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Infrastructure & Construction

Canada's Engineering Firms: Designing Impressive Shareholder Returns

Frederic Bastien, CFA [email protected] 604.659.8232 Ben Cherniavsky [email protected] 604.659.8244

Jamil Murji, CFA (Associate) [email protected] 604.659.8261 Theoni Pilarinos, CFA (Associate) [email protected] 604.659.8234 Greg Jackson (Associate) [email protected] 604.659.8262

RAYMOND JAMES

Industrial

®

Canada Research

Published by Raymond James Ltd

May 3, 2011 Industry Report

Frederic Bastien CFA | 604.659.8232 | [email protected] Ben Cherniavsky | 604.659.8244 | [email protected] Jamil Murji CFA (Associate) | 604.659.8261 | [email protected] Theoni Pilarinos CFA (Associate) | 605.659.8234 | [email protected] Greg Jackson (Associate) | 604.659.8262 | [email protected]

Infrastructure & Construction

Canada`s Engineering Firms: Designing Impressive Shareholder Returns

In this report, we explore the fundamentals of the engineering and design industry and explain why the Canadian firms serving it­­Genivar, IBI Group and Stantec­­have been great stocks to own over time. We also include SNC-Lavalin in our analysis because of the influential position its engineering practice now commands globally, and the similarly impressive returns the 100-year old firm has achieved for its shareholders. What we will highlight in the following pages is our thesis that the design business­­or what is often referred to as the professional technical services industry­­boasts compelling investment attributes and will continue to be positively influenced by powerful secular trends. We will also demonstrate the four firms comprising the engineering sub-segment of our Infrastructure & Construction (I&C) coverage are best-in-class and suitable for a broad range of investors. A Business Blessed With Attractive (and Enduring) Investment Attributes. Genivar, IBI Group and Stantec boast a number of characteristics that differentiate them from the other three I&C groups we cover (contractors, equipment dealers and engineered products). They focus on a fee-for-service consulting model and typically shy away from construction risk (this is where SNC-Lavalin's model differs). Design firms also generate healthy margins that reflect their high value-add and tend to have low capex requirements, enabling them to generate strong cash flows from operations. Finally, the nature of their services and their positioning in all phases of a project life cycle facilitate the generation of stable and diversified revenue streams. Strong Fundamentals Underpin this Sector. First there is a growing secular demand for public infrastructure. This was a key premise behind our Nov-28-07 `Nation Building' report's investment thesis and one that continues to weigh in positively today. Then there is the highly-fragmented U.S. market, which represents fertile acquisition grounds for the three design firms under our coverage (especially in light of the strong Canadian currency). Lastly, there is a trend toward larger and more complex projects, and the impact of tighter environmental regulations, both of which are boosting demand for design services. High-Quality Companies; Near-term Headwinds. We believe the four Outperform-rated companies included herein boast solid management teams, industry-leading positions and very sound business strategies. That said, we remain mindful of certain risks and challenges each firm faces in the short term. Specifically, we expect: (i) the softer market conditions in the U.S. to continue weighing down on both IBI Group and Stantec; (ii) the government of Trinidad and Tobago's quest to reform procurement legislation to slow Genivar's organic growth for one or two more quarters; and (iii) more headline risk to potentially emerge for SNC-Lavalin in the Middle East and Northern Africa. These headwinds, combined with the lack of any very compelling valuation discount on these stocks, explain why a Strong Buy rating is conspicuously absent from our recommendations for the group. To Each His Own. None of this, however, should detract from our main message that Canada' four engineering firms are designed to deliver impressive shareholder returns over time. Moreover, each boasts unique traits that make it attractive for a broad range of investors. Genivar, which we selected earlier this year as one Raymond James' Best Picks for 2011, stands out as the stock that offers the best combination of growth and income. What draws us to IBI Group are its proven partnership model and industry-leading yield. We favour Stantec for its leadership position in P3s and latent leverage to a recovery in U.S. endmarket demand, and see SNC-Lavalin as the obvious choice for investors seeking exposure to global infrastructure markets.

Company Engineering Genivar Inc. IBI Group Inc. SNC-Lavalin Stantec Inc

Raymond James Ltd.

Ticker Primary GNV-TSX IBG-TSX SNC-TSX STN-TSX

Ticker Secondary

Current Price C$30.10 C$14.79 C$56.53 C$29.62

Rating

Target Price (6-12 months) C$33.00 C$16.50 C$63.00 C$33.75

Total Return To Target 15% 19% 13% 14%

STN-NYSE

2 2 2 2

Please read domestic and foreign disclosure/risk information beginning on page 44 and Analyst Certification on page 45.

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Canada Research | Page 2 of 52

Infrastructure & Construction

Table of Contents

Overview............................................................................................................................................. 3 Professional Technical Services 101 ................................................................................................... 6 The ABCs of Design Firms ........................................................................................................ 7 How Projects are Administered............................................................................................... 8 Defining Features of Design Firms........................................................................................... 9 Key Industry Trends ............................................................................................................................ 12 1. Horizontal Integration: Many Innings Left.......................................................................... 12 2. Vertical Integration: More are Embracing the Integrated Approach .................................. 15 3. Projects are Growing Larger and More Complex ................................................................ 16 4. The Environment: A Good Business for Engineers ............................................................. 16 End Market Outlook ........................................................................................................................... 17 Buildings .................................................................................................................................. 18 Urban and Muncipal Infrastructure ........................................................................................ 20 Transportation......................................................................................................................... 20 Industrial and Power ............................................................................................................... 21 Environmental ......................................................................................................................... 21 Analyzing the Returns ......................................................................................................................... 23 Return on Invested Capital (ROIC)........................................................................................... 23 EBITDA Margin ........................................................................................................................ 25 EBITDA Growth........................................................................................................................ 26 Revenue and EBITDA per Employee........................................................................................ 27 Working Capital Management (Day Sales Receivable)............................................................ 28 Company Profiles................................................................................................................................ 30 Risks .................................................................................................................................................... 41

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Infrastructure & Construction

Canada Research | Page 3 of 52

Overview

This report profiles the engineering and design sub-segment of our Infrastructure & Construction (I&C) coverage universe in Canada. Namely, the list of public companies that participate in this market include Genivar, IBI Group, and Stantec. Recognizing some important distinctions in its `fully-integrated' business model, we have also elected to include SNC-Lavalin in this report because of its close parallels to the pure design firms mentioned above. Our comprehensive analysis begins with a broad, high-level overview of what the engineering and design business is all about--or what we label `Professional Technical Services 101.' We then identify and discuss what we believe to be the most important industry trends currently underway before turning to a review of the key end markets that the sector serves. Next, we introduce a peer group benchmarking exercise that evaluates the historical performance of select financial ratios for the companies noted above. We then provide a detailed review of our respective investment theses for Genivar, IBI Group, SNC-Lavalin and Stantec, and close with a brief overview of some of the largest independent players domiciled in Canada. If asked to encapsulate all of the facts and opinions expressed in this comprehensive report, we would reference Exhibit 1. Therein, it is strikingly evident that investing in Canada's publicly-traded engineering and design firms has been a very lucrative experience over the long-run. For example, since its IPO in 2006 Genivar has generated a total return (dividends and share price appreciation) of 244%; IBI Group's five-year return has been 87%; SNC-Lavalin's has been 82%; and Stantec's has been 37%. Over a ten-year period, the total return for the latter two companies has been 819% and 579% respectively (10-year data are not available for Genivar or IBI Group). Investing in the engineering and design sector has been a very lucrative exercise

Exhibit 1: Five-Year Total Returns for Canada's Engineering and Design Stocks

300%

SNC

STN

IBG

GNV

250%

200%

150%

100%

50%

0%

-50% Dec-06 Dec-07 Dec-08 Dec-09 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Dec-10 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11

Source: Capital IQ, Raymond James Ltd.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 4 of 52 Although the past tells us only very little about the future, our broad recommendation to stay invested in this sector is significantly influenced by such impressive historical results. Indeed, we believe it is more than mere coincidence that all four of our engineering and design stocks have outperformed the index over such a challenging period of time for the economy. Rather, we view this as indicative of the very strong fundamentals that underpin this sector. At the macro level these include: (i) a growing secular demand for public infrastructure; (ii) an increase in the outsourcing of engineering practices from general industry to specialized firms; (iii) a tightening of environment regulations and permitting processes; (iv) on-going horizontal and vertical consolidation; and (v) a trend towards the construction of larger, more complex projects. Similarly, we believe that the microeconomics of this business are blessed with some very attractive (and enduring) investment attributes including: (i) high gross margins that reflect the value-added `intellectual' component of engineering and design services; (ii) limited capital investment requirements that lead to strong free cash generation; (iii) ample opportunity to cross-sell services and diversify revenue streams into multiple end-markets and complete `life-cycle' solutions; (iv) disciplined competitive dynamics; and (v) a general strategy (with some important exceptions, most notably for SNC-Lavalin) of focusing on a fee-for-service model that limits exposure to construction risks. The positive influence that all the variables noted above have had on our universe of engineering and design companies is visible not only in the long-term shareholder returns, but also in the financial benchmarking analysis that we have included in this report (see the section Analyzing the Returns). For example, Genivar, Stantec and SNCLavalin have each consistently averaged an ROIC in the range of 10-13% over many years, well over their respective cost of capital. Similarly, respectable EBITDA margins have been maintained in the range of 13-20% for the `pure' design firms in Canada and 8-9% for SNC-Lavalin going back to 2006 and beyond. Meanwhile, the most recent `full cycle' EBITDA growth (i.e. over a trough to peak period in the economy) compounded at a rate ranging from 23% (Stantec) to 55% (Genivar) for the group. To the extent that all of the aforementioned macro and micro forces are expected to remain intact (and in some cases accelerate), we believe that our coverage universe of engineering and design firms can continue to generate impressive financial results for the foreseeable future. That is largely why we currently rate all four of these stocks Outperform. At the same time, we remain mindful of the numerous risks and challenges that continue to weigh on this industry. As expounded upon in this report, these include: (i) the government's increasing fiscal restraint; (ii) the depressed state of private non-industrial construction markets; and (iii) the lofty valuations of independent `target' firms that have made acquisitions more expensive. These headwinds, combined with the lack of any very compelling EV/EBITDA discount on the stocks we cover, have taken some of the `sizzle' away from our sector call and investment thesis at this point in time. As a result, a Strong Buy rating is conspicuously absent from our current recommendations for the group. None of this, however, should detract from our main message that the engineering and design firms in Canada represent an attractive "buy and hold" opportunity for investors seeking healthy long-term returns with relatively low-risk. Accordingly, we expect all four firms in our coverage universe to perform well over the next 12 months and beyond, with Genivar standing out as the one stock that was selected for Raymond James Ltd.'s 2011 `Best Picks' list in the Dec-7-10 report.

Infrastructure & Construction

Favourable secular trends and good business fundamentals...

...should positively influence Genivar, IBI Group, Stantec and SNC-Lavalin for years to come

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction Our investment thesis for each of these companies can be summarized as follows: Genivar. In the short five years it has operated as a publicly-traded entity, Genivar has completed 51 acquisitions, grown its employee base from 1,150 to over 4,500, and generated a total return of 244% for its shareholders. Much of this growth was facilitated by the firm's entrepreneurial and decentralized approach, which empowers partners to focus on what they do best­­win business and drive revenue synergies. There is reason to expect more of the same as the firm shifts its focus to global diversification and aims to add new fields of expertise, including architectural design, energy and mining. At the same, we expect the firm's outsized position in Canada to help drive organic growth at an annual rate of 5-10% for many years to come (notwithstanding some recent short-term headwinds from the Trinidad & Tobago operations). This, combined with Genivar's healthy dividend, leads us to believe the stock offers one of the Canadian I&C sector's most enticing combination of growth and income. IBI Group. Income-oriented investors will be well-served buying shares of IBI Group, in our opinion. We feel the firm is well positioned to capitalize on: (i) an impending recovery in private sector spending; (ii) the continued growth in private financing initiatives; and (iii) an increasing concentration of ownership and management of real estate portfolios. But what draws us to IBI Group is its proven partnership model; today the firm's leadership team comprises approximately 80 Directors and Associate Directors who collectively own 46% of the firm's common shares. We believe this is one of the most powerful ways to align the interests of all IBI stakeholders. Other considerations supporting our constructive stance on the stock include the firm's world-class architectural practice and its strengthened position in social infrastructure. SNC-Lavalin. We find it difficult to poke holes in SNC-Lavalin's integrated business model. The Montreal-based firm has over the past ten years developed into a global engineering and construction (E&C) juggernaut as well as an active participant in the ownership, operation and maintenance of infrastructure assets. Simply put, no other firm comes even close to matching the breadth and scope of SNC-Lavalin's operations in Canada, where the company is developing massive power and civil construction projects a mari usque ad mare. Globally, the company is a go-to name for mining and metallurgy projects­­as recent services contract wins from Vale, Rio Tinto and BHP Billiton can attest­­and also boasts one of the leading foreign E&C presences in emerging countries. Recent events in Libya show that investing in SNCLavalin is not without risks, but we know from experience (and the firm's 10-year average ROE of 19%) that management will adapt, innovate and continue to drive shareholder value higher. Stantec. Over the past decade, Stantec has evolved from a small, regional player into one of North America's largest design firms. Its ability to generate this type of self-funded growth (mainly through acquisitions) while maintaining healthy levels of profitability, respectable ROIC, and conservative financial leverage has earned management a laudable reputation among investors. Stantec's growing scale has also provided it with an increasingly diversified revenue stream, lucrative crossselling opportunities, and an expanding expertise in the P3 market. The depressed state of the U.S. construction markets, the related depreciation of the U.S. dollar, a deceleration of acquisition activity, and simply `the law of large numbers' have all conspired to slow the company's growth rate more recently. Nevertheless, we remain positive on the stock because of its reasonable valuation along with the firm's formidable position in the more robust Canadian market (especially in the West), its strong economic fundamentals, its opportunity to continue consolidating the market, and its latent leverage to an eventual recovery in end market demand.

Canada Research | Page 5 of 52

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Canada Research | Page 6 of 52

Infrastructure & Construction

Professional Technical Services 101

Genivar, IBI Group and Stantec compete in the broadly defined professional technical services field. Participants in this industry offer comprehensive consulting services (which range from conceptual planning and design to engineering and project management) to customers in the infrastructure and facilities market. Because these entities have traditionally centered their activities on the front-end of projects, they are commonly referred to as design firms. That description isn't stopping a growing number of companies from adopting a holistic, long-term view to meeting client needs by rounding out their offering with services such and maintenance and decommissioning (see Exhibit 2).

Exhibit 2: Project Lifecycle

Project Lifecycle Phase Pre-project Planning

Role of Professional Technical Services Firms

- Explore project concept - Decide type of project (fixed price, cost plus) - Determine delivery method (design-bid-build, design-build, PPP, etc.) - Feasibility study - Schematic design and specifications - Draft contract

Design

Construction

- Project management - Surveying - Resident engineering services - Facilities and infrastructure management - Facilities operations - Performance engineering - Solutions and recommendations for taking facilities out of active service

Maintenance

Decommissioning

Source: Stantec Inc., Raymond James Ltd.

Within the design industry, there is considerable diversity among companies. Some choose to specialize in one or two specific disciplines while others (generally the larger ones) strive to offer complete life-cycle solutions. The one common thread is that all design firms focus on a fee-for-service consulting model and typically shy away from construction risk. This low-risk strategy used by Genivar, IBI Group and Stantec differs from the integrated approach SNC-Lavalin has employed successfully for years and that many global construction firms are moving towards. There are pros and cons to each business approach, all of which will be expounded upon below. But first we wish to delineate the professions that this report includes in its definition of design firms.

