First Quarter 2006 Financial Highlights

Shareholder Information

Transfer Agent

Computershare Trust Company of Canada

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 and on

the New York Stock Exchange

under the symbol SXC.

Investor Relations

Stantec Inc.

10160 - 112 Street

Edmonton AB

Canada T5K 2L6

Tel: (780) 917-7000

Fax: (780) 917-7330

ir@stantec.com

10160 - 112 STREET

EDMONTON AB CANADA T5K 2L6

ir@stantec.com

First Quarter 2006 Financial Highlights

• Gross revenue for the first quarter of 2006 increased 31.3% to $185.3 million, compared to $141.1 million for the first quarter of 2005. Net revenue increased 36.9% to $163.1 million, compared to $119.1 million for the first quarter of 2005.

• Net income for the first quarter of 2006 increased 69.5% to $11.4 million, compared to $6.7 million for the first quarter of 2005.

•Diluted earnings per share for the first quarter of 2006 were 42.9% higher at $0.50, versus $0.35 for the first quarter of 2005.

Report to Shareholders

I am very pleased to report continuing strong performance for our Company for the first quarter of 2006. Net income for the quarter was $11.4 million, and diluted earnings per share were $0.50.

In general, our operations in most of our regions and practice areas performed well during the quarter. Performance was very strong in our Canadian operations, particularly in the West, and strong in our US West operations. Performance in our US East operations, although improved over 2005, continued to be weak due to lower revenue. Over the past year, we have been focusing on streamlining these operations while looking for opportunities to expand our presence in the US East. We expect these initiatives to improve our position in 2006. However, as we have indicated previously, we will be undertaking our regular goodwill impairment analysis in the third quarter of 2006 to assess whether performance in our US East operations could potentially impact our goodwill for the region.

Highlights of the first quarter included the acquisition of Carinci Burt Rogers Engineering, Inc., an electrical engineering firm based in Toronto, Ontario. The integration of colleagues from this firm will strengthen our growing presence in the Greater Toronto Area and bolster our buildings engineering and illumination design capabilities. Soon after the quarter-end, we also completed the acquisition of Dufresne-Henry, Inc., a multidiscipline engineering, planning, environmental science, and landscape architecture firm headquartered in North Springfield, Vermont, which added over 270 employees and 12 locations to our Company. Along with complementing our New York operations, this acquisition will expand our services into four new states in New England and create an initial platform for growth in Florida.

Project awards during the quarter showcased our growing involvement in sustainable development, particularly new assignments in the Buildings and Environment areas. For example, our Buildings Engineering team secured a contract to provide mechanical and electrical engineering design services for the development of the Calgary Campus Digital Library (CCDL) as well as the Institute for Sustainable Energy, Environment and Economy (ISEEE) at the University of Calgary in Calgary, Alberta. The CCDL will provide 22,000 square metres (236,806 square feet) of renovated space and 19,500 square metres (209,896 square feet) of new space to accommodate modern computer environments and wireless networking technology on the university campus, and the ISEEE building will provide 62,000 square metres (667,362 square feet) of new space for the promotion of sustainable energy research, teaching, and technology. Using state-of-the-art energy conservation strategies and other green building innovations, both projects will be constructed to meet the criteria for Platinum certification by the Leadership in Energy and Environmental Design (LEED) Green Building Rating System®. Similarly, our staff were contracted to provide mechanical and electrical engineering along with project management, energy modeling, and sustainable design consulting services for the development of the Centre for Interactive Research on Sustainability in Vancouver, British Columbia. The design goal for this project is to create a facility that is a net producer of water and energy, treats all its waste on site, and is greenhouse gas emission neutral.

New project awards in the Environment area illustrated our commitment to providing sustainable solutions for the environmentally responsible production of energy as well as water and wastewater treatment. During the quarter, work began on the development of the High Sheldon Wind Farm in Sheldon, New York, for which we are contributing our expertise in environmental review and technical consulting. In addition to environmental impact analysis, the project will involve the coordination of public consultations with local municipalities. In the water and wastewater treatment sectors, our Environmental Infrastructure team is acting as the prime consultant for the process, control systems, and architectural design of a 40-megalitre-per-day (10.6-million-US-gallon-per-day) water treatment plant in Salmon Arm, British Columbia. Scheduled to begin operation in 2009, the plant will employ ultraviolet disinfection technology and serve a community of 25,000 people that currently does not have a water treatment facility. We are also designing a multimillion-dollar expansion of the South End Water Pollution Control Centre in Winnipeg, Manitoba, to the use of biological nutrient removal technology, which is slated for completion in 2012. As well, our skills are being used in the planning, pilot testing, design, and construction management of three 1,000-US-gallon-per-minute (3,785-litre-per-minute) to 2,000-US-gallon-per-minute (7,570-litre-per-minute) arsenic treatment systems as part of a water treatment improvement project for the City of Live Oak in California. And in Ontario, California, we are providing preliminary engineering services for the development of a 200-acre (80.9-hectare) wetland that will treat urban runoff for a 52-square-mile (134.7-square-kilometre) tributary area within the Santa Cruz County Flood Control District. Along with facility siting, hydraulic sizing, layout, and vegetative modeling, these services will include the preparation of a plan for recreational use of the wetland by area residents.

Also notable during the first quarter was the award of projects involving the design of infrastructure complementary to the oil and gas development sector. For example, our Transportation group is leading a team to design the widening of Highway 63 through the oil sands development area of Fort McMurray, Alberta, to six lanes, as well as two new interchanges and additional bridge structures across the Athabasca River. These highway improvements are expected to be completed by 2010. Also in the Transportation area, we are designing the widening of 15 kilometres (9.3 miles) of Highway 401 near Woodstock, Ontario, from four to six lanes for the Ontario Ministry of Transportation and the upgrading of 8.7 kilometres (5.4 miles) of ABC Highway in Barbados from two to four lanes for the Barbados Ministry of Public Works. This initial assignment to increase local roadway capacity for the upcoming Cricket World Cup 2007 is part of a larger Barbados project that will ultimately include six overpasses at seven roundabout locations, drainage improvements, and intersection upgrades.

Finally, we are pleased to be providing geotechnical, survey, and civil engineering services for the development of a 230-acre (93.1-hectare) regional park facility in Sparks, Nevada, that will include six softball diamonds, four baseball diamonds, a soccer field, a multipurpose field, three concession areas, and parking spaces for 650 vehicles. Because of the fast-track schedule for the project—which must be completed by spring 2007—along with concerns for water conservation and the need to reduce long-term maintenance, the playing fields will be built with artificial turf.

