a base price                of                C$10.875. The second payment is an amount equal to 5% of the product                of                (i) the total number of shares outstanding on a fully diluted basis                at the                time of the sale and (ii) the per share consideration received by                holders                of Subordinate Voting Shares minus a base price of                C$16.25. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **13.** | **Stock-based                compensation** |
|---------|---------------------------------------------|

|                                               |   |   | **2007**  |   |   | 2006   |   |   | 2005   |   |
|----------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|
|                                               |   |   |      |   |   |   |   |   |   |   |
| Stock                option expense - Company plan |   | **$**  | **1,916** |   | $      | 1,380  |   | $      | 622    |   |
| Stock                option expense - subsidiaries |   |   | **1,791** |   |   | 552    |   |   | 177    |   |
| Stock                value appreciation plans      |   |   | **3,074** |   |   | 659    |   |   | 889    |   |
|                                               |   | **$**  | **6,781** |   | $      | 2,591  |   | $      | 1,688  |   |

*Accounting      for Stock-Based Compensation*
*Accounting      for Stock-Based Compensation - Transition and Disclosure, an amendment of SFAS      123 *

----

*Share      Based Payment*

**Company      stock option plan **

|   |   |   | Grants                under the Company’s stock option plan are equity classified awards under                SFAS 123R. Stock option activity for the three years ended March                31, 2007                was as follows: |
|--------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                         |   |   | Number                of options |   |   | Weighted                average exercise price |   |   | Weighted                average remaining contractual life (years | )      |   | Aggregate                intrinsic value |   |
|------------------------------------------------------------------------------|--------|--------|----------------------------------|--------|--------|------------------------------------------------|--------|--------|-------------------------------------------------------------------|--------|--------|------------------------------------------|--------|
| Shares                issuable under options - March                31, 2004 |   |   | 2,288,630                        |   | $      | 8.01                                           |   |   |                                                              |   |   |                                     |   |
| Granted                                                                      |   |   | 496,500                          |   |   | 13.63                                          |   |   |                                                              |   |   |                                     |   |
| Exercised                                                                    |   |   | (911,130                         | )      |   | 6.42                                           |   |   |                                                              |   |   |                                     |   |
| Forfeited                                                                    |   |   | (30,000                          | )      |   | 10.43                                          |   |   |                                                              |   |   |                                     |   |
| Shares                issuable under options - March                31, 2005 |   |   | 1,844,000                        |   | $      | 10.83                                          |   |   |                                                              |   |   |                                     |   |
| Granted                                                                      |   |   | 328,000                          |   |   | 19.96                                          |   |   |                                                              |   |   |                                     |   |
| Exercised                                                                    |   |   | (434,650                         | )      |   | 8.60                                           |   |   |                                                              |   |   |                                     |   |
| Forfeited                                                                    |   |   | (21,000                          | )      |   | 9.38                                           |   |   |                                                              |   |   |                                     |   |
| Shares                issuable under options - March                31, 2006 |   |   | 1,716,350                        |   | $      | 13.74                                          |   |   |                                                              |   |   |                                     |   |
| Granted                                                                      |   |   | 305,000                          |   |   | 25.50                                          |   |   |                                                              |   |   |                                     |   |
| Exercised                                                                    |   |   | (564,800                         | )      |   | 11.40                                          |   |   |                                                              |   |   |                                     |   |
| Forfeited                                                                    |   |   | (11,000                          | )      |   | 13.43                                          |   |   |                                                              |   |   |                                     |   |
| Shares                issuable under options - March                31, 2007 |   |   | 1,445,550                        |   | $      | 17.31                                          |   |   | 3.12                                                              |   | $      | 14,543                                   |   |
| Options                exercisable - March                31, 2007           |   |   | 598,675                          |   | $      | 13.58                                          |   |   | 2.34                                                              |   | $      | 8,427                                    |   |