Professional technical services firms focus on a fee-based model and typically shy away from construction risk

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Infrastructure & Construction

Canada Research | Page 7 of 52

The ABCs of Design Firms

We have structured this report to include the following practices: architecture, design, urban planning, engineering and surveying. Architecture can be loosely defined as the art and science of designing buildings and other physical structures. The discipline employs licensed professionals who spend hours blending functional, technical, social and aesthetic considerations into their drawings. On many projects, architects are also called upon to prepare detailed bid documents, hire the engineers and general contractors, and administer the construction contract on behalf of the project owner. In contrast, designers are non-designated (no pun intended), less technical and generally handle only a subset of an architect's responsibilities. Interior designers, for example, apply their skills to achieve built environments that are functional and aesthetically attractive, support user safety and enhance the quality of life of the occupants. Urban planning extends beyond the architectural practice (and physical buildings) to include activities supporting the continued welfare of people­­ land use management, the design of transportation and communication networks, and the protection and enhancement of the natural environment. To the extent architectural, planning and design activities often overlap, it is common to see companies offer these related services under one roof. IBI Group and Stantec are two such firms. While architects, designers and planners are generally viewed as the artists responsible for the functionality, look and ambience of a building, engineers use math and science to make it all work. Civil engineers ensure buildings are strong and stable enough to resist all appropriate structural loads; mechanical engineers handle the ever so critical HVAC and plumbing systems; and electrical engineers are responsible for all communications, lighting, wiring, power and control systems. It is worth highlighting, however, that these `building' engineers represent only a portion of all practicing engineers today. Countless others specialize in other fields of the infrastructure and construction sector (such as transportation, power and utilities, water treatment and distribution, mining and energy) and in unrelated industries. We have opted to include geophysical surveying and mapping in this report for obvious reasons. Because the profession focuses on locating and measuring the extent of subsurface resources, it exerts significant influence on sectors that are of strategic importance to SNC-Lavalin, Genivar and Stantec­­oil, gas, mining and metallurgy­­ especially at this point in the cycle. However, for the sake of keeping the scope of this report manageable, we exclude any other technical services professions from our discussion. Combined, these five consulting industries form a vital and growing part of the Canadian economy, accounting for roughly two percent of GDP. According to Statistics Canada's most recent survey, design firm operating revenues rose at an impressive compound annual growth rate (CAGR) of 11.7% to $27 billion between 2004 and 2009, with engineers making up the lion's share of this market (see Exhibit 3). We attribute much of the industry growth in Canada to three secular trends. Firstly, competitive and cost pressures have compelled entities ranging from large oil and gas companies to real estate developers and crown corporations to focus operations on their core competencies. As a result, such organizations began outsourcing their engineering needs, the implementation of their capital expenditure programs and other non-core projects to consulting firms. Secondly, all levels of government took decisive steps in the mid 2000s to bridge the country's infrastructure gap by significantly boosting investments. This was the fundamental premise behind our Nov-28-07 `Nation Building' report's investment thesis and one that continues to weigh in positively on the I&C sector and all design firms (even despite our governments' recent belt-tightening). Lastly, professional technical services firms are seeing increased business from

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Architects blend functional, social and aesthetic considerations into their drawings...

...while engineers use math and science to make it all work

With annual revenues of $27 billion, design firms form a vital part of the Canadian economy

Canada Research | Page 8 of 52 environmental compliance and permitting as regulations continue to dictate the progression of an infrastructure project ­ be it a greenfield job or a brownfield redevelopment.

Infrastructure & Construction

Exhibit 3: Canadian Design Firm Operating Revenues

80%

75%

12%

13%

12%

8%

2009 Market Size = $27 billion

Engineering Architecture, design and landscaping

2004 Market Size = $16 billion

Surveying and mapping

Source: Statistics Canada, Raymond James Ltd.

In the United States, the economy may be softer, but the demand for design services is still outpacing overall GDP growth. Over the five-year period ending 2009, we estimate that the industry expanded at a CAGR of 8.0% to US$252 billion, compared to an average of 2.9% for the U.S. economy. We believe the decentralization of government engineering arms and stricter environmental regulations have similarly influenced the sector's growth, as have technological advances and the increased complexity of projects undertaken nowadays. To the extent the American Society of Civil Engineers gives America's infrastructure a grade of "D" and estimates a five-year investment need of $2.2 trillion, there is the potential for many more years of above-GDP growth rates for design firms south of the border (www.infrastructurereportcard.org). However, we believe this will depend largely on the country's willingness to adopt innovative ways to finance infrastructure projects (including public-private partnerships, or P3s) as well as its ability to raise taxes as a means of tackling the federal and state deficits that loom over the economy.

The U.S. design industry witnessed a CAGR of 8.0% between 2004 and 2009, versus 11.7% for the Canadian sector

How Projects are Administered

On a typical Design-Bid-Build project, which many in the construction industry refer to as conventional delivery, the architect and its design team are the owner's agents (and represent its interests). While this relationship still holds true for much public and private sector work performed today, the advent of the P3 and design-build (DB) models over the past decade has altered the traditional pecking order for large-scale infrastructure projects. Under these alternative delivery methods, the owner awards the design-build mandate to a general contractor or a construction joint venture, which in turn hires consulting firms to carry out the design and engineering. Because P3s are

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction structured over terms that generally last between 25 and 30 years, they also force said firms to place greater consideration on the assets' operation and maintenance phases. Although DB projects are diminishing the influence design firms have traditionally held on the tendering process, they often bring additional opportunities for such firms. That's because a public owner sometimes chooses to engage a team of professionals, often referred to as the owner's engineer, to advise and represent its interest over the length of the DB contract.

Canada Research | Page 9 of 52

Defining Features of Design Firms

Professional technical services firms sell knowledge and solutions. As such, their most valuable assets are the employees on their payroll. To attract and keep these individuals, design firms must develop a healthy corporate culture that fosters a strong entrepreneurial, can-do spirit, and offer opportunities to work on challenging projects with some of the most talented people in the industry. They must also take the necessary steps to groom the next generation of professionals through various training and leadership programs, and incentivize all employees to row in the same direction. To this end, all three design firms under our research coverage require their senior management to own an equity position in their firm and offer up-and-comers long-term stock-based compensation. These incentives, we believe, go a long way in building a significant accumulated knowledge base, continuity in the firms' relationships with their clients and business stability. Design firms boast a number of characteristics that differentiate them from the other three I&C groups we cover (see Exhibit 4). Broadly speaking, they tend to boast relatively healthy margins that not only reflect their high value-add, but also their critical role in the industry value chain. They are well-diversified and have low capex requirements, but generally lack scalability. Equipment distributors similarly have limited fixed capital investments, but do operate with considerable working capital requirements. This group is exposed to attractive parts and service opportunities and tends to perform best during the later stages of the cycle. Engineered product manufacturers have comparatively high fixed capital requirements, which in turn provide significant operating leverage. The defining characteristics of the contractor segment are lower margins and a rather high degree of cyclicality (and scalability). The amount of fixed capital investments for these companies depends on the degree to which they chose to 'self-perform' construction activities. Human capital is the largest and most important asset of a design firm

Relative to other I&C segments, design firms generate higher margins and have lower capex requirements, but generally lack scalability

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Canada Research | Page 10 of 52 Exhibit 4: Infrastructure and Construction Value Chain

Equipment

Finning Cervus Equipment Rocky Mountain Ritchie Brothers Strongco, Toromont Wajax

Infrastructure & Construction

Materials and Engineered Products

ADF Group, Canam Group, Armtec Infrastructure GLV, ZCL Composites Russel Metals

Planning

Master plans Feasibility studies Strategic planning Project development Financial analysis Functional programming Technical programming

Design

Surveying and mapping Preliminary plans Detailed engineering Value engineering Process engineering Equipment selection Equipment design Programming

Construction

Site preparation Site construction Site supervision Site inspection Procurement Scheduling Quality control Cost control

Operation & Maintenance

Commissioning Training Start-up Maintenance programs

Engineering

Genivar IBI Group Stantec SNC-Lavalin

Contractors

Aecon Group Bird Construction Churchill Corp. North American Energy Partners SNC-Lavalin

Source: Raymond James Ltd.

If we focus our analysis on the technical consulting firms specifically, we find that the nature of their services facilitates the generation of stable and diversified revenue streams. This level of diversification stems from their positioning in all phases of the infrastructure and facilities project life cycle, and can be often enhanced further through geographical expansion and/or the pursuit of complementary practice areas. To drive this point home, we note that the seven engineering consulting firms included in our I&C comparable valuations table were able to grow EBITDA at an average annual rate of 12% over the two-year period ending Dec-31-10, compared to respective declines of 6% and 15% for two groups comprised of global integrated firms and North American contractors (we provide more detail in the Analyzing the Returns section). Additionally, while we track and document the large jobs our engineering and architectural names secure, this analysis merely captures the tip of the iceberg; the bread and butter for these firms actually comes from a myriad of projects each performs for its clients every single working day, and which are typically small in both size and scope (e.g., feasibility studies, conceptual drawings and environmental impact assessments). For proof consider that IBI Group, Genivar and Stantec handled roughly 10,000, 15,000 and 25,000 active projects, respectively, in 2010 with none deriving more than 3% of their top-line from any single project. This steady flow of work, in our view, also helps explain the relative resilience of design firms in recessionary times­­when clients prefer to plan projects in anticipation of better times ahead. Architects and engineers, like other consultants and professionals, charge a fee for their service. The fees are structured depending on the type of project undertaken, the scope of work to be performed, and whether the contract was competitively tendered or solesourced (read: negotiated). In situations when the scope of services and schedule can be

Professional services firms work on a large number of small projects in various sectors, which helps explain their resilience in recessionary times

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Infrastructure & Construction clearly defined, a lump-sum or fixed-fee arrangement is generally favoured. Examples of this are an architectural firm executing a contract for a percentage of a building's construction cost, or a municipality hiring a civil engineering firm to perform a transportation study for a set amount. However, in instances when either the scope or the schedule of services cannot be reasonably defined, as is often the case on industrial projects, a time-and-materials or hourly agreement is recommended. Design firms agree to fixed-fee arrangements based on an estimate of the costs a specific project will entail. They will tend to favour such contracts over those based on hourly rates to the extent they generally result in higher-margin, more profitable jobs. But every so often some unforeseen difficulties can force staff to work additional hours on a particular assignment, rendering it less profitable than anticipated. It is worth stressing, however, that these cost overruns are usually immaterial to the consultant's bottom-line (especially when considering the multitude of projects over which they are spread), and pale in comparison to the losses contractors and even integrated firms can suffer on large hard-bid jobs. This latter point was most clearly driven home two months ago when Aecon Group warned about a $55 million loss suffered on Suncor's Firebag 3 Central Plant Facilities (CPF) project. Even best-in-class SNC-Lavalin was inadvertently caught by surprise in 2007 when the bankruptcy of a key supplier derailed its Goreway thermal power project for several quarters. From these examples, it is clear one key advantage to the design firms' fee-based strategy is that it limits their liability; the flipside is that it prevents them from offering fully packaged, in-house solutions. Each consulting firm employs a unique mix of professional, technical and administrative support staff with differing levels of experience, expertise and responsibility. As a rule of thumb, when preparing their budgets, most firms typically commit 70-80% of available staff time to billable projects, with the remaining 20-30% made available for business development efforts, R&D projects, training and professional development. Also, since there is a limit to how much revenue they can extract from the average professional, design firms are best served to expand headcount when reporting over nine months worth of backlog (conversely they should downsize when the backlog falls below six months). To provide the basis for continued organic growth, and to offset the lack of scalability inherent in their fee-for-service business model, Genviar, IBI Group and Stantec have all been active acquirers; in the section that follows we explain why we expect they will remain so.

Canada Research | Page 11 of 52

Cost overruns are rare and usually immaterial to a design firm's bottomline...

...but can wreck a contractor's fortunes

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Canada Research | Page 12 of 52

Infrastructure & Construction

Key Industry Trends

Demand for the services design firms offer is innately linked to the business cycle. It rises during economic upswings as the ability of private and public sector clients to make investments improves, and typically declines when the outlook for corporate profits becomes less certain. The degree to which fee volumes soften will invariably depend on the governments' ability to continue funding infrastructure projects or, failing this, their willingness to embrace Keynesian economics. Recent history shows the federal and provincial governments in Canada did just that following the 2008 credit crisis, whereas their U.S. counterparts were largely ineffective with their pump priming efforts. We believe this helps explain in part why Canadian-centric Genivar has been able to expand its business while other technical consulting firms with U.S. exposure struggled to grow organically (though there were also other factors at play behind Genivar's healthy performance). But over and beyond these macro forces, we see four underlying themes combining to drive continued growth for the professional technical services firms under our coverage. These include: 1. Horizontal Integration: Many Innings Left The consolidation of engineering and design firms is much like the consolidation that occurred in the accounting industry. In the 1950s most public accountants operated locally as sole-proprietorships or single-office partnerships. But as travel and telecommunication improvements in the 1960s and 1970s made it easier to expand business beyond local confines, accounting firms started following their clients abroad. Many established satellite offices from the ground up, but soon found it simpler and more efficient to partner with established companies sharing complementary client lists and similar values of service quality and professionalism. From this emerged a multitude of national firms and ultimately, through cross-border consolidation, the Big 4 (Deloitte, PricewaterhouseCoopers, Ernst & Young and KPMG). Today these accounting firms: (i) audit 98% of the more than 1,500 largest U.S. public companies on record­­according to United States Government Accountability Office; (ii) boast an expanded offering of management consulting, corporate finance, risk and tax services, and (iii) are major developers of talent within the financial services industry. While the Big 4 dominate the audit market and are orders of magnitude larger than their next largest competitors, they still leave some room for smaller entrepreneurial firms to thrive in specific niches or regions. Although no other profession has experienced to date a structural evolution emulating that of the accounting industry, we believe design firms appear to be following a similar path. In 2010, Stantec continued to march toward its goal of becoming a top 10 global design firm with ten acquisitions, Genivar outlined plans to double in size over three years, IBI Group snapped up the United Kingdom's largest architectural practice specializing in social infrastructure (Nightingale Associates) and SNC-Lavalin added Colombia's biggest oil and gas engineering firm to its services offering. Notably, all of this was unfolding as industry giants Aecom Technology Corp. and Tetra Tech were gobbling up medium-sized firms across Canada ­ including EBA, RSW and BPR. With all this consolidation activity, investors may be justified in asking: "How long can this possibly last?" For quite some time, we believe. The ten largest U.S. design firms generated combined revenues of US$34 billion in 2010, giving them a mere 13% share of the professional technical services market (see Exhibit 5). Of these participants even the largest, Aecom, had just 2% market share. This leaves the U.S. industry with nearly 400 firms generating annual fees ranging from US$25-500 million, and thousands of smaller ones focusing on specialized sectors (see Exhibit 6). The design and consulting world may not be as fragmented as it used to, but we believe there are many innings left in the consolidation theme. The ten biggest U.S. design firms make up only 13% of the market

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction Exhibit 5: Top U.S. Design Firms in 2010

Ranking 1 2 3 4 5 6 7 8 9 10 Company Aecom Technology Corp. URS Corp Jacobs CH2M Hill Flour Corp. Amec Tetra Tech Inc. Bechtel KBR Parsons Brinckerhoff Inc. Type of Firm Engineer-Architect Engineer, Architect, Contractor Engineer, Architect, Contractor Engineer-Contractor Engineer-Contractor Engineer-Contractor Engineer Engineer Engineer-Contractor Engineer-Contractor 2010 Revenue (million) $5,920 $5,039 $4,748 $3,603 $3,128 $2,456 $2,456 $2,210 $2,170 $2,010 $33,740 $578 Market Share 2.3% 2.0% 1.9% 1.4% 1.2% 1.0% 1.0% 0.9% 0.9% 0.8% 13.4% 0.2%

Canada Research | Page 13 of 52

25

Stantec Inc.

Engineer, Architect, Planner

Source: ENR Sourcebook, Raymond James Ltd.

Exhibit 6: Top U.S. Design Firms, 2002 & 2010

350 300 250 200 150 100 50 0 More than $1 billion $500 million to $1 billion $250 million to $500 million $100 million to $250 million $50 million to $100 million $25 million to $50 million Less than $25 million

2002

2010

.....but the total number of firms in .....but the total number the industry is very large. of firms in the industry is

1000's

In 2002, there were just 17 U.S. Design firms with revenue greater than US$500 million. in 2010 there were 27....

very large.

Source: ENR Sourcebook, Raymond James Ltd.

Genivar, IBI Group, Stantec and SNC-Lavalin consider acquisitions to be an integral part of their long-term strategy. There are several reasons for this. Acquisitions provide design firms with an increasingly comprehensive range of engineering services to promote and cross-sell. They help address the scalability issues engineers and consultants face when targeting new opportunities and can unlock significant revenue synergies (as the customer lists of the design practices are combined). Moreover, if done right, they allow employees to enjoy greater career opportunities­­effecting a powerful and attractive virtuous circle for these firms (see Exhibit 7).

Acquisitions offer engineering firms an increasingly comprehensive range of engineering services to promote and cross-sell...

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 14 of 52 Exhibit 7: Engineering Services Virtual Circle at Work

The firm gains a new client base to which it can cross-sell services The firm provides a full range of professional consulting services to its private and public sector clients

Infrastructure & Construction

4

1

Potential Partners and Targets

Professional Technical Services Firms

3 2

Private and Public Clients

The firm adds capabilities across all three parameters of the enterprise ­­geography, discipline and end market­­most predominantly through acquisition

Satisfied clients in turn outsource more and more engineering services to the firm, increasing demand for new types of services

Source: Raymond James Ltd.

