Exhibit 99.3

Management Report

The annual report, including the consolidated financial statements and
Managements Discussion and Analysis (MD&A), is the responsibility of the management of the Company. The consolidated financial statements were prepared by management in accordance with International Financial Reporting Standards. Where
alternative accounting methods exist, management has chosen those it considers most appropriate in the circumstances. The significant accounting policies used are described in note 4 to the consolidated financial statements. Certain amounts in the
financial statements are based on estimates and judgments relating to matters not concluded by year-end. The integrity of the information presented in the financial statements is the responsibility of management. Financial information presented
elsewhere in this annual report has been prepared by management and is consistent with the information in the consolidated financial statements.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities and for providing final approval of the annual consolidated financial statements. The board has appointed
an Audit and Risk Committee comprising four directors, none of whom is an officer or employee of the Company or its subsidiaries. The Audit and Risk Committee meets at least four times each year to discharge its responsibilities under a written
mandate from the Board of Directors. The Audit and Risk Committee meets with management and with the external auditors to satisfy itself that they are properly discharging their responsibilities; reviews the consolidated financial statements,
MD&A, and Independent Auditors Report on Financial Statements; and examines other auditing and accounting matters. The Audit and Risk Committee has reviewed the audited consolidated financial statements with management and discussed the
quality of the accounting principles as applied and significant judgments affecting the consolidated financial statements. The Audit and Risk Committee has discussed with the external auditors the external auditors judgments of the quality of
those principles as applied and the judgments noted above. The consolidated financial statements and MD&A have been reviewed by the Audit and Risk Committee and approved by the Board of Directors of Stantec Inc.

The consolidated financial statements have been examined by the shareholders auditors, Ernst & Young LLP, Chartered Accountants. The
Independent Auditors Report on Financial Statements outlines the nature of their examination and their opinion on the consolidated financial statements of the Company. The external auditors have full and unrestricted access to the Audit and
Risk Committee, with or without management being present.

Managements Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. The
Companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
International Financial Reporting Standards. Management conducted an evaluation of the effectiveness of the system of 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. Based on this evaluation, management concluded that the Companys system of internal control over financial reporting was effective as at December 31, 2011.

Ernst & Young LLP, which has audited the consolidated financial statements of the Company for the year ended December 31, 2011,
has also issued a report on the effectiveness of the Companys internal control over financial reporting.



|                  |  |                            
|----------------- |  | ---------------------------
|LOGO              |  | LOGO                       
|                  | 
|Bob Gomes, P.Eng. |  | Dan Lefaivre, FCMA         
|President & CEO   |  | Senior Vice President & CFO
|February 23, 2012 |  | February 23, 2012          



December 31,
2011

STANTEC INC.

F-1



---

Independent Auditors Report of Registered Public Accounting Firm

To the Board of Directors and Shareholders of Stantec Inc.

We have audited the accompanying consolidated financial statements of Stantec Inc., which comprise the consolidated statements of financial position as at December 31, 2011 and 2010, and
January 1, 2010, and the consolidated statements of income, comprehensive income, shareholders equity, and cash flows for the years ended December 31, 2011 and 2010, and a summary of significant accounting policies and other
explanatory information.

Managements Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the auditors consider internal control relevant to the entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe
that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Stantec Inc. as
at December 31, 2011 and 2010, and January 1, 2010, and its financial performance and its cash flows for the years ended December 31, 2011 and 2010, in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board.

Emphasis of matter

As discussed in Note 11 to the financial statements, the Company has changed the date of its annual impairment test to October 1 from July 1 effective the third quarter of 2011. Our opinion is
not modified in respect of this matter.

Other Matter

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Stantec Inc.s internal control over financial reporting as of
December 31, 2011, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2012, expressed
an unqualified opinion on Stantec Inc.s internal control over financial reporting.



LOGO

Chartered Accountants

Edmonton, Canada

February 23, 2012



December 31,
2011

STANTEC INC.

F-2



---

Independent Auditors Report on Internal Control Over Financial Reporting

(Under the standards of the Public Company Accounting Oversight Board (United States))

To the Board of Directors and Shareholders of Stantec Inc.

We have audited Stantec Inc.s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal ControlIntegrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Stantec Inc.s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the
effectiveness of internal control over financial reporting included in the accompanying Managements Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the companys internal control
over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards. A companys internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Stantec Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011,
based on the COSO criteria.

We also have audited, in accordance with Canadian generally accepted auditing standards and the standards of the
Public Company Accounting Oversight Board (United States), the consolidated statements of financial position of Stantec Inc. as at December 31, 2011 and 2010, and January 1, 2010, and the related consolidated statements of income,
comprehensive income, shareholders equity and cash flows for the years ended December 31, 2011 and 2010, and our report dated February 23, 2012, expressed an unqualified opinion thereon.



LOGO

Chartered Accountants

Edmonton, Canada

February 23, 2012



December 31,
2011

STANTEC INC.

F-3



---

Consolidated Statements of Financial Position



|                                                           |  |       |       |  |             |  |           |             |  |  |           |   |  |  |           | 
|---------------------------------------------------------- |  | ----- | ----- |  | ----------- |  | --------- | ----------- |  |  | --------- | - |  |  | --------- | 
|                                                           |  |       |       |  | December 31 |  |           | December 31 |  |  | January 1 |  
|                                                           |  |       |       |  | 2011        |  |           | 2010        |  |  | 2010      |  
|(In thousands of Canadian dollars)                         |  | Notes |       |  | $           |  |           | $           |  |  | $         |  
|                                                           | 
|                                                           |  |       |       | 
|ASSETS                                                     |  |       | 18,38 |  |             |  |           |             |  |  |           |   |  |  |           | 
|Current                                                    |  |       |       |  |             |  |           |             |  |  |           |   |  |  |           | 
|Cash and short-term deposits                               |  |       | 8     |  |             |  | 36,111    |             |  |  | 62,731    |   |  |  | 14,690    | 
|Trade and other receivables                                |  |       | 9     |  |             |  | 310,669   |             |  |  | 295,740   |   |  |  | 253,205   | 
|Unbilled revenue                                           |  |       | 36    |  |             |  | 133,881   |             |  |  | 104,696   |   |  |  | 95,794    | 
|Income taxes recoverable                                   |  |       |       |  |             |  | 16,800    |             |  |  | 12,313    |   |  |  | 12,144    | 
|Prepaid expenses                                           |  |       |       |  |             |  | 13,908    |             |  |  | 10,699    |   |  |  | 11,352    | 
|Other financial assets                                     |  |       | 15    |  |             |  | 14,612    |             |  |  | 10,589    |   |  |  | 4,664     | 
|Other assets                                               |  |       | 16    |  |             |  | 3,172     |             |  |  | 4,176     |   |  |  | 4,234     | 
|                                                           | 
|                                                           |  |       |       | 
|Total current assets                                       |  |       |       |  |             |  | 529,153   |             |  |  | 500,944   |   |  |  | 396,083   | 
|Non-current                                                |  |       |       |  |             |  |           |             |  |  |           |   |  |  |           | 
|Property and equipment                                     |  |       | 10    |  |             |  | 107,853   |             |  |  | 113,689   |   |  |  | 107,830   | 
|Investment property                                        |  |       | 10    |  |             |  | -         |             |  |  | -         |   |  |  | 881       | 
|Goodwill                                                   |  |       | 11    |  |             |  | 509,028   |             |  |  | 548,272   |   |  |  | 468,814   | 
|Intangible assets                                          |  |       | 12    |  |             |  | 72,047    |             |  |  | 72,136    |   |  |  | 60,331    | 
|Investments in associates                                  |  |       | 14    |  |             |  | 2,365     |             |  |  | 2,831     |   |  |  | 6,631     | 
|Deferred tax assets                                        |  |       | 29    |  |             |  | 43,647    |             |  |  | 40,912    |   |  |  | 43,463    | 
|Other financial assets                                     |  |       | 15    |  |             |  | 61,606    |             |  |  | 57,235    |   |  |  | 48,657    | 
|Other assets                                               |  |       | 16    |  |             |  | 1,657     |             |  |  | 1,339     |   |  |  | -         | 
|                                                           | 
|                                                           |  |       |       | 
|Total assets                                               |  |       |       |  |             |  | 1,327,356 |             |  |  | 1,337,358 |   |  |  | 1,132,690 | 
|                                                           | 
|                                                           |  |       |       | 
|LIABILITIES AND EQUITY                                     |  |       |       |  |             |  |           |             |  |  |           |   |  |  |           | 
|Current                                                    |  |       |       |  |             |  |           |             |  |  |           |   |  |  |           | 
|Trade and other payables                                   |  |       | 17    |  |             |  | 191,859   |             |  |  | 186,287   |   |  |  | 159,393   | 
|Billings in excess of costs                                |  |       | 36    |  |             |  | 49,441    |             |  |  | 56,741    |   |  |  | 52,007    | 
|Income taxes payable                                       |  |       |       |  |             |  | -         |             |  |  | 4,595     |   |  |  | -         | 
|Current portion of long-term debt                          |  |       | 18    |  |             |  | 59,593    |             |  |  | 46,394    |   |  |  | 35,428    | 
|Provisions                                                 |  |       | 19    |  |             |  | 16,373    |             |  |  | 17,297    |   |  |  | 15,287    | 
|Other financial liabilities                                |  |       | 20    |  |             |  | 5,042     |             |  |  | 9,365     |   |  |  | 6,196     | 
|Other liabilities                                          |  |       | 21    |  |             |  | 5,208     |             |  |  | 3,313     |   |  |  | 3,811     | 
|                                                           | 
|                                                           |  |       |       | 
|Total current liabilities                                  |  |       |       |  |             |  | 327,516   |             |  |  | 323,992   |   |  |  | 272,122   | 
|Non-current                                                |  |       |       |  |             |  |           |             |  |  |           |   |  |  |           | 
|Long-term debt                                             |  |       | 18    |  |             |  | 236,601   |             |  |  | 275,636   |   |  |  | 198,769   | 
|Provisions                                                 |  |       | 19    |  |             |  | 42,076    |             |  |  | 39,143    |   |  |  | 42,232    | 
|Deferred tax liabilities                                   |  |       | 29    |  |             |  | 54,564    |             |  |  | 47,780    |   |  |  | 47,177    | 
|Other financial liabilities                                |  |       | 20    |  |             |  | 2,257     |             |  |  | 5,789     |   |  |  | 7,606     | 
|Other liabilities                                          |  |       | 21    |  |             |  | 37,191    |             |  |  | 29,330    |   |  |  | 26,720    | 
|                                                           | 
|                                                           |  |       |       | 
|Total liabilities                                          |  |       |       |  |             |  | 700,205   |             |  |  | 721,670   |   |  |  | 594,626   | 
|                                                           | 
|                                                           |  |       |       | 
|Shareholders equity                                       |  |       |       |  |             |  |           |             |  |  |           |   |  |  |           | 
|Share capital                                              |  |       | 25    |  |             |  | 226,744   |             |  |  | 225,158   |   |  |  | 221,983   | 
|Contributed surplus                                        |  |       | 25    |  |             |  | 14,906    |             |  |  | 13,340    |   |  |  | 12,606    | 
|Retained earnings                                          |  |       |       |  |             |  | 397,847   |             |  |  | 393,844   |   |  |  | 302,966   | 
|Accumulated other comprehensive (loss) income              |  |       | 28    |  |             |  | (12,449   | )           |  |  | (16,757   | ) |  |  | 323       | 
|                                                           | 
|                                                           |  |       |       | 
|Total equity attributable to equity holders of the Company |  |       |       |  |             |  | 627,048   |             |  |  | 615,585   |   |  |  | 537,878   | 
|                                                           | 
|                                                           |  |       |       | 
|Non-controlling interests                                  |  |       |       |  |             |  | 103       |             |  |  | 103       |   |  |  | 186       | 
|                                                           | 
|                                                           |  |       |       | 
|Total equity                                               |  |       |       |  |             |  | 627,151   |             |  |  | 615,688   |   |  |  | 538,064   | 
|                                                           | 
|                                                           |  |       |       | 
|Total liabilities and equity                               |  |       |       |  |             |  | 1,327,356 |             |  |  | 1,337,358 |   |  |  | 1,132,690 | 
|                                                           | 

See accompanying notes

On behalf of Stantecs Board of Directors



|                                |  |                             |  | 
|------------------------------- |  | --------------------------- |  | 
|LOGO                            |  | LOGO                        |  | 
|Aram Keith, PE, FASCE, Director |  | Bob Gomes, P.Eng., Director |  | 



December 31,
2011

STANTEC INC.

F-4



---

Consolidated Statements of Income



|                                                             |  |       |        |  |      |  |           |      |  |  |           |  
|------------------------------------------------------------ |  | ----- | ------ |  | ---- |  | --------- | ---- |  |  | --------- | -
|Years ended December 31                                      |  |       |        |  | 2011 |  |           | 2010 | 
|(In thousands of Canadian dollars, except per share amounts) |  | Notes |        |  | $    |  |           | $    | 
|                                                             | 
|                                                             |  |       |       
|Gross revenue                                                |  |       |        |  |      |  | 1,683,403 |      |  |  | 1,513,062 |  
|Less subconsultant and other direct expenses                 |  |       |        |  |      |  | 304,856   |      |  |  | 287,022   |  
|                                                             | 
|                                                             |  |       |       
|Net revenue                                                  |  |       |        |  |      |  | 1,378,547 |      |  |  | 1,226,040 |  
|Direct payroll costs                                         |  |       | 31     |  |      |  | 615,136   |      |  |  | 537,704   |  
|                                                             | 
|                                                             |  |       |       
|Gross margin                                                 |  |       |        |  |      |  | 763,411   |      |  |  | 688,336   |  
|Administrative and marketing expenses                        |  |       | 25, 31 |  |      |  | 565,164   |      |  |  | 510,724   |  
|Depreciation of property and equipment                       |  |       | 10     |  |      |  | 27,933    |      |  |  | 25,461    |  
|Impairment of goodwill                                       |  |       | 11     |  |      |  | 90,000    |      |  |  | -         |  
|Amortization of intangible assets                            |  |       | 12     |  |      |  | 18,395    |      |  |  | 17,289    |  
|Net interest expense                                         |  |       | 30     |  |      |  | 9,723     |      |  |  | 7,862     |  
|Other net finance expense (income)                           |  |       | 30     |  |      |  | 2,848     |      |  |  | (219      | )
|Share of income from associates                              |  |       | 14     |  |      |  | (793      | )    |  |  | (2,209    | )
|Gain on sale of equity investments                           |  |       | 14     |  |      |  | -         |      |  |  | (7,183    | )
|Foreign exchange loss                                        |  |       |        |  |      |  | 501       |      |  |  | 994       |  
|Other (income) expense                                       |  |       |        |  |      |  | (36       | )    |  |  | 838       |  
|                                                             | 
|                                                             |  |       |       
|Income before income taxes                                   |  |       |        |  |      |  | 49,676    |      |  |  | 134,779   |  
|                                                             | 
|                                                             |  |       |       
|Income taxes                                                 |  |       | 29     |  |      |  |           |      |  |  |           |  
|Current                                                      |  |       |        |  |      |  | 32,733    |      |  |  | 42,435    |  
|Deferred                                                     |  |       |        |  |      |  | 4,281     |      |  |  | (2,397    | )
|                                                             | 
|                                                             |  |       |       
|Total income taxes                                           |  |       |        |  |      |  | 37,014    |      |  |  | 40,038    |  
|                                                             | 
|                                                             |  |       |       
|Net income for the year                                      |  |       |        |  |      |  | 12,662    |      |  |  | 94,741    |  
|                                                             | 
|                                                             |  |       |       
|Earnings per share                                           |  |       |        |  |      |  |           |      |  |  |           |  
|Basic                                                        |  |       | 32     |  |      |  | 0.28      |      |  |  | 2.07      |  
|                                                             | 
|                                                             |  |       |       
|Diluted                                                      |  |       | 32     |  |      |  | 0.28      |      |  |  | 2.06      |  
|                                                             | 

See accompanying notes



December 31,
2011

STANTEC INC.

F-5



---

Consolidated Statements of Comprehensive Income



|                                                           |  |       |    |  |      |  |        |      |  |  |         |  
|---------------------------------------------------------- |  | ----- | -- |  | ---- |  | ------ | ---- |  |  | ------- | -
|Years ended December 31                                    |  |       |    |  | 2011 |  |        | 2010 | 
|(In thousands of Canadian dollars)                         |  | Notes |    |  | $    |  |        | $    | 
|                                                           | 
|                                                           |  |       |   
|Net Income for the year                                    |  |       |    |  |      |  | 12,662 |      |  |  | 94,741  |  
|                                                           | 
|                                                           |  |       |   
|Other comprehensive income (loss)                          |  |       |    |  |      |  |        |      |  |  |         |  
|Exchange differences on translation of foreign operations  |  |       | 28 |  |      |  | 5,761  |      |  |  | (18,615 | )
|Net (loss) gain on available-for-sale financial assets     |  |       | 28 |  |      |  | (1,479 | )    |  |  | 1,562   |  
|Income tax                                                 |  |       | 28 |  |      |  | 26     |      |  |  | (27     | )
|                                                           | 
|                                                           |  |       |   
|Other comprehensive income (loss) for the year, net of tax |  |       |    |  |      |  | 4,308  |      |  |  | (17,080 | )
|                                                           | 
|                                                           |  |       |   
|Total comprehensive income for the year, net of tax        |  |       |    |  |      |  | 16,970 |      |  |  | 77,661  |  
|                                                           | 

See accompanying notes



December 31,
2011

STANTEC INC.

F-6



---

Consolidated Statements of Shareholders Equity



|                                                                    |  |                              |            |   |                         |  |         |                               |  |  |                   |   |  |                                                         |         |   |       |  |         |   |  |  |         |  
|------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ----------------------- |  | ------- | ----------------------------- |  |  | ----------------- | - |  | ------------------------------------------------------- | ------- | - | ----- |  | ------- | - |  |  | ------- | -
|                                                                    |  | Shares Outstanding (note 25) |            |   | Share Capital (note 25) |  |         | Contributed Surplus (note 25) |  |  | Retained Earnings |   |  | Accumulated Other Comprehensive
Income (Loss)
(note 28) |         |   | Total | 
|(In thousands of Canadian dollars, except shares outstanding)       |  | #                            |            |   | $                       |  |         | $                             |  |  | $                 |   |  | $                                                       |         |   | $     | 
|                                                                    | 
|                                                                    |  |                              |            |   |                         | 
|Balance, January 1, 2010                                            |  |                              | 45,716,820 |   |                         |  | 221,983 |                               |  |  | 12,606            |   |  |                                                         | 302,966 |   |       |  | 323     |   |  |  | 537,878 |  
|                                                                    | 
|                                                                    |  |                              |            |   |                         | 
|Net income                                                          |  |                              |            |   |                         |  |         |                               |  |  |                   |   |  |                                                         | 94,741  |   |       |  |         |   |  |  | 94,741  |  
|Other comprehensive loss                                            |  |                              |            |   |                         |  |         |                               |  |  |                   |   |  |                                                         |         |   |       |  | (17,080 | ) |  |  | (17,080 | )
|                                                                    |  |                              |            |   |                         |  |         |                               |  |  |                   |   |  |                                                         |         |  
|                                                                    |  |                              |            |   |                         | 
|Total comprehensive income                                          |  |                              |            |   |                         |  |         |                               |  |  |                   |   |  |                                                         | 94,741  |   |       |  | (17,080 | ) |  |  | 77,661  |  
|                                                                    |  |                              |            |   |                         | 
|Share options exercised for cash                                    |  |                              | 249,800    |   |                         |  | 3,044   |                               |  |  |                   |   |  |                                                         |         |   |       |  |         |   |  |  | 3,044   |  
|Share-based compensation expense                                    |  |                              |            |   |                         |  |         |                               |  |  | 1,889             |   |  |                                                         |         |   |       |  |         |   |  |  | 1,889   |  
|Shares repurchased under normal course issuer bid                   |  |                              | (198,300   | ) |                         |  | (965    | )                             |  |  | (59               | ) |  |                                                         | (3,863  | ) |       |  |         |   |  |  | (4,887  | )
|Reclassification of fair value of share options previously expensed |  |                              |            |   |                         |  | 1,096   |                               |  |  | (1,096            | ) |  |                                                         |         |   |       |  |         |   |  |  | -       |  
|                                                                    | 
|                                                                    |  |                              |            |   |                         | 
|Balance, December 31, 2010                                          |  |                              | 45,768,320 |   |                         |  | 225,158 |                               |  |  | 13,340            |   |  |                                                         | 393,844 |   |       |  | (16,757 | ) |  |  | 615,585 |  
|                                                                    | 
|                                                                    |  |                              |            |   |                         | 
|Balance, December 31, 2010                                          |  |                              | 45,768,320 |   |                         |  | 225,158 |                               |  |  | 13,340            |   |  |                                                         | 393,844 |   |       |  | (16,757 | ) |  |  | 615,585 |  
|                                                                    |  |                              |            |   |                         | 
|Net income                                                          |  |                              |            |   |                         |  |         |                               |  |  |                   |   |  |                                                         | 12,662  |   |       |  |         |   |  |  | 12,662  |  
|Other comprehensive income                                          |  |                              |            |   |                         |  |         |                               |  |  |                   |   |  |                                                         |         |   |       |  | 4,308   |   |  |  | 4,308   |  
|                                                                    |  |                              |            |   |                         |  |         |                               |  |  |                   |   |  |                                                         |         |  
|                                                                    |  |                              |            |   |                         | 
|Total comprehensive income                                          |  |                              |            |   |                         |  |         |                               |  |  |                   |   |  |                                                         | 12,662  |   |       |  | 4,308   |   |  |  | 16,970  |  
|                                                                    |  |                              |            |   |                         | 
|Share options exercised for cash                                    |  |                              | 214,865    |   |                         |  | 2,867   |                               |  |  |                   |   |  |                                                         |         |   |       |  |         |   |  |  | 2,867   |  
|Share-based compensation expense                                    |  |                              |            |   |                         |  |         |                               |  |  | 2,700             |   |  |                                                         |         |   |       |  |         |   |  |  | 2,700   |  
|Shares repurchased under normal course issuer bid                   |  |                              | (459,600   | ) |                         |  | (2,270  | )                             |  |  | (145              | ) |  |                                                         | (8,659  | ) |       |  |         |   |  |  | (11,074 | )
|Reclassification of fair value of share options previously expensed |  |                              |            |   |                         |  | 989     |                               |  |  | (989              | ) |  |                                                         |         |   |       |  |         |   |  |  | -       |  
|                                                                    | 
|                                                                    |  |                              |            |   |                         | 
|Balance, December 31, 2011                                          |  |                              | 45,523,585 |   |                         |  | 226,744 |                               |  |  | 14,906            |   |  |                                                         | 397,847 |   |       |  | (12,449 | ) |  |  | 627,048 |  
|                                                                    | 

See accompanying notes



December 31,
2011

STANTEC INC.