In sum, the first quarter of 2006 was productive for our Company, bringing new and exciting developments on several different fronts. Such activity bodes well for our ability to continue to pursue our goal of focused and orderly growth.

Tony Franceschini, P.Eng.

President & CEO

May 4, 2006

Consolidated Balance Sheets

		March 31	December 31
		2006	2005
(Columnar figures in thousands of Canadian dollars) (Unaudited)		$	$
ASSETS [note 4]
Current
Cash and cash equivalents		5,741	28,143
Restricted cash		19,139	21,312
Accounts receivable, net of allowance for doubtful accounts of
	$13,262 in 2006 ($16,053 - 2005)	163,457	137,928
Costs and estimated earnings in excess of billings		47,363	66,172
Income taxes recoverable		369	-
Prepaid expenses		4,634	5,420
Future income tax assets		13,746	14,827
Other assets [note 3]		5,670	6,569

Total current assets		260,119	280,371
Property and equipment		60,318	58,519
Goodwill		245,107	242,674
Intangible assets		26,231	27,304
Future income tax assets		6,469	6,814
Other assets [note 3]		14,733	13,097
Total assets		612,977	628,779

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities	70,593	106,757
Billings in excess of costs and estimated earnings	26,084	24,251
Income taxes payable	-	4,441
Current portion of long-term debt [note 4]	3,732	4,813
Future income tax liabilities	14,883	17,552

Total current liabilities	115,292	157,814
Long-term debt [note 4]	93,558	81,886
Other liabilities [note 5]	26,414	24,764
Future income tax liabilities	15,974	16,262

Total liabilities	251,238	280,726

Shareholders' equity
Share capital [note 6]	212,070		210,604
Contributed surplus [note 6]	5,073		5,522
Cumulative translation account	(24,543	)	(25,575	)
Deferred stock compensation	(613	)	(833	)
Retained earnings	169,752		158,335
Total shareholders' equity	361,739		348,053
Total liabilities and shareholders' equity	612,977		628,779
See accompanying notes

Consolidated Statements

of Income and Retained Earnings

	For the quarter ended
	March 31
	2006			2005
(Columnar figures in thousands of Canadian dollars, except per share amounts) (Unaudited)		$			$
INCOME
Gross revenue		185,270			141,144
Less subconsultant and other direct expenses		22,132			22,011

Net revenue		163,138			119,133
Direct payroll costs		72,209			54,439

Gross margin		90,929			64,694
Administrative and marketing expenses		68,377			51,262
Depreciation of property and equipment		3,471			2,764
Amortization of intangible assets		1,528			238
Net interest expense [note 4]		598			75
Share of income from associated companies		(38	)		(68	)
Foreign exchange (gains) losses		(48	)		61

Income before income taxes		17,041			10,362
Income taxes
Current		7,498			3,828
Future		(1,874	)		(201	)

Total income taxes		5,624			3,627

Net income for the period		11,417			6,735
Retained earnings, beginning of the period		158,335			117,874
Shares repurchased [note 6]		-			(67	)

Retained earnings, end of the period		169,752			124,542

Weighted average number of shares outstanding - basic		22,473,395			18,917,670
Weighted average number of shares outstanding - diluted		22,958,941			19,424,308
Shares outstanding, end of the period		22,535,173			18,933,019

Earnings per share
Basic		0.51			0.36
Diluted		0.50			0.35
See accompanying notes

Consolidated Statements

of Cash Flows

	For the quarter ended March 31
		2006		2005
(Columnar figures in thousands of Canadian dollars) (Unaudited)		$		$

CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Cash receipts from clients		184,163		151,134
Cash paid to suppliers		(68,086	)	(53,263	)
Cash paid to employees		(127,967	)	(92,124	)
Dividends from equity investments		150		250
Interest received		1,571		1,264
Interest paid		(2,066	)	(1,321	)
Income taxes paid		(11,817	)	(13,493	)
Income taxes recovered		90		18

Cash flows used in operating activities [note 9]		(23,962	)	(7,535	)

CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Business acquisitions, including cash acquired [note 2]		(2,168	)	(700	)
Restricted cash used for acquisitions [note 2]		2,200		-
Increase in investments held for self-insured liabilities		(882	)	(1,726	)
Proceeds on disposition of investments		2		432
Purchase of property and equipment		(5,646	)	(4,151	)
Proceeds on disposition of property and equipment		11		2

Cash flows used in investing activities		(6,483	)	(6,143	)

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Repayment of long-term debt		(2,255	)	(5,882	)
Proceeds from long-term borrowings		9,142		-
Repurchase of shares for cancellation [note 6]		-		(83	)
Proceeds from issue of share capital [note 6]		1,249		440

Cash flows from (used in) financing activities		8,136		(5,525	)

Foreign exchange (loss) gain on cash held in foreign currency		(93	)	163

Net decrease in cash and cash equivalents		(22,402	)	(19,040	)
Cash and cash equivalents, beginning of the period		28,143		37,890

Cash and cash equivalents, end of the period		5,741		18,850
See accompanying notes

Notes to the Unaudited Interim Consolidated

Financial Statements

(Unaudited)

1.	General Accounting Policies

These unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles on a basis consistent with those used in the preparation of the annual December 31, 2005, consolidated financial statements. Because the disclosures included in these interim consolidated financial statements do not conform in all respects to the requirements of generally accepted accounting principles for annual financial statements, these interim consolidated financial statements should be read in conjunction with the December 31, 2005, annual consolidated financial statements. In management's opinion, these interim consolidated financial statements include all the adjustments necessary to present fairly such interim consolidated financial statements. The consolidated statements of income and retained earnings and cash flows for interim periods are not necessarily indicative of results on an annual basis due to short-term variations as well as the timing of acquisitions, if any, during interim periods.

2.	Business Acquisitions

Acquisitions are accounted for under the purchase method of accounting, and the results of operations since the respective dates of acquisition are included in the consolidated statements of income. 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. Purchase price allocations are completed after the vendors' final financial statements and income tax returns have been prepared and accepted by the Company.