No matter how attractive an avenue for growth it represents, it is our view that a firm's roll-up strategy will ultimately be influenced by its cash flow generating capacity as well as its ability to tap external funds. Specifically, we estimate­­based on the industry's historical operating profit margin of 10%­­that design firms can afford to grow strategically at an annual rate of 5-10%. Beyond this range, growth can only be reasonably achieved with sufficient access to capital (either from the public markets or through strategic partners). This puts private firms at a significant disadvantage to the extent their internal funds are typically paid out to employees-owners or retained to buy-out retiring shareholders. The silver lining for the smaller firms it that the industry's ongoing consolidation is giving them a practical alternative to succession. As the old adage goes, if you can't beat them, join them. Another driving force behind the `growth-through-acquisition' model is that it can be a highly accretive exercise. Private companies, depending on their size and focus, have historically been acquired for multiples ranging from 3.0x to 7.0x trailing EBITDA. For the larger design firms, this compares very favourably to the average EV/EBITDA multiple of 8.5x they have commanded from the Street over the past 15 years (see Exhibit 8). ... and can be highly accretive

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction Exhibit 8: Engineering Services Historical EV/EBITDA Valuation

Canada Research | Page 15 of 52

12x 11x 10x 9x 8x 7x 6x 5x 4x 3x 2x 1Q96

The engineering services industry has traded at an average EV/EBITDA multiple of 8.5x over the past 15 years

11.7x

Average: 8.5x

1 standard deviation

5.1x

Private companies in the industry are typically acquired for 3-7x EV/EBITDA

1Q97

1Q98

1Q99

1Q00

1Q01

1Q02

1Q03

1Q04

1Q05

1Q06

1Q07

1Q08

1Q09

1Q10

TTM EV/EBITDA

Average

Source: Capital IQ, Raymond James Ltd. 2. Vertical Integration: More are Embracing the Integrated Approach SNC-Lavalin was one of the very first engineering firms to package the professional services that Genivar, IBI Group and Stantec deliver efficiently today with full-blown construction services. In the late 1990s the company went a few steps further by layering on investment financing and operations and maintenance (O&M) capabilities to its engineering and construction offering. This was in keeping with the objective of major infrastructure owners to integrate all key phases of the value chain to drive efficiencies and reduce costs. To wit, SNC-Lavalin's one-stop approach can take pressure off the design, engineering and procurement activities, cut the risks of supply chain conflicts and avoid the inefficiencies of managing too many supplier interfaces. It also allows for more flexibility, as construction projects can be handled with varying risk profiles and better coordinated with the work of designers. The integrated approach has certainly pushed SNC-Lavalin to assume more risk, but it also has rewarded the firm with a first-mover advantage over its industry peers and a significantly larger share of client budgets. Big construction firms have caught on to the benefits of the integrated model, and are now positioning themselves earlier in the project life-cycle. This is precisely what U.K.based Balfour Beatty did in 2009 when it acquired U.S. engineering stalwart Parsons Brinckerhoff (PB) for US$626 million. The deal combined PB's well-established global design practice with Balfour Beatty's large construction and investment businesses to create a group with significantly enhanced capabilities. Based on this example, we would be remiss to ignore some of the appeal IBI Group's global architectural practice may have for players situated further down the I&C supply chain. There are advantages to integrating all key phases of the I&C value chain...

1Q11

...and large contractors have caught on to these

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 16 of 52 3. Projects are Growing Larger and More Complex On a recent magazine cover, ReNew Canada coined the expression Infranormous to describe the 100 largest infrastructure projects currently underway in Canada. We felt this was appropriate since the average project on the list had ballooned in size from $680 million in 2010 to $960 million in 2011. Due to their sheer size and the increased complexity that tougher regulations and stricter standards have placed on owners, the planning of such projects has been taken to a whole new level. Nowhere is this more obvious than in the oil sands where a host of recently sanctioned projects are slowly progressing through the planning and engineering phases. Producers reason it's better to spend more time planning things right in the very early stages of development, than to cut corners and end up paying for it dearly at the end. These delays may drive the contractors we follow up the wall, but they are music to the ears of engineers. Many Canadian public owners have embraced the use of the P3 model to undertake large-scale infrastructure projects. But we note that the resulting growth has had mixed implications on the design industry. For one, high barriers to entry effectively render the P3 market impenetrable to smaller firms. They also require the designer to work for a reduced fee early in the proposal and qualification stages of a project, with the promise of much improved economics if the bid proves successful. Accordingly, firms must efficiently manage staff utilization and carefully asses the proponents they team up with to ensure the rewards for chasing P3 work more than justify all efforts put in and risks assumed. There is obviously more upside for firms that maintain high securement ratios, to the extent they can spread their costs across a greater number of successful bids. IBI Group and Stantec appear to be doing a good job of it, judging from their recent successes. Notably, the former company is lead architect on SNC-Lavalin's Glen Campus project in Montreal as well as the Women's College Hospital in Toronto; the latter is handling all design services for two Carillion-led projects in Ontario, the new Forensic Services and Coroner Complex and the Centre for Addiction and Mental Health. We invite readers interested in learning more about P3s to refer to our comprehensive Jun-11-08 report titled `Under the Microscope; How P3s Change Industry Dynamics' and our Sep-30-10 update `The P3 Model: An Enduring Feature of Canada's I&C Market' for more detail.

Infrastructure & Construction

The trend toward larger and more complex projects...

...has had mixed implications on the engineering and design industry...

4. The Environment: A Good Business for Engineers Long gone are the days when environmental matters were plainly ignored in the execution phases of a project. Increased regulation and public awareness have, together, propelled environmental considerations and permitting to the forefront of a project's planning phase. In turn, demand for related consulting services and expert advice has ballooned­­arguably making environmental engineering the hottest subsector of the design and consulting industry. Since all new projects under consideration now invariably have a green angle to them, most engineering firms see the benefits of developing or acquiring expertise in this field. Stantec significantly bolstered its expertise in the field in early 2009 when 1,700-employee strong Jacques Whitford, an internationally recognized leader in environmental and earth sciences solutions, joined the company. Largely as a result of this deal and the many tuck-ins it has performed since, the firm today ranks as a top-tier firm in the North American water sector. ...but the impact of tighter environmental regulations has been universally favourable

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction

Canada Research | Page 17 of 52

End Market Outlook

Before turning our focus to the key market segments that professional technical services firms target, we believe a brief analysis of the industry's macro drivers is warranted. Activity in the design industry is dictated at least partially by the economic cycle. This certainly rings true for private sector spending, which relies heavily on corporate profits, the labour market, property vacancy rates and commodity prices. When private sector activity dried up at the onset of the global credit crisis, the Canadian governments kept the lights on in the construction sector by not only committing $21 billion in stimulus money, but also accelerating the roll-out of large-scale projects earmarked under the $33 billion Building Canada Plan. However, as mounting fiscal realities force certain provinces to scale back their funding, we believe that a sustained economic recovery is necessary to propel the I&C sector higher. We maintain the western Canadian provinces will provide more ample and lucrative business opportunities than their counterparts to the east and the south, ceteris paribus, thanks to their healthier fiscal position (see Exhibit 9) and wealth of natural resources. Exhibit 9: Projected Provincial Debt-to GDP Ratios (F2011)

50%

48%

There are stark differences in the fiscal state of Canada's ten provinces, which biases our research towards companies with a strong foothold in the west

40%

36% 34%

40% 35% 35%

30%

26%

20%

17%

10%

7%

0%

-10% B.C.

-6%

Alba

Sask

Man

Ont

Que

NB

NS

PEI

NFLD

Source: Conference Board of Canada, Globe and Mail Canadian design firms serve a smorgasbord of industries (see Exhibit 10). This makes an analysis of numerous end markets an important part of any outlook for the sector, and we follow a wide range of macro indicators accordingly. In some cases, such as mining and oil and gas, where our firm has established respected sector research, we largely defer to our internal sources of expertise for our analysis. In other areas, such as buildings, transportation or municipal infrastructure, we have established our own practice of evaluating trends and monitoring key demand drivers. Either way, a thorough review of all the end markets that the design and consulting universe serves could constitute a separate report on its own. Therefore, in order to maintain a manageable scope, we limit ourselves to providing a summary of the current demand conditions in and future outlook for the five markets that are most relevant to design and consulting firms we cover.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 18 of 52 Exhibit 10: Sector Exposure of Canadian Designers and Engineers

Buidings Dessau exp Global Genivar Golder Hatch IBI Stantec SNC-Lavalin Urban and Municipal Infrastructure Transportation Industrial and Power

Infrastructure & Construction

Enivironmental < 5% 5-20% 20-50% 50-75% 75% +

Source: ENR, Company Reports, Raymond James Ltd.

Buildings Projects in this segment are carried out for both public and private sector clients and run the gamut from courthouses, hospitals and universities to condos, office towers and entertainment complexes. To gauge the prospects of the related components of this industry in North America­­residential, commercial, institutional and industrial­­we continuously monitor the monthly buildings permits data made available by both Statistics Canada and the U.S. Census Bureau, the American Institute of Architects (AIA) and the websites of all major P3 agencies. Most large-scale social infrastructure projects north of the border have recently been tendered under various P3 forms, and we expect this to continue for some time. In healthcare alone, the list of projects includes the Oakville Hospital and the third phase of the London Health Sciences Centre in Ontario, the Interior Heart and Surgical Centre Project in British Columbia, and the Montreal University Hospital Centre (CHUM) in Quebec. In Alberta, the government is expected to stick to the traditional procurement approach to fund health facility projects in several medium-sized cities and rural locations, including a massive hospital for Grande Prairie. However, if we look at the general trend for institutional buildings intentions (see Exhibit 11), the data suggests a drop in activity over the coming months and quarters, which is consistent with the more cautious outlook we communicated in our Jan-14-10 report dubbed `Life After Stimulus'. The outlook for privately-funded construction activity in Canada has brightened considerably from 18-24 months ago, especially in the industrial sector, where key commodity prices generally remain above investment threshold levels (despite the recent volatility). According to many industry sources, the commercial building segment in western Canada is also rebounding from trough levels as the surplus in office and retail space is being worked off, but the last few months of data suggest the recovery may be lumpy. Also key to the publicly-traded design firms we cover are the construction intentions for multi-residential buildings and the related influence these have on urban land development. We would be remiss to ignore their impact on IBI Group, in particular, to the extent the firm has been instrumental in the planning and design of Toronto and Vancouver's waterfronts. In this regard, the outlook for private condo developments also appears to be on the mend. The outlook for privately-funded construction activity has brightened considerably in Canada...

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction Exhibit 11: Canadian Non-Residential and Residential Building Permits

Canadian Non-Residential Building Permits

5.0

2.0

Canada Research | Page 19 of 52

Canadian Building Permits

4.5 4.0

1.5 Permit Values ($ billion)

3.5 Permit Values ($ billion) 3.0 2.5 2.0 1.5

1.0

0.5

1.0 0.5

0.0 May-06 Aug-06 Feb-06 May-07 Aug-07 Feb-07 Nov-06 May-08 Aug-08 Feb-08 Nov-07 May-09 Aug-09 Feb-09 Nov-08 May-10 Nov-09 Aug-10 Feb-10 Nov-10 Feb-11

0.0 Feb-02 Jun-02 Feb-03 Jun-03 Feb-04 Jun-04 Feb-05 Jun-05 Feb-06 Jun-06 Feb-07 Jun-07 Feb-08 Jun-08 Feb-09 Jun-09 Feb-10 Jun-10 Feb-11

2011

Oct-02

Oct-03

Oct-04

Oct-05

Oct-06

Oct-07

Oct-08

Oct-09

Industrial

Commercial

Institutional

Non-Residential

Residential

Source: Statistics Canada, Raymond James Ltd. Any concerns about the fiscal condition of certain Canadian provinces pale in comparison to the problems that the U.S. federal government and many U.S. states currently face. Simply put, we feel public-sector building work south of the 49th parallel will continue to languish until the current debate in Congress over the deficit and the budget gets resolved. The outlook for private construction activity is more favourable, though we believe the restricted lending practices of the banks, excess housing supply and a general lack of confidence in the economy will continue to present the industry with near-term headwinds. All of these issues are evident in certain key industry metrics that we track such as the building permits or the Architectural Billings Index. The latter reflects a 9-12 month lag time between architecture billings and construction spending, with any score above 50 indicating an increase in demand for design services (see Exhibit 12). The corollary to this suboptimal environment, when combined with a strong Canadian currency, is that the U.S. market should remain fertile acquisition grounds for the Canadian-based designers for some time to come. ...but economic conditions in the U.S. remain suboptimal

This may prove fortuitous for the four companies highlighted herein

Exhibit 12: U.S. Non-Residential and Residential Building Permits, Architectural Billings Index (ABI)

65.0

750 Residential 700 650 600 550 (SAAR, US$ billion) 500 450 Non-residental

Architect's Billings Index (ABI) 12M Moving Average 60.0

55.0

50.0

45.0

400 350

40.0

300 250 200 150 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11

35.0

30.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: U.S. Census, The American Institute of Architects, Raymond James Ltd.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Oct-10

Canada Research | Page 20 of 52 Urban and Municipal Infrastructure Professional services provided in this area focus on a city's below- and above-ground infrastructure. This results in a broadly-defined market that encompasses water distribution and treatment, wastewater collection and treatment, land planning, landscape architecture and transportation accessibility. New investments in this field are generally driven by the cyclical housing market, population growth and urbanization; in contrast the maintenance, operations and repair of existing infrastructure is generally managed (unfortunately) on an as-needed basis. This chronic underinvestment has to do with the fact that much of the funding commitment falls in the hands of local municipalities, which have limited financial flexibility. A more stable residential sector and fiscally stronger jurisdictions provide for a much healthier outlook in Canada than in the U.S. Moreover, we view the nation's aging water infrastructure as the next logical candidate for the P3 model, and surmise that a pipeline of related projects will build over the medium term. Globally, Frost & Sullivan pegs the water market for design, consulting and construction at $126 billion. We highlight the global water treatment and re-use segment for its explosive potential, as drinking water shortages now affect roughly one-third of the world's population. Transportation This segment includes planning, surveying, design and project management services for a variety of transportation projects­­including highways, bridges, ports, airports, mass transit facilities and traffic systems. Most clients represent public authorities, weighting the sector's outlook heavily on spending budgets. However, as we have highlighted in previous industry reports, larger-scale transportation projects are ideally suited for the P3 model because: (i) the capital asset provision and the availability payments can be tied to performance, and (ii) they necessitate significant operation and maintenance requirements (see Exhibit 13). It is no wonder P3s are being contemplated for many big ticket projects across Canada including the eastern extension of Toronto's Highway 407, the final leg of the Edmonton Ring Road and the reconstruction of Montreal's crumbling Turcot Interchange and Champlain Bridge. Exhibit 13: Suitability of P3 Model for Various Infrastructure Project Types

Urban Highway Higher Suitability · Proven model · Well defined requirements · Stable long term O&M · Innovation & economies of scale · Low financial risk · Government payment stream · Defined and stable funct. requirements · Defined and stable program requirements · Stable long term O&M · Government payment stream · Lessons learned · Deal flow · Defined performance criteria · Stable long term O&M · Low financial risk · Government payment stream · Expansion requirements · Limited innovation & economies of scale · Defined and stable operating and performance criteria · Utility type function · Jurisdictional issues (municipal) · Need GoA payment guarantee · Asset ownership · Specialized program and functional requirements · One-off buildings · Architectural / design competition · Long term performance criteria change · Technology change · Severance of O&M · Limited deal flow · Building complexity · Premature obsolescence · Technology change · Jurisdictional issues · Need GoA payment guarantee · Severance of O&M · Limited deal flow · Asset ownership · Limited economies of scale · Premature obsolescence · Size/bundling · Program inconsistency · Jurisdictional issues · Need GoA payment guarantee · Severance of O&M · Limited deal flow · Asset ownership Government owned service delivery facility Major Rural Highway Water / Wastewater Government owned public buildings Health Facilities Schools

Infrastructure & Construction

Post Secondary Institutions

Facility Upgrades (brownfield) Lower Suitability

· Partial GoA funding · Technology change · Specialized technology · Building complexity · Jurisdictional issues · Need GoA payment guarantee · Limited deal flow · Asset ownership

· Latent defects · Unforeseen risks · Limited deal flow

Source: Alberta Infrastructure and Transportation, Raymond James Ltd.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction South of the border, decreasing tax revenues and continued uncertainty about longterm funding has stifled some planned transportation projects. A case in point is the recent proposal from the House Budget Committee to reduce the mandatory budget authority for all federal transportation programs by 30% to $41 billion for F2012. There might be a silver lining to this, as the shortage of funding and the construction downturn have many public agencies rethinking their approach to capital asset allocation and evaluating alternative financing and procurement methods. But before we can count on P3s to drive the U.S. transportation sector into recovery, lots of political hurdles need to be cleared. Industrial and Power This segment encompasses various sectors including mining and metallurgy, oil and gas, power generation and transmission, and manufacturing to name a few. The service offering spans the entire project life-cycle, from planning, functional programming and engineering to project management, construction support and decommissioning. The industrial segment of the Canadian economy continues to demonstrate marked resilience and growth. This is largely a function of strong commodity prices that support elevated levels of related activity. The prevailing levels of capex in mining and energy are particularly robust and, notwithstanding some recent volatility, are expected to remain strong over the foreseeable future. Longer term our Raymond James Ltd. and Raymond James & Associates' energy and mining teams project oil, gold and copper prices to settle at $125.00/bbl, US$1,100/oz and US$2.50/lb. We note that these estimates, assuming they materialize, remain well above investment threshold levels and should create favourable operating dynamics for the engineering firms that support exploration and production (E&P) activities. In a sure sign that power demand is on the rise, various hydro-electrical power projects were recently sanctioned across Canada. These include two SNC-led developments--the Lower Churchill Project in Newfoundland and B.C.'s Waneta Expansion--as well as the Lower Mattagami Complex in Northern Ontario. Although no material power gen projects are slated for Alberta in the immediate term, the province is bulking up its transmission infrastructure with investments totaling $14.5 billion over the next decade (also a potential boon for SNC-Lavalin's AltaLink). And while the demand outlook for new nuclear reactors looks grim in the wake of the Fukushima Daiichi power plant crisis, we believe more money will flow toward the refurbishment of older plants. Add to this burgeoning wind and solar power industries and you have the recipe for many years of growth for the engineering firms serving the power market, in our view. Environmental As discussed in the Key Industry Trends section, a regulatory push from pollution cleanup to prevention has taken hold amid growing public awareness. This has left engineering firms to handle ever increasing volumes of work ranging from impact studies, permitting and compliance audits to hazardous waste remediation and air pollution monitoring. Engineers are also spending more time on existing assets, as the fear of retroactive environmental liability escalates among infrastructure owners. The two high-profile industrial disasters in recent history­­BP's Deepwater Horizon oils spill and Fukushima's nuclear reactor leak--may also turn clients' focus from solely complying with regulations to more proactively managing the integrity of their assets. Based on these, and to the extent environmental matters will increasingly dictate the development and ongoing operation of infrastructure and facilities projects, it is easy for us to envision a favourable outlook for the environmental engineering profession.

