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Published: 2020-08-05
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Interim Condensed Consolidated Statements of Financial Position(Unaudited)
        June 30December 31
c 313120202019
(In millions of Canadian dollars)Notes$$
ASSETSCurrentCash and deposits
5266.3223.5
Trade and other receivables6777.1817.7
Unbilled receivables428.2374.2
Contract assets74.167.5
Income taxes recoverable44.336.2
Prepaid expenses47.542.9
Other assets822.118.1
Total current assets1,659.61,580.1
Non-currentProperty and equipment
281.9286.5
Lease assets7 532.2558.5
Goodwill151,709.01,651.8
Intangible assets15197.8219.6
Investments in joint ventures and associates 8.98.8
Net employee defined benefit asset1134.826.0
Deferred tax assets31.931.9
Other assets8209.4198.3
Total assets     4,665.5           4,561.5
LIABILITIES AND EQUITYCurrentBank indebtedness
-19.5
Trade and other payables589.8576.4
Lease liabilities7 107.099.9
Deferred revenue180.0199.2
Income taxes payable29.328.4
Long-term debt938.446.9
Provisions1019.323.9
Other liabilities1212.512.1
Total current liabilities976.31,006.3
Non-currentLease liabilities
7 567.9589.0
Income taxes payable12.211.6
Long-term debt9786.4814.0
Provisions10111.689.1
Net employee defined benefit liability1176.485.2
Deferred tax liabilities80.273.2
Other liabilities12 24.816.0
Total liabilities2,635.82,684.4
Shareholders’ equityShare capital
13922.5879.8
Contributed surplus16.623.9
Retained earnings951.1917.7
Accumulated other comprehensive income 138.354.1
Total shareholders’ equity2,028.51,875.5
Non-controlling interests1.21.6
Total liabilities and equity4,665.54,561.5
 See accompanying notes
F-1Stantec Inc.
Interim Condensed Consolidated Statements of Income(Unaudited)
For the quarter endedFor the two quarters ended
June 30June 30
2020201920202019
(In millions of Canadian dollars, except per share amounts)Notes$$$$
Continuing operationsGross revenue
1,205.61,224.12,426.12,375.6
Less subconsultant and other direct expenses254.5270.5519.8517.9
Net revenue951.1953.61,906.31,857.7
Direct payroll costs16461.4436.1909.9851.7
Gross margin489.7517.5996.41,006.0
Administrative and marketing expenses7,13,16344.0372.4711.3729.5
Depreciation of property and equipment14.914.729.428.4
Impairment of lease assets72.0-11.7-
Depreciation of lease assets730.628.560.255.9
Amortization of intangible assets13.617.627.833.0
Net interest expense7,912.517.727.534.9
Other net finance expense 0.81.32.42.6
Share of income from joint ventures and associates(0.6)(0.4)(0.2)(0.4)
Foreign exchange loss (gain)0.8(0.2)(0.5)2.7
Other (income) expense17(2.2)(1.5)8.2(6.5)
Income before income taxes and discontinued operations73.367.4118.6125.9
Income taxesCurrent 
21.618.830.214.6
Deferred(0.9)(0.7)6.317.1
Total income taxes20.718.136.531.7
Net income for the period from continuing operations52.649.382.194.2
Discontinued operationsNet income from discontinued operations, net of tax
4--10.2-
Net income for the period52.649.392.394.2
Weighted average number of shares outstanding - basic111,346,512 111,676,731 111,355,426 111,740,256
Weighted average number of shares outstanding - diluted111,851,675 111,684,858 111,804,674 111,740,256
Shares outstanding, end of the period111,691,138 111,700,217 111,691,138 111,700,217
Earnings per share, basic and diluted
Continuing operations, basic0.470.440.740.84
Discontinued operations, basic--0.09-
Total basic earnings per share0.470.440.830.84
Continuing operations, diluted0.470.440.740.84
Discontinued operations, diluted--0.09-
Total diluted earnings per share0.470.440.830.84
 See accompanying notes
F-2Stantec Inc.
Interim Condensed Consolidated Statements of Comprehensive Income (Unaudited)
For the quarter ended For the two quarters ended 
June 30June 30
2020201920202019
(In millions of Canadian dollars)Notes$$$$
Net income for the period52.649.392.394.2
Other comprehensive income (loss)
Items that may be reclassified to net income in subsequent periods:
    Exchange differences on translation of foreign operations15(29.3)(42.9)80.3(76.2)
    Net unrealized gain on FVOCI financial assets8    2.00.33.11.0
    Unrealized loss on interest rate swap15(0.3)(2.2)(5.0)(2.7)
(27.6)(44.8)78.4(77.9)
 Items not to be reclassified to net income:
 Remeasurement gain on net employee defined benefit liability 11--5.8-
Other comprehensive (loss) income for the period, net of tax(27.6)(44.8)84.2(77.9)
Total comprehensive income for the period, net of tax25.04.5176.516.3
 See accompanying notes
F-3Stantec Inc.