Such preliminary purchase price allocations are based on management's best estimates of the fair value of the acquired assets and liabilities. Upon finalization, adjustments to the initial estimates may be required, and these adjustments may be material. The purchase prices of acquisitions are generally subject to price adjustment clauses included in the purchase agreements. Such purchase price adjustments generally result in an increase or reduction to the promissory note consideration recorded at acquisition to reflect either more or less non-cash working capital realized than was originally expected. These purchase price adjustments, therefore, have no net effect on the original purchase price allocations. In the case of some acquisitions, additional consideration may be payable based on future performance parameters. As at March 31, 2006, the maximum contingent consideration that may be payable in 2006 and future years is approximately $9,000. This additional consideration is recorded as additional goodwill in the period in which the contingency is resolved.

On March 6, 2006, the Company acquired the shares and business of Carinci Burt Rogers Engineering, Inc. for cash consideration and promissory notes. This acquisition supplements the Company's buildings engineering capabilities and presence in the Greater Toronto Area.

During the first quarter of 2006, the Company adjusted the purchase price on the Dunlop Architects Inc. (2004), CPV Group Architects & Engineering Co. Ltd. (2005), and Keen Engineering Co. Ltd. (2005) acquisitions pursuant to price adjustment clauses included in the purchase agreements.

During the first quarter of 2005, the Company paid additional consideration in connection with the Cosburn Patterson Mather Limited (2002) acquisition and adjusted the purchase price on the GBR Architects Limited (2004) acquisition pursuant to purchase price adjustment clauses included in the purchase agreements.

The purchase price allocations for the CPV Group Architects & Engineers Ltd., The Keith Companies, Inc., the Keen Engineering Co. Ltd., and the Carinci Burt Rogers Engineering, Inc. acquisitions have not yet been finalized. The Company expects to finalize the purchase price allocations for the CPV Group Architects & Engineers Ltd. and The Keith Companies, Inc. acquisitions during the second quarter of 2006, for the Keen Engineering Co. Ltd. acquisition during the third quarter of 2006, and for the Carinci Burt Rogers Engineering, Inc. acquisition during the fourth quarter of 2006.

Details of the aggregate consideration given and of the fair values of net assets acquired or adjusted for in the first quarter of each year are as follows:

Aggregate consideration paid

	2006		2005
(In thousands of Canadian dollars)	$		$

Cash consideration	2,200		700
Promissory notes	3,273		105

Purchase price	5,473		805


Assets and liabilities acquired at fair values
Cash acquired	32		-
Non-cash working capital	3,794		263
Property and equipment	36		(9	)
Goodwill	1,626		606
Intangible assets
Client relationships	265		-
Contract backlog	113		-
Long-term debt	(44	)	-
Future income tax liabilities	(349	)	(55	)

Net assets acquired	5,473		805

All of the goodwill is non-deductible for income tax purposes.


3.	Other Assets
		March 31	December 31
		2006	2005
	(In thousands of Canadian dollars)	$	$

	Investments held for self-insured liabilities	17,739	16,857
	Investments in associated companies	1,398	1,545
	Investments - other	710	710
	Other	556	554
		20,403	19,666
	Less current portion of investments held for self-insured liabilities	5,670	6,569
		14,733	13,097

4.	Long-Term Debt
		March 31	December 31
		2006	2005
	(In thousands of Canadian dollars)	$	$

	Non-interest-bearing note payable	125	122
	Other non-interest-bearing notes payable	8,569	5,643
	Bank loan	88,468	79,035
	Mortgages payable	-	1,706
	Other	128	193
		97,290	86,699
	Less current portion	3,732	4,813
		93,558	81,886

The Company has a revolving credit facility in the amount of $160 million due on August 31, 2008. This facility is available for acquisitions, working capital needs, capital expenditures, and general corporate purposes. Depending on the form under which the credit facility is accessed, rates of interest will vary between Canadian prime, US base rate, or LIBOR rate or bankers acceptance rates plus 65 or 85 basis points. At March 31, 2006, $44,968,000 of the bank loan was payable in US funds (US$38,500,000). Loans may be repaid under the credit facility from time to time at the option of the Company. The credit facility agreement contains restrictive covenants, including, but not limited to, debt to earnings ratio and earnings to debt service ratio. The Company was in compliance with all the covenants under this agreement as at March 31, 2006. All the assets of the Company are held as collateral under a general security agreement for the bank loan.

The interest incurred on long-term debt in Q1 06 was $1,002,000 (Q1 05 - $354,000).

5.	Other Liabilities
		March 31	December 31
		2006	2005
	(In thousands of Canadian dollars)	$	$

Provision for self-insured liabilities	13,310	11,346
Deferred gain on sale leaseback	6,507	6,624
Lease inducement benefits	7,917	7,997
Liabilities on lease exit activities	1,798	2,251
Other	1,333	1,021
	30,865	29,239
Less current portion included in accounts payable and accrued liabilities	4,451	4,475
	26,414	24,764

Provision for self-insured liabilities
	March 31	December 31
	2006	2005
(In thousands of Canadian dollars)	$	$
Provision, beginning of the period	11,346	5,236
Addition to provision	2,247	8,244
Payment for claims settlement	(283)	(2,134)
Provision, end of the period	13,310	11,346

Liabilities on lease exit activities
	March 31		December 31
	2006			2005
(In thousands of Canadian dollars)	$			$
Liability, beginning of the period	2,251			2,817
Current year provision:
Established for existing operations	-			609
Resulting from acquisitions	-			276
Reductions:
Impacting administrative and marketing expenses	(455	)		(1,103	)
Impacting the purchase price allocation	-			(325	)
Impact of foreign exchange	2			(23	)
Liability, end of the period	1,798			2,251

6.	Share Capital
								Contributed
		Capital Stock						Surplus
		2006		2005				2006		2005
		Shares		Shares
	(In thousands of Canadian dollars)	#	$	#		$		$		$
	Balance, beginning of the year	22,313,131	210,604	18,871,085		87,656		5,522		2,544
	Share options exercised for cash	218,903	1,249	64,834		440		-		-
	Stock-based compensation expense							186		254
	Shares repurchased under normal
	course issuer bid	-	-	(2,900	)	(15	)	-		(1	)
	Reclassification of fair value of stock
	options previously expensed		136			57		(136	)	(57	)
	Shares issued on vesting of
	restricted shares	3,139	81	-		-		(499	)	-
	Balance, as at March 31	22,535,173	212,070	18,933,019		88,138		5,073		2,740

During Q1 06, the Company did not repurchase any common shares for cancellation pursuant to an ongoing normal course issuer bid. In Q1 05, 2,900 common shares were repurchased at a cost of $83,000. Of this amount, $15,000 and $1,000 reduced the share capital and contributed surplus accounts, respectively, with $67,000 being charged to retained earnings.