Canada Research | Page 21 of 52

The industrial segment of the Canadian economy continues to show marked resilience and growth...

...while investments in power generation and transmission assets have been accelerating

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 22 of 52 Exhibit 14: Sector Summary Table

Market

Buildings

Infrastructure & Construction

Key Drivers

- Overall economic activity - Building permits - Municipal budgets - Environmental regulations - Drinking water shortages - Overall economic activity - Government financing for public works - Global economic activity - Commodity prices - Corporate profits - Regulation and public awareness

Outlook

Neutral to Positive

Municipal Infrastructure

Neutral

Transportation

Neutral

Industrial and Power

Positive

Environmental

Neutral to Positive

Source: Raymond James Ltd.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction

Canada Research | Page 23 of 52

Analyzing the Returns

In this section of the report, we present a comparative analysis of certain financial metrics we consider key to the design industry. The intent is to provide investors with some insightful data about how each company we cover stacks up against other industry bellwethers (Aecom Technology, AMEC, Arcadis and Tetra Tech), along with a cursory overview of how professional technical services firms compare to other subsectors of the I&C industry, most notably the integrated firms (please refer to Appendix A for the list of companies comprising this group). This analysis obviously involves some subjectivity in selecting what to measure and how to measure it. It is also an imperfect exercise in that some of the companies we examine have unique reporting segments--such as SNC-Lavalin's Infrastructure Concession Investments (ICI) division--or operated under different capital structures until recently. Here we specifically refer to Genivar and IBI Group, both of which converted from an income fund structure to a corporate structure at the beginning of 2011. Our ability to look back at and compare the historical performance of design firms is further limited by the length of time they have operated as public entities. This is not a problem for companies like Stantec and SNC-Lavalin, which have been public for many years. But for IBI Group and Genivar, which first tapped equity markets in 2004 and 2006, respectively, it is a consideration that cannot be overlooked. Notwithstanding these complications, we believe a comparative analysis can still be useful and telling. In particular, we like to look at it in the context of valuation. That is to say, perhaps the companies with the best and most consistent financial performance should command a premium multiple in the market, while those that have underperformed deserve a discount. But this too becomes a subjective call because the past can obviously tell us only so much about the future; we also, for reasons noted above, have to be careful with how we interpret relative performance. With all of these considerations in mind, we will briefly discuss each of the metrics that we have selected for this analysis, why we selected them, how we define them, and what the numbers tell us about the companies that we cover.

Return on Invested Capital (ROIC)

We believe that ROIC is a useful measure of a company's overall financial performance and of a management team's ability to create shareholder value. This measure, however, is open to various definitions and interpretations. For our purposes, we prefer to measure ROIC using net operating income less adjusted taxes (NOPLAT) divided by total invested capital. We also like to adjust the capital base for any goodwill writedowns and ignore the related charge to EBIT. Specifically, in our methodology, we define ROIC as follows: EBIT less Adjusted Taxes + Changes in Deferred Taxes Net Debt + Equity Capital We have tax effected the operating profits of the two former incomes trusts using a statutory rate of 34.5% over the 2005-2010 period, which helps to adjust for a more accurate comparison with their corporate peers. We also elected to omit the addition of changes in deferred taxes as we assume the tax rate adjustment accounts for GAAP and income tax reporting mismatches. Ultimately, we will leave it up to the investor to decide how to interpret these distortions and what to make of the whole income trust debate (i.e. did it `starve' companies of capital for future growth?). But from our perspective we offer the following observations about the data presented in Exhibit 15: We view ROIC as one of the best measures of a management team's ability to create shareholder value

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 24 of 52 Generally speaking, all of the companies in this benchmarking analysis have generated respectable ROIC metrics over both five and ten year periods. This consistent ability to exceed the cost of capital reflects the attractive economics of the engineering and design business and underscores our view that all four of the firms that we profile in this report represent attractive buy-and-hold investment opportunities. Stantec has not only averaged the industry's highest ROIC over the medium and long term, but also shown tremendous consistency over the years. This comes to us as no surprise in light of the firm's consistent profitability (to be illustrated next) and assiduousness in funding growth mainly through internally generated funds. Having said this, we would be remiss not to acknowledge that its ROIC (after adjusting for asset write-downs) has tracked lower in recent years (2009 and especially 2010). This, we believe, is a function of changes in project mix, intensified competitive pressures, and the timing and pace of acquisitions. Genivar's double-digit ROIC performance suggests to us that management has done a good job deploying the $200 million of additional equity it has raised since the IPO. We also attribute the solid results, in part, to the firm's concentrated exposure to the Canadian I&C markets, which have proven more resilient than many other jurisdictions in the past three years. IBI Group, on the other hand, has exhibited the lowest returns among the group. We believe much of this has to do with the fact that as an architecture-heavy firm, its past performance closely reflected the overall state of the commercial and multiresidential (read: condominium) markets. Recent acquisitions in the civil and social infrastructure markets should go a long way in alleviating some of the cyclicality inherent in these private sector markets, and provide smother returns over time. There has been a step change in SNC-Lavalin's ROIC over the past few years­­an impressive feat considering the improvement was achieved amid recessionary times. We link this performance to a number of factors­­including a maturing staple of concession investments, the favourable allocation of resources toward growth producing regions and strengthening project execution.

Infrastructure & Construction

Stantec has generated the industry's highest ROIC over the medium and long term

Exhibit 15: Peer Group Analysis of ROIC for Design Firms

ROIC ENGINEERS Genivar IBI Group Stantec Aecom Technologies AMEC ARCADIS NV Tetra Tech Engineers - Average SNC-Lavalin Integrated Firms - Average 2001 n.a. n.a. 11.5% n.a. 8.8% 11.6% 8.0% 10.0% 5.5% 2.9% 2002 n.a. n.a. 13.5% n.a. 2.6% 15.7% 12.0% 10.9% 6.9% 12.3% 2003 n.a. n.a. 15.8% n.a. 13.2% 12.1% 12.2% 13.3% 7.2% 17.2% 2004 n.a. n.a. 14.0% n.a. 6.4% 10.5% 3.5% 8.6% 8.1% 11.1% 2005 n.a. 5.2% 17.0% n.a. 5.7% 17.1% 4.1% 9.8% 8.6% 12.9% 2006 n.a. 9.0% 14.9% n.a. 12.5% 14.7% 8.8% 12.0% 7.6% 10.3% 2007 8.5% 8.3% 13.6% 18.6% 5.1% 12.9% 7.8% 10.7% 4.1% 10.9% 2008 11.3% 6.4% 14.1% 6.9% 15.7% 14.9% 8.3% 11.1% 10.9% 10.3% 2009 10.0% 4.5% 13.6% 7.2% 5.4% 12.9% 15.6% 9.9% 13.9% 14.8% 2010 8.6% 5.6% 11.5% 10.0% 18.7% 10.8% 11.2% 10.9% 12.8% 11.2% 5-yr AVG 9.6% 6.8% 13.5% 10.7% 11.5% 13.2% 10.3% 10.8% 9.9% 11.5% 10-yr AVG 9.6% 6.5% 13.9% 10.7% 9.4% 13.3% 9.2% 10.4% 8.5% 11.0%

Source: Capital IQ, Company Documents, Raymond James Ltd.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction

Canada Research | Page 25 of 52

EBITDA Margin

One notable disadvantage to using ROIC, in our view, is that it fails to reflect the different policies design firms use for their purchase price allocations and to amortize intangible assets. In other words, it does not provide a clear account of a firm's cash generating capabilities. For this reason, we feel it is important to look at the EBITDA margin performance of the professional technical services firms under review (see Exhibit 16). An analysis of EBITDA margins also provides us with a good read of firm profitability. Our conclusions are as follows: The Canadian companies we cover have sustained generally higher margins than other well-known U.S. and international engineering firms. We believe this largely reflects the benefits of industry consolidation and the less fragmented nature of the market `north of the 49th parallel.' The level and consistency of these margins also lends more support to our view that all three design firms and SNC-Lavalin are good stocks to own for the long-term. Genivar boasts the industry's highest EBITDA margins. There are two principal reasons for this, in our opinion. Firstly, the salaries paid to Genivar's top management are less onerous than at other comparable firms because these employee-owners receive a significant portion of their compensation in the form of dividends (formerly distributions). Secondly, the firm commands a dominant share of and is highly concentrated in Quebec's engineering services market, which we believe yields its operations certain economies of scale. Our expectations are for Genivar's margins to shrink moderately in the years to come as the firm acquires larger firms and transitions to a leadership-based model, but nonetheless remain at elevated levels. A proven partnership structure also helps IBI Group generate strong margins. But we believe there is more to this; it is likely that the firm's positioning at the very front-end of the I&C value chain allows it to generate premium fees (that or its status as one of the world's top architectural practices). We believe Stantec's stronghold on the Alberta market has been a major contributor to the firm's healthy and stable EBITDA margins, as has its design-heavy focus. This is largely consistent with BD World Architecture's most recent survey, which ranks Stantec as the world's top practice for non-architectural creative staff (including technologists, engineers, planners, construction managers, landscape architects, graphics specialists and designers). Aecom's EBITDA margins are unusually low for a professional services firm. This has to do with the firm deriving a material portion of its revenue from low-margin O&M activities. The margins its professional technical services business has historically commanded are approximately three to four points higher than the figures displayed. The benefits of industry consolidation in Canada are reflected in higher margins for the companies we cover

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 26 of 52 Exhibit 16: Peer Group Analysis of EBITDA Margins for Design Firms

EBITDA margin (%) ENGINEERS Genivar IBI Group Stantec Aecom Technologies AMEC ARCADIS NV Tetra Tech Engineers - Average SNC Integrated Firms - Average 2001 15.8% 14.1% 12.5% n.a. 5.0% 6.8% 9.7% 10.7% 8.0% 7.6% 2002 13.1% 14.6% 12.3% n.a. 4.3% 7.2% 11.6% 10.5% 6.2% 6.2% 2003 11.8% 14.4% 13.3% 4.1% 5.3% 6.2% 12.6% 9.7% 7.2% 5.8% 2004 14.9% 15.1% 13.1% 4.8% 4.6% 5.0% 7.1% 9.2% 7.8% 5.5% 2005 19.0% 15.2% 14.3% 4.8% 5.5% 7.3% 5.3% 10.2% 7.0% 5.9% 2006 20.3% 18.6% 14.8% 3.9% 6.8% 7.6% 8.6% 11.5% 6.5% 5.4% 2007 20.3% 19.1% 13.5% 4.4% 7.8% 8.4% 9.3% 11.8% 4.3% 5.6% 2008 21.4% 19.2% 13.2% 5.3% 10.2% 8.8% 10.0% 12.6% 8.8% 6.4% 2009 19.9% 15.2% 12.9% 5.6% 10.8% 8.6% 10.8% 12.0% 12.1% 7.6%

Infrastructure & Construction

2010 5-yr AVG 18.0% 14.7% 12.9% 6.1% 11.9% 8.5% 10.8% 11.9% 13.9% 7.5% 20.0% 17.4% 13.5% 5.1% 9.5% 8.4% 9.9% 12.0% 9.1% 6.5%

10-yr AVG 17.4% 16.0% 13.3% 4.9% 7.2% 7.4% 9.6% 10.8% 8.2% 6.2%

Source: Capital IQ, Company Documents, Raymond James Ltd.

EBITDA Growth

We have elected to use the designers' CAGR for EBITDA as the best measure of growth. We feel this is appropriate because it captures both revenue and margin performance and, unlike net income, steers clear of potential distortions associated with the income trust structure as well as the purchase price allocation and intangible amortization policies highlighted above. We specifically reviewed three periods: 2003-2008, 20082010, and 2000-2010. The first period provides us with insight into the performance of the sector from the bottom to the top of the last cycle (i.e. through a period of robust economic expansion); the second illustrates how each company managed the most recent slowdown; and the last time-frame furnishes us with a very good measure of long-term growth. Our analysis (presented in Exhibit 17) yields the following key observations and conclusions: In aggregate, the designers have not only grown at robust rates over the last five and ten years, but also weathered the recession well. The integrated firms comparatively suffered a drop in earnings over the past two years. This, we opine, speaks to the stability of the engineering fee-based business model and the relative ease with which publicly-traded companies can fuel growth with acquisitions. Genivar's five-year performance stands out from the pack, having increased EBITDA at a pace that even leaves the second fastest growing company, Aecom, a distant laggard. We attribute this strong performance to the healthy opportunities the Canadian I&C industry has afforded the firm, the high level of cross-selling management has been able to extract from acquired companies and the fact that its growth has come from a low base (turning the smallest of deals into needlemoving transactions). Although we fully expect Genivar's growth to moderate in the years to come, we feel these growth factors have yet to fully play out. For these reasons, we believe the firm can continue to outpace its industry peers over the next few years. Stantec's ten-year performance shows that engineering firms can grow at a very healthy pace with minimal equity issuances Stantec's ten-year performance shows that engineering firms can grow at a very healthy pace with minimal equity issuances. However, its performance over the last two years highlights that design firms are not completely immune from macro and industry forces. IBI Group's return in that same period similarly demonstrates the challenges that many architectural firms invariably faced as private sector activity nearly grounded to a halt (making its five-year performance all the more remarkable). On balance, the engineers have not only grown at robust rates over the last five and ten years, but also weathered the recession well Genivar's five-year performance has been outstanding

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction SNC-Lavalin's unique business model, exposure to resource-rich jurisdictions and growing presence in emerging countries has facilitated tremendous growth rates over the three periods evaluated. It is no wonder bouts of weakness in this worldclass firm's stock price are generally short-lived.

Canada Research | Page 27 of 52

Exhibit 17: Peer Group Analysis of EBITDA CAGR for Design Firms

EBITDA (mln) ENGINEERS Genivar IBI Group Stantec Aecom Technologies AMEC ARCADIS NV Tetra Tech Engineers - Average 2001 6.7 n.a. 37.4 n.a. 130.8 54.3 70.6 2002 7.9 9.2 44.9 n.a. 102.9 58.9 86.1 2003 7.7 9.8 52.2 79.0 176.3 52.1 104.0 2004 10.2 13.9 59.0 97.0 161.9 45.0 69.2 2005 18.8 14.9 74.8 115.9 118.2 72.7 48.0 2006 25.9 26.8 105.1 132.8 108.6 94.2 82.2 2007 42.0 31.8 112.2 185.0 137.6 126.0 94.3 2008 68.5 45.6 148.9 275.1 200.3 153.3 125.0 2009 78.5 41.7 160.3 343.7 204.8 154.3 149.1 2-yr CAGR 5-yr CAGR 10-yr CAGR 2010 (2008-10) (2003-08) (2000-10) 84.7 42.7 158.0 401.9 264.1 169.6 158.0 11.2% -3.3% 3.0% 20.9% 14.8% 5.2% 12.4% 9.2% 18.4% 8.8% 54.9% 36.0% 23.3% 28.3% 2.6% 24.1% 3.8% 24.7% 23.7% -7.9% n.m. n.m. 17.9% n.m. 8.3% 12.3% 6.0% 11.1% 19.9% 18.5%

SNC 170.6 196.3 Integrated Firms - Average * note, figures are in reported currencies

216.3

247.4

242.2

333.6

287.1

627.7

735.6

879.5

Source: Capital IQ, Company Documents, Raymond James Ltd.

