<DOCUMENT>
<TYPE>EX-99.13
<SEQUENCE>16
<FILENAME>t17577exv99w13.txt
<DESCRIPTION>EX-99.13
<TEXT>
<PAGE>

                                                                         [PHOTO]

Jan Mulligan, Director, Financial
Reporting, Don Wilson, Vice President &
CFO, and Dan Lefaivre, Vice President &
Corporate Controller



MANAGEMENT'S DISCUSSION AND ANALYSIS

This discussion and analysis, dated February 20, 2004, of Stantec's operations
and financial position should be read in conjunction with the Company's 2003
consolidated financial statements and related notes, as well as the Message to
Shareholders and management discussions included in this annual report.
Additional information regarding the Company, including the Annual Information
Form, is available on SEDAR at www.sedar.com.

This report includes forward-looking statements that are based on current
expectations and are therefore subject to risks and uncertainties. These
statements can be identified by the use of forward-looking terminology such as
"expects," "believes," "may," "will," "should," "estimates," "anticipates," or
the negative thereof or other variations thereon. The Company cautions readers
that, by their nature, forward-looking statements involve risk and uncertainties
and that the Company's actual actions or results may differ materially.

                                                 Stantec Inc. 2003 Annual Report

20

<PAGE>

This report includes references to and uses terms that are not specifically
defined in the Canadian Institute of Chartered Accountants Handbook and do not
have any standardized meaning prescribed by Canadian generally accepted
accounting principles (GAAP). These non-GAAP measures may not be comparable to
similar measures presented by other companies. The Company refers to and uses
the terms "net revenue" and "gross margin" throughout this analysis, and the
definitions of these terms are provided within the Results section of this
Management's Discussion and Analysis.

VISION, CORE BUSINESS, AND STRATEGY

Stantec provides professional services in infrastructure and facilities. Through
comprehensive service delivery in planning, engineering, architecture, interior
design, landscape architecture, surveying and geomatics, environmental sciences,
project management, and project economics, we support clients through the entire
life cycle of a project -- from the initial concept and financial feasibility
phases to project completion and beyond.

Our current Company goal is to become one of the top 10 global design and
professional services firms with $1 billion in annual revenue and 10,000
employees by the year 2008. To achieve this objective, we will continue to
deliver professional services in the infrastructure and facilities market and to
follow an orderly growth plan. We are confident that we can reach our goal
because the market for our services is very large, exceeding US$50 billion in
annual sales, and we have an organization of dedicated people who give us our
competitive advantage -- the ability to execute a proven operating strategy
through a focused, sustainable business model. Our three-dimensional model --
built on geographic diversification, practice area specialization, and provision
of services in all five phases of the project life cycle -- allows us to manage
risk while pursuing our objective of continued revenue and earnings growth.

[PHOTO TALLYN'SREACH COMMUNITY DEVELOPMENT, COLORADO (URBAN LAND ENGINEERING)]

Tallyn'sreach Community Development, Colorado (Urban Land Engineering)

[PHOTO OF CONCRETE FIELD TESTING, NEVADA (QUALITY CONTROL/ASSURANCE)]

Concrete Field Testing, Nevada (Quality Control/Assurance)

Stantec Inc. 2003 Annual Report

                                                                              21

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF GARRY LEVECK, VICE PRESIDENT, TRANSPORTATION]

Garry Leveck, Vice President, Transportation

[PHOTO OF CN TOWER REDEVELOPMENT, ONTARIO (PROGRAM & PROJECT MANAGEMENT)]

CN Tower Redevelopment, Ontario (Program & Project Management)

[PHOTO OF TERI LIVENGOOD, SENIOR ENGINEERING COORDINATOR]

Teri Livengood, Senior Engineering Coordinator

[PHOTO SUSAN RADKE, ACCOUNTING MANAGER]

Susan Radke, Accounting Manager

[PHOTO OF LINDA STAVROS, HUMAN RESOURCE REPRESENTATIVE]

Linda Stavros, Human Resource Representative

GEOGRAPHIC DIVERSIFICATION

Currently, our principal geographic reach includes four economic regions in
Canada and the US as well as a project presence in the Caribbean and other
selected international locations. Our strategy for geographic diversification
has two components. The first is to grow our existing regional operations
through expansion of our services portfolio, particularly in areas where we have
not yet reached a mature market presence. We aim to achieve a minimum market
penetration of $10 million in gross revenue per one million population.
Secondly, our strategy includes expansion outside our existing regions
principally focused on the US and Canada. (We expect that our International
operation will generate less than 10% of our gross revenue through to 2008.)
Geographic expansion is expected to occur primarily through opportunities to
acquire firms that meet our integration criteria and to a lesser extent through
organic growth.

Stantec Inc. 2003 Annual Report

22

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF QUIDA NEWMAN, ADMINISTRATIVE RECEPTIONIST]

Quida Newman, Administrative Receptionist

PRACTICE AREA SPECIALIZATION

Practice area specialization and diversity are achieved by providing services in
16 distinct professional services practice areas that can generally be grouped
into five key market segments -- Buildings, Environment, Industrial,
Transportation, and Urban Land. These specialized project services help
differentiate us from our competitors, allowing us to enhance our presence in
new geographic regions and markets and to establish and maintain client
relationships. Our strategy for strengthening this part of our business model is
to increase the depth of our expertise in our current practice areas and to
selectively add complementary practice areas to our operations

[PHOTO OF JIM DRESCHER, MANAGING PRINCIPAL, URBAN LAND]

Jim Drescher, Managing Principal, Urban Land

[PHOTO OF STCKON ESSENTIAL SERVICES FACILITY, (CALIFORNIA ARCHITECTURE &
INTERIOR DESIGN)]

[PHOTO DOUG HAMMING, SENIOR ASSOCIATE, ARCHITECTURE & INTERIOR DESIGN]

Stckon Essential Services Facility, (California Architecture & Interior Design)

Doug Hamming, Senior Associate, Architecture & Interior Design

Stantec Inc. 2003 Annual Report

                                                                              23

<PAGE>

GREAT FACES OF STANTEC

[PHOTO CREEKSIDE SHOPPING CENTER, CALIFORNIA (PLANNING & ARCHITECTURE)]

Creekside Shopping Center, California (Planning & Architecture)

[PHOTO GERRY WHITTLE, RECEPTIONIST]

GERRY WHITTLE, RECEPTIONIST



LIFE CYCLE SOLUTIONS

The third element of our business model is the provision of professional
services in all five phases of the project life cycle -- planning, design,
construction, maintenance, and decommissioning. This inclusive approach allows
us to supply services during periods of strong new capital project activity
(design and construction) as well as periods of lower new capital project
expenditures (maintenance and rehabilitation). Beginning with the planning and
design stages, we provide conceptual and detailed design services, conduct
feasibility studies, and prepare plans and specifications. During the
construction phase, we generally act as the owners' representative, providing
project management, surveying, and resident engineering services. We focus
exclusively on fee-for-service type work, and we do not, except in rare
circumstances, act as the contractor or take on construction risk. Beyond
project completion, during the maintenance phase, we supply ongoing services for
maintenance and rehabilitation in areas such as facilities and infrastructure
management, facilities operations, and performance engineering. Finally, we
provide decommissioning solutions for taking facilities out of active service.