----

|                                       |   |   | **2007**    |   |   | 2006    |   |   | 2005    |   |
|--------------------------------------------|--------|--------|-------------|--------|--------|---------|--------|--------|---------|--------|
|                                       |   |   |        |   |   |    |   |   |    |   |
| Number                of options exercised |   |   | **564,800** |   |   | 434,650 |   |   | 911,130 |   |
|                                       |   |   |        |   |   |    |   |   |    |   |
| Aggregate                fair value        |   | **$**  | **13,266**  |   | $      | 10,784  |   | $      | 12,939  |   |
| Intrinsic                value             |   |   | **6,831**   |   |   | 7,044   |   |   | 7,424   |   |
| Amount                of cash received     |   | **$**  | **6,435**   |   | $      | 3,740   |   | $      | 5,515   |   |
|                                       |   |   |        |   |   |    |   |   |    |   |
| Tax                benefit recognized      |   | **$**  | **-**       |   | $      | -       |   | $      | -       |   |
|                                       |   |   |        |   |   |    |   |   |    |   |

|                                   |   |   | **2007** |   |   | 2006   |   |   | 2005   |   |
|----------------------------------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
|                                   |   |   |     |   |   |   |   |   |   |   |
| Risk-free                interest rate |   |   | **4.3**  | **%**  |   | 4.7    | %      |   | 3.2    | %      |
| Expected                life in years  |   |   | **3.75** |   |   | 4.4    |   |   | 4.4    |   |
| Expected                volatility     |   |   | **25.2** | **%**  |   | 30.0   | %      |   | 30.0   | %      |
| Dividend                yield          |   |   | **0**    | **%**  |   | 0      | %      |   | 0      | %      |

*Share-Based      Payment*

----

*Accounting      for Stock Issued to Employees*

|                                                                                                                               |   |   | **2006**   |   |   | 2005   |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|
|                                                                                                                               |   |   |       |   |   |   |   |
| Net                  earnings as reported                                                                                          |   | **$**  | **69,497** |   | $      | 23,207 |   |
| Deduct:                  Stock-based compensation expense determined                  under fair value method, net of income taxes |   |   | **(738**   | **)**  |   | (1,826 | )      |
| Pro                  forma net earnings                                                                                            |   | **$**  | **68,759** |   | $      | 21,381 |   |
|                                                                                                                               |   |   |       |   |   |   |   |
| Pro                  forma net earnings per share:                                                                                 |   |   |       |   |   |   |   |
|     Basic                                                                                                      |   | **$**  | **2.28**   |   | $      | 0.72   |   |
|     Diluted                                                                                                    |   |   | **2.18**   |   |   | 0.68   |   |
|                                                                                                                               |   |   |       |   |   |   |   |
| Reported                  net earnings per share:                                                                                  |   |   |       |   |   |   |   |
|     Basic                                                                                                      |   | **$**  | **2.30**   |   | $      | 0.78   |   |
|     Diluted                                                                                                    |   |   | **2.21**   |   |   | 0.74   |   |

**Subsidiary      stock option and appreciation plans**

| **14.** | **Income                taxes** |
|---------|---------------------------------|

|                                                                                                                                                 |   |   | **2007**   |   |   | 2006   |   |   | 2005   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|
| Income                tax expense using combined statutory rate of approximately     36%                (2006 - 36%; 2005 - 40%) |   | **$**  | **26,827** |   | $      | 20,632 |   | $      | 11,394 |   |
| Non-deductible                expenses                                                                                                               |   |   | **3,143**  |   |   | 137    |   |   | 1,217  |   |
| Reduction                in tax liability of prior years                                                                                             |   |   | **(1,788** | **)**  |   | -      |   |   | (1,133 | )      |
| Effect                of changes in enacted tax rates                                                                                                |   |   | **(451**   | **)**  |   | -      |   |   | -      |   |
| Losses                of prior years                                                                                                                 |   |   | **(553**   | **)**  |   | -      |   |   | -      |   |
| Foreign                tax rate reduction                                                                                                            |   |   | **(5,440** | **)**  |   | (3,561 | )      |   | (4,464 | )      |
| Provision                for income taxes as reported                                                                                                |   | **$**  | **21,738** |   | $      | 17,208 |   | $      | 7,014  |   |