During Q1 06, the Company recognized a stock-based compensation expense of $631,000 (Q1 05 - $349,000) in administrative and marketing expenses. Of the amount expensed, $186,000 related to the fair value of the options granted (Q1 05 - $254,000); $224,000 related to deferred share unit compensation (Q1 05 - $95,000); and $221,000 related to the restricted shares issued on The Keith Companies, Inc. acquisition. The fair value of the options granted was reflected through contributed surplus; the deferred share unit compensation was reflected through accrued liabilities; and the restricted shares were reflected through deferred stock compensation. Upon the exercise of share options for which a stock-based compensation expense has been recognized, the cash paid together with the related portion of contributed surplus is credited to share capital. Upon the vesting of restricted shares for which a stock-based compensation expense has been recognized, the related portion of contributed surplus is credited to share capital.

During Q1 06 the Board of Directors of the Company resolved to subdivide the issued common shares of the Company on a two-for-one basis. The share split requires shareholder approval at the annual and special meeting of shareholders to be held on May 4, 2006. The issued common share information and the earnings per share information presented in these interim consolidated financial statements do not reflect the impact of the proposed two-for-one share split.

7. 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. 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, and the Company's operating segments are based on its regional geographic areas.

All the operations of the Company are included in one reportable segment as Consulting Services, which provides services throughout North America and internationally.

Geographic information	Property and Equipment,
	Goodwill, Intangible Assets
		March 31, 2006	December 31, 2005
(In thousands of Canadian dollars)		$	$

Canada		107,130	104,463
United States		224,079	223,593
International		447	441
		331,656	328,497


	Gross Revenue
Geographic information
		For the quarter ended March 31
		2006	2005
(In thousands of Canadian dollars)		$	$
Canada		105,363	86,916
United States		79,129	53,156
International		778	1,072
		185,270	141,144

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

Practice area information		Gross Revenue
	For the quarter ended March 31
		2006	2005
(In thousands of Canadian dollars)		$	$

Consulting Services
Environment		31,398	24,685
Buildings		45,269	35,206
Transportation		23,586	21,889
Urban Land		65,434	43,477
Industrial & Project Management		19,583	15,887

		185,270	141,144

8.	Employee Future Benefits

The Company contributes to group retirement savings plans and an employee share purchase plan based on the amount of employee contributions made subject to maximum limits per employee. The Company accounts for such defined contributions as an expense in the period in which the contributions are made. The expense recorded in Q1 06 was $3,313,000 (Q1 05 - $2,004,000).

9.	Cash Flows From (Used In) Operating Activities

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

	For the quarter ended
		March 31
		2006		2005
(In thousands of Canadian dollars)		$		$


Net income for the period		11,417		6,735
Add (deduct) items not affecting cash:
Depreciation of property and equipment		3,471		2,764
Amortization of intangible assets		1,528		238
Future income tax		(1,874	)	(201	)
Loss (gain) on dispositions of investments and property and equipment		323		(101	)
Stock-based compensation expense		631		349
Provision for self-insured liability		2,247		2,020
Other non-cash items		(1,177	)	(312	)
Share of income (loss) from equity investments		(38	)	(68	)
Dividends from equity investments		150		250

		16,678		11,674

Change in non-cash working capital accounts:
Accounts receivable		(20,988	)	8,102
Costs and estimated earnings in excess of billings		18,775		(3,074	)
Prepaid expenses		867		713
Accounts payable and accrued liabilities		(36,470	)	(15,840	)
Billings in excess of costs and estimated earnings		1,819		543
Income taxes payable/recoverable		(4,643	)	(9,653	)

		(40,640	)	(19,209	)

Cash flows used in operating activities		(23,962	)	(7,535	)

10.

Subsequent Events

On April 14, 2006, the Company acquired the shares and business of Dufresne-Henry, Inc. for cash consideration and promissory notes of US$10.2 million. The cash consideration was financed through use of the Company's existing cash. The acquisition of the multidiscipline design firm of Dufresne-Henry, Inc. expands the Company's services into four new states in New England and establishes an initial presence in Florida. Dufresne-Henry, Inc.'s staff offer professional services in engineering, planning, environmental science, and landscape architecture.

11.

Comparative Figures

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

Management's Discussion and Analysis

April 28, 2006

This Management’s Discussion and Analysis of Stantec Inc.’s operations and cash flows for the quarter ended March 31, 2006, should be read in conjunction with our Company’s unaudited interim consolidated financial statements and related notes for the quarter ended March 31, 2006, the Management’s Discussion and Analysis and audited consolidated financial statements and related notes included in our 2005 Annual Report, and the Report to Shareholders contained in our 2006 First Quarter Report. Unless otherwise indicated, all amounts shown below are in Canadian dollars. Our Company continues to use the same accounting policies and methods as those used in 2005. Additional information regarding our Company, including our Annual Information Form, is available on SEDAR at www.sedar.com. Such additional information is not incorporated by reference herein and should not be deemed to be made part of this Management’s Discussion and Analysis.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Stantec’s public communications often include written or verbal forward-looking statements. Forward-looking statements are disclosures regarding possible events, conditions, or results of operations that are based on assumptions about future economic conditions and courses of action and include future-oriented financial information.

Statements of this type are included in this report and may be included in filings with Canadian securities regulators or in other communications. Forward-looking statements may involve, but are not limited to, comments with respect to our objectives for 2006 and beyond, our strategies or future actions, our targets, our expectations for our financial condition or share price, or the results of or outlook for our operations or for the Canadian or US economies.

By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that predictions and other forward-looking statements will not prove to be accurate. We caution readers of this report to not place undue reliance on our forward-looking statements since a number of factors could cause actual future results, conditions, actions, or events to differ materially from the targets, expectations, estimates, or intentions expressed in these forward-looking statements.

Factors listed in this Management’s Discussion and Analysis and in the Risk Factors section of our 2005 Annual Report could cause Stantec’s actual results to differ materially from those projected in our forward-looking statements. Investors and the public should carefully consider these factors, other uncertainties and potential events as well as the inherent uncertainty of forward-looking statements when relying on these statements to make decisions with respect to Stantec. We do not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time by the organization or on its behalf.