Through the combined resources of our staff, we are able to undertake
infrastructure and facilities projects of any size for both public and private
sector clients. Currently, the majority of our assignments are considered to be
small to midsize projects with a capital value of less than $100 million and
potential project fees for Stantec of less than $10 million. These types of
projects represent the largest share of the infrastructure and facilities
market. Focusing on this project mix continues to ensure that we do not rely on
a few large, single projects for our revenue and that no single client or
project accounts for more than 5% of our overall business.

                                                 Stantec Inc. 2003 Annual Report

24

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF ZOE SHIELDS, ADMINISTRATIVE ASSISTANT]

Zoe Shields, Administrative Assistant

[PHOTO OF PRIYATOSH RAY, ENGINEER, ENVIRONMENTAL INFRASTRUCTURE]

 Priyatosh Ray, Engineer, Environmental Infrastructure

[PHOTO OF ALICE TEMPLETON, ADMINISTRATIVE SERVICES MANAGER]

Alice Templeton, Administrative Services Manager

KEY PERFORMANCE DRIVERS

At Stantec our success depends on our ability to attract and retain qualifiead
people; maximize market opportunities; find, acquire, and intergrte firms and/
or new employees into our operations; finance our growth  achieve a top-three
market pentration in the geographic areas we serve. In 2003 we focused on
strengthening these performance drivers and on building our organnization,
people and systems for future growth. Based on our performance in these areas,
we believe we are well positioned to continue to be a top-three provider
of professinoal services to the infrastructure  and facilities industry in the
geographic areas we serve.

[PHOTO OF VANCOUVER GENERAL HOSPITAL -- RADIOLOGY, BRITISH COLUMBIA
(ARCHITECTURE & INTERIOR DESIGN)]

Vancouver General Hospital -- Radiology, British Columbia (Architecture &
Interior Design)

Stantec Inc. 2003 Annual Report

                                                                              25

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF MARRY CREW, SENOIR ASSOCIATE, QUALITY CONTROL/ASSURANCE]

Marry Crew, Senoir Associate, Quality Control/assurance

[PHOTO OF SURREY MEMORIAL HOSPITAL AMBULATORY CARE CENTER, BRITISH COLUMBIA
(ARCHITECTURE & INTERIOR DESIGN)]

Surrey Memorial Hospital Ambulatory Care Center, British Columbia (ARCHITECTURE
& INTERIOR DESIGN)

[PHOTO OF RAINER FASSLER, SENIOR ASSWOCIATE, (ARCHITECTURE & INTERIOR DESIGN)]

Rainer Fassler, Senior Asswociate, (Architecture & Interior Design)

PEOPLE

The most important driver of Stantec's performance is our people. Our people are
our most valuable resource because their combined knowledge forms the basis of
the project solutions we deliver to clients. To reach our goal of becoming one
of the top 10 global design firms, we are growing our workforce through a
combination of internal hiring and acquisitions. We measure our performance in
this area by total staff numbers. In 2003 our staff increased to approximately
3,700 from 3,500 in 2002. Currently, our workforce is made up of about 1,850
professionals, 1,300 technical staff, and 550 support personnel. Employee
numbers are expected to continue to grow in 2004 and beyond as we pursue our
vision.

To attract and retain qualified employees, Stantec offers opportunities to be
part of a multidiscipline team working on challenging projects with some of the
best people in our industry. In 2003 we launched an "employer of choice"
initiative that will focus on strengthening our people-oriented culture. Our
plan is to continue to benchmark and maintain a competitive compensation and
benefits program, emphasize teamwork across the Company, and provide
opportunities for professional development and enhancement. During the year, we
introduced a number of learning programs, including an on-line Stantec
orientation process and training in project and financial management and in our
new business information system. These programs are part of our TIE initiative
-- our commitment to having among the best-trained, best-informed,

                                                 Stantec Inc. 2003 Annual Report

27

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF ABIGAIL MAYRENA, HYDROLOGIST, URBAN LAND]

Abigail Mayrena, Hydrologist, Urban Land

and best-equipped employees in our industry. We also implemented a revised
performance development review process that addresses personal and career growth
plans, training, and mentoring.

Because of our "diversified portfolio" approach to business -- operating in
different regions and practice areas -- we are generally able to redeploy a
portion of our workforce in response to changes in local, regional, or national
economies or practice area demand. At present, we see no constraints on the
general availability of qualified staff for our operations. Although there will
always be some areas where it will be difficult to find appropriate staff during
certain periods, as we increase in size we are better able to address these
issues by becoming more capable of using staff from other parts of the Company
either through temporary relocation or work allocation. We are continually
improving our capability to work on projects from multiple office locations
through Web-based technology.

[PHOTO OF KEN DUNCAN, CONSULTANT, URBAN LAND]

Ken Duncan, Consultant, Urban Land

[PHOTO OF IDA RAWAT, MARKETING COORDINATOR]

Ida Rawat, Marketing Coordinator

[PHOTO OF LONG TERM PAVEMENT PERFORMANCE PROGRAM, NEW JERSEY (INFRASTRUCTURE
MANAGEMENT & PAVEMENT ENGINEERING)]


Long Term Pavement Performance Program, New Jersey (Infrastructure Management &
Pavement Engineering)

Stantec Inc. 2003 Annual Report

                                                                              27
<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF BRAD FRIZZELL, PRINCIPAL, URBAN LAND]

Brad Frizzell, Principal, Urban Land

[PHOTO OF  LISA THOMPSON, ADMINISTRATIVE ASSISTANT]

Lisa Thompson, Administrative Assistant

INDUSTRY ENVIRONMENT/MARKET OPPORTUNITIES

Another key driver of Stantec's success is our ability to maximize market
opportunities for growth. We recognize that growth is necessary in order to
enhance the depth and breadth of our expertise, broaden our service provision,
increase our shareholder value, provide expanded opportunities for our
employees, and support our information technology systems. Over the last 10
years, we have integrated a total of approximately 2,800 employees into our
operations through a combination of direct hiring and acquisitions. We are
confident that we can continue to capitalize on acquisition opportunities
because we are operating in an industry sector that includes more than 100,000
firms and is estimated to generate over US$50 billion in revenue in North
America every year, of which we currently have less than a 1% market share.
(According to the Engineering News Record, the largest 500 engineering and
architecture companies in the US generated over US$50 billion in fees in 2002.)
Our strategy for increasing this percentage is to combine internal growth with
the acquisition of small to midsize firms that believe in our vision and want to
be part of our growing Company.

