##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 20-F



(Mark One)



| ̈ |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------------

OR



|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------

For the fiscal year ended October 31, 2008

OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------

OR



| ̈ |  | SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------



Date of event requiring shell company report



For the transition period
from to



Commission file number





PCL Employees Holdings Ltd.

|                                                      
|------------------------------------------------------
|(Exact name of Registrant as specified in its charter)





|                                               
|-----------------------------------------------
|(Translation of Registrants name into English)





|                                                   
|---------------------------------------------------
|Alberta                                            
|(Jurisdiction on incorporation or organization)    
|                                                   
|5410  99 Street, Edmonton, Alberta, T6E 3P4 Canada
|(Address of principal executive offices)           





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##### Table of Contents

Securities registered or to be registered pursuant to Section 12(b)



|                    |  |  |  |                                          
|------------------- |  |  |  | -----------------------------------------
|Title of each class |  |  |  | Name of each exchange on which registered
|                    |  | 
|                    |  |  |  | None                                     

Securities registered or to be registered pursuant to Section 12(g) of the Act.





Class 1
Common Shares

|                
|----------------
|(Title of Class)





Class 3 Common Shares

|                
|----------------
|(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.





None

|                
|----------------
|(Title of Class)

Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of
the close of the period covered by the annual report.



|                                
|--------------------------------
|Class 1 Common Shares: 6,309,310
|                                
|Class 3 Common Shares: 2,491,736

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.   ̈ Yes  x No

If this report is an annual or
transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.   ̈ Yes  x No

Note  Checking the box above will not relieve any registrant required to file reports pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections

Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  x Yes   ̈ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.
(Check one):

Large accelerated filer   ̈                 Accelerated filer   ̈                 Non-accelerated filer  x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



|             |  |                                                                                                          |  |         
|------------ |  | -------------------------------------------------------------------------------------------------------- |  | --------
|U.S. GAAP   ̈ |  | International Financial Reporting Standards as issued by the International Accounting Standards Board   ̈ |  | Other  x

If Other has been checked in response to the previous question, indicate by check mark which financial
statement item the registrant has elected to follow.  x Item 17   ̈ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ̈ Yes  x No









ii



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##### Table of Contents

TABLE OF CONTENTS



|                                                                                      |  |   
|------------------------------------------------------------------------------------- |  | --
|ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                         |  | 6 
|ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE                                       |  | 6 
|ITEM 3. KEY INFORMATION                                                               |  | 6 
|A. Selected Financial Data                                                            |  | 6 
|D. Risk Factors                                                                       |  | 7 
|ITEM 4. INFORMATION ON THE COMPANY                                                    |  | 14
|A. History and Development of the Company                                             |  | 14
|B. Business Overview                                                                  |  | 15
|C. Organizational Structure                                                           |  | 21
|D. Property, Plant and Equipment                                                      |  | 22
|ITEM 4A. UNRESOLVED STAFF COMMENTS                                                    |  | 24
|ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                  |  | 24
|A. Operating Results                                                                  |  | 25
|B. Liquidity and Capital Resources                                                    |  | 31
|C. Research and Development, Patents and Licenses                                     |  | 32
|D. Trends and Uncertainties                                                           |  | 32
|E. Off-Balance Sheet Arrangements                                                     |  | 33
|F. Contractual Obligations                                                            |  | 34
|G. Forward Looking Statements                                                         |  | 35
|H. Critical Accounting Policies                                                       |  | 35
|ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                    |  | 36
|A. Directors and Senior Management                                                    |  | 36
|B. Compensation                                                                       |  | 41
|C. Board Practices                                                                    |  | 41
|D. Employees                                                                          |  | 48
|E. Share Ownership                                                                    |  | 49
|ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                             |  | 52
|A. Major Shareholders                                                                 |  | 52
|B. Related Party Transactions                                                         |  | 54
|ITEM 8. FINANCIAL INFORMATION                                                         |  | 54
|A. Consolidated Statements and Other Financial Information                            |  | 54
|B. Significant Changes                                                                |  | 55
|ITEM 9. THE OFFER AND LISTING                                                         |  | 56
|A. Offer and Listing Details; Markets                                                 |  | 56
|ITEM 10. ADDITIONAL INFORMATION                                                       |  | 57
|A. Share Capital                                                                      |  | 57
|B. Memorandum of Association and Articles of Association                              |  | 57
|C. Material Contracts                                                                 |  | 57
|D. Exchange Controls                                                                  |  | 57
|E. Taxation                                                                           |  | 57
|F. Dividends and Paying Agents                                                        |  | 61
|G. Statements by Experts                                                              |  | 61
|H. Documents on Display                                                               |  | 62
|ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |  | 62
|ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  | 62
|ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  | 63
|ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  | 63
|ITEM 15. CONTROLS AND PROCEDURES                                                      |  | 63
|ITEM 16. RESERVED                                                                     |  | 64
|A. Audit Committee Financial Expert                                                   |  | 64
|B. Code Of Ethics                                                                     |  | 64
|C. Principal Accounting Fees And Services                                             |  | 64
|D. Exemptions From The Listing Standards For Audit Committees                         |  | 65



iii



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##### Table of Contents

|                                                                          |  |   
|------------------------------------------------------------------------- |  | --
|E. Purchases Of Equity Securities By The Issuer And Affiliated Purchasers |  | 66
|ITEM 17. FINANCIAL STATEMENTS                                             |  | 67
|ITEM 18. FINANCIAL STATEMENTS                                             |  | 67
|ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS                                |  | 67
|A. Financial Statements                                                   |  | 67
|B. Exhibits                                                               |  | 67



iv



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##### Table of Contents

As used in this annual report, unless the context otherwise indicates, the terms PCL, we,
us, our or the Company refer to PCL Employees Holdings Ltd. and its consolidated subsidiaries.

EXCHANGE RATE INFORMATION

Unless otherwise indicated, all monetary references herein are denominated in Canadian dollars; references to
dollars or $ or CAD$ are to Canadian dollars and references to US$ or U.S. dollars are to United States dollars. As at January 9, 2009, the noon rate as quoted by the Federal Reserve
Bank of New York was $1.1920 equals US$1.00. (See Item 3  Key Information for further exchange rate information to U.S. currency.) Except as otherwise indicated, financial statements of, and information regarding, PCL
Employees Holdings Ltd. are presented in Canadian dollars.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management,
based on information currently available to management. Forward-looking statements are those that do not relate strictly to historical or current facts, and can be identified by the use of the future tense or other forward-looking words such as
believe, expect, anticipate, intend, plan, estimate, should, may, objective, projection, forecast, management
believes, continue, strategy, position or the negative of those terms or other variations of them or by comparable terminology. In particular, statements, express or implied, concerning future operating
results or the ability to generate income or cash flow are forward-looking statements. Forward-looking statements include the information concerning possible or assumed future results of our operations set forth under Item 4 - Information
on the Company, Item 5 - Operating and Financial Review and Prospects, Item 11 - Quantitative and Qualitative Disclosures About Market Risk and elsewhere in this Annual Report on Form 20-F.

Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future
results of operations may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond managements ability to control or predict. Specific factors that could cause
actual results to vary from those in the forward-looking statements include:



| |  |  | changes in laws or regulations, third party relations and approvals, and decisions of courts, regulators and governmental bodies that may adversely affect our
business or the business of the customers we serve;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to manage risks inherent in the government contracting business;
| | - |  | ----------------------------------------------------------------------------



| |  |  | our ability to obtain surety bonds as required by some of our customers;
| | - |  | ------------------------------------------------------------------------



| |  |  | our ability to collect on accounts receivable and unbilled work-in-process accounts;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | state, provincial, regional and local economic, competitive and regulatory conditions and developments;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | technological developments;
| | - |  | ---------------------------



| |  |  | capital markets conditions;
| | - |  | ---------------------------



| |  |  | inflation;
| | - |  | ----------



| |  |  | foreign currency exchange rates;
| | - |  | --------------------------------



| |  |  | interest rates;
| | - |  | ---------------



| |  |  | weather conditions;
| | - |  | -------------------



| |  |  | the timing and success of business development efforts;
| | - |  | -------------------------------------------------------



| |  |  | construction commodity shortages;
| | - |  | ---------------------------------



| |  |  | availability of skilled labor;
| | - |  | ------------------------------



| |  |  | our ability to successfully identify and acquire new businesses and assets and integrate them into our existing operations; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | availability and performance of subcontractors.
| | - |  | -----------------------------------------------

Also see Risk Factors on pages 7 through 14. You are cautioned not to put undue reliance on any forward-looking statements, and we undertake no obligation to update those statements.



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##### Table of Contents

PART I



|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|------- | -----------------------------------------------------

Not
applicable.



|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE
|------- | ---------------------------------------

Not applicable.



|ITEM 3. | KEY INFORMATION
|------- | ---------------

A. Selected Financial
Data

The selected financial data set forth in the following table is expressed in Canadian dollars. A history of the exchange rates for Canadian
dollars in terms of United States (U.S.) dollars follows. The financial information set forth in the following table includes the accounts of the Company and subsidiaries on a consolidated basis. This financial information was prepared in accordance
with accounting principles generally accepted (GAAP) in Canada, the application of which conforms in all material respects for the periods presented with accounting principles generally accepted in the United States, except to the extent noted in
Note 24 to the Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 20-F. The selected financial data should be read in conjunction with and is qualified by such Consolidated Financial Statements and the Notes thereto.
Where differences between accounting principles generally accepted in Canada and the United States exist, the financial information under U.S. GAAP has been disclosed.



|                                                                                                    |  |      |         |      |   |         |  |      |         |      |   |         |  |   |        
|--------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|Fiscal Year Ended October 31, (millions of dollars except per share amounts and outstanding shares) |  | 2008 |         | 2007 |   | 2006    |  | 2005 |         | 2004
|Contract Revenues                                                                                   |  | $    | 5,837.4 |      | $ | 5,065.3 |  | $    | 4,208.3 |      | $ | 3,295.5 |  | $ | 3,052.6
|Operating Profit  Canadian GAAP                                                                    |  |      | 411.0   |      |   | 243.0   |  |      | 200.6   |      |   | 108.1   |  |   | 79.2   
|Operating Profit  U.S. GAAP                                                                        |  |      | 403.8   |      |   | 237.9   |  |      | 197.9   |      |   | 106.2   |  |   | 78.0   
|Net Earnings  Canadian GAAP                                                                        |  |      | 242.0   |      |   | 221.2   |  |      | 169.2   |      |   | 79.8    |  |   | 55.8   
|Net Earnings  U.S. GAAP                                                                            |  |      | 234.8   |      |   | 216.1   |  |      | 166.9   |      |   | 77.2    |  |   | 55.0   
|Earnings Per Share  Canadian GAAP(1)(2)                                                            |  |      | 10.86   |      |   | 11.47   |  |      | 10.12   |      |   | 5.31    |  |   | 4.03   
|Earnings Per Share  U.S. GAAP(1)(2)                                                                |  |      | 10.77   |      |   | 11.21   |  |      | 10.19   |      |   | 5.22    |  |   | 3.97   
|Number of Outstanding Shares (in millions)(2)                                                       |  |      | 22.3    |      |   | 19.3    |  |      | 16.7    |      |   | 15.0    |  |   | 13.9   
|Dividends Per Share(1)                                                                              |  | $    | 8.60    |      | $ | 9.05    |  | $    | 4.88    |      | $ | 3.03    |  | $ | 2.88   
|Total Assets  Canadian GAAP                                                                        |  |      | 3,074.7 |      |   | 2,263.2 |  |      | 1,849.6 |      |   | 1,483.8 |  |   | 1,261.7
|Total Assets  U.S. GAAP                                                                            |  |      | 3,072.1 |      |   | 2,261.9 |  |      | 1,851.5 |      |   | 1,484.6 |  |   | 1,260.5
|Shareholders Equity  Canadian GAAP                                                                |  |      | 790.2   |      |   | 583.9   |  |      | 493.9   |      |   | 359.8   |  |   | 297.3  
|Redeemable Common Stock  U.S. GAAP                                                                 |  |      | 773.9   |      |   | 567.0   |  |      | 485.5   |      |   | 354.1   |  |   | 294.8  
|Share Capital  Canadian GAAP                                                                       |  |      | 435.7   |      |   | 336.9   |  |      | 274.3   |      |   | 225.8   |  |   | 192.8  
|Share Capital  U.S. GAAP                                                                           |  |      | 428.5   |      |   | 328.4   |  |      | 268.2   |      |   | 222.4   |  |   | 192.8  



Notes:

|(1) | Basic and fully diluted.
|--- | ------------------------

|(2) | Weighted average number of shares outstanding using the total of all Class 1, 2, 3 and 4 shares of the Company.
|--- | ---------------------------------------------------------------------------------------------------------------



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The following tables set forth the rate of exchange for the Canadian dollar, average rates for the end of fiscal year
2004 through fiscal year 2008, and the range of high and low rates for the period as well as for the last six months. The tables set forth the number of Canadian dollars required under that formula to buy one United States dollar based on the noon
rates of exchange as reported by the Federal Reserve Bank of New York. The average rate means the average of the exchange rates on the last day of each month during the period. As at the most recent practicable date, January 9, 2009, the noon
rate as quoted by the Federal Reserve Bank of New York was $1.1920 equals US$1.00.

Exchange Rates



|                                   |  |                                      |  |        |  |        |  |       
|---------------------------------- |  | ------------------------------------ |  | ------ |  | ------ |  | ------
|                                   |  | Canadian dollar/United States dollar
|                                   |  | Average                              |  | High   |  | Low    |  | Close 
|Fiscal Year Ended October 31, 2008 |  | 1.0266                               |  | 1.2942 |  | 0.9168 |  | 1.2158
|Fiscal Year Ended October 31, 2007 |  | 1.0947                               |  | 1.1852 |  | 0.9496 |  | 0.9496
|Fiscal Year Ended October 31, 2006 |  | 1.1329                               |  | 1.1960 |  | 1.0989 |  | 1.1227
|Fiscal Year Ended October 31, 2005 |  | 1.2134                               |  | 1.2703 |  | 1.1607 |  | 1.1796
|Fiscal Year Ended October 31, 2004 |  | 1.3147                               |  | 1.3970 |  | 1.2194 |  | 1.2209



|     |  |          |  |          |  |         |  |           |  |        |  |       
|---- |  | -------- |  | -------- |  | ------- |  | --------- |  | ------ |  | ------
|     |  | 2008    
|     |  | December |  | November |  | October |  | September |  | August |  | July  
|High |  | 1.2971   |  | 1.2850   |  | 1.2942  |  | 1.0797    |  | 1.0677 |  | 1.0261
|Low  |  | 1.1962   |  | 1.1502   |  | 1.0607  |  | 1.0338    |  | 1.0251 |  | 1.0015

D. Risk Factors

Unpredictable economic cycles, and failure by our customers to pay our progress billings and retainage, could impact our business.

Demand for construction services is affected by the general level of economic activity in the markets in which we operate - in Canada, the United States, and the Bahamas. Our private and public sectors customers are
likely to experience periods of economic decline from time-to-time. In particular, recent global economic developments, including the financial crisis and the dramatic decreases in oil prices, have resulted in slow downs in demand for our services
in all of our principal markets. The diversification of our operating segments, along with the long-term nature of our construction contracts already in progress, offset immediate impacts from these economic changes, but there can be no assurances
that our business overall will not be impacted if there is a prolonged slow down in our principal markets.

Our private sector customers could delay or
fail to pay our progress billings or retainage as a result of a difficult business climate.

Credit risk with private owners of construction contracts is
mitigated because of statutory mechanics liens, which give the Company security on the property on which construction is taking place. Construction contracts generally provide for progress payments as work is completed, with a retainage, ranging
from zero to ten percent, to be paid when performance is substantially complete. In some instances, the Company is able to substitute bank letters of credit or escrowed securities in lieu of retainage.



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##### Table of Contents

Credit risk is minimal with public (government) owners since funds generally have been appropriated by the governmental
project owner prior to commencing work on public projects. Most public contracts are subject to termination at the election of the governmental contracting entity. In the event of termination, however, the contractor is generally entitled to receive
the contract price on completed work and payment of certain termination-related costs.

On projects where construction financing is supplied by financial
institutions, credit risk varies with the financial strength and viability of the financial institutions involved. The global financial crisis noted above has resulted in financial difficulty, and sometimes bankruptcy, for certain financial
institutions with which certain owners have arranged construction financing. In fiscal 2008, the owner of one project successfully requested the Company extend the terms of payment of the Companys progress billings, in order to deal with the
bankruptcy of Lehman Brothers Holdings Inc., who provided construction financing for the project. As a result, the owner of this project has deferred payment to the Company of US$11.0 million until 2009. The Company performs an assessment of the
financial capacity of each potential customer prior to the submission of bids or other proposals for new work, including the sources of construction financing. When construction financing is provided by financial institutions, the Company reviews
the credit rating of the financial institution assigned by international-credit rating agencies. Further, the Company has performed an assessment of the financial capacity of certain existing customers, including the financial institutions providing
construction financing to such customers, which have been or may be significantly impacted by the global financial crisis. The Company has established an allowance for doubtful accounts that it believes is sufficient to address the credit risk in
receivables. However, if a major customer failed to pay a significant outstanding progress billing or retainage, our financial results could be adversely affected.

We work in a highly competitive marketplace.

The construction industry as a whole has historically been very competitive. The
Company competes with other major contractors as well as numerous mid-size and smaller contractors in the United States and Canada. New work securement and contract profitability is dependent on the general state of the economy in each of our
markets. Fluctuating demand cycles are typical of the construction industry, and such cycles determine to a large extent the degree of competition for available projects. A contractor's competitive position is based primarily on its prices for
construction services, its ability to obtain performance bonds, its financial strength, and its reputation for quality, timeliness, and experience. In addition, public sector contracts are normally required by law to be awarded to the lowest capable
and responsive bidder. Competition for work is particularly intense during economic downturns. Intense competition may result in lower profit margins and commercially unfavorable contractual terms, increasing the risk of losses to the Company as a
result of unforeseen problems and unbudgeted costs.

Our fixed price contracts subject us to the risk of project cost overruns.

The Company undertakes a significant number of fixed price construction contracts under which we agree to perform a project for a definite, predetermined price
regardless of our actual costs. Fixed price contracts present the risk that our actual costs may exceed those estimated for the project, the result being a decrease in profit margin or in extreme cases, a loss on the project.

The Company has developed and maintains procedures and controls during the bidding process to manage the risks associated with this type of work to the greatest extent
possible. However, some factors during the construction phase of projects are beyond managements direct control and are difficult to forecast, including changes in the business environment, changes to laws and regulations, exceptionally bad
weather or other unanticipated natural conditions, world shortages of material supply, labor unrest, and bankruptcy of subcontractors. There can be no assurance that the Company will be able to perform its obligations under fixed price contracts
without incurring losses. If the Company was to significantly underestimate the cost of one or more fixed price contracts, the resulting losses could have a materially adverse effect on the Company.

As at October 31, 2008, 67% (2007  71%; 2006  68%) of the backlog of work to be completed, measured by expected gross revenues, was under fixed price
construction contracts.



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PCLs backlog is subject to unexpected adjustments and is, therefore, an uncertain indicator of our future
performance.

The Companys backlog of incomplete construction work under contract at October 31, 2008 was $6.9 billion (2007 
$7.2 billion; 2006  $5.6 billion). It cannot be assured that the revenues projected in the backlog will be realized or, if realized, will result in profits. Project execution may occur unevenly over the current and multiple future
periods. Project terminations, suspensions or reductions in scope may occur from time-to-time with respect to contracts reflected in the backlog. The uncertainty of project timing can present difficulties in matching our workforce size with our
contract needs. If expected project execution is delayed or terminated, we could incur costs resulting from reductions in staff or redundancy of facilities that would reduce profits. Some backlog reductions would adversely affect the revenue and
profit actually received from contracts reflected in backlog. Future project cancellations and scope adjustments could further reduce the dollar amount of the backlog and the revenues and profits that is actually earned.

Reductions in public funding could have a negative impact on our business.

A substantial portion of our billings is derived from public sector projects. In 2008, approximately 28% (2007  27%; 2006  26%) of our billings came from contracts with federal, state, provincial and local
governments.

Government contracts present risks of termination for convenience, adjustment of payments received, restrictions on ability to compete for
government work and funding constraints.

The following risks are inherent in federal, state, provincial and local government contracts:



|a) | Because laws in the United States generally permit government agencies to terminate a contract for convenience, the Companys government clients in the United States may
terminate contracts with little or no prior notice.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|b) | Our U.S. government clients may audit contract payments received for several years after these payments are made. Based on these audits, these clients may adjust or demand repayment
of funds previously received. None of the audits performed to date on PCLs government contracts resulted in any significant adjustments to the financial statements. It is possible that a future audit could have a materially adverse effect on
our consolidated financial statements.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|c) | The Companys ability to earn revenues from existing and future government projects will depend upon the availability of funding from government agencies. In times of worsening
economic conditions, governments and government agencies face increased budget constraints, reducing their ability and willingness to commit funds to new construction projects. The Company cannot control whether those agencies will fund or continue
funding the outstanding projects.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A significant reduction in our public sector work due to any one or combination of factors listed above
would adversely affect our business, operating results and financial condition.

If we are found to have violated the terms of our government
contracts or applicable statutes and regulations in the United States, we are subject to the risk of suspension or debarment from government contracting activities, which could have a material adverse effect on our business and results of
operations.

Many of our projects are funded under federal, state, provincial or local government contracts. If we fail to comply with the terms of
one or more of our government contracts or governmental statutes or regulations in the United States, or if any of our companies or employees are indicted or convicted on criminal charges (including misdemeanors) relating to any of our government
contracts in the United States, or if we fail to self-report certain violations in circumstances where self-reporting is required, in addition to any civil or criminal penalties and costs we may incur, we could be suspended or debarred from
government contracting activities in the United States for a period of time. Some U.S. federal and state statutes and regulations provide for automatic debarment in certain circumstances, such as upon a conviction for a violation. The suspension or
debarment in any particular case may be limited to the facility, contract or subsidiary involved in the violation or could be applied to the whole PCL family of companies if the circumstances were deemed severe enough. Even a narrow suspension or
debarment could result in negative publicity that could adversely affect our ability to secure new contracts, both with governments and private customers, which could have materially adverse affects on our business and results of operations.



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##### Table of Contents

The Companys joint venture partners may not be able to meet their obligations.

The Company participates in various construction joint ventures. Generally, each construction joint venture is formed to accomplish a specific project, jointly
controlled by the joint venture partners and dissolved upon completion of the project. The Company selects its joint venture partners based on its analysis of the prospective venturers construction and financial capabilities, expertise in the
type of work to be performed and past working relationships with the Company, among other criteria. The Company and its joint venture partners commonly execute joint venture agreements which serve to spread risk among participating companies with
agreements that typically stipulate that the participating companies will supply their proportionate share of the necessary operating funds for the project (e.g. the cost of equipment) and will share the profits or losses in accordance with
specified percentages. Each of the participants in a joint venture is usually liable to the client for completion of the entire project in the event of default by any of the other joint venturers. The success of the Companys joint ventures
depends on the satisfactory performance by its joint venture partners related to their joint venture obligations. The Company regularly evaluates the financial stability of its joint venture partners; however, if any of the joint venture partners
fail to satisfactorily perform its joint venture obligations as a result of financial or other difficulties, the joint venture to which such joint venturer is a partner may be unable to adequately perform or deliver its contracted services. Under
these circumstances, the Company may be required to make additional investments and provide additional services to ensure the adequate performance and delivery of the contracted services. These additional obligations could result in reduced profits
or, in some cases, significant losses for the Company with respect to the joint venture.

Our success depends on attracting and retaining qualified
personnel and subcontractors in a competitive environment.

The Company is highly dependent on the availability of experienced staff, skilled
workers, and qualified subcontractors for which there is significant competition from other construction services firms. From time to time, particularly when the level of construction activity is high in a particular area, the Company faces
shortages in all of these categories. The Companys inability to attract and retain experienced staff, skilled workers, and qualified subcontractors could impede its ability to secure additional work and complete existing engagements on
schedule, in which event it may lose market share and its revenue and profits could decline.

Increases in the cost of raw materials negatively
impact our business.

The cost of raw materials is a significant component of our operating expenses. Because we are often unable to pass such
increases in the costs of raw materials through to our customers, such increases represent additional costs and negatively impact our results of operations. Various Asian countries have emerged as powerful global forces that are affecting
construction markets world-wide due to their sheer size and increasing demand for raw materials to sustain their rapidly growing economies. The global availability of basic construction materials such as steel and cement have been impacted by the
massive requirements in Asia, the consequences being price fluctuations, periodic supply shortages, and overall price escalation. These conditions have added significant risk for many vendors and subcontractors, who in some cases will not guarantee
price or availability for long-term contracts. This in turn increases the risk for general contractors, who typically are not able to pass such risks on to the owner under lump-sum contracts.

Our design-build contracts subject us to additional risk.

Our design-build contracts subject the Company to liability to property owners for project design and construction. In all instances, project design is done either by a joint venture partner or is subcontracted to an architect/engineer and
the extent of the design risks assumed is dependent upon the applicable joint venture agreement (as described in the risk factor related to our joint venture relationships above) or subcontract arrangement. However, the Company, as the design-build
contractor or joint venture participant, is ultimately responsible for the accuracy and completeness of the project plans and specifications.



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Many of our contracts subject us to the risk of damages resulting from delays.

Many construction contracts contain deadlines for completion of a project, or various phases of a project, to which the contract relates and impose penalties for failing
to complete the project or phase by the required date. The Company attempts to negotiate in its contracts waivers of consequential damages arising from delays, including damages for loss of use, loss of product, loss of revenue and loss of profit.
However, on some contracts, PCL is required to undertake responsibility for consequential or liquidated damages for failure to meet contract schedules. Although the Company has not incurred material penalties for liquidated damages during the past
three fiscal years, we may incur such penalties in the future. Such penalties for consequential or liquidated damages may be significant and could negatively affect our financial condition or results of operations. In addition, projects that are not
completed on schedule further reduce profitability because staff must continue to work on the project longer than anticipated, which may prevent them from pursuing and working on new projects. Projects that are over budget or behind schedule may
also lead to client dissatisfaction.

PCLs construction field activities are generally performed outdoors. Certain weather conditions and natural or
other disasters, such as fires, floods, influenza pandemics, and similar events, may cause postponements in the initiation and/or completion of its field activities and may hinder the ability of its office employees to arrive at work, which may
result in a delay or elimination of revenue that otherwise would have been recognized while certain costs continue to be incurred. Any delay in the completion of PCLs field, office, and/or other activities may require it to incur additional
costs attributable to overtime work necessary to meet its clients required schedule. Due to various factors, a delay in the commencement or completion of a project may also result in the cancellation of the contract. As a result, PCLs
net revenue and profitability may be adversely affected.

An inability to obtain bonding would have a negative impact on our operations and results.

Some of our construction contracts require us to post payment and performance bonds written by qualified surety companies guaranteeing our
completion of the project and the payment of workers, subcontractors and vendors. The cost of such bonds may be included as a project cost passed along to the client. Historically we have had and continue to have good relationships with our sureties
and have a strong bonding capacity. However, the issuance of bonds under any bonding facilities is at the sureties sole discretion. Bonds may be more difficult to obtain in the future or they may only be available at significant additional
cost. There can be no assurance that bonds will continue to be available to us on reasonable terms. Although we have not been unable to obtain bonding, our inability to procure such bonds for any reason in the future would limit our ability to bid
for new projects.

It can be difficult or expensive to obtain the insurance we need for our business operations.

As part of business operations, the Company maintains insurance both as a corporate risk management strategy and in order to satisfy the requirements of many of our
contracts. Our risk management personnel continuously monitor the developments in the insurance market. The financial stability of the insurance provider is one of the major factors that is considered when buying insurance coverage. Currently,
insurance is purchased from several of the worlds leading and most financially stable providers, often in layered insurance arrangements. The built-in redundancy of such arrangements usually enables us to call upon existing insurance suppliers
to fill gaps that may arise if other such suppliers become financially unstable. However, insurance products go through market fluctuations and can become expensive and sometimes very difficult to obtain. Although in the past the Company has
generally been able to cover our insurance needs, there can be no assurances that the Company can secure all necessary or appropriate insurance in the future. Failure to obtain such insurance could lead to uninsured losses or limit our ability to
pursue some construction contracts, both of which could have a materially adverse effect on results or financial condition.

Claims against the
Company could have a material adverse impact on our financial condition or results of operations.

Disputes arise frequently in the ordinary course
of business in the construction industry. Disputes may include claims against PCL based upon alleged defects in performance under contracts or claims by PCL against customers who refuse to pay contract amounts based on alleged breaches by PCL.
Litigation often requires substantial expenditures for legal and consulting fees, and equally or more importantly, requires significant management time and energy that otherwise would be focused on other projects or pursuing



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new opportunities. PCL incurred legal fees of $9.2 million in fiscal 2008 (2007  $7.5 million; 2006  $6.1 million), in relation to claims both
for and against the Company. Although we have adopted a range of insurance, risk management and risk avoidance programs designed to reduce potential liabilities, such programs will not protect us fully from all risks and liabilities.

Construction claims by PCL against customers are included in revenue when the amount can be reasonably estimated and recovery of the claim is probable, such as when the
claim is resolved or collected; and we reserve for claims asserted against PCL in our financial statements. A partially or completely uninsured claim against PCL, if successful and of a significant magnitude, could have a materially adverse effect
on our financial condition or results of operations. The total value of judgments and negotiated settlements relating to claims against PCL that were not covered by insurance in fiscal 2008 was $2.3 million (2007  $5.2 million; 2006 
$18.9 million).

We may incur liabilities under environmental laws and regulations as a result of our operations.

Our operations are subject to compliance with the regulatory requirements of federal, provincial, state and local agencies and authorities in the United States, Canada
and the Bahamas relating to the environment, including those relating to discharges to air, water and land, the handling and disposal of solid and hazardous waste, the handling of underground storage tanks and the cleanup of properties affected by
hazardous substances. Certain environmental laws impose substantial penalties for non-compliance and others, such as the United States Comprehensive Environmental Response, Compensation and Liability Act, impose strict, retroactive, joint and
several liability upon persons responsible for releases of hazardous substances. While we have not incurred material environmental liabilities in the past, there can be no assurance that our operations will not result in such liabilities in the
future and that such liabilities will not have a materially adverse effect on our business and financial condition. Moreover, these laws and regulations may become more stringent, or may be more stringently enforced in the future, which could
increase our costs of operations and reduce our profitability.

Actual results may differ from estimates and assumptions made in preparing financial
statements.

PCL recognizes contract revenue using the percentage of completion method. Under this method, the ratio of actual cost of work
performed to date to current estimated total contract costs is applied to the estimated net contract profit to determine the amount of profit currently recognized. Changes in job performance, job conditions and estimated profitability, including
those arising from contract penalty provisions and final contract settlements, may result in revisions to cost and income and are recognized in the period in which such adjustments are determined. The Company recognizes the full amount of an
estimated loss where current estimates indicate an ultimate loss on a project. On a historical basis, PCL believes that reasonably reliable estimates of the progress towards completion on its long term contracts have been made and, to date,
percentage of completion accounting adjustments have not materially affected PCLs financial results. However, given the uncertainties associated with these types of contracts, it is possible for actual costs to vary from estimates previously
made, which may result in reductions or reversals of previously recorded revenues and profits.

Further, in order to prepare financial statements in
conformity with generally accepted accounting principles in the United States and Canada, the Company is required to make estimates and assumptions as of the date of the financial statements which affect the reported values of the assets,
liabilities, revenues and expenses, and disclosures of contingent assets and liabilities. Areas requiring significant estimates include:



|a) | recognition of contract revenues, costs, profit or losses in applying the percentage-of-completion method of accounting as discussed above;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------



|b) | recognition of recoveries under contract change orders and claims by PCL;
|-- | -------------------------------------------------------------------------



|c) | collectability of accounts receivable and unbilled work-in-process accounts and allowances for doubtful accounts;
|-- | -----------------------------------------------------------------------------------------------------------------



|d) | estimated amounts for anticipated project losses, warranty costs, contract close-out costs and claims against PCL;
|-- | ------------------------------------------------------------------------------------------------------------------



|e) | income tax provisions and related valuation allowances; and
|-- | -----------------------------------------------------------



|f) | accruals for other estimated liabilities.
|-- | -----------------------------------------



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Actual results could differ from the estimates and assumptions used to prepare the financial statements.

Inadequate internal controls or disclosure controls may result in events that could adversely affect the business.

Inadequate internal controls or disclosure controls over financial reporting could result in material misstatements in the financial statements and related disclosures.
Such inadequate controls could also result in system downtime, backlogs, fraud, or the inability to continue PCLs business operations. The Company has procedures in place for ongoing evaluation of internal controls and disclosure controls over
financial reporting, but there can be no assurance that such controls will fully safeguard the Company against the risks described above.

If fraud
occurs and remains undetected, PCL may have a material loss of assets or misstatement in its financial statements.

Fraud may occur and remain
undetected resulting in a material loss of assets and/or misstatement in the financial statements and related disclosures. PCL has implemented various business policies and procedures to protect itself against potential fraud risks, including its
code of ethics entitled Code of Conduct, which is attached as Exhibit 11.1 to this Annual Report on Form 20-F. However, there can be no assurance that such policies and procedures will fully safeguard the Company against the risks
associated with fraud.

Our reputation is an integral part of our business.

Reputation risk is the risk to earnings from negative public opinion. Negative public opinion can result from actual or alleged misconduct in any number of activities, but often involves questions about business
ethics and integrity, competence, corporate governance practices, quality and accuracy of financial reporting disclosure or quality of products and services. PCL has implemented various business conduct policies addressing actual or alleged
misconduct, including its code of ethics entitled Code of Conduct. Each salaried employee, officer and director of PCL and its affiliates and subsidiaries attends a compulsory training program on the Code of Conduct, and commits to abide by the Code
of Conduct by signing a receipt and acknowledgement form. Each of those persons also commits to abide by all the policies referenced in the Code of Conduct that are relevant to that person. Violations will be the cause for corrective action, which
may result in disciplinary action up to and including termination of employment.

No public trading market exists for our shares.

No public trading market exists for shares of the Company. Shares of the Company are not listed on any stock exchange or other regulated market. Each of the
Companys shareholders is a party to a Unanimous Shareholder Agreement which, among other things, restricts the shareholders ability to transfer shares of the Company, restricts ownership of shares of the Company by corporations, grants
options to the Company to purchase shares of the Company under certain circumstances, establishes obligations on the Company to purchase shares of the Company under certain circumstances and grants a right of first refusal to the Company to purchase
shares of the Company that a shareholder proposes to transfer to a third party. The Unanimous Shareholder Agreement includes a formula for establishing the price at which our shares are to be purchased by the Company. For additional information,
please see Item 9 - The Offer and Listing - Offer and Listing Details; Marketsand Item 10 - Additional Information - Memorandum of Association and Articles of Association - Unanimous Shareholder Agreement
(previously filed in our registration on Form 20-F filed on February 8, 2006 and incorporated herein by reference).

Shareholders in the
United States may not be able to enforce civil liabilities against PCL and its directors and executive officers.

PCL is incorporated under the
laws of the Province of Alberta, Canada, and all of PCLs directors and a majority of PCLs executive officers are residents of Canada. Consequently, it may be difficult for United States shareholders to effect service of process within
the United States upon PCL and its directors or upon those executive officers who are not residents of the United States, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under the United
States federal securities laws. In addition, a shareholder should not assume that the courts of Canada (i) would enforce judgments of U.S. courts obtained in



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actions against PCL or such persons predicated upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States, or
(ii) would enforce, in original actions, liabilities against PCL or such persons predicated upon the U.S. federal securities laws or other laws of the United States.

However, a Canadian court would generally enforce, in an original action, civil liability predicated on U.S. securities laws provided that those laws that govern the shareholders claim according to applicable
Canadian law, are proven by expert evidence, are not contrary to public policy as the term is applied by a Canadian court and do not arise from foreign penal laws or laws that deal with taxation or the taking of property by a foreign government,
provided that the action is in compliance with Canadian procedural laws and applicable Canadian legislation regarding the limitation of actions. Also, a Canadian court would generally recognize a judgment obtained in a U.S. court except, for
example, where:



|a) | no real or substantial connection can be established between the cause of action and the U.S. court where the judgment was rendered, resulting in the U.S. court having no
jurisdiction according to applicable Canadian law;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|b) | the judgment was subject to ordinary remedies or subject to appeal, judicial review or any other judicial proceeding which renders the judgment not final, conclusive or enforceable
under the laws of the applicable state;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|c) | the judgment was obtained by fraud or in any manner contrary to natural justice or rendered in contravention of fundamental principles of procedure;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------



|d) | a dispute between the same parties, based on the same subject matter has given rise to a judgment rendered in a Canadian court or has been decided in a third country and the
judgment meets the necessary conditions for recognition in a Canadian court;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|e) | the outcome of the judgment of the U.S. court was inconsistent with Canadian public policy; or
|-- | ----------------------------------------------------------------------------------------------



|f) | there has not been compliance with applicable Canadian law dealing with the limitation of actions.
|-- | --------------------------------------------------------------------------------------------------



|ITEM 4. | INFORMATION ON THE COMPANY
|------- | --------------------------

A. History
and Development of the Company

PCL Employees Holdings Ltd. was incorporated under the
Companies Act (Alberta) on April 25, 1977 and continued under the Business Corporations Act (Alberta) on June 19, 1984. The Companys head office is located at 5410  99 Street, Edmonton, Alberta, Canada, T6E 3P4.
The telephone and facsimile numbers are (780) 733-5000 and (780) 733-5075, respectively. The transfer agent is Computershare Investor Services Inc. located at 6thFloor, Western Gas Tower, 530 8 Avenue SW, Calgary, Alberta, Canada, T2P 3S8. The Company does not have an agent for service of process in the United States.

Principal Capital Expenditures

During the 2008 fiscal year,
the Company spent $19.3 million, net of cash acquired, on the acquisition of Nordic Construction, Ltd. as disclosed in note 7(b) to the consolidated financial statements. During the years 2006, 2007, and 2008 the Company spent $52.0 million; $62.0
million; and $47.3 million respectively, on the purchase of property, plant and equipment. No individual expenditure was material. All capital expenditures have been financed through working capital. The Company has no material purchase commitments
for capital expenditures, either individually or in aggregate, subsequent to October 31, 2008.



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B. Business Overview

General

PCL Employees Holdings Ltd. is a holding company owning 100% of the issued shares of
PCL Construction Holdings Ltd., a holding company, which in turn directly or indirectly owns 100% of the issued shares of its significant subsidiaries. 100% of the issued shares of PCL Constructors Bahamas Ltd. are held in trust for PCL Construction
Holdings Ltd. and PCL Constructors Inc. PCL Construction Holdings Ltd. indirectly owns 100% of the issued shares of PCL Constructors Inc. The Companys operations are in the nature of construction services. Those operations are carried out by a
number of separate subsidiary companies, operating in different construction or geographic markets.

A number of PCLs projects can be classified as
major construction, involving large quantities of materials, labour, management expertise and capital, in the general areas of: (a) commercial and institutional buildings, including construction of shopping centers, educational facilities,
airports, light civil structures, hospitals, museums, sporting and entertainment facilities, hotels, light industrial facilities, multifamily condominiums and apartments, seniors facilities, and office buildings; (b) construction,
shutdown and maintenance services for manufacturing, petrochemical, oil and gas and mine processing facilities, chemical plants, forestry projects and power plants; and (c) roadways, bridges, tunnels, large diameter pipelines, water and
wastewater treatment facilities, dams and mine site preparation.

PCL performs a large number of smaller or Special Projects involving tenant
installations, alterations, and restorations or small stand-alone projects. PCL also performs ongoing service and maintenance contract work for certain clients.

Contracts awarded to PCL pursuant to bid or negotiation with the owners generally provide for compensation based on: (a) lump sum price; (b) unit prices; or (c) cost plus a fee (with or without a guaranteed maximum cost to
the owner). Pursuant to each general contract awarded to it, PCL provides all general supervisory, management and administrative services, and assumes responsibility for the execution of the entire project, performing varying portions of the work
with its own forces, most of which are employed locally for the particular project. Subcontractors often perform the balance of the work.

