<DOCUMENT>
<TYPE>EX-99.7
<SEQUENCE>10
<FILENAME>t17577exv99w7.txt
<DESCRIPTION>EX-99.7
<TEXT>
<PAGE>

                                  STANTEC INC.

                               2003 ANNUAL REPORT

                                 [STANTEC LOGO]

<PAGE>

                                     STANTEC
                                   REPORT CARD
                                    1954-2004

                          STANTEC STARTED WITH A DREAM.

   And the dream continued to grow over the years. Our success did not happen
through circumstance or luck, but through innovation, adaptation, and hard work.
     Here is a report of our achievements over the past 50, 10, and 5 years.

<TABLE>
<CAPTION>
                           GOALS                         ACHIEVED                             COMMENTS
-------------------------------------------------------- -------- ------------------------------------------------------------
<S>                                                      <C>      <C>
50 YEARS AGO

1. Provide civil engineering services in western            -     Stantec provided engineering services for much-needed water
   Canada ..............................................          supply and sewage systems, roadwork, and bridges throughout
                                                                  Alberta during the 1950s. Today Stantec provides civil
                                                                  engineering services across North America.

2. Provide professional services internationally .......    -     Stantec secured its first international project in Malaysia
                                                                  in 1967. By 1970 the Company had projects in Malaysia,
                                                                  Jamaica, the Philippines, South Korea, Belize, and Vietnam.
                                                                  Today Stantec undertakes infrastructure projects around the
                                                                  world.

3. Diversify beyond the civil engineering                   -     Stantec added a broad variety of new services and
   disciplines .........................................          disciplines beyond civil engineering beginning in the late
                                                                  1970s and continuing through the '80s and '90s and into the
                                                                  new millennium.

4. Expand beyond western Canada ........................    -     By 1976 Stantec had five regional branch offices in Canada.
                                                                  The Company embarked on expansion into the US in 1991. Today
                                                                  Stantec has over 40 offices across North America.
10 YEARS AGO

5. Become a publicly traded company ....................    -     Stantec completed its initial public offering in March 1994.

6. Continue to expand services and locations ...........    -     Since 1994 Stantec has completed more than 40 acquisitions
                                                                  and increased staff numbers from about 900 to close to
                                                                  4,000.

5 YEARS AGO

7. Create a single-brand identity for the Company ......    -     Stantec consolidated its operations under a new global,
                                                                  single-brand identity in 1998. In 2003 Stantec undertook an
                                                                  initiative to enhance its brand recognition, launching an
                                                                  updated branding program that reflects the quality,
                                                                  strength, and vitality of the Company.

8. Refine the Company's business model .................    -     Stantec's unique 3-D business model of geographic
                                                                  diversification, practice area specialization, and provision
                                                                  of services in all phases of the infrastructure life cycle
                                                                  allows the Company to manage risk while growing revenue and
                                                                  earnings.

9. Grow the Company between 10 and 25% annually through     -     In 1998 Stantec established a vision to become one of the
   a 10-year growth plan ...............................          top 10 global design firms with 10,000 employees and $1
                                                                  billion in annual revenue by 2008. At the five-year mark,
                                                                  Stantec is a $460 million company with almost 4,000
                                                                  employees.

10. Strengthen internal systems and processes to support    -     Since 2000 Stantec has invested resources in developing its
    growth plan ........................................          systems and processes and training employees. In 2003 a new,
                                                                  integrated business information system was implemented for
                                                                  managing projects, financial information, human resources,
                                                                  and business intelligence.
</TABLE>

5-YEAR TRACK RECORD--HIGHLIGHTS

<TABLE>
<CAPTION>
  Years ended December 31        2003        2002          2001        2000        1999
 (in thousands of dollars)                (restated)    (restated)
---------------------------- -----------  ----------   -----------  ----------  ----------
<S>                          <C>          <C>          <C>          <C>         <C>
Gross revenue                   459,942      428,456      356,942      265,568     211,929
Net revenue                     391,396      365,148      298,772      221,263     169,908
Income before taxes              39,268       33,095       27,306       20,867      16,153
Net income                       25,070       20,192       15,370       11,226       8,561
Current assets                  177,629      163,261      121,267       94,183      82,735
Current liabilities             128,506       99,295       88,487       68,667      51,087
Property and equipment           67,670       51,747       41,371       36,938      19,875
Long-term debt                   31,159       41,730       15,652       13,893      15,013
Shareholders' equity            160,528      151,426      107,450       92,233      63,573
Gross revenue backlog           310,380      299,801      259,185      192,238     149,615
Net cash (bank indebtedness)
  position                       (9,808)      29,202       (7,145)       3,426       1,070

Earnings per share - basic         1.37         1.12         0.92         0.78        0.60
Earnings per share - diluted       1.31         1.07         0.88         0.76        0.59
Book value per share               8.76         8.28         6.38         5.54        4.46
Current ratio                      1.38         1.64         1.37         1.37        1.62
Debt to equity ratio               0.34         0.22         0.30         0.22        0.37
Price earnings ratio              16.13        14.91        13.99         9.94        9.20

Weighted average number of
  shares outstanding         18,329,960   17,987,358   16,742,730   14,374,264  14,308,660
Shares outstanding           18,327,284   18,282,720   16,846,340   16,668,340  14,247,970
Shares traded                 5,163,000    4,553,100    8,907,200    4,551,610   4,231,992
High                              23.48        20.50        14.25         8.00        5.75
Low                               14.50        12.88         7.25         5.25        4.85
Close                             22.10        16.70        12.88         7.75        5.50
</TABLE>

                                   [BAR CHARTS]
<PAGE>

2003 HIGHLIGHTS

-     Ranked #3 on The Zweig Letter Hot Firm 2003 List of the 100
      fastest-growing architecture and engineering firms in the US between 1999
      and 2002.

-     Achieved an increase in gross revenue of 7.3% to $459.9 million from
      $428.5 million in 2002, with net revenue increasing 7.2% to $391.4
      million, net income increasing 24.2% to $25.1 million, and basic earnings
      per share increasing 22.3% to $1.37.

-     Chosen by the US Federal Highway Administration to act as the prime
      contractor for the Long Term Pavement Performance (LTPP) Program in the
      North Central Region. This three-year assignment, which involves pavement
      performance studies in 15 north central states and two provinces, is the
      latest in a series of contracts undertaken with the LTPP Program over the
      past 15 years.

-     Ranked #54 on the Engineering News Record's listing of Top 150 Global
      Design Firms, rising from #61 in 2002 (ranking by fee volume).

-     Received the 2003 National Clean Water Act Recognition Award for Medium
      Advanced Plants from the US Environmental Protection Agency for the
      Kalispell Wastewater Treatment Plant Biological Nutrient Removal Process
      Expansion project in Montana.

-     Listed #28 on the Swedish Federation of Consulting Engineers and
      Architects' survey of the World's Top 200 Consulting Engineering and
      Architectural Groups, rising from #33 in 2002 (ranking by number of
      employees).

-     Awarded an assignment to design a water treatment plant for the Metro Air
      Park at the Sacramento International Airport that will be the first in
      California to comply with new arsenic content restrictions.

-     Continued to fulfill growth strategy by acquiring Architectura in
      Vancouver, British Columbia; ESG International in Guelph, Ontario; Optimum
      Energy Management in Calgary, Alberta; and the Inner Dimension Design
      Group in Regina, Saskatchewan. Following the first quarter of 2004, expect
      to create a new US region for the Company pending the completion of the
      planned acquisition of The Sear-Brown Group.

-     Awarded the Polo Ralph Lauren Warehouse Expansion project in Greensboro,
      North Carolina. The contract required the creation of a space to support a
      materials handling and storage system--an area equivalent to almost six
      football fields.

-     Named the Airport Revenue News' Best Concessions Poll 2003 1st Place
      Winner in three categories: Large Airports (Chicago O'Hare International
      Airport--Retail Master Plan and Design Guidelines project), Medium
      Airports (Chicago Midway Airport--Retail Planning and Design Guidelines
      project), and Small Airports (San Antonio Airport--Retail Space project).

[BAR CHART]

[BAR CHART]

[LINE GRAPH]

<PAGE>

[PICTURE]

<PAGE>

OUR VISION

Stantec's goal is to become one of the top 10 global design firms. To achieve
this vision, we will continue to pursue excellence in design and project
delivery and to follow an orderly growth plan that builds on our solid
foundation.

OUR PEOPLE

At Stantec our people are the backbone of our Company. In this annual report, we
are proud to feature 50 of the "Great Faces of Stantec"--employees who are
recognized by their peers as representative of our Company's spirit.

[50* YEARS LOGO]

Stantec Inc. 2003 Annual Report                                                1

<PAGE>

EVOLUTION

2003 was a milestone year in the evolution of our Company--our 50th year of
operation, our 10th year as a publicly traded company, and, I am proud to note,
my fifth year as President & CEO. We have arrived at this pivotal point in time
for our Company because we are united behind a common vision and committed to
putting our heart and soul into our projects with our clients, maintaining our
solid business principles, and pursuing an orderly growth plan through our
focused business model.

Our ability to adjust to changes in a challenging economic climate allowed us to
maintain our long-standing track record of strong performance in 2003. In doing
so, we achieved our 50th year of uninterrupted profitability--another impressive
milestone in our Company's history. Gross revenue increased to $459.9 million,
up 7.3% from 2002; net revenue increased to $391.4 million, up 7.2%; net income
increased to $25.1 million, up 24.2%; and basic earnings per share increased to
$1.37, up 22.3%. This consistent performance contributed to an increase of 32.7%
in shareholder value during the year.

[PICTURE OF TONY FRANCESCHINI]

Tony Franceschini, P.Eng., President & CEO

2                                                Stantec Inc. 2003 Annual Report

<PAGE>

In 2003 our focus was on continuing to evolve our dynamic Company, not by
changing our business model or operating philosophy, but by strengthening our
systems and processes to support our future. To this end, we undertook 11
Company-wide initiatives during the year, including a reorganization of our
balanced leadership organization structure, the implementation of a new business
information technology system, and investment in learning and training programs
for our employees. We also introduced an improved employee performance
development review process and human resources information management system.
With this solid foundation, we are ready to take advantage of any opportunity
that develops in the infrastructure and facilities professional services
industry.

Along with our internal infrastructure, we continue to unfold our growth plan,
adding the people, expertise, and services we need to gain momentum in our
marketplace. Stantec's business model is based on three key strategic
drivers--diversifying our operations in distinct geographic regions,
specializing in distinct but complementary practice areas, and providing
professional services in all phases of the infrastructure and facilities project
life cycle. In 2003 we strengthened our Company through the acquisition of four
firms. In Vancouver, British Columbia, we added Architectura, which expanded the
depth and breadth of our Architecture & Interior Design practice area to a
top-tier level across Canada. We also continued to strengthen and expand
existing operations in Regina, Saskatchewan, with the integration of the Inner
Dimension Design Group and in Calgary, Alberta, with the addition of Optimum
Energy Management. And we enhanced our Environmental Management practice by
adding ESG International in Guelph, Ontario.

Immediately following the first quarter of 2004, we expect to create a new US
region for our Company pending the completion of the planned acquisition of The
Sear-Brown Group. This upcoming acquisition will establish a presence for
Stantec in the US Northeast, providing a vital new market for our services and a
platform for further expansion. With Rochester, New York, as its hub, the region
will include eight locations in New York State as well as offices in Cleveland,
Ohio; State College, Pennsylvania; and Guaynabo, Puerto Rico. The integration of
Sear-Brown will also bring our Company into the US biopharmaceuticals sector. We
are excited about our expansion into this growing market and expect that it will
result in rewarding new business.

As Stantec continues to grow and develop, our financial condition remains robust
and liquid. We have a very strong balance sheet with a sustainable level of debt
and unused capacity in our existing credit facilities. This financial strength
positions us well to continue to pursue appropriate investments in our future.

Even as we reflect on how far we have evolved over the years, we are excited
about how far we can still develop. Stantec's current vision--which we
established in 1998--is to become one of the top 10 global design firms by the
year 2008, and in 2003 we reached the halfway mark in our 10-year growth plan.
To achieve our objective, we will continue to pursue excellence in design and
project delivery and to follow an orderly growth plan that builds on our solid
foundation. Our strategic focus is to extend our reach in North America and
selected international markets, where we see the potential to grow new regions
and develop new markets for our services.