F-7



---

Consolidated Statements of Cash Flows



|                                                              |  |       |    |  |      |  |           |      |  |  |           |  
|------------------------------------------------------------- |  | ----- | -- |  | ---- |  | --------- | ---- |  |  | --------- | -
|Years ended December 31                                       |  |       |    |  | 2011 |  |           | 2010 | 
|(In thousands of Canadian dollars)                            |  | Notes |    |  | $    |  |           | $    | 
|                                                              | 
|                                                              |  |       |   
|CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES                |  |       |    |  |      |  |           |      |  |  |           |  
|Cash receipts from clients                                    |  |       |    |  |      |  | 1,611,974 |      |  |  | 1,499,392 |  
|Cash paid to suppliers                                        |  |       |    |  |      |  | (496,270  | )    |  |  | (508,637  | )
|Cash paid to employees                                        |  |       |    |  |      |  | (943,439  | )    |  |  | (821,360  | )
|Interest received                                             |  |       |    |  |      |  | 1,953     |      |  |  | 3,111     |  
|Interest paid                                                 |  |       |    |  |      |  | (16,604   | )    |  |  | (16,775   | )
|Finance costs paid                                            |  |       |    |  |      |  | (2,546    | )    |  |  | (1,773    | )
|Income taxes paid                                             |  |       |    |  |      |  | (50,282   | )    |  |  | (51,548   | )
|Income taxes recovered                                        |  |       |    |  |      |  | 9,800     |      |  |  | 9,522     |  
|                                                              | 
|                                                              |  |       |   
|Cash flows from operating activities                          |  |       | 33 |  |      |  | 114,586   |      |  |  | 111,932   |  
|                                                              | 
|                                                              |  |       |   
|CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES                |  |       |    |  |      |  |           |      |  |  |           |  
|Business acquisitions, net of cash acquired                   |  |       | 7  |  |      |  | (76,434   | )    |  |  | (106,393  | )
|Dividends from equity investments                             |  |       |    |  |      |  | 175       |      |  |  | 2,852     |  
|Increase in investments held for self-insured liabilities     |  |       |    |  |      |  | (8,393    | )    |  |  | (7,301    | )
|Proceeds on disposition of investments and other assets       |  |       |    |  |      |  | 10,767    |      |  |  | 1,283     |  
|Purchase of intangible assets                                 |  |       |    |  |      |  | (3,958    | )    |  |  | (3,262    | )
|Purchase of property and equipment                            |  |       |    |  |      |  | (21,832   | )    |  |  | (25,725   | )
|Proceeds on disposition of property and equipment             |  |       |    |  |      |  | 291       |      |  |  | 412       |  
|Proceeds on sale of equity investments                        |  |       | 14 |  |      |  | -         |      |  |  | 9,980     |  
|                                                              | 
|                                                              |  |       |   
|Cash flows used in investing activities                       |  |       |    |  |      |  | (99,384   | )    |  |  | (128,154  | )
|                                                              | 
|                                                              |  |       |   
|CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES                |  |       |    |  |      |  |           |      |  |  |           |  
|Repayment of bank debt                                        |  |       |    |  |      |  | (229,449  | )    |  |  | (140,002  | )
|Proceeds from bank debt                                       |  |       |    |  |      |  | 80,736    |      |  |  | 216,948   |  
|Proceeds from senior secured notes                            |  |       |    |  |      |  | 125,000   |      |  |  | -         |  
|Transaction costs on senior secured notes                     |  |       |    |  |      |  | (1,115    | )    |  |  | -         |  
|Repayment of acquired bank indebtedness                       |  |       | 7  |  |      |  | (3,389    | )    |  |  | (3,895    | )
|Payment of finance lease obligations                          |  |       |    |  |      |  | (5,449    | )    |  |  | (5,356    | )
|Repurchase of shares for cancellation                         |  |       | 25 |  |      |  | (11,074   | )    |  |  | (4,887    | )
|Proceeds from issue of share capital                          |  |       |    |  |      |  | 2,867     |      |  |  | 3,044     |  
|                                                              | 
|                                                              |  |       |   
|Cash flows (used in) from financing activities                |  |       |    |  |      |  | (41,873   | )    |  |  | 65,852    |  
|                                                              | 
|                                                              |  |       |   
|Foreign exchange gain (loss) on cash held in foreign currency |  |       |    |  |      |  | 51        |      |  |  | (1,589    | )
|                                                              | 
|                                                              |  |       |   
|Net (decrease) increase in cash and cash equivalents          |  |       |    |  |      |  | (26,620   | )    |  |  | 48,041    |  
|Cash and cash equivalents, beginning of the year              |  |       | 8  |  |      |  | 62,731    |      |  |  | 14,690    |  
|                                                              | 
|                                                              |  |       |   
|Cash and cash equivalents, end of the year                    |  |       | 8  |  |      |  | 36,111    |      |  |  | 62,731    |  
|                                                              | 

See accompanying notes



December 31,
2011

STANTEC INC.

F-8



---

Notes to the Consolidated Financial Statements



|1. | Corporate Information
|-- | ---------------------

The consolidated financial statements of Stantec Inc. (the Company) for the year ended December 31, 2011, were authorized for issue
in accordance with a resolution of the Companys board of directors on February 23, 2012. The Company was incorporated under the Canada Business Corporations Act on March 23, 1984. Its shares are traded on the Toronto Stock Exchange
(TSX) and New York Stock Exchange under the symbol STN. The Companys registered office and records office is located at 10160  112 Street, Edmonton, Alberta. The Company is domiciled in Canada.

The Company is a provider of comprehensive professional services in the area of infrastructure and facilities for clients in the public
and private sectors. The Companys services include planning, engineering, architecture, interior design, landscape architecture, surveying, project management, environmental sciences, and project economics for infrastructure and facilities
projects.



|2. | Basis of Preparation
|-- | --------------------

These consolidated financial statements of the Company were prepared in accordance with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board (IASB). Since this is the first year the Company is presenting its results and financial position under IFRS, these consolidated financial statements were prepared in accordance with IFRS 1,
First-Time Adoption of IFRS (IFRS 1). Subject to certain transition elections disclosed in note 38, the Company has consistently applied the same accounting policies in its opening IFRS statement of financial position at January 1,
2010, and throughout all periods presented as if these policies had always been in effect. Note 38 discloses the impact of the transition to IFRS on the Companys reported financial position, financial performance, and cash flows, including the
nature and effect of significant changes in accounting policies from those used in the Companys consolidated financial statements for the year ended December 31, 2010. Comparative figures for 2010 in these consolidated financial
statements have been restated to give effect to these changes.

The policies applied in these consolidated financial
statements are based on IFRS issued and outstanding as of February 23, 2012.

The consolidated financial statements have
been prepared on a historical cost basis, unless otherwise stated in the significant accounting policies. Exceptions to the historical cost basis include certain categories of property and equipment that have been recorded using fair value as at
January 1, 2010, as deemed cost, investment property, derivative financial instruments, and available-for-sale financial assets that have been measured at fair value. The consolidated financial statements are presented in Canadian dollars, and
all values are rounded to the nearest thousand ($000) except when otherwise indicated.



|3. | Basis of Consolidation
|-- | ----------------------

The consolidated financial statements include the accounts of Stantec Inc., its subsidiaries, and all its special purpose entities as at
December 31, 2011.

Subsidiaries and special purpose entities are fully consolidated from the date of acquisition, being
the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The statements of financial position of the subsidiaries are prepared as at December 31, 2011, using consistent accounting
policies. All intercompany balances are eliminated in full.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-9



---

Joint ventures and partnerships are accounted for on the proportionate consolidation basis,
which results in the Company recording its pro rata share of the assets, liabilities, revenues, and expenses of each of these entities.



|4. | Summary of Significant Accounting Policies
|-- | ------------------------------------------

a) Cash and short-term deposits

Cash and cash equivalents include cash,
cash in escrow, and unrestricted investments with initial maturities of three months or less. Such investments are carried at fair value. For the purpose of the consolidated statements of cash flows, cash and cash equivalents consist of cash, cash
in escrow, and unrestricted investments as defined above, net of outstanding bank overdrafts.

b) Property and equipment

Property and equipment are recorded at cost less accumulated depreciation and any impairment losses. Cost includes the
cost of replacing parts of property and equipment. When significant parts of property and equipment are required to be replaced in intervals, the Company recognizes such parts as individual assets with specific useful lives and depreciation,
respectively. All other repair and maintenance costs are recognized in the consolidated statements of income as incurred.

Depreciation is calculated at annual rates designed to write off the costs of assets over their estimated useful lives as follows:



|                       |  |        |  |                                                                                             
|---------------------- |  | ------ |  | --------------------------------------------------------------------------------------------
|Engineering equipment  |  | 20-30% |  | Declining balance                                                                           
|Office equipment       |  | 20-30% |  | Declining balance                                                                           
|Automotive equipment   |  | 30%    |  | Declining balance                                                                           
|Leasehold improvements |  |        |  | Straight-line over term of lease to a maximum of 15 years or the improvements economic life
|Buildings              |  | 10-20% |  | Declining balance                                                                           

The assets residual values, useful lives, and methods of depreciation are reviewed at each
financial year-end and adjusted prospectively, if appropriate.

c) Investment property

Land and buildings (or parts thereof) are transferred to investment property when they are not used for operational purposes but, instead,
are held to earn rental income or for capital appreciation. Investment properties are stated at cost less accumulated depreciation and any impairment losses, if any, and are accounted for in the same manner as property and equipment. As at
January 1, 2010, the Companys investment property included a building that depreciated on a declining basis over its estimated useful life.

d) Assets held for sale

Assets are classified as held for sale if their
carrying amounts will be recovered through a sale rather than through continuing use. This condition is met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Management expects the sale to
be completed within one year from the date of classification. Assets held for sale are measured at the lower of their carrying amount and fair value less costs to sell and are classified as a current asset. Once classified as held for sale, property
and equipment are not depreciated or amortized.

e) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business
combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any impairment losses.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-10



---

The Companys intangible assets have finite lives that are amortized over their useful
economic lives on a straight-line basis. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year-end.

Intangible assets acquired from business combinations

The Companys policy is to amortize client relationships with determinable lives over periods ranging from 10 to 15 years. Contract backlog is amortized over estimated contractual lives of generally
1 to 3 years. Other intangible assets include technology, non-compete agreements, and advantageous leasehold commitments, which are amortized over estimated lives of 3 to 11 years. The Company assigns value to acquired contract backlog and customer
lists using the income approach, which involves quantifying the present value of net cash flows attributed to the subject asset. This, in turn, involves estimating the revenues and earnings expected from the asset. Recognition of the contributory
assets, such as working capital and property and equipment required and used to generate the expected after-tax earnings, is included since these assets also require a return based on their fair values. Expected earnings after contributory charges
and income taxes are discounted by the appropriate after-tax discount rate to arrive at the fair value.

Intangible
assetssoftware

For internally generated software, research costs are expensed as incurred. Development expenditures
on an individual project are recognized as an intangible asset when the Company can demonstrate



| |  |  | The technical feasibility of completing the intangible asset so that it will be available for use
| | - |  | -------------------------------------------------------------------------------------------------

| |  |  | Its intention to complete and its ability to use the asset
| | - |  | ----------------------------------------------------------

| |  |  | How the asset will generate future economic benefits
| | - |  | ----------------------------------------------------

| |  |  | The availability of resources to complete the asset
| | - |  | ---------------------------------------------------

| |  |  | The ability to reliably measure the expenditure during development
| | - |  | ------------------------------------------------------------------

Following initial recognition of the development expenditure as an asset, it is carried at cost less accumulated amortization and any
impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. The Company amortizes certain purchased and internally generated software on a straight-line basis over periods ranging from 3 to 7
years.

f) Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date. A lease is an agreement whereby the lessor conveys to the lessee, in
return for a payment or series of payments, the right to use an asset for an agreed period of time.

Finance leases, which
transfer to the Company substantially all the risks and benefits incidental to ownership of the leased items, are capitalized at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease
payments. Lease payments are apportioned between finance charges and reduction of the lease liability, achieving a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in the consolidated statements of
income.

Leased assets are depreciated over their useful lives. However, if there is no reasonable certainty that the Company
will obtain ownership of the asset by the end of the lease term, the asset is depreciated over the shorter of its estimated useful life and the lease term. The Companys finance leases are for certain office and automotive equipment and are
depreciated on a 20-to-30% declining balance basis.

Rental payments under operating leases are expensed evenly over the lease
term.

From time to time, the Company enters into or renegotiates premises operating leases that result in the receipt of
lease inducement benefits. These benefits are accounted for as a reduction of rental expense over the term of the



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-11



---

associated leases. As well, from time to time, the Company enters into or renegotiates premises operating leases that include escalation clauses. The scheduled rent increases pursuant to lease
escalation clauses are recognized on a straight-line basis over the lease term.

g) Investments in associates and joint
ventures

Investments in associated companies over which the Company is able to exercise significant influence, but not
control, are accounted for using the equity method, which reflects the Companys investment at original cost plus postacquisition changes in the Companys share of the net assets of the associate. The share of the profit of associates is
shown on the face of the consolidated statements of income. Since this is profit attributable to the equity holders of the associate, it is profit after tax. Adjustments are made in the Companys consolidated financial statements to eliminate
its share of unrealized gains and losses resulting from transactions with its associates.

The Company has interests in joint
ventures whereby the venturers have a contractual arrangement that establishes joint control over the economic activities of the entity. The Company accounts for its joint ventures using the proportionate consolidation method. The Company combines
its share of each of the assets, liabilities, income, and expense of the joint venture with similar items, line by line, in its consolidated financial statements.

If the financial statements of the associates or joint ventures are prepared for a different date from those of the Company, adjustments are made for the effects of significant transactions or events that
occur between that date and the date of the Companys financial statements. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

h) Investments held for self-insured liabilities

In other financial assets, the Company has investments held for self-insured liabilities that are categorized as available for sale and are recorded at fair value with associated unrealized gains or
losses reported in other comprehensive income until disposed of, at which time realized gains or losses are recognized in income. These investments consist of government and corporate bonds and equity securities.

i) Provisions

General

Provisions are recognized when the Company has a present legal or
constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where the
Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset but only when it is virtually certain. The expense relating to any provision is presented in
the consolidated statements of income net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Provisions
for self-insured liabilities

The Company self-insures certain risks related to professional liability and automobile
physical damages. The provision for self-insured liabilities includes estimates of the costs of reported claims (including potential claims that are probable of being asserted) and is based on estimates of loss using assumptions made by management,
including consideration of actuarial projections. The provision for self-insured liabilities does not include unasserted claims where assertion by a third party is not probable.

The Company invests funds to support the provision for self-insured liabilities. These investments are recorded at fair value in other
financial assets as investments held for self-insured liabilities.

Provision for claims

The Company has claims that are not covered by its provisions for self-insurance, in particular those claims



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-12



---

assumed from a business combination covered under an assumed insurance contract. Provisions are recognized for these claims in accordance with the above general description of provisions.

Contingent liabilities recognized in a business combination

A contingent liability recognized in a business combination is initially measured at its fair value. Subsequently, it is measured in
accordance with the above general description of provisions.

Lease exit liabilities

The Company accrues charges when it ceases to use office space under an operating lease arrangement. Included in the liability is the
present value of the remaining lease payments. As well, an asset is accrued in the consolidated statements of financial position as an other financial asset if it is virtually certain that sublease rental will be obtained for the office space that
the Company ceases to use. The asset is measured using the present value of the future rental income to the extent of the present value of the lease liability.

Onerous contracts

From time to time, the Company may sublet a portion of
an office space under an operating lease arrangement. The Company accrues a liability and asset if the costs to be incurred under an operating lease are to exceed the anticipated revenue on the sublease. Included in the liability is the present
value of the remaining lease payments. Included in the asset is the present value of the future rental income.

j) Foreign
currency translation

The Companys consolidated financial statements are presented in Canadian dollars, which is also
the parent Companys functional currency. Each entity in the Company determines its own functional currency, and items included in the financial statements of each entity are measured using that functional currency. For example, the functional
currency of the Companys US-based subsidiaries is the US dollar.

Transactions and balances

Transactions in foreign currencies (i.e., different than an entitys functional currency) are initially translated into the
functional currency of entities using the foreign exchange rate at the date of the transaction. Subsequent to the transaction date, foreign currency transactions are measured as follows:



| |  |  | On the statements of financial position, monetary items are translated at the rate of exchange in effect at the reporting date. Non-monetary items at
cost are translated at historical exchange rates. Non-monetary items at fair value are translated at rates in effect at the date the fair value is determined. Any resulting realized and unrealized foreign exchange gains or losses are included in
income in the period incurred. The exception is unrealized foreign exchange gains and losses on non-monetary investments (i.e., equity investments) classified as available for sale, which are included in accumulated other comprehensive income.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Revenue and expense items are translated at the average exchange rate for the year with the exception of depreciation and amortization, which are
translated at historical exchange rates.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Foreign operations

The Companys foreign operations are translated into its reporting currency (Canadian dollar) as follows: assets and liabilities are
translated at the rate of exchange in effect at each consolidated statement of financial position date, and revenue and expense items (including depreciation and amortization) are translated at the average rate of exchange for the month. The
resulting unrealized exchange gains and losses on foreign subsidiaries are recognized in accumulated other comprehensive income.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-13



---

k) Financial instruments

Initial recognition and subsequent measurement

The Company classifies its financial instruments as follows:



| |  |  | Cash and short-term deposits are classified as financial assets at fair value through profit and loss (FVPL) and are recorded at fair value, with
realized and unrealized gains and losses reported in income.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Trade and other receivables are classified as receivables and are initially accounted for at fair value and subsequently adjusted for any allowance for
doubtful accounts, with allowances reported in administrative and marketing expenses.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Investments held for self-insured liabilities, consisting of equity securities and bonds, are classified as financial assets available for sale and are
recorded at fair value, with accumulated unrealized gains and losses reported in other comprehensive income until disposed of, at which time the realized gains and losses are recognized in other income. Interest income is recorded in finance income,
and dividends are recorded in other income.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Trade and other payables are classified as other financial liabilities and are recorded at fair value and subsequently recorded at amortized cost using
the effective interest rate method (EIR), with realized gains and losses reported in income. The EIR method discounts estimated future cash payments or receipts through the expected life of a financial instrument, therefore calculating the amortized
cost and subsequently allocating the interest income or expense over the life of the instrument.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Long-term debts, including non-interest bearing debts, are classified as loans and borrowings and are initially recorded at fair value and subsequently
recorded at amortized cost using the EIR method, with the EIR amortization and realized gains and losses reported in finance costs.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Derivatives are classified as financial assets or liabilities at FVPL and are accounted for at fair value, with unrealized and realized gains and
losses reported in other net finance expense (income) or foreign exchange gains/losses. Derivatives are carried as other financial assets when the fair value is positive and as other financial liabilities when the fair value is negative.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Fair value

All financial assets are recognized initially at fair value plus directly attributable transaction costs except for financial assets at FVPL, for which transaction costs are expensed. Purchases or sales
of financial assets are accounted for at trade dates. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, net of directly attributable transaction costs.

Subsequent to initial recognition, the fair values of financial instruments are based on the bid prices in quoted active markets for
financial assets and on the ask prices for financial liabilities. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include recent arms-length
market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis, or other valuation models. The fair values of the Companys derivatives are based on third-party
indicators and forecasts. The fair values of cash and short-term deposits, trade and other receivables, and trade and other payables approximate their carrying amounts because of the short-term maturity of these instruments. The carrying amount of
bank loans approximates their fair value because the applicable interest rate is based on variable reference rates. The carrying amounts of other financial assets and financial liabilities approximate their fair values except as otherwise disclosed
in the consolidated financial statements.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-14



---

Derivatives

From time to time, the Company enters into foreign currency forward contracts to manage risk associated with net operating assets denominated in US dollars. The Company also enters into interest rate swap
agreements to manage the risk associated with interest rate cash flows to the extent that its credit facilities are based on floating rates of interest. The Companys policy is not to use these derivatives for trading or speculative purposes.
The Company has not designated any of its derivatives for hedge accounting.

l) Impairment

The carrying amounts of the Companys assets or group of assets, other than deferred tax assets, are reviewed at each reporting date
to determine whether there is an indication of impairment. An asset may be impaired if there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (i.e., an incurred
loss event) and that loss event has an impact on the estimated future cash flows of the financial asset. If an indication of impairment exists, or when annual impairment testing for an asset is required, the assets recoverable
amount is estimated.

Trade and other receivables

The Company maintains an allowance for doubtful accounts on trade receivables. The estimate is based on the best assessment of the
collectability of the related receivable balance based, in part, on the age of the outstanding receivables and on the Companys historical collection and loss experience. When the carrying amount of the receivable is reduced through the
allowance, the reduction is recognized in administrative and marketing expenses in the consolidated statements of income.

Non-financial assets

For non-financial assets such as property and equipment, investment property, goodwill, investments in associates and joint ventures, and intangible assets, the recoverable amount is the higher of an
assets or cash-generating units (CGUs) fair value less costs to sell and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent
of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an
appropriate valuation model is used. The results of these valuation techniques are corroborated by quoted share prices for comparable publicly traded companies or other available fair value indicators. Impairment losses are recognized in the
consolidated statements of income in those expense categories consistent with the nature of the impaired asset.

Goodwill is
not amortized but is evaluated for impairment annually (as at October 1) and when indicators of impairment exist. Effective the third quarter of 2011, the Company changed the date of its annual goodwill impairment test to October 1, from
July 1. The Company considers the relationship between its market capitalization and its book value, among other factors, when reviewing for indicators of impairment. Impairment is determined by assessing the recoverable amount of each CGU to
which the goodwill relates. The Companys CGUs for goodwill impairment testing are Canada, the United States, and International. Where the recoverable amount of a CGU is less than its carrying amount, an impairment loss is recognized.

An impairment loss of goodwill is not reversed. Regarding other assets, an impairment loss may be reversed if there has been
a change in the estimates used to determine the recoverable amount. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount or the carrying amount that would have been determined, net of depreciation,
had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statements of income.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-15



---

Available-for-sale financial investments

For equity investments classified as available for sale, objective evidence of impairment would include a significant or prolonged decline
in the fair value of the investment below its cost. Significant is to be evaluated against the original cost of the investment and prolonged against the period in which the fair value has been below its original cost. Where
there is evidence of impairment, the cumulative loss is removed from other comprehensive income and recognized in the consolidated statements of income. Impairment losses on equity investments are not reversed through the consolidated statements of
income; increases in their fair value after impairment are recognized directly in other comprehensive income.

For debt
instruments classified as available for sale, the Company first assesses individually whether objective evidence of impairment exists for debt instruments that are individually significant or collectively for debt instruments that are not
individually significant. If an impairment loss has occurred, the amount recorded is the cumulative loss measured as the difference between the amortized cost and the current fair value, less any previously recognized impairment loss. This amount is
removed from other comprehensive income and recognized in the consolidated statements of income.

Future interest income
continues to be accrued based on the reduced carrying amount of the asset using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. If, in a subsequent year, the fair value of a debt
instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized, the impairment loss is reversed through the consolidated statements of income.

m) Revenue recognition

In the course of providing its services, the Company incurs certain direct costs for subconsultants and other expenditures that are recoverable directly from clients. These direct costs are included in
the Companys gross revenue. Since such direct costs can vary significantly from contract to contract, changes in gross revenue may not be indicative of the Companys revenue trends. Accordingly, the Company also reports net revenue, which
is gross revenue less subconsultant and other direct expenses.

Revenue is recognized to the extent that it is probable that
the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts, duty, and taxes collected from clients that are reimbursable to
government authorities. The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Company has concluded that it is acting as a principal in all its revenue arrangements.

Revenue from fixed-fee and variable-fee-with-ceiling contracts is recognized by reference to the stage of completion using
the revenue cost approach. Stage of completion is measured by reference to labor costs incurred to date as a percentage of total estimated labor costs for each contract. Where the contract outcome cannot be measured reliably, revenue is recognized
only to the extent that the expenses incurred are eligible to be recovered. Provisions for estimated losses on incomplete contracts are made in the period in which the losses are determined. Revenue from time-and-material contracts without stated
ceilings and from short-term projects is recognized as costs are incurred. Revenue is calculated based on billing rates for the services performed.

Unbilled revenue represents work in progress that has been recognized as revenue but not yet invoiced to clients. Billings in excess of costs represents amounts that have been invoiced to clients but not
yet recognized as revenue.

n) Employee benefit plans

The Company contributes to group retirement savings plans and an employee share purchase plan based on the amount of employee
contributions subject to maximum limits per employee. The Company accounts for defined contributions as an expense in the period in which the contributions are made. The Company does not provide postemployment or postretirement benefits.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-16



---

o) Taxes

Current income tax

Current income tax assets and liabilities for the
current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date,
in the countries where the Company operates and generates taxable income.

Current income tax, relating to items recognized
directly in equity, is recognized in equity and not in the consolidated statements of income. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to
interpretation and establishes an uncertain tax liability where appropriate.

Deferred tax

Deferred tax is determined using the liability method on temporary differences at the reporting date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences, carry
forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be
utilized. Deferred taxes are not recognized for the initial recognition of goodwill; the initial recognition of assets or liabilities, outside of a business combination, that affect neither accounting nor taxable profit; or the differences relating
to investments in subsidiaries, associates, and interests in joint ventures to the extent that the reversal can be controlled and it is probable that it will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that
future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax, relating to items recognized in equity, is recognized in equity. Deferred tax items are recognized in correlation to the
underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax
liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Sales tax

Revenues, expenses, and assets are recognized net of the amount of sales tax recoverable from, or payable to, a taxation authority. Trade
receivables and trade payables are stated with the amount of sales tax included. The net amount of sales tax recoverable from, or payable to, a taxation authority is included as part of trade receivables or trade payables, as appropriate, in the
consolidated statements of financial position.

p) Share-based payment transactions

Under the Companys share option plan, the board of directors may grant to officers and employees remuneration in the form of
share-based payment transactions, whereby officers and employees render services as consideration for equity instruments (equity-settled transactions).



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-17



---

Under the Companys deferred share unit plan, the chief executive officer and directors
of the board of the Company may receive deferred share units equal to one common share. Under the Companys restricted share unit plan, senior vice presidents are granted share units that are to be settled after a two-year period. The deferred
share units and restricted share units are share appreciation rights that can only be settled in cash (i.e., cash-settled transactions).

Equity-settled transactions

The cost of equity-settled transactions awards
is measured by reference to the fair value at the grant date using a Black-Scholes option-pricing model. The cost of equity-settled transactions is recognized, together with a corresponding increase in equity, over the period in which the service
conditions are fulfilled (the vesting period). The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Companys best
estimate of the number of equity instruments that will ultimately vest. The expense or credit to income for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recorded in
administrative and marketing expenses. No expense is recognized for awards that do not ultimately vest.

Cash-settled
transactions

The cost of cash-settled transactions is measured initially at fair value at the grant date using a
Black-Scholes option-pricing model. This fair value is expensed upon issue with the recognition of a corresponding liability. The liability is remeasured to fair value at each reporting date, up to and including the settlement date, with changes in
fair value recognized in administrative and marketing expenses.

q) Earnings per share

Basic earnings per share are computed based on the weighted average number of common shares outstanding during the period. Diluted
earnings per share are computed using the treasury stock method, which assumes that the cash that would be received on the exercise of options is applied to purchase shares at the average price during the period and that the difference between the
number of shares issued on the exercise of options and the number of shares obtainable under this computation, on a weighted average basis, is added to the number of shares outstanding. Antidilutive options are not considered in computing diluted
earnings per share.

r) Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the consideration
transferred at fair value at the acquisition date. Any contingent consideration to be transferred by the Company will be recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration, which is
deemed to be an asset or liability, will be recognized in accordance with IAS 39, Financial Instruments: Recognition and Measurement, in other income. If the business combination is achieved in stages, the acquisition-date fair value of
the Companys previously held equity interest in the acquiree is remeasured to fair value as at the acquisition date through income. Acquisition costs are expensed when incurred in administrative and marketing expenses.

Goodwill is initially measured at cost, being the excess of the consideration transferred over the Companys net identifiable assets
acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in income.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition
date, allocated to each of the Companys CGUs (Canada, United States, and International) that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-18



---

|5. | Significant Accounting Judgments, Estimates, and Assumptions
|-- | ------------------------------------------------------------

The preparation of the Companys consolidated financial statements requires management to make judgments, estimates, and assumptions that affect the reported amounts of revenues, expenses, assets,
and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the
asset or liability affected in future periods.

The key management judgments and assumptions concerning the future and other
key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

a) Revenue recognition

The Company accounts for its revenue in accordance with IAS 11, Construction Contracts, which requires estimates to be made for contract costs and revenues. Revenue from fixed-fee and
variable-fee-with-ceiling contracts is recognized using the percentage of completion method based on the ratio of labor costs incurred to total estimated labor costs. Estimating total direct labor costs is subjective and requires the use of
managements best judgments based on the information available at that point in time. The Company also provides for estimated losses on incomplete contracts in the period in which such losses are determined. Changes in the estimates are
reflected in the period in which they are made and would affect the Companys revenue and unbilled revenue.

b)
Allowance for doubtful accounts

The Company maintains an allowance for doubtful accounts for estimated losses resulting
from the inability to collect on its trade receivables. The Company uses estimates in arriving at its allowance for doubtful accounts that are based on the age of the outstanding receivables and on its historical collection and loss experience.

c) Provision for self-insured liabilities

The Company self-insures certain risks, including professional liability and automobile liability. The accrual for self-insured liabilities includes estimates of the costs of reported claims and is based
on estimates of loss using managements assumptions, including consideration of actuarial projections. These estimates of loss are derived from loss history that is then subjected to actuarial techniques in the determination of the proposed
liability. Estimates of loss may vary from those used in the actuarial projections and result in a larger loss than estimated. Any increase in loss would be recognized in the period in which the loss is determined and increase the Companys
self-insured liabilities and reported expenses.

d) Share-based payment transactions

The Company measures the cost of share-based payment transactions by reference to the fair value of the equity instruments at the date at
which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. The Company has chosen the Black-Scholes
option-pricing model for equity-settled and cash-settled share-based payment transactions. This estimate also requires determining the most appropriate inputs to the valuation model, including volatility in the price of the Companys shares, a
risk-free interest rate, and the expected hold period to exercise, and making assumptions about them. The expected volatility is based on the historical volatility of the Companys shares over a period commensurate with the expected term of the
share option. The risk-free interest rate for the expected life of the options is based on the yield available on government bonds, with an approximate equivalent remaining term at the time of the grant. Historical data is used to estimate the
expected life of the option. As well, the Company estimates its forfeiture rate for equity-settled transactions based on historical experience in order to determine the compensation expense arising from the share-based awards.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-19



---

e) Business combinations

In a business combination, the Company may acquire the assets and assume certain liabilities of an acquired entity. The estimate of fair
values for these transactions involves judgment in determining the fair values assigned to the tangible and intangible assets (i.e., backlog, client relationships, and favorable and unfavorable leases) acquired and the liabilities assumed on the
acquisition. The determination of these fair values involves a variety of assumptions, including revenue growth rates, expected operating income, discount rates, and earnings multiples.

Contingent consideration resulting from business combinations is recorded at fair value at the acquisition date as part of the business
combination based on discounted cash flows and is subsequently remeasured to fair value at each reporting date. The key assumptions used in determining fair value include the probability of meeting each performance target and a discount factor.

f) Impairment of non-financial assets

Impairment exists when the carrying amount of an asset or CGU exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. Fair value less costs to sell
is based on available data from binding sales transactions in an arms-length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. In the absence of such data, other valuation techniques
can be used to estimate fair value less costs to sell. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from budgets over an appropriate number of years and do not include restructuring activities
that the Company is not yet committed to or significant future investments that will enhance the assets performance of the CGU being tested. The recoverable amount, when based on a discounted cash flow methodology, is most sensitive to the
discount rate used, as well as the expected future cash inflows and the growth rate used for extrapolation purposes. To arrive at cash flow projections, the Company uses estimates of economic and market information over the projection period,
including growth rates in revenues, estimates of future expected changes in operating margins, and cash expenditures. Other significant estimates and assumptions include future estimates of capital expenditures and changes in future working capital
requirements.

g) Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the consolidated statements of financial position cannot be
derived from active markets, they are determined using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment
is required in establishing fair values. The judgments include considerations of inputs such as liquidity risk, credit risk, and, volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

h) Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of deferred taxable income. The Companys income tax assets and liabilities are based on
interpretations of income tax legislation across various jurisdictions, primarily in Canada and the United States. The Companys effective tax rate can change from year to year based on the mix of income among different jurisdictions, changes
in tax laws in these jurisdictions, and changes in the estimated value of deferred tax assets and liabilities. The Companys income tax expense reflects an estimate of the cash taxes it expects to pay for the current year, as well as a
provision for changes arising in the values of deferred tax assets and liabilities during the year. The tax value of these assets and liabilities is impacted by factors such as accounting estimates inherent in these balances, managements
expectations about future operating results, and previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authorities. Such differences in interpretation may arise on a wide variety of issues
depending on the conditions prevailing in the respective legal entitys domicile. Management assesses the likelihood of recovering value from deferred tax assets, such as loss carryforwards, on a regular basis, as well as the deferred tax
depreciation of capital assets, and adjusts the tax provision accordingly.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-20



---

Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant
management judgment is required to determine the amount of deferred tax assets that can be recognized, based on the likely timing and the level of future taxable profits, together with future tax-planning strategies.



|6. | Recent Accounting Pronouncements
|-- | --------------------------------

Recently adopted

On transition to IFRS, the Company adopted the annual
improvements to IFRS issued by the IASB in May 2010. The adoption of these amendments did not have an effect on the Companys financial position or on the results of its operations.

Future adoptions

The listing below includes issued standards, amendments, and interpretations that the Company reasonably expects to be applicable at a future date and intends to adopt when they become effective. Unless
otherwise noted, the effective date of each standard below is the first annual period beginning on or after January 1, 2013, with retrospective application required and early adoption permitted. Unless otherwise noted, the Company is currently
considering the impact of adopting these standards and interpretations on its consolidated financial statements and cannot reasonably estimate the effect at this time.

Financial Instruments

In November 2009, the IASB issued IFRS 9,
Financial Instruments (IFRS 9), as part of the first of three phases to replace IAS 39, Financial Instruments: Recognition and Measurement (IAS 39). The first phase addressed the classification and measurement of financial
assets. IFRS 9 replaces the multiple classification and measurement models of IAS 39 with a single model that has only two classification categories: amortized cost and fair value.

In October 2010, the IASB reissued IFRS 9, incorporating new requirements on accounting for financial liabilities and carrying over from
IAS 39 the requirements for derecognition of financial assets and financial liabilities and for classification and measurement of financial liabilities. The reissued IFRS 9 requires that the amount of change in the fair value of the financial
liability that is attributable to changes in the credit risk of that liability be presented in other comprehensive income, instead of in profit and loss.

In December 2011, the IASB issued amendments to IFRS 9 (the amendments). The amendments result in a deferred effective date for IFRS 9, from annual periods beginning on or after January 1, 2013, to
January 1, 2015, with early adoption still permitted. This deferral makes it possible for all phases of the replacement of IAS 39 to have the same mandatory effective date. The amendments provide relief in restating prior periods, requiring
instead that entities provide disclosures to allow financial statement users to understand the initial impact of applying IFRS 9.

Financial Instruments: Presentation

In December 2011, the IASB issued
amendments to IAS 32, Financial Instruments: Presentation (IAS 32) (the amendments). The amendments clarify when an entity has a legally enforceable right to set-off, as well as clarifying the application of offsetting criteria related
to some settlement systems that may be considered the same as net settlement. The amendments to IAS 32 are applicable for annual periods beginning on or after January 1, 2014.

Financial Instruments: Disclosures

In October 2010, the IASB issued amendments to IFRS 7, Financial Instruments: Disclosures (IFRS 7) (the amendments). The amendments require additional qualitative and quantitative disclosure
associated with the



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-21



---

transfers of financial assets. Entities are required to apply the amendments for annual periods beginning on or after July 1, 2011. Early adoption is permitted. The new disclosure
requirements are required to be applied prospectively. The adoption of the amendments is not expected to have a material impact on the Companys consolidated financial statements.

In December 2011, the IASB issued further amendments to IFRS 7 related to the disclosures of offsetting financial assets and financial
liabilities. These amendments require disclosure of information that will allow financial statement users to assess the impact of an entitys netting arrangements, including rights of set-off associated with an entitys recognized
financial assets and liabilities, on the entitys statement of financial position.

Consolidated Financial Statements

In May 2011, the IASB issued IFRS 10, Consolidated Financial Statements, which replaces Standing
Interpretations Committee (SIC)-12, Consolidation-Special Purpose Entities (SIC-12), and parts of IAS 27, Consolidated and Separate Financial Statements (IAS 27). The new standard builds on existing principles by identifying
the concept of control as the determining factor in whether an entity should be included in a companys consolidated financial statements. The standard provides additional guidance to assist in the determination of control where it is difficult
to assess.

Joint Arrangements

In May 2011, the IASB issued IFRS 11, Joint Arrangements (IFRS 11), to establish principles for financial reporting by parties to a joint arrangement. This standard supersedes IAS 31,
Interests in Joint Ventures (IAS 31), and SIC-13, Jointly Controlled EntitiesNon-Monetary Contributions by Venturers. Under IFRS 11, joint arrangements are classified as either joint operations or joint ventures; the
classification of a joint arrangement focuses on the nature and substance of the rights and obligations of the arrangement. IFRS 11 requires that joint ventures be accounted for using the equity method, rather than proportionate consolidation.

Investments in Associates and Joint Ventures

In May 2011, the IASB amended IAS 28, Investments in Associates and Joint Ventures (IAS 28), previously IAS 28, Investments in Associates. The amended IAS 28 sets out the
accounting for investments in associates and the requirements for application of the equity method when accounting for investments in associates and joint ventures.

Disclosure of Interests in Other Entities

In May 2011, the IASB issued
IFRS 12, Disclosure of Interests in Other Entities (IFRS 12). IFRS 12 combines the disclosure requirements for an entitys interests in subsidiaries, joint arrangements, associates, and structured entities into one comprehensive
disclosure standard. Many of the disclosure requirements were previously included in IAS 27, IAS 28, IAS 31, and SIC-12, while others are new. IFRS 12 requires that an entity disclose the significant judgment and assumptions it has made in
determining whether it controls an entity.

Fair Value Measurement

In May 2011, the IASB issued IFRS 13, Fair Value Measurement (IFRS 13). IFRS 13 provides guidance on how to measure fair value
under IFRS when fair value is required or permitted by other standards. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. IFRS 13 requires enhanced disclosure for fair value. IFRS 13 is applied prospectively for annual periods beginning on or after January 1, 2013, and comparative disclosures for prior periods are not required.

Presentation of Financial Statements

In June 2011, the IASB issued amendments to IAS 1, Presentation of Financial Statements (IAS 1), to improve the consistency and clarity of items presented in other comprehensive income. The
amendments require that items presented in other comprehensive income be grouped into two categories: 1) items that may be reclassified into profit or loss at a future date and 2) items that will never be reclassified into profit or loss. The
amendments to IAS 1 are effective for annual periods beginning on or after July 1, 2012.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-22



---

Employee Benefits

In June 2011, the IASB issued amendments to IAS 19, Employee Benefits (the amendments). Among other changes, the amendments
impact the timing of the recognition of termination benefits. The revised standard requires termination benefits outside of a wider restructuring to be recognized only when the offer becomes legally binding and cannot be withdrawn. In the context of
a wider restructuring, termination benefits are recognized at the same time as other restructuring costs.



|7. | Business Acquisitions
|-- | ---------------------

Acquisitions are accounted for under the acquisition method of accounting, and the results of operations since the respective dates of
acquisition are included in the consolidated statements of income. From time to time, as a result of the timing of acquisitions in relation to the Companys reporting schedule, certain estimates of fair values of assets and liabilities acquired
may not be finalized at the initial time of reporting. These estimates are completed after the vendors final financial statements and income tax returns have been prepared and accepted by the Company and when the valuation of intangible assets
acquired is finalized. The preliminary fair values are based on managements best estimates of the acquired identifiable assets and liabilities at the acquisition date. During a measurement period not to exceed one year, adjustments to the
initial estimates may be required to finalize the fair value of assets and liabilities acquired. The Company will revise comparative information if these measurement period adjustments are material.

The consideration paid for acquisitions may be subject to price adjustment clauses included in the purchase agreements and may extend
over a number of years. At each consolidated statement of financial position date, these price adjustment clauses are reviewed, which may result in an increase or reduction to the note payable consideration recorded at acquisition to reflect either
more or less non-cash working capital than was originally recorded. Since these adjustments are due to facts and circumstances occurring after the acquisition date, they are not considered measurement period adjustments.

In addition, consideration, specified in certain purchase agreements, may be based on future performance parameters. This contingent
consideration is recognized at its fair value at the acquisition date. Any changes to the fair value after the acquisition date are recorded in other (income) expense.

In the case of some acquisitions, additional payments may be made to the employees of an acquired company that are based on their continued service over an agreed period of time. These additional payments
are not included in the purchase price. They are expensed, as compensation, as services are provided by the employees.

Acquisitions in 2011

On February 11, 2011, the Company acquired all the shares and business of QuadraTec, Inc. for cash consideration and notes payable. With offices in Newfoundland and Labrador, QuadraTec, Inc. provides
mechanical, electrical, industrial, and communications engineering; energy management; design studies; and contract management.

On May 27, 2011, the Company acquired all the shares and business of the Caltech Group (Caltech) for cash consideration and notes
payable. Headquartered in Calgary, Alberta, Caltech provides multidisciplinary engineering, procurement, and construction management services. The addition of Caltechs services augmented the Companys existing oil and gas and power
business throughout North America. Caltech has experience in the design of utility, electrical asset, and telecom facilities, which includes a range of client planning, engineering, consulting, and development services.

On September 2, 2011, the Company acquired all the shares and business of Bonestroo, Inc. and Bonestroo Services, LLC (Bonestroo)
for cash consideration and promissory notes. Bonestroo is an engineering, planning,



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-23



---

and environmental science firm with offices in Minnesota, Wisconsin, Illinois, Michigan, and North Dakota. The addition of Bonestroo enhances and augments the Companys expertise with the
firms specialty services in infrastructure planning, streets and utilities, water supply, water storage, water distribution, brownfield redevelopment, environmental planning, environmental management, environmental compliance, transportation
engineering, traffic engineering, bridge design, water resources management, ice design, aquatics design, athletic fields, and sports courts design.

On October 1, 2011, the Company acquired all the shares and business of FSC Architects and Engineers (FSC) for cash consideration and promissory notes. FSC is an integrated architecture and
engineering firm specializing in cold climate and remote location projects. The firm has offices in Yellowknife, Northwest Territories; Whitehorse, Yukon; Iqaluit, Nunavut; and Edmonton, Alberta. FSC is active in many sectors including airports,
education, emergency services, healthcare, residential, and sports and leisure, and, therefore, will primarily augment the Companys Building practice area unit, with additional services in Transportation and Environment.

On October 28, 2011, the Company acquired all the shares and business of ENTRAN, Inc. for cash consideration and promissory notes.
The acquisition of ENTRAN, Inc. augments the Companys Transportation practice area unit. ENTRAN, Inc. has offices in Lexington, Kentucky; Louisville, Kentucky; Cincinnati, Ohio; Chicago, Illinois; Nashville, Tennessee; and Charleston, West
Virginia. ENTRAN, Inc. specializes in roadway and bridge design, transportation planning and traffic engineering, construction engineering services, and aviation services.

Acquisitions in 2010

On March 1, 2010, the Company acquired the net
assets and business of Project Control Group Inc. for cash consideration and notes payable. The acquisition of this firm, located in Toronto, Ontario, strengthened the Companys program and project management expertise.

On April 30, 2010, the Company acquired all the shares and business of the Winnipeg, Manitoba-based firm TetrES Consultants
Inc. (TetrES) for cash consideration and notes payable. TetrES is an environmental management consulting firm that specializes in providing infrastructure and master planning, environmental assessment, and management of strategic
regulatory issues and regulatory defense and expert testimony for the energy, government, mining, food-processing, petrochemical, and tribunal support sectors. The acquisition of this firm strengthened the Companys environmental services in
Canada.

On July 2, 2010, the Company acquired all the shares and business of IEA Holdings, Inc. (IEA) for cash
consideration and promissory notes. The acquisition of IEA, headquartered in Portland, Maine, enhanced the Companys expertise in the power sector. IEA specializes in providing engineering, project management, procurement, construction
management, and start-up services for the energy market.

On July 23, 2010, the Company acquired all the shares and
business of WilsonMiller Inc. for cash consideration and promissory notes. Headquartered in Naples, Florida, with offices throughout the state, WilsonMiller Inc. is a multidisciplinary planning, design, and engineering firm that provides services
for infrastructure, transportation, land management, and environmental projects to public and private sector clients.

On
July 30, 2010, the Company acquired the net assets and business of Natural Resources Consulting, Inc. (NRC) for cash consideration and promissory notes. The acquisition of this firm, headquartered in Cottage Grove, Wisconsin, strengthened the
Companys Environment practice area unit. NRC provides environmental permitting and compliance support services particularly related to the siting and permitting of electrical transmission lines, natural gas and petroleum pipelines, and
renewable energy projects.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-24



---

On August 6, 2010, the Company acquired the net assets and business of Communication
Arts, Inc. (CommArts) for cash consideration and promissory notes. The acquisition of this firm, headquartered in Boulder, Colorado, enhanced the Companys Architecture practice. CommArts is a design firm that specializes in project visioning,
branding, and associated conceptual architectural and environmental graphics.

On September 10, 2010, the Company
acquired all the shares and business of Anshen & Allen Architecture, Inc. (Anshen + Allen) for cash consideration and notes payable. Anshen + Allen is an international architecture firm that specializes in the design of healthcare,
academic, and research facilities through offices in San Francisco, California; Columbus, Ohio; Boston, Massachusetts; and London, England.

On September 15, 2010, the Company acquired all the shares and business of ECO:LOGIC Engineering (ECO:LOGIC) for cash consideration and promissory notes. The acquisition of ECO:LOGIC, headquartered
in Rocklin, California, enhanced the services offered in the Companys Environment practice area unit. ECO:LOGIC specializes in the planning, permitting, design, construction management, and operations of water and wastewater facilities in
Northern California and Nevada.

On October 8, 2010, the Company acquired the net assets and business of Street Smarts,
Inc. and Data Smarts, LLC (Street Smarts) for cash consideration and promissory notes. These firms, based in Duluth, Georgia, provide services to both the public and private sectors in transportation planning, traffic engineering, roadway design,
surveying and geomatics, subsurface utility engineering, and land development. The acquisition of Street Smarts provided greater depth to the Transportation practice in the southeastern United States and built on the Companys presence in
Atlanta, Georgia.

On December 3, 2010, the Company acquired all the shares and business of Burt Hill, Inc. (Burt Hill)
for cash consideration and promissory notes. This Pennsylvania-headquartered international architecture and engineering firm specializes in higher education and healthcare design. Burt Hills office locations largely complement the
Companys existing operations along the US East Coast, including a shared presence in Pittsburgh and Philadelphia, Pennsylvania; Boston, Massachusetts; Columbus, Ohio; and Phoenix, Arizona. The acquisition also added US staff in Butler and
State College, Pennsylvania; Cleveland, Ohio; Washington, DC; and Miami, Florida, and international staff in the United Arab Emirates and India.

During 2011, the Company finalized the estimated fair value of assets acquired and liabilities assumed for the TetrES, IEA, WilsonMiller, Inc., NRC, CommArts, Anshen + Allen, ECO:LOGIC, Street
Smarts, Burt Hill, and QuadraTec, Inc. acquisitions. The Company expects to finalize the estimated fair value of assets acquired and liabilities assumed for the Caltech acquisition in the second quarter of 2012; for the Bonestroo acquisition in the
third quarter of 2012; and for the FSC and ENTRAN, Inc. acquisitions in the fourth quarter of 2012.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-25



---

Aggregate consideration for assets acquired and liabilities assumed

Details of the aggregate consideration transferred and the fair value of the identifiable assets and liabilities acquired at the date of
acquisition are as follows:



Total


Total2011


2010(In thousands of Canadian dollars)

Notes


$


$Cash consideration






30,658



79,256Notes payable






31,812



39,878Consideration






62,470



119,134Assets and liabilities acquiredCash acquired






108



12,267Bank indebtedness assumed






(3,389
)


(3,895
)Non-cash working capital






16,353



(1,476
)Property and equipment


10



4,260



13,925Investments






317



1,493Other financial assets






8,420



6,655Intangible assets


12Client relationships






1,709



13,119Contract backlog






7,828



5,289Software






-



391Lease disadvantages






(5,975
)


-Other






1,998



195Provisions


19



(2,948
)


(3,727
)Other liabilities






(530
)


(493
)Long-term debt






(9,060
)


(15,965
)Deferred income taxes


29



(238
)


(5,071
)Total identifiable net assets at fair value






18,853



22,707Non-controlling interest in subsidiaries






-



83Goodwill arising on acquisitions


11



43,617



96,344Consideration






62,470



119,134


Trade receivables assumed from acquired companies are recognized at their fair value at the time of
acquisition. The fair value of trade receivables amounts to $24,949,000 (December 31, 2010  $49,567,000). The gross amount of trade receivables is $26,785,000 (December 31, 2010  $55,953,000).

Goodwill comprises the value of expected synergies arising from an acquisition, the expertise and reputation of the assembled workforce
acquired, and the geographic location of the acquiree. Of the goodwill and intangible assets resulting from acquisitions completed in 2011, $12,958,000 (December 31, 2010  $25,494,000) is deductible for income tax purposes.

The fair value of provisions are determined at the acquisition date. These liabilities relate to claims that are subject to legal
arbitration. During 2011, the Company assumed $2,039,000 in provisions for claims relating to current acquisitions. As at the reporting date, provisions for claims outstanding from current and prior acquisitions were reassessed and determined to be
$9,385,000 based on their expected probable outcome. Certain of these claims are indemnified by the acquiree (note 15). The Company recorded $808,000 of indemnification assets relating to current-year acquisitions.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-26



---

For business combinations that occurred in 2011, the Company estimates that gross revenue
earned in 2011, since these acquired entities acquisition date, is $39,958,000. For business combinations that occurred in 2010, the Company estimates that gross revenue earned in 2010, since these acquired entities acquisition date, is
$46,601,000. The Company integrates the operations and systems of acquired entities shortly after the acquisition date; therefore, it is impracticable for the Company to disclose the acquirees earnings in its consolidated financial statements
since the acquisition date.

If the business combinations that occurred in 2011 had taken place at the beginning of 2011,
gross revenue from continuing operations for the year ended December 31, 2011 would have been $1,747,483,000 and the profit from continuing operations for the Company would have been $13,070,000. If the business combinations that occurred in
2010 had taken place at the beginning of 2010, gross revenue from continuing operations for the fiscal year 2010 would have been $1,692,132,000 and the profit from continuing operations for the Company would have been $95,793,000.

In 2011, directly attributable acquisition-related costs of $508,000 (December 31, 2010  $1,946,000) have been expensed and are
included in administrative and marketing expenses.

Consideration paid and outstanding

Details of the consideration paid for current and past acquisitions are as follows:



(In thousands of Canadian dollars)

December 312011
$


December 31 2010 $Cash consideration (net of cash acquired)


30,550



66,989Payments on notes payable from previous acquisitions


41,120



37,703Contingent consideration paid


4,764



1,701Total net cash paid


76,434



106,393The total notes payable, contingent consideration outstanding, and adjustments to these obligations are as follows:(In thousands of Canadian dollars)

NotesPayable $


ContingentConsideration
$January 1, 2010


89,822



5,854Additions for acquisitions in the year


39,878



-Other adjustments


109



476Payments


(37,703
)


(1,701
)Interest


-



192Impact of foreign exchange


(1,862
)


(218
)December 31, 2010


90,244



4,603Additions for acquisitions in the year


31,812



-Other adjustments


27



(130
)Payments


(41,120
)


(4,764
)Interest


333



41Impact of foreign exchange


1,059



250December 31, 2011


82,355



-




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-27



---

During 2010, the Company adjusted the notes payable on the Granary Associates, Inc.; the
Jacques Whitford Group Ltd. and Jacques Whitford Global Group Limited (Jacques Whitford); The Zande Companies, Inc.; the Murphy Hilgers Architects Inc.; the Dunlop Architects Inc.; and the McIntosh Engineering Holdings Corporation acquisitions
pursuant to price adjustment clauses included in the purchase agreements. These adjustments impacted non-cash working capital.

During 2011, the Company adjusted the notes payable on the Murphy Hilgers Architects Inc.; The Zande Companies, Inc.; the McIntosh
Engineering Holdings Corporation; the Jacques Whitford; the TetrES; the WilsonMiller Inc.; the Anshen + Allen; the ECO:LOGIC; the Street Smarts; the Burt Hill; the QuadraTec Inc.; and the Caltech acquisitions, pursuant to price adjustment
clauses included in the purchase agreements. These adjustments impacted non-cash working capital.

The Company uses the income
approach to determine the fair value of contingent consideration. Contingent consideration may be payable at various dates depending on whether the prior owners meet various future performance parameters. During 2011, since indicators showed that
future performance parameters would be achieved, the Company increased the fair value of contingent consideration by $122,000 (December 31, 2010 -$476,000) and the amount was charged to income. In addition, certain prior owners did not meet their
performance target in 2011; therefore, $252,000 (December 31, 2010  nil) in accrued contingent consideration was reversed and credited to income. In 2011; $4,764,000 (December 31, 2010  $1,701,000) of contingent consideration was settled
and paid to prior owners. As at December 31, 2011, there is no contingent consideration outstanding.



|8. | Cash and Short-Term Deposits
|-- | ----------------------------

The Companys policy is to invest cash in excess of operating requirements in highly liquid investments. Cash and cash equivalents consist of the following:



(In thousands of Canadian dollars)

December 31 2011 $


December 31 2010 $


January 1 2010 $Cash in bank and on hand


33,533



59,829



12,767Unrestricted investments


1,534



2,902



1,923Cash held in escrow


1,044



-



-Cash and cash equivalents


36,111



62,731



14,690


Unrestricted investments consist of short-term bank deposits with initial maturities of three
months or less.

As part of the Bonestroo acquisition (note 7), US$1,027,000 was placed in an escrow account to be settled on
September 2, 2012, pending the outcome of price adjustment clauses included in the purchase agreement. A corresponding US$1,027,000 obligation was also recorded at acquisition.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-28



---

|9. | Trade and Other Receivables
|-- | ---------------------------



(In thousands of Canadian dollars)

December 312011
$


December 312010
$


January 12010 $Trade receivables, net of allowance


302,791



285,449



238,983Joint venture trade receivables


2,061



3,652



5,017Holdbacks, current


2,797



2,184



2,829Other


3,020



4,455



6,376Trade and other receivables


310,669



295,740



253,205


The Company maintains an allowance for estimated losses on trade receivables. The estimate is based
on the best assessment of the collectability of the related receivable balance based, in part, on the age of the outstanding receivables and on the Companys historical collection and loss experience. The following table provides a
reconciliation of changes to the Companys allowance for doubtful accounts.



(In thousands of Canadian dollars)

December 312011
$


December 312010
$


January 12010 $Balance, beginning of the year


8,033



9,395



11,597Provision for doubtful accounts


9,627



5,915



17,151Deductions


(5,986
)


(6,892
)


(17,734
)Impact of foreign exchange


548



(385
)


(1,619
)Balance, end of the year


12,222



8,033



9,395


The aging analysis of gross trade receivables is as follows:



(In thousands of Canadian dollars)

Total $


1-30 $


31-60 $


61-90 $


91-120$


120+ $December 31, 2011


315,013



171,036



74,299



26,673



15,880



27,125December 31, 2010


293,482



160,141



69,715



22,600



17,500



23,526January 1, 2010


248,378



141,737



43,857



27,346



12,491



22,947




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-29



---

|10. | Property and Equipment
|--- | ----------------------



|                                   |  |                       |        |   |                  |  |        |                      |  |  |                        |   |  |                           |        |   |            |  |        |       |  |  |         |   |  |  |       |   |  |  |         |  
|---------------------------------- |  | --------------------- | ------ | - | ---------------- |  | ------ | -------------------- |  |  | ---------------------- | - |  | ------------------------- | ------ | - | ---------- |  | ------ | ----- |  |  | ------- | - |  |  | ----- | - |  |  | ------- | -
|(In thousands of Canadian dollars) |  | EngineeringEquipment$ |        |   | OfficeEquipment$ |  |        | AutomotiveEquipment$ |  |  | LeaseholdImprovements$ |   |  | AssetsunderFinanceLeases$ |        |   | Buildings$ |  |        | Land$ |  |  | Total $ |  
|                                   | 
|                                   |  |                       |        |   |                  |  |        |                     
|Cost:                              |  |                       |        |   |                  |  |        |                      |  |  |                        |   |  |                           |        |   |            |  |        |       |  |  |         |   |  |  |       |   |  |  |         |  
|January 1, 2010                    |  |                       | 76,029 |   |                  |  | 40,397 |                      |  |  | 7,123                  |   |  |                           | 58,855 |   |            |  | 3,680  |       |  |  | 9,144   |   |  |  | 1,837 |   |  |  | 197,065 |  
|Additions                          |  |                       | 11,898 |   |                  |  | 2,997  |                      |  |  | 659                    |   |  |                           | 8,008  |   |            |  | 32     |       |  |  | 92      |   |  |  | 640   |   |  |  | 24,326  |  
|Additions arising on acquisitions  |  |                       | 3,356  |   |                  |  | 3,228  |                      |  |  | 877                    |   |  |                           | 5,365  |   |            |  | 33     |       |  |  | 1,038   |   |  |  | 28    |   |  |  | 13,925  |  
|Disposals                          |  |                       | (5,066 | ) |                  |  | (1,064 | )                    |  |  | (723                   | ) |  |                           | (2,054 | ) |            |  | -      |       |  |  | -       |   |  |  | -     |   |  |  | (8,907  | )
|Transferred to held for sale       |  |                       | -      |   |                  |  | -      |                      |  |  | (140                   | ) |  |                           | -      |   |            |  | -      |       |  |  | (1,892  | ) |  |  | (505  | ) |  |  | (2,537  | )
|Transfers                          |  |                       | 210    |   |                  |  | 7      |                      |  |  | 415                    |   |  |                           | 68     |   |            |  | (700   | )     |  |  | -       |   |  |  | -     |   |  |  | -       |  
|Impact of foreign exchange         |  |                       | (1,559 | ) |                  |  | (696   | )                    |  |  | (256                   | ) |  |                           | (1,019 | ) |            |  | 1      |       |  |  | (157    | ) |  |  | (39   | ) |  |  | (3,725  | )
|                                   | 
|                                   |  |                       |        |   |                  |  |        |                     
|December 31, 2010                  |  |                       | 84,868 |   |                  |  | 44,869 |                      |  |  | 7,955                  |   |  |                           | 69,223 |   |            |  | 3,046  |       |  |  | 8,225   |   |  |  | 1,961 |   |  |  | 220,147 |  
|                                   | 
|                                   |  |                       |        |   |                  |  |        |                     
|Additions                          |  |                       | 10,880 |   |                  |  | 2,598  |                      |  |  | 872                    |   |  |                           | 7,110  |   |            |  | -      |       |  |  | -       |   |  |  | (140  | ) |  |  | 21,320  |  
|Additions arising on acquisitions  |  |                       | 837    |   |                  |  | 768    |                      |  |  | 282                    |   |  |                           | 2,319  |   |            |  | 54     |       |  |  | -       |   |  |  | -     |   |  |  | 4,260   |  
|Disposals                          |  |                       | (4,887 | ) |                  |  | (1,805 | )                    |  |  | (1,034                 | ) |  |                           | (8,066 | ) |            |  | (28    | )     |  |  | -       |   |  |  | -     |   |  |  | (15,820 | )
|Transferred to held for sale       |  |                       | -      |   |                  |  | -      |                      |  |  | -                      |   |  |                           | -      |   |            |  | -      |       |  |  | (1,006  | ) |  |  | (523  | ) |  |  | (1,529  | )
|Transfers                          |  |                       | 712    |   |                  |  | 112    |                      |  |  | 199                    |   |  |                           | -      |   |            |  | (1,023 | )     |  |  | -       |   |  |  | -     |   |  |  | -       |  
|Impact of foreign exchange         |  |                       | 758    |   |                  |  | 318    |                      |  |  | 118                    |   |  |                           | 568    |   |            |  | (3     | )     |  |  | 35      |   |  |  | 15    |   |  |  | 1,809   |  
|                                   | 
|                                   |  |                       |        |   |                  |  |        |                     
|December 31, 2011                  |  |                       | 93,168 |   |                  |  | 46,860 |                      |  |  | 8,392                  |   |  |                           | 71,154 |   |            |  | 2,046  |       |  |  | 7,254   |   |  |  | 1,313 |   |  |  | 230,187 |  
|                                   | 
|                                   |  |                       |        |   |                  |  |        |                     
|Accumulated depreciation:          |  |                       |        |   |                  |  |        |                      |  |  |                        |   |  |                           |        |   |            |  |        |       |  |  |         |   |  |  |       |   |  |  |         |  
|January 1, 2010                    |  |                       | 44,593 |   |                  |  | 22,558 |                      |  |  | 4,850                  |   |  |                           | 16,276 |   |            |  | 953    |       |  |  | 5       |   |  |  | -     |   |  |  | 89,235  |  
|Current year depreciation          |  |                       | 9,685  |   |                  |  | 3,955  |                      |  |  | 845                    |   |  |                           | 8,884  |   |            |  | 684    |       |  |  | 1,408   |   |  |  | -     |   |  |  | 25,461  |  
|Disposals                          |  |                       | (4,179 | ) |                  |  | (608   | )                    |  |  | (421                   | ) |  |                           | (1,399 | ) |            |  | 44     |       |  |  | -       |   |  |  | -     |   |  |  | (6,563  | )
|Transferred to held for sale       |  |                       | -      |   |                  |  | -      |                      |  |  | 165                    |   |  |                           | -      |   |            |  | -      |       |  |  | (301    | ) |  |  | -     |   |  |  | (136    | )
|Transfers                          |  |                       | 173    |   |                  |  | (3     | )                    |  |  | 238                    |   |  |                           | -      |   |            |  | (408   | )     |  |  | -       |   |  |  | -     |   |  |  | -       |  
|Impact of foreign exchange         |  |                       | (766   | ) |                  |  | (274   | )                    |  |  | (167                   | ) |  |                           | (314   | ) |            |  | (2     | )     |  |  | (16     | ) |  |  | -     |   |  |  | (1,539  | )
|                                   | 
|                                   |  |                       |        |   |                  |  |        |                     
|December 31, 2010                  |  |                       | 49,506 |   |                  |  | 25,628 |                      |  |  | 5,510                  |   |  |                           | 23,447 |   |            |  | 1,271  |       |  |  | 1,096   |   |  |  | -     |   |  |  | 106,458 |  
|                                   | 
|                                   |  |                       |        |   |                  |  |        |                     
|Current year depreciation          |  |                       | 10,974 |   |                  |  | 4,324  |                      |  |  | 883                    |   |  |                           | 10,452 |   |            |  | 339    |       |  |  | 961     |   |  |  | -     |   |  |  | 27,933  |  
|Disposals                          |  |                       | (4,162 | ) |                  |  | (1,382 | )                    |  |  | (904                   | ) |  |                           | (6,531 | ) |            |  | (15    | )     |  |  | -       |   |  |  | -     |   |  |  | (12,994 | )
|Transferred to held for sale       |  |                       | -      |   |                  |  | -      |                      |  |  | -                      |   |  |                           | -      |   |            |  | -      |       |  |  | (18     | ) |  |  | -     |   |  |  | (18     | )
|Transfers                          |  |                       | 414    |   |                  |  | 49     |                      |  |  | 129                    |   |  |                           | -      |   |            |  | (592   | )     |  |  | -       |   |  |  | -     |   |  |  | -       |  
|Impact of foreign exchange         |  |                       | 470    |   |                  |  | 185    |                      |  |  | 74                     |   |  |                           | 208    |   |            |  | -      |       |  |  | 18      |   |  |  | -     |   |  |  | 955     |  
|                                   | 
|                                   |  |                       |        |   |                  |  |        |                     
|December 31, 2011                  |  |                       | 57,202 |   |                  |  | 28,804 |                      |  |  | 5,692                  |   |  |                           | 27,576 |   |            |  | 1,003  |       |  |  | 2,057   |   |  |  | -     |   |  |  | 122,334 |  
|                                   | 
|                                   |  |                       |        |   |                  |  |        |                     
|Net book value:                    |  |                       |        |   |                  |  |        |                      |  |  |                        |   |  |                           |        |   |            |  |        |       |  |  |         |   |  |  |       |   |  |  |         |  
|At January 1, 2010                 |  |                       | 31,436 |   |                  |  | 17,839 |                      |  |  | 2,273                  |   |  |                           | 42,579 |   |            |  | 2,727  |       |  |  | 9,139   |   |  |  | 1,837 |   |  |  | 107,830 |  
|                                   | 
|                                   |  |                       |        |   |                  |  |        |                     
|At December 31, 2010               |  |                       | 35,362 |   |                  |  | 19,241 |                      |  |  | 2,445                  |   |  |                           | 45,776 |   |            |  | 1,775  |       |  |  | 7,129   |   |  |  | 1,961 |   |  |  | 113,689 |  
|                                   | 
|                                   |  |                       |        |   |                  |  |        |                     
|At December 31, 2011               |  |                       | 35,966 |   |                  |  | 18,056 |                      |  |  | 2,700                  |   |  |                           | 43,578 |   |            |  | 1,043  |       |  |  | 5,197   |   |  |  | 1,313 |   |  |  | 107,853 |  
|                                   | 



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-30



---

Included in leasehold improvements is construction work in progress in the amount of $24,000
(December 31, 2010  $347,000), on which depreciation has not started. The Company entered into finance leases for certain office and automotive equipment.

Revaluation of land and buildings

Land and buildings balances, including
investment property (see below) in existence as at January 1, 2010, were revalued by professional valuators at that date on an existing-use basis. As stated in the accounting policies note, this revaluation has been carried forward as deemed
cost under the transitional provisions of IFRS 1.

Investment property

Investment property is measured initially at cost, including transaction costs (except at January 1, 2010, on transition to IFRS,
investment property was measured at fair value). Subsequent to initial recognition, investment properties are stated at amortized cost. At January 1, 2010, the fair value of the investment property was $881,000. The fair value was determined
based on valuations performed by an independent professional valuator. As at December 31, 2010, the investment property was transferred to assets held for sale.



|11. | Goodwill
|--- | --------



(In thousands of Canadian dollars)

December 31 2011 $


December 31 2010 $Net goodwill, beginning of the year


548,272



468,814Current year acquisitions


43,617



96,344Impairment


(90,000
)


-Impact of foreign exchange


7,139



(16,886
)Net goodwill, end of the year


509,028



548,272Gross goodwill, end of the year


687,028



636,272Accumulated impairment losses


(178,000
)


(88,000
)Net goodwill, end of the year


509,028



548,272


Goodwill arising on acquisitions includes factors such as the expertise and reputation of the
assembled workforce acquired, the geographic location of the acquiree, and the expected synergies.

Effective the third
quarter of 2011, the Company changed the date of its annual goodwill impairment test to October 1 from July 1. In accordance with its accounting policies, the Company conducts a goodwill impairment test annually or more frequently if
circumstances indicate that an impairment may occur or if a significant acquisition occurs between the annual impairment date and December 31.

In 2010, the Company performed an impairment test as at January 1, 2010, on transition to IFRS as required by IFRS 1. In addition, the Company performed its annual goodwill impairment test as at
July 1, 2010. Due to the acquisitions completed in the third and fourth quarters of 2010, an impairment test was also performed as at December 31, 2010. Based on the results of these tests, the Company concluded that the recoverable amount
of its CGUs exceeded their carrying amount and, therefore, goodwill was not impaired.

The Company allocates goodwill to its
CGUs, which are also its operating segments. These CGUs are defined based on the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Other factors
are considered, including how management



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-31



---

monitors the entitys operations. In 2010, the Company defined its CGUs as Canada East, Canada West, US East, and US West. With its growth internationally in 2010 and resulting
reorganization, the Company redefined its CGUs as Canada, the United States, and International, effective January 1, 2011. The Company does not monitor goodwill at or allocate goodwill to its practice area units.

On October 1, 2011, the Company performed its annual goodwill impairment test in accordance with its policy as described in note 4.
Due to stock market fluctuations, the Companys share price decreased as at October 1, 2011, adversely impacting its market capitalization. In addition, due to ongoing challenging economic conditions, the short-term performance of the
Companys US and International CGUs was weaker than expected. Considering these factors and their impact on the annual goodwill impairment test, the Company concluded that goodwill was impaired and, in the fourth quarter, recorded a
$90.0 million non-cash goodwill impairment charge to income. The Company allocated $78.8 million of this charge to the US CGU and $11.2 million to the International CGU. This non-cash charge does not impact the operations of the Company.

The Company has allocated its goodwill to its CGUs as follows:



(In thousands of Canadian dollars)

December 31 2011 $Canada


247,734United States


261,294International


-Allocated


509,028




(In thousands of Canadian dollars)

December 31 2010 $


January 1 2010 $Canada East


79,396



77,645Canada West


130,020



121,445US East


126,325



117,368US West


176,931



152,356Allocated


512,672



468,814Unallocated


35,600



-548,272



468,814


At December 31, 2010, the goodwill associated with the Burt Hill acquisition remained
unallocated to the Companys CGUs due to a lack of available information.

Management believes that the methodology used
to test impairment of goodwill, which involves a significant number of judgments and estimates, provides a reasonable basis for determining whether an impairment has occurred. Many of the factors used in determining whether or not goodwill is
impaired are outside managements control and involve inherent uncertainty. Therefore, actual results could differ from those estimated. It is reasonably likely that assumptions and estimates will change in future periods and could have a
significant impact on the recoverable amount of a CGU, resulting in impairments.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-32



---

Valuation techniques

In performing the goodwill impairment test, the Company compares the recoverable amount of its CGUs to their respective carrying amounts.
If the carrying amount of a CGU is higher than its recoverable amount, an impairment charge is recorded as a reduction in the carrying amount of the goodwill on the consolidated statements of financial position and recognized as a non-cash
impairment charge in income.

The Company estimates the recoverable amount by using the fair value less costs to sell
approach. It estimates fair value using market information and discounted after-tax cash flow projections, which is known as the income approach. The income approach uses a CGUs projection of estimated operating results and discounted cash
flows based on a discount rate that reflects current market conditions. The Company uses cash flow projections from financial forecasts approved by senior management covering a five-year period. For its October 1, 2011, impairment test, the
Company discounted its CGUs cash flows using after-tax discount rates ranging from 9.6% to 17% (December 31, 2010  9.75% to 11.75%; July 1, 2010  9.7% to 11.5%; January 1, 2010  10% to 12%). To arrive at
cash flow projections, the Company used estimates of economic and market information over the projection period as described in note 5.

The Company validates its estimate of the fair value of each CGU under the income approach by comparing the resulting multiples to multiples derived from comparable public company transactions or
acquisition multiples on comparable private company transactions. The Company reconciles the total of the fair values of its CGUs with its market capitalization to determine if the sum of the individual fair values is reasonable. If the
reconciliation indicates a significant difference between the external market capitalization and the fair values of the CGUs, the Company reviews and adjusts, if appropriate, the discount rates by CGUs and considers if the implied control premium is
reasonable in light of current market conditions.

Although the Company has reduced the carrying amount of goodwill, if market
and economic conditions deteriorate or if continued volatility in the financial markets causes declines in the Companys share price, increases the weighted average cost of capital, or changes valuation multiples or other inputs to its goodwill
assessment, the Company may need to test its goodwill for impairment between its annual testing periods. In addition, it is possible that changes in the numerous variables associated with the judgments, assumptions, and estimates made by management
in assessing the fair value of the Companys goodwill could cause its CGUs to be further impaired. Goodwill impairment charges are non-cash charges that could have a material adverse effect on the Companys consolidated financial
statements but in themselves do not have any adverse effect on its liquidity, cash flows from operating activities, or debt covenants and will not have an impact on its future operations.

Key assumptions

The calculation of fair value less costs to sell for all CGUs is most sensitive to the following assumptions:



| |  |  | Operating margins based on actual experience and managements long-term projections.
| | - |  | ------------------------------------------------------------------------------------



| |  |  | Discount rates reflecting investors expectations when discounting future cash flows to a present value, taking into consideration market rates of
return, capital structure, company size, and industry risk. This rate is further adjusted to reflect risks specific to the CGU for which future estimates of cash flows have not been adjusted.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Growth rate estimates based on actual experience and market analysis. Projections are extrapolated beyond five years using a growth rate that typically
does not exceed 4.0%.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-33



---

Sensitivity to changes in assumptions

As at October 1, 2011, the recoverable amount of the Companys Canadian CGUs exceeded its carrying amount by a substantial
amount. With regard to the assessment of fair value less costs to sell, management believes that no reasonably possible change in any of the above key assumptions would have caused the carrying amount of the Canadian CGU to materially exceed its
recoverable amount.



|12. | Intangible Assets
|--- | -----------------



(In thousands of Canadian dollars)

ClientRelationships$


ContractBacklog$


Software$


Other$


Total $


Total LeaseDisadvantage(note 21)
$Cost:January 1, 2010


61,391



11,048



13,774



4,764



90,977



-Additions


-



-



11,310



-



11,310



-Additions  internal development


-



-



489



-



489



-Additions arising on acquisitions


13,119



5,289



391



195



18,994



-Removal of fully amortized assets


-



(5,540
)


(3,631
)


(1,397
)


(10,568
)


-Impact of foreign exchange


(2,408
)


(209
)


(8
)


(55
)


(2,680
)


-December 31, 2010


72,102



10,588



22,325



3,507



108,522



-Additions


-



-



4,324



-



4,324



-Additions  internal development


-



-



2,757



-



2,757



-Additions arising on acquisitions


1,709



7,828



-



1,998



11,535



(5,975
)Removal of fully amortized assets


(439
)


(7,811
)


(2,681
)


(1,702
)


(12,633
)


-Impact of foreign exchange


1,124



222



9



5



1,360



(27
)December 31, 2011


74,496



10,827



26,734



3,808



115,865



(6,002
)Accumulated amortization:January 1, 2010


18,431



5,349



4,389



2,477



30,646



-Current year amortization


4,845



6,082



5,648



714



17,289



-Removal of fully amortized assets


-



(5,540
)


(3,631
)


(1,397
)


(10,568
)


-Impact of foreign exchange


(763
)


(78
)


(44
)


(96
)


(981
)


-December 31, 2010


22,513



5,813



6,362



1,698



36,386



-Current year amortization


5,179



6,209



5,898



2,158



19,444



(1,049
)Removal of fully amortized assets


(439
)


(7,811
)


(2,681
)


(1,702
)


(12,633
)


-Impact of foreign exchange


414



201



2



4



621



(2
)December 31, 2011


27,667



4,412



9,581



2,158



43,818



(1,051
)Net book value:At January 1, 2010


42,960



5,699



9,385



2,287



60,331



-At December 31, 2010


49,589



4,775



15,963



1,809



72,136



-At December 31, 2011


46,829



6,415



17,153



1,650



72,047



(4,951
)


Once an intangible asset is fully amortized, the gross carrying amount and related accumulated
amortization are removed from the accounts. Other than goodwill, the Company has not recorded any intangible assets with indefinite lives. Included in software are finance leases with a net book value of $8,712,000 (December 31, 2010 
$10,744,000; January 1, 2010  $5,228,000). Also included in software is $3,246,000 in internally generated software that is not ready for use and, therefore, is not being amortized.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-34



---

In accordance with its accounting policies in note 4, the Company tests intangible assets
for recoverability when events or a change in circumstances indicate that their carrying amount may not be recoverable. The determination of recoverability is based on an estimate of discounted cash flows, using the fair value less costs to sell
method, and the measurement of impairment loss is based on the amount that the carrying amount of an intangible asset exceeds its recoverable amount. As part of the impairment test, the Company updates its future cash flow assumptions and estimates,
including factors such as current and future contracts with clients, margins, market conditions, and the useful lives of the assets. During 2011, the Company concluded that there were no indicators of impairment to intangible assets.

The Company performed an impairment test as at January 1, 2010, on transition to IFRS as required by IFRS 1. As a result of this
review, the Company recorded a $3,824,000 non-cash impairment charge to opening retained earnings for 2010. This non-cash impairment charge related to certain client relationships and a lease advantage. The impairment primarily reflected a decline
in expected future cash flows from these clients and a reduction in the value of a favorable lease in the Companys New York, New York, office. The remaining carrying amount of these specific client relations, following this impairment charge,
was $5,115,000. The carrying amount of the favorable lease was reduced to zero.



|13. | Interests in Joint Ventures
|--- | ---------------------------

The Company participates in joint ventures with other parties as follows:





Percent Owned (%)December 312011


December 312010


January 12010yyC.T. Joint Venture


17



17



17Dunlop Joint Ventures


53



53



50-53Stantec Architecture Ltd./J.L. Richards & Associates Joint Venture


50



50



50Smith/Chong Joint Venture


50



50



50Coleson Power Group Inc.


50



50



50ACCENT Engineering Consultants Incorporated


40



40



40FFEB JV, L.L.C.


30



30



30Jacobs/Stantec JV


50



50



50Hatch McIntosh Alliance Joint Venture


50



50



50Kuwabara Payne McKenna Blumberg (KPMB)


50



50



50HNTB Joint Venture


50



50



50STARR


15



15



15EM&I Stantec Ltd.


50



50



50Stassinu Stantec Limited Partnership


49



49



49Granary/Driscoll Joint Venture


50



50



50INCA/FMSM


50



50



n/aConsorcio Stantec Architecture Ltd. y Capitel S.A. Limitada


60



n/a



n/a


A summary of the assets, liabilities, revenues, expenses, and cash flows included in the
consolidated financial statements related to joint ventures (before intercompany eliminations) is as follows:



Investments in joint ventures (In thousands of Canadian dollars)

December 312011
$


December 312010
$


January 12010 $Current assets


5,183



7,693



9,655Non-current assets


90



85



127Current liabilities


3,575



5,950



7,950




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-35



---



For the year endedDecember 31Share of after-tax profit from joint ventures (In thousands of Canadian dollars)

2011 $


2010 $Gross revenue


14,127



24,000Subcontractor costs and other direct expenses


(12,512
)


(21,193
)Administrative and marketing expenses


(1,033
)


(1,533
)Profit before income taxes


582



1,274Income tax expense


(196
)


(73
)Profit for the year from joint ventures


386



1,201




For the year endedDecember 31Statements of cash flows (In thousands of Canadian dollars)

2011 $


2010 $Cash flows (used in) operating activities


(500
)


(817
)


The Company has no share of any contingent liabilities or capital commitments in its joint ventures
as at December 31, 2011, and December 31, 2010.



|14. | Investments in Associates
|--- | -------------------------

The following table lists the Companys investments in associates:



% Equity InterestName

Jurisdiction of Incorporation

December 312011


December 312010


January 12010ADC-Stantec Inc.

Ontario, Canada


49



49



49AIVEK Stantec Limited Partnership

Newfoundland and Labrador, Canada


49



49



49CLFN-AXYS Limited Partnership

Alberta, Canada


49



49



49DetonCho Stantec Limited Partnership

Northwest Territories, Canada


49



-



-DetonCho Stantec Ltd.

Northwest Territories, Canada


49



-



-Fort McKay-Stantec Evergreen Inc.

Alberta, Canada


49



49



49Fugro Jacques GeoSurveys Inc.

Newfoundland and Labrador, Canada


-



-



30Fugro Jacques N.V.

Curacao


-



-



30KAVIK-STANTEC INC.

Northwest Territories, Canada


20



24.5



24.5Neegan Naynowan Stantec LP

Ontario, Canada


49



49



49Nunami Stantec Limited

Nunavut, Canada


49



49



49Planning & Stantec Limited

Trinidad and Tobago


50



50



50SSBV Consultants Inc.

British Columbia, Canada


33 1/3



33 1/3



33 1/3Teshmont Consultants Inc.

Canada


50



50



50




These associated
companies are private entities that are not listed on any public exchange.

On August 31, 2010, the Company sold its 30%
equity investments in Fugro Jacques Geosurveys Inc. and Fugro Jacques N.V. for an aggregate price of $10,000,000, resulting in a $7,183,000 ($5,942,000 net of tax) gain on sale.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-36



---

The following table illustrates summarized financial information about the Companys
investment in associated companies:



(In thousands of Canadian dollars)

December 312011
$


December 312010
$


January 12010 $Share of the associates statements of financial position:Assets


3,515



3,885



7,475Liabilities


1,770



1,675



3,139Equity


1,745



2,210



4,336Carrying amount of the investment


2,365



2,831



6,631For the year endedDecember 31(In thousands of Canadian dollars)




2011 $


2010 $Share of the associates revenue and profits:Revenue






4,009



6,565Profits






793



2,209




|15. | Other Financial Assets
|--- | ----------------------



(In thousands of Canadian dollars)

December 312011
$


December 312010
$


January 12010 $Investments held for self-insured liabilities


55,009



46,578



38,418Investments


4,828



5,411



1,459Holdbacks on long-term contracts


6,637



5,966



3,411Indemnifications


2,329



1,937



2,139Future sublease revenue


6,893



5,847



6,369Other


522



2,085



1,52576,218



67,824



53,321Less current portion


14,612



10,589



4,664Long-term portion


61,606



57,235



48,657




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-37



---

Investments held for self-insured liabilities

Investments held for self-insured liabilities consist of government and corporate bonds and equity securities. These investments are
classified as available for sale and are stated at fair value.

The fair value of the bonds at December 31, 2011, was
$38,280,000 (December 31, 2010  $31,564,000; January 1, 2010  $26,748,000), and the fair value of the equities was $16,729,000 (December 31, 2010  $15,014,000; January 1, 2010  $11,670,000). The amortized
cost of the bonds at December 31, 2011, was $37,642,000 (December 31, 2010  $31,002,000; January 1, 2010  $26,250,000) and the cost of the equities was $16,451,000 (December 31, 2010 
$13,040,000; January 1, 2010  $11,556,000). The bonds bear interest at rates ranging from 0.38% to 5.50% per annum (December 31, 2010  1.43% to 5.50%; January 1, 2010  2.63% to 7.00%).

The term to maturity of the bond portfolio, stated at fair value, is as follows:



December 312011


December 312010


January 12010(In thousands of Canadian dollars)

$


$


$Within one year


10,085



3,433



3,780After one year but less than five years


28,195



28,131



22,968Total


38,280



31,564



26,748


Indemnifications

If the Company is contractually indemnified by an acquiree for the outcome of a contingency, it must recognize an indemnification asset at the same time that it recognizes a provision. The asset and
liability are initially recognized at the fair value on the acquisition date based on expected probable outcome. The Companys indemnifications relate to certain legal claims (note 19). During 2011, the Company decreased provisions and
indemnification assets relating to prior acquisitions by $416,000 due to new information obtained in the year.

Future
sublease revenue

When the Company ceases to use an office space under an operating lease arrangement, or sublets part of
an office space at a loss compared to its original operating lease arrangement, it records a liability for the present value of future lease payments, as well as an asset for the present value of the future rental income that is virtually certain.



|16. | Other Assets
|--- | ------------



December 312011


December 312010


January 12010(In thousands of Canadian dollars)

$


$


$Assets held for sale


2,551



3,381



844Other


2,278



2,134



3,3904,829



5,515



4,234Less current portion


3,172



4,176



4,234Long-term portion


1,657



1,339



-




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-38



---

The Company is in the process of selling certain buildings, land, and equipment. These
properties meet the criteria for assets held for sale, with the expectation of selling these assets within 2012. Therefore, these assets are measured at the lower of their carrying amount and fair value less costs to dispose, are no longer
depreciated, and are classified as a current asset.

During 2011, the Company sold buildings, land, and equipment classified
as held for sale with a net loss on sale of $432,000, which was recorded in administrative and marketing expenses in the consolidated statements of income.



|17. | Trade and Other Payables
|--- | ------------------------



December 31 2011


December 31 2010


January 12010(In thousands of Canadian dollars)

$


$


$Trade accounts payable


65,735



64,097



63,204Employee and payroll liabilities


104,172



93,636



77,582Accrued liabilities


21,952



28,554



18,607191,859



186,287



159,393




|18. | Long-Term Debt
|--- | --------------



December 31 2011


December 312010


January 1 2010(In thousands of Canadian dollars)

$


$


$Non-interest-bearing note payable


214



195



177Other notes payable


83,162



91,903



91,830Bank loan


83,476



220,217



134,600Senior secured notes


124,000



-



-Finance lease obligations


5,342



9,715



7,590296,194



322,030



234,197Less current portion


59,593



46,394



35,428Long-term portion


236,601



275,636



198,769


Non-interest-bearing note payable

The non-interest-bearing note payable is due November 1, 2027, in the amount of $933,000. The notes carrying amount of $214,000
is determined using a discount rate of 9.75%. If the non-interest-bearing note payable was discounted at interest rates in effect at December 31, 2011, the fair value of the note would be $622,000 (December 31, 2010 
$468,000; January 1, 2010  $318,000).

Other notes payable

The weighted average rate of interest on the other notes payable is 3.18% (December 31, 2010  4.29%; January 1, 2010
 4.98%). The notes may be supported by promissory notes and are due at various times from 2012 to 2014. The aggregate maturity value of the notes is $84,003,000 (December 31, 2010  $91,922,000; January 1, 2010 
$91,895,000). As at December 31, 2011, $39,880,000 (US$39,213,000) (December 31, 2010  $43,015,000; January 1, 2010  $25,684,000) of the notes carrying amount was payable in US funds (December 31, 2010 
US$43,249,000; January 1, 2010  US$24,438,000). The carrying amount of the other notes payable approximates their fair value based on interest rates in effect at December 31, 2011.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-39



---

Bank loan

During the third quarter of 2011, the Company extended the maturity date of its existing $350 million revolving credit facility to August 31, 2015. This facility also allows the Company access to an
additional $75 million under the same terms and conditions on approval from its lenders. The facility is available for future acquisitions, working capital needs, and general corporate purposes. Depending on the form under which the credit facility
is accessed, rates of interest will vary between Canadian prime, US base rate, or LIBOR or bankers acceptance rates, plus specified basis points. The specified basis points may vary, depending on the Companys level of consolidated debt
to EBITDA (a non-IFRS measure), from 50 to 175 for Canadian prime and US base rate loans and from 150 to 275 for bankers acceptances, LIBOR loans, and letters of credit. Prior to the extension, the basis points varied, depending on the
Companys level of consolidated debt to EBITDA, from 100 to 225 for Canadian prime and US base rate loans and from 200 to 325 for bankers acceptances, LIBOR loans, and letters of credit. As at December 31, 2011, $28,476,000 of the
bank loan was payable in US funds (US$28,000,000), and $55,000,000 was payable in Canadian funds. As at December 31, 2010, $144,217,000 of the bank loan was payable in US funds (US$145,000,000), and $76,000,000 was payable in Canadian funds. As
at January 1, 2010, $105,100,000 of the bank loan was payable in US funds (US$100,000,000), and $29,500,000 was payable in Canadian funds. Loans may be repaid under the credit facility from time to time at the option of the Company. The credit
facility contains restrictive covenants (note 27).

The average interest rate applicable at December 31, 2011, was 2.65%
(December 31, 2010  2.97%; January 1, 2010  3.42%) (note 30). The Company entered into an interest rate swap agreement during 2008 that had the effect of converting the variable interest obligation associated with US$100
million of the credit facility, based on a LIBOR rate, into a fixed interest rate of 3.43%, plus an applicable basis points spread, which expired on September 3, 2010 (note 23).

The funds available under the revolving credit facility are reduced by any outstanding letters of credit issued pursuant to this facility
agreement. At December 31, 2011, the Company had issued and outstanding letters of credit, expiring at various dates before January 2013, totaling $4,661,000 (December 31, 2010  $4,736,000; January 1, 2010  $141,000)
payable in Canadian funds; $1,369,000 (US$1,346,000) (December 31, 2010  $1,286,000, US$1,293,000; January 1, 2010  $1,882,000, US$1,791,000) payable in US funds; $920,000 (QAR3,272,000) (December 31, 2010  $467,000,
QAR1,724,000) payable in Qatari rial funds; and $42,000 (AED150,000) payable in Dirham funds. These letters of credit were issued in the normal course of operations, including the guarantee of certain office rental obligations. At December 31,
2011, $259,532,000 (December 31, 2010  $123,294,000; January 1, 2010  $163,377,000) was available in the revolving credit facility for future activities.

As at December 31, 2011, no additional letters of credit assumed from acquisitions were outstanding. As at December 31, 2010, $142,000 (US$143,000) in additional letters of credit payable in US
funds and $5,000 payable in Canadian funds were assumed from acquisitions (January 1, 2010  $518,000 (US$493,000) payable in US funds, $114,000 payable in Canadian funds.) The Company has a surety facility to facilitate, as part of the normal
course of operations, the issuance of bonds for certain types of project work. As at December 31, 2011, $11,334,000 (US$11,145,000) (December 31, 2010  $11,472,000, US$11,535,000; January 1, 2010  $11,470,000, US$10,913,000) in
bonds had been issued under this surety facility.

During the fourth quarter of 2011, the Company amended its $350 million
revolving credit facility to add a bid bond facility in the amount of $10 million. This facility also allows the Company to access an additional $5 million under the same terms and conditions upon approval from its lenders. This facility may be used
for the issuance of bid bonds, performance guarantees, letters of credit, and documentary credits in an international currency. At December 31, 2011, $366,000 (CLP187,080,000), payable in Chilean pesos funds, had been issued under this bid bond
facility.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-40



---

Senior secured notes

On May 13, 2011, the Company issued $70 million of 4.332% senior secured notes due May 10, 2016, and $55 million of 4.757%
senior secured notes due May 10, 2018. These amounts were recorded net of transaction costs of $1,115,000. The senior secured notes were issued pursuant to an indenture dated May 13, 2011, between the Company, as issuer, and BNY Trust
Company of Canada, as trustee and collateral agent. The senior secured notes are ranked pari passu with the Companys existing revolving credit facility.

Interest on the senior secured notes is payable semi-annually in arrears on May 10 and November 10 each year commencing on November 10, 2011, until maturity or the earlier payment,
redemption, or purchase in full of the senior secured notes (note 30). The Company may redeem the senior secured notes, in whole at any time or in part from time to time, at specified redemption prices and subject to certain conditions required by
the indenture. The Company may purchase its senior secured notes for cancellation at any time. The senior secured notes contain restrictive covenants (note 27). All the assets of the Company are held as collateral under a general security agreement
for the revolving credit facility and the senior secured notes.

Finance lease obligations

The Company has finance leases for software, motor vehicles, and equipment. As at December 31, 2011, the Companys finance
lease obligations included finance leases bearing interest at rates ranging from 3.02% to 9.60% (December 31, 2010  2.29% to 13.89%; January 1, 2010  2.30% to 14.71%). These finance leases expire at various dates before January
2015.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments
are as follows:



(In thousands of Canadian dollars)

December 31 2011 $


December 31 2010 $


January 1 2010 $Within one year


5,074



5,177



3,108After one year but less than five years


362



4,830



5,011Total minimum lease payments


5,436



10,007



8,119Present value of minimum lease payments


5,342



9,715



7,590




|19. | Provisions
|--- | ----------



(In thousands of Canadian dollars)

December 31 2011 $


December 312010
$


January 12010 $Provision for self-insured liabilities


36,662



33,372



31,284Lease exit liabilities and onerous contracts


10,233



11,758



16,564Provisions for claims


11,554



11,310



9,67158,449



56,440



57,519Less current portion


16,373



17,297



15,287Long-term portion


42,076



39,143



42,232




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-41



---

Provision for self-insured liabilities

The Company self-insures a portion of its estimated liabilities that may arise in connection with reported legal claims (note 24). This
provision for self-insured liabilities is based on the results of an actuarial review performed in 2011 and 2010, with the current and long-term portion determined based on the actuarial estimate. Due to the nature of this provision, the timing of
outflows is uncertain. At December 31, 2011, the long-term portion was $34,189,000 (December 31, 2010  $30,256,000; January 1, 2010  $29,424,000).



(In thousands of Canadian dollars)

December 312011
$


December 312010
$Provision, beginning of the year


33,372



31,284Current-year provision


9,348



9,405Payment for claims settlement


(6,750
)


(6,294
)Impact of foreign exchange


692



(1,023
)Provision, end of the year


36,662



33,372


Lease exit liabilities and onerous contracts



(In thousands of Canadian dollars)

December 312011
$


December 312010
$Liability, beginning of the year


11,758



16,564Current-year provision


3,243



1,706Resulting from acquisitions


909



-Costs paid or otherwise settled


(5,876
)


(6,090
)Impact of foreign exchange


199



(422
)Liability, end of the year


10,233



11,758


Payments for lease exit liabilities will occur until July 2017.

Provisions for claims

Provisions for claims include an estimate for legal claims covered by third-party insurance. Due to the legal nature of this provision, the timing of outflows is uncertain. Often, these legal claims are
from prior acquisitions and may be indemnified by the acquiree (notes 7 and 15).



(In thousands of Canadian dollars)

December 312011
$


December 312010
$Provision, beginning of the year


11,310



9,671Current-year provision


2,115



1,557Claims from acquisitions


2,039



3,727Claims paid or otherwise settled


(4,052
)


(3,533
)Impact of foreign exchange


142



(112
)Provision, end of the year


11,554



11,310




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-42



---

|20. | Other Financial Liabilities
|--- | ---------------------------



(In thousands of Canadian dollars)

Notes


December 312011
$


December 312010
$


January 12010 $Interest accrued on other notes payable


18



5,193



5,746



4,622Loss on derivative financial instruments


23



-



-



2,427Contingent consideration


7



-



4,603



5,854Other






2,106



4,805



8997,299



15,154



13,802Less current portion






5,042



9,365



6,196Long-term portion






2,257



5,789



7,606




|21. | Other Liabilities
|--- | -----------------



(In thousands of Canadian dollars)

Notes


December 312011
$


December 312010
$


January 12010 $Deferred gain on sale leaseback






4,004



4,441



4,877Lease inducement benefits






27,258



23,435



21,764Lease disadvantages


12



4,951



-



-Deferred share units payable


25



3,712



3,294



2,361Restricted share units payable


25



904



-



-Liability for uncertain tax positions






1,570



1,473



1,52942,399



32,643



30,531Less current portion






5,208



3,313



3,811Long-term portion






37,191



29,330



26,720


Deferred gain on sale leaseback

In 2004, the Company completed the sale of its office building in Edmonton, Alberta, for cash proceeds of $34,500,000. Concurrent with the
sale, the Company leased the property back for a period of 15 years. The lease is accounted for as an operating lease. The resulting gain of $7,103,000 was deferred and is being amortized over the lease term.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-43



---

|22. | Commitments
|--- | -----------

The Company
has entered into various operating lease commitments, including commitments for annual basic premises rent under long-term leases, storage facilities, and equipment and vehicle operating leases. The Company also entered into purchase obligations for
software support. Depending on the agreement, the Company may enter into renewal options or escalation clauses.

Future
minimum rentals payable under non-cancellable operating leases and purchase obligations as at December 31, 2011, are as follows:



(In thousands of Canadian dollars)



$Within one year


85,529After one year but less than five years


244,344More than five years


127,708457,581


The premises rental expense for the year ended December 31, 2011, was $70,625,000 (December
31, 2010  $63,255,000).

Sublease rental income for the year ended December 31, 2011, was $3,965,000 (December 31,
2010  $3,403,000). Receivables for future sublease revenue totals $8,651,000.



|23. | Derivative Financial Instruments
|--- | --------------------------------

As at December 31, 2011, and December 31, 2010, the Company had no forward contract arrangements. As at January 1, 2010, the Company had entered into foreign currency forward contract
arrangements that provided for the purchase of US$75,000,000 at rates ranging from 1.05310 to 1.05485 per US dollar maturing over the next month. These derivative financial instruments are entered into to mitigate the risk of foreign currency
fluctuations on net operating assets denominated in US dollars. The fair value of these contracts, estimated using third-party market indications and forecasts as at January 1, 2010, was an unrealized loss of $270,000. The unrealized losses
relating to these derivative financial instruments were recorded in income as foreign exchange gains or losses and in the consolidated statements of financial position as other financial liabilities. These foreign currency forward contracts are not
designated as a hedge.

During 2008, the Company entered into a US$100 million interest rate swap agreement that matured on
September 3, 2010. This swap agreement had the effect of converting the variable interest rate on US$100 million of the Companys revolving credit facility, based on a LIBOR rate, into a fixed interest rate of 3.43%, plus an applicable
basis points spread. The fair value of the interest rate swap, estimated using third-party market indicators and forecasts at January 1, 2010, was an unrealized loss of $2,157,000 ($1,531,000 net of tax). The Company did not designate the
interest rate swap as a hedge; therefore, the unrealized gains or losses relating to this derivative financial instrument were recorded in income as an other net finance income (expense) and in the consolidated statements of financial position as an
other financial liability or asset.



|24. | Contingencies and Guarantees
|--- | ----------------------------

In the normal conduct of operations, various legal claims are pending against the Company alleging, among other things, breaches of contract or negligence in connection with the performance of consulting
services. The Company carries professional liability insurance, subject to certain deductibles and policy limits, and has a captive insurance company that provides insurance protection against such claims. In some cases, parties are seeking



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-44



---

damages that substantially exceed the Companys insurance coverage. Based on advice and information provided by legal counsel, the Companys previous experience with the settlement of
similar claims, and the results of the annual actuarial review, management believes that the Company has recognized adequate provision for probable and reasonably estimable liabilities associated with these claims and that their ultimate resolution
will not materially exceed insurance coverages or have a material adverse effect on the Companys consolidated financial position or annual results of operations. Management cannot estimate the extent to which losses exceeding those already
recorded in the consolidated financial statements may be incurred.

During 2009, the Company issued a guarantee, up to a
maximum of US$60 million, for project work with the US federal government. If the guarantee is exercised, the Company has recourse to its insurers, subject to certain deductibles, policy terms, and limits, to recover claims costs and damages arising
from errors or omissions in professional services. At December 31, 2011, $104,000 of this guarantee has been exercised, but the Company has not made any payments under this guarantee, and no amounts have been accrued in the consolidated
financial statements with respect to the guarantee.

In the normal course of business, the Company provides indemnifications
and, in very limited circumstances, surety bonds. These are often standard contractual terms and are provided to counterparties in transactions such as purchase and sale contracts for assets or shares, service agreements, and leasing transactions.
The Company also indemnifies its directors and officers against any and all claims or losses reasonably incurred in the performance of their service to the Company to the extent permitted by law. These indemnifications may require the Company to
compensate the counterparty for costs incurred as a result of various events, including changes to or in the interpretation of laws and regulations, or as a result of damages or statutory sanctions that may be suffered by the counterparty as a
consequence of the transaction. The terms of these indemnifications will vary based upon the contract, the nature of which prevents the Company from making a reasonable estimate of the maximum potential amount that it could be required to pay to
counterparties. The Company carries liability insurance, subject to certain deductibles and policy limits, that provides protection against certain insurable indemnifications. Historically, the Company has not made any significant payments under
such indemnifications, and no amounts have been accrued in the accompanying consolidated financial statements with respect to these indemnifications.



|25. | Share Capital
|--- | -------------

Authorized



|          |  |                                                                                          
|--------- |  | -----------------------------------------------------------------------------------------
|Unlimited |  | Common shares, with no par value                                                         
|Unlimited |  | Preferred shares issuable in series, with attributes designated by the board of directors

Common shares

During 2011, 459,600 (2010  198,300) common shares were repurchased for cancellation pursuant to an ongoing normal course issuer bid at a cost of $11,074,000 (2010  $4,887,000). Of this
amount, $2,270,000 and $145,000 (2010  $965,000 and $59,000) reduced the share capital and contributed surplus accounts, respectively, with $8,659,000 (2010  $3,863,000) being charged to retained earnings.

During Q2 2011, the Company renewed its normal course issuer bid with the TSX, which enables it to purchase up to 2,287,592 common shares
during the period of June 1, 2011, to May 31, 2012.

During 2011, the Company recognized a share-based compensation
expense of $5,575,000 (2010  $2,822,000) in administrative and marketing expenses. Of the amount expensed, $2,700,000 related to the fair value of options granted, and $2,875,000 related to cash-settled share-based compensation. Of the
amount expensed during 2010, $1,889,000 related to the fair value of options granted, and $933,000 related to deferred share unit compensation.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-45



---

The fair value of options granted was reflected through contributed surplus, and the
cash-settled share-based compensation was reflected through other liabilities. Upon the exercise of share options for which a share-based compensation expense has been recognized, the cash paid, together with the related portion of contributed
surplus, is credited to share capital.

During Q2 2010, the Company filed a short-form base shelf prospectus with all
securities regulatory authorities in Canada. The Company concurrently filed a shelf registration statement in the United States on Form F-10, which was effective upon filing in definitive form. Pursuant to the prospectus, the Company may issue up to
$300 million in common shares from time to time during a 25-month period effective May 6, 2010, by way of one or more prospectus supplements. As at December 31, 2011, no common shares were issued pursuant to the prospectus.

Share options

Under the Companys share option plan, options to purchase common shares may be granted by the board of directors to officers and employees. Options are granted at exercise prices equal to or greater
than fair market value at the issue date, generally vest evenly over a three-year period, and have contractual lives that range from 7 to 10 years. The aggregate number of common shares reserved for issuance that may be purchased upon the exercise
of options granted pursuant to the plan shall not exceed 4,487,026 common shares. At December 31, 2011, 1,523,232 (December 31, 2010  1,835,566; January 1, 2010  1,813,899) options were available for issue.

The Company has granted share options to officers and employees to purchase 1,578,300 shares at prices between $12.17 and $30.61 per
share. These options expire on dates between January 3, 2013, and January 28, 2018.



December 31 2011


December 31 2010Shares #


WeightedAverageExercise Price
$


Shares #


WeightedAverageExercise Price
$Share options, beginning of the year


1,480,831



24.31



1,752,298



22.65Granted


410,000



28.65



-



-Exercised


(214,865
)


13.34



(249,800
)


12.19Forfeited


(26,668
)


28.70



(10,838
)


29.59Cancelled


(70,998
)


29.24



(10,829
)


29.77Share options, end of the year


1,578,300



26.64



1,480,831



24.31




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-46



---

The options held by officers and employees at December 31, 2011, were as follows:



Options Outstanding

Options ExercisableRange of Exercise Prices $

Outstanding #

Weighted Average
RemainingContractualLife in Years

Weighted Average Exercise
Price
$

Shares Exercisable #

Weighted Average
RemainingContractualLife in Years

Weighted Average Exercise
Price
$12.17-13.55

120,000

1.01

12.86

120,000

1.01

12.8620.37-20.42

283,300

1.65

20.39

283,300

1.65

20.3928.65-30.61

1,175,000

4.11

29.55

790,000

3.15

29.9912.17-30.61

1,578,300

3.43

26.64

1,193,300

2.58

25.99


The fair value of options granted subsequent to January 1, 2002, is determined at the date of
grant using the Black-Scholes option-pricing model. The model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input
of highly subjective assumptions, including expected share price volatility.

The estimated fair value of options granted in
2011 at the share market price on the grant date was determined using the weighted average assumptions indicated below:



December 312011Risk-free interest rate (%)


2.63Expected hold period to exercise (years)


5.50Volatility in the price of the Companys shares (%)


37.05Weighted average fair value per option ($)


11.00Exercise price ($)


28.65Option life (years)


7


The expected volatility was based on the historical volatility of the Companys shares over a
period commensurate with the expected term of the share option. The risk-free interest rate for the expected life of the options was based on the yield available on government bonds, with an approximate equivalent remaining term at the time of the
grant. Historical data was used to estimate the expected life of the option.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-47



---

A summary of the status of the Companys non-vested options as of December 31,
2011, and of changes in the year, are as follows:



Number of SharesSubject to Option#


Weighted AverageGrant Date FairValue
$Non-vested share options, beginning of the year


145,934



9.82Granted


410,000



11.00Vested


(144,266
)


9.82Forfeited


(26,668
)


10.92Non-vested share options, end of the year


385,000



11.00


As at December 31, 2011, 385,000 (December 31, 2010  145,934) options remained unvested,
and a total unrecognized compensation cost of $1,868,000 (December 31, 2010  $303,000) related to the Companys share option plans. This cost is expected to be recognized over a weighted average period of 1.08 years (December 31, 2010
 0.63 years).

Deferred share units

Under the Companys deferred share unit plan, the chief executive officer (CEO) and directors of the board of the Company may receive deferred share units equal to one common share. These units vest
on their grant date. They are paid out to the CEO and directors of the board of the Company upon their death or retirement, or in the case of the CEO, on termination, in the form of cash and are valued at the weighted-by-volume average of the
closing market price of the Companys common shares for the last 10 trading days of the month of death, retirement, or termination. Deferred share units cannot be paid in the form of Company shares. These units are recorded at fair value using
the Black-Scholes option-pricing model. As at December 31, 2011, 136,768 units were outstanding at the carrying amount of $3,712,000 (December 31, 2010  118,005 units at the carrying amount of $3,294,000; January 1, 2010 
78,472 units at the carrying amount of $2,361,000). As at December 31, 2011, the total intrinsic value of deferred share units was equal to the carrying amount.

Restricted share units

Under the Companys restricted share unit
plan, senior vice presidents may receive restricted share units equal to one common share. The senior vice presidents are granted annually an allotment of these units, which, after two years, they receive a cash equivalent to the weighted-by-volume
average of the closing price of the Companys common shares for the last 10 trading dates prior to the units release date. The restricted share units vest on their grant date since the senior vice presidents are not required to complete a
specified period of service. The units are recorded at fair value using the Black-Scholes option-pricing model. As at December 31, 2011, 33,311 units were outstanding at the carrying amount of $904,000. As at December 31, 2011, the total
intrinsic value of the restricted share units was equal to the carrying amount.



|26. | Financial Instruments
|--- | ---------------------

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:



| |  |  | Level 1 inputs are quoted prices in active markets for identical assets or liabilities at the measurement date.
| | - |  | ---------------------------------------------------------------------------------------------------------------

| |  |  | Level 2 inputs are observable inputs other than quoted prices included within level 1, such as quoted prices for similar assets or liabilities in
active markets, quoted prices for identical assets or liabilities in markets that
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-48



---

| | are not active, or other inputs that are observable directly or indirectly.
| | ---------------------------------------------------------------------------

| |  |  | Level 3 inputs are unobservable inputs for the asset or liability that reflect the reporting entitys own assumptions and are not based on
observable market data.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

In forming estimates, the Company uses the most observable inputs available for
valuation purposes. If a fair value measurement reflects inputs of different levels within the hierarchy, the financial instrument is categorized based on the lowest level of significant input.

At December 31, 2011, and December 31, 2010, investments held for self-insured liabilities were the only assets measured at
fair value on a recurring basis. The carrying amount of these assets was $55,009,000 (December 31, 2010  $46,578,000; January 1, 2010  $38,418,000), and their fair value hierarchy was level 1.

The following table summarizes the Companys fair value hierarchy for those assets and liabilities measured at fair value on a
recurring basis as of January 1, 2010.



(In thousands of Canadian dollars)

Carrying Amount
of Asset/Liability at January 1, 2010 $


Quoted Prices inActive Marketsfor IdenticalItems (Level
1) $


Significant Other ObservableInputs (Level 2)
$


SignificantUnobservableInputs (Level 3)
$AssetsInvestments held for self-insured liabilities


38,418



38,418



-



-LiabilitiesForeign currency forward contracts


270



-



270



-Interest rate swap


2,157



-



2,157



-2,427



-



2,427



-


Investments held for self-insured liabilities are measured based on active market prices for
identical bonds and equity securities. Forward contracts are determined based on the estimated cash payment or receipt necessary to settle the contract. Cash payments or receipts are based on discounted cash flow analysis using current market rates
and prices. The valuation of the interest rate swap is based on similar transactions observable in active markets or industry standard models that primarily rely on market observable inputs.

Credit Risk

Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligation. Financial instruments that subject the Company to credit risk
consist primarily of cash and short-term deposits, investments held for self-insured liabilities, investments, holdbacks on long-term contracts, future sublease revenue, and trade and other receivables. The Companys maximum amount of credit
risk exposure is limited to the carrying amount of these financial instruments, which is $420,147,000 as at December 31, 2011 (December 31, 2010  $422,273,000; January 1, 2010  $317,552,000).

The Company limits its exposure to credit risk by placing its cash and short-term deposits in and entering into derivative agreements
with high-quality credit institutions. Investments held for self-insured liabilities include bonds and equities. The risk associated with bonds and equities is mitigated by the overall quality and mix of the Companys investment portfolio.

The Company mitigates the risk associated with trade receivables and holdbacks on long-term contracts by providing services
to diverse clients in various industries and sectors of the economy. The Company does not concentrate its credit risk in any particular client, industry, economic, or geographic sector. In addition,



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-49



---

management reviews trade receivables past due on an ongoing basis with the objective of identifying matters that could potentially delay the collection of funds at an early stage. The Company
monitors trade receivables to an internal target of days of revenue in trade receivables (a non-IFRS measure). At December 31, 2011, there were 64 days (December 31, 2010  63 days; January 1, 2010  59 days) of revenue in trade
receivables.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet obligations associated with its financial liabilities as they fall due. The Company meets its liquidity needs through a variety of
sources, including cash generated from operations, long- and short-term borrowings from its $350 million credit facility and senior secured notes, and the issuance of common shares. The unused capacity of the credit facility at December 31,
2011, was $259,532,000 (December 31, 2010  $123,294,000; January 1, 2010  $163,377,000). The Company believes that internally generated cash flows, supplemented by borrowings and additional equity issues, if necessary, will be
sufficient to cover its normal operating and capital expenditures as well as currently anticipated acquisition activity in 2012. Liquidity risk is managed according to the Companys internal guideline of maintaining a net debt to equity ratio
of less than 0.5 to 1 (note 27).

The timing of undiscounted cash outflows relating to financial liabilities is outlined in
the table below:



Total


Less than 1 Year


1-3 Years


After 3 Years(In thousands of Canadian dollars)

$


$


$


$January 1, 2010Trade and other payables


159,393



159,393



-



-Long-term debt


235,015



35,475



198,607



933Interest rate swap


2,157



2,157



-



-Foreign currency forward contract


270



270



-



-Other financial liabilities


11,686



4,287



6,896



503Total contractual obligations


408,521



201,582



205,503



1,436December 31, 2010Trade and other payables


186,287



186,287



-



-Long-term debt


322,787



46,409



275,190



1,188Other financial liabilities


15,263



10,326



3,107



1,830Total contractual obligations


524,337



243,022



278,297



3,018December 31, 2011Trade and other payables


191,859



191,859



-



-Long-term debt


298,848



59,979



112,931



125,938Other financial liabilities


7,188



5,042



595



1,551Total contractual obligations


497,895



256,880



113,526



127,489


In addition to the financial liabilities listed in the table above, the Company will pay interest
on the bank loan and senior secured notes outstanding in future periods. Further information on long-term debt is included in note 18.

Interest Rate Risk

Interest rate risk is the risk that the fair value of
the future cash flows of a financial instrument will fluctuate because of changes in market rates of interest. The Company is subject to interest rate cash flow risk to the extent that its revolving credit facility is based on floating rates of
interest. In addition, the Company is subject to interest rate pricing risk to the extent that its investments held for self-insured liabilities include fixed-rate government and corporate bonds.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-50



---

If the interest rate on the Companys revolving credit facility balance at
December 31, 2011, had been 0.5% higher, with all other variables held constant, net income would have decreased by approximately $307,000. If the interest rate had been 0.5% lower, there would have been an equal and opposite impact on net
income.

The Company has the flexibility to partially mitigate its exposure to interest rate changes by maintaining a mix of
both fixed and floating rate debt. The Companys senior secured notes have fixed interest rates; therefore, interest rate fluctuations would have no impact on the senior secured notes interest payments.

Foreign Exchange Risk

Foreign exchange risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Foreign exchange gains or losses in
the Companys net income arise on the translation of foreign-denominated assets and liabilities (such as trade and other receivables, trade and other payables, and long-term debt) held in the Companys Canadian operations and non-US-based
foreign subsidiaries. The Company minimizes its exposure to foreign exchange fluctuations on these items by matching US-dollar assets with US-dollar liabilities and, when appropriate, by entering into forward contracts to buy or sell US dollars in
exchange for Canadian dollars.

If the exchange rates had been $0.01 higher or lower at December 31, 2011, with all other
variables held constant, net income would have increased or decreased by approximately $37,000.

Foreign exchange fluctuations
may also arise on the translation of the Companys US-based subsidiaries, or other foreign subsidiaries, where the functional currency is different from the Canadian dollar, and are recorded in other comprehensive income. The Company does not
hedge for this foreign exchange risk.



|27. | Capital Management
|--- | ------------------

The
Companys objective when managing capital is to provide sufficient capacity to cover normal operating and capital expenditures, as well as acquisition growth, while maintaining an adequate return for shareholders. The Company defines its
capital as the aggregate of long-term debt (including the current portion) and shareholders equity.

The Company manages
its capital structure to maintain the flexibility to adjust to changes in economic conditions and acquisition growth and to respond to interest rate, foreign exchange, credit, and other risks. In order to maintain or adjust its capital structure,
the Company may purchase shares for cancellation pursuant to normal course issuer bids, issue new shares, or raise or retire debt.

The Company periodically monitors capital by maintaining the following ratio targets:



| |  |  | Net debt to equity ratio below 0.5 to 1
| | - |  | ---------------------------------------

| |  |  | Return on equity (ROE) at or above 14%
| | - |  | --------------------------------------

These objectives are established on an annual basis and are monitored on a quarterly basis. The targets for 2011 remained unchanged from those for 2010.

Net debt to equity ratio, a non-IFRS measure, is calculated as the sum of (1) long-term debt, including current portion, plus bank
indebtedness, less cash and short-term deposits, divided by (2) shareholders equity. The Company's net debt to equity ratio was 0.41 to 1 at December 31, 2011 (December 31, 2010  0.42 to 1; January 1, 2010  0.41
to 1). Going forward, there may be occasions when the Company exceeds its target by completing acquisitions that increase its debt level above the target for a period of time.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-51



---

ROE, a non-IFRS measure, is calculated as net income for the last four quarters, divided by
average shareholders equity over each of these quarters. The Companys ROE was 1.9% for the year ended December 31, 2011 (December 31, 2010  16.5%). The Companys ROE was below target because of the $90.0 million goodwill
impairment charge recorded in the fourth quarter of 2011.

The Company is subject to restrictive covenants related to its $350
million revolving credit facility and its senior secured notes that are measured on a quarterly basis. These covenants include, but are not limited to, consolidated debt to EBITDA and EBITDAR to consolidated debt service ratio (non-IFRS measures).
EBITDA is calculated as earnings before interest expense, income taxes, depreciation of property and equipment, amortization of intangible assets, and goodwill and intangible impairments. EBITDAR is calculated as EBITDA plus building rental
obligations net of common area costs, taxes, charges, and levies. Failure to meet the terms of one or more of these covenants may constitute a default, potentially resulting in accelerating the repayment of the debt obligation. The Company was in
compliance with all the covenants under these agreements as at and throughout the year ended December 31, 2011.



|28. | Accumulated Other Comprehensive Income (Loss)
|--- | ---------------------------------------------



(In thousands of Canadian dollars)

ExchangeDifferences onTranslation ofForeignOperations
$


UnrealizedGains/Losseson FinancialAssets
$


Total $Balance, January 1, 2010


-



323



323Gains (losses) arising during the year


(9,823
)


1,653



(8,170
)Reclassification adjustments for gains transferred to income


(8,792
)


(91
)


(8,883
)Current-year activity before tax


(18,615
)


1,562



(17,053
)Tax effect


-



(27
)


(27
)Balance, December 31, 2010


(18,615
)


1,858



(16,757
)Gains (losses) arising during the year


5,761



(1,441
)


4,320Reclassification adjustments for gains transferred to income


-



(38
)


(38
)Current-year activity before tax


5,761



(1,479
)


4,282Tax effect


-



26



26Balance, December 31, 2011


(12,854
)


405



(12,449
)


The exchange difference on the translation of foreign operations represents the unrealized gain or
loss on the Companys net investment in US-based operations or other foreign operations where the functional currency is different from the Canadian dollar. The change in the translation of foreign operations during the year relates to the
fluctuation in the value of the Canadian dollar relative to these other functional currencies. Statement of financial position accounts denominated in US dollars have been translated to Canadian dollars at the rate of 1.0170 (December 31, 2010
 0.9946).

The unrealized gains (losses) on financial assets represent the change in the fair value of investments held
for self-insured liabilities (note 15).



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-52



---

|29. | Income Taxes
|--- | ------------

The
effective income tax rate in the consolidated statements of income differs from statutory Canadian tax rates as a result of the following:



2011


2010%


%Income tax expense at statutory Canadian rates


27.4



29.2Increase (decrease) resulting from:Impairment of goodwill


48.0



-Income from associated companies


(0.1
)


(0.3
)Rate differential on foreign income


(0.7
)


(0.9
)Taxable capital gains


0.1



3.8Non-deductible expenses:Meals and entertainment


0.7



0.9Share-based compensation


0.3



0.3Non-taxable foreign income net of non-creditable withholding taxes


(1.5
)


(2.8
)Other


0.3



(0.5
)74.5



29.7


The major components of deferred income tax expense (recovery) are as follows:



For the year endedDecember 31(In thousands of Canadian dollars)

2011 $


2010 $Origination and reversal of timing differences


3,641



(1,937
)Write-down of loss carryforwards


1,331



-Change of tax rates


(691
)


(460
)Total deferred income tax expense (recovery)


4,281



(2,397
)




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-53



---

Significant components of the Companys deferred income tax assets and liabilities are
as follows:



December 31


December 31


January 1(In thousands of Canadian dollars)

2011 $


2010 $


2010 $Deferred income tax assetsDifferences in timing of deductibility of expenses


30,665



21,778



25,040Loss carryforwards


7,928



9,486



13,680Tax cost of property and equipment in excess of carrying value


2,053



2,444



1,377Deferred gain on sale of building


438



585



747Other


2,563



6,619



2,61943,647



40,912



43,463December 31


December 31


January 1(In thousands of Canadian dollars)

2011 $


2010 $


2010 $Deferred income tax liabilitiesCash to accrual adjustments on acquisitions of US subsidiaries


3,424



5,997



2,266Differences in timing of taxability of revenues


12,132



7,766



9,317Carrying value of property and equipment in excess of tax cost


5,320



6,162



7,080Carrying value of intangible assets in excess of tax cost


26,589



23,451



21,808Other


7,099



4,404



6,70654,564



47,780



47,177




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-54



---

The following is a reconciliation of net deferred tax assets (liabilities):



(In thousands of Canadian dollars)

December 312011
$


December 312010
$Balance, beginning of the year


(6,868
)


(3,714
)Tax recovery (expense) during the year recognized in net income


(4,281
)


2,397Tax recovery (expense) during the year recognized in other comprehensive income


26



(27
)Deferred taxes acquired through business combinations


(238
)


(5,071
)Impact of foreign exchange


16



(207
)Other


428



(246
)Balance, end of the year


(10,917
)


(6,868
)


At December 31, 2011, except as noted below, all loss carryforwards available to reduce the
taxable income of Canadian, US, and foreign subsidiaries were recognized in the consolidated financial statements. The Company has unrecognized federal loss carryforwards of approximately $900,000 (US$885,000) that are available to reduce the
taxable income of certain US subsidiaries and that expire at varying times over the next 20 years. The Company also has unrecognized loss carryforwards of approximately $5,006,000 that are available to reduce the taxable income of certain other
foreign subsidiaries that have no expiry date.



|30. | Net Interest Expense and Other Net Finance Expense (Income)
|--- | -----------------------------------------------------------

Net interest expense



For the year endedDecember 
31(In thousands of Canadian dollars)

2011 $


2010 $Interest on other notes payable


2,479



3,561Interest on bank loan


4,795



5,438Interest on senior secured notes


3,590



-Interest on finance leases


235



457Other


577



654Total interest expense


11,676



10,110Interest income on available-for-sale investment debt securities


(1,468
)


(1,371
)Other


(485
)


(877
)Total interest income


(1,953
)


(2,248
)Net interest expense


9,723



7,862




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-55



---

Other net finance expense (income)



For the year endedDecember 31(In thousands of Canadian dollars)

2011 $


2010 $Amortization on available-for-sale investment debt securities


302



248Bank charges


2,546



1,773Total other finance expense


2,848



2,021Realized gain on sale of available-for-sale investment debt securities


-



(83
)Fair value gain on interest rate swap


-



(2,157
)Total other finance income


-



(2,240
)Other net finance expense (income)


2,848



(219
)




|31. | Employee Costs
|--- | --------------



For the year endedDecember 31(In thousands of Canadian dollars)

2011 $


2010 $Wages, salaries, and benefits


893,955



780,767Pension costs


24,419



21,982Share-based compensation


5,575



2,822Total employee costs


923,949



805,571Direct labor


615,136



537,704Indirect labor


308,813



267,867Total employee costs


923,949



805,571


Direct labor costs include the salaries, wages, and related fringe benefits for labor hours that
are directly associated with the completion of projects. Bonuses, share-based compensation, and labor costs and related fringe benefits for labor hours that are not directly associated with the completion of projects are included in indirect
employee costs. Indirect employee costs are included in administrative and marketing expenses in the consolidated statements of income.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-56



---

|32. | Earnings Per Share
|--- | ------------------

The
number of basic and diluted common shares outstanding, as calculated on a weighted average basis, is as follows:



December 312011
#


December 312010
#Basic shares outstanding


45,638,311



45,690,555Share options (dilutive effect of 403,300 options; 2010  624,165)


36,726



200,436Diluted shares outstanding


45,675,037



45,890,991


At December 31, 2011, 1,175,000 (December 31, 2010  856,666) options were antidilutive
and, therefore, were not considered in computing diluted earnings per share.



|33. | Cash Flows From (Used in) Operating Activities
|--- | ----------------------------------------------

Cash flows from (used in) operating activities determined by the indirect method are as follows:



For the year endedDecember 31(In thousands of Canadian dollars)

2011 $


2010 $CASH FLOWS FROM (USED IN) OPERATING ACTIVITIESNet income for the year


12,662



94,741Add (deduct) items not affecting cash:Depreciation of property and equipment


27,933



25,461Impairment of goodwill


90,000



-Amortization of intangible assets


18,395



17,289Deferred income tax


4,281



(2,397
)Loss on dispositions of investments and property and equipment


1,298



586Share-based compensation expense


5,575



2,822Provision for self-insured liability and claims


11,463



10,962Other non-cash items


(9,155
)


(5,908
)Share of income from equity investments


(793
)


(2,209
)Gain on sale of equity investments


-



(7,183
)161,659



134,164Trade and other receivables


11,917



11,647Unbilled revenue


(26,685
)


(1,250
)Prepaid expenses


(2,166
)


4,055Trade and other payables


(15,936
)


(22,975
)Billings in excess of costs


(7,247
)


(13,158
)Income taxes payable


(6,956
)


(551
)(47,073
)


(22,232
)Cash flows from operating activities


114,586



111,932




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-57



---

|34. | Related-Party Disclosures
|--- | -------------------------

Subsidiaries

As at December 31, 2011, the Company has subsidiaries where it owns 100% of the voting and restricted securities. These subsidiaries are consolidated in the Companys consolidated financial
statements.



|                                              |  |                                  
|--------------------------------------------- |  | ---------------------------------
|Name                                          |  | Jurisdiction of Incorporation    
|                                              | 
|58053 Newfoundland & Labrador Inc.            |  | Newfoundland and Labrador, Canada
|59991 Newfoundland & Labrador Ltd.            |  | Newfoundland and Labrador, Canada
|3221969 Nova Scotia Company                   |  | Nova Scotia, Canada              
|AXYS Environmental Consulting (Barbados) Inc. |  | Barbados                         
|Bonestroo Services, LLC                       |  | Minnesota, United States         
|BVE Development, LLC                          |  | Pennsylvania, United States      
|International Insurance Group Inc.            |  | Barbados                         
|I.R. Wilson Consultants Ltd.                  |  | British Columbia, Canada         
|Jacques Whitford Consultants BV               |  | Netherlands                      
|Jacques Whitford Holdco Ltd.                  |  | Cayman Islands                   
|Nu Nennè-Stantec Inc.                         |  | Alberta, Canada                  
|RiverMorph, LLC                               |  | Kentucky, United States          
|SEA, Incorporated                             |  | Nevada, United States            
|Stantec Consulting Caribbean Ltd.             |  | Barbados                         
|Stantec Consulting Cayman Islands Ltd.        |  | Cayman Islands                   
|Stantec Consulting Colombia S.A.S.            |  | Colombia                         
|Stantec Consulting Guatemala, S.A.            |  | Guatemala                        
|Stantec Consulting International LLC          |  | Arizona, United States           
|Stantec Consulting International Ltd.         |  | Canada                           
|Stantec Consulting Labrador Ltd.              |  | Newfoundland and Labrador, Canada
|Stantec Consulting Ltd.                       |  | Canada                           
|Stantec Consulting Michigan Inc.              |  | Michigan, United States          
|Stantec Consulting Panama, S.A.               |  | Panama                           
|Stantec Consulting Services Inc.              |  | New York, United States          
|Stantec Delaware II LLC                       |  | Delaware, United States          
|Stantec Experts-conseils Itée                 |  | Canada                           
|Stantec Holdings (Delaware) III Inc.          |  | Delaware, United States          
|Stantec Holdings Ltd.                         |  | Alberta, Canada                  
|Stantec Holdings II Ltd.                      |  | Alberta, Canada                  
|Stantec Newfoundland & Labrador Ltd.          |  | Newfoundland and Labrador, Canada
|Stantec Technology International Inc.         |  | Delaware, United States          
|UEI Associates, Inc.                          |  | Texas, United States             
|UEI Global I, Inc.                            |  | Texas, United States             
|Universal Energy do Brasil Ltda.              |  | Brazil                           
|WilsonMiller, Inc.                            |  | Florida, United States           
|WM Aviation, LLC                              |  | Delaware, United States          

Special purpose entities

As at December 31, 2011, the Company has management agreements in place with several entities to provide various services, including architecture, engineering, planning, and project management. The
management agreement provides the Company with control over the management and operation of these entities. The Company also receives a management fee generally equal to the net income of the entities and has an obligation regarding the liabilities
and losses of the entities. Based on these facts and circumstances, management has concluded that the Company controls these entities and, therefore, consolidates these entities in its consolidated financial statements.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-58



---



|                                                 |  |                              
|------------------------------------------------ |  | -----------------------------
|Name                                             |  | Jurisdiction of Incorporation
|                                                 | 
|Anshen & Allen Associates Limited                |  | England and Wales            
|Burt Hill Architects and Engineers, P.C.         |  | New Jersey, United States    
|Burt Hill International, LLC                     |  | Pennsylvania, United States  
|Burt, Hill Design Private Limited                |  | India                        
|Granary Associates Architects, P.C.              |  | Pennsylvania, United States  
|Stantec Architecture and Engineering LLC         |  | Pennsylvania, United States  
|Stantec Architecture and Engineering P.C.        |  | Massachusetts, United States 
|Stantec Architecture Inc.                        |  | North Carolina, United States
|Stantec Architecture Ltd.                        |  | Canada                       
|Stantec Connecticut Inc.                         |  | Connecticut, United States   
|Stantec Engineering (Puerto Rico) P.S.C.         |  | Puerto Rico                  
|Stantec Geomatics Ltd.                           |  | Alberta, Canada              
|Stantec International Enterprises Limited        |  | Bahamas                      
|Stantec International Inc.                       |  | Pennsylvania, United States  
|Stantec International Limited                    |  | Barbados                     
|Stantec Planning and Landscape Architecture P.C. |  | Maine, United States         
|Stantec Planning and Landscape Architecture P.C. |  | New York, United States      

Associated companies and joint ventures

The Company enters into transactions through its investments in associates and joint ventures. These transactions involve providing or
receiving services and are entered into in the normal course of business and on an arms-length basis. Refer to notes 13 and 14 for a listing of the joint ventures in which the Company is a venturer and for a listing of the Companys
investments in associates.

The following table provides the total amount of transactions (before intercompany eliminations)
that have been entered into with related parties for the year ended December 31, 2011:



(In thousands of Canadian dollars)

Sales toRelatedParties$


DistributionsPaid
$


AmountsOwed byRelatedParties
$Joint ventures


15,099



227



4,978Associates


8,004



1,198



2,413


The following table provides the total amount of transactions (before intercompany eliminations)
that have been entered into with related parties for the year ended December 31, 2010:



(In thousands of Canadian dollars)

Sales toRelatedParties$


DistributionsPaid $


AmountsOwed byRelatedParties
$Joint ventures


14,231



-



3,122Associates


8,942



2,789



2,310




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-59



---

Compensation of key management personnel of the Company

The Companys key management personnel include its CEO, chief financial officer, chief operating officer, and senior vice presidents.
The following table outlines their compensation:



For the year ended
December 31(In thousands of Canadian dollars)

2011 $


2010 $Salaries and other short-term employment benefits


8,027



8,792Directors fees


248



264Share-based compensation


3,079



1,196Total compensation


11,354



10,252


The amounts disclosed in the table are the amounts recognized as an expense related to key
management personnel and directors during the reporting year. Share-based compensation includes the fair value adjustment for the year.

Directors interests in share-based payments

Share options held by
directors of the Company to purchase ordinary shares have the following expiry dates and exercise prices:



Exercise Price


December 312011


December 31 2010Issue Date

Expiry Date

$


# Outstanding


# OutstandingJanuary 3, 2003

January 3, 2012


10.80



-



30,000January 3, 2003

January 3, 2013


12.17



60,000



60,000January 3, 2003

January 3, 2013


13.55



60,000



60,000December 14, 2004

December 14, 2011


12.25



-



8,000August 18, 2006

August 18, 2013


20.37



10,000



10,000August 17, 2007

August 17, 2014


30.61



10,000



10,000August 18, 2008

August 18, 2015


29.40



7,500



7,500Total share options outstanding








147,500



185,500




|35. | Segmented Information
|--- | ---------------------

The Company provides comprehensive professional services in the area of infrastructure and facilities throughout North America and
internationally. It considers the basis on which it is organized, including geographic areas and service offerings, in identifying its reportable segments. Operating segments of the Company are defined as components of the Company for which separate
financial information is available and is evaluated regularly by the chief operating decision maker in allocating resources and assessing performance. The chief operating decision maker is the CEO of the Company, and the Companys operating
segments are based on its regional geographic areas.

In 2010, the Company had four operating segments: Canada East, Canada
West, US East, and US West. With its growth internationally in 2010 and resulting reorganization, the Company redefined its operating segments as



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-60



---

Canada, the United States, and International, effective January 1, 2011. The Companys operating segments are aggregated into the Consulting Services reportable segment.



Geographic information

Non-Current Assets(In thousands of Canadian dollars)

December 31 2011 $


December 31 2010 $Canada


350,551



313,894United States


335,213



419,896International


3,164



307688,928



734,097Non-current assets for this purpose consist of property and equipment, goodwill, and intangible
assets.Geographic information

Gross RevenueFor the year endedDecember 31(In thousands of Canadian dollars)

2011 $


2010 $Canada


945,261



901,859United States


679,296



581,813International


58,846



29,3901,683,403



1,513,062Gross revenue is attributed to countries based on the location of the project.Practice area unit information

Gross RevenueFor the year endedDecember 31(In thousands of Canadian dollars)

2011 $


2010 $Buildings


414,716



326,111Environment


604,788



601,845Industrial


287,215



241,312Transportation


197,834



187,660Urban Land


178,850



156,1341,683,403



1,513,062


Customers

The Company has a large number of clients in various industries and sectors of the economy. Gross revenue is not concentrated in any particular client.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-61



---

|36. | Amounts Due From Customers
|--- | --------------------------

The net amount due from customers, excluding trade receivables, for contracts in progress at each consolidated statement of financial
position date, is as follows:



(In thousands of Canadian dollars)

December 31 2011 $


December 31 2010 $


January 1 2010 $Gross amount due from customers (unbilled revenue)


133,881



104,696



95,794Gross amount due to customers (billings in excess of costs)


(49,441
)


(56,741
)


(52,007
)Net amount due from customers


84,440



47,955



43,787


As at December 31, 2011, the current portion of holdbacks held by customers included in trade
and other receivables was $2,797,000 (December 31, 2010  $2,184,000; January 1, 2010  $2,829,000).



|37. | Investment Tax Credits
|--- | ----------------------

Investment tax credits, arising from qualifying scientific research and experimental development efforts pursuant to existing tax
legislation, are recorded as a reduction of the applicable administrative and marketing expenses when there is reasonable assurance of their ultimate realization. In 2011, investment tax credits of $408,000 (2010  $1,161,000) were recorded and
reduced administrative and marketing expenses.



|38. | Transition to IFRS
|--- | ------------------

For
all periods up to and including the year ended December 31, 2010, the Company prepared its financial statements in accordance with Canadian generally accepted accounting principles (GAAP). These consolidated financial statements for the year
ended December 31, 2011, are prepared in accordance with IFRS.

Accordingly, the Company has prepared financial
statements that comply with IFRS applicable for periods beginning on or after January 1, 2011, as described in the accounting policies (note 4). The Company prepared its opening statement of financial position as at January 1, 2010, its
date of transition to IFRS. This note explains the principal adjustments the Company made in restating its Canadian GAAP statement of financial position as at January 1, 2010, and its previously published Canadian GAAP financial statements for
the year ended December 31, 2010.

Exemptions applied

IFRS 1 allows first-time adopters certain exemptions from the retrospective application of certain IFRS.

The Company has applied the following exemptions:



| |  |  | Business Combinations. IFRS 3, Business Combinations (IFRS 3), has not been applied retrospectively to past business combinations.
Accordingly, the Company did not restate business combinations that took place prior to January 1, 2010. Any goodwill arising on business combinations before the transition date was not adjusted from the carrying amount previously determined
under Canadian GAAP as a result of applying this exemption, except as required under IFRS 1.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fair value or revaluation as deemed cost. The Company elected to measure buildings, classified as property and equipment and investment
property, at their fair values and used those amounts as their deemed costs at January 1, 2010. The costs of buildings were determined by reference to their fair values at January 1, 2010, by professional valuators on an existing-use
basis.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-62



---

| |  |  | Cumulative currency translation adjustment. The Company elected to deem the cumulative currency translation difference for all foreign
operations to be zero at January 1, 2010.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Share-based payments. IFRS 2, Share-Based Payments (IFRS 2), has not been applied to equity instruments in share-based payment
transactions that were granted on or before November 7, 2002, or after November 7, 2002, that vested before January 1, 2010. For cash-settled share-based payment transactions, called deferred share units, the Company has not applied
IFRS 2 to liabilities that were settled before January 1, 2010.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Reconciliations of Canadian GAAP to IFRS

IFRS 1 requires that equity, income, comprehensive income, and cash flows be reconciled for the comparative periods
presented. The Companys first-time adoption of IFRS did not have a material impact on its total operating, investing, or financing cash flows. The following represents the reconciliations from Canadian GAAP to IFRS for the respective periods
noted for equity, income, and comprehensive income, with adjustments presented on an after-tax basis.

Reconciliation of
equity:



(In thousands of Canadian dollars)

Notes


December 31 2010 $


January 1 2010 $Equity, Canadian GAAP






625,475



547,394IFRS adjustments:Contingent consideration outstanding from past business combinations


14



(6,573
)


(5,969
)Intangible asset impairment and amortization


15



(1,033
)


(2,370
)Sublease revenue


11



(355
)


(1,725
)Restructuring and acquisition-related costs


10,19



(1,737
)


-Other


9,12,16,17



(89
)


734(9,787
)


(9,330
)Equity, IFRS






615,688



538,064Reconciliation of income:(In thousands of Canadian dollars)

Notes


For the year endedDecember 31
2010
$Net income for the year, Canadian GAAP










93,595IFRS adjustments:Sublease revenue


11







1,370Unrealized gain on interest rate swap


12







1,531Intangible asset impairment and amortization


15







1,337Restructuring and acquisition-related costs


10,19







(1,913
)Other


9,14,16,17,18







(1,179
)1,146Net income for the year, IFRS










94,741




NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-63



---

Reconciliation of comprehensive income:



(In thousands of Canadian dollars)

Notes


For the year endedDecember 31
2010
$Comprehensive income for the year, Canadian GAAP






78,035IFRS adjustments:Net income adjustments


9-19



1,146Reclassification of unrealized gain on interest rate swap


12



(1,531
)Reclassification of foreign exchange on bonds


16



(355
)Net impact of IFRS adjustments on the exchange on translation of foreign operations


13



366(374
)Comprehensive income for the year, IFRS






77,661


Changes in Accounting Policies

The following notes describe the differences between the previous historical Canadian GAAP accounting policies and the current IFRS
policies applied by the Company that resulted in adjustments to its December 31, 2010, and January 1, 2010, consolidated financial statements.

Reclassification adjustments:

1) Classification of deferred taxes.
Per IAS 12, Income Taxes, deferred tax balances are classified as non-current. Under Canadian GAAP, deferred tax balances are classified as current or non-current based on the nature of the underlying related asset or liability.

2) Investment property. Per IAS 40, Investment Property, land or buildings (or parts thereof), held to earn
rental income or for capital appreciation instead of for own use, are classified as investment property. Under Canadian GAAP, these items are classified as property and equipment.

3) Provisions. Per IAS 37, Provisions, Contingent Liabilities and Contingent Assets (IAS 37), provisions are defined as
liabilities of uncertain timing or amount. Per IAS 1, Presentation of Financial Statements (IAS 1), provisions are to be disclosed as a line item on the consolidated statements of financial position. As a result, the Company reclassified
its provision for self-insured liabilities, liabilities on lease exit activities, onerous sublease contracts, and provisions for claims from other liabilities and from trade and other payables to provisions.

4) Non-controlling interest (NCI). IFRS 3 requires NCI to be recorded in equity on the consolidated statements of financial
position, whereas Canadian GAAP requires NCI to be recorded between liabilities and equity.

5) Sublease
revenueoffsetting. Per IAS 17, Leases, and IAS 37, when the Company ceases to use an office space under an operating lease arrangement or sublets part of an office space at a loss compared to its original operating lease
arrangement, it records a liability for the present value of future lease payments, as well as an asset for the present value of the future rental income that is virtually certain. Under IFRS, the liability is recorded separately from the asset in
these cases. Under Canadian GAAP, netting the asset against the liability was permitted.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-64



---

6) Financial assets and liabilities. Per IAS 1, financial assets and financial
liabilities are to be disclosed as line items on the consolidated statements of financial position. As a result, the Company reclassified derivative financial instruments and interest on long-term debt from other liabilities to other financial
liabilities. The Company also reclassified investments held for self-insured liabilities, investments, and holdbacks on long-term contracts from other assets to other financial assets.

7) Investments accounted for using the equity method. Per IAS 1, investments accounted for using the equity method must be
presented as a separate line on the consolidated statements of financial position. As a result, the Company reclassified investments in associated companies from other assets to investments in associates.

8) Contingent liabilities. Because the Company elected not to apply IFRS 3 retrospectively to business combinations prior to
January 1, 2010, IFRS requires the Company to recognize any contingent liabilities assumed from past acquisitions that were not recognized in Canadian GAAP but would require recognition under IFRS unless IAS 37 prohibits their recognition in
the statement of the acquiree. Also, if a seller contractually indemnified the acquirer for the outcome of a contingent liability, the acquirer would recognize an indemnification asset at the same time that it recognized the contingent liability. As
a result, the Companys provisions and other financial assets have increased.

Adjustments impacting net income and
retained earnings:

9) Fair value of property and equipment and investment property. The Company elected to measure
buildings, classified as property and equipment and investment property, at fair value at January 1, 2010, and used that amount as deemed cost as at January 1, 2010. The aggregate fair value of buildings at January 1, 2010 was
$9,845,000 compared to a carrying amount of $9,390,000. As a result, on transition, the Companys property and equipment and investment property increased by $455,000, and retained earnings increased by $370,000 (net of tax) for the difference
between the fair value and net book value of these properties.

IFRS requires component accounting for significant parts of an
item of property and equipment with a cost that is significant in relation to the total cost of the item. Component accounting is required if the useful life and/or depreciation method for the component is different from the remainder of the asset.
Based on the componentization analysis, the Companys buildings were componentized. Depreciation for 2010 and 2011 was based on buildings balances stated at fair value on January 1, 2010, and broken into components.

10) Postacquisition exit/restructuring costs. Because the Company elected not to apply IFRS 3 retrospectively to business
combinations prior to January 1, 2010, IFRS requires the Company to exclude from its opening IFRS consolidated statements of financial position any item recognized in accordance with Canadian GAAP that does not qualify for recognition as an
asset or liability under IFRS. Per IFRS 3, any postacquisition exit/restructuring plans of an acquiring company are expensed in the consolidated statements of income as incurred. Under Canadian GAAP, many of these costs are recognized as liabilities
in the purchase price allocation and impact goodwill at the time of acquisition. Therefore, the Company was required to derecognize any postacquisition exit/restructuring liabilities existing at January 1, 2010, decreasing its accrual for
exit/restructuring activities by $250,000 and increasing retained earnings by $177,000 (net of tax). During 2010, administrative and marketing expenses increased since these costs were expensed when incurred, along with the exit/restructuring costs
from new acquisitions in 2010.

11) Sublease revenue recognition. Per IAS 37, an inflow of resources is recognized in
the consolidated statements of financial position when it is virtually certain. Under Canadian GAAP, the Company established lease exit liabilities when it ceased to use office space under an operating lease arrangement. Included in the liability
was the present value of the remaining lease payments offset by an estimate of future sublease revenue. Therefore, the Company derecognized $2,551,000 in estimated future sublease revenue at January 1, 2010, since it was not virtually certain
at that date. As a result, on transition, the Companys provision for lease exit liabilities increased by $2,551,000, and its retained earnings decreased by $1,725,000 (net of tax).



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-65



---

During 2010, administrative and marketing expenses decreased to recognize sublease revenues
that became virtually certain.

12) Hedge accounting. As at December 31, 2009, the Company used the
shortcut method to prove the effectiveness of its interest rate hedge as permitted by Canadian GAAP. Per IAS 39, the Company is not permitted to use the shortcut method to assess hedge effectiveness. As a result, the Company discontinued
hedge accounting (for IFRS accounting purposes only) on January 1, 2010, and removed the $1,531,000 loss (net of tax) in accumulated other comprehensive income and decreased retained earnings, accordingly.

The interest rate swap expired in September 2010. As its fair value approached zero, the Company reclassified the resulting unrealized
gain, decreasing other comprehensive income and increasing finance income.

13) Foreign currency translation. On
transition to IFRS, the Company elected to deem the cumulative translation difference for all foreign operations to be zero at January 1, 2010. As a result, the Companys accumulated other comprehensive income increased and retained
earnings decreased by $50,837,000.

Due to the adjustments made to the consolidated statements of financial position to restate
Canadian GAAP to IFRS, the balances used to calculate the exchange on translation of foreign operations are different under IFRS. Because of this difference, other comprehensive income increased.

14) Contingent consideration. Despite the Company having elected not to apply IFRS 3 retrospectively to business combinations prior
to January 1, 2010, IFRS generally requires the Company to recognize any assets acquired or liabilities assumed in past business combinations that would require recognition by an acquirer under IFRS but not under Canadian GAAP. IFRS 3 records
contingent consideration at the date of acquisition, based on the fair value at that date, as a liability or equity depending on its nature. The remeasurement of the liability at fair value each quarter-end impacts earnings until the liability is
settled. Under Canadian GAAP, a liability for contingent consideration is only recognized at the date of acquisition when the amount is determinable; therefore, contingent consideration is generally recognized when the contingency is resolved and
the consideration becomes payable. As a result, the Company fair valued contingent consideration outstanding from past business combinations at January 1, 2010, using an income approach, which increased other financial liabilities by $5,854,000
and decreased retained earnings by $5,969,000.

Contingent consideration was recorded at a discounted amount due to its
long-term nature. In 2010, net interest expense increased to record the unwinding of the discount on contingent consideration. In addition, in 2010, due to a change in the probability of meeting a performance target, the Company accrued additional
contingent consideration of $476,000 as an increase to other financial liabilities and a decrease to other (income) expense.

15) Impairment of assets. Under IAS 36, Impairment of Assets (IAS 36), the impairment test for definite-lived
intangible assets and long-lived assets is only one step. If the carrying amount exceeds the recoverable amount (on a discounted basis), the asset value is written down to the recoverable amount. Under Canadian GAAP, this test is a two-step process.
In the first step, the carrying amount of an asset is compared to the expected undiscounted cash flows for the asset. If the carrying amount is more than the undiscounted cash flows, the fair value of the asset is determined. An impairment loss is
recorded if the carrying amount is more than the fair value.

Per IFRS 1, in preparing the opening IFRS consolidated statement
of financial position, the Company is required to perform an impairment test, in accordance with IAS 36, on goodwill and intangible assets at January 1, 2010. The impairment tests concluded that goodwill was not impaired but that intangible
assets relating to certain client relationships and favorable lease agreements were impaired by $3,824,000. The intangible impairments primarily reflected the financial distress experienced by specific clients in relation to past acquisitions and a
reduction in the value of favorable leases in the Manhattan, New York, area. Therefore, on transition, the Companys intangible assets decreased by $3,824,000, and retained earnings decreased by $2,370,000 (net of tax).



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-66



---

As a result of the intangible asset impairment recorded on January 1, 2010, intangible
asset amortization decreased in 2010. In addition, the Company added back the $1,772,000 impairment of client relationships and favorable lease agreements that were impaired under Canadian GAAP during 2010 since they were already accounted for in
the IFRS opening consolidated statement of financial position.

16) Available-for-sale financial instruments. For
available-for-sale financial instruments, IFRS requires that unrealized foreign exchange gains or losses from non-monetary investments be recorded in other comprehensive income and that unrealized foreign exchange gains or losses from monetary
investments be recorded in income. Under Canadian GAAP, unrealized foreign exchange gains or losses from both non-monetary and monetary available-for-sale financial instruments are recorded in other comprehensive income. Since the Company has bonds
(monetary investments) classified as available for sale, an adjustment was made on January 1, 2010, to decrease other comprehensive income and increase retained earnings by $281,000.

In 2010, as a result of reclassifying the unrealized foreign exchange gain on bonds from other comprehensive income to income, other
comprehensive income decreased, and foreign exchange gain increased.

17) Professional fees. Per IAS 39, transaction
costs associated with issuing new shares are deducted from equity when these costs are directly attributable to the issue of the new shares and otherwise are expensed to income. As a result, administrative and marketing expenses increased due to
legal and audit costs associated with the filing of a short-term shelf prospectus in 2010.

18) Income taxes. Where
appropriate, deferred taxes were adjusted to reflect the tax effect of the adjustments identified above. As a result, on January 1, 2010, the Company increased deferred tax assets by $4,005,000 and increased deferred tax liabilities by
$1,998,000. To the extent that deferred taxes were adjusted due to IFRS adjustments made in 2010, income tax expense increased.

19) Acquisition-related costs. Per IFRS 3, the acquirer accounts for acquisition-related costs as expenses in the periods in which
the costs are incurred. Per Canadian GAAP, incremental costs incurred to effect business combinations are recognized as costs of the business combinations and impact goodwill at the time of acquisition. As a result, during 2010, under IFRS, the
Company recognized legal and audit costs associated with acquisitions, which increased administrative and marketing expenses.

Adjustments to purchase price allocations

Under Canadian GAAP, generally, initial purchase price allocations are subsequently adjusted through goodwill on a prospective basis. Under IFRS, if the initial accounting for a business combination can
only be determined provisionally, subsequent adjustments to the allocation are retrospectively recognized from the date of acquisition. These adjustments (i.e., measurement period adjustments) are only those that confirm facts and circumstances
existing at the acquisition date and may occur up to 12 months from the acquisition date. During 2011, the Company had significant measurement period adjustments relating to 2010 acquisitions; therefore, these adjustments were retroactively applied
to 2010, impacting various line items in the Companys consolidated statements of financial position.

Restated
consolidated financial statements

The following are reconciliations of the financial statements previously presented under
Canadian GAAP to financial statements prepared under IFRS.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-67



---

Consolidated Statements of Financial Position



|                                                           |  |                         |           |   |                              |  |         |        |  |  |                |   |  |                              |           |   |        |  |         |   |  |  |           | 
|---------------------------------------------------------- |  | ----------------------- | --------- | - | ---------------------------- |  | ------- | ------ |  |  | -------------- | - |  | ---------------------------- | --------- | - | ------ |  | ------- | - |  |  | --------- | 
|                                                           |  | As at December 31, 2010 |           |   | As at January 1, 2010        | 
|                                                           |  |                         |           |  
|(In thousands of Canadian dollars)                         |  | CanadianGAAP $          |           |   | Effect ofTransitionto IFRS
$ |  |         | IFRS $ |  |  | CanadianGAAP $ |   |  | Effect ofTransitionto IFRS
$ |           |   | IFRS $ | 
|                                                           | 
|                                                           |  |                         |           |   |                              | 
|ASSETS                                                     |  |                         |           |   |                              |  |         |        |  |  |                |   |  |                              |           |   |        |  |         |   |  |  |           | 
|Current                                                    |  |                         |           |   |                              |  |         |        |  |  |                |   |  |                              |           |   |        |  |         |   |  |  |           | 
|Cash and short-term deposits                               |  |                         | 62,731    |   |                              |  | -       |        |  |  | 62,731         |   |  |                              | 14,690    |   |        |  | -       |   |  |  | 14,690    | 
|Trade and other receivables                                |  |                         | 290,388   |   |                              |  | 5,352   |        |  |  | 295,740        |   |  |                              | 253,205   |   |        |  | -       |   |  |  | 253,205   | 
|Unbilled revenue                                           |  |                         | 103,204   |   |                              |  | 1,492   |        |  |  | 104,696        |   |  |                              | 95,794    |   |        |  | -       |   |  |  | 95,794    | 
|Income taxes recoverable                                   |  |                         | 12,313    |   |                              |  | -       |        |  |  | 12,313         |   |  |                              | 12,144    |   |        |  | -       |   |  |  | 12,144    | 
|Prepaid expenses                                           |  |                         | 11,068    |   |                              |  | (369    | )      |  |  | 10,699         |   |  |                              | 11,352    |   |        |  | -       |   |  |  | 11,352    | 
|Deferred tax assets                                        |  |                         | 16,059    |   |                              |  | (16,059 | )      |  |  | -              |   |  |                              | 15,518    |   |        |  | (15,518 | ) |  |  | -         | 
|Other financial assets                                     |  |                         | -         |   |                              |  | 10,589  |        |  |  | 10,589         |   |  |                              | -         |   |        |  | 4,664   |   |  |  | 4,664     | 
|Other assets                                               |  |                         | 8,750     |   |                              |  | (4,574  | )      |  |  | 4,176          |   |  |                              | 6,550     |   |        |  | (2,316  | ) |  |  | 4,234     | 
|                                                           | 
|                                                           |  |                         |           |   |                              | 
|Total current assets                                       |  |                         | 504,513   |   |                              |  | (3,569  | )      |  |  | 500,944        |   |  |                              | 409,253   |   |        |  | (13,170 | ) |  |  | 396,083   | 
|Non-current                                                |  |                         |           |   |                              |  |         |        |  |  |                |   |  |                              |           |   |        |  |         |   |  |  |           | 
|Property and equipment                                     |  |                         | 113,996   |   |                              |  | (307    | )      |  |  | 113,689        |   |  |                              | 108,256   |   |        |  | (426    | ) |  |  | 107,830   | 
|Investment property                                        |  |                         | -         |   |                              |  | -       |        |  |  | -              |   |  |                              | -         |   |        |  | 881     |   |  |  | 881       | 
|Goodwill                                                   |  |                         | 551,446   |   |                              |  | (3,174  | )      |  |  | 548,272        |   |  |                              | 468,814   |   |        |  | -       |   |  |  | 468,814   | 
|Intangible assets                                          |  |                         | 73,370    |   |                              |  | (1,234  | )      |  |  | 72,136         |   |  |                              | 64,155    |   |        |  | (3,824  | ) |  |  | 60,331    | 
|Investments in associates                                  |  |                         | -         |   |                              |  | 2,831   |        |  |  | 2,831          |   |  |                              | -         |   |        |  | 6,631   |   |  |  | 6,631     | 
|Deferred tax assets                                        |  |                         | 21,396    |   |                              |  | 19,516  |        |  |  | 40,912         |   |  |                              | 23,940    |   |        |  | 19,523  |   |  |  | 43,463    | 
|Other financial assets                                     |  |                         | -         |   |                              |  | 57,235  |        |  |  | 57,235         |   |  |                              | -         |   |        |  | 48,657  |   |  |  | 48,657    | 
|Other assets                                               |  |                         | 58,787    |   |                              |  | (57,448 | )      |  |  | 1,339          |   |  |                              | 49,127    |   |        |  | (49,127 | ) |  |  | -         | 
|                                                           | 
|                                                           |  |                         |           |   |                              | 
|Total assets                                               |  |                         | 1,323,508 |   |                              |  | 13,850  |        |  |  | 1,337,358      |   |  |                              | 1,123,545 |   |        |  | 9,145   |   |  |  | 1,132,690 | 
|                                                           | 
|                                                           |  |                         |           |   |                              | 
|LIABILITIES AND EQUITY                                     |  |                         |           |   |                              |  |         |        |  |  |                |   |  |                              |           |   |        |  |         |   |  |  |           | 
|Current                                                    |  |                         |           |   |                              |  |         |        |  |  |                |   |  |                              |           |   |        |  |         |   |  |  |           | 
|Trade and other payables                                   |  |                         | 192,106   |   |                              |  | (5,819  | )      |  |  | 186,287        |   |  |                              | 167,175   |   |        |  | (7,782  | ) |  |  | 159,393   | 
|Billings in excess of costs                                |  |                         | 58,071    |   |                              |  | (1,330  | )      |  |  | 56,741         |   |  |                              | 52,007    |   |        |  | -       |   |  |  | 52,007    | 
|Income taxes payable                                       |  |                         | 3,397     |   |                              |  | 1,198   |        |  |  | 4,595          |   |  |                              | -         |   |        |  | -       |   |  |  | -         | 
|Current portion of long-term debt                          |  |                         | 47,265    |   |                              |  | (871    | )      |  |  | 46,394         |   |  |                              | 35,428    |   |        |  | -       |   |  |  | 35,428    | 
|Provisions                                                 |  |                         | -         |   |                              |  | 17,297  |        |  |  | 17,297         |   |  |                              | -         |   |        |  | 15,287  |   |  |  | 15,287    | 
|Deferred tax liabilities                                   |  |                         | 15,843    |   |                              |  | (15,843 | )      |  |  | -              |   |  |                              | 15,643    |   |        |  | (15,643 | ) |  |  | -         | 
|Other financial liabilities                                |  |                         | -         |   |                              |  | 9,365   |        |  |  | 9,365          |   |  |                              | -         |   |        |  | 6,196   |   |  |  | 6,196     | 
|Other liabilities                                          |  |                         | 14,660    |   |                              |  | (11,347 | )      |  |  | 3,313          |   |  |                              | 13,558    |   |        |  | (9,747  | ) |  |  | 3,811     | 
|                                                           | 
|                                                           |  |                         |           |   |                              | 
|Total current liabilities                                  |  |                         | 331,342   |   |                              |  | (7,350  | )      |  |  | 323,992        |   |  |                              | 283,811   |   |        |  | (11,689 | ) |  |  | 272,122   | 
|Non-current                                                |  |                         |           |   |                              |  |         |        |  |  |                |   |  |                              |           |   |        |  |         |   |  |  |           | 
|Long-term debt                                             |  |                         | 269,294   |   |                              |  | 6,342   |        |  |  | 275,636        |   |  |                              | 198,769   |   |        |  | -       |   |  |  | 198,769   | 
|Provisions                                                 |  |                         | -         |   |                              |  | 39,143  |        |  |  | 39,143         |   |  |                              | -         |   |        |  | 42,232  |   |  |  | 42,232    | 
|Deferred tax liabilities                                   |  |                         | 30,749    |   |                              |  | 17,031  |        |  |  | 47,780         |   |  |                              | 29,536    |   |        |  | 17,641  |   |  |  | 47,177    | 
|Other financial liabilities                                |  |                         | -         |   |                              |  | 5,789   |        |  |  | 5,789          |   |  |                              | -         |   |        |  | 7,606   |   |  |  | 7,606     | 
|Other liabilities                                          |  |                         | 66,545    |   |                              |  | (37,215 | )      |  |  | 29,330         |   |  |                              | 63,849    |   |        |  | (37,129 | ) |  |  | 26,720    | 
|                                                           | 
|                                                           |  |                         |           |   |                              | 
|Total liabilities                                          |  |                         | 697,930   |   |                              |  | 23,740  |        |  |  | 721,670        |   |  |                              | 575,965   |   |        |  | 18,661  |   |  |  | 594,626   | 
|                                                           | 
|                                                           |  |                         |           |   |                              | 
|Non-controlling interests                                  |  |                         | 103       |   |                              |  | (103    | )      |  |  | -              |   |  |                              | 186       |   |        |  | (186    | ) |  |  | -         | 
|                                                           |  |                         |           |   |                              | 
|Shareholders equity                                       |  |                         |           |   |                              |  |         |        |  |  |                |   |  |                              |           |   |        |  |         |   |  |  |           | 
|Share capital                                              |  |                         | 225,158   |   |                              |  | -       |        |  |  | 225,158        |   |  |                              | 221,983   |   |        |  | -       |   |  |  | 221,983   | 
|Contributed surplus                                        |  |                         | 13,340    |   |                              |  | -       |        |  |  | 13,340         |   |  |                              | 12,606    |   |        |  | -       |   |  |  | 12,606    | 
|Retained earnings                                          |  |                         | 454,301   |   |                              |  | (60,457 | )      |  |  | 393,844        |   |  |                              | 364,569   |   |        |  | (61,603 | ) |  |  | 302,966   | 
|Accumulated other comprehensive (loss) income              |  |                         | (67,324   | ) |                              |  | 50,567  |        |  |  | (16,757        | ) |  |                              | (51,764   | ) |        |  | 52,087  |   |  |  | 323       | 
|                                                           | 
|                                                           |  |                         |           |   |                              | 
|Total equity attributable to equity holders of the Company |  |                         | 625,475   |   |                              |  | (9,890  | )      |  |  | 615,585        |   |  |                              | 547,394   |   |        |  | (9,516  | ) |  |  | 537,878   | 
|                                                           | 
|                                                           |  |                         |           |   |                              | 
|Non-controlling interests                                  |  |                         | -         |   |                              |  | 103     |        |  |  | 103            |   |  |                              | -         |   |        |  | 186     |   |  |  | 186       | 
|                                                           | 
|                                                           |  |                         |           |   |                              | 
|Total equity                                               |  |                         | 625,475   |   |                              |  | (9,787  | )      |  |  | 615,688        |   |  |                              | 547,394   |   |        |  | (9,330  | ) |  |  | 538,064   | 
|                                                           | 
|                                                           |  |                         |           |   |                              | 
|Total liabilities and equity                               |  |                         | 1,323,508 |   |                              |  | 13,850  |        |  |  | 1,337,358      |   |  |                              | 1,123,545 |   |        |  | 9,145   |   |  |  | 1,132,690 | 
|                                                           | 



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-68



---

Consolidated Statements of Income



|                                                             |  |                                     |           |   |                               |  |        |        |  |  |           |  
|------------------------------------------------------------ |  | ----------------------------------- | --------- | - | ----------------------------- |  | ------ | ------ |  |  | --------- | -
|                                                             |  | For the year endedDecember 31,
2010 |          
|(In thousands of Canadian dollars, except per share amounts) |  | CanadianGAAP $                      |           |   | Effect of Transitionto IFRS $ |  |        | IFRS $ | 
|                                                             | 
|                                                             |  |                                     |          
|Gross revenue                                                |  |                                     | 1,513,062 |   |                               |  | -      |        |  |  | 1,513,062 |  
|Less subconsultant and other direct expenses                 |  |                                     | 287,022   |   |                               |  | -      |        |  |  | 287,022   |  
|                                                             | 
|                                                             |  |                                     |          
|Net revenue                                                  |  |                                     | 1,226,040 |   |                               |  | -      |        |  |  | 1,226,040 |  
|Direct payroll costs                                         |  |                                     | 537,704   |   |                               |  | -      |        |  |  | 537,704   |  
|                                                             | 
|                                                             |  |                                     |          
|Gross margin                                                 |  |                                     | 688,336   |   |                               |  | -      |        |  |  | 688,336   |  
|Administrative and marketing expenses                        |  |                                     | 510,934   |   |                               |  | (210   | )      |  |  | 510,724   |  
|Depreciation of property and equipment                       |  |                                     | 24,402    |   |                               |  | 1,059  |        |  |  | 25,461    |  
|Amortization of intangible assets                            |  |                                     | 17,599    |   |                               |  | (310   | )      |  |  | 17,289    |  
|Impairment of intangible assets                              |  |                                     | 1,772     |   |                               |  | (1,772 | )      |  |  | -         |  
|Net interest expense                                         |  |                                     | 9,000     |   |                               |  | (1,138 | )      |  |  | 7,862     |  
|Other net finance income                                     |  |                                     | -         |   |                               |  | (219   | )      |  |  | (219      | )
|Share of income from associates                              |  |                                     | (2,209    | ) |                               |  | -      |        |  |  | (2,209    | )
|Gain on sale of equity investments                           |  |                                     | (7,183    | ) |                               |  | -      |        |  |  | (7,183    | )
|Foreign exchange loss (gain)                                 |  |                                     | 1,355     |   |                               |  | (361   | )      |  |  | 994       |  
|Other (income) expense                                       |  |                                     | (850      | ) |                               |  | 1,688  |        |  |  | 838       |  
|                                                             | 
|                                                             |  |                                     |          
|Income before income taxes                                   |  |                                     | 133,516   |   |                               |  | 1,263  |        |  |  | 134,779   |  
|                                                             | 
|                                                             |  |                                     |          
|Income taxes                                                 |  |                                     |           |   |                               |  |        |        |  |  |           |  
|Current                                                      |  |                                     | 42,429    |   |                               |  | 6      |        |  |  | 42,435    |  
|Deferred                                                     |  |                                     | (2,508    | ) |                               |  | 111    |        |  |  | (2,397    | )
|                                                             | 
|                                                             |  |                                     |          
|Total income taxes                                           |  |                                     | 39,921    |   |                               |  | 117    |        |  |  | 40,038    |  
|                                                             | 
|                                                             |  |                                     |          
|Net income for the year                                      |  |                                     | 93,595    |   |                               |  | 1,146  |        |  |  | 94,741    |  
|                                                             | 
|                                                             |  |                                     |          
|Earnings per share                                           |  |                                     |           |   |                               |  |        |        |  |  |           |  
|Basic                                                        |  |                                     | 2.05      |   |                               |  | 0.02   |        |  |  | 2.07      |  
|                                                             | 
|                                                             |  |                                     |          
|Diluted                                                      |  |                                     | 2.04      |   |                               |  | 0.02   |        |  |  | 2.06      |  
|                                                             | 



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-69



---

Consolidated Statements of Comprehensive Income



For the year endedDecember 31,
2010(In thousands of Canadian dollars)

Canadian GAAP $


Effect of Transition to IFRS
$


IFRS $Net income for the year


93,595



1,146



94,741Other comprehensive income (loss)Exchange differences on translation of foreign operations


(18,981
)


366



(18,615
)Net gain (loss) on available-for-sale financial assets


1,923



(361
)


1,562Net gain (loss) on cash flow hedge


2,157



(2,157
)


-Income tax


(659
)


632



(27
)Other comprehensive loss for the year, net of tax


(15,560
)


(1,520
)


(17,080
)Total comprehensive income for the year, net of tax


78,035



(374
)


77,661




|39. | Event After the Reporting Period
|--- | --------------------------------

On February 15, 2012, the Companys board of directors approved a dividend policy and concurrently declared its first quarterly dividend of $0.15 per share, payable on April 17, 2012, to
shareholders of record on March 30, 2012.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2011

STANTEC INC.

F-70



---



LOGO



---













LOGO