Some of the
contracts PCL bids on are design/build projects. On design/build projects, contract arrangements are entered into for both the design and the construction of a project. As the contract price is established at a very early stage in the design, PCL
has additional exposure in construction costs due to the added detail contained in the final design. In addition, these contracts take on the additional risk of design liabilities during both the construction period and the post construction period.
Design/build projects normally earn higher fees commensurate with the additional risk being taken. PCL mitigates its design risk exposure by either subcontracting the responsibility for design to a third party, or through joint venture arrangements,
as discussed below.

PCL occasionally undertakes, as a member of joint ventures, responsibilities as a general contractor in association with other
construction companies or, on design/build projects, in conjunction with designers. In both the private and public sectors, acting either as a prime contractor or as a subcontractor, we may join with other companies to form a team to compete for a
single contract. Because a team can often offer stronger combined qualifications than any company standing alone, these teaming arrangements can be very important to the success of a particular contract competition or proposal. Consequently, we
maintain a network of relationships with other companies to form teams that compete for particular contracts and projects. Each joint venture arrangement customarily relates to a single contract or project. Some of the joint ventures undertaken may
involve multiple projects and an ongoing business relationship. One of the joint venturers customarily acts as sponsor, providing the bulk of the supervisory and administrative services for the project.

Principal Markets

The following tables set
forth reportable operating segment and geographic information for contract revenue for the last three fiscal years for the countries in which the Company currently operates. The Company has four reportable operating segments under Canadian GAAP
(2007 and 2006, a fifth industry segment, Heavy Civil, was reportable).



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##### Table of Contents

Contract Revenue: Reportable Operating Segments

(millions of dollars)



|     |  |                   |       |                 |   |                         |  |                       |     |             |   |       |  |       |     |                           |   |                   |  |   |       |  |   |  |   |      
|---- |  | ----------------- | ----- | --------------- | - | ----------------------- |  | --------------------- | --- | ----------- | - | ----- |  | ----- | --- | ------------------------- | - | ----------------- |  | - | ----- |  | - |  | - | -----
|     |  | Buildings Canada |       | Buildings U.S. |   | HeavyIndustrial Canada |  | HeavyIndustrial U.S. |     | Heavy Civil |   | Other |  | Total |     | ConsolidatingEliminations |   | ConsolidatedTotal
|2008 |  | $                 | 2,845 |                 | $ | 1,475                   |  | $                     | 650 |             | $ | 484   |  | $     |    |                           | $ | 383               |  | $ | 5,837 |  |  |  | $ | 5,837
|2007 |  |                   | 2,109 |                 |   | 1,444                   |  |                       | 579 |             |   | 412   |  |       | 509 |                           |   | 12                |  |   | 5,065 |  |  |  |   | 5,065
|2006 |  |                   | 1,767 |                 |   | 1,217                   |  |                       | 507 |             |   | 258   |  |       | 431 |                           |   | 28                |  |   | 4,208 |  |  |  |   | 4,208

Contract Revenue: Geographic Segments

(millions of dollars)



|     |  |        |       |      |   |         |  |       |    |  |   |      
|---- |  | ------ | ----- | ---- | - | ------- |  | ----- | -- |  | - | -----
|     |  | Canada |       | U.S. |   | Bahamas |  | Total
|2008 |  | $      | 3,495 |      | $ | 2,340   |  | $     | 2  |  | $ | 5,837
|2007 |  |        | 2,688 |      |   | 2,365   |  |       | 12 |  |   | 5,065
|2006 |  |        | 2,273 |      |   | 1,907   |  |       | 28 |  |   | 4,208

Construction Markets

PCL is engaged in the construction services industry, performing construction services for a broad range of public and private clients in Canada, the United States and the Bahamas. Construction services are performed
in the following construction markets:



| |  |  | Commercial and institutional buildings including: shopping centers, educational facilities, airports, light civil structures, hospitals, museums, sporting and
entertainment facilities, hotels, light industrial facilities, multifamily condominiums and apartments, seniors facilities, and office buildings.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Heavy industrial construction including: manufacturing, petrochemical, oil and gas and mine processing facilities, chemical plants, forestry projects, power plants
and industrial shutdown and maintenance.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Heavy civil construction including: roadways, bridges, tunnels, large diameter pipelines, water and wastewater treatment facilities, dams and mine site preparation.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

Principal Operating Locations

PCL has its principal district and operations (*) offices at the following locations listed from east to west by country. At its principal district office, the operating company will have established a permanent location, with a
complement of on-site administrative personnel to support daily operations. At an operations office, the operating company will share some of the services necessary to run the business with one of the district offices.



|                                |  |                                |  |                     
|------------------------------- |  | ------------------------------ |  | --------------------
|   Halifax, Nova Scotia        |  |    Charlotte, North Carolina* |  |    Nassau, Bahamas*
|   Ottawa, Ontario             |  |    Orlando, Florida           |  |                     
|   Toronto, Ontario            |  |    Tampa, Florida             |  |                     
|   Winnipeg, Manitoba          |  |    Atlanta, Georgia           |  |                     
|   Regina, Saskatchewan        |  |    Minneapolis, Minnesota     |  |                     
|   Saskatoon, Saskatchewan*    |  |    Denver, Colorado           |  |                     
|   Ft. McMurray, Alberta*      |  |    Vail, Colorado*            |  |                     
|   Edmonton, Alberta           |  |    Phoenix, Arizona           |  |                     
|   Calgary, Alberta            |  |    Albuquerque, New Mexico*   |  |                     
|   Kelowna, British Columbia*  |  |    Las Vegas, Nevada*         |  |                     
|   Surrey, British Columbia    |  |    San Diego, California      |  |                     
|   Vancouver, British Columbia |  |    Los Angeles, California    |  |                     
|                                |  |    Bakersfield, California    |  |                     
|                                |  |    Seattle, Washington        |  |                     
|                                |  |    Anchorage, Alaska*         |  |                     
|                                |  |    Honolulu, Hawaii           |  |                     



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Seasonality

Certain specializations within the construction industry are highly weather dependent and experience dramatic seasonal swings in activity level. As a result, management of these companies must focus significant attention on cash management
and the retention of key staff during the slow periods.

However, due to its size, geographic coverage and diversity of operations, PCL has not
historically experienced major seasonal changes in activity. Supporting this statement is the following table that summarizes PCLs monthly billings for the five year period 2004  2008.

PCL Family of Companies

Monthly
Billings

Years Ending October 31, 2004  2008

(millions of Canadian dollars)



|                  |  |     |       |     |   |       |  |     |       |     |   |       |  |     |       |     |   |       |  |     |       |     |   |       |  |   |       |  |   |       |  |   |       |  |   |      
|----------------- |  | --- | ----- | --- | - | ----- |  | --- | ----- | --- | - | ----- |  | --- | ----- | --- | - | ----- |  | --- | ----- | --- | - | ----- |  | - | ----- |  | - | ----- |  | - | ----- |  | - | -----
|                  |  | Nov |       | Dec |   | Jan   |  | Feb |       | Mar |   | Apr   |  | May |       | Jun |   | Jul   |  | Aug |       | Sep |   | Oct  
|2004              |  |     | 245.6 |     |   | 230.9 |  |     | 215.3 |     |   | 249.2 |  |     | 260.4 |     |   | 294.1 |  |     | 271.9 |     |   | 241.3 |  |   | 261.6 |  |   | 265.9 |  |   | 256.6 |  |   | 282.6
|2005              |  |     | 302.8 |     |   | 265.5 |  |     | 245.3 |     |   | 262.7 |  |     | 319.4 |     |   | 335.8 |  |     | 337.3 |     |   | 324.7 |  |   | 355.6 |  |   | 342.3 |  |   | 408.9 |  |   | 392.0
|2006              |  |     | 320.8 |     |   | 331.0 |  |     | 367.5 |     |   | 350.4 |  |     | 403.7 |     |   | 326.1 |  |     | 421.4 |     |   | 424.0 |  |   | 422.9 |  |   | 432.8 |  |   | 443.1 |  |   | 409.7
|2007              |  |     | 424.0 |     |   | 398.1 |  |     | 461.0 |     |   | 464.9 |  |     | 433.5 |     |   | 447.1 |  |     | 440.9 |     |   | 439.6 |  |   | 494.7 |  |   | 492.2 |  |   | 472.3 |  |   | 497.1
|2008              |  |     | 450.1 |     |   | 354.1 |  |     | 454.4 |     |   | 445.4 |  |     | 506.4 |     |   | 592.8 |  |     | 490.0 |     |   | 523.0 |  |   | 505.9 |  |   | 559.3 |  |   | 625.1 |  |   | 603.7
|Five Year Average |  | $   | 348.7 |     | $ | 315.9 |  | $   | 348.7 |     | $ | 354.5 |  | $   | 384.7 |     | $ | 399.2 |  | $   | 392.3 |     | $ | 390.5 |  | $ | 408.1 |  | $ | 418.5 |  | $ | 441.2 |  | $ | 437.0
|                  |  |     |       |     |   |       |  |     |       |     |   |       |  |     |       |     |   |       |  |     |       |     |   |       |  |   |       |  |   |       |  |   |       |  |   |      

LOGO



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As illustrated above, although a moderate drop in billings is typically seen for the month of December each year, the
average billings during the three-month winter season, i.e. December through February, falls within 22% of the overall annual average billings level. Seasonal fluctuation in billings is not a significant concern requiring management attention. For
each fiscal year, the U.S. billing numbers, originally billed in U.S. dollars, have been converted to Canadian dollars using the average U.S. dollar/Canadian dollar exchange rate over that fiscal year.

Sources and Availability of Raw Materials and Price Volatility

Periodically the construction industry experiences severe shortages in certain types of construction materials, and with these shortages there typically are dramatic swings in pricing. In the past decade, shortages have been experienced in
lumber, structural steel, alloys, reinforcing steel, Portland cement, and electrical cable.

In its role as a general contractor in the commercial and
institutional construction market, PCL subcontracts out a high percentage of the work it performs, typically in the range of 75% and in certain instances as high as 100% of the work other than general supervisory, management and administrative
services. With the exception of materials such as cement, lumber, and aggregates, PCL typically is not directly responsible for the procurement of either raw materials or finished construction products, as this scope generally is the responsibility
of the subcontractors.

PCL will typically require firm lump sum or firm unit prices from its subcontractors, which will apply for the entire duration of a
project. If this is not possible, PCL will attempt to pass on to the client any material price escalation risks, and where neither of these approaches is possible, PCL may decide that its best overall commercial strategy is to accept the risk of
material cost escalation, to quantify the risk as well as it can, and deal with the risk assumed as a business opportunity or otherwise manage the risk.

In industrial construction, major plant components equipment and a significant percentage of the bulk materials required for a project are typically procured by the client, who by doing so assumes all risks tied to price escalation and
foreign currency exchange. Furthermore, certain major industrial projects undertaken by PCL are fundamentally labor contracts, with a low material and equipment content, and in which labor escalations are typically defined by collective agreements
and are passed through to the client.

PCL, as a corporate policy, does not speculate in currency risk. In addition to the Companys practice of
managing its risk against devaluation of its U.S. assets from currency exchange rate fluctuations, each PCL company typically operates inside its home country and as a consequence generally does not assume the risk of contract payments in foreign
currencies.

The evaluation of subcontractor and material pricing risks are addressed in all major bid reviews, with significant attention from both
district as well as senior management, depending upon the size of the project.

Marketing Channels and Sales Methods

Due to the diversity and breadth of PCLs operations, a wide range of marketing strategies and techniques are used that vary significantly from region to region.

In the Canadian commercial markets, where PCL and its predecessors have operated for over 100 years, the Companys reputation is well-established.
Because of the high level of brand recognition, much of the ongoing marketing effort is focused on reinforcing PCLs reputation through industry associations and community involvement.

In the Canadian heavy industrial markets, the projects are large and the client base is relatively small, dominated by Fortune 500 companies. These clients are
sophisticated buyers of construction services, and place a high value on the project management performance and safety experience of the contractors they utilize. Because of its position in this market, PCL is typically aware of most major projects
during or prior to the design phase, and discussions on construction execution are held with the client early in the bidding cycle to determine if the clients requirements and PCLs capabilities fit at that time. Where there is a fit, PCL
management will develop a project execution strategy, and at times take on joint venture partners and dedicated subcontractors if appropriate, to offer the client a competitive proposal with a high chance of success. In certain cases, where there is
not a fit, the negotiations will be dropped long before a project reaches the bidding stage.



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##### Table of Contents

In the U.S. commercial buildings market, PCL is frequently seen as one of several large, experienced and financially
capable contractors. In this market, PCL must expend a much greater effort to convince potential clients as to why PCL would be a good choice as their contractor. Thus, in these areas, the business development function is much more critical than in
Canada, and the ratio of business development costs to revenue is significantly higher.

In the heavy civil markets, the clients are typically government
entities such as a state department of transportation and regional water authorities. Marketing in the conventional sense is minimal in these markets, as the work is traditionally awarded through the competitive bid process to qualified bidders.
While each authority will have its own prequalification standards and procedures, the common metrics usually include financial strength, safety record, past project performance and history of lawsuits.

PCLs style is consistent in all markets, and emphasizes our people, our project experience, technical excellence, performance, quality, and financial strength,
with a high value placed on long-term relationships and repeat business.

From time to time various media are used to focus on project announcements,
project completions, and recognition for project or individual accomplishments. Radio, television and newspaper advertisements are rarely used in PCL marketing efforts.

Dependence Upon Patents, Licenses, or New Manufacturing Processes

Although construction is a highly technical
industry, general contractors typically are not directly involved in the development of, and are not dependent upon, patents or licensing agreements. Leading contractors continually strive to develop methods and procedures that are safer, faster,
and less costly. However, most of these innovations are drawn from industry experience, have typically been in the public domain for many years, and thus are not eligible for patent protection by an individual contractor. Furthermore,
the effort required to patent a construction process is significant and expensive and the commercialization of an invention is time-consuming.

Although
PCL is typically not able to secure exclusive use of its innovations, on the other hand it does not face the risk of other contractors interfering with PCL projects by blocking the use of construction techniques through patent rights.

From time to time, PCL may work with developer clients who have process patents, but as a general rule PCL will not assume contract risks tied to process performance.
Alternatively, any process risks assumed must be clearly defined and quantified, and either an appropriate contingency will be established or insurance will be purchased to address such risks.

Assessment of PCLs Competitive Position

In assessing a
contractors competitiveness, a number of metrics can be used, including a companys ability to sustain growth while maintaining profitability. A review of PCLs competitive position on this basis follows:

Sustained Growth with Profitability

Over the past thirty-one years since its transition to employee ownership, PCL has grown from annual consolidated revenue of $300 million to $5.8 billion, representing a compounded annual growth rate of 10.05%. Every
year during that period the Company has been profitable.

Competition and Backlog

PCL has achieved a strong position in the construction industry in Canada and the U.S. Competition from others on large projects is somewhat limited to
the larger contractors due to financial requirements for bonding; however, on smaller or routine work, a large number of companies typically compete for the contract award. A portion of PCLs business is dependent upon domestic governmental
spending policy. Other portions depend on demand and funds available for plant expansion and other capital improvements by private companies.



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As of October 31, the backlog of incomplete construction work under contract was as follows:

Total Incomplete at October 31

(millions of dollars)



|                                          |  |      |       |      |   |       |  |   |      
|----------------------------------------- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                                          |  | 2008 |       | 2007 |   | 2006 
|Backlog of Work to be Completed           |  | $    | 6,887 |      | $ | 7,189 |  | $ | 5,611
|                                          |  |      |       |      |   |       |  |   |      
|Breakdown By Reportable Operating Segment |  |      |       |      |   |       |  |   |      
|Buildings  Canada                        |  | $    | 4,129 |      | $ | 4,260 |  | $ | 2,858
|Buildings  U.S.                          |  |      | 1,618 |      |   | 1,439 |  |   | 1,470
|Heavy Industrial  Canada                 |  |      | 519   |      |   | 579   |  |   | 338  
|Heavy Industrial  U.S.                   |  |      | 283   |      |   | 459   |  |   | 218  
|Heavy Civil                               |  |      |      |      |   | 437   |  |   | 473  
|Other                                     |  |      | 338   |      |   | 15    |  |   | 254  
|                                          |  |      |       |      |   |       |  |   |      
|Total                                     |  | $    | 6,887 |      | $ | 7,189 |  | $ | 5,611
|                                          |  |      |       |      |   |       |  |   |      
|                                          |  |      |      
|Breakdown By Country                      |  |      |       |      |   |       |  |   |      
|Total Canada                              |  | $    | 4,648 |      | $ | 4,839 |  | $ | 3,196
|Total U.S.                                |  |      | 2,239 |      |   | 2,335 |  |   | 2,161
|Total Bahamas                             |  |      |      |      |   | 15    |  |   | 254  
|                                          |  |      |       |      |   |       |  |   |      
|Total                                     |  | $    | 6,887 |      | $ | 7,189 |  | $ | 5,611
|                                          |  |      |       |      |   |       |  |   |      

The total value of work awarded to the Company over the last five fiscal years is as follows:

Total Value Of Work Awarded

(millions of dollars)



|                            |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      
|--------------------------- |  | ---- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                            |  | 2008 |       | 2007 |   | 2006  |  | 2005 |       | 2004
|Competitively Bid           |  | $    | 1,391 |      | $ | 1,987 |  | $    | 2,227 |      | $ | 2,577 |  | $ | 1,743
|Negotiated                  |  |      | 4,291 |      |   | 4,793 |  |      | 2,349 |      |   | 1,946 |  |   | 1,219
|Construction Management     |  |      | 258   |      |   | 366   |  |      | 931   |      |   | 751   |  |   | 1,179
|                            |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      
|Total Value of Work Awarded |  | $    | 5,940 |      | $ | 7,146 |  | $    | 5,507 |      | $ | 5,274 |  | $ | 4,141
|                            |  |      |       |      |   |       |  |      |       |      |   |       |  |   |      



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##### Table of Contents

Material Effects of Government Regulation

Other than in critical areas such as safety, the environment, and U.S. Government (USG) contracting, the construction industry as a whole is not highly susceptible to the impacts of government regulation,
compared to certain other industries such as energy, mining, and forestry.

We enter into contracts to provide construction services to a number of USG
agencies. Since those contracts are funded with U.S. tax dollars, there are numerous U.S. laws and regulations which apply to the award and administration of those contracts. Those laws and regulations are sometimes complex. Of particular importance
are: the Procurement Integrity Act, the purpose of which is to maintain a fair and balanced environment during the bid and award phase of a USG procurement; the Federal Acquisition Regulation, a collection of rules governing almost all aspects of
the acquisition process; and the False Claims Act, which establishes liability from the improper receipt or avoidance of payment to the USG, such as the submission of a false invoice or a false request for progress payment to the USG, with penalties
ranging from a monetary penalty for each false claim submitted, to suspension or debarment.

In accordance with our Code of Conduct (filed with the
Securities and Exchange Commission as an exhibit to this Annual Report on Form 20-F, and may be accessed through the Commissions EDGAR database by visiting www.sec.gov), PCL complies with the laws and regulations of the jurisdictions in which
it conducts its operations, competing on a level playing field with the competition. Also, in relation to the total number of salaried staff in the Company, and the size of the equipment fleet, there are relatively few cross-border transfers of
staff or equipment that would be subject to government regulation or controls.

C. Organizational Structure

PCL Employees Holdings Ltd. is a holding company owning 100% of the issued shares of PCL Construction Holdings Ltd. which in turn directly or indirectly owns 100% of the
issued shares of its significant subsidiaries. 100% of the issued shares of PCL Constructors Bahamas Ltd. are held in trust for PCL Construction Holdings Ltd. and PCL Constructors Inc. PCL Construction Holdings Ltd. indirectly owns 100% of the
issued shares of PCL Constructors Inc. The Companys significant subsidiaries are listed below:



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|                                         |  |                               |  |                                    |  
|---------------------------------------- |  | ----------------------------- |  | ---------------------------------- | -
|Subsidiary Name                          |  | Jurisdiction of Incorporation |  | Percentage ofCommon ShareOwnership |  
|PCL Construction Group Inc.              |  | Alberta, Canada               |  | 100                                | %
|PCL Construction Holdings Ltd.           |  | Alberta, Canada               |  | 100                                | %
|PCL Construction Management Inc.         |  | Alberta, Canada               |  | 100                                | %
|PCL Construction Resources Inc.          |  | Alberta, Canada               |  | 100                                | %
|PCL Constructors Bahamas Ltd.            |  | Nassau, Bahamas               |  | 100                                | %
|PCL Constructors Canada Inc.             |  | Alberta, Canada               |  | 100                                | %
|PCL Constructors Inc.                    |  | Alberta, Canada               |  | 100                                | %
|PCL Constructors Northern Inc.           |  | Alberta, Canada               |  | 100                                | %
|PCL Constructors Westcoast Inc.          |  | Alberta, Canada               |  | 100                                | %
|PCL Industrial Constructors Inc.         |  | Alberta, Canada               |  | 100                                | %
|PCL Industrial Management Inc.           |  | Alberta, Canada               |  | 100                                | %
|PCL Intracon Power Inc.                  |  | Alberta, Canada               |  | 100                                | %
|Grand Sierra Equipment Ltd.              |  | Alberta, Canada               |  | 100                                | %
|Melloy Industrial Services Inc.          |  | Alberta, Canada               |  | 100                                | %
|Monad Industrial Constructors Inc.       |  | Alberta, Canada               |  | 100                                | %
|Health Partners Ottawa Ltd.              |  | Alberta, Canada               |  | 100                                | %
|Health Partners Kingston Ltd.            |  | Alberta, Canada               |  | 100                                | %
|PCL Capital Inc.                         |  | British Virgin Islands        |  | 100                                | %
|4102410 Canada Inc.                      |  | Northwest Territories, Canada |  | 100                                | %
|GHI Holdings, Inc.                       |  | Colorado, U.S.A.              |  | 100                                | %
|PCL Construction Enterprises, Inc.       |  | Colorado, U.S.A.              |  | 100                                | %
|PCL Civil Constructors, Inc.             |  | Colorado, U.S.A.              |  | 100                                | %
|PCL Construction Resources (U.S.A.) Inc. |  | Colorado, U.S.A.              |  | 100                                | %
|PCL Construction Services, Inc.          |  | Colorado, U.S.A.              |  | 100                                | %
|PCL Industrial Services, Inc.            |  | Colorado, U.S.A.              |  | 100                                | %
|Teton Industrial Construction, Inc.      |  | Colorado, U.S.A.              |  | 100                                | %
|PCL Construction New Mexico, Inc.        |  | New Mexico, U.S.A.            |  | 100                                | %
|PCL Construction, Inc.                   |  | Colorado, U.S.A.              |  | 100                                | %
|Nordic PCL Construction, Inc.            |  | Hawaii, U.S.A.                |  | 100                                | %

D. Property, Plant and Equipment

The Company has 63 permanent facilities located throughout Canada and the United States, 26 of which are owned facilities and 37 of which are leased facilities. The
Company also leases several short term, project duration facilities. Since construction projects are inherently temporary and location-specific, the Company owns approximately 408 portable offices, shops, and transport trailers. The Company also has
a large construction equipment fleet, including approximately 830 trucks and pickups and 144 tower and mobile cranes.

As at the end of fiscal 2008, the
book value of the Companys property, plant and equipment were as follows:

Book Value

(in thousands of dollars)



|                       |  |      |        
|---------------------- |  | ---- | -------
|                       |  | 2008
|Land & Buildings       |  | $    | 77,325 
|Construction Equipment |  |      | 61,784 
|Vehicles               |  |      | 13,350 
|Computers              |  |      | 6,403  
|Office Equipment       |  |      | 4,346  
|                       |  |      |        
|                       |  | $    | 163,208
|                       |  |      |        



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##### Table of Contents

Edmonton and Area Land and Buildings

PCL Business Park, Edmonton, Alberta

The PCL Business Park consists of a 18.3 acre business park in south central
Edmonton totaling 223,752 s.f. in office and warehouse space, utilized as follows:



| |  |  | PCLs Corporate Office (65,645 s.f  office)
| | - |  | --------------------------------------------



| |  |  | Edmonton District Office (30,586 s.f.  office)
| | - |  | -----------------------------------------------



| |  |  | Heavy Industrial Main Office (34,086 s.f.  office)
| | - |  | ---------------------------------------------------



| |  |  | PCL Resources Office (14,840 s.f.  office; 4,458 s.f.  warehouse)
| | - |  | --------------------------------------------------------------------



| |  |  | Intracon Office (7,500 s.f.  office; 2,010 s.f.  warehouse)
| | - |  | -------------------------------------------------------------



| |  |  | PCL File Storage Building (7,326 s.f.  warehouse)
| | - |  | --------------------------------------------------



| |  |  | Space leased to third parties (15,412 s.f.  office; 37,249 s.f.  warehouse)
| | - |  | -----------------------------------------------------------------------------



| |  |  | Vacant space (1,920 s.f.  office; 2,720 s.f.  warehouse; 5.7 acres  yard)
| | - |  | ----------------------------------------------------------------------------

PCL Industrial Fabrication Facility and Module Assembly Yard, Nisku, Alberta

Located approximately 24 kilometres (15 miles) south of Edmonton, the combined facility consists of 19,080 s.f. of office space, a 125,240 s.f. state-of-the-art piping fabrication facility located on 13.3 acres, plus a nearby additional
31.3 acres for the assembly of large industrial piping and equipment modules.

Other Edmonton and Area



| |  |  | Resources Yard and Repair Facility; Nisku, Alberta (6,240 s.f.  office; 16,198 s.f.  shop; 13,942 s.f.  warehouse; 12.9 acres  yard; 7,763
s.f.  ancillary buildings)
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Melloy Industrial; Nisku, Alberta (9,208 s.f.  office; 14,252 s.f.  shop; 5.0 acres  yard)
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | Remington Module Yard Land; Nisku, Alberta (41.8 acres  yard)
| | - |  | --------------------------------------------------------------

Other Canadian Land and Buildings



| |  |  | Regina District Office; Regina, Saskatchewan (10,900 s.f.  office; 4,805 s.f.  shop; 3,200 s.f.  warehouse; 2.2 acres  yard)
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | Calgary District Office; Calgary, Alberta (33,916 s.f.  office)
| | - |  | ----------------------------------------------------------------



| |  |  | Calgary Yard and Shop; Calgary, Alberta (1,800 s.f.  office; 6,085 s.f.  shops; 6.1 acres  yard)
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | Winnipeg District Office; Winnipeg, Manitoba (14,476 s.f.  office; 3,600 s.f.  warehouse; 8,866 s.f.  space leased to third parties)
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Ottawa District; Nepean, Ontario (22,969 s.f.  office; 700 s.f.  warehouse)
| | - |  | -----------------------------------------------------------------------------



| |  |  | BC District Yard; Surrey, British Columbia (2,080 s.f.  office; 4.3 acres  yard)
| | - |  | ----------------------------------------------------------------------------------

U.S. Land and Buildings



| |  |  | Minneapolis District Office; Burnsville, Minnesota (19,902 s.f.  office; 1,902 s.f.  warehouse; 5,098 s.f.  leased to a third party; 2.8 acres
 yard)
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Teton Industrial District Office; Alpharetta, Georgia (10,000 s.f. shop; 5.0 acres  yard; Vacant  (13,641 s.f.  office; 5,705 s.f. 
warehouse; 2.7 acres  yard))
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | PCL Industrial Services District Office and Warehouse; Bakersfield, California (51,639 s.f.  office/warehouse; 21.7 acres  yard)
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Waipahu, Hawaii (12,470 s.f.  office)
| | - |  | --------------------------------------

None of
the listed properties is mortgaged.



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##### Table of Contents

In addition to the owned properties listed above, the Company also leases space for district and operations offices and
yards in the following locations:



| |  |  | Richmond, B.C. (24,600 s.f.  office)
| | - |  | -------------------------------------



| |  |  | Surrey, B.C. (7,504 s.f.  office; 6,248 s.f.  warehouse; 4.3 acres  yard)
| | - |  | ----------------------------------------------------------------------------



| |  |  | Kelowna, B.C. (7,040 s.f.  office; 1,360 s.f.  shop)
| | - |  | ------------------------------------------------------



| |  |  | Saskatoon, Saskatchewan (6,000 s.f.  office; 12,000 s.f.  warehouse)
| | - |  | ----------------------------------------------------------------------



| |  |  | Edmonton, Alberta (17,836 s.f.  office)
| | - |  | ----------------------------------------



| |  |  | Fort McMurray, Alberta (1,144 s.f.  office)
| | - |  | --------------------------------------------



| |  |  | Winnipeg, Manitoba (3,611 s.f.  office)
| | - |  | ----------------------------------------



| |  |  | Toronto, Ontario (52,271 s.f.  office; 2,000 s.f.  warehouse; 2.0 acres  yard)
| | - |  | ---------------------------------------------------------------------------------



| |  |  | Ottawa, Ontario (1.4 acres  yard)
| | - |  | ----------------------------------



| |  |  | Halifax, Nova Scotia (9,497 s.f.  office)
| | - |  | ------------------------------------------



| |  |  | Minneapolis, Minnesota (1,100 s.f. office; 79,700 s.f. warehouse)
| | - |  | -----------------------------------------------------------------



| |  |  | Denver, Colorado (32,296 s.f.  office; 1,800 s.f  warehouse; 4.0 acres  yard)
| | - |  | --------------------------------------------------------------------------------



| |  |  | Phoenix, Arizona (13,076 s.f.  office; 2.0 acres  yard)
| | - |  | ---------------------------------------------------------



| |  |  | Tampa, Florida (16,572 s.f.  office; 11.0 acres  yard)
| | - |  | --------------------------------------------------------



| |  |  | Orlando, Florida (17,834 s.f.  office; 1.0 acres  yard)
| | - |  | ---------------------------------------------------------



| |  |  | Seattle, Washington (35,647 s.f.  office; 2.0 acres  yard)
| | - |  | ------------------------------------------------------------



| |  |  | Glendale, California (17,619 s.f.  office; 1.8 acres  yard)
| | - |  | -------------------------------------------------------------



| |  |  | San Diego, California (9,442 s.f.  office)
| | - |  | -------------------------------------------



| |  |  | Honolulu, Hawaii (16,917 s.f.  office)
| | - |  | ---------------------------------------



| |  |  | Alpharetta, Georgia (26,907 s.f.  office)
| | - |  | ------------------------------------------



| |  |  | Rock Falls, Illinois (600 s.f.  office)
| | - |  | ----------------------------------------



| |  |  | Las Vegas, Nevada (3,840 s.f.  office)
| | - |  | ---------------------------------------



| |  |  | Charlotte, North Carolina (3,258 s.f.  office)
| | - |  | -----------------------------------------------



| |  |  | Bakersfield, California (10.0 acres  yard)
| | - |  | -------------------------------------------

The Company does not have any significant unutilized space in any of its leased or owned premises.

The Company is not aware of any material
environmental issues which may affect the utilization of these assets.



|ITEM 4A. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

None.



|ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|------- | --------------------------------------------

The following
discussion should be read in conjunction with our consolidated financial statements which are included elsewhere in this Annual Report on Form 20-F. Our consolidated financial statements have been prepared in accordance with the provisions of
generally accepted accounting principles in Canada, which differ in certain respects from generally accepted accounting principles in the United States. See Note 24 to our consolidated financial statements for a description of the principal
differences between Canadian GAAP and U.S. GAAP as they relate to PCL.

Overview

The Company operates in the construction industry and performs construction services in Canada, the United States and the Bahamas for a wide variety of public and private clients. The Companys operations are
categorized into four industry segments: Buildings  Canada, Buildings  U.S., Heavy Industrial  Canada, and Heavy Industrial  U.S. (2007 and 2006  a fifth industry segment, Heavy Civil, was reportable). The Buildings
segments performs construction services for commercial and institutional buildings, including construction of shopping centers, educational facilities, airports, light civil structures, hospitals, museums, sporting and entertainment facilities,
hotels, light industrial facilities, multifamily condominiums and apartments, seniors facilities, and office buildings. The Heavy Industrial segments



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##### Table of Contents

performs construction, shutdown and maintenance services for manufacturing, petrochemical, oil and gas and mine processing facilities, chemical plants,
forestry projects and power plants. The Heavy Civil segment performs construction services for roadways, bridges, tunnels, large diameter pipelines, water and wastewater treatment facilities, dams and mine site preparation.

The construction industry is competitive in nature, which often results in lower gross profit on work done than in many other industries. Therefore, in order to maximize
returns, managements central focus is on cost containment. The ability to control costs allows the Company to bid work more competitively and also to complete the work more profitably. Since shareholder returns are directly tied to the
earnings of the Company, the success of the Company is dependent on the ability to perform projects profitably. The Company views both gross profit as a percentage of revenue and indirect and administrative expenses as a percentage of revenue as key
performance indicators.

A. Operating Results

Below is a brief summary of the Companys financial operations for the last three fiscal years ended October 31. For more detailed information, please see the consolidated financial statements attached to
this report.

Summary: Operating Results

(millions of
dollars)



|                                                     |  |      |         |   |      |   |         |  |   |        
|---------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- |  | - | -------
|                                                     |  | 2008 |         |   | 2007 |   | 2006   
|Contract revenues                                    |  | $    | 5,837.4 |   |      | $ | 5,065.3 |  | $ | 4,208.3
|Contract costs                                       |  |      | 4,984.0 |   |      |   | 4,469.7 |  |   | 3,722.8
|Gross profit on contracts                            |  |      | 853.4   |   |      |   | 595.6   |  |   | 485.5  
|Indirect and administrative expenses  Canadian GAAP |  |      | 443.6   |   |      |   | 354.2   |  |   | 287.2  
|Indirect and administrative expenses  U.S. GAAP     |  |      | 450.8   |   |      |   | 359.3   |  |   | 289.9  
|Gain on disposal of property, plant and equipment    |  |      | 1.2     |   |      |   | 1.6     |  |   | 2.3    
|Operating profit  Canadian GAAP                     |  |      | 411.0   |   |      |   | 243.0   |  |   | 200.6  
|Operating profit  U.S. GAAP                         |  |      | 403.8   |   |      |   | 237.9   |  |   | 197.9  
|Other income (expense)(1)                            |  |      | (34.2   | ) |      |   | 70.3    |  |   | 31.7   
|Earnings before income taxes  Canadian GAAP         |  |      | 376.8   |   |      |   | 313.3   |  |   | 232.3  
|Earnings before income taxes  U.S. GAAP             |  |      | 369.7   |   |      |   | 308.2   |  |   | 229.6  
|Income taxes  Canadian GAAP                         |  |      | 134.8   |   |      |   | 92.1    |  |   | 63.1   
|Income taxes  U.S. GAAP                             |  |      | 134.8   |   |      |   | 92.1    |  |   | 62.8   
|Net earnings  Canadian GAAP                         |  |      | 242.0   |   |      |   | 221.2   |  |   | 169.2  
|Net earnings  U.S. GAAP                             |  |      | 234.8   |   |      |   | 216.1   |  |   | 166.8  



Notes:

|(1) | Sources of revenue for the other category are derived mainly from investing activity and foreign exchange gains or losses on U.S. dollar- denominated bank loans.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Operating Segments

(millions of dollars)



|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |                       |   |  |       |        |   |       |   |        |                           |  |   |                   |   |  |   |        |   |  |   |          |  
|------------------------------------------------------------------- |  | ------------------- | -------- | - | --------------- | - | -------- | ----------------------- |  | - | --------------------- | - |  | ----- | ------ | - | ----- | - | ------ | ------------------------- |  | - | ----------------- | - |  | - | ------ | - |  | - | -------- | -
|                                                                    |  | Reportable Segments |          |   |                 |   |          |                         |  |   |                       |   |  |       |       
|                                                                    |  | Buildings Canada   |          |   | Buildings U.S. |   |          | HeavyIndustrial Canada |  |   | HeavyIndustrial U.S. |   |  | Other |        |   | Total |   |        | ConsolidatingEliminations |  |   | ConsolidatedTotal |  
|2008                                                                |  |                     |          |   |                 |   |          |                         |  |   |                       |   |  |       |        |   |       |   |        |                           |  |   |                   |   |  |   |        |   |  |   |          |  
|Contract revenues                                                   |  | $                   | 2,845.4  |   |                 | $ | 1,475.1  |                         |  | $ | 650.0                 |   |  | $     | 483.9  |   |       | $ | 383.0  |                           |  | $ | 5,837.4           |   |  | $ |       |   |  | $ | 5,837.4  |  
|Contract costs                                                      |  |                     | (2,513.8 | ) |                 |   | (1,354.4 | )                       |  |   | (532.5                | ) |  |       | (379.0 | ) |       |   | (327.8 | )                         |  |   | (5,107.5          | ) |  |   | 123.5  |   |  |   | (4,984.0 | )
|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |                       |   |  |       |        |   |       |   |        |                           |  |   |                   |   |  |   |        |   |  |   |          |  
|Gross profit                                                        |  |                     | 331.6    |   |                 |   | 120.7    |                         |  |   | 117.5                 |   |  |       | 104.9  |   |       |   | 55.2   |                           |  |   | 729.9             |   |  |   | 123.5  |   |  |   | 853.4    |  
|Indirect and administrative expenses and gain on disposal of PP & E |  |                     | (48.3    | ) |                 |   | (39.6    | )                       |  |   | (28.8                 | ) |  |       | (12.9  | ) |       |   | (10.2  | )                         |  |   | (139.8            | ) |  |   | (302.6 | ) |  |   | (442.4   | )
|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |                       |   |  |       |        |   |       |   |        |                           |  |   |                   |   |  |   |        |   |  |   |          |  
|Operating profit                                                    |  | $                   | 283.3    |   |                 | $ | 81.1     |                         |  | $ | 88.7                  |   |  | $     | 92.0   |   |       | $ | 45.0   |                           |  | $ | 590.1             |   |  | $ | (179.1 | ) |  | $ | 411.0    |  
|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |                       |   |  |       |        |   |       |   |        |                           |  |   |                   |   |  |   |        |   |  |   |          |  
|Total Assets                                                        |  | $                   | 1,263.8  |   |                 | $ | 501.5    |                         |  | $ | 214.6                 |   |  | $     | 241.2  |   |       | $ | 171.8  |                           |  | $ | 2,392.9           |   |  | $ | 681.8  |   |  | $ | 3,074.7  |  
|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |                       |   |  |       |        |   |       |   |        |                           |  |   |                   |   |  |   |        |   |  |   |          |  



|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |            |   |  |                       |        |   |       |   |        |       |  |   |                           |   |  |                   |          |   |  |   |        |   |  |   |          |  
|------------------------------------------------------------------- |  | ------------------- | -------- | - | --------------- | - | -------- | ----------------------- |  | - | ---------- | - |  | --------------------- | ------ | - | ----- | - | ------ | ----- |  | - | ------------------------- | - |  | ----------------- | -------- | - |  | - | ------ | - |  | - | -------- | -
|                                                                    |  | Reportable Segments |          |   |                 |   |          |                         |  |   |            |   |  |                       |        |   |       |  
|                                                                    |  | Buildings Canada   |          |   | Buildings U.S. |   |          | HeavyIndustrial Canada |  |   | HeavyCivil |   |  | HeavyIndustrial U.S. |        |   | Other |   |        | Total |  |   | ConsolidatingEliminations |   |  | ConsolidatedTotal |         
|2007                                                                |  |                     |          |   |                 |   |          |                         |  |   |            |   |  |                       |        |   |       |   |        |       |  |   |                           |   |  |                   |          |   |  |   |        |   |  |   |          |  
|Contract revenues                                                   |  | $                   | 2,109.4  |   |                 | $ | 1,443.8  |                         |  | $ | 578.5      |   |  | $                     | 509.3  |   |       | $ | 411.9  |       |  | $ | 12.4                      |   |  | $                 | 5,065.3  |   |  | $ |       |   |  | $ | 5,065.3  |  
|Contract costs                                                      |  |                     | (1,865.4 | ) |                 |   | (1,338.5 | )                       |  |   | (474.0     | ) |  |                       | (468.3 | ) |       |   | (375.9 | )     |  |   | (13.1                     | ) |  |                   | (4,535.2 | ) |  |   | 65.5   |   |  |   | (4,469.7 | )
|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |            |   |  |                       |        |   |       |   |        |       |  |   |                           |   |  |                   |          |   |  |   |        |   |  |   |          |  
|Gross profit                                                        |  |                     | 244.0    |   |                 |   | 105.3    |                         |  |   | 104.5      |   |  |                       | 41.0   |   |       |   | 36.0   |       |  |   | (0.7                      | ) |  |                   | 530.1    |   |  |   | 65.5   |   |  |   | 595.6    |  
|Indirect and administrative expenses and gain on disposal of PP & E |  |                     | (44.1    | ) |                 |   | (31.5    | )                       |  |   | (25.7      | ) |  |                       | (10.5  | ) |       |   | (10.5  | )     |  |   | (0.2                      | ) |  |                   | (122.5   | ) |  |   | (230.1 | ) |  |   | (352.6   | )
|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |            |   |  |                       |        |   |       |   |        |       |  |   |                           |   |  |                   |          |   |  |   |        |   |  |   |          |  
|Operating profit                                                    |  | $                   | 199.9    |   |                 | $ | 73.8     |                         |  | $ | 78.8       |   |  | $                     | 30.5   |   |       | $ | 25.5   |       |  | $ | (0.9                      | ) |  | $                 | 407.6    |   |  | $ | (164.6 | ) |  | $ | 243.0    |  
|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |            |   |  |                       |        |   |       |   |        |       |  |   |                           |   |  |                   |          |   |  |   |        |   |  |   |          |  
|Total Assets                                                        |  | $                   | 859.8    |   |                 | $ | 362.4    |                         |  | $ | 229.2      |   |  | $                     | 149.5  |   |       | $ | 133.9  |       |  | $ | 14.8                      |   |  | $                 | 1,749.6  |   |  | $ | 513.6  |   |  | $ | 2,263.2  |  
|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |            |   |  |                       |        |   |       |   |        |       |  |   |                           |   |  |                   |          |   |  |   |        |   |  |   |          |  
|                                                                    |  |                     |          |   |                 |   |          |                         | 
|2006                                                                |  |                     |          |   |                 |   |          |                         |  |   |            |   |  |                       |        |   |       |   |        |       |  |   |                           |   |  |                   |          |   |  |   |        |   |  |   |          |  
|Contract revenues                                                   |  | $                   | 1,766.9  |   |                 | $ | 1,217.5  |                         |  | $ | 506.7      |   |  | $                     | 431.4  |   |       | $ | 258.0  |       |  | $ | 27.8                      |   |  | $                 | 4,208.3  |   |  | $ |       |   |  | $ | 4,208.3  |  
|Contract costs                                                      |  |                     | (1,587.4 | ) |                 |   | (1,154.0 | )                       |  |   | (391.3     | ) |  |                       | (395.1 | ) |       |   | (230.0 | )     |  |   | (16.1                     | ) |  |                   | (3,773.9 | ) |  |   | 51.1   |   |  |   | (3,722.8 | )
|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |            |   |  |                       |        |   |       |   |        |       |  |   |                           |   |  |                   |          |   |  |   |        |   |  |   |          |  
|Gross profit                                                        |  |                     | 179.5    |   |                 |   | 63.5     |                         |  |   | 115.4      |   |  |                       | 36.3   |   |       |   | 28.0   |       |  |   | 11.7                      |   |  |                   | 434.4    |   |  |   | 51.1   |   |  |   | 485.5    |  
|Indirect and administrative expenses and gain on disposal of PP & E |  |                     | (40.4    | ) |                 |   | (29.2    | )                       |  |   | (20.9      | ) |  |                       | (9.2   | ) |       |   | (7.5   | )     |  |   | (0.2                      | ) |  |                   | (107.4   | ) |  |   | (177.5 | ) |  |   | (284.9   | )
|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |            |   |  |                       |        |   |       |   |        |       |  |   |                           |   |  |                   |          |   |  |   |        |   |  |   |          |  
|Operating profit                                                    |  | $                   | 139.1    |   |                 | $ | 34.3     |                         |  | $ | 94.5       |   |  | $                     | 27.1   |   |       | $ | 20.5   |       |  | $ | 11.5                      |   |  | $                 | 327.0    |   |  | $ | (126.4 | ) |  | $ | 200.6    |  
|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |            |   |  |                       |        |   |       |   |        |       |  |   |                           |   |  |                   |          |   |  |   |        |   |  |   |          |  
|Total Assets                                                        |  | $                   | 661.4    |   |                 | $ | 308.0    |                         |  | $ | 222.9      |   |  | $                     | 130.2  |   |       | $ | 85.8   |       |  | $ | 12.2                      |   |  | $                 | 1,420.5  |   |  | $ | 429.1  |   |  | $ | 1,849.6  |  
|                                                                    |  |                     |          |   |                 |   |          |                         |  |   |            |   |  |                       |        |   |       |   |        |       |  |   |                           |   |  |                   |          |   |  |   |        |   |  |   |          |  



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Information concerning principal geographic areas is as follows:

Contract Revenues

(millions of dollars)



|              |  |      |         |      |   |         |  |   |        
|------------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|              |  | 2008 |         | 2007 |   | 2006   
|Canada        |  | $    | 3,495.4 |      | $ | 2,688.0 |  | $ | 2,273.6
|United States |  |      | 2,340.0 |      |   | 2,365.0 |  |   | 1,906.8
|Bahamas       |  |      | 2.0     |      |   | 12.3    |  |   | 27.9   
|              |  |      |         |      |   |         |  |   |        
|Total         |  | $    | 5,837.4 |      | $ | 5,065.3 |  | $ | 4,208.3
|              |  |      |         |      |   |         |  |   |        

Long-lived Assets

(millions of dollars)



|              |  |      |       |      |   |       |  |   |      
|------------- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|              |  | 2008 |       | 2007 |   | 2006 
|Canada        |  | $    | 103.4 |      | $ | 101.8 |  | $ | 87.6 
|United States |  |      | 69.1  |      |   | 40.0  |  |   | 36.4 
|              |  |      |       |      |   |       |  |   |      
|Total         |  | $    | 172.5 |      | $ | 141.8 |  | $ | 124.0
|              |  |      |       |      |   |       |  |   |      

Long-lived assets consist of property, plant and equipment and intangible assets.