Interim Condensed Consolidated Statements 
 of Shareholders’ Equity  (Unaudited)
   SharesShareAccumulated Other
Outstanding Capital ContributedRetainedComprehensive
(note 13)(note 13)SurplusEarningsIncome (Loss)Total
(In millions of Canadian dollars, except shares)#$$$$$
Balance, December 31, 2018111,860,105867.824.8851.2163.11,906.9
Impact of change in accounting policy, 
  net of tax of $8.7(34.0)(34.0)
Adjusted balance, January 1, 2019111,860,105867.824.8817.2163.11,872.9
Net income94.294.2
Other comprehensive loss(77.9)(77.9)
Total comprehensive income (loss)94.2(77.9)16.3
Share options exercised for cash222,6244.04.0
Share-based compensation expense2.32.3
Shares repurchased under Normal Course
Issuer Bid(382,512)(3.0)(0.1)(8.8)(11.9)
Reclassification of fair value of share options previously expensed1.1(1.1)-
Dividends declared (32.4)(32.4)
Balance, June 30, 2019111,700,217869.9     25.9870.285.21,851.2
Balance, December 31, 2019111,212,975879.823.9917.754.11,875.5
Net income92.392.3
Other comprehensive income84.284.2
Total comprehensive income 92.384.2176.5
Share options exercised for cash1,324,33441.841.8
Share-based compensation expense0.60.6
Shares repurchased under Normal Course
Issuer Bid (846,171)(6.8)(0.2)(24.4)(31.4)
Reclassification of fair value of share options previously expensed7.7(7.7)-
Dividends declared(34.5)(34.5)
Balance, June 30, 2020111,691,138922.516.6951.1138.32,028.5
 See accompanying notes
F-4Stantec Inc.
Interim Condensed Consolidated Statements of Cash Flows(Unaudited)
For the quarter ended For the two quarters ended 
 June 30 June 30
    2020201920202019
(In millions of Canadian dollars)Notes$$$$
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIESCash receipts from clients
1,245.41,213.02,423.12,323.7
Cash paid to suppliers(296.7)(366.3)(787.6)(881.3)
Cash paid to employees16(668.0)(653.1)(1,376.3)(1,312.7)
Interest received1.50.92.01.8
Interest paid7,9(13.3)(18.4)(28.3)(36.3)
Finance costs paid(0.8)(1.3)(1.7)(2.6)
Income taxes paid(16.6)(12.5)(25.1)(18.8)
Cash flows from operating activities from continuing operations251.5162.3206.173.8
Cash flows (used in) from operating activities from discontinued operations(0.9)(2.0)1.5(3.6)
Net cash flows from operating activities250.6160.3207.670.2
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIESBusiness acquisitions, net of cash acquired
---(77.1)
Purchase of investments held for self-insured liabilities8(2.9)-(14.6)-
Purchase of intangible assets(1.2)(0.4)(1.7)(1.8)
Purchase of property and equipment(7.3)(18.2)(15.8)(39.0)
Other0.2-0.31.1
Net cash flows used in investing activities(11.2)(18.6)(31.8)(116.8)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES(Repayment of) proceeds from revolving credit facility
9,19(62.0)(30.6)(2.0)94.7
Repayment of notes payable and other long-term debt(7.8)(13.0)(24.3)(22.8)
Net payment of lease obligations7(31.8)(27.0)(64.8)(52.6)
Proceeds from lease inducements72.52.82.77.6
Payment of software financing obligations (3.1)-(11.3)(8.2)
Repurchase of shares for cancellation13(0.1)-(33.4)(11.9)
Proceeds from share options exercised19.11.041.84.0
Payment of dividends to shareholders13(17.2)(16.2)(33.3)(31.6)
Net cash flows used in financing activities19(100.4)(83.0)(124.6)(20.8)
Foreign exchange (loss) gain on cash held in foreign currency   (5.5)(5.8)11.1(11.1)
Net increase (decrease) in cash and cash equivalents133.552.962.3(78.5)
Cash and cash equivalents, beginning of the period132.853.8204.0185.2
Cash and cash equivalents, end of the period5266.3106.7266.3106.7
See accompanying notes
F-5Stantec Inc.