----

|                         |   |   | **2007**   |   |   | 2006   |   |   | 2005   |   |
|------------------------------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|
|                         |   |   |       |   |   |   |   |   |   |   |
| Canada                       |   | **$**  | **7,808**  |   | $      | 5,238  |   | $      | (4,966 | )      |
| United                States |   |   | **45,555** |   |   | 39,742 |   |   | 30,627 |   |
| Foreign                      |   |   | **21,380** |   |   | 12,143 |   |   | 2,828  |   |
| Total                        |   | **$**  | **74,743** |   | $      | 57,123 |   | $      | 28,489 |   |

|                                                 |   |   | **2007**   |   |   | 2006   |   |   | 2005   |   |
|------------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|
|                                                 |   |   |       |   |   |   |   |   |   |   |
| Current                                              |   |   |       |   |   |   |   |   |   |   |
|     Canada                       |   | **$**  | **1,002**  |   | $      | 2,370  |   | $      | 4,553  |   |
|     United                States |   |   | **21,310** |   |   | 14,792 |   |   | 8,479  |   |
|     Foreign                      |   |   | **7,343**  |   |   | 4,482  |   |   | 834    |   |
|                                                 |   |   | **29,655** |   |   | 21,644 |   |   | 13,866 |   |
| Deferred                                             |   |   |       |   |   |   |   |   |   |   |
|     Canada                       |   |   | **(1,540** | **)**  |   | (1,778 | )      |   | (2,890 | )      |
|     United                States |   |   | **(4,790** | **)**  |   | (2,378 | )      |   | (3,962 | )      |
|     Foreign                      |   |   | **(1,587** | **)**  |   | (280   | )      |   | -      |   |
|                                                 |   |   | **(7,917** | **)**  |   | (4,436 | )      |   | (6,852 | )      |
| Total                                                |   | **$**  | **21,738** |   | $      | 17,208 |   | $      | 7,014  |   |

|                                                                                        |   |   | **2007**   |   |   | 2006   |   |
|---------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|
| Deferred                income tax assets                                                   |   |   |       |   |   |   |   |
|     Expenses                not                currently deductible     |   | **$**  | **9,823**  |   | $      | 4,374  |   |
|     Provision                for                doubtful accounts       |   |   | **784**    |   |   | 831    |   |
|     Inventory                and                other reserves          |   |   | **397**    |   |   | 326    |   |
|     Loss                carry-forwards                                  |   |   | **5,169**  |   |   | 4,381  |   |
|                                                                                        |   |   | **16,173** |   |   | 9,912  |   |
| Deferred                income tax liabilities                                              |   |   |       |   |   |   |   |
|     Depreciation                and amortization                        |   |   | **28,365** |   |   | 29,822 |   |
|     Investments                                                         |   |   | **2,397**  |   |   | 3,953  |   |
|     Prepaid                and other expenses deducted for tax purposes |   |   | **458**    |   |   | 666    |   |
|     Unrealized                foreign exchange gains                    |   |   | **1,010**  |   |   | 493    |   |
|     Financing                fees                                       |   |   | **172**    |   |   | 219    |   |
|                                                                                        |   |   | **32,402** |   |   | 35,153 |   |
| Net                deferred income tax liability                                            |   | **$**  | **16,229** |   | $      | 25,241 |   |

----

| **15.** | **Earnings                per share** |
|---------|---------------------------------------|

|                                                                                                                           |   |   | **2007**   |   |   | 2006   |   |   | 2005   |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                           |   |   |       |   |   |   |   |   |   |   |
| Net                earnings from continuing operations                                                                         |   | **$**  | **36,687** |   | $      | 28,034 |   | $      | 15,390 |   |
| Dilution                of net earnings resulting from assumed exercise                of stock options in subsidiaries        |   |   | **(2,228** | **)**  |   | (1,253 | )      |   | (569   | )      |
| Net                earnings from continuing operations for diluted earnings                per share calculation purposes |   | **$**  | **34,459** |   | $      | 26,781 |   | $      | 14,821 |   |
|                                                                                                                           |   |   |       |   |   |   |   |   |   |   |
| Net                earnings                                                                                                    |   | **$**  | **34,863** |   | $      | 69,497 |   | $      | 23,207 |   |
| Dilution                of net earnings resulting from assumed exercise                of stock options in subsidiaries        |   |   | **(2,228** | **)**  |   | (1,253 | )      |   | (569   | )      |
| Net                earnings for diluted earnings per share calculation purposes                                                |   | **$**  | **32,635** |   | $      | 68,244 |   | $      | 22,638 |   |