Results of Operations: Consolidated

Contract revenues

New work securement dropped significantly in 2008 to $5.9 billion from the record
set in 2007 of $7.1 billion. This was due primarily to the financial turmoil most markets experienced in 2008 resulting in project delays and cancellations. During the fiscal year, the Company had three projects experience financing disruptions
resulting in two unpaid contract receivables and one project which required project financing assistance from the Company. In addition, three projects were downsized and several heavy industrial projects in Canada have been delayed a minimum of one
year. The distribution of new work securement showed the largest decreases amongst the Buildings  Canada and Heavy Industrial  Canada segments, down $652 million and $338 million respectively. The Buildings  U.S. segment was up
$378 million, due in part to the acquisition of Nordic Construction Ltd., and both the Heavy Civil and the Heavy Industrial  U.S. segments showed decreases of $98 million and $302 million respectively. The decrease in new work has resulted in
a slight decrease in backlog of $302 million from the previous backlog record at October 31, 2007 of $7.2 billion. The Company had set progressively higher new work securement records in each of the years 2005, 2006 and 2007. This has
translated into higher contract revenues in each of the years 2008, 2007, and 2006. Contract revenues in 2008 increased $772 million (15.2%) as compared to 2007. Contract revenues in 2007 increased $857 million (20.4 %) as compared to 2006.
Revenue attributable to the Companys operations in the United States decreased slightly by $25 million (1.1%) in 2008 as compared to 2007 due entirely to the stronger average Canadian dollar in fiscal 2008 compared to the average United
States dollar (5.6% strengthening). United States contract revenues in United States dollars increased $104 million in 2008. United States contract revenues increased $458 million (24.0%) in 2007 as compared to 2006. This increase in United
States contract revenues is despite devaluation of the average United States dollar against the average Canadian dollar of 3.5% in fiscal 2007. United States contract revenues in 2008 were up in 6 operations and down in 5 operations. The increase in
United States contract revenues in 2007 was due to increases in revenues in all but two of the U.S. operations. Canadian contract revenues in 2008 increased $808 million over 2007 and increased $414 million in 2007 over 2006. Canadian revenues in
2008 increased primarily to increases in Ontario ($514 million) and Alberta ($264 million) operations. The increase in 2007 Canadian revenues was due primarily to increases in the Ontario ($172 million) and British Columbia ($144 million)
operations.



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##### Table of Contents

Contract Costs and Gross Profit

The Company only includes construction claims in revenue when the amount can be reasonably estimated and recovery of the claim is probable, such as when
the claim is resolved or collected. As such, contract revenues and gross profits can fluctuate from year to year depending on the timing of the award or receipt of outstanding construction claims.

Gross profits have increased $258 million (43.3%) in 2008 and $110 million (22.7%) in 2007. The gross profit as a percentage of contract
revenues increased to 15.2% in 2008 as compared to 11.8% in 2007. This increase was due primarily to the Heavy Industrial  U.S. segment which saw its gross profit as a percentage of contract revenues increase to 21.7% in 2008 from 8.7% in
2007. This increase was due almost entirely to the resolution of the Vineyard, Utah power plant project claim which resulted in a $30 million payment to the Company for which the contract costs had been incurred in fiscal 2006 and 2007. The gross
profit as a percentage of contract revenues remained relatively consistent at 11.8% in 2007 as compared to 11.5% in 2006.

Indirect and Administrative Expenses

Indirect and administrative expenses fluctuate with the timing of
new work. Salaried project personnel are charged to projects to which they are assigned. Upon project completion if salaried project personnel are not immediately assigned to another project they are charged to indirect and administrative expenses.

In 2008, indirect and administrative expenses increased $89.4 million. This increase was due primarily to a $60.6 million increase in
bonuses paid to employees as a result of increased Company profits and an increase in salary expense of $19.0 million resulting from an increase of 368 salaried staff. The other significant increase was a $4.1 million increase in interest expense as
a result of the increase in bank loans. Operating segment indirect and administrative expenses increased $17.2 million (14.0%) and is consistent with the increase in contract revenues.

In 2007, indirect and administrative expenses increased $67.0 million. This increase was due primarily to a $35.8 million increase in bonuses paid to
employees as a result of increased Company profits and an increase in salary expense of $11.8 million resulting from an increase of 759 salaried staff. Other significant increases include an increase in amortization expense of $7.1 million due to
the large net additions to plant and equipment, as well as the $6.7 million increase in interest expense as a result of the increase in bank loans. Operating segment indirect and administrative expenses increased $15.2 million and is attributable to
the increase in contract revenues.

Other Income

Other income consists of interest income earned on cash and cash equivalents and short-term deposits, foreign exchange gains and losses, gains or losses
on marketable securities and equity in earnings of limited liability companies and limited partnerships.

Interest income decreased $17.1
million despite an increase in cash and cash equivalents and short-term deposits of $444.6 million. This decrease was due primarily to a decrease in the weighted average Canadian and United States prime rates of 1.28% and 2.98% respectively. In
2007, interest income increased $11.2 million due to an increase in cash and cash equivalents and short-term deposits of $90 million and increases in the Canadian and United States weighted average prime rates of .51% and .43% respectively. The
Company experienced a foreign exchange loss of $53.8 million in 2008 on the Companys U.S. dollar denominated debt due to a weakening of the fiscal year-end exchange rate of 27.5% and the increase in the Companys U.S. dollar denominated
debt. In 2007 and 2006 the Company experienced a foreign exchange gain of $32.0 million and $3.4 million respectively. The improvement of the fiscal year-end exchange rate for 2007 and 2006 was 15.9% and 4.9% respectively. In 2008 and 2007 the
Company recognized a loss of $1.7 million and a gain of $2.8 million, respectively, on the sale of marketable securities. In 2008 and 2007 the Company recognized $0.5 million and $1.0 million, respectively, from equity in earnings of limited
liability companies and limited partnerships.



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##### Table of Contents

Income Taxes

The effective income tax rate for fiscal 2008 is 35.8% (29.4% in 2007; 27.2% in 2006). The effective rate for 2008 differs from the combined Federal and
Provincial or State statutory income tax rate of 34% (35% in 2007; 34% in 2006) primarily as a result of non-taxable capital losses and gains, the recognition of previously unrecognized temporary differences and other changes in estimates, and
enacted future tax rate reductions.

Results of Operations: Buildings  Canada

Contract revenues

Contract revenues increased $736 million (34.9%) due primarily to increases in Ontario ($514 million) and Alberta ($192 million).

Contract revenues increased $343 million (19.4%) in 2007 due primarily to increases in the Ontario ($172 million) and British Columbia ($144 million) operations and the continuation of strong markets in the balance of Western Canada.

Contract Costs and Gross Profit

Gross profit for this segment has increased in each of the last three years up $87.7 million in 2008, $64.5 million in 2007 and $64.5 million in 2006 due primarily to an overall strengthening of this market,
particularly Western Canada and Ontario, and a larger proportion of design/build construction projects which is resulting in gross profit increases. As disclosed in Item 4B  Information on the Company  Business
Overview design/build projects normally earn higher fees commensurate with the additional risk being taken. Gross profit for the Buildings  Canada segment has averaged 11.2% of contract revenues over the past three years. Gross
profit as a percentage of contract revenues was 0.5% higher in 2008 and 0.4% higher in 2007 than the three year average. This difference was primarily due to the increase in project gross profits as discussed.

Indirect and Administrative Expenses

Indirect and administrative expenses were 1.7% of contract revenues in 2008 as compared to 2.1% in 2007 and 2.3% in 2006. Indirect and administrative expenses as a percentage of contract revenues have decreased due
entirely to the increase in contract revenues without a proportionate increase in indirect and administrative expenses as most of the additional required salaried personnel have been charged directly to project costs.

Results of Operations: Buildings  U.S.

Contract revenues

Contract revenues increased $31.3 million in 2008. Contract revenues increased in
Hawaii, Washington, and Colorado and decreased in California and Florida. Contract revenues increased in 2007 by $226 million (18.6%) to $1.4 billion. This increase was due to an increase in revenues in all but two markets.

Contract Costs and Gross Profit

The 2008 gross profit percentage increased significantly to 8.2% from 7.3% in 2007. This increase was due primarily to an overall strengthening of this market segment, an increase in the amount of self-perform work
and a larger proportion of design/build construction projects which is resulting in gross profit increases. As disclosed in Item 4B  Information on the Company  Business Overview design/build projects normally earn
higher fees commensurate with the additional risk being taken. Gross profit percentage in 2008 and 2007 was slightly higher than the three year average of 7.0% due also to the reasons discussed above.



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##### Table of Contents

Indirect and Administrative Expenses

Indirect and administrative expenses as a percentage of contract revenues increased to 2.7% in 2008 after having dropped to 2.2% in 2007 and 2.4% in 2006.
2008 indirect and administrative expenses as a percentage of revenues are higher than 2007 due to the acquisition of Nordic Construction Ltd., the placing of unassigned project people into overhead in the operations which seen decreases in contract
revenues during the year and the opening of the operations office in Charlotte, North Carolina.

Results of Operations: Heavy Industrial 
Canada

Contract revenues

Contract revenues in the Heavy Industrial  Canada segment in 2008 and 2007 were up $71.5 million (12.4%) and $71.9 million (14.2%). The 2008 increase was due primarily to the completion of a significant oil
sands project near Fort McMurray, Alberta and working on a large oil sands upgrader project near Fort Saskatchewan, Alberta. Contract revenues in 2007 were derived primarily from oil sands projects near Fort McMurray and Cold Lake, Alberta, and an
ethanol project in Minnedosa, Manitoba.

Contract Costs and Gross Profit

Gross profit in the Heavy Industrial  Canada segment was up $13.0 million in 2008 as compared to a decrease of $10.8 million in 2007. Gross profit
in 2008 increased in proportion to the increase in contract revenues with gross profit as a percentage of contract revenues remaining constant at 18.1%.

Indirect and Administrative Expenses

Indirect and administrative expenses
increased $3.1 million (11.8%) in 2008 and $4.9 million (23.6%) in 2007. These increases were due primarily to the 12.4% and 14.2% respective increase in contract revenues. Indirect and administrative expenses as a percentage of revenue
remained consistent at 4.4% as compared to 4.5% in 2007.

Results of Operations: Heavy Industrial  U.S.

Contract revenues

Contract revenues in the Heavy Industrial  U.S. segment in 2008 and 2007 were up $72.0 million (17.5%) and $154.0 million (59.7%) respectively. Both the operations based in Atlanta, Georgia and the operations located in
Bakersfield, California set contract revenue records in 2008 making it the fifth straight year that these operations have set contract revenue records. The Atlanta operations contract revenues have been derived primarily from a new cement plant as
well as two electricity generation projects. The Bakersfield operations contract revenues were derived primarily from the strong oil & gas sector in the Bakersfield area.

Contract Costs and Gross Profit

Gross profit in the Heavy Industrial  U.S. segment was $104.9 million up $68.9 million (191.4%) from 2007. Gross profit as a percentage of contract revenues has increased from 8.7% in 2007 to 21.7% in 2008.
The three year average gross profit percentage is 14.6%. As discussed above, this increase is due almost entirely to the resolution of the Vineyard, Utah power plant project claim which resulted in a $30 million payment to the Company for which the
contract costs had been incurred in fiscal 2006 and 2007.

Indirect and Administrative Expenses

Indirect and administrative expenses increased $2.4 million (23.1%) in 2008 and $2.9 million (39.1%) in 2007. Indirect and administrative
expenses as a percentage of contract revenues have averaged 2.7% over the last three fiscal periods. Indirect and administrative expenses as a percentage of revenue was 2.7% in 2008 and 2.5% in 2007 remaining very comparable to the three year
average.



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##### Table of Contents

B. Liquidity and Capital Resources

Below is a brief summary of the Companys financial position for the last two fiscal years ending October 31st. For more detailed information, please see the
consolidated financial statements attached to this report.



|                                                   |  |      |            |      |   |           
|-------------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|(in millions of dollars except shares outstanding) |  | 2008 |            | 2007
|Working capital                                    |  | $    | 491.4      |      | $ | 311.5     
|Shareholders Equity  Canadian GAAP               |  |      | 790.2      |      |   | 583.9     
|Redeemable Common Stock  U.S. GAAP                |  |      | 773.9      |      |   | 567.0     
|Shares Outstanding as at Oct. 31(1)                |  |      | 24,374,062 |      |   | 20,688,637



Notes:

|(1) | This represents the total of all Class 1, 2, 3 and 4 common shares of the Company.
|--- | ----------------------------------------------------------------------------------

Financial Condition

As at October 31, 2008, the Company held $1,068 million in cash and cash
equivalents, an increase of $478.6 million. This increase is due to the increase in cash provided from operations ($421.5 million), decrease in short term deposits ($34.1 million), net proceeds of bank loans ($140.2 million), net issuance of capital
($84.6 million), and unrealized foreign exchange loss ($66.0 million) offset primarily by the purchase of Nordic Construction Ltd. ($19.3 million), purchase of property, plant and equipment ($47.3 million) and the payment of dividends ($177.6
million).

Cash provided from operations increased $182.2 million to $421.5 million at October 31, 2008 compared to $239.3 million at October 31,
2007. This increase is due primarily to the increase in net earnings ($20.9 million), the change in future income taxes ($14.3 million), and the net change in operating accounts ($126.7 million). Cash provided by or used for operations can vary from
year to year depending on the mix of contract types, contract terms, and their stage of completion.

Included in cash and cash equivalents is $253.8
million (2007  $70.0 million) pledged in favor of a bank for the Companys US dollar denominated bank loans. These bank loans (2008  $301.1 million; 2007  $202.2 million) are used exclusively to minimize changes in the value
of the United States operations as a result of currency exchange fluctuations, are renewed every 30 to 365 days and are covered by a syndicated credit facility. Interest on these loans is designed to vary with the banks United States
Base Rate or the London Interbank Offered Rate plus 0.33% at the Companys option. During 2008 the Company increased its borrowings under these credit facilities by $98.9 million to reflect the increase in net assets of the operations in the
United States.

Short-term deposits decreased $34.0 million to $177.1 million in 2008 from $211.1 million in 2007. Included in short-term deposits is $59.6
million (2007  $132.5) pledged in favor of a bank for the Companys US dollar denominated bank loans.

Long-term investments held by the Company
increased in 2008 and 2007 by $8.3 million and $45.6 million, respectively. The 2008 increase was due to an investment in held to maturity investments of $21.8 million net of a decrease in marketable securities of $13.5 million due to net realized
and unrealized losses. The 2007 increase was due primarily to an additional investment in marketable securities of $35 million. The remainder of the increase for 2007 was due to net realized and unrealized gains.

Cash flow used by investing activities, net of short-term deposit and marketable securities activities, was $85.8 million and $63.1 million in 2008 and 2007
respectively. The major use of cash flow is the purchase of property, plant and equipment and the business acquisition. Cash flow used to acquire property, plant and equipment in 2008 was $47.3 million and $62.0 million in 2007. In 2008, the Company
used $19.3 million for the acquisition of Nordic Construction Ltd.



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##### Table of Contents

Cash flow of $47.3 million was provided by financing activities in 2008 versus a use of $18.0 million in 2007. The
Company increased its bank loans by $140.2 million in 2008 and $68 million in 2007. Net issuance of share capital provided cash of $84.6 million and $60.4 million in 2008 and 2007 respectively offset by the payment of dividends of $177.6 million in
2008 and $161.7 million in 2007. These amounts are determined by the Board of Directors and are paid in February of each year.

Liquidity

The Company has access to lines of credit in the amount of $355.9 million, in addition to the U.S. dollar denominated bank loans see Financial
Condition section above. At October 31, 2008 the Company has utilized $186.7 million (2007  $73 million) of these lines of credit, all in the form of letters of credit. Working capital as at October 31, 2008 is $491.4
million which represents an increase of $179.9 million over 2007s working capital of $311.5 million.

Issuance of share capital provides a source of
liquidity for the Company. Shares are normally offered to eligible salaried employees in March or April of each year. The Company repurchased all shares of employees terminated in the year and while there is no obligation to do so, generally
repurchases shares of active employees at the employees request. As mentioned above, cash proceeds from issuance of share capital less repurchases was $84.6 million and $60.4 million in 2008 and 2007 respectively.

The Company has no material binding purchase commitments and requires cash only to meet its needs in the normal course of business. The Company believes that its current
financial condition combined with funds generated from operations will be sufficient to finance cash requirements in the foreseeable future.

C. Research and Development, Patents and Licenses

PCL generally is not involved in the development or use of ideas tied to patents or licensing
agreements. While we continually strive to improve productivity and to reduce costs by developing new techniques or new applications for existing practices, such innovations usually are not patentable, having been in the public domain
and thus are not the property of PCL. Furthermore, PCL believes that, in general, obtaining, commercializing and enforcing a patent with respect to a construction process would be prohibitively time consuming and expensive.

In 2007, PCL received a Notice of Publication of Application from the United States Patent and Trademark Office in relation to PCLs patent application for an
invention entitled Diffuser plate for boiler burner feed assembly (publication no. US-2007-0224556-A1). This invention relates to a modified burner assembly for use in the context of a fuel gas-fired boiler, such as a boiler used in an
oilfield operation for generating steam, with the objective to reduce environmentally undesirable NOx emissions in flue gases leaving the boiler burner. In 2006, PCL received a Filing Certificate from the Canadian Intellectual Property Office in
relation to this invention (application no. 2,538,875).

From time to time the Company may work with a developer using its unique patents, but as a general
matter, the Company will not assume contract risks tied to process performance. Alternatively, any process risks assumed must be clearly defined and quantified. Either an appropriate contingency will be established or insurance will be purchased to
address such risks.

D. Trends and Uncertainties

Management believes that the Company is well positioned for the near term. In 2008, the Company experienced new work attainment of $5.9 billion (2007  $7.1 billion), and at the end of 2008, the Company had a
backlog (which is anticipated revenue from uncompleted contracts) of $6.9 billion (2007  $7.2 billion). These achievements provided a strong starting point for 2009 and beyond.



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However, as noted under Item 3  Risk Factors, recent global economic developments, including the
financial crisis and the dramatic decreases in oil prices, have resulted in slow downs in demand for our services in all of our principal markets. Credit and/or financing is very hard to find and, when available, interest rates on such financing now
carry a premium compared to the last number of years. This has put pressure on private developers trying to find financing and will likely put pressure on the Public-Private Partnership delivery models that we have been participating in (as
discussed below) as the spread between interest rates for government lending and private sector lending have increased dramatically and the availability of financing to the private sector has reduced. The diversification of our operating segments,
along with the long-term nature of our construction contracts already in progress, offset immediate impacts from these economic changes, but there can be no assurances that new work securement, and our business overall, will not be impacted if there
is a prolonged slow down in our principal markets.

The Company continues to benefit from large bonding capacity enabling it to bid on work not accessible
to many smaller construction firms. This will continue to be a strong driver in the Companys growth and its ability to compete. Bonding of contractor performance and payment obligations is a standard practice with construction owners and their
lenders, who are contracting on a fixed price basis, to ensure that there is sufficient capital available for the contractor to fulfill its obligations. PCLs backlog of bonded work varies significantly depending on the economic cycles and the
mix of fixed price contracts versus reimbursable contracts PCL obtains. Our equity, working capital and operating track record have enabled us to secure bonding capacity to operate with a total backlog of work exceeding $9.5 billion.

The Company continues to bid projects as Public-Private Partnerships (defined by The Canadian Council for Public-Private Partnerships as a cooperative venture
between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards) where PCL has participated as a design build
contractor and has been successful in this evolving market already securing projects worth approximately $1.8 billion. However, we have recently encountered difficulty in closing projects that employ the Public-Private Partnership delivery models
because of the difficulty in finding sufficient financing, due to the financial crisis discussed above. There can be no assurance that we will be able to secure new work under the Public-Private Partnership delivery models during this financial
crisis.

Diversity in both geographic location and construction markets continues to be essential in the global economy. Cyclical demand for construction
services is typical of the industry and operations can also be adversely affected by shortages of labor and supplies, adverse weather conditions, government spending constraints and the Companys ability to obtain bonding.

E. Off-Balance Sheet Arrangements

For the
Companys joint venture activity it is contingently liable at October 31, 2008 for $16.4 million (2007  $27.2 million) for the other joint venture participants share of liabilities, net of security by way of letters of credit
and cross-company guarantees, should the other joint venture participants not be able to satisfy them.

Management believes that the contingent joint
venture liabilities will not have a materially adverse effect on the Companys financial position, results of operations, or liquidity.



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F. Contractual Obligations



|                                                                                               |  |                       |         |                 |   |           |  |          |        |                  |   |        |  |   |       
|---------------------------------------------------------------------------------------------- |  | --------------------- | ------- | --------------- | - | --------- |  | -------- | ------ | ---------------- | - | ------ |  | - | ------
|(thousands of dollars)                                                                         |  | Payment due by period
|Contractual Obligations(1)                                                                     |  | Total                 |         | Less than 1year |   | 1-3 years |  | 3-5years |        | More than 5years
|Bank loans                                                                                     |  | $                     | 301,125 |                 | $ | 301,125   |  | $        |       |                  | $ |       |  | $ |      
|Interest commitments on bank loans(2)                                                          |  |                       | 4,879   |                 |   | 4,879     |  |          |       |                  |   |       |  |   |      
|Bank loans relating to build-interim finance construction contracts(3)                         |  |                       | 50,106  |                 |   | 36,124    |  |          | 9,970  |                  |   | 4,012  |  |   |      
|Interest commitments on bank loans relating to build-interim finance construction contracts(4) |  |                       | 21,481  |                 |   | 3,806     |  |          | 1,299  |                  |   | 16,376 |  |   |      
|Operating lease obligations                                                                    |  |                       | 65,734  |                 |   | 7,118     |  |          | 23,328 |                  |   | 15,096 |  |   | 20,192
|Employer contributions to defined benefit pension plan(5)                                      |  |                       | 65      |                 |   | 65        |  |          |       |                  |   |       |  |   |      
|Purchase commitments(6)                                                                        |  |                       |        |                 |   |          |  |          |       |                  |   |       |  |   |      
|                                                                                               |  |                       |         |                 |   |           |  |          |        |                  |   |        |  |   |       
|Total                                                                                          |  | $                     | 443,390 |                 | $ | 353,117   |  | $        | 34,597 |                  | $ | 35,484 |  | $ | 20,192
|                                                                                               |  |                       |         |                 |   |           |  |          |        |                  |   |        |  |   |       



Notes:

|(1) | The table above does not include contracts with subcontractors and suppliers because, in the event of termination of the prime contract for convenience by the owner, the Company
generally has the right to cancel its subcontracts and purchase orders in relation to that prime contract by paying costs or damages of the subcontractor or supplier resulting directly from the termination of the subcontract or purchase order or by
paying such amounts as the Company recovers from the owner.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Interest rates on the bank loans vary with the banks U.S. Base Rate or the London Interbank Offered Rate (LIBOR) plus 0.33% at the Companys option. The Company has
chosen the LIBOR rate plus 0.33% on all bank loans. The Company has assumed that the LIBOR rate will be at an average of 1.29% over the remaining terms of the loans, and has prepared its estimate of interest commitments for these loans on this
basis.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The Company has financing arrangements in relation to certain build-interim finance construction contracts. The total financing available under these financing arrangements is
$232,109. The financing arrangements have maturity dates that correspond with the dates of substantial completion of the related construction contracts.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The total financing available under these financing arrangements is $102,297 at an interest rate equal to the Canadian Dollar Offered Rate plus 1.00% and $129,812 at an interest
rate equal to the Bankers Acceptances Rate plus 1.40%. The interest commitments have been determined based on the predefined drawdown schedules contained in the financing arrangements. The Company has assumed that the Canadian Dollar Offered Rate
will be at an average of 4.26% and that the Bankers Acceptances Rate will be at an average of 4.37%.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | The Companys best estimate of contributions to be paid to the defined benefit pension plan during the year ending October 31, 2009 is $65. The Company is unable to
estimate what its contributions will be under the plan in years subsequent to October 31, 2009, and therefore has not included any contributions related to the plan for these years in the table above.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | The Company has no material purchase commitments for capital expenditures, either individually or in aggregate, subsequent to October 31, 2008.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

The bank loans noted above represent U.S. dollar denominated bank loans used exclusively to minimize changes in the value of the United States operations as a result of
currency exchange fluctuations and are renewed every 30 to 365 days. Cash equivalents and short-term deposits are held by the Company which offset these loans and are hypothecated in favor of the bank.

The financing arrangements in relation to certain build-interim finance construction contracts noted above are secured by the related construction contracts, along with
the assets and shares of certain wholly-owned subsidiaries of the Company directly contracted to carry out the related construction. The Company has entered into agreements with its customers and lenders in relation to these construction contracts
such that the Companys customers will make payments on the trade accounts receivable owed to the Company directly to the Companys lenders to satisfy the amounts outstanding under the financing arrangements.



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G. Forward Looking Statements

The information in this Annual Report on Form 20-F, including this Item 5, may contain forward-looking statements. All statements, other than statements
of historical facts, that address activities, events, outcomes and other matters that the Company plans, expects, intends, assumes, believes, budgets, predicts, forecasts, projects, estimates or anticipates (and other similar expressions) will,
should or may occur in the future are forward-looking statements. These forward-looking statements are based on managements current belief, based on currently available information, as to the outcome and timing of future events.

Forward-looking statements appear in a number of places and include statements with respect to, among other things:



| |  |  | planned capital expenditures and working capital and availability of capital resources to fund capital expenditures and working capital;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Companys future financial condition or results of operations and future revenues and expenses;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | the Companys future gross profit and net profit margins;
| | - |  | ---------------------------------------------------------



| |  |  | the Companys business strategy and other plans and objectives for future operations; and
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | fluctuations in the demand for the Companys services.
| | - |  | ------------------------------------------------------

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, many of which are beyond the Companys control. These risks include, but are not limited to, economic conditions, currency
fluctuations, inflation, regulatory changes and the other risks described under Information Regarding Forward Looking Statementsand Item 3  Risk Factors.

Should one or more of the risks or uncertainties described above or elsewhere in this Annual Report on Form 20-F occur, or should underlying assumptions prove incorrect,
the Companys actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements
included in this Annual Report on Form 20-F and attributable to the Company are qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral
forward-looking statements that the Company or persons acting on its behalf might issue. The Company does not undertake any obligation to update any forward-looking statements to reflect events or circumstances after the date of filing this Annual
Report on Form 20-F with the Securities and Exchange Commission, except as required by law.

H. Critical Accounting Policies

Profit Recognition on Contracts

For
financial reporting purposes, revenue on lump-sum contracts is recognized on the percentage-of-completion method, measured by the ratio of costs incurred to date to estimated total cost. Revenue on cost plus and unit price contracts is recognized as
work is performed. Under this method, the costs incurred and the related revenue are included in the consolidated statement of operations and retained earnings as work progresses.

Contract costs include all direct material, labor, and equipment costs and those indirect costs related to contract performance such as indirect labor, supplies, and tool costs. General and administrative costs are
charged to expense as incurred.

Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty
provisions and final contract settlements may result in revisions to costs and income and are recognized in the period in which such adjustments are determined. Profit incentives are included in revenue when their realization is reasonably assured.

On all contracts in process where current estimates indicate an ultimate loss, the full amount of the estimated loss is recognized. Construction claims by
the Company are included in revenue when the amount can be reasonably estimated and recovery of the claim is probable, such as when the claim is resolved or collected. Insurance claims are recorded when it is determined that the claim is covered
under an existing insurance policy and collection is reasonably assured.



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Revisions to project forecasts are made on a periodic basis by individual project managers responsible for each project,
using actual costs to date and forecasting software developed by the Company. In addition, representatives of senior management are involved in assessing project forecasts at least annually during the year-end district review process. In general,
this combination of review procedures results in accurate forecasts of total project costs, which helps to ensure that any unforeseen project costs do not result in material impacts to forecasted project profit.

However, it is at least reasonably possible that cost and profit forecasts will be revised in the near-term by amounts which may be material on an individual project
basis.

It is the Companys experience, however, in aggregate, the overall gross profit is not materially different than what is forecasted.



|ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|------- | ------------------------------------------

A. Directors and Senior Management

Board of Directors of PCL Employees Holdings Ltd.

The following table sets forth the names and biographical information concerning our directors.



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                                                                  |  |              
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------- |  | -------------
|Name, Age, Place of Residence and Biographical Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | Principal Occupation                                                                                                             |  | DirectorSince
|Joseph D. Thompson  75 Edmonton, Alberta, Canada  Joined Poole Construction Limited (a predecessor to PCL) in 1967. During his 40+
years with PCL and its predecessor, he has progressively held positions such as chief engineer, district manager, regional manager, president and chief executive officer and chairman, before assuming his present position in 1997 as Chairman of the
Board of PCL Employees Holdings Ltd., chairman of PCL Employees Holdings Ltd.  Human Resource, Compensation and Nominating Committee and a member of the PCL Employees Holdings Ltd. Audit Committee. Mr. Thompson also currently serves as
board member of Eleven Engineering Inc., a fabless semiconductor company specializing in wireless baseband processors and digital wireless audio modules; a not-for profit organization, Merit Contractors Association, that provides its members with a
benefits plan in the Canadian construction industry; and a registered charity, the Royal Alexandra Hospital Foundation. On November 1, 2009, Mr. Thompson will step down as Chairman of the Boards of PCL Employees Holdings Ltd. and PCL
Construction Holdings Ltd. |  | Private Investor, Chairman of the Board PCL Employees Holdings Ltd., and Chairman of the Board of PCL Construction Holdings Ltd. |  | 1984         



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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                                                                                                                                                                                                                   |  |              
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------
|Name, Age, Place of Residence and Biographical Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Principal Occupation                                                                                                                                                                                                              |  | DirectorSince
|Ross A. Grieve  61 Edmonton, Alberta,
Canada  Joined Poole Construction Limited (a predecessor to PCL) in 1969 in his
hometown of Winnipeg, after completing a Bachelor of Science in Civil Engineering from the University of Manitoba. Since that time, he has worked in positions of increasing responsibility throughout the PCL family of companies before assuming his
present position as president and chief executive officer in 1997 of PCL Employees Holdings Ltd. Mr. Grieve presently serves as a director of Melcor Developments Ltd., a publicly-traded residential, commercial, and industrial property development
company, Centennial Valley Properties Inc., a residential property development company and Inn at the Forks Ltd., a hotel company. On October 31, 2009, Mr. Grieve will step down as President and Chief Executive Officer of PCL Construction
Holdings Ltd.; on November 1, 2009, he will become Chairman of the Board of PCL Employees Holdings Ltd. and Executive Chairman of the Board of PCL Construction Holdings Ltd.; and on November 1, 2010, he will step down as President and
Chief Executive Officer of PCL Employees Holdings Ltd. and become the non- executive Chairman of the Board of PCL Construction Holdings Ltd. |  | President and Chief Executive Officer, PCL Employees Holdings Ltd. and PCL Construction Holdings Ltd., Director, PCL Employees Holdings Ltd., Director, PCL Construction Holdings Ltd., and
Director, PCL Construction Group Inc. |  | 1991         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                                                                                                                                                                                                                  
|Garnet K. Wells  68 Chestermere, Alberta, Canada  Joined the PCL family of companies in 1986 as chief financial officer. He retired in
2001 but remains a director of PCL Employees Holdings Ltd. and a member of the PCL Employees Holdings Ltd. Audit Committee and PCL Employees Holdings Ltd. - Human Resource, Compensation and Nominating Committee. Mr. Wells also currently serves
as vice-chairman of the board of Conematic Heating Systems Inc., a heating systems manufacturing company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Private Investor, Director, PCL Employees Holdings Ltd. and Director, PCL Construction Holdings Ltd.                                                                                                                              |  | 1987         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                                                                                                                                                                                                                                  
|Henry R. Gillespie  75 Edmonton, Alberta, Canada  Joined Poole Construction Limited (predecessor to PCL) in 1969 as
secretary/treasurer. In 1977, he became vice president finance and administration and subsequently senior vice president and chief financial officer, a position he held until he retired in 1984. Mr. Gillespie is a director of PCL Employees
Holdings Ltd., chairman of the PCL Employees Holdings Ltd. Audit Committee and a member of PCL Employees Holdings Ltd.  Human Resource, Compensation and Nominating Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | Private Investor, Director, PCL Employees Holdings Ltd., and Director, PCL Construction Holdings Ltd.                                                                                                                             |  | 1977         



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Senior Management

The key executive officers of PCL Employees Holdings Ltd. and its principal subsidiary companies are as follows:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                            |  |                                                            |  |                  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------- |  | ---------------------------------------------------------- |  | -----------------
|Name                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Title                                                      |  | PCL Company                                                |  | Years withCompany
|Peter E. Beaupré  58 Denver, Colorado, USA  Joined the PCL family of companies in 1980 as a project manager. During his 27 years
with PCL he has held many positions including district manager, regional vice president and president of several divisions before assuming his current position as president in 1998 and chief operating officer in 2001 of PCL Construction Enterprises,
Inc. He is responsible for all U.S. operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | President and Chief Operating Officer                      |  | PCL Construction Enterprises, Inc.                         |  | 28               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                            | 
|Paul G. Douglas  54 Edmonton, Alberta,
Canada  Joined PCL in 1985. He is president and chief operating officer, Canadian
Operations of PCL Construction Holdings Ltd., overseeing operations and administration of all Canadian building and industrial districts. He is responsible for asset management and health, safety and the environment for all of the PCL companies. On
November 1, 2009, Mr. Douglas will step down as Chief Operating Officer, Canadian Operations, and become President and Chief Executive Officer of PCL Construction Holdings Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                |  | President and Chief Operating Officer, Canadian Operations |  | PCL Construction Holdings Ltd.                             |  | 23               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                                                            | 
|Ross A. Grieve  61 Edmonton, Alberta,
Canada  Joined Poole Construction Limited (a predecessor to PCL) in 1969 in his
hometown of Winnipeg, after completing a Bachelor of Science in Civil Engineering from the University of Manitoba. Since that time, he has worked in positions of increasing responsibility throughout the PCL family of companies before assuming his
present position as president and chief executive officer in 1997 of PCL Employees Holdings Ltd. On October 31, 2009, Mr. Grieve will step down as President and Chief Executive Officer of PCL Construction Holdings Ltd.; on November 1,
2009, he will become Chairman of the Board of PCL Employees Holdings Ltd. and Executive Chairman of the Board of PCL Construction Holdings Ltd.; and on November 1, 2010, he will step down as President and Chief Executive Officer of PCL
Employees Holdings Ltd. and become the non- executive Chairman of the Board of PCL Construction Holdings Ltd. |  | President and Chief Executive Officer                      |  | PCL Employees Holdings Ltd. PCL Construction Holdings Ltd. |  | 39               



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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                                             |  |                                                             |  |                  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------- |  | ----------------------------------------------------------- |  | -----------------
|Name                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Title                                                       |  | PCL Company                                                 |  | Years withCompany
|Ian R. Johnston  51 Edmonton, Alberta,
Canada  Joined PCL in 2002 as a Vice President and is responsible for the industrial
operations in Canada. He has over 30 years of industrial construction experience. Prior to joining PCL he was the president responsible for operations in Canada for a multi-national EPC contractor.                                                                                                                                                                                                                                                                                                                                                                                                            |  | Senior Vice President, Heavy Industrial                     |  | PCL Constructors Inc.                                       |  | 6                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                                             | 
|Gordon D. Maron  61 Edmonton, Alberta,
Canada  Joined PCL in 1971 as a junior accountant and has held progressively more
senior positions such as administration manager, controller, vice president finance and in 2001 he assumed the position of president and chief financial officer of PCL Construction Holdings Ltd. He is responsible for all financial and accounting
aspects of the corporation including specific responsibility for treasury, taxation, legal and corporate secretary duties, and liaison and negotiation with insurance providers and bonding companies. He also ensures that the overall financial
reporting, planning, control and analytical processes operate effectively at the district/subsidiary level. |  | Vice President, Secretary/Treasurer Chief Financial
Officer |  | PCL Employees Holdings Ltd.  PCL Construction Holdings Ltd. |  | 38               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                                             | 
|R. Brad Nelson  55 Toronto, Ontario,
Canada  Joined PCL in 1997 and is responsible for PCLs building operations in
Canada. He is also responsible for labour relations for all of the PCL companies. He has over 29 years of construction experience in Canada and the United States. Prior to joining PCL, he was executive vice president and chief operating officer
responsible for North American operations for a large contractor.                                                                                                                                                                                                                                                                                                   |  | President and Chief Operating Officer, Canadian Buildings   |  | PCL Constructors Inc.                                       |  | 11               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                                             | 
|Peter A. Stalenhoef  55 Edmonton, Alberta, Canada  Joined the PCL family of companies in 1987 as a senior estimator and has held
progressively more senior positions such as chief estimator, operations manager, division manager, and president and chief operating officer responsible for all the industrial operating companies. He has over 30 years of heavy industrial
construction experience with an emphasis in petrochemical, refinery, oil and gas, power, and pulp and paper projects.                                                                                                                                                                                                                                         |  | President and Chief Operating Officer, Heavy Industrial     |  | PCL Constructors Inc.                                       |  | 21               



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|                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |                                    |  |                                                                     |  |                  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- |  | ------------------------------------------------------------------- |  | -----------------
|Name                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | Title                              |  | PCL Company                                                         |  | Years withCompany
|Douglas R. Stollery  55 Edmonton, Alberta, Canada  Joined the PCL family of companies in 2006 as general counsel. He practiced law with
a private law firm in Edmonton, Alberta from 1977 to 2006. He is responsible for the legal affairs of the PCL family of companies and serves as corporate secretary for the PCL family of companies.                                                                                           |  | Secretary General Counsel          |  | PCL Employees Holdings Ltd. PCL Constructors
Inc.                   |  | 2                
|                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |                                    | 
|Alfred E. Troppmann  59 Denver, Colorado,
USA  Joined PCL in 1973 as a project manager and has held progressively more senior
positions such as district manager, vice president, and executive vice president before assuming his current position as president of PCL Construction Services, Inc. and executive vice president of PCL Construction Enterprises, Inc. He is
responsible for building operations in the United States. |  | Executive Vice President President |  | PCL Construction Enterprises, Inc.  PCL Construction Services, Inc. |  | 35               

There are no family relationships among any of the directors and officers of the Company listed above.



