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Published: 2020-02-26

Annual Report 2019

TABLE OF CONTENTS
3	Who We Are
4	Clear Vision
6	2019 Financial Highlights
8	Message from the Chair
9	Message from the CEO
10	Sustainability
M-1 Management's Discussion and Analysis
F-1 Consolidated Financial Statements
Radiant (21st & Welton)
Denver, Colorado, USA
2	2019 S TA N T E C A N N U A L R E P O R T

WHO WE ARE
	Business Operating Units*
	29% Infrastructure
	22% Buildings
	20% Water
	15% Environmental Services
	14% Energy & Resources
		2019 Net Revenue
	Reportable Segments*
	52% United States
	30% Canada
	18% Global
	*Percent of net revenue
	Engineering and design are at the core of what we do. At any given time, we’re working on tens of thousands of projects for thousands of clients in hundreds of communities. While we provide integrated expertise and services across the entire project life cycle, design is at the heart of it all.
	65+ Years of profitability		350 Office locations	#3Design firm in North America
	22,000 Employees		6 Continents	#10Design firm in the world
S TA N T E C I N C .					3

CLEAR VISION: STANTEC’S STR ATEGIC PL AN
We aim to grow and diversify sustainably for the benefit of our clients, employees, and shareholders. We will do this through a client-centric framework with four value creators.
Excellence	Innovation
We have reshaped our organization to be lean and highly engaged. We will continue to drive earnings growth through exceptional project execution and efficient operations.	We will continue to invest in the development of leading-edge services for our clients that differentiate our service offerings and drive organic growth. We also expect innovation to drive operational efficiency.
GrowthPeople
We will create shareholder value and grow earnings through a combination of organic growth and disciplined capital allocation.	We will provide a workplace that attracts, engages, rewards, and retains the best talent in the industry.
2019 S TA N T E C A N N U A L R E P O R T	4

Our 2022 Targets
Net Revenue
>10% CAGR
Adjusted EBITDA
Margin
16-17%of Net Revenue
Adjusted Earnings
per Share
>11%CAGR
Return on
Invested Capital
>10%
	Crescent Dunes Solar Energy Facility – Phase I ESA
	Tonopah, Nevada, USA
	Energy Remix
		S TA N T E C I N C .	5

2 019 FINANCIAL HIGHLIGHTS
					Adjusted Diluted Earnings	Gross Revenue and	Adjusted EBITDA millions (C$)
					per Share (C$)	Net Revenue millions (C$)
	$600	$6,000					$2.50
	$500				$2.00
	$400	$4,000
					$1.50
	$300
					$1.00
	$200	$2,000
					$0.50
	$100
		Y		Y											Y	Y	Y
	$0	E		E	$0															E	E	$0.00	E
	15		16							17	18	19		19							15	16	17	18	19	15	16	17	18	19
		Pre		Post
		IFRS 16	IFRS 16
	Adjusted EBITDA	Gross revenue														Net revenue	Diluted EPS	Adjusted diluted EPS
Adjusted Net Income millions (C$)					Capital Returned to	Free Cashflow millions (C$)
					Shareholders millions (C$)
	$500				$150	$250
	$400				$120	$200
	$300				$90	$150
	$200				$60	$100
	$100				$30	$50
		Y		Y		Y									Y
		E		E	$0	E	$0															E
	$0
	15		16	17	18	19		19	15		16	17	18	19					15	16	17	18	19
		Pre		Post
		IFRS 16	IFRS 16
	Operating Cash Flow	Free Cash Flow			Share Repurchase	Dividends	Adjusted net income														Net income
Construction Services operations are presented as discontinued operations. Results for 2019 were accounted
for using IFRS 16 and results for 2018 and 2017 were accounted for using IAS 17. Gross and net revenue were
accounted for using IFRS 15 for 2019 and 2018 and IAS 11 for years prior. Adjusted diluted EPS, adjusted EBITDA,
adjusted net income and measures excluding IFRS 16 are non-IFRS measures discussed in the Definition section of
the 2019 annual report. The financial results reflect the continuing operations of the company, except for cash flow
which is on a consolidated basis.
2019 S TA N T E C A N N U A L R E P O R T	6

				8.8%Return on Invested Capital
2019 Results Versus Targets
Expressed as a percent of net revenue and revised for IFRS 16
	2019 Target Range	LEGEND		2019 Results
				10.6%Net Revenue Growth (2019 v 2018)
Gross Margin (%)
50 51 52 53 54 55 56 57 58 59 60
	54.1%
				4.4%Organic Net Revenue Growth (2019 v 2018)
Administrative & Marketing Expenses (%)
34 35 36 37 38 39 40 41 42 43 44
	38.6%
Adjusted EBITDA (%)
				5.2%Acquisition Net Revenue Growth (2019 v 2018)
10 11 12 13 14 15 16 17 18 19 20
			15.5%
Adjusted Net Income (%)
0 1 2 3 4 5 6 7 8 9 10
				$4.3 B
			6.1%
				Contract Backlog
ROIC, Adjusted EBITDA and adjusted net income are non-IFRS measures				1.1xNet Debt to Adjusted EBITDA
(discussed in the Definition section of the 2019 Annual Report).
		S TA N T E C I N C .			7

MES SAGE FROM OU R CHAIR
	occurring both locally and globally. And the strength of the board is enhanced by the diversity and independence represented by our members, underscoring the strong governance that has become a hallmark of Stantec. I would like to thank the board for their continued diligence and dedication. Together, we look forward to guiding Stantec as it continues to draw upon its expertise to tackle the challenges and opportunities facing our communities.
It was my honor to be appointed as board chair in May 2019 following Aram Keith’s retirement. 2019 was a year of reinvigoration for Stantec as the company returned to its pure-play design roots. Under Gord Johnston’s leadership, Stantec has refocused its strategic vision and plotted a course to create value for all our stakeholders: our clients, our employees, and our shareholders. Our newly released 3-year strategic plan provides clarity in our direction and in the financial targets that will be used to measure Stantec’s success. My fellow board members and I strongly support the company’s strategic plan and are confident in management’s ability to deliver upon it.


	Douglas K. Ammerman
	Chair Stantec Board of Directors
As Stantec enters the new decade, the board remains deeply committed to the Company’s ongoing success. The diverse backgrounds of our directors allows the board to bring a broad range of perspectives to bear on how to address, and capture value from, the emerging trends and industry dynamics that are
2019 S TA N T E C A N N U A L R E P O R T	8

		MES SAGE FROM OU R CEO
	streamlined energy use and multifunctional layouts. Our success at finding innovative solutions is the reason we have been selected as lead designer for the Battery Coastal Resilience Project in Lower Manhattan, which will help address rising sea levels.	maximizes long-term, sustainable value by being accountable to the targets we have set and by maintaining our disciplined approach to capital allocation.
		We enter 2020 as a re-energized Company with a clear vision and a blueprint for our future—a future we look forward to with confidence and determination.
Designing a Better World The solutions to many of today’s most pressing issues can be found in better design. Better design can prepare communities for the effects of climate change. It can help revitalize our cities and restore our ecosystems.
	Whatever the challenge, Stantec’s experts are ready to help our clients and communities meet it.
		As always, I thank our shareholders, clients, and employees for their continued confidence in our Company.
	Designing a Better StantecIn 2019, our 65th anniversary, we were determined to design a better Stantec. Better design starts with questioning and challenging the status quo. So we asked ourselves: How can we drive operational excellence at all levels in the organization? How can we use leading-edge technology and innovation to enhance our services and operations? How can we attract and retain the world’s best people? And where are our best opportunities to grow our business, both organically and by acquisition?
At Stantec, we take pride in differentiating ourselves by helping our clients and communities address their challenges with better design. This passion is ultimately what drives value for our employees and shareholders, too.
		Gord Johnston
		President and CEO
Better design is how we enabled the city of Varennes, Québec, to build Canada’s first Net Zero building. Despite the cold climate, the Varennes library consumes nine times less energy on average than similar buildings across the country. In Philadelphia, the Charles Library we designed for Temple University’s sustainable campus is a 220,000-square-foot (20,439-square-metre) building that pushes the boundaries of what can be achieved with
	The answers drove key changes in 2019, including our organizational reshaping. They also formed the spine of our strategic plan, the roadmap that will guide our decision-making for the next three years. We will strengthen our position as a top-10 global design firm that
			S TA N T E C I N C .	9

SUPPORTING A SU STAINABLE FUTU RE
	Our commitment to designing in a way that supports a sustainable future is ingrained in our operations: in the services we provide to our clients, the way we treat our people and run our business, and the passion we have for serving our communities.
Ratings and Rankings• CDP: A-, • MSCI: AA• ISS E&S QualityScore, environment: 1,
		social: 2, governance: 2
	Sustainability is woven directly into Stantec’s leadership. Our CEO is recognized as an Envision Sustainability Professional by the Institute for Sustainable Infrastructure. And our CFO is a member of the CFO Taskforce for the SDGs – UN Global Compact Sustainable Finance Programme.	• ISS ESG = Prime rating• Sustainalytics = Outperformer, low risk• Refinitiv = A-
	We are ideal y positioned to help clients and communities achieve their sustainability objectives in pursuit of a sustainable future.
	Key Sustainability Highlights
	Environmental• Ranked by Corporate Knights in 2020 in the Top 100
	Most Sustainable Companies in the World and 50 Best Corporate Citizens in Canada.
	• We have already achieved a 36% reduction in scope 1
	and 2 per person emissions from our 2013 baseline and expect to surpass our 2028 reduction target of 40%.
	• Employ 900+ LEED Accredited Professionals and
	266 Envision Sustainability Professionals.
	Social• Actively support the UN Global Compact and
	Sustainable Development Goals.
	• Actively support the success of Indigenous
	communities.
	• Annual y donate approximately $3 million to charities
	and host a Company-wide volunteer event, Stantec in the Community Week.
	Governance• Governed by executive- and board-level sustainability
	committees.
	• Made strides in gender equity, with females representing
	44% of our board and 20% of our executive officers.
	• Incorporate sustainability, including climate action,
	into our strategy.
Robinson Preserve (Phase I, II, and IIb)
Bradenton, Florida, USA
Coastal Resilience
	For more details, including our Sustainability Reports, visit
	stantec.com/sustainability.
10	2019 S TA N T E C A N N U A L R E P O R T

BUSINESS MODEL AND STRATEGY	2	Index to
		Management's
BASIS OF PRESENTATION	4
		Discussion
		and Analysis
2019 FINANCIAL HIGHLIGHTS	5
2019 FOURTH QUARTER HIGHLIGHTS	8
FINANCIAL TARGETS	9
OUTLOOK 11
FINANCIAL PERFORMANCE	11
FOURTH QUARTER RESULTS	16
QUARTERLY TRENDS	18
STATEMENTS OF FINANCIAL POSITION	20
LIQUIDITY AND CAPITAL RESOURCES	21
CRITICAL ACCOUNTING ESTIMATES, DEVELOPMENTS, AND MEASURES	28
Critical Accounting Estimates	28
Accounting Developments	28
Materiality 31Definition of Non-IFRS Measures
	32
RISK FACTORS	33
CONTROLS AND PROCEDURES	40
SUBSEQUENT EVENTS	41
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	41
			M -1	S TA N T E C I N C .	11

Management’s Discussion and Analysis February 26, 2020
This discussion and analysis of Stantec Inc.’s (Stantec or the Company) operations, financial position, and cash flows for the year ended December 31, 2019, dated February 26, 2020, should be read in conjunction with the Company’s 2019 audited consolidated financial statements and related notes for the year ended December 31, 2019. Our 2019 audited consolidated financial statements and related notes are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). All amounts shown are in Canadian dollars.
Additional information regarding the Company, including our Annual Information Form, is available on SEDAR at sedar.com and on EDGAR at sec.gov. This additional information is not incorporated by reference unless otherwise specified and should not be deemed to be made part of this Management’s Discussion and Analysis (MD&A).
Stantec trades on the TSX and the NYSE under the symbol STN. Visit us at stantec.com or find us on social media.
Business Model and Strategy Stantec is a global design and engineering firm with 22,000 employees that operate out of 350 locations around the world. We design with community in mind. Annual net revenue in 2019 of $3.7 billion was earned 30% in Canada, 52% in the United States and 18% from our Global operations. We will continue to grow and diversify sustainably for the benefit of our clients, employees and shareholders.
With strong expertise across the buildings, energy and resources, environmental services, infrastructure, and water sectors, Stantec is well positioned to address new opportunities that are emerging as a result of climate change, urbanization, geopolitics and technology. Over the next decade, an incremental US$2 trillion in emerging engineering and design opportunities are expected worldwide in areas like coastal resilience, ecosystem restoration, smart cities and urban places, and energy remix. This is on top of an already healthy level of business activity.
Stantec’s vision is to remain a top 10 global design firm that maximizes long-term, sustainable value.
Key components of our business model are:
1. Geographic diversification. We do business in three regional operating units—Canada, the United
			States, and Global—offering similar services across all regions. This diversity allows us to cultivate close client relationships at the local level while offering the expertise of our global team.
2. Service diversification. We offer services in various sectors across the project life cycle through five
			business operating units (BOUs): Buildings, Energy & Resources, Environmental Services, Infrastructure, and Water.
3. Design focus. We serve the design phase of buildings, energy, and infrastructure projects, which offers
			higher margin opportunities and more controllable risk than integrated engineering and construction firms.
4. Life-cycle solutions. We provide professional services in all phases of the project life cycle: planning,
			design, construction administration, commissioning, maintenance, decommissioning, and remediation.
Management’s Discussion and Analysis
December 31, 2019	M-2	Stantec Inc.

Strategy

We aim to grow and diversify sustainably for the benefit of our clients, employees and shareholders. We will do this through a client-centric framework with four value creators:

Excellence - We have reshaped our organization to be lean and highly engaged. We will continue to drive earnings growth through exceptional project execution and efficient operations.

Innovation - We will continue to invest in the development of leading-edge services for our clients that differentiate our service offering and drive organic growth. Innovation is also expected to drive operational efficiency.

People - We will provide a workplace that attracts, engages, rewards and retains the best talent in the industry.

Growth - We will create shareholder value and grow earnings through a combination of organic and acquisition growth and disciplined capital allocation.

We aim to achieve four key financial targets by the end of 2022:

1. Grow net revenue at a compound annual growth rate (CAGR) of greater than 10%.

2. Drive adjusted EBITDA margins to the range of 16% to 17%.

3. Grow earnings per share at a CAGR of greater than 11%.

4. Deliver a return on invested capital of greater than 10%.

Strategic Acquisitions Completed in 2019 and 2018

Following is a list of acquisitions that contributed to revenue growth in our reportable segments and business

operating units:

BUSINESS OPERATING UNITS

Date

# of

Energy &

Environmental

REPORTABLE SEGMENTS

Acquired

Primary Location

Employees Buildings

Resources

Services

Infrastructure Water

Canada

Norwest Corporation (NWC)

May 2018

Calgary, Alberta

110



Cegertec Experts Conseils Inc. (CEG)

May 2018

Chicoutimi, Quebec

250



True Grit Engineering Limited (TGE)

October 2018

Thunder Bay, Ontario



United States

Occam Engineers Inc. (OEI)

March 2018 Albuquerque, New Mexico



Norwest Corporation (NWC)

May 2018

Calgary, Alberta



Global

ESI Limited (ESI)

March 2018

Shrewsbury, England



Traffic Design Group Limited (TDG)

April 2018

Wellington, New Zealand



Peter Brett Associates LLP (PBA)

September 2018

Reading, England

700



Wood & Grieve Engineers (WGE)

March 2019

Perth, Australia

600



Management’s Discussion and Analysis

December 31, 2019

M-3

Stantec Inc.

Basis of Presentation Effective January 1, 2019, we adopted IFRS 16 Leases (IFRS 16) using the modified retrospective approach and did not restate comparative information. The new standard requires companies to bring operating leases, formerly treated as off-balance sheet items, onto a company’s statement of financial position. As such, on January 1, 2019, our consolidated statement of financial position recognized lease assets for our right to use the underlying assets and lease liabilities associated with future fixed lease payments. IFRS 16 impacted our financial results as follows:
Impact on January 1, 2019, statement of financial position:
•			Recognized lease assets of $561.8 million and lease liabilities of $645.0 million.
•			Opening retained earnings was adjusted downward by $31.2 million.
•			Certain current and non-current items on our statement of financial position were also reclassified to
			conform to IFRS 16.
Impact on 2019 earnings and cash flows:
•			The adoption of IFRS 16 reduced net income and diluted earnings per share by approximately $3.7 million
			($5.1 million pre-tax) and $0.03, respectively.
•			Administrative and marketing expenses decreased $143.0 million.
•			Depreciation expense for leased assets increased $115.8 million.
•			Interest expense increased $32.3 million.
•			EBITDA and adjusted EBITDA increased $143.0 million.
•			Operating cash inflows increased $116.7 million, investing cash outflows increased $50.4 million, and
			financing cash outflows increased $66.3 million, resulting in a net zero effect on total cash flows.
EBITDA and adjusted EBITDA are non-IFRS measures. For further details, including a tabular presentation of IFRS 16 impacts on our financial results, refer to IFRS 16 Leases (M-2
				9 to M-31) in this MD&A and note 6 of
our 2019 audited consolidated financial statements.
Management’s Discussion and Analysis
December 31, 2019	M-4	Stantec Inc.

2019 Financial Highlights
						Year Ended Dec 31
				2019		2018	2017
					% of Net		% of Net	% of Net
(In millions of Canadian dollars, except per share amounts and percentages)				$	Revenue	$	Revenue	$						Revenue
Gross revenue	4,827.3					130.1%	4,283.8		127.7%	4,028.7						126.9%
Net revenue	3,711.3					100.0%	3,355.2		100.0%	3,173.8						100.0%
Direct payroll costs	1,702.9					45.9%	1,540.0		45.9%	1,411.9						44.5%
Gross margin	2,008.4					54.1%	1,815.2		54.1%	1,761.9						55.5%
Administrative and marketing expenses	1,433.6					38.6%	1,438.2		42.9%	1,407.7						44.4%
Other				(1.2)						0.0%	6.9	0.2%	(60.4)				(2.0% )
EBITDA from continuing operations (note)				576.0						15.5%	370.1	11.0%	414.6				13.1%
Depreciation of property and equipment				58.2						1.6%	50.1	1.5%	52.2		1.6%
Depreciation of lease assets				115.8						3.1%	-	0.0%	-		0.0%
Amortization of intangible assets				66.9						1.8%	65.0	1.9%	73.0		2.3%
Net interest expense				69.6						1.9%	28.7	0.9%	25.9		0.8%
Income taxes				71.1						2.0%	55.0	1.6%	166.5		5.2%
Net income from continuing operations				194.4						5.2%	171.3	5.1%	97.0		3.1%
Net loss from discontinued operations				-						0.0%	(123.9)	(3.7% )	-		0.0%
Net income				194.4						5.2%	47.4	1.4%	97.0		3.1%
Basic and diluted earnings per share (EPS) from continuing operations
				1.74						n/m	1.51	n/m	0.85		n/m
Adjusted EBITDA from continuing operations (note)				574.4						15.5%	392.5	11.7%	353.3				11.1%
- Excluding IFRS 16 (note)				431.4						11.6%	392.5	11.7%	353.3				11.1%
Adjusted net income from continuing operations (note)				225.0						6.1%	206.6	6.2%	196.7		6.2%
Adjusted diluted EPS from continuing operations (note)				2.02						n/m	1.82	n/m	1.72		n/m
Dividends declared per common share				0.58						n/m	0.55	n/m	0.50		n/m
Total assets	4,561.5						4,009.9		3,883.1
Total long-term debt				860.9							933.7	739.6
Construction Services operations are presented as discontinued operations. Results for 2019 were accounted for using IFRS 16 and results for 2018 and 2017 were accounted for using IAS 17. Gross and net revenue were accounted for using IFRS 15 for 2019 and 2018 and IAS 11 for 2017.
note: EBITDA, adjusted EBITDA, adjusted net income, adjusted basic and diluted EPS, and measures excluding IFRS 16 are non-IFRS measures (discussed in the Definitions section of this MD&A).
			n/m = not meaningful
We delivered solid performance in 2019 and met all of our key financial metrics. Our gross revenue and net revenue growth remained strong, we achieved consistent gross margin performance, and generated more than 10% growth in our adjusted diluted earnings per share.
•			Net revenue increased 10.6% or $356.1 million mainly due to acquisition growth of 5.2% and organic growth of 4.4%. Organic growth was achieved in all businesses except for a 1.6% retraction in Energy & Resources.
			Organic growth was particularly strong in Environmental Services and Infrastructure and in our US and Global
			regions, while Canada’s organic net revenue growth was flat.
•			Gross margin increased 10.6% and, as a percentage of net revenue, remained stable at 54.1%.
•			Administrative and marketing costs were 38.6% of net revenue which is within our targeted range, including a
			0.2% impact from severances associated with our organizational reshaping efforts. Without the impact of
			IFRS 16, administrative and marketing expenses as a percentage of net revenue decreased from 42.9% to
			42.5%. 2018 results included non-recurring costs related to a lease exit liability charge and a past pension service cost. Adjusted for severances associated with our reshaping efforts and non-recurring costs, our
			results for administration and marketing expenses remained consistent with 2018.
Management’s Discussion and Analysis
December 31, 2019	M-5	Stantec Inc.

			o	In 2019 we initiated a process to improve utilization and reshape the organization to significantly
			reduce excess labor costs. At December 31, 2019, our organizational reshaping efforts have
			delivered annualized cost savings within the guidance we provided of approximately $40 million to
			$45 million, or $0.26 to $0.29 per share. This initiative has not affected our ability to execute projects,
			build backlog, or achieve organic growth. While undertaking our reshaping effort, we continued to
			add staff in our regions and businesses that are experiencing strong organic growth and high
			utilization.
•			Adjusted EBITDA from continuing operations increased 46.3% from $392.5 million to $574.4 million,
			representing 15.5% of net revenue, mainly due to IFRS 16 (a 9.9% increase to $431.4 million and
			representing 11.6% of net revenue, before IFRS 16).
•			Adjusted diluted EPS increased 11.0%—from $1.82 to $2.02.
•			Contract backlog is $4.3 billion—a 1.9% increase from December 31, 2018—representing approximately 11
			months of work.
•			Net debt to adjusted EBITDA (on a trailing twelve-month basis) is 1.1x—within our internal guideline of 1.0x to
			2.0x (post-IFRS 16 adoption), reflecting a continued reduction over the course of 2019.
•			Return on invested capital at December 31, 2019 is 8.8%.
•			Operating cash flows from continuing operations increased 119.2% from $205.2 million to $449.9 million,
			mainly due to increased cash receipts from clients and IFRS 16; partly offset with higher payments made to suppliers and employees because of acquisition growth (a 62.4% increase to $333.2 million before IFRS 16).
•			Days sales outstanding was 94 days (79 days including deferred revenue), a strong improvement compared
			to 103 days (88 days including deferred revenue) at December 31, 2018 and 104 days (91 days including deferred revenue) at September 30, 2019, as well as below our target of 98 days. This improvement reflects
			our significant and continuous efforts made during the year to improve our billing and collections and the
			receipt of certain milestone-based payments.
•			On February 26, 2020, our Board of Directors declared a dividend of $0.155 per share, payable on April 15,
			2020, to shareholders on record on March 31, 2020.

Management’s Discussion and Analysis
December 31, 2019	M-6	Stantec Inc.

Reconciliation of Non-IFRS Financial Measures
			Year Ended Dec 31				Quarter Ended Dec 31
			2019	2018	2019			2018
(In millions of Canadian dollars, except per share amounts)
Net income from continuing operations			194.4			171.3			42.4		21.2
Add back:
Income taxes			71.1			55.0			17.9		2.6
Net interest expense			69.6			28.7			17.5		9.3
Depreciation and amortization			240.9			115.1			62.2		28.1
EBITDA from continuing operations			576.0			370.1			140.0		61.2
Add back (deduct) pre-tax:
Lease exit liability			-			12.8			-		12.8
Past service cost for pensions			-			4.7			-		4.7
Unrealized (gain) loss on investments held for self-insured liabilities			(7.9)			4.9			(1.0)		5.5
Severances related to organizational reshaping			6.3			-			3.8		-
Adjusted EBITDA from continuing operations			574.4			392.5			142.8		84.2
			Year Ended Dec 31				Quarter Ended Dec 31
			2019	2018	2019			2018
(In millions of Canadian dollars, except per share amounts)
Net income from continuing operations			194.4			171.3			42.4		21.2
Add back (deduct) after tax:
Amortization of intangible assets related to acquisitions (note 1)			30.7			28.8			8.0		7.3
Lease exit liability (note 2)			-			9.4			-		9.4
Past service cost for pensions (note 3)			-			3.5			-		3.5
Unrealized (gain) loss on investments held for self-insured liabilities (note 4)			(5.7)			3.6			(0.8)		4.1
Transition tax (recovery) expense (note 5)			1.1			(10.0)			-		-
Severances related to organizational reshaping (note 6)			4.5			-			2.7		-
Adjusted net income from continuing operations			225.0			206.6			52.3		45.5
Weighted average number of shares outstanding - basic			111,550,424			113,733,118			111,202,939	113,142,068
Weighted average number of shares outstanding - diluted			111,550,424			113,822,318			111,209,359	113,158,097
Adjusted earnings per share from continuing operationsAdjusted earnings per share - basic
			2.02			1.82			0.47		0.40
Adjusted earnings per share - diluted			2.02			1.82			0.47		0.40
See the Definitions section of this MD&A for our discussion of non-IFRS measures used. Construction Services operations are presented as discontinued operations. This table has been updated to include only continuing operation results.
note 1: The add back of intangible amortization relates only to the amortization from intangible assets acquired through acquisitions and excludes the amortization of software purchased by Stantec. For the year ended December 31, 2019, this amount is net of tax of $11.2 (2018 - $10.6). For the quarter ended December 31, 2019, this amount is net of tax of $2.4 (2018 - $1.4).
note 2: For the quarter and year ended December 31, 2019, this amount is net of tax of nil (2018 - $3.4).
note 3: For the quarter and year ended December 31, 2019, this amount is net of tax of nil (2018 - $1.2).
note 4: For the year ended December 31, 2019, this amount is net of tax of $2.2 (2018 - ($1.3)). For the quarter ended December 31, 2019, this amount is net of tax of $0.2 (2018 - ($1.4)).
note 5: Refer to Income Taxes section for further details.
note 6: For the year ended December 31, 2019, this amount is net of tax of $1.8 (2018 - nil). For the quarter ended December 31, 2019, this amount is net of tax of $1.1 (2018 - nil).



Management’s Discussion and Analysis
December 31, 2019	M-7	Stantec Inc.

2019 Fourth Quarter Highlights
					Quarter Ended Dec 31
				2019	2018
					% of Net	% of Net
				$	Revenue	$			Revenue
(In millions of Canadian dollars, except per share amounts and percentages)
Gross revenue				1,210.2		134.3%	1,083.9			129.7%
Net revenue				901.0		100.0%	835.6			100.0%
Direct payroll costs				414.7		46.0%	386.2			46.2%
Gross margin				486.3		54.0%	449.4			53.8%
Administrative and marketing expenses				348.5		38.7%	382.7			45.8%
Other				(2.2)		(0.2% )	5.5	0.7%
EBITDA from continuing operations (note)				140.0		15.5%	61.2	7.3%
Depreciation of property and equipment				14.7		1.6%	13.0	1.6%
Depreciation of lease assets				30.6		3.4%	-	0.0%
Amortization of intangible assets				16.9		1.9%	15.1	1.8%
Net interest expense				17.5		1.9%	9.3	1.1%
Income taxes				17.9		2.0%	2.6	0.3%
Net income from continuing operations				42.4		4.7%	21.2	2.5%
Net loss from discontinued operations				-		0.0%	(32.2)			(3.8% )
Net income				42.4		4.7%	(11.0)			(1.3% )
Basic and diluted earnings per share (EPS) from continuing operations				0.38		n/m	0.19	n/m
Adjusted EBITDA from continuing operations (note)				142.8		15.8%	84.2			10.1%
- Excluding IFRS 16 (note)				105.6		11.7%	84.2			10.1%
Adjusted net income from continuing operations (note)				52.3		5.8%	45.5	5.4%
Adjusted diluted EPS from continuing operations (note)
				0.47		n/m	0.40	n/m
Dividends declared per common share				0.1450		n/m	0.1375	n/m
Results for 2019 were accounted for using IFRS 16 and results for 2018 were accounted for using IAS 17.
note: EBITDA, adjusted EBITDA, adjusted net income, adjusted basic and diluted EPS, and measures excluding IFRS 16 are non-IFRS measures (discussed in the Definitions section of this MD&A).
			n/m = not meaningful
Consistent with our performance throughout 2019, our Q4 19 results include strong revenue growth and gross margins were in line with expectations.
•			Net revenue increased 7.8% or $65.4 million mainly due to organic growth of 5.3% and acquisition growth of 2.8%. Organic growth was achieved in all our businesses. Organic growth was 9.6% in the US operations and particularly strong within our Environmental Services, Infrastructure, and Water businesses.
•			Gross margin increased 8.2% and, as a percentage of net revenue, increased from 53.8% to 54.0% reflecting continued focus on project execution and project mix.
•			Administrative and marketing expenses were 38.7% of net revenue, including a 0.4% impact from severances associated with our organizational reshaping efforts. On a pre-IFRS 16 basis, administrative and marketing expenses as a percentage of net revenue decreased from 45.8% in Q4 18 to 42.8% in Q4 19. As well, Q4 18 included non-recurring items such as lease exit liability charges and past pension service costs. Adjusted for these, administrative and marketing expenses as a percentage of revenue decreased from 43.7% in Q4 18 to 42.4% in Q4 19. The decrease was primarily as a result of improved utilization and operational efficiencies.
Management’s Discussion and Analysis
December 31, 2019	M-8	Stantec Inc.

•

Adjusted EBITDA from continuing operations increased 69.6% from $84.2 million to $142.8 million, representing 15.8% of net revenue, mainly due to IFRS 16, higher net revenue and lower administrative and marketing expenses from cost reduction initiatives (a 25.4% increase to $105.6 million and representing 11.7% of net revenue, before IFRS 16).

•

Adjusted diluted EPS increased 17.5%—from $0.40 to $0.47.

Financial Targets

2019 Results Compared to Targets

Our adoption of IFRS 16 resulted in non-cash impacts to administrative and marketing expenses, depreciation of leased assets, and net interest expense. As a result, in Q1 19, we updated our targets, previously provided in our 2018 Annual Report. We revised our EBITDA and net income targets to adjusted EBITDA and adjusted net income since we believe these measures better reflect our underlying operations.

2019 Target before

Revised for adoption

2019 Results

(In millions of Canadian dollars, unless otherwise stated)

IFRS 16 adoption

of IFRS 16

Compared to Revised Annual Target

MeasureGross margin as % of net revenue

53% to 55%

No change

54.1%



Administrative and marketing expenses as % of net revenue

41% to 43%

37% to 39%

38.6%



EBITDA as % of net revenue (note)

11% to 13%

withdrawn

Adjusted EBITDA as % of net revenue (note)

15% to 17%

15.5%



Net income as % of net revenue

At or above 5.0%

withdrawn

Adjusted net income as % of net revenue (note)

At or above 6.0%

6.1%



note: EBITDA, adjusted EBITDA, and adjusted net income are non-IFRS measures (discussed in the Definitions section of this MD&A).

 Meeting or performing better than annual target.

We are within our target range for all our measures in 2019. For further details regarding our overall annual performance, refer to the Financial Performance section of this MD&A.

Management’s Discussion and Analysis

December 31, 2019

M-9

Stantec Inc.

Targets for 2020
The following table summarizes our expectations for 2020:
				2020 Target Range
(In millions of Canadian dollars, unless otherwise stated)
Measure
Adjusted EBITDA as % of net revenue (note)		15.5% to 16.5%
Adjusted net income as % of net revenue (note)		At or above 6.0%
Return on invested capital (note)		At or above 9.0%
GuidanceGross margin as % of net revenue
		53% to 55%
Administrative and marketing expenses as % of net revenue		37% to 39%
Net debt to adjusted EBITDA (note)		1.0x to 2.0x
Capital expenditures		$75 to $80
Software additions		$3 to $7
Depreciation on property and equipment		$60 to $65
Depreciation on lease assets		$113 to $118
Amortization of intangible assets related to acquisitions		$34 to $39
Al other amortization of intangible assets		$14 to $18
Efective tax rate (without discrete transactions)		27.5% to 28.5%
		40% in Q1 and Q460% in Q2 and Q3
Earnings pattern
DSO (includes deferred revenue) (note)		90 days
note: Adjusted EBITDA, adjusted net income, and ROIC are non-IFRS measures and DSO is a metric (discussed in the Definitions section of this MD&A).

The target range guidance has been prepared using the assumptions outlined in the Outlook section of this MD&A. We expect to maintain our adjusted net income at or above 6% of net revenue and introduced a new measure—return on invested capital—to be in-line with targets set for 2022 in our Strategic Plan and our approach to capital allocation.
•			We have tightened the adjusted EBITDA range after recognizing the full benefit of our reorganization efforts in 2020.
•			Capital expenditures planned for 2020 relate primarily to leasehold improvements and office equipment and increased from 2019 because of expected lease improvements associated with lease renewals and relocations for certain locations. We are continuing our efforts to consolidate certain office locations to achieve better efficiencies and reduce leasing cost.
•			The range provided for our effective income tax rate is based on the statutory rates in jurisdictions where we operate and on our estimated earnings in each of those jurisdictions. We review statutory rates, uncertain tax positions, and jurisdictional earnings quarterly and adjust our estimated income tax rate accordingly.
•			Our DSO metric for 2020 has been adjusted to include deferred revenue because we believe it is a better measurement of our performance and will improve comparability with our peers.
In addition, we expect the gross to net revenue ratio to be between 1.25 and 1.30.


