Enhanced Investments - Financial Portal

Published: 2020-05-06

Interim Condensed Consolidated Statements of Financial Position(Unaudited)
	March 31	December 31
	c 31312020		2019
(In millions of Canadian dollars)Notes			$	$
ASSETSCurrentCash and deposits
	5			159.3	223.5
Trade and other receivables	6			811.2	817.7
Unbilled receivables				462.9	374.2
Contract assets				78.5	67.5
Income taxes recoverable				41.3	36.2
Prepaid expenses				46.1	42.9
Other assets	8			23.2	18.1
Total current assets					1,622.5	1,580.1
Non-currentProperty and equipment
				292.9	286.5
Lease assets	7			553.0	558.5
Goodwill	15				1,725.2	1,651.8
Intangible assets	15			210.7	219.6
Investments in joint ventures and associates				8.3	8.8
Net employee defined benefit asset	11			33.8	26.0
Deferred tax assets				32.5	31.9
Other assets	8			200.4	198.3
Total assets					4,679.3	4,561.5
LIABILITIES AND EQUITYCurrentBank indebtedness
	5			26.5	19.5
Trade and other payables				504.2	576.4
Lease liabilities	7			98.5	99.9
Deferred revenue				189.8	199.2
Income taxes payable				28.8	28.4
Long-term debt	9			39.2	46.9
Provisions	10			20.0	23.9
Other liabilities	12			17.0	12.1
Total current liabilities				924.0	1,006.3
Non-currentLease liabilities
	7			595.5	589.0
Income taxes payable				12.5	11.6
Long-term debt	9			855.9	814.0
Provisions	10			101.2	89.1
Net employee defined benefit liability	11			79.0	85.2
Deferred tax liabilities				82.7	73.2
Other liabilities	12			25.5	16.0
Total liabilities					2,676.3	2,684.4
Shareholders’ equityShare capital
	13			900.0	879.8
Contributed surplus				20.0	23.9
Retained earnings				915.8	917.7
Accumulated other comprehensive income				165.9	54.1
Total shareholders’ equity					2,001.7	1,875.5
Non-controlling interests				1.3	1.6
Total liabilities and equity					4,679.3	4,561.5
See accompanying notes
						F-1	Stantec Inc	.

Interim Condensed Consolidated Statements of Income(Unaudited)
	For the quarter ended
		March 31
	2020			2019
(In millions of Canadian dollars, except per share amounts)Notes	$		$
Continuing operationsGross revenue
	1,220.5			1,151.5
Less subconsultant and other direct expenses	265.3			247.4
Net revenue	955.2			904.1
Direct payroll costs			16	448.5			415.6
Gross margin	506.7			488.5
Administrative and marketing expenses			16	367.3			357.1
Depreciation of property and equipment	14.5			13.7
Impairment of lease assets			7	9.7		-
Depreciation of lease assets			7	29.6			27.4
Amortization of intangible assets	14.2			15.4
Net interest expense			7,9	15.0			17.2
Other net finance expense		1.6		1.3
Share of income from joint ventures and associates		0.4		-
Foreign exchange (gain) loss	(1.3)			2.9
Other expense (income)			17	10.4			(5.0)
Income before income taxes and discontinued operations	45.3			58.5
Income taxesCurrent
		8.6		(4.2)
Deferred		7.2		17.8
Total income taxes	15.8			13.6
Net income for the period from continuing operations	29.5			44.9
Discontinued operationsNet income from discontinued operations, net of tax
			4	10.2			-
Net income for the period	39.7			44.9
Weighted average number of shares outstanding - basic	111,364,788				111,805,946
Weighted average number of shares outstanding - diluted	111,852,155				111,805,946
Shares outstanding, end of the period	111,103,584				111,657,956
Earnings per share, basic and diluted
Continuing operations, basic	0.27			0.40
Discontinued operations, basic	0.09			-
Total basic earnings per share	0.36			0.40
Continuing operations, diluted	0.26			0.40
Discontinued operations, diluted	0.09			-
Total diluted earnings per share	0.35			0.40
See accompanying notes
						F-2	Stantec Inc	.