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B. Compensation

Total compensation paid to the Companys directors and senior management for the fiscal year ended October 31, 2008 was $47,026,805. The aggregate remuneration paid to the directors of the Company for the
fiscal year ended October 31, 2008 was $15,719,335. The aggregate remuneration paid to the five highest officers and employees of the Company, other than directors, for the fiscal year ended October 31, 2008 was $5,657,165. This amount
does not include dividends paid to the directors and senior management in respect of common shares. Directors and senior management share ratably in all dividends with other employee-shareholders.

As a Canadian company which is not a reporting issuer under the securities legislation of any jurisdiction in Canada, the Company is not required to publicly disclose
individual compensation information either as a requirement under governing statute (the Business Corporations Act (Alberta)) or under any securities legislation. PCL does not publicly disclose individual compensation information in Canada.

The chief executive officer and vice president, secretary/treasurer of the Company receive a non-discretionary bonus that is a fixed percentage of the
overall operating results for the Company. Three of the chief operating officers receive a non-discretionary bonus that is a fixed percentage of operating results of the units of the Company over which they have charge. Other members of senior
management described above participate in a discretionary bonus program under which they share in a bonus pool based on operating results, as approved by the Board of Directors of the Company and as individually set by the chief executive officer
and senior management. Bonuses for 2008 are paid out in December 2008 and January 2009.

The total amount paid by the Company to the defined contribution
pension plan of our senior management for the fiscal year ended October 31, 2008 was $172,498. The Company has not set aside or accrued any other amount to provide pension, retirement or similar benefits for senior management or directors.

The Company does not have any written employment agreements with its officers. However, under Canadian law, each Canadian employee, including an employee
who is an officer of PCL, has a contractual relationship with PCL by virtue of his or her employment, whether or not a written employment agreement exists. That contractual relationship includes an entitlement to reasonable notice of termination or
compensation in lieu of reasonable notice, unless expressly agreed to the contrary or unless the employee is terminated for cause. In addition to these contractual rights, Canadian employees, including those who are officers of PCL, have a statutory
right to receive notice of termination or wages in lieu of notice (including, in some cases, continuation of benefit plan contributions during the notice period). With respect to PCLs employees, these rights are a matter of provincial or
territorial law and vary from one province or territory to another within Canada. In general, the statutes afford employees the right to receive between zero and eight weeks notice based on the number of years of service or to payment of an
amount equal to the wages (or wages and the value of benefits) that the employee would have received during the notice period. In certain provinces and territories, where a significant number of employees are terminated within a designated time
period, a longer period of notice may apply. In addition, in the Province of Ontario, an employee is entitled in certain circumstances to severance pay calculated by multiplying the employees regular wages for a regular work week by the sum of
the number of complete and partial years of employment that the employee has completed. The maximum statutory entitlement of an employee to severance pay under Ontario law is an amount equal to the employees regular wages for a regular work
week for 26 weeks. To date, the application of these laws has never had a material impact on PCL.

C. Board Practices

The Companys Amended Articles of Continuance provide that the board of directors will consist of between one (1) and twelve
(12) directors. There are currently four (4) directors each of whom holds office until the Companys next annual meeting of the shareholders and until his successor has been elected. Officers of the Company serve at the discretion of
the board of directors.

Directors are compensated by cash payments and participation in the share purchase plans.Directors do not serve as such
under any written or unwritten agreements. Directors who are also employees serve under unwritten employment agreements.



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Audit Committee

The audit committee has a formal mandate and consists of at least three members of the Board. The current members of the Companys audit committee are Joseph D. Thompson, Garnet K. Wells and Henry R. Gillespie.

All of the members of the Committee are persons who are independent of management and are free from any business or other relationships that could, or could reasonably
be perceived to, materially interfere with their abilities to act with a view to the best interests of the Company, other than interests and relationships arising from shareholding.

The members of the audit committee are appointed annually upon recommendation by the Chairman of the Board and approval by the Board. The Board appoints a Chairman of the audit committee. Each member of the Committee
is financially literate or must become financially literate within a reasonable period of time after appointment to the audit committee. At least one member of the audit committee must be a financial expert as defined by applicable
Securities and Exchange Commission rules.

The primary function of the audit committee is to assist the board of directors in fulfilling the Boards
oversight responsibilities on matters relating to:



| |  |  | the Companys financial reports and other financial information provided by the Company;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | the Companys systems of internal controls regarding financing, accounting and legal compliance;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | the Companys auditing, accounting and financial reporting processes generally;
| | - |  | -------------------------------------------------------------------------------

and such other matters as may from time to time be specifically delegated to the audit committee by the Board or as the audit committee, in its own discretion, may deem
desirable in connection with its mandate.

The audit committee will also undertake such responsibilities as are required by law of an audit committee,
including review of the financial statements of the Company before they are approved by the board of directors.

In addition, the audit committee:



| |  |  | recommends to the Board annually, the firm to be retained as the Companys independent auditor;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | recommends to the Board the remuneration to be paid to the Companys independent auditor, provided that the Chairman of the Committee is authorized to approve
remuneration of up to $50,000 per fiscal year, or such other amount as may be authorized by the Board of Directors, to be paid to the Companys independent auditor for non-audit services;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | if determined to be appropriate by the audit committee, recommends to the Board the replacement of the Companys independent auditor;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | in connection with recommending to the Board the firm to be retained or removed as the Companys independent auditor:
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | evaluates the performance of the firms independent auditor; and
| | - |  | ----------------------------------------------------------------



| |  |  | reviews the information provided by management and the independent auditor relating to the independence of such firm;
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | reviews, with the independent auditor, its plans, and overall scope of its annual audit and other examinations;
| | - |  | ---------------------------------------------------------------------------------------------------------------



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| |  |  | pre-approves all auditing services to be provided by the independent auditor;
| | - |  | -----------------------------------------------------------------------------



| |  |  | pre-approves all non-audit services to be provided by the independent audit, except as provided in the de minimus exception of the Sarbanes-Oxley Act of 2002;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviews, with the independent auditor, the report of its annual audit, its proposed report concerning the audit, the accompanying management letter, and any other
reports of the results of any other examinations, which may fall outside its normal audit procedures, that the independent auditor may from time to time undertake;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviews, with the independent auditor, the annual financial reports of the Company, prior to the Committee recommending the reports to the Board for approval;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviews, with the independent auditor:
| | - |  | --------------------------------------



| |  |  | the quality and adequacy of the Companys accounting policies, financial controls and systems; and
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | the quality and adequacy of managements disclosure of information to the independent auditor.
| | - |  | ----------------------------------------------------------------------------------------------

The audit committee also:



| |  |  | reviews, with the appropriate officers of the Company, the annual financial reports of the Company, before the Committee recommends reports to the Board for
approval.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviews, with the Companys management, its plans and reports concerning the Companys ongoing program of internal reviews of districts or offices of the
Companys subsidiaries or specific projects of the Companys subsidiaries, including approval of the specific assignments for the year and review of the completed reports.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviews, with the appropriate officers of the Company or subsidiaries of the Company:
| | - |  | -------------------------------------------------------------------------------------



| |  |  | the quality and adequacy of the Companys accounting policies, financial controls and systems; and
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | the quality and adequacy of managements disclosure of information to the independent auditor.
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | reviews, with the appropriate officers of the Company, the Companys policies and compliance procedures with respect to proper business practices.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviews, with the appropriate officers of the Company, the Companys proposed Securities and Exchange Commission Form 20-F filings and recommends approval to
the board of directors.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviews, with the appropriate officers of the Company, the Companys proposed formal filings as required by the Sarbanes-Oxley Act of 2002, including
compliance with the provisions of Section 404, and recommends approval to the Board of Directors.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviews annual reports on insurance coverage prepared by the Companys management and forwards as information to the board of directors, together with any
applicable recommendations.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviews reports on Employee Pension Benefit Plans prepared by the Companys management and ensures that the necessary Trustees and Investment Committees are in
place, and forwards as information to the board of directors.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | reviews, with the Companys management, its calculation of the Adjusted Consolidated Book Value of all Common Shares of the Company and recommends to the Board
of Directors the amount to be determined as the Adjusted Consolidated Book Value of all Common Shares in accordance with the Unanimous Shareholder Agreement.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | requires that the Companys management disclose to the Committee the existence of any improper or illegal conduct of which management is aware and periodically
review with the Companys management the steps being taken to avoid, disclose and correct such improper or illegal conduct.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
addition, the Companys Ethical Conduct Compliance Committee (ECCC) reports to the audit committee. Further information on the ECCC, PCLs Ethics Policies, and PCLs Ethical Conduct Compliance Program are described below.
In this regard, the audit committee:



| |  |  | reviews the ethics policies developed by the ECCC and recommends adoption of those policies by the Board of Directors.
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | establishes the frequency of and nature of reporting by the ECCC to the audit committee, which shall be at least annually.
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | receives from the ECCC:
| | - |  | -----------------------



| |  |  | reports of the activities of the ECCC;
| | - |  | --------------------------------------



| |  |  | reports of the results of the audits respecting compliance with Ethics Policies;
| | - |  | --------------------------------------------------------------------------------



| |  |  | reports of unethical conduct, investigations of those reports and disciplinary action taken in respect of those reports;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | recommendations to improve compliance with ethics policies to better facilitate achievement of the objectives of the Ethical Conduct Compliance Program; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | such other reports as may be required by the Ethical Conduct Compliance Program or the audit committee.
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | periodically reviews with the ECCC the steps being taken to avoid, disclose and correct unethical conduct.
| | - |  | ----------------------------------------------------------------------------------------------------------

The audit committee is responsible for the resolution of disagreements between the Companys management and the Companys independent auditor regarding
financial reporting.

The audit committee reviews the impact of any new pronouncements issued by recognized organizations, agencies or other bodies that
could have an effect upon the Companys financial statements and financial reporting.

The audit committee meets as frequently as it determines
necessary to comply with its responsibilities. The Chairman of the audit committee, any other member of the audit committee or the independent auditor of the Company may call a meeting of the audit committee. The Chairman of the audit committee is
responsible for supervising the conduct of meetings of the audit committee and, in consultation with the other members of the audit committee, for establishing the agenda for the meetings. A majority of the members constitutes a quorum of the
Committee.

The independent auditor is entitled to receive notice of every meeting of the audit committee and, at the expense of the Company, to attend and
be heard at the meeting. If so requested by a member of the Committee, the independent auditor attends any or every meeting of the Committee held during the term of the independent auditor.

The audit committee may request any officer or employee of the Company or any of its subsidiaries, or the Companys outside legal counsel, or other third parties,
to attend a meeting of the committee or to meet with any members of, or act as consultants to the audit



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##### Table of Contents

committee. The audit committee may meet with management, the independent auditor or others in private sessions to discuss any matter that the audit
committee, management, the independent auditor or other such persons believe should be discussed privately.

The audit committee requires the
Companys management, the independent auditor and the ECCC to provide the audit committee with the necessary information as required by the audit committee to fulfill its responsibilities.

The audit committee may retain, at such times and on such terms as the audit committee determines in its sole discretion and at the Companys expense, special
legal, accounting or other consultants to advise and assist it in complying with its mandate.

The audit committee reports its activities to the Board at
the Boards first regular meeting thereafter, or at such earlier time as it deems appropriate.

The audit committee reviews and reassesses the
adequacy of the audit committees mandate at least annually and recommends any proposed changes to the Board for approval.

Ethical Conduct
Compliance Committee

The Companys Ethical Conduct Compliance Committee (ECCC) has a formal mandate and consists of certain PCL senior
management. The current members of the ECCC are Ross A. Grieve, Paul G. Douglas, Peter E. Beaupré, Peter A. Stalenhoef, R. Brad Nelson, Gordon D. Maron, and Douglas R. Stollery. The ECCC reports to the audit committee.

The ECCC has the primary responsibility to develop procedures to implement the Companys Ethical Conduct Compliance Program (the Program), to oversee
the implementation of those procedures, to monitor compliance with those procedures and to develop and oversee the implementation of further procedures to better achieve the objectives of the Program.

The objectives of the Program are to ensure that:



| |  |  | PCL conducts its business affairs at all times and in all circumstances in accordance with all applicable laws and regulations and generally accepted ethical
business practice; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | all PCL Personnel, including every person who is an employee, officer or director of PCL and every agent, consultant and contract worker engaged by PCL, conduct
themselves at all times and in all circumstances in accordance with all applicable laws and regulations and generally accepted ethical business practice when they are acting on behalf of PCL.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The ECCC develops Ethics Policies, which consist of the Companys Code of Conduct and related policies, and recommends adoption of the ethics policies by the Board.
The ECCC also develops revisions to the Ethics Policies from time to time to better achieve the object of the Program and recommends adoption of such revisions by the Board.

In addition, the ECCC:



| |  |  | oversees the development and implementation of appropriate periodic training programs for all appropriate PCL Personnel, designed to facilitate understanding of the
Ethics Policies, as well as the applicable laws and regulations with which PCL must comply;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | implements procedures to ensure that all appropriate PCL Personnel acknowledge in writing that they have received and read the Ethics Policies and will comply with
their requirements;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | oversees the development and implementation of appropriate specialized training programs for PCL Personnel engaged in entering into or administering contracts with
the government of the United States or its agencies;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | oversees the maintenance of records of the scope and nature of all training sessions, attendance at such training sessions and acknowledgment forms;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | periodically (at least annually) initiates an audit program designed to determine and measure compliance with the Ethics Policies by PCL Personnel and PCLs
consolidated subsidiaries and the steps being undertaken by each PCL consolidated subsidiaries to better ensure compliance with the Ethics Policies;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | receives reports from Enforcement Personnel (being those persons designated in PCLs Code of Conduct to be responsible for determining the process for
investigation, resolution and/or disciplinary action in respect of a complaint respecting unethical conduct) of complaints of unethical conduct by PCL Personnel and PCLs consolidated subsidiaries. The ECCC oversees, monitors and, where
appropriate, assists the Enforcement Personnel in investigating reports of suspected unethical conduct, determines whether unethical conduct has occurred and, in circumstances where unethical conduct has been found to occur, undertakes disciplinary
action;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | prepares for the audit committee:
| | - |  | ---------------------------------



| |  |  | reports of the activities of the ECCC;
| | - |  | --------------------------------------



| |  |  | reports of the results of the audits respecting compliance with Ethics Policies;
| | - |  | --------------------------------------------------------------------------------



| |  |  | reports of unethical conduct, investigations of those reports and disciplinary action taken in respect of those reports;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | recommendations to improve compliance with ethics policies to better facilitate achievement of the objectives of the Ethical Conduct Compliance Program; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | such other reports as may be required by the Ethical Conduct Compliance Program or the audit committee;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | determines, on a case by case basis, those instances when it is appropriate for PCL to voluntarily report conduct which violates the Ethics Policies or the Program
to appropriate governmental officials and the manner and means by which to carry out such reporting;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | implements measures as it may determine appropriate from time to time to create, support and maintain an ethical work environment for all PCL Personnel;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | designates appropriate PCL Personnel to assist in administering the Program;
| | - |  | ----------------------------------------------------------------------------



| |  |  | establishes and maintains appropriate systems and internal controls to implement the Ethics Policies and the Program;
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | retains external counsel, auditors, consultants or other persons as may be necessary to implement the Program.
| | - |  | --------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Human Resource, Compensation and Nominating Committee

The members of the Companys human resource, compensation and nominating committee are Joseph D. Thompson, Garnet K. Wells and Henry R. Gillespie. The committee has
a formal mandate under which it functions. The committee consists of at least three members of the Board.

All of the members of the committee are persons
who are independent of management and are free from any business or other relationships that could, or could reasonably be perceived to, materially interfere with their abilities to act with a view to the best interests of the Company, other than
interests and relationships arising from shareholding.

The members of the committee are appointed annually upon recommendation of the Chairman of the
Board and approval by the Board. The Board appoints a Chairman of the committee. The human resource, compensation and nominating committees primary function is to assist the board of directors in fulfilling the Boards oversight
responsibilities on matters relating to management and board succession and compensation. The committee:



| |  |  | sets the salary, bonus and share allocation for the president and chief executive officer;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | approves the salary, bonus and share allocation for the chief financial officer, president and chief operating officer of Canadian Operations, president and chief
operating officer of the United States, president and chief operating officer of Canadian Buildings, president and chief operating officer of Heavy Industrial, and General Counsel;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | determines succession of senior officers;
| | - |  | -----------------------------------------



| |  |  | recommends candidates for election to the board of directors;
| | - |  | -------------------------------------------------------------



| |  |  | recommends candidates for the board committees;
| | - |  | -----------------------------------------------



| |  |  | recommends compensation levels for the members of the board of directors;
| | - |  | -------------------------------------------------------------------------



| |  |  | sets the long-term bonus pool for payment to employees of subsidiaries of the Company and non-employee directors of the Company;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | authorizes the payment of a long-term bonus to non-employee directors of the Company;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | recommends to subsidiaries of the Company the payment of a long-term bonus to their employees.
| | - |  | ----------------------------------------------------------------------------------------------

In order to fulfill these responsibilities, the committee relies upon the recommendations of the chief executive officer and its own analysis of compensation data.

The committee may request any officer or employee of the Company or any of its subsidiaries, or the Companys outside legal counsel, or other third
parties, to attend a meeting of the committee or to meet with any members of, or act as consultants to the committee.

The committee meets as frequently as
it determines necessary to comply with its responsibilities. The Chairman of the Committee, any other member of the committee or the independent auditor of the company may call a meeting of the committee. The Chairman of the Committee is responsible
for supervising the conduct of the meetings of the committee and, in consultation with the other members of the committee, for establishing the agenda for the meetings. A majority of the members constitutes a quorum of the committee.

The committee requires the Companys management to provide the committee with the necessary information to fulfill its responsibilities.



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##### Table of Contents

The committee may retain, at such times and on such terms as the committee determines in its sole discretion and at the
Companys expense; special legal, accounting or other consultants to advise and assist it in complying with this mandate.

The members of the
committee are entitled to receive such remuneration for acting as members of the committee as the board of directors may from time to time determine.

The
committee reports its activities to the Board at the Boards first regular meeting thereafter, or at such earlier time as it deems appropriate.

The
committee reviews and reassesses the adequacy of the committees mandate at least annually and recommends any proposed changes to the Board for approval.

Investment Committee

The members of the Investment Committee are Joseph D. Thompson, Ross A. Grieve, Gordon D. Maron, and Paul G.
Douglas. The committee has a formal mandate under which it functions. The committee is made up of the Chairman, the chief executive officer, the vice president secretary/treasurer, and the chief operating officer, Canadian Operations.

The Committee recommends investment objectives and criteria to the Board. The Board approves the investment objectives and criteria and the aggregate amount of funds to
be placed in each investment category.

The committee is responsible for obtaining investment advice, authorizing investments, monitoring performance, and
reports to the board on a quarterly basis.

D. Employees

The following chart lists the average number of salaried and hourly (unionized and non-unionized) employees by location for each of the last three fiscal years:



|                            |  |       |  |       |  |      
|--------------------------- |  | ----- |  | ----- |  | -----
|Average Number of Employees |  | 2008* |  | 2007  |  | 2006 
|Salaried Staff              |  |       |  |       |  |      
|Canada                      |  | 2,133 |  | 1,841 |  | 1,420
|United States               |  | 1,379 |  | 1,296 |  | 917  
|Bahamas                     |  | 1     |  | 8     |  | 49   
|                            |  |       | 
|Hourly Trades               |  |       |  |       |  |      
|Canada                      |  |       |  |       |  |      
|Unionized                   |  | 2,142 |  | 2,514 |  | 1,968
|Non-Unionized               |  | 8     |  | 101   |  | 99   
|                            |  |       | 
|United States               |  |       |  |       |  |      
|Unionized                   |  | 867   |  | 616   |  | 627  
|Non-Unionized               |  | 1,683 |  | 1,783 |  | 1,683



|* | Note: Based on count as of December 2008.
|- | -----------------------------------------

All hourly trades are
temporary employees. PCL maintains good relations with the various unions for which we have collective bargaining agreements.



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##### Table of Contents

E. Share Ownership

The following table presents information regarding the ownership of certain classes of shares by our directors and executive officers as of December 31, 2008.



|                       |  |                                                             |  |                                                             |  |                           |  |                                |  |                                            |  |    |  
|---------------------- |  | ----------------------------------------------------------- |  | ----------------------------------------------------------- |  | ------------------------- |  | ------------------------------ |  | ------------------------------------------ |  | -- | -
|Name                   |  | Title                                                       |  | PCL Company                                                 |  | Number &Share Class       |  | Percentage of Class            |  | Percentageof TotalVotingShares             | 
|Peter E. Beaupré(1)    |  | President and Chief Operating Officer                       |  | PCL Construction Enterprises, Inc.                          |  | 40018,750 291,900 139,550 |  | Class 1Class 2 Class 3 Class 4 |  | * Class 1 * Class 2 12% Class 3 4% Class 4 |  | 7  | %
|                       |  |                                                             |  |                                                             |  |                          
|Paul G. Douglas(2)     |  | President and Chief Operating Officer, Canadian Operations  |  | PCL Construction Holdings Ltd.                              |  | 10,400420,450             |  | Class 2Class 4                 |  | * Class 2 11% Class 4                      |  | 7  | %
|                       |  |                                                             |  |                                                             |  |                          
|Henry R. Gillespie(3)  |  | Director                                                    |  | PCL Employees Holdings Ltd.                                 |  | 50,000                    |  | Class 4                        |  | 1% Class 4                                 |  | 1  | %
|                       |  |                                                             |  |                                                             |  |                          
|Ross A. Grieve(4)      |  | President & Chief Executive Officer                         |  | PCL Employees Holdings Ltd.  PCL Construction Holdings Ltd. |  | 194,400632,500            |  | Class 2Class 4                 |  | 2% Class 2 16% Class 4                     |  | 10 | %
|                       |  |                                                             |  |                                                             |  |                          
|Ian R. Johnston        |  | Senior Vice President, Heavy
Industrial                     |  | PCL Constructors Inc.                                       |  | 43,62039,490              |  | Class 2Class 4                 |  | * Class 2 1% Class 4                       |  | 1  | %
|                       |  |                                                             |  |                                                             |  |                          
|Gordon D. Maron        |  | Chief Financial Officer Vice President,
Secretary/Treasurer |  | PCL Construction Holdings Ltd. PCL Employees Holdings
Ltd.  |  | 51,400296,570             |  | Class 2Class 4                 |  | * Class 2 8% Class 4                       |  | 5  | %
|                       |  |                                                             |  |                                                             |  |                          
|R. Brad Nelson         |  | President and Chief Operating Officer, Canadian
Buildings   |  | PCL Constructors Inc.                                       |  | 400303,240                |  | Class 2Class 4                 |  | * Class 2 8% Class 4                       |  | 5  | %
|                       |  |                                                             |  |                                                             |  |                          
|Peter A. Stalenhoef(5) |  | President and Chief Operating Officer, Heavy Industrial     |  | PCL Constructors Inc.                                       |  | 18,000287,280             |  | Class 2Class 4                 |  | * Class 2 7% Class 4                       |  | 5  | %
|                       |  |                                                             |  |                                                             |  |                          
|Douglas R. Stollery    |  | Secretary                                                   |  | PCL Employees Holdings Ltd.                                 |  | 200116,000                |  | Class 2Class 4                 |  | * Class 2 3% Class 4                       |  | 2  | %
|                       |  | General Counsel                                             |  | PCL Constructors Inc.                                       |  |                           |  |                                |  |                                            |  |    |  
|                       |  |                                                             |  |                                                             |  |                          
|Joseph D. Thompson(6)  |  | Director                                                    |  | PCL Employees Holdings Ltd.                                 |  | 50,000                    |  | Class 4                        |  | 1% Class 4                                 |  | 1  | %
|                       |  |                                                             |  |                                                             |  |                          
|Al E. Troppmann        |  | Executive Vice President                                    |  | PCL Construction Enterprises, Inc.                          |  | 40,400278,830             |  | Class 1Class 3                 |  | 1% Class 1 11% Class 3                     |  | 4  | %
|                       |  | President                                                   |  | PCL Construction Services, Inc.                             |  |                           |  |                                |  |                                            |  |    |  
|                       |  |                                                             |  |                                                             |  |                          
|Garnet K. Wells(7)     |  | Director                                                    |  | PCL Employees Holdings Ltd.                                 |  | 50,000                    |  | Class 4                        |  | 1% Class 4                                 |  | 1  | %



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##### Table of Contents



Notes:

|* | Less than 1%.
|- | -------------

|(1) | Includes 292,300 shares held of record by Mr. Peter E. Beaupré and 158,300 shares held of record by Casalingo Productions Inc., a company beneficially owned by
Mr. Peter E. Beaupré.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Shareholder of record is Dougco Holdings Limited, a company beneficially owned by Mr. Paul G. Douglas.
|--- | ------------------------------------------------------------------------------------------------------

|(3) | Shareholder of record is Cabernet Investments Ltd., a company beneficially owned by Mr. Henry R. Gillespie.
|--- | -----------------------------------------------------------------------------------------------------------

|(4) | Includes 306,700 shares held of record by Mr. Ross A. Grieve and 520,200 shares held of record by Kamandor Holdings Ltd., a company beneficially owned by
Mr. Ross A. Grieve.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Shareholder of record is 635098 Alberta Ltd., a company beneficially owned by Mr. Peter A. Stalenhoef.
|--- | ------------------------------------------------------------------------------------------------------

|(6) | Shareholder of record is Jonan Enterprises Ltd., a company beneficially owned by Mr. Joseph D. Thompson.
|--- | --------------------------------------------------------------------------------------------------------

|(7) | Shareholder of record is Garval Investments Inc., a company beneficially owned by Mr. Garnet K. Wells.
|--- | ------------------------------------------------------------------------------------------------------

Employee Share Purchase Plans

Since its inception, PCL
Employees Holdings Ltd. has been owned by employees and directors of PCL Employees Holdings Ltd. and its subsidiaries and affiliates (including Employees Corporations as described in the Unanimous Shareholders Agreement  see
Item 10  Additional Information  Unanimous Shareholder Agreement (previously filed in our registration statement on Form 20-F filed on February 8, 2006 and incorporated herein by reference)). In order to provide
new employees with an opportunity to participate in ownership and to provide continuing employees with an opportunity to increase their ownership, the Board has followed the practice of adopting annual employee share purchase plans pursuant to which
common shares are made available for purchase from the Company by employees. Participation in such plans is limited to salaried employees. Those plans are of two types: (i) Universal Plans under which shares are available to certain
salaried employees, subject to a maximum number of shares that may be purchased by a given employee each year and in the aggregate under all Universal Plans; and (ii) Regular Plans under which shares of stock are offered to certain
salaried employees approved by the Chief Executive Officer of the Company (the CEO), based on various criteria, including position, performance and existing share ownership.

For 2008, the Board established the following Plans:



| |  |  | Universal 2008 Class 1 Non-Voting Employee Common Share Purchase Plan.
| | - |  | ----------------------------------------------------------------------



| |  |  | Universal 2008 Class 2 Non-Voting Employee Common Share Purchase Plan.
| | - |  | ----------------------------------------------------------------------



| |  |  | Universal 2008 Class 3 Voting Employee Common Share Purchase Plan.
| | - |  | ------------------------------------------------------------------



| |  |  | Regular 2008 Class 1 Non-Voting Employee Common Share Purchase Plan.
| | - |  | --------------------------------------------------------------------



| |  |  | Regular 2008 Class 2 Non-Voting Employee Common Share Purchase Plan.
| | - |  | --------------------------------------------------------------------



| |  |  | Regular 2008 Class 3 Voting Employee Common Share Purchase Plan.
| | - |  | ----------------------------------------------------------------



| |  |  | Regular 2008 Class 4 Voting Employee Common Share Purchase Plan.
| | - |  | ----------------------------------------------------------------

The Class designations relate to whether the shares are non-voting (Classes 1 and 2) or voting (Classes 3 and 4) and whether the shares are offered to employees in the Bahamas and/or all or part of the United States
(Classes 1 and 3) or Canada (Classes 2 and 4).

The Plans became effective on January 23, 2008, the date on which the Board adopted the Plans.



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The Board determined in its sole discretion whether each qualifying employee will be offered voting or non-voting shares
under the applicable Universal Plans, and the CEO determined, in his sole discretion after taking into account criteria determined by the Board from time to time (including position, performance and existing share ownership), whether each qualifying
employee will be offered voting or non-voting shares under the Regular Plans and, if so, how many shares will be offered to such employees. Most of the shares offered under the Plans are non-voting.

Under the 2008 Universal Plans, salaried qualifying employees who are employed on a full-time or part-time basis by PCL as of a qualifying date established by the
Company are eligible to purchase up to 100 or 70 shares, respectively, in multiples of 10 shares and subject to a minimum purchase of 50 shares. The maximum aggregate number of shares that either type of employee may purchase under previous and the
2008 Universal Plans in all years is 400. Once that maximum is reached, the employee is ineligible to purchase further shares under the 2008 Universal Plans. The number of shares offered to an eligible employee under the Regular Plans in any one
year depends on the employees target code as described below, their district/department managers recommendation that they be offered shares, and the availability of shares at that particular time. Each employee group job classification
(position, title) has had assigned to it a share target code which relates to the upper limit of shares an individual can own over time while they are functioning within that area of responsibility. If an employee advances to higher level positions,
their upper limit for share ownership increases accordingly. An employee may be offered a percentage of their share target code each year that their district/department manager recommends that they should be offered shares. When an employee has
purchased the maximum number of shares in their share target code, generally they will not be offered more shares as part of the annual regular share offer. Allocations for the annual regular share offering are in addition to the Universal Share
Purchase Program explained above. The right to purchase shares under the Plans cannot be assigned.

A total of 280,000 common shares were available under
the 2008 Universal Plans, consisting of 110,000 Class 1 shares, 130,000 Class 2 shares and 40,000 Class 3 shares. Under the 2008 Regular Plans, a total of 6,950,000 common shares were made available for purchase, consisting of 2,000,000 Class 1
shares, 3,000,000 Class 2 shares, 1,500,000 Class 3 shares and 450,000 Class 4 shares. These shares, as well as the purchase price for these shares (which is determined as described below), are subject to proportional adjustment by the Board, in its
sole discretion, for stock splits, common stock dividends, recapitalizations, combinations or any other increases or decreases in the number of issued and outstanding common shares affected without receipt of any consideration by the Company.

The purchase price at which the Company sold shares pursuant to these Plans was based on the Adjusted Consolidated Book Value, as determined in accordance
with the Companys Unanimous Shareholders Agreement. Please see Item 10  Additional Information  Unanimous Shareholder Agreement  Company Rights and Obligations to Repurchase Shares (previously filed in our
registration statement on Form 20-F filed on February 8, 2006 and incorporated herein by reference)) for additional information. Based on its most recent calculation of the Adjusted Consolidated Book Value, the Board determined that the
purchase price for the shares offered under the Plans was $23.50 per share.

The amount of the purchase price for shares purchased under Universal Plans is
loaned to the employee by PCL Constructors Inc. to employees resident in Canada and by PCL Construction Enterprises, Inc. to employees resident in the United States (both of which are subsidiaries of the Company) and those loans are repaid by
payroll deductions in equal amounts over a period of three years. The employee executes a promissory note for the purchase price, which becomes due (if not repaid sooner) upon termination of employment, grants an option to the Company to repurchase
the shares in the event of default by the employee under the promissory note and grants security to the lender in respect of the proceeds of sale under the option.

The purchase price for shares purchased under the Regular Plans is payable in full at the time of purchase in Canadian funds (subject, however, to the CEOs right to modify the method, but not the amount or timing, of payment). Subject
to normal credit approvals, a number of banks have historically been willing to finance the purchase of shares by PCL employees.

The Company will issue a
certificate representing shares purchased under a Plan as promptly as practicable after the employee delivers the purchase price for the shares to the Company. If, however, a participants employment with the Company or any of its subsidiaries
is terminated for any reason, including disability or death (but excluding an intercompany transfer of the employee, sick leave, military leave or any other leave of absence approved by the Board), prior to the actual issuance of a certificate for
any Plan shares, the former employees rights to purchase Plan shares will immediately terminate and the Company will return any payment received from the former employee for such shares.



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The right to purchase shares under the Plans cannot be assigned. Prior to purchasing shares, an employee must become a
party to the Unanimous Shareholder Agreement, which greatly restricts the transferability of the shares. For a discussion of the material terms of the Unanimous Shareholder Agreement, see Item 10  Additional Information 
Unanimous Shareholder Agreement (previously filed in our registration statement on Form 20-F filed on February 8, 2006 and incorporated herein by reference).

The Company offered qualifying employees the opportunity to purchase shares under the Plans on one occasion during the year. An eligible employee was able to purchase shares under a Plan on only one such occasion.
Approximately 3,184 salaried employees were offered the opportunity to purchase shares under the 2008 Regular Plans. The Company sent a letter to each employee who was eligible to purchase shares under a Plan advising him or her of the number of
shares available. That notice included appropriate forms for use by the employee in purchasing shares and established deadlines and procedures for electing to purchase shares. The CEO was authorized to modify or waive compliance with such deadlines
and procedures.

The Plans are not subject to any provisions of the Employee Retirement Income Security Act of 1974, nor are they qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the Code). The Plans are governed by Alberta law.

The foregoing
description relates to the Companys historical practice with respect to employee share purchase plans and to the Plans adopted for 2008. The Company is not required to make shares available to employees in any future year and, if it determines
to do so, the terms on which such shares are offered may differ from those described above.



|ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|------- | -------------------------------------------------

A. Major Shareholders

Names and share ownership of any holders of 5% or more of any class of voting shares of the Company as at December 31,
2008 are as follows:



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|                       |  |                                                                     |  |                           |  |                          |   
|---------------------- |  | ------------------------------------------------------------------- |  | ------------------------- |  | ------------------------ | --
|Shareholder of Record  |  | Share Class                                                         |  | Number of Shares          |  | Percentage ofShare Class |   
|Ross A. Grieve(1)      |  | Class 4 Voting Class 2
Non-Voting                                   |  | 632,500194,400            |  | 162                      | %%
|Paul G. Douglas(2)     |  | Class 4 Voting Class 2
Non-Voting                                   |  | 420,45010,400             |  | 11*                      | % 
|R. Brad Nelson         |  | Class 4 Voting Class 2
Non-Voting                                   |  | 303,240400                |  | 8*                       | % 
|Gordon D. Maron        |  | Class 4 Voting Class 2
Non-Voting                                   |  | 296,57051,400             |  | 8*                       | % 
|Peter A. Stalenhoef(3) |  | Class 4 Voting Class 2
Non-Voting                                   |  | 287,28018,000             |  | 7*                       | % 
|Al E. Troppmann        |  | Class 3 Voting Class 1
Non-Voting                                   |  | 278,83040,400             |  | 111                      | %%
|Peter E. Beaupré(4)    |  | Class 4 Voting Class 3 Voting Class 2 Non-Voting Class 1 Non-Voting |  | 139,550291,900 18,750 400 |  | 412 * *                  | %%
|Jerry Harder           |  | Class 3 Voting Class 1
Non-Voting                                   |  | 136,43052,400             |  | 51                       | %%
|Fred Auch              |  | Class 3 Voting Class 1
Non-Voting                                   |  | 147,70024,700             |  | 6*                       | % 
|Robert M. Martz        |  | Class 3 Voting Class 1
Non-Voting                                   |  | 158,21022,500             |  | 6*                       | % 



Notes:

|* | Less than 1%.
|- | -------------

|(1) | Includes 306,700 shares held of record by Mr. Ross A. Grieve and 520,200 shares held of record by Kamandor Holdings Ltd., a company beneficially owned by
Mr. Ross A. Grieve.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Shareholder of record is Dougco Holdings Limited, a company beneficially owned by Mr. Paul G. Douglas.
|--- | ------------------------------------------------------------------------------------------------------

|(3) | Shareholder of record is 635098 Alberta Ltd., a company beneficially owned by Mr. Peter A. Stalenhoef.
|--- | ------------------------------------------------------------------------------------------------------

|(4) | Includes 292,300 shares held of record by Mr. Peter E. Beaupré and 158,300 shares held of record by Casalingo Productions Inc., a company beneficially owned by
Mr. Peter E. Beaupré.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There has not been a significant change in the percentage ownership of any of the shareholders listed
above during the past three years.

The major shareholders do not have different voting rights. To the best knowledge of management, the Company is not
directly or indirectly owned or controlled by a single person, a group of persons or by another corporation or by any foreign government. The Company believes that the day-to-day business operations and affairs of the Company are controlled by the
board of directors. To the best knowledge of management, there are no arrangements, the operations of which may, at a date subsequent to the date hereof result in a change of control of the Company.

As of December 31, 2008, the Company had 2,910 registered holders of its common shares, 1,197 of whom were residents of the United States, holding 100% of the Class
1 and Class 3 shares of the Corporation.