Stantec Inc. 2003 Annual Report                                                3

<PAGE>

Throughout our rich history, we have remained true to the principles that guided
our founder, Dr. Don Stanley, in 1954: look after our clients, excel in our
work, operate cost effectively, and motivate our employees. Although advances in
technology have dramatically changed the way we deliver our projects, what we
deliver has not changed, namely, good client service. But where we were once a
local operation serving a few clients in northern Alberta, we are now a global
organization serving several thousand clients across North America and
internationally. With bold ideas and determination, our employees are still
generating great projects that enhance the quality of life all around us. Our
projects create the communities where we live, the fresh air we breathe, the
clean water we drink, and the safe roads we travel, among many other of life's
necessities.

The range of services we now offer in our specialist practice areas allows us to
undertake diverse projects of any size for both public and private sector
clients in our industry. Projects as diverse as the Alberta Heart Institute, the
Stallion Mountain Master Planned Community, the Lou Romano Water Reclamation
Plant, and the New Jersey Department of Transportation Pavement Management
Systems II project. In Edmonton, Alberta, we are proud to be acting as the prime
design consultant for the development of the Alberta Heart Institute, a new
state-of-the-art health care facility. Scheduled to open in 2005, the institute
will bring together the best in cardiac patient-care services, research, and
education to serve a population of approximately 1.6 million people across
Alberta and western Canada. In Las Vegas, Nevada, we are providing planning,
engineering, surveying, and landscape architecture services for the
redevelopment of a 260-acre (105-hectare) portion of the Stallion Mountain golf
course community for residential use. This project also includes lake
reclamation, a practice not commonly incorporated into land redevelopment. Our
skills are also being used in an expansion and upgrade to secondary treatment of
the Lou Romano Water Reclamation Plant, the largest capital work project to date
to be carried out by the City of Windsor in Ontario. In addition, we continue to
provide infrastructure management and pavement engineering services for the New
Jersey Department of Transportation Pavement Management Systems II project,
including analysis of all state-maintained and county roads, more than 20,000
miles (32,180 kilometres) of pavement.

Since our beginning, passion for our work has been a major force behind our
business. Like Dr. Stanley, we love what we do, and it shows in the success of
our Company. As we embark on the next 50 years of our evolution, we remain
committed to delivering the highest quality services and solutions to our
clients, honoring our time-proven business principles, and executing our focused
business strategy. It is indeed a pivotal point in time for our Company, and
with our talented, dedicated employees, we are taking hold of our future.

I wish to extend my sincere appreciation to our employees for their continued
commitment to our shared vision and to thank our board of directors, clients,
and shareholders for their ongoing confidence and support.

/s/ Tony Franceschini
------------------------
Tony Franceschini P.Eng.
President & CEO

4                                                Stantec Inc. 2003 Annual Report

<PAGE>

COMMUNITY INVESTMENT

Throughout our history, Stantec has been a caring company. Fifty years ago, our
founder, Dr. Don Stanley, himself a president of the local chamber of commerce
and active in the Rotary Club and the YMCA, expressly encouraged his first
employees to be involved in their communities in northern Alberta. Today, with
almost 4,000 people in our organization, we strive to enhance the knowledge,
prosperity, health, and quality of life of the communities in which we work
throughout North America. Through donations of our time, expertise, and funds,
we formally support endeavors in five major categories: youth and education,
health, community service, arts, and public/civic affairs.

For example, in 2003 Stantec's office in Kitchener, Ontario, acted as one of 18
sponsors of the Solar Technology Education Project at the University of Waterloo
(U of W) in Ontario. This initiative, the first-ever student-designed solar
project at a university campus in Canada, involves the installation of 36 solar
panels on the roof of the U of W's Federation Hall. The students' goal is to use
the solar array as a demonstration project for promoting awareness of renewable
energies and solutions for climate change. Our Company donated enough funds to
the project to buy four of the 36 panels.

Driven by their community spirit, Stantec staff in Salt Lake City, Utah, joined
other members of the Utah division of the American Consulting Engineers Council
as volunteers in a yearlong community service campaign to assist municipalities
in the Salt Lake City area with local activities. Over the year, they
participated in a cleanup of Jordan River, a blood drive, and Fish Daze.
Complete with casting contests, Fish Daze was a festival celebrating the opening
of a new park and fishing pond--stocked with trout--in Murray City.

In Edmonton, Alberta, staff representing Stantec searched their closets for
outrageous outfits to wear while playing in the first annual Henry Singer "Bad
Pants" Open golf tournament held to raise funds for the new Alberta Heart
Institute. Slated for completion in 2005, this prestigious health care facility
will provide the most advanced treatment and research available in cardiac
patient-care today. Stantec is also supporting the institute through a five-year
pledge of funds, and representatives of the Company currently sit on the Alberta
Heart Institute Strategy Council.

Throughout the year, successful fundraising campaigns in all Stantec locations
resulted in donations to the United Way, the Juvenile Diabetes Research
Foundation, the American Cancer Association, the Heart and Stroke Foundation,
the Canadian Cancer Society, and many other worthwhile organizations.

These are only a few examples of the many ways Stantec is a caring company,
continuing our legacy of helping to build strong communities where we live and
work across North America.

Stantec Inc. 2003 Annual Report                                                5

<PAGE>

[PHOTO]

Our Company's three presidents (circa 1998)--Tony Franceschini (1998 to
present), Dr. Don Stanley (1954 to 1983), and Ron P. Triffo (1983 to 1998).

EVOLUTION OF A COMPANY

Our Company began 50 years ago with a dream. Our founder, Dr. Don Stanley, a
Harvard graduate in environmental engineering, set out to improve the quality of
life in small towns in western Canada by designing innovative, economically
feasible municipal water supply and sewage systems. In 50 short years, we have
evolved from his one-person consulting engineering business working out of a
250-square foot office in Edmonton, Alberta, into an almost 4,000-person
multidiscipline design firm operating from over 40 offices across North America.
Our success has not happened by circumstance or luck, but by innovation,
adaptation, and hard work.

6                                                Stantec Inc. 2003 Annual Report

<PAGE>

From the beginning, we built the Company on solid business practices focused on
operating efficiently and providing quality services--a straightforward, elegant
approach that launched a 50-year tradition of meeting our clients' needs and
achieving consistent, profitable growth in revenue and earnings. From this
foundation, we have developed a sustainable business model that allows us to
manage risk while continuing to pursue an orderly growth plan. It is a
three-dimensional model based on diversifying our operations across geographic
regions, practice areas, and all phases of the infrastructure and facilities
project life cycle.

But even a brilliant business model is of little value without great people to
execute it. It takes passionate and dedicated employees to sustain a successful
business for 50 years. Throughout our history, our people have been the backbone
of our Company, contributing the talent, expertise, and skills that define our
projects and culture. With a deep commitment to excellence in project design and
delivery and the enthusiasm to seek out new opportunities for the future, they
continue to empower our growth and development.

At Stantec our goal is to become one of the top 10 global design firms, and our
track record shows that we can deliver. People, passion, and progress have made
our Company what it is today and created the foundation for what it will be
tomorrow. In the pages that follow, we invite you to examine our performance,
look at the depth and breadth of our capabilities, and then assess both our
position and strategy for long-term growth. We are confident that you will see a
Company that can continue to create value for our clients, shareholders, and
employees well into the future.

[PICTURE]

In 1962 the Company operated from offices above a local grocery store in
Edmonton, Alberta.

[PICTURE]

Today our Company is headquartered at Stantec Centre, a three-tower office
complex in downtown Edmonton.

Stantec Inc. 2003 Annual Report                                                7

<PAGE>

50 YEARS AGO ...

[PICTURE]

In 1957 we were involved in a transportation study of 86th Avenue in Edmonton.

We set a goal to provide much-needed civil engineering services in western
Canada.

In 1954 our founder, Dr. Don Stanley, traveled 27,000 kilometres (17,000 miles)
in four months offering "sanitary engineering" services to communities in rural
Alberta, British Columbia, and Saskatchewan, which were still primarily
agricultural. He was initially awarded two small projects in Irma and Rycroft,
Alberta. As a result of his promotional efforts, the Company's main work in the
first few years was upgrading small towns in western Canada from outhouses,
wells, and septic tanks to municipal water supply and sewage systems. With the
addition of partners with long-time experience in transportation, the Company
also focused on designing roadwork and bridges throughout Alberta, including
overpasses, underpasses, and railway and river crossings. In 1957 we were the
first engineering company to carry out transportation and traffic studies for
the City of Edmonton. The following year the Company was part of an engineering
team involved in redesigning the Peace River Bridge at Taylor, British Columbia,
on the Alaska Highway. That year we also undertook our first sanitary
engineering project in British Columbia--the design of a sewage treatment plant
in Penticton.

8                                                Stantec Inc. 2003 Annual Report
<PAGE>

[PHOTO OF DR. DON STANLEY]

Dr. Don Stanley was one of the first North Americans to earn a doctorate in
environmental engineering from Harvard University in 1952.

[PICTURE]

In 1958 work began on the first sewage treatment plant in Penticton, British
Columbia.

The 19th Street Bridge in Saskatoon, Saskatchewan, was one of our early bridge
projects.

[PICTURE]

The traffic and transportation studies we conducted for the City of Edmonton in
1957 included access roads to the Low Level Bridge.

[PICTURE]

In the early 1960s, we completed feasibility studies for the 127th Street
Underpass project and other railway crossings in Edmonton.

[PICTURE]

Stantec Inc. 2003 Annual Report                                                9

<PAGE>

[PICTURE]

Boats in the Kuala Lumpur area of Malaysia, where we undertook our first
international project in 1967.

[PHOTO]

Dr. Stanley (second from left) traveled to Kingstown, Jamaica, to sign the Four
Towns Water Supply Studies and Designs project contract.

[PICTURE]

The road design project we completed in Zambia in the 1980s involved training of
over 300 local employees.

WE SET A GOAL TO PROVIDE SERVICES INTERNATIONALLY.

Guam was one of the locations where our International group worked in the 1980s
designing a water treatment plant.

[PICTURE]

With close to 50 employees, we obtained our first international project--a
review of a sewerage system--in Kuala Lumpur, Malaysia, in 1967. Other
international projects soon followed, including a study and review of proposed
water supply systems for approximately 250,000 people in four towns in Jamaica.
By 1970 we were completing projects in Malaysia, Jamaica, the Philippines, South
Korea, Belize, and Vietnam--all managed from our western Canada operations. And
in 1977 we officially established our International group to focus on services
and projects in water resources engineering, highway and transportation
planning, solid waste management, and buildings for overseas clients. Our
international expertise was recognized in 1983 when we were one of 14 companies
to receive the Canada Export Award for our initiative, perseverance, and
entrepreneurial flair as well as earning Alberta's top export honor, the
International Marketing Award. Today our International group provides services
in the Caribbean as well as undertaking individual project assignments with
clients in designated areas around the world.

10                                               Stantec Inc. 2003 Annual Report

<PAGE>

WE SET A GOAL TO DIVERSIFY BEYOND THE TRADITIONAL CIVIL ENGINEERING DISCIPLINES.

Following our first 20 years, when our focus was engineering design for water
supply, sewage, and transportation projects, we set out to diversify our
services in 1976. That year, with five regional branch offices and over 165
employees, we completed our first acquisition--of Calgary firm Strong, Lamb, and
Nelson--adding 125 staff to our family as well as services in the urban land
area. The subsequent acquisition of Cheriton Associates established our presence
in the buildings market with mechanical and electrical engineering services. We
continued to add new services beyond the traditional civil engineering
disciplines during the early 1980s, and in 1983 management implemented a major
diversification of services as well as geographic expansion. The acquisition of
Pavement Management Systems Ltd. in 1984 helped us realize this goal, adding
state-of-the-art technology and services in pavement infrastructure management.
By 1985 our Saskatchewan operation had developed a leading capability in the gas
distribution field, and we continued to evolve expertise in water and wastewater
plant design--to a level without parallel in western Canada--as well as the
strongest light rail transit design and project management capability in the
region. With further growth in the late '80s and early '90s came the addition of
interior design services, industrial electrical expertise, and structural
engineering services for bridges and sports facilities.

Diversification allowed us to enter the industrial sector, where we obtained
projects such as the design of the Sulfer Works Sulphur Plant in the 1990s.