VISION, CORE BUSINESS, AND STRATEGY

Our Company provides professional consulting services in planning, engineering, architecture, interior design, landscape architecture, surveying and geomatics, environmental sciences, project management, and project economics for infrastructure and facilities projects. Through multidiscipline service delivery, we support clients throughout the project life cycle—from the initial conceptual planning to project completion and beyond. Our goal is to become a top 10 global design and consulting services firm with $1 billion in annual revenue by the year 2008 while providing quality services that have a positive impact on our world. Our vision, core business, and strategy and the key performance drivers and capabilities required to meet our goals have not changed in Q1 06 from the description included in our 2005 Annual Report.

RESULTS

Overall Performance

Highlights for Q1 06

By execuing our business strategy, we generated strong results for the quarter ended March 31, 2006. Gross revenue, net income, and earnings pershare increased in Q1 06 compared to Q1 05 as follows:

(In millions of Canadian dollars, except per share amounts)	Q1 06			Q1 05			$Change			% Change

Gross revenue		185.3			141.1			44.2			31.3	%
Net revenue		163.1			119.1			44.0			36.9	%
Net income		11.4			6.7			4.7			69.5	%
Earnings per share - basic		0.51			0.36			0.15			41.7	%
Earnings per share - diluted		0.50			0.35			0.15			42.9	%
Cash flows used in operating activities		(24.0	)		(7.5	)		(16.5	)		n/a
Cash flows used in investing activities		(6.5	)		(6.1	)		(0.4	)		n/a
Cash flows from (used in) financing activities		8.1			(5.5	)		13.6			n/a

In our 2005 Management’s Discussion and Analysis, we established various ranges of expected performance for fiscal 2006. Below is an indication of our progress toward our annual targets:

Measure	2006 Expected Range			Performance to Q1 06

Debt to equity ratio (note 1)		At or below 0.5 to 1			0.25
Return on equity (note 2)		At or above 14	%		15.4	%
Net income as % of net revenue		At or above 5	%		7.0	%
Gross margin as % of net revenue		Between 54 and 56	%		55.7	%
Administrative and marketing expenses as		Between 40 and 42	%		41.9	%
% of net revenue
Effective income tax rate		Between 32 and 34	%		33.0	%

note 1: Debt to equity ratio is calculated as long-term debt plus current portion of long-term debt plus bank indebtedness less cash, all divided by shareholders’ equity.

note 2: Return on equity is calculated as net income for the last four quarters divided by average shareholders’ equity over each of the last four quarters.

The following highlights our major strategic activities in the first quarter ended March 31, 2006, as we continued to progress toward our goals:

•

On March 6, 2006, we completed the acquisition of Carinci Burt Rogers Engineering Inc., adding over 20 employees in the Greater Toronto Area. This addition strengthens our Company’s electrical engineering practice. Carinici Burt Rogers Engineering Inc.’s illumination experience spans all categories of projects, including commercial, industrial, institutional, residential, and recreational.

•

Subsequent to the quarter-end, on April 14, 2006, we acquired the shares and business of Dufresne-Henry, Inc. for cash consideration and promissory notes of US$10.2 million, adding over 270 employees and 12 office locations to our Company. The cash consideration component of US$8.7 million was financed through use of our existing restricted cash. The acquisition of this multidiscipline design firm expands our services into four new states in New England and establishes an initial presence in Florida. Dufresne-Henry, Inc.’s staff offer a full range of professional services in engineering, planning, environmental science, and landscape architecture.

Our financial condition continues to remain strong as shareholders’ equity increased by $13.7 million in Q1 06 due mainly to net income of $11.4 million in Q1 06. Our total liabilities decreased by $29.5 million from December 31, 2005, due primarily to the timing of payments to employees, including annual employee bonuses and payroll. Our total assets decreased by $15.8 million mainly due to a decline of $22.4 million in cash and cash equivalents used to reduce the payables noted above. This decline was offset by a net increase of $6.7 million in our investment in accounts receivable and in costs and estimated earnings in excess of billings attributable to factors explained in the Liquidity and Capital Resources section below.

Results of Operations

Our Company operates in one reportable segment—Consulting Services. We provide knowledge-based solutions for infrastructure and facilities projects through value-added professional services principally under fee-for-service agreements with clients.

The following table summarizes our key operating results on a percentage of net revenue basis and the percentage increase in the dollar amount of these results in Q1 06 compared to the same period last year:

	Quarter ended March 31
	% of Net Revenue					% Increase*
		2006		2005		2006 vs. 2005
Gross revenue		113.6	%	118.5	%	31.3	%
Net revenue		100.0	%	100.0	%	36.9	%
Direct payroll costs		44.3	%	45.7	%	32.6	%
Gross margin		55.7	%	54.3	%	40.6	%
Administrative and marketing expenses		41.9	%	43.0	%	33.4	%
Depreciation of property and equipment		2.1	%	2.3	%	25.6	%
Amortization of intangible assets		0.9	%	0.2	%	542.0	%
Net interest expense		0.4	%	0.1	%	697.3	%
Foreign exchange (gains) losses		0.0	%	0.1	%	(155.7	%)
Share of (income) loss from associated companies		0.0	%	(0.1	%)	(1.5	%)
Income before income taxes		10.4	%	8.7	%	64.5	%
Income taxes		3.4	%	3.0	%	55.1	%
Net income for the period		7.0	%	5.7	%	69.5	%

* % increase calculated based on the dollar change from the comparable period.

The following discussion outlines certain factors affecting the results of our operations for the first quarter of 2006, which should be read in conjunction with our unaudited consolidated financial statements for that quarter.

Gross and Net Revenue

In the course of providing professional services, we incur certain direct costs for subconsultants, equipment, and other expenditures that are recoverable directly from our clients. The revenue associated with these direct costs is included in our gross revenue. Since such direct costs and their associated revenue can vary significantly from contract to contract, changes in our 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.

The following table summarizes the impact of acquisitions, internal growth, and foreign exchange on our gross and net revenue for the first quarter of 2006 compared to the same period in 2005.