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B. Related Party Transactions

See also Item 10  Additional Information  Unanimous Shareholders Agreement (previously filed in our registration statement on Form 20-F filed
on February 8, 2006 and incorporated herein by reference) for a discussion of an agreement among the Company and all of its shareholders.



|ITEM 8. | FINANCIAL INFORMATION
|------- | ---------------------

A. Consolidated
Statements and Other Financial Information

See our audited consolidated financial statements attached hereto.

Legal or Arbitration Proceedings

On August 5, 2005 PCL
Civil Constructors, Inc. (Civil) commenced a civil action against a number of engineering firms, claiming negligence in design and peer review in respect of the superstructure design for the Ringling Causeway Bridge in Sarasota, Florida.
Civil was seeking damages in excess of US$15,000,000. One of the engineering firms, Earth Tech, Inc., filed a counterclaim against Civil for an unspecified amount, believed to be estimated by Earth Tech, Inc. at US$400,000. On May 28, 2008 the
parties reached a settlement agreement to pay Civil US$9,500,000 to settle all claims. Civil received full payment in the summer of 2008. Recovery of the claim proceeds have been recorded in the Companys fiscal 2008 financial statements.

On February 2, 2006, PCL Construction Services, Inc. (Services) commenced a civil action in the United States Court of Federal Claims
arising out of a contract performed for the United States Bureau of Reclamation for the construction of a visitors center and parking structure at Hoover Dam, commencing in April, 1994. This matter includes a claim for US$2,400,000 for
additional costs as a result of changes in the scope of the contract and US$19,700,000 relating to delays and disruptions by the government. The government filed a motion to dismiss this claim on the doctrine of res judicata, and on
October 22, 2008, Services claim was dismissed. On December 10, 2008, the Company filed a notice of appeal. The Company is unable to determine the outcome of the appeal at this time.

On October 25, 2005 a Statement of Claim was filed in the Ontario Superior Court of Justice by The Bank of Nova Scotia, Scotia Realty Limited and SPE Operations
Ltd. (collectively the Owners) against PCL Constructors Canada Inc. (PCL Canada), Sayers & Associates Limited (Sayers), WZMH Architects, The Mitchell Partnership Inc. and Quinn Dressel Associates. On
December 28, 2005, the Owners issued a Fresh Statement of Claim in the action adding PCL Constructors Eastern Inc. (PCL Eastern) and The Webb Zerafa Menkes Housden Partnership as defendants to the action. The Owners are now seeking
to add PCL Construction Group Inc. and PCL Construction Resources Inc. as defendants in this action, which motion is being opposed by these corporations. The Owners are seeking $35,000,000 in damages plus interest and costs related to this action
for alleged deficiencies in the design and construction of the water pipe systems in a 67 storey commercial high rise located in the City of Toronto known as Scotia Plaza. The PCL companies involved in this litigation intend to
vigorously defend themselves against this claim and have asserted claims for insurance coverage and for indemnity against its co-defendants. The litigation is currently in the discovery stage. The Company is currently unable to determine the outcome
of the litigation and no reserves have been established in connection with this claim.

On April 3, 2007, Teton Industrial Construction, Inc.
(Teton) commenced a civil action against a project Client for an amount in excess of US$40,000,000 for damages attributed to inadequate design, design changes, work disruption, late delivered materials and substantial scope growth on a
power plant project in Vineyard, Utah. The Client filed a countersuit against Teton for an amount in excess of US$15,000,000 for liquidated and actual damages. The parties, by court order, participated in mediation in 2008. On November 7, 2008
the parties reached a settlement agreement wherein the project Client agreed to pay Teton US$29,187,000 to settle all claims. Teton received payment of US$29,187,000 from the project Client on December 10, 2008. Recovery of the claim proceeds
have been accrued in the Companys fiscal 2008 financial statements.



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PCL Civil Constructors, Inc. (Civil) is seeking additional compensation of approximately $22,000,000 under a
construction contract for costs incurred arising from the failure of certain bridge piers on a project being constructed by Civil in Tampa, Florida. The failure was caused by inadequate design and Civil was engaged by the project Owner to perform
the required pier remediation. The Owner has filed a lawsuit against certain project designers for the damages caused by the design failures, including the required remediation efforts. On December 11, 2007 an amended complaint was filed by the
Owner adding Civil as party to its lawsuit, seeking a declaration from the court of the amount owing by the Owner to Civil. PCL has now been dismissed from this lawsuit without prejudice. PCL is in the process of presenting a final accounting
to the Owner. Following the submission of the final accounting, the Owner and PCL will submit their disputes to a non-binding Dispute Resolution Board (DRB) per the requirements of the parties contract. This process will begin in
early 2009, and it is unclear when the DRB will render its final recommendations. If the parties are not able to resolve claims following the DRBs recommendation, the contract calls for litigation of remaining disputes. The
Company has accrued contract revenue to the extent that the contract price has been adjusted by change orders signed by the Owner and Owner directed changes for which collection is probable. However, no amounts have been accrued for adjustments to
the contract price where change orders have not been signed by the Owner or where Owner directed changes have not been received. The Company believes that the ultimate resolution of this matter will not have a material adverse effect on the
Companys financial position, results of operations, or liquidity.

The Company is party to various other pending legal proceedings in the ordinary
course of business. We do not believe that any resulting liabilities for such other legal proceedings, beyond amounts reserved, will materially affect the financial position, future results of operation, or future cash flows of the Company.

Dividend Policy

PCL Employees Holdings Ltd.
plans to pay a regular dividend once a year, normally in February. The dividends actually paid in any year are determined by the board of directors based on a variety of factors, including the results of operations of PCL Employees Holdings Ltd. and
its need for capital resources.

B. Significant Changes

There have been no significant changes since the date of our annual financial statements, except for the declaration of dividends in January 2009 by the Company on its common shares in the amount of $11.00 per share
to shareholders of record on January 31, 2009. The dividends, totaling an estimated $266.8 million, will be paid in February 2009.



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|ITEM 9. | THE OFFER AND LISTING
|------- | ---------------------

A. Offer and
Listing Details; Markets

There is no market for the Companys securities and the Companys securities are not listed on any stock exchange or
other regulated market. Each of the Companys shareholders is a party to a Unanimous Shareholder Agreement, which, among other things, restricts the shareholders ability to transfer our shares and establishes a formula for calculating the
price at which our shares may be offered and sold. The Company has a right of first refusal to purchase the shares. For a further explanation of the Unanimous Shareholder Agreement and the provisions regarding repurchase of the shares of the
Company, see Item 10  Additional Information  Unanimous Shareholder Agreement(previously filed in our registration statement on Form 20-F filed on February 8, 2006 and incorporated herein by reference).

The board of directors sets the price of the shares each year based on Adjusted Consolidated Book Value for the shares. The price set by the Board of
Directors remains in effect until the new price is set the next year. The calculation of Adjusted Consolidated Book Value is further described under Item 10  Additional Information  Unanimous Shareholder Agreement  Company
Rights and Obligations to Repurchase Shares (previously filed in our registration statement on Form 20-F filed on February 8, 2006 and incorporated herein by reference).

The table below lists the price set by the Board of Directors for fiscal year 2009 and in each of the last five fiscal years. To the Companys knowledge, shares
have not been offered or sold except at the price determined by the board of directors. All price amounts are expressed in Canadian dollars and each of Classes 1, 2, 3 and 4 of the shares have the same price.



|                  |  |             |      
|----------------- |  | ----------- | -----
|Fiscal Year Ended |  | Share Price
|October 31, 2009  |  | $           | 25.00
|October 31, 2008  |  | $           | 23.50
|October 31, 2007  |  | $           | 22.00
|October 31, 2006  |  | $           | 20.75
|October 31, 2005  |  | $           | 20.00
|October 31, 2004  |  | $           | 19.00

Prior Offerings of Common Shares

As described above under the heading Item 6  Directors, Senior Management and Employees  Share OwnershipEmployee Share Purchase
Plans, PCL issues shares to its employees and directors in the United States and Canada pursuant to annual employee share purchase plans. The following table describes the shares issued to United States residents pursuant to these plans
during the past three fiscal years:



|                              |  |              |  |                                                     |  |                         |                     
|----------------------------- |  | ------------ |  | --------------------------------------------------- |  | ----------------------- | --------------------
|Fiscal Year Ended October 31, |  | Date of Sale |  | Class and Number of Shares Sold                     |  | AggregateOffering Price
|2008                          |  | April 2008   |  | Class 1  1,502,555 shares Class 3  669,040 shares |  | $$                      | 35,310,04315,722,440
|2007                          |  | April 2007   |  | Class 1  874,615 shares Class 3 
308,785 shares   |  | $$                      | 19,241,5306,793,270 
|2006                          |  | May 2006     |  | Class 1  574,720 shares Class 3 
245,820 shares   |  | $$                      | 11,925,4405,100,765 



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The shares offered and sold as listed above were pursuant to offerings registered with the Securities and Exchange
Commission.

The aggregate offering price during any consecutive 12 month period did not exceed 15% of PCLs total assets. PCL had total assets of
$3,074,677,000 at October 31, 2008, $2,263,172,000 at October 31, 2007 and $1,849,591,000 at October 31, 2006. Every employee who was given the opportunity to purchase shares under the share purchase plans received an information
package which described PCL, the plans, the restrictions on transfer of PCLs shares, the risks associated with investment in securities sold pursuant to the plans, and audited financial statements. In addition, each employee received a letter
explaining the number and Class of shares being offered to him or her and a copy of the plan under which those shares were offered.



|ITEM 10. | ADDITIONAL INFORMATION
|-------- | ----------------------

A. Share
Capital

Not applicable.

B.
Memorandum of Association and Articles of Association

For a complete description of the Companys Amended Articles of Continuance and By-laws and
for other information called for by Item 10.B of Form 20-F, please see Item 10.B of the Form 20-F/A filed by the Company on February 8, 2006, which is incorporated herein by reference. For complete copies of the Companys Amended
Articles of Continuance and By-laws, please see the exhibits to the Form 20-F filed by the Company on May 18, 2005 and on March 3, 2006, which are incorporated herein by reference.

C. Material Contracts

PCL Employees
Holdings Ltd. operates as a general contractor. In the last two years, all material contracts to which the Company is a party have been entered into as part of our ordinary course of business.

D. Exchange Controls

There is no law or
governmental decree or regulation in Canada that restricts the export or import of capital including the availability of cash and cash equivalents for use by the Company and its subsidiaries, or affects the remittance of dividends, interest or other
payments to a non-resident holder of shares of the Company other than withholding tax requirements.

E. Taxation

Material Canadian Federal Income Tax Consequences

The following is a summary of the material Canadian federal income tax considerations generally applicable in respect of the holding and disposition of our common shares. The tax consequences to any particular holder of common shares will
vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally, according to that
holders particular circumstances.

This summary is applicable only to holders who are resident solely in the United States, have never been resident
in Canada, deal at arms length with us, hold their common shares as capital property and who will not use or hold the common shares in carrying on business in Canada.

This summary is based upon the provisions of the Income Tax Act (Canada) and the regulations thereunder (collectively, the Tax Act or ITA) and the Canada-United States Tax
Convention (the Tax Convention) as at the date hereof and the current administrative practices of the Canada Revenue Agency (CRA). This summary does not take into account provincial income tax consequences.



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This summary is not exhaustive of all possible income tax consequences. Each holder should consult his, her or its own
tax advisor with respect to the income tax consequences applicable to them in their own particular circumstances.

Dividends

In the case of any dividends paid to non-resident shareholders, Canadian taxes are withheld
and remitted by the Company, resulting in only the net amount paid to the shareholder. The rate of withholding tax is generally 25% but by virtue of Article X of the Tax Convention, the rate of tax on dividends paid to persons who are residents only
of the United States for purposes of the Tax Convention is generally limited to 15% of the gross amount of the dividend (or 5% in the case of certain corporate shareholders owning at least 10% of our voting shares).

Dispositions

The Income Tax Act provides that a non-resident person is subject to tax in Canada on the disposition of taxable Canadian property. Common shares of PCL meet the definition of taxable Canadian property in the Income
Tax Act, and therefore would normally be subject to tax in Canada on eventual disposition. However, as PCL is not publicly traded there is no commercial market for the shares, and the company retains first right of refusal to repurchase shares, any
repurchase of common shares by PCL results in a deemed dividend rather than a capital gain.

Section 212.2 of the Income Tax Act
(Canada) deems a dividend to have been paid to a non-resident of Canada where the proceeds of the disposition of capital stock of a corporation resident in Canada are in excess of the paid up capital of the shares. As PCLs annual issue of
shares are made in series, the paid up capital of each series of shares will always be equal to, or less than, the proceeds on repurchase thereby creating a deemed dividend.

The deemed dividend on the repurchase of shares is treated by the CRA as a normal taxable dividend. As a result, the rate of withholding tax is the same
as the regular annual dividends as discussed above.

Section 116 of the Income Tax Act (Canada) requires any non-resident proposing to
dispose of taxable Canadian property to send the Minister of National Revenue a notice setting out the details of the disposition and applying for a clearance certificate. Certificates will be issued once any Part 1 tax liability has been paid or
acceptable security posted with the Minister. In the absence of a clearance certificate, the purchaser is required to withhold 25% of the proceeds of the disposition.

As discussed above, the Common shares of PCL qualify as taxable Canadian property. As a result, all non-resident shareholders of PCL disposing of their shares would be required to apply for a clearance certificate.
However, an exemption to the clearance certificate requirement is available on the disposition of treaty-protected property, which is property where any income or gain on disposition is exempt from Part I tax as a result of a tax treaty with another
country. Accordingly, as any gain on disposition would be taxed in the United States, a clearance certificate is no longer required on the disposition of the common shares of PCL.

United States Federal Income Tax Consequences

The following is a discussion of material United States federal
income tax consequences generally applicable to a U.S. Holder (as defined below) of our common shares. This discussion does not address all potentially relevant federal income tax matters, and it does not address consequences peculiar to persons
subject to special provisions of federal income tax law, such as, for example, tax-exempt organizations, qualified retirement plans, persons subject to alternative minimum tax, financial institutions, insurance companies, real estate investment
trusts, regulated investment companies, broker-dealers, non-resident alien individuals or foreign corporations whose ownership of our common shares is not effectively connected with the conduct of a trade or business in the United States and
shareholders who acquired their shares through the exercise of employee share options or otherwise as compensation. In addition, this discussion only applies to common shares held by U.S. Holders as capital assets within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended, (the Code) and does not cover any state, local or foreign tax consequences.



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The following discussion is based upon the sections of the Code, treasury regulations promulgated under the Code,
published Internal Revenue Service (IRS) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive
basis, at any time. Holders and prospective holders of our common shares should consult their own tax advisors about the federal, state, local, and foreign tax consequences of purchasing, owning and disposing of our common shares.

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that: (i) any tax advice contained in this document (including
any attachment) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on any taxpayer by the IRS; (ii) such advice was written in connection with the promotion or
marketing of the matters addressed herein; and (iii) taxpayers should seek advice based on their particular circumstances from an independent tax advisor.

U.S. Holders

As used herein, a U.S. Holder includes any person,
with the exception of those subject to special provisions of federal income tax law, who holds our common shares who is a citizen or resident of the United States, a partnership or corporation organized under the laws of the United States, an
estate, the income of which is subject to United States federal income tax without regard to its source, a trust if a United States court is able to exercise primary supervision over administration of the trust and one or more United States persons
have authority to control all substantial decisions of the trust or if the trust was in existence on August 20, 1996 and has elected to continue to be treated as a United States person.

Distributions on Our Common Shares

U.S. Holders receiving dividend distributions with respect to our common shares are required to include in gross income for United States federal income tax purposes the gross amount of such distributions to the
extent that we have current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Note that PCL withholds 15% Canadian tax on dividends paid to US residents. Such Canadian tax withheld
may be credited, subject to certain limitations, against the U.S. Holders United States federal income tax liability or, alternatively, may be deducted in computing the U.S. Holders United States federal taxable income by those who
itemize deductions (see more detailed discussion at Foreign Tax Credit below). To the extent that distributions exceed our current or accumulated earnings and profits, they will be treated first as a return of capital up to the U.S.
Holders adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common shares. Preferential tax rates for long-term capital gains are applicable to a U.S. Holder that is an individual, estate or trust. There
are currently no preferential tax rates for long-term capital gains for a U.S. Holder that is a corporation. Dividends paid in Canadian dollars will be included in income in a U.S. dollar amount based on the exchange rate at the time of their
receipt. U.S. Holders should consult their own tax advisors regarding the treatment of any foreign currency gain or loss on any Canadian dollars received as a dividend which are converted into U.S. dollars on a date subsequent to receipt.

Dividends paid on our common shares will not generally be eligible for the dividends received deduction provided to corporations receiving
dividends from certain United States corporations. A U.S. Holder which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from us (unless we qualify as a
passive foreign investment company, as defined below) if such U.S. Holder owns shares representing at least 10% of the voting power and value of PCL. The availability of this deduction is subject to several complex limitations, which are
beyond the scope of this discussion.



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Disposition of Our Common Shares

A U.S. Holder will recognize a gain or loss upon the sale (i.e. repurchase) of our common shares equal to the difference, if any, between (i) the
amount of cash plus the fair market value of any property received, and (ii) the shareholders tax basis in the common shares. Any gain recognized on the sale or other disposition of common shares will generally be U.S. source income. Any
loss recognized on the sale or other disposition of common shares will generally be U.S. source. However, such loss will be foreign source to the extent certain dividends were received by the U.S. Holder within the 24-month period proceeding the
date on which the loss was recognized. This gain or loss will be a capital gain or loss if the common shares are a capital asset in the hands of the U.S. Holder, which will be a short-term or long-term capital gain or loss depending upon the holding
period of the U.S. Holder. Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year. Deductions for net capital losses are subject to significant limitations. For
U.S. Holders who are individuals, a capital loss is deductible only to the extent of capital gains, plus ordinary income of up to U.S. $3,000; any unused portion of such net capital loss may be carried over to be used in later tax years until such
net capital loss is thereby exhausted. For U.S. Holders which are corporations (other than corporations subject to Subchapter S of the Code), any unused net capital loss may be carried back three years from the loss year and carried forward five
years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted. If the amount realized on a sale or exchange is not denominated in U.S. dollars, the amount realized will be equal to the U.S. dollar value
thereof, determined at the exchange rate on the date of the sale or exchange.

As discussed above, the Canadian tax treatment of
dispositions results in a 15% withholding tax on the portion deemed to be a dividend, and potentially a 25% withholding tax on the proceeds net of any deemed dividend in situations where a clearance certificate is not available. Such Canadian taxes
withheld may be credited, subject to certain limitations, against the U.S. Holders United States federal income tax liability.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax
with respect to the ownership of our common shares may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a
credit reduces United States federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayers income subject to tax. This election is made on an annual basis and applies to all foreign income taxes (or taxes in
lieu of income tax) paid by (or withheld from) the U.S. Holder during the year. There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of
the U.S. Holder United States income tax liability that the U.S. Holders foreign source income bears to his, her or its worldwide taxable income.

In the determination of the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. There are
further limitations on the foreign tax credit for certain types of income such as passive income, high withholding tax interest, financial services income, shipping income, and certain other
classifications of income. In certain circumstances, recently enacted legislation and other guidance issued by the United States Treasury may deny a United States holder foreign tax credits (and instead may allow deductions) for certain foreign
taxes imposed on a dividend if the United States holder (i) has not held the common shares for at least 16 days in the 31-day period beginning 15 days before the ex-dividend date, during which it is not protected from risk of loss; (ii) is
obligated to make payments related to the dividends; or (iii) holds the common shares in arrangements in which the United States holders expected economic profit, after non-U.S. taxes, is insubstantial.

The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and holders and prospective holders of
our common shares should consult their own tax advisors regarding their individual circumstances.



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##### Table of Contents

Other Considerations

In the following two circumstances, the above sections of the discussion may not describe the United States federal income tax consequences resulting from
the holding and disposition of our common shares, although we do not believe that we are either a Controlled Foreign Corporation, or a Passive Foreign Investment Company, as discussed below.

Controlled Foreign Corporation

If more than 50% of the voting power of all classes of shares or the total value of our shares is owned, directly or indirectly, by U.S. shareholders, each of whom own 10% or more of our voting shares (U.S.
Shareholders), we could be treated as a controlled foreign corporation or a CFC under Subpart F of the Code. For these purposes, stock held by related U.S. Shareholders is treated as held by a single U.S. Shareholder.
If we were classified as a CFC and as a Passive Foreign Investment Company (as discussed below), CFC treatment would prevail with respect to U.S. Shareholders. CFC classification would create many complex results, including the required inclusion by
such U. S. Shareholders in income of their pro rata share of Subpart F Income (as specially defined by the Code) of PCL, and of our earnings invested in U.S. property. In addition, under Section 1248 of the Code, gain from the sale
or exchange of our common shares by a U.S. person who is or was a U.S. shareholder (as defined in the Code) at any time during the five-year period ending with the sale or exchange is generally treated as a dividend to the extent of our earnings and
profits attributable to the shares sold or exchanged. Because of the complexity of Subpart F of the Code to which this discussion relates, a more detailed review of these rules is outside of the scope of this discussion.

Passive Foreign Investment Company

Section 1297 of the Code defines a passive foreign investment company or PFIC as a corporation that is not formed in the United States and either (i) 75% or more of its gross income for the taxable year is
passive income, which generally includes interest, dividends and certain rents and royalties or (ii) the average percentage, by fair market value (or, if PCL elects, adjusted tax basis), of its assets that produce or are held for
the production of passive income is 50% or more. PCL does not believe that it will be a PFIC for the current fiscal year or for future years. Whether PCL is a PFIC in any year and the tax consequences relating to PFIC status will depend
on the composition of PCLs income and assets, including cash. If PCL is a PFIC as defined in Section 1297 of the Code, U.S. Holders will be subject to U.S. federal income taxation under one of two alternative tax regimes at the election
of each such U.S. Holder. The first regime imposes a special shareholder tax and interest charge on the deferral benefits enjoyed by U.S. Holders by virtue of their PFIC investment. The second regime allows shareholders, under special circumstances,
to elect to have their share of PFIC earnings taxed currently, in order to avoid the special shareholder tax and interest charge of the first regime. U.S. Holders should be aware, however, that if PCL becomes a PFIC, it may not be able or willing to
satisfy record-keeping requirements that would enable U.S. Holders to make an election to treat PCL as a qualified electing fund for purposes of the second regime. U.S. Holders or potential shareholders should consult their own tax
advisor concerning the impact of these rules on their investment in PCL.

F. Dividends and Paying Agents

Not applicable.

G. Statements by Experts

Not applicable.



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H. Documents on Display

The documents referred to herein may be examined at the Companys offices at 5410  99 Street, Edmonton, Alberta, T6E 3P4, Canada during normal business hours.



|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

Exchange Rate Risk

The Company currently earns revenue and incurs expenses in United States dollars and Canadian dollars.
Fluctuations in the Canadian dollar in relation to the U.S. dollar may have an adverse effect on our earnings as our consolidated financial statements are reported in Canadian dollars. The impact of a 10% strengthening, 5% strengthening, 5%
weakening and a 10% weakening of the Canadian dollar in relation to the U.S. dollar compared to the fiscal year ended October 31, 2008 average U.S. dollar/Canadian dollar exchange rate of $1.0266 is as follows:



|                                  |  |                                  |  |                                  |  |                              |  |                              
|--------------------------------- |  | -------------------------------- |  | -------------------------------- |  | ---------------------------- |  | -----------------------------
|US$1=CAD$0.9239 10% strengthening |  | US$1=CAD$0.9753 5% strengthening |  | US$1=CAD$1.0266 October 31, 2008 |  | US$1=CAD$1.0779 5% weakening |  | US$1=CAD$1.1293 10% weakening
|US$1,000                          |  | US$1,000                         |  | US$1,000                         |  | US$1,000                     |  | US$1,000                     
|CAD$924                           |  | CAD$975                          |  | CAD$1,027                        |  | CAD$1,078                    |  | CAD$1,129                    

The Company uses U.S. dollar denominated bank loans to minimize changes in the value of the United States
operations as a result of currency exchange fluctuations.

Interest Rate Risk

The Company does not believe that fluctuations in interest rates have a material impact on its financial condition or results of operations. The Company manages against increases in interest rates under its bank loan
facility by hypothecating short term deposits in excess of the bank loans in favour of the bank. These short term deposits have maturities which approximate the maturities of the bank loans and as a result any increase in interest expense as a
result of increases in interest rates is offset by a corresponding increase in investment income.



|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|-------- | ------------------------------------------------------

Not
required.



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PART II



|ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|-------- | -----------------------------------------------

None.



|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|-------- | ----------------------------------------------------------------------------

None.



|ITEM 15. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Disclosure Controls and Procedures

As at October 31, 2008, our management, including our president and vice president, secretary/treasurer, has evaluated the effectiveness of
the design and operations of our disclosure controls and procedures in accordance with Rule 13a-15 under the Securities Exchange Act of 1934. Based upon and as of the date of the evaluation, our president and vice president, secretary/treasurer
concluded that the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized, and reported as and when required, and that it is accumulated and communicated to our management, including our president and vice president, secretary/treasurer, as appropriate to allow timely decisions regarding required disclosure.
There has been no change in the Companys internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) that occurred during the period covered by this Annual Report that has
materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.

The Company is in the
process of reviewing the internal controls of Nordic Construction, Ltd. and, if necessary, will make appropriate changes as we incorporate our controls and procedures into this recently acquired business.

Managements Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act of 1934 Rules 13a-15(f). All internal control
systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Under the supervision
and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in
Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We acquired
Nordic Construction, Ltd. (Nordic) on April 7, 2008. Our management has excluded the Nordic business from its assessment of the effectiveness of internal control over financial reporting on October 31, 2008. The acquired
business has US$34.9 million of total assets and US$67.0 million of total revenues included in our consolidated financial statements as at and for the year ended October 31, 2008.

Based on our evaluation under the framework in Internal ControlIntegrated Framework, our management concluded that our internal control over financial reporting
was effective as of October 31, 2008.

This annual report does not include an attestation report of the Companys registered public accounting
firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that
permit the company to provide only managements report in this annual report.



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|ITEM 16. | RESERVED
|-------- | --------

A. Audit Committee Financial
Expert

Our board of directors has determined that Henry R. Gillespie is an audit committee financial expert, as that term is defined by Item 16A
of Form 20-F and that Mr. 
Gillespie is independent, as that term is defined in the New York Stock Exchange listing standards.

B. Code Of Ethics

PCL is committed to maintaining the highest standards of honesty, integrity and ethical conduct and has adopted our code of ethics to deter wrong doing
and to promote:



| | a. | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | full, fair, accurate, timely and understandable disclosure in reports and documents filed by PCL with securities commissions and in other public communications made by PCL;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. | compliance with applicable governmental laws, rules and regulations;
| | -- | --------------------------------------------------------------------



| | d. | the prompt internal reporting to the audit committee of violations of this code of ethics; and
| | -- | ----------------------------------------------------------------------------------------------



| | e. | accountability for adherence to this code of ethics.
| | -- | ----------------------------------------------------

Our code of ethics
entitled Code of Conduct applies to our president and vice president, secretary/treasurer, among other members of management. A copy of the code of ethics has been filed with the Securities and Exchange Commission as an exhibit to this
Annual Report on Form 20-F, and may be accessed through the Commissions EDGAR database by visiting www.sec.gov.

C.
Principal Accounting Fees And Services

PCL has appointed KPMG LLP to serve as external auditors.

Audit Fees

KPMG LLP billed PCL $770,838 in 2008 and $861,489 in 2007
for audit services. Audit fees were incurred for the audit of our annual financial statements, the audits of the annual financial statements of certain of our consolidated subsidiaries, and services provided in connection with regulatory filings.

Audit Related Fees

None.

Tax Fees

KPMG LLP billed PCL $116,313 in 2008 and $190,410 in 2007
for tax compliance, tax advice, and tax planning services.

All Other Fees

KPMG LLP billed PCL $nil in 2008 and $nil in 2007 for advisory services.

Audit Committee Pre-approval Policy

On September 4, 2008, the audit committee adopted a pre-approval policy for the services provided by our external auditors. According to the
policy, the audit committee pre-approved the following categories of defined engagements for PCL and its consolidated subsidiaries as specified below:



| |  |  | Audit services: The audit committee will pre-approve all audit services provided by the external auditors through their recommendation of the external auditors as
shareholders auditors at the Companys annual meeting and through the audit committees review of the external auditors annual Audit Plan; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Audit-related, tax and other services: Annually, the audit committee will update the list of Pre-Approved Services and pre-approve services that are recurring or
otherwise reasonably expected to be provided. The audit committee will be subsequently informed annually of the services on the list for which the auditor has been actually engaged. Any additional requests for pre-approval will be addressed on a
case-by-case specific engagement basis. The chair of the audit committee is authorized to pre-approve additional services where the aggregate fees are estimated to be less than or equal to $25,000, provided that the chair reports such approvals to
the committee at its next meeting.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The policy also defines audit services, audit-related services, tax services, and other services,
with reference to the definitions of these services provided by the rules of the Canadian Securities Administrators. The policy also defines prohibited services, with reference to the Rules of Professional Conduct of the Institute of Chartered
Accountants of Alberta.

D. Exemptions From The Listing Standards For Audit Committees

Not applicable.



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##### Table of Contents

E. Purchases Of Equity Securities By The Issuer And Affiliated Purchasers

The following table outlines the purchases of the Companys Class 1 and Class 3 shares by the Company during each month of the fiscal year ended October 31,
2008:



|                                        |  |                                     |  |                                 |       |                                     |         |                                 |   |      
|--------------------------------------- |  | ----------------------------------- |  | ------------------------------- | ----- | ----------------------------------- | ------- | ------------------------------- | - | -----
|                                        |  | Class 1                             |  | Class 3                        
|Period                                  |  | (a) Total Number ofShares Purchased |  | (b) Average PricePaid per Share |       | (a) Total Number ofShares Purchased |         | (b) Average PricePaid per Share
|November 1, 2007 to November 30, 2007   |  | 2,590                               |  | $                               | 22.00 |                                     | 200     |                                 | $ | 22.00
|                                        |  |                                     |  |                                
|December 1, 2007 to December 31, 2007   |  | 1,500                               |  | $                               | 22.00 |                                     | 100     |                                 | $ | 22.00
|                                        |  |                                     |  |                                
|January 1, 2008 to January 31, 2008     |  | 12,620                              |  | $                               | 22.00 |                                     | 200     |                                 | $ | 21.00
|                                        |  |                                     |  |                                
|February 1, 2008 to February 28, 2008   |  | 429,660                             |  | $                               | 23.50 |                                     | 82,680  |                                 | $ | 23.50
|                                        |  |                                     |  |                                
|March 1, 2008 to March 31, 2008         |  | 2,310                               |  | $                               | 23.00 |                                     | 10,000  |                                 | $ | 23.50
|                                        |  |                                     |  |                                
|April 1, 2008 to April 30, 2008         |  | 5,640                               |  | $                               | 23.50 |                                     | 700     |                                 | $ | 23.50
|                                        |  |                                     |  |                                
|May 1, 2008 to May 31, 2008             |  | 5,590                               |  | $                               | 23.50 |                                     | 7250    |                                 | $ | 23.50
|                                        |  |                                     |  |                                
|June 1, 2008 to June 30, 2008           |  | 11,220                              |  | $                               | 23.50 |                                     |        |                                 | $ |     
|                                        |  |                                     |  |                                
|July 1, 2008 to July 31, 2008           |  | 5,280                               |  | $                               | 23.50 |                                     | 5,710   |                                 | $ | 23.50
|                                        |  |                                     |  |                                
|August 1, 2008 to August 31, 2008       |  | 11,660                              |  | $                               | 23.50 |                                     | 1,140   |                                 | $ | 23.50
|                                        |  |                                     |  |                                
|September 1, 2008 to September 30, 2008 |  | 13,160                              |  | $                               | 23.50 |                                     | 150     |                                 | $ | 23.50
|                                        |  |                                     |  |                                
|October 1, 2008 to October 31, 2008     |  | 14,390                              |  | $                               | 23.50 |                                     |        |                                 | $ |     
|                                        |  |                                     |  |                                
|TOTAL                                   |  | 515,620                             |  | $                               | 23.45 |                                     | 108,130 |                                 | $ | 23.49

Note: The terms of the share repurchases by the Company, including the number of shares to be repurchased and the
determination of the price to be paid upon repurchase, are determined in accordance with the Companys Unanimous Shareholder Agreement, as described in Item 10  Additional Information  Unanimous Shareholder Agreement 
Company Rights and Obligations to Repurchase Shares (previously filed in our registration statement on Form 20-F filed on February 8, 2006 and incorporated herein by reference). There were no shares purchased as part of publicly
announced plans or programs, nor are there shares that may yet be purchased under any such plans or programs.



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##### Table of Contents

PART III



|ITEM 17. | FINANCIAL STATEMENTS
|-------- | --------------------

The Auditors Report and Financial
Statements for the Company are attached hereto as itemized under Item 19(a) and are incorporated herein by reference. Such Financial Statements have been prepared on the basis of Canadian GAAP. A reconciliation to United States GAAP appears in
Note 24 thereto.



|ITEM 18. | FINANCIAL STATEMENTS
|-------- | --------------------

Not applicable. The Company has elected to
provide Financial Statements pursuant to Item 17.



|ITEM 19. | FINANCIAL STATEMENTS AND EXHIBITS
|-------- | ---------------------------------

A.
Financial Statements



|    |  |                                                           
|--- |  | ----------------------------------------------------------
|    | 
|F-1 |  | Report of Independent Registered Public Accounting Firm;  
|    | 
|F-2 |  | Consolidated Statements of Earnings and Retained Earnings;
|    | 
|F-3 |  | Consolidated Balance Sheets;                              
|    | 
|F-4 |  | Consolidated Statements of Cash Flows;                    
|    | 
|F-5 |  | Consolidated Statements Comprehensive Income; and         
|    | 
|F-6 |  | Notes to Consolidated Financial Statements.               

B. Exhibits



|     |  |                                                                                                               
|---- |  | --------------------------------------------------------------------------------------------------------------
|     | 
|1.1  |  | Certificate of Amendment and Registration of Restated Articles dated March 3, 2006**                          
|     | 
|1.2  |  | By-Laws of the Company*                                                                                       
|     | 
|2.1  |  | Unanimous Shareholder Agreement dated effective May 1, 1988, as amended*                                      
|     | 
|4.1  |  | 2008 Class 1 Regular Employee Stock Purchase Plan***                                                          
|     | 
|4.2  |  | 2008 Class 1 Universal Employee Stock Purchase Plan***                                                        
|     | 
|4.3  |  | 2008 Class 2 Regular Employee Stock Purchase Plan****                                                         
|     | 
|4.4  |  | 2008 Class 2 Universal Employee Stock Purchase Plan****                                                       
|     | 
|4.5  |  | 2008 Class 3 Regular Employee Stock Purchase Plan***                                                          
|     | 
|4.6  |  | 2008 Class 3 Universal Employee Stock Purchase Plan***                                                        
|     | 
|4.7  |  | 2008 Class 4 Regular Employee Stock Purchase Plan****                                                         
|     | 
|8.1  |  | List of subsidiaries, including their jurisdiction of incorporation and names under which they do business****
|     | 
|11.1 |  | Code of Conduct****                                                                                           



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|     |  |                                                                                              
|---- |  | ---------------------------------------------------------------------------------------------
|     | 
|12.1 |  | Section 13a-14(a)/15d-14(a) Certification of Principal Executive Officer****                 
|     | 
|12.2 |  | Section 13a-14(a)/15d-14(a) Certification of Principal Financial Officer****                 
|     | 
|13.1 |  | Section 1350 Certification of Principal Executive Officer and Principal Financial Officer****



|* | Previously filed as an exhibit to our registration on Form 20-F filed on May 18, 2005, and incorporated herein by reference.
|- | ----------------------------------------------------------------------------------------------------------------------------

|** | Previously filed as an exhibit to our annual report on Form 20-F filed on March 3, 2006, and incorporated herein by reference.
|-- | ------------------------------------------------------------------------------------------------------------------------------

|*** | Previously filed as an exhibit to our registration on Form S-8 filed on March 11, 2008, and incorporated herein by reference.
|--- | -----------------------------------------------------------------------------------------------------------------------------

|**** | Filed herewith.
|---- | ---------------

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this
Annual Report on its behalf.



PCL EMPLOYEES HOLDINGS LTD.By:

/s/ GORDON D. MARONGordon D. MaronVice President, Secretary/Treasurer


Date: January 16, 2009



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|     |  |                       |  |           |  |               
|---- |  | --------------------- |  | --------- |  | --------------
|LOGO |  | KPMG LLP              |  | Telephone |  | (780) 429-7300
|     |  | Chartered Accountants |  | Fax       |  | (780) 429-7379
|     |  | 10125 - 102 Street    |  | Internet  |  | www.kpmg.ca   
|     |  | Edmonton AB T5J 3V8   |  |           |  |               
|     |  | Canada                |  |           |  |               

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Directors of PCL Employees Holdings Ltd.

We have audited the
accompanying consolidated balance sheets of PCL Employees Holdings Ltd. as of October 31, 2008 and 2007 and the consolidated statements of earnings and retained earnings, cash flows and comprehensive income for each of the years in the
three-year period ended October 31, 2008. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our audit opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of PCL Employees Holdings Ltd. as of October 31, 2008 and 2007 and the results of its operations and its cash flows for each of the years in the three-year period ended October 31, 2008 in conformity with Canadian generally
accepted accounting principles.

As discussed in Notes 13, 24(2) and 24(5) to the consolidated financial statements, the Company adopted new accounting
pronouncements related to recognition and measurement of financial instruments and recognition, measurement, disclosure and presentation of comprehensive income on November 1, 2006.

Canadian generally accepted accounting principles vary in certain significant respects from US generally accepted accounting principles. Information relating to the nature and effect of such differences is presented
in Note 24 to the consolidated financial statements.



|                     
|---------------------
|LOGO                 
|                     
|Chartered Accountants
|                     
|Edmonton, Canada     
|January 14, 2009     



| |  |                                                                                            
| |  | -------------------------------------------------------------------------------------------
| |  | KPMG LLP, is a Canadian limited liability partnership and a member firm of the KPMG        
| |  | network of independent member firms affiliated with KPMG International, a Swiss cooperative
| |  | KPMG Canada provides services to KPMG LLP.                                                 



---

##### Table of Contents

PCL EMPLOYEES HOLDINGS LTD.

Consolidated Statements of Earnings and Retained Earnings

Years ended October 31

(In thousands of Canadian dollars, except share data)



|                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|----------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                                                  |  | 2008 |            |   | 2007 |   |            | 2006 | 
|Contract revenues                                                 |  | $    | 5,837,426  |   |      | $ | 5,065,349  |      |  | $ | 4,208,284  |  
|Contract costs                                                    |  |      | (4,984,016 | ) |      |   | (4,469,716 | )    |  |   | (3,722,821 | )
|                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Gross profit                                                      |  |      | 853,410    |   |      |   | 595,633    |      |  |   | 485,463    |  
|Indirect and administrative expenses                              |  |      | (443,638   | ) |      |   | (354,216   | )    |  |   | (287,193   | )
|Gain on disposal of property, plant and equipment                 |  |      | 1,211      |   |      |   | 1,576      |      |  |   | 2,300      |  
|                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Operating profit                                                  |  |      | 410,983    |   |      |   | 242,993    |      |  |   | 200,570    |  
|Other income (expense) - Note 15                                  |  |      | (34,179    | ) |      |   | 70,273     |      |  |   | 31,756     |  
|                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Earnings before income taxes                                      |  |      | 376,804    |   |      |   | 313,266    |      |  |   | 232,326    |  
|                                                                  |  |      |           
|Income taxes - Note 11(a)                                         |  |      | (134,772   | ) |      |   | (92,113    | )    |  |   | (63,122    | )
|                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Net earnings                                                      |  |      | 242,032    |   |      |   | 221,153    |      |  |   | 169,204    |  
|                                                                  |  |      |           
|Retained earnings at beginning of year                            |  |      | 315,927    |   |      |   | 258,631    |      |  |   | 166,185    |  
|                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|                                                                  |  |      | 557,959    |   |      |   | 479,784    |      |  |   | 335,389    |  
|Dividends                                                         |  |      | (177,556   | ) |      |   | (161,664   | )    |  |   | (75,736    | )
|                                                                  |  |      |           
|Premium on repurchase of share capital                            |  |      | (14,193    | ) |      |   | (2,193     | )    |  |   | (1,022     | )
|                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Retained earnings at end of year                                  |  | $    | 366,210    |   |      | $ | 315,927    |      |  | $ | 258,631    |  
|                                                                  |  |      |            |   |      |   |            |      |  |   |            |  
|Earnings per share (basic and diluted)                            |  | $    | 10.86      |   |      | $ | 11.47      |      |  | $ | 10.12      |  
|                                                                  |  |      |           
|Weighted average number of shares outstanding (basic and diluted) |  |      | 22,292,775 |   |      |   | 19,278,222 |      |  |   | 16,719,446 |  
|                                                                  |  |      |            |   |      |   |            |      |  |   |            |  

See Notes to Consolidated Financial Statements



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PCL EMPLOYEES HOLDINGS LTD.