[PICTURE]

The addition of structural engineering services helped us secure the Saddledome
Parkade project in Calgary, Alberta, in the 1980s.

[PICTURE]

We added services in the urban land area through our first acquisition in 1976.

[PICTURE]

We entered the airports and aviation sector in the 1980s, providing structural
engineering services for the Calgary International Airport.

[PICTURE]

Stantec Inc. 2003 Annual Report                                               11

<PAGE>

WE SET A GOAL TO EXPAND BEYOND WESTERN CANADA.

Our Company grew gradually throughout the early years, first expanding to
British Columbia and Saskatchewan and then to Manitoba. By 1976 we had
established five regional branch offices in Canada. Our operations continued to
grow in Canada through the 1980s--including expansion to Ontario--with employee
numbers topping 500. In 1991 we embarked on expansion into the US with our first
US acquisition, in Phoenix, Arizona. The addition established a base for
specialty services and future growth in the Southwest. Our early US project work
included providing pavement management and consulting services in the airports
and aviation area for the Phoenix Sky Harbor International Airport and its two
satellite facilities.

[PHOTO OF RON.P.TRIFFO]

Ron P. Triffo was appointed President of the Company in 1983.

[PICTURE]

One of our early US projects was providing pavement management services for the
Phoenix international airport.

[PICTURE]

We began providing urban land services for residential community developments in
Arizona in the early 1990s.

[PICTURE]

Expansion to Ontario led to providing environmental infrastructure services for
facilities such as the Canadian War Museum in Hamilton.

12                                               Stantec Inc. 2003 Annual Report

<PAGE>

10 YEARS AGO . . .

[PICTURE]

Our Company completed its initial public offering in 1994.

[PICTURE]

The Alberta-Pacific Athabasca Pulp Mill project, completed in 1993, brought us
into the forest products sector.

[PICTURE]

Work began on McKenzie Lake, a residential community development in Calgary,
Alberta, in 1988 and continued into the 1990s.

WE SET A GOAL TO BECOME A PUBLICLY TRADED COMPANY.

With a proven track record of 40 years of uninterrupted profitability to our
credit, we completed an initial public offering in March of 1994 to make room
for a transition in ownership and to support a new plan to raise capital for
growth. The Company was listed on the Toronto Stock Exchange, and the move was
eminently successful. In the years since, our gross revenue, net income, and
basic earnings per share have grown at an impressive compound average annual
rate of 20%, 22%, and 15% respectively. Our consistent performance has improved
shareholder value by over 500% during this period.

Stantec Inc. 2003 Annual Report                                               13

<PAGE>

[PICTURE]

We grew our industrial services to include engineering design for the automotive
manufacturing industry through acquisitions completed in 1997.

[PICTURE]

Our involvement with the Confederation Bridge, a co-structural design and
construction management project 10 years in the making, earned us a global
reputation in bridge design.

[PICTURE]

Since the early 1990s, we have evolved a leading capability in biological
nutrient removal process design for advanced wastewater treatment.

[PICTURE]

Through expansion in the southwest US, we provided landscape architecture
services for the New York, New York Hotel and Casino project in Las Vegas,
Nevada, in 1997.

We reaffirmed our goal to continue growing the Company by expanding our services
and geographic locations.

In 1995 we reached a major milestone in our evolution when our employee numbers
topped 1,000 following the completion of six major acquisitions that
strengthened our market position in Manitoba, Alberta, Arizona, and the Ottawa
area of Ontario. Two years later, the addition of regional leader Paragon
Engineering marked another major Ontario expansion. Further acquisitions in 1997
quickly increased our staff numbers to 1,700. Altogether, since 1994 we have
integrated over 40 firms and more than 2,800 employees into the Stantec family
from throughout Canada, the US, and the Caribbean.

14                                               Stantec Inc. 2003 Annual Report

<PAGE>

Tony Franceschini became President & CEO in 1998.

[PHOTO OF TONY FRANCESCHINI]

5 years ago ...

We set a goal to create a single-brand identity for our Company.

To support our business model, we launched a new global, single-brand identity,
Stantec, in 1998 and began to deliver all Company professional services through
an integrated, client-focused approach. Prior to that time, we had several
identities in different regions, including Stanley in western Canada and
Stantech in the southwest US. The move was a major achievement--in a two-month
period, we sought and received shareholder approval to change the name of over
30 companies and 2,000 staff, completely rearranged our marketing materials,
business cards, and letterheads, and informed all our clients. In 2003 we
undertook another exciting Company-wide initiative to enhance our brand
recognition, rolling out an updated branding program--including new stationery
and marketing materials--that proudly reflects the quality, strength, and
vitality of our Company.

[STANTEC LOGO]

The Stantec logo adopted in 1998 includes a globe with a stylized S. It is the
end product of a process that started 50 years ago when Dr. Stanley first used
the letter S to brand the Company.

[PICTURE]

In 2003 we updated our branding program to strengthen our brand recognition.

Stantec Inc. 2003 Annual Report                                               15

<PAGE>

WE SET A GOAL TO REFINE OUR BUSINESS MODEL.

Geographic diversification: Growth in Ontario's Greater Toronto Area in 2002 led
to providing project management services for the development of the National
Trade Centre.

[PICTURE]

Practice area specialization: Acquisitions completed in 2002 and 2003
strengthened our Environmental Management practice area, giving us one of the
largest ecotoxicity testing labs in North America.

[PICTURE]

Infrastructure life cycle: Projects like the Canada Sound Stage, involving the
reuse of a historic building, increased our work in the maintenance phase in
2002.

[PICTURE]

In the late 1990s, we introduced a focused, three-dimensional business model to
enable us to manage risk while pursuing our objective of continuing to grow our
revenue and earnings. Focused on the infrastructure and facilities sector, it
incorporated geographic diversification, practice area specialization, and
provision of services in all phases of the infrastructure life cycle. The model
promised to ensure that we would not be dependent on any single geographic
region, practice area, or life cycle solution for our business.

Five years later, our model has proven to be sustainable. Today we operate in
four geographic regions in North America--Canada West, Canada Central, the US
Southwest & West, and the US Southeast. In total we have offices in five
provinces and 11 states. We also serve selected international markets in the
Caribbean as well as working with clients in designated areas around the world.
We provide services in 16 distinct specialist practice areas grouped into five
market segments--Buildings, Environment, Industrial, Transportation, and Urban
Land. And we offer specialized services in five life cycle phases--planning,
design, construction, maintenance, and decommissioning. By cross-selling our
expertise among our regions and practice areas, we are able to offer a full
complement of services delivered through one source to clients in both the
public and private sectors.

As we evolve, we continue to strengthen our model by expanding our geographic
reach, bolstering our practice areas, and increasing our work in the five life
cycle phases. In 2003 we achieved several key growth objectives--strengthening
our existing services and operations in Regina, Saskatchewan; boosting our
Architecture & Interior Design and Environmental Management practices to a
top-tier level across the Company; and adding specialized energy management
services to our Power, Resources & Chemicals practice area. Following the first
quarter of 2004, we will celebrate the creation of a new US Northeast region for
our Company, with additional offices in New York, Ohio, Pennsylvania, and Puerto
Rico. Our plan going forward is to continue our growth in all current regions
while expanding outside our existing regions by integrating firms that provide
services in our services matrix. In addition, our strategy is to increase the
depth of our expertise in our current practice areas, particularly in the
Transportation and Environment market segments, both within and outside our
existing regions. We are also excited about the opportunities we will have to
grow services in the biopharmaceuticals sector as a result of the acquisition to
be completed following the first quarter of 2004.

16                                               Stantec Inc. 2003 Annual Report

<PAGE>

[PICTURE]

We are boosting our reputation for creative architectural design through
projects like the futuristic Lake City Skytrain Station in Burnaby, British
Columbia.

[PICTURE]

Our growth to a full-service multidiscipline design firm is evidenced by the
Alberta Heart Institute project in Edmonton for which we are acting as the prime
design consultant.

[PICTURE]

Through projects like the Ellerslie Overpass in Edmonton, we are building on our
strong foundation in roadwork and bridge design.

WE SET A GOAL TO GROW THE COMPANY BETWEEN 15 AND 25% ANNUALLY THROUGH A 10-YEAR
GROWTH PLAN.

In 1998 we took another bold step to facilitate our growth, setting a goal to
become one of the top 10 global design firms with 10,000 employees and $1
billion in annual revenue by the year 2008. The 10-year plan established to
reach this objective relies on growing our Company between 15 and 25% annually,
and at the five-year mark, we are squarely on schedule. Stantec is now a $460
million company with close to 4,000 employees operating out of more than 40
offices. In 2003 our size earned us a 54th-place ranking on the Engineering News
Record's list of Top 150 Global Design Firms, rising from #61 in 2002, and a
28th-place listing on the Swedish Federation of Consulting Engineers and
Architects' survey of the World's Top 200 Consulting Engineering and
Architectural Groups. We were also ranked among the top three hot firms on The
Zweig Letter Hot Firm List--which monitors the fastest-growing architecture and
engineering firms in the US--for the third consecutive year.

Stantec Inc. 2003 Annual Report                                               17

<PAGE>

WE SET A GOAL TO STRENGTHEN OUR INTERNAL SYSTEMS AND PROCESSES TO SUPPORT OUR
GROWTH.

At Stantec we know that our growth to 10,000 employees and $1 billion in annual
revenue will require not only a focused, sustainable business model but also a
solid, integrated infrastructure and well-trained, informed, and equipped staff.
To this end, since the year 2000 we have invested resources in developing our
internal systems and processes and providing ongoing training for our employees.
The first phase of improvement focused on ensuring that our information
technology systems were secure and manageable by moving to 100% hardware and
software compliancy and compatibility across the Company. In 2003 we completed
the second phase--the implementation of a new, integrated business information
system for managing our projects, financial information, human resources, and
business intelligence. We also refined our organization structure during the
year, as well as initiating training programs to support our employees and
introducing an improved employee performance development review process and
human resources information management system. During 2004, we will continue to
update our internal systems and processes in order to keep our staff among the
best-trained, best-informed, and best-equipped employees in our industry and to
maintain a solid base for further growth.

[PICTURE]

Our Marketing Knowledge Center, introduced in 2003, provides employees with a
full range of marketing materials, tools, and information.

[PICTURE]

In 2001 we implemented our Company intranet--StanNet--a Web-based information
resource for all Stantec employees.

[PICTURE]

Since 2000 we have moved to 100% hardware and software compliancy and
compatibility across the Company to ensure the security of our information
technology systems.

18                                               Stantec Inc. 2003 Annual Report

<PAGE>

[PICTURE]

We continue to be recognized as an innovator of environmental solutions that
promote sustainability, including providing biological monitoring services.

[PICTURE]

We look forward to evolving services in the growing biopharmaceuticals sector,
where we are providing project management services for the development of the
Centre for Cellular and Biomolecular Research in Toronto, Ontario.

STANTEC'S SUCCESS ...

Stantec's success did not happen overnight. It was built by decades of
perseverance, determination, and hard work. As we complete our 50th year in
business, we are committed to ensuring that the next 50 years are as remarkable
as the first.

At Stantec we have the same objectives for the future that we have always had in
the past--to grow our Company responsibly and to deliver high-quality services
that contribute positively to the world around us. We are confident that we can
achieve our goals because we have built an organization of dedicated people with
the spirit, imagination, and commitment to execute our operating plan. Ours is a
sustainable, long-term strategy backed by sound business principles, financial
strength, and passion for our work. Through brilliant execution and ongoing
expansion of our professional services, we will continue to create
uncompromising value for our clients, employees, and shareholders.

At Stantec we have inherited a strong legacy of passion, commitment, and bold
ideas, and we are dedicated to carrying on that legacy for decades to come.

We are strengthening our ability to provide bold, innovative solutions in the
Power, Resources & Chemicals practice area.

[PICTURE]

Stantec Inc. 2003 Annual Report                                               19

<PAGE>

[PICTURE]

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.

20                                               Stantec Inc. 2003 Annual Report

<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.