In 2003 we completed four acquisitions in our two Canadian regions, adding
approximately 225 employees to our operations. Our focus for the year, however,
was the integration of the 10 firms and approximately 550 employees acquired by
Stantec in 2002. The integration of acquired companies begins immediately
following the acquisition closing date and may take between six months and three
years. We integrate new colleagues into our Company-wide information technology
and financial management systems as

[PHOTO OF STALLION MOUNTAIN COMMUNITY DEVELOPMENT, NEVADA (URBAN LAND
ENGINEERING)

Stallion Mountain Community Development, Nevada (Urban Land Engineering)

                                                 Stantec Inc. 2003 Annual Report

28

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF BRIAN KUGLER, CIVIL ENGINEER]

Brian Kugler, Civil Engineer

[PHOTO OF HT LAM, ASSOCIATE, PLANNING & Landscape Architecture]

HT Lam, Associate, Planning & Landscape Architecture

[PHOTO OF WINNIPEG MAIN STREET STREETSCAPING, MANITOBA (PLANNING & LANDSCAPE
ARCHITECTURE, TRANSPORTATION INFRASTRUCTURE)

WINNIPEG MAIN STREET STREETSCAPING, MANITOBA (PLANNING & LANDSCAPE
ARCHITECTURE, TRANSPORTATION INFRASTRUCTURE)

[PHOTO OF MARTIN JONES, MANAGING PRINCIPAL, URBAN LAND]

Martin Jones, Managing Principal, Urban Land

well as provide "back office" support services through our corporate office,
allowing our new colleagues to focus on client service delivery.

Stantec's acquisition program is managed by an acquisition team dedicated to
supporting the Company's growth objectives. The team is responsible for
identifying and pricing acquisition candidates, undertaking and coordinating due
diligence, negotiating and closing transactions, and assisting with the
integration of employees and systems.

FINANCING

Stantec's success is also dependent on our continuing ability to finance our
growth. Adequate financing gives us the flexibility to make appropriate
investments in our future. Over the past 10 years, Stantec has grown at a
compound annual rate of 20%. To fund this growth, the Company requires cash
generated from both internal and external sources. Historically, we have
completed acquisitions using mostly cash and notes, with very little use of the
Company's shares.

We have sought additional equity financing at times when our growth has outpaced
our ability to generate cash inside the Company for maintaining our internal
debt to equity guidelines. Our practice is to raise additional equity to
replenish our cash reserves, pay down debt, or strengthen the Company's balance
sheet. To date we have issued additional shares for these purposes on three
occasions -- in 1997, 2000, and 2002.

Stantec Inc. 2003 Annual Report

                                                                              29

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF CLAIRE GAUDET, ADMINISTRATIVE ASSISTANT]

Claire Gaudet, Administrative Assistant

[PHOTO OF OTTAWA MACDONALD-CARTIER INTERNATIONAL AIRPORT, ONTARIO (ARCHITECTURE
& INTERIOR DESIGN, SURVEYS/GEOMATICS)]

Ottawa Macdonald-cartier International Airport, Ontario (ARCHITECTURE & INTERIOR
DESIGN, SURVEYS/GEOMATICS)

[PHOTO OF WOODLANDS COMPREHENSIVE REZONING PROJECT, BRITISH COLUMBIA
(ARCHITECTURE & INTERIOR DESIGN)

Woodlands Comprehensive Rezoning Project, British Columbia (Architecture &
Interior Design)

[PHOTO OF MICHELLE GLASKIN-CLAY, EXECUTIVE ASSISTANT]

Michelle Glaskin-Clay, Executive Assistant

[PHOTO OF JOHN KRUG, SENIOR MANAGING PRINCIPAL, SURVEYS/GEOMATICS

John Krug, Senior Managing Principal, Surveys/Geomatics

MARKET PENETRATION

Also key to Stantec's success is achieving a certain level of market penetration
in the geographic areas we serve. Our goal is to be among the top three service
providers in our geographic regions and practice areas. With this level of
market presence, we are less likely to be affected by downturns in regional
economies. Top-three positioning also gives us increased opportunities to work
for the best clients, obtain the best projects, and attract the best employees
in a region, and is important for building or maintaining the critical mass of
staff needed to generate consistent performance and support regional
infrastructure.

                                                 Stantec Inc. 2003 Annual Report

30
<PAGE>


RESULTS

OVERVIEW OF 2003

The following table summarizes certain of the Company's key information:

                           Selected Annual Information
          (in millions of dollars, except per share and share amounts)
                  (prepared in accordance with Canadian GAAP)

<TABLE>
<CAPTION>
                                                                                         2002                2001
                                                                     2003             (restated)          (restated)
                                                                 -----------          ----------          ----------
<S>                                                              <C>                  <C>                 <C>
Gross revenue                                                          459.9               428.5               356.9
Net income                                                              25.1                20.2                15.4
Earnings per share - basic                                              1.37                1.12                0.92
Earnings per share - diluted                                            1.31                1.07                0.88
Cash dividends declared per common share                                 Nil                Nil                  Nil
Total assets                                                           326.6               299.0               217.5
Total long-term debt                                                    44.6                62.3                24.8
Outstanding common shares - as at December 31                     18,327,284          18,282,720          16,846,340
Outstanding common shares - as at February 20, 2004               18,333,724
</TABLE>

The information reflected above is impacted by the following items:

1.    Prior period adjustment -- During 2003, the Company determined with the
      assistance of outside valuators that the intangible assets acquired in
      acquisitions completed subsequent to June 30, 2001, had not been
      appropriately reflected in the allocation of the purchase price. As a
      result, a portion of our goodwill for post June 30, 2001, acquisitions has
      been allocated to identifiable intangible assets (i.e., contract backlog
      and client relationships) and charged to earnings over the estimated
      useful lives of these intangible assets on a straight-line basis. For
      contract backlog, the amortization period ranges from six to 12 months,
      and for client relationships, the amortization period ranges from 10 to 15
      years. The impact of this change is more fully described in note 2 to the
      consolidated financial statements.

2.    The Company completed four acquisitions in 2003, 10 in 2002, and six in
      2001. Each of these acquisitions will impact the level of the gross
      revenue earned in the year of acquisition and going forward as further
      explained in the Results of Operations section below.

3.    Effective January 1, 2002, as disclosed in note 1 to the consolidated
      financial statements, our Company changed the designation of our US-based
      subsidiaries to self-sustaining, resulting in a change in the method of
      translation from the temporal method to the current rate method. This
      change results in the impact of foreign currency fluctuations on our
      US-based subsidiary operations being charged to a separate component of
      shareholders' equity in our cumulative

Stantec Inc. 2003 Annual Report

                                                                              31

<PAGE>

translation account. Prior to 2002, the impact of foreign currency fluctuations
was reflected through our income statement. The Company continues to reflect
foreign currency gains and losses through our income statement for foreign
currency-denominated transactions that occur in our Canadian operations.