Revenue and EBITDA per Employee

As we have discussed earlier in this report, the principal assets of a design firm are its people. They also represent the largest expense item on its P&L and are often a bottleneck for growth and operating leverage. For these reasons, we have elected to measure the contribution of the average employee to a firm's top-line and EBITDA compare among firms. We note the reported figures for Aecom, AMEC, Arcardis and Tetra Tech have been converted into Canadian dollars to facilitate our analysis. Readers are encouraged to treat both `per head' metrics jointly for a proper analysis, as a high revenue-per-employee number means little if adequate profitability cannot be achieved. Conversely, a high profitability-per-employee figure coupled with a low revenue metric can be achieved if operating costs are effectively managed. Once again, we must keep in mind that past results only tell us only so much about the future. With that said, our analysis (shown in Exhibit 18) yields the following key observations and conclusions: IBI Group garners the highest EBITDA-per-employee among the seven consulting firms under review. This should come as no surprise considering the advantages of its partnership model discussed and the high proportion of architects included on the firm's payroll (architects book higher fees than engineers, which in turn charge more than contractors, which earn more than operators, and so on). Genivar ranks lowest in terms of revenue-per-employee contribution because it derives the bulk of its revenues from Canadian sources (where professional fees are significantly lower than in the United States and Europe). However, for the reasons explained earlier, the firm fares very well in terms of profitability. According to our analysis, integrated firms exceeded the revenue-per-head and EBITDA-per-head of the average design firm by factors of 2.2 to 1 and 1.3 to 1, respectively, over the past five year. This makes sense to us since the integrateds generally sub the high-volume, low-margin work to contractors. IBI group generates the second highest EBITDA-per-employee due to its heavy focus on architecture

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 28 of 52 SNC-Lavalin's EBITDA-per-employee was the highest among nine integrated firms we analyzed over the five- and ten-year periods ending Dec-31-10. This helps explain why this firm has generally commanded a valuation premium over its peers. A poor demand environment and greater competitive pressures compelled many firms to cut staff and drop their professional fees during the recession­­as reflected in decreases in both revenue and profitability figures 2008 to 2009. Certain companies were able to extract more revenue from their staff in 2010 as market conditions slowly improved last year. This was the case for Genivar and AMEC.

Infrastructure & Construction

Genivar and AMEC were able to extract more revenue from their staff in 2010 as market conditions slowly improved

Exhibit 18: Peer Group Analysis of Revenue/Employee and EBITDA/Employee for Design Firms

Revenue/Employee (C$000's) ENGINEERS Genivar IBI Group Stantec Aecom Technologies AMEC ARCADIS NV Tetra Tech Engineers - Average 0 SNC Integrated Firms - Average 420.7 285.7 420.9 270.2 355.8 368.1 282.4 313.6 275.3 279.4 351.0 303.4 2006 88.3 135.9 124.8 89.8 176.7 124.9 152.7 127.6 2007 103.3 124.5 120.1 87.3 167.2 131.6 143.8 125.4 2008 110.4 139.4 135.3 97.1 166.5 144.0 163.2 136.6 2009 108.3 130.2 138.1 100.3 149.9 297.2 162.2 155.2 2010 111.8 127.9 122.6 94.3 159.8 261.1 135.8 144.8 5-yr AVG 104.4 131.6 128.2 93.8 164.0 191.7 151.5 137.9

EBITDA/Employee (C$000's) ENGINEERS Genivar IBI Group Stantec Aecom Technologies AMEC ARCADIS NV Tetra Tech Engineers - Average SNC Integrated Firms - Average

2006 17.9 25.3 18.5 6.0 12.1 14.8 13.1 15.4 27.3 15.7

2007 21.0 23.7 16.2 6.2 13.0 16.0 13.4 15.7 17.9 15.5

2008 23.6 26.7 17.8 7.8 17.1 20.6 16.4 18.6 31.4 22.9

2009 21.5 19.8 17.8 8.6 16.1 35.2 17.5 19.5 34.0 23.0

2010 5-yr AVG 20.2 18.8 15.8 9.1 19.1 30.2 14.7 18.3 38.3 19.6 20.8 22.9 17.2 7.5 15.5 23.4 15.0 17.5 29.8 19.3

* Note: figures are converted from reported currency to Canadian Dollars

Source: Capital IQ, Company Documents, Raymond James Ltd.

Working Capital Management (Day Sales Receivable)

Insofar as it can heavily influence free cash flows and, in turn, self-funded acquired growth, efficient working capital management is critical to the long-term success of any professional services firm. With no real inventories involved in the business this effectively comes down to an equation of days payable minus days receivable. The former, which consists mainly of payroll and fees paid to sub-contractors, is usually more stable than the latter. There are basically two reasons for this: (i) projects that go awry tend to create problems getting paid; and (ii) revenue mix can shift between the public and private sectors and billings from the government generally take longer to collect (as anyone who has ever been owed a tax refund can attest!). In Exhibit 19, we

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction present a comparison of days receivable ratios for each of the companies in our engineering coverage universe. Our key observations are as follows: IBI Group has the highest five-year average days receivable ratio of any firm that we reviewed. Its ratio has also been in a consistent upward trend, prompting us to stay on the sidelines at the end of 2009 and until recently. Although not visible in the annual calculations shown in the table below, significant progress has been made over the last few quarters to reduce the working capital tied up in IBI Group's operations. But our analysis suggests there is room to further improve the company's performance in this area, which is one of management's top strategic priorities. Genivar's days sales outstanding ratio has also inched upward throughout the recession. However, similarly to IBI Group, the firm made significant strides since 3Q10 in reducing this ratio within a more acceptable range. We expect that the recent implementation of a corporate-wide business information system will further facilitate this task. Stantec has the lowest five-year days receivable average among the pure design firms. Moreover, the trend shows--in contrast to IBI Group and Genivar--a relatively steady performance in this operational metric since 2005. We reckon that this reflects the firm's reputation for bidding on and being awarded high quality projects as well as its heavy investment in world class IT systems about five years ago.

Canada Research | Page 29 of 52

Stantec's efficient working capital management has allowed it to flourish with minimal equity issuances

Exhibit 19: Peer Group Analysis of Days Sales Outstanding

2001 ENGINEERS Genivar IBI Group Stantec Aecom Technologies AMEC ARCADIS NV Tetra Tech Engineers - Average SNC-Lavalin Integrated Firms - Average n.a. n.a. 81 n.a. 131 112 139 116 75 92 2002 n.a. n.a. 80 n.a. 131 111 133 113 53 74 2003 n.a. n.a. 81 n.a. 129 113 132 114 64 69 2004 n.a. n.a. 81 n.a. 172 125 130 127 79 76 2005 n.a. 104 87 n.a. 303 148 133 155 84 77 2006 n.a. 107 78 155 291 151 124 151 68 67 2007 112 123 81 152 126 151 141 127 72 66 2008 109 133 75 151 103 155 156 126 82 55 2009 119 156 75 161 106 163 149 133 94 55 2010 130 162 81 169 93 152 134 132 91 60 5-yr AVG 118 136 78 158 144 154 141 133 82 60 10-yr AVG n.a. n.a. 80 n.a. 158 138 137 128 76 68

Source: Capital IQ, Company Documents, Raymond James Ltd.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 30 of 52

Infrastructure & Construction

Company Profiles

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction

Canada Research | Page 31 of 52

Genivar Inc.

GNV-TSX Frederic Bastien CFA | 604.659.8232 | [email protected] Jamil Murji CFA (Associate)| 604.659.8261 | [email protected] Engineered for Growth (Still)

Founded in 1959, Quebec-based Genivar is one of the leading engineering services firms in Canada, providing an extensive range of professional consulting services to public and private sector clients across all execution phases of a project. The company completed its initial public offering in May 2006 as an income trust, and subsequently converted to a corporation at the beginning of 2011. In the short five years it has operated as a publicly-traded entity, Genivar has completed 51 acquisitions, grown its employee base from 1,150 to over 4,500, and generated a total return of 244% for its shareholders. In 2010 Genivar worked for more than 6,000 clients and on approximately 15,000 projects spanning five principal market segments: Buildings, Urban Infrastructure, Industrial & Power, Transportation and Environment. The company maintains over 85 offices across Canada and in the Caribbean. We recommend the purchase of Genivar common shares, as we believe they offer one of the Canadian I&C sector's most enticing combinations of growth and income. Key points to our analysis are as follows: Going Global. Genivar has set out an aggressive plan to double in size over the next three years. Although management still sees opportunities to increase the firm's presence in each Canadian province, international growth is set to take center stage. New markets considered include Australia, Latin America, French-speaking Africa and, naturally, the United States. Genivar has notably spent the last 24 months mapping out the markets south of the border, and has grown increasingly comfortable with the related risk/reward potential. Layering More Expertise. Genivar recently tapped the upstream oil and gas infrastructure sector with the acquisition of Alberta-based Tundra Engineering Associates in late 2010. Management also aspires to enter the fields of architecture and power transmission, and better leverage its leadership position in disciplines such as mining and transportation. More Organic Growth on Tap. We expect the firm's outsized position in Quebec and rapidly growing presence throughout Canada to help drive organic growth at an annual rate of 5-10% for many years to come (notwithstanding some recent short-term headwinds from the Trinidad & Tobago operations). Helping support these targets are a strong recurring base of revenues from repeat clients, the cross-selling opportunities that every Genivar acquisition offers, and improved private sector fundamentals. Healthy Dividend Yield of 5.0%. Management is targeting a long-term payout ratio of 50%, compared to the 53% our financial model is currently producing for 2011. We anticipate the firm to grow into this ratio by 2012, after which we could see it begin raising the dividend beyond the $1.50 annualized rate it currently pays.

Rating & Target Target Price (6-12 mos) Current Price (Apr-15-11) Total Return to Target 52-Week Range Market Data Market Capitalization (mln) Current Net Debt (mln) Enterprise Value (mln) Shares Outstanding (mln) Average Daily Volume (000s) Dividend/Yield Key Financial Metrics 2010A EPS (C$) $1.70 P/E 17.7x EPS - 1Q $0.41 EPS - 2Q $0.52 EPS - 3Q $0.61 EPS - 4Q $0.16 Revenue (mln) $469 EBITDA (mln) $85 EV/EBITDA 9.8x Net Debt/Equity Net Debt/EBITDA BVPS Employees (mrq) Revenue Breakdown (2010) Quebec Ontario Western Canada Atlantic Region International Outperform 2 C$33.00 C$30.10 15% C$24.56-34.55 C$783 C$46 C$829 26.0 53 C$1.50/5.0% 2011E $2.05 14.7x $0.36 $0.50 $0.62 $0.58 $572 $110 7.5x 2012E $2.50 12.0x $0.52 $0.64 $0.72 $0.62 $698 $135 6.1x 0.2 0.5 $12.67 4,500 49% 29% 18% 1% 3%

Company Description Genivar is a leading engineering services firm in Canada serving five principal market segments: Building, Urban Infrastructure, Industrial and Power, Transportation and Environment.

1 Year Price Chart - Publishing will paste

Source: Raymond James Ltd., Thomson One

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 32 of 52 More of the Same under Corporate Structure. Genivar recognizes that its successes rest on its entrepreneurial and decentralized approach, which under the former income trust structure had empowered partners to focus on what they do best (win business) and drive revenue synergies. There is reason to expect more of the same as the firm transitions from an ownership to a leadership platform in 2011.

Infrastructure & Construction

Reiterating Outperform Rating and $33.00 Target Price. The latter is based on an EV/EBITDA multiple of 9.0x our current year estimates. This implies a premium to the engineering services group's historical average multiple of 8.5x, but one we feel is reasonable in light of Genivar's industry leading margins, strong balance sheet and healthy dividend yield. The stock currently trades at a multiple of 7.5x our 2011 EBITDA forecast, implying good value relative to its industry peers.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction

Canada Research | Page 33 of 52

IBI Group

IBG-TSX Frederic Bastien CFA | 604.659.8232 | [email protected] Jamil Murji CFA (Associate)| 604.659.8261 | [email protected]

Rating & Target

Juicy Yield and Proven Partnership Model: A Winning Recipe

IBI Group is a leading provider of professional services focused on the physical development of cities. The Toronto-based firm offers planning, design, implementation and several other consulting services to a diverse base of public and private sector clients. IBI Group participates in a plethora of projects spanning four main areas of practice: urban land, building facilities, transportation networks and systems technology. The company was founded in 1974, went public as an income trust at the end of 2004, and converted to a corporate structure in early 2011. Since tapping the equity markets, IBI Group has acquired and integrated 27 firms to bring its complement of professional and support staff to 2,650. These individuals operate from 74 offices across Canada and the United States, Europe, the Middle East, and Asia. In our view, IBI Group is well positioned to capitalize on an impending recovery in private sector spending, the continued growth in private financing initiatives and outsourcing globally, as well as an increasing concentration of ownership and management of real estate portfolios. We believe compelling elements to the IBI Group story include: World-Class Architectural Practice. With over 750 registered architects IBI Group ranks as the sixth largest architecture practice globally, according to BD World Architecture. The firm has leveraged this leadership position to integrate the various disciplines relevant to providing comprehensive services to its customers­­becoming a one-stop shop for the development of major urban projects. This helps explain why IBI's name has been associated with the development of Toronto's entire waterfront and Vancouver's high-rise buildings for the past 30 years. By replicating this proven approach to other global markets, we believe IBI Group can achieve similar successes. Fully Aligned Partners. We highlight IBI Group's ability to develop and retain senior management through a proven partnership model as the main force behind its early success. Today, the firm's leadership team comprises approximately 80 Directors and Associate Directors who collectively own 46% of the firm's common shares. IBI Group strongly encourages individuals to prove their professional talent, managerial skills and commitment to contributing to the firm's growth as a basis of election to partnership. No one gets a free pass--not even the senior or founding members of the firms acquired by IBI. All must earn their stripes. We believe this is one of the most powerful ways to align the interests of all IBI Group stakeholders. Strengthened Position in Social Infrastructure. IBI Group's June 2010 acquisition of Nightingale Architects, United Kingdom's largest designer of health care facilities, bolstered the firm's expertise in alternative project delivery methods (read: P3s). We lauded this deal at the time to the extent: (i) it expanded or extended the scope of IBI Group's activities in Europe, the Gulf and Australia; (ii) complemented the firm's already established

Target Price (6-12 mos) Current Price (Apr-15-11) Total Return to Target 52-Week Range Market Data Market Capitalization (mln) Current Net Debt (mln) Enterprise Value (mln) Shares Outstanding (mln) Average Daily Volume (000s) Dividend/Yield Key Financial Metrics 2010A EPS (C$) $1.11 P/E 13.3x EPS - 1Q $0.22 EPS - 2Q $0.21 EPS - 3Q $0.25 EPS - 4Q $0.43 Revenue (mln) $290 EBITDA (mln) $43 EV/EBITDA 10.2x Net Debt/Equity Net Debt/EBITDA BVPS Employees (mrq) Revenue Breakdown (2010) Canada United States International

Outperform 2 C$16.50 C$14.79 19% C$12.16-15.94 C$315 C$120 C$434 21.3 23 C$1.10/7.4% 2011E $1.20 12.3x $0.24 $0.28 $0.32 $0.36 $334 $53 8.1x 2012E $1.50 9.9x $0.31 $0.36 $0.39 $0.43 $384 $63 6.9x 0.6 2.8 $7.76 2,484 62% 25% 12%

Company Description IBI provides planning, design, implementation and several other consulting services spanning four main areas of practice: urban land, building facilities, transportation networks and systems technology.

1 Year Price Chart - Publishing will paste

Source: Raymond James Ltd., Thomson One

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 34 of 52 Canadian footprint to a tee, and (iii) it was financed with a relatively strong Canadian dollar and consumed at or near the bottom of the cycle. Industry-Leading Dividend. IBI's annual dividend of $1.10 per share positions it as the highest yielding stock among its engineering and design peers. This stems from the firm's commitment to remaining a relatively high distributor of cash earned (after its conversion to a corporate structure) to fully align the interests (and the performance) of its partners with those of the shareholders.