Tallyn's Reach Community Development, Colorado (Urban Land Engineering)

[PICTURE]

Concrete Field Testing, Nevada (Quality Control/Assurance)

[PICTURE]

Stantec Inc. 2003 Annual Report                                               21

<PAGE>

GREAT FACES OF STANTEC

[PICTURE]

Garry Leveck, Vice President, Transportation

[PICTURE]

Teri Livengood, Senior Engineering Coordinator

[PICTURE]

CN Tower Redevelopment, Ontario (Program & Project Management)

[PICTURE]

Susan Radke, Accounting Manager

Linda Stavros, Human Resources Representative

[PICTURE]

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.

22                                               Stantec Inc. 2003 Annual Report

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF OUIDO NEWMAN]

Ouida 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]

Jim Drescher, Managing Principal, Urban Land

[PICTURE]

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

[PHOTO OF DOUG HAMMING]

Doug Hamming, Senior Associate, Architecture & Interior Design

Stantec Inc. 2003 Annual Report                                               23

<PAGE>

[PICTURE]

Creekside Shopping Center, California (Planning & Landscape Architecture)

GREAT FACES OF STANTEC

Gerrie Whittle, Receptionist

[PHOTO OF GERRIE WHITTLE]

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.

24                                               Stantec Inc. 2003 Annual Report

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF ZOE SHIELDS]

Zoe Shields, Administrative Assistant

[PHOTO OF ALICE TEMPLETON]

Alice Templeton, Administrative Services Manager

[PHOTO OF PRIYATOSH RAY]

Priyatosh Ray, Engineer, Environmental Infrastructure

KEY PERFORMANCE DRIVERS

At Stantec our success depends on our ability to attract and retain qualified
people; maximize market opportunities; find, acquire, and integrate firms and/or
new employees into our operations; finance our growth; and achieve a top-three
market penetration in the geographic areas we serve. In 2003 we focused on
strengthening these performance drivers and on building our organization,
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
professional services to the infrastructure and facilities industry in the
geographic areas we serve.

[PICTURE]

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

Stantec Inc. 2003 Annual Report                                               25

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF MARTY CREW]

Marty Crew, Senior Associate, Quality Control/Assurance

[PICTURE]

Surrey Memorial Hospital Ambulatory Care Centre, British Columbia (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.

[PHOTO OF RAINER FASSLER]

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,

[PHOTO OF RAINER FASSLER]

26                                               Stantec Inc. 2003 Annual Report

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF ABIGAIL MAYRENA]

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]

Ken Duncan, Consultant, Urban Land

[PHOTO OF IDA ROWAT]

Ida Rowat, Marketing Coordinator

[PICTURE]

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]

Brad Frizzell, Principal, Urban Land

[PHOTO OF LISA THOMPSON]

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

[PICTURE]

Stallion Mountain Community Development, Nevada (Urban Land Engineering)

28                                               Stantec Inc. 2003 Annual Report

<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF BRIAN KUGLER]

Brian Kugler, Civil Engineer

[PHOTO OF MARTIN JONES]

Martin Jones, Managing Principal, Urban Land

[PHOTO OF HT LAM]

HT Lam, Associate, Planning & Landscape Architecture

Winnipeg Main Street Streetscaping, Manitoba (Planning & Landscape Architecture,
Transportation Infrastructure)

[PICTURE]

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]

Claire Gaudet, Administrative Assistant

[PICTURE]

Ottawa Macdonald-Cartier International Airport, Ontario (Architecture & Interior
Design, Surveys/Geomatics)

[PICTURE]

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

[PHOTO OF MICHELLE GLASKIN-CLAY]

Michelle Glaskin-Clay, Executive Assistant

[PHOTO OF JOHN KRUG]

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.

30                                               Stantec Inc. 2003 Annual Report
<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.

GREAT FACES OF STANTEC

[PHOTO OF JOHN TAKE]

John Take, Office Leader

[PHOTO OF HAYLEY HENDRICKS PARK, NEVADA]

Hayley Hendricks Park, Nevada (Planning & Landscape Architecture)

[PHOTO OF BURLINGTON CANAL LIFT BRIDGE, ONTARIO (TRANSPORTATION INFRASTRUCTURE)]

Burlington Canal Lift Bridge, Ontario

[PHOTO OF ALAN GEE]

Alan Gee, Manager, Human Resources

                                                 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>

GREAT FACES OF STANTEC

[Photo of Robin Campbell]

Robin Campbell, Technologist, Planning & Landscape Architecture

[PHOTO OF TUWANNA WOOD]

Tuwanna Wood, Accountant

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.

[PHOTO OF MESA TRANSIT MAINTENANCE OPERATIONS FACILITY, ARIZONA]

Mesa Transit Maintenance Operations Facility, Arizona (Transportation

Infrastructure)

                                                 Stantec Inc. 2003 Annual Report

34
<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF LEXWEBSTER]

Lex Webster, Project Manager, Buildings Engineering

[PHOTO OF CARLYLE PLACE SENIOR LIVING COMMUNITY, GEORGIA]

Carlyle Place Senior Living 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
                                                            ------------------------------  -------------------
                                                                        2002        2001     2003        2002
                                                             2003     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.

TheCompany'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>

[BAR 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

                                                 Stantec Inc. 2003 Annual Report

36
<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%.

[BAR GRAPH]

[BAR 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.

[BAR 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

                                                 Stantec Inc. 2003 Annual Report

38
<PAGE>

[PHOTO OF THE FARM AT ARAPAHOE COUNTY COMMUNITY DEVELOPMENT, COLORADO]

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

GREAT FACES OF STANTEC

[PHOTO OF GORDON FORBES]

Gordon Forbes, Structural Engineer, Buildings 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:

<TABLE>
<CAPTION>
CONTRACTUAL OBLIGATIONS
(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

                                                 Stantec Inc. 2003 Annual Report

40
<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF BOB DAWSON]

Bob Dawson,Vice President, Environment

[PHOTO OF DEBRA MOLLET]

Debra Mollet, Civil Engineer, Urban Land

Dan Richert, Technologist, Environmental Management

[PHOTO OF DAN RICHERT]

[PHOTO OF WILLIAMS CAFETERIA, NORTH CAROLINA AGRICULTURE AND TECHNICAL STATE
UNIVERSITY, NORTH CAROLINA]

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, Associate, 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

                                                 Stantec Inc. 2003 Annual Report

42
<PAGE>

GREAT FACES OF STANTEC

[PHOTO OF MICHAEL UNGER]

Michael Unger, Managing Principal, Urban Land

[PHOTO OF TREVOR PASIKA]

Trevor Pasika, Survey Technologist

[PHOTO OF JUDI STEWART]

Judi Stewart, Senior Marketing Coordinator

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 INDEPENDENCE BOULEVARD UTILITY RELOCATION EVALUATION, NORTH CAROLINA]

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.

[PHOTO OF UNIVERSITY COLLEGE OF THE CARIBOO CAMPUS PLAN, BRITISH COLUMBIA]

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

[PHOTO OF CRAIG RUARK]

Craig Ruark, Business Development Manager

                                                 Stantec Inc. 2003 Annual Report

44
<PAGE>

GREAT FACES OF STANTEC

[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

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

Mission Hills Park, Nevada (Planning & 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.

[PHOTO OF CALGARY CENTRE FOR INNOVATIVE TECHNOLOGY, ALBERTA]

Calgary Centre for Innovative Technology, Alberta (Buildings Engineering)

                                                 Stantec Inc. 2003 Annual Report

46
<PAGE>

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.

GREAT FACES OF STANTEC

[PHOTO OF TIM LINES]

Tim Lines, Managing Principal, Environmental Infrastructure

[PHOTO OF SANMING WASTEWATER TREATMENT PLANT,LIANGYANG SANMING,
CHINA]

Sanming Wastewater Treatment Plant,Liangyang Sanming, China(Environmental
Infrastructure)

Stantec Inc. 2003 Annual Report

                                                                              47
<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]

Chris Van Bussel, Senior Vice President, Urban Land

[PHOTO OF MOHAWK/MCMASTER INSTITUTE FOR APPLIED HEALTH SCIENCES, ONTARIO]

Mohawk/McMaster Institute for Applied Health Sciences, Ontario (Buildings
Engineering)

[PHOTO OF NIAGARA FALLS CASINO/GATEWAY PROJECT, ONTARIO]

Niagara Falls Casino/Gateway Project, Ontario (Program & Project Management)

[PHOTO OF ENVIRONMENTAL EFFECTS MONITORING, ONTARIO]

Environmental Effects Monitoring, Ontario (Environmental Management)

[PHOTO OF MARY-ANNA MCQUADE]

Mary-Anna McQuade, Administrative Assistant

                                                 Stantec Inc. 2003 Annual Report

48
<PAGE>

                                Management Report

The annual report, including the consolidated financial statements, is the
responsibility of the management of the Company. The consolidated financial
statements were prepared by management in accordance with Canadian generally
accepted accounting principles. Where alternative accounting methods exist,
management has chosen those it considers most appropriate in the circumstances.
The significant accounting policies used are described in note 1 to the
consolidated financial statements. Certain amounts in the financial statements
are based on estimates and judgments relating to matters not concluded by
year-end. The integrity of the information presented in the financial statements
is the responsibility of management. Financial information presented elsewhere
in this annual report has been prepared by management and is consistent with the
information in the consolidated financial statements.

Management is responsible for the development and maintenance of systems of
internal accounting and administrative controls of high quality. Such systems
are designed to provide reasonable assurance that the financial information is
accurate, relevant, and reliable and that the Company's assets are appropriately
accounted for and adequately safeguarded.

The Board of Directors is responsible for ensuring that management fulfills its
responsibilities and for final approval of the annual consolidated financial
statements. The Board has appointed an Audit Committee comprising three
Directors, none of whom is an officer or employee of the Company or its
subsidiaries. The Audit Committee meets at least four times each year to
discharge its responsibilities under a written mandate from the Board of
Directors. The Audit Committee meets with management and with the external
auditors to satisfy itself that they are properly discharging their
responsibilities, reviews the consolidated financial statements and the
Auditors' Report, and examines other auditing and accounting matters. The Audit
Committee has reviewed the audited consolidated financial statements with
management, including a discussion of the quality of the accounting principles
as applied and significant judgements affecting the Company's consolidated
financial statements. The Audit Committee has discussed with the external
auditors the external auditors' judgements of the quality of those principles as
applied and judgements noted above. The consolidated financial statements have
been reviewed by the Audit Committee and approved by the Board of Directors of
Stantec Inc.

The consolidated financial statements have been examined by the shareholders'
auditors, Ernst & Young LLP, Chartered Accountants. The Auditors' Report
outlines the nature of their examination and their opinion on the consolidated
financial statements of the Company. The external auditors have full and
unrestricted access to the Audit Committee, with or without management being
present.

/s/ Tony Franceschini P.Eng.             /s/ Don Wilson CA
Tony Franceschini P.Eng.                 Don Wilson CA
President & CEO                          Vice President & CFO
February 20, 2004                        February 20, 2004

Stantec Inc. 2003 Annual Report

                                                                              49
<PAGE>

                                Auditors' Report

To the Shareholders of
STANTEC INC.

We have audited the consolidated balance sheets of STANTEC INC. as at December
31, 2003 and 2002 and the consolidated statements of income and retained
earnings and cash flows for the years then ended. These financial statements are
the responsibility of the company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at December 31, 2003
and 2002 and the results of its operations and its cash flows for the years then
ended in accordance with Canadian generally accepted accounting principles.