Index to the Notes to the Unaudited Interim CondensedConsolidated Financial Statements NotePage
1 Corporate InformationF-7
2 Basis of PreparationF-7
3 Recent Accounting Pronouncements and Changes to Accounting PoliciesF-8
4 Discontinued Operations F-8
5 Cash and Cash EquivalentsF-9
6 Trade and Other ReceivablesF-9
7 Lease Assets and Lease LiabilitiesF-9
8 Other AssetsF-10
9 Long-Term DebtF-11
10 ProvisionsF-12
11 Employee Defined Benefit ObligationsF-12
12 Other LiabilitiesF-12
13 Share CapitalF-13
14 Fair Value MeasurementsF-14
15 Financial InstrumentsF-15
16 Employee Costs from Continuing OperationsF-16
17 Other (Income) ExpenseF-17
18 Income TaxesF-17
19 Cash Flow InformationF-17
20 Related-Party DisclosuresF-18
21 Segmented InformationF-18
22 Event after the Reporting PeriodF-21
23 Comparative FiguresF-21
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-6Stantec Inc.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
1. Corporate InformationThe interim condensed consolidated financial statements (consolidated financial statements) of Stantec Inc., itssubsidiaries, and its structured entities (the Company) for the two quarters ended June 30, 2020, were authorized forissuance in accordance with a resolution of the Company’s Audit and Risk Committee on August 5, 2020. TheCompany was incorporated under the Canada Business Corporations Act on March 23, 1984. Its shares are tradedon 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 for the two quarters ended June 30, 2020, were prepared in accordance withInternational Accounting Standard (IAS) 34 Interim Financial Reporting. These consolidated financial statements donot include all information and disclosures required in the annual consolidated financial statements and should beread in conjunction with the Company’s December 31, 2019, annual consolidated financial statements.
The accounting policies applied when preparing the Company’s consolidated financial statements are consistent withthose followed when preparing the annual consolidated financial statements for the year ended December 31, 2019,except as described in notes 3 and 16.
The preparation of these consolidated financial statements requires management to make judgments, estimates, andassumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue,and expenses. Actual results may differ from these estimates. The significant judgments made by management whenapplying the Company’s accounting policies and the key sources of estimation uncertainty were the same as thosethat applied to the Company’s December 31, 2019, annual consolidated financial statements, except for the changein use of lease assets, which included estimating discount rates and cash receipts from subleases to determine thenet lease impairment loss as described in note 7, as noted below.
In March of 2020, the World Health Organization (WHO) characterized COVID-19 as a pandemic. In the secondquarter of 2020, countries such as the United States and Canada have begun to implement staged plans to reopentheir economies. The COVID-19 pandemic, in the first two quarters of 2020 had, and will continue to have, adversefinancial impacts on the global economy, including but not limited to, negative impacts on demand for goods andservices, disruptions to supply-chains, and volatility in interest rates and market prices of equities and certaincommodities. There is significant uncertainty regarding the length of time it will take for these financial impacts toreverse. As the magnitude of the COVID-19 pandemic is continuously evolving, it is impracticable to determine theeffect that the COVID-19 pandemic will have on management’s judgments, estimates, and assumptions. 
These consolidated financial statements are presented in Canadian dollars, and all values are rounded to the nearest million ($000,000), except where otherwise indicated.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-7Stantec Inc.
3. Recent Accounting Pronouncements and Changes to Accounting PoliciesCertain amendments disclosed in note 6 of the Company's December 31, 2019, annual consolidated financialstatements had an effective date of January 1, 2020, but did not have an impact on the Company's consolidatedfinancial statements or accounting policies during the two quarters ended June 30, 2020. This included Interest RateBenchmark Reform (Amendments to IFRS 9, IAS 39, and IFRS 7) which provided temporary relief during the periodof uncertainty for companies that have hedging relationships that are directly affected by the reform. The Company'scash flow hedge is not affected by the reform because the hedged cash flows are based on an interbank offered ratethat will continue to be published after the reform.
a) Recent adoptionsIn May 2020, the IASB issued COVID-19-Related Rent Concessions (Amendments to IFRS 16). The amendmentsprovide temporary relief to lessees in determining whether COVID-19 related rent concessions are leasemodifications. The amendments are effective for annual periods beginning on or after June 1, 2020, with earlierapplication permitted. The Company early adopted these amendments in the second quarter of 2020. As a result ofthe amendments, the Company accounts for all COVID-19 related rent concessions for payments originally due on orbefore June 30, 2021, as if they were not lease modifications. The amendments did not have a material impact on thefinancial position or performance of the Company.
b) Future adoptionsThe standards, amendments, and interpretations issued before 2020 but not yet adopted by the Company have beendisclosed in note 6 of the Company's December 31, 2019, annual consolidated financial statements. In addition, thefollowing amendment was issued during 2020:
In May 2020, the IASB issued Onerous Contracts-Cost of Fulfilling a Contract (Amendments to IAS 37). Theamendments clarify which costs to include in assessing whether a contract is onerous. The amendments areeffective January 1, 2022, with earlier application permitted.
The Company is currently considering the impact of adopting these standards, amendments, and interpretations onits consolidated financial statements.
4. Discontinued Operations In 2018, the Company completed the sale of its Construction Services reportable segment, reported as discontinuedoperations in these consolidated financial statements for all periods presented as prescribed by IFRS 5.
In the fourth quarter of 2019, the Company entered into settlement agreements to release its obligations from theongoing waste-to-energy project. The terms and conditions of these agreements were satisfied in the first quarter of 2020 and resulted in the recovery of provisions for expected project losses and accrued liabilities in theamount of $10.8. 