Interim Condensed Consolidated Statements of Comprehensive Income (Unaudited)
	For the quarter ended
		March 31
	2020		2019
(In millions of Canadian dollars)Notes	$	$
Net income for the period	39.7		44.9
Other comprehensive income (loss)
Items that may be reclassified to net income in subsequent periods:
Exchange differences on translation of foreign operations				15	109.6		(33.3)
Net unrealized gain on FVOCI financial assets				8	1.1	0.7
Unrealized loss on interest rate swap				15	(4.7)	(0.5)
	106.0		(33.1)
Items not to be reclassified to net income:
Remeasurement gain on net employee defined benefit liability				11	5.8	-
Other comprehensive income (loss) for the period, net of tax	111.8		(33.1)
Total comprehensive income for the period, net of tax	151.5		11.8
See accompanying notes
					F-3	Stantec Inc	.

Interim Condensed Consolidated Statements
of Shareholders’ Equity (Unaudited)
	Shares	Share			Accumulated Other
	Outstanding	Capital	Contributed	Retained	Comprehensive
	(note 13)	(note 13)	Surplus	Earnings	Income (Loss)	Total
(In millions of Canadian dollars, except shares)							#	$				$	$	$	$
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 $8.7				(34.0)		(34.0)
Adjusted balance, January 1, 2019	111,860,105	867.8						24.8	817.2			163.1	1,872.9
Net income				44.9		44.9
Other comprehensive loss									(33.1)	(33.1)
Total comprehensive income (loss)				44.9					(33.1)	11.8
Share options exercised for cash	180,363	3.0				3.0
Share-based compensation expense								1.5	1.5
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 expensed		0.8						(0.8)	-
Dividends declared				(16.2)		(16.2)
Balance, March 31, 2019	111,657,956	868.6						25.4	837.1			130.0	1,861.1
Balance, December 31, 2019	111,212,975	879.8						23.9	917.7			54.1	1,875.5
Net income				39.7		39.7
Other comprehensive income									111.8	111.8
Total comprehensive income				39.7					111.8	151.5
Share options exercised for cash	736,101	22.7				22.7
Share-based compensation expense								0.6	0.6
Shares repurchased under Normal Course
Issuer Bid	(845,492)	(6.8)						(0.2)	(24.4)		(31.4)
Reclassification of fair value of share options previously expensed		4.3						(4.3)	-
Dividends declared				(17.2)		(17.2)
Balance, March 31, 2020	111,103,584	900.0						20.0	915.8			165.9	2,001.7
See accompanying notes
		F-4							Stantec Inc	.

Interim Condensed Consolidated Statements of Cash Flows(Unaudited)
	For the quarter ended
	March 31
	2020	2019
(In millions of Canadian dollars)Notes	$	$
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIESCash receipts from clients
	1,177.7	1,110.7
Cash paid to suppliers	(490.9)	(515.0)
Cash paid to employees	(708.3)	(659.6)
Interest received				0.5	0.9
Interest paid			7	(15.0)	(17.9)
Finance costs paid				(0.9)	(1.3)
Income taxes paid				(8.5)	(6.3)
Cash flows used in operating activities from continuing operations	(45.4)	(88.5)
Cash flows from (used in) operating activities from discontinued operations				2.4	(1.6)
Net cash flows used in operating activities	(43.0)	(90.1)
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIESBusiness acquisitions, net of cash acquired
				-	(77.1)
(Purchase) proceeds of investments held for self-insured liabilities			8	(11.7)	0.4
Purchase of intangible assets				(0.5)	(1.4)
Purchase of property and equipment				(8.5)	(20.8)
Other				0.1	0.7
Net cash flows used in investing activities	(20.6)	(98.2)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIESProceeds from revolving credit facility
			9	60.0	125.3
Repayment of notes payable and other long-term debt	(16.5)	(9.8)
Net payment of lease obligations			7	(33.0)	(25.6)
Proceeds from lease inducements			7	0.2	4.8
Payment of software financing obligations				(8.2)	(8.2)
Repurchase of shares for cancellation			13	(33.3)	(11.9)
Proceeds from issue of share capital				22.7	3.0
Payment of dividends to shareholders			13	(16.1)	(15.4)
Net cash flows (used in) from financing activities			19	(24.2)	62.2
Foreign exchange gain (loss) on cash held in foreign currency				16.6	(5.3)
Net decrease in cash and cash equivalents	(71.2)	(131.4)
Cash and cash equivalents, beginning of the period	204.0	185.2
Cash and cash equivalents, end of the period			5	132.8	53.8
See accompanying notes
					F-5	Stantec Inc	.