Management’s Discussion and Analysis
December 31, 2019	M-10	Stantec Inc.

Outlook We expect organic net revenue growth in 2020 to be in the low- to mid-single digits, slightly ahead of global GDP growth.
Our 2020 outlook was determined based on our expectations, including:
•			Backlog growth in the US and Global regions partly offset by a slight backlog decline in Canada.
•			For 2020, the World Bank forecasts 2.7% global real GDP growth. The Bank of Canada projects 1.7% GDP growth for Canada, and the Congressional Budget Office projected 2.1% GDP growth for the United States, and the Bank of England forecast GDP growth of 1.25%.
•			Solid US consumer spending and business investment, continued low interest rates, and continued strong employment; however, we expect some uncertainty due to the ongoing trade dispute between the United States and China.
•			Slow economic growth in Canada due to global trade conflicts and associated uncertainty, continued low oil differential pricing, and a relatively low level of business confidence.
•			Growth in our Global markets as we expand our global footprint and benefit from healthy GDP growth in the countries where we operate. We also expect recent commodity price volatility that impacts our Mining and Environmental Services operations to stabilize in 2020. Though we do expect Brexit to create some continued uncertainty in the United Kingdom and Europe, we believe greater clarity as to outcomes will drive a more predictable and stronger investment climate in the private sector. Our UK Water business is largely insulated from these uncertainties because of our long-term contracts providing services for critical infrastructure projects.
Financial Performance The following sections outline specific factors that affected the results of our operations in 2019.
Gross and Net Revenue
While providing professional services, we incur certain direct costs for subconsultants, equipment, and other expenditures that are recoverable directly from our clients. Revenue associated with these direct costs is included in gross revenue. Because these direct costs and associated revenue can vary significantly from contract to contract, changes in gross revenue may not be indicative of our revenue trends. Accordingly, we also report net revenue (which is gross revenue less subconsultant and other direct expenses) and analyze results in relation to net revenue rather than gross revenue.
We generate approximately 75% of gross revenue in foreign currencies, primarily in US dollars and GBP. Fluctuations in these currencies had a net $34.8 million positive impact on our net revenue results in 2019 compared to 2018, as further described below:
•			The Canadian dollar averaged US$0.77 in 2018 and US$0.75 in 2019—a 2.6% decrease. The weakening Canadian dollar versus the US dollar had a positive effect on gross and net revenue.
• The Canadian dollar averaged GBP0.58 in 2018 and GBP0.59 in 2019—a 1.7% increase. The
			strengthening Canadian dollar versus the British Pound had a negative effect on gross and net revenue.
Fluctuations in other foreign currencies did not have a material impact on our gross and net revenue in 2019 compared to 2018.
Management’s Discussion and Analysis
December 31, 2019	M-11	Stantec Inc.

Revenue earned by acquired companies in the first 12 months following an acquisition is reported as revenue from acquisitions and thereafter as organic revenue.
Revenue by Reportable Segment
	Gross Revenue						Net Revenue
						2019 Organic
(In millions of Canadian dollars, except percentages)
			2019	2018	2019	2018				Growth %
Canada	1,283.1				1,275.8			1,109.5	1,087.8				0.1%
United States	2,688.1				2,334.6			1,947.6	1,774.4				7.0%
Global			856.1					673.4		654.2		493.0			4.7%
Total	4,827.3				4,283.8			3,711.3	3,355.2				4.4%

Revenue by Business Operating Unit
	Gross Revenue						Net Revenue
						2019 Organic
(In millions of Canadian dollars, except percentages)
			2019	2018	2019	2018				Growth %
Buildings	1,053.3				938.7			828.0			718.4			1.7%
Energy & Resources			613.1					597.5		525.1			513.1				(1.6% )
Environmental Services			788.6					682.8		567.0			480.3				13.1%
Infrastructure	1,401.7				1,169.3			1,055.2	935.5				6.4%
Water			970.6					895.5		736.0			707.9			3.1%
Total	4,827.3				4,283.8			3,711.3	3,355.2				4.4%
Comparative figures have been reclassified due to a realignment of several business lines and to conform to the presentation adopted for the current year.

Net revenue growth was strong, increasing by 10.6% compared to 2018. Increased net revenue was driven by acquisition growth of 5.2%, organic growth of 4.4%, and positive foreign exchange fluctuations of 1.0%.
Canada
Consistent with muted growth in the Canadian economy, our net revenue increased 2.0% primarily reflecting acquisition net revenue growth in 2019.
Organic net revenue growth was flat in 2019 as our results were affected by Canada’s slowing economic growth particularly in the industrial buildings, major water/wastewater treatment plants, and housing markets. As well, retraction in the Water business and Power sector resulted from the completion or near completion of several large projects. Environmental Services and our Transportation sector drove growth in 2019 as we continued to see opportunities emerging from liquefied natural gas support projects, the midstream oil and gas sector, and environmental planning for mining projects. Several large light rail transit projects in Montreal, Calgary, and Edmonton as well as other roadway and bridge projects contributed to growth in Transportation. The commencement of the Trans Mountain Expansion Project and new project work in our Mining sector drove growth in our Energy & Resources business.
Acquisitions completed in 2018 contributed to net revenue growth of 1.9%, primarily in Energy & Resources.
United States
With project opportunities remaining strong, our United States operations continue to generate solid growth. Net revenue increased 9.8% in 2019, reflecting strong organic revenue growth and positive impacts from the strengthening of the US dollar compared to the Canadian dollar.
We achieved organic net revenue growth of 7.0% in 2019. Our Transportation business continued to grow significantly with progress made on the Long Island Rail Road project and the Chicago Transit Authority’s Red
Management’s Discussion and Analysis
December 31, 2019	M-12	Stantec Inc.

and Purple Line Modernization project. Environmental Services continued to see growth in renewables and hydropower and dam projects. Robust activity in our Commercial, Education, and Civic sectors, particularly in the northeast, Florida, and Colorado, drove solid growth in Buildings. We also saw growth in Water attributable to our continued expansion into the California, Texas, and northwest US markets and increased opportunities in conveyance and wastewater projects. Our results for Energy & Resources retracted due to the wind down of large Mining and WaterPower & Dams projects that began in 2017; however, we are experiencing a ramp up of new projects in our Power sector as we continue to diversify into the renewables market.

Global

Our ongoing efforts to expand into the global markets continue to contribute to our growth, with Global net revenue increasing 32.7% in 2019 compared to 2018.

We achieved organic net revenue growth of 4.7% in our Global operations in 2019. New project work spurred strong growth in our Mining export business and in our Middle East Buildings and Water businesses. Water also saw steady work volume in the United Kingdom as we advanced major projects associated with the latest Asset Management Program regulatory cycle. Environmental Services continued to perform well on the strength of its offerings in the Netherlands, while the ramp up of a transmission project in Nepal also contributed to growth in our Power sector. Our WaterPower & Dams sector retracted due to the wind down of large projects in 2019.

Acquisitions completed in 2019 and 2018 contributed to net revenue growth of 29.8%, primarily in Buildings and Infrastructure.

Backlog

(In millions of Canadian dollars)

2019

2018

Canada

1,014.8

1,052.0

United States

2,612.6

2,538.9

Global

630.0

588.3

Total

4,257.4

4,179.2

Our contract backlog—$4.3 billion at December 31, 2019—represents approximately 11 months of work and increased 1.9% over December 31, 2018.

We define “backlog” as the total value of secured work that has not yet been completed where we have an executed contract or a letter of intent that management is reasonably assured will be finalized in a formal contract.

Major Project Awards

Major projects awarded in 2019 in Canada include a base contract from the Government of Canada for architecture, engineering, and design of federal research and laboratory facilities over the next five years. We were also selected to provide technical advisory services for the $2.1 billion Hurontario LRT line, which will connect the cities of Mississauga and Brampton in Ontario.

In the United States, we continued to secure major transportation projects, including leading the design for the I-64 road widening project in West Virginia and overseeing traffic improvements for the City of Baton Rouge’s MOVEBR infrastructure improvement program

. We also won several significant water projects, including two

major coastal resilience projects

. In Texas, we were selected by the US Army Corps of Engineers to design a 27-

mile (43-kilometre) levee and floodwall system along the coastline near Galveston. The eight-year, $1.9-billion project will help the region better address the impacts of climate change. In New York, we will lead design for the Battery Coastal Resilience Project, which will protect Lower Manhattan from impacts of rising sea levels.

Management’s Discussion and Analysis

December 31, 2019

M-13

Stantec Inc.

In our Global operations, major project awards in Q4 2019 include leading an advisory consortium for the European Union’s $35-million Global Technical Assistance Facility for Sustainable Energy. We were also named owner’s engineer for a 15-megawatt Tina River Hydropower Project in the Solomon Islands.
Gross Margin
Gross margin is calculated as net revenue minus direct payroll costs. Direct payroll costs include salaries and related fringe benefits for labor hours directly associated with completing projects. Labor costs and related fringe benefits for labor hours not directly associated with completing projects are included in administrative and marketing expenses.
Gross Margin by Reportable Segments
				2019	2018
(In millions of Canadian dollars, except percentages)			$	% of Net Revenue	$	% of Net Revenue
Canada			571.1				51.5%	557.0		51.2%
United States			1,070.2				54.9%	982.5		55.4%
Global			367.1				56.1%	275.7		55.9%
Total			2,008.4				54.1%	1,815.2	54.1%

Gross margin increased $193.2 million as a result of overall revenue increases and was consistent as a percentage of net revenue in 2019 compared to 2018.
Gross margin in our Canada operations increased $14.1 million and increased 0.3% as a percentage of net revenue in 2019 compared to 2018. The increase was the result of higher margin work in our Transportation business and Mining sector as well as more efficient project execution across our businesses. This was partly offset with an increased proportion of lower-margin oil and gas sector projects.
Gross margin in our US operations increased $87.7 million and decreased 0.5% as a percentage of net revenue in 2019 compared to 2018. The decrease as a percentage of net revenue is partly due to project mix and the effect of a Water project recovery in Q1 18 that contributed to a higher gross margin for that period. US gross margin was also affected by localized challenges on certain projects, for which we have put actions in place to address; we expect gross margin to improve in 2020.
Gross margin in our Global operations increased $91.4 million and increased 0.2% as a percentage of net revenue in 2019 compared to 2018. Our project mix and certain success fees recognized on a hydro project in Australia and an incentive fee earned on a major project in Qatar contributed to a higher gross margin.
Administrative and Marketing Expenses
Administrative and marketing expenses fluctuate year to year due to the amount of staff time charged to marketing and administrative labor, which is influenced by the mix of projects in progress during the period, business development activities, and integration activities resulting from acquisitions. In the months after completing an acquisition, staff time charged to administration and marketing is generally higher as a result of integration activities, including orienting newly acquired staff. Our operations also include higher administrative and marketing expenses in the first and fourth quarters as a result of the holiday season and seasonal weather conditions in the northern hemisphere, which, in turn, result in lower staff utilization.
Administrative and marketing expenses were $1,433.6 million in 2019 and 38.6% as a percentage of revenue, or $1,576.6 million and 42.5% without the adoption of IFRS 16, compared to $1,438.2 million and 42.9% in 2018. Our 2019 results included a severance costs impact of 0.2% associated with our reshaping initiatives. Our 2018 results included several unusual, non-recurring items recorded in Q4 18: a lease exit liability charge of $12.8 million related to the move to our new head office in Edmonton and a past service cost of $4.7 million associated
Management’s Discussion and Analysis
December 31, 2019	M-14	Stantec Inc.

with our defined benefit pension plans. Adjusted for these, administrative and marketing expenses as a percentage of revenue for both 2019 and 2018 would be 42.3%.
In the first half of the year, administrative and marketing expenses were negatively impacted with lower utilization and increased opportunistic investments in marketing campaigns, which resulted in a higher than anticipated allocation of labor costs to administrative and marketing expenses. Our utilization improved in the second half of the year as a result of our reshaping initiative that has brought our salary costs in line with expectations for the last two quarters and achieved annualized cost savings within the guidance we provided of approximately $40 million to $45 million, or $0.26 to 0.29 per share.
Other factors impacting administrative and marketing expenses include increases in occupancy costs associated with our head office lease, subscription costs from the renewal of certain cloud-based software solutions previously licensed-based and therefore capitalized and amortized as intangible assets, and share-based compensation charges. These increases were offset by reductions in various other items as a result of cost reduction initiatives.
Depreciation of Property and Equipment
Depreciation increased $8.1 million in 2019. As a percentage of net revenue, depreciation of property and equipment was 1.6% in 2019 compared to 1.5% in 2018. The increase was due primarily to higher depreciation expense for leasehold improvements.
Intangible Assets
The following table summarizes the amortization of identifiable intangible assets:
			2019	2018
(In millions of Canadian dollars)
Client relationships			31.1		26.9
Backlog			10.0		9.9
Other		0.8			2.5
Total amortization of acquired intangible assets			41.9		39.3
Software			25.0		25.7
Total amortization of intangible assets			66.9		65.0

The increase in intangible asset amortization of $1.9 million in 2019 compared to 2018 was mainly due to higher client relationships. The acquisition of WGE added $29.5 million to client relationships and $10.3 million to backlog. The increase was partly offset with an IFRS 16 reclass of net lease advantages and disadvantages from acquisitions completed in prior years to lease assets (previously included in the Other category).
We review intangible assets at each reporting period to determine whether there is an indication of impairment, and based on this review, there were no material indicators of impairment in 2019 and 2018. Our review considered external sources, such as prevailing economic and market conditions, and internal sources, such as the historical and expected financial performance of intangible assets. (See the Critical Accounting Estimates section of this MD&A for more information about the methodology used to test long-lived assets and intangibles for impairment.)
Net Interest Expense
Net interest expense increased $40.9 million in 2019 compared to 2018. The adoption of IFRS 16 increased net interest expense by $32.3 million in 2019. Without the adoption of IFRS 16, net interest expense increased $8.6 million in 2019 and was driven by increased drawings during the year on our revolving credit facility to fund the WGE acquisition and share repurchases under our Normal Course Issuer Bid (NCIB) as well as higher interest rates on our credit facilities.
Management’s Discussion and Analysis
December 31, 2019	M-15	Stantec Inc.

Foreign Exchange Losses and Gains
We reported a foreign exchange loss of $4.7 million in 2019 and $2.7 million in 2018. Foreign exchange gains and losses arise from the translation of the foreign-currency denominated assets and liabilities held in our Canadian, US, and other foreign subsidiaries. We minimize our exposure to foreign exchange fluctuations by matching foreign currency assets with foreign currency liabilities and, when appropriate, by entering into forward contracts to buy or sell foreign currencies in exchange for Canadian dollars.
Other (Income) Expense
Our 2019 results included an unrealized gain of $7.9 million, compared to an unrealized loss of $4.9 million in 2018, on our equity securities in our investments held for self-insured liabilities and represents fair value fluctuations in the equity markets.
Income Taxes
Our 2019 effective income tax rate was 26.8% compared to 24.3% in 2018. Our normalized effective tax rate for 2019 would be 28.6% compared to 26.8% in 2018. Our tax expense in 2019 included a tax recovery of $4.9 million in our Australian operations and $4.3 million in our US operations for previously unrecognized tax loss carryforwards. These recoveries were partly offset by certain valuation adjustments of $3.4 million and US transition tax adjustment of $1.1 million based on recent regulations and guidance released by the US Internal Revenue Service. Adjusted for these discrete items, our normalized tax rate is higher compared to 2018 as a result of the mix of jurisdictional earnings and tax rates, resulting in an increase in the effective tax rate.
Discussion of Discontinued Operations
On November 2, 2018, we completed the sale of our Construction Services operations. The results of our Construction Services operations are reported as discontinued operations in our 2018 consolidated financial statements for all periods presented as prescribed by IFRS 5. In Q1 19, management and the purchaser completed their review of the closing financial statements, resulting in an immaterial settlement adjustment.
The activities in 2019 related to the recently completed waste-to-energy project in the UK and resulted in a nil impact on net income during the year because our best estimate of the expected loss on the project was included as a provision in 2018. In Q4 19, we reached settlement agreements for the engineering, procurement, and construction component, which took effect in Q4 19, and for the operation and maintenance component, which takes effect in Q1 20; these agreements release Stantec from its obligations under this project.

Fourth Quarter Results The following sections outline specific factors that affected the results of our operations in Q4 19 vs Q4 18.
Gross and Net Revenue
Revenue by Reportable Segment
	Gross Revenue						Net Revenue
		Q4 19 Organic
(In millions of Canadian dollars, except percentages)
	Q4 2019		Q4 2018	Q4 2019	Q4 2018		Growth %
Canada						336.1		319.2		273.2	268.9		1.6%
United States						659.7		572.0		466.1	425.5		9.6%
Global						214.4		192.7		161.7	141.2		(0.5% )
Total	1,210.2			1,083.9			901.0		835.6			5.3%

Management’s Discussion and Analysis
December 31, 2019	M-16	Stantec Inc.

Revenue by Business Operating Unit
	Gross Revenue							Net Revenue
		Q4 19 Organic
(In millions of Canadian dollars, except percentages)
	Q4 2019		Q4 2018	Q4 2019	Q4 2018				Growth %
Buildings						256.7				232.2					198.0	172.1		1.3%
Energy & Resources						156.3				159.9					130.2	131.4		0.1%
Environmental Services						213.9				185.3					141.6	125.4		13.2%
Infrastructure						348.9				295.3					254.9	237.7		7.5%
Water						234.4				211.2					176.3	169.0		4.7%
Total	1,210.2			1,083.9					901.0		835.6						5.3%
			Comparative figures have been reclassified due to a realignment of several business lines and to conform to the presentation adopted for the current period.
Net revenue growth was strong, increasing by 7.8% in Q4 19 compared to Q4 18. Increased net revenue was driven by organic growth of 5.3% and acquired growth of 2.8%.
	growth of 1.6% in Q4 19 compared to Q4 18. Organic
Our Canada operations achieved net revenue organic
growth continued in our Environmental Services business and Transportation sector with offsetting revenue retraction in our Power sector and Water business. New mining projects as well as the commencement of the Trans Mountain Expansion Project spurred growth in our Energy and Resources business during the quarter.
Our US operations achieved net revenue organic growth of 9.6% in Q4 19 compared to Q4 18 with growth across all our businesses. Consistent with our annual results, our Transportation business continued to perform well with progress made on our Transit & Rail projects, our Environmental Services in the renewables and hydropower and dam markets, and our Water business through our expansion efforts into California, Texas, and northwest US markets. Growth in Energy & Resources was driven by a ramp-up of new renewable projects in Power, and upstream projects in Oil & Gas.
Our Global operations achieved net revenue growth of 14.5% in Q4 19 compared to Q4 18 driven by acquisition growth of 16.9% in our Buildings business. We saw a slight retraction in organic growth as a result of declining commodity prices impacting our Mining projects, large project wind-downs in WaterPower & Dams, and a slowdown in our UK Transportation sector. Our Environmental Services business continued to drive growth and our UK Water business saw steady work volume as we advanced major projects associated with the latest Asset Management Program regulatory cycle. The ramp up of a transmission project in Nepal also resulted in growth in our Power sector.
Gross Margin
			Q4 2019	Q4 2018
(In millions of Canadian dollars, except percentages)							$	% of Net Revenue					$	% of Net Revenue
Canada			140.0				51.2%	134.0				49.8%
United States			256.7				55.1%	234.7				55.2%
Global			89.6				55.4%	80.7				57.2%
Total			486.3				54.0%	449.4				53.8%

Gross margin increased $36.9 million in the quarter and increased 0.2% as a percentage of net revenue.
Overall, gross margins in the quarter remained stable. Our Canada operations is seeing improvements from higher margin work and more efficient project execution. In our US operations, margins were mainly impacted by project mix. Margins in our Global operations were primarily impacted by project mix, challenges arising from instability in Latin America, and pricing pressures in the UK and European markets.
Management’s Discussion and Analysis
December 31, 2019	M-17	Stantec Inc.

Other
Administrative and marketing expenses were $348.5 million in Q4 19 and 38.7% as a percentage of net revenue, or $385.7 million and 42.8% without the adoption of IFRS 16, compared to $382.7 million and 45.8% in Q4 18. The decrease in administrative and marketing expenses was mainly from our reshaping initiatives which resulted in improved utilization and our focused effort to reduce discretionary spending.
Amortization of intangible assets increased due to an increase in backlog and client relationships resulting from our WGE acquisition. Net interest expense increased $8.2 million primarily due to the adoption of IFRS 16 which increased net interest expense by $7.8 million.
Our reported tax rate was 29.7% in Q4 19 compared to 10.9% in Q4 18. Our reported tax expense included the recognition of tax recoveries of $4.3 million in our US operations on tax credits previously unrecognized and offset by a valuation allowance of $3.4 million. Adjusted for these discrete items, our normalized tax rate would be 31.2% as a result of the mix of jurisdictional earnings and tax rates. Our Q4 18 reported tax rate included the recognition of additional tax credits, estimated deduction of foreign-derived intangible income introduced with US tax reform, and non-taxable capital gains.
Quarterly Trends The following is a summary of our quarterly operating results for the last two fiscal years. 2018 values have not been restated for the impact of IFRS 16.
						2019	2018
(In millions of Canadian dollars, except per share amounts)
			Q4	Q3		Q2	Q1	Q4	Q3	Q2	Q1
Gross revenue			1,210.2		1,241.5			1,224.1		1,151.5		1,083.9		1,086.6		1,092.0			1,021.3
Net revenue			901.0		952.6			953.6		904.1		835.6		847.5		863.3		808.8
Net income from continuing operations			42.4		57.8			49.3		44.9		21.2		55.9		57.6		36.6
Net income (loss) from discontinued operations, net of tax	-			-			-		-		(32.2)		(73.9)		(18.0)		0.2
Net income (loss)			42.4		57.8			49.3		44.9		(11.0)		(18.0)		39.6		36.8
Basic and diluted earnings (loss) per shareContinuing operations
			0.38		0.52			0.44		0.40		0.19		0.49		0.51		0.32
Discontinued operations-			-			-		-		(0.29)		(0.65)		(0.16)		-
Total basic and diluted earnings (loss) per share			0.38		0.52			0.44		0.40		(0.10)		(0.16)		0.35		0.32
Continuing operations
Adjusted net income (note)			52.3		66.3			56.1		50.3		45.5		51.2		62.0		47.9
Adjusted basic and diluted EPS (note)			0.47		0.59			0.50		0.45		0.40		0.45		0.54		0.42
Adjusted net income and adjusted EPS are non-IFRS measures and are further discussed in the Definitions section of this MD&A. Quarterly EPS and adjusted EPS are not additive and may not equal the annual EPS reported. This is a result of the effect of shares issued on the weighted average number of shares. Quarterly and annual diluted EPS and adjusted EPS are also affected by the change in the market price of our shares since we do not include in dilution options when the exercise price of the option is not in the money.


Management’s Discussion and Analysis
December 31, 2019	M-18	Stantec Inc.

The table below compares quarters, summarizing the impact of acquisitions, organic growth, and foreign

exchange on net revenue:

Net Revenue

Q4 19 vs.

Q3 19 vs.

Q2 19 vs.

Q1 19 vs.

(In millions of Canadian dollars)

Q4 18

Q3 18

Q2 18

Q1 18

Increase in net revenue due to

Organic growth

44.6

63.1

20.0

20.6

Acquisition growth

23.8

40.3

55.5

53.4

Impact of foreign exchange rates on

revenue earned by foreign subsidiaries

(3.0)

1.7

14.8

21.3

Total net increase in net revenue

65.4

105.1

90.3 95.3

Construction Services operations are presented as discontinued operations. This table has been updated to include only continuing operation results.

We experience variability in our results of operations from quarter to quarter due to the nature of the industries and geographic locations we operate in. In the first and fourth quarters, we see slowdowns related to winter weather conditions and holiday schedules. (See additional information about operating results in our MD&A for each respective quarter.)

Management’s Discussion and Analysis

December 31, 2019

M-19

Stantec Inc.

Statements of Financial Position The following highlights the major changes to our assets, liabilities, and equity from December 31, 2018, to December 31, 2019.
			Dec 31, 2019	Jan 1, 2019	IFRS 16		Dec 31, 2018
(In millions of Canadian dollars)
Total current assets			1,580.1		1,573.7	(61.8)			1,635.5
Property and equipment						286.5	289.4	-				289.4
Lease assets						558.5	561.8	561.8			-
Goodwil			1,651.8		1,621.2	-			1,621.2
Intangible assets						219.6	242.0	(5.7)				247.7
Net employee defined benefit asset						26.0	10.0	-			10.0
Investments in joint ventures and associates						8.8		9.4	-				9.4
Deferred tax assets						31.9	21.2	-			21.2
Other assets						198.3	178.2	2.7				175.5
Total assets			4,561.5		4,506.9	497.0			4,009.9
Current portion of long-term debt						46.9	48.5	-			48.5
Current portion of provisions						23.9	41.7	(0.7)			42.4
Current portion of lease liabilities						99.9	44.8	44.8			-
Al other current liabilities						835.6	784.2	(18.5)				802.7
Total current liabilities			1,006.3		919.2	25.6				893.6
Lease liabilities						589.0	600.2	600.2			-
Income taxes payable						11.6	15.9	-			15.9
Long-term debt						814.0	885.2	-				885.2
Provisions						89.1	86.6	8.4			78.2
Net employee defined benefit liability						85.2	68.6	-			68.6
Deferred tax liability						73.2	42.8	(11.5)			54.3
Other liabilities						16.0	10.9	(94.5)				105.4
Equity			1,875.5		1,875.7	(31.2)			1,906.9
Non-controlling interests						1.6		1.8	-				1.8
Total liabilities and equity			4,561.5		4,506.9	497.0			4,009.9

Refer to the Liquidity and Capital Resources section for an explanation of the changes in current assets and current liabilities and the Shareholders’ Equity section for an explanation of the changes in equity.
The adoption of IFRS 16 resulted in an overall increase to assets and liabilities because the new standard requires the lessee to recognize an asset for the right to use the underlying asset during the lease term (lease assets) and
recognize a liability to make lease payments (lease liabilities). We also reclassified certain balance sheet accounts
to conform to the accounting requirements of IFRS 16. Refer to the Accounting Developments section in this
MD&A for IFRS 16 impacts. As well, the carrying amounts of assets and liabilities for our US subsidiaries on our consolidated statements of financial position decreased due to the strengthening Canadian dollar—from
US$0.73 at December 31, 2018, to US$0.77 at December 31, 2019.
For non-current assets, the adoption of IFRS 16 resulted in the recognition of lease assets, a reclass of lease advantages from intangible assets to lease assets, and a recognition of sublease receivables included in
other assets. Excluding the adoption of IFRS 16, property and equipment decreased mainly because of
increased depreciation expense, partly offset by additions made to leasehold improvements and engineering equipment and the acquisition of WGE. Goodwill increased due to our acquisition of WGE. Intangible assets
decreased due to amortization expense partly offset by additions from the WGE acquisition. The long-term
Management’s Discussion and Analysis
December 31, 2019	M-20	Stantec Inc.

portion of other assets increased $20.1 million due primarily to increases in investments held for self-insured
liabilities and holdbacks on long-term contracts.
For liabilities, the adoption of IFRS 16 resulted in the recognition of lease liabilities, a reclass of lease
inducement benefits and lease from other liabilities to lease assets, a recognition of lease restoration liabilities included in provisions, and a net decrease in deferred tax liabilities. Excluding the adoption of IFRS 16, total
current and long-term debt decreased $72.8 million due primarily to a decrease in our revolving credit facility
of $80.6 million offset by a net increase of $11.9 million in notes payable. Increases in notes payable were
associated with the WGE acquisition.
Deferred tax liabilities, excluding IFRS 16 adjustments, increased as a result of deferred taxes acquired through business combinations and deferred tax expense recorded in 2019. Net employee defined benefit liability increased $16.6 million and net employee defined benefit asset increased $16.0 million for a combined net increase of $0.6 million. Return on plan assets of $55.5 million and contributions of $23.0 million made in 2019 were offset by actuarial losses of $75.6 million and the addition of WGE’s end-of-employment benefit liability. Our adoption of the IFRS Interpretations Committee’s decision on the presentation requirements of uncertain tax provisions recognized under IFRIC 23 resulted in a reclass from other liabilities to current income taxes payable of $25.9 million at December 31, 2019 and $35.0 million at December 31, 2018.
Goodwill
In accordance with our accounting policies (described in note 4 of our 2019 audited consolidated financial statements), we conduct a goodwill impairment test annually as at October 1 or more frequently if circumstances indicate that an impairment may occur or if a significant acquisition occurs between the annual impairment test date and December 31.
Our CGUs are identified by considering the interdependence of cashflows between different geographic locations and how management monitors the operations. As such, we define our CGUs as follows: Canada, US, Asia/Pacific, Latin America, and UK/Europe/ Middle East. As goodwill is not monitored at a level lower than our operating segments; three of our CGUs (Asia/Pacific, Latin America, and UK/Europe/ Middle East) are grouped into Global for the purpose of allocating goodwill and testing impairment.
On October 1, 2019, and October 1, 2018, we performed our annual goodwill impairment tests. We estimate the recoverable amount by using the fair value less costs of disposal approach. There is a material degree of uncertainty with respect to the estimates of the recoverable amounts of our CGUs, given the necessity of making key economic assumptions about the future.
As at October 31, 2019, we concluded that the recoverable amount of our CGUs, Canada and US, exceeded its carrying amount and management believes that no reasonably possible change in assumptions would have resulted in the carrying amount to exceed their respective recoverable amount. The recoverable amount of our Global group of CGUs exceeded its carrying amount by $37.6 million. Management believes that the only reasonably possible changes to key assumptions that would cause the group of CGUs’ carrying amount to exceed its recoverable amount would be a 50-basis points reduction in the assumed operating margins or a 50-basis points increase in the discount rate (further described in note 13 of our 2019 audited consolidated financial statements and incorporated by reference in this MD&A).
Liquidity and Capital Resources We are able to meet our liquidity needs through various sources, including cash generated from operations, long- and short-term borrowings from our $800 million revolving credit facility (with access to an additional
$600 million subject to approval), our $310 million senior term loan, and the issuance of common shares. We use
Management’s Discussion and Analysis
December 31, 2019	M-21	Stantec Inc.

funds primarily to pay operational expenses; complete acquisitions; sustain capital spending on property,
equipment, and software; repay long-term debt; repurchase shares; and pay dividend distributions to shareholders.
We believe that internally generated cash flows, supplemented by borrowings, if necessary, will be sufficient to
cover our normal operating and capital expenditures. We also believe that the design of our business model reduces the impact of changing market conditions on operating cash flows. However, under certain favorable
market conditions, we do consider issuing common shares to facilitate acquisition growth or to reduce borrowings
under our credit facilities.
We continue to limit our exposure to credit risk by placing our cash and cash equivalents in short-term deposits
in—and, when appropriate, by entering into derivative agreements with—high-quality credit institutions.
Investments held for self-insured liabilities include bonds, equities, and term deposits. We mitigate risk associated with these bonds, equities, and term deposits through the overall quality and mix of our investment
portfolio.
Working Capital
The following table shows summarized working capital information as at December 31, 2019, compared to December 31, 2018:
(In millions of Canadian dollars, except ratios)			Dec 31, 2019	Jan 1, 2019	IFRS 16				Dec 31, 2018
Current assets			1,580.1	1,573.7 (61.8)	1,635.5
Current liabilities			(1,006.3)	(919.2)	(25.6)				(893.6)
Working capital (note)						573.8	654.5	(87.4)	741.9
Current ratio (note)						1.57	1.71	n/a	1.83
note: Working capital is calculated by subtracting current liabilities from current assets. Current ratio is calculated by dividing current assets by current liabilities. Both non-IFRS measures are further described in the Definitions section of this MD&A.

The adoption of IFRS 16 resulted in reclasses of certain balance sheet accounts (discussed in the Accounting
Development section of the MD&A). As well, the carrying amounts of assets and liabilities for our US subsidiaries on our consolidated statements of financial position decreased due to the strengthening Canadian
dollar.
IFRS 16 resulted in a reclass of $50.0 million of lease inducements receivable from other receivables, $12.9 million of prepaid rent from prepaid expenses to lease assets, and a $1.1 million adjustment to other current assets. Excluding the adoption of IFRS 16, current assets increased primarily because of increases in cash and deposits of $38.3 million (explained in the Cash Flows section of this MD&A).These increases were partly offset by a collective net decrease of $13.0 million from trade and other receivables, unbilled receivables, and contract assets. As well as decreases to income taxes recoverable of $11.7 million as a result of lower tax installments paid during 2019.
Our DSO, defined in the Definitions section of this MD&A, was 94 days at December 31, 2019 (79 days including deferred revenue), four days lower than our DSO target of 98 days, and nine days lower than our results at December 31, 2018 of 103 days. The decrease in DSO was primarily due to our continued efforts and focus on collection activities and the receipt of certain milestone-based payments, which resulted in strong collections throughout our operations in Q4 19.
The aging of trade receivables improved in the over-90-day aging category by 2.6% as a percentage of total trade
receivable, or $18.9 million due to the mix of clients and collection efforts.
Management’s Discussion and Analysis
December 31, 2019	M-22	Stantec Inc.