The results of discontinued operations are summarized as follows:
For the quarter endedFor the two quarters ended
June 30June 30
2020 2019 2020 2019 
$$ $ $ 
Revenue--3.7-
Expenses --(3.7)0.8
Project loss recovery--10.8-
Profit from operating activities, before income taxes--10.80.8
Income taxes--(0.6)(0.8)
Net income from discontinued operations--10.2-
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-8Stantec Inc.
5. 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:
June 30June 30
20202019
$$
Cash 260.0102.4
Unrestricted investments6.34.3
Cash and deposits266.3106.7
Cash and cash equivalents266.3106.7
6. Trade and Other Receivables
June 30December 31
20202019
$$
Trade receivables, net of expected credit losses of $3.0 (2019 – $2.2)748.3787.3
Holdbacks, current18.320.6
Other10.59.8
Trade and other receivables777.1817.7
The aging analysis of gross trade receivables is as follows:
Total1–3031–6061–9091–120121+
$$$$$$
June 30, 2020751.3423.3149.962.541.574.1
December 31, 2019789.5395.9221.163.527.881.2
Information about the Company’s exposure to credit risks for trade and other receivables is included in note 15. 
7. Lease Assets and Lease Liabilities
Lease 
Lease assets Liabilities 
BuildingOtherTotal
$$$$
Balance, beginning of the period554.44.1558.5(688.9)
Additions32.10.832.9(31.8)
Depreciation(58.8)(1.4)(60.2)-
Modifications(0.2)0.1(0.1)-
Impairment(11.7)-(11.7)  -
Accretion of interest ---(15.1)
Payments, net of receipts---77.2
Foreign exchange12.70.112.8(16.3)
528.53.7532.2(674.9)
Less current portion---107.0
Long-term portion528.53.7532.2(567.9)
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-9Stantec Inc.
During the first two quarters of 2020, a change in use related to certain real estate lease assets resulted in a netimpairment loss of $11.7. The recoverable amount determined for those lease assets is based on the value in usemethod and a weighted average discount rate of 4.65% and involved estimates of sublease commencement dates,market rates, terms, and cash receipts. The impaired lease assets are within the Canada and Global reportablesegments (note 21).
During the second quarter of 2020, as a result of the COVID-19 pandemic, the Company was granted $1.2 of totaltemporary deferrals for lease payments originally due before the end of 2020 which are due to be settled within oneyear. These were not accounted for as lease modifications as permitted by the amendments to IFRS 16 (note 3),and did not result in the extinguishment of any portion of the lease liabilities.
8. Other AssetsJune 30December 31
20202019
$$
Financial assets  Investments held for self-insured liabilities
14153.0
  Holdbacks on long-term contracts33.9
  Other12.6
Non-financial assets16.9
216.4
Less current portion - financial11.6
Less current portion - non-financial6.5
Long-term portion198.3
Investments held for self-insured liabilities include government and corporate bonds that are classified as FVOCI withunrealized gains (losses) recorded in other comprehensive income (loss) and equity securities that are classified atFVPL with gains (losses) recorded in net income. During the first two quarters of 2020, the Company recorded anunrealized loss on equity securities of $7.0 (June 30, 2019 – unrealized gain of $5.6) (note 17) and an unrealizedgain on bonds of $3.1 (June 30, 2019 – unrealized gain $1.0).
Their fair value and amortized cost are as follows:
June 30December 31
20202019
$$
Amortized Amortized 
   Fair Value Fair Value  Cost/Cost 
Bonds114.5102.8103.4
Equity securities49.250.246.1
Total163.7153.0149.5
The bonds bear interest at rates ranging from 1.13% to 5.00% per annum (December 31, 2019 – 0.75% to 5.00%).The terms to maturity of the bond portfolio, stated at fair value, are as follows:
June 30December 31
2019
$$
Within one year9.5
After one year but not more than five years79.9
More than five years13.4
Total102.8
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-10Stantec Inc.
9. Long-Term Debt
June 30December 31
20202019
$$
Revolving credit facility446.0448.0
Term loan308.8308.5
Notes payable64.788.7
Software financing obligations5.315.7
824.8860.9
Less current portion38.446.9
Long-term portion786.4814.0
Interest on the Company's long-term debt during the second quarter of 2020 was $5.8 (June 30, 2019 – $10.3) and  for the first two quarters of 2020, was $14.0 (June 30, 2019 – $20.2).
Revolving credit facilities and term loan
The Company has syndicated credit facilities consisting of a senior revolving credit facility in the maximum amount of $800.0 and senior term loans of $310.0 in two tranches. Additional funds of $600.0 can be accessed subject toapproval and under the same terms and conditions. The average interest rate for the credit facilities at June 30,2020, was 2.32% (December 31, 2019 – 3.77%).