Index to the Notes to the Unaudited Interim CondensedConsolidated Financial Statements NotePage
1 Corporate Information	F-7
2 Basis of Preparation	F-7
3 Recent Accounting Pronouncements and Changes to Accounting Policies	F-7
4 Discontinued Operations	F-8
5 Cash and Cash Equivalents	F-8
6 Trade and Other Receivables	F-8
7 Lease Assets and Lease Liabilities	F-9
8 Other Assets	F-9
9 Long-Term Debt	F-10
10 Provisions	F-11
11 Employee Defined Benefit Obligations	F-11
12 Other Liabilities	F-12
13 Share Capital	F-12
14 Fair Value Measurements	F-12
15 Financial Instruments	F-13
16 Employee Costs from Continuing Operations	F-15
17 Other Expense (Income)	F-15
18 Income taxes	F-15
19 Cash Flow Information	F-16
20 Related-Party Disclosures	F-16
21 Segmented Information	F-16
22 Events after the Reporting Period	F-18
23 Comparative Figures	F-18
Notes to the Unaudited Interim Condensed Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

March 31, 2020		F-6	Stantec 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 quarter ended March 31, 2020, were authorized forissuance in accordance with a resolution of the Company’s Audit and Risk Committee on May 6, 2020. The Companywas incorporated under the Canada Business Corporations Act on March 23, 1984. Its shares are traded on theToronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) under the symbol STN. The Company’sregistered office is located at Suite 400, 10220 - 103 Avenue, Edmonton, Alberta. The Company is domiciledin 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 quarter ended March 31, 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.
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.
The outbreak of the COVID-19 pandemic in the first quarter of 2020 had, and will continue to have, adverse financialimpacts on the global economy, including but not limited to, negative impacts on demand for goods and services,disruptions to supply-chains, volatility in interest rates, and significant declines in market prices of equities andcertain commodities. There is significant uncertainty regarding the length of time it will take for these financial impactsto reverse. 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.
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 first quarter of 2020. This included Interest Rate BenchmarkReform (Amendments to IFRS 9, IAS 39, and IFRS 7) which provided temporary relief during the period ofuncertainty 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.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

March 31, 2020	F-7	Stantec Inc.

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. The Company iscurrently considering the impact of adopting these standards, amendments, and interpretations on its consolidatedfinancial 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 ended
		March 31
	2020		2019
		$	$
Revenue	3.7		-
Expenses	(3.7)		0.8
Project loss recovery	10.8		-
Profit from operating activities, before income taxes	10.8		0.8
Income taxes	(0.6)		(0.8)
Net income from discontinued operations	10.2		-
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:
	March 31		March 31
	2020		2019
		$	$
Cash	150.7		89.4
Unrestricted investments	8.6		7.5
Cash and deposits	159.3		96.9
Bank indebtedness	(26.5)		(43.1)
Cash and cash equivalents	132.8		53.8
6. Trade and Other Receivables
	March 31			December 31
	2020		2019
		$	$
Trade receivables, net of expected credit losses of $2.2 (2019 – $2.2)	779.6		787.3
Holdbacks, current	20.0		20.6
Other	11.6		9.8
Trade and other receivables	811.2		817.7
Notes to the Unaudited Interim Condensed Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

March 31, 2020					F-8	Stantec Inc.