IFRS 16 resulted in the recognition of $44.8 million of lease liabilities (current portion); partly offset by a decrease in other liabilities of $18.2 million because lease inducement benefits and lease disadvantages were reclassed

to lease assets. As at December 31, 2019, the current portion of lease liabilities increased $55.1 million. Our

adoption of the IFRS Interpretations Committee’s decision on the presentation requirements of uncertain tax

provisions recognized under IFRIC 23 also resulted in a reclassification of our uncertain tax liabilities of $25.9 million from other liabilities to current income taxes payable at December 31, 2019, and $35.0 million at

December 31, 2018. Excluding the impacts of IFRS 16 and IFRIC 23, current liabilities increased primarily

because of an increase to deferred revenue of $24.8 million due to the timing of billings and projects mix, bank indebtedness of $19.5 million, and trade and other payables of $9.5 million, mainly attributable to the timing of

payments to suppliers and employees. The increases were partly offset by a decrease to the current portion of

our provisions because of payments and settlements made during 2019.

Cash Flows

Continuing

Discontinued

Operations

Total

2019

2018

Change

2019

2018

Change

2019

2018

Change

(In millions of Canadian dollars)

Cash flows from (used in) operating activities

449.9

205.2

244.7

2.6

(32.6) 35.2

452.5

172.6

279.9

Cash flows used in investing activities

(135.2)

(220.9)

85.7

(3.2) 3.2

(135.2)

(224.1)

88.9

Cash flows (used in) from financing activities

(286.0)

(23.9) (262.1)

(0.1) 0.1

(286.0)

(24.0) (262.0)

Because of the adoption of IFRS 16, fixed lease payments and proceeds for leasehold inducements are no longer included in operating and investing activities, respectively, and are now recognized in financing activities in our statement of cash flows. These reclassifications had a net zero effect on total cash flows. Our comparative figures were not restated.

Cash flows from (used in) operating activities

Cash flows used in operating activities are impacted by the timing of acquisitions, particularly the timing of payments for acquired trade and other payables, which includes short-term employee incentive awards.

The adoption of IFRS 16 increased reported 2019 operating cash inflow by $116.7 million for fixed lease

payment reclasses. Excluding the adoption of IFRS 16, cash flows from operating activities for continuing

operations would have been $333.2 million, a $128.0 million increase compared to 2018. The increase in cash

inflow was driven by an increase in cash receipts from clients. These cash inflows were partly offset by an increase in cash paid to suppliers and employees due to acquisition growth, the timing of various payments, and an

increase in interest paid on debt.

Cash flows used in investing activities

The adoption of IFRS 16 increased reported 2019 investing cash outflow by $50.4 million for lease inducements reclasses. Pre-IFRS 16, cash flows used in investing activities would have been $84.8 million, a

$136.1 million decrease compared to 2018, mainly due to a decrease in property and equipment and software

purchases—$60.3 million in 2019 compared to $134.2 million in 2018. These purchases relate mainly to

leasehold improvements and engineering equipment at various locations. Additionally, there was a $40.3 million

increase in lease inducements paid by our landlords.

Cash flows (used in) from financing activities

The adoption of IFRS 16 increased reported 2019 financing cash outflow by $66.3 million due to lease

payments of $116.7 million, partly offset by lease inducements of $50.4 million received. Excluding the

adoption of IFRS 16, cash flows used in financing activities would have been $219.7 million compared to an outflow of $23.9 million in 2018, reflecting a $242.6 million net reduction in drawings from our revolving credit

Management’s Discussion and Analysis

December 31, 2019

M-23

Stantec Inc.

facility and term loan. Cash outflows were partly offset with a $33.5 million decrease in share repurchases and
increased proceeds of $12.0 million from share capital issuance.
Capital Management
Our objective in managing Stantec’s capital is to provide sufficient capacity to cover normal operating and capital expenditures and to have flexibility for financing future growth. We focus our capital allocations on increasing shareholder value through funding accretive acquisitions in pursuit of our growth strategy while maintaining a strong balance sheet, repurchasing shares opportunistically, and managing dividend increases to our target payout ratio in a sustainable manner.
We manage our capital structure according to our internal guideline of maintaining a net debt to adjusted EBITDA (actual trailing twelve months) ratio of less than 2.0 to 1.0. At December 31, 2019, our net debt to adjusted EBITDA ratio was 1.1 to 1.0, falling within our stated internal guideline and consistent with our overall approach to capital allocation. There may be occasions when we exceed our target by completing acquisitions that increase our debt level for a period of time. Prior to the adoption of IFRS 16, we managed our capital structure according to our internal guideline of maintaining a net debt to EBITDA (actual trailing twelve months) ratio of less than 2.5 to 1.0.
			Dec 31, 2019	Dec 31, 2018
(In millions of Canadian dollars, except ratios)
Current and non current portion of long term debt		860.9		933.7
Less: cash and cash equivalents		(223.5)		(185.2)
Bank indebtedness		19.5		-
Net debt		656.9		748.5
Shareholders equity		1,875.5		1,906.9
Total Capital Managed		2,532.4		2,655.4
Trailing twelve months adjusted EBITDA from continuing operations (note 1)		574.4		392.5
Net debt to adjusted EBITDA ratio (note 1)		1.1		1.9
See the Definitions section of this MD&A for our discussion of non-IFRS measures used.
Note 1: Results for 2019 were accounted for using IFRS 16 and results for 2018 were accounted for using IAS 17.

Stantec has syndicated senior credit facilities consisting of a senior revolving credit facility of a maximum of
$800 million and a $310 million term loan in two tranches. On July 19, 2019, we amended our credit facilities which
changed certain terms and conditions, including extending the maturity date of the revolving credit facility by one year
(expires on June 27, 2024), increasing our access to additional funds from $400 million to $600 million, and reducing certain interest rate spreads. We are required to comply with certain covenants as part of our credit facility. The key
financial covenants specify requirements of our leverage ratio and interest coverage ratio (as defined by the credit
facilities agreement). Refer to the Definition of non-IFRS measures section for further discussion of our covenant
ratios.
At December 31, 2019, $282.6 million was available in our revolving credit facility for future activities and we were in
compliance with the covenants related to our credit facilities as at and throughout the period ended
December 31, 2019.
Shareholders’ Equity
Shareholders’ equity decreased $31.4 million. Opening shareholders’ equity was adjusted downward by $31.2 million related to the adoption of IFRS 16. The decrease in shareholder’s equity was mainly due to a
comprehensive loss of $109.0 million that related primarily to the exchange difference on translation of our foreign
subsidiaries and the remeasurement loss on net employee defined benefit liability, $64.7 million in dividends
declared, and $43.2 million in shares repurchased under our NCIB. These decreases were partly offset by net
Management’s Discussion and Analysis
December 31, 2019	M-24	Stantec Inc.

income of $194.4 million earned in 2019 and $22.3 million for share options exercised for cash and share-based
compensation expense.
Our NCIB on the TSX was renewed on November 8, 2019 enabling us to repurchase up to 5,559,313 of our
common shares during the period November 14, 2019 to November 13, 2020. We also have an Automatic Share Purchase Plan with a broker that allows the purchase of common shares for cancellation under the NCIB
at any time during predetermined trading blackout periods within certain pre-established parameters.
We believe that, from time to time, the market price of our common shares does not fully reflect the value of our business or future business prospects and that, at such times, the repurchase of outstanding common
shares are an appropriate use of available Company funds. We repurchased 1,400,713 common shares for an
aggregated price of $43.2 million during 2019, compared to the repurchase of 2,470,560 common shares for an
aggregated price of $76.7 million during 2018.
Other
Outstanding Share Data
At December 31, 2019, there were 111,212,975 common shares and 4,051,080 share options outstanding. From January 1, 2020, to February 26, 2020, 141,700 were repurchased and cancelled under our NCIB, no share options were granted, 432,039 share options were exercised, and 56,937 share options were forfeited. At February 26, 2020, there were 111,503,314 common shares and 3,562,104 share options outstanding.
Contractual Obligations
As part of our operations, we enter into long-term contractual arrangements from time to time. The following table summarizes the contractual obligations due on our long-term debt, lease arrangements, purchase and service obligations, and other obligations at December 31, 2019, on an undiscounted basis.
				Payment Due by Period
				Less than		After
			Total	1 Year	1–3 Years	4–5 Years				5 Years
(In millions of Canadian dollars)
Debt			864.6				47.8		207.8		608.1						0.9
Interest on debt			112.0				30.0		53.8		28.2					-
Bank indebtedness			19.5		19.5		-	-				-
Lease liabilities			810.5				138.5		255.0		151.2						265.8
Restoration			13.9		1.8		3.5		2.9					5.7
Variable lease payments			269.6				47.6		82.4		48.4					91.2
Short-term and low-value lease payments			4.0		2.6		1.4		-				-
Leases not commenced but commited			50.6		2.3		10.2		9.3					28.8
Foreign currency forward contract			31.0		31.0		-	-				-
Purchase and service obligations			67.6		43.9		20.5		3.1					0.1
Other obligations			54.0		13.8		23.2		1.1					15.9
Total contractual obligations	2,297.3				378.8		657.8		852.3						408.4
For further information regarding the nature and repayment terms of our long-term debt, refer to the Cash Flows from (Used in) Financing Activities and Capital Management sections of this MD&A and notes 16, 17 and 26 in our 2019 audited consolidated financial statements, incorporated by reference.
Management’s Discussion and Analysis
December 31, 2019	M-25	Stantec Inc.

Our lease arrangements include non-cancellable rental payments for office space, vehicles, and other equipment. Purchase and service obligations include enforceable and legally binding agreements to purchase
future goods and services. Other obligations include amounts payable for our restricted share, deferred share,
and performance share units issued under our Long-Term Incentive Plan and obligations for our end of
employment benefit plans. Failure to meet the terms of our lease payment commitments may constitute a default, potentially resulting in a lease termination payment, accelerated payments, or a penalty as detailed in each lease
agreement. The previous table does not include obligations to fund defined benefit pension plans, although
we make regular contributions. Funding levels are monitored regularly and reset with triennial funding valuations performed for the pension plans’ board of trustees. The Company expects to contribute $19.0 million
to the pension plans in 2020.
Off-Balance Sheet Arrangements
As at December 31, 2019, we had off-balance sheet financial arrangements relating to letters of credit in the amount of $83.2 million that expire at various dates before January 2021, except for $14.6 million that have open-ended terms. These—including the guarantee of certain office rental obligations—were issued in the normal course of operations.
Also, as part of the normal course of operations, our surety facilities allow for the issuance of bonds for certain types of project work. As at December 31, 2019, $392.1 million in bonds—expiring at various dates before July 2024—were issued under these surety facilities. These bonds are intended to provide owners with financial security regarding the completion of their construction project in the event of default and relate mainly to our former Construction Services business. Although we remain obligated for these instruments, the purchaser of the Construction Services business has indemnified Stantec should any of these obligations be triggered.
In the normal course of business, we also provide indemnifications and, in limited circumstances, guarantees. These are granted on commercially reasonable contractual terms and are provided to counterparties in transactions such as purchase and sale contracts for assets or shares, service agreements, and leasing transactions. We also indemnify our 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 us to compensate the counterparty for costs incurred through various events. The terms of these indemnifications and guarantees will vary based on the contract, the nature of which prevents us from making a reasonable estimate of the maximum potential amount that could be required to pay counterparties. Historically, we have not made any significant payments under such indemnifications or guarantees, and no amounts have been accrued in our consolidated financial statements with respect to these guarantees.
Financial Instruments and Market Risk
In 2019, we entered into an interest rate swap to manage the fluctuation in floating interest rates on Tranche C of our term loan. The agreement matures on June 27, 2023 and has the effect of converting the variable interest rate associated with $160 million of our term loan into a fixed interest rate of 2.295% plus an applicable basis points spread.
We had also entered into foreign currency forward contracts to purchase $31.0 million (or GBP18.0 equivalent) at trade dates maturing before February 2020. These contracts were entered to mitigate the risk of foreign
currency fluctuations.
These arrangements are further described in note 25 of our 2019 audited consolidated financial statements, incorporated by reference.
Market risk. We are exposed to various market factors that can affect our performance, primarily our currency and interest rates.
Management’s Discussion and Analysis
December 31, 2019	M-26	Stantec Inc.

Currency
Our currency exchange rate risk results primarily from the following three factors:
1. A significant portion of our revenue and expenses is in US dollars. Therefore, we are exposed to
			fluctuations in exchange rates to the extent that
			a. Foreign currency revenues greater than foreign currency expenses in a strengthening Canadian
				dollar environment will result in a negative impact on our income from operations.
			b. Foreign currency revenues greater than foreign currency expenses in a weakening Canadian
				dollar environment will result in a positive impact on our income from operations.
2. Foreign exchange fluctuations may also arise on the translation of the balance sheet of US-based or
			other foreign subsidiaries where the functional currency is different from the Canadian dollar, and they are recorded in other comprehensive income. We do not hedge for this foreign exchange translation risk.
3. Foreign exchange gains or losses arise on the translation of foreign-denominated assets and liabilities
			(such as accounts receivable, accounts payable and accrued liabilities, and long-term debt) held in our Canadian, US, and other foreign subsidiaries. We minimize our exposure to foreign exchange fluctuations on these items by matching foreign currency assets with foreign currency liabilities and, when appropriate, by entering into forward foreign currency contracts.
Although we may buy or sell foreign currencies in exchange for Canadian dollars in accordance with our foreign exchange risk mitigation strategy, on occasion we may have a net exposure to foreign exchange fluctuations because of the timing of the recognition and relief of foreign-denominated assets and liabilities.
Interest rates
Changes in interest rates also present a risk to our performance. Our revolving credit facility and term loan balances carry a floating rate of interest. In addition, we are subject to interest rate pricing risk to the extent that our investments held for self-insured liabilities contain fixed-rate government and corporate bonds and term deposits. Based on our loan balance at December 31, 2019, we estimate that a 0.5% increase or decrease in interest rates (with all other variables held constant) would have decreased or increased net income by $2.2 million, respectively.
Price risk
We are subject to market price risk to the extent that our investments held for self-insured liabilities contain equity funds. This risk is mitigated because the portfolio of equity funds is monitored regularly and is appropriately diversified. The effect of a 1.0% increase or decrease in equity prices (with all other variables held constant) would have increased or decreased net income by $0.4 million, respectively.
Related-Party Transactions
We have subsidiaries that are 100% owned and are consolidated in our financial statements. We also have agreements in place with several structured entities to provide various services, including architecture, engineering, planning, and project management. From time to time, we enter into transactions with associated companies and other entities pursuant to a joint arrangement. In 2019, total sales to our joint ventures were $40.2 million, and at December 31, 2019, receivables from our joint ventures were $8.9 million. In 2019, the total sales to our associates were $1.9 million, and at December 31, 2019, receivables from our associates were $0.2 million.
From time to time, we guarantee the obligations of a subsidiary or structured entity for lease agreements, service agreements, and obligations to a third party pursuant to an acquisition agreement. In addition, we may guarantee service agreements for associated companies, joint ventures, and joint operations. (Transactions with subsidiaries, structured entities, associated companies, joint ventures, and joint operations are further described in note 34 of our 2019 audited consolidated financial statements and are incorporated by reference in this MD&A.)
Management’s Discussion and Analysis
December 31, 2019	M-27	Stantec Inc.

Key management personnel have authority and responsibility for planning, directing, and controlling the activities of our Company. Total compensation to key management personnel and directors recognized as an expense was $20.1 million in 2019 and $10.7 million in 2018.
Critical Accounting Estimates, Developments, and Measures
Critical Accounting Estimates
The preparation of consolidated financial statements in accordance with IFRS requires us to make various judgments, estimates, and assumptions. There has been no significant change in our critical accounting estimates in 2019 from 2018, except for the change in accounting estimates related to the adoption of IFRS 16, described in note 6 of our 2019 audited consolidated financial statements.
Note 5 of our December 31, 2019, consolidated financial statements outlines our significant accounting estimates and is incorporated by reference in this MD&A.
The accounting estimates discussed in our consolidated financial statements are considered particularly important because they require the most difficult, subjective, and complex management judgments. Accounting estimates are done for the following:
•			Revenue and cost recognition on contracts
•			Assessment of impairment of goodwill
•			Fair values on business combinations
•			Leases
•			Provision for self-insured liabilities and claims
•			Employee benefit plans
•			Taxes
Because of the uncertainties inherent in making assumptions and estimates regarding unknown future outcomes, future events may result in significant differences between estimates and actual results. We believe that each of our assumptions and estimates is appropriate to the circumstances and represents the most likely future outcome.
Unless otherwise specified in our discussion of specific critical accounting estimates, we expect no material changes in overall financial performance and financial statement line items to arise, either from reasonably likely changes in material assumptions underlying an estimate or within a valid range of estimates from which the recorded estimate was selected. In addition, we are not aware of trends, commitments, events, or uncertainties that can reasonably be expected to materially affect the methodology or assumptions associated with our critical accounting estimates, subject to items identified in the Risk Factors, Outlook, and Cautionary Note Regarding Forward-Looking Statements sections of this MD&A.
Accounting Developments
Recently Adopted
Effective January 1, 2019, we adopted the following standards and amendments (further described in note 6 of our December 31, 2019, consolidated financial statements and incorporated by reference in this MD&A):
• IFRS 16 Leases (IFRS 16) • IFRIC 23 Uncertainty over Income Tax Treatments (IFRIC 23) • Amendments to IFRS 9 Prepayment Features with Negative Compensation (IFRS 9) • Amendments to IAS 28 Long-term Interest in Associates and Joint Ventures (IAS 28)
Management’s Discussion and Analysis
December 31, 2019	M-28	Stantec Inc.

• Annual Improvements (2015-2017 Cycle) related to IFRS 3 Business Combinations, IFRS 11 Joint
			Arrangements, IAS 12 Income Taxes, and IAS 23 Borrowing Costs
• Amendments to IAS 19 Employee Benefits (IAS 19)
The adoption of these new standards, amendments, interpretations, and improvements did not have an impact on our disclosure controls and procedures or our business activities, including debt covenants, key performance
indicators, and compensation plans. The adoption of IFRS 16 resulted in a change in accounting policies, non-
cash changes to our financial results, and key non-IFRS indicators. Our debt covenants were not impacted since they continued to be reported under pre-IFRS 16 standards.
In September 2019, the IFRS Interpretation Committee concluded that the presentation requirements in IAS 1
Presentation of Financial Statements apply to uncertain tax liabilities or assets recognized under IFRIC 23. This will require an entity to present uncertain tax liabilities as current tax liabilities or deferred tax liabilities, and
uncertain tax assets as current tax assets or deferred tax assets. As a result, we reclassified our uncertain tax
liabilities from other liabilities to current income taxes payable for both 2019 and 2018.
IFRS 16 Leases
Effective January 1, 2019, we adopted IFRS 16 Leases (IFRS 16) using the modified retrospective approach and did not restate comparative information. The new standard replaces IAS 17 Leases and IFRIC 4 Determining Whether an Arrangement Contains a Lease (IFRIC 4) and requires companies to bring operating leases, formerly treated as off-balance sheet items, onto a company’s statement of financial position. Certain current and non-current items on our statement of financial position were also reclassified to conform with the accounting requirements of IFRS 16.
The majority of our leases are for office space, vehicles, and other equipment. We no longer include fixed lease payments in administrative and marketing expenses. Instead, lease costs are replaced with depreciation of leased assets and interest expense using the effective interest method for lease liabilities. We continue to expense in administrative and marketing low-value asset leases, short-term leases with a term of 12 months or less, and variable lease expenses. Prior to IFRS 16, occupancy costs were accounted for on a straight-line basis. With the adoption of IFRS 16, lease assets are amortized on a straight-line basis; however, interest from the effective interest method results in higher interest at the start of the lease term, causing a difference between our pre- and post-IFRS 16 net income. The adoption of IFRS 16 resulted in a non-cash reduction of our 2019 net income by $3.7 million or $0.03 on an earnings per share basis.
At the lease commencement date, lease liabilities are recognized at the present value of lease payments less any incentives receivable. Lease assets are equal to lease liabilities less lease incentives received, plus restoration costs, indirect costs, and prepayments. On transition, certain lease assets were measured at the amount equal to the lease liability; however, certain significant leases were measured retrospectively as though the standard was applied since the commencement date of the lease. Over time, depreciated leased assets and discounted liabilities are not equal; therefore, on transition, we recorded a non-cash after-tax cumulative debit adjustment of $31.2 million against our opening retained earnings for the leases that were measured retrospectively.
On the statement of cash flows, fixed lease payments and proceeds for leasehold inducements are no longer included in operating and investing activities, respectively, and are now recognized in financing activities. This reclassification increases cash flows from operating activities and reduces cash flows from investing and financing activities, resulting in a net zero effect on total cash flows.
A summary of IFRS 16’s impact on our January 1, 2019, consolidated statement of financial position, income statement items and non-IFRS financial measures, and cash flows is included in the tables below.
Management’s Discussion and Analysis
December 31, 2019	M-29	Stantec Inc.

Impact on Statement of Financial Position at January 1, 2019
					Increase
			After IFRS 16	Before IFRS 16	(Decrease)
(In millions of Canadian dollars)				$	$		$
Current assets
Trade and other receivables				828.1		878.1	(50.0)
Prepaid expenses				43.9		56.8	(12.9)
Other assets				24.3		23.2	1.1
Non-current assets
Lease assets				561.8		-	561.8
Intangible assets				242.0		247.7	(5.7)
Other assets				178.2		175.5	2.7
Total increase in assets					497.0
Current liabilities
Trade and other payables				566.9		567.2	(0.3)
Lease liabilities				44.8		-	44.8
Provisions				41.7		42.4	(0.7)
Other liabilities				5.0		23.2	(18.2)
Non-current liabilities
Lease liabilities				600.2		-	600.2
Provisions				86.6		78.2	8.4
Deferred tax liabilities				42.8		54.3	(11.5)
Other liabilities				10.9		105.4	(94.5)
Shareholders' equity
Retained earnings				820.0		851.2	(31.2)
Total increase in liabilities and equity					497.0
Management’s Discussion and Analysis
December 31, 2019	M-30	Stantec Inc.

Impact on Statement of Income - Continuing Operations				Year Ended Dec 31
				2019	2019				Increase
					as Reported	before IFRS 16	(Decrease)
				$	$	$
(In millions of Canadian dollars)
Impact on income statement items
Administrative and marketing expenses				1,433.6		1,576.6				(143.0)
Net interest expense				69.6		37.3			32.3
Depreciation of lease assets				115.8		-				115.8
Net income				194.4		198.1					(3.7)
Impact on non-IFRS financial measures (note)
EBITDA				576.0		433.0					143.0
Adjusted EBITDA				574.4		431.4					143.0
Net debt/adjusted EBITDA - Continuing operations				1.1		1.5			(0.4)
note: Non-IFRS measures are discussed in the Definitions section of this MD&A.
Impact on Statement of Cash Flows - Continuing Operations				Year Ended Dec 31
				2019	2019				Increase
					as Reported	before IFRS 16	(Decrease)
(In millions of Canadian dollars)				$	$	$
Cash flows from operating activities				449.9		333.2				116.7
Cash paid to suppliers				(1,716.9)		(1,865.9)				149.0
Interest paid				(71.6)		(39.3)			(32.3)
Cash flows (used in) from investing activities				(135.2)		(84.8)			(50.4)
Proceeds from lease inducements				-		50.4			(50.4)
Cash flows used in financing activities				(286.0)		(219.7)			(66.3)
Payments of lease obligations				(116.7)		-				(116.7)
Proceeds from lease inducements				50.4	-			50.4

Future Adoptions
The list below includes issued standards, amendments, and interpretations that we reasonably expect to be applicable at a future date and intend to adopt when they become effective. We are currently assessing the impact of adopting these standards, amendments, and interpretations on our consolidated financial statements and cannot reasonably estimate the effect at this time.
•			Conceptual Framework for Financial Reporting
•			Definition of a Business (Amendments to IFRS 3)
•			Definition of Material (Amendments to IAS 1 and IAS 8)
•			Interest Rate Benchmark (IBOR) Reform
•			Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)
These standards, amendments, and interpretations are described in note 6 of our December 31, 2019, consolidated financial statements and are incorporated by reference in this MD&A.
Materiality
We determine whether information is material based on whether we believe that a reasonable investor’s decision to buy, sell, or hold securities in our Company would likely be influenced or changed if the information was omitted, obscured, or misstated.
Management’s Discussion and Analysis
December 31, 2019	M-31	Stantec Inc.

Definition of Non-IFRS Measures
This Management’s Discussion and Analysis includes references to and uses terms that are not specifically defined in IFRS and do not have any standardized meaning prescribed by IFRS. These measures and terms are working capital, current ratio, EBITDA, net debt to adjusted EBITDA, leverage ratio, adjusted EBITDA, adjusted net income, and adjusted EPS. These non-IFRS measures may not be comparable to similar measures presented by other companies. We believe that the measures defined here are useful for providing investors with additional information to assist them in understanding components of our financial results.
Working Capital. We use working capital as a measure for assessing overall liquidity. Working capital is calculated by subtracting current liabilities from current assets. There is no directly comparable IFRS measure for working capital.
Current Ratio. We use current ratio as a measure for assessing overall liquidity. Current ratio is calculated by dividing current assets by current liabilities. There is no directly comparable IFRS measure for current ratio.
EBITDA. EBITDA represents net income before interest expense, income taxes, depreciation of property and equipment, depreciation of lease assets, amortization of intangible assets, and goodwill and intangible impairment. This measure is referenced in our credit facility agreement (adjusted for pre-IFRS 16 basis) as part of our debt covenants, and we use it as part of our overall assessment of our operating performance. There is no directly comparable IFRS measure for EBITDA.
Net Debt to adjusted EBITDA. As part of our assessment of our capital structure, we monitor net debt to adjusted EBITDA. It is defined as the sum of (1) long-term debt, including current portion, less cash and cash equivalents and cash in escrow, divided by (2) adjusted EBITDA (as defined below). There is no directly comparable IFRS measure for net debt to adjusted EBITDA.
Return on Invested Capital (ROIC): ROIC is a non-IFRS measure we use to evaluate our returns generated on our debt and equity capital. It represents our actual trailing twelve months net income before tax adjusted interest relative to our average aggregate net debt and shareholders’ equity. Our method of calculating ROIC may differ from methods presented by other companies. There is no directly comparable IFRS measure.
Days Sales Outstanding (DSO):			DSO is a metric that we use to evaluate our business that does not have a
standardized definition within IFRS. It represents the average number of days to convert our trade and other receivables, unbilled receivables, and contract assets to cash. For 2020, this metric has been adjusted to include deferred revenue because we believe it is a better measurement of our performance and will improve comparability with our peers.
Leverage Ratio. This ratio is referenced in our credit facilities agreement as part of our debt covenants. It is defined as total indebtedness divided by EBITDA (as defined by the credit facility agreement). There is no directly comparable IFRS measure for leverage ratio.
Interest Coverage Ratio. This ratio is referenced in our credit facilities agreement as part of our debt covenants. It is defined as trailing twelve months EBITDA divided by trailing twelve months interest expense (as defined by the credit facility agreement). There is no directly comparable IFRS measure for interest coverage ratio.
Adjusted Measures
Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS represent the respective financial measures (1) excluding the amortization of intangibles acquired through acquisitions and (2) after the adjustments for specific items that are significant but are not reflective of our underlying operations. Specific items are subjective; however, we use our judgement and informed decision-making when identifying items to be excluded in calculating our adjusted measures. Specific items may include, but are not limited to, discontinued operations, sale of
Management’s Discussion and Analysis
December 31, 2019	M-32	Stantec Inc.

subsidiaries, adjustments arising from legislative or judicial rulings, such as changes to pension or income tax regulations, significant and unusual non-recurring costs associated with lease exit liabilities and restructuring costs, gains or losses on sales of assets, certain fair value adjustments, and asset impairment losses. We currently use EBITDA as a measure of pre-tax operating cash flow and net income as a measure of overall profitability. There is no directly comparable IFRS measure for adjusted EBITDA. The most comparable IFRS measure for adjusted net income and adjusted EPS is net income and EPS, respectively. Reconciliations to net income, EBITDA and EPS to their respective adjusted measures are included in M-7.
We believe adjusted EBITDA, adjusted net income, and adjusted EPS are useful for providing securities analysts, investors, and other interested parties with additional information to assist them in understanding components of our financial results (including a more complete understanding of factors and trends affecting our operating performance). They also provide supplemental measures of operating performance, thus highlighting trends that may not otherwise be apparent when relying solely on IFRS financial measures.
Risk Factors
Overview
To deliver on our vision and strategic objectives, we continually identify and manage potential company-wide risks and uncertainties facing our business. We view each risk in relation to all other risks because the risks considered, and the actions taken to mitigate them may create new risks to the Company.
To effectively manage risks, our Enterprise Risk Management (ERM) program
•			Maintains a value-based framework to support our efforts to manage risk effectively, transparently, and consistently
•			Reviews our risk profile continuously and iteratively so risks are identified and managed as they evolve
•			Aligns and embeds risk management into key processes like strategic planning to reduce the effect of uncertainty on achieving our objectives
•			Reports to our executives and Board of Directors to provide assurance on the effectiveness of our risk management process
Board Governance and Risk Oversight
The board provides strategic direction to and guidance on the ERM program and has delegated the responsibility for oversight of the program to the Audit and Risk Committee (ARC).
The ARC supports the development and evolution of
•			Appropriate methods to identify, evaluate, mitigate, and report the principal risks inherent to our business and strategic direction
•			Systems, policies, and practices appropriate to address our principal risks
•			A risk appetite appropriate for the organization
Annually, the board receives a comprehensive risk report when it receives the Company’s Strategic Plan. Quarterly, the ARC receives a report on the changes in principal risks and mitigation strategies.
In addition to the ARC, two other board committees have roles in risk management. The Health, Safety, Security, Environment and Sustainability Committee provides oversight with a focus on relevant operational
Management’s Discussion and Analysis
December 31, 2019	M-33	Stantec Inc.

risk exposures, including the Company’s climate risk tolerance. The Corporate Governance and Compensation Committee guides the deployment of an effective corporate governance system to manage the board's overall stewardship responsibility, including requiring that appropriate management policies are in place.
Management Oversight
The C-suite is directly accountable to the board for all risk-taking activities and risk management practices. Responsibility for risk management is shared across the organization. The Executive Leadership Team (ELT) manages risk from an integrated, company-wide perspective; risk management, part of our day-to-day operations, is included in our key decision-making processes like project go/no-go decisions and strategic planning.
The ELT is supported by numerous teams—Legal; Health, Safety, Security, and Environment (HSSE); Information Technology (IT); Finance; and others—that provide risk management and compliance functions across the organization and work with management to design and monitor appropriate risk mitigation. Our Internal Audit team provides independent assurance regarding the effectiveness and efficiency of our company-wide risk management.
Principal Risks and Uncertainties
Management remains confident in our ability to successfully achieve our long-term corporate objectives; however, like our competitors, we are exposed to risks and uncertainties. Our risk assessment has identified our most significant risks (see Risks section below). These risks are listed from most to least significant based on their assessed impact on our Company and the probability that they may occur. If any risks occur, individually or in combination, our business, financial condition, results of operations, and prospects could be materially and adversely affected. Given our assessment and mitigation efforts, we do not expect any such material adverse impacts, but we plan for them as part of our ERM processes.
The risks and uncertainties described in this MD&A are not the only ones we face. Additional risks and uncertainties—that we are unaware of, that we currently believe are not material, and that may arise based on new developments—may also become important factors that adversely affect our business.
Risks
Project workplaces are inherently dangerous. Failure to maintain safe work sites could have an adverse impact on Stantec’s business, reputation, financial condition, and results of operations.
Project sites are inherently dangerous, with hazardous materials, large equipment mobilization and vehicle traffic. With projects and office locations across the globe, our employees travel to and work in high-security-risk countries that may be undergoing political, social, and economic problems that could lead to war, civil unrest, criminal activity, acts of terrorism, or public health crises.
Though we invest in a strong program that is focused on the health, safety, and security of our employees and controls environment-related risks, we are exposed to the risk of personal injury, loss of life, or environmental or other damage to our property or the property of others. We could be exposed to civil or statutory liability arising from injuries or deaths or be held liable for either uninsured damages or damages higher than our insurance coverage.
We may also incur additional costs on projects due to delays arising from health and safety incidents. Failure to maintain a strong safety record may also result in losing client confidence and future projects.
Failure to attract, retain, and mobilize skilled employees could harm our ability to execute our strategy.
Stantec derives revenue almost exclusively from services performed by our employees. Failing to attract, retain, and mobilize highly qualified staff could impede our ability to compete for new projects, deliver successfully on projects, and maintain or expand client relationships. Competition for talent remains challenging with low unemployment rates in the US, exit of skilled labor due to retirement, and skill deficits in many of the countries in which we operate. As a result of this talent scarcity, wages are increasing. If current trends continue, securing and
Management’s Discussion and Analysis
December 31, 2019	M-34	Stantec Inc.

retaining our key talent will become even more critical. As demand for skilled labor grows and its supply shrinks, firms everywhere will be in a fierce competition for the limited human capital so essential to business growth.
Failure to maintain effective operational management practices may adversely affect Stantec’s financial condition and results of operations.
For Stantec to succeed, our internal processes—including project management, billing and collecting tools, administrative overheads, and an appropriate insurance program—must be managed effectively; otherwise, we may incur additional costs. Projects that are over budget or not on schedule may lead to client dissatisfaction, claims against Stantec, and withheld payments. Delayed billings and customer payments may require Stantec to increase working capital investment. High administrative overheads may result in Stantec not being competitive in the marketplace.
A cybersecurity breach may cause loss of critical data, interrupt operations, and cause prejudice to our clients.
Like other global companies, we rely on computers, large enterprise systems, and information and communication technologies including third-party vendor systems, to conduct our business.