The funds available under the revolving credit facility are reduced by any outstanding letters of credit issued pursuantto the facility agreement. At June 30, 2020, the Company had issued outstanding letters of credit that expire atvarious dates before May 2021, are payable in various currencies, and total $14.3 (December 31, 2019 – $49.9).These letters of credit were issued in the normal course of operations, including the guarantee of certain office rentalobligations. At June 30, 2020, $339.7 (December 31, 2019 – $282.6) was available in the revolving credit facility forfuture activities.
The Company is subject to restrictive covenants  related to its credit facilities which are measured quarterly. Thesecovenants are consistent with those disclosed in the Company's annual consolidated financial statements for the yearended December 31, 2019. The Company was in compliance with these covenants as at and throughout the twoquarters ended June 30, 2020.
Effective January 1, 2020, the Company entered into an additional separate letter of credit facility outside of itsrevolving credit facilities that provides letters of credit up to $100.0. At June 30, 2020, $70.5 (December 31, 2019 – $33.3) in aggregate letters of credit outside of the Company’s revolving credit facility were issued and outstanding.These were issued in various currencies. Of these letters of credit, $56.8 (December 31, 2019 – $18.7) expire atvarious dates before July 2021 and $13.7 (December 31, 2019 – $14.6) have open-ended terms.
Surety facilitiesThe Company has surety facilities, primarily related to Construction Services, to accommodate the issuance of bondsfor certain types of project work. At June 30, 2020, the Company had issued $279.4 (December 31, 2019 – $392.1) in bonds under these surety facilities. These bonds expire at various dates before June 2025. Although the Companyremains obligated for these instruments, the purchaser of the Construction Services business has indemnified theCompany for any obligations that may arise from these bonds (note 4).
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-11Stantec Inc.
10. Provisions
Self- Expected 
insured Onerous project Lease 
liabilities Claims contracts losses restoration Total 
$$$$$$
Balance, beginning of the period80.115.40.44.812.3113.0
Current period provisions26.92.9-0.11.431.3
Paid or otherwise settled(8.0)(4.5)(0.2)(3.3)(0.6)(16.6)
Impact of foreign exchange3.00.1--0.13.2
102.013.90.21.613.2130.9
Less current portion5.210.20.11.62.219.3
Long-term portion96.83.70.1-11.0111.6
11. Employee Defined Benefit ObligationsThe calculation of defined benefit obligations (DBOs) is performed at least annually by a qualified actuary, or moreoften as required due to plan amendments, curtailments, or settlements, or in the event that fluctuations in themarket significantly impact the assumptions used in the most recent actuarial valuation. 
The COVID-19 pandemic affected the markets significantly and impacted certain assumptions used in themeasurement of the DBOs and the fair value of plan assets. As such, the Company remeasured the DBOs and thefair value of plan assets in the first quarter of 2020. The remeasurement resulted in an increase in the discount ratefrom 1.89% to 2.20%. The increase to the discount rate in the first quarter of 2020 resulted in a decrease in theDBOs, partly offset by a decrease in the fair value of plan assets for a remeasurement gain of $7.2($5.8 net of deferred income tax expense), recorded through other comprehensive income. In the second quarter of2020 there were no further significant changes to the assumptions and no adjustments made.
12. Other Liabilities
June 30December 31
20202019
Note$$
Cash-settled share-based compensation1319.323.0
Interest rate swap15     8.1     1.5
Other9.93.6
    37.3     28.1
Less current portion    12.5     12.1
Long-term portion     24.8     16.0
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-12Stantec Inc.
13. 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 that allows thepurchase of common shares for cancellation under the NCIB at any time during predetermined trading blackoutperiods. Such purchases are determined by the broker in its sole discretion based on parameters established by theCompany under the ASPP. As at June 30, 2020 and December 31, 2019, no liability was recorded in the Company'sconsolidated statements of financial position in connection with the ASPP.
During the first two quarters of 2020, 846,171 common shares (June 30, 2019 – 382,512) were repurchased forcancellation pursuant to the NCIB at a cost of $31.4 (June 30, 2019 – $11.9). Of this amount, $6.8 and $0.2 (June 30, 2019 – $3.0 and $0.1) reduced share capital and contributed surplus, respectively, and $24.4 (June 30, 2019 – $8.8) was charged to retained earnings. 
DividendsHolders of common shares are entitled to receive dividends when declared by the Company’s board of directors. The table below describes the dividends paid in 2020. 
Dividend per Share Paid 
 Date DeclaredRecord DatePayment Date $  $ 
 November 6, 2019December 30, 2019January 15, 20200.145016.1
 February 26, 2020March 31, 2020April 15, 20200.155017.2
 May 6, 2020June 30, 2020July 15, 20200.1550-
At June 30, 2020, trade and other payables included $17.3 (December 31, 2019 – $16.1) related to the dividendsdeclared on May 6, 2020.
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. 