|                                                                                                                            |   |   | **2007**       |   |   | 2006       |   |   | 2005       |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------|--------|--------|------------|--------|--------|------------|--------|
|                                                                                                                            |   |   |           |   |   |       |   |   |       |   |
| Shares                issued and outstanding at beginning of year                                                               |   |   | **30,055,788** |   |   | 30,192,788 |   |   | 29,499,730 |   |
| Weighted                average number of shares:                                                                               |   |   |           |   |   |       |   |   |       |   |
| Issued                during the year                                                                                           |   |   | **210,843**    |   |   | 137,943    |   |   | 381,309    |   |
| Repurchased                during the year                                                                                      |   |   | **(364,101**   | **)**  |   | (160,040   | )      |   | (103,665   | )      |
|                                                                                                                            |   |   |           |   |   |       |   |   |       |   |
| Weighted                average number of shares used in computing                basic earnings per share                      |   |   | **29,902,530** |   |   | 30,170,691 |   |   | 29,777,374 |   |
| Assumed                exercise of stock options, net of shares assumed                acquired under the Treasury Stock Method |   |   | **451,774**    |   |   | 725,286    |   |   | 689,597    |   |
| Number                of shares used in computing diluted earnings per                share                                     |   |   | **30,354,304** |   |   | 30,895,977 |   |   | 30,466,971 |   |

| **16.** | **Other                supplemental information** |
|---------|---------------------------------------------------|

|                                                   |   |   | **2007**    |   |   | 2006   |   |   | 2005   |   |
|--------------------------------------------------------|--------|--------|-------------|--------|--------|--------|--------|--------|--------|--------|
|                                                   |   |   |        |   |   |   |   |   |   |   |
| **Franchised                operations**               |   |   |        |   |   |   |   |   |   |   |
| Revenues                                               |   | **$**  | **112,858** |   | $      | 88,531 |   | $      | 79,541 |   |
| Operating                earnings                      |   |   | **20,619**  |   |   | 16,728 |   |   | 15,574 |   |
| Initial                franchise fee revenues          |   |   | **5,571**   |   |   | 3,482  |   |   | 3,459  |   |
|                                                   |   |   |        |   |   |   |   |   |   |   |
| **Cash                payments made during the year**  |   |   |        |   |   |   |   |   |   |   |
| Income                taxes                            |   | **$**  | **25,764**  |   | $      | 25,179 |   | $      | 16,854 |   |
| Interest                                               |   |   | **16,283**  |   |   | 12,481 |   |   | 11,073 |   |
|  **Non-cash                financing activities** |   |   |        |   |   |   |   |   |   |   |
| Increases                in capital lease obligations  |   | **$**  | **1,502**   |   | $      | 3,284  |   | $      | 1,986  |   |
|                                                   |   |   |        |   |   |   |   |   |   |   |
| **Other                expenses**                      |   |   |        |   |   |   |   |   |   |   |
| Rent                expense                            |   | **$**  | **34,979**  |   | $      | 26,762 |   | $      | 14,104 |   |

----

| **17.** | **Financial                instruments** |
|---------|------------------------------------------|