Although we devote significant resources to securing Stantec’s computer systems and have strong vetting processes for third-party systems we rely on, a breach in cybersecurity is an inherently high risk. If our systems are breached, we could be exposed to system interruptions, delays, loss of employee personal data, and loss of critical data that could delay or interrupt our operations. Loss of any sensitive and confidential data that our clients entrust us with could harm our clients and others. Other possible adverse impacts include remediation and litigation costs, regulatory penalties, costs associated with increased protection, lost revenues, and reputational damage leading to lost clients.
In addition, many of our projects use leading-edge technologies to deliver innovative solutions to our clients including design of state-of-the-art SMART buildings, connected autonomous vehicles, or other infrastructure facilities. Any cyber breach of such systems may expose us and our clients to remediation and litigation costs.
Stantec bears the risk of cost overruns on fixed-price contracts.
Our business has historically followed a fee-for-service model; however, some clients in select markets and business operating units are demanding alternative project delivery (APD) methods such as bundled engineering, and procurement; design-builds; and public-private partnerships. Stantec may experience reduced profits or, in some cases, losses under these contracts if costs increase above our estimates or if we make errors in estimating costs. Poor project management may also result in cost overruns and liabilities.
Failure to manage subcontractor performance could lead to significant losses.
Profitably completing some contracts depends on the satisfactory performance of subcontractors and subconsultants. If these third parties do not perform to acceptable standards, Stantec may need to hire others to complete the tasks, which may add costs to a contract, impact profitability, and, in some situations, lead to significant losses and claims.
Due to participation in joint arrangements, we may have limited control and be adversely impacted by the failure of the joint arrangement or its participants in fulfilling their obligations.
As part of our business strategy, Stantec may enter into joint arrangements, such as partnerships or joint ventures, where control is shared with unaffiliated third parties. For certain projects, we have contractual joint and several liability with these parties. In some cases, these joint arrangements may not be subject to the same internal controls (over financial reporting and otherwise) that we follow. Failure by a joint-arrangement partner to comply with rules, regulations, and client requirements may adversely impact Stantec’s reputation, business, and financial condition.
Management’s Discussion and Analysis
December 31, 2019	M-35	Stantec Inc.

Claims and litigation against us could adversely impact our business.
The threat of a major loss—such as the filing of a design-defect lawsuit against Stantec for damages that exceed Stantec’s professional liability insurance limits—could adversely impact our business even if, after several years of protracted legal proceedings, Stantec is ultimately found not liable for the loss or claim.
A failure in our IT infrastructure could lead to business interruption and loss of critical data, adversely affecting our operating results.
To sustain business operations and remain competitive, we rely heavily on our core and regional networks, complex server infrastructure and operating systems, communications and collaboration technology, design software, and business applications. We must constantly upgrade our applications, systems, and network infrastructure, as well as attract and retain key IT personnel; otherwise, service delivery and revenues could be interrupted.
Demand for Stantec’s services is vulnerable to economic downturns and reductions in government and private industry spending.
Demand for our services is vulnerable to economic conditions and events. As a growing global organization, we are more widely exposed to geopolitical risks and fluctuations in the local economies where we operate. These risks can negatively impact client interest in pursuing new projects.
For example, currency and interest rate fluctuations, inflation, financial market volatility, and credit market disruptions may negatively affect the ability of our clients to deploy capital or to obtain credit to finance their businesses on acceptable terms. This may impact their ability to pay us on time for our services, which, in turn, may adversely affect our backlog, working capital, earnings, and cash flows.
Geopolitical uncertainties and the rise of protectionism, including uncertainties with respect to Brexit, America First, and ongoing US trade disputes with China and other countries may negatively impact the global economy and as a result, Stantec’s business. Within the US, impeachment proceedings and upcoming elections in 2020 may delay infrastructure spending. With these conditions, our clients may seek to change the overall mix of services they purchase and demand more favorable contract terms, including lower prices. Increased competition during an economic decline could force us to accept unfavourable contract terms that cause revenue and margin reductions and greater liability.
Stantec may have difficulty achieving organic growth expectations.
If we are unable to effectively compete for projects, expand services to existing and new clients by cross-selling our services, and attract qualified staff, or if we are significantly affected by adverse economic conditions, we may have difficulty increasing our market share and achieving organic growth objectives.
We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-corruption laws.
The U.S. Foreign Corrupt Practices Act, UK’s Bribery Act, Canada’s Corruption of Foreign Public Officials Act, and similar worldwide anticorruption laws generally prohibit companies and their intermediaries from making improper payments to officials for obtaining or retaining business. Stantec operates in many parts of the world that have experienced government corruption. In certain circumstances, strict compliance with anticorruption laws may conflict with local customs and practices.
We train employees to strictly comply with anti-bribery laws, and our policies prohibit employees from offering or accepting bribes. We have built processes to advise our partners, subconsultants, suppliers, and agents who work with us or work on our behalf that they must comply with anti-corruption laws. Despite Stantec’s policies, training, and compliance programs, we cannot provide assurance that our internal control policies and procedures
Management’s Discussion and Analysis
December 31, 2019	M-36	Stantec Inc.

will always protect us from inadvertent, reckless, or criminal acts committed by employees or others. Violations or allegations of violations could disrupt our business and materially adversely effect our operating results or financial condition. Litigation or investigations relating to alleged violations could be costly and distracting for management, even if we are found not to have engaged in misconduct.
Failure to source suitable acquisition targets could impair our growth.
As the professional services industry consolidates, suitable acquisition candidates may be more difficult to find and available only at prices or under terms that are less favorable than before. Future acquisitions may decrease our operating income or operating margins, and we may be unable to recover investments made in those acquisitions.
If we are not able to successfully manage our integration program, our business and results of operations may be adversely affected.
Difficulties encountered while integrating acquired companies could adversely affect the Company’s business. This may prevent us from achieving anticipated synergies and improving our professional service offerings, market penetration, profitability, and geographic presence, all key drivers of our acquisition program. The value of an acquired business may decline if we are unable to retain key acquired employees. Acquired firms may also expose Stantec to unanticipated problems or legal liabilities undiscovered during our due diligence processes.
Force majeure events could interrupt our business and negatively impact our ability to complete client work.
Stantec’s offices, IT infrastructure, project sites, and staff may be impacted by events beyond our control, such as natural disasters, extreme weather, telecommunications failures, and acts of war or terrorism. Though we maintain a strong business continuity program, a major event could impact our ability to operate and may put our employees and clients at risk.
Climate change creates both risks and opportunities for Stantec.
Our business interruption risk is exacerbated by an increasing number of extreme weather events related to climate change.
Transitioning to a lower-carbon economy may present risks in the form of new environmental regulations, laws, and policies that could result in increased costs or create the potential for litigation, possibly preventing a project from going forward.
Climate change events are having impacts on investment decisions by local governments. On one hand, it is spurring on additional investments by local governments to make their cities and communities more resilient and on the other hand, it is diverting funds that might otherwise be invested into other infrastructure.
Addressing climate change has also created opportunities for Stantec. All our business lines have programs related to renewable energy, climate change adaptation, resiliency, sustainable buildings and infrastructure, environmental preservation, carbon capture and storage, and more. By partnering with our clients, we help them proactively address business interruption risk and better protect the environment. This results in additional revenue for Stantec.
New or changing policies, regulations, and standards could adversely affect our business operations and results.
Stantec’s business model includes a range of business operating units and jurisdictions, each with its own rules and regulations. As we grow geographically, complying with additional regulations and standards could materially increase our costs; not complying could have a significant impact on our reputation and results.
Relaxed or repealed laws and regulations could also impact the demand for our services.
Management’s Discussion and Analysis
December 31, 2019	M-37	Stantec Inc.

New trade barriers, changes in duties or border taxes, and changes in laws, policies, or regulations governing the industries and sectors we work in could mean a decreased demand for our services or increased costs. Such changes cannot be predicted, nor can we predict their impact on our business and clients.
Currency and interest rate fluctuations, inflation, financial market volatility, or credit market disruptions may limit our access to capital.
Several capital market risks could affect our business including currency risk, interest rate risk, and availability of capital.
Although we report our financial results in Canadian dollars, the greater portion of our revenues and expenses is generated or incurred in non-Canadian dollars. A stronger Canadian dollar could result in decreased net income from our non-Canadian dollar businesses.
Our credit facility carries a floating rate of interest; our interest costs will be impacted by change in interest rates. We are also subject to interest rate pricing risk to the extent that our investments held for self-insured liabilities contain fixed-rate government and corporate bonds. Our expansion plans may be restricted without continued access to debt or equity capital on acceptable terms. This may negatively affect our competitiveness and results of operations.
As well, these market fluctuations may negatively affect the ability of our clients to deploy capital or to obtain credit to finance their businesses on acceptable terms, which will impact their demand for our services and our clients’ ability to pay for our services.
Failure to adequately tax plan could significantly impair Stantec’s overall capital efficiency.
Continuous changes to various global tax laws are a risk for our organization. Management uses accounting and fiscal principles to determine income tax positions, however, ultimate tax determinations by applicable tax authorities may vary from our estimates, adversely impacting our net income or cash flows.
A change in our effective tax rate could have a material adverse impact on the results of our operations.
Stantec has defined benefit pension plans that currently have a significant deficit. These could grow in the future, resulting in additional costs.
Stantec has foreign defined benefit pension plans for certain employees. In the future, our pension deficits or surplus may increase or decrease depending on changes in interest rate levels, pension plan performance, inflation and mortality rates, and other factors. If we are forced or elect to make up all or a portion of the deficit for unfunded benefit plans over a short time, our cash flow could be materially and adversely affected.
Managing Our Risks
Global Operations
We manage our business through a combination of centralized and decentralized controls that address the unique aspects of the various markets, cultures, and geographies we operate in.
Our approach to integrating acquired companies involves implementing company-wide information technology and financial management systems and providing support services from corporate and regional offices.
Business Model
Our business model—based on geography, business operating unit specialization, and life-cycle diversification—reduces our dependency on any particular industry or economic driver. We intend to continue diversifying our geographic presence and service offerings and focusing on key client sectors. We believe this will reduce our susceptibility to industry-specific and regional economic cycles and will help us take advantage of economies of scale in the highly fragmented professional services industry.
Management’s Discussion and Analysis
December 31, 2019	M-38	Stantec Inc.

We also differentiate our business from competitors by entering into both large and small contracts with varying fee amounts. We work on tens of thousands of projects for thousands of clients in hundreds of locations. Our broad project mix strengthens our brand identity and ensures that we do not rely on only a few large projects for our revenue. We expect to continue to pursue selective acquisitions, enabling us to enhance our market penetration and to increase and diversify our revenue base.
Effective Processes and Systems
Our Global Management System (GMS) provides a disciplined and accountable framework for managing risks, quality outcomes, and occupational health and safety and environmental compliance. Stantec’s operations (except for recent acquisitions) are certified to, or are following the requirements of, these four internationally recognized consensus ISO standards:
ISO 9001:2015 (Quality Management)
ISO 14001:2015 (Environmental Management)
ISO 45001:2018 (Occupational Health & Safety Management)
ISO/IEC 20000-1:2011 (IT Service Management)
Our operations are largely managed by country-specific management systems with differing ISO certifications as required to support those country- and industry-specific business requirements. We began the review and streamlining of the global ISO certifications in 2019.
We use a Project Management (PM) Framework that confirms and clarifies the expectations Stantec has of its project managers and project teams. It includes the critical tasks that affect both the management of risks and achievement of quality on typical projects.
Our internal practice audit process enables us to assess the compliance of operations with the requirements of our GMS. This ensures that all offices and labs are audited at least once over the three-year term of our ISO 9001, ISO 14001, and ISO 45001 registrations. Additionally, field-level assessments are conducted for construction-related projects. We have a formal improvement process to encourage suggestions for improvement, address nonconformances, promote root-cause analysis, and document follow-up actions and responsibilities.
Our largest and most complex projects are supported by our Programs and Business Solutions (PBS) group, which provides specialized program and project management services.
Our comprehensive IT security (cybersecurity) program is designed to predict, prevent, detect, and respond. Key initiatives include detailed security and acceptable use policies, practices, and procedures; awareness campaigns for staff; and a range of security initiatives for enforcing security standards, including regular penetration tests. Our integrated Security Incident Response team is linked to our Crisis Communication Plan to ensure that breach response protocols are aligned with our overall corporate crisis response plans.
We invest resources in our Risk Management team. Team members provide company-wide support and guidance on risk avoidance practices and procedures. Structured risk assessments are conducted before we begin pursuing projects with heightened or unique risk factors.
Insurance
Our policies include but are not limited to the following types of insurance: general liability, automobile liability and physical damage, workers compensation and employer’s liability, directors’ and officers’ liability, professional, pollution & cyber liability, fiduciary and crime. We have a regulated/licensed captive insurance company to fund the payment of professional liability self-insured retentions related to claims as well as specific types of insurance policies such as employment practices. We or our clients obtain project-specific professional liability insurance when required or as needed on large and or complex projects.

Management’s Discussion and Analysis
December 31, 2019	M-39	Stantec Inc.

Growth Management
We have an acquisition and integration program managed by a dedicated acquisition team to minimize the risks associated with integrating acquired companies. A senior regional or business leader is appointed for each acquisition. The team is responsible for
•			Identifying and valuing acquisition candidates
•			Undertaking and coordinating due diligence
•			Negotiating and closing transactions
•			Integrating employees and leadership structures (immediately) and systems (as soon as practical
			following an acquisition)
Capital Liquidity
We meet our capital liquidity needs and fund our acquisition strategy through various sources, including cash generated from operations, short- and long-term borrowing from our syndicated senior credit facilities ($800 million revolving credit facility, $310 million term loan, and access to additional funds of $600 million), and the issuance of common shares.
Controls and Procedures Disclosure controls and procedures are designed to ensure that information we are required to disclose in reports filed with securities regulatory agencies is recorded, processed, summarized, and reported on a timely basis and is accumulated and communicated to management—including our CEO and CFO, as appropriate—to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of management, including our CEO and CFO, we carried out an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2019 (as defined in rules adopted by the Securities and Exchange Commission (SEC) in the United States and as defined in Canada by National Instrument 52-109, Certification of Disclosure in Issuer’s Annual and Interim Filings). Based on this evaluation, our CEO and CFO concluded that the design and operation of our disclosure controls and procedures were effective.
We account for the following significant joint operations in accordance with IFRS: West, a Joint Venture and Starr II, a Joint Venture. Management does not have the contractual ability to assess the internal controls of these joint arrangements. Once the financial information is obtained from these joint arrangements, it falls within the scope of our internal controls framework. Management’s conclusion regarding the effectiveness of internal controls does not extend to the internal controls at the transactional level of these joint arrangements. Our 2019 audited consolidated financial statements includes $13.9 million and $0.4 million of total assets and net assets, respectively, as at December 31, 2019, and $60.8 million and $0.7 million of revenues and net income, respectively, for the year then ended related to these joint arrangements.
As permitted by published guidance of the SEC in the United States, management’s evaluation of and conclusions on the effectiveness of internal control over financial reporting did not include the internal controls of WGE; their financial results are included in the Company’s 2019 consolidated financial statements. Aggregate assets of WGE acquired were $36.4 million, representing 0.8% of the Company’s total assets as at December 31, 2019. Gross revenue earned from the date of acquisition to December 31, 2019, constituted 1.7% of the Company’s gross revenue for the year ended December 31, 2019.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respect to the reliability of our financial reporting and preparation of our financial statements. Accordingly,
Management’s Discussion and Analysis
December 31, 2019	M-40	Stantec Inc.

management, including our CEO and CFO, does not expect that our internal control over financial reporting will prevent or detect all errors and all fraud. Management’s Annual Report on Internal Control over Financial Reporting and the Independent Auditors’ Report on Internal Controls are included in our 2019 consolidated financial statements.
There has been no change in our internal control over financial reporting during the year ended December 31, 2019, that materially affected or is reasonably likely to materially affect our internal control over financial reporting.
We will continue to periodically review our disclosure controls and procedures and internal control over financial reporting and may make modifications from time to time as considered necessary or desirable.
Subsequent Events
Normal Course Issuer Bid
From January 1, 2020, to February 26, 2020, pursuant to our NCIB, we repurchased and cancelled 141,700 common shares for an aggregate price of $5.2 million.
Dividends
On February 26, 2020, our Board of Directors declared a dividend of $0.155 per share, payable on April 15, 2020, to shareholders of record on March 31, 2020.
Cautionary Note Regarding Forward-Looking Statements Our public communications often include written or verbal forward-looking statements within the meaning of the US Private Securities Litigation Reform Act and Canadian securities laws. Forward-looking statements are disclosures regarding possible events, conditions, or results of operations that are based on assumptions about future economic conditions or courses of action and include financial outlook or future-oriented financial information. Any financial outlook or future-oriented financial information in this Management’s Discussion and Analysis has been approved by management of Stantec. Such financial outlook or future-oriented financial information is provided for the purpose of providing information about management’s current expectations and plans relating to the future.
Forward-looking statements may involve but are not limited to comments with respect to our objectives for 2020 and beyond, our strategies or future actions, our targets, our expectations for our financial condition or share price, or the results of or outlook for our operations. Statements of this type may be contained in filings with securities regulators or in other communications and are contained in this MD&A. Forward-looking statements in this MD&A include but are not limited to the following:
• Our aim to achieve our four key financial targets by the end of 2022 as set out in the Business Model
			and Strategy section of this MD&A;
• Our targets and expectations for 2020;
• Our expectations regarding the impact our major project awards will have on adapting to climate
			change and rising sea levels;
• Our expectations regarding economic trends, currency stability, industry trends, and commodity prices
			in the sectors and regions that we operate in;
• Our expectations regarding our sources of cash and ability to meet our normal operating and capital
			expenditures in the Liquidity and Capital Resources section, based in part on the design of our business model;
Management’s Discussion and Analysis
December 31, 2019	M-41	Stantec Inc.

• Our expectations regarding organic net revenue growth and gross margin improvement in 2020; and
• Our expectations with respect to pension plan contributions, the amount and time thereof.
These describe the management expectations and targets by which we measure our success and assist our shareholders in understanding our financial position as at and for the periods ended on the dates presented in this MD&A. Readers are cautioned that this information may not be appropriate for other purposes. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that predictions, forecasts, conclusions, projections, and other forward-looking statements will not prove to be accurate. We caution readers of this MD&A not to place undue reliance on our forward-looking statements since a number of factors could cause actual future results, conditions, actions, or events to differ materially from the targets, expectations, estimates, or intentions expressed in these forward-looking statements.
Future outcomes relating to forward-looking statements may be influenced by many factors and material risks, including the risks described in the Risk Factors section of this MD&A.
Assumptions
In determining our forward-looking statements, we consider material factors including assumptions about the performance of the Canadian, US, and global economies in 2020 and their effect on our business. The factors and assumptions we used about the performance of Canadian, US, and Global economies in 2020 in determining our annual targets and our outlook for 2020 are listed in the Outlook section of this MD&A. In addition, our budget is a key input for making certain forward-looking statements and certain key assumptions underlying our budget. These key factors and assumptions are set forth below:
• Management assumed the Canadian dollar would be relatively stable compared to 2019 and used an
			average value of US$0.77, £0.61 GBP in 2020.
•			In Canada, the overnight interest rate target—currently at 1.75%—is expected to rise over time, but not necessarily in 2020 and the US Federal Reserve is expected to maintain the current federal funds rate in 2020. Therefore, management assumed that the average interest rates will remain consistent in 2020.
• To establish our effective income tax rate, management considered the tax rates in place as of
			December 31, 2019, for the countries we operate in.
• The Canadian unemployment rate—5.9% in November 2019—is not expected to change significantly in
			2020. In the United States, the unemployment rate—3.5% for November 2019 is at lowest level in fifty years—is expected to stay at historical lows through 2020.
• In the United States, housing activity is forecasted to increase in 2020. The expected seasonally
			adjusted annual rate of total housing starts for 2020 is 1,286,000, up from the expected 1,243,000 total housing starts in 2019.
			In Canada, the Canadian Mortgage and Housing Corporation suggested that the number of total housing starts will increase. Expected new housing starts will fall between 194,000 and 204,300 units in 2020, a 3-4% increase from forecasted housing starts in 2019.
•			The Architecture Billings Index (ABI) from the American Institute of Architects was 52.0 in October 2019, suggesting growing demand for design services. We anticipate demand to remain stable throughout 2020.
• Prices for precious metals are expected to increase in 2020 compared to 2019. However, other
			metals, minerals and crude oil prices are forecasted to decline in 2020.
Management’s Discussion and Analysis
December 31, 2019	M-42	Stantec Inc.

• Management expects to support our targeted level of growth using a combination of cash flows from
			operations and borrowings.
The preceding list of factors is not exhaustive. Investors and the public should carefully consider these factors, other uncertainties and potential events, and the inherent uncertainty of forward-looking statements when relying on these statements to make decisions with respect to our Company. The forward-looking statements contained herein represent our expectations as of February 26, 2020, and, accordingly, are subject to change after such date. Except as may be required by law, we do not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time. In the case of the ranges of expected performance for fiscal year 2020, it is our current practice to evaluate and, where we deem appropriate, to provide updates. However, subject to legal requirements, we may change this practice at any time at our sole discretion.
Management’s Discussion and Analysis
December 31, 2019	M-43	Stantec Inc.

Consolidated Financial Statements For the Years Ended December 31, 2019, and 2018

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 wereprepared by management in accordance with International Financial Reporting Standards. Where alternativeaccounting 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. Certainamounts in the financial statements are based on estimates and judgments relating to matters not concluded byyear-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 isconsistent with the information in the consolidated financial statements.
The board of directors is responsible for ensuring that management fulfills its responsibilities and for providing finalapproval of the annual consolidated financial statements. The board has appointed an Audit and Risk Committeecomprising four directors; none are officers or employees of the Company or its subsidiaries. The Audit and RiskCommittee meets at least four times each year to discharge its responsibilities under a written mandate from theboard of directors. The Audit and Risk Committee meets with management and with the external auditors to satisfyitself that it is properly discharging its responsibilities; reviews the consolidated financial statements, MD&A, and theReport of Independent Registered Public Accounting Firm; and examines other auditing and accounting matters.The Audit and Risk Committee has reviewed the audited consolidated financial statements with management anddiscussed the quality of the accounting principles as applied and the significant judgments affecting the consolidatedfinancial 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 financialstatements and MD&A have been reviewed by the Audit and Risk Committee and approved by the board of directorsof Stantec Inc.
The consolidated financial statements have been examined by the shareholders’ auditors, Ernst & Young LLP,Chartered Professional Accountants. The Report of Independent Registered Public Accounting Firm outlines the nature of their examination and their opinion on the consolidated financial statements of the Company. Theexternal auditors have full and unrestricted access to the Audit and Risk Committee with or without managementbeing present.
Gord JohnstonTheresa Jang
President & CEO	Executive Vice President & CFO
February 26, 2020	February 26, 2020
	F-1	Stantec Inc	.

Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining an adequate system of internal control over financialreporting. The Company’s internal control over financial reporting is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with International Financial Reporting Standards (IFRS). Management conducted anevaluation of the effectiveness of the system of internal control over financial reporting based on the framework inInternal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the TreadwayCommission (2013 framework).
The Company accounts for joint operations in accordance with IFRS. The Company's significant joint operations are:West, a Joint Venture, and Starr ll, a Joint Venture. Once the financial information is obtained from these jointoperations, it falls within the scope of the Company’s internal controls framework. Management’s conclusionregarding the effectiveness of internal controls does not extend to the internal controls at the transactional level ofthese joint operations. The 2019 consolidated financial statements of the Company includes $13.9 million and $0.4million of total assets and net assets, respectively, as at December 31, 2019, and $60.8 million and $0.7 million ofrevenues and net income, respectively, for the year then ended related to these joint operations.
Management has assessed the effectiveness of the Company’s internal control over financial reporting, as atDecember 31, 2019, and has concluded that such internal control over financial reporting is effective. Ernst & Young LLP, which has audited the consolidated financial statements of the Company for the year ended December31, 2019, has also issued a report on the effectiveness of the Company’s internal control over financial reporting.
As permitted by published guidance of the U.S. Securities and Exchange Commission (SEC), management’sevaluation of and conclusions on the effectiveness of internal control over financial reporting did not include theinternal controls of Wood & Grieve Engineers, which are included in the Company’s 2019 consolidated financialstatements. The aggregate assets were $36.4 million, representing 0.8% of the Company’s total assets as atDecember 31, 2019. The gross revenue earned from their dates of acquisition to December 31, 2019, constituted1.7% of the Company’s gross revenue for the year ended December 31, 2019.
Gord JohnstonTheresa Jang
President & CEO	Executive Vice President & CFO
February 26, 2020	February 26, 2020
		F-2	Stantec Inc	.

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Stantec Inc.:
Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated statements of financial position of Stantec Inc. (the “Company”) as of December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income,shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2019, and therelated notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidatedfinancial statements present fairly, in all material respects, the financial position of the Company at December 31,2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period endedDecember 31, 2019, in conformity with International Financial Reporting Standards (IFRSs) as issued by theInternational Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2019, basedon criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of SponsoringOrganizations of the Treadway Commission (“COSO”), and our report dated February 26, 2020 expressed anunqualified opinion thereon.
Adoption of IFRS 16
As discussed in Note 6 to the consolidated financial statements, the Company changed its method of accounting forleases in 2019 due to the adoption of IFRS 16, Leases.
Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility isto express an opinion on the Company’s consolidated financial statements based on our audits. We are a publicaccounting firm registered with the PCAOB and are required to be independent with respect to the Company inaccordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities andExchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free ofmaterial misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risksof material misstatement of the consolidated financial statements, whether due to error or fraud, and performingprocedures that respond to those risks. Such procedures included examining, on a test basis, evidence regardingthe amounts and disclosures in the consolidated financial statements. Our audits also included evaluating theaccounting principles used and significant estimates made by management, as well as evaluating the overallpresentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit MatterThe critical audit matter communicated below is a matter arising from the current period audit of the financialstatements that was communicated or required to be communicated to the Audit and Risk Committee - and that:(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especiallychallenging, subjective or complex judgments. The communication of the critical audit matter does not alter in anyway our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating thecritical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosuresto which it relates.
	F-3	Stantec Inc	.

Goodwill impairment assessment in respect of Global group of cash generating units ("CGUs")
	Description ofthe Matter	A goodwill impairment charge is required when the carrying value of a group of CGUs exceeds itsrecoverable amount. The recoverable amount is estimated using the fair value less costs of disposalapproach. As described in management’s goodwill disclosure in Note 13 to the consolidated financialstatements, the recoverable amount of the Global group of CGUs exceeded its carrying amount by$37.6 million (goodwill allocated of $337.6 million) as at October 1, 2019.
We identified the estimation of the recoverable amount of the Global group of CGUs as a criticalaudit matter because it is contingent on future cash flows and there is a risk that, if these cash flowsdo not meet the Company’s expectations, the goodwill might be impaired. Auditing the impairmentanalysis was complex due to the significant estimation uncertainty and judgement applied bymanagement in determining the recoverable amount. The significant estimation uncertainty wasprimarily due to the subjective nature of the underlying key assumptions and the significant effectchanges in these assumptions would have on the recoverable amount. The significant assumptionsused to estimate the recoverable amount included discount rates and certain forward-lookingassumptions, such as revenue growth and operating margin rates, that could be affected by futureeconomic and market conditions.
	How WeAddressedthe Matter inOur Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of theCompany’s controls relating to the Company’s determination of the recoverable amount of the Globalgroup of CGUs, including controls over management’s review of the significant assumptionsdescribed above.
To test the recoverable amount of the Global group of CGUs, we performed audit procedures thatincluded, among others, assessing management’s methodologies, testing the significantassumptions discussed above and the underlying data used by the Company in its analysis. Wecompared forward-looking assumptions to historical financial information, and we evaluated whetherchanges to the significant assumptions would impact the impairment conclusion. We assessed thediscount rates used, with the assistance of our valuation specialists. In addition, we testedmanagement’s reconciliation of the fair value of the reporting units to the market capitalization of the Company.
	We have served as the Company's auditor since 1993.
	Chartered Professional Accountants
	Edmonton, CanadaFebruary 26, 2020
		F-4	Stantec Inc	.

Report on Internal Control over Financial Reporting
To the Board of Directors and Shareholders of Stantec Inc.:Opinion on Internal Control over Financial ReportingWe have audited Stantec Inc.’s (the “Company”) internal control over financial reporting as of December 31, 2019,based on criteria established in Internal Control—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Stantec Inc.maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019 basedon the COSO criteria.
As indicated in the accompanying Management’s Annual Report on Internal Control over Financial Reporting,management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did notinclude the internal controls of Wood & Grieve Engineers Ltd. (the “Acquisition”), which is included in the 2019consolidated financial statements of the Company and constituted 0.8% of total assets, as of December 31, 2019and 1.7% of revenues for the year then ended. In addition, it did not include the internal controls of West, a JointVenture, and Starr II, a Joint Venture (“Joint Operations”) which are included in the 2019 consolidated financialstatements of the Company and constituted $13.9 million and $0.4 million total and net assets, respectively as ofDecember 31, 2019, and $60.8 million and $0.7 million of revenues and net income, for the year then ended. Ouraudit of internal control over financial reporting of the Company also did not include an evaluation of the internalcontrol over financial reporting of the Acquisition and Joint Operations.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States) (PCAOB), the consolidated financial statements of Stantec Inc., which comprise the consolidatedstatements of financial position as at December 31, 2019 and 2018, the consolidated statements of income,comprehensive income, shareholders’ equity and cash flows for the years ended December 31, 2019 and 2018, and the related notes, and our report dated February 26, 2020 expressed an unqualified opinion thereon.
Basis for Opinion
Stantec Inc.’s management is responsible for maintaining effective internal control over financial reporting and for itsassessment of the effectiveness of internal control over financial reporting included in the accompanyingManagement Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinionon Stantec Inc.’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to Stantec Inc. in accordance with theU.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commissionand the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether effective internal control over financial reportingwas maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that amaterial weakness exists, testing and evaluating the design and operating effectiveness of internal control based onthe assessed risk, and performing such other procedures as we considered necessary in the circumstances. Webelieve that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A company’s internal control over financial reportingincludes 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 reasonableassurance that transactions are recorded as necessary to permit preparation of financial statements in accordancewith generally accepted accounting principles, and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’sassets that could have a material effect on the financial statements.
	F-5	Stantec Inc	.

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 maybecome inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.
Chartered Professional Accountants
Edmonton, CanadaFebruary 26, 2020
	F-6	Stantec Inc	.

Consolidated Statements of Financial PositionAs at December 31
	Mc 31312019	2018
(In millions of Canadian dollars)Notes	$	$
ASSETSCurrentCash and deposits
	9			223.5	185.2
Trade and other receivables	10			817.7	878.1
Unbilled receivables				374.2	384.6
Contract assets				67.5	59.7
Income taxes recoverable				36.2	47.9
Prepaid expenses				42.9	56.8
Other assets	15			18.1	23.2
Total current assets					1,580.1	1,635.5
Non-currentProperty and equipment
	11			286.5	289.4
Lease assets			6,12	558.5	-
Goodwill	13				1,651.8	1,621.2
Intangible assets	14			219.6	247.7
Investments in joint ventures and associates				8.8	9.4
Net employee defined benefit asset	19			26.0	10.0
Deferred tax assets	27			31.9	21.2
Other assets	15			198.3	175.5
Total assets					4,561.5	4,009.9
LIABILITIES AND EQUITYCurrentBank indebtedness
	9			19.5	-
Trade and other payables	16			576.4	567.2
Lease liabilities			6,12	99.9	-
Deferred revenue				199.2	174.4
Income taxes payable			6,20	28.4	37.9
Long-term debt	17			46.9	48.5
Provisions	18			23.9	42.4
Other liabilities	20			12.1	23.2
Total current liabilities					1,006.3	893.6
Non-currentLease liabilities
			6,12	589.0	-
Income taxes payable				11.6	15.9
Long-term debt	17			814.0	885.2
Provisions	18			89.1	78.2
Net employee defined benefit liability	19			85.2	68.6
Deferred tax liabilities	27			73.2	54.3
Other liabilities			6,20	16.0	105.4
Total liabilities					2,684.4	2,101.2
Shareholders’ equityShare capital
	23			879.8	867.8
Contributed surplus	23			23.9	24.8
Retained earnings	6			917.7	851.2
Accumulated other comprehensive income				54.1	163.1
Total shareholders’ equity					1,875.5	1,906.9
Non-controlling interests				1.6	1.8
Total liabilities and equity					4,561.5	4,009.9
See accompanying notes On behalf of Stantec Inc.’s Board of Directors
Douglas Ammerman, Director						Gord Johnston, Director
							F-7	Stantec Inc	.