4.    Also effective January 1, 2002, the Company adopted the recommendations of
      the Canadian Institute of Chartered Accountants for stock-based
      compensation and other stock-based payments on a prospective basis. In
      2002, $45,000 was expensed as stock-based compensation while $600,000 was
      expensed in 2003.

GRAET FACES OF STANTEC

[PHOTO OF JOHN TAKE, OFFICE LEADER]

John Take, Office Leader

[PHOTO OF HAYLEY HENDRICK PARK, NEVADA (PLANNING & LANDSCAPE ARCHITECTURE)]

Hayley Hendrick Park, Nevada (Planning & Landscape Architecture)

[PHOTO OF ALAN GEE, MANAGER, HUMAN RESOURCE]

Alan Gee, Manager, Human Resource

[PHOTO OF BURLINGTON CANAL LIFE BRIDGE, ONTARIO (TRANSPORTATION INFRASTRUSTURE)

Burlington Canal Life Bridge, Ontario (Transportation Infrastrusture

                                                 Stantec Inc. 2003 Annual Report

32

<PAGE>

Highlights for 2003

-     The results our Company achieved in 2003 were within the expected range we
      set out in our 2002 Management's Discussion and Analysis as follows:

<TABLE>
<CAPTION>
MEASURE                                                 EXPECTED RANGE              RESULT ACHIEVED
-------                                                 --------------              ---------------
<S>                                                     <C>                         <C>
Debt to equity ratio [note 1]                            At or below 0.5 to 1            0.34
Return on equity [note 2]                                     At or above 14%            16.3%
Net income as % of net revenue                                 At or above 5%             6.4%
Gross margin as % of net revenue                           Between 52 and 54%            53.1%
Administrative expenses as % of net revenue                Between 40 and 42%            39.5%
Effective tax rate                                       Between 37.5 and 38%            36.7%
</TABLE>

      Note 1 -- Debt to equity ratio is calculated as long-term debt plus
      current portion of long-term debt plus bank indebtedness less cash and
      cash equivalents, divided by shareholders' equity.

      Note 2 -- Return on equity is calculated as net income for the year
      divided by average shareholders' equity at the end of the last five
      quarters.

-     New business information system -- In 2002 the Company initiated the
      planning and development of a new business information system for managing
      our projects, financial information, human resources, and business
      intelligence. This initiative continued into 2003, and we marked the
      implementation date of the system at the beginning of the last quarter.
      The implementation of this initiative has had a significant impact on our
      Company's resources -- both in terms of people and finances. Adjusting to
      the breadth of the new system created a significant learning curve for
      employees. One of the short-term impacts was an increase in the time
      required to prepare invoices to send to clients. As a result, we
      experienced an increase in costs and estimated earnings in excess of
      billings during the fourth quarter of 2003. Because this impact was
      expected, we negotiated a temporary increase in our revolving credit
      facility as disclosed in note 7 to the consolidated financial statements.

-     Growth by acquisition -- In addition to the four acquisitions completed in
      2003, subsequent to the year-end we entered into an agreement, subject to
      the approval of the vendor's shareholders and regulatory approval, to
      acquire The Sear-Brown Group, Inc., a New York-based firm with
      approximately 500 employees. This acquisition, if completed, will be our
      largest acquisition to date.

-     Earnings per share -- Our basic earnings per share increased 22.3% to
      $1.37 from $1.12 in 2003.

-     Divestitures -- During 2003, Teshmont Consultants Inc., a 50% equity
      accounted investment, disposed of a portion of its business. In addition,
      effective December 31, 2003, the Company reached an agreement in principle
      to dispose of our 50% share in Lockerbie Stanley Inc.

Stantec Inc. 2003 Annual Report

                                                                              33

<PAGE>

RESULTS OF OPERATIONS

Our Company provides knowledge-based solutions for infrastructure and facilities
projects through value-added professional services principally under
fee-for-service agreements with clients. In the course of providing services, we
incur certain direct costs for subconsultants, equipment, and other expenditures
that are recoverable directly from our clients. These direct costs are included
in our gross revenue. Since such direct costs can vary significantly from
contract to contract, changes in gross revenue may not be indicative of our
revenue trends. Accordingly, we also report net revenue, which is gross revenue
less subconsultant and other direct expenses, and analyze our results in
relation to net revenue rather than gross revenue.

We recognize that the most significant portion of our business is reflected in
our Consulting Services reporting unit as defined and disclosed in the notes to
our consolidated financial statements. The other operating segments, on a
combined basis, are not material to the operations of the Company. Consequently,
we analyze and review the results of our operations on a consolidated basis.

GREAT FACE STANTEC

[PHOTO OF ROBIN CAMPBELL, TECHNOLOGIST, PLANNING & LANDSCAPE ARCHITECTURE

Robin Campbell, Technologist, Planning & Landscape Architecture

[PHOTO OF TUWANA WOOD, ACCOUNTANT]

Tuwana Wood, Accountant

[PHOTO OF MESA TRANSIT MAINTENANCE OPERATIONS FACILITY, ARIZONA (TRANSPORTATION
INFRASTRUCTURE)]

Mesa Transit Maintenance Operations Facility, Arizona (Transportation
Infrastructure)

                                                 Stantec Inc. 2003 Annual Report

34

<PAGE>

GREAT FACE STANTEC

[PHOTO OF LEX WEBSTER, PROJECT MANAGER, BUILDINGS ENGINEERING]

Lex Webster, Project Manager, Buildings Engineering

[PHOTO OF CARLYLE SENIOR LIVINGS COMMUNITY, GEORGIA (SURVEYS/GEOMATICS, URBAN
LAND ENGINEERING)]

Carlyle Senior Livings Community, Georgia (Surveys/geomatics, Urban Land
Engineering)

The following table summarizes Stantec's key operating results on a percentage
of net revenue basis and the percentage increase in the dollar amount of these
results from year to year:

<TABLE>
<CAPTION>
                                              PERCENTAGE OF NET REVENUE                           PERCENTAGE INCREASE
                                       -----------------------------------------------          -------------------------
                                        2003               2002                2001              2003              2002
                                                         RESTATED             RESTATED          VS 2002           VS 2001
                                       ------            --------             --------          -------           -------
<S>                                    <C>               <C>                  <C>               <C>               <C>
Gross revenue                           117.5%              117.3%             119.5%             7.3%             20.0%
Net revenue                             100.0%              100.0%             100.0%             7.2%             22.2%
Direct payroll costs                     46.9%               47.6%              46.5%             5.7%             24.9%
Gross margin                             53.1%               52.4%              53.5%             8.6%             19.9%
Administrative and
    marketing expenses                   39.5%               39.9%              40.9%             6.4%             19.0%
Depreciation of
    property and equipment                2.5%                2.6%               2.4%             4.3%             34.2%
Amortization of intangible
    assets and goodwill [note 1]          0.2%                0.3%               0.6%           (14.3%)           (36.3%)
Net interest expense                      0.7%                0.7%               0.6%             0.3%             58.5%
Foreign exchange
    (gains) losses                        0.2%                0.0%              (0.4%)          743.9%           (106.9%)
Share of (income)loss
    from associated companies            (0.1%)              (0.1%)              0.2%            63.4%           (155.9%)
Income before income taxes               10.1%                9.0%               9.2%            19.7%             20.6%
Income taxes                              3.7%                3.5%               4.0%            12.8%              6.8%
Net income                                6.4%                5.5%               5.2%            24.2%             31.4%
</TABLE>

      Note 1 -- Effective January 1, 2002, the Company ceased recording
      amortization on all goodwill.

The Company's operating results for 2003 are consistent with the goals we
established in 2002. In particular, our gross margin was within the range we
expected to achieve in 2003, while our administrative and marketing expenses and
effective tax rates were below expected ranges. Our operating results, in
particular administrative and marketing expenses, continue to be influenced by
the number of acquisitions completed in the current and prior two years due to
the length of time required for the integration of such acquisitions. The
majority of the acquisitions

Stantec Inc. 2003 Annual Report

                                                                              35
<PAGE>

completed in 2002 and 2003 were in Canada and were integrated into more mature
operations. The Company's effective tax rate is discussed below.

GROSS AND NET REVENUE

The following tables summarize the impact of certain of the above-noted items on
our gross and net revenue for 2003 compared to 2002 and for 2002 compared to
2001:

<TABLE>
<CAPTION>
GROSS REVENUE (in millions of dollars)                                                          2003 VS 2002        2002 VS 2001
--------------------------------------                                                          ------------        ------------
<S>                                                                                             <C>                 <C>
Increase over prior year                                                                            31.4                71.6
                                                                                                    ----                ----
Increase (decrease) due to:
 Acquisitions completed in current and prior two years                                              41.0                65.9
 Net internal growth                                                                                10.2                 3.2
 Impact of foreign exchange rates on revenue earned by foreign subsidiaries                        (19.8)                2.5
                                                                                                    ----                ----
</TABLE>

<TABLE>
<CAPTION>
NET REVENUE (in millions of dollars)                                                            2003 VS 2002        2002 VS 2001
------------------------------------                                                            ------------        ------------
<S>                                                                                             <C>                 <C>
Increase over prior year                                                                            26.3                66.3
                                                                                                    ----                ----
Increase(decrease) due to:
 Acquisitions completed in current and prior two years                                              36.7                53.5
 Net internal growth                                                                                 7.0                10.6
 Impact of foreign exchange rates on revenue earned by foreign subsidiaries                        (17.4)                2.2
                                                                                                    ----                ----
</TABLE>

                                    [Graph]

Revenue earned in Canada during 2003 increased to $290.4 million from $238.8
million in 2002, while revenue generated in the US decreased to $161.6 million
from $180.3 million. Revenue earned in our International region in 2003 was $7.9
million, compared to $9.4 million in 2002. The US revenues reported were
impacted by a change in exchange rates of approximately $19 million, as
indicated above. We had expected that our Canadian-based revenue in 2003 would
continue to exceed our US-based revenue based on our 2002 acquisition activity
as well as the anticipated strength of the Canadian economy. Subsequent to the
year-end, we entered into an agreement, subject to the approval of the vendor's
shareholders and regulatory approval, to acquire The Sear-Brown Group, Inc., a
New York-based firm of 500 staff, and we expect this addition to increase the
level of our US revenues in 2004.

AMORTIZATION OF INTANGIBLE ASSETS

As part of the prior period adjustment referred to in note 2 to the consolidated
financial statements, we now amortize identifiable intangible assets.
Amortization rates range from

36                                               Stantec Inc. 2003 Annual Report

<PAGE>

less than one year for contract backlog to 10 to 15 years for client
relationships. Amortization expense for 2003 was $925,000, compared to
$1,079,000 for 2002.

FOREIGN EXCHANGE GAINS (LOSSES)

The Company recorded a foreign exchange loss of $0.6 million in 2003, compared
to a foreign exchange loss of $0.1 million in 2002. The foreign exchange losses
incurred in 2002 and 2003 arose on the translation of the foreign-denominated
assets and liabilities held in our Canadian companies and in our non-US-based
foreign subsidiaries. The nature and timing of our foreign currency transactions
did not change significantly during the last year, with most of the transactions
occurring in US dollars.

We have noted that, overall, the Canadian dollar continued to strengthen against
the US dollar from December 2001 to December 2003. As a result of periodic
weakening of the Canadian dollar in 2002, our Company recognized gains and
losses throughout the year resulting in a net loss of $0.1 million. In 2003 the
Canadian dollar demonstrated significant strength relative to the US dollar, and
the impact of this significant change on our overall exposure to foreign
exchange losses resulted in a cumulative loss of $0.6 million for the year. We
will continue to monitor our foreign currency exposures to minimize our exposure
to loss.

INCOME TAXES

The effective tax rate for Stantec in 2003 was 36.7%, compared to 39.0% in 2002
and 43.7% in 2001. We had anticipated that our effective tax rate would be in
the range of 37.5 to 38%. This rate was estimated based on known statutory rate
reductions. Subsequent reductions in statutory rates resulted in the lower
effective tax rate for 2003. This rate reduction continues to be driven
primarily by a drop in federal and provincial Canadian statutory rates -- 2.5%
in 2003 and 2.8% in 2002. In 2002 the impact of the elimination of goodwill
amortization on Stantec's effective tax rate was a reduction of 2.2%, and in
2003 the impact of non-deductible stock compensation expense increased the rate
by approximately 0.6%.

                                    [Graph]

                                    [Graph]
Stantec Inc. 2003 Annual Report                                               37

<PAGE>

QUARTERLY OPERATING RESULTS

The following is a summary of the Company's quarterly operating results for the
last two fiscal years. Effective January 1, 2003, Stantec converted to a
12-period reporting schedule, and each quarter in 2003 contained three periods
totaling 13 weeks. In 2002 and earlier years, the Company followed a
13-period-per-year reporting schedule. Each of the first, second, and fourth
quarters contained three periods totaling 12 weeks, and the third quarter
contained four periods totaling 16 weeks.