The aging analysis of gross trade receivables is as follows:
	Total	1–30	31–60	61–90	91–120	121+
	$	$	$	$			$	$
March 31, 2020	781.8	444.1	169.2	48.3	33.0	87.2
December 31, 2019	789.5	395.9	221.1	63.5	27.8	81.2
During the first quarter of 2020, no trade receivables were written off and the Company had no recoveries fromthe collection of accounts receivable previously written off.
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
									Building	Other	Total
			$	$			$	$
Balance, beginning of the period			554.4	4.1	558.5	(688.9)
Additions			26.6	0.5	27.1	(26.3)
Depreciation			(28.9)	(0.7)	(29.6)	-
Modifications			(9.5)	-	(9.5)	9.1
Impairment			(9.7)	-	(9.7)	-
Accretion of interest			-	-			-	(7.6)
Payments, net of receipts---	40.4
Foreign exchange			16.1	0.1	16.2	(20.7)
			549.0	4.0	553.0	(694.0)
Less current portion---	98.5
Long-term portion			549.0	4.0	553.0	(595.5)
During the first quarter of 2020, a change in use related to certain real estate lease assets resulted in a netimpairment loss of $9.7. The recoverable amount determined for those lease assets is based on the value in usemethod and a weighted average discount rate of 3.93% 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).
8. Other Assets				March 31			December 31
										2020	2019
			Note		$	$
Financial assets Investments held for self-insured liabilities
			14							155.1	153.0
Holdbacks on long-term contracts										39.1	33.9
Other										13.0	12.6
Non-financial assets										16.4	16.9
										223.6	216.4
Less current portion - financial										16.2	11.6
Less current portion - non-financial					7.0	6.5
Long-term portion										200.4	198.3
Notes to the Unaudited Interim Condensed Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

March 31, 2020		F-9					Stantec Inc.

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 (loss). During the first quarter of 2020, the Company recorded anunrealized loss on equity securities of $11.4 (March 31, 2019 – unrealized gain of $5.1) (note 17) and an unrealizedgain on bonds of $1.1 (March 31, 2019 – unrealized gain of $0.7).
Their fair value and amortized cost are as follows:
	March 31	December 31
	2020	2019
	$		$
					Amortized	Amortized
				Fair Value	Cost/Cost	Fair Value				Cost/Cost
Bonds	115.3				114.2	102.8				103.4
Equity securities	39.8						47.3	50.2			46.1
Total	155.1				161.5	153.0				149.5
The bonds bear interest at rates ranging from 0.75% 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:
									March 31	December 31
		2020				2019
		$						$
Within one year		14.1						9.5
After one year but not more than five years		83.0						79.9
More than five years		18.2						13.4
Total		115.3				102.8
9. Long-Term Debt
									March 31	December 31
		2020				2019
		$						$
Revolving credit facility		508.0				448.0
Term loan		308.7				308.5
Notes payable		69.9						88.7
Software financing obligations		8.5						15.7
		895.1				860.9
Less current portion		39.2						46.9
Long-term portion		855.9				814.0
Interest on the Company's long-term debt in the first quarter of 2020 was $8.1 (March 31, 2019 – $10.0).
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 March 31,2020, was 3.08% (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 March 31, 2020, the Company had issued outstanding letters of credit that expire at
Notes to the Unaudited Interim Condensed Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

March 31, 2020	F-10		Stantec Inc.

various dates before April 2021, are payable in various currencies, and total $14.8 (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 March 31, 2020, $250.7 (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 quarterended March 31, 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 March 31, 2020, $72.8 (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, $59.1 (December 31, 2019 – $18.7) expire atvarious dates before April 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 March 31, 2020, the Company had issued $352.2 (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).
10. Provisions
	Self-			Expected
	insured		Onerous	project	Lease
	liabilities	Claims	contracts	losses	restoration	Total
	$						$	$	$	$	$
Balance, beginning of the period	80.1	15.4						0.4	4.8	12.3	113.0
Current period provisions	8.7	1.4						-	0.1	1.1	11.3
Paid or otherwise settled	(2.3)	(2.5)	(0.1)						(2.2)	(0.6)	(7.7)
Impact of foreign exchange	4.1	0.3						-	-	0.2	4.6
	90.6	14.6						0.3	2.7	13.0	121.2
Less current portion	4.3	10.7						0.2	2.7	2.1	20.0
Long-term portion	86.3	3.9						0.1	-	10.9	101.2
11. Employee Defined Benefit ObligationsThe 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, or in the event that fluctuations in the marketsignificantly impact the assumptions used in the most recent actuarial valuation.
The COVID-19 pandemic, as described in note 2, affected the markets significantly and impacted certainassumptions used in the measurement of the defined benefit obligation (DBO) and the fair value of plan assets asof March 31, 2020 compared to those utilized at December 31, 2019. As such, the Company remeasured the DBOand the fair value of plan assets at March 31, 2020. The remeasurement resulted in an increase in the discount ratefrom 1.89% at December 31, 2019, to 2.20% at March 31, 2020. The impact of the increase to the discount rateresulted in a decrease in the DBO, partly offset by a decrease in the fair value of plan assets for a remeasurementgain of $7.2 (net of deferred tax liability of $1.4), recorded through other comprehensive income.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

March 31, 2020		F-11			Stantec Inc.