Gross Revenue (In millions of Canadian dollars)	First Quarter 2006 vs. 2005

Increase (decrease) due to:
Acquisition growth	46.8
Net internal growth	0.5
Impact of foreign exchange rates on revenue earned by foreign subsidiaries	(3.1	)
Total increase in gross revenue	44.2

Net Revenue	First Quarter
(In millions of Canadian dollars)	2006 vs. 2005
Increase (decrease) due to:
Acquisition growth	42.6
Net internal growth	4.0
Impact of foreign exchange rates on revenue earned by foreign subsidiaries	(2.6	)
Total increase in net revenue	44.0

The net increase in gross revenue was $44.2 million for Q1 06 over Q1 05 due to growth of $46.8 million from acquisitions and internal growth of $0.5 million, offset by an impact of foreign exchange rates on revenue earned by foreign subsidiaries of $3.1 million. The large increase in acquisition gross and net revenue in the quarter-over-quarter comparison is due to the revenue earned in Q1 06 attributed to the CPV Group Architects & Engineers Ltd. (CPV), Keen Engineering Co. Ltd. (Keen), and The Keith Companies, Inc. (Keith) acquisitions, which occurred in the second half of 2005.

The following table summarizes the strong growth in gross revenue by practice area for the first quarter of 2006 compared to the same period for 2005:

(In millions of Canadian dollars)	Quarter ended March 31
Practice Area Gross Revenue		2006	2005	Change
Environment		31.4	24.7	6.7
Buildings		45.3	35.2	10.1
Transportation		23.6	21.9	1.7
Urban Land		65.4	43.4	22.0
Industrial & Project Management		19.6	15.9	3.7
Total		185.3	141.1	44.2

As indicated above, our gross revenue was impacted by acquisitions, net internal growth, and foreign exchange rates on revenue earned by our foreign subsidiaries. The impact of these factors on gross revenue earned by practice area is summarized below:

	Quarter ended March 31
Practice Area Gross Revenue					Change Due to Net
			Change Due		Internal Growth
	Total		to		and Foreign
		Change		Acquisitions		Exchange
Environment		6.7		6.8		(0.1	)
Buildings		10.1		12.3		(2.2	)
Transportation		1.7		0.0		1.7
Urban Land		22.0		25.0		(3.0	)
Industrial & Project Management		3.7		2.7		1.0

Total		44.2		46.8		(2.6	)

The following lists the acquisitions completed in 2005 and Q1 06 that impacted specific practice areas:

•	Environment: The Keith Companies, Inc. (September 2005).

•	Buildings: Carinci Burt Rogers Engineering, Inc. (March 2006); Keen Engineering Co. Ltd. (October 2005); The Keith Companies, Inc. (September 2005); and CPV Group Architects & Engineers Ltd. (August 2005).

•	Urban Land: The Keith Companies, Inc. (September 2005).

•	Industrial & Project Management: The Keith Companies, Inc. (September 2005).

All of our practice areas generate a portion of their gross revenue in the United States. The value of the Canadian dollar averaged US$0.87 in Q1 06 compared to US$0.81 in Q1 05, representing an appreciation of 7.4% . This strengthening of the Canadian dollar had a negative effect on reported revenue in Q1 06 compared to Q1 05.

Gross revenue for the Environment practice area increased by 27.1% in Q1 06 compared to Q1 05. In 2005 the Environment practice area focused on improving the operational effectiveness of underperforming operations. During the last half of 2004, certain of our operations in the Environment practice area were curtailed through staff reductions, resulting in a decrease in the level of revenue generated in 2005. This strategic realignment enhanced the Environment practice area’s ability to improve its gross revenue and gross margin in Q1 06 (57.8% in Q1 06 versus 56.1% in Q1 05). The Environment practice area remains strong, particularly the Environmental Infrastructure resulting in larger project sizes and higher labor utilization rates.

Gross revenue for the Buildings practice area grew 28.7% in Q1 06 compared to Q1 05. The percentage increase resulted from a combination of growth through acquisitions, the presence of strong economies in the regions in which the practice area operates, and our transition from a group of local and regional offices into a national practice able to provide sought-after expertise in markets such as health care, research, education, and aviation. In Q1 06 our Architecture group continued to encounter larger project sizes and project volumes. The Buildings practice area is very active in western Canada, resulting in a strong backlog. To assist in meeting this increased demand, the Buildings practice area is making use of work sharing initiatives across the Company.

Gross revenue for the Transportation practice area increased by 7.8% in Q1 06 compared to Q1 05. Opportunities in the United States are increasing due to the implementation of the new six-year, US$286.4 billion Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users signed on August 10, 2005. The passage of this bill has increased the funds available for transportation projects; however, this has not translated into projects for our Company as quickly as anticipated. The outlook for our Transportation practice area in Canada remains strong.

Gross revenue for the Urban Land practice area grew by 50.7% in Q1 06 compared to Q1 05. The $22.0 million increase was due primarily to the gross revenue earned in Q1 06 from the Keith acquisition. In 2006 some of the markets in which Urban Land operates are experiencing a moderate slowdown. However, since we are generally a top-three service provider in this practice area in these regions, we expect the impact to also be moderate and our performance to remain strong during the year.

Gross revenue for the Industrial & Project Management practice area grew by 23.3% in Q1 06 compared to Q1 05. Of the $3.7 million increase in Q1 06, $2.7 million was due to the Keith acquisition. The increase in internal growth was primarily due to securing projects in the strengthening energy sector in western Canada. The Industrial & Project Management practice area is positioning itself to capture the support facilities and infrastructure segment related to the energy and resources sectors.

Gross Margin

For a definition of gross margin, refer to the Definition of Non-GAAP Measures included in our 2005 Annual Report. Gross margin as a percentage of net revenue was 55.7% in Q1 06 compared to 54.3% in Q1 05. The information available from our new enterprise management system has contributed to improved project management and enhanced gross margin. As well, because of the nature of our business model, which is based on diversifying our operations across geographic regions, practice areas, and all phases of the infrastructure and facilities project life cycle, there will continue to be fluctuations in the margins reported from quarter to quarter depending on the mix of projects in progress during any quarter.

The following table summarizes our gross margin percentages by practice area for Q1 06 and Q1 05:

	Quarter ended March 31
Practice Area Gross Margin		2006		2005
Environment		57.8	%	56.1	%
Buildings		55.0	%	52.7	%
Transportation		56.1	%	53.9	%
Urban Land		56.5	%	56.9	%
Industrial & Project Management		50.9	%	47.3	%

Gross margin percentages increased in all practice areas except Urban Land in Q1 06 compared to Q1 05, which is attributable to the same factors mentioned above. Overall, our Q1 06 gross margin met the anticipated range of 54 to 56% set out in our 2005 Annual Report.