/s/ Epxst & young LLP
CHARTERED ACCOUNTANTS
Edmonton, Canada
February 20, 2004

                                                 Stantec Inc. 2003 Annual Report

50
<PAGE>

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
As at December 31                                                             2003          2002
(in thousands of dollars)                                                       $            $
-------------------------                                                    -------      --------
<S>                                                                          <C>          <C>
                                                                                          restated
                                                                                          [note 2]
ASSETS [note 7]
CURRENT
Cash and cash equivalents                                                      7,343        29,202
Accounts receivable                                                           87,101        85,940
Costs and estimated earnings in excess of billings                            67,094        35,752
Income taxes recoverable                                                       6,921           807
Prepaid expenses                                                               3,246         3,362
Future income tax assets [note 13]                                             5,924         8,198
                                                                             -------      --------
                                                                             177,629       163,261
Property and equipment [note 4]                                               67,670        51,747
Investment in associated companies                                             1,844         1,264
Investments - other                                                            1,137         1,471
Goodwill [note 5]                                                             69,696        72,423
Intangible assets [note 6]                                                     5,112         4,817
Future income tax assets [note 13]                                             3,487         4,018
                                                                             -------      --------
                                                                             326,575       299,001
                                                                             =======      ========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Bank indebtedness [note 7]                                                    17,151             -
Accounts payable and accrued liabilities                                      70,255        57,413
Billings in excess of costs and estimated earnings                            16,882        12,706
Current portion of long-term debt [note 8]                                    13,416        20,526
Future income tax liabilities [note 13]                                       10,802         8,650
                                                                             -------      --------
                                                                             128,506        99,295
Long-term debt [note 8]                                                       31,159        41,730
Future income tax liabilities [note 13]                                        6,382         6,550
                                                                             -------      --------
                                                                             166,047       147,575
                                                                             -------      --------

COMMITMENTS AND CONTINGENCIES [notes 9 and 10]
SHAREHOLDERS' EQUITY
Share capital [note 11]                                                       84,281        83,973
Contributed surplus [note 11]                                                  1,842         1,247
Cumulative translation account [note 12]                                     (13,861)        1,966
Retained earnings                                                             88,266        64,240
                                                                             -------      --------
                                                                             160,528       151,426
                                                                             -------      --------
                                                                             326,575       299,001
                                                                             =======      ========
</TABLE>

See accompanying notes

On behalf of the Board:

[ILLEGIBLE]                                                          [ILLEGIBLE]
Director                                                             Director

Stantec Inc. 2003 Annual Report                                               51

<PAGE>

                             Consolidated Statements
                         of Income and Retained Earnings

<TABLE>
<CAPTION>
Years ended December 31                                                             2003          2002
(in thousands of dollars)                                                            $              $
-------------------------                                                          -------      --------
<S>                                                                                <C>          <C>
                                                                                                restated
                                                                                                [note 2]
INCOME
Gross revenue                                                                      459,942       428,456
Less subconsultant costs and other direct expenses                                  68,546        63,308
                                                                                   -------      --------
NET REVENUE                                                                        391,396       365,148
Direct payroll costs                                                               183,471       173,609
                                                                                   -------      --------
GROSS MARGIN                                                                       207,925       191,539
Administrative and marketing expenses                                              154,788       145,515
Depreciation of property and equipment                                               9,912         9,502
Amortization of intangible assets                                                      925         1,079
Net interest expense [note 8]                                                        2,637         2,630
Foreign exchange losses                                                                615            73
Share of income from associated companies                                             (580)         (355)
                                                                                   -------      --------
INCOME BEFORE INCOME TAXES                                                          39,628        33,095
                                                                                   -------      --------
INCOME TAXES [note 13]
Current                                                                             10,050        12,949
Future                                                                               4,508           (46)
                                                                                   -------      --------
                                                                                    14,558        12,903
                                                                                   -------      --------

NET INCOME FOR THE YEAR                                                             25,070        20,192
                                                                                   =======      ========

RETAINED EARNINGS,BEGINNING OF THE YEAR, AS PREVIOUSLY REPORTED                     64,905        44,701
Prior period adjustment [note 2]                                                      (665)          (11)
                                                                                   -------      --------
RETAINED EARNINGS,BEGINNING OF THE YEAR, AS RESTATED                                64,240        44,690
Net income for the year                                                             25,070        20,192
Shares repurchased [note 11]                                                        (1,044)         (642)
                                                                                   -------      --------
RETAINED EARNINGS,END OF THE YEAR                                                   88,266        64,240
                                                                                   =======      ========

EARNINGS PER SHARE [notes 2 and 14]
Basic                                                                                 1.37          1.12
Diluted                                                                               1.31          1.07
</TABLE>

See accompanying notes

52                                               Stantec Inc. 2003 Annual Report

<PAGE>

                             Consolidated Statements
                                  of Cash Flows

<TABLE>
<CAPTION>
Years ended December 31                                                              2003          2002
(in thousands of dollars)                                                             $             $
-------------------------                                                          --------      --------
<S>                                                                                <C>           <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Cash receipts from clients                                                          465,114       437,354
Cash paid to suppliers                                                             (156,460)     (128,148)
Cash paid to employees                                                             (274,444)     (257,667)
Dividends from equity investments                                                         -           175
Interest received                                                                     2,710         3,970
Interest paid                                                                        (4,462)       (6,122)
Income taxes paid                                                                   (15,565)      (13,453)
                                                                                   --------      --------
CASH FLOWS FROM OPERATING ACTIVITIES [note 15]                                       16,893        36,109
                                                                                   --------      --------

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Business acquisitions, including cash acquired and
   bank indebtedness assumed [note 3]                                                (6,046)      (17,409)
Cash of joint venture held for sale [note 16]                                          (369)            -
Proceeds on disposition of investments                                                  195         2,158
Proceeds on disposition of subsidiary                                                     -         1,856
Purchase of property and equipment                                                  (28,713)      (17,444)
Proceeds on disposition of property and equipment                                     1,444         1,612
                                                                                   --------      --------
CASH FLOWS USED IN INVESTING ACTIVITIES                                             (33,489)      (29,227)
                                                                                   --------      --------

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Repayment of long-term debt                                                         (20,592)      (18,619)
Proceeds from long-term borrowings                                                        -        30,540
Repurchase of shares for cancellation [note 11]                                      (1,392)         (880)
Proceeds from issue of share capital                                                    651        18,484
                                                                                   --------      --------

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES                                      (21,333)       29,525
                                                                                   --------      --------

Foreign exchange loss on cash held in foreign currency                               (1,081)          (60)
                                                                                   --------      --------

NET INCREASE (DECREASE) IN CASH                                                     (39,010)       36,347
Cash, beginning of the year                                                          29,202        (7,145)
                                                                                   --------      --------
CASH,END OF THE YEAR                                                                 (9,808)       29,202
                                                                                   ========      ========

CASH CONSISTS OF
Cash and cash equivalents                                                             7,343        29,202
Bank indebtedness                                                                   (17,151)            -
                                                                                   --------      --------
                                                                                     (9,808)       29,202
                                                                                   ========      ========
</TABLE>

See accompanying notes

Stantec Inc. 2003 Annual Report                                               53

<PAGE>

                             Notes to Consolidated
                              Financial Statements

1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

STANTEC INC. ("the Company") is a provider of comprehensive professional
services in the area of infrastructure and facilities for clients in the public
and private sectors. The Company's services include planning, engineering,
architecture, interior design, landscape architecture, surveying and geomatics,
environmental sciences, and project economics.

USE OF ESTIMATES

The preparation of consolidated financial statements in accordance with Canadian
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant estimates included in the
preparation of these consolidated financial statements include the percentage of
completion of fixed fee and variable fee with ceiling contracts, provisions for
losses on incomplete contracts, allowances for doubtful accounts receivable, the
provision for legal claims, the fair value of stock-based awards, the fair value
of identifiable intangible assets acquired in business acquisitions, and the
future cash flows used to estimate the fair value of reporting units for
goodwill impairment purposes. Actual results may differ from these estimates.
The financial statements have, in management's opinion, been properly prepared
within reasonable limits of materiality and within the framework of the
accounting policies summarized below.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its subsidiary companies, all of which are wholly owned. The results of
operations of subsidiaries acquired during the year are included from their
respective dates of acquisition.

Joint ventures and partnerships are accounted for on the proportionate
consolidation basis, which results in the Company recording its pro rata share
of the assets, liabilities, revenues, and expenses of each of the entities.

INVESTMENTS

Investments in associated companies over which the Company is able to exercise
significant influence, but not control, are accounted for using the equity
method, which reflects the Company's investment at original cost plus its share
of earnings (losses) net of dividends received.

Other investments are recorded at cost. When a loss in value of such investments
occurs that is other than temporary, the investment is written down to recognize
the loss.

FOREIGN CURRENCY TRANSLATION

Transactions denominated in a foreign currency and the financial statements of
foreign subsidiaries (excluding US-based subsidiaries) included in the
consolidated financial statements are translated as follows: monetary items at
the rate of exchange in effect at the balance sheet date; non-monetary items at
historical exchange rates; and revenue and expense items (except depreciation
and amortization, which are translated at historical exchange rates) at the
average exchange rate for the year. Any resulting gains or losses are included
in income in the year incurred.

54                                               Stantec Inc. 2003 Annual Report

<PAGE>

Effective January 1, 2002, the Company's US-based subsidiaries were designated
as self-sustaining operations due to a change in the financial and operational
independence of the operating subsidiaries. As a result, the foreign currency
translation method used for the financial statements of the subsidiaries
included in the consolidated financial statements was changed from the temporal
method, as described above for foreign subsidiaries excluding US-based
subsidiaries, to the current method. Under the current method, assets and
liabilities are translated at the rate of exchange in effect at the balance
sheet date, and revenue and expense items (including depreciation and
amortization) are translated at the average rate of exchange for the year. The
resulting exchange gains and losses are deferred and included as a separate
component of shareholders' equity in the cumulative translation account.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, accounts receivable, costs
and estimated earnings in excess of billings, accounts payable and accrued
liabilities, and billings in excess of costs and estimated earnings approximate
their fair values because of the short-term maturity of those instruments. The
carrying amount of bank indebtedness approximates fair value because the
applicable interest rate is based on variable reference rates or is fixed for a
short term. The carrying values of other financial assets and financial
liabilities approximate fair values except as otherwise disclosed in the
financial statements.

CASH AND CASH EQUIVALENTS

Cash equivalents include all investments with initial maturities of three months
or less. Such investments are carried at the lower of cost or market value.

CREDIT RISK

Financial instruments that subject the Company to credit risk consist primarily
of cash, accounts receivable, and costs and estimated earnings in excess of
billings. The Company maintains an allowance for estimated credit losses. The
Company provides services to diverse clients in various industries and sectors
of the economy, and our credit risk is not concentrated in any particular
client, industr y, economic, or geographic sector.

EMPLOYEE BENEFIT PLANS

The Company contributes to group retirement savings plans and an employee share
purchase plan based on the amount of employee contributions subject to maximum
limits per employee. The Company accounts for such contributions as an expense
in the period that the contributions are made. The Company does not provide
postemployment or postretirement benefits.

REVENUE RECOGNITION

In the course of providing its services, the Company incurs certain direct costs
for subconsultants and other expenditures that are recoverable directly from
clients. These direct costs are included in the Company's gross revenue. Since
such direct costs can vary significantly from contract to contract, changes in
gross revenue may not be indicative of the Company's revenue trends.
Accordingly, the Company also reports net revenue, which is gross revenue less
subconsultant and other direct expenses.

Revenue from fixed fee and variable fee with ceiling contracts is recognized
using the percentage of completion method on a cost-to-cost basis. Contract
revenue is recognized on the ratio of contract costs incurred to total estimated
costs. Provisions for estimated losses on incomplete contracts are made in the
period in which the losses are determined. Revenue from time and material
contracts without stated ceilings and from short-term projects is recognized as
costs are incurred. Revenue is calculated based on billing rates for the
services performed. Costs and estimated earnings in excess of billings
represents work in progress recognized as revenue but not yet invoiced to
clients. Billings in excess of costs and estimated earnings represents amounts
that have been invoiced to clients but not yet recognized as revenue.

Stantec Inc. 2003 Annual Report                                               55

<PAGE>

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost less accumulated depreciation.
Depreciation is calculated at annual rates designed to write off the costs of
assets over their estimated useful lives as follows:

<TABLE>
<S>                                      <C>         <C>
Engineering equipment                    20% - 30%   declining balance
Business information system                          straight-line over 5 years
Office equipment                         20% - 30%   declining balance
Automotive equipment                           30%   declining balance
Leasehold improvements                               straight-line over term of lease
                                                     plus one renewal period to a
                                                     maximum of 15 years
Buildings                                  4% - 5%   declining balance
</TABLE>

GOODWILL AND INTANGIBLE ASSETS

The cost of intangible assets is amortized over the period in which the benefits
of such assets are expected to be realized, principally on a straight-line
basis. The Company's policy is to amortize client relationships with
determinable lives over periods ranging from 10 to 15 years. Contract backlog is
amortized over the estimated contractual lives, generally less than one year.
Other intangible assets include technology and non-compete agreements, which are
being amortized over estimated lives of one to three years. Goodwill is not
amortized but is evaluated annually for impairment by comparing the fair value
of the reporting unit, determined on a discounted after-tax cash flow basis, to
the carrying value. An impairment loss would be recognized if the carrying value
of the goodwill exceeds its fair value.