Infrastructure & Construction

Reaffirming Outperform Rating; $16.50 Target Price. Our positive outlook remains predicated on the continued progress in the firm's operating and financial metrics, improved industry fundamentals north and south of the border and, of course, its yield dividend yield of 7.4%. Our target is based on an EV/EBITDA multiple of 8.5x to our estimates for 2011, which matches the engineering group's historical trading average.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

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Canada Research | Page 35 of 52

SNC-Lavalin Group

SNC-TSX Frederic Bastien CFA | 604.659.8232 | [email protected] Jamil Murji CFA (Associate)| 604.659.8261 | [email protected]

Rating & Target

Bigger Is Better

Founded in 1911, Montreal-based SNC-Lavalin is one of the world's premier engineering and construction (E&C) firms. The company is also a major participant in the ownership of infrastructure assets and in the provision of operations and maintenance (O&M) services. Although SNC-Lavalin currently operates in over 100 countries, it still derives the bulk (54%) of its revenues from the Canadian market. Grouped into seven reporting segments­­Infrastructure and Environment, Power, Chemicals and Petroleum, Mining and Metallurgy, Operations and Maintenance, Infrastructure Concession Investments and Other Industries­­the company's activities generated $6.3 billion in revenue for 2010. We encourage large-cap and growth oriented investors to buy shares of this wellrun, financially strong and globally diversified engineering firm. Key points to our analysis are as follows: Proven Business Model. SNC-Lavalin is a pioneer in infrastructure concession investments, having made since the mid-1980s selective equity bets in many industry verticals­­including airports, bridges, power, mass transit systems, roads and water. Today, its portfolio of investments extends from Canada's largest healthcare facility, minutes away from the firm's headquarters in Montreal, to an open-pit mine in the far reaches of Madagascar. Importantly, such a position of direct influence in a concession generally leads to a comprehensive mandate that benefits all its activities­­Services, Packages and O&M. Canada's Infrastructure Giant. No other firm comes even close to matching the breadth and scope of SNC-Lavalin's operations in Canada. The engineering firm is notably developing massive power and transmission projects a mari usque ad mare, highways and public transit systems in Alberta, and a concert hall in Quebec. These domestic projects not only combine for a large chunk of SNC-Lavalin's record backlog of $13.0 billion, but also provide a solid foundation for future growth, in our view. A Go-To Name For Mining and Metallurgy Projects. Over its illustrious 100year history SNC-Lavalin has carried out nearly 400 projects worldwide in the fields of alumina, aluminum, copper, gold, nickel, steel and zinc. Most recently, the firm secured key engineering procurement and construction management (EPCM) services contracts from all three global mining giants­­ Vale's S11D project in Brazil, Rio Tinto Alcan's AP60 Phase I smelter project in Quebec and BHP Billiton's flagship Jansen project in Saskatchewan. Lest we forget, SNC-Lavalin was also selected as lead engineer on Inmet Mining's multi-billion Cobre Panama copper. If these don't attest to the firm's established industry position and its strong prospect in mining and metallurgy, we simply don't know what will. Leading Foreign E&C Presence in Emerging Countries. Over the past years SNC-Lavalin has established or significantly bolstered its presence in key growth markets. In Brazil, for example, the company gained over 2000

Target Price (6-12 mos) Current Price (Apr-15-11) Total Return to Target 52-Week Range Market Data Market Capitalization (mln) Current Net Debt (mln) Enterprise Value (mln) Shares Outstanding (mln) Average Daily Volume (000s) Dividend/Yield Key Financial Metrics 2010A EPS (C$) $2.87 P/E 19.7x EPS - 1Q $0.47 EPS - 2Q $0.64 EPS - 3Q $0.84 EPS - 4Q $0.91 Revenue (mln) $6,315 EBITDA (mln) $879 EV/EBITDA 12.1x Net Debt/Equity Net Debt/EBITDA BVPS E&C Business EPS $2.33 P/E 15.0x EBITDA (mln) $551 EV/EBITDA 7.9x Market Capitalization (mln) Total Net Debt (mln) Enterprise Value (mln) Employees (mrq) Revenue Breakdown (2010) Canada Africa Europe Middle East Latin America and Caribbean United States Asia Other

Outperform 2 C$63.00 C$56.53 13% C$41.59-63.23 C$8,618 C$2,048 C$10,666 152.5 289 C$0.84/1.5% 2011E $2.80 20.2x $0.53 $0.67 $0.78 $0.82 $7,022 $920 11.6x 2012E $3.30 17.2x $0.70 $0.79 $0.89 $0.91 $7,770 $1,031 10.3x 1.2 2.3 $11.21

$2.30 15.2x $541 8.1x

$2.75 12.7x $625 7.0x 5,317 -940 4,377 23,923 54% 20% 7% 6% 6% 3% 3% 1%

Company Description SNC-Lavalin is one of the worlds premier engineering and construction firms and a major player in the ownership of infrastructure and in the provision of operations and maintenance services.

1 Year Price Chart - Publishing will paste

Source: Raymond James Ltd., Thomson One

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 36 of 52 professionals through the acquisitions of two firms (Minerconsult and Marte) and teamed up with a third one (Alusa) to pursue construction opportunities ahead of the 2014 FIFA World Cup and the 2016 Olympics. We believe these deals reflect well on the company's ability to adapt to change, innovate and continue driving shareholder value. Libyan Headwinds. The company halted work on all its projects in Libya after violence began spreading across the country in February. It is too early to say what will eventually come out of these tense events, but we do take some comfort in the fact that SNC-Lavalin's key projects in Libya are essential to its people and prosperity, and should logically resume once the political tensions abate. But this scenario was conservatively removed from our forecasts following the release of the firm's 4Q10 results.

Infrastructure & Construction

Reaffirming Outperform Rating; $63.00 Target Price. We value the E&C business at $41.29 per share using an EV/EBITDA multiple of 9.0x our 2011 estimates. While this multiple is slightly higher than the average of 8.5x a group of integrated E&C firms have historically commanded from the Street, we believe it is amply justified by the firm's best-in-class status. To this we add $21.65 per share to account for our estimate of SNC's concession investments.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction

Canada Research | Page 37 of 52

Stantec Inc.

STN-TSX | STN-NYSE Ben Cherniavsky | 604.659.8244 | [email protected] Frederic Bastien CFA | 604.659.8232 | [email protected] Theoni Pilarinos CFA (Associate)| 604.659.8234| [email protected] Greg Jackson (Associate)| 604.659.8234 | [email protected] Steady as She Goes; Positioned to Capitalize on Gradual Recovery

Stantec provides professional engineering and technical consulting services to the infrastructure and facilities industry and specializes in planning, design, construction, maintenance and decommissioning. Currently, the company employs approximately 10,500 individuals scattered across 160 offices globally. Founded in 1954, the company is headquartered Edmonton, Alberta and trades under the symbol STN on both the New York and Toronto Stock Exchange. We continue to advise investors to buy Stantec shares. Although the depressed nature of the U.S. construction markets suggests that Stantec story currently lacks some near-term `sizzle,' we continue to recommend the stock. This positive bias is based primarily on the company's impressive historical performance (see Analyzing the Returns section), abundant acquisition opportunities, diversified business model, and latent leverage to an eventual recovery in end market demand. We also believe that the stock is attractively valued at current levels. Hence, we rate Stantec Outperform with a $33.75 target price. Key attributes of our investment thesis include: Challenged End-Market Conditions Mitigated by Strong Operational Management. Notwithstanding the economic slowdown experienced in Stantec's key end-markets, the company has managed to deliver solid financial results. EPS, for example, between 2007 (the peak of the economic cycle) and 2010 grew at a compounded rate of 11% (EPS CAGR over the last ten years is 17%). We believe this reflects the company's acquisitive growth platform and management's relentless focus on operational performance. For 2011, we expect construction activity in the U.S. to remain moderately restrained due to the fiscal crisis, political gridlock, and persistent challenges in the housing market--among other factors. Meanwhile, in Canada, we think the market outlook is better with robust P3 activity, strong commodity prices, and generally better economic activity. Still, the withdrawal of stimulus funding and widening deficits both federally and provincially (especially in Ontario and Quebec) will pose some new challenges for the construction services markets, in our view. Nonetheless, we expect Stantec to continue navigating this environment deftly, as it has been doing in the past two years. Global Appetite for Acquisition Growth. Last Fall, Stantec made its first foray into international waters via the acquisitions of Pennsylvania-based Burt Hill Inc. (600 people) and San Francisco-based Anshen + Allen (200 people). In particular, we believe this development was encouraging in that it (i) added four international firms (two in UAE, one in India and one in the UK); (ii) improved the firm's geographic reach in the U.S. northeast and

Rating & Target Target Price (6-12 mos) Current Price (Apr-15-11) Total Return to Target 52-Week Range Market Data Market Capitalization (mln) Current Net Debt (mln) Enterprise Value (mln) Shares Outstanding (mln) Average Daily Volume (000s) Dividend/Yield Key Financial Metrics 2010A EPS (C$) $2.07 P/E 14.3x EPS - 1Q $0.43 EPS - 2Q $0.52 EPS - 3Q $0.57 EPS - 4Q $0.54 Revenue (mln) $1,513 EBITDA (mln) $158 EV/EBITDA 10.2x Net Debt/Equity Net Debt/EBITDA BVPS (mrq, tangible) Employees (mrq) Revenue Breakdown (2010) Canada United States International Outperform 2 C$33.75 C$29.62 14% C$30.33-22.79 C$1,353 C$254 C$1,607 45.7 192 C$0.00/0.0% 2011E $2.26 13.1x $0.49 $0.57 $0.63 $0.57 $1,673 $181 8.9x 2012E $2.70 11.0x NA NA NA NA $1,948 $213 7.5x 0.4x 1.6x $13.69 10,000 57% 40% 3%

Company Description Stantec provides professional engineering and technical consulting services to the infrastructure and facilities industry and specializes in planning, design, construction, maintenance, and decommission.

1 Year Price Chart - Publishing will paste

Source: Raymond James Ltd., Thomson One

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 38 of 52 California, and (iii) bolstered Stantec's established architectural design practice in the health care, education and science sectors (together these three firms now boast nearly 2,000 architects, which ranks among North America's largest practice). Most importantly, however, the aforementioned acquisitions mark the first steps towards Stantec's 2018 goal of generating 20% of its revenue from outside North America and have taken the proverbial `lid of the basket' concerning Stantec's future international acquisition growth. Attractive Valuation. At current levels, Stantec is trading at a discount to both its five and 10-year average P/E multiples, and its peers (see Appendix A). Consequently, in our view, investors who purchase Stantec's shares will be generously rewarded over the long run.

Infrastructure & Construction

Reiterate Outperform rating; $33.75 target price­We believe that Stantec is well-positioned to capitalize on future growth prospects. We continue to recommend the stock because of its attractive valuation, strong long-term fundamentals, acquisition opportunities, diversified business model, and latent leverage to an eventual recovery in end market demand. To arrive at our $33.75 target price, we apply a ~15.0x P/E multiple to our 2011 EPS estimate of $2.26. This is consistent with the stock's 10-year P/E average.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction

Canada Research | Page 39 of 52

Dessau Inc. (private)

www.dessau.com Founded in 1957, Quebec-based Dessau is the fifth largest engineering and construction firm in Canada and the 58th biggest worldwide. The company's integrated service offering spans various fields including urban planning and landscape architecture, engineering, geotechnical and materials engineering, project and construction management, and operations. Dessau employs nearly 5,000 people, generates annual revenues in excess of $650 million, and operates from offices in Canada's four largest provinces and internationally. The company is very active in Latin America, where it recently acquired a 350-employee firm specializing in the oil and gas sector. The engineering firm, Compañía de Estudios e Interventorías Ltda, is based in Bogota, Colombia.

Key Financial Metrics Revenue (mln) Employees 2008A $506 3,700 2009A $600 4,300 2010A $660 4,700

Revenue Breakdown (2009) Canada International

81% 19%

All figures in C$, unless otherwise noted. Sources: Dessau, ENR, Raymond James Ltd.

Golder Associates (private)

www.golder.ca From its inception over 50 years ago, Golder Associates has grown into a global leader in ground engineering and environmental services. The firm services global clients which span the world's major economic drivers­­oil and gas, mining, manufacturing, power and transportation. Golder operates from 160 offices across six continents and employs a global staff of 7,000. The firm has worked on a remarkable range of international projects, from roads through the jungles of Bolivia and along the coastal desert of Oman, to port facilities in Brisbane Australia. In North America, the company's list of projects is equally impressive. It includes Calgary's Olympic speedskating oval, massive dams in British Columbia, uranium mines in Ontario and transportation tunnels in Tennessee, to name a few.

Key Financial Metrics Revenue (mln) Employees 2008A $966 2009A $894 6,630 2010A $1,100 7,000

Revenue Breakdown (2009) Canada Unites States Australasia Europe South America Africa Asia

40% 21% 16% 13% 5% 4% 1%

All figures in C$, unless otherwise noted. Sources: Golder, ENR, Raymond James Ltd.

Hatch Group (private)

www.hatch.ca Hatch is an 8,000-employee firm with roots tracing back to 1955 and the construction industry. In 1996, the company began an expansion program that saw it purchase several aligned engineering companies. Today, Hatch provides consulting, operations support, technologies, process design, and project and construction management services to clients in three principal sectors­­mining and metals, energy and infrastructure. Hatch notably counts among its clients the movers and shakers of the mining and metallurgy world, including Alcoa, BHP Billiton, Barrick Gold, Xstrata, Vale and Rio Tinto. The firm operates from 65 offices on six continents.

Key Financial Metrics Revenue (mln) Employees 2008A $1,355 2009B $1,215 2010E n/a 8,000

Revenue Breakdown (2009) Canada International

36% 64%

All figures in C$, unless otherwise noted. Sources: Hatch, ENR, Raymond James Ltd.

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Canada Research | Page 40 of 52

Infrastructure & Construction

exp Global (private)

www.exp.com Formerly known as Trow Global, exp Global is a multi-disciplinary engineering and consulting firm based in Brampton, Ontario. The firm has been in operation since 1957, and today employs over 3,500 professionals whose projects span five distinct markets globally. These include buildings, infrastructure, energy, industrial and earth, environmental and sustainability. The firm has recently accelerated its roll-up strategy in the U.S. with the help of General Atlantic, a Greenwich, CT based equity firm that manages approximately $15 billion in capital. Key acquisitions include Chicago-based Teng Affiliated and X-nth of Florida­­two firms that ranked No. 157 and No. 198, respectively, on Engineering News Record's list of top U.S. design firms for 2009-2010. exp Global representative projects include highways in China, Algeria and British Colombia, pipelines in North and South America, and various entertainment complexes across the United States.

Key Financial Metrics Revenue (mln) Employees 2008A $348 2,000 2009A $390 3,000 2010E n/a 3,400

Revenue Breakdown (2009) Canada International

65% 35%

All figures in C$, unless otherwise noted. Sources: exp Global, ENR, Raymond James Ltd.

Focus Corporation (private)

www.focus.ca

Founded in 1977, Focus Corporation is a multidisciplinary firm providing a range of engineering and geomatics services to the western Canadian energy, infrastructure, land development and environmental sectors. September 2005 saw the firm recapitalize and sell a material ownership interest to Denver-based KRG Capital Partners. Over the five years that have elapsed since, Focus has grown its complement of professionals from 400 to roughly 1,400. Today, the company operates from offices in British Columbia, Alberta, and Saskatchewan, and in select areas of the world.

Key Financial Metrics Revenue (mln) Employees Revenue Breakdown Canada International 2008A n/a 2009A n/a 2010E ~$150 1,100

n/a n/a

All figures in C$, unless otherwise noted. Sources: Focus Corporation, ENR, Raymond James Ltd.

Associated Engineering (private)

www.ae.ca Edmonton-based Associated Engineering is an employee-owned consulting engineering firm specializing in the water, transportation, infrastructure and environmental sectors. Its 700 employees offer to public and private sector clients services that range from planning and feasibility studies to detailed design, construction, training, and operational assistance. Associated Engineering's reach extends from urban centres across Canada to small communities and rural areas abroad.

Key Financial Metrics Revenue ($mln) Employees Revenue Breakdown Canada International 2008A n/a 2009A n/a 2010E n/a 700

n/a n/a

All figures in C$, unless otherwise noted. Sources: Associated Engineering, Raymond James Ltd.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

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Canada Research | Page 41 of 52

Appendix 1: Engineering Peer Group Comparables

P/E Company Name Ticker Fx FY END Market Price Shares O/S Market Cap (mln) (mln) Net Debt (mln) Ent. Value (mln) 2010A 2011E 2012E 2010A EV / EBITDA 2011E 2012E Net Debt/ Price Div. Yield Cap (%) /Book (x) (%) RJL Rating

ENGINEERING

AECOM TECHNOLOGIES CORP AMEC ARCADIS NV GENIVAR INC IBI GROUP STANTEC INC TETRA TECH INC ACM.US AMEC.GB ARCAD.NL GNV.CA IBG.CA STN.CA TTEK.US USD BPN EUR CAD CAD CAD USD SEP DEC DEC DEC DEC DEC NOV $26.77 £11.96 17.45 $30.10 $14.79 $29.62 $23.37 118.7 331.9 67.7 26.0 21.3 45.7 62.3 $3,178 £3,969 1,181 $783 $315 $1,353 $1,456 $785 -£740 208 $46 $120 $254 $65 $3,964 £3,229 1,389 $829 $434 $1,607 $1,521 13.1 19.1 15.2 17.7 13.3 14.3 18.8 15.9 11.6 17.4 13.5 14.7 12.3 13.1 16.8 14.2 9.7 15.3 12.0 12.0 9.9 11.0 14.8 12.1 9.4 12.2 8.5 9.8 10.2 10.2 9.6 10.0 7.3 10.4 7.8 7.5 8.1 8.9 7.9 8.3 6.3 9.2 7.2 6.1 6.9 7.5 7.3 7.2 19.8 n.m. 15.0 5.6 27.6 15.8 4.3 1.5 0.0 2.9 2.4 1.9 2.2 1.9 -2.5 2.7 5.0 7.4 --nc nc nc OP2 OP2 OP2 nc

INTEGRATED ENGINEERING & CONSTRUCTION

CHICAGO BRIDGE & IRON FLUOR CORP FOSTER WHEELER AG JACOBS ENGR GROUP INC KBR INC SHAW GROUP INC SNC-LAVALIN (E&C Business only) URS CORPORATION WORLEYPARSONS CBI.US FLR.US FWLT.US JEC.US KBR.US SHAW.US SNC.CA URS.US WOR.AU USD USD USD USD USD USD CAD USD AUS DEC DEC JAN SEP DEC AUG DEC DEC DEC $40.47 $67.45 $34.75 $48.84 $37.77 $38.77 $56.53 $44.22 $31.69 99.9 176.8 124.9 126.4 151.4 81.3 152.5 80.6 241.3 $4,043 $11,927 $4,341 $6,173 $5,717 $3,153 $8,618 $3,565 $7,647 ($345) ($2,214) ($886) ($957) ($682) ($542) $2,048 $129 $534 $3,697 $9,713 $3,455 $5,215 $5,035 $2,611 $10,666 $3,695 $8,181 19.8 n.m. 21.2 19.7 18.1 17.7 15.0 12.5 n.m. 17.7 16.9 20.6 19.7 18.8 16.9 21.7 15.2 12.1 24.6 18.5 14.5 17.3 14.7 16.3 15.0 14.4 12.7 11.1 19.6 15.1 9.8 10.3 9.7 9.1 7.4 7.2 7.9 5.5 15.8 9.2 8.6 8.3 9.8 8.5 7.8 8.7 8.1 4.9 14.9 8.9 7.4 7.2 8.0 7.5 7.1 6.3 7.0 4.7 12.2 7.5 n.m. n.m. n.m. n.m. n.m. n.m. 19.2 3.5 6.5 3.8 1.8 6.3 2.2 2.5 2.1 5.0 0.9 4.2 -0.7 --0.6 -1.5 -2.4 nc nc nc nc nc nc OP2 nc nc

Notes: 1) Estimates for Genivar, IBI Group, SNC-Lavalin and Stantec are from Raymond James; all other estimates are consensus from Thomson One. 2) Net debt (cash) positions for Genivar, IBI Group and Stantec include balances of purchase price payable. 3) 2010 P/E calculations for Genivar and IBI Group assume earnings are tax effected. 4) P/E and EV/EBITDA calculations for SNC-Lavalin are for the engineering and construction business only; they exclude the company's Infrastructure Concession Investments, which we currently estimate at $21.65 per share. 5) IBI Group's two outstanding convertible debentures are treated as debt due to the anti-dilutive impact of the convertible rights.