**Concentration      of credit risk**

**Interest      rate risk**

**Fair      values of financial instruments**

----

|                                         |   |   | **2007**          |   |  2006 |                    |
|----------------------------------------------|--------|--------|------------------------|--------|------------|-------------------------|
|                                         |   |   | **Carrying****amount** |   |       | **Fair**** value** |   |   | Carrying                amount |   |   | Fair                value |   |
| Mortgage                loans receivable     |   | **$**  | **13,716**             |   | **$**      | **13,716**              |   | $ | 6,874 |   | $ | 6,874 |   |
| Other                receivables             |   |   | **7,215**              |   |       | **7,215**               |   |   | 8,311 |   |   | 8,311 |   |
| Available-for-sale                securities |   |   | **17,419**             |   |       | **17,419**              |   |   | 18,845 |   |   | 18,845 |   |
| Long-term                debt                |   |   | **235,149**            |   |       | **261,009**             |   |   | 248,686 |   |   | 267,166 |   |
| Interest                rate swaps           |   |   | **368**                |   |       | **368**                 |   |   | 57 |   |   | 57 |   |

| **18.** | **Commitments                and contingencies** |
|---------|--------------------------------------------------|

|   | **(a)** | **Lease                commitments** |
|--------|---------|--------------------------------------|

| Year              ending March              31 |   |   |   |   |
|------------------------------------------------|--------|--------|--------|--------|
| 2008                                           |   | $      | 30,802 |   |
| 2009                                           |   |   | 26,705 |   |
| 2010                                           |   |   | 21,239 |   |
| 2011                                           |   |   | 16,871 |   |
| 2012                                           |   |   | 14,695 |   |
| Thereafter                                     |   |   | 26,904 |   |

|   | **(b)** | **Minority                shareholder agreements** |
|--------|---------|----------------------------------------------------|

|   | **(c)** | **Contingencies** |
|--------|---------|-------------------|

| **19.** | **Related                party transactions** |
|---------|-----------------------------------------------|

| **20.** | **Segmented                information** |
|---------|------------------------------------------|

*Operating      segments*

----

| 2007                                                                              |   |   | Commercial                Real Estate Services |   |   | Residential                Property Management |   |   | Property                Improvement Services |   |   | Integrated                Security Services |   |   | Corporate |   |   | Consolidated |   |
|-----------------------------------------------------------------------------------|--------|--------|------------------------------------------------|--------|--------|------------------------------------------------|--------|--------|----------------------------------------------|--------|--------|---------------------------------------------|--------|--------|-----------|--------|--------|--------------|--------|
|                                                                              |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   |         |   |
| Revenues                                                                          |   | $      | 608,065                                        |   | $      | 423,797                                        |   | $      | 150,794                                      |   | $      | 176,476                                     |   | $      | 554       |   | $      | 1,359,686    |   |
| Depreciation                and amortization                                      |   |   | 16,235                                         |   |   | 7,644                                          |   |   | 4,653                                        |   |   | 2,832                                       |   |   | 223       |   |   | 31,587       |   |
| Operating                earnings                                                 |   |   | 31,464                                         |   |   | 32,623                                         |   |   | 25,911                                       |   |   | 7,769                                       |   |   | (14,779   | )      |   | 82,988       |   |
| Other                income, net                                                  |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | 1,709        |   |
| Interest                expense, net                                              |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | (9,954       | )      |
| Income                taxes                                                       |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | (21,738      | )      |
| Minority                interest                                                  |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | (16,318      | )      |
| Net                earnings from continuing                operations             |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | 36,687       |   |
| Net                earnings from discontinued                operations           |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | (471         | )      |
| Cumulative                effect of change                in accounting principle |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | (1,353       | )      |
| Net                earnings                                                       |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   | $      | 34,863       |   |
| Total                assets                                                       |   | $      | 328,338                                        |   | $      | 206,977                                        |   | $      | 123,832                                      |   | $      | 91,827                                      |   | $      | 66,024    |   | $      | 816,998      |   |
| Total                additions to long-lived                assets                |   |   | 89,484                                         |   |   | 27,917                                         |   |   | 10,165                                       |   |   | 2,236                                       |   |   | 331       |   |   | 130,133      |   |