                           QUARTERLY OPERATING RESULTS
               (in millions of dollars, except per share amounts)

<TABLE>
<CAPTION>
                                           2003                                         2002
                       Dec 31       Sep 30     Jun 30      Mar 31      Dec 31    Sep 30    Jun 30      Mar 31
                       ------       ------     ------      ------      ------    ------    ------      ------
<S>                    <C>          <C>        <C>         <C>         <C>       <C>       <C>         <C>
Gross revenue           111.6        120.8      119.1       108.4       101.8     137.9     104.2       84.6
Net income                6.3          7.3        6.5         5.0         5.6       6.0       5.1        3.5
EPS - basic              0.35         0.40       0.35        0.27        0.31      0.33      0.28       0.20
EPS - diluted            0.33         0.38       0.34        0.26        0.30      0.32      0.27       0.19
                        -----        -----      -----       -----       -----     -----     -----       ----
</TABLE>

The quarterly earnings per share on a basic and diluted basis are not additive
and may not equal the annual earnings per share reported. This is due to the
effect of shares issued or repurchased during the year on the weighted average
number of shares. Diluted earnings per share on a quarterly and annual basis are
also affected by the change in the market price of the Company's shares.

                                    [Graph]

During Q4 03, gross revenue increased $9.8 million, or 9.7%, to $111.6 million
from $101.8 million in Q4 02. Approximately $8.2 million of this increase
resulted from the acquisitions completed in 2001, 2002, and 2003. The additional
week of revenue in Q4 03 resulting from the change in our reporting schedules
added $8.9 million. These items were offset by the effect of a change in foreign
exchange rates of $6.5 million and a reduction in the revenue of existing
operations of $0.8 million.

FINANCIAL CONDITION AND LIQUIDITY

Cash flow from operating activities was $16.9 million in 2003, compared to $36.1
million in 2002 and $13.4 million in 2001. As indicated previously, the Company
implemented our new business information system in the fourth quarter of 2003.
As with any major change in systems, the timing and length of the conversion
activities required to complete the implementation affected our day-to-day
operations. More specifically, these conversion activities impacted the level of
billings that we could generate in the last quarter of the year as evidenced by
the increase in our level of investment in costs and estimated earnings in
excess of billings at the end of the year. The number of days' revenues in this
account increased to 52 days compared to 30 days at the end of

38                                               Stantec Inc. 2003 Annual Report

<PAGE>

Great Faces of Stantec

                            [Photo of Gordon Forbes]

Gordon Forbes, Structural Engineer
Buildings engineeing

The Farm at Arapahoe County Community Development, Colorado (Urban Land
Engineering)

2002. Billing activity subsequent to the year-end is returning to preconversion
levels, and we anticipate that our investment in this balance will return to our
normal expected range of between 30 and 35 days.

In 2003, $33.5 million in cash was used in investing activities, compared to
$29.2 million in 2002. We completed fewer acquisitions in 2003 than in 2002,
resulting in a net decrease in cash expended of approximately $11.4 million.
This difference was offset by an increased investment in property and equipment
of $11.3 million in 2003 compared to 2002. The implementation of our new
business information system, the construction of the Stantec Atrium Tower in
Edmonton, and continued renovations to Stantec Centre in Edmonton accounted for
this additional investment. The remaining difference is the amount of proceeds
received in 2002 on the disposition of our minority interest in Linnet Geomatics
International Inc. and on the divestiture of our 50-person operation in
Gatineau, Quebec. The amount of cash used in investing activities in 2002
totaled $29.2 million, compared to $11.4 million in 2001. This difference was
due to the additional $13.6 million spent on acquisitions and the $6.8 million
spent on property and equipment, particularly for renovations to and expansion
of Stantec Centre.

The Company used $21.3 million in cash in financing activities in 2003, compared
to the generation of $29.5 million in 2002 and the use of $12.6 million in 2001.
We issued an additional 1.2 million common shares for net cash proceeds of $18.3
million in 2002 and borrowed $30.0 million on our existing acquisition credit
facility. During 2003, we repaid

Stantec Inc. 2003 Annual Report                                               39

<PAGE>

long-term debt in the amount of $20.6 million, and $1.4 million was used to
repurchase shares of the Company under our Normal Course Issuer Bid. The
following table summarizes the contractual obligations due on our long-term debt
and operating lease commitments:

CONTRACTUAL OBLIGATIONS

<TABLE>
<CAPTION>
(in thousands of dollars)                                               Payments Due
-------------------------              ----------------------------------------------------------------------------
                                                       < than
                                        Total          1 year        2 - 3 years      4 - 5 years     After 5 years
                                       -------         ------        -----------      -----------     -------------
<S>                                    <C>             <C>           <C>              <C>             <C>
Long-term debt                          44,575         13,416           16,647            5,665            8,847
Operating lease commitments            111,034         19,038           32,545           24,521           34,930
                                       -------         ------           ------           ------           ------
Total contractual obligations          155,609         32,454           49,192           30,186           43,777
                                       -------         ------           ------           ------           ------
</TABLE>

During 2003, we renegotiated the credit facility we maintain with a major
Canadian chartered bank. Our new credit facility allows for an operating line of
credit of $50 million for the period of October 15, 2003, through February 28,
2004, returning to $20 million thereafter. At December 31, 2003, $8.3 million of
this amount had been used (none had been used at December 31, 2002).

Our shareholders' equity increased $9.1 million to $160.5 million from $151.4
million in 2002. This increase resulted from net income of $25.1 million, the
recognition of the fair value of share-based compensation of $0.6 million in
2003, and the issue of shares on the exercise of options of $0.6 million, offset
by the repurchase of shares pursuant to the Normal Course Issuer Bid of $1.4
million during the year and the $15.8 million change in our cumulative
translation account arising on the translation of our US-based foreign
subsidiaries in 2003. The $15.8 million change is due to the significant
strengthening of the Canadian dollar -- from $0.63 to $0.77 -- in relation to
the US dollar during the year.

Our Normal Course Issuer Bid was renewed in 2003 and allows the Company to
repurchase up to 550,311 shares. We continue to believe that, from time to time,
the market price of our common shares does not fully reflect the value of our
business or future business prospects and that, at such

GREAT FACES OF STANTEC]

[PHOTO OF STEVEN VOLL]
Steven Voll, Managing Principal,
Manufacturing/Industrial

[PHOTO OF CHARLOTTE SMITH]
Charlotte Smith, Administrative Assistant

[PHOTO OF DONNY JOHNSON]
Donny Johnson, Project Manager, Transportation

40                                               Stantec Inc. 2003 Annual Report

<PAGE>

GREAT FACES OF STANTEC

[Photo of Bob Dawson]
Bob Dawson, Vice President, Environment

[Photo of Debra Mollet]
Debra Mollet, Civil Engineer, Urban Land

[Photo of Dan Richert]
Dan Richert, Technologist, Environmental
Management

[WILLIAM CAFETERIA, NORTH CAROLINA AGRICULTURE AND TECHNICAL STATE
UNIVERSITY, NORTH CAROLINA (BUILDINGS ENGINEERING, ARCHITECTURE & INTERIOR
DESIGN PICTURE]
William Cafeteria, North Carolina Agriculture and Technical State
University, North Carolina (Buildings Engineering, Architecture & Interior
Design


Williams Cafeteria, North Carolina Agriculture and Technical State University,
North Carolina (Buildings Engineering, Architecture & Interior Design)

times, outstanding common shares are an attractive, appropriate, and desirable
use of available Company funds. Consequently, in 2003 we purchased 74,700 common
shares at an average price of $18.63 per share for an aggregate price of
$1,392,000. In 2002 we purchased 54,600 common shares at an average price of
$16.12 per share for an aggregate price of $880,000.