Administrative and Marketing Expenses

Administrative and marketing expenses as a percentage of net revenue were 41.9% for Q1 06 compared to 43.0% for Q1 05 and were within our expected range of 40 to 42% for fiscal 2006. Administrative and marketing expenses may fluctuate from quarter to quarter as a result of the amount of staff time charged to marketing and administrative labor, which is influenced by the mix of projects in progress and being pursued during the period. During Q1 06, the amount of labor charged to administrative and marketing expenses as a percentage of net revenue decreased by 0.6% compared to Q1 05. As well, our administrative expense for Q1 06 was affected by a 0.5% decline in occupancy costs as a percentage of net revenue compared to Q1 05.

Depreciation of Property and Equipment

Depreciation of property and equipment as a percentage of net revenue decreased to 2.1% in Q1 06 from 2.3% in Q1 05. Quarter over quarter, our depreciation expense on an absolute basis has remained relatively constant, resulting in a reduction as a percentage of an increasing net revenue base.

Amortization of Intangible Assets

The timing of completed acquisitions, the size of acquisitions, and the type of intangible assets acquired impact the amount of amortization of intangible assets in a period. Client relationships and other intangible assets are amortized over estimated useful lives ranging from 10 to 15 years, whereas contract backlog is amortized over an estimated useful life of generally less than one and a half years.

As a result, the impact of amortization of contract backlog can be significant in the two to six quarters following an acquisition. The table below summarizes the amortization of identifiable intangible assets for the first quarter of 2006 and 2005:

	Quarter ended March 31
(In thousands of Canadian dollars)		2006	2005
Amortization of client relationships		587	142
Amortization of backlog		890	50
Other		53	46
Total amortization of intangible assets		1,530	238

An increase of $1.3 million in Q1 06 from the same quarter last year was mainly due to the intangible assets acquired in the last half of 2005 from the CPV, Keith, and Keen acquisitions. Of the $1.5 million amortized in Q1 06, $530,000 and $425,000, respectively, related to the backlog and client relationships acquired in the Keith acquisition in September 2005. We recorded $4.0 million of backlog upon the acquisition of Keith. Of this amount, $2.5 million remains to be amortized over the next 11 months.

Net Interest Expense

The increase of $523,000 in net interest expense in Q1 06 compared to Q1 05 was a result of our long-term debt position throughout the first quarter of 2006 being higher than in the same period in 2005. As at March 31, 2006, $43.5 million and US$38.5 million (C$45.0 million) for a total of $88.5 million were outstanding on our credit facility versus $22.2 million outstanding as at March 31, 2005. In addition, depending on the form under which the credit facility is accessed and certain financial covenant calculations, rates of interest may vary between Canadian prime, US base rate, or LIBOR or bankers acceptance rates plus 65 or 85 basis points. Our average interest rate increased 0.6% to 4.94% at March 31, 2006, compared to 4.34% at December 31, 2005. We estimate that, based on our balance at March 31, 2006, a 1% change in interest rate would impact our annual earnings per share by between $0.02 and $0.03.

Foreign Exchange Gains (Losses)

During Q1 06, we recorded a foreign exchange gain of $48,000 compared to a $61,000 loss in Q1 05. The foreign exchange gains and losses reported have arisen on the translation of the foreign-denominated assets and liabilities held in our Canadian companies and in our non-US-based foreign subsidiaries. We minimize our exposure to foreign exchange fluctuations by matching US-dollar assets with US-dollar liabilities and by entering into forward contracts to buy or sell US dollars in exchange for Canadian dollars. In Q4 05 we borrowed US dollars to complete the Keith acquisition. The US-dollar debt offset our investment in US-dollar net assets and eliminated the need to enter into forward contracts in Q1 06. The exchange rate in effect at the end of Q1 06 remained consistent with the rate in effect at the end of 2005 at US$0.86.

Income Taxes

Our effective income tax rate decreased to 33.0% for Q1 06 compared to 35.0% for the year ended December 31, 2005. Our estimated income tax rate is adjusted quarterly, based on changes in statutory rates in the jurisdictions in which we operate as well as on our estimated earnings in each of these jurisdictions. For 2006 we are expecting an increase in the portion of income earned in lower tax jurisdictions resulting in the reduction of our effective tax rate from 2005.

SUMMARY OF QUARTERLY RESULTS

The following table sets forth selected data derived from our consolidated financial statements for each of the eight most recently completed quarters. This information should be read in conjunction with the applicable interim unaudited and annual audited consolidated financial statements and related notes thereto.

Quarterly Unaudited Financial Information
(In millions of Canadian dollars,
except per share amounts)	Jun 30, 2005	Sep 30, 2005	Dec 31, 2005	Mar 31, 2006

Gross revenue	150.2	146.1	180.6	185.3
Net revenue	127.7	125.9	151.9	163.1
Net income	13.1	12.8	8.0	11.4
EPS - basic	0.69	0.66	0.36	0.51
EPS - diluted	0.67	0.64	0.35	0.50

	June 30, 2004	Sep 30, 2004	Dec 31, 2004	Mar 31, 2005

Gross revenue	136.8	139.8	127.0	141.1
Net revenue	118.7	119.8	107.1	119.1
Net income	6.4	8.5	9.6	6.7
EPS - basic	0.35	0.46	0.52	0.36
EPS - diluted	0.33	0.44	0.50	0.35

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 our shares, since we do not include in dilution options whose exercise price is not in the money.

The following table summarizes the impact of acquisitions, internal growth, and foreign exchange on our gross revenue for the following quarterly comparisons:

(In millions of Canadian dollars)	Q1 06 vs.Q1 05		Q4 05 vs.Q4 04		Q3 05 vs.Q3 04		Q2 05 vsQ2 04

Increase (decrease) in gross revenue due to:
Acquisition growth	46.8		40.8		9.9		14.2
Net internal growth	0.5		14.4		0.8		4.3
Impact of foreign exchange rates on revenue earned by foreign subsidiaries	(3.1	)	(1.6	)	(4.4	)	(5.1	)
Total increase in gross revenue	44.2		53.6		6.3		13.4

LIQUIDITY AND CAPITAL RESOURCES

The following table represents summarized working capital information as at March 31, 2006, compared to December 31, 2005:

(In millions of Canadian dollars, except ratios)	Mar 31, 2006		Dec 31, 2005		% Change

Current assets	260.1		280.4		(7.2	%)
Current liabilities	(115.3	)	(157.8	)	(26.9	%)
Working capital	144.8		122.6		18.1	%
Ratio of current assets to current liabilities	2.26		1.78		n/a

note: Working capital is calculated by subtracting current liabilities from current assets. The current ratio is calculated by dividing current assets by current liabilities.