Consolidated Statements of Income
Years ended December 31
		2019	2018
(In millions of Canadian dollars, except per share amounts)Notes	$	$
			(note 2)
Continuing operations
Gross revenue		4,827.3	4,283.8
Less subconsultant and other direct expenses		1,116.0	928.6
Net revenue		3,711.3	3,355.2
Direct payroll costs	30	1,702.9	1,540.0
Gross margin		2,008.4	1,815.2
Administrative and marketing expenses	6,23,30,36	1,433.6	1,438.2
Depreciation of property and equipment	11	58.2	50.1
Depreciation of lease assets	6,12	115.8	-
Amortization of intangible assets	14	66.9	65.0
Net interest expense	28	69.6	28.7
Other net finance expense	28	3.1	5.7
Share of income from joint ventures and associates		(0.8)	(1.6)
Foreign exchange loss		4.7	2.7
Other (income) expense	31	(8.2)	0.1
Income before income taxes and discontinued operations		265.5	226.3
Income taxesCurrent
	27	56.0	54.5
Deferred	27	15.1	0.5
Total income taxes		71.1	55.0
Net income for the year from continuing operations		194.4	171.3
Discontinued operationsNet loss from discontinued operations, net of tax
	8	-	(123.9)
Net income for the year		194.4	47.4
Earnings (loss) per share, basic and dilutedContinuing operations
	32	1.74	1.51
Discontinued operations	32	-	(1.09)
Total basic and diluted earnings per share		1.74	0.42
See accompanying notes
				F-8	Stantec Inc	.

Consolidated Statements of Comprehensive Income Years ended December 31
	2019	2018
(In millions of Canadian dollars)Notes	$	$
Net income for the year	194.4	47.4
Other comprehensive (loss) income
Items that may be reclassified to net income in subsequent periods:
Exchange differences on translation of foreign operations	(91.4)	124.1
Realized exchange difference on disposition of a subsidiary	-	0.1
Net unrealized gain on FVOCI financial assets	-	1.1
Unrealized loss on interest rate swap			25	(1.1)	-
	(92.5)	125.3
Items not to be reclassified to net income:
Remeasurement loss on net employee defined benefit liability			19	(16.5)	(10.8)
Other comprehensive (loss) income for the year, net of tax	(109.0)	114.5
Total comprehensive income for the year, net of tax	85.4	161.9
See accompanying notes
				F-9	Stantec Inc	.

Consolidated Statements of Shareholders’ Equity
	Shares	Share	Contributed		Accumulated Other
	Outstanding	Capital	Surplus	Retained	Comprehensive
	(note 23)	(note 23)	(note 23)	Earnings	Income (Loss)	Total
(In millions of Canadian dollars, except shares)							#	$				$	$	$	$
Balance, December 31, 2017	113,991,676	878.2						21.5	947.1			49.5	1,896.3
Impact of change in accounting policy,
net of tax of $6.7 for IFRS 9 and 15				(23.8)					(0.9)	(24.7)
Adjusted balance, January 1, 2018	113,991,676	878.2						21.5	923.3			48.6	1,871.6
Net income				47.4		47.4
Other comprehensive income									114.5	114.5
Total comprehensive income				47.4					114.5	161.9
Share options exercised for cash	338,989	6.9				6.9
Share-based compensation expense								5.6	5.6
Shares repurchased under Normal Course
Issuer Bid	(2,470,560)	(19.1)						(0.5)	(57.1)		(76.7)
Reclassification of fair value of share options previously expensed		1.8						(1.8)	-
Dividends declared				(62.4)		(62.4)
Balance, December 31, 2018	111,860,105	867.8						24.8	851.2			163.1	1,906.9
Impact of change in accounting policy,
net of tax of $11.5 (note 6)				(31.2)		(31.2)
Adjusted balance, January 1, 2019	111,860,105	867.8						24.8	820.0			163.1	1,875.7
Net income				194.4		194.4
Other comprehensive loss									(109.0)	(109.0)
Total comprehensive income (loss)				194.4					(109.0)	85.4
Share options exercised for cash	753,583	18.9				18.9
Share-based compensation expense								3.4	3.4
Shares repurchased under Normal Course
Issuer Bid	(1,400,713)	(10.9)						(0.3)	(32.0)		(43.2)
Reclassification of fair value of share options previously expensed		4.0						(4.0)	-
Dividends declared				(64.7)		(64.7)
Balance, December 31, 2019	111,212,975	879.8						23.9	917.7			54.1	1,875.5
See accompanying notes
		F-10							Stantec Inc	.

Consolidated Statements of Cash Flows
Years ended December 31	2019	2018
(In millions of Canadian dollars)Notes	$	$
		(note 2)
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Cash receipts from clients	4,934.2	4,367.6
Cash paid to suppliers	(1,716.9)	(1,706.3)
Cash paid to employees	(2,658.6)	(2,375.3)
Interest received	3.7	2.7
Interest paid	(71.6)	(30.5)
Finance costs paid	(5.7)	(5.5)
Income taxes paid	(47.4)	(59.0)
Income taxes recovered	12.2	11.5
Cash flows from operating activities from continuing operations	449.9	205.2
Cash flows from (used in) operating activities from discontinued operations	2.6	(32.6)
Net cash flows from operating activities	452.5	172.6
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIESBusiness acquisitions, net of cash acquired
			7	(77.1)	(80.2)
Proceeds on leasehold improvements-	10.1
Proceeds on disposition of a subsidiary-	28.8
Cash sold on disposition of subsidiary-	(49.1)
Purchase of intangible assets	(3.6)	(9.4)
Purchase of property and equipment	(56.7)	(124.8)
Other	2.2	3.7
Cash flows used in investing activities from continuing operations	(135.2)	(220.9)
Cash flows used in investing activities from discontinued operations-	(3.2)
Net cash flows used in investing activities	(135.2)	(224.1)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES(Repayment of) proceeds from revolving credit facility
	(80.3)	312.3
Repayment of term loan-	(150.0)
Repayment of notes payable and other long-term debt	(40.8)	(42.3)
Net payment of lease obligations			6,12	(116.7)	-
Proceeds from lease inducements			6,12	50.4	-
Payment of software financing obligations	(12.3)	(14.8)
Repurchase of shares for cancellation			23	(41.2)	(74.7)
Proceeds from issue of share capital	18.9	6.9
Payment of dividends to shareholders			23	(64.0)	(61.3)
Cash flows used in financing activities from continuing operations	(286.0)	(23.9)
Cash flows used in financing activities from discontinued operations-	(0.1)
Net cash flows used in financing activities			33	(286.0)	(24.0)
Foreign exchange (loss) gain on cash held in foreign currency	(12.5)	21.2
Net increase (decrease) in cash and cash equivalents	18.8	(54.3)
Cash and cash equivalents, beginning of the year	185.2	239.5
Cash and cash equivalents, end of the year			9	204.0	185.2
See accompanying notes
				F-11	Stantec Inc	.

Index to the Notes to the Consolidated Financial Statements NotePage
1 Corporate Information	F-13
2 Basis of Preparation	F-13
3 Basis of Consolidation	F-13
4 Summary of Significant Accounting Policies	F-13
5 Significant Accounting Judgments, Estimates, and Assumptions	F-24
6 Recent Accounting Pronouncements and Changes to Accounting Policies	F-27
7 Business Acquisitions	F-30
8 Discontinued Operations	F-32
9 Cash and Cash Equivalents	F-33
10 Trade and Other Receivables	F-33
11 Property and Equipment	F-34
12 Lease Assets and Lease Liabilities	F-35
13 Goodwill	F-36
14 Intangible Assets	F-38
15 Other Assets	F-39
16 Trade and Other Payables	F-40
17 Long-Term Debt	F-40
18 Provisions	F-41
19 Employee Defined Benefit Obligations	F-42
20 Other Liabilities	F-46
21 Commitments	F-46
22 Contingencies and Guarantees	F-46
23 Share Capital	F-47
24 Fair Value Measurements	F-50
25 Financial Instruments	F-51
26 Capital Management	F-53
27 Income Taxes	F-54
28 Net Interest Expense and Other Net Finance Expense	F-56
29 Revenue	F-56
30 Employee Costs from Continuing Operations	F-57
31 Other (Income) Expense	F-58
32 Weighted Average Shares Outstanding	F-58
33 Cash Flow Information	F-58
34 Related-Party Disclosures	F-58
35 Segmented Information	F-60
36 Investment Tax Credits	F-62
37 Events after the Reporting Period	F-62
38 Comparative Figures	F-62
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019		F-12	Stantec Inc.

Notes to the Consolidated Financial Statements
1. Corporate InformationThe consolidated financial statements of Stantec Inc. (the Company) for the year ended December 31, 2019, wereauthorized for issuance in accordance with a resolution of the Company’s board of directors on February 26, 2020.The Company was incorporated under the Canada Business Corporations Act on March 23, 1984. Its shares aretraded on the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) under the symbol STN. TheCompany’s registered office is located at Suite 400, 10220 - 103 Avenue, Edmonton, Alberta. The Company isdomiciled in Canada.
The Company is a provider of comprehensive professional services in the area of infrastructure and facilities forclients in the public and private sectors. The Company’s services include engineering, architecture, interior design,landscape architecture, surveying, environmental sciences, project management, and project economics, from initialproject concept and planning through to design, construction administration, commissioning, maintenance,decommissioning, and remediation.
2. Basis of PreparationThese consolidated financial statements were prepared in accordance with International Financial ReportingStandards (IFRS) as issued by the International Accounting Standards Board (IASB). The accounting policiesadopted in these consolidated financial statements are based on IFRS effective as at December 31, 2019.
The consolidated financial statements have been prepared on a historical cost basis, unless otherwise stated in the significant accounting policies. The consolidated financial statements are presented in Canadian dollars, and all values, including United States dollars, are rounded to the nearest million ($000,000), except when otherwise indicated.
In November 2018, the Company sold its Construction Services business, which was reported as discontinuedoperations, as prescribed by IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
3. Basis of ConsolidationThe consolidated financial statements include the accounts of the Company, its subsidiaries, and its structuredentities as at December 31, 2019.
Subsidiaries and structured entities are fully consolidated from the date of acquisition, which is the date the Company obtains control, and continue to be consolidated until the date that this control ceases. The financialstatements of the subsidiaries and structured entities are prepared as at December 31, 2019 and December 31,2018. All intercompany balances are eliminated.
Joint ventures and associates are accounted for using the equity method, and joint operations are accounted for by the Company recognizing its share of assets, liabilities, revenue, and expenses of the joint operation.
4. Summary of Significant Accounting Policiesa) Cash and cash equivalentsCash and cash equivalents include cash and unrestricted investments, net of bank indebtedness. Unrestrictedinvestments are comprised of short-term bank deposits with a maturity of three months or less.
b) Property and equipmentProperty and equipment are recorded at cost less accumulated depreciation and any impairment losses. Costincludes 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 those parts as individual assets with specific useful lives. All other repair and maintenance costs are recognized in the consolidated statements of income as incurred.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-13	Stantec Inc.

Depreciation is calculated over the assets estimated useful lives on a straight-line basis as follows:
Engineering equipment	5 to 10 years	straight-line
Office equipment	5 to 10 years	straight-line
Leasehold improvements		straight-line over term of lease to a maximum of15 years or the improvement's economic life
Other	5 to 50 years	straight-line
The residual values, useful lives, and methods of depreciation of property and equipment are reviewed at eachfinancial year-end and adjusted prospectively, if appropriate.
c) Intangible assetsIntangible assets acquired separately are measured on initial recognition at cost. Intangible assets acquired in abusiness combination are measured at fair value as at the date of acquisition. Following initial recognition, finite lifeintangible assets are carried at cost less any accumulated amortization and any impairment losses and indefinitelife intangible assets are carried at cost less any impairment loss.
The Company’s intangible assets with finite lives are amortized over their useful economic lives on a straight-linebasis. The amortization period and the amortization method for an intangible asset with a finite useful life arereviewed at least at each financial year-end. Once an intangible asset is fully amortized, the gross carrying amountand related accumulated amortization are removed from the accounts.
The Company also incurs costs for third-party internet-based cloud computing services. These costs are expensedin administrative and marketing expenses over the period of the service agreement when the Company determinesthat it has not obtained control of the software.
Intangible assets acquired from business combinationsThe Company’s policy is to amortize client relationships with finite lives over periods ranging from 10 to 15 years.Contract backlog and finite trademarks are amortized over estimated lives of generally 1 to 3 years. The Companyassigns value to acquired intangibles using the income approach, which involves quantifying the present value of netcash flows attributed to the subject asset. This, in turn, involves estimating the revenues and earnings expected fromthe asset.
d) LeasesFor leases entered into or modified on or after January 1, 2019, a contract is a lease or contains a lease if itconveys the right to control the use of an asset for a time period in exchange for consideration. To identify a lease,the Company (1) considers whether an explicit or implicit asset is specified in the contract and (2) determineswhether the Company obtains substantially all the economic benefits from the use of the underlying asset byassessing numerous factors, including but not limited to substitution rights and the right to determine how and forwhat purpose the asset is used.
At the commencement of a lease, the Company determines the lease term as the non-cancellable period of a lease,together with periods covered by an option to extend or an option to terminate if it is reasonably certain to exercisean extension option or to not exercise a termination option. Management considers all facts and circumstances thatcreate an economic incentive to exercise an extension option or to not exercise a termination option. This judgmentis based on factors such as contract rates compared to market rates, economic reasons, significance of leaseholdimprovements, termination and relocation costs, installation of specialized assets, residual value guarantees, andany sublease term. The Company reassesses this when a significant event or significant change in circumstanceswithin the Company’s control has occurred.
The Company recognizes lease assets and lease liabilities for all leases, except for leases of low-value assets andshort-term leases with a term of 12 months or less. The lease payments associated with those exempted leases arerecognized in administrative and marketing expenses on a straight-line basis over the lease term.
The lease liability is recognized at the commencement date of the lease and is initially measured at the presentvalue of the lease payments that are not paid. The Company elected to not separate non-lease components from
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019		F-14	Stantec Inc.

lease components and to account for the non-lease and lease components as a single lease component. Leasepayments generally include fixed payments less any lease incentives receivable.
The lease liability is discounted using the interest rate implicit in the lease or, if that rate cannot be readilydetermined, the Company’s incremental borrowing rate. The lease liability is subsequently measured at amortizedcost using the effective interest method. The lease liability is remeasured when the expected lease paymentschange as a result of a change in the lease term, a change in the assessment of an option to purchase the leasedasset, changes in the future lease payments as a result of a change in an index or rate used to determine the leasepayments, and changes in estimated payments for residual value guarantees.
The lease asset is recognized at the commencement date of the lease and is initially measured at cost, comprisedof the amount of the initial measurement of the lease liability less any incentives received from the lessor. Added tothe lease asset are any initial direct costs incurred, lease payments made before the commencement date, andestimated restoration costs. The lease asset is subsequently depreciated on a straight-line basis from thecommencement date to the earlier of the end of the useful life of the lease asset or the end of the lease term. Thelease asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of thelease liability.
e) Investments in joint arrangements and associatesEach joint arrangement of the Company is classified as either a joint operation or joint venture based on the rightsand obligations arising from the contractual obligations between the parties to the arrangement. A joint arrangementthat provides the Company with rights to the individual assets and obligations arising from the arrangement isclassified as a joint operation and a joint arrangement that provides the Company with rights to the net assets of thearrangement is classified as a joint venture.
The Company accounts for a joint operation by recognizing its share of assets, liabilities, revenues, and expensesof the joint operation and combining them line by line with similar items in the Company’s consolidated financialstatements.
The Company accounts for a joint venture using the equity method. The Company's share of the after-tax netincome or loss of associates or joint ventures is recorded in the consolidated statements of income. Adjustmentsare made in the Company’s consolidated financial statements to eliminate its share of unrealized gains and lossesresulting from transactions with its associates.
If the financial statements of associates or joint arrangements are prepared for a date that is different from theCompany’s date (due to the timing of finalizing and receiving information), adjustments are made for the effects ofsignificant transactions or events that occur between that date and the date of the Company’s financial statements.When necessary, adjustments are made to bring the accounting policies in line with the Company’s.
f) ProvisionsGeneral Provisions are recognized when the Company has a present legal or constructive obligation as a result of a pastevent, it is probable that an outflow of resources embodying economic benefits will be required to settle theobligation, and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed—for example, under an insurance contract—and when the reimbursement isvirtually certain, the reimbursement is recognized as a separate asset. The expense relating to any provision ispresented in the consolidated statements of income net of any reimbursement. If the effect of the time value ofmoney is significant, provisions are discounted using a current pre-tax rate that reflects, where appropriate, therisks specific to the liability. When discounting is used, the increase in the provision due to the passage of time isrecognized as a finance cost. Management regularly reviews the timing of the outflows of these provisions.
Provision for self-insured liabilitiesThe Company self-insures certain risks related to professional liability, automobile physical damages, andemployment practices liability. The provision for self-insured liabilities includes estimates of the costs of reportedclaims (including potential claims that are probable of being asserted) and is based on assumptions made by
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-15	Stantec Inc.

management and actuarial estimates. The provision for self-insured liabilities does not include unasserted claimswhere assertion by a third party is not probable.
Provisions for claimsProvision for claims include an estimate for costs associated with legal claims covered by third-party insurance. The Company has claims that are not covered by its provisions for self-insured liabilities, including claims that aresubject to exclusions under the Company’s commercial and captive insurance policies. Often, these legal claims are from previous acquisitions and may be indemnified by the acquiree (notes 7 and 15).
Contingent liabilities recognized in a business combinationA contingent liability recognized in a business combination is initially measured at its fair value. Subsequently, it ismeasured as discussed under "General."
g) Foreign currency translationThe Company’s consolidated financial statements are presented in Canadian dollars, which is also the parentCompany’s functional currency. Each entity in the Company determines its own functional currency, and itemsincluded in the financial statements of each entity are measured using that functional currency. The Company ismainly exposed to fluctuations in the US dollar and GBP.
Transactions and balancesTransactions in foreign currencies (those different from an entity’s functional currency) are initially translated intothe functional currency of an entity using the foreign exchange rate at the transaction date. Subsequent to thetransaction date, foreign currency transactions are measured as follows:
	On the consolidated 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 recognized in income in the periodincurred, however, unrealized foreign exchange gains and losses on non-monetary investments are recognizedin other comprehensive income.
	Revenue and expense items are translated at the exchange rate on the transaction date, except for depreciationand amortization, which are translated at historical exchange rates.
Foreign operationsThe 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 financialposition date.
	Revenue and expense items (including depreciation and amortization) are translated at the average rate ofexchange for the month.
The resulting unrealized exchange gains and losses on foreign subsidiaries are recognized in othercomprehensive income (loss).
h) Financial instruments Initial recognition and subsequent measurementFinancial assets (except trade and other receivables and unbilled receivables that do not have a significantfinancing component) are initially recognized at fair value plus directly attributable transaction costs, except forfinancial assets at fair value through profit and loss (FVPL), for which transaction costs are expensed. Trade andother receivables and unbilled receivables that do not have a significant financing component are initially measuredat the transaction price determined in accordance with IFRS 15. Purchases or sales of financial assets areaccounted for at trade dates.
Subsequent measurement of financial assets is at FVPL, amortized cost, or fair value through other comprehensiveincome (FVOCI). The classification is based on two criteria: the Company’s business approach for managing the
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019		F-16	Stantec Inc.

financial assets and whether the instruments’ contractual cash flows represent “solely payments of principal andinterest” on the principal amount outstanding (the SPPI criterion). The business approach considers whether aCompany’s objective is to receive cash flows from holding assets, from selling assets in a portfolio, or a combination of both. The Company reclassifies financial assets only when its business approach for managingthose assets changes.
	Amortized cost: Assets held for collection of contractual cash flows—when they meet the SPPI criterion—aremeasured at amortized cost using the effective interest rate (EIR) method and are subject to impairment. Gainsand losses are recognized in profit or loss when the asset is derecognized, modified, or impaired. Items in thiscategory include cash and cash equivalents, receivables, and certain other financial assets.
	FVOCI: Assets held in a business approach to both collect cash flows and sell the assets—when they meet theSPPI criterion—are measured at FVOCI. Bonds held for self-insured liabilities are included in this category.Changes in the carrying amount are reported in other comprehensive income (except impairments) untildisposed of. At this time, the realized gains and losses are recognized in finance income. Interest income fromthese financial assets is included in interest income using the EIR method. Impairment and foreign exchangegains and losses are reported in income.
	FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL with realized andunrealized gains and losses reported in other income (expense). Equity securities held for self-insured liabilitiesand indemnifications are included in this category.
Financial liabilities are initially recognized at fair value and, in the case of loans and borrowings, net of directlyattributable transaction costs. Subsequent measurement of financial liabilities is at amortized cost using the EIR method. The EIR method discounts estimated future cash payments or receipts through the expected life of a financial instrument, and thereby calculates the amortized cost and subsequently allocates the interest income or expense over the life of the instrument. For trade and other payables and other financial liabilities, realized gains and losses are reported in income. For long-term debt, EIR amortization and realized gains andlosses are recognized in net finance expense. Gains and losses are recognized in profit or loss when the liability isderecognized or modified.
Fair valueAfter initial recognition, the fair values of financial instruments are based on the bid prices in quoted active marketsfor financial assets and on the ask prices for financial liabilities. For financial instruments not traded in activemarkets, fair values are determined using appropriate valuation techniques, which may include recent arm’s lengthmarket transactions, reference to the current fair value of another instrument that is substantially the same, anddiscounted cash flow analysis; however, other valuation models may be used. The fair values of the Company’sderivatives are based on third-party indicators and forecasts. Fair values of cash and cash equivalents, trade andother receivables, and trade and other payables approximate their carrying amounts because of the short-termmaturity of these instruments. The carrying amounts of bank loans approximate their fair values because theapplicable interest rates are 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 financialstatements.
All financial instruments carried at fair value are categorized into one of the following:
	Level 1 – quoted market prices in active markets for identical assets or liabilities at the measurement date.
	Level 2 – observable inputs other than quoted prices included within level 1, such as quoted prices for similarassets and liabilities in active markets, quoted prices for identical assets or liabilities that are not active, or otherinputs that are observable directly or indirectly.
	Level 3 – unobservable inputs for the assets and liabilities that reflect the reporting entity's own assumptions andare not based on observable market data.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019		F-17	Stantec Inc.

When forming estimates, the Company uses the most observable inputs available for valuation purposes. If a fairvalue measurement reflects inputs of different levels within the hierarchy, the financial instrument is categorizedbased on the lowest level of significant input.
When determining fair value, the Company considers the principal or most advantageous market in which it wouldtransact and the assumptions that market participants would use when pricing the asset or liability. For financialinstruments recognized at fair value on a recurring basis, the Company determines whether transfers have occurredbetween levels of the hierarchy by reassessing categorizations at the end of each reporting period.
DerivativesFrom time to time, the Company enters into foreign currency forward contracts to manage risk associated with netoperating assets or liabilities denominated in foreign currencies. The Company’s policy is not to use these derivativesfor trading or speculative purposes.
i) ImpairmentThe carrying amounts of the Company’s assets or group of assets, other than deferred tax assets, are reviewed ateach reporting date to determine whether there is an indication of impairment. An asset may be impaired if objectiveevidence of impairment exists because of one or more events that have occurred after the initial recognition of theasset (referred to as a “loss event”) and if that loss event has an impact on the estimated future cash flows of theasset. When an indication of impairment exists, or annual impairment testing for an asset is required, the asset’srecoverable amount is estimated.
The Company recognizes a loss allowance for expected credit losses (ECLs) on financial assets and contract assetsbased on a 12-month ECL or lifetime ECL. The lifetime ECL (the simplified approach) is applied to trade and otherreceivables, unbilled receivables, contract assets, sublease receivables, and holdbacks. 12-month ECLs arerecorded against all other financial assets, unless credit risk has significantly increased since initial recognition, thenthe ECL is measured at the lifetime ECL. ECLs are based on the difference between the contractual cash flows duein accordance with the contract and all the cash flows that the Company expects to receive.
The loss allowance provision is based on the Company’s historical collection and loss experience and incorporatesforward-looking factors, where appropriate.
When the carrying amount of financial assets or contract assets is reduced through an ECL allowance, the reductionis recognized in administrative and marketing expenses in the consolidated statements of income.
Non-financial assetsFor non-financial assets such as property and equipment, lease assets, goodwill, investments in joint ventures andassociates, and intangible assets, the recoverable amount is the higher of an asset’s or cash-generating unit’s(CGU’s) value in use or its fair value less costs of disposal. The recoverable amount is determined for an individualasset, unless the asset does not generate cash inflows that are largely independent of those from other assets orgroups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset isconsidered impaired and is written down to its recoverable amount. To assess value in use, the estimated future cashflows are discounted to their present value using a pre-tax discount rate that reflects current market assessments ofthe time value of money and the risks specific to the asset. To determine fair value less costs of disposal, anappropriate valuation model is used. The results of these valuation techniques are corroborated by the marketcapitalization of comparable public companies and arm’s length transactions of comparable companies. Impairmentlosses are recognized in the consolidated statements of income in expense categories that are consistent with thenature of the impaired asset.
CGUs are defined based on the smallest identifiable group of assets that generates cash inflows that are largelyindependent of the cash inflows from other assets or groups of assets. Other factors are considered, including howmanagement monitors the entity’s operations. The Company does not monitor goodwill at or allocate goodwill to itsbusiness operating units.
The Company tests intangible assets for recoverability when events or changes in circumstances indicate that theircarrying amount may not be recoverable. To determine indicators of impairment of intangible assets, the Company
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-18	Stantec Inc.

considers external sources of information such as prevailing economic and market conditions and internal sources of information such as the historical and expected financial performance of the intangible assets. If indicators ofimpairment are present, the Company determines recoverability based on an estimate of discounted cash flows,using the higher of either the value in use or the fair value less costs of disposal method. The measurement ofimpairment loss is based on the amount that the carrying amount of an intangible asset exceeds its recoverableamount at the CGU level. As part of the impairment test, the Company updates its future cash flow assumptions andestimates, including factors such as current and future contracts with clients, margins, market conditions, and theuseful lives of the assets.
Goodwill is evaluated for impairment annually (as at October 1) or more frequently if circumstances indicate that animpairment may occur or if a significant acquisition occurs between the annual impairment test date and December31. The Company considers the relationship between its market capitalization and its book value, as well as otherfactors, when reviewing for indicators of impairment. Goodwill is assessed for impairment based on the CGUs orgroup of CGUs to which the goodwill relates. Any potential goodwill impairment is identified by comparing therecoverable amount of a CGU or group of CGUs to its carrying value which includes the allocated goodwill. If therecoverable amount is less than its carrying value, an impairment loss is recognized.
The Company may need to test its goodwill for impairment between its annual test dates if market and economicconditions deteriorate or if volatility in the financial markets causes declines in the Company’s share price, increasesthe weighted average cost of capital, or changes valuation multiples or other inputs to its goodwill assessment. Inaddition, changes in the numerous variables associated with the judgments, assumptions, and estimates made by management in assessing the fair value could cause them to be impaired. Goodwill impairment charges are non-cash charges that could have a material adverse effect on the Company’s consolidated financial statements butin themselves do not have any adverse effect on its liquidity, cash flows from operating activities or debt covenants.
An impairment loss of goodwill is not reversed. For other assets, an impairment loss may be reversed if the estimatesused to determine the recoverable amount have changed. The reversal is limited so that the carrying amount of theasset does not exceed its recoverable amount or the carrying amount that would have been determined, net ofamortization or depreciation, had no impairment loss been recognized for the asset in prior years. The reversal isrecognized in the consolidated statements of income.
j) Revenue recognitionThe Company generates revenue from contracts in which goods or services are typically provided over time.Revenue is measured based on the consideration the Company expects to be entitled to in exchange for providing goods and services, excluding discounts, duty, and taxes collected from clients that are reimbursableto government authorities.
While providing services, the Company incurs certain direct costs for subconsultants and other expenses that arerecoverable directly from clients. The recoverable amounts of these direct costs are included in the Company’s grossrevenue. Since these direct costs can vary significantly from contract to contract, changes in gross revenue may notbe indicative of the Company’s revenue trends. Therefore, the Company also reports net revenue, which is grossrevenue less subconsultants and other direct expenses. The Company assesses its revenue arrangements againstspecific criteria to determine whether it is acting as a principal or an agent. In general, the Company acts as aprincipal in its revenue arrangements because it obtains control of the goods or services before they are provided tothe customer.
Most of the Company’s contracts include a single performance obligation because the promise to transfer theindividual goods or services is not separately identifiable from other promises in the contract and therefore is notdistinct. The Company’s contracts may include multiple goods or services that are accounted for as separateperformance obligations if they are distinct—if a good or service is separately identifiable from other items in thecontract and if a customer can benefit from it. If a contract has multiple performance obligations, the consideration in the contract is allocated to each performance obligation based on the estimated stand-alone selling price.
The Company transfers control of the goods or services it provides to clients over time and therefore recognizesrevenue progressively as the services are performed. Revenue from fixed-fee and variable-fee-with-ceiling contracts,including contracts in which the Company participates through joint arrangements, is recognized based on the
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-19	Stantec Inc.

percentage of completion method where the stage of completion is measured using costs incurred to date as apercentage of total estimated costs for each contract, and the percentage of completion is applied to total estimatedrevenue. When the contract outcome cannot be measured reliably, revenue is recognized only to the extent that theexpenses incurred are eligible to be recovered. Provisions for estimated losses on incomplete contracts are made inthe period that the losses are determined. Revenue from time-and-material contracts without stated ceilings isrecognized as costs are incurred based on the amount that the Company has a right to invoice.
The timing of revenue recognition, billings, and cash collections results in trade and other receivables, holdbacks,unbilled receivables, contract assets, and deferred revenue in the consolidated statements of financial position.Amounts are typically invoiced as work progresses in accordance with agreed-upon contractual terms, either atperiodic intervals or when contractual milestones are achieved. Receivables represent amounts due from customers: trade and other receivables and holdbacks consist of invoiced amounts, and unbilled receivables consist of work in progress that has not yet been invoiced. Contract assets represent unbilled amounts where theright to payment is subject to more than the passage of time and includes performance-based incentives andservices provided ahead of agreed contractual milestones. Contract assets are transferred to receivables when the right to consideration becomes unconditional. Deferred revenue represents amounts that have been invoiced but not yet recognized as revenue, including advance payments and billings in excess of revenue. Deferred revenue is recognized as revenue when (or as) the Company performs under the contract.
Revenue is adjusted for the effects of a significant financing component when the period between the transfer of thepromised goods or services to the customer and payment by the customer exceeds one year. Advance paymentsand holdbacks typically do not result in a significant financing component because the intent is to provide protectionagainst the failure of one party to adequately complete some or all of its obligations under the contract.
Deferred contract costsContract costs are typically expensed as incurred. Contract costs are deferred if the costs are expected to berecoverable and if either of the following criteria is met:
	The costs of obtaining the contract are incremental or explicitly chargeable to the customer.
	The fulfillment costs relate directly to the contract or an anticipated contract and generate or enhance theCompany’s resources that will be used in satisfying performance obligations in the future.
Deferred contract costs are included in other assets in the consolidated statements of financial position andamortized over the period of expected benefit using the percentage of completion applied to estimated revenue.Amortization of deferred contract costs is included in other direct expenses in the consolidated statements of income.
k) Employee benefit plansDefined benefit plansThe Company sponsors defined benefit pension plans covering certain full-time employees and past employees,primarily in the United Kingdom. Benefits are based on final compensation and years of service. Benefit costs(determined separately for each plan using the projected unit credit method) are recognized over the periods thatemployees are expected to render services in return for those benefits.
Remeasurements, comprising actuarial gains and losses and the return on the plan assets (excluding interest), arerecognized immediately in the consolidated statements of financial position with a corresponding debit or credit toother comprehensive income in the period they occur. Remeasurements are not reclassified to net income insubsequent periods.
The calculation of defined benefit obligations is performed at least annually by a qualified actuary, or more often asrequired due to plan amendments, curtailments, or settlements. When the calculation results in a potential asset, therecognized asset is limited to the economic benefits available in the form of any future refunds or of reductions infuture contributions to the plan.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019		F-20	Stantec Inc.

Past service costs are recognized in net income on the earlier of the date of the plan amendment or curtailment andthe date that the Company recognizes related restructuring costs.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, adjusted for benefitand contribution payments during the year. The Company recognizes the following changes in the net defined benefitobligations under administrative and marketing expenses: service costs comprising current service costs, pastservice costs, gains and losses on curtailments and non-routine settlements; net interest expense or income; andadministrative expenses paid directly by the pension plans.
Defined contribution plansThe Company also contributes to group retirement savings plans and an employee share purchase plan. Certainplans are based on employee contribution amounts and subject to maximum limits per employee. The Companyaccounts for defined contributions as an expense in the period the contributions are made.
l) TaxesCurrent income taxCurrent income tax assets and liabilities for current and prior periods are measured at the amount expected to berecovered from or paid to taxation authorities. Tax rates and tax laws used to compute the amounts are thoseenacted or substantively enacted at the reporting date in the countries where the Company operates and generatestaxable income.
Current income tax that relates to items recognized directly in equity is recognized in equity and not in theconsolidated statements of income. Management periodically evaluates positions taken in the tax returns whenapplicable tax regulations are subject to interpretation and then establishes an uncertain tax liability, if appropriate.
Income taxes payable are typically expected to be settled within twelve months of the year-end date. However, theremay be instances where taxes are payable over a longer period. Portions due after a one-year period are classifiedas non-current and are not discounted.
Deferred taxDeferred tax is determined using the liability method for temporary differences at the reporting date between the taxbases 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 deductibletemporary differences and the carryforward of unused tax credits and unused tax losses, to the extent that it isprobable that taxable profit will be available against which the deductible temporary differences and the carryforwardof unused tax credits and unused tax losses can be utilized. Deferred taxes are not recognized for the initialrecognition of goodwill; the initial recognition of assets or liabilities, outside of a business combination, that affectneither accounting nor taxable profit; or the differences relating to investments in associates, subsidiaries, andinterests in joint arrangements to the extent that the reversal can be controlled and it is probable that it will notreverse 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 nolonger probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be used.Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it hasbecome 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 assetis realized or the liability is settled and are based on tax rates and tax laws that have been enacted or substantivelyenacted at the reporting date.
Deferred tax relating to items recognized outside income is also recognized outside income. 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 when a legally enforceable right exists to set off tax assetsagainst tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-21	Stantec Inc.