Source: Thomson ONE, Capital IQ, Raymond James Ltd.

Risks

The success of an engineering firm hinges on its ability to attract and retain qualified workers with adequate skills, experience, reputation and established client relationships. As acquisitions are a key driver of growth for the engineering names under coverage, some related risks include: (i) an inability to identify appropriate acquisition targets at reasonable valuations; (ii) difficulties in integrating the acquired businesses, resulting in a lack of anticipated synergies; and (iii) uncertainties associated with acquisitions or mergers, leading to a loss of customers and/or key employees. More general risks which could materially reduce anticipated profits include cost overruns on a significant number of projects, potential liability claims and contract disputes, unexpected project cancellations, and a damaged reputation due to client dissatisfaction.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 42 of 52

Infrastructure & Construction

Company Citations Company Name ADF Group Inc. Aecom Technology Corp Aecon Group ALCOA, Inc. Armtec Infrastructure Inc. Barrick Gold Corp. BHP Billiton Ltd Bird Construction Inc. Canam Group Cervus Equipment Corp. Finning International Genivar Inc. GLV Inc. IBI Group Inc. Inmet Mining Corporation North American Energy Partners Rio Tinto Ritchie Bros. Auctioneers Rocky Mountain Dealerships Inc. Russel Metals SNC-Lavalin Stantec Inc Strongco Corp. Suncor Energy Inc Tetra Tech The Churchill Corp. Toromont Industries Vale S.A. Wajax Corp. ZCL Composites

Ticker DRX ACM ARE AA ARF ABX BHP BDT CAM CVL FTT GNV GLV.A IBG IMN NOA RIO RBA RME RUS SNC STN SQP SU TTEK CUQ TIH VALE WJX ZCL

Exchange TSX NYSE TSX NYSE TSX TSX NYSE TSX TSX TSXV TSX TSX TSX TSX TSX TSX NYSE NYSE TSX TSX TSX TSX TSX TSX NASDAQ TSX TSX NYSE TSX TSX

Currency C$ C$ C$

Closing Price 1.89 9.36 15.98

C$ C$ C$ C$ C$ C$ C$ C$ C$ US$ C$ C$ C$ C$ C$ C$ C$ C$ C$ C$

12.33 8.25 17.75 27.75 30.42 0.00 14.85 66.40 10.76 31.27 9.94 26.00 57.24 29.82 5.20 43.61 20.63 32.97 40.76 3.25

RJ Rating 2 NC 2 NC 3 NC NC 3 2 1 3 2 1 2 UR 1 NC 2 2 3 2 2 2 3 NC 1 2 NC 2 3

RJ Entity RJ LTD. RJ LTD. RJ LTD.

RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD. RJ LTD.

Notes: Prices are as of the most recent close on the indicated exchange and may not be in US$. See Disclosure section for rating definitions. Stocks that do not trade on a U.S. national exchange may not be approved for sale in all U.S. states. NC=not covered.

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Important Investor Disclosures

Raymond James is the global brand name for Raymond James & Associates (RJA) and its non-US affiliates worldwide. Raymond James & Associates is located at The Raymond James Financial Center, 880 Carillon Parkway, St. Petersburg, FL 33716, (727) 567-1000. Affiliates include the following entities, which are responsible for the distribution of research in their respective areas. In Canada, Raymond James Ltd., Suite 2200, 925 West Georgia Street, Vancouver, BC V6C 3L2, (604) 659-8200. In Latin America, Raymond James Latin America, Ruta 8, km 17, 500, 91600 Montevideo, Uruguay, 00598 2 518 2033. In Europe, Raymond James European Equities, 40, rue La Boetie, 75008, Paris, France, +33 1 45 61 64 90. This document is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. The securities discussed in this document may not be eligible for sale in some jurisdictions. This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation nor does it take into account the particular investment objectives, financial situations, or needs of individual clients. Information in this report should not be construed as advice designed to meet the individual objectives of any particular investor. Investors should consider this report as only a single factor in making their investment decision. Consultation with your investment advisor is recommended. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. The information provided is as of the date above and subject to change, and it should not be deemed a recommendation to buy or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. Persons within the Raymond James family of companies may have information that is not available to the contributors of the information contained in this publication. Raymond James, including affiliates and employees, may execute transactions in the securities listed in this publication that may not be consistent with the ratings appearing in this publication. With respect to materials prepared by Raymond James Ltd. ("RJL"), all expressions of opinion reflect the judgment of the Research Department of RJL, or its affiliates, at this date and are subject to change. RJL may perform investment banking or other services for, or solicit investment banking business from, any company mentioned in this document. All Raymond James Ltd. research reports are distributed electronically and are available to clients at the same time via the firm's website (http://www.raymondjames.ca). Immediately upon being posted to the firm's website, the research reports are then distributed electronically to clients via email upon request and to clients with access to Bloomberg (home page: RJLC), First Call Research Direct and Reuters. Selected research reports are also printed and mailed at the same time to clients upon request. Requests for Raymond James Ltd. research may be made by contacting the Raymond James Product Group during market hours at (604) 659-8000. In the event that this is a compendium report (i.e., covers 6 or more subject companies), Raymond James Ltd. may choose to provide specific disclosures for the subject companies by reference. To access these disclosures, clients should refer to: http://www.raymondjames.ca (click on Equity Capital Markets / Equity Research / Research Disclosures) or call toll-free at 1-800-667-2899.

Analyst Information

Analyst Compensation: Equity research analysts and associates at Raymond James are compensated on a salary and bonus system. Several factors enter into the compensation determination for an analyst, including i) research quality and overall productivity, including success in rating stocks on an absolute basis and relative to the local exchange composite Index and/or a sector index, ii) recognition from institutional investors, iii) support effectiveness to the institutional and retail sales forces and traders, iv) commissions generated in stocks under coverage that are attributable to the analyst's efforts, v) net revenues of the overall Equity Capital Markets Group, and vi) compensation levels for analysts at competing investment dealers. Analyst Stock Holdings: Effective September 2002, Raymond James equity research analysts and associates or members of their households are forbidden from investing in securities of companies covered by them. Analysts and associates are permitted to hold long positions in the securities of companies they cover which were in place prior to September 2002 but are only permitted to sell those positions five days after the rating has been lowered to Underperform. The Analyst and/or

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Canada Research | Page 44 of 52

Infrastructure & Construction

Associate or a member of his/their household has a long position in the securities of Finning International. The Analyst and/or Associate or a member of his/their household has a long position in the securities of Ritchie Bros. Auctioneers. The Analyst and/or Associate or a member of his/their household has a long position in the securities of Toromont Industries. The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.

Ratings and Definitions

Raymond James Ltd. (Canada) definitions Strong Buy (SB1) The stock is expected to appreciate and produce a total return of at least 15% and outperform the S&P/TSX Composite Index over the next six months. Outperform (MO2) The stock is expected to appreciate and outperform the S&P/TSX Composite Index over the next twelve months. Market Perform (MP3) The stock is expected to perform generally in line with the S&P/TSX Composite Index over the next twelve months and is potentially a source of funds for more highly rated securities. Underperform (MU4) The stock is expected to underperform the S&P/TSX Composite Index or its sector over the next six to twelve months and should be sold. Raymond James & Associates (U.S.) definitions Strong Buy (SB1) Expected to appreciate, produce a total return of at least 15%, and outperform the S&P 500 over the next six to 12 months. For higher yielding and more conservative equities, such as REITs and certain MLPs, a total return of at least 15% is expected to be realized over the next 12 months. Outperform (MO2) Expected to appreciate and outperform the S&P 500 over the next 12-18 months. For higher yielding and more conservative equities, such as REITs and certain MLPs, an Outperform rating is used for securities where we are comfortable with the relative safety of the dividend and expect a total return modestly exceeding the dividend yield over the next 12-18 months. Market Perform (MP3) Expected to perform generally in line with the S&P 500 over the next 12 months. Underperform (MU4) Expected to underperform the S&P 500 or its sector over the next six to 12 months and should be sold. Suspended (S) The rating and price target have been suspended temporarily. This action may be due to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances, including when Raymond James may be providing investment banking services to the company. The previous rating and price target are no longer in effect for this security and should not be relied upon. Raymond James Latin American rating definitions Strong Buy (SB1) Expected to appreciate and produce a total return of at least 25.0% over the next twelve months. Outperform (MO2) Expected to appreciate and produce a total return of between 15.0% and 25.0% over the next twelve months. Market Perform (MP3) Expected to perform in line with the underlying country index. Underperform (MU4) Expected to underperform the underlying country index. Raymond James European Equities rating definitions Strong Buy (1) Absolute return expected to be at least 10% over the next 12 months and perceived best performer in the sector universe. Buy (2) Absolute return expected to be at least 10% over the next 12 months. Fair Value (3) Stock currently trades around its fair price and should perform in the range of -10% to +10% over the next 12 months. Sell (4) Expected absolute drop in the share price of more than 10% in next 12 months. Suitability Categories (SR) For stocks rated by Raymond James & Associates only, the following Suitability Categories provide an assessment of potential risk factors for investors. Suitability ratings are not assigned to stocks rated Underperform (Sell). Projected 12month price targets are assigned only to stocks rated Strong Buy or Outperform. Total Return (TR) Lower risk equities possessing dividend yields above that of the S&P 500 and greater stability of principal. Growth (G) Low to average risk equities with sound financials, more consistent earnings growth, possibly a small dividend, and the potential for long-term price appreciation. Aggressive Growth (AG) Medium or higher risk equities of companies in fast growing and competitive industries, with less predictable earnings and acceptable, but possibly more leveraged balance sheets.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction

Canada Research | Page 45 of 52

High Risk (HR) Companies with less predictable earnings (or losses), rapidly changing market dynamics, financial and competitive issues, higher price volatility (beta), and risk of principal. Venture Risk (VR) Companies with a short or unprofitable operating history, limited or less predictable revenues, very high risk associated with success, and a substantial risk of principal.

Rating Distributions

Coverage Universe Rating Distribution RJL Strong Buy and Outperform (Buy) Market Perform (Hold) Underperform (Sell) 69% 30% 1% RJA 53% 41% 6% Investment Banking Distribution RJL 58% 33% 0% RJA 23% 10% 9%

Raymond James Relationship Disclosures

Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months. Company Name Aecon Group Disclosure Raymond James Ltd. has managed or co-managed a public offering of securities within the last 12 months with respect to Aecon Group. Raymond James Ltd. has provided investment banking services within the last 12 months with respect to Aecon Group. Raymond James Ltd. has provided non-investment banking securities-related services within the last 12 months with respect to Aecon Group. Raymond James Ltd. has received compensation for investment banking services within the last 12 months with respect to Aecon Group. Raymond James Ltd. has received compensation for services other than investment banking within the last 12 months with respect to Aecon Group. Armtec Infrastructure Inc. Raymond James Ltd. has managed or co-managed a public offering of securities within the last 12 months with respect to Armtec Infrastructure Inc.. Raymond James Ltd. has provided investment banking services within the last 12 months with respect to Armtec Infrastructure Inc.. Raymond James Ltd. has received compensation for investment banking services within the last 12 months with respect to Armtec Infrastructure Inc.. Bird Construction Inc. Raymond James Ltd. has provided investment banking services within the last 12 months with respect to Bird Construction Inc.. Raymond James Ltd. has received compensation for investment banking services within the last 12 months with respect to Bird Construction Inc.. Canam Group Raymond James Ltd. has managed or co-managed a public offering of securities within the last 12 months with respect to Canam Group. Raymond James Ltd. has provided investment banking services within the last 12 months with respect to Canam Group. Raymond James Ltd. has received compensation for investment banking services within the last 12 months with respect to Canam Group. Finning International Raymond James Ltd. has provided non-investment banking securities-related services within the last 12 months with respect to Finning International. Raymond James Ltd. has received compensation for services other than investment banking within the last 12 months with respect to Finning International.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Canada Research | Page 46 of 52 Company Name GLV Inc. IBI Group Inc. Disclosure

Infrastructure & Construction

Raymond James Ltd. has received compensation for investment banking services within the last 12 months with respect to GLV Inc.. Raymond James Ltd. makes a market in the securities of IBI Group Inc.. Raymond James Ltd. has managed or co-managed a public offering of securities within the last 12 months with respect to IBI Group Inc.. Raymond James Ltd. has provided investment banking services within the last 12 months with respect to IBI Group Inc.. Raymond James Ltd. has received compensation for investment banking services within the last 12 months with respect to IBI Group Inc..

Inmet Mining Corporation

Raymond James Ltd. makes a market in the securities of Inmet Mining Corporation. Within the last 12 months, Inmet Mining Corporation has paid for all or a material portion of the travel costs associated with a site visit by the Analyst and/or Associate.

North American Energy Partners Ritchie Bros. Auctioneers Rocky Mountain Dealerships Inc.

Within the last 12 months, North American Energy Partners has paid for all or a material portion of the travel costs associated with a site visit by the Analyst and/or Associate. Raymond James Ltd. makes a market in the securities of Ritchie Bros. Auctioneers. Raymond James Ltd. has managed or co-managed a public offering of securities within the last 12 months with respect to Rocky Mountain Dealerships Inc.. Raymond James Ltd. has provided investment banking services within the last 12 months with respect to Rocky Mountain Dealerships Inc.. Raymond James Ltd. has received compensation for investment banking services within the last 12 months with respect to Rocky Mountain Dealerships Inc..

The Churchill Corp.

Raymond James Ltd. has managed or co-managed a public offering of securities within the last 12 months with respect to The Churchill Corp.. Raymond James Ltd. has provided investment banking services within the last 12 months with respect to The Churchill Corp.. Raymond James Ltd. has received compensation for investment banking services within the last 12 months with respect to The Churchill Corp..

Toromont Industries

Within the last 12 months, Toromont Industries has paid for all or a material portion of the travel costs associated with a site visit by the Analyst and/or Associate.

Stock Charts, Target Prices, and Valuation Methodologies

Valuation Methodology: The Raymond James methodology for assigning ratings and target prices includes a number of qualitative and quantitative factors including an assessment of industry size, structure, business trends and overall attractiveness; management effectiveness; competition; visibility; financial condition, and expected total return, among other factors. These factors are subject to change depending on overall economic conditions or industry- or companyspecific occurrences.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction

Canada Research | Page 47 of 52

Update Date

Closing Price

Target Price 16.50 15.00 16.00 17.50 17.50 19.00 20.50 22.00 28.00 Target Price 63.00 67.00 64.00 58.00 55.00 47.00 44.00 42.00 42.00 48.00 54.00 65.00 65.00

M $28.00 O2

M $22.00 O2 M $20.50 O2

M $19.00 O2

M $17.50 O2 MP3 $17.50

MP3 $16.00 M $15.00 P3

M $16.50 O2

$25.00 $23.00 $21.00

$19.00 $17.00 $15.00 $13.00 $11.00 $9.00 A ug-22-08 S ep-19-08 Feb-06-09 A ug-21-09 S ep-18-09 Feb-05-10 A ug-20-10 S ep-17-10 Feb-02-11 A pr-03-09 A pr-02-10 A pr-30-10 Mar-06-09 Mar-05-10 Mar-02-11 May-02-08 May-30-08 May-01-09 May-29-09 May-28-10 Mar-29-11 Nov-14-08 Dec-12-08 Nov-13-09 Dec-11-09 Nov-12-10 Dec-10-10 A pr-26-11 Ju l-25-08 Ju l-24-09 O ct-17-08 O ct-16-09 Ju l-23-10 O ct-15-10 Ju n-27-08 Ja n-09-09 Ju n-26-09 Ja n-08-10 Ju n-25-10 Ja n-06-11

Nov-11-10 May-10-10 Mar-19-10 Dec-09-09 Nov-05-09 Mar-20-09 Nov-06-08 Oct-20-08 Jun-30-08

14.06 14.02 14.90 16.88 15.68 12.25 13.31 14.49 22.20

Security P rice (C$)

Analyst Recommendations & 12 Month SB1: Strong Buy MO2: MP3: Market Perform MU4: NR : Not Rated R:

Price Objective Outperform Underperform Restricted

D ate: April 29 2011 P rice C overage Suspended R ating C hange Target P rice and R ating C hange T arget P rice C hange Split Adjustm ent

Valuation Methodology: We value IBI on a comparative basis to peer group historical multiples.