INCOME TAXES

The Company uses the liability method to account for income taxes. Under this
method, future income tax assets and liabilities are determined based on
differences between financial reporting and the tax bases of assets and
liabilities and measured using the substantively enacted tax rates and laws that
will be in effect when these differences are expected to reverse.

NON-INTEREST BEARING DEBT

Non-interest bearing debt is carried at its present value using discount rates
based on the bank prime rate prevailing at the time the debt was issued. The
discount is applied over the term of the debt and is charged to interest
expense.

STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS

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. As permitted by these recommendations, the Company
adopted the new standards prospectively for new awards granted on or after
January 1, 2002. In years prior to January 1, 2002, the Company recognized no
compensation expense when shares or stock options were issued.

The Company has one share option plan, which is more fully described in note 11,
and accounts for grants under the plan in accordance with the fair value-based
method of accounting for stock-based compensation. Compensation expense for
stock options awarded under the plan is measured at the fair value at the grant
date using the Black-Scholes valuation model and is recognized over the vesting
period of the options granted.

EARNINGS PER SHARE

Basic earnings per share is computed based on the weighted average number of
common shares outstanding during the year. Diluted earnings per share is
computed using the treasury stock method, which assumes that the cash that would
be received on the exercise of options is applied to purchase shares at the
average price during the year and that the difference between the shares issued
upon the exercise of options and the number of shares obtainable under this

56                                               Stantec Inc. 2003 Annual Report

<PAGE>

computation, on a weighted average basis, is added to the number of shares
outstanding. Antidilutive options are not considered in computing diluted
earnings per share.

2.PRIOR PERIOD ADJUSTMENT

During 2003, the Company determined, with the assistance of an independent
valuator, that intangible assets acquired in post June 30, 2001, acquisitions
had not been properly identified and valued in the purchase allocation. As a
result, a portion of goodwill for these acquisitions has been allocated to
identifiable intangible assets (contract backlog, client relationships,
technology, and non-compete agreements). The adjustment has been made
retroactively and results in the following changes to previously reported
financial information:

<TABLE>
<CAPTION>
                                                                                            2002      2001
(in thousands of dollars)                                                                    $          $
-------------------------                                                                --------     -----
BALANCE SHEETS                                                                           increase/(decrease)
<S>                                                                                      <C>          <C>
Goodwill                                                                                   (3,587)     (437)
Intangible assets                                                                           4,817       709
Future income tax liabilities - current                                                       342        59
Future income tax liabilities - non-current                                                 1,553       224
Retained earnings, beginning of year                                                          (11)        -
Retained earnings, end of year                                                               (665)      (11)
                                                                                         ========     =====
</TABLE>

<TABLE>
<CAPTION>
                                                                                            2002       2001
(in thousands of dollars, except earnings per share amounts)                                  $        $
                                                                                         --------     -----
STATEMENTS OF INCOME                                                                      increase/(decrease)
<S>                                                                                      <C>          <C>
Amortization of intangible assets                                                           1,079        18
Income before income taxes                                                                 (1,079)      (18)
Income taxes                                                                                 (425)       (7)
Net income for the year                                                                      (654)      (11)
Earnings per share - basic                                                                  (0.04)     0.00
Earnings per share - diluted                                                                (0.04)    (0.01)
                                                                                         ========     =====
</TABLE>

The effect of the adjustment for 2003 was to reduce income before income taxes
by $925,000, reduce income tax expense by $346,000, and reduce net income by
$579,000.

3. BUSINESS ACQUISITIONS

Acquisitions are accounted for under the purchase method of accounting, and the
results of earnings since the respective dates of acquisition are included in
the consolidated statements of income. The purchase prices of acquisitions are
generally subject to price adjustment clauses included in the purchase
agreements. From time to time, as a result of the timing of acquisitions in
relation to the Company's reporting schedule, certain of the purchase price
allocations may not be finalized at the initial time of reporting. In the case
of some acquisitions, additional consideration may be payable based on future
performance parameters. As at December 31, 2003, the maximum contingent
consideration that may be payable in 2004 and future years is approximately
$1,168,000. Such additional consideration is recorded as additional goodwill in
the period in which confirmation of the consideration to be paid is known.

During 2003, the Company acquired the shares and businesses of APAI Architecture
Inc. and Mandalian Enterprises Limited ( January 2, 2003) and of Ecological
Services Group Inc. (May 30,

Stantec Inc. 2003 Annual Report                                               57

<PAGE>

2003) for consideration consisting of cash and promissory notes and the net
assets and businesses of Optimum Energy Management Incorporated (October 31,
2003) and Inner Dimension Design Associates Inc. (November 28, 2003) for cash
consideration. The Company also paid additional contingent consideration in
connection with the Cosburn Patterson Mather Limited (2002) acquisition and
adjusted the purchase price on The Pentacore Family Group of Companies (2001),
English Harper Reta Architects (2002), Site Consultants, Inc. (2002), Beak
International Incorporated (2002), GeoViro Engineering Ltd. (2002), McCartan
Consulting Ltd. (2002), and The RPA Group (2002) acquisitions pursuant to price
adjustment clauses included in the purchase agreements.

During 2002, the Company acquired the shares and businesses of McCartan
Consulting Ltd. (January 2, 2002); Webster & Simmonds Surveying Ltd. (February
14, 2002); Cosburn Patterson Mather Limited (February 26, 2002); GKO Engineering
(March 30, 2002); M.R.S.F.M. Holdings Ltd., operating as Graeme & Murray
Consultants Ltd., (April 12, 2002); GeoViro Engineering Ltd. (May 12, 2002);
English Harper Reta Architects ( June 14, 2002); Site Consultants, Inc. ( June
14, 2002); The RPA Group (July 19, 2002); and Beak International Incorporated
(October 25, 2002). The Company also paid additional contingent consideration in
connection with the DSAtlantic Corporation (2000) acquisition and reduced the
purchase price on the Eckhoff, Watson and Preator Engineering, Inc. (2000) and
The Pentacore Family Group of Companies (2001) acquisitions pursuant to price
adjustment clauses included in the purchase agreements.

Details of the aggregate consideration given and the fair values of net assets
acquired are as follows:

<TABLE>
<CAPTION>
                                                                        2003       2002
(in thousands of dollars)                                                 $          $
-------------------------                                              ------     ------
<S>                                                                    <C>        <C>
Cash consideration                                                      4,300     17,736
Share consideration                                                         -      3,712
Promissory notes                                                        3,375     17,356
                                                                       ------     ------
PURCHASE PRICE                                                          7,675     38,804
                                                                       ======     ======

ASSETS AND LIABILITIES ACQUIRED AT FAIR VALUES
Cash acquired (bank indebtedness assumed)                              (1,746)       327
Non-cash working capital                                                3,578     13,859
Property and equipment                                                  1,337      3,498
Investments - other                                                        44          -
Goodwill                                                                3,848     24,533
Intangible assets                                                       1,344      5,187
Long-term debt                                                           (646)    (8,104)
Future income taxes                                                       (84)      (496)
                                                                       ------     ------
NET ASSETS ACQUIRED                                                     7,675     38,804
                                                                       ======     ======
</TABLE>

Of the goodwill, $3,816,000 (2002 - $24,533,000) is non-deductible for income
tax purposes. All of the goodwill is attributable to the Consulting Services
reportable segment [note 17].

58                                               Stantec Inc. 2003 Annual Report

<PAGE>

4. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                  2003                      2002
                                           -----------------------    -----------------------
                                                       ACCUMULATED               Accumulated
                                            COST      DEPRECIATION    Cost       Depreciation
(in thousands of dollars)                    $             $            $             $
----------------------------               ------     ------------   ------      ------------
<S>                                        <C>        <C>            <C>         <C>
Engineering equipment                      27,261        12,257      24,887         12,204
Business information system                 7,223           328         181              -
Office equipment                           17,654         6,017      16,620          4,983
Automotive equipment                        3,406         1,850       3,842          2,090
Leasehold improvements                      6,570         1,386       6,485          1,506
Buildings                                  27,191         1,553      20,131          1,535
Land                                        1,756             -       1,919              -
                                           ------        ------      ------         ------
                                           91,061        23,391      74,065         22,318
                                           ------        ------      ------         ------
NET BOOK VALUE                                           67,670                     51,747
                                                         ======                     ======
</TABLE>

Included in buildings is a building under construction in the amount of
$8,942,000 (2002 - $248,000) on which depreciation has not started.

5. GOODWILL

<TABLE>
<CAPTION>
                                                                               2003       2002
(in thousands of dollars)                                                       $           $
---------------------------------------------------                           ------     ------
<S>                                                                           <C>        <C>
Goodwill, beginning of year, as originally reported                           76,010     47,365
Prior period adjustment [note 2]                                              (3,587)      (437)
                                                                              ------     ------
Goodwill, beginning of year, as restated                                      72,423     46,928
Current year acquisitions                                                      5,047     22,877
Additional purchase price payments                                               925      1,546
Other purchase price adjustments                                              (2,124)       110
Disposition of subsidiary                                                          -       (529)
Impact of foreign exchange on goodwill balances                               (6,575)     1,491
                                                                              ------     ------
GOODWILL,END OF YEAR                                                          69,696     72,423
                                                                              ======     ======
</TABLE>

6. INTANGIBLE ASSETS

<TABLE>
<CAPTION>
                                                             2003                            2002
                                                -------------------------------   ------------------------------
                                                GROSS CARRYING     ACCUMULATED    GROSS CARRYING    ACCUMULATED
                                                    AMOUNT         AMORTIZATION      AMOUNT         AMORTIZATION
(in thousands of dollars)                             $                 $               $                 $
----------------------------------              --------------     ------------   --------------    ------------
<S>                                             <C>                <C>            <C>               <C>
Client relationships                                 5,626              691           4,979               272
Contract backlog                                       905              901             870               816
Other intangible assets                                266               93              66                10
                                                     -----            -----           -----             -----
                                                     6,797            1,685           5,915             1,098
                                                     -----            -----           -----             -----
CARRYING AMOUNT                                                       5,112                             4,817
                                                                      -----                             -----
</TABLE>

Stantec Inc. 2003 Annual Report                                               59

<PAGE>

7.BANK INDEBTEDNESS

The Company has a revolving credit facility in the amount of $20 million (for
the period October 15, 2003, through February 28, 2004 - $50 million) to support
general business operations. The facility matures on July 31, 2004, subject to
extension by the parties for a 364-day period. Depending on the form under which
the credit facility is accessed, rates of interest will vary between Canadian
prime, US base rate, LIBOR rate plus 125 basis points, or bankers acceptance
rates plus 75 basis points. At December 31, 2003, the interest rate on
outstanding bank indebtedness under the credit facility was 4.5%, and the
balance was $8,300,000. The credit facility agreement contains restrictive
covenants including but not limited to debt to earnings ratio, earnings to debt
service ratio, current assets to current liabilities ratio, and a minimum
shareholders' equity. The Company is in compliance with all covenants under this
agreement as at December 31, 2003. All assets of the Company are held as
collateral under a general security agreement for the bank indebtedness and bank
loan [note 8].

Included in bank indebtedness at December 31, 2003, is $6,930,000 related to an
interim loan obtained to finance the construction of Stantec Centre. Interest,
calculated daily at Canadian prime plus 0.25% (2003 - 4.75%), is payable
monthly. The loan is due on the earlier of the demand of the lender, 180 days
from substantial completion of the project, or December 31, 2004. The loan is
supported by a general security agreement and a second mortgage.

8.LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                               2003     2002
(in thousands of dollars)                                       $         $
                                                              ------   ------
<S>                                                           <C>      <C>
Non-interest bearing note payable                                102       93
Other non-interest bearing notes payable                      14,436   24,279
Bank loan                                                     19,186   26,310
Mortgages payable                                             10,609   10,991
Other                                                            242      583
                                                              ------   ------
                                                              44,575   62,256
Less current portion                                          13,416   20,526
                                                              ------   ------
                                                              31,159   41,730
                                                              ======   ======
</TABLE>

The non-interest bearing note payable is due November 1, 2027, in the amount of
$933,000. The note's carrying value of $102,000 is determined applying a
discount rate of 9.75%. If the non-interest bearing note payable were discounted
at interest rates in effect at December 31, 2003, the fair value of the note
would be $124,000 (2002 - $133,000).