Uncertain tax positionsIf the Company determines that it is not probable that a taxation authority will accept an uncertain tax treatment,then an uncertain tax liability is recorded using either the most likely amount or the expected value method,depending on which method better predicts the resolution of the circumstances giving rise to the uncertainty.
Uncertain tax liabilities are presented as either income taxes payable or deferred tax liabilities. This depends onwhether the uncertain tax liabilities are in respect of taxable profit for a period or income taxes payable in futureperiods in respect of taxable temporary differences.
Sales taxRevenues, expenses, and assets, except trade receivables, are recognized net of the amount of sales taxrecoverable from or payable to a taxation authority. The net amount of sales tax recoverable from or payable to ataxation authority is included as part of trade receivables or trade payables (as appropriate) in the consolidatedstatements of financial position.
m) Share-based payment transactionsUnder the Company’s share option plan, the board of directors may grant to officers and employees, remuneration inthe form of share-based payment transactions, whereby officers and employees render services as consideration forequity instruments (equity-settled transactions).
Under the Company’s deferred share unit plan, the directors of the board of the Company may receive deferredshare units (DSUs), each of which is equal to one common share. Under the Company’s long-term incentive plan,certain members of the senior leadership teams are granted performance share units (PSUs) or restricted share units (RSUs) that vest and are settled after a three-year period. DSUs, PSUs, and RSUs are settled only in cash(cash-settled transactions).
Equity-settled transactionsThe cost of equity-settled transactions is measured at fair value at the grant date using a Black-Scholes option-pricing model. The cost of equity-settled transactions, together with a corresponding increase in contributedsurplus, is recognized over the period in which the service conditions are fulfilled (the vesting period). Upon theexercise 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. For equity-settled transactions,the cumulative expense recognized at each reporting date until the vesting date reflects the extent to which thevesting period has expired and the Company’s best estimate of the number of equity instruments that will ultimatelyvest. The expense or credit to income for a period represents the movement in cumulative expense recognized as atthe beginning and end of that period and is recorded in administrative and marketing expenses. No expense isrecognized for awards that do not ultimately vest.
Cash-settled transactionsThe cost of cash-settled transactions is measured initially at fair value at the grant date. For DSUs, this fair value isexpensed on issue with the recognition of a corresponding liability through other liabilities. For PSUs and RSUs, thefair value is expensed over the vesting period. These liabilities are remeasured to fair value at each reporting date, upto and including the settlement date, with changes in fair value recognized in administrative and marketing expenses.
n) Earnings per shareBasic earnings per share is computed based on the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed using the treasury stock method, which assumes that thecash that would be received on the exercise of options is applied to purchase shares at the average price duringthe year and that the difference between the number of shares issued on the exercise of options and the number ofshares obtainable under this computation, on a weighted average basis, is added to the number of sharesoutstanding. Antidilutive options are not considered when computing diluted earnings per share.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-22	Stantec Inc.

o) Business combinations and goodwill Business combinations are accounted for using the acquisition method, and the results of operations after therespective dates of acquisition are included in the consolidated statements of income. Acquisition-related costs areexpensed when incurred in administrative and marketing expenses.
The cost of an acquisition is measured as the consideration transferred at fair value at the acquisition date. Anycontingent consideration to be transferred by the Company is recognized at fair value at the acquisition date.Subsequent changes to the fair value of the contingent consideration are recognized in other income.
The consideration paid for acquisitions may be subject to price adjustment clauses included in the purchaseagreements and may extend over a number of years. At each consolidated statement of financial position date, theseprice adjustment clauses are reviewed. This may result in an increase or decrease of the notes payable consideration(recorded on the acquisition date) to reflect either more or less non-cash working capital than was originally recorded.Since these adjustments are a result of facts and circumstances occurring after the acquisition date, they are notconsidered measurement period adjustments.
For some acquisitions, additional payments may be made to the employees of an acquired company that are basedon the employees’ continued service over an agreed time period. These additional payments are not included in thepurchase price but are expensed as compensation when services are provided by the employees.
Goodwill is initially measured at cost, which is the excess of the consideration transferred over the fair value of acompany’s net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value ofthe net assets acquired, the difference is recognized in income.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is notamortized. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisitiondate, allocated to each CGU or group of CGUs that is expected to benefit from the synergies of the combination,irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each CGU or group ofCGUs represents the lowest level at which management monitors the goodwill.
p) DividendsDividends on common shares are recognized in the Company’s consolidated financial statements in the period thedividends are declared by the Company’s board of directors.
q) Non-current assets held for sale and discontinued operationsThe Company classifies non-current assets and disposal groups as held for sale when their carrying amount will berecovered principally through a sale transaction rather than through continuing use and when a sale is consideredhighly probable. These non-current assets and disposal groups are remeasured at the lower of their carrying amountand fair value less costs to sell, and these assets are no longer depreciated. Costs to sell are the incremental costsdirectly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.
Impairment losses on initial classification and subsequent gains or losses on remeasurement are recognized in theconsolidated statements of income as discontinued operations. Assets and liabilities classified as held for sale arepresented separately as current items in the consolidated statements of financial position.
A discontinued operation is a component of the Company’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Company, and (a) represents a separate major line of business orgeographic area of operations; (b) is part of a single coordinated plan to dispose of a separate major line of businessor geographic area of operations; or (c) is a subsidiary acquired exclusively with a view to resale. Classification as adiscontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified asheld for sale.
Discontinued operations are presented separately from continuing operations in the consolidated statements ofincome and consolidated statements of cash flows for all years presented.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-23	Stantec Inc.

5. Significant Accounting Judgments, Estimates, and AssumptionsPreparation 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, as well asthe disclosure of contingent liabilities at the end of the reporting year. However, uncertainty about these assumptionsand estimates could result in outcomes that require a material adjustment to the carrying amount of the asset orliability affected in future periods.
Discussed below are the key management judgments and assumptions concerning the future and other key sourcesof estimation uncertainty at the reporting date that may lead to a material adjustment to the carrying amounts ofassets and liabilities within the next financial year.
a) Revenue recognitionThe Company accounts for its revenue from fixed-fee and variable-fee-with-ceiling contracts using the percentage of completion method, which requires estimates to be made for contract costs and revenues.
Contract costs include direct labor, direct costs for subconsultants, and other expenditures that are recoverabledirectly from clients. Progress on jobs is regularly reviewed by management and estimated costs to complete arerevised based on the information available at the end of each reporting period. Contract cost estimates are based onvarious assumptions that can result in a change to contract profitability from one financial reporting period to another.Assumptions are made about labor productivity, the complexity of the work to be performed, the performance ofsubconsultants, and the accuracy of original bid estimates. Estimating total costs is subjective and requiresmanagement’s best judgments based on the information available at that time.
On an ongoing basis, estimated revenue is updated to reflect the amount of consideration the Company expects tobe entitled to in exchange for providing goods and services. Revenue estimates are affected by various uncertaintiesthat depend on the outcome of future events, including change orders, claims, variable consideration, and contractprovisions for performance-based incentives or penalties.
Change orders are included in estimated revenue when management believes the Company has an enforceable rightto the change order, the amount can be estimated reliably, and realization is highly probable. Claims against otherparties, including subconsultants, are recognized as a reduction in costs using the same criteria. To evaluate thesecriteria, management considers the contractual or legal basis for the change order, the cause of any additional costsincurred, and the history of favorable negotiations for similar amounts. As change orders are not recognized untilhighly probable, it is possible for the Company to have substantial contract costs recognized in one accounting periodand associated revenue or reductions in cost recognized in a later period.
The Company’s contracts may include variable consideration such as revenue based on costs incurred andperformance-based incentives or penalties. Variable consideration is estimated by determining the most likelyamount the Company expects to be entitled to, unless the contract includes a range of possible outcomes forperformance-based amounts. In that case, the expected value is determined using a probability weighting of therange of possible outcomes. Variable consideration, including change orders approved as to scope but unapprovedas to price, is included in estimated revenue to the extent it is highly probable that a significant reversal of cumulativerevenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.Estimates of variable consideration are based on historical experience, anticipated performance, and management’sbest judgment based on the information available at the time.
Consideration in contracts with multiple performance obligations is allocated to the separate performance obligationsbased on estimates of stand-alone selling prices. The primary method used to estimate the stand-alone selling priceis expected cost plus an appropriate margin. To determine the appropriate margin, management considers marginsfor comparable services under similar contracts in similar markets.
Changes in estimates are reflected in the period in which the circumstances that gave rise to the change becameknown and affect the Company’s revenue, unbilled receivables, contract assets, and deferred revenue.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-24	Stantec Inc.

b) Impairment of goodwillImpairment exists when the carrying amount of an asset or CGU or group of CGUs exceeds its recoverable amount, which is the higher of its fair value less costs of disposal or its value in use. Fair value less costs to sell is based on a discounted cash flow model and observable market prices for an arm's length transaction of similar assets, less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cashflow model. The cash flows are derived from budgets over an appropriate number of years and do not includerestructuring activities that the Company is not yet committed to or significant future investments that will enhance theasset’s performance of the CGU or group of CGUs being tested. To arrive at the estimated recoverable amount, theCompany uses estimates of economic and market information, including arm's length transactions for similar assets,growth rates in revenues, estimates of future expected changes in operating margins, cash expenditures, andestimates of capital expenditures.
The Company estimates the recoverable amount by using the fair value less costs of disposal approach. It estimatesfair value using market information and discounted after-tax cash flow projections, which is known as the incomeapproach. The income approach uses a CGUs or group of CGUs projection of estimated operating results anddiscounted cash flows based on a discount rate that reflects current market conditions and the risk of achieving thecash flows. The Company uses cash flow projections covering a five-year period from financial forecasts approved bysenior management. To arrive at cash flow projections, the Company uses estimates of economic and marketinformation over the projection period.
The Company validates its estimate of the fair value of each CGU or group of CGUs under the income approach bycomparing the resulting multiples to multiples derived from comparable public companies and comparable companytransactions. The Company reconciles the total fair value of all CGUs and groups of CGUs with its marketcapitalization to determine whether the sum is reasonable. If the reconciliation indicates a significant differencebetween the external market capitalization and the fair value of the CGUs or groups of CGUs, the Company reviewsand adjusts, if appropriate, the discount rate of the CGUs or groups of CGUs and considers whether the impliedacquisition premium (if any) is reasonable in light of current market conditions. The fair value measurement wascategorized as level 3 in the fair value hierarchy based on the significant inputs in the valuation technique used (note 4h).
c) Business combinationsIn a business combination, the Company may acquire certain assets and assume certain liabilities of an acquired entity. The estimate of fair values for these transactions involves judgment to determine the fair valuesassigned to the tangible and intangible assets (i.e., backlog, client relationships, and trademarks) and the liabilitiesassumed on the acquisition. Determining fair values involves a variety of assumptions, including revenue growthrates, client retention rates, expected operating income, and discount rates.
From time to time, as a result of the timing of acquisitions in relation to the Company’s reporting schedule, certainestimates of fair values of assets and liabilities acquired may not be finalized at the initial time of reporting. Theseestimates are completed after the vendors’ final financial statements have been prepared and accepted by theCompany, after detailed project portfolio reviews are performed, and when the valuations of intangible assets andother assets and liabilities acquired are finalized.
d) LeasesThe Company accounts for leases in accordance with IFRS 16 Leases, which requires judgments to be made indetermining the incremental borrowing rate (IBR).
The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the lease asset in a similar economicenvironment. The Company estimates the incremental borrowing rate based on the lease term, collateralassumptions, and the economic environment in which the lease is denominated.
e) Provision for self-insured liabilities and claimsIn the normal conduct of operations, various legal claims are pending against the Company, alleging, among otherthings, breaches of contract or negligence in connection with the performance of its services. The Company carries
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-25	Stantec Inc.

professional liability insurance, subject to certain deductibles and policy limits, and self-insures certain risks,including professional liability, automobile liability, and employment practices liability. In some cases, the Companymay be subject to claims for which it is only partly insured or completely insured. The accrual for self-insuredliabilities includes estimates of the costs of reported claims and is based on management’s assumptions, includingconsideration of actuarial estimates. These estimates of loss are derived from loss history that is then subjected toactuarial techniques to determine the proposed liability. Estimates of loss may vary from those used in the actuarialprojections and result in a larger loss than estimated. An increase in loss is recognized in the period that the loss isdetermined and increases the Company’s self-insured liabilities and reported expenses.
Damages assessed in connection with and the cost of defending such actions could be substantial and possibly inexcess of policy limits, for which a range of possible outcomes are either not able to be estimated or not expected tobe significant. However, based on advice and information provided by legal counsel, the Company’s previousexperience with the settlement of similar claims, and the results of the annual actuarial review, managementbelieves that the Company has recognized adequate provisions for probable and reasonably estimated liabilitiesassociated with these claims. In addition, management believes that it has appropriate insurance in place torespond to and offset the cost of resolving these claims.
Due to uncertainties in the nature of the Company’s legal claims, such as the range of possible outcomes and theprogress of the litigation, provisions for self-insured liabilities and claims involve estimates. The ultimate cost toresolve these claims may exceed or be less than that recorded in the consolidated financial statements.Management believes that the ultimate cost to resolve these claims will not materially exceed the insurancecoverage or provisions accrued and, therefore, would not have a material adverse effect on the Company’sconsolidated statements of income and financial position.
f) Employee benefit plansThe cost of the defined benefit pension plans and the present value of the pension obligations are determinedseparately for each plan using actuarial valuations. An actuarial valuation involves making various assumptions thatmay differ from actual future developments. These include determining the discount rate, mortality rates, future salary increases, inflation, and future pension increases. Due to the complexities involved in the valuation and itslong-term nature, the defined benefit obligation and cost are highly sensitive to changes in these assumptions,particularly to the discount and mortality rates (although a portion of the pension plans has protection againstimproving mortality rates by utilizing guaranteed annuity rate contracts with an insurance company). All assumptionsare reviewed annually.
In determining the appropriate discount rate, management considers the interest rates of corporate bonds incurrencies consistent with the currencies of the post-employment obligation and that have an ‘AA’ rating or above, as set by an internationally acknowledged rating agency, and extrapolated as needed along the yield curve tocorrespond with the expected term of the benefit obligation.
The mortality rate is based on publicly available information in the actuarial profession’s publications plus any specialgeographical or occupational features of each plan’s membership. Mortality tables tend to change only at intervals inresponse to demographic changes. Future salary increases reflect the current estimate of management. Pensionincreases are calculated based on the terms of the individual plans and estimated future inflation rates.
g) TaxesUncertainties 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, United States, and the United Kingdom. TheCompany’s effective tax rate can change from year to year based on the mix of income among jurisdictions, changesin tax laws in these jurisdictions, and changes in the estimated value of deferred tax assets and liabilities. TheCompany’s income tax expense reflects an estimate of the taxes it expects to pay for the current year, as well as aprovision for changes arising in the values of deferred tax assets and liabilities during the year. The tax value of theseassets and liabilities is impacted by factors such as accounting estimates inherent in these balances, management’sexpectations about future operating results, previous tax audits, and differing interpretations of tax regulations by thetaxable entity and the responsible tax authorities. Differences in interpretation may arise for a wide variety of issues,
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-26	Stantec Inc.

depending on the conditions prevailing in the respective legal entity’s domicile. Management regularly assesses thelikelihood of recovering value from deferred tax assets, such as loss carryforwards, as well as from deferred taxdepreciation of capital assets, and adjusts the tax provision accordingly.
Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will beavailable against which the losses can be utilized. Significant management judgment is required to determine theamount 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. If estimates change, the Company may be required to recognize anadjustment to its deferred income tax asset or liability and income tax expense.
6. Recent Accounting Pronouncements and Changes to Accounting Policiesa) LeasesEffective January 1, 2019, the Company adopted IFRS 16 Leases (IFRS 16) using the modified retrospectiveapproach. The new standard requires a lessee to recognize a liability to make lease payments (the lease liabilities)and an asset to recognize the right to use the underlying asset during the lease term (the lease assets) in theconsolidated statement of financial position.
The Company recognized the after-tax cumulative effect of initially applying IFRS 16 as an adjustment to opening retained earnings at January 1, 2019. Comparative information has not been restated and continues to be reported under IAS 17 Leases (IAS 17) and IFRIC 4 Determining Whether an Arrangement Contains a Lease(IFRIC 4).
The Company used the practical expedient not to reassess whether a contract is or contains a lease at January 1, 2019. Instead, the Company applied IFRS 16 only to contracts previously identified as leases under IAS 17 and IFRIC 4.
The Company also used the following practical expedients to account for leases at January 1, 2019:
	Applied recognition exemptions for operating leases when the underlying asset was of low value or the lease term ends within 12 months. The lease payments associated with these leases are recognized as an expense in administrative and marketing expenses.
	Applied a single discount rate to a portfolio of leases with similar characteristics.
	Relied on the Company’s assessment of whether leases are onerous immediately before January 1, 2019and adjusted the lease asset by the amount of any provision for onerous leases previously recognized in theconsolidated statement of financial position.
	Excluded initial direct costs when measuring the lease asset.
	Used hindsight to determine the lease term when the contract contained options to extend or terminate the lease.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019		F-27	Stantec Inc.

Quantitative impact of significant changes The significant impact on the Company’s consolidated statement of financial position at January 1, 2019, after theadoption of IFRS 16 is as follows:
	January 1, 2019
		After IFRS 16	Before IFRS 16 Increase (Decrease)
			$	$	$
CurrentTrade and other receivables
			828.1	878.1	(50.0)
Prepaid expenses			43.9	56.8	(12.9)
Other assets			24.3	23.2	1.1
Non-currentLease assets
			561.8	-	561.8
Intangible assets			242.0	247.7	(5.7)
Other assets			178.2	175.5	2.7
Total increase in assets					497.0
CurrentTrade and other payables
			566.9	567.2	(0.3)
Lease liabilities			44.8	-	44.8
Provisions			41.7	42.4	(0.7)
Other liabilities			5.0	23.2	(18.2)
Non-currentLease liabilities
			600.2	-	600.2
Provisions			86.6	78.2	8.4
Deferred tax liabilities			42.8	54.3	(11.5)
Other liabilities			10.9	105.4	(94.5)
Shareholders' equityRetained earnings
			820.0	851.2	(31.2)
Total increase in liabilities and equity					497.0
For leases previously classified as operating leases, lease liabilities were measured at the present value of theremaining lease payments, discounted using the Company’s weighted-average incremental borrowing rate, andcalculated in accordance with IFRS 16, at January 1, 2019, of 4.6%. Associated lease assets for certain buildingleases, elected on a lease-by-lease basis, were measured retrospectively as though IFRS 16 had been applied sincethe commencement date. Other lease assets were measured at the amount equal to the lease liabilities. The leaseassets were adjusted by the amount of any prepaid rent, lease inducement benefits, or acquisition lease advantagesor disadvantages relating to that lease and recognized in the consolidated statement of financial position as atDecember 31, 2018.
On adoption of IFRS 16 at January 1, 2019, lease inducement benefits and lease disadvantages of $112.7 atDecember 31, 2018, were reclassified from other liabilities to lease assets. The provision for onerous leases(consisting of lease exit liabilities and sublease losses) recognized at December 31, 2018, was also reclassed toreduce lease asset balances. The Company did not reclassify the provision for onerous leases that were consideredto be short-term.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019						F-28	Stantec Inc.

The lease liabilities as at January 1, 2019 can be reconciled to the total minimum lease payments disclosed in Note20 of the Company’s annual consolidated financial statements as of December 31, 2018, as follows:
	January 1, 2019
		$
Total minimum lease payments disclosed as at December 31, 2018		902.5
Commitments relating to short-term leases		(15.3)
Commitments relating to leases of low-value assets		(6.3)
Extension and termination options reasonably certain to be exercised		7.1
Payments relating to fixed non-lease components		13.0
Commitments relating to leases not commenced but committed		(54.4)
Lease inducements receivable		(58.1)
Undiscounted lease payments		788.5
Discount effect at January 1, 2019		(143.5)
Lease liabilities recognized at January 1, 2019		645.0
b) Other recent adoptionsThe following amendments and interpretations have been adopted by the Company effective January 1, 2019. The adoption of these amendments did not have a material impact on the financial position or performance of the Company.
			In June 2017, the IFRIC issued IFRIC 23 Uncertainty Over Income Tax Treatments (IFRIC 23). Thisinterpretation addresses how to reflect the effects of uncertainty in accounting for income tax. It does not applyto taxes outside of the scope of IAS 12 Income Taxes (IAS 12), such as excise taxes. When there isuncertainty over income tax treatments under IAS 12, IFRIC 23 is applied to determine taxable profit (tax loss),tax bases, unused tax losses, unused tax credits, and tax rates. On adoption of IFRIC 23 on January 1, 2019,excise taxes payable of $7.3 was reclassified from uncertain tax liabilities to other liabilities.
			In October 2017, the IASB issued Prepayment Features with Negative Compensation (Amendments to IFRS 9). The amendments address concerns about how IFRS 9 Financial Instruments classifies prepayablefinancial assets and clarifies accounting for financial liabilities following a modification.
			In October 2017, the IASB issued Long-term Interest in Associates and Joint Ventures (Amendments to IAS 28). The amendments clarify that an entity applies IFRS 9 to long-term interests in an associate or jointventure that forms part of a net investment in the associate or joint venture but to which the equity method isnot applied.
			In December 2017, the IASB issued Annual Improvements (2015-2017 Cycle) to make necessary but non-urgent amendments to IFRS 3 Business Combinations, IFRS 11 Joint Arrangements, IAS 12 IncomeTaxes, and IAS 23 Borrowing Costs.
			In February 2018, the IASB issued amendments to IAS 19 Employee Benefits, which requires entities touse updated actuarial assumptions to determine current service cost and net interest when planamendments, curtailments, or settlements occur during an annual reporting period.
In September 2019, the IFRS Interpretations Committee, acting on a request for interpretation, concluded that thepresentation requirements in IAS 1 Presentation of Financial Statements apply to uncertain tax liabilities or assetsrecognized under IFRIC 23 (the Decision). An entity is required to present uncertain tax liabilities as current taxliabilities or deferred tax liabilities, and uncertain tax assets as current tax assets or deferred tax assets. Prior toSeptember 30, 2019, the Company classified these amounts as other liabilities. As a result of the Decision, theCompany has presented uncertain tax liabilities of $25.9 as income taxes payable at December 31, 2019. Theimpact of the Decision was also applied retrospectively to the December 31, 2018 consolidated statement offinancial position. Further, the amount of $35.0 as of December 31, 2018 has been reclassified from non-current to current liabilities.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019				F-29	Stantec Inc.

c) Future adoptionsListed below are the standards, amendments, and interpretations that the Company reasonably expects to beapplicable at a future date and intends to adopt when they become effective. The Company is currently consideringthe impact of adopting these standards, amendments, and interpretations on its consolidated financial statementsand cannot reasonably estimate the effect at this time, unless specifically mentioned below.
Interest Rate Benchmark (IBOR) ReformIn September 2019, the IASB issued Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39, and IFRS 7).The amendments provide temporary relief during the period of uncertainty for companies that have hedges that areexpected to be impacted by the interest rate benchmark reform and provide additional disclosure requirements.These amendments are effective January 1, 2020, with earlier application permitted. The Company is evaluating theimpact as it relates to the interest rate swap (note 25).
Other future adoptions
	In March 2018, the IASB issued the revised Conceptual Framework for Financial Reporting, which includes revised definitions of an asset and a liability as well as new guidance onmeasurement and derecognition, presentation, and disclosure. The amendments have aneffective date of January 1, 2020, and apply when companies that use the framework to developaccounting policies when no IFRS applies to a transaction or when a standard allows a choice ofaccounting policy.
	In October 2018, the IASB issued the revised Definition of a Business (Amendments to IFRS 3).The amendments clarify the definition of a business with the objective of assisting entities todetermine whether a transaction should be accounted for as a business combination or as anasset acquisition. The amendments are effective for business combinations where the acquisitiondate is on or after the beginning of the first annual reporting period beginning on or after January1, 2020, with earlier application permitted.
	In October 2018, the IASB issued the Definition of Material (Amendments to IAS 1 and IAS 8). Theamendments clarify the definition of material to align the definition used in the ConceptualFramework for Financial Reporting and the IFRS standards. The amendments are effective forannual reporting periods beginning on or after January 1, 2020, with earlier application permitted.
	In January 2020, the IASB issued Classification of Liabilities as Current or Non-current (Amendments to IAS 1). The amendments aim to promote consistency in applying the requirements by helpingcompanies determine whether, in the statement of financial position, debt and other liabilities with anuncertain settlement date should be classified as current (due or potentially due to be settled within oneyear) or non-current. The amendments include clarifying the classification requirements for debt acompany might settle by converting it into equity. The amendments are effective for annual reportingperiods beginning on or after January 1, 2022, with earlier application permitted.
7. Business AcquisitionsAcquisitions in 2018During 2018, the Company acquired all the shares and business of ESI Limited (ESI), Traffic Design Group Limited(TDG), Norwest Corporation (NWC), and Cegertec Experts Conseils Inc. (Cegertec); acquired certain assets andliabilities of Occam Engineers Inc. (OEI) and True Grit Engineering Limited (TGE); and acquired all the partnershipinterests and business of Peter Brett Associates LLP and the shares and business of PBA International Limited.
Acquisitions in 2019On March 1, 2019, the Company acquired all the shares and business of Wood & Grieve Engineers (WGE) for cashconsideration and notes payable. WGE, based in Perth, Australia, enhances the Company's Global group of cashgenerating units (CGUs) and has expertise in structural, mechanical, electrical, plumbing, and hydraulic engineering.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019		F-30	Stantec Inc.

The preliminary fair values of the net assets recognized in the Company's consolidated financial statements werebased on management's best estimates of the acquired identifiable assets and liabilities at the acquisition dates.Management finalized the fair value assessments of assets and liabilities acquired from NWC, Cegertec, TGE, Peter Brett Associates LLP, PBA International Limited, and WGE in 2019 and ESI, OEI, and TDG in 2018. Nosignificant measurement period adjustments were recorded during the year ended December 31, 2019.
Aggregate consideration for assets acquired and liabilities assumedDetails of the aggregate consideration transferred and the fair value of the identifiable assets and liabilities acquiredat the date of acquisition are as follows:
For the acquisition completed year to date	Total
		Notes	$
Cash consideration	82.8
Notes payable	52.4
Consideration	135.2
Assets and liabilities acquired Cash acquired
	5.7
Non-cash working capital Trade receivables
	19.3
Unbilled receivables	2.7
Trade and other payables	(9.5)
Lease liabilities		12	(3.3)
Deferred revenue	(4.6)
Other non-cash working capital	0.7
Property and equipment		11	5.8
Lease assets		12	19.4
Intangible assets		14	41.4
Deferred tax assets		27	3.9
Lease liabilities		12	(15.8)
Long-term debt			(4.2)
Provisions		18	(1.0)
Net employee defined benefit liability	(1.9)
Deferred tax liabilities		27	(13.5)
Total identifiable net assets at fair value	45.1
Goodwill arising on acquisition		13	90.1
Consideration	135.2
Trade receivables, unbilled receivables, and deferred revenue are recognized at fair value at the time of acquisition,and their fair value approximated their net carrying value.
The Company measured the acquired lease liabilities using the present value of the remaining lease payments at the date of acquisition as if the acquired leases were new leases at the acquisition date. The lease assets weremeasured at an amount equal to the lease liabilities and adjusted to reflect the favorable/unfavorable terms of thelease relative to market terms.
Goodwill consists of the value of expected synergies arising from an acquisition, the expertise and reputation of theassembled workforce acquired, and the geographic location of the acquiree. The goodwill is not tax deductible.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019				F-31	Stantec Inc.

The fair values of provisions are determined at the acquisition date and relate to claims that are subject to legalarbitration. For WGE, the Company assumed $1.0 in provisions.
At December 31, 2019, provisions for claims outstanding relating to all prior acquisitions were $8.5, based on theirexpected probable outcome. Certain of these claims are indemnified by the acquiree.
Gross revenue earned in 2019 since WGE's acquisition date is approximately $83.5. The Company integrates theoperations and systems of acquired entities shortly after the acquisition date; therefore, it is impracticable to disclosethe acquiree’s earnings in its consolidated financial statements since the acquisition date.
If the business combination of WGE had taken place at the beginning of 2019, gross revenue from continuingoperations for 2019 would have been $4,844.8.
Consideration paid and outstandingDetails of the consideration paid for current and past acquisitions are as follows:
	December 31
		2019
		$
Cash consideration (net of cash acquired)		77.1
Payments on notes payable from previous acquisitions		36.5
Total net cash paid		113.6
Total notes payable and adjustments to these obligations are as follows:
	December 31
		2019
		$
Balance, beginning of the year		76.1
Additions for acquisitions in the year		52.4
Other adjustments		(2.2)
Payments		(36.5)
Interest		1.4
Impact of foreign exchange		(3.2)
Total notes payable		88.0
8. Discontinued Operations On November 2, 2018, the Company completed the sale of its Construction Services reportable segment, reported as discontinued operations in these consolidated financial statements for all years presented as prescribed byIFRS 5. In the first quarter of 2019, management and the purchaser completed their review of the closing financial statements, which resulted in an immaterial settlement adjustment.
In the fourth quarter of 2019, the Company entered into settlement agreements to release its obligations from theongoing waste-to-energy project. The agreements took effect in the fourth quarter of 2019 for the engineering,procurement, and construction component and take effect in the first quarter of 2020 for the operation andmaintenance component of the project.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019			F-32	Stantec Inc.

The results of discontinued operations are summarized as follows:	For the year ended
	December 31
	2019	2018
			$	$
Revenue	9.7	884.4
Expenses	(10.8)	(953.8)
Impairment of goodwill (note 13)			-	(53.0)
Loss from operating activities, before income taxes	(1.1)	(122.4)
Income taxes on operating activities	0.3	10.8
Loss from operating activities, net of income taxes	(0.8)	(111.6)
Gain on disposal of discontinued operations before income taxes	1.9	1.5
Income taxes on disposal of discontinued operations	(1.1)	(13.8)
Gain (loss) on disposal of discontinued operations, net of income taxes	0.8	(12.3)
Net loss from discontinued operations-	(123.9)
9. Cash and Cash EquivalentsThe Company’s policy is to invest cash in excess of operating requirements in highly liquid investments. For thepurpose of the consolidated statements of cash flows, cash and cash equivalents consist of the following:
				December 31	December 31
	2019	2018
			$	$
Cash	208.1	176.5
Unrestricted investments	15.4	8.7
Cash and deposits	223.5	185.2
Bank indebtedness	(19.5)	-
Cash and cash equivalents	204.0	185.2
10. Trade and Other Receivables
				December 31	December 31
	2019	2018
			$	$
Trade receivables, net of expected credit losses of $2.2 (2018 – $1.5)	787.3	774.5
Holdbacks, current	20.6	18.7
Lease inducements receivable (note 6)			-	44.0
Other	9.8	40.9
Trade and other receivables	817.7	878.1
The aging analysis of gross trade receivables is as follows:
						Total	1–30	31–60	61–90	91–120	121+
						$	$	$	$				$	$
December 31, 2019						789.5	395.9	221.1	63.5		27.8	81.2
December 31, 2018						776.0	355.6	228.7	63.8		43.2	84.7
Information about the Company’s exposure to credit risks and impairment losses for trade and other receivables isincluded in note 25.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019							F-33	Stantec Inc.

11. Property and Equipment
	Engineering		Office	Leasehold
	Equipment	Equipment		Improvements		Other	Total
		$	$		$	$	$
CostDecember 31, 2017
		116.7	61.6	175.5		33.9	387.7
Additions		23.2	19.4		79.5	8.1	130.2
Additions arising on acquisitions		1.6	0.7		1.7	0.4	4.4
Disposals		(12.2)	(2.2)	(31.4)		(4.7)	(50.5)
Discontinued operations (note 8)		(11.5)	(0.4)		(1.7)	(2.0)	(15.6)
Transfers		(0.4)	(0.1)		(0.2)	0.7	-
Impact of foreign exchange		4.9	3.0		7.8	1.4	17.1
December 31, 2018		122.3	82.0	231.2		37.8	473.3
Additions		20.3	9.6		24.4	4.8	59.1
Additions arising on acquisitions		0.7	0.7		4.4	-	5.8
Disposals		(13.7)	(3.1)		(7.3)	(0.9)	(25.0)
Impact of foreign exchange		(2.8)	(2.4)		(6.1)	(1.3)	(12.6)
December 31, 2019		126.8	86.8	246.6		40.4	500.6
Accumulated depreciationDecember 31, 2017
		57.4	27.6		74.1	16.0	175.1
Depreciation - continuing operations		15.3	6.7		25.9	2.2	50.1
Depreciation - discontinued operations		1.5	-		0.2	0.3	2.0
Disposals		(10.6)	(1.9)	(31.1)		(1.9)	(45.5)
Discontinued operations (note 8)		(3.3)	(0.3)		(0.3)	(0.7)	(4.6)
Transfers		(0.4)	(0.1)		(0.2)	0.7	-
Impact of foreign exchange		2.3	1.2		2.9	0.4	6.8
December 31, 2018		62.2	33.2		71.5	17.0	183.9
Depreciation - continuing operations		16.5	8.1		30.9	2.7	58.2
Disposals		(12.2)	(2.6)		(7.3)	(0.8)	(22.9)
Impact of foreign exchange		(1.2)	(0.8)		(2.4)	(0.7)	(5.1)
December 31, 2019		65.3	37.9		92.7	18.2	214.1
Net book valueDecember 31, 2018
		60.1	48.8	159.7		20.8	289.4
December 31, 2019		61.5	48.9	153.9		22.2	286.5
Leasehold improvements includes construction work in progress of $1.9 (2018 – $8.9) on which depreciation has not started.
Included in the Other category is automotive equipment, buildings, land, and an ownership interest in an aircraft.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019		F-34				Stantec Inc.