----

| 2006                                                                    |   |   | Commercial                Real Estate Services |   |   | Residential                Property Management |   |   | Property                Improvement Services |   |   | Integrated                Security Services |   |   | Corporate |   |   | Consolidated |   |
|-------------------------------------------------------------------------|--------|--------|------------------------------------------------|--------|--------|------------------------------------------------|--------|--------|----------------------------------------------|--------|--------|---------------------------------------------|--------|--------|-----------|--------|--------|--------------|--------|
|                                                                    |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   |         |   |
| Revenues                                                                |   | $      | 438,434                                        |   | $      | 346,133                                        |   | $      | 134,136                                      |   | $      | 149,063                                     |   | $      | 368       |   | $      | 1,068,134    |   |
| Depreciation                and amortization                            |   |   | 11,388                                         |   |   | 5,618                                          |   |   | 3,749                                        |   |   | 2,655                                       |   |   | 168       |   |   | 23,578       |   |
| Operating                earnings                                       |   |   | 25,079                                         |   |   | 25,767                                         |   |   | 22,016                                       |   |   | 5,005                                       |   |   | (12,641   | )      |   | 65,226       |   |
| Other                income, net                                        |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | 3,776        |   |
| Interest                expense, net                                    |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | (11,879      | )      |
| Income                taxes                                             |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | (17,208      | )      |
| Minority                interest                                        |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | (11,881      | )      |
| Net                earnings from continuing                operations   |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | 28,034       |   |
| Net                earnings from discontinued                operations |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | 41,463       |   |
| Net                earnings                                             |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   | $      | 69,497       |   |
| Total                assets                                             |   | $      | 211,321                                        |   | $      | 150,641                                        |   | $      | 114,188                                      |   | $      | 85,479                                      |   | $      | 149,375   |   | $      | 711,004      |   |
| Total                additions to long-lived                assets      |   |   | 36,799                                         |   |   | 10,400                                         |   |   | 9,909                                        |   |   | 2,809                                       |   |   | 546       |   |   | 60,463       |   |

| 2005                                                                    |   |   | Commercial                Real Estate Services |   |   | Residential                Property Management |   |   | Property                Improvement Services |   |   | Integrated                Security Services |   |   | Corporate |   |   | Consolidated |   |
|-------------------------------------------------------------------------|--------|--------|------------------------------------------------|--------|--------|------------------------------------------------|--------|--------|----------------------------------------------|--------|--------|---------------------------------------------|--------|--------|-----------|--------|--------|--------------|--------|
|                                                                    |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   |         |   |
| Revenues                                                                |   | $      | 120,535                                        |   | $      | 275,229                                        |   | $      | 111,779                                      |   | $      | 143,160                                     |   | $      | 673       |   | $      | 651,376      |   |
| Depreciation                and Amortization                            |   |   | 9,868                                          |   |   | 5,170                                          |   |   | 3,071                                        |   |   | 2,819                                       |   |   | 179       |   |   | 21,107       |   |
| Operating                earnings                                       |   |   | 1,276                                          |   |   | 18,917                                         |   |   | 16,796                                       |   |   | 7,468                                       |   |   | (9,151    | )      |   | 35,306       |   |
| Other                income, net                                        |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | 375          |   |
| Interest                expense, net                                    |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | (7,192       | )      |
| Income                taxes                                             |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | (7,014       | )      |
| Minority                interest                                        |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | (6,085       | )      |
| Net                earnings from continuing                operations   |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | 15,390       |   |
| Net                earnings from discontinued                operations |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | 7,817        |   |
| Net                earnings                                             |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   | $      | 23,207       |   |
| Total                assets                                             |   | $      | 100,634                                        |   | $      | 150,080                                        |   | $      | 107,063                                      |   | $      | 86,598                                      |   | $      | 12,060    |   | $      | 456,435      |   |
| Discontinued                operations                                  |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | 170,293      |   |
|                                                                    |   |   |                                           |   |   |                                           |   |   |                                         |   |   |                                        |   |   |      |   |   | 626,728      |   |
| Total                additions to long-lived assets                     |   |   | 77,255                                         |   |   | 21,412                                         |   |   | 10,437                                       |   |   | 3,684                                       |   |   | 357       |   |   | 113,145      |   |