Update Date Closing Price

SB1 $48.00 MP3 $65.00 MO2 $65.00 $68.00 $65.00 $62.00 $59.00 $56.00 $53.00 $50.00 $47.00 $44.00 $41.00 $38.00 $35.00 $32.00 $29.00 $26.00 $23.00 A ug-22-08 S ep-19-08 A ug-21-09 S ep-18-09 A ug-20-10 S ep-17-10 Feb-06-09 Feb-05-10 Feb-24-11 A pr-03-09 A pr-02-10 A pr-30-10 Mar-06-09 Mar-05-10 May-02-08 May-30-08 May-01-09 May-29-09 May-28-10 Mar-23-11 Nov-14-08 Dec-12-08 Nov-13-09 Dec-11-09 Nov-12-10 Dec-10-10 A pr-19-11 Ju l-25-08 Ju l-24-09 O ct-17-08 O ct-16-09 Ju l-23-10 O ct-15-10 Ju n-27-08 Ja n-09-09 Ju n-26-09 Ja n-08-10 Ju n-25-10 Ja n-05-11 Ja n-29-11 M $54.00 O2 SB1 $42.00 MO2 $42.00 M $44.00 P3 M $47.00 P3 M $55.00 O2 MO2 $58.00 MO2 $64.00 M $67.00 O2 M $63.00 O2

Analyst Recommendations & 12 Month SB1: Strong Buy MO2: MP3: Market Perform MU4: NR : Not Rated R:

Price Objective Outperform Underperform Restricted

Mar-08-11 Feb-15-11 Nov-08-10 Jan-14-10 Nov-09-09 Jul-29-09 Jun-08-09 Apr-14-09 Mar-09-09 Oct-20-08 Sep-19-08 Jul-21-08 Jun-18-08

54.66 60.02 55.22 52.17 49.15 45.05 43.97 36.38 28.30 37.84 45.00 54.60 59.50

Security P rice (C$)

D ate: April 29 2011 P rice C overage Suspended R ating C hange Target P rice and R ating C hange T arget P rice C hange Split Adjustm ent

Valuation Methodology: We value SNC-Lavalin's E&C business a comparative basis to peer group historical multiples. To this we add the value of SNC's various concession investments, which we value using various methodologies.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Rating 2 2 2 2 2 3 3 2 1 1 2 2 3

SNC-Lavalin (SNC) 3 yr. Stock Perform ance

Rating 2 3 3 3 2 2 2 2 2

IBI Group Inc. (IBG) 3 yr. Stock Perform ance Performance

Canada Research | Page 48 of 52

Infrastructure & Construction

Target Prices: The information below indicates target price and rating changes for the subject companies included in this research.

Update Date Closing Price Target Price 33.00 34.00 30.00 30.00 27.50 27.50 26.00 32.00 Target Price 16.50 15.00 16.00 17.50 17.50 19.00 20.50 22.00 28.00 Rating 2 2 2 1 1 2 2 1 Rating 2 3 3 3 2 2 2 2 2

Genivar Inc. (GNV) 3 yr. Stock Performance

SB1 $32.00M $26.00 O2 M $27.50 O2 SB1 $27.50 SB1 $30.00 $37.00 $35.00 $33.00 $31.00 MO2 $30.00 M $34.00 O2 M $33.00 O2

Security P rice (C$)

$29.00 $27.00 $25.00 $23.00 $21.00 $19.00 $17.00 $15.00 Mar-06-09 Mar-05-10 Mar-02-11 Mar-29-11 A pr-03-09 A pr-02-10 A pr-30-10 Feb-06-09 Feb-05-10 Nov-14-08 Dec-12-08 Nov-13-09 Dec-11-09 Nov-12-10 Dec-10-10 May-02-08 May-30-08 May-01-09 May-29-09 May-28-10 Feb-02-11 A ug-22-08 S ep-19-08 A ug-21-09 S ep-18-09 A ug-20-10 S ep-17-10 A pr-26-11 Ju n-27-08 Ja n-09-09 Ju n-26-09 Ja n-08-10 Ju n-25-10 Ja n-06-11 O ct-17-08 O ct-16-09 O ct-15-10 Ju l-25-08 Ju l-24-09 Ju l-23-10

Mar-17-11 Aug-11-10 Jan-14-10 Sep-03-09 Aug-12-09 May-13-09 Oct-20-08 Aug-06-08

30.33 26.88 27.24 24.85 24.20 25.09 20.00 26.00

Analyst Recommendations & 12 Month SB1: Strong Buy MO2: MP3: Market Perform MU4: NR : Not Rated R:

Price Objective Outperform Underperform Restricted

D ate: April 29 2011 P rice C overage Suspended R ating C hange Target P rice and R ating C hange Target P rice C hange Split Adjustm ent

Valuation Methodology: We value Genivar on a comparative basis to peer group historical multiples.

Update Date Nov-11-10 May-10-10 Mar-19-10 Dec-09-09 Nov-05-09 Mar-20-09 Nov-06-08 Oct-20-08 Jun-30-08

Mar-06-09 Mar-05-10 Mar-02-11 Mar-29-11 A pr-03-09 A pr-02-10 A pr-30-10 Feb-06-09 Feb-05-10 Nov-14-08 Dec-12-08 Nov-13-09 Dec-11-09 Nov-12-10 Dec-10-10 May-02-08 May-30-08 May-01-09 May-29-09 May-28-10 Feb-02-11 A ug-22-08 S ep-19-08 A ug-21-09 S ep-18-09 A ug-20-10 S ep-17-10 A pr-26-11 Ju n-27-08 O ct-17-08 Ja n-09-09 Ju n-26-09 O ct-16-09 Ja n-08-10 Ju n-25-10 O ct-15-10 Ja n-06-11 Ju l-25-08 Ju l-24-09 Ju l-23-10

M $28.00 O2

M $22.00 O2 M $20.50 O2

MO2 $19.00

M $17.50 O2 M $17.50 P3

M $16.00 P3 M $15.00 P3

M $16.50 O2

$25.00 $23.00 $21.00

$19.00 $17.00 $15.00 $13.00 $11.00 $9.00

14.06 14.02 14.90 16.88 15.68 12.25 13.31 14.49 22.20

Security P rice (C$)

Analyst Recommendations & 12 Month SB1: Strong Buy MO2: MP3: Market Perform MU4: NR : Not Rated R:

Price Objective Outperform Underperform Restricted

D ate: April 29 2011 P rice C overage Suspended R ating C hange Target P rice and R ating C hange Target P rice C hange Split Adjustm ent

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Closing Price

IBI Group Inc. (IBG) 3 yr. Stock Perform ance

Infrastructure & Construction

Canada Research | Page 49 of 52

Valuation Methodology: We value IBI on a comparative basis to peer group historical multiples.

Update Date Closing Price Target Price 63.00 67.00 64.00 58.00 55.00 47.00 44.00 42.00 42.00 48.00 54.00 65.00 65.00 Target Price 33.75 33.00 28.00 27.00 29.00 30.50 30.50 29.00 30.50 30.00 24.00 27.50 22.25 30.00

SB1 $48.00 M $65.00 P3 M $65.00 O2 $68.00 $65.00 $62.00 $59.00 $56.00 $53.00 $50.00 $47.00 $44.00 $41.00 $38.00 $35.00 $32.00 $29.00 $26.00 $23.00 Mar-06-09 Mar-05-10 Mar-23-11 A pr-03-09 A pr-02-10 A pr-30-10 Feb-06-09 Feb-05-10 Nov-14-08 Dec-12-08 Nov-13-09 Dec-11-09 Nov-12-10 Dec-10-10 May-02-08 May-30-08 May-01-09 May-29-09 May-28-10 Feb-24-11 A ug-22-08 S ep-19-08 A ug-21-09 S ep-18-09 A ug-20-10 S ep-17-10 A pr-19-11 Ju n-27-08 Ja n-09-09 Ju n-26-09 Ja n-08-10 Ju n-25-10 Ja n-05-11 Ja n-29-11 O ct-17-08 O ct-16-09 O ct-15-10 Ju l-25-08 Ju l-24-09 Ju l-23-10 MO2 $54.00 SB1 $42.00 MO2 $42.00 MP3 $44.00 MP3 $47.00 M $55.00 O2 MO2 $58.00 MO2 $64.00 M $67.00 O2 MO2 $63.00

Analyst Recommendations & 12 Month SB1: Strong Buy MO2: MP3: Market Perform MU4: NR : Not Rated R:

Price Objective Outperform Underperform Restricted

Mar-08-11 Feb-15-11 Nov-08-10 Jan-14-10 Nov-09-09 Jul-29-09 Jun-08-09 Apr-14-09 Mar-09-09 Oct-20-08 Sep-19-08 Jul-21-08 Jun-18-08

54.66 60.02 55.22 52.17 49.15 45.05 43.97 36.38 28.30 37.84 45.00 54.60 59.50

Security P rice (C$)

D ate: April 29 2011 P rice C overage Suspended R ating C hange Target P rice and R ating C hange Target P rice C hange Split Adjustm ent

Valuation Methodology: We value SNC-Lavalin's E&C business a comparative basis to peer group historical multiples. To this we add the value of SNC's various concession investments, which we value using various methodologies.

Update Date Closing Price

M $29.00 P3 MO2 $30.00 M $22.25 P3 $34.00 $32.00 $30.00 $28.00 M $27.50 P3 M $24.00 MO2 $30.00 M $30.50M $29.00 P3 O2 O2 M $30.50 O2 M $30.50 P3 MP3 $27.00 M $33.00 O2 M $28.00 O2 M $33.75 O2

$26.00 $24.00 $22.00 $20.00 $18.00 $16.00 $14.00 Mar-06-09 Mar-05-10 Mar-02-11 Mar-30-11 A pr-03-09 A pr-02-10 A pr-30-10 Feb-06-09 Feb-05-10 Nov-14-08 Dec-12-08 Nov-13-09 Dec-11-09 Nov-12-10 Dec-10-10 May-02-08 May-30-08 May-01-09 May-29-09 May-28-10 Feb-03-11 A ug-22-08 S ep-19-08 A ug-21-09 S ep-18-09 A ug-20-10 S ep-17-10 A pr-27-11 Ju n-27-08 O ct-17-08 Ja n-09-09 Ju n-26-09 O ct-16-09 Ja n-08-10 Ju n-25-10 O ct-15-10 Ja n-06-11 Ju l-25-08 Ju l-24-09 Ju l-23-10

Analyst Recommendations & 12 Month SB1: Strong Buy MO2: MP3: Market Perform MU4: NR : Not Rated R:

Price Objective Outperform Underperform Restricted

Sep-10-10 Aug-06-10 May-25-10 May-14-10 Feb-26-10 Jan-14-10 Nov-06-09 Oct-21-09 Aug-07-09 May-15-09 Feb-27-09 Dec-12-08 Oct-20-08 Sep-19-08

26.91 25.22 25.90 26.11 27.16 29.25 26.69 26.40 29.28 27.45 20.45 26.57 19.36 29.00

Security P rice (C$)

D ate: April 29 2011 P rice C overage Suspended R ating C hange Target P rice and R ating C hange Target P rice C hange Split Adjustm ent

Valuation Methodology: We value Stantec on a comparative basis to historical P/E multiples.

Risk Factors

General Risk Factors: Following are some general risk factors that pertain to the projected target prices included on Raymond James research: (1) Industry fundamentals with respect to customer demand or product / service pricing could change and adversely impact expected revenues and earnings; (2) Issues relating to major competitors or market shares or new product expectations could change investor attitudes toward the sector or this stock; (3) Unforeseen developments with respect to the management, financial condition or accounting policies or practices could alter the prospective valuation; or (4) External factors that affect the U.S. economy, interest rates, the U.S. dollar or major segments of the economy could alter investor confidence and investment prospects. International investments involve additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability.

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Rating 2 2 2 3 3 3 2 2 2 2 3 3 3 2

Stantec Inc (STN) 3 yr. Stock Performance

Rating 2 2 2 2 2 3 3 2 1 1 2 2 3

SNC-Lavalin (SNC) 3 yr. Stock Performance Perform ance

Canada Research | Page 50 of 52

Infrastructure & Construction

Risks - Stantec Inc. Some of the specific risk factors that pertain to the projected 6-12 month stock price target for Stantec are as follows: a) Stantec's current compensation policy does not guarantee the continued availability of qualified personnel; b) the company derives a significant portion of its revenue in U.S. dollars, but at the same time reports its operating results in Canadian dollars. As a result, fluctuations in the US$/C$ exchange rate may adversely affect the company's profitability; c) Stantec has no assurance that it will not face intensified competition from international, national or regional competitors going forward; d) the company carries an unusually high level of accounts receivable on its balance sheet and has no assurance that outstanding accounts will be paid on a timely basis, if at all; e) Stantec may face difficulty accessing debt financing on favourable terms from its current lender or other financial institutions, and f) changes in interest rates could adversely impact Stantec's financial performance. Risks - Genivar Income Fund Some of the specific risk factors that pertain to the projected 6-12 month stock price target for Genivar are as follows: (i) the Fund relies heavily on the skills, experience, reputation and commitment of its professionals; therefore it is imperative for Genivar to attract and retain outstanding professionals; (ii) failure to acquire suitable engineering firms on satisfactory terms could potentially curb the Fund's growth prospects and negatively impact our financial forecasts; (iii) integration issues may also surface and place significant demands on Genivar's executives, diverting their attention from existing activities; (iv) Genivar operates in a highly competitive industry, where numerous firms will often wrestle over the same contract. It tends to butt heads with localized, niche players on small mandates and battle full service players with greater financial resources on large projects; (v) Genivar's operations are also linked to the overall business cycle and, more specifically, to the wellbeing of the Quebec and Ontario economies; (vi) roughly half of the Fund's top-line is derived from fixed-price negotiated fee contracts, where the potential risks and rewards fall into the Genivar camp, and (vii) the Fund is also exposed to various litigation, environmental, weather, safety and regulatory risks, which all have the potential to negatively impact Genivar's performance. Risks - IBI Income Fund Some of the specific risk factors that pertain to the projected 6-12 month stock price target for IBI are as follows: (i) the Fund relies heavily on the skills, experience, reputation and commitment of its professionals. As such, it is imperative for IBI to be able to attract and retain outstanding professionals; (ii) failure to acquire suitable architecture/engineering/design firms on satisfactory terms could potentially curb the Fund's growth prospects and negatively impact our financial forecasts; (iii) integration issues may also surface and place significant demands on IBI's partners, diverting their attention from existing activities; (iv) IBI operates in a highly competitive industry, where numerous firms will often wrestle over the same contract. This intense competition may exert downward pressure on margins; (v) IBI's operations are also linked to the overall business cycle and as a result, adverse economic conditions, cyclical trends and increases in interest rates could all have a negative impact on the firms operating results; and (vi) its practice areas are, to a certain extent, dependent upon the spending commitments outlined by the federal, provincial and municipal governments. Any or all of these risks may adversely impact the Fund's ability to maintain its current growth rate, market position and ultimately, its profitability. Risks - SNC-Lavalin Some of the specific risk factors that pertain to the projected 6-12 month stock price target for SNC-Lavalin are as follows: (i) an inability to accurately estimate project costs as a result of both raw material and labour cost inflation-an issue particularly relevant to projects with long time horizons; (ii) an inability to attract and retain qualified workers with adequate skills, experience, reputation and established client relationships; (iii) work stoppages resulting from labour strikes: (iv) the financial strength (or lack thereof) of suppliers and customers along the value chain may adversely impact a company's ability to collect receivables, potentially leading to the recognition of bad debt expense; (v) quality of work performed by the subcontractors; (vi) inclement weather; and (vii) financial penalties should a contract fail to be completed according to contract specifications. As acquisitions are a key driver of growth for the company, some related risks include: (i) an inability to identify appropriate acquisition targets at reasonable valuations; (ii) difficulties in integrating the acquired businesses, resulting in a lack of anticipated synergies; and (iii) uncertainties associated with acquisitions or mergers, leading to a loss of customers and/or key employees. More general risks which could materially reduce anticipated profits include cost overruns on a significant number of projects, potential liability claims and contract disputes, unexpected project cancellations, and a damaged reputation due to client dissatisfaction. Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability categories, is available at www.raymondjames.ca/researchdisclosures. Copies of research or Raymond James' summary policies relating to research analyst independence can be obtained by contacting any Raymond James & Associates or Raymond James Financial Services office (please see raymondjames.com for office locations) or by calling 727-567-1000, toll

Raymond James Ltd. | 2200 ­ 925 West Georgia Street | Vancouver BC Canada V6C 3L2

Infrastructure & Construction

Canada Research | Page 51 of 52

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International Disclosures

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