12. Lease Assets and Lease Liabilities
		Lease
	Lease assets	Liabilities
			Building	Other	Total
	$			$	$	$
January 1, 2019			556.6	5.2	561.8	(645.0)
Additions	63.9			1.6	65.5	(64.0)
Acquisitions	19.3			0.1	19.4	(19.1)
Depreciation			(113.2)	(2.6)	(115.8)	-
Modifications	42.6			-	42.6	(42.7)
Impairment	(2.0)			-	(2.0)	-
Accretion of interest	-			-	-	(32.3)
Payments, net of receipts---	98.6
Foreign exchange			(12.8)	(0.2)	(13.0)	15.6
December 31, 2019			554.4	4.1	558.5	(688.9)
Less current portion---	99.9
Long-term portion			554.4	4.1	558.5	(589.0)
The Company has leases mainly for buildings, vehicles, and office equipment.
At December 31, 2019, lease liabilities of $688.9 were discounted using the Company's incremental borrowing rate and had a weighted-average rate of 4.43%. Future undiscounted cash outflows for lease liabilities are disclosedin note 25.
Amounts recognized in administrative and marketing expensesFor the year ended
						December 31
		2019
		$
Rent expense - variable lease payments		48.7
Rent expense - short-term leases and leases of low-value assets		10.0
Income from subleases		(5.1)
Total		53.6
Variable lease payments include operating expenses, real estate taxes, insurance, and other variable costs. Futureundiscounted cash flows for short-term leases, leases of low-value assets, variable lease payments, and subleasepayments receivable are disclosed in note 21.
Amounts recognized in the consolidated statement of cash flowsFor the year ended
						December 31
		2019
		$
Cash payments for the interest portion of lease liabilities		32.3
Cash payments for leases not included in the measurement of lease liabilities		53.6
Cash outflow in operating activities		85.9
Cash payments for the principal portion of lease liabilities		116.7
Proceeds from lease incentives		(50.4)
Cash outflow in financing activities		66.3
Total cash outflow for leases		152.2
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019							F-35	Stantec Inc.

The Company leases buildings for its office spaces across the globe. Lease terms typically range from one to sixteen years and had a weighted average remaining lease term of 7.7 years. To provide operational flexibility, theCompany seeks to include extension or termination options in new leases.
The Company leases vehicle and office equipment with terms typically ranging from three to five years and had aweighted average remaining lease term of 2.2 years. These leases do not usually contain extension options,purchase options, or residual value guarantees.
The Company also leases IT equipment and other equipment with terms typically ranging from one to five years.These leases are generally short-term or for low-value assets that the Company has elected not to recognize in leaseassets and lease liabilities.
13. Goodwill
	December 31	December 31
			2019	2018
			$	$
Gross goodwill, beginning of the year			1,799.2	1,734.6
Acquisitions			90.1	96.3
Disposals (note 8)			-	(120.2)
Impact of foreign exchange			(59.5)	88.5
Gross goodwill, end of the year			1,829.8	1,799.2
Accumulated impairment losses, beginning of the year			(178.0)	(178.0)
Impairment of goodwill - discontinued operations (note 8)			-	(53.0)
Disposals - discontinued operations (note 8)			-	53.0
Accumulated impairment losses, end of the year			(178.0)	(178.0)
Net goodwill, end of the year			1,651.8	1,621.2
Goodwill arising from acquisitions includes factors such as the expertise and reputation of the assembledworkforce acquired, the geographic location of the acquiree, and the expected synergies.
The Company considers its CGUs based on the interdependence of cash flows between different geographiclocations and how management monitors the operations. As such, the CGUs are defined as Canada, US,Asia/Pacific, Latin America, and UK/Europe/Middle East. As goodwill is not monitored at a level lower than theCompany's operating segments, the CGUs excluding Canada and the US are grouped in Global for purposes ofallocating goodwill and testing impairment.
Goodwill was allocated to its CGUs or group of CGUs as follows:
	December 31	December 31
			2019	2018
			$	$
Canada			358.2	358.2
United States			956.0	1,003.7
Global			337.6	259.3
Allocated			1,651.8	1,621.2
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019					F-36	Stantec Inc.

On October 1, 2019, and October 1, 2018, the Company performed its annual goodwill impairment test in accordancewith its policy described in note 4. Based on the results of the 2019 and 2018 tests, except as described below for theConstruction Services business, the Company concluded that the recoverable amount of each CGU or group ofCGUs associated with the Consulting Services business exceeded its carrying amount and, therefore, goodwill wasnot impaired.
In 2018, the Company completed the sale of its Construction Services business (note 8). In connection with the sale,the Company reviewed the carrying value of the Construction Services disposal group and recognized a goodwillimpairment charge of $53.0 in the third quarter of 2018. The fair value measurement of the Construction Servicesgroup of CGUs was categorized as Level 3 in the fair value hierarchy based on unobservable market inputs.
Key assumptions The calculation of fair value less costs of disposal is most sensitive to the following assumptions:
	Operating margin rates 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 intoconsideration market rates of return, capital structure, company size, and industry risk. If necessary, a discountrate is further adjusted to reflect risks specific to a CGU or group of CGUs when future estimates of cash flowshave not been adjusted. For its October 1, 2019 and October 1, 2018, impairment tests, the Company discountedthe cash flows for each CGU or group of CGUs using an after-tax discount rate ranging from 8.7% to 16.3% (2018 – 9.3% to 17.0%).
	Terminal growth rates based on actual experience and market analysis. Projections are extrapolated beyond fiveyears using a growth rate that does not exceed 3.0%.
	Non-cash working capital requirements are based on historical actual rates, market analysis, and management’slong-term projections.
	Net revenue growth rate based on management's best estimates of cash flow projections over a five-year period.
Sensitivity to changes in assumptionsAs at October 1, 2019, the recoverable amounts of the Canada and US CGUs exceeded their carrying amounts andmanagement believes that no reasonably possible change in any of the above key assumptions would have causedthe carrying amount to exceed its recoverable amount.
As at October 1, 2019, the recoverable amount of the Global group of CGUs exceeded its carrying amount by $37.6,assuming operating margins that range from 7.4% to 9.0% and a weighted-average discount rate of 10.3%.Assuming all other assumptions remain the same, the principal changes to key assumptions that would cause thegroup of CGUs’ carrying amount to exceed its recoverable amount would be a 50-basis point reduction in theassumed operating margins or a 50-basis points increase in the discount rate.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019		F-37	Stantec Inc.

14. Intangible Assets
	Client		Contract
		Relationships	Backlog	Software	Other	Total
	$						$	$	$	$
CostDecember 31, 2017
	289.5		47.9	65.6	27.5	430.5
Additions--	33.2	-	33.2
Additions arising on acquisitions	25.1		5.7	0.2	2.0	33.0
Discontinued operations (note 8)	(19.7)						-	(5.3)	(4.4)	(29.4)
Removal of fully amortized assets	(3.9)		(46.2)	(18.8)	(10.8)	(79.7)
Impact of foreign exchange	16.3		1.1	0.3	0.7	18.4
December 31, 2018	307.3		8.5	75.2	15.0	406.0
Impact of IFRS 16 (note 6)	-						-	-	(10.2)	(10.2)
January 1, 2019	307.3		8.5	75.2	4.8	395.8
Additions--	12.0	-	12.0
Additions arising on acquisitions	29.5		10.3	1.3	0.3	41.4
Removal of fully amortized assets-		(4.7)	(23.7)	(1.0)	(29.4)
Impact of foreign exchange	(11.5)		(0.4)	0.2	(1.8)	(13.5)
December 31, 2019	325.3		13.7	65.0	2.3	406.3
Accumulated amortizationDecember 31, 2017
	90.4		37.6	26.9	13.2	168.1
Amortization - continuing operations	26.9		9.9	25.7	2.5	65.0
Amortization - discontinued operations	1.8		1.4	0.7	1.8	5.7
Discontinued operations (note 8)	(4.9)						-	(1.9)	(2.4)	(9.2)
Removal of fully amortized assets	(3.9)		(46.2)	(18.8)	(10.8)	(79.7)
Impact of foreign exchange	5.9		0.9	0.1	1.5	8.4
December 31, 2018	116.2		3.6	32.7	5.8	158.3
Impact of IFRS 16 (note 6)	-						-	-	(4.5)	(4.5)
January 1, 2019	116.2		3.6	32.7	1.3	153.8
Amortization - continuing operations	31.1		10.0	25.0	0.8	66.9
Removal of fully amortized assets-		(4.7)	(23.7)	(1.0)	(29.4)
Impact of foreign exchange	(4.4)		(0.1)	0.5	(0.6)	(4.6)
December 31, 2019	142.9		8.8	34.5	0.5	186.7
Net book valueDecember 31, 2018
	191.1		4.9	42.5	9.2	247.7
Impact of IFRS 16 (note 6)	-						-	-	(5.7)	(5.7)
January 1, 2019	191.1		4.9	42.5	3.5	242.0
December 31, 2019	182.4		4.9	30.5	1.8	219.6
During 2019, the Company concluded that there were no indicators of impairment related to intangible assets.
The net book value of software acquired through software financing obligations is $16.7 (2018 - $19.1). In 2019,software additions through software financing obligations were $8.4 (2018 - $15.1) and have been excluded from theconsolidated statement of cash flows (note 33).
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-38								Stantec Inc.

15. Other Assets
	December 31	December 31
			2019	2018
			$	$
Financial assets Investments held for self-insured liabilities
			153.0	144.2
Holdbacks on long-term contracts			33.9	28.7
Other			12.6	7.3
Non-financial assets			16.9	18.5
			216.4	198.7
Less current portion - financial			11.6	18.1
Less current portion - non-financial			6.5	5.1
Long-term portion			198.3	175.5
Financial assets-other primarily include indemnifications, sublease receivables, and deposits. Non-financial assetsinclude deferred contract costs, transactions costs on long-term debt, and investment tax credits.
Investments held for self-insured liabilitiesInvestments held for self-insured liabilities include government and corporate bonds that are classified as FVOCI withunrealized gains (losses) recorded in other comprehensive income. Investments also include equity securities thatare classified at FVPL with gains (losses) recorded in net income.
Their fair value and amortized cost are as follows:
					December 31	December 31
					2019	2018
						$	$
								Amortized	Amortized
							Fair Value	Cost/Cost	Fair Value	Cost/Cost
Bonds					102.8			103.4	103.0	103.8
Equity securities					50.2				46.1	41.2	45.0
Total					153.0			149.5	144.2	148.8
The bonds bear interest at rates ranging from 0.75% to 5.00% per annum (2018 – 0.75% to 5.15%). The terms tomaturity of the bond portfolio, stated at fair value, are as follows:
	December 31	December 31
			2019	2018
			$	$
Within one year			9.5	14.0
After one year but not more than five years			79.9	85.2
More than five years			13.4	3.8
Total			102.8	103.0
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019					F-39	Stantec Inc.

16. Trade and Other Payables
	December 31	December 31
			2019	2018
			$	$
Trade accounts payable			225.5	222.6
Employee and payroll liabilities			266.7	263.3
Accrued liabilities			84.2	81.3
Trade and other payables			576.4	567.2
17. Long-Term Debt
	December 31	December 31
			2019	2018
			$	$
Revolving credit facilities			448.0	528.6
Notes payable			88.7	76.8
Term loan			308.5	308.8
Software financing obligations			15.7	19.5
			860.9	933.7
Less current portion			46.9	48.5
Long-term portion			814.0	885.2
Notes payableNotes payable consists primarily of notes payable for acquisitions (note 7). The weighted average rate of interest onthe notes payable at December 31, 2019, was 2.7% (2018 – 3.16%). Notes payable may be supported by promissorynotes and are due at various times from 2020 to 2022. The aggregate maturity value of the notes at December 31,2019, was $90.7 (2018 – $78.2). At December 31, 2019, $4.2 (US$3.2) (2018 – $23.2 (US$17.0)) of the notes’carrying amount was payable in US funds, $52.0 (AU$57.1) (2018 – nil) was payable in Australian funds, and $23.2(2018 – $32.9) was payable in other foreign currencies.
Revolving credit facilities and term loanOn July 19, 2019, the Company amended its syndicated senior credit facilities (Credit Facilities) which consist of asenior revolving credit facility in the maximum amount of $800.0 and senior term loans of $310.0 in two tranches. The amendment changed certain terms and conditions, including extending the maturity date of its revolving creditfacility by one year (expires on June 27, 2024) and reducing the interest rate spreads that are applicable based onthe Company's leverage ratio. Additional funds can be accessed subject to approval and under the same terms andconditions. As a result of the amendment, access to these additional funds increased from $400.0 to $600.0. Theamendment to the terms and conditions was not considered to be substantial. As such, the amendment wasaccounted for as a debt modification. The revolving credit facility and the term loans may be repaid from time totime at the option of the Company. The two tranches of the term loan were drawn in Canadian funds of $150.0(due on June 27, 2022) and $160.0 (due on June 27, 2023).
At December 31, 2019, $448.0 of the revolving credit facility was payable in Canadian funds. At December 31, 2018,$515.0 of the revolving credit facility was payable in Canadian funds and $13.6 (US$10.0) was payable in US funds.As at December 31, 2019 and 2018, the entire term loan was payable in Canadian funds. The average interest rateapplicable at December 31, 2019, for the Credit Facilities was 3.77% (2018 – 4.53%).
The funds available under the revolving credit facility are reduced by any outstanding letters of credit issued pursuantto the facility agreement. At December 31, 2019, the Company had issued outstanding letters of credit that expire atvarious dates before January 2021, are payable in various currencies, and total $49.9 (2018 – $48.0). These lettersof credit were issued in the normal course of operations, including the guarantee of certain office rental obligations.At December 31, 2019, $282.6 (2018 – $223.4) was available in the revolving credit facility for future activities.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019					F-40	Stantec Inc.

At December 31, 2019, $33.3 (2018 – $23.8) in additional letters of credit outside of the Company’s revolving creditfacility was issued and outstanding. These were issued in various currencies. Of these letters of credit, $18.7 (2018 – $14.7) expire at various dates before January 2021 and $14.6 (2018 – $9.1) have open-ended terms.
Software financing obligationsThe Company has financing obligations for software (included in intangible assets) bearing interest at rates rangingfrom 1.4% to 5.25%. These obligations expire at various dates before May 2022.
Surety facilitiesThe Company has surety facilities, primarily related to Construction Services, to accommodate the issuance of bonds for certain types of project work. At December 31, 2019, the Company had issued $392.1 in bonds underthese surety facilities: $3.3 (2018 – $3.5) in Canadian funds, $386.2 (US$297.3) (2018 – $791.4 (US$580.2)) in USfunds, and $2.6 (2018 – $4.7) in other foreign currencies. These bonds expire at various dates before July 2024.Although the Company remains obligated for these instruments, the purchaser of the Construction Services businesshas indemnified the Company for any obligations that may arise from these bonds (note 8).
18. Provisions
	Provision
	for self-			Expected	Provision
	insured	Provision	Onerous	project	for lease
	liabilities	for claims	contracts	losses	restoration	Total
							$	$	$	$	$	$
December 31, 2018							77.0	14.8	12.5	15.6				0.7	120.6
Impact of IFRS 16 (note 6)							-	-	(2.6)				-	10.3	7.7
January 1, 2019							77.0	14.8	9.9	15.6				11.0	128.3
Current year provisions							29.8	8.4	0.4	(0.6)	2.4	40.4
Acquisitions-	0.3	-	-	0.7	1.0
Paid or otherwise settled	(24.1)							(7.9)	(9.9)				(9.5)	(1.5)	(52.9)
Impact of foreign exchange							(2.6)	(0.2)	-	(0.7)	(0.3)	(3.8)
							80.1	15.4	0.4	4.8	12.3	113.0
Less current portion							3.8	12.8	0.1	4.8	2.4	23.9
Long-term portion							76.3	2.6	0.3	-	9.9	89.1
On adoption of IFRS 16 at January 1, 2019, onerous contracts (consisting of lease exit liabilities and subleaselosses) at December 31, 2018, were reclassified to reduce lease assets. The Company did not reclassify theprovision for onerous contracts for leases that were considered to be short term (note 6).
Cash outflows for provisions for claims are expected to occur within the next one to five years, although this isuncertain and depends on the development of the various claims. These outflows are not expected to have a materialimpact on the Company’s net cash flows. Provision for lease restoration relates to building leases (note 12). Cashoutflows for provisions for lease restoration are expected to occur within the next one to fourteen years.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019								F-41			Stantec Inc.

19. Employee Defined Benefit Obligations
	December 31		December 31
		2019		2018
		$			$
Net defined benefit pension asset		(26.0)		(10.0)
Net defined benefit pension liability		69.8		55.5
End of employment benefit plans		15.4		13.1
		85.2		68.6
Defined benefit pension plansThe Company sponsors defined benefit pension plans (the Plans) covering certain full-time and past employees,primarily in the United Kingdom. The benefits for the Plans are based on final compensation and years of service.The Plans are closed to new participants and have ceased all future service benefits, although the future salary linkhas been retained for certain continuing active members.
The Plans are governed by the laws of the United Kingdom. Each pension plan has a board of trustees that isresponsible for administering the assets and defining the investment policies of the Plans.
The funding objective of each pension plan is to have sufficient and appropriate assets to meet actuarial liabilities.The board of trustees reviews the level of funding required based on separate triennial actuarial valuations forfunding purposes; the most recent were completed as at March 31, 2017, and February 1, 2019. The Plans requiredthat contributions be made to separately administered funds, which are maintained independently by custodians. TheCompany expects to contribute approximately $19 to the Plans in 2020.
The Plans expose the Company to a number of risks, including changes to long-term UK interest rates and inflationexpectations, movements in global investment markets, changes in life expectancy rates, foreign exchange risk, andregulatory risk from changes in UK pension legislation. The Company is also exposed to price risk because thePlans' assets include significant investments in equities.
Guaranteed annuities, purchased for certain plan members upon retirement, protect a portion of the Plans fromchanges in interest rates and longevity post-retirement. Post-retirement benefits that are fully matched with insurancepolicies have been included in both the asset and liability figures in the following tables.
A liability-driven investment (LDI) strategy has been implemented to hedge a portion of the Plans’ long-term interestrate and inflation risks by investing in assets that have similar interest rate and inflation characteristics as the Plans'liabilities. The LDI strategy relates to only a portion of the Plans’ investments; therefore, the Plans remain exposed tosignificant interest rate and inflation risk, along with the other risks mentioned above.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019						F-42	Stantec Inc.

The following table presents a reconciliation from the opening balances to the closing balances for the net definedbenefit liability and its components:
	2019	2018
				Net		Net
			Defined	Fair Value			Defined	Defined	Fair Value				Defined
			Benefit	of Plan			Benefit	Benefit	of Plan				Benefit
			Obligation	Assets			Liability	Obligation	Assets				Liability
	$						$	$	$					$	$
Balance, beginning of the year			494.3	(448.8)			45.5	397.7	(379.2)				18.5
Acquisitions---	80.9	(64.4)				16.5
Included in pre-tax profit or loss
Interest expense (income)			13.0	(12.1)			0.9	10.8	(10.2)				0.6
Past service cost---	10.5			-	10.5
Administrative expenses paid by the Plans-	1.1			1.1	-	1.7				1.7
			13.0	(11.0)			2.0	21.3	(8.5)				12.8
Included in other comprehensive loss (income)
Return on the plan assets, excluding interest income-	(55.5)			(55.5)	-	17.4				17.4
Actuarial (gains) losses arising from:
Changes in demographic assumptions			(1.9)				-	(1.9)	(0.8)			-	(0.8)
Changes in financial assumptions			81.9				-	81.9	(9.3)			-	(9.3)
Experience adjustments			(4.4)				-	(4.4)	5.5			-	5.5
Remeasurement loss on net employee defined benefit liability, before tax			75.6	(55.5)			20.1	(4.6)	17.4				12.8
Effect of movement in exchange rates			(5.0)	4.2			(0.8)	11.5	(10.3)				1.2
			70.6	(51.3)			19.3	6.9			7.1	14.0
Other
Benefits paid			(14.8)	14.8			-	(12.5)	12.3				(0.2)
Contributions by employer-	(23.0)			(23.0)	-	(16.1)				(16.1)
			(14.8)	(8.2)			(23.0)	(12.5)	(3.8)				(16.3)
Balance, end of the year			563.1	(519.3)			43.8	494.3	(448.8)				45.5
The total remeasurement loss on the net employee defined benefit liability at December 31, 2019, is a loss of $16.5net of deferred tax recovery of $3.6 (2018 – loss of $10.8 net of deferred tax recovery of $2.0).
				December 31				December 31
					2019	2018
		$				$
Included in the consolidated statement of financial position within: Net defined benefit asset
					(26.0)	(10.0)
Net defined benefit liability					69.8	55.5
					43.8	45.5
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019			F-43	Stantec Inc.

The Company has an unconditional right to derive economic benefit from the above surplus and has thereforerecognized a net defined benefit asset.
	For the year ended December 31
		2019	2018
				$	$
Included in the consolidated statement of income as:
Continuing operations - administrative and marketing expenses		2.0	6.6
Discontinued operations				-	6.2
		2.0	12.8
On October 26, 2018, the United Kingdom high court issued a ruling that resulted in an amendment to the Plans toequalize guaranteed minimum pension benefits between genders and increased the Company's defined benefitobligation by $10.5 as at December 31, 2018. Corresponding past service costs were recognized in the consolidatedstatements of income of which $4.7 was recognized in continuing operations and $5.8 in discontinued operations. Norulings applied to 2019.
Major categories of plan assets, measured at fair value, are as follows:
	December 31				December 31
		2019	2018
		$	$
Cash and cash equivalents		7.6	3.3
Investments quoted in active markets (mutual, exchange-traded, and pooled funds): Equities
		163.4	138.1
Corporate bonds and fixed income		73.3	57.5
Pooled fund liability-driven investments		13.2	15.5
Property funds		14.4	10.6
Unquoted investments: Annuity policies
		123.2	110.8
Insurance contract: Equities and property
		85.0	80.2
Corporate bonds		29.9	19.2
Cash and cash equivalents		9.3	13.6
Fair value of the plan assets		519.3	448.8
The investment policy for the Plans is to balance risk and return. Approximately 52% of plan assets are invested inmutual, exchange-traded, and pooled funds (fair valued using quoted market prices) or held in cash. Approximately24% of plan assets are held in annuity policies that are purchased for certain plan members upon retirement. The fairvalue of these policies reflects the value of the obligation for these retired plan members and is determined usingactuarial techniques and guaranteed annuity rates. The remaining assets of the Plans are invested in a whollyinsured with-profits insurance contract with a major insurance company. Contributions made to this contract areinvested in insurance policies administered by third parties, which provide for a declared rate of interest. The yieldson the investments are intended to provide for a steady return on the assets. The insurance contract is fair valuedusing valuation techniques with market observable inputs.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019						F-44	Stantec Inc.

The present value of the defined benefit obligation is determined by discounting the estimated future cash flows usingactuarial valuations. The principal assumptions used in determining pension benefit obligations for the Plans areshown below (expressed as weighted averages):
	December 31	December 31
			2019	2018
Discount rate			1.89%	2.77%
Rate of increase in salaries			4.34%	4.47%
Rate of inflation, pre-retirement			2.60%	2.55%
Rate of increase in future pensions payment			3.44%	3.51%
Life expectancy at age 65 for current pensioners: Male
	22 years			22 years
Female	24 years			24 years
Life expectancy at age 65 for current members aged 45: Male
	23 years			23 years
Female	25 years			25 years
At December 31, 2019, the weighted average duration of the defined benefit obligation was 16 years (2018 – 16 years).
Quantitative sensitivity analyses showing the impact on the defined benefit obligation for significant assumptions areas follows:
					December 31	December 31
					2019	2018
					Increase	Decrease		Increase	Decrease
							$	$	$	$
Change in discount rate by 0.25%					(18.9)	19.6				(15.6)	17.0
Change in pre-retirement inflation rate by 0.25%					5.7	(5.5)	5.0		(4.8)
Change in salary growth by 0.25%					1.0	(1.0)	0.9		(0.8)
Change in pension increase assumption by 0.25%					10.5	(9.2)	8.4		(8.1)
Increase of one year in the life expectancy					11.8	n/a	9.4		n/a
The sensitivity analyses above have been determined based on a method that extrapolates the impact on the definedbenefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting year.The sensitivity analyses were based on changing a significant assumption and keeping all other assumptionsconstant and may not be representative of an actual change in the defined benefit obligation as it is unlikely thatchanges in assumptions would occur in isolation of one another.
End of employment benefit plans The liability for end of employment benefit plans represents the Company's estimated obligations for long serviceleave and annual leave that is legislated in some countries in which the Company operates.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019								F-45	Stantec Inc.

20. Other Liabilities
	December 31	December 31
			2019	2018
					Note	$	$
Lease inducement benefits and lease disadvantages					6	-	112.7
Cash-settled share-based compensation					23	23.0	12.8
Other			5.1	3.1
			28.1			128.6
Less current portion			12.1			23.2
Long-term portion			16.0			105.4
As a result of the IFRS Interpretations Committee conclusion in September 2019 (note 6b), the Company reclassifieduncertain tax liabilities of $35.0 from other liabilities to income taxes payable at December 31, 2018.
21. CommitmentsThe Company has various lease commitments included in lease liabilities (note 12). In addition, the Company hascommitments for variable lease payments, short-term leases, and leases of low-value assets. The Company also hasvarious purchase obligations such as cloud services, software support, and equipment. These commitments as atDecember 31, 2019, are as follows:
						Total	Less than 1 Year	1 to 3 Years	After 3 Years
						$	$				$	$
Variable lease payments						269.6	47.6		82.4	139.6
Short-term and low value lease payments						4.0	2.6		1.4	-
Leases not commenced but committed						50.6	2.3		10.2	38.1
Purchase obligations						67.6	43.9		20.5	3.2
						391.8	96.4		114.5	180.9
Future minimum payments receivable under non-cancelable sublease agreements as at December 31, 2019, are$14.5 (2018 - $19.2), of which $3.6 (2018 - nil) relates to sublease receivables included in other assets (note 15).
22. Contingencies and GuaranteesThe nature of the Company’s legal claims and the provisions recorded for these claims are described in notes 4 and 5. Although the Company accrues adequate provisions for probable legal claims, it has contingent liabilitiesrelating to reported legal incidents that, based on current known facts, are not probable to result in future cashoutflows. The Company is monitoring these incidents and will not accrue any provision until further information resultsin a situation in which the criteria required to record a provision is met. Due to the nature of these incidents, such asthe range of possible outcomes and the possibility of litigation, it is not practicable for management to estimate thefinancial effects of these incidents, the amount and timing of future outflows, and the possibility of any reimbursementof these outflows.
In the normal course of business, the Company provides indemnifications and, in limited circumstances, surety bondsand guarantees. These are often standard contractual terms and are provided to counterparties in transactions suchas purchase and sale contracts for assets or shares, service agreements, and leasing transactions. The Companyalso indemnifies its directors and officers against any and all claims or losses reasonably incurred in the performanceof their service to the Company to the extent permitted by law. These indemnifications may require the Company tocompensate the counterparty for costs incurred as a result of various events, including changes to or in theinterpretation of laws and regulations, or as a result of damages or statutory sanctions that may be suffered by thecounterparty as a consequence of the transaction. The terms of these indemnifications and guarantees will varybased on the contract, the nature of which prevents the Company from making a reasonable estimate of themaximum potential amount that it could be required to pay to counterparties. In most cases, the potential payment
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019						F-46	Stantec Inc.

amount of an outstanding indemnification or guarantee is limited to the remaining cost of work to be performed underservice contracts. The Company carries liability insurance, subject to certain deductibles and policy limits, thatprovides protection against certain insurable indemnifications. Historically, the Company has not made any materialpayments under such indemnifications or guarantees, and no amounts have been accrued in the consolidatedfinancial statements with respect to these indemnifications and guarantees.
23. Share CapitalAuthorizedUnlimited
	Common shares, with no par value
UnlimitedPreferred shares issuable in series, with attributes designated by the board of directors
Common sharesOn November 8, 2019, the Company received approval from the TSX to renew its Normal Course Issuer Bid (NCIB), enabling it to purchase up to 5,559,313 common shares during the period November 14, 2019, to November 13, 2020. In addition, the Company has an Automatic Share Purchase Plan (ASPP) with a broker thatallows the purchase of common shares for cancellation under the NCIB at any time during predetermined tradingblackout periods. Such purchases are determined by the broker in its sole discretion based on parametersestablished by the Company under the ASPP. As at December 31, 2019 and December 31, 2018, no liability wasrecorded in the Company's consolidated statements of financial position in connection with the ASPP.
During 2019, 1,400,713 common shares (2018 – 2,470,560) were repurchased for cancellation pursuant to the NCIBat a cost of $43.2 (2018 – $76.7). Of this amount, $10.9 and $0.3 (2018 – $19.1 and $0.5) reduced share capital andcontributed surplus, and $32.0 (2018 – $57.1) was charged to retained earnings.
During 2019, the Company recognized a share-based compensation expense of $18.1 (2018 – $5.3) inadministrative and marketing expenses in the consolidated statements of income. Of the amount expensed, $3.4(2018 – $5.6) related to the amortization of the fair value of options granted and $14.7 (2018 – recovery of $0.3)related to the cash-settled share-based compensation (RSUs, DSUs, and PSUs).
DividendsHolders of common shares are entitled to receive dividends when declared by the Company’s board of directors. The table below describes the dividends declared and recorded in the consolidated financial statements in 2019.
				Dividend per Share		Paid
Date Declared		Record Date	Payment Date		$	$
February 27, 2019		March 29, 2019	April 15, 2019		0.1450	16.2
May 9, 2019		June 28, 2019	July 15, 2019		0.1450	16.2
August 7, 2019		September 30, 2019	October 15, 2019		0.1450	16.2
November 6, 2019		December 30, 2019	January 15, 2020		0.1450	-
At December 31, 2019, trade and other payables included $16.1 (2018 – $15.4) related to the dividends declared onNovember 8, 2019.
Share-based payment transactionsThe Company has a long-term incentive program that uses share options, RSUs, and PSUs. The Company also hasa DSU plan for the board of directors.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019							F-47	Stantec Inc.

a) Share options
	For the year ended	For the year ended
	December 31	December 31
			2019	2018
			Weighted Average	Weighted Average
					Exercise Price	Exercise Price
	Shares				per Share	Shares				per Share
			#				$	#				$
Share options, beginning of the year	4,987,542						31.11	4,426,237						29.84
Granted--	1,112,779						32.98
Exercised	(753,583)						25.09	(338,989)						20.40
Forfeited	(182,879)						32.41	(212,485)						31.49
Share options, end of the year	4,051,080						32.17	4,987,542						31.11
The options held by officers and employees at December 31, 2019, were as follows:
									Options Outstanding	Options Exercisable
	Weighted					Weighted
											Weighted	Average	Weighted						Average
											Average	Exercise	Average						Exercise
Range of ExerciseRemainingPrice perSharesRemainingPrice per
Prices per ShareOutstandingContractualShareExercisableContractualShare
									$	#	Life in Years	$				#	Life in Years		$
													20.88	107,168		0.16	20.88		107,168	0.16		20.88
														31.75 – 32.98	3,943,912		2.24	32.48		2,916,710	1.96		32.45
														20.88 – 32.98	4,051,080		2.18	32.17		3,023,878	1.89		32.04
These options expire on dates between February 26, 2020 and May 15, 2023.
The fair value of options granted was determined at the date of grant using the Black-Scholes option-pricing model.The model was developed to use when estimating the fair value of traded options that have no vesting restrictionsand are fully transferable.
In 2019, the Company granted no (2018 – 1,112,779) share options. The estimated fair value of options granted in2018 was $5.73 per option and was determined using the weighted average assumptions indicated below:
								2018
Volatility in the price of the Company’s shares (%)								24.12
Risk-free interest rate (%)								2.10
Expected hold period to exercise (years)								3.50
Dividend yield (%)								1.668
Exercise price ($)								32.98
The expected volatility was based on the historical volatility of the Company’s shares over a period commensuratewith the expected hold period of the share options. The risk-free interest rate for the expected hold period of theoptions was based on the yield available on government bonds, with an approximate equivalent remaining term at thetime of the grant. Historical data was used to estimate the expected hold period before exercising the options. Theoptions have a contractual life of five years.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-48					Stantec Inc.