ACQUISITIONS

Our Company completed four acquisitions in 2003 for total consideration of $9.4
million and 10 acquisitions in 2002 for total consideration of $38.5 million.

In January 2003, the Company acquired the shares of Vancouver, British
Columbia-based APAI Architecture Inc. and Mandalian Enterprises Limited, a
comprehensive architectural design services firm, to expand our Architecture &
Interior Design practice area. This addition was followed in May by the
acquisition of Ecological Services Group Inc., an environmental consulting firm
headquartered in Guelph, Ontario. We then acquired the assets and business of
Optimum Energy Management Inc. in November. This Calgary, Alberta-based firm
specializes in industrial energy management services and complements our Power,
Resources & Chemicals practice area. In December the team from Inner Dimension
Design Associates joined our Regina, Saskatchewan, office to provide
professional services in interior design.

Stantec Inc. 2003 Annual Report                                               41

<PAGE>

GREAT FACES OF STANTEC

[Photo of Linda Tomlinson]
Linda Tomlinson, Office Administrator

[Photo of Brian Johnson]
Brian Johnson, Vice President, British Columbia

[Photo of Jacques Gauthier]
Jacques Gauthier, Associates, Architecture &
Interior Design

FUTURE EXPECTATIONS

Our Company continues to operate in a highly diverse infrastructure and
facilities market within a North American economy that is demonstrating
significant divergence across regions. The market involves numerous technical
disciplines, clients, and industries and engages both the private and public
sectors. Over the next few years, we expect the demand for services in this
market to be driven by continued population growth, government regulations, and
the need to maintain, upgrade, and replace an aging North American
infrastructure. The industry should also benefit from continued outsourcing of
technical services, especially in the public sector. Its fortunes are at least
partially tied to the performance of the economy, and the overall outlook
heading into 2004 is promising.

The US economy is forecasted to show continued strength as the impacts of
aggressive monetary and fiscal incentives take effect. During 2003, federal rate
and tax cuts were successful in encouraging consumer spending, resulting in a
strong year for housing construction, while business investment was slower to
respond, and we have yet to see a significant rebound in a weak commercial
infrastructure market. In addition, certain market segments, such as
transportation, remain highly dependent on government allocations to programs
such as the Transportation Equity Act for the 21st Century and its successors.
Although federal government spending has remained strong throughout the economic
downturn of the past few years, several state and local governments have been
forced to curtail their spending in response to lower tax revenues and budget
shortfalls. State and local spending is expected to rebound, however, in the
next 12 to 18 months, concurrent with an overall economic recovery. McGraw Hill
Construction and other sources are predicting a modest to strong increase in
overall construction spending in the US in 2004, depending on the degree of an
anticipated slowdown in the residential market.

At the same time, Canada's economy is forecasted to improve in 2004 while
underperforming that of the US. Domestic demand is expected to be strong, and
although the strong Canadian dollar continues to impact exports, improved US
demand resulting from greater economic activity is anticipated to offset this
effect. More specifically, the demand for housing is expected to remain robust
fueled by low interest rates, job

42                                               Stantec Inc. 2003 Annual Report

<PAGE>

GREAT FACES OF STANTEC

[Photo of Michael Unger]
Michael Unger, Managing Principal, Urban Land

[Photo of Trevor Pasika]
Trevor Pasika, Survey Technologies

and income growth, and strong market conditions. Housing starts are expected to
moderate only slightly in 2004 from a 15-year high in 2003, contributing to
ongoing strong performance in Stantec's Urban Land market segment. As well,
indications are that the institutional sector, which has been the driving force
behind non-residential construction over the past three years, with the greatest
investment going into health care and educational facilities, will continue to
be strong in 2004.

Within this market outlook, our Company expects to achieve continued growth
through a combination of internal hiring and acquisitions. We target long-term
average compound growth rates of 15 to 25%, although not every year may see
growth in this range. We have chosen this target because we believe it is an
achievable goal that allows us to enhance the depth of our expertise, broaden
our service provision, provide expanded opportunities to our employees, and
support our information technology systems. Our ability to continue to grow at
this rate depends to a large extent on the availability of acquisition
opportunities. Since our industry is composed of 100,000, mostly small firms,
there are many acquisition candidates. At any one time, we are engaged in
discussions with up to 20 or more firms. Currently, the firms with which we are
in some stage of discussion have between 10 and 750 employees.

[PHOTO OF JUDI STEWART]
Judi Stewart, Senior Marketing Coordinator

[INDEPENDENCE BOULEVARD UTILITY RELOCATION EVALUATION, NORTH CAROLINA (URBAN
LAND ENGINEERING) PICTURE]

Independence Boulevard Utility Relocation Evaluation, North Carolina (Urban Land
Engineering)

Stantec Inc. 2003 Annual Report                                               43

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF NANCY WILSON]
Nancy Wilson, Financial Manager

We plan to support this level of growth through a combination of cash flow from
operations and additional financing while maintaining a return on equity at or
above 14% and a net income at or above 5% of net revenue. Although we believe
that an appropriate target for a normal debt to equity ratio for our Company is
at or below .5 to 1, opportunities to conclude transactions may require us to
increase the amount of debt we carry beyond that limit. If the need to finance a
larger acquisition arises, we will seek to raise cash through additional share
issues.

Looking at the results of our current mix of project activity in the US and
Canada, we anticipate that our gross margin as a percentage of net revenue will
remain in the range of 52 to 54% for 2004 and that administrative expenses will
remain in the range of 39 to 41% of net revenue. We expect our effective tax
rate for 2004 to be between 36.5 to 37.5%. Although the federal Canadian
statutory tax rate will decrease by 2% in 2004, this reduction will be offset in
part by an increase in provincial statutory rates as well as an anticipated
increase in revenue from our US-based operations.