Our cash flows from (used in) operating, investing, and financing activities for the first quarter of 2006 and 2005, as reflected in the Consolidated Statements of Cash Flows, are summarized in the following table:

	Quarter ended March 31
(In millions of Canadian dollars)	2006		2005		$Change

Cash flows used in operating activities	(24.0	)	(7.5	)	(16.5	)
Cash flows used in investing activities	(6.5	)	(6.1	)	(0.4	)
Cash flows from (used in) financing activities	8.1		(5.5	)	13.6

Our liquidity needs can be met through a variety of sources, including cash generated from operations, borrowings from our $160 million credit facility, and the issuance of common shares. We also have access to restricted cash, which can be used to finance future acquisitions as well as future capital expenditures. Our primary use of funds is for operational expenses, acquisitions, and sustaining capital spending on property and equipment. We continue to manage according to the management guidelines established in our 2005 Annual Report of maintaining a debt to equity ratio of less than 0.5 to 1.

Working Capital

Our working capital (current assets less current liabilities) at the end of Q1 06 was $144.8 million compared to $122.6 million at December 31, 2005. Current assets decreased by $20.3 million, and current liabilities decreased by $42.5 million during this period. The decrease in current assets from December 31, 2005, was due to a decline of $22.4 million in our cash and cash equivalents as cash was used in the reduction of $36.2 million in accounts payable and accrued liabilities during the quarter. Accounts payable and accrued liabilities decreased from December 31, 2005, partially due to the payment of annual employee bonuses. The addition of the non-cash working capital ($1.5 million) of Carinci Burt Rogers Engineering Inc. also contributed to the increase in working capital during the quarter.

Cash Flows Used in Operating Activities

Our cash flows used in operating activities increased by $16.4 million in Q1 06 compared to the same period in 2005. The quarter-over-quarter change was mainly due to a decrease of $17.6 million in cash receipts from clients less cash paid to suppliers and employees. Our cash flow was affected by an increase in our investment in costs and estimated earnings in excess of billings and in accounts receivable to 102 days in Q1 06 from 95 days in Q1 05 as we continued to integrate the acquisitions made in the last half of 2005. The above was partly offset by a $1.7 million decrease in income taxes paid in Q1 06 versus Q1 05.

Cash Flows Used in Investing Activities

Our cash flows used in investing activities increased by $0.3 million in Q1 06 compared to the same period in 2005. In Q1 06 we used $2.2 million of our restricted cash in the acquisition of Carinci Burt Rogers Engineering, Inc. Quarter-over-quarter, there was a $1.4 million increase in the purchase of property and equipment. As a professional services organization, we are not capital intensive. Expenditures are made primarily for property and equipment, including such items as computer equipment and business information systems software, furniture, leasehold improvements, and other office and field equipment. Our capital expenditures increased to $5.6 million in Q1 06 from $4.1 million in Q1 05. Our Q1 06 expenditures were within the expected range for 2006 to support ongoing operational activity and growth. During Q1 06, our capital expenditures were financed by cash flows from operations and by borrowing from our existing credit facility.

Cash Flows From Financing Activities

Our cash flows from financing activities rose by $13.6 million in Q1 06 compared to the same period in 2005. In Q1 06 we accessed an additional $9.1 million on our revolving credit facility versus repaying $5.9 million in Q1 05. The $9.1 million of additional funds drawn on our credit facility was partially offset by the repayment of $1.7 million in mortgages payable during the quarter. In Q1 05 we repaid our long-term debt since we had a significant reduction in our investment in accounts receivable and in costs and estimated earnings in excess of billings. As familiarity and efficiencies were realized with the use of the enterprise management system, improved project management, invoicing, and collection procedures enabled us to reduce our net investment in these accounts in Q1 05. As indicated above, due to the acquisitions completed in the last half of 2005, our investment in accounts receivable and in costs and estimated earnings in excess of billings increased in Q1 06. At March 31, 2006, we had $71.5 million available under our $160 million credit facility for future activities.

Shareholders’ Equity

Share options exercised for cash during the first quarter of 2006 generated cash of $1.2 million compared to $440,000 for the same period in 2005.

OTHER

Outstanding Share Data

As at March 31, 2006, there were 22,535,173 common shares and 719,361 share options outstanding. During the period of April 1, 2006, to April 28, 2006, no shares were repurchased under our normal course issuer bid, 4,858 net shares were issued on the vesting of restricted shares, no new share options were issued, and 800 share options were exercised.

Contractual Obligations

As part of our continuing operations, we enter into long-term contractual arrangements from time to time due mainly to our long-term debt and operating lease commitments. During the quarter ended March 31, 2006, we did not enter into any new material long-term contractual obligations other than assuming $745,000 in lease premise obligations on the acquisition of Carinci Burt Rogers Engineering Inc. As well, we drew down an additional $9.1 million on our existing revolving credit facility.

Off-Balance Sheet Arrangements

During the quarter ended March 31, 2006, there was no material change to our off-balance sheet arrangements as described in our 2005 Annual Report.

Market Risk

We are exposed to various market factors that can affect our performance with respect to currency and interest rates. There has been no significant change in our market risks from those described in our 2005 Annual Report.

Related Party Transactions

As was the case in 2005 (as described in our 2005 Annual Report), no related party transactions were made during Q1 06.

OUTLOOK

The outlook for the remainder of 2006 continues to be positive since our Company operates in a highly diverse infrastructure and facilities market within North America. Results may fluctuate from quarter to quarter depending on variables such as project mix, economic factors, and integration activities from acquisitions. There have been no significant changes in our industry environment or market opportunities, and our expectations remain consistent with those described in the Outlook section of the Management’s Discussion and Analysis included in our 2005 Annual Report.

CRITICAL ACCOUNTING ESTIMATES, DEVELOPMENTS, AND MEASURES

For the quarter ended March 31, 2006, there has been no significant change in our critical accounting estimates, accounting developments, or description of accounting measures from those described in our 2005 Annual Report.

RISK FACTORS

For the quarter ended March 31, 2006, there has been no significant change in our Risk Factors from those described in our 2005 Annual Report.