During the second quarter of 2020, the Company recognized a share-based compensation expense of $7.7 (June 30, 2019 – $4.0) in administrative and marketing expenses in the consolidated statements of income. Of the amount expensed, nil (June 30, 2019 – $0.8) related to the amortization of the fair value of options granted and $7.7 (June 30, 2019 – $3.2) related to the cash-settled share-based compensation (restricted share units,deferred share units, and performance share units (RSUs, DSUs, and PSUs)).
During the first two quarters of 2020, the Company recognized a share-based compensation expense of $9.9(June 30, 2019 – $8.3) in administrative and marketing expenses in the consolidated statements of income. Of theamount expensed, $0.6 (June 30, 2019 – $2.3) related to the amortization of the fair value of options granted and$9.3 (June 30, 2019 – $6.0) related to the cash-settled share-based compensation (RSUs, DSUs, and PSUs).
During the second quarter of 2020, the Company granted 138,148 RSUs (June 30, 2019 – 164,719) at a fair value of $5.8 (June 30, 2019 – $5.3), and 308,136 PSUs (June 30, 2019 – 371,396) at a fair value of $16.4(June 30, 2019 – $11.6), under the same terms, conditions, and vesting requirements as the units issued in 2019.Also, during the second quarter of 2020, 149,848 DSUs were paid (June 30, 2019 – 75,315) at a value of $6.1 (June 30, 2019 – $2.4).
At June 30, 2020, the obligations accrued for RSUs were $2.5 (December 31, 2019 – $1.1), the obligations accruedfor PSUs were $10.4 (December 31, 2019 – $11.1) and  the outstanding and vested DSUs had a fair value of $5.9(December 31, 2019 – $10.2) included in other liabilities (note 12).
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-13Stantec Inc.
14. Fair Value MeasurementsAll financial instruments carried at fair value are categorized into one of the following:
Level 1 – quoted market prices
Level 2 – valuation techniques (market observable)
Level 3 – valuation techniques (non-market observable)
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. The Companymeasures certain financial assets and liabilities at fair value on a recurring basis. 
In the first two quarters of 2020, no changes were made to the method of determining fair value and no transferswere made between levels of the hierarchy.
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 June 30, 2020:
CarryingAmount 
    Level 1  Level 2 Level 3 
Notes $ $ $ $ 
AssetsInvestments held for self-insured liabilities
8 163.7-163.7-
LiabilitiesInterest rate swap
12,15 8.1-8.1-
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.
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 June 30, 2020:
CarryingAmount 
Level 1 Level 2  Level 3 
Note$ $ $ $ 
Notes payable 964.7- 65.7- 
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.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-14Stantec Inc.
15. Financial Instrumentsa) Derivative financial instrumentsThe Company has an interest rate swap agreement to manage the interest rate risk related to a tranche of the term loan with a notional amount of $160.0, both maturing on June 27, 2023. The swap agreement has the effect ofconverting the variable interest rate on the term loan, based on a bankers' acceptance rate, into a fixed interest rateof 2.295%, plus applicable basis points spread. During the first two quarters of 2020, the change in fair value of theinterest rate swap, estimated using market rates at June 30, 2020, is an unrealized loss of $6.6 ($5.0 net of tax)(June 30, 2019 –  unrealized loss of $3.8 ($2.7 net of tax)). The Company has designated the swap as a cash flowhedge against a tranche of the term loan; therefore, the unrealized gains and losses relating to the swap arerecorded in other comprehensive income (loss) and in the statement of financial position as other assets or otherliabilities.
b) Nature and extent of risksThe COVID-19 pandemic, as described in note 2, has generally increased the nature and extent of risks arisingfrom financial instruments that the Company is exposed to. Management expects that the COVID-19 pandemic willmost significantly impact credit risk, liquidity risk, and price risk. The extent to which these risks will be impacted isbeing closely monitored and is expected to change as the situation continues to develop. Management will continueto evaluate the Company’s risk exposure and will adjust its risk management approach as necessary.
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,and other financial assets. The Company's maximum amount of credit risk exposure is limited to the carryingamount of these assets, which at June 30, 2020, was $1,762.2 (December 31, 2019 – $1,682.4). 
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 clientsin various industries and sectors of the economy. 
The Company does not concentrate its credit risk in any particular client, industry, or economic or geographicsector. In addition, management reviews trade and other receivables past due on an ongoing basis to identifymatters 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. At June 30,2020, the days of revenue in trade receivables was 58 days (December 31, 2019 – 61 days). Bonds held by theCompany are investment grade, and none are past due. The Company monitors changes in credit risk by trackingpublished external credit ratings.
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. 
Liquidity risk
The 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 common shares.The unused capacity of the revolving credit facility at June 30, 2020, was $339.7 (December 31, 2019 – $282.6). TheCompany believes that it has sufficient resources to meet obligations associated with its financial liabilities.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-15Stantec Inc.
Foreign exchange risk
Foreign 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 income (loss). During the first two quarters of 2020, the Company recorded exchange gains ontranslation of foreign operations of $80.3 through other comprehensive income (loss), of which $57.2 related togoodwill and $5.7 related to intangible assets. The Company does not hedge for this foreign exchange risk.