The carrying values of the other non-interest bearing notes payable have been
calculated utilizing a weighted average rate of interest of 6.32%. The notes are
due at various times from 2004 to 2008. The notes' aggregate maturity value is
$15,132,000 (2002 - $24,705,000). $206,000 (2002 - $5,786,000) of the notes'
carrying value is payable in US funds (US$158,000; 2002 -US$3,668,000). The
carrying value approximates the fair value of these notes based on interest
rates in effect at December 31, 2003.

The bank loan is due in equal quarterly payments of US$918,000 (or
Canadian-dollar equivalent) plus accrued interest to October 1, 2007, and bears
interest at LIBOR or bankers acceptance rates plus 125 to 165 basis points. The
actual rate is dependent upon certain ratio calculations determined on a
quarterly basis. The interest rate applicable at December 31, 2003, was 3.71%
(2002 - 3.94%). $5,186,000 (2002 - $6,310,000) of the bank loan is denominated
in US dollars (US$4,000,000; 2002 - US$4,000,000). Collateral and restrictive
covenants for the bank loan are described in note 7.

60                                               Stantec Inc. 2003 Annual Report

<PAGE>

The mortgages payable bear interest at a weighted average rate of 7.65%, are due
in 2005 and 2006, and are supported by first mortgages against land and
buildings. Monthly payments are approximately $95,850.

Other long-term debt bears interest at a weighted average rate of 6.78% and is
due at dates ranging from 2004 to 2006. No assets are pledged in support of this
debt.

Principal repayments required on long-term debt in each of the next five years
and thereafter are as follows:

<TABLE>
<CAPTION>
(in thousands of dollars)                               $
-------------------------           ----------        ------
<S>                                 <C>               <C>
                                          2004        13,416
                                          2005        10,466
                                          2006         6,181
                                          2007         5,246
                                          2008           419
                                    Thereafter         8,847
                                                      ------
                                                      44,575
                                                      ======
</TABLE>

In 2003 interest of $2,681,000 (2002 - $2,648,000) was incurred on the long-term
debt.

At December 31, 2003, the Company has issued letters of credit totaling
$105,000.

9. COMMITMENTS

Commitments for annual basic premises rent under long-term leases and equipment
and vehicle operating leases for the next five years are as follows: 2004 -
$19,038,000; 2005 -$16,866,000; 2006 - $15,679,000; 2007 - $14,348,000; 2008 -
$10,173,000; and thereafter -$34,930,000.

10. CONTINGENCIES

In the normal conduct of operations, various legal claims are pending against
the Company alleging, among other things, breaches of contract or negligence in
connection with the performance of consulting services. The Company carries
professional liability insurance, subject to certain deductibles and policy
limits, against such claims. In some cases, parties are seeking damages that
substantially exceed the Company's insurance coverage. Based on advice and
information provided by legal counsel, and the Company's previous experience
with the settlement of similar claims, management believes that the Company has
recognized adequate provisions for probable and reasonably estimable liabilities
associated with these claims and that their ultimate resolutions will not
materially exceed insurance coverages or have a material adverse effect on the
consolidated financial position or annual results of operations.

Stantec Inc. 2003 Annual Report                                               61
<PAGE>

11. SHARE CAPITAL

AUTHORIZED
Unlimited     Common shares
Unlimited     Preferred shares issuable in series

COMMON SHARES ISSUED AND OUTSTANDING

<TABLE>
<CAPTION>
                                                     2003                   2002
                                        -----------------------    -------------------
(in thousands of dollars)               # OF SHARES           $   # of shares        $
------------------------------------    ------------     ------   -----------   ------
<S>                                     <C>              <C>      <C>           <C>
BALANCE,BEGINNING OF THE YEAR             18,282,720     83,973    16,846,340   61,555
Share options exercised                      119,264        651        29,300      148
Shares repurchased under normal
   course issuer bid                         (74,700)      (343)      (54,600)    (235)
Shares issued on acquisitions                      -          -       261,680    3,712
Shares issued under public offering,
   net of share issue costs                        -          -     1,200,000   18,793
                                          ----------     ------    ----------   ------
BALANCE,END OF THE YEAR                   18,327,284     84,281    18,282,720   83,973
                                          ==========     ======    ==========   ======
</TABLE>

On May 2, 2002, the shareholders approved the subdivision of the Company's
common shares on a two-for-one basis (a "stock split"). The stock split was
effective for registered common shareholders at the close of business on May 15,
2002. All references to common shares, per share amounts, and stock-based
compensation plans in these consolidated financial statements have been restated
to reflect the stock split on a retroactive basis.

During 2003, 74,700 common shares (2002 - 54,600) were repurchased for
cancellation pursuant to an ongoing normal course issuer bid at a cost of
$1,392,000 (2002 - $880,000). Of this amount, $343,000 (2002 - $235,000) and
$5,000 (2002 - $3,000) reduced the share capital and contributed surplus
accounts respectively, with $1,044,000 (2002 - $642,000) being charged to
retained earnings.

During 2002, 1,200,000 common shares were issued for cash consideration of
$19,500,000 less share issue costs of $1,164,000 less a future tax recovery of
$457,000.

SHARE OPTIONS

Under the Company's share option plan, options to purchase common shares may be
granted by the Board of Directors to directors, officers, and employees. Options
are granted at exercise prices equal to or greater than fair market value at the
issue date, generally vest evenly over a three-year period, and have contractual
lives that range from five to 10 years. The aggregate number of common shares
reserved for issuance that may be purchased upon the exercise of options granted
pursuant to the plan shall not exceed 1,689,174 common shares. At December 31,
2003, 210,074 options are available for issue.

The Company has granted share options to directors, officers, and employees to
purchase 1,479,100 shares at prices between $3.38 and $27.10 per share. These
options expire on dates between March 30, 2004, and January 2, 2013.

62                                               Stantec Inc. 2003 Annual Report

<PAGE>

<TABLE>
<CAPTION>
                                                   2003                              2002
                                     ----------------------------     -----------------------------
                                                         WEIGHTED                          Weighted
                                                          AVERAGE                           Average
                                        SHARES     EXERCISE PRICE        Shares      Exercise Price
                                             #                  $             #                   $
                                     ---------     --------------     ---------      --------------
<S>                                  <C>           <C>                <C>            <C>
SHARE OPTIONS,BEGINNING OF
THE YEAR                             1,296,200               6.09     1,188,500                5.10
Granted                                307,500              21.29       137,000               14.50
Exercised                             (119,264)              5.46       (29,300)               5.04
Cancelled                               (5,336)             12.62             -                   -
                                     ---------              -----     ---------                ----
SHARE OPTIONS,END OF THE YEAR        1,479,100               9.28     1,296,200                6.09
                                     =========              =====     =========                ====
</TABLE>


The Company has issued options to directors, officers, and employees at December
31, 2003, as follows:

<TABLE>
<CAPTION>
                Options Outstanding                     Options Exercisable
---------------------------------------------------   -----------------------
                                  Weighted
                                   Average   Weighted                  Weighted
     Range of                    Remaining    Average                   Average
     Exercise                  Contractual   Exercise        Shares    Exercise
       Prices  Outstanding   Life in Years      Price   Exercisable       Price
            $            #                          $             #           $
-------------  -----------   -------------   --------   -----------    ---------
<S>            <C>           <C>             <C>        <C>            <C>
  3.38 - 3.60      485,500             2.7       3.55       485,500        3.55
  5.20 - 7.50      555,700             1.3       6.41       555,700        6.41
14.50 - 18.85      190,400             8.8      15.44        43,467       14.50
21.00 - 27.10      247,500             7.6      22.22             -           -
-------------    ---------             ---      -----     ---------       -----
 3.38 - 27.10    1,479,100             3.4       9.28     1,084,667        5.46
</TABLE>

The fair value of options granted subsequent to January 1, 2002, is determined
at the date of grant using the Black-Scholes option-pricing model. The
Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics that are significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of the Company's employee stock options.

The estimated fair value of options granted, both at the share market price on
the grant date and in excess of the share market price on the grant date, was
determined using the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                                   2003                        2002
                                                         ------------------------------   ---------
                                                            GRANTED          GRANTED IN     Granted
                                                          AT MARKET    EXCESS OF MARKET   at Market
                                                         ------------------------------------------
<S>                                                      <C>           <C>                <C>
Risk-free interest rate (%)                                    4.42                5.04        4.35
Expected hold period to exercise (years)                        6.1                 9.1         6.0
Volatility in the price of the Company's shares (%)            28.2                28.5        17.5
Dividend yield                                                  0.0                 0.0         0.0
Weighted average fair value per option                         6.61                6.04        4.19
</TABLE>

A share-based compensation expense of $600,000 has been recognized in 2003
($45,000 - 2002).

Stantec Inc. 2003 Annual Report                                               63

<PAGE>

12. CUMULATIVE TRANSLATION ACCOUNT

The foreign currency cumulative translation account represents the unrealized
gain or loss on the Company's net investment in self-sustaining US-based
operations. The change in the cumulative translation account during the year
relates to the fluctuation in the value of the Canadian dollar relative to the
US dollar. Balance sheet accounts denominated in US dollars have been translated
to Canadian dollars at the rate of 1.2965 (2002 - 1.5776).

13. INCOME TAXES

The effective income tax rate in the consolidated statements of income differs
from statutory Canadian tax rates as a result of the following:

<TABLE>
<CAPTION>
                                                            2003       2002
                                                               %          %
                                                            ----       ----
<S>                                                         <C>        <C>
Income tax expense at statutory Canadian rates              36.8       39.3
Increase (decrease) resulting from:
   Loss (income) from associated companies accounted
     for on the equity basis                                (0.6)      (0.3)
   Rate differential on foreign income                       0.6       (0.1)
   Non-deductible expenses:
     Meals and entertainment                                 1.4        1.8
     Stock compensation                                      0.6          -
   Non-taxable foreign income net of non-creditable
     withholding taxes                                      (1.6)      (2.4)
   Other                                                    (0.5)       0.7
                                                            ----        ---
                                                            36.7       39.0
</TABLE>

Significant components of the Company's future income tax assets and liabilities
are as follows:

<TABLE>
<CAPTION>
                                                                        2003       2002
(in thousands of dollars)                                                   $          $
--------------------------------------------------------------         ------     ------
<S>                                                                    <C>        <C>
FUTURE INCOME TAX ASSETS
Differences in timing of deductibility of expenses                      6,060       8,035
Loss carryforwards                                                      2,051       1,932
Share issue and other financing costs                                     431         639
Tax cost of property and equipment in excess of carrying value            645         498
Other                                                                     224       1,112
                                                                        -----      ------
                                                                        9,411      12,216
                                                                        =====      ======
</TABLE>

<TABLE>
<CAPTION>
                                                                         2003        2002
(in thousands of dollars)                                                             $ $
--------------------------------------------------------------         ------     ------
<S>                                                                    <C>        <C>
FUTURE INCOME TAX LIABILITIES
Cash to accrual adjustments on acquisition of US subsidiaries             508       2,108
Differences in timing of taxability of revenues                         9,955       6,590
Carrying value of property and equipment in excess of tax cost          2,970       1,832
Carrying value of intangible assets in excess of tax cost               1,996       1,895
Other                                                                   1,755       2,775
                                                                       ------      ------
                                                                       17,184      15,200
</TABLE>

64                                               Stantec Inc. 2003 Annual Report

<PAGE>

At December 31, 2003, loss carryforwards of approximately $4,052,000 are
available to reduce the taxable income of certain Canadian subsidiaries. These
losses expire as set out below:

<TABLE>
<CAPTION>
(in thousands of dollars)                               $
------------------------                   --------------
<S>                                        <C>      <C>
                                           2006       180
                                           2007       325
                                           2008     1,778
                                           2010       193
                                           2009     1,576
                                                    -----
                                                    4,052
                                                    =====
</TABLE>

In addition, the Company has loss carryforwards of approximately $1,249,000
available to reduce the taxable income of certain US subsidiaries that expire at
varying times over the next 20 years.

The potential income tax benefits that will result from the application of
Canadian and US tax losses have been recognized in these financial statements.