12. Other Liabilities
	March 31	December 31
	2020		2019
				$	$
Cash-settled share-based compensation		23.0
Interest rate swap				15				1.5
Other		3.6
								28.1
Less current portion								12.1
Long-term portion								16.0
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 March 31, 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 quarter of 2020, 845,492 common shares (March 31, 2019 – 382,512) were repurchased forcancellation pursuant to the NCIB at a cost of $31.4 (March 31, 2019 – $11.9). Of this amount, $6.8 and $0.2(March 31, 2019 – $3.0 and $0.1) reduced share capital and contributed surplus, and $24.4 (March 31, 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 Declared								Record Date	$	$
November 6, 2019								December 30, 2019	0.1450	16.1
February 26, 2020								March 31, 2020	0.1550	-
At March 31, 2020, trade and other payables included $17.2 (December 31, 2019 – $16.1) related to the dividendsdeclared on February 26, 2020.
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.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

March 31, 2020										F-12	Stantec Inc.

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 the first quarter of 2020, no change was made to the method of determining fair value and no transfers weremade 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 March 31, 2020:
	CarryingAmount
		Level 1	Level 2	Level 3
					Notes	$	$	$	$
AssetsInvestments held for self-insured liabilities
					8	155.1						-	155.1	-
LiabilitiesInterest rate swap
					12,15	7.8						-	7.8	-
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 March 31, 2020:
	CarryingAmount
		Level 1	Level 2	Level 3
					Note	$	$	$	$
Notes payable					9	69.9						-	71.0	-
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.
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. The change in fair value of the interest rate swap, estimated usingmarket rates at March 31, 2020, is an unrealized loss of $6.3 ($4.7 net of tax) (March 31, 2019 – unrealized loss of$0.7 ($0.5, net of tax)). The Company has designated the swap as a cash flow hedge against a tranche of the termloan; therefore, the unrealized gains and losses relating to the swap are recorded in other comprehensive income(loss) and in the statement of financial position as other assets or other liabilities.
b) Nature and extent of risksThe COVID-19 pandemic, as described in note 2, has generally increased the nature and extent of risks arising fromfinancial instruments that the Company is exposed to. Management expects that the COVID-19 pandemic will mostsignificantly impact credit risk, liquidity risk, and price risk. The extent to which these risks will be impacted is beingclosely monitored and is expected to change as the situation continues to develop. Management will continue toevaluate the Company’s risk exposure and will adjust its risk management approach as necessary.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

March 31, 2020										F-13	Stantec Inc.

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 carrying amountof these assets, which at March 31, 2020, was $1,719.1 (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 geographic sector.In addition, management reviews trade and other receivables past due on an ongoing basis to identify matters thatcould 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 March31, 2020, the days of revenue in trade receivables was 60 days (December 31, 2019 – 61 days). Bonds held bythe Company are investment grade, and none are past due. The Company monitors changes in credit risk bytracking published 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 March 31, 2020, was $250.7 (December 31, 2019 – $282.6).The Company believes that it has sufficient resources to meet obligations associated with its financial liabilities.
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). The Company recorded exchange gains on translation of foreign operations of $109.6through other comprehensive income (loss), of which $73.3 related to goodwill and $6.0 related to intangible assets.The Company does not hedge for this foreign exchange risk.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

March 31, 2020	F-14	Stantec Inc.

16. Employee Costs from Continuing Operations
	For the quarter ended
		March 31
	2020		2019
		$	$
Wages, salaries, and benefits	679.5		640.8
Pension costs		21.6		19.9
Share-based compensation		2.2		4.3
Total employee costs	703.3		665.0
Direct labor	448.5		415.6
Indirect labor	254.8		249.4
Total employee costs	703.3		665.0
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 $21.1 (March 31, 2019 – $19.3) related to defined contribution plans.
17. Other Expense (Income)
	For the quarter ended
		March 31
		2020	2019
				Note	$	$
Unrealized loss (gain) on equity securities				8	11.4	(5.1)
Other		(1.0)		0.1
Total other expense (income)		10.4	(5.0)
18. Income TaxesIn the first quarter of 2020, the Company recorded a reorganization tax expense of $2.6 in connection with itsreorganization efforts to integrate the operations of Peter Brett Associates LLP with the UK group, a withholding taxexpense 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.
These items are the principal source of the variance in the current quarter's effective tax rate.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

March 31, 2020					F-15	Stantec Inc.