Consolidated Balance Sheets

As at October 31

(In thousands of Canadian dollars)



|                                                                                |  |      |           |   |      |   |           |  
|------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                                                                |  | 2008 |           |   | 2007 |  
|ASSETS                                                                          |  |      |           |   |      |   |           |  
|Current Assets                                                                  |  |      |           |   |      |   |           |  
|Cash and cash equivalents - Note 10                                             |  | $    | 1,067,523 |   |      | $ | 588,898   |  
|Short-term deposits - Notes 2 and 10                                            |  |      | 177,096   |   |      |   | 211,134   |  
|Accounts receivable - Note 3                                                    |  |      | 1,252,419 |   |      |   | 970,500   |  
|Costs and estimated earnings in excess of billings - Note 4                     |  |      | 122,081   |   |      |   | 85,018    |  
|Investment in limited liability companies and limited partnerships - Note 23(a) |  |      | 1,090     |   |      |   | 200       |  
|Income taxes recoverable                                                        |  |      |          |   |      |   | 34,268    |  
|Future income taxes - Note 11(c)                                                |  |      | 35,508    |   |      |   | 42,232    |  
|                                                                                |  |      |           |   |      |   |           |  
|                                                                                |  |      | 2,655,717 |   |      |   | 1,932,250 |  
|Long-term investments - Notes 5 and 19                                          |  |      | 99,879    |   |      |   | 91,593    |  
|Holdbacks receivable - Note 3                                                   |  |      | 125,904   |   |      |   | 90,948    |  
|Property, plant and equipment - Note 6                                          |  |      | 163,208   |   |      |   | 140,669   |  
|Intangible assets - Note 7                                                      |  |      | 4,232     |   |      |   | 1,116     |  
|Goodwill                                                                        |  |      | 5,097     |   |      |   |          |  
|Future income taxes - Note 11(c)                                                |  |      | 15,751    |   |      |   | 1,866     |  
|Accrued benefit asset - Note 18                                                 |  |      | 4,889     |   |      |   | 4,730     |  
|                                                                                |  |      |           |   |      |   |           |  
|                                                                                |  | $    | 3,074,677 |   |      | $ | 2,263,172 |  
|                                                                                |  |      |           |   |      |   |           |  
|LIABILITIES                                                                     |  |      |           |   |      |   |           |  
|Current Liabilities                                                             |  |      |           |   |      |   |           |  
|Accounts payable - Note 8                                                       |  | $    | 956,341   |   |      | $ | 762,281   |  
|Accrued liabilities - Note 9                                                    |  |      | 321,840   |   |      |   | 225,749   |  
|Unearned revenue - Note 4                                                       |  |      | 518,869   |   |      |   | 383,030   |  
|Income taxes payable                                                            |  |      | 32,535    |   |      |   |          |  
|Bank loans - Note 10                                                            |  |      | 301,125   |   |      |   | 202,166   |  
|Future income taxes - Note 11(c)                                                |  |      | 33,597    |   |      |   | 47,500    |  
|                                                                                |  |      |           |   |      |   |           |  
|                                                                                |  |      | 2,164,307 |   |      |   | 1,620,726 |  
|Holdbacks payable - Note 8                                                      |  |      | 66,830    |   |      |   | 57,236    |  
|Bank loans - Note 10                                                            |  |      | 20,280    |   |      |   |          |  
|Future income taxes - Note 11(c)                                                |  |      | 33,109    |   |      |   | 1,345     |  
|                                                                                |  |      |           |   |      |   |           |  
|                                                                                |  |      | 2,284,526 |   |      |   | 1,679,307 |  
|                                                                                |  |      |           |   |      |   |           |  
|SHAREHOLDERS EQUITY                                                            |  |      |           |   |      |   |           |  
|Share capital - Note 12                                                         |  |      | 435,689   |   |      |   | 336,881   |  
|Retained earnings                                                               |  |      | 366,210   |   |      |   | 315,927   |  
|Accumulated other comprehensive loss - Note 13                                  |  |      | (11,748   | ) |      |   | (68,943   | )
|                                                                                |  |      |           |   |      |   |           |  
|                                                                                |  |      | 790,151   |   |      |   | 583,865   |  
|Commitments and contingencies - Notes 7, 14, 22 and 23                          |  |      |           |   |      |   |           |  
|                                                                                |  |      |           |   |      |   |           |  
|                                                                                |  | $    | 3,074,677 |   |      | $ | 2,263,172 |  
|                                                                                |  |      |           |   |      |   |           |  

See Notes to Consolidated Financial Statements



|                        |  |          |  |                    |  |                |  |         
|----------------------- |  | -------- |  | ------------------ |  | -------------- |  | --------
|On behalf of the Board: |  |          |  |                   
|                        |  |         
|/s/ J.D. Thompson       |  |          |  | /s/ H.R. Gillespie
|J.D. Thompson           |  | DIRECTOR |  |                    |  | H.R. Gillespie |  | DIRECTOR



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PCL EMPLOYEES HOLDINGS LTD.

Consolidated Statements of Cash Flows

Years ended October 31

(In thousands of Canadian dollars)



|                                                                                  |  |      |            |   |      |   |            |      |  |   |          |  
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- |  | - | -------- | -
|                                                                                  |  | 2008 |            |   | 2007 |   |            | 2006 | 
|CASH PROVIDED BY (USED FOR):                                                      |  |      |            |   |      |   |            |      |  |   |          |  
|OPERATIONS (Note 16):                                                             |  |      |            |   |      |   |            |      |  |   |          |  
|Net earnings                                                                      |  | $    | 242,032    |   |      | $ | 221,153    |      |  | $ | 169,204  |  
|Items not involving cash:                                                         |  |      |            |   |      |   |            |      |  |   |          |  
|Depreciation and amortization                                                     |  |      | 38,029     |   |      |   | 35,510     |      |  |   | 28,403   |  
|Gain on disposal of property, plant and equipment                                 |  |      | (1,211     | ) |      |   | (1,576     | )    |  |   | (2,300   | )
|Loss (gain) on disposal of marketable securities                                  |  |      | 1,744      |   |      |   | (2,841     | )    |  |   | (3,164   | )
|Future income taxes - Note 11(a)                                                  |  |      | 14,258     |   |      |   | 31,235     |      |  |   | (34,356  | )
|Net change in operating accounts - Note 17                                        |  |      | 126,657    |   |      |   | (44,135    | )    |  |   | 59,432   |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |          |  
|                                                                                  |  |      | 421,509    |   |      |   | 239,346    |      |  |   | 217,219  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |          |  
|INVESTING:                                                                        |  |      |            |   |      |   |            |      |  |   |          |  
|Investment in marketable securities                                               |  |      | (85,430    | ) |      |   | (64,126    | )    |  |   | (16,384  | )
|Proceeds on disposal of marketable securities                                     |  |      | 61,543     |   |      |   | 27,587     |      |  |   | 15,312   |  
|Decrease (increase) in short-term deposits, other than investments held in escrow |  |      | 53,533     |   |      |   | (58,473    | )    |  |   | (97,622  | )
|Increase in investments held in escrow                                            |  |      | (19,458    | ) |      |   | (8,848     | )    |  |   | 355      |  
|Purchase of property, plant and equipment                                         |  |      | (47,322    | ) |      |   | (61,980    | )    |  |   | (52,003  | )
|Proceeds on disposal of property, plant and equipment                             |  |      | 4,583      |   |      |   | 6,851      |      |  |   | 5,865    |  
|Decrease in loans receivable                                                      |  |      |           |   |      |   | 1,123      |      |  |   | 58       |  
|Increase in investment in limited liability companies and limited partnerships    |  |      | (890       | ) |      |   | (200       | )    |  |   | 7,945    |  
|Increase in intangible assets                                                     |  |      |           |   |      |   |           |      |  |   | (3       | )
|Business acquisition (net of cash acquired of $5,854) - Note 7(b)                 |  |      | (19,253    | ) |      |   |           |      |  |   |         |  
|Increase in goodwill - Note 7(c)                                                  |  |      | (3,487     | ) |      |   |           |      |  |   |         |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |          |  
|                                                                                  |  |      | (56,181    | ) |      |   | (158,066   | )    |  |   | (136,477 | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |          |  
|FINANCING:                                                                        |  |      |            |   |      |   |            |      |  |   |          |  
|Repayment of operating bank loans                                                 |  |      |           |   |      |   | (23        | )    |  |   | (401     | )
|Proceeds from bank loans                                                          |  |      | 1,338,534  |   |      |   | 1,211,649  |      |  |   | 683,948  |  
|Repayments of bank loans                                                          |  |      | (1,198,297 | ) |      |   | (1,128,351 | )    |  |   | (657,322 | )
|Issuance of share capital                                                         |  |      | 120,037    |   |      |   | 68,747     |      |  |   | 53,621   |  
|Repurchase of share capital                                                       |  |      | (35,422    | ) |      |   | (8,318     | )    |  |   | (6,220   | )
|Dividends paid                                                                    |  |      | (177,556   | ) |      |   | (161,664   | )    |  |   | (75,736  | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |          |  
|                                                                                  |  |      | 47,296     |   |      |   | (17,960    | )    |  |   | (2,110   | )
|Unrealized foreign exchange loss (gain)                                           |  |      | 66,001     |   |      |   | (40,626    | )    |  |   | (3,496   | )
|                                                                                  |  |      |            |   |      |   |            |      |  |   |          |  
|Net increase in cash and cash equivalents                                         |  |      | 478,625    |   |      |   | 22,694     |      |  |   | 75,136   |  
|                                                                                  |  |      |           
|Cash and cash equivalents at beginning of year                                    |  |      | 588,898    |   |      |   | 566,204    |      |  |   | 491,068  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |          |  
|Cash and cash equivalents at end of year                                          |  | $    | 1,067,523  |   |      | $ | 588,898    |      |  | $ | 566,204  |  
|                                                                                  |  |      |            |   |      |   |            |      |  |   |          |  

See Notes to Consolidated Financial Statements



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PCL EMPLOYEES HOLDINGS LTD.

Consolidated Statements of Comprehensive Income

Years ended October 31

(In thousands of Canadian dollars)



|                                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|-------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                     |  | 2008 |         |   | 2007 |   |         | 2006 | 
|Net earnings                                                         |  | $    | 242,032 |   |      | $ | 221,153 |      |  | $ | 169,204 |  
|Other comprehensive income (loss) - Note 13:                         |  |      |         |   |      |   |         |      |  |   |         |  
|Loss (gain) on disposal of marketable securities                     |  |      | 1,744   |   |      |   | (2,841  | )    |  |   |        |  
|Unrealized gain (loss) on investment in marketable securities        |  |      | (15,755 | ) |      |   | 2,803   |      |  |   |        |  
|Effect of exchange rate changes during the year                      |  |      | 68,033  |   |      |   | (34,874 | )    |  |   | (6,721  | )
|                                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|                                                                     |  |      | 296,054 |   |      |   | 186,241 |      |  |   | 162,483 |  
|Tax impact of above items:                                           |  |      |         |   |      |   |         |      |  |   |         |  
|Tax on gain (loss) on disposal of marketable securities              |  |      | (385    | ) |      |   | 664     |      |  |   |        |  
|Tax on unrealized loss (gain) on investment in marketable securities |  |      | 3,558   |   |      |   | (635    | )    |  |   |        |  
|                                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|                                                                     |  |      | 3,173   |   |      |   | 29      |      |  |   |        |  
|                                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|Comprehensive income                                                 |  |      | 299,227 |   |      |   | 186,270 |      |  |   | 162,483 |  
|                                                                     |  |      |         |   |      |   |         |      |  |   |         |  

See Notes to Consolidated Financial Statements



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|1. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------



| | (a) | Nature of Operations
| | --- | --------------------

The Company operates in the
construction industry. The Company performs construction services in Canada, the United States and the Bahamas as a general contractor, on either a negotiated or competitive bid basis, as a construction manager, or as a design build service provider
in the following construction markets: (a) commercial and institutional buildings, including construction of shopping centers, educational facilities, airports, light civil structures, hospitals, museums, sporting and entertainment facilities,
hotels, light industrial facilities, multifamily condominiums and apartments, seniors facilities, and office buildings; (b) construction, shutdown and maintenance services for manufacturing, petrochemical, oil and gas and mine processing
facilities, chemical plants, forestry projects and power plants; and (c) roadways, bridges, tunnels, large diameter pipelines, water and wastewater treatment facilities, dams and mine site preparation. The Companys customers are private
and governmental entities.

The length of the Companys contracts varies, but is typically between one and three years. Contracts
generally provide for progress payments, net of holdbacks, to be made as work progresses. Holdbacks, ranging from zero to ten percent, are paid upon substantial completion. In some instances, the Company is able to substitute short-term deposits
held in escrow by a financial institution or bank letters of credit in lieu of holdbacks.



| | (b) | Basis of Accounting
| | --- | -------------------

These consolidated financial
statements include the accounts of PCL Employees Holdings Ltd. and its subsidiaries and are prepared using generally accepted accounting principles in Canada and reconciled to generally accepted accounting principles in the United States in Note 24.
All intercompany transactions and balances are eliminated on consolidation.

Investments in joint ventures are accounted for using the
proportionate consolidation method whereby the Companys share of the assets, liabilities, revenues and expenses is consolidated as outlined in Note 23.



| | (c) | Profit Recognition on Contracts
| | --- | -------------------------------

For financial
reporting purposes, revenue on lump-sum contracts is recognized using the percentage-of-completion method, measured by the ratio of costs incurred to date to estimated total cost. Revenue on cost plus and unit price contracts is recognized as work
is performed. Under this method, the costs incurred and the related revenue are included in the consolidated statement of earnings and retained earnings as work progresses.

Contract costs include all direct material, labor, and equipment costs and those indirect costs related to contract performance such as indirect labor,
supplies, and tool costs. General and administrative costs are charged to expense as incurred.

Changes in job performance, job conditions,
and estimated profitability, including those arising from contract penalty provisions and final contract settlements may result in revisions to costs and income and are recognized in the period in which such adjustments are determined. Profit
incentives are included in revenue when their realization is reasonably assured.

On each contract in process where the current estimate
indicates an ultimate loss, the full amount of the estimated loss is recognized. Construction claims are included in revenue when the amount can be reasonably estimated and recovery of the claim is probable, such as when the claim is resolved or
collected. Insurance claims are recorded when it is determined that the claim is covered under an existing insurance policy and collection is reasonably assured.



| | (d) | Cash and Cash Equivalents
| | --- | -------------------------

The Company considers
all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. Cash and cash equivalents are classified as held-for-trading and are recorded at fair value.



| | (e) | Short-term Deposits
| | --- | -------------------

Short-term deposits are
categorized as held-to-maturity financial instruments and are recorded at amortized cost. When there is objective evidence that held-to-maturity financial assets are impaired and there is a decline in fair value below amortized cost that is other
than temporary, an impairment loss is recorded for the excess of amortized cost over fair value.



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|1. | SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | -------------------------------------------



| | (f) | Long-term Investments
| | --- | ---------------------

Investments held-to-maturity
are recorded at amortized cost. When there is objective evidence that held-to-maturity financial assets are impaired and there is a decline in fair value below amortized cost that is other than temporary, an impairment loss is recorded for the
excess of amortized cost over fair value.

Marketable securities are classified as available for sale financial instruments and are recorded
at fair value. Changes in the fair value of these securities are recorded as other comprehensive income. When there is objective evidence that marketable securities are impaired and the decline is other than temporary, the cumulative loss that had
been recognized directly in other comprehensive income is removed from accumulated other comprehensive income and is recognized in net income.



| | (g) | Property, Plant and Equipment
| | --- | -----------------------------

Property, plant and
equipment is recorded at cost. Depreciation is recorded using the following methods and annual rates which are designed to depreciate the cost of the assets over their estimated useful lives:



|                                |  |                                                                                
|------------------------------- |  | -------------------------------------------------------------------------------
|Contractors moveable equipment |  | -        20% to 30% declining balance                                          
|Buildings - frame               |  | -        10% declining balance                                                 
|- brick                         |  | -        4% to 5% declining balance                                            
|Automobiles and trucks          |  | -        30% declining balance                                                 
|Computer hardware               |  | -        30% to 45% declining balance                                          
|Leasehold improvements          |  | -        Straight-line over the terms of the leases which vary up to five
years
|Office furniture and fixtures   |  | -        20% declining balance                                                 
|Land improvements               |  | -        Straight-line over five years                                         
|Computer software               |  | -        100% annually                                                         



| | (h) | Intangible Assets
| | --- | -----------------

Intangible assets representing
primarily customer lists and relationships, employment contracts and workforce and non-competition arrangements are recorded at cost less accumulated amortization as outlined in Note 7. Intangible assets are being amortized on a straight-line basis
over periods ranging from one to five years.



| | (i) | Goodwill
| | --- | --------

Goodwill represents the excess purchase
price paid by the Company over the fair value of tangible and identifiable intangible assets and liabilities acquired as a result of purchasing a business. Goodwill is not amortized but instead is tested for impairment annually or more frequently if
events or changes in circumstances indicate that it may be impaired. The impairment test is carried out in two steps. In the first step, the carrying amount of the reporting unit, including goodwill, is compared to its fair value. When the fair
value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to be impaired and the second step of the impairment test is unnecessary. The second step is carried out when the carrying amount of a
reporting unit exceeds its fair value, in which case the implied fair value of the reporting units goodwill, determined in the same manner as the value of goodwill is determined in a business combination, is compared with its carrying amount
to measure the amount of the impairment loss, if any.

The Company performed its annual impairment test on goodwill on August 31, 2008
and determined that there was no impairment in carrying value.



| | (j) | Long-Lived Assets
| | --- | -----------------

Long-lived assets subject to
depreciation are reviewed for impairment upon the occurrence of events or changes in circumstances indicating that the carrying value of the assets may not be recoverable. If such events or change in circumstances exist, the carrying value of the
assets are compared to estimated future cash flows expected to be generated over the remaining useful life of the assets. If the carrying values of the assets exceed their estimated future cash flows, impairments are recognized for the excess of the
carrying value over the fair value of the assets.



| | (k) | Income Taxes
| | --- | ------------

The Company uses the asset and
liability method of accounting for income taxes. Under the asset and liability method, future income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Future income tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on future income tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the date of enactment or substantive
enactment.



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|1. | SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | -------------------------------------------



| | (l) | Translation of Foreign Currency
| | --- | -------------------------------

The monetary
assets and liabilities of the Company, which are denominated in foreign currencies, are translated at year-end exchange rates. Revenues and expenses are translated at rates of exchange prevailing on the transaction dates. All exchange gains or
losses are recognized currently in earnings.

The Companys foreign operations are translated using the current rate method, whereby
assets and liabilities are translated at year-end exchange rates. Revenues and expenses are translated at the average rate of exchange over the fiscal period. The resulting unrealized exchange gains and losses from the foregoing translation
procedures are deferred and recorded as a component of accumulated other comprehensive loss.



| | (m) | Employee Future Benefits
| | --- | ------------------------

The Company has a defined
benefit pension plan covering certain salaried employees. The Company has adopted the following policies:



| | (i) | The cost of the accrued benefit obligations for pensions earned by employees is actuarially determined using the projected benefit method prorated on service and managements
best estimate of expected plan investment performance, salary escalation, retirement ages and other actuarial factors.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | For the purpose of calculating expected return on plan assets, those assets are valued at fair value.
| | ---- | -----------------------------------------------------------------------------------------------------



| | (iii) | Past service costs from plan amendments are deferred and amortized on a straight-line basis over the average remaining service period of employees active at the date of the
amendment.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | Actuarial gains (losses) on plan assets arise from the difference between the actual return on plan assets for a period and the expected return on plan assets for that period.
Actuarial gains (losses) on the accrued benefit obligation arise from differences between actual and expected experience and from changes in the actuarial assumptions used to determine the accrued benefit obligation. The excess of the net
accumulated actuarial gains (losses) over 10 percent of the greater of the accrued benefit obligation and the fair value of plan assets is amortized over the average remaining service period of active employees. The average remaining service period
of the active employees covered by the pension plans is 3 years (2007 - 3 years; 2006 - 3 years).
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (v) | When a restructuring of a benefit plan gives rise to both a curtailment and a settlement of obligations, the curtailment is accounted for prior to the settlement.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company also has a Canadian and a United States defined contribution plan providing pension benefits for the remainder of
its salaried employees. The cost of the defined contribution plan is recognized based on the contributions required to be made during each period. The Company has no obligations for employee non-pension future benefits.



| | (n) | Use of Estimates
| | --- | ----------------

The preparation of financial
statements in conformity with generally accepted accounting principles in Canada requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The Company estimates
the total contract cost and the extent of progress toward completion of contracts and recognizes a loss if the total estimated costs exceed the contract value. The actual costs to complete the contract and the ultimate amount of revenue to be
recognized could differ from those estimates.

Other significant estimates by management include the determination of the allowance for
doubtful accounts and the expected useful lives of property, plant and equipment. Actual results could differ from these estimates.



| | (o) | Variable-interest Entities
| | --- | --------------------------

The Company
consolidates variable-interest entities (VIE) when it is the primary beneficiary, as described in the Canadian Institute of Chartered Accountants (CICA) Accounting Guideline 15 Consolidation of Variable-Interest
Entities and the CICA Emerging Issues Committee Abstract No. 157, Implicit Variable Interests under AcG-15 and the CICA Emerging Issues Committee Abstract No. 163, Determining the Variability to be Considered in
Applying AcG - 15.



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|1. | SIGNIFICANT ACCOUNTING POLICIES (continued)
|-- | -------------------------------------------



| | (p) | Adoption of Canadian Accounting Pronouncements
| | --- | ----------------------------------------------

Effective November 1, 2007, the Company prospectively adopted two new CICA standards, Section 3862 Financial Instruments Disclosures and Section 3863 Financial Instruments Presentation which replace Section 3861
Financial Instruments Disclosure and Presentation. The new disclosure standard increases the emphasis on the risks associated with both recognized and unrecognized financial instruments and how those risks are managed. The new presentation
standard carries forward the former presentation requirements in Section 3861. The Company has provided the additional required disclosures in Note 19.

Effective November 1, 2007, the Company prospectively adopted new Handbook Section 1535 Capital Disclosures which requires companies to disclose their objectives, policies and processes for
managing capital. In addition, disclosures are to include whether companies have complied with externally imposed capital requirements. The Company has provided the additional required disclosures in Notes 10 and 20.

Effective November 1, 2007, the Company adopted the new CICA Handbook Section 1506, Accounting Changes. This section establishes
criteria for changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, accounting estimates and the correction of errors. It includes the disclosure of a description and the impact on the
Companys financial results of any new primary source of GAAP that has been issued but is not yet effective. The adoption of this standard did not have a material effect on the Companys consolidated financial statements.



| | (q) | Recent Canadian Accounting Pronouncements Not Yet Adopted
| | --- | ---------------------------------------------------------

In February 2008, the CICA issued Handbook Section 3064, (CICA 3064) Goodwill and Intangible Assets. CICA 3064, which replaces Section 3062, Goodwill and Intangible Assets, and Section 3450, Research
and Development Costs, establishes standards for the recognition, measurement and disclosure of goodwill and intangible assets. CICA 3064 will apply to the Companys consolidated financial statements for the fiscal year ending October 31,
2009. The Company is currently reviewing the impact of this standard but does not expect a material impact to the consolidated financial statements.



|2. | SHORT-TERM DEPOSITS
|-- | -------------------

Short-term deposits of
$66,720 (2007 - $47,262) are held in escrow by a financial institution and are assigned to certain customers in lieu of holdback on contract accounts receivable. These deposits are typically released upon project completion.



|3. | ACCOUNTS RECEIVABLE
|-- | -------------------



|                                     |  |      |           |   |      |   |          
|------------------------------------ |  | ---- | --------- | - | ---- | - | ---------
|                                     |  | 2008 |           |   | 2007
|Trade accounts receivable            |  | $    | 934,764   |   |      | $ | 715,832  
|Allowance for doubtful accounts      |  |      | (16,423   | ) |      |   |         
|                                     |  |      |           |   |      |   |          
|Net trade accounts receivable        |  |      | 918,341   |   |      |   | 715,832  
|Holdbacks receivable within one year |  |      | 334,078   |   |      |   | 254,668  
|                                     |  |      |           |   |      |   |          
|                                     |  |      | 1,252,419 |   |      |   | 970,500  
|Holdbacks receivable beyond one year |  |      | 125,904   |   |      |   | 90,948   
|                                     |  |      |           |   |      |   |          
|                                     |  | $    | 1,378,323 |   |      | $ | 1,061,448
|                                     |  |      |           |   |      |   |          



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|   |  |                                                                                        |  |      |            |   |      |   |           |  
|-- |  | -------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | --------- | -
|4. |  | COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS                                  |  |      |            |   |      |   |           |  
|   |  |                                                                                        | 
|   |  |                                                                                        |  | 2008 |            |   | 2007 |  
|   |  | Costs incurred on uncompleted contracts                                                |  | $    | 11,791,072 |   |      | $ | 8,220,917 |  
|   |  | Estimated earnings                                                                     |  |      | 1,173,536  |   |      |   | 636,240   |  
|   |  |                                                                                        |  |      |            |   |      |   |           |  
|   |  |                                                                                        |  |      | 12,964,608 |   |      |   | 8,857,157 |  
|   |  | Less billings to date                                                                  |  |      | 13,361,396 |   |      |   | 9,155,169 |  
|   |  |                                                                                        |  |      |            |   |      |   |           |  
|   |  |                                                                                        |  | $    | (396,788   | ) |      | $ | (298,012  | )
|   |  | Included in the accompanying consolidated balance sheets under the following captions: |  |      |            |   |      |   |           |  
|   |  |                                                                                        | 
|   |  | Costs and estimated earnings in excess of billings                                     |  | $    | 122,081    |   |      | $ | 85,018    |  
|   |  | Unearned revenue                                                                       |  |      | (518,869   | ) |      |   | (383,030  | )
|   |  |                                                                                        |  |      |            |   |      |   |           |  
|   |  |                                                                                        |  | $    | (396,788   | ) |      | $ | (298,012  | )
|   |  |                                                                                        |  |      |            |   |      |   |           |  
|   |  |                                                                                        | 
|5. |  | LONG-TERM INVESTMENTS                                                                  |  |      |            |   |      |   |           |  
|   |  |                                                                                        | 
|   |  |                                                                                        |  | 2008 |            |   | 2007 |  
|   |  | Investments held-to-maturity                                                           |  | $    | 21,772     |   |      | $ |          |  
|   |  | Investments in marketable securities                                                   |  |      | 78,107     |   |      |   | 91,593    |  
|   |  |                                                                                        |  |      |            |   |      |   |           |  
|   |  |                                                                                        |  | $    | 99,879     |   |      | $ | 91,593    |  
|   |  |                                                                                        |  |      |            |   |      |   |           |  



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|6. | PROPERTY, PLANT AND EQUIPMENT
|-- | -----------------------------



|                                |  |      |         |                         |   |               |  |   |        
|------------------------------- |  | ---- | ------- | ----------------------- | - | ------------- |  | - | -------
|October 31, 2008                |  | Cost |         | AccumulatedDepreciation |   | Net BookValue
|Contractors moveable equipment |  | $    | 163,291 |                         | $ | 101,507       |  | $ | 61,784 
|Buildings                       |  |      | 50,254  |                         |   | 15,899        |  |   | 34,355 
|Leasehold improvements          |  |      | 30,103  |                         |   | 14,146        |  |   | 15,957 
|Automobiles and trucks          |  |      | 29,057  |                         |   | 15,707        |  |   | 13,350 
|Land improvements               |  |      | 11,937  |                         |   | 3,928         |  |   | 8,009  
|Computer hardware               |  |      | 16,797  |                         |   | 10,844        |  |   | 5,953  
|Office furniture and fixtures   |  |      | 8,323   |                         |   | 3,977         |  |   | 4,346  
|Computer software               |  |      | 7,221   |                         |   | 6,771         |  |   | 450    
|                                |  |      |         |                         |   |               |  |   |        
|                                |  |      | 316,983 |                         |   | 172,779       |  |   | 144,204
|Land                            |  |      | 19,004  |                         |   |              |  |   | 19,004 
|                                |  |      |         |                         |   |               |  |   |        
|                                |  | $    | 335,987 |                         | $ | 172,779       |  | $ | 163,208
|                                |  |      |         |                         |   |               |  |   |        
|                                |  |      |        
|October 31, 2007                |  | Cost |         | AccumulatedDepreciation |   | Net BookValue
|Contractors moveable equipment |  | $    | 131,580 |                         | $ | 79,793        |  | $ | 51,787 
|Buildings                       |  |      | 46,939  |                         |   | 13,639        |  |   | 33,300 
|Leasehold improvements          |  |      | 22,076  |                         |   | 9,788         |  |   | 12,288 
|Automobiles and trucks          |  |      | 21,309  |                         |   | 11,052        |  |   | 10,257 
|Land improvements               |  |      | 9,791   |                         |   | 2,206         |  |   | 7,585  
|Computer hardware               |  |      | 13,946  |                         |   | 8,506         |  |   | 5,440  
|Office furniture and fixtures   |  |      | 6,153   |                         |   | 2,838         |  |   | 3,315  
|Computer software               |  |      | 6,010   |                         |   | 5,549         |  |   | 461    
|                                |  |      |         |                         |   |               |  |   |        
|                                |  |      | 257,804 |                         |   | 133,371       |  |   | 124,433
|Land                            |  |      | 16,236  |                         |   |              |  |   | 16,236 
|                                |  |      |         |                         |   |               |  |   |        
|                                |  | $    | 274,040 |                         | $ | 133,371       |  | $ | 140,669
|                                |  |      |         |                         |   |               |  |   |        

Depreciation expense in the amount of $36,119 (2007 - $34,117; 2006 - $26,618) has been included
in indirect and administrative expenses in the consolidated statements of earnings and retained earnings.



|7. | INTANGIBLE ASSETS
|-- | -----------------



| | (a) | The intangible assets balance consists of the following:
| | --- | --------------------------------------------------------



|                          |  |      |        |   |      |   |        |  
|------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                          |  | 2008 |        |   | 2007 |  
|Intangible assets at cost |  | $    | 13,491 |   |      | $ | 7,471  |  
|Accumulated amortization  |  |      | (9,259 | ) |      |   | (6,355 | )
|                          |  |      |        |   |      |   |        |  
|Net                       |  | $    | 4,232  |   |      | $ | 1,116  |  
|                          |  |      |        |   |      |   |        |  

Amortization expense in the amount of $1,910 (2007 - $1,393; 2006 - $1,785) has been included in
indirect and administrative expenses in the consolidated statements of earnings and retained earnings.



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|7. | INTANGIBLE ASSETS (Continued)
|-- | -----------------------------



| | (b) | On April 7, 2008, the Company acquired all of the outstanding shares of Nordic Construction Ltd. in Honolulu, Hawaii. The acquisition was accounted for using the purchase
method and the results of operations have been included in the consolidated financial statements from the date of acquisition.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The aggregate purchase price was $25,107 (U.S. $20,845) which can be summarized as follows:



|                                          |  |   |         |  
|----------------------------------------- |  | - | ------- | -
|Current assets (including cash of $5,854) |  | $ | 51,423  |  
|Property, plant & equipment               |  |   | 6,380   |  
|Intangible assets                         |  |   | 5,191   |  
|Goodwill                                  |  |   | 1,610   |  
|Current liabilities                       |  |   | (39,497 | )
|                                          |  |   |         |  
|Total assets acquired                     |  | $ | 25,107  |  
|                                          |  |   |         |  

The goodwill, which relates to the Buildings - U.S. reporting segment, that forms part of the
aggregate purchase price is deductible for tax purposes in the U.S.

The Company may pay additional contingent consideration if the
subsidiarys earnings exceed certain annual amounts. This additional consideration period ends October 31, 2011 with a U.S. $4,500 aggregate maximum amount payable.



| | (c) | On October 1, 2003, the Company acquired the assets and operations of Teton Industrial Group, Inc.s industrial construction business in Atlanta, Georgia.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

The Company may pay additional contingent consideration if the subsidiarys earnings exceed certain annual amounts. This
additional consideration period ended October 31, 2008. Additional consideration of U.S. $2,895 was required in 2008 (2007-$nil). The additional consideration has been recorded as goodwill for the Heavy Industrial - U.S. reporting segment. At
October 31, 2008, the Canadian dollar equivalent of this goodwill is $3,487.



|8. | ACCOUNTS PAYABLE
|-- | ----------------



|                                  |  |      |           |      |   |        
|--------------------------------- |  | ---- | --------- | ---- | - | -------
|                                  |  | 2008 |           | 2007
|Trade accounts payable            |  | $    | 668,361   |      | $ | 562,300
|Holdbacks payable within one year |  |      | 287,980   |      |   | 199,981
|                                  |  |      |           |      |   |        
|                                  |  |      | 956,341   |      |   | 762,281
|Holdbacks payable beyond one year |  |      | 66,830    |      |   | 57,236 
|                                  |  |      |           |      |   |        
|                                  |  | $    | 1,023,171 |      | $ | 819,517
|                                  |  |      |           |      |   |        



|9. | ACCRUED LIABILITIES
|-- | -------------------



|                            |  |      |         |      |   |        
|--------------------------- |  | ---- | ------- | ---- | - | -------
|                            |  | 2008 |         | 2007
|Accrued payroll liabilities |  | $    | 67,453  |      | $ | 55,303 
|Bonus provision             |  |      | 231,744 |      |   | 150,325
|Other                       |  |      | 22,643  |      |   | 20,121 
|                            |  |      |         |      |   |        
|                            |  | $    | 321,840 |      | $ | 225,749
|                            |  |      |         |      |   |        



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|10. | BANK LOANS
|--- | ----------



| | (a) | The U.S. $250,000 (2007 - U.S. $214,000) bank loans have maturity dates ranging from 30 to 365 days. Interest on these loans is designed to vary with the banks United States
Base Rate or the London Interbank Offered Rate plus 0.33% at the Companys option. Cash equivalents of $253,793 (2007 - $70,045) and short-term deposits of $59,566 (2007 - $132,546) are hypothecated in favour of the bank under the
terms of the credit facilities. Interest expense of $9,370 (2007 - $11,101; 2006 - $6,268) is included in indirect and administrative expenses.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to these bank loans, the Company has access to lines of credit in the amount of $355,893 (2007 - $340,989). As at October 31, 2008, the Company has utilized $186,691 (2007 - $73,025) of these
lines of credit, all in the form of letters of credit.

At October 31, 2008, the Canadian dollar equivalent of these U.S. dollar
denominated bank loans is $301,125 (2007 - $202,166).

The Company is subject to restrictive covenants under its bank loans and lines of
credit as described above that are measured on an annual basis. These covenants include, but are not limited to a current ratio, funded debt to EBITDA ratio, and funded debt to shareholder equity ratio. The Company is in compliance with its loan
covenants.



| | (b) | During 2008, the Company entered into financing arrangements in relation to certain build-interim finance construction contracts. The total financing available under these financing
arrangements is $102,297 at an interest rate equal to the Canadian Dollar Offered Rate plus 1.00% and $129,812 at an interest rate equal to the Bankers Acceptances Rate plus 1.40%. These financing arrangements have maturity dates that correspond
with the dates of substantial completion of the related construction contracts. These financing arrangements are secured by the related construction contracts, along with the assets and shares of certain wholly-owned subsidiaries of the Company
directly contracted to carry out the related construction. The Company has entered into agreements with its customers and lenders in relation to these construction contracts such that the Companys customers will make payments on the trade
accounts receivable owed to the Company directly to the Companys lenders to satisfy the amounts outstanding under the financing arrangements. At October 31, 2008, the Company has offset accounts receivable of $29,826 against outstanding
bank loans of $45,388, and presented the net outstanding bank loan of $20,280 on its consolidated balance sheet. Interest expense of $825 related to these arrangements is included in indirect and administrative expenses.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|11. | INCOME TAXES
|--- | ------------



| | (a) | Components of income tax expense (benefit) are as follows:
| | --- | ----------------------------------------------------------



|                      |  |      |         |      |   |        |      |  |   |         |  
|--------------------- |  | ---- | ------- | ---- | - | ------ | ---- |  | - | ------- | -
|                      |  | 2008 |         | 2007 |   |        | 2006 | 
|Current income taxes: |  |      |         |      |   |        |      |  |   |         |  
|Canadian Federal      |  | $    | 44,336  |      | $ | 13,447 |      |  | $ | 57,089  |  
|Canadian Provincial   |  |      | 26,983  |      |   | 12,096 |      |  |   | 25,741  |  
|U.S. Federal          |  |      | 40,899  |      |   | 29,484 |      |  |   | 13,146  |  
|U.S. State            |  |      | 8,296   |      |   | 5,851  |      |  |   | 1,502   |  
|                      |  |      |         |      |   |        |      |  |   |         |  
|                      |  |      | 120,514 |      |   | 60,878 |      |  |   | 97,478  |  
|                      |  |      |         |      |   |        |      |  |   |         |  
|Future income taxes:  |  |      |         |      |   |        |      |  |   |         |  
|Canadian Federal      |  |      | 5,496   |      |   | 26,259 |      |  |   | (14,286 | )
|Canadian Provincial   |  |      | 2,351   |      |   | 7,747  |      |  |   | (6,880  | )
|U.S. Federal          |  |      | 5,343   |      |   | (2,312 | )    |  |   | (11,837 | )
|U.S. State            |  |      | 1,068   |      |   | (459   | )    |  |   | (1,353  | )
|                      |  |      |         |      |   |        |      |  |   |         |  
|                      |  |      | 14,258  |      |   | 31,235 |      |  |   | (34,356 | )
|                      |  |      |         |      |   |        |      |  |   |         |  
|                      |  | $    | 134,772 |      | $ | 92,113 |      |  | $ | 63,122  |  
|                      |  |      |         |      |   |        |      |  |   |         |  



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|11. | INCOME TAXES (continued)
|--- | ------------------------



| | (b) | Income tax expense differs from the amount that would be computed by applying the combined Federal and Provincial or State income tax rates of 34% (2007 - 35%; 2006 - 34%) to
earnings before income taxes. The reasons for the differences are as follows:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                            |  |        |         |   |                   |       |   |        |   |         |                   |  |       |        |  |   |                   |   |  |       |  
|------------------------------------------------------------------------------------------- |  | ------ | ------- | - | ----------------- | ----- | - | ------ | - | ------- | ----------------- |  | ----- | ------ |  | - | ----------------- | - |  | ----- | -
|                                                                                            |  |        |         |   | 2008              |       |   |        |   |         | 2007              |  |       |        |  |   | 2006              |  
|                                                                                            |  | Amount |         |   | % ofPre-taxIncome |       |   | Amount |   |         | % ofPre-taxIncome |  |       | Amount |  |   | % ofPre-taxIncome |  
|Income tax at statutory rate                                                                |  | $      | 126,304 |   |                   | 33.52 |   |        | $ | 108,954 |                   |  | 34.78 |        |  | $ | 78,874            |   |  | 33.95 |  
|Non-taxable capital loss (gain)                                                             |  |        | 7,137   |   |                   | 1.89  |   |        |   | (4,125  | )                 |  | (1.32 | )      |  |   | (295              | ) |  | (0.13 | )
|Effect of enacted future tax rates                                                          |  |        | (1,312  | ) |                   | (0.35 | ) |        |   | (5,778  | )                 |  | (1.84 | )      |  |   | (2,564            | ) |  | (1.10 | )
|Recognition of previously unrecognized temporary differences and other changes in estimates |  |        | (1,300  | ) |                   | (0.35 | ) |        |   | (5,500  | )                 |  | (1.76 | )      |  |   | (12,442           | ) |  | (5.36 | )
|Large corporation tax, refundable tax, permanent differences and other                      |  |        | 3,943   |   |                   | 1.05  |   |        |   | (1,438  | )                 |  | (0.46 | )      |  |   | (451              | ) |  | (0.19 | )
|                                                                                            |  |        |         |   |                   |       |   |        |   |         |                   |  |       |        |  |   |                   |   |  |       |  
|                                                                                            |  | $      | 134,772 |   |                   | 35.76 |   |        | $ | 92,113  |                   |  | 29.40 |        |  | $ | 63,122            |   |  | 27.17 |  
|                                                                                            |  |        |         |   |                   |       |   |        |   |         |                   |  |       |        |  |   |                   |   |  |       |  



| | (c) | The tax effects that give rise to significant portions of the future income tax assets and future income tax liabilities at October 31, 2008 and 2007 are presented below:
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                                  |  |      |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                                  |  | 2008 |         |   | 2007 |  
|Future income tax assets:                                                                         |  |      |         |   |      |   |         |  
|Unearned revenue                                                                                  |  | $    | 61,922  |   |      | $ | 53,551  |  
|Accounts payable, principally due to holdbacks payable                                            |  |      | 69,293  |   |      |   | 54,662  |  
|Accrued liabilities not claimed for tax                                                           |  |      | 40,987  |   |      |   | 42,744  |  
|Property, plant and equipment - differences between net book value and undepreciated capital cost |  |      | 1,236   |   |      |   | 2,139   |  
|Losses carried forward for tax purposes                                                           |  |      | 6,378   |   |      |   | 552     |  
|Other                                                                                             |  |      | 2,979   |   |      |   | 1,179   |  
|                                                                                                  |  |      |         |   |      |   |         |  
|                                                                                                  |  |      | 182,795 |   |      |   | 154,827 |  
|Less valuation allowance                                                                          |  |      | (3,825  | ) |      |   | (113    | )
|                                                                                                  |  |      |         |   |      |   |         |  
|                                                                                                  |  |      | 178,970 |   |      |   | 154,714 |  
|                                                                                                  |  |      |         |   |      |   |         |  
|Future income tax liabilities:                                                                    |  |      |         |   |      |   |         |  
|Marketable securities                                                                             |  |      | (1,724  | ) |      |   | 1,449   |  
|Accounts receivable, principally due to holdbacks receivable and uncertified progress billings    |  |      | 182,910 |   |      |   | 152,572 |  
|Other                                                                                             |  |      | 13,231  |   |      |   | 5,440   |  
|                                                                                                  |  |      |         |   |      |   |         |  
|                                                                                                  |  |      | 194,417 |   |      |   | 159,461 |  
|                                                                                                  |  |      |         |   |      |   |         |  
|Net future income tax liability                                                                   |  | $    | (15,447 | ) |      | $ | (4,747  | )
|                                                                                                  |  |      |         |   |      |   |         |  

The net future income tax liability is presented in the consolidated balance sheets as follows:



|                                |  |   |         |   |  |   |         |  
|------------------------------- |  | - | ------- | - |  | - | ------- | -
|Current assets                  |  | $ | 35,508  |   |  | $ | 42,232  |  
|Non-current assets              |  |   | 15,751  |   |  |   | 1,866   |  
|Current liabilities             |  |   | (33,597 | ) |  |   | (47,500 | )
|Non-current liabilities         |  |   | (33,109 | ) |  |   | (1,345  | )
|                                |  |   |         |   |  |   |         |  
|Net future income tax liability |  | $ | (15,447 | ) |  | $ | (4,747  | )
|                                |  |   |         |   |  |   |         |  



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|11. | INCOME TAXES (continued)
|--- | ------------------------



| | (d) | Losses carried forward:
| | --- | -----------------------

Non-capital losses

Non-capital losses carried forward for tax purposes will expire as follows:



|                        |  |   |       
|----------------------- |  | - | ------
|Year ending October 31: |  |  
|2009                    |  | $ | 205   
|2010                    |  |   | 1,182 
|2011                    |  |   | 181   
|2012                    |  |   |      
|2013                    |  |   |      
|2014 and thereafter     |  |   | 9,052 
|                        |  |   |       
|                        |  | $ | 10,620
|                        |  |   |       



| | (e) | Certain taxes paid by the Company on investment income are refundable at the rate of $1 for every $3 of taxable dividends paid. Such tax and its recovery are charged to retained
earnings. At October 31, 2008, $2,565 of refundable taxes have been fully recovered (2007 - $3,324; 2006 - $2,593).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|12. | SHARE CAPITAL
|--- | -------------



| | (a) | Authorized:
| | --- | -----------

The Company is authorized to
issue unlimited numbers of Class 1, 2, 3 and 4 common shares in each series. Class 1 and 2 shares are non-voting shares and Class 3 and 4 shares have voting rights. Each year a new series of shares is issued and the series number assigned
corresponds to the year of issue.