14. EARNINGS PER SHARE

The number of basic and diluted common shares outstanding, as calculated on a
weighted average basis, is as follows:

<TABLE>
<CAPTION>
                                                                                            2003        2002
                                                                                               #           #
----------------------------------------------------------------------                ----------  ----------
<S>                                                                                   <C>         <C>
BASIC SHARES OUTSTANDING                                                              18,329,960  17,987,358
Share options (dilutive effect of 1,419,100 options; 2002 - 1,296,200)                   788,056     812,126
                                                                                      ----------  ----------
DILUTED SHARES OUTSTANDING                                                            19,118,016  18,799,484
                                                                                      ==========  ==========
</TABLE>

Stantec Inc. 2003 Annual Report                                               65

<PAGE>

15. CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES

Cash flows from operating activities determined by the indirect method are as
follows:

<TABLE>
<CAPTION>
                                                                           2003           2002
(in thousands of dollars)                                                     $              $
-----------------------------------------------------------------       --------       -------
<S>                                                                     <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the year                                                  25,070         20,192
Add (deduct) items not affecting cash:
   Depreciation of property and equipment                                 9,912          9,502
   Amortization of intangible assets                                        925          1,079
   Future income tax                                                      4,508            (46)
   Loss on dispositions of investments and property and equipment            57             89
   Share-based compensation expense                                         600             45
   Share of income from equity investments                                 (580)          (355)
Dividends from equity investments                                             -            175
                                                                        -------         ------
                                                                         40,492         30,681
                                                                        -------         ------
Change in non-cash working capital accounts:
   Accounts receivable                                                   (1,252)         8,174
   Costs and estimated earnings in excess of billings                   (35,239)        (4,673)
   Prepaid expenses                                                         113             29
   Accounts payable and accrued liabilities                              14,050          4,576
   Billings in excess of costs and estimated earnings                     4,951         (2,147)
   Income taxes payable/recoverable                                      (6,222)          (531)
                                                                        -------         ------
                                                                        (23,599)         5,428
                                                                        -------         ------
CASH FLOWS FROM OPERATING ACTIVITIES                                     16,893         36,109
                                                                        =======         ======
</TABLE>

16. JOINT VENTURES

The Company participates in joint ventures with other parties as follows:

<TABLE>
<CAPTION>
                                                    PERCENTAGE OWNED
                                                       2003     2002
                                                          %        %
                                                    --------    ----
<S>                                                 <C>         <C>
yyC.T. Joint Venture                                     20       20
Lockerbie Stanley Inc.                                    -       50
Stantec - S&L Partnership                                50       50
Colt Stantec Joint Venture                               50       50
Edmonton International Airports Joint Venture            33        -
Pine Creek Consultants Joint Venture                     33        -
                                                         --       --
</TABLE>

Effective December 31, 2003, the Company has an agreement in principle to sell
its 50% interest in Lockerbie Stanley Inc. for proceeds equal to the net book
value at December 31, 2003. Net assets of $312,000 have been reclassified as
assets held for sale and included in accounts receivable as collection of the
proceeds is expected within the next year. No gain or loss for accounting or tax
purposes arises on the disposition of this interest, and the net loss from the
operations recognized in the accounts for 2003 was $78,000.

66                                               Stantec Inc. 2003 Annual Report

<PAGE>

A summary of the assets, liabilities, revenues, expenses, and cash flows
included in the consolidated financial statements related to joint ventures is
as follows:

<TABLE>
<CAPTION>
STATEMENTS OF INCOME                              2003      2002
(in thousands of dollars)                            $         $
---------------------------------------         ------    ------
<S>                                             <C>       <C>
Gross revenue                                   11,949    11,174
Subconsultant and other direct expenses          9,611    12,529
Administrative and marketing expenses              776       277
                                                ------    ------
Net income for the year                          1,562    (1,632)
                                                ======    ======

BALANCE SHEETS
Current assets                                   1,547     4,374
                                                ======    ======

Current liabilities                              1,583     5,516
                                                ======    ======
STATEMENTS OF CASH FLOWS

Cash flows used in operating activities            (86)     (425)
                                                ======    ======
</TABLE>

17. SEGMENTED INFORMATION

The Company provides comprehensive professional services in the area of
infrastructure and facilities throughout North America and internationally. The
Company considers the basis on which it is organized, including geographic areas
and service offerings, in identifying its reportable segments. During 2003, the
Company had seven operating segments of which five have been aggregated into the
Consulting Services reportable segment. The two other operating segments, which
are below the quantitative thresholds in the recommendations of the Canadian
Institute of Chartered Accountants, are disclosed in the Other reportable
segment. Operating segments of the Company are defined as components of the
Company for which separate financial information is available that is evaluated
regularly by the chief operating decision maker in allocating resources and
assessing performance. The chief operating decision maker is the Chief Executive
Officer of the Company.

In addition to the above-noted operating segments, corporate administration
groups also report to the CEO. Whe repra cticable, the Company allocates these
expenses to the operating segments, primarily as a percentage of net revenues.
Certain corporate-level operating expenses are not allocated to operating
segments. The Company does not allocate net intere stexpense, foreign exchange
gains or losses, income from associated companies, or income taxes to its
operating segments.

REPORTABLE SEGMENTS

<TABLE>
<CAPTION>
                                                           2003
                                          -----------------------------------
                                          CONSULTING
                                            SERVICES       OTHER        TOTAL
(in thousands of dollars)                          $           $            $
----------------------------------------  ----------      ------      -------
<S>                                       <C>             <C>         <C>
Gross revenue                                455,466       4,476      459,942
Net revenue                                  390,252       1,144      391,396
Depreciation of property and equipment         8,140       1,772        9,912
Amortization of intangible assets                925           -          925
Operating income                              42,789        (489)      42,300
Segment assets                               291,432      35,143      326,575
Expenditures for property and equipment,
   goodwill, and intangible assets            33,337       1,465       34,802
</TABLE>

Stantec Inc. 2003 Annual Report                                               67

<PAGE>

<TABLE>
<CAPTION>
                                                           2002
                                          -----------------------------------
                                          Consulting
                                            Services       Other        Total
(in thousands of dollars)                          $           $            $
----------------------------------------  ----------      ------     --------
<S>                                       <C>             <C>        <C>
Gross revenue                                423,884       4,572     428,456
Net revenue                                  363,449       1,699     365,148
Depreciation of property and equipment         8,283       1,219       9,502
Amortization of intangible assets              1,079           -       1,079
Operating income                              30,671       4,772      35,443
Segment assets                               245,192      53,809     299,001
Expenditures for property and equipment,
   goodwill, and intangible assets            48,625       1,669      50,294
</TABLE>

GEOGRAPHIC INFORMATION

<TABLE>
<CAPTION>
                                           2003                   2002
                                ----------------------   -----------------------
                                          PROPERTY AND              Property and
                                            EQUIPMENT,                Equipment,
                                          GOODWILL,AND             Goodwill, and
                                   GROSS    INTANGIBLE     Gross      Intangible
                                REVENUES        ASSETS  Revenues          Assets
(in thousands of dollars)              $             $         $               $
-------------------------       --------  ------------  --------   -------------
<S>                             <C>       <C>           <C>        <C>
Canada                           290,413       104,088   238,774        76,882
United States                    161,655        37,815   180,296        51,509
International                      7,874           575     9,386           596
-------------                      -----           ---     -----           ---
                                 459,942       142,478   428,456       128,987
</TABLE>

Gross revenue is attributed to countries based on the location of work
performed.

CUSTOMERS

The Company has a large number of clients in various industries and sectors of
the economy. Gross and net revenue are not concentrated in any particular
client.

18. SUBSEQUENT EVENTS

Subsequent to the year-end, the Company entered into an agreement, subject to
the approval of the vendor's shareholders and regulatory approval, to acquire
the shares and businesses of The Sear-Brown Group, Inc.

19. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the
presentation adopted for the current year.

68                                               Stantec Inc. 2003 Annual Report

<PAGE>

Board of Directors

NEILSON A. "DUTCH" BERTHOLF, JR.(2)
Phoenix, Arizona
Retired Aviation
Director City of
Phoenix

ROBERT J. BRADSHAW (2)
Toronto,
Ontario
Chairman
Contor Industries Limited

E. JOHN (JACK) FINN(1)
Madison,
Connecticut
Corporate Director

ROBERT E. FLYNN (2)
Winnetka,
Illinois
Corporate
Director

ANTHONY P. FRANCESCHINI
Edmonton,
Alberta
President & CEO
Stantec Inc.

WILLIAM D. GRACE (1), (2)
Edmonton,
Alberta
Corporate
Director

STEPHEN D. LISTER (1)
Toronto,
Ontario
Managing Partner
Imperial Capital Corporation

RONALD P. TRIFFO
Edmonton,
Alberta Chairman
Stantec Inc.

(1)   Audit Committee

(2)   Corporate Governance & Compensation Committee

OFFICERS

RONALD P. TRIFFO
Chairman

ANTHONY P. FRANCESCHINI
President & CEO

DONALD W. WILSON
Vice President & CFO

JEFFREY S. LLOYD
Vice President & Secretary

[PICTURE]

SEATED: (from left) Tony Franceschini, Ron Triffo

STANDING: (from left) Dutch Bertholf, Robert Flynn, Robert Bradshaw, Stephen
      Lister, Bill Grace, Jack Finn

Shareholder Information
TRANSFER AGENT

CIBC Mellon Trust Company Calgary, Alberta

AUDITORS
Ernst & Young LLP
Chartered Accountants
Edmonton, Alberta

PRINCIPAL BANK

Canadian Imperial Bank of
Commerce

SECURITIES EXCHANGE LISTING
Stantec shares are traded on the
Toronto Stock Exchange
under the symbol STN.

INVESTOR RELATIONS
Stantec Inc.
10160 - 112
Street Edmonton
AB Canada T5K
2L6 Tel: (780)
917-7000 Fax:
(780) 917-7330
ir@stantec.com

ANNUAL MEETING
May 6, 2004
11:00 AM
Stantec Centre
10160 - 112
Street Edmonton AB
Canada

Stantec Inc. 2003 Annual Report                                              69

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[STANTEC LOGO]

Principal Offices

Stantec Inc.
10160 - 112
Street Edmonton
AB Canada T5K 2L6
Tel: (780)
917-7000 Fax:
(780) 917-7330
corp@stantec.com

Canada West
200 - 325 - 25th
Street SE Calgary AB
T2A 7H8 Tel: (403)
716-8000 Fax: (403)
716-8049
calgary@stantec.com

Canada Central
49 Frederick Street
Kitchener ON N2H 6M7
Tel: (519) 579-4410
Fax: (519) 579-6733
kitchener@stantec.com

US Southwest & West
8211 South 48th
Street Phoenix AZ
85044 Tel: (602)
438-2200 Fax:
(602) 431-9562
phoenix@stantec.com

US Southeast
801 Jones Franklin Road
Suite 300 Raleigh NC 27606
Tel: (919) 851-6866 Fax:
(919) 851-7024
raleigh@stantec.com

International
10160 - 112 Street
Edmonton AB Canada
T5K 2L6 Tel: (780)
917-7000 Fax:
(780) 917-7330
international@stantec.com

[PICTURE]

Local Offices by
Region

Canada West
Calgary, Alberta
Edmonton,
Alberta
Lethbridge,
Alberta Red
Deer, Alberta
Kamloops, British
Columbia Kelowna,
British Columbia
Surrey, British
Columbia Vancouver,
British Columbia
Victoria, British
Columbia Winnipeg,
Manitoba Regina,
Saskatchewan
Saskatoon, Saskatchewan

Canada Central
Brampton,
Ontario Guelph,
Ontario
Hamilton,
Ontario
Kitchener,
Ontario London,
Ontario Markham,
Ontario
Mississauga,
Ontario Ottawa,
Ontario Toronto,
Ontario Windsor,
Ontario

US Southwest & West
Phoenix, Arizona
Tucson, Arizona
Sacramento,
California Denver,
Colorado Las
Vegas, Nevada
Reno, Nevada Salt
Lake City, Utah

US Southeast
Macon, Georgia
McDonough, Georgia
Charlotte, North
Carolina Raleigh, North
Carolina Winston-Salem,
North Carolina Amherst,
New York Lancaster, New
York Charleston, South
Carolina Columbia, South
Carolina Nashville,
Tennessee Richmond,
Virginia

Caribbean
St. Michael, Barbados
stantec.com

70                                               Stantec Inc. 2003 Annual Report
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