----

*Geographic      information*

|                                   |   |   | **2007**    |   |   | 2006    |   |   | 2005    |   |
|----------------------------------------|--------|--------|-------------|--------|--------|---------|--------|--------|---------|--------|
|                                   |   |   |        |   |   |    |   |   |    |   |
| **United                State****s**   |   |   |        |   |   |    |   |   |    |   |
| Revenues                               |   | **$**  | **868,976** |   | $      | 685,921 |   | $      | 473,027 |   |
| Total                long-lived assets |   |   | **287,056** |   |   | 230,811 |   |   | 244,447 |   |
|                                   |   |   |        |   |   |    |   |   |    |   |
| **Canada**                             |   |   |        |   |   |    |   |   |    |   |
| Revenues                               |   | **$**  | **276,195** |   | $      | 233,342 |   | $      | 132,998 |   |
| Total                long-lived assets |   |   | **83,929**  |   |   | 56,037  |   |   | 85,009  |   |

| **Australia**                          |   |   |        |   |   |   |   |   |   |   |
|----------------------------------------|--------|--------|-------------|--------|--------|--------|--------|--------|--------|--------|
| Revenues                               |   | **$**  | **117,794** |   | $      | 78,011 |   | $      | 24,374 |   |
| Total                long-lived assets |   |   | **29,514**  |   |   | 15,273 |   |   | 15,665 |   |

| **Other**                              |   |   |       |   |   |   |   |
|----------------------------------------|--------|--------|------------|--------|--------|--------|--------|
| Revenues                               |   | **$**  | **96,721** |   | $      | 70,860 |   | $ | 20,977 |   |
| Total                long-lived assets |   |   | **12,737** |   |   | 13,874 |   |   | 10,083 |   |

| **Consolidated**                       |   |   |          |   |   |      |   |   |    |   |
|----------------------------------------|--------|--------|---------------|--------|--------|-----------|--------|--------|---------|--------|
| Revenues                               |   | **$**  | **1,359,686** |   | $      | 1,068,134 |   | $      | 651,376 |   |
| Total                long-lived assets |   | **$**  | **413,236**   |   | $      | 315,995   |   | $      | 355,204 |   |

| **21.** | **Application                of Staff Accounting Bulletin No.                108** |
|---------|------------------------------------------------------------------------------------|

*Considering      the Effects of Prior Year Misstatements when Quantifying Misstatements in      Current Year Financial Statements*

----

|   | (a) | In                the Company’s Commercial Real Estates Services operations, broker and                management compensation vary during the calendar year based on exceeding                pre-determined production or earnings thresholds. Since the time                this                segment was acquired in November 2004, the Company recorded compensation                expense incrementally as thresholds were exceeded, but should have                recorded compensation expense systematically on a basis approximating                the                expected average commission rate for the calendar year. As a result,                the                accrued compensation liability as of April 1, 2006 was understated                by                $7,951. The Company recorded a $7,951 increase in the liability as                of                April 1, 2006 with a corresponding reduction in retained earnings                to                correct this misstatement. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | In                the Company’s Residential Property Management operations, certain                subsidiaries did not accrue vacation pay since the time they were                acquired                in 1996 and 1997. As a result, accrued vacation pay liability as                of April                1, 2006 was understated by $1,607. The Company recorded a $1,607                increase                in the liability as of April 1, 2006 with a corresponding reduction                in                retained earnings to correct this                misstatement. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | In                the Company’s Residential Property Management operations, certain prepaid                insurance expenses were not eliminated on consolidation. As a result,                prepaid insurance as of April 1, 2006 was overstated by $467. The                Company                recorded a $467 decrease in the prepaid insurance as of April 1,                2006 with                a corresponding reduction in retained earnings to correct this                misstatement. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **22.** | **Impact                of recently issued accounting                standards** |
|---------|----------------------------------------------------------------------------------|

*Accounting      for Servicing of Financial Assets, an amendment of SFAS No. 140*
*Accounting      for Transfers and Servicing of Financial Assets and Extinguishments of      Liabilities*

----

*Accounting      for Uncertainty in Income Taxes - an interpretation of FASB Statement No.      109*

*Fair      Value Measurements*

*The      Fair Value Option for Financial Assets and Financial Liabilities Including      an      Amendment of SFAS No. 115*

| **23.** | **Subsequent                event** |
|---------|-------------------------------------|