The Unanimous Shareholder Agreement provides that the Company can only issue shares to employees and
directors (and their personal corporations) of PCL Employees Holdings Ltd. and its subsidiaries and affiliates. No shareholder (or related group of shareholders) may own more than 11% of the outstanding voting shares. The Company has the option or
right (subject to applicable laws) to repurchase shares of the Company in certain situations. The Company has the option to purchase the shares of a shareholder (i) who ceases to be an employee for any reason other than death or disability,
including dismissal or resignation, (ii) whose shares are seized or transferred pursuant to court order or who becomes bankrupt, (iii) who breaches certain provisions of the Unanimous Shareholder Agreement, or (iv) if that shareholder
is a corporation, it ceases to be controlled by an employee or director of the Company or its subsidiaries and affiliates. It also provides that the Company is obligated (subject to applicable laws) to repurchase the shares of an employee in a
limited number of situations, being the employee having reached the age of 64 while still an employee, or the death or disability (as defined in the Unanimous Shareholder Agreement) of the employee. The purchase price for any shares that the Company
has the obligation or option to purchase is the Adjusted Consolidated Book Value of the shares, as determined by the Board.



| | (b) | Issued:
| | --- | -------



|                               |  |           |   |  |            |   |  |           |   |  |           |   |  |            |   |  | 
|------------------------------ |  | --------- | - |  | ---------- | - |  | --------- | - |  | --------- | - |  | ---------- | - |  | 
|                               |  | Class 1   |   |  | Class 2    |   |  | Class 3   |   |  | Class 4   |   |  | Total      |  
|Number of shares (all series): |  |           |   |  |            |   |  |           |   |  |           |   |  |            |  
|                               |  |           |   |  |           
|Outstanding, October 31, 2005  |  | 4,009,870 |   |  | 7,228,641  |   |  | 1,375,991 |   |  | 2,963,110 |   |  | 15,577,612 |  
|Issued during the year         |  | 605,670   |   |  | 1,377,315  |   |  | 252,120   |   |  | 377,770   |   |  | 2,612,875  |  
|Repurchased during the year    |  | (52,770   | ) |  | (246,300   | ) |  | (2,610    | ) |  |          |   |  | (301,680   | )
|Realigned shares               |  | (19,620   | ) |  | 19,620     |   |  |          |   |  |          |   |  |           |  
|                               |  |           |   |  |            |   |  |           |   |  |           |   |  |            |  
|Outstanding, October 31, 2006  |  | 4,543,150 |   |  | 8,379,276  |   |  | 1,625,501 |   |  | 3,340,880 |   |  | 17,888,807 |  
|Issued during the year         |  | 874,615   |   |  | 1,732,355  |   |  | 308,785   |   |  | 263,590   |   |  | 3,179,345  |  
|Repurchased during the year    |  | (107,860  | ) |  | (268,195   | ) |  | (3,460    | ) |  |          |   |  | (379,515   | )
|Realigned shares               |  | (11,480   | ) |  | 11,480     |   |  |          |   |  |          |   |  |           |  
|                               |  |           |   |  |            |   |  |           |   |  |           |   |  |            |  
|Outstanding, October 31, 2007  |  | 5,298,425 |   |  | 9,854,916  |   |  | 1,930,826 |   |  | 3,604,470 |   |  | 20,688,637 |  
|Issued during the year         |  | 1,502,555 |   |  | 2,493,820  |   |  | 669,040   |   |  | 530,330   |   |  | 5,195,745  |  
|Repurchased during the year    |  | (515,620  | ) |  | (621,910   | ) |  | (108,130  | ) |  | (264,660  | ) |  | (1,510,320 | )
|Realigned shares               |  | 23,950    |   |  | (23,950    | ) |  |          |   |  |          |   |  |           |  
|                               |  |           |   |  |            |   |  |           |   |  |           |   |  |            |  
|Outstanding, October 31, 2008  |  | 6,309,310 |   |  | 11,702,876 |   |  | 2,491,736 |   |  | 3,870,140 |   |  | 24,374,062 |  
|                               |  |           |   |  |            |   |  |           |   |  |           |   |  |            |  



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|12. | SHARE CAPITAL (Continued)
|--- | -------------------------





|                              |  |         |         |   |         |   |         |         |  |   |         |   |  |       |        |   |  |   |         |  
|----------------------------- |  | ------- | ------- | - | ------- | - | ------- | ------- |  | - | ------- | - |  | ----- | ------ | - |  | - | ------- | -
|                              |  | Class 1 |         |   | Class 2 |   |         | Class 3 |  |   | Class 4 |   |  | Total |       
|Stated capital (all series):  |  |         |         |   |         |   |         |         |  |   |         |   |  |       |        |   |  |   |         |  
|                              |  |         |         |   |        
|Outstanding, October 31, 2005 |  | $       | 56,911  |   |         | $ | 112,064 |         |  | $ | 21,156  |   |  | $     | 37,505 |   |  | $ | 227,636 |  
|Issued during the year        |  |         | 12,568  |   |         |   | 28,579  |         |  |   | 5,231   |   |  |       | 7,839  |   |  |   | 54,217  |  
|Repurchased during the year   |  |         | (985    | ) |         |   | (4,162  | )       |  |   | (51     | ) |  |       |       |   |  |   | (5,198  | )
|Realigned shares              |  |         | (329    | ) |         |   | 329     |         |  |   |        |   |  |       |       |   |  |   |        |  
|                              |  |         |         |   |         |   |         |         |  |   |         |   |  |       |        |   |  |   |         |  
|Outstanding, October 31, 2006 |  | $       | 68,165  |   |         | $ | 136,810 |         |  | $ | 26,336  |   |  | $     | 45,344 |   |  | $ | 276,655 |  
|Issued during the year        |  |         | 19,242  |   |         |   | 38,112  |         |  |   | 6,793   |   |  |       | 5,799  |   |  |   | 69,946  |  
|Repurchased during the year   |  |         | (1,842  | ) |         |   | (4,210  | )       |  |   | (73     | ) |  |       |       |   |  |   | (6,125  | )
|Realigned shares              |  |         | (201    | ) |         |   | 201     |         |  |   |        |   |  |       |       |   |  |   |        |  
|                              |  |         |         |   |         |   |         |         |  |   |         |   |  |       |        |   |  |   |         |  
|Outstanding, October 31, 2007 |  | $       | 85,364  |   |         | $ | 170,913 |         |  | $ | 33,056  |   |  | $     | 51,143 |   |  | $ | 340,476 |  
|Issued during the year        |  |         | 35,310  |   |         |   | 58,605  |         |  |   | 15,722  |   |  |       | 12,463 |   |  |   | 122,100 |  
|Repurchased during the year   |  |         | (5,693  | ) |         |   | (9,744  | )       |  |   | (1,547  | ) |  |       | (4,245 | ) |  |   | (21,229 | )
|Realigned shares              |  |         | 438     |   |         |   | (438    | )       |  |   |        |   |  |       |       |   |  |   |        |  
|                              |  |         |         |   |         |   |         |         |  |   |         |   |  |       |        |   |  |   |         |  
|Outstanding, October 31, 2008 |  | $       | 115,419 |   |         | $ | 219,336 |         |  | $ | 47,231  |   |  | $     | 59,361 |   |  | $ | 441,347 |  
|                              |  |         |         |   |         |   |         |         |  |   |         |   |  |       |        |   |  |   |         |  



|                 |  |                          |         |                     |        |   |                                                    |   |        
|---------------- |  | ------------------------ | ------- | ------------------- | ------ | - | -------------------------------------------------- | - | -------
|                 |  | Share capitaloutstanding |         | Share purchaseloans |        |   | Share capitaloutstanding netof sharepurchase loans
|October 31, 2007 |  | $                        | 340,476 |                     | (3,595 | ) |                                                    | $ | 336,881
|October 31, 2008 |  | $                        | 441,347 |                     | (5,658 | ) |                                                    | $ | 435,689
|                 |  |                          |         |                     |        |   |                                                    |   |        

Share purchase loans are non-interest bearing and are repaid by payroll deductions over a period of
three years. The employee shareholder grants an option to the Company to repurchase the shares in the event of default by the shareholder under the promissory note and grants security in respect of the proceeds of sale under the option.



|13. | ACCUMULATED OTHER COMPREHENSIVE LOSS
|--- | ------------------------------------

Accumulated other comprehensive loss consists of the following:



|                                                                                         |  |      |         |   |      |   |         |  
|---------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                                         |  | 2008 |         |   | 2007 |  
|Balance, beginning of year                                                               |  | $    | (68,943 | ) |      | $ | (38,949 | )
|Transitional amount on adoption of new financial instruments standards                   |  |      |        |   |      |   | 4,889   |  
|Balance at beginning of year, as adjusted                                                |  |      | (68,943 | ) |      |   | (34,060 | )
|Other comprehensive loss for the year:                                                   |  |      |         |   |      |   |         |  
|Loss (gain) on disposal of marketable securities                                         |  |      | 1,744   |   |      |   | (2,841  | )
|Unrealized gain (loss) on investment in marketable securities                            |  |      | (15,755 | ) |      |   | 2,803   |  
|Effect of exchange rate changes during the year                                          |  |      | 68,033  |   |      |   | (34,874 | )
|Tax impact of above items                                                                |  |      | 3,173   |   |      |   | 29      |  
|                                                                                         |  |      |         |   |      |   |         |  
|                                                                                         |  |      | 57,195  |   |      |   | (34,883 | )
|                                                                                         |  |      |         |   |      |   |         |  
|Balance, end of year                                                                     |  | $    | (11,748 | ) |      | $ | (68,943 | )
|                                                                                         |  |      |         |   |      |   |         |  
|Components of accumulated other comprehensive loss are as follows:                       |  |      |         |   |      |   |         |  
|Accumulated foreign exchange losses on translation of self-sustaining foreign operations |  | $    | (5,790  | ) |      | $ | (73,823 | )
|Accumulated unrealized gain (loss) on investments in marketable securities               |  |      | (7,682  | ) |      |   | 6,329   |  
|Tax effect on unrealized loss (gain) on investments in marketable securities             |  |      | 1,724   |   |      |   | (1,449  | )
|                                                                                         |  |      |         |   |      |   |         |  
|Balance, end of year                                                                     |  | $    | (11,748 | ) |      | $ | (68,943 | )
|                                                                                         |  |      |         |   |      |   |         |  
|                                                                                         |  |      |         |   |      |   |         |  



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|14. | LEASE COMMITMENTS
|--- | -----------------



Future minimum lease payments for non-cancelable operating leases with initial or remaining terms of
one year or more are as follows:



|                        |  |   |       
|----------------------- |  | - | ------
|Year ending October 31: |  |  
|2009                    |  | $ | 7,118 
|2010                    |  |   | 12,220
|2011                    |  |   | 11,108
|2012                    |  |   | 10,329
|2013                    |  |   | 4,767 
|2014 and thereafter     |  |   | 20,192
|                        |  |   |       
|                        |  | $ | 65,734
|                        |  |   |       



|15. | OTHER INCOME (EXPENSE)
|--- | ----------------------



|                                                                           |  |      |         |   |      |   |        |  |   |       
|-------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------ |  | - | ------
|                                                                           |  | 2008 |         |   | 2007 |   | 2006  
|Interest income                                                            |  | $    | 20,873  |   |      | $ | 34,469 |  | $ | 23,220
|Foreign exchange gain (loss)                                               |  |      | (53,817 | ) |      |   | 31,992 |  |   | 3,440 
|Equity in earnings of limited liability companies and limited partnerships |  |      | 509     |   |      |   | 971    |  |   | 1,932 
|Gain (loss) on disposal of marketable securities                           |  |      | (1,744  | ) |      |   | 2,841  |  |   | 3,164 
|                                                                           |  |      |         |   |      |   |        |  |   |       
|                                                                           |  | $    | (34,179 | ) |      | $ | 70,273 |  | $ | 31,756
|                                                                           |  |      |         |   |      |   |        |  |   |       



|16. | SUPPLEMENTAL CASH FLOW INFORMATION
|--- | ----------------------------------



|                  |  |      |        |      |   |         |  |   |       
|----------------- |  | ---- | ------ | ---- | - | ------- |  | - | ------
|                  |  | 2008 |        | 2007 |   | 2006   
|Interest paid     |  | $    | 14,828 |      | $ | 11,000  |  | $ | 6,855 
|Interest received |  |      | 32,317 |      |   | 33,266  |  |   | 24,394
|Income taxes paid |  |      | 53,850 |      |   | 153,316 |  |   | 58,011
|                  |  |      |        |      |   |         |  |   |       



|17. | NET CHANGE IN OPERATING ACCOUNTS
|--- | --------------------------------



|                                 |  |      |          |   |      |   |          |      |  |   |          |  
|-------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                 |  | 2008 |          |   | 2007 |   |          | 2006 | 
|Accounts receivable              |  | $    | (266,895 | ) |      | $ | (153,467 | )    |  | $ | (124,721 | )
|Holdbacks receivable             |  |      | (34,956  | ) |      |   | (43,663  | )    |  |   | (13,955  | )
|Accrued benefit asset            |  |      | (159     | ) |      |   | (170     | )    |  |   | (744     | )
|Accounts payable                 |  |      | 167,813  |   |      |   | 162,185  |      |  |   | 83,545   |  
|Accrued liabilities              |  |      | 93,501   |   |      |   | 44,881   |      |  |   | 54,362   |  
|Holdbacks payable                |  |      | 9,594    |   |      |   | 22,759   |      |  |   | 18,481   |  
|Unearned revenue, net            |  |      | 90,672   |   |      |   | 18,499   |      |  |   | 2,997    |  
|Income taxes recoverable/payable |  |      | 67,087   |   |      |   | (95,159  | )    |  |   | 39,467   |  
|                                 |  |      |          |   |      |   |          |      |  |   |          |  
|                                 |  | $    | 126,657  |   |      | $ | (44,135  | )    |  | $ | 59,432   |  
|                                 |  |      |          |   |      |   |          |      |  |   |          |  



|18. | EMPLOYEE BENEFIT PLANS
|--- | ----------------------

Canada

The Company has a defined benefit pension plan, which includes a defined contribution pension plan, for its resident Canadian
employees. Under the defined contribution portion, the employees contributions of up to 5% of their gross salary are matched by the Company. Contributions are required only for employees current services. The combined contributions are
invested by the individual employees, at their discretion, in any of several mutual funds offered by the plan.

The defined benefit portion
provides a benefit based on a percentage of final average earnings and years of service. Independent consultants prepared an actuarial valuation for funding purposes at December 31, 2006 which has been extrapolated to October 31, 2008 and
an actuarial valuation for funding purposes at December 31, 2006 which had been extrapolated to October 31, 2007. The next required valuation is December 31, 2009.



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|18. | EMPLOYEE BENEFIT PLANS (continued)
|--- | ----------------------------------



The reconciliation of the funded status of the defined benefit plan to the amounts recorded in the
financial statements is as follows:



|                               |  |      |        |   |      |   |        |  
|------------------------------ |  | ---- | ------ | - | ---- | - | ------ | -
|                               |  | 2008 |        |   | 2007 |  
|Accrued benefit obligation:    |  |      |        |   |      |   |        |  
|Balance, beginning of year     |  | $    | 17,470 |   |      | $ | 21,660 |  
|Current service cost           |  |      | 150    |   |      |   | 216    |  
|Interest cost                  |  |      | 967    |   |      |   | 1,047  |  
|Benefits paid                  |  |      | (1,604 | ) |      |   | (3,853 | )
|Actuarial (gain) loss          |  |      | (2,057 | ) |      |   | (1,600 | )
|                               |  |      |        |   |      |   |        |  
|Balance, end of year           |  | $    | 14,926 |   |      | $ | 17,470 |  
|                               |  |      |        |   |      |   |        |  
|Plan assets:                   |  |      |        |   |      |   |        |  
|Fair value, beginning of year  |  | $    | 20,173 |   |      | $ | 21,744 |  
|Actual return on plan assets   |  |      | (5,853 | ) |      |   | 1,399  |  
|Employer contributions         |  |      | 28     |   |      |   | 835    |  
|Employees contributions       |  |      | 38     |   |      |   | 48     |  
|Benefits paid                  |  |      | (1,604 | ) |      |   | (3,853 | )
|                               |  |      |        |   |      |   |        |  
|Fair value, end of year        |  | $    | 12,782 |   |      | $ | 20,173 |  
|                               |  |      |        |   |      |   |        |  
|Accrued benefit asset:         |  |      |        |   |      |   |        |  
|Funded status                  |  | $    | (2,144 | ) |      | $ | 2,703  |  
|Unamortized net actuarial loss |  |      | 7,033  |   |      |   | 2,027  |  
|                               |  |      |        |   |      |   |        |  
|Accrued benefit asset          |  | $    | 4,889  |   |      | $ | 4,730  |  
|                               |  |      |        |   |      |   |        |  

During the year ended October 31, 2008, benefits paid out of the defined benefit plan were
$1,604 (2007 - $3,853; 2006 - $1,554). The percentage of the fair value of plan assets by major category is as follows:



|                |  |       |   |  |       |  
|--------------- |  | ----- | - |  | ----- | -
|                |  | 2008  |   |  | 2007  |  
|Equities        |  | 53.7  | % |  | 54.6  | %
|Debt securities |  | 40.7  | % |  | 33.1  | %
|Cash and other  |  | 5.6   | % |  | 12.3  | %
|                |  |       |   |  |       |  
|                |  | 100.0 | % |  | 100.0 | %
|                |  |       |   |  |       |  

Significant actuarial assumptions used to determine both the accrued benefit obligation and the
benefit cost are as follows (weighted average):



|                                                 |  |      |   |  |      |  
|------------------------------------------------ |  | ---- | - |  | ---- | -
|                                                 |  | 2008 |   |  | 2007 |  
|Discount rate                                    |  | 7.25 | % |  | 5.75 | %
|Expected long-term rate of return on plan assets |  | 6.25 | % |  | 6.25 | %
|Rate of compensation increase                    |  | 3.00 | % |  | 3.00 | %
|                                                 |  |      |   |  |      |  

Total cash amounts recognized as paid or payable by the Company to both the defined contribution
and defined benefit portions of the pension plan for the year ended October 31, 2008 were $3,741 (2007 - $5,187; 2006 - $5,195).

The
elements of the Companys defined benefit plan costs recognized in the year are as follows:



|                                        |  |      |        |   |      |   |        |      |  |   |        |  
|--------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                        |  | 2008 |        |   | 2007 |   |        | 2006 | 
|Current service cost (employer portion) |  | $    | 112    |   |      | $ | 168    |      |  | $ | 163    |  
|Interest cost                           |  |      | 967    |   |      |   | 1,047  |      |  |   | 1,103  |  
|Expected return on plan assets          |  |      | (1,213 | ) |      |   | (1,317 | )    |  |   | (1,387 | )
|Transfers                               |  |      |       |   |      |   |       |      |  |   |       |  
|Amortization of transitional asset      |  |      |       |   |      |   |       |      |  |   | (1,163 | )
|Amortization of net actuarial loss      |  |      | 3      |   |      |   | 767    |      |  |   | 1,429  |  
|                                        |  |      |        |   |      |   |        |      |  |   |        |  
|Net benefit plan cost (income)          |  | $    | (131   | ) |      | $ | 665    |      |  | $ | 145    |  
|                                        |  |      |        |   |      |   |        |      |  |   |        |  



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|18. | EMPLOYEE BENEFIT PLANS (continued)
|--- | ----------------------------------



The benefits expected to be paid under the defined benefit pension plan are as follows:



|                        |  |   |       
|----------------------- |  | - | ------
|Year ending October 31: |  |  
|2009                    |  | $ | 1,544 
|2010                    |  |   | 1,617 
|2011                    |  |   | 1,623 
|2012                    |  |   | 1,608 
|2013                    |  |   | 1,599 
|2014 and thereafter     |  |   | 8,943 
|                        |  |   |       
|                        |  | $ | 16,934
|                        |  |   |       

United States

The Company has a qualified defined contribution 401(k) plan which covers substantially all resident United States salaried employees. Eligible
participants may contribute a portion of their annual salary, subject to certain limitations. The Company matches 50% of the first 8% that a participant contributes of compensation. The participants contributions are 100% vested and
non-forfeitable. The Companys matching contributions vest over a seven-year period. The Companys contributions in 2008 totaled $3,223 (2007 - $2,780; 2006 - $2,123).



|19. | FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
|--- | ---------------------------------------------------



| | (a) | Risk Management Activities
| | --- | --------------------------

Overview

The Company has exposure to market risk, credit risk and liquidity risk from its use of financial instruments. Market risk is the risk
of loss that results from changes in market factors, including foreign exchange risk, interest rate risk, and equity price risk. The Company monitors the risks associated with its financial instruments and manages them to the extent possible.

Foreign Exchange Risk

The Company currently earns revenue and incurs expenses in U.S. dollars and Canadian dollars. The Company uses the U.S. dollar bank loans as outlined in Note 9, to manage its exposure to foreign exchange risk on its United States dollar
denominated assets and liabilities. The total loan balance is maintained at a level approximating the forecasted financial position of the Companys U.S. dollar net assets at the end of the next fiscal year, but is not documented and accounted
for as a hedge of the Companys net investment in self-sustaining U.S. subsidiaries. Management monitors the forecasted financial position of the Companys U.S. dollar net assets on a periodic basis throughout the course of the year and
adjusts the total loan balance accordingly. The Company does not use its U.S. dollar bank loans for speculative purposes.

A 10%
strengthening of the Canadian dollar against the U.S. dollar at October 31, 2008 would have increased net earnings and retained earnings by $30,114 (2007 - $20,217) due to a reduction in the value of the Companys U.S. dollar bank
loans, and increased other comprehensive loss and accumulated other comprehensive loss by $35,157 (2007: $19,108) due to a reduction in the value of the Companys U.S. dollar net assets. A 10% weakening of the Canadian dollar against the U.S.
dollar at October 31, 2008 and 2007 would have had the equal but opposite effect.

Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arise principally from the Companys cash and cash equivalents, short-term deposits and receivables, including costs and estimated earnings in excess of billings. The carrying amount of financial assets represents the maximum
credit exposure.



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|19. | FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
|--- | ---------------------------------------------------------------



Credit Risk (Continued)

The Company is exposed to credit risk in receivables arising from changes in the credit quality of its customers which could affect the Companys
earnings. The Company does not have a significant exposure of credit risk to any individual customer, or customers in any geographic area or industry. The Company performs an assessment of the financial capacity of each potential customer prior to
the submission of a bid or other proposal for new work. This assessment confirms that the potential customer has sufficient funds either through its own equity, financing from financial institutions with high credit-ratings assigned by
international-credit rating agencies, or a combination thereof, to pay the Company the contract sum and change orders as the work progresses. On occasion, some form of financial security, either a letter of credit or some other deposit, is required
prior to the commencement of work on the project. The Company also performs assessments of the financial capacity of its existing customers when contractual conditions are violated, including failing to adhere to payment schedules, or when other
objective evidence is received that a customer may default in whole or in part on amounts owed to the Company. Further, the Company has performed an assessment of the financial capacity of certain existing customers that have been or may be
significantly impacted by the tightening of the global credit markets resulting from the global financial crisis of 2008. At October 31, 2008, $112,007 of trade accounts receivable are considered past due, which is defined as amounts beyond
contractually-established credit terms and conditions for the respective customers. The Company has established an allowance for doubtful accounts that it believes is sufficient to address the credit risk in receivables.

In accordance with its investment policy, the Company invests in Government of Canada and provincial treasury bills, U.S. Government treasury bills,
t-notes, t-bonds, and Federal Agency securities, short-term Canadian and provincial government debt, bankers acceptance notes, term deposits of Schedule 1 Banks, commercial paper rated R-1 High to R-1 Low or A1/P-1 or better, repurchase
agreements, money market funds and negotiable certificates of deposit. The credit risk on cash and cash equivalents, short-term deposits and long-term investments is limited because the counterparties are governments, banks and corporations with
high credit-ratings assigned by international-credit rating agencies.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages liquidity risk by
monitoring actual and projected cash flows on a weekly basis to ensure that it will always have sufficient liquidity to meet its liabilities when due, both under normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Companys reputation.

The following are the contractual maturities, excluding interest payments, reflecting undiscounted
disbursements of the Companys financial liabilities:



|                       |  |                |           |                       |   |                 |  |           |           |           |   |                  |  |   |   |  |   |  
|---------------------- |  | -------------- | --------- | --------------------- | - | --------------- |  | --------- | --------- | --------- | - | ---------------- |  | - | - |  | - | -
|October 31, 2008       |  | Carryingamount |           | Contractualcash flows |   | Less than 1year |  | 1-3 years |           | 3-5 years |   | More than5 years
|Trade accounts payable |  | $              | 668,361   |                       | $ | 668,361         |  | $         | 668,361   |           | $ |                 |  | $ |  |  | $ | 
|Accrued liabilities    |  |                | 321,840   |                       |   | 321,840         |  |           | 321,840   |           |   |                 |  |   |  |  |   | 
|Bank loans             |  |                | 321,405   |                       |   | 301,125         |  |           | 301,125   |           |   |                 |  |   |  |  |   | 
|Holdbacks payable      |  |                | 354,810   |                       |   | 354,810         |  |           | 287,980   |           |   | 66,830           |  |   |  |  |   | 
|                       |  |                |           |                       |   |                 |  |           |           |           |   |                  |  |   |   |  |   |  
|                       |  | $              | 1,666,416 |                       | $ | 1,646,136       |  | $         | 1,579,306 |           | $ | 66,830           |  | $ |  |  | $ | 
|                       |  |                |           |                       |   |                 |  |           |           |           |   |                  |  |   |   |  |   |  
|                       |  |                |           |                       |   |                
|October 31, 2007       |  | Carryingamount |           | Contractualcash flows |   | Less than 1year |  | 1-3 years |           | 3-5 years |   | More than5 years
|Trade accounts payable |  | $              | 562,300   |                       | $ | 562,300         |  | $         | 562,300   |           | $ |                 |  | $ |  |  | $ | 
|Accrued liabilities    |  |                | 225,749   |                       |   | 225,749         |  |           | 225,749   |           |   |                 |  |   |  |  |   | 
|Bank loans             |  |                | 202,166   |                       |   | 202,166         |  |           | 202,166   |           |   |                 |  |   |  |  |   | 
|Holdbacks payable      |  |                | 257,217   |                       |   | 257,217         |  |           | 199,981   |           |   | 57,236           |  |   |  |  |   | 
|                       |  |                |           |                       |   |                 |  |           |           |           |   |                  |  |   |   |  |   |  
|                       |  | $              | 1,247,432 |                       | $ | 1,247,432       |  | $         | 1,190,196 |           | $ | 57,236           |  | $ |  |  | $ | 
|                       |  |                |           |                       |   |                 |  |           |           |           |   |                  |  |   |   |  |   |  



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##### Table of Contents

PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|19. | FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
|--- | ---------------------------------------------------------------



In addition to the amounts noted above, interest payments over the life of the bank loans are as
follows:



|                                |  |                       |        |                 |   |           |  |           |   |                  |   |   |  |   |  
|------------------------------- |  | --------------------- | ------ | --------------- | - | --------- |  | --------- | - | ---------------- | - | - |  | - | -
|October 31, 2008                |  | Contractualcash flows |        | Less than 1year |   | 1-3 years |  | 3-5 years |   | More than5 years
|Interest payments - bank loans* |  | $                     | 4,879  |                 | $ | 4,879     |  | $         |  |                  | $ |  |  | $ | 
|                                |  |                       |        |                 |   |           |  |           |   |                  |   |   |  |   |  
|                                |  |                       |        |                 |  
|October 31, 2007                |  | Contractualcash flows |        | Less than 1year |   | 1-3 years |  | 3-5 years |   | More than5 years
|Interest payments - bank loans* |  | $                     | 10,135 |                 | $ | 10,135    |  | $         |  |                  | $ |  |  | $ | 
|                                |  |                       |        |                 |   |           |  |           |   |                  |   |   |  |   |  

| | * | Interest rates on the bank loans vary with the banks U.S. Base Rate or the London Interbank Offered Rate (LIBOR) plus 0.33% at the Companys option. The Company has
chosen the LIBOR rate plus 0.33% on all bank loans. The Company has assumed that the LIBOR rate will be at an average of 1.29% (2007 - 4.63%) over the remaining terms of the loans, and has prepared its estimate of interest commitments for these
loans on this basis.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Interest Rate Risk

The Company does not believe that fluctuations in interest rates have a material impact on its financial condition or results of operations. The Company manages against increases in interest rates under its bank loan
facility by hypothecating short-term deposits in excess of the bank loans in favour of the bank. These short-term deposits have maturities which approximate the maturities of the bank loans and as a result any increase in interest expense as a
result of increases in interest rates is offset by a corresponding increase in investment income.

Equity Price Risk

Equity price risk arises from equity securities held by the Company. The Companys investments in equity securities are held as part of its
investments in marketable securities, and as part of the plan assets of the defined benefit portion of the defined benefit pension plan, as described in Note 18.

Management of the Company monitors and adjusts the mix of debt and equity securities it holds based on market expectations, the Companys investment policies and guidelines, and guidance received from external
advisors. The Investment Committee of the Board of Directors of the Company recommends investment objectives and criteria to the Board. The Board approves the investment objectives and criteria and the aggregate amount of funds to be placed in each
investment category. The Committee is responsible for obtaining investment advice, authorizing investments, monitoring performance, and reports to the Board on a quarterly basis.

The primary investment objectives of the Companys investments in marketable securities are safety of principal and provision of secure and assured
income. The Company benchmarks the rate of return from its investments in marketable securities based on a mix of financial market indices over a long-term market cycle.

The percentage of the fair value of the investments in marketable securities by major category is as follows:



|                |  |       |   |  |       |  
|--------------- |  | ----- | - |  | ----- | -
|                |  | 2008  |   |  | 2007  |  
|Equities        |  | 65.3  | % |  | 73.7  | %
|Debt securities |  | 30.3  | % |  | 21.9  | %
|Cash and other  |  | 4.4   | % |  | 4.4   | %
|                |  |       |   |  |       |  
|                |  | 100.0 | % |  | 100.0 | %
|                |  |       |   |  |       |  

The equity securities above are listed on the following major exchanges (based on fair values):



|                        |  |       |   |  |       |  
|----------------------- |  | ----- | - |  | ----- | -
|                        |  | 2008  |   |  | 2007  |  
|Toronto Stock Exchange  |  | 91.3  | % |  | 66.6  | %
|New York Stock Exchange |  | 6.9   | % |  | 17.9  | %
|International - various |  | 1.8   | % |  | 15.5  | %
|                        |  |       |   |  |       |  
|                        |  | 100.0 | % |  | 100.0 | %
|                        |  |       |   |  |       |  

A three per cent increase in the S&P/TSX Capped Composite Index, a one percent increase in the
S&P 500 Index, and a one percent increase in the MSCI EAFE Net Index would have increased other comprehensive income by $1,442 after tax (2007 - $1,214 increase); an equal change in the opposite direction would have decreased other comprehensive
income by $1,442 after tax (2007 - $1,214 decrease).



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##### Table of Contents

PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|19. | FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)
|--- | ---------------------------------------------------------------



| | (b) | Fair Value of Financial Instruments
| | --- | -----------------------------------

Fair value is
used to measure financial assets that are held for trading or available for sale, financial liabilities that are held for trading and all derivative financial instruments. Other financial assets such as loans and receivables and investments that are
held to maturity and other financial liabilities are measured at amortized cost.

Cash and cash equivalents, short term deposits, accounts
receivable, holdbacks receivable, accounts payable, accrued liabilities, bank loans, and holdbacks payable are recorded at amortized cost. Investments in marketable securities, included in long-term investments, are classified as available for sale
securities and are recorded at fair value with changes in the fair value of these securities recorded as other comprehensive income. Investments held-to-maturity are recorded at amortized cost.

Counterparty confirmations and discounted cash flow analysis, based on market conditions and risks existing at yearend, are used to determine the fair
value of the Companys financial instruments. All methods of fair value measurement result in a general approximation of value and such value may never actually be realized.

The fair value of cash and cash equivalents, short term deposits, accounts receivable, accounts payable, and accrued liabilities approximate their
carrying amounts due to the short term nature of these instruments. Bank loans approximate their carrying amounts as they bear floating rates of interest.

The fair value of long term holdbacks receivable and payable approximate their carrying amounts.

The fair
value of marketable securities as at October 31, 2008 is $78,107 (2007 - $91,593).



|20. | CAPITAL MANAGEMENT
|--- | ------------------

The Companys
objectives in managing capital are to ensure sufficient liquidity to (a) fund day-to-day operations; (b) secure necessary credit facilities, such as surety bonds and letters of credit, to complete the Companys backlog of incomplete
work under contract and bid for new projects; (c) pursue strategic business opportunities, including acquisitions and expansion into new geographic markets; and (d) share-related transactions, including the repurchase of share capital and
the provision of returns to its shareholders.

The Company defines capital that it manages as the aggregate of its shareholders
equity, which is comprised of share capital, retained earnings, and accumulated other comprehensive loss. The Company manages its capital structure and makes adjustments to it in response to general economic conditions, the risk characteristics of
incomplete work under contract, and the Companys working capital requirements. In order to maintain or adjust its capital structure, the Company, upon approval of its Board of Directors, may issue or repay debt, issue or repurchase shares, or
pay dividends. The Board of Directors reviews and approves any material transaction out of the ordinary course of business, including proposals on acquisitions or other major investments or divestitures, as well as capital and operating budgets.

The primary non-GAAP measures monitored by the Company to manage its capital are the current ratio, funded debt to EBITDA ratio, and funded
debt to shareholder equity ratio, as defined by its restrictive covenants under its bank loans and lines of credit as described in Note 10. The Company targets budgeted capital to ensure that, at a minimum, it achieves these ratios.



|21. | SEGMENT INFORMATION
|--- | -------------------

The Company operates in
the construction industry and performs construction services in Canada, the United States and the Bahamas for a wide variety of public and private clients. The Companys operations are categorized into four industry segments: Buildings 
Canada, Buildings  U.S., Heavy Industrial  Canada, and Heavy Industrial  U.S. (2007 & 2006  a fifth industry segment, Heavy Civil, was reportable). The Buildings segments performs construction services for commercial
and institutional buildings, including construction of shopping centers, educational facilities, airports, light civil structures, hospitals, museums, sporting and entertainment facilities, hotels, light industrial facilities, multifamily
condominiums and apartments, seniors facilities, and office buildings. The Heavy Industrial segment performs construction, shutdown and maintenance services for manufacturing, petrochemical, oil and gas and mine processing facilities, chemical
plants, forestry projects and power plants. The Heavy Civil segment performs construction services for roadways, bridges, tunnels, large diameter pipelines, water and wastewater treatment facilities, dams and mine site preparation.