16. Employee Costs from Continuing Operations
 For the quarter endedFor the two quarters ended
June 30June 30
2020201920202019
$$$$
Wages, salaries, and benefits691.4667.91,370.91,308.7
Pension costs18.318.739.9    38.6
Share-based compensation 7.74.09.9    8.3
Total employee costs717.4690.61,420.71,355.6
Direct labor461.4436.1909.9851.7
Indirect labor256.0254.5510.8503.9
Total employee costs717.4690.61,420.71,355.6
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 for the first two quarters of2020 is $38.9 (June 30, 2019 – $37.5) related to defined contribution plans.
The Company recognizes government grants when there is reasonable assurance that the conditions of the grant willbe met and the funds will be received. Grants related to costs, such as subsidies, are deducted from the related costsfor which the grants are intended to compensate.
As a result of the outbreak of the COVID-19 pandemic, government grants received for wage subsidies were $2.3and were primarily related to the UK Coronavirus Job Retention Scheme.  The wage subsidies were presented as areduction to indirect labor in administrative and marketing expenses. At June 30, 2020, there were no unperformedconditions related to these grants. 
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-16Stantec Inc.
17. Other (Income) Expense
For the quarter ended   For the two quarters ended
June 30June 30
2020201920202019
$$$$
Loss on sale of property and equipment1.40.11.80.3
Unrealized (gain) loss on equity securities(4.4)(0.5)7.0(5.6)
Other0.8(1.1)(0.6)    (1.2)
Total other (income) expense(2.2)(1.5)8.2(6.5)
18. Income TaxesDuring the first two quarters of 2020, the Company recorded a reorganization tax expense of $2.6 in connection withits reorganization efforts to integrate the operations of Peter Brett Associates LLP with the UK group, a withholdingtax expense of $2.3 associated with intercompany distributions, and a tax recovery of $2.0 primarily related to aremeasurement of deferred tax assets and liabilities arising from a change in tax rate in the United Kingdom. Theseitems are the principal source of the variance in the effective tax rate.
In the second quarter of 2020, certain jurisdictions, primarily Canada and the United States, permitted companies todefer payment of corporate income taxes as a result of the COVID-19 pandemic until the third quarter of 2020. Assuch, the Company deferred the payment of corporate income taxes of $23.8. Other jurisdictions, primarily the UnitedKingdom and Australia, permitted companies to defer other non-corporate tax payments. The Company deferredpayments of these taxes of $11.3 which are due at various dates before the end of the first quarter of 2021. Also, dueto a change in United States tax legislation as a result of the COVID-19 pandemic, the depreciable life of leaseholdimprovements was accelerated for tax purposes, which resulted in an adjustment of $10.2 that increased incometaxes recoverable and deferred tax liabilities. 
19. Cash Flow InformationA reconciliation of liabilities arising from financing activities for the quarter ended June 30, 2020, is as follows:
SoftwareDividends
Credit Notes LeaseFinancingto
Facility Payable LiabilitiesObligationsShareholdersTotal
$ $ $ $  $  $ 
March 31, 2020816.769.9694.08.517.21,606.3
Statement of cash flowsProceeds
--2.5--2.5
Repayments or payments(62.0)(7.8)(31.8)(3.1)(17.2)(121.9)
Non-cash changesForeign exchange
-2.4(4.4)(0.1)-(2.1)
Additions and modifications-(0.1)14.6--14.5
Dividends declared----17.317.3
Other 0.10.3---0.4
June 30, 2020754.864.7674.95.317.3     1,517.0
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-17Stantec Inc.
A reconciliation of liabilities arising from financing activities for the two quarters ended June 30, 2020, is as follows:
SoftwareDividends
Credit Notes LeaseFinancingto
Facility Payable LiabilitiesObligationsShareholdersTotal
$ $ $ $  $  $ 
December 31, 2019756.588.7688.915.716.11,565.9
Statement of cash flowsProceeds
60.0-2.7--62.7
Repayments or payments(62.0)(24.3)(64.8)(11.3)(33.3)(195.7)
Non-cash changesForeign exchange
-0.216.30.4-16.9
Additions and modifications-(0.5)31.80.5-31.8
Dividends declared----34.534.5
Other 0.30.6---0.9
June 30, 2020754.864.7674.95.317.3     1,517.0
The Credit Facility includes the Company's revolving credit facility and term loan (note 9).
20. Related-Party DisclosuresAt June 30, 2020, the Company had subsidiaries and structured entities that it controlled and included in itsconsolidated financial statements. These subsidiaries and structured entities are listed in the Company's December31, 2019, annual consolidated financial statements. The Company enters into related-party transactions through anumber of joint ventures, associates, and joint operations. During the first two quarters of 2020, the nature and extentof these transactions were not materially different from those disclosed in the Company's December 31, 2019, annualconsolidated statements.