19. Cash Flow InformationA reconciliation of liabilities arising from financing activities for the quarter ended March 31, 2020, is as follows:
				Software		Dividends
	Credit	Notes	Lease	Financing			to
	Facility	Payable	Liabilities	Obligations	Shareholders			Total
	$	$	$		$		$	$
December 31, 2019	756.5	88.7	688.9	15.7			16.1	1,565.9
Statement of cash flowsProceeds
	60.0	-	0.2		-		-	60.2
Repayments or payments-	(16.5)	(33.0)	(8.2)		(16.1)		(73.8)
Non-cash changesForeign exchange
									-	(2.2)	20.7		0.5	-	19.0
Additions and modifications-	(0.4)	17.2		0.5		-	17.3
Dividends declared----		17.2	17.2
Other	0.2	0.3	-		-		-	0.5
March 31, 2020	816.7	69.9	694.0		8.5		17.2			1,606.3
The Credit Facility includes the Company's revolving credit facility and term loan (note 9).
20. Related-Party DisclosuresAt March 31, 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. For the first quarter ended March 31, 2020, the nature andextent of these transactions were not materially different from those disclosed in the Company's December 31, 2019,annual consolidated 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 its reportable 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 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, 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

March 31, 2020											F-16	Stantec Inc.

Reportable segments from continuing operations
	For the quarter ended March 31, 2020
					Adjustments
	United			Total		and
		Canada	States		Global	Segments	Eliminations Consolidated
							$	$						$	$	$	$
Total gross revenue		319.6	694.3		230.5	1,244.4		(23.9)			1,220.5
Less inter-segment revenue		8.7	4.7		10.5	23.9		(23.9)		-
Gross revenue from external
customers		310.9	689.6		220.0	1,220.5		-			1,220.5
Less subconsultants and other direct
expenses		35.1	180.6		49.6	265.3		-		265.3
Total net revenue		275.8	509.0		170.4	955.2		-		955.2
Gross margin		139.5	272.1		95.1	506.7		-		506.7
	For the quarter ended March 31, 2019
					Adjustments
				Total	and
		Canada United States	Global	Segments	Eliminations Consolidated
							$	$						$	$	$	$
Total gross revenue		318.6	642.0		224.0	1,184.6		(33.1)			1,151.5
Less inter-segment revenue		10.7	5.7		16.7	33.1		(33.1)		-
Gross revenue from external
customers		307.9	636.3		207.3	1,151.5		-			1,151.5
Less subconsultants and other direct
expenses		37.0	158.9		51.5	247.4		-		247.4
Total net revenue		270.9	477.4		155.8	904.1		-		904.1
Gross margin		139.0	262.3		87.2	488.5		-		488.5
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
	March 31		December 31 For the quarter ended March 31
	2020			2019		2020			2019
			$	$		$			$
Canada	730.2			760.5	310.9				307.9
United States	1,588.6							1,486.2	689.6			636.3
United Kingdom	147.4			143.3		84.8			53.2
Other Global Geographies	315.6			326.4	135.2				154.1
	2,781.8							2,716.4	1,220.5				1,151.5
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 Unaudited Interim Condensed Consolidated Financial Statements In Millions of Canadian Dollars Except Number of Shares and Per Share Data

March 31, 2020	F-17					Stantec Inc.

Gross revenue is attributed to countries based on the location of the project.
Gross revenue by services	For the quarter ended
		March 31
	2020		2019
		$	$
Buildings	273.1		261.0
Energy & Resources	176.9		152.5
Environmental Services	180.4		169.7
Infrastructure	342.1		326.4
Water	248.0		241.9
Total gross revenue from external customers	1,220.5		1,151.5
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 temporary changes to this pattern.
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. Events after the Reporting PeriodDividendOn May 6, 2020, the Company declared a dividend of $0.155 per share, payable on July 15, 2020, to shareholders

of record on June 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 DataMarch 31, 2020
				F-18	Stantec Inc.

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