[UNIVERSITY COLLEGE OF THE CARIBOO CAMPUS
PLAN, BRITISH COLUMBIA (ARCHITECTURE & INTERIOR DESIGN PICTURE]

University College of the Cariboo Campus
Plan, British Columbia (Architecture & Interior Design

[PHOTO OF CRAIG RUARK]
Craig Ruark, Business Development Manager

44                                               Stantec Inc. 2003 Annual Report

<PAGE>
[GREAT FACES PF STANTC]

[PHOTO OF RICK GROSS]
Rick Gross, Senior Designer, Mechanical

[PHOTO OF BRENDA ARSENAULT]
Brenda Arsenault, Quality Control Coordinator

[PHOTO OF OREST KLUFAS]
Orest Klufas, Architect

[MISSION HILLS PARK, NEVADA (PLANNING & LANDSCAPE ARCHITECTURE]

Mission Hills Park, Nevada (Planing & Landscape Architecture
RISK

OPERATIONS

Like all professional services firms in the infrastructure and facilities
industry, Stantec is exposed to a number of risks in carrying out the day-to-day
activities of our operations. These operating risks include the following:

      -     Timing of completion and potential cancellation of client orders and
            projects

      -     Our ability to complete projects on schedule and within budget

      -     Our clients' satisfaction with the quality of our services

      -     Potential litigation through exposure to third-party claims

      -     Competition for new contracts, including pricing pressures

      -     Economic factors that impact the ability of clients to contract for
            our services

      -     Availability of qualified staff and personnel

      -     Quality of our clients and their credit risk

      -     Our ability to obtain the necessary licenses and permits to carry
            out our projects

      -     Risks associated with working in international locations.

We mitigate our operating risks through our business strategy and other
protective measures. As mentioned previously, our three-dimensional business
model of geographic, practice area, and life cycle diversification minimizes our
dependency on any particular industry or economic sector for our income. Stantec
also protects itself from exposure to competition by entering into a diverse
range of contracts with a wide range of fee amounts.

Stantec Inc. 2003 Annual Report                                               45

<PAGE>

To address the risk of competition for qualified personnel, we offer a number of
employment incentives, including training programs, employee share ownership
(for Canadian employees), and opportunities for professional development and
enhancement, along with compensation plans that we believe to be innovative,
flexible, and designed to reward top performance. As well, in 2003 we embarked
on an "employer of choice" initiative to maintain our ability to attract and
retain the most qualified staff.

Our Company also maintains insurance coverage for our operations, including
professional liability insurance. The maximum coverage under our professional
liability policy is generally $25 million per claim and per annum, with a per
claim deductible of $500,000 and an aggregate excess deductible of $2.5 million.
In September 2003, Stantec established a regulated captive insurance company to
insure and fund the payment of any professional liability self-insured
retensions related to claims arising after August 1, 2003. We, or our clients,
also obtain project-specific insurance for designated projects from time to
time. In addition, we invest resources in a Risk Management team dedicated to
providing Company-wide support and guidance on risk avoidance and professional
practices and procedures. One such practice is to carry out select client
evaluations, including credit risk appraisals, before entering into contract
agreements to reduce the risk of non-payment for our services.

In 2003 we launched a new project manager training program for our Company.
Requiring a passing score for each training module, the program is aimed at
skill development in risk mitigation, project planning, quality control and
assurance, and financial administration, among other project management
responsibilities. We believe that improved project management across our
operations will increase our ability to deliver projects on schedule and within
budget.

As well, we believe our experience and knowledge in conducting business outside
North America help us mitigate the risks of undertaking international projects.
This work involves political uncertainties, contracts with foreign clients, and
operating under foreign legal systems.

[CALGARY CENTRE FOR INNOVATIVE TECHNOLOGY,
ALBERTA (BUILDINGS ENGINEERING PICTURE]

Calgary Centre For Innovative Technology,
Alberta (Buildings Engineering)

46                                               Stantec Inc. 2003 Annual Report

<PAGE>
GREAT FACES OF STANTEC

MARKET

Our Company is also exposed to various market factors that can affect our
performance. Three such market risks include the availability of debt financing,
the impact of the rate of exchange between Canadian and US dollars, and the
effect of changes in interest rates. We minimize these risks by adhering to
solid financial practices and procedures.

As mentioned previously, our Company currently has a term loan and operating
facility with one financial institution. Although we have continued to meet
required covenant ratios, we have no assurance that debt financing will continue
to be available from our current lender or other financial institutions on
similar terms. As our need for debt financing increases, we will seek financing
from more than one financial institution.

Because significant portions of our Company's revenue and expenses are generated
or incurred in US dollars, we face the challenge of fluctuations in exchange
rates. To the extent that US-dollar revenues are greater than US-dollar expenses
in a strengthening US-dollar environment, we expect a positive impact on our
income from operations. Conversely, to the extent that US-dollar revenues are
greater than US-dollar expenses in a weakening US-dollar environment, we expect
a negative impact. This exchange rate risk primarily reflects, on an annual
basis, the impact of fluctuating exchange rates on the net difference between
total US-dollar professional revenues and US-dollar expenses. Other exchange
risk arises from our non-US-based foreign subsidiaries. The Company's income
from operations will be impacted by exchange rate fluctuations used in
translating these revenues and expenses. In addition, the impact of exchange
rates on the balance sheet accounts of our non-US-based foreign subsidiaries
will impact our operating results. We also continue to be exposed to exchange
rate risk for the US-dollar and other foreign currency-denominated balance sheet
items carried by our Canadian and International operations.

[SANMING WASTEWATER TREATMENT PLAN, LIANGYANG SANMING, CHINA (ENVIORANMENT
INFRASTRUCTURE PICTURE]

Sanming Wastewater Treatment Plan, Liangyang Sanming, China (Envioranment
Infrastructure

[PHOTO OF TIM LINES]
Tim Lines, Managing Principal,
Environmental Infrastructure
<PAGE>

In addition, changes in interest rates present a risk to our performance. All of
our Company's bank facilities (i.e., operating loans and acquisition loan) and
$87,000 of our outstanding promissory notes carry a floating rate of interest.
We estimate that, based on our balances at December 31, 2003, a 1% change in
interest rates would impact our earnings per share by approximately $0.02.

GREAT FACES OF STANTEC

[PHOTO OF CHRIS VAN BUSSEL SENIOR VICE PRESIDENT, URBAN LAND]

[PHOTO OF NIAGARA FALL CASINO/GATEWAY PROJECT, ONTANIO (PROGRAM & PROJECT
MANAGEMENT)]

[PHOTO OF MAHAWK/MC MASTER INSTIUTE FOR APPLIED HEALTH SCINCES, ONTARIO
(BUILDINGS ENGINEERING)]

[PHOTO OF ENVIROMENTAL EFFECT MANTITORING ONTTARIO (ENVIROMENTAL MANAGEMENT)]

[PHOTO OF MARY - ANNA MCQUADE, ADMINISTRATIVE ASSISTANT]

                                                 Stantec Inc. 2003 Annual Report

48
</TEXT>
</DOCUMENT>