21. 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(the CEO) when allocating resources and assessing performance. The Company’s operating segments are based onits 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, are reported as discontinued operations(note 4).
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 Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-18Stantec Inc.
Reportable segments from continuing operations
For the quarter ended June 30, 2020
Adjustments 
United Total and 
Canada States Global Segments Eliminations  Consolidated 
$$$$$$
Total gross revenue302.9718.7211.31,232.9(27.3)1,205.6
Less inter-segment revenue10.05.411.927.3(27.3)-
Gross revenue from external
customers292.9713.3199.41,205.6-1,205.6
Less subconsultants and other direct
expenses31.8181.241.5254.5-254.5
Total net revenue261.1532.1157.9951.1-951.1
Gross margin126.7281.481.6489.7-489.7
For the quarter ended June 30, 2019
Adjustments
Total                and
Canada  United States Global Segments Eliminations Consolidated 
$$$$$$
Total gross revenue322.9693.2238.11,254.2(30.1)1,224.1
Less inter-segment revenue9.45.315.430.1(30.1)-
Gross revenue from external
customers313.5687.9222.71,224.1-1,224.1
Less subconsultants and other direct
expenses33.4185.851.3270.5-270.5
Total net revenue280.1502.1171.4953.6-953.6
Gross margin143.3277.396.9517.5-517.5
For the two quarters ended June 30, 2020
Adjustments
Total               and
Canada  United States Global Segments Eliminations Consolidated 
$$$$$$
Total gross revenue622.51,413.0441.82,477.3(51.2)2,426.1
Less inter-segment revenue18.710.122.451.2(51.2)-
Gross revenue from external
customers603.81,402.9419.42,426.1-2,426.1
Less subconsultants and other direct
expenses66.9361.891.1519.8-519.8
Total net revenue536.91,041.1328.31,906.3-1,906.3
Gross margin266.2553.5176.7996.4-996.4
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-19Stantec Inc.
For the two quarters ended June 30, 2019
Adjustments
Total               and
Canada  United States Global Segments EliminationsConsolidated 
$$$$$$
Total gross revenue641.51,335.2462.12,438.8(63.2)2,375.6
Less inter-segment revenue20.111.032.163.2(63.2)-
Gross revenue from external
customers621.41,324.2430.02,375.6-2,375.6
Less subconsultants and other direct
expenses70.4344.7102.8517.9-517.9
Total net revenue551.0979.5327.21,857.7-1,857.7
Gross margin282.3539.6184.11,006.0-1,006.0
The following tables disclose the disaggregation of non-current assets and gross revenue by geographic area and services:
Geographic information
Non-Current Assets Gross Revenue
June 30 December 31 For the quarter ended June 30 For the two quarters ended June 30
202020192020201920202019
$$$$$$
Canada712.6760.5292.9313.5603.8621.4
United States1,541.81,486.2713.3687.91,402.91,324.2
United Kingdom138.9143.375.951.5160.7104.7
Other global geographies327.6326.4123.5171.2258.7325.3
2,720.92,716.41,205.61,224.12,426.12,375.6
Non-current assets consist of property and equipment, lease assets, goodwill, and intangible assets. Geographicinformation is attributed to countries based on the location of the assets.
Gross revenue is attributed to countries based on the location of the project.
Gross revenue by servicesFor the quarter endedFor the two quarters ended
June 30June 30
2020201920202019
$$$$
Buildings258.7269.4531.8530.4
Energy & Resources152.5157.6329.4310.1
Environmental Services184.1189.9364.5359.6
Infrastructure353.5356.1695.6682.5
Water256.8251.1504.8493.0
Total gross revenue from external customers1,205.61,224.12,426.12,375.6
Performance will fluctuate quarter to quarter. The first and fourth quarters historically have the lowest revenuegeneration and project activity because of holidays and weather conditions in the northern hemisphere. Despite thisquarterly fluctuation, the Company has concluded that it is not highly seasonal in accordance with IAS 34. Theuncertain impacts of the COVID-19 pandemic also may result in changes to this pattern.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-20Stantec Inc.
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.
22. Event after the Reporting PeriodDividendOn August 5, 2020, the Company declared a dividend of $0.155 per share, payable on October 15, 2020, toshareholders of record on September 30, 2020.
23. Comparative FiguresCertain comparative figures have been reclassified to conform to the presentation adopted for 2020.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements      In Millions of Canadian Dollars Except Number of Shares and Per Share Data                             
              
June 30, 2020F-21Stantec Inc.
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Head Office 400-10220 103 Avenue NW  
Edmonton, Alberta T5J 0K4 Canada 
Ph: 780-917-7000 
Fx: 780-917-7330 
ir@stantec.com
Securities Exchange Listing Stantec shares are listed on the Toronto 
Stock Exchange and the New York Stock 
Exchange under the symbol STN.
  ON THE COVER
Joint Venture with Snøhetta
Temple University – Charles Library 
Philadelphia, Pennsylvania
Photo credit: Michael Grimm