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##### Table of Contents

PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|21. | SEGMENT INFORMATION (continued)
|--- | -------------------------------



Transactions between segments are recorded at the exchange amount. The accounting policies for the
reportable operating segments are those outlined in Note 1, Significant Accounting Policies.



|                                                  |  |                     |            |   |                 |   |            |                         |  |   |                           |   |  |   |          |   |                   |   |          |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  
|------------------------------------------------- |  | ------------------- | ---------- | - | --------------- | - | ---------- | ----------------------- |  | - | ------------------------- | - |  | - | -------- | - | ----------------- | - | -------- | - |  | - | ---------- | - |  | - | -------- | - |  | -- | - |  | - | ---------- | -
|                                                  |  | Reportable Segments |            |   | Other (a)       |   |            | Total                   |  |   | ConsolidatingEliminations |   |  |   |          |   | ConsolidatedTotal |  
|October 31, 2008                                  |  | Buildings -Canada   |            |   | Buildings -U.S. |   |            | HeavyIndustrial -Canada |  |   | HeavyIndustrial -U.S.     |   |  |   |          |   |                  
|Contract revenues                                 |  | $                   | 2,845,471  |   |                 | $ | 1,475,076  |                         |  | $ | 650,013                   |   |  | $ | 483,876  |   |                   | $ | 382,990  |   |  | $ | 5,837,426  |   |  | $ |         |   |  |    |   |  | $ | 5,837,426  |  
|Contract costs                                    |  |                     | (2,513,752 | ) |                 |   | (1,354,438 | )                       |  |   | (532,484                  | ) |  |   | (379,000 | ) |                   |   | (327,844 | ) |  |   | (5,107,518 | ) |  |   | 123,502  |   |  | (b | ) |  |   | (4,984,016 | )
|                                                  |  |                     |            |   |                 |   |            |                         |  |   |                           |   |  |   |          |   |                   |   |          |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  
|Gross profit                                      |  |                     | 331,719    |   |                 |   | 120,638    |                         |  |   | 117,529                   |   |  |   | 104,876  |   |                   |   | 55,146   |   |  |   | 729,908    |   |  |   | 123,502  |   |  |    |   |  |   | 853,410    |  
|Indirect and administrative expenses              |  |                     | (48,298    | ) |                 |   | (39,619    | )                       |  |   | (28,821                   | ) |  |   | (12,861  | ) |                   |   | (10,154  | ) |  |   | (139,753   | ) |  |   | (303,885 | ) |  | (c | ) |  |   | (443,638   | )
|Gain on disposal of property, plant and equipment |  |                     |           |   |                 |   |           |                         |  |   |                          |   |  |   |         |   |                   |   |         |   |  |   |           |   |  |   | 1,211    |   |  |    |   |  |   | 1,211      |  
|                                                  |  |                     |            |   |                 |   |            |                         |  |   |                           |   |  |   |          |   |                   |   |          |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  
|Operating profit (loss)                           |  | $                   | 283,421    |   |                 | $ | 81,019     |                         |  | $ | 88,708                    |   |  | $ | 92,015   |   |                   | $ | 44,992   |   |  | $ | 590,155    |   |  | $ | (179,172 | ) |  |    |   |  | $ | 410,983    |  
|                                                  |  |                     |            |   |                 |   |            |                         |  |   |                           |   |  |   |          |   |                   |   |          |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  
|Total assets                                      |  | $                   | 1,263,791  |   |                 | $ | 501,478    |                         |  | $ | 214,552                   |   |  | $ | 241,166  |   |                   | $ | 171,798  |   |  | $ | 2,392,785  |   |  | $ | 681,892  |   |  | (d | ) |  | $ | 3,074,677  |  
|                                                  |  |                     |            |   |                 |   |            |                         |  |   |                           |   |  |   |          |   |                   |   |          |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  



|                                                  |  |                     |            |   |                       |   |            |                         |  |   |             |   |  |                           |          |   |  |   |          |                   |  |   |         |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  
|------------------------------------------------- |  | ------------------- | ---------- | - | --------------------- | - | ---------- | ----------------------- |  | - | ----------- | - |  | ------------------------- | -------- | - |  | - | -------- | ----------------- |  | - | ------- | - |  | - | ---------- | - |  | - | -------- | - |  | -- | - |  | - | ---------- | -
|                                                  |  | Reportable Segments |            |   | HeavyIndustrial -U.S. |   |            | Other (a)               |  |   | Total       |   |  | ConsolidatingEliminations |          |   |  |   |          | ConsolidatedTotal | 
|October 31, 2007                                  |  | Buildings -Canada   |            |   | Buildings -U.S.       |   |            | HeavyIndustrial -Canada |  |   | Heavy Civil |   |  |                           |          |   |  |  
|Contract revenues                                 |  | $                   | 2,109,443  |   |                       | $ | 1,443,802  |                         |  | $ | 578,529     |   |  | $                         | 509,260  |   |  | $ | 411,918  |                   |  | $ | 12,397  |   |  | $ | 5,065,349  |   |  | $ |         |   |  |    |   |  | $ | 5,065,349  |  
|Contract costs                                    |  |                     | (1,865,446 | ) |                       |   | (1,338,512 | )                       |  |   | (473,959    | ) |  |                           | (468,303 | ) |  |   | (375,932 | )                 |  |   | (13,053 | ) |  |   | (4,535,205 | ) |  |   | 65,489   |   |  | (b | ) |  |   | (4,469,716 | )
|                                                  |  |                     |            |   |                       |   |            |                         |  |   |             |   |  |                           |          |   |  |   |          |                   |  |   |         |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  
|Gross profit                                      |  |                     | 243,997    |   |                       |   | 105,290    |                         |  |   | 104,570     |   |  |                           | 40,957   |   |  |   | 35,986   |                   |  |   | (656    | ) |  |   | 530,144    |   |  |   | 65,489   |   |  |    |   |  |   | 595,633    |  
|Indirect and administrative expenses              |  |                     | (44,146    | ) |                       |   | (31,454    | )                       |  |   | (25,770     | ) |  |                           | (10,478  | ) |  |   | (10,446  | )                 |  |   | (244    | ) |  |   | (122,538   | ) |  |   | (231,678 | ) |  | (c | ) |  |   | (354,216   | )
|Gain on disposal of property, plant and equipment |  |                     |           |   |                       |   |           |                         |  |   |            |   |  |                           |         |   |  |   |         |                   |  |   |        |   |  |   |           |   |  |   | 1,576    |   |  |    |   |  |   | 1,576      |  
|                                                  |  |                     |            |   |                       |   |            |                         |  |   |             |   |  |                           |          |   |  |   |          |                   |  |   |         |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  
|Operating profit (loss)                           |  | $                   | 199,851    |   |                       | $ | 73,836     |                         |  | $ | 78,800      |   |  | $                         | 30,479   |   |  | $ | 25,540   |                   |  | $ | (900    | ) |  | $ | 407,606    |   |  | $ | (164,613 | ) |  |    |   |  | $ | 242,993    |  
|                                                  |  |                     |            |   |                       |   |            |                         |  |   |             |   |  |                           |          |   |  |   |          |                   |  |   |         |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  
|Total assets                                      |  | $                   | 859,848    |   |                       | $ | 362,363    |                         |  | $ | 229,194     |   |  | $                         | 149,490  |   |  | $ | 133,859  |                   |  | $ | 14,829  |   |  | $ | 1,749,583  |   |  | $ | 513,589  |   |  | (d | ) |  | $ | 2,263,172  |  
|                                                  |  |                     |            |   |                       |   |            |                         |  |   |             |   |  |                           |          |   |  |   |          |                   |  |   |         |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  
|                                                  |  |                     |            |   |                       |   |           
|                                                  |  | Reportable Segments |            |   | HeavyIndustrial -U.S. |   |            | Other (a)               |  |   | Total       |   |  | ConsolidatingEliminations |          |   |  |   |          | ConsolidatedTotal | 
|October 31, 2006                                  |  | Buildings -Canada   |            |   | Buildings -U.S.       |   |            | HeavyIndustrial -Canada |  |   | Heavy Civil |   |  |                           |          |   |  |  
|Contract revenues                                 |  | $                   | 1,766,924  |   |                       | $ | 1,217,473  |                         |  | $ | 506,677     |   |  | $                         | 431,380  |   |  | $ | 257,950  |                   |  | $ | 27,880  |   |  | $ | 4,208,284  |   |  | $ |         |   |  |    |   |  | $ | 4,208,284  |  
|Contract costs                                    |  |                     | (1,587,456 | ) |                       |   | (1,153,989 | )                       |  |   | (391,289    | ) |  |                           | (395,045 | ) |  |   | (230,000 | )                 |  |   | (16,133 | ) |  |   | (3,773,912 | ) |  |   | 51,091   |   |  | (b | ) |  |   | (3,722,821 | )
|                                                  |  |                     |            |   |                       |   |            |                         |  |   |             |   |  |                           |          |   |  |   |          |                   |  |   |         |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  
|Gross profit                                      |  |                     | 179,468    |   |                       |   | 63,484     |                         |  |   | 115,388     |   |  |                           | 36,335   |   |  |   | 27,950   |                   |  |   | 11,747  |   |  |   | 434,372    |   |  |   | 51,091   |   |  |    |   |  |   | 485,463    |  
|Indirect and administrative expenses              |  |                     | (40,386    | ) |                       |   | (29,238    | )                       |  |   | (20,854     | ) |  |                           | (9,229   | ) |  |   | (7,509   | )                 |  |   | (151    | ) |  |   | (107,367   | ) |  |   | (179,826 | ) |  | (c | ) |  |   | (287,193   | )
|Gain on disposal of property, plant and equipment |  |                     |           |   |                       |   |           |                         |  |   |            |   |  |                           |         |   |  |   |         |                   |  |   |        |   |  |   |           |   |  |   | 2,300    |   |  |    |   |  |   | 2,300      |  
|                                                  |  |                     |            |   |                       |   |            |                         |  |   |             |   |  |                           |          |   |  |   |          |                   |  |   |         |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  
|Operating profit (loss)                           |  | $                   | 139,082    |   |                       | $ | 34,246     |                         |  | $ | 94,534      |   |  | $                         | 27,106   |   |  | $ | 20,441   |                   |  | $ | 11,596  |   |  | $ | 327,005    |   |  | $ | (126,435 | ) |  |    |   |  | $ | 200,570    |  
|                                                  |  |                     |            |   |                       |   |            |                         |  |   |             |   |  |                           |          |   |  |   |          |                   |  |   |         |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  
|Total assets                                      |  | $                   | 661,421    |   |                       | $ | 307,978    |                         |  | $ | 222,912     |   |  | $                         | 130,149  |   |  | $ | 85,804   |                   |  | $ | 12,180  |   |  | $ | 1,420,444  |   |  | $ | 429,147  |   |  | (d | ) |  | $ | 1,849,591  |  
|                                                  |  |                     |            |   |                       |   |            |                         |  |   |             |   |  |                           |          |   |  |   |          |                   |  |   |         |   |  |   |            |   |  |   |          |   |  |    |   |  |   |            |  

|(a) | In all years, consists of those operating segments not meeting the quantitative thresholds to qualify as a reportable operating segment. The sources of contract revenues are from
the Companys heavy civil operations in the United States and building operations in the Bahamas (2007 & 2006 - Building operations in the Bahamas).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | In all years, consolidating eliminations for intersegment transactions.
|--- | -----------------------------------------------------------------------

|(c) | In all years, consist of corporate general and administrative expenses, depreciation, and bonuses not allocated to reportable segments for internal reporting purposes.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | In all years, corporate assets consist principally of cash and cash equivalents, short-term deposits, accounts receivable, long-term investments and property, plant and equipment.
Capital expenditures are not allocated to reportable segments for internal reporting purposes.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|21. | SEGMENT INFORMATION (continued)
|--- | -------------------------------



Information concerning principal geographic areas is as follows:



|                      |  |      |           |      |   |           |  |   |          
|--------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                      |  | 2008 |           | 2007 |   | 2006     
|Contract Revenues     |  |      |           |      |   |           |  |   |          
|Canada                |  | $    | 3,495,484 |      | $ | 2,687,972 |  | $ | 2,273,601
|United States         |  |      | 2,339,950 |      |   | 2,364,980 |  |   | 1,906,803
|Bahamas               |  |      | 1,992     |      |   | 12,397    |  |   | 27,880   
|                      |  |      |           |      |   |           |  |   |          
|                      |  | $    | 5,837,426 |      | $ | 5,065,349 |  | $ | 4,208,284
|                      |  |      |           |      |   |           |  |   |          
|Long-Lived Assets (i) |  |      |           |      |   |           |  |   |          
|Canada                |  | $    | 103,469   |      | $ | 101,823   |  | $ | 87,614   
|United States         |  |      | 69,068    |      |   | 39,962    |  |   | 36,407   
|                      |  |      |           |      |   |           |  |   |          
|                      |  | $    | 172,537   |      | $ | 141,785   |  | $ | 124,021  
|                      |  |      |           |      |   |           |  |   |          

| | (i) | Long-lived assets consist of property, plant and equipment, intangible assets and goodwill.
| | --- | -------------------------------------------------------------------------------------------



|22. | OTHER MATTERS
|--- | -------------



| | (a) | Legal or Arbitration Proceedings
| | --- | --------------------------------

On August 5,
2005 PCL Civil Constructors, Inc. (Civil) commenced a civil action against a number of engineering firms, claiming negligence in design and peer review in respect of the superstructure design for the Ringling Causeway Bridge in Sarasota,
Florida. Civil was seeking damages in excess of US$15,000. One of the engineering firms, Earth Tech, Inc., filed a counterclaim against Civil for an unspecified amount, believed to be estimated by Earth Tech, Inc. at US$400. On May 28, 2008 the
parties reached a settlement agreement to pay Civil US$9,500 to settle all claims. Civil received full payment in the summer of 2008. Recovery of the claim proceeds have been accrued in the Companys fiscal 2008 financial statements.

On February 2, 2006, PCL Construction Services, Inc. (Services) commenced a civil action in the United States Court of
Federal Claims arising out of a contract performed for the United States Bureau of Reclamation for the construction of a visitors center and parking structure at Hoover Dam, commencing in April, 1994. This matter includes a claim for US$2,400
for additional costs as a result of changes in the scope of the contract and US$19,700 relating to delays and disruptions by the government. The government filed a motion to dismiss this claim on the doctrine of res judicata and on October 22,
2008, Services claim was dismissed. On December 10, 2008, the Company filed a notice of appeal. The Company is unable to determine the outcome of the appeal at this time.

On October 25, 2005 a Statement of Claim was filed in the Ontario Superior Court of Justice by The Bank of Nova Scotia, Scotia Realty Limited and SPE
Operations Ltd. (collectively the Owners) against PCL Constructors Canada Inc. (PCL Canada), Sayers & Associates Limited (Sayers), WZMH Architects, The Mitchell Partnership Inc. and Quinn Dressel
Associates. On December 28, 2005, the Owners issued a Fresh Statement of Claim in the action adding PCL Constructors Eastern Inc. (PCL Eastern) and The Webb Zerafa Menkes Housden Partnership as defendants to the action. The Owners
are now seeking to add PCL Construction Group Inc. and PCL Construction Resources Inc. as defendants in this action, which motion is being opposed by these corporations. The Owners are seeking $35,000 in damages plus interest and costs related to
this action for alleged deficiencies in the design and construction of the water pipe systems in a 67 storey commercial high rise located in the City of Toronto known as Scotia Plaza. The PCL companies involved in this litigation intend
to vigorously defend themselves against this claim and have asserted claims for insurance coverage and for indemnity against its co-defendants. The litigation is currently in the discovery stage. The Company is currently unable to determine the
outcome of the litigation and no reserves have been established in connection with this claim.

On April 3, 2007, Teton Industrial
Construction, Inc. (Teton) commenced a civil action against a project Client for an amount in excess of US$40,000 for damages attributed to inadequate design, design changes, work disruption, late delivered materials and substantial
scope growth on a power plant project in Vineyard, Utah. The Client filed a countersuit against Teton for an amount in excess of US$15,000 for liquidated and actual damages. The parties, by court order, participated in mediation in 2008. On
November 7, 2008 the parties reached a settlement agreement wherein the project Client agreed to pay Teton US$29,187 to settle all claims. Teton received payment of US$29,187 from the project Client on December 10, 2008. Recovery of the
claim proceeds have been accrued in the Companys fiscal 2008 financial statements.



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|22. | OTHER MATTERS (continued)
|--- | -------------------------



PCL Civil Constructors, Inc. (Civil) is seeking additional compensation of approximately
$22,000 under a construction contract for costs incurred arising from the failure of certain bridge piers on a project being constructed by Civil in Tampa, Florida. The failure was caused by inadequate design and Civil was engaged by the project
Owner to perform the required pier remediation. The Owner has filed a lawsuit against certain project designers for the damages caused by the design failures, including the required remediation efforts. On December 11, 2007 an amended complaint
was filed by the Owner adding Civil as party to its lawsuit, seeking a declaration from the court of the amount owing by the Owner to Civil. PCL has now been dismissed from this lawsuit without prejudice. PCL is in the process of presenting a final
accounting to the Owner. Following the submission of the final accounting, the Owner and PCL will submit their disputes to a non-binding Dispute Resolution Board (DRB) per the requirements of the parties contract. This process will
begin in early 2009, and it is unclear when the DRB will render its final recommendations. If the parties are not able to resolve claims following the DRBs recommendation, the contract calls for litigation of remaining disputes. The
Company has accrued contract revenue to the extent that the contract price has been adjusted by change orders signed by the Owner and Owner directed changes for which collection is probable. However, no amounts have been accrued for adjustments to
the contract price where change orders have not been signed by the Owner or where Owner directed changes have not been received. The Company believes that the ultimate resolution of this matter will not have a material adverse effect on the
Companys financial position, results of operations, or liquidity.

The Company is party to various other pending legal proceedings in
the ordinary course of business. We do not believe that any resulting liabilities for such other legal proceedings, beyond amounts reserved, will materially affect the financial position, future results of operation, or future cash flows of the
Company.

The Company is party to various negotiations and legal proceedings regarding contractual disputes and injury and other claims on
its construction projects in the normal course of business. The Company is also contingently liable for commitments and performance guarantees arising from its construction contracts. Management believes that the outcome of such negotiations and
legal proceedings, as well as commitments and performance guarantees, will not have a material adverse effect on the Companys financial position, results of operations, or liquidity.

During the year ended October 31, 2008, the Company recognized additional contract revenues of $39,913 (2007 - $25; 2006 - $3,461) resulting from
construction claims awarded or received on construction projects.



| | (b) | Subsequent Event
| | --- | ----------------

In January 2009, the Company
declared dividends on its common shares in the amount of $11.00 per share to shareholders of record on January 31, 2009. The dividends, totaling $266,848, will be paid in February 2009.



|23. | INVESTMENT IN JOINT VENTURES, LIMITED LIABILITY COMPANIES AND LIMITED PARTNERSHIPS
|--- | ----------------------------------------------------------------------------------



| | (a) | Investment in Limited Liability Companies and Limited Partnerships
| | --- | ------------------------------------------------------------------

At October 31, 2008, the Company had investments of $1,090 (2007 - $200) in limited liability companies and limited partnerships in which the Company does not have an undivided interest in the assets,
liabilities, revenue and expenses. During 2008, the Company recorded income of $509 (2007 - $971) on these United States investments. The Companys maximum exposure to loss as a result of its involvement with these property developments
was the carrying amount of its investments.



| | (b) | Investment in Joint Ventures
| | --- | ----------------------------

The Companys
proportionate share of the assets, liabilities, revenues and expenses of joint ventures included in the consolidated financial statements is as follows:



|                                                                  |  |      |        |      |   |        
|----------------------------------------------------------------- |  | ---- | ------ | ---- | - | -------
|                                                                  |  | 2008 |        | 2007
|ASSETS                                                            |  |      |        |      |   |        
|Cash and cash equivalents                                         |  | $    | 21,163 |      | $ | 40,343 
|Accounts receivable (including holdbacks of $NIL; 2007 - $24,281) |  |      | 16,062 |      |   | 62,682 
|Costs and estimated earnings in excess of billings                |  |      | 13,297 |      |   |       
|                                                                  |  |      |        |      |   |        
|                                                                  |  | $    | 50,522 |      | $ | 103,025
|                                                                  |  |      |        |      |   |        
|                                                                  |  |     
|LIABILITIES AND EQUITY                                            |  |      |        |      |   |        
|Accounts payable (including holdbacks of $NIL (2007 - $17,826)    |  | $    | 21,029 |      | $ | 59,526 
|Unearned revenue                                                  |  |      | 3,052  |      |   | 10,705 
|Equity and advances                                               |  |      | 26,441 |      |   | 32,794 
|                                                                  |  |      |        |      |   |        
|                                                                  |  | $    | 50,522 |      | $ | 103,025
|                                                                  |  |      |        |      |   |        



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|23. | INVESTMENT IN JOINT VENTURES, LIMITED LIABILITY COMPANIES AND LIMITED PARTNERSHIPS (continued)
|--- | ----------------------------------------------------------------------------------------------



|                                                     |  |      |          |   |      |   |         |      |  |   |          |  
|---------------------------------------------------- |  | ---- | -------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|                                                     |  | 2008 |          |   | 2007 |   |         | 2006 | 
|EARNINGS                                             |  |      |          |   |      |   |         |      |  |   |          |  
|Contract revenues                                    |  | $    | 169,241  |   |      | $ | 293,350 |      |  | $ | 210,101  |  
|Contract costs                                       |  |      | 151,277  |   |      |   | 264,854 |      |  |   | 187,480  |  
|                                                     |  |      |          |   |      |   |         |      |  |   |          |  
|Earnings before income taxes                         |  | $    | 17,964   |   |      | $ | 28,496  |      |  | $ | 22,621   |  
|                                                     |  |      |          |   |      |   |         |      |  |   |          |  
|                                                     |  |      |         
|CASH FLOWS PROVIDED BY (USED IN)                     |  |      |          |   |      |   |         |      |  |   |          |  
|Operating activities                                 |  | $    | 5,136    |   |      | $ | 30,193  |      |  | $ | (8,117)  |  
|Investing activities                                 |  |      | (33,769  | ) |      |   |        |      |  |   |         |  
|Financing activities                                 |  |      | 9,453    |   |      |   | (18,405 | )    |  |   | (23,266  | )
|                                                     |  |      |          |   |      |   |         |      |  |   |          |  
|Net increase (decrease) in cash and cash equivalents |  | $    | (19,180) |   |      | $ | 11,788  |      |  | $ | (31,383) |  
|                                                     |  |      |          |   |      |   |         |      |  |   |          |  

The Company is contingently liable at October 31, 2008 for $16,419 (2007 -
$27,212) being the other joint venture participants share of liabilities, net of securing letters of credit and cross-company guarantees, should they not be able to satisfy them.

Throughout the year, the Company makes cash contributions, receives distributions, and records its proportionate share of income or losses in joint
ventures. A summary of the joint venture transactions for the years ended October 31, 2008 and 2007 is as follows:



|                                                |  |      |         |   |      |   |         |  
|----------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                |  | 2008 |         |   | 2007 |  
|Investment in joint ventures, beginning of year |  | $    | 32,794  |   |      | $ | 22,703  |  
|Share of net income                             |  |      | 17,964  |   |      |   | 28,496  |  
|Unrealized foreign exchange loss                |  |      | 10,923  |   |      |   | (4,871  | )
|Contributions                                   |  |      | 6,997   |   |      |   | 1,887   |  
|Distributions                                   |  |      | (42,237 | ) |      |   | (15,421 | )
|                                                |  |      |         |   |      |   |         |  
|                                                |  | $    | 26,441  |   |      | $ | 32,794  |  
|                                                |  |      |         |   |      |   |         |  



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|24. | SUMMARY OF MATERIAL DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) IN CANADA AND THE UNITED STATES
|--- | -----------------------------------------------------------------------------------------------------------------------



he Companys consolidated financial statements have been prepared in accordance with Canadian
GAAP which differs in certain respects from United States GAAP. The effects of these differences on the Companys consolidated financial statements are as follows:

If United States GAAP were employed, net earnings would be adjusted as follows:



|                                                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                         |  | 2008 |         |   | 2007 |   |         | 2006 | 
|Net earnings based on Canadian GAAP                                                                                      |  | $    | 242,032 |   |      | $ | 221,153 |      |  | $ | 169,204 |  
|Additional pension expense due to the elimination of amortization of the transitional asset(1)                           |  |      |        |   |      |   |        |      |  |   | (1,163  | )
|Change in fair value of mandatorily redeemable shares(3)                                                                 |  |      | (1,061  | ) |      |   | (620    | )    |  |   | (207    | )
|Dividends on mandatorily redeemable shares(3)                                                                            |  |      | (6,083  | ) |      |   | (4,485  | )    |  |   | (1,345  | )
|Tax impact of reconciling items                                                                                          |  |      | (52     | ) |      |   | 38      |      |  |   | 361     |  
|                                                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Net earnings based on U.S. GAAP                                                                                          |  | $    | 234,836 |   |      | $ | 216,086 |      |  | $ | 166,850 |  
|                                                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Earnings per share based on U.S. GAAP net earnings(3)                                                                    |  | $    | 10.77   |   |      | $ | 11.56   |      |  | $ | 10.19   |  
|                                                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|                                                                                                                        
|Comprehensive income under United States GAAP is as follows:                                                             | 
|                                                                                                                         |  | 2008 |         |   | 2007 |   |         | 2006 | 
|Net earnings based on U.S. GAAP                                                                                          |  | $    | 234,836 |   |      | $ | 216,086 |      |  | $ | 166,850 |  
|Other comprehensive income (loss), net of taxes of $3,173 (2007 - $29; 2006 - $nil), in accordance with Canadian GAAP(5) |  |      | 57,195  |   |      |   | (34,883 | )    |  |   | (6,721  | )
|Change in net pension liability(1)                                                                                       |  |      | (5,006  | ) |      |   |        |      |  |   |        |  
|Change in minimum pension liability(1)                                                                                   |  |      |        |   |      |   | 359     |      |  |   | 1,460   |  
|(Gain) loss on disposal of marketable securities(2) (5)                                                                  |  |      |        |   |      |   |        |      |  |   | (3,164  | )
|Unrealized gain on investment in marketable securities(2) (5)                                                            |  |      |        |   |      |   |        |      |  |   | 5,604   |  
|Tax impact of reconciling items                                                                                          |  |      | 1,705   |   |      |   | (125    | )    |  |   | (1,064  | )
|                                                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  
|Comprehensive income under U.S. GAAP                                                                                     |  | $    | 288,730 |   |      | $ | 181,437 |      |  | $ | 162,965 |  
|                                                                                                                         |  |      |         |   |      |   |         |      |  |   |         |  

The following tables reconcile the consolidated balance sheets as reported under Canadian GAAP and
those that would have been reported under United States GAAP:



|                                                    |  |               |         |   |           |   |         |  
|--------------------------------------------------- |  | ------------- | ------- | - | --------- | - | ------- | -
|2008                                                |  | Canadian GAAP |         |   | U.S. GAAP |  
|Balance Sheet                                       |  |               |         |   |           |   |         |  
|Deferred income tax asset(4)                        |  | $             | 15,751  |   |           | $ | 18,109  |  
|Accrued benefit asset(1)                            |  |               | 4,889   |   |           |   |        |  
|Net pension liability(1)                            |  |               |        |   |           |   | 2,144   |  
|Mandatorily redeemable shares liability(3)          |  |               |        |   |           |   | 11,616  |  
|Share capital(3)                                    |  |               | 435,689 |   |           |   | 428,514 |  
|Retained earnings(1) (3) (4)                        |  |               | 366,210 |   |           |   | 358,979 |  
|Accumulated other comprehensive loss(1) (2) (4) (5) |  |               | (11,748 | ) |           |   | (13,633 | )
|                                                    |  |               |         |   |           |   |         |  



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|24. | SUMMARY OF MATERIAL DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) IN CANADA AND THE UNITED STATES (continued)
|--- | -----------------------------------------------------------------------------------------------------------------------------------



|                                                                                            |  |               |         |   |           |   |         |  
|------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | --------- | - | ------- | -
|2007                                                                                        |  | Canadian GAAP |         |   | U.S. GAAP |  
|Balance Sheet                                                                               |  |               |         |   |           |   |         |  
|Deferred income tax asset(4)                                                                |  | $             | 1,866   |   |           | $ | 2,571   |  
|Accrued benefit asset(1)                                                                    |  |               | 4,730   |   |           |   |        |  
|Net pension asset(1)                                                                        |  |               |        |   |           |   | 2,703   |  
|Mandatorily redeemable shares liability(3)                                                  |  |               |        |   |           |   | 15,562  |  
|Share capital(3)                                                                            |  |               | 336,881 |   |           |   | 328,366 |  
|Retained earnings(1)(3) (4)                                                                 |  |               | 315,927 |   |           |   | 306,141 |  
|Accumulated other comprehensive loss(1)(2) (4) (5)                                          |  |               | (68,943 | ) |           |   | (67,526 | )
|                                                                                            |  |               |         |   |           |   |         |  
|                                                                                           
|Accumulated other comprehensive loss under United States GAAP is as follows:                | 
|                                                                                            |  | 2008          |         |   | 2007      |  
|Accumulated change in net pension asset (liability)(1)                                      |  | $             | (2,832  | ) |           | $ | 2,174   |  
|Accumulated unrealized gain (loss) on investments in marketable securities(2)               |  |               | (7,682  | ) |           |   | 6,329   |  
|Accumulated foreign exchange losses on translation of self-sustaining foreign operations(5) |  |               | (5,790  | ) |           |   | (73,823 | )
|Accumulated tax impact of reconciling items                                                 |  |               | 2,671   |   |           |   | (2,206  | )
|                                                                                            |  |               |         |   |           |   |         |  
|Accumulated other comprehensive loss(1)(2) (4) (5)                                          |  | $             | (13,633 | ) |           | $ | (67,526 | )
|                                                                                            |  |               |         |   |           |   |         |  

There are no material differences between cash flows reported in the statement of cash flows
prepared in accordance with Canadian GAAP and the cash flows that would be reported in a statement of cash flows prepared in accordance with United States GAAP.

SEC Accounting Series Release No. 268 (ASR 268) prohibits the combination of all equity securities under the general heading Shareholders Equity where the redemption of equity is outside the
control of the issuer resulting in the Companys common stock, retained earnings and accumulated other comprehensive loss being presented as Redeemable Common Stock outside of Shareholders Equity. ASR 268 applies to the Company as there
are a limited number of situations where the Company is obligated to repurchase the shares of an employee after a triggering event. The aggregate redemption value of those shares which the Company was obligated to repurchase at October 31, 2008
was $11,616 (2007 - $15,562). The redemption value per share established on January 23, 2008 is $23.50. The aggregate redemption value of those shares which the Company was obligated to repurchase at October 31, 2008 is reclassified as a
current liability in accordance with SFAS No. 150, Accounting For Certain Financial Instruments with Characteristics of Both Liabilities and Equity.

Canadian GAAP requires proportionate consolidation of interests in joint ventures. Proportionate consolidation is not permitted for the Companys interests in joint ventures under United States GAAP and these
interests would be accounted for under the equity method. However, as allowed by the Securities and Exchange Commission (SEC), reclassification is not required in this reconciliation when specified criteria are met and the information is
disclosed. These criteria have been met and the information is disclosed in Note 23. Although adoption of proportionate consolidation has no impact on net earnings or redeemable common stock, it does increase assets, liabilities, revenues and
expenses and changes the classification of cash flows otherwise reported under United States GAAP.



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PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|24. | SUMMARY OF MATERIAL DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) IN CANADA AND THE UNITED STATES (continued)
|--- | -----------------------------------------------------------------------------------------------------------------------------------



Notes:



| | (1) | Under Canadian GAAP, the Company adopted Section 3461, Employee Future Benefits effective November 1, 2000. Section 3461 contains similar measurement
principles to United States GAAP for measuring obligations and plan assets under its pension plan. On adoption of Section 3461, the difference between the fair value of plan assets and the accrued benefit obligation (projected benefit
obligation) of $6,983 (the transitional asset) was amortized over six years. The amortization period ended on October 31, 2006.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For United States GAAP purposes, the Company is utilizing transition guidance provided by the SEC as it was not feasible to apply SFAS No. 87 Employers Accounting for Pensions on the effective date of the standard. As
a result of applying this guidance, the difference between the fair value of plan assets and the projected benefit obligation of $3,262 was recorded as a prepaid pension asset as at November 1, 2001. Net periodic pension income (cost) under
United States GAAP for 2008 and 2007 is $131 and $(665) respectively, which is the same as under Canadian GAAP, as the amortization of the transitional asset under Canadian GAAP ended on October 31, 2006. Net periodic pension cost under United
States GAAP for 2006 is $1,308, as the amortization of the transitional asset under Canadian GAAP is not permitted under United States GAAP. The resulting prepaid pension asset under United States GAAP prior to the recognition of the minimum pension
liability for 2006 is $359.

Effective October 31, 2007, United States GAAP (SFAS No. 158, Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans  an amendment to FASB Statements No. 87, 88, 106, and 132(R)) requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as
an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. Applying this standard to the Companys employees defined pension
plan, at October 31, 2007, the difference between the prepaid pension asset recognized under SFAS No. 87 Employers Accounting for Pensions of $529 (after giving recognition to the reversal of the accumulated additional
minimum pension liability of $359) and the overfunded status of the plan of $2,703 was recorded by way of a credit to accumulated other comprehensive loss of $2,174.

Prior to the effective date of SFAS No. 158, for United States GAAP purposes, the Company recognized an additional minimum pension liability as was required by SFAS No. 87 Employers Accounting
for Pensions. The recognition of an additional minimum pension liability is not required under Canadian GAAP.



| | (2) | Effective November 1, 2006, under both United States GAAP and Canadian GAAP, the Companys investments in marketable securities are considered available for sale
securities and are reported at fair value, with unrealized gains and losses reported, net of tax, in other comprehensive income for the period.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Prior to this effective date, under Canadian GAAP, the Companys investments in marketable securities were recorded at cost, with write downs taken on the investments when losses in value were other than
temporary in nature. In accordance with the transitional requirements under Canadian GAAP, the remeasurement from cost to fair value was recorded as an adjustment to opening accumulated other comprehensive in 2007 as more fully described in Note
24(5) below without restatement of prior years.



| | (3) | Under United States GAAP, certain of the Companys common shares must be reclassified as a liability, as they become mandatorily redeemable after the occurrence of certain
triggering events, as defined by SFAS No. 150. Upon reclassification the liability is initially measured at fair value, with a reduction to redeemable common stock by the amount of that initial measure, recognizing no gain or loss.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During 2008, 2007 and 2006, certain of the Companys common shares became mandatorily redeemable after the occurrence of
certain triggering events. As a result, these mandatorily redeemable shares were reclassified as a liability at their fair value of $4,285 (2007 - $5,962; 2006 - $4,766), with a corresponding reduction in redeemable common stock, consisting of a
decrease in share capital of $3,219 (2007 - $3,476; 2006 - $2,610), and a decrease in retained earnings under United States GAAP of $1,066 (2007 - $2,486; 2006 - $2,156).

SFAS No. 150 requires that subsequent changes in the fair value of these shares are recognized in earnings. In 2007, the subsequent change in fair value was as a result of an increase in the share price of $1.50
per share (2007 - $1.25 per share; 2006 - $0.75 per share). This resulted in a change in fair value of these shares of $1,061 (2007 - $620; 2006 - $207), which is recognized in net earnings under United States GAAP.

In addition, dividends were paid during 2008 of $8.60 per share (2007 - $9.05 per share; 2006 - $4.88 per share). In 2008, dividends on mandatorily
redeemable shares were $6,083 (2007 - $4,485; 2006 - $1,345), which is recognized in net earnings under United States GAAP.

During 2008,
mandatorily redeemable shares with a fair value of $9,292 (2007 - $1,304; 2006 - $202) were repurchased by the Company.



| | (4) | Under United States GAAP, future income tax assets and liabilities are referred to as deferred income tax assets and liabilities. The adjustment above relates to the tax effect of
items (1) and (2) above.
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##### Table of Contents

PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|24. | SUMMARY OF MATERIAL DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) IN CANADA AND THE UNITED STATES (continued)
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| | (5) | Effective November 1, 2006, under both United States GAAP and Canadian GAAP, other comprehensive income (loss) primarily includes changes in shareholders equity arising
from unrealized changes in the fair value of available for sale investments (as described in Note 24(2) above) and foreign exchange gains and losses on the translation of the financial statements of self sustaining subsidiaries previously recorded
in the cumulative translation account.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In accordance with transitional provisions under Canadian GAAP, the net unrealized
foreign currency translation losses on financial statements of self-sustaining foreign operations were reclassified from the cumulative translation account to accumulated other comprehensive loss on a retrospective basis with the effect of exchange
rate changes during each year now being reported as a component of other comprehensive income. The transition rules for recognizing the accumulated unrealized changes in the fair value of available-for-sale investments in accumulated other
comprehensive income were required to be adopted retrospectively without restatement of the prior period on November 1, 2006.

Recently Adopted United States Accounting Pronouncements

In June 2006, the FASB issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109 (FIN 48) which clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial
statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, disclosure, and transition requirements. FIN 48 applies to the Companys consolidated financial
statements for the fiscal year ended October 31, 2008. The adoption of this standard did not have a material impact on the Companys consolidated financial statements.

Interest and penalties associated with uncertain tax positions are recognized as components of the current tax provision. As at and for the year ended
October 31, 2008, this amount was not material.

At October 31, 2008, tax years that remain subject to examination for the
Companys major tax jurisdictions are 2005 - 2008 for state and local taxes in the United States, 2006 - 2008 for federal income taxes in the United States, and 2006 - 2008 for provincial and federal income tax in Canada.

Recent United States Accounting Pronouncements Not Yet Adopted

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurement (SFAS
No. 157). SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. SFAS No. 157 also expands disclosures about the extent to which companies measure assets and liabilities at fair value, the
information used to measure fair value, and the effect of fair value measurement on earnings disclosures made by the Company. SFAS 157 will apply to the Companys consolidated financial statements for the fiscal year ending October 31,
2009, except for certain non-financial assets and non-financial liabilities, to which SFAS 157 will apply for the fiscal year ending October 31, 2010. The Company is currently reviewing the impact of this statement.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities (SFAS No. 159). SFAS No. 159 allows measurement at fair value of eligible financial assets and liabilities that are not otherwise measured at fair value. If the fair value option for an eligible item is
elected, unrealized gains and losses for that item shall be reported in current earnings at each subsequent reporting date. SFAS 159 also establishes additional disclosure requirements designed to facilitate comparison between companies that choose
different measurement attributes for similar type assets and liabilities. SFAS 159 will apply to the Companys consolidated financial statements for the fiscal year ending October 31, 2009. The Company is currently reviewing the impact of
this statement.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (Revised), Business
Combinations (SFAS No. 141R). SFAS No. 141 (Revised) requires that the acquisition method of accounting be applied to all transactions and other events in which one entity (the acquirer) obtains control over one or more
other businesses (the acquiree). SFAS 141 (Revised) will apply to the Companys consolidated financial statements for the fiscal year ending October 31, 2010. The Company is currently reviewing the impact of this statement.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51 (SFAS No. 160). SFAS No. 160 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements. SFAS
160 will apply to the Companys consolidated financial statements for the fiscal year ending October 31, 2010. The Company is currently reviewing the impact of this statement.



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##### Table of Contents

PCL EMPLOYEES HOLDINGS LTD.

Notes to Consolidated Financial Statements

(In thousands of Canadian dollars except share data)



|24. | SUMMARY OF MATERIAL DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) IN CANADA AND THE UNITED STATES (continued)
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Valuation and Qualifying Accounts



|                                           |  |                            |       |                                      |        |                                     |        |   |                      |   |       
|------------------------------------------ |  | -------------------------- | ----- | ------------------------------------ | ------ | ----------------------------------- | ------ | - | -------------------- | - | ------
|                                           |  | Balance atbeginning ofyear |       | Additionscharged tocosts andexpenses |        | Deductionsreducingcosts andexpenses |        |   | Balance atendof year
|Year ended October 31, 2008:               |  |                            |       |                                      |        |                                     |        |   |                      |   |       
|Valuation allowance on deferred tax assets |  | $                          | 113   |                                      | 3,825  |                                     | (113   | ) |                      | $ | 3,825 
|Valuation allowance on accounts receivable |  |                            |      |                                      | 16,423 |                                     |       |   |                      |   | 16,423
|                                           |  |                            |       |                                      |        |                                     |        |   |                      |   |       
|                                           |  | $                          | 113   |                                      | 20,248 |                                     | (113   | ) |                      | $ | 20,248
|                                           |  |                            |       |                                      |        |                                     |        |   |                      |   |       
|                                           |  |                            |       |                                     
|Year ended October 31, 2007:               |  |                            |       |                                      |        |                                     |        |   |                      |   |       
|Valuation allowance on deferred tax assets |  | $                          | 1,185 |                                      | 113    |                                     | (1,185 | ) |                      | $ | 113   
|                                           |  |                            |       |                                      |        |                                     |        |   |                      |   |       
|                                           |  |                            |       |                                     
|Year ended October 31, 2006:               |  |                            |       |                                      |        |                                     |        |   |                      |   |       
|Valuation allowance on deferred tax assets |  | $                          | 2,082 |                                      |       |                                     | (897   | ) |                      | $ | 1,185 
|                                           |  |                            |       |                                      |        |                                     |        |   |                      |   |       



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