A summary of the status of the Company’s non-vested options for the year ended December 31, 2019, is as follows:
		Weighted Average
			Grant Date
	Number of Shares		Fair Value
	Subject to Option		per Share
		#		$
Non-vested share options, beginning of the year					2,079,153	5.53
Vested					(997,936)	5.37
Forfeited					(54,015)	5.60
Non-vested share options, end of the year					1,027,202	5.69
b) Cash-settled share-based paymentsA summary of the Company's RSUs, PSUs, and DSUs for 2019, is as follows:
						December 31, 2019	December 31, 2018
						RSUs		PSUs	DSUs	PSUs	DSUs
						#		#	#	#		#
Units, beginning of year-		744,081	306,459	686,250	438,969
Granted									166,963	379,289	44,806	280,884	46,356
Paid-		(198,815)	(75,315)	(193,385)	(178,866)
Forfeited						(2,259)		(48,816)	-	(29,668)		-
Units, end of the year									164,704	875,739	275,950	744,081	306,459
Units vested, end of the year--	275,950	-	306,459
Restricted share unitsDuring 2019, the Company granted 164,719 RSUs to officers and employees at a fair value of $5.3, based on thetrading price of the Company's common shares at the grant date. These units are adjusted for dividends as theyarise, based on the number of units held on the record date. These units vest upon completing a three-year servicecondition that starts after the grant date and are adjusted for dividends as they arise, based on the number of unitsheld on the record date. For units that vest, unit holders will receive cash payments based on the volume weightedaverage trading price of the Company's common shares for the last five trading days preceding the vesting date,less withholding amounts.
At December 31, 2019, the obligations accrued for RSUs were $1.1 (2018 - nil) included in other liabilities (note 20).
Performance share unitsUnder the Company’s long-term incentive program, certain members of the senior leadership team may be grantedPSUs. These units are adjusted for dividends as they arise, based on the number of units held on the record date.PSUs vest upon completing a three-year service condition that starts on the grant date. The number of units that vestis subject to a percentage that can range from 0% to 200%, depending on achieving three-year performance andmarket objectives as described below. For units that vest, unit holders receive a cash payment based on the closingmarket price of the Company’s common shares on the third anniversary date of issue.
For PSUs granted in 2018 onward, the cash payment is based on the volume weighted average of the closing marketprice of the Company’s common shares for the last five trading days preceding the vesting date, less withholdingamounts. The performance objectives for these units include achieving a range of net income growth and return onequity targets with equal weighting. The fair value of these units is expensed over their three-year vesting period.
For the PSUs granted in 2019, the Company amended its PSU agreement by increasing the weighting of the returnon equity target to 60% and by replacing the net income growth with a market objective of total shareholder returnrelative to the Company's peer group for a 40% weighting.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019						F-49	Stantec Inc.

During the year ended December 31, 2019, 378,049 PSUs (December 31, 2018 - 280,884) were granted at a fairvalue of $11.6 (December 31, 2018 - $8.9). At December 31, 2019, the obligations accrued for PSUs were $11.1(2018 – $3.6) included in other liabilities (note 20).

Deferred share unitsThe directors of the board receive DSUs and annually elect to receive an additional fixed value compensation in theform of either DSUs or cash payment, less withholding amounts, to purchase common shares. A DSU is equal to onecommon share. These units vest on their grant date and are paid in cash to the directors of the board on their deathor retirement. They are valued at the volume weighted average of the closing market price of the Company’scommon shares for the last 10 trading days of the month of death or retirement. These units are recorded at fairvalue. DSUs are adjusted for dividends as they arise, based on the number of units outstanding on the record date.

During the year ended December 31, 2019, 44,772 DSUs (December 31, 2018 – 46,356) were granted at a fair value of $1.2 (December 31, 2018 – $1.4), based on the closing market price of the Company's common shares atthe grant date. At December 31, 2019, the outstanding and vested DSUs had a fair value of $10.2 (2018 – $9.0)included in other liabilities (note 20).

24. Fair Value MeasurementsWhen forming estimates, the Company uses the most observable inputs available for valuation purposes. If a fairvalue measurement reflects inputs of different levels within the hierarchy, the financial instrument is categorizedbased on the lowest level of significant input.

When determining fair value, the Company considers the principal or most advantageous market in which it wouldtransact and the assumptions that market participants would use when pricing the asset or liability. The Companymeasures certain financial assets and liabilities at fair value on a recurring basis. During 2019, no change was madeto the method of determining fair value.

For financial instruments recognized at fair value on a recurring basis, the Company determines whether transfershave occurred between levels in the hierarchy by reassessing categorizations at the end of each reporting period.During 2019, no transfers were made between levels 1 and 2 of the fair value measurements.

The following table summarizes the Company’s fair value hierarchy for those assets and liabilities measured andadjusted to fair value on a recurring basis at December 31, 2019:

Quoted Prices in

Active Markets for

Significant Other

Significant

Carrying

Identical Items

Observable Inputs

Unobservable Inputs

Amount

(Level 1)

(Level 2)

(Level 3)

Notes

AssetsInvestments held for self-insured

liabilities

153.0

LiabilitiesInterest rate swap

20,25

1.5

Investments held for self-insured liabilities consist of government and corporate bonds and equity securities. Fairvalue of bonds is determined using observable prices of debt with characteristics and maturities that are similar to thebonds being valued. Fair value of equities is determined using the reported net asset value per share of theinvestment funds. The funds derive their value from the observable quoted prices of the equities owned that aretraded in an active market.

Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019

F-50

Stantec Inc.

The following table summarizes the Company’s fair value hierarchy for those liabilities that were not measured at fairvalue but are required to be disclosed at fair value on a recurring basis as at December 31, 2019:

Quoted Prices in

Active Markets for

Significant Other

Significant

Carrying

Identical Items

Observable Inputs

Unobservable Inputs

Amount

(Level 1)

(Level 2)

(Level 3)

Notes payable

89.5

The fair value of notes payable is determined by calculating the present value of future payments using observablebenchmark interest rates and credit spreads for debt with similar characteristics and maturities.

25. Financial InstrumentsDerivative financial instrumentsOn January 10, 2019, the Company entered into an interest rate swap agreement to manage the interest rate riskrelated to a tranche of the term loan with a notional amount of $160.0, both maturing on June 27, 2023. The swapagreement has the effect of converting the variable interest rate on the term loan, based on a bankers' acceptancerate, into a fixed interest rate of 2.295%, plus applicable basis points spread. The fair value of the interest rateswap, estimated using market rates at December 31, 2019, is an unrealized loss of $1.5 ($1.1 net of tax). TheCompany has designated the swap as a cash flow hedge against a tranche of the term loan; therefore, theunrealized gains and losses relating to the swap are recorded in other comprehensive (loss) income and in thestatement of financial position as other assets or other liabilities.

There is an economic relationship between the interest rate swap and this tranche of the term loan because theterms of the two instruments match (i.e., notional amount, maturity, payment, and reset dates). The Company hasestablished a hedge ratio of 1:1 for the hedging relationship as the underlying risk of the interest rate swap isidentical to the hedged risk component.

Hedge ineffectiveness could arise due to renegotiations or amendments to terms of the hedged tranche of the term loan which could create a mismatch in the notional amount or term. In the event the hedging relationship is no longer effective or ceases to exist, the gains and losses will be recorded in income.

As at December 31, 2019, the Company has foreign currency forward contracts to purchase CAD$31.0 or GBP$18.0 equivalent on the trade date. These were entered to mitigate the risk of foreign currency fluctuations. Thefair value of these contracts, estimated using market rates as at December 31, 2019, is an unrealized gain of $0.2and was recorded in foreign exchange gains and in the consolidated statement of financial position within trade andother receivables.

Credit risk Assets that subject the Company to credit risk consist primarily of cash and deposits, trade and other receivables,unbilled receivables, contract assets, investments held for self-insured liabilities, holdbacks on long-term contracts,sublease receivables, indemnifications, and other financial assets. The Company's maximum amount of credit risk exposure is limited to the carrying amount of these assets, which at December 31, 2019, was $1,682.4 (2018 – $1,687.8).

The Company limits its exposure to credit risk by placing its cash and cash equivalents in high-quality creditinstitutions. Investments held for self-insured liabilities include corporate bonds and equity securities. The Companybelieves the risk associated with corporate bonds and equity securities is mitigated by the overall quality and mix ofthe Company’s investment portfolio.

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

Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019

F-51

Stantec Inc.

geographic sector. In addition, management reviews trade and other receivables past due on an ongoing basis toidentify 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. AtDecember 31, 2019, the days of revenue in trade receivables was 61 days (2018 – 66 days).
The lifetime ECLs (simplified approach) relating to financial assets are outlined in the table below:
	Total	1–30	31–60	61–90	91–120	121+
December 31, 2019	$	$	$	$			$	$
Expected loss rate		0.10%	0.13%	0.30%	0.59%	1.05%
Gross carrying amount	1,308.3	914.7	221.1	63.5	27.8	81.2
Loss allowance provision, end of the year									2.8	1.1	0.2	0.2	0.3	1.0
December 31, 2018
Expected loss rate		0.07%	0.10%	0.22%	0.43%	0.75%
Gross carrying amount	1,356.9	936.5	228.7	63.8	43.2	84.7
Loss allowance provision, end of the year									1.9	0.7	0.2	0.1	0.2	0.7
During 2019, $1.7 trade receivables were written off (2018 – $0.8) and the Company had no recoveries from thecollection of accounts receivable previously written off.
Bonds carried at FVOCI are considered to be low risk; therefore, the impairment provision is determined to be the 12-month ECL. To the extent that the credit risk for any instruments significantly increases since initial acquisition,the impairment provision is determined using the lifetime ECL.
Substantially all bonds held by the Company are investment grade, and none are past due. The Company monitorschanges in credit risk by tracking published external credit ratings.
Liquidity riskThe Company meets its liquidity needs through various sources, including cash generated from operations, long- and short-term borrowings from its $800.0 revolving credit facility, term loans, and the issuance of commonshares. The unused capacity of the revolving credit facility at December 31, 2019, was $282.6 (2018 – $223.4). The Company believes that it has sufficient resources to meet obligations associated with its financial liabilities.
The timing of undiscounted cash outflows relating to financial liabilities is outlined in the table below:
	Total	Less than 1 Year		1 to 3 Years			After 3 Years
		$							$	$	$
December 31, 2019Bank indebtedness
	19.5		19.5		-	-
Trade and other payables	576.4		576.4		-	-
Lease liabilities	810.5		138.5		255.0	417.0
Long-term debt	863.0		47.2		366.9	448.9
Other financial liabilities										4.8	0.9		1.8	2.1
Total contractual obligations	2,274.2		782.5		623.7	868.0
December 31, 2018Trade and other payables
	567.2		567.2		-	-
Long-term debt	935.4		49.1		196.7	689.6
Other financial liabilities										3.1	1.1		0.3	1.7
Total contractual obligations	1,505.7		617.4		197.0	691.3
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-52						Stantec Inc.

Interest rate risk The Company is subject to interest rate cash flow risk to the extent that its revolving credit facility and term loan are based on floating interest rates. The Company is also subject to interest rate pricing risk to the extent that itsinvestments held for self-insured liabilities include fixed-rate government and corporate bonds.
If the interest rate on the Company’s revolving credit facility and term loan balances at December 31, 2019, was 0.5% higher or lower, with all other variables held constant, net income would decrease or increase by $2.2,respectively.
Foreign exchange riskForeign exchange risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuatebecause of changes in foreign exchange rates. Foreign exchange gains or losses in net income arise on thetranslation of foreign currency-denominated assets and liabilities (such as trade and other receivables, trade andother payables, and long-term debt) held in the Company’s Canadian operations and foreign subsidiaries. TheCompany manages its exposure to foreign exchange fluctuations on these items by matching foreign currency assets with foreign currency liabilities and through the use of foreign currency forward contracts.
Foreign exchange fluctuations may also arise on the translation of the Company’s US-based subsidiaries or otherforeign subsidiaries, where the functional currency is different from the Canadian dollar, and are recorded in othercomprehensive (loss) income. The Company does not hedge for this foreign exchange risk.
Price riskThe Company’s investments held for self-insured liabilities are exposed to price risk arising from changes in themarket values of the equity securities. This risk is mitigated because the portfolio of equity funds is monitoredregularly and appropriately diversified.
A 1.0% increase or decrease in equity prices at December 31, 2019, would increase or decrease the Company’s netincome by $0.4, respectively.
26. Capital ManagementThe Company’s objective when managing capital is to provide sufficient capacity to cover normal operating andcapital expenditures, acquisition growth, payment of dividends, and opportunistic share repurchases under its NCIB program, while maintaining an adequate return for shareholders. The Company defines its capital as cash, the aggregate of long-term debt (including the current portion) and shareholders’ equity.
	December 31	December 31
			2019	2018
			$	$
Current portion of long-term debt			46.9	48.5
Non-current portion of long-term debt			814.0			885.2
Long-term debt			860.9	933.7
Bank indebtedness			19.5	-
Less: cash and deposits			(223.5)	(185.2)
Net debt			656.9	748.5
Shareholders' equity			1,875.5	1,906.9
Total capital managed			2,532.4	2,655.4
The Company manages its capital structure to maintain the flexibility to adjust to changes in economic conditions andacquisition growth and to respond to interest rate, foreign exchange, credit, and other risks. To maintain or adjust itscapital structure, the Company may purchase shares for cancellation pursuant to NCIB, issue new shares, or raise orretire debt.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019					F-53	Stantec Inc.

The Company is subject to restrictive covenants related to its Credit Facilities (measured quarterly). These covenants include but are not limited to a leverage ratio and an interest coverage ratio (non-IFRS measures). Theleverage ratio is calculated as the aggregate amount of indebtedness, less unencumbered cash of up to $150.0Canadian dollars, to EBITDA (pre-IFRS 16 basis as more fully defined in the Credit Facility agreement). The interestcoverage ratio is calculated as EBITDA to interest expense (pre-IFRS 16 basis). Failure to meet the terms of one ormore of these covenants may constitute a default, potentially resulting in accelerating the repayment of the debtobligation. These covenants are based on the credit facility agreement (note 17).
The Company was in compliance with the covenants under these agreements as at and throughout the year endedDecember 31, 2019.
27. Income TaxesThe effective income tax rate for continuing operations in the consolidated statements of income differs from statutoryCanadian tax rates as a result of the following:
	For the year ended
	December 31
	2019	2018
			%	%
Income tax expense at statutory Canadian rates	27.0	27.1
Increase (decrease) resulting from:
Rate differential on foreign income	2.2	(3.1)
Non-deductible expenses and non-taxable income	0.7	0.8
Unrecognized tax losses and temporary differences	0.6	2.0
Transition tax related to US tax reform	0.4	(4.4)
Research and development and other tax credits	(1.0)	(0.7)
Other	(3.1)	2.6
	26.8	24.3
Major components of current income tax expense from continuing operations are as follows:
	For the year ended
	December 31
	2019	2018
			$	$
Ongoing operations	54.9	64.5
Transition tax related to US tax reform	1.1	(10.0)
Total current income tax expense	56.0	54.5
Major components of deferred income tax expense from continuing operations are as follows:
	For the year ended
	December 31
	2019	2018
			$	$
Origination and reversal of timing differences	12.9	(1.9)
Unrecognized tax losses and temporary differences	7.8	2.7
Change of tax rates	(1.0)	(0.1)
Recovery arising from previously unrecognized tax assets	(4.6)	(0.2)
Total deferred income tax expense	15.1	0.5
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019					F-54	Stantec Inc.

Significant components of net deferred income tax assets (liabilities) are as follows:
	December 31	December 31
			2019	2018
			$	$
Deferred income tax assets (liabilities)Lease liabilities
			162.0	-
Differences in timing of taxability of revenue and deductibility of expenses			16.2	33.4
Loss and tax credit carryforwards			11.4	16.7
Employee defined benefit plan			8.5	7.7
Other			1.1	2.5
Carrying value of property and equipment in excess of tax cost			(22.7)	(7.3)
Carrying value of intangible assets in excess of tax cost			(90.1)	(86.1)
Lease assets			(127.7)	-
			(41.3)	(33.1)
The following is a reconciliation of net deferred tax assets (liabilities):
	December 31	December 31
			2019	2018
			$	$
Balance, beginning of the year			(33.1)	(31.4)
Impact of IFRS 16 in 2019 and IFRS 15 and IFRS 9 in 2018			11.5	6.7
January 1, 2019			(21.6)	(24.7)
Discontinued operations-	(8.6)
Tax effect on other comprehensive (loss) income			4.0	2.0
Impact of foreign exchange			0.8	(2.3)
Other			0.2	(0.1)
Deferred taxes acquired through business combinations			(9.6)	(0.7)
Tax (expense) recovery during the year recognized in net income			(15.1)	1.3
Balance, end of the year			(41.3)	(33.1)
At December 31, 2019, all loss carryforwards and deductible temporary differences available to reduce the taxableincome of Canadian, US, and foreign subsidiaries were recognized in the consolidated financial statements, exceptas noted below.
	December 31	December 31
			2019	2018
			$	$
Deductible temporary differences			9.2	13.0
Non-capital tax losses: Expire (2020 to 2039)
			37.8	27.4
Never expire			71.2	73.4
			109.0	100.8
Capital tax losses: Never expire
			6.8	9.3
			125.0	123.1
Deferred tax assets have not been recognized in respect of these temporary differences and losses because they arerestricted to certain jurisdictions and cannot be used elsewhere in the Company at this time.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019					F-55	Stantec Inc.

United States tax reformIn 2017 ,the United States enacted tax reform legislation through the Tax Cuts and Jobs Act by introducing a newCode Section 965, which imposed a one-time transition tax on deemed mandatory repatriation of earnings. As such,in 2017 the Company recorded a one-time transition tax of $31.2 and realized a recovery of $12.6 on remeasurementof deferred tax assets and liabilities using the substantively enacted federal tax rate of 21.0%. Proposed section 965regulations issued resulted in a tax recovery of $10.0 in 2018 and final regulations released recognized an additionaltransition tax expense of $1.1 in 2019.
The Company will continue to monitor for new interpretation and guidance issued by the US Treasury Department,the IRS, and state taxing authorities. The Company also continues to assess other areas of the Tax Act for significantimpacts on its estimated average annual effective tax rate and accounting policies, such as the base erosion anti-abuse tax, limitations on interest expense deductions, foreign-derived intangible income deduction, and tax on globalintangible low-taxed income. At December 31, 2019, the Company has incorporated the relevant Tax Act items intoits provision calculation.
28. Net Interest Expense and Other Net Finance Expense
Net interest expense	For the year ended
	December 31
	2019	2018
			Note	$	$
Interest on notes payable				2.6	2.1
Interest on credit facilities				37.6	28.4
Interest on lease liabilities			12	32.3	-
Other				0.8	1.1
Total interest expense				73.3	31.6
Interest income on FVOCI investment debt securities				(2.5)	(2.5)
Other				(1.2)	(0.4)
Total interest income				(3.7)	(2.9)
Net interest expense				69.6	28.7
	For the year ended
Other net finance expense	December 31
	2019	2018
				$	$
Realized loss on sale of FVOCI investment debt securities-	0.3
Amortization on FVOCI investment debt securities-	0.5
Bank charges				3.5	5.6
Total other finance expense				3.5	6.4
Derecognition of notes payable				(0.4)	(0.7)
Other net finance expense				3.1	5.7
29. RevenueDisaggregation of revenueThe Company provides professional consulting services in engineering, architecture, interior design, landscapearchitecture, surveying, environmental sciences, project management, and project economics throughout NorthAmerica and globally. The Company has five specialized business operating units: Buildings, Energy & Resources,Environmental Services, Infrastructure, and Water. Revenue is derived principally under fee-for-service agreementswith clients. Disaggregation of revenue by geographic area and service is included in note 35.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019						F-56	Stantec Inc.

Significant increases (decreases) in contract assets and deferred revenue in the year are as follows:
	For the year ended
		December 31, 2019	December 31, 2018
		Contract	Deferred		Contract	Deferred
		Assets	Revenue		Assets	Revenue
					Note	$					$	$	$
Acquisitions
	1.1					4.6	0.7					7.2
Discontinued operations and disposition of subsidiaries		8	-					-	(15.3)	(59.3)
Revenue recognized in 2019 and included in deferred revenue at January 1, 2019, was $174.4 (2018 – $196.4).
Revenue recognized in 2019 from performance obligations satisfied (or partially satisfied) in prior years was less than5% (2018 – 5%) of the Company's gross revenue from continuing operations.
Remaining performance obligations (backlog)The aggregate amount of estimated revenue related to performance obligations that are unsatisfied (or partiallyunsatisfied) as at December 31, 2019, was $4,257 (2018 – $4,179). This amount includes all contracts withcustomers but excludes variable consideration that is not highly probable. The Company expects to recognizeapproximately 77% (2018 – 77%) of this revenue as contracts are completed over the next 18 months with theremainder recognized thereafter.
30. Employee Costs from Continuing Operations
						For the year ended
			December 31
			2019	2018
			$					$
Wages, salaries, and benefits						2,629.9	2,365.0
Pension costs			75.0		77.1
Share-based compensation (note 23)			18.1		5.3
Total employee costs						2,723.0	2,447.4
Direct labor						1,702.9	1,540.0
Indirect labor						1,020.1	907.4
Total employee costs						2,723.0	2,447.4
Direct labor costs include salaries, wages, and related fringe benefits (including pension costs) for labor hoursdirectly associated with the completion of projects. Bonuses, share-based compensation, termination payments, and salaries, wages, and related fringe benefits (including pension costs) for labor hours not directly associated withthe completion of projects are included in indirect labor costs. Indirect labor costs are included in administrative andmarketing expenses in the consolidated statements of income. Included in pension costs is $73.0 (2018 – $70.5)related to defined contribution plans.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019									F-57	Stantec Inc.

31. Other (Income) Expense
	For the year ended
	December 31
	2019	2018
			$	$
Unrealized (gain) loss on equity securities			(7.9)	4.9
Other			(0.3)	(4.8)
Total other (income) expense			(8.2)	0.1
32. Weighted Average Shares OutstandingThe number of basic shares outstanding and diluted common shares, calculated on a weighted average basis, is as follows:
	December 31			December 31
	2019	2018
			#	#
Basic shares outstanding	111,550,424			113,733,118
Share options (dilutive effect in 2019 of 107,168 options; 2018 – 507,066 options)			-	89,200
Diluted shares	111,550,424			113,822,318
At December 31, 2019, no options were antidilutive. At December 31, 2018, 4,480,476 options were antidilutive.
33. Cash Flow InformationA reconciliation of liabilities arising from financing activities for the year ended December 31, 2019, is as follows:
					Revolving				Software	Dividends
					Credit		Term	Lease	Financing	to
					Facility		Loan	Liabilities	Obligations	Shareholders	Total
						$	$	$		$	$	$
January 1, 2019					528.6		308.8	645.0	19.5	15.4	1,517.3
Statement of cash flowsProceeds
					163.4			50.4		-	-	213.8
Repayments or payments					(243.7)			(116.7)	(12.3)	(64.0)	(436.7)
Non-cash changesForeign exchange
						(0.3)		(16.0)	(0.8)	-	(17.1)
Additions and modifications-		125.8	8.4	-	134.2
Dividends declared---	64.7	64.7
Other						-	(0.3)	0.4		0.9	-	1.0
December 31, 2019					448.0		308.5	688.9	15.7	16.1	1,477.2
34. Related-Party DisclosuresAt December 31, 2019, the Company had subsidiaries and structured entities that it controlled and included in itsconsolidated financial statements. The Company also enters into related-party transactions through a number of jointventures, associates, and joint operations. These transactions involve providing or receiving services entered into inthe normal course of business.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share DataDecember 31, 2019
											F-58	Stantec Inc.

The following lists the most significant entities where the Company owns 100% of the voting and restricted securities.
NameJurisdiction of Incorporation
	Nova Scotia, Canada	3221969 Nova Scotia CompanyInternational Insurance Group Inc.Mustang Acquisition Holdings Inc.MWH International, Inc.Stantec Australia Pty LtdStantec Consulting Caribbean Ltd.Stantec Consulting International LLCStantec Consulting International Ltd.Stantec Consulting Ltd./Stantec Experts-conseils ltée
	BarbadosDelaware, United StatesDelaware, United States
	AustraliaBarbadosArizona, United StatesCanadaCanadaMichigan, United StatesNew York, United StatesDelaware, United StatesUnited KingdomAlberta, CanadaNew ZealandDelaware, United States

Stantec Consulting Michigan Inc.Stantec Consulting Services Inc.Stantec Delaware II LLCStantec Holding (2017) LimitedStantec Holdings II Ltd.Stantec New ZealandStantec Technology International Inc.Stantec UK Limited
	United Kingdom
There are no significant restrictions on the Company’s ability to access or use assets or to settle liabilities of itssubsidiaries. Financial statements of all subsidiaries are prepared as at the same reporting date as the Company’s.
Structured entitiesAt December 31, 2019, the Company had management agreements in place with several entities to provide variousservices, including architecture, engineering, planning, and project management. These entities have been designedso that voting rights are not the dominant factor in deciding who controls the entity. Each entity has a managementagreement in place that provides the Company with control over the relevant activities of the entity where it has beenassessed that the Company is exposed to variable returns of the entity and can use its power to influence thevariable returns. The Company receives a management fee generally equal to the net income of the entities and hasan obligation regarding the liabilities and losses of the entities. Based on these facts and circumstances,management determined that the Company controls these entities and they are consolidated in the Company’sconsolidated financial statements. The Company does not have any unconsolidated structured entities.
The following lists the most significant structured entities that are consolidated in the Company’s financial statements.
NameJurisdiction of Incorporation
Stantec Architecture Inc.			North Carolina, United States
Stantec Architecture Ltd.			Canada
Stantec Geomatics Ltd.			Alberta, Canada
Stantec International Inc.			Pennsylvania, United States
Joint operationsThe Company also conducted its business through the following significant joint operations.
			OwnershipInterests
NameJurisdiction
Stantec-Bonatti, a Joint Venture			85%	Canada
Stantec/SG, a Joint Venture			65%	United States
West, a Joint Venture			50%	United States
Starr ll, a Joint Venture			47%	United States
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share DataDecember 31, 2019
					F-59	Stantec Inc.

Joint ventures and associatesThe Company enters into transactions through its investments in joint ventures and associates. The following tableprovides the total dollar amount for transactions that have been entered into with related parties.
	For the year ended December 31, 2019	For the year ended December 31, 2018
						Amounts Owed			Amounts Owed
	Sales to			Distributions		by Related	Sales to					Distributions	by Related
			Related Parties		Paid		Parties	Related Parties					Paid		Parties
											$	$				$	$	$	$
Joint ventures											40.2	0.9	8.9	39.8				0.3	10.2
Associates											1.9	0.2	0.2				4.3	0.2	1.0
Compensation of key management personnel and directors of the Company
								For the year ended
								December 31
								2019		2018
								$		$
Salaries and other short-term employment benefits								11.0		9.0
Directors’ fees								0.8		0.8
Share-based compensation								8.3		0.9
Total compensation								20.1		10.7
The Company’s key management personnel for 2019 and 2018 include its chief executive officer (CEO), chiefoperating officer, chief business officer, chief financial officer, chief practice and project officer, and executive vicepresidents. The amounts disclosed in the table are the amounts recognized as an expense related to keymanagement personnel and directors during the year. Share-based compensation includes the fair value adjustmentfor the year.
35. Segmented InformationThe Company provides comprehensive professional services in the area of infrastructure and facilities throughoutNorth America and globally. It considers the basis on which it is organized, including geographic areas, to identify itsreportable segments. Operating segments of the Company are defined as components of the Company for whichseparate financial information is available and are evaluated regularly by the chief operating decision maker whenallocating 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.
The Company's reportable segments are Canada, United States, and Global. These reportable segments provideprofessional consulting in engineering, architecture, interior design, landscape architecture, surveying, environmentalsciences, project management, and project economics services in the area of infrastructure and facilities. Theoperating results of Construction Services, previously a reportable segment, were reported as discontinuedoperations (note 8).
Segment performance is evaluated by the CEO based on gross margin and is measured consistently with grossmargin in the consolidated financial statements. Inter-segment revenues are eliminated on consolidation andreflected in the Adjustments and Eliminations column.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019						F-60			Stantec Inc.

Reportable segments from continuing operations
	For the year ended December 31, 2019
					Adjustments
	United			Total		and
		Canada	States		Global	Segments	Eliminations Consolidated
							$	$						$	$	$	$
Total gross revenue		1,314.7	2,709.8		914.2	4,938.7		(111.4)				4,827.3
Less inter-segment revenue		31.6	21.7		58.1	111.4		(111.4)			-
Gross revenue from external
customers		1,283.1	2,688.1		856.1	4,827.3		-				4,827.3
Less subconsultants and other direct
expenses		173.6	740.5		201.9	1,116.0		-				1,116.0
Total net revenue		1,109.5	1,947.6		654.2	3,711.3		-				3,711.3
Gross margin		571.1	1,070.2		367.1	2,008.4		-				2,008.4
	For the year ended December 31, 2018
					Adjustments
				Total	and
		Canada United States	Global	Segments	Eliminations Consolidated
							$	$						$	$	$	$
Total gross revenue		1,311.0	2,365.9		742.7	4,419.6		(135.8)				4,283.8
Less inter-segment revenue		35.2	31.3		69.3	135.8		(135.8)			-
Gross revenue from external
customers		1,275.8	2,334.6		673.4	4,283.8		-				4,283.8
Less subconsultants and other direct
expenses		188.0	560.2		180.4	928.6		-			928.6
Total net revenue		1,087.8	1,774.4		493.0	3,355.2		-				3,355.2
Gross margin		557.0	982.5		275.7	1,815.2		-				1,815.2
The following tables disclose disaggregation of revenue by geographic area and services:
Geographic information	Non-Current Assets				Gross Revenue
	December 31		December 31 For the year ended December 31
	2019			2018		2019			2018
			$	$		$			$
Canada	760.5			535.2	1,283.1					1,275.8
United States	1,486.2							1,342.3	2,688.1				2,334.6
United Kingdom	143.3			140.5		279.1			184.9
Global	326.4			140.3		577.0			488.5
	2,716.4							2,158.3	4,827.3				4,283.8
Non-current assets consist of property and equipment, lease assets, goodwill, and intangible assets. Geographicinformation is attributed to countries based on the location of the assets.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019	F-61					Stantec Inc.

Gross revenue is attributed to countries based on the location of the project.
Gross revenue by services	For the year ended
	December 31
	2019	2018
			$	$
Buildings	1,053.3	938.7
Energy & Resources	613.1	597.5
Environmental Services	788.6	682.8
Infrastructure	1,401.7	1,169.3
Water	970.6	895.5
Total gross revenue from external customers	4,827.3	4,283.8
CustomersThe Company has a large number of clients in various industries and sectors of the economy. No particular customerexceeds 10% of the Company’s gross revenue.
36. Investment Tax CreditsInvestment tax credits, arising from qualifying scientific research and experimental development efforts pursuantto existing tax legislation, are recorded as a reduction of administrative and marketing expenses when there isreasonable assurance of their ultimate realization. In 2019, investment tax credits of $11.5 (2018 – $7.3) were recorded.
37. Events after the Reporting PeriodNormal Course Issuer BidFrom January 1, 2020, to February 26, 2020, pursuant to the NCIB, the Company repurchased and cancelled141,700 common shares at an average price of $37.03 per share for an aggregate price of $5.2.
DividendOn February 26, 2020, the Company declared a dividend of $0.155 per share, payable on April 15, 2020, toshareholders of record on March 31, 2020.
38. Comparative FiguresCertain comparative figures have been reclassified to conform to the presentation adopted for 2019.
Notes to the Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

December 31, 2019					F-62	Stantec Inc.

Aménagement d'une passerelle et d'un marais aux résidences SEVA /
Development of a footbridge and a marsh at SEVA residences Candiac, Québec, Canada
Ecosystem Restoration
	S TA N T E C I N C .	15

Corporate Information
	Corporate Officers Douglas K. Ammerman	Board of DirectorsDouglas K. Ammerman (1)
	Chair of the Board of Directors	Chair of the Board of Directors
	Laguna Beach, California	Laguna Beach, California
	Gordon A. Johnston	Gordon A. Johnston
	President & Chief Executive Officer	President & CEO
	Edmonton, Alberta	Edmonton, Alberta
	Theresa B. Y. Jang	Richard C. Bradeen (1)
	Executive Vice President &	Director
	Chief Financial Officer	Montréal, Québec
	Edmonton, Alberta
Shelley Brown (2)
	Stuart E. Lerner	Director
	Executive Vice President &	Saskatoon, Saskatchewan
	Chief Operating Officer, North America
Delores M. Etter (2, 3)
	New York, New York
Director
	Catherine M. Schefer	Camano Island, Washington
	Executive Vice President &
Robert J. Gomes (3)
	Chief Operating Officer, Global
Director
	Warrington, United Kingdom
Edmonton, Alberta
	Steve M. Fleck
Susan E. Hartman (2)
	Executive Vice President &
Director
	Chief Practice & Project Officer
Evergreen, Colorado
	Vancouver, British Columbia
Donald J. Lowry (1, 3)
	Valentino DiManno
Director
	Executive Vice President &
Edmonton, Alberta
	Chief Business Officer
	Calgary, Alberta	Marie-Lucie Morin (1, 2)
Director
	Marshall W. Davert
Ottawa, Ontario
	Executive Vice President &
	Chief Innovation Officer
	Broomfield, Colorado
	Paul J. D. Alpern
	Senior Vice President,
	Secretary and General Counsel
	Sherwood Park, Alberta
(1)	Member of Audit and Risk Committee	Head Office 400-10220 103 Avenue NW
(2)	Member of Corporate Governance and
Compensation Committee	Edmonton, Alberta T5J 0K4 Canada
(3)	Member of Health, Safety, Security,	Ph: 780-917-7000
Environment, and Sustainability Committee	Fx: 780-917-7330
	ir@stantec.com
ON THE COVER
	Securities Exchange Listing Stantec shares are listed on the Toronto
Joint Venture with Snøhetta
Temple University – Charles Library
Philadelphia, Pennsylvania	Stock Exchange and the New York Stock
Photo credit: Michael Grimm	Exchange